SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1996
OR
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ___to___
Commission file number 0-15325
INFORMIX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
94-3011736
(I.R.S. Employer Identification No.)
4100 Bohannon Drive, Menlo Park, CA 94025
(Address of principal executive office)
415-926-6300
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
(Title of each class)
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 the 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of February 28, 1997 was approximately $2,616,000,000.
Shares of Common Stock held by each officer and director have been
excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive
determination for other purposes.
As of February 28, 1997, Registrant had outstanding 151,163,317 shares
of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE (to be deemed filed only to the
extent specifically incorporated herein by reference and not otherwise
excluded by law):
PART III: Parts of the Proxy Statement to be used in conjunction
with Registrant's Annual Stockholders Meeting to be held May 22,
1997.
_______________________________________________________________________
INFORMIX CORPORATION
1996 ANNUAL REPORT ON FORM 10-K
Table of Contents
PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Item 13. Certain Relationships and Related Transactions
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K
Signatures
_______________________________________________________________________
FORWARD LOOKING STATEMENTS
This Annual Report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Actual
results could differ materially from those projected in the forward-
looking statements as a result of certain factors described herein and
in other documents. Readers should pay particular attention to the risk
factors described in the section of this Report entitled "Management's
Discussion and Analysis of Financial Condition and Results of
Operations." Readers should also carefully review the risk factors
described in the other documents the Company files from time to time
with the Securities and Exchange Commission, specifically the Quarterly
Reports on Form 10-Q to be filed by the Company in 1997 and any Current
Reports on Form 8-K filed by the Company.
_______________________________________________________________________
PART I
ITEM 1. BUSINESS
BACKGROUND
The Company is a multinational supplier of high-performance,
parallel processing database technology for open systems. The Company's
products also include applications development tools for creating
client/server production applications, decision-support systems, ad-hoc
query interfaces, and software that allows information to be shared from
personal computers to mainframes within the corporate computing
environment. In addition to software products, the Company offers
training, consulting, and post-contract support to its customers. The
principal geographic markets for the Company's products are in North
America, Europe, Asia/Pacific, Japan, and Latin America. Customers
include large-, medium- and small-sized corporations in the
manufacturing, financial services, telecommunications, retail/wholesale,
hospitality and government services sectors.
The Company was initially incorporated in California in 1980 and
was reincorporated in Delaware in August 1986. Unless the context
requires otherwise, the terms "Company" and "Informix" refer to Informix
Corporation and its subsidiaries. The Company maintains its executive
offices at 4100 Bohannon Drive, Menlo Park, California 94025. Its
telephone number is (415) 926-6300.
All of the Company's database products developed since 1983 support
Structured Query Language ("SQL"), an industry standard created by IBM.
The Company's core database management software runs on the UNIX(R) ,
Windows(TM) and Windows/NT(TM) operating systems, and certain networks
composed of computers running these operating systems.
The Company's customers consist primarily of end-users, application
vendors, original computer equipment manufacturers ("OEMs") and
distributors. The Company markets its products directly to end-users
through its sales force and indirectly to end-users through application
vendors, OEMs and distributors. The Company markets its products
worldwide and has operating subsidiaries in 37 foreign countries.
In February 1996, the Company acquired Illustra Information
Technologies, Inc. ("Illustra"), a United States based provider of
object-relational database systems and tools for managing complex data,
such as audio, video, text and images. Approximately 12,700,000 shares
of the Company's common stock were issued to acquire all of the
outstanding shares of Illustra stock. An additional 2,300,000 shares
were reserved by the Company for future issuance in connection with the
assumption of Illustra's outstanding stock options and warrants. The
transaction was accounted for as a pooling of interests. In December
1996, the Company announced the availability of a new product based on
the Illustra technology named INFORMIX(R) -Universal Server. INFORMIX-
Universal Server combines the object relational technology developed by
Illustra with the core database technology based on Informix's Dynamic
Scalable Architecture(TM) giving customers the ability to manage all kinds
of data throughout their enterprises.
PRODUCTS
Database Servers and Connectivity Products
Database Servers
The Company offers a full line of relational database servers. The
Company's principal servers include:
INFORMIX-Universal Server, a new, enterprise capable, fully-
extensible object relational database server based on Informix's Dynamic
Scalable Architecture. This product became available in December 1996.
INFORMIX-Universal Server allows customers to intelligently manage
traditional datatypes alongside new kinds of data, such as audio, video,
text and images. This extensibility is obtained through the use of
DataBlade(R) modules - reusable, plug-in object extensions - which expand
the general purpose capabilities of INFORMIX-Universal Server to provide
data storage and management functionality for non-traditional datatypes.
Customers can select prebuilt DataBlade modules (available from the
Company and many other companies) or design their own DataBlade modules
with the INFORMIX-DataBlade Developer's Kit to accommodate their unique
data management requirements. DataBlade modules available from the
Company include: INFORMIX-Spatial, INFORMIX-TimeSeries, INFORMIX-Video
Foundation and INFORMIX-Web.
INFORMIX-OnLine Dynamic Server(TM) , a high performance,
enterprise capable online transaction processing database server. This
product is based on the Company's Dynamic Scalable Architecture and
features parallel data processing capability, replication and
connectivity options built into its core.
INFORMIX-OnLine Workgroup Server, a database management system
designed specifically for workgroups. This product is based on the
Company's Dynamic Scalable Architecture and comes bundled with Netscape
FastTrack Server. This product became available in the third quarter of
1996.
INFORMIX-OnLine Extended Parallel Server, a high-performance,
scalable database server which extends the Company's Dynamic Scalable
Architecture to loosely coupled, "shared nothing" computing
architectures, including clusters of symmetric multiprocessing systems
and massively parallel processing systems.
Connectivity Products
The Company's principal connectivity products include:
INFORMIX-Enterprise Gateway(TM) Manager, a connectivity tool
allowing applications running on UNIX, Microsoft Windows or Windows 95
to access data sources via loadable gateway drivers. The Company offers
gateway drivers for Oracle and Sybase databases. Drivers for additional
data sources are available from various third parties.
INFORMIX-Enterprise Gateway with DRDA, a UNIX-based
connectivity tool allowing interoperability to IBM databases such as
DB2, DB2/VM and DB2/400 from Windows and UNIX clients. INFORMIX-Gateway
with DRDA allows applications built with Informix application
development tools to access and modify information in Distributed
Relational Database Architecture(TM) -compliant database management systems.
INFORMIX-ESQL for C and COBOL, embedded SQL products which
permit developers to take advantage of SQL technology while building
applications in C or COBOL.
INFORMIX-CLI, a library of low level functions that provide
high performance direct access to Informix databases from applications
built in C or other third generation languages. INFORMIX-CLI is
compliant with Microsoft's ODBC specifications.
INFORMIX-Universal Web Connect(TM) , a tool that provides high
performance connectivity between Web servers and databases. INFORMIX-
Universal Web Connect enables Web developers to create "intelligent" web
applications that dynamically deliver multimedia rich, tailored Web
pages to users.
Database Tools
The Company offers a variety of database application development
tools designed to allow users to build applications. The Company's
principal database tools include:
INFORMIX-NewEra(TM) , a graphical, object-oriented development
environment designed for creating enterprise-wide multi-tier
client/server database applications. INFORMIX-NewEra features a fourth-
generation object-oriented programming language, reusable class
libraries, application partitioning, and flexible application
deployment, and supports open connectivity to Informix and non-Informix
databases. INFORMIX-NewEra is currently available for Microsoft(R)
Windows(TM) and OSF Motif(TM).
INFORMIX-4GL, a character-based development environment, which
includes a fourth-generation programming language with full screen-
building, report entry and SQL database input/output capabilities. The
INFORMIX-4GL product family is comprised of three core products:
INFORMIX-4GL Compiled, INFORMIX-4GL Rapid Development System and
INFORMIX-4GL Interactive Debugger.
INFORMIX-SQL, a package of five interactive tools for creating
character-based applications. INFORMIX-SQL consists of a forms package,
a report writer, an interactive SQL editor, a menu builder and an
interactive schema editor.
INFORMIX-MetaCube(TM) , a high-performance on-line analytical
processing engine that automatically preconsolidates data and provides a
multidimensional view of data without the constraints of a two
dimensional (row and table) data model. The INFORMIX-MetaCube product
family also includes MetaCube Explorer, an adhoc decision support tool
for end users, MetaCube Warehouse Manager, a graphical tool for
administering the "metadata" describing a database in a logical, user-
friendly view, MetaCube Scheduler for batch processing, MetaCube
Queryback for running queries in the background, MetaCube Aggregator for
creating and maintaining aggregates in a data warehouse, MetaCube for
Excel which enables data warehouse analysis in an Excel spreadsheet
environment, and MetaCube for the Web which brings MetaCube analysis
capabilities to intranets.
Maintenance, Consulting and Services
The Company maintains field-based and centralized corporate
technical staffs to provide a comprehensive range of assistance to its
customers. These services include pre- and post- sales technical
assistance, consulting, product and sales training and technical support
services. Consultants and trainers provide services to customers to
assist them in the use of the Company's products and the design and
development of applications that utilize the Company's products.
The Company provides post-sales support to its customers on an
optional basis for annual fees which generally range from 10% to 18% of
the license fees paid by the customer. These support services usually
include product updates.
The Company also has several Information Superstores. These
Superstores provide customers with a dedicated environment in which they
can plan, prototype and test information technology investments using
the expertise of Company specialists and partners. The typical customer
spends approximately one week on-site. The SuperStores provide
customers with the real world information they need to make informed
business decisions and mitigate the risk associated with making a
significant technology purchase. The Company now has SuperStores
located in Ashford UK; Denver, Mexico City, Munich, Paris, Sydney and
Tokyo.
MARKETING AND CUSTOMERS
The Company distributes its products through the channels of direct
end-user licensing, OEMs, application vendors addressing specific
markets and distributors. The Company has chosen a multiple channel
distribution strategy to maintain broad market coverage and product
availability. The Company, therefore, has generally avoided exclusive
relationships with its licensees and other resellers of its products.
Discount policies and reseller licensing programs are intended to
support each distribution channel with a minimum of channel conflict.
The Company also provides a financing option to customers in connection
with the license of software.
At December 31, 1996, the Company's sales, marketing and support
staff totaled 1,427 regular employees in the North America region; 122
regular employees in the Latin America region, 947 regular employees in
the Europe, Middle East and Africa regions, 344 regular employees in the
Asia/Pacific region and 99 regular employees in Japan.
LICENSING
End-User Licensing
The Company licenses its products to large companies and government
entities through its direct sales force, and to certain of these
companies, as well as smaller end-users, through its telemarketing sales
force. The Company believes that the common core technology of its
database management system products, based on standard operating systems
and the SQL database language, helps it sell into major corporations and
government agencies that wish to standardize their diverse computing
environments. As a result, certain of these end-user organizations have
entered into general purchasing agreements with the Company which offer
volume discounts.
Application Vendor Licensing
Since its inception, the Company has licensed application vendors
to distribute its products. A typical application vendor develops an
application product (e.g., an insurance agency management system) using
one of the Company's products and then licenses the resultant
application software to its customers in the target market. The
application vendor customer purchases a license for use of the Company's
product to develop an applications program. Depending on the
application program developed, it may include a run-only license, a full
version license or even multiple product licenses.
Application vendors develop applications using a wide array of
application development tools, including products from the Company, such
as INFORMIX-NewEra, INFORMIX-4GL and INFORMIX-SQL, as well as products
offered by third parties. Applications developed using the Company's
products are generally portable across various brands of computers and
different operating systems.
The Company has specialized programs to support the application
vendor distribution channel. Under these programs, the Company provides
to selected application vendors a combination of marketing development
services, consulting and technical marketing support and discounts.
OEM Licensing
The Company's products are also marketed with the assistance of the
sales forces of its OEM customers who have concluded that "solution
selling" of a combination of software and hardware to their respective
customers enhances the sales of their computer equipment. The Company
believes that the compatibility and range of applications for its
products is significant to this distribution channel.
Distributor Licensing
The Company has established a network of full service international
distributors who provide local service and support, as well as the
Company's products, to their respective national markets. Distributors
are used to supplement the Company's direct sales force and enable the
Company to sell its products and services in countries where the Company
has not established a direct sales force.
PRODUCT DEVELOPMENT
The computer software industry is highly competitive and rapidly
changing. Consequently, the Company dedicates considerable resources to
research and development efforts to enhance its existing product lines
and to develop new products to meet new market opportunities. Most of
the Company's current software products and accompanying documentation
have been developed internally; however, the Company has acquired
certain software products from others and plans to do so again in the
future.
Major product releases resulting from research and development
projects in 1996 included the release of INFORMIX-Universal Server, the
release of INFORMIX-OnLine WorkGroup Server and new releases of
INFORMIX-OnLine Dynamic Server and INFORMIX-OnLine Extended Parallel
Server.
Current product development is focused toward:
Improvement and enhancement of current products and new
products, with particular emphasis on parallel computer architecture,
user-defined database extensions, Web technology integration, graphical
desk top and system administration.
Improvements to the Company's products to provide greater
speed and support for larger numbers of concurrent users.
Adaptation of new products to the broad range of computer
brands and operating systems the Company currently supports and
adaptation of current products to new brands of computers and operating
systems which represent attractive market opportunities for the
Company's products.
There can be no assurance that the Company's product development
efforts will be successful or that any new products will achieve
significant market acceptance.
As of December 31, 1996, the Company had 967 regular employees
engaged in research and development.
During fiscal 1994, 1995 and 1996, the Company expended $77.9
million, $103.1 million and $148.6 million, respectively, on research
and development, representing approximately 17%, 14% and 16% of revenues
for such periods. Also during fiscal 1994, 1995 and 1996, the Company
capitalized costs in accordance with Statement of Financial Accounting
Standards No. 86 of $13.6 million, $17.5 million and $28.4 million,
respectively. See Item 7 of this Annual Report entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations
- - Research and Development Expenses."
COMPETITION
The Company faces intense competition in the market for relational
database management system software products. Companies in this market
compete primarily on the basis of price/performance characteristics,
name recognition, and technical support, training and consulting
services.
With respect to product performance, the Company believes that the
principal competitive factors include:
Application development productivity (the speed with which
applications can be built).
Database performance (the speed at which database storage and
retrieval functions are executed).
The ability to support large warehouses of information.
Reliability, availability and serviceability.
The distribution of software applications and data across
networks of computers from multiple suppliers.
Increasingly, the ability to manage complex data and solve
more complex business problems based on such data.
The Company believes that the technical advantages of its products,
its approach to sales and marketing, its relations with application
vendors, OEMs and distributors and its customer service and support
contribute to its ability to compete in this market.
The chief competition faced by the Company is currently provided by
Oracle Corporation, Sybase, Inc., IBM Corporation and Microsoft
Corporation. Several of the Company's current competitors have greater
financial, technical and marketing resources than the Company.
To the extent that market acceptance for personal computer oriented
technologies increases at the expense of UNIX or other non-PC platforms,
this could result in greater price pressure on certain of the Company's
database products and services. The availability and market acceptance
of Microsoft Corporation's Windows NT operating system may increase the
competition faced by the principal operating system platforms on which
the Company's products operate and may result in greater price pressure
on certain of the Company's database products and services. Also, new
or enhanced products introduced by existing or future competitors could
have an adverse effect on the Company's business. Existing and future
competition or changes in the Company's product or service pricing
structure or product or service offerings could result in an immediate
reduction in the prices of the Company's products or services. If this
were to result in significant price declines, the effects of which were
not offset by any resulting increases in sales volume of the Company's
products or services, the Company's business, results of operations and
financial condition would be adversely affected.
PRODUCT PROTECTION
The Company relies on a combination of trade secret, copyright and
trademark laws, license agreements and technical measures to protect its
rights in its software products. Like many software companies, the
Company has no patents to date, although it has several applications
pending. The Company maintains trademark and service mark registrations
in the United States and numerous other foreign jurisdictions.
The Company's products are generally licensed to end-users on a
"right-to-use" basis pursuant to a license that restricts the use of the
products for the customer's internal business purposes. The Company
also relies on "shrink-wrap" licenses. The Company's "shrink-wrap"
license includes a prominently displayed notice informing the end-user
that, by opening the product packaging, the end-user agrees to be bound
by the Company's license agreement printed on the package. Copyright
and trade secret protection for source and object code version of
software products may be unavailable in certain foreign countries. In
addition, "shrink-wrap" licenses may be wholly or partially
unenforceable under the laws of certain jurisdictions.
The Company protects the human readable, source code version of its
products as a trade secret and an unpublished copyrighted work. The
Company has licensed the source code of its products to certain
customers under certain circumstances, and for restricted uses. In
addition, the Company has entered into source code escrow agreements
with a number of its customers that generally require release of source
code to the customer in the event there is a bankruptcy or similar
proceeding by or against the Company, the Company ceases to do business
or the Company ceases to support the product. In the event of a release
of the source code to a customer, the customer is required to maintain
its confidentiality and, in general, to use the source code solely for
internal business purposes or for the purpose of providing maintenance
and support to its customers, and, in certain circumstances, to
embedding it in customer products.
The Company believes that, because of the rapid pace of
technological change in the computer software industry, patent, trade
secret and copyright protection are less significant than factors such
as the knowledge, ability and experience of the Company's personnel, new
product introduction, frequent product enhancement, name recognition and
ongoing product maintenance.
EMPLOYEES
As of December 31, 1996, the Company and its subsidiaries had 4,491
regular employees worldwide, including 2,939 in sales, marketing and
support; 967 in research and development; 89 in operations and 496 in
administration and finance.
Competition in recruiting personnel in the database software
industry is intense. The Company believes that its future success will
depend on its continued ability to attract and retain highly skilled
sales, consulting, technical, marketing and management personnel.
None of the Company's U.S. employees are represented by a labor
union. A small number of employees located outside of the United States
are represented by labor unions. The degree of this representation
varies from country to country. The Company has experienced no work
stoppages.
EXECUTIVE OFFICERS
Set forth below in alphabetical order are biographical summaries of
the current executive officers of the Company.
Ronald M. Alvarez, 47, joined the Company in December 1991 as
Director of Latin America Operations. He was promoted to Executive
Director, Latin America Operations in March 1993, and to Vice
President, Latin America in May 1995. He was appointed to his current
position of Vice President, Americas Sales in January 1996.
Karen Blasing, 40, joined the Company in November 1992 as Director
of Financial Planning and Analysis and became Controller in June 1996.
From January 1989 to October 1992, Ms. Blasing was a Senior Financial
Manager at Oracle Corporation, a provider of information management
software and services.
Margaret R. Brauns, 42, became Vice President and Treasurer of the
Company in November 1992. Ms. Brauns joined the Company as Treasurer in
May 1990.
D. Kenneth Coulter, 52, joined the Company in February 1988 as
Managing Director, UK. From January 1990 to April 1992, Mr. Coulter was
Vice President, Europe. He became Senior Vice President, Europe, Middle
East and Africa, in April 1992 and was named Senior Vice President,
International in January 1996. Mr. Coulter became Executive Vice
President, Worldwide Field Operations in November 1996.
Ira H. Dorf, 56, joined the Company as Vice President, Human
Resources in October 1989.
Bruce Golden, 37, joined the Company in February 1996 as Vice
President of Business Units and became General Manager, Data Warehouse
Business Development Unit in September 1996. From June 1993 to February
1996, he was Vice President of Marketing of Illustra Information
Technologies, Inc., a supplier of object-relational database management
systems. Prior to Illustra, Mr. Golden was employed by Sun
Microsystems, Inc., a computer hardware and software company, for eight
years in a variety of positions, his last being Director of Commercial
Market Development.
James F. Hendrickson, Jr., 57, joined the Company as Vice
President, Customer Services in July 1992. In February 1995, Mr.
Hendrickson assumed the additional responsibility of Lenexa Site
Manager. From 1991 until the time he joined the Company, Mr.
Hendrickson was Senior Vice President of Marketing at Image Business
Systems.
Alan S. Henricks, 46, joined the Company as Executive Vice
President and Chief Financial Officer in January 1997. From May 1994 to
December 1996, Mr. Henricks was Vice President, Finance and Operations,
and Chief Financial Officer of Documentum, Inc., a provider of document
management software and services, where he was responsible for all
financial functions, as well as MIS, legal and operations. From
February 1988 to April 1994, Mr. Henricks was Senior Vice President,
Finance and Operations, and Chief Financial Officer, of Borland
International, a provider of software development tools.
Stephen E. Hill, 38, joined the Company in December 1985, and has
served the Company in a variety of strategic planning, development and
marketing positions. Mr. Hill currently serves as Vice President,
Advanced Technology.
Jeffrey V. Hudson, 44, joined the Company in June 1995 as Vice
President, Business Development and became Vice President, Business
Development and Product Marketing in May 1996. From December 1993 to
January 1995, Mr. Hudson was President and Chief Executive Officer of
Visioneer Communications, Inc. From June 1989 to December 1993, he was
Vice President, Sales, Marketing and Service for Netframe Systems, Inc.
Mike Saranga, 59, joined the Company as Senior Vice President,
Product Management and Development in May 1993. Prior to joining the
Company, Mr. Saranga was employed by IBM for 30 years, most recently as
Assistant General Manager of Programming Systems, where Mr. Saranga
developed IBM's technical and business strategies for key technologies
including client/server, distributed systems and multimedia.
David H. Stanley, 50, joined the Company as Vice President, Legal,
General Counsel and Assistant Secretary in July 1988. In August 1990,
Mr. Stanley was elected to the additional office of Secretary. In March
1995, Mr. Stanley assumed the additional responsibility for corporate
services and became Vice President, Legal and Corporate Services,
General Counsel and Secretary.
Michael R. Stonebraker, 53, joined the Company as Vice President
and Chief Technology Officer in February 1996. Dr. Stonebraker
cofounded Illustra Information Technologies, Inc., a supplier of object-
relational database management systems, in July 1992, and served in a
consulting capacity with Illustra as Chief Technology Officer until
February 1996. Dr. Stonebraker is professor emeritus of Electrical
Engineering and Computer Sciences at the University of California,
Berkeley, where he joined the faculty in 1971.
Phillip E. White, 54, has been the Company's Chief Executive
Officer and a director since January 1989. He has held the additional
office of President since August 1990 and of Chairman since December
1992. Mr. White also serves as a director of Adaptec, Inc., a computer
input/output technology company, and of Legato Systems, a manufacturer
and developer of network storage management software products.
Edwin C. Winder, 47, joined the Company in February 1990. Since
joining the Company, Mr. Winder has held a variety of executive
positions in sales, marketing and customer service. He is currently the
Company's Senior Vice President, Japan Operations.
______________
Distributed Relational Database Architecture, Microsoft, Motif, UNIX,
Windows and Windows/NT are trademarks of their respective owners. All
other names indicated by (R) or (TM) are trademarks of the Company.
ITEM 2. PROPERTIES
The Company's headquarters and its marketing, finance, Americas
sales, administration, customer service and research and development
operations are located in five modern buildings in a seven building
office park in Menlo Park, California, approximately 30 miles south of
San Francisco. The Company leases approximately 214,000 square feet of
space in these buildings. The leases for spaces in three of the
buildings expire in March 1998. The Company has options to renew each
lease for up to two additional five year terms at 95% of the then fair
rental value. The leases for space in the other two buildings expire in
September 2001.
The Company plans on relocating its corporate headquarters to a
site in Santa Clara, California approximately 15 miles south of the
Company's current headquarters. In November 1996, the Company leased
approximately 200,000 square feet of space in a high-rise office
building located in Santa Clara. This building is scheduled to be
available for occupancy by the Company in April 1998. The lease is for
a term of 15 years. Additionally, in January 1997, the Company leased
approximately 27 acres of undeveloped commercial real estate adjacent to
this leased building for the phased construction of additional office
buildings. The term of this lease is two years. At the expiration of
the lease the Company is required to either purchase the land for
$61,500,000 or find a buyer for the land and, if the net sales proceeds
are less than $61,500,000, pay the lessor the difference between the net
sales proceeds and $61,500,000. Facility construction on the Santa
Clara site will be phased over time based on the Company's utilization
needs. The Company intends to fund construction costs through outside
financing, the availability of which has not yet been determined.
Some of the research and development for the Company's tools
products, a portion of the Company's customer service organization, the
Company's principal domestic manufacturing facility and the Company's
telemarketing organization are located in two modern buildings
aggregating approximately 135,000 square feet in Lenexa, Kansas, a
suburb of Kansas City. The buildings are owned by a partnership, of
which the Company is a 50% partner, and leased by the partnership to the
Company under a lease with an initial ten-year term that expires in
March 1998. There are two five-year renewal options. Rental under this
lease remains fixed through 1998, and then adjusts to prevailing rates
for the renewal terms.
The Company also leases office space in approximately 56 facilities
in the United States and Canada and approximately 60 facilities
internationally.
The Company believes that its facilities are adequate for its
current needs and that suitable additional or substitute space will be
available as needed to accommodate the expansion of the Company's
operations.
ITEM 3. LEGAL PROCEEDINGS
The Company is not involved in any legal proceedings, other than
ordinary routine litigation incidental to the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of security
holders during the fourth quarter of the fiscal year ended December 31,
1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Market Information
The Company's common stock has been traded on the over-the-counter
market under the NASDAQ symbol IFMX since the Company's initial public
offering on September 24, 1986. The following table sets forth the
range of high and low closing prices as reported on the NASDAQ National
Market System for the periods indicated.
High Low
Fiscal 1995*
First Quarter $19.63 $14.63
Second Quarter 25.94 17.06
Third Quarter 34.00 25.25
Fourth Quarter 33.00 24.13
Fiscal 1996
First Quarter 35.88 26.38
Second Quarter 26.88 18.38
Third Quarter 30.25 20.31
Fourth Quarter 28.63 17.63
* The prices shown reflect a two-for-one stock split effected in the
form of a stock dividend in June 1995.
Common Stockholders of Record and Dividends
At December 31, 1996, there were approximately 3,400 stockholders of
record of the Company's common stock, as shown in the records of the
Company's transfer agent. The Company has never paid dividends on its
common stock and its present policy is to retain its earnings to finance
anticipated future growth.
ITEM 6. SELECTED FINANCIAL DATA
FINANCIAL OVERVIEW
<TABLE>
<CAPTION>
Five-Year Summary (1)
(in thousands, except per share data) 1996 1995 1994 1993 1992 (2)
<S> <C> <C> <C> <C> <C>
Net Revenues $939,311 $714,219 $470,112 $353,115 $283,594
Net Income 97,818 97,644 61,948 54,989 47,782
Net Income per Share (3) 0.63 0.65 0.43 0.40 0.38
Total Assets 903,842 691,146 449,545 328,001 231,459
Long-Term Obligations 2,359 2,846 892 451 1,797
</TABLE>
The Company has not paid and does not anticipate paying cash dividends
on its common stock.
(1) The above information have been restated to reflect the Company's
business combination with Illustra Information Technologies, Inc. from
its inception date of July 31,1992 through the merger date of February
16, 1996, as a pooling of interests.
(2) In 1991, the Company was selected to provide the database component
of a decision-support system for the Army National Guard and Army
Reserves. In 1992, the Company received $26.8 million for license fees
and support as part of this Reserve Component Automation System (RCAS)
contract and recorded $21.8 million as license revenue and incurred $3.2
million in operating expenses in 1992. The remaining $5.0 million of
service revenue was recognized over the support period.
(3) Per-share information applicable to prior periods has been restated
to reflect a two-for-one stock split (effected in the form of a stock
dividend) which was effective June 26, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Management's Discussion and Analysis of Financial Condition and
Results of Operation contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Actual
results could differ materially from those projected in the forward-
looking statements as a result of certain factors described herein and
in other documents. Readers should carefully review the risk factors
described in the documents the Company files from time to time with the
Securities and Exchange Commission, specifically the Quarterly Reports
on Form 10-Q to be filed by the Company in 1997 and any Current Reports
on Form 8-K filed by the Company.
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto. All information is
based on the Company's fiscal calendar.
Selected elements of Informix's financial statements are shown below for
the last three years as a percentage of revenue and as a percentage
change from year to year.
<TABLE>
<CAPTION>
% Increase (Decrease)
Percent of Net Revenue 1996 1995
Years Ended December 31, Compared Compared
1996 1995 1994 to 1995 to 1994
<S> <C> <C> <C> <C> <C>
Licenses 75% 76% 78% 31% 48%
Services 25 24 22 33 65
Net revenues 100 100 100 32 52
Cost and Expenses:
Cost of software distribution 5 5 5 26 54
Cost of services 15 13 10 58 96
Sales and marketing 45 43 43 39 48
Research and development 13 12 14 40 33
General and administrative 6 7 8 26 45
Merger expenses 1 - - 100 -
Total costs and expenses 85 80 80 41 52
Operating income 15 20 20 (6) 53
Net income 10% 14% 13% 0% 58%
</TABLE>
Operating Results
Informix's operating income was affected negatively in 1996 as a
result of operating expenses growing more rapidly than revenues,
primarily in the North America region as Informix continues to invest
heavily in personnel in the areas of sales, marketing and customer
service, and research and development and due to integration expenses
and fees associated with the acquisition of Illustra Information
Technologies, Inc. (Illustra) as a pooling-of-interests in February
1996. In December 1996, Informix began shipping the INFORMIX-Universal
Server, based on Informix's proven Dynamic Scaleable Architecture(tm) (DSA)
and providing extensibility to handle the broad range of datatypes not
managed effectively by traditional relational databases. This product
merges the technology of Illustra and Informix. Informix incurred
significant marketing expenses in connection with the initial
announcement and launch of the Universal Server in 1996. The Company
expects selling and marketing expenses in 1997 to be at a level
comparable to 1996 both in support of INFORMIX-Universal Server and as
Informix continues developing specific market channels and specific
products for such channels. These development, integration and marketing
expenses and the relatively low operating margins of Illustra have
adversely affected Informix's ability to achieve operating margins
consistent with 1994 and 1995. In the near term, these development and
marketing efforts will continue to negatively affect the Company's
operating margins.
Revenues
The Company derives revenues principally from licensing its
software and from providing technical product services to customers.
License revenues may involve the shipment of product by the Company or
the granting of a license to a customer to manufacture products. Service
revenue consists of customer telephone or direct support, update rights
for new product versions, consulting, and training fees. The Company's
products are sold directly to end-user customers or through resellers,
including original equipment manufacturers (OEMs), distributors, and
value added resellers (VARs) including application vendors. Prior to
1996, the Company's customer mix had been decreasing in the distributor
and hardware OEM channels in favor of the end user and application
vendor channels. However, in 1996, this trend shifted towards a higher
proportion of OEM sales as the Company has increased the focus on its
partnerships with several hardware vendors in order to utilize their
sales forces, obtain access to their installed bases in certain
industries and benefit from their consulting and systems integration
organizations. The increased focus on OEM sales coupled with increases
in the other reseller channels resulted in total reseller sales
representing half of the Company's 1996 license revenue . The Company
estimates that almost half of the licenses sold to these resellers in
1996 were not resold to end users prior to December 31, 1996. If these
resellers do not commit to licensing the same level of products for
resale to end users in future periods, the Company's future revenues
could be adversely affected. The Company sold approximately $55 million
of software licenses to certain vendors during 1996 where the Company
concurrently committed to acquire goods or services in approximately the
same dollar amount. The Company's license sales transactions can be
relatively large in size and difficult to forecast both in timing and
dollar value. As a result, these transactions have caused fluctuations
in net revenues and net income because of the relatively high gross
margin on such revenues. As is common in the industry, a disproportional
amount of the Company's license revenue is derived from transactions
that close in the last few weeks of a quarter. The timing of closing
large license agreements also increases the risk of quarter-to-quarter
fluctuations. The Company expects that these sorts of transactions and
the resulting fluctuations will continue.
The overall revenue growth in 1996 compared to 1995 primarily
reflects continued acceptance of the Company's server products. The
Company's revenues, along with those of the relational database
management system (RDBMS) industry as a whole, have shown substantial
growth over the last several years. The industry has benefited from
trends to downsize from large proprietary computer systems and market
acceptance of UNIX(R), Windows(TM), Windows NT(TM) and other open operating
environments. The quarterly revenue growth rates and the geographical
growth trends rates slowed during the latter half of 1996 and there can
be no assurances that growth rates in 1997 will be comparable with those
achieved in 1996.
Informix's current server product line debuted in the fall of 1994
with INFORMIX-OnLine Dynamic Server for Sequent (DSA) and was expanded
to a wide array of Unix-based multi-processor systems in December 1994.
This product is now available on Windows/NT operating systems and
accounts for a majority of the Company's server sales. In the spring of
1996, the Company introduced a workgroup version of this product named
INFORMIX-OnLine Workgroup Server. In fall 1996, the Company released
INFORMIX-Online Extended Parallel Server 8.1, designed for very high end
use in "loosely-coupled" computer architectures. In late 1996, the first
version of INFORMIX-Universal Server was released which was the
combination of the INFORMIX-OnLine Dynamic Server product with the
Illustra server product.
The license revenue growth in 1996 compared to 1995 reflects strong
demand for the Company's server products, particularly the Company's
flagship database server, INFORMIX-OnLine Dynamic Server(TM). In addition,
many Informix partners, including OEM resellers, purchased high volumes
of product to resell in anticipation of customer demand. The Company
believes that the license revenues derived from its database tool
products declined from 1995 to 1996 primarily as a result of competitive
product offerings from other companies and an increase in the Company's
sales to resellers, which traditionally have concentrated on purchases
of database server products.
The increase in service revenue was primarily attributable to the
continued growth of the Company's installed customer base, and resulting
renewal of maintenance contracts and increased consulting revenue. The
Company continues to emphasize support services as a source of revenue.
As the Company's products become more complex, more support services
will be required. The Company intends to satisfy this requirement
through internal support, third-party services and OEM support. The
contribution margin on service revenue decreased from 48 percent in 1995
to 37 percent in 1996. The decrease resulted from increased costs
incurred to expand the support function due to sales increases and the
continuing complexity of the products. In addition, sales through the
reseller channel where the product has not been resold to end users has
not yet resulted in service revenue.
Approximately 58 percent, 58 percent and 54 percent of Informix's
net revenues were derived from sales to foreign customers in 1996, 1995,
and 1994, respectively. The increase in foreign revenues in absolute
dollars is primarily attributable to continued international acceptance
for Informix's new and existing server products, and the establishment
of new subsidiaries and sales offices in Europe, Asia/Pacific, Japan,
and Latin America. Over the past few quarters, revenue continued to be
stronger in Europe, but weaker in Japan. Informix expects that foreign
revenues will continue to provide a significant portion of total
revenues. However, changes in foreign currency exchange rates, the
strength of local economies, and the general volatility of software
markets may result in a higher or lower proportion of foreign revenues
in the future. In Europe, Asia/Pacific, and Japan, most revenues and
expenses are now denominated in local currencies. The U.S. dollar
strengthened in the fourth quarter and for the year against the major
European and Asia/Pacific currencies, which resulted in lower revenue
and expenses recorded when translated into U.S. dollars, compared with
the prior year periods. The Company has also increased its direct
presence in Latin America, although a significant percentage of this
region's revenue is still denominated in U.S. dollars. Although the
effect was not significant in 1996, the Company has experienced
significant currency fluctuations in Mexico, and to a lesser extent,
other Latin American countries, and expects such fluctuations may occur
in the future. The Company's operating and pricing strategies take into
account changes in exchange rates over time; however, the Company's
results of operations may be significantly affected in the short term by
fluctuations in foreign currency exchange rates.
The Company enters into forward foreign exchange contracts
primarily to hedge the impact of fluctuations in exchange rates on
accounts receivable or accounts payable denominated in foreign
currencies until such receivables are collected or payables are
disbursed. This program involves the use of forward foreign exchange
contracts in the primary European and Asian currencies. The Company
operates, on a limited basis, in certain countries in Latin America,
Eastern Europe, and Asia Pacific where there are limited forward
currency exchange markets and thus the Company has limited unhedged
transaction exposures in these currencies. The Company does not attempt
to hedge the translation to U.S. dollars of foreign denominated revenues
and expenses not yet earned or incurred.
Informix's distribution markets are organized into three general
markets: North America; Europe, which includes the Middle East and
Africa; and the Intercontinental Group, consisting of Latin America,
Japan, and the Asia/Pacific region. The North America, Europe, and
Intercontinental Group organizations contributed 42 percent, 39 percent
and 19 percent of Informix's net revenues respectively, in 1996,
compared to 42 percent, 38 percent and 20 percent, respectively, in
1995, and 46 percent, 38 percent and 16 percent, respectively, in 1994.
In 1996, the American Institute of Certified Public Accountants
issued an exposure draft on Software Revenue Recognition that is
proposed to supersede the Statement of Position 91-1. The Company is
evaluating the exposure draft in relation to its current revenue
recognition policy. Certain provisions of the exposure draft differ from
the Company's current policy. Adoption of the exposure draft in its
final form may significantly affect the revenue recognition practices of
Informix and could significantly alter, either favorably or unfavorably,
the timing of revenue recorded under the Company's current policy.
Cost of Software Distribution
<TABLE>
<CAPTION>
(Dollars in Millions) 1996 Change 1995 Change 1994
<S> <C> <C> <C> <C> <C>
Manufactured cost of software distribution $ 33.5 28% $ 26.2 54% $ 17.0
Percentage of license revenue 5% 5% 5%
Amortization of capitalized software $ 14.6 22% $ 12.0 54% $ 7.8
Percentage of license revenue 2% 2% 2%
Cost of software distribution $ 48.1 26% $ 38.2 54% $ 24.8
Percentage of license revenue 7% 7% 7%
</TABLE>
Software distribution costs consist primarily of: 1) manufacturing
and related costs such as media, documentation, product assembly and
purchasing costs, freight, customs, and third-party royalties, and 2)
amortization of previously capitalized software development costs and
any write-offs of previously capitalized software costs that are no
longer realizable.
Excluding amortization of previously capitalized software
development costs, cost of software distribution as a percentage of
license revenue was 5 percent for both 1996 and 1995. In the future,
the cost of software distribution as a percentage of revenue may vary
depending upon whether the product is reproduced by the Company or by
its customers.
Amortization of capitalized software increased 22 percent in 1996
compared to 1995 due to the release of several products in the latter
half of 1995 and 1996. Amortization expense will continue to rise in
absolute dollars in 1997 due to 1996 product releases including
INFORMIX-Universal Server. The absolute value of amortization of
capitalized software will vary from quarter to quarter as new products
are released and other product development costs become fully amortized.
Cost of Services
<TABLE>
<CAPTION>
(Dollars in Millions) 1996 Change 1995 Change 1994
<S> <C> <C> <C> <C> <C>
Cost of services $144.9 58% $ 91.5 96% $ 46.8
Percentage of service revenue 63% 52% 44%
</TABLE>
Cost of services consists primarily of maintenance, consulting and
training expenses. The increase in cost of services in 1996 in absolute
dollars and as a percentage of net revenues compared to the prior year
is primarily due to the Company's expansion of consulting and support
service capabilities as products have become more complex. The increase
in cost of services as a percentage of net service revenue is due to
increases in support personnel in anticipation of additional consulting
revenue as more customers utilize the Company's products in more complex
applications. The Company has also subcontracted certain service
projects which reduces margins.
Sales and Marketing Expenses
<TABLE>
<CAPTION>
(Dollars in Millions) 1996 Change 1995 Change 1994
<S> <C> <C> <C> <C> <C>
Sales and marketing $418.7 39% $301.9 48% $203.8
Percentage of net revenue 45% 43% 43%
</TABLE>
The increase in sales and marketing expenses in 1996 in absolute
dollars compared to 1995 was a result of the addition of new sales
offices and sales personnel worldwide as the Company expanded its
worldwide direct sales organizations, the opening of new subsidiaries,
higher commission expense associated with the increase in revenues, and
increased marketing programs associated with new product launches. As a
percentage of net revenues, sales and marketing expenses increased from
43 percent in 1995 to 45 percent in 1996.
With the expected continuing expansion in 1997 of worldwide
operations, as well as increased sales and marketing expenditures aimed
at positioning the Company and its new and existing products in the
marketplace, the Company expects that sales and marketing expenses for
1997 will increase. The increase in sales and marketing expense will
include depreciation of equipment, and facilities and manpower costs
associated with operating the Company's Information SuperStores, which
are more fully discussed in "Liquidity and Capital Resources".
Research and Development Expenses
Informix accounts for its software development expenses in
accordance with Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to Be Sold, Leased, or
Otherwise Marketed." This statement requires that, once technological
feasibility of a developing product has been established, all subsequent
costs incurred in developing that product to a commercially acceptable
level be capitalized and amortized ratably over the revenue life of the
product. The following table summarizes research and development costs
for the prior three years:
<TABLE>
<CAPTION>
(Dollars in Millions) 1996 Change 1995 Change 1994
<S> <C> <C> <C> <C> <C>
Incurred product development costs $148.6 44% $103.1 32% $ 77.9
Expenditures capitalized 28.4 62% 17.5 29% 13.6
Research and development expenses $120.2 40% $ 85.6 33% $ 64.3
Expenditures capitalized as percent of incurred 19% 17% 17%
</TABLE>
The increase in research and development expenditures in absolute
dollars from year to year is attributed to an increase in staff working
on new products and product extensions, including the Company's latest
product INFORMIX-Universal Server.
The higher capitalization in absolute dollars of product
development expenditures from year to year resulted from an increase in
the work involved in projects reaching technological feasibility as they
neared their release dates.
Significant programs currently under development include
improvements and enhancements of current products, with particular
emphasis on parallel computer architecture, user-defined database
extensions, web technology integration, and graphic desktop and systems
administration. The Company believes that research and development
expenditures are essential to maintaining its competitive position in
its primary markets and expects the expenditure levels to continue to
constitute a significant percentage of revenues.
General and Administrative Expenses
<TABLE>
<CAPTION>
(Dollars in Millions) 1996 Change 1995 Change 1994
<S> <C> <C> <C> <C> <C>
General and administrative expenses $ 64.2 26% $ 51.1 44% $ 35.4
Percentage of net revenues 6% 7% 8%
</TABLE>
General and administrative expenses increased in absolute dollars
in 1996 compared to 1995 as a result of the continued expansion of the
Company's international operations. General and administrative expenses
in 1995 increased in absolute dollars compared to 1994 as a result of
the continued expansion in international operations as well as the
acquisition of several foreign distributors.
Merger Expenses
In the first quarter of 1996, the Company recorded expenses of
approximately $5.9 million as a result of the acquisition of Illustra,
which was accounted for as a pooling of interests. These costs consisted
primarily of investment banking, legal and accounting fees.
Interest Income
<TABLE>
<CAPTION>
(Dollars in Millions) 1996 Change 1995 Change 1994
<S> <C> <C> <C> <C> <C>
Interest income $ 9.9 22% $ 8.1 103% $ 4.0
Percentage of net revenues 1% 1% 1%
</TABLE>
The increase in absolute dollars from 1994 to 1995 and 1995 to 1996
results from higher balances of cash and cash equivalents and short-term
investments, offset by slightly lower interest rates.
Provision for Income Taxes
<TABLE>
<CAPTION>
(Dollars in Millions) 1996 Change 1995 Change 1994
<S> <C> <C> <C> <C> <C>
Provision for income taxes $ 50.4 (9%) $ 55.2 62% $ 34.1
Effective tax rate 34% 36% 35%
</TABLE>
Informix's effective tax rates for fiscal years 1996, 1995, and
1994 are less than the combined federal and state statutory rates
primarily due to the permanent reinvestment of a portion of the offshore
earnings of Informix's lower-taxed Irish operations and the
reinstatement of the federal research and development credit. The amount
considered permanently invested in the Irish operations may vary from
year to year and may affect Informix's effective tax rate.
Informix anticipates its fiscal 1997 effective tax rate to remain
approximately the same as 1996; however, this rate could change based on
a change in the geographic mix of Informix's financial results, the
amount of permanent reinvestment of a portion of the 1997 offshore
earnings of Informix's lower-taxed Irish operations, the reinstatement
of the federal research and development tax credit which is scheduled to
expire in 1997 and acquisitions by the Company.
Impact of Inflation
The effect of inflation on the Company's financial position has not
been significant.
Liquidity and Capital Resources
<TABLE>
<CAPTION>
(Dollars in Millions)
1996 1995 1994
<S> <C> <C> <C>
Cash, cash equivalents, and investments $267.7 $263.0 $198.6
Working capital 258.4 252.8 200.8
Cash provided by operations 178.3 158.2 104.1
Cash used in investment activities, excluding
investments of excess cash 203.0 125.4 51.9
Cash provided by financing activities 21.5 27.5 0.3
</TABLE>
Cash generated by operations provided sufficient resources to fund
the Company's headcount growth and capital asset needs in all periods
presented. In addition, sufficient cash was generated in 1996 to
finance the Company's strong commitment to training and marketing
efforts surrounding the acquisition of Illustra and the development and
release of INFORMIX-Universal Server. The increases in cash and cash
equivalents provided by operations in 1996 compared with 1995 and in
1995 compared with 1994, were primarily attributable to higher income
before depreciation and amortization charges.
Net accounts receivable increased by $68.6 million in 1996 as
compared to December 1995. Days sales outstanding increased from
approximately 76 days in December 1995 to 84 days in December 1996. The
days sales outstanding ratio is dependent on many factors, including the
mix of contract-based revenue with significant OEMs and large corporate
and government end-users versus revenue recognized on shipments to
application vendors and distributors and the success of the Company's
third-party accounts receivable financing programs. The Company has
programs whereby third-party financing institutions provide financing
for extended credit terms instead of such financing being provided by
the Company. The Company at times enhances its cash position through
certain financing activities related to its account receivables.
Excluding investments of excess cash, net cash and cash equivalents
used for investing activities increased in 1996 compared with 1995; the
decrease in corporate acquisition activity (the Company acquired 90 percent
of the database division of ASCII Corporation in the first quarter of 1995)
was offset by investments in property and equipment and in software
development costs. In 1996, 1995 and 1994, the Company acquired $148.3
million, $56.5 million and $25.7 million, respectively, of capital
equipment consisting primarily of computer equipment, computer software
and office equipment. The increase of capital equipment purchases in
1996 resulted from the Company's investments in capital equipment used
in sales and product demonstration activities and an effort to improve
the level of consulting and support services provided to customers, and
to provide technology infrastructure for the Company's growing employee
headcount.
Informix plans to continue to launch a series of Information
SuperStores worldwide which demonstrate and offer the most recent
Informix technology advances. Along with the core Informix product line,
these locations have tools from leading third-party tools and
application vendors installed on a wide variety of hardware platforms.
Initial participants include Data General, Hewlett Packard, IBM, NCR,
Pyramid, Sequent, Silicon Graphics, and Sun, among others. Engineers
from both the Informix Professional Services and the Informix Advanced
Technology Group are working with prospects and customers at the
SuperStores to create information technology prototypes, such as pilot
data warehouses, based on comprehensive, proven methodology. To date,
the Company has spent approximately $63 million and has committed to
spend approximately an additional $45 million in the acquisition of
capital equipment to support the launch of the Information SuperStores
The Company expects to make further capital equipment expenditures
against these commitments in 1997.
The Company's investments in software costs were previously
discussed under "Results of Operations."
In January 1995, the Company acquired a 90 percent interest in the
database division of ASCII Corporation, a distributor of its products in
Japan. The Company acquired the remaining 10 percent interest in January
1996. The acquisition was recorded as a purchase. The purchase price of
ASCII's database division was approximately $46.0 million, of which
approximately $35.4 million has been allocated to intangible assets
acquired.
In April 1995, the Company acquired an 80 percent interest in the
database division of Daou Corporation, a distributor of its products in
Korea. The Company acquired the remaining 20 percent in January 1997 for
approximately $1 million. The acquisition was recorded as a purchase.
The initial purchase price of this business was approximately $4.6
million, and was increased by approximately $3.0 million in January 1997
due to performance incentives outlined in the agreement; a total of
approximately $7.0 million has been allocated to intangible assets
acquired.
The operating results of these distributors subsequent to the
acquisition dates have been included in the consolidated results of
operations.
In February 1996, the Company acquired Illustra, a U.S.-based
company that provides dynamic content management database software and
tools for managing complex data in the Internet,
multimedia/entertainment, financial services, earth sciences, and other
markets. Approximately 12.7 million shares of Informix common stock were
issued to acquire all outstanding shares of Illustra stock. An
additional 2.3 million shares of Informix common stock were reserved for
issuance in connection with the assumption of Illustra's outstanding
stock options and warrants. The transaction has been accounted for as a
pooling of interests and accordingly all of the accompanying financial
statements have been restated to reflect the merger as of the beginning
of the earliest period presented. Merger expenses of approximately $5.9
million were recorded in the first quarter of 1996.
Net cash and cash equivalents provided by financing activities in
1996 and 1995 consisted primarily of proceeds from the sale of the
Company's common stock to employees, partially offset by payments on
capital leases. Net cash and cash equivalents used in financing
activities in 1994 included payments on capital leases and repurchases
of the Company's common stock, offset by proceeds from the sale of the
Company's common stock to employees.
In 1993 and 1994, the Board of Directors authorized the repurchase
of up to 8 million shares of the Company's common stock in the open
market. As of December 31, 1996, the Company had repurchased 3,580,000
shares with an aggregate cost of approximately $32.1 million on the open
market. All repurchased shares were re-issued to partially satisfy
requirements under Stock Option and Stock Purchase Plans. In 1996, the
Company rescinded the stock repurchase authorization.
The Company plans on relocating its corporate headquarters to Santa
Clara, California approximately 15 miles to the south of the Company's
current headquarters. To facilitate the move, in January 1997, the
Company entered into a two year lease for twenty seven acres of
undeveloped commercial real estate ("the Real Estate Lease"). Upon
termination of the lease term, the Company will have the option to
purchase the land, or if such purchase option is not exercised, arrange
for the sale of the parcels to an unrelated third party. In the event
the latter option is exercised, the Company is required to pay the lessor
any difference between the net sales proceeds and the lessor's
investment in the parcels, approximately $61.5 million. In order to
secure performance of its obligation under the lease, the Company was
required to pledge certain cash collateral to the lessor throughout the
full term of the lease. Accordingly, in January 1997, the Company
deposited $60 million in cash into a non-interest bearing collateral
account controlled by an affiliate of the lessor. Interest on these
deposits computed at market rates, otherwise due to the Company, have
been assigned by the Company to the lessor in order to reduce the gross
monthly lease payments due under the lease. The resulting net monthly
lease payments will be recognized by the Company as rent expense over
the lease term. The real estate lease also includes certain financial
performance criteria which must be met by the Company during the lease
term.
Construction of buildings on the Santa Clara site will be phased
over time based on the Company's utilization needs. The Company intends
to fund construction costs through outside financing, the availability of
which has not been determined.
In addition, in November 1996, the Company leased approximately
200,000 square feet of office space in Santa Clara adjacent to the
twenty seven acres described above. The lease term is for fifteen years
and minimum lease payments amount to $96.0 million over the term. The
minimum lease payments are scheduled to increase within a contractual
range based on changes in the Consumer Price Index.
After giving consideration to the Company's planned financing of
construction costs in Santa Clara, the Company expects that current
balances of cash, cash equivalents, and short-term investments will be
sufficient to fund anticipated levels of operations at least through
1997 and may be used for investments and acquisitions to supplement
internal revenue growth and for other corporate purposes.
Business Risks
Fluctuations in Quarterly Results. The Company's operating results
can vary substantially from period to period. The timing and amount of
the Company's license revenues are subject to a number of factors that
make estimation of operating results prior to the end of a quarter
extremely uncertain. The Company has operated historically with little
or no backlog and, as a result, license revenues in any quarter are
dependent on contracts entered into or orders booked and shipped in that
quarter. The Company's operating margins have generally followed a
historic pattern, with second half revenues and operating margins being
higher than those of the preceding first half. The Company believes that
this pattern has been primarily related to customers' capital spending
cycles at the end of a calendar year as well as to the Company's selling
efforts, influenced by annual sales incentive plans which culminate at
the end of the calendar year, which is the end of the Company's fiscal
year. Additionally, as is common in the industry, a disproportionate
amount of the Company's license revenues are derived from transactions
that close in the last few weeks of a quarter. The timing of closing
large license agreements also increases the risks of quarter-to-quarter
fluctuations and the uncertainty of estimating quarterly operating
results. The Company's operating expenditures are guided by projected
annual and quarterly revenue levels and are incurred approximately
ratably throughout each quarter. As a result, if projected revenues are
not realized in the expected period, the Company's operating results for
that period would be adversely affected as the operating expenses are
relatively fixed in the short term. The Company's revenue generation is
also highly dependent on the economic conditions. If the economy were to
slow down, existing and potential customers might delay the purchase of
the Company's products, which would negatively affect the Company's
revenue. Failure to achieve revenue, earnings and other operating and
financial results as forecasted or anticipated by brokerage firm
analysts or industry analysts could result in an immediate and adverse
effect on the market price of the Company's common stock. Further, the
Company may not learn of, or be able to confirm, revenue or earnings
shortfall until the end of each quarter, which could result in an even
more immediate and adverse effect on the trading price of the Company's
common stock.
Volatility of Informix Stock Prices. The market for the Company's
common stock is highly volatile. The trading price of the Company's
common stock could be subject to wide fluctuations in response to
quarterly variations in operating and financial results, announcements
of technological innovations or new products by the Company or its
competitors, changes in prices of the Company's or its competitors'
products and services, changes in product mix, change in the Company's
revenue and revenue growth rates for the Company as a whole or for
individual geographic areas, business units, products or product
categories, as well as other events or factors. Statements or changes in
opinions, ratings, or earnings estimates made by brokerage firms or
industry analysts relating to the market in which the Company does
business or relating to the Company specifically have resulted, and
could in the future result, in an immediate and adverse effect on the
market price of the Company's common stock. In addition, the stock
market has from time to time experienced extreme price and volume
fluctuations which have particularly affected the market price for the
securities of many high technology companies and which often have been
unrelated to the operating performance of these companies. These broad
market fluctuations may adversely affect the market price of the
Company's common stock.
Personnel changes. The Company's future performance will depend to
a significant extent on its ability to attract and retain highly skilled
sales, consulting, technical, marketing and management personnel. The
competition for employees in the database software industry is intense,
and the Company expects that such competition will continue for the
foreseeable future. From time to time the Company has experienced
difficulty in locating candidates with appropriate qualifications. The
Company also believes stock options are a critical component for
motivating and retaining its key employees. The recent decline in the
price of the Company's Common Stock has made stock options previously
granted with higher exercise prices less valuable to the Company's
current employees and has consequently made it more difficult for the
Company to retain its key employees. The failure of the Company to
attract and retain key personnel could have an adverse effect on the
Company's business, results of operations, financial position and cash
flows.
Competition. The market for the Company's software products and
services is extremely competitive. Some of the Company's current
competitors have greater financial, technical and marketing resources
than the Company. The industry movement to new operating systems, like
Windows NT, access through low-end desktop machines, and access to data
through the Internet may cause downward pressure on prices of database
and related products. If such downward pressure on prices were to occur,
margins would be adversely affected. Also, new or enhanced products
introduced by existing or future competitors could have an adverse
effect on the Company's business, results of operations and financial
condition. Existing and future competition or changes in the Company's
product or service pricing structure or product or service offerings
could result in an immediate reduction in the prices of the Company's
products or services. If significant price reductions in the Company's
products or services were to occur and not be offset by increases in
sales volume, the Company's business, results of operations and
financial condition would be adversely affected. There can be no
assurance that the Company will continue to compete successfully with
its existing competitors or will be able to compete successfully with
new competitors.
Technological Change and New Products. The market for the Company's
products and services is characterized by rapidly changing technology
and frequent new product introductions. The Company's success will
depend upon its ability to enhance its existing products and to
introduce new products on a timely and cost-effective basis and that
meet dynamic customer requirements. There can be no assurance that the
Company will be successful in developing new products or enhancing its
existing products or that such new or enhanced products will receive
market acceptance or be delivered timely to the market. The Company has
experienced product delays in the past and may experience delays in the
future. Delays in the scheduled availability or a lack of market
acceptance of its products or failure to accurately anticipate customer
demand and meet customer performance requirements could have a material
adverse effect on the Company's business, results of operations and
financial condition. In addition, products as complex as those offered
by the Company may contain undetected errors or bugs when first
introduced or as new versions are released. There can be no assurance
that, despite testing, new products or new versions of existing products
will not contain undetected errors or bugs that will delay the
introduction or commercial acceptance of such products. A key factor in
determining the success of the Company will continue to be the ability
of the Company's products to interoperate and perform well with existing
and future leading, industry-standard application software products
intended to be used in connection with relational database management
systems. Failure to meet existing or future interoperability and
performance requirements of certain independent vendors marketing such
applications in a timely manner could adversely affect the market for
the Company's products. Commercial acceptance of the Company's products
and services could also be adversely affected by critical or negative
statements or reports by brokerage firms, industry and financial
analysts and industry periodicals concerning the Company, its products,
business or competitors or by the advertising or marketing efforts of
competitors, or other factors that could affect consumer perception.
International Operations. In 1995 and 1996, approximately 58 percent
of the Company's net revenues were derived from its international
operations. The Company's operations and financial results could be
significantly affected by factors associated with international
operations such as changes in foreign currency exchange rates and
uncertainties relative to regional economic circumstances, as well as
by other factors associated with international activities. Most of the
Company's international revenue and expenses are denominated in local
currencies. Although the Company takes into account changes in exchange
rates over time in its pricing strategy, the Company's business,
results of operations and financial condition could be materially and
adversely affected by fluctuations in foreign currency exchange rates.
Integration of Acquired Companies. The Company has completed
several acquisitions during the last two years, including the database
division of ASCII Corporation in Japan; distributors in Germany, Korea
and Malaysia; Stanford Technology Group; and, most recently, Illustra in
the United States. The Company may acquire other distributors,
companies, products or technologies in the future. There can be no
assurance that these acquisitions can be effectively integrated, that
such acquisitions will not result in costs and liabilities that could
adversely affect the Company's results of operations and financial
condition, or that the Company will obtain the anticipated or desired
benefits of such acquisitions.
Infringement Claims. As the number of software products and
software patents in the industry increases, the Company believes that
software developers like the Company have and will become increasingly
subject to infringement claims with respect to patents, trademarks and
other proprietary rights. Such claims, with or without merit, can be time
consuming and expensive to defend and could have an adverse effect on
the Company's business, results of operations, financial position, and
cash flows.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, December 31,
(in thousands, except share and per-share amounts) 1996 1995
<S> <C> <C>
(Note)
ASSETS
Current Assets:
Cash and cash equivalents $ 226,508 $ 164,305
Short-term investments 34,512 88,904
Accounts receivable, less allowances for doubtful
accounts of $21,429 in 1996 and $12,854 in 1995 254,096 185,452
Deferred taxes 13,329 21,504
Other current assets 29,479 25,924
Total current assets 557,924 486,089
Property and Equipment, at cost
Computer equipment 225,336 103,650
Office equipment and leasehold improvements 67,982 49,292
293,318 152,942
Less accumulated depreciation and amortization (106,591) (71,310)
186,727 81,632
Software Costs, less accumulated amortization
of $41,559 in 1996 and $18,980 in 1995 54,486 36,866
Deferred taxes 7,775 16,248
Long-term investments 6,639 9,781
Intangible assets 34,693 40,730
Other assets 55,598 19,800
Total Assets $ 903,842 $ 691,146
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 65,446 $ 29,655
Accrued expenses 52,347 34,919
Accrued employee compensation 57,626 49,911
Income tax payable 32,896 41,221
Deferred taxes 1,612 1,612
Deferred revenue 84,102 66,681
Current portion of capital lease obligations 866 769
Other current liabilities 4,671 8,479
Total current liabilities 299,566 233,247
Capital lease obligations, less current portion 1,462 890
Other noncurrent liabilities 897 1,956
Deferred taxes 31,203 24,488
Commitments and contingencies
Stockholders' Equity:
Preferred stock, par value $.01 per share- - -
5,000,000 shares authorized, none issued
Common stock, par value $.01 per share-
350,000,000 shares authorized, issued 150,782,000
and 147,984,000 in 1996 and 1995, respectively 1,508 1,480
Additional paid-in capital 243,564 204,448
Retained earnings 322,805 226,797
Unrealized gain on available-for-sale securities, net of tax 11,690 4,064
Foreign currency translation adjustment (8,853) (6,224)
Total stockholders' equity 570,714 430,565
Total Liabilities and Stockholders' Equity $ 903,842 $ 691,146
</TABLE>
(Note) Balances at December 31, 1995 have been restated to reflect the
Company's business combination with Illustra Information Technologies,
Inc. as a pooling-of-interests.
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended December 31,
(in thousands, except per-share data) 1996 1995 1994
<S> <C> <C> <C>
(Note) (Note)
Net Revenues
Licenses $ 708,035 $ 539,733 $ 364,661
Services 231,276 174,486 105,451
939,311 714,219 470,112
Costs and Expenses
Cost of software distribution 48,058 38,165 24,773
Cost of services 144,850 91,540 46,799
Sales and marketing 418,695 301,932 203,816
Research and development 120,211 85,643 64,263
General and administrative 64,239 51,113 35,370
Expenses related to Illustra merger 5,914 - -
801,967 568,393 375,021
Operating income 137,344 145,826 95,091
Interest income 9,868 8,148 3,970
Interest expense (2,617) (1,154) (441)
Other income (expense), net 3,614 (12) (2,598)
Income before income taxes 148,209 152,808 96,022
Income Taxes 50,391 55,164 34,074
Net Income $ 97,818 $ 97,644 $ 61,948
Net Income Per Common Share $ 0.63 $ 0.65 $ 0.43
Weighted Average Number of Common and
Common Equivalent Shares Outstanding: 155,573 150,627 142,782
</TABLE>
(Note) Amounts presented above applicable to the prior periods have been
restated to reflect the Company's business combination with Illustra
Information Technologies, Inc. as a pooling-of-interests.
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
(in thousands) 1996 1995 1994
<S> <C> <C> <C>
(Note) (Note)
Operating Activities
Net income $ 97,818 $ 97,644 $ 61,948
Adjustments to reconcile net income to cash and cash
equivalents provided by operating activities:
Depreciation and amortization 47,207 28,949 16,581
Amortization of capitalized software 14,626 12,041 7,848
Deferred tax expense 15,188 (593) (624)
Provisions for losses on accounts receivable 14,983 8,508 3,831
Foreign currency transaction gain (5,349) (4,609) (1,323)
Gain on sales of strategic investments (3,856) - -
Loss on disposal of property and equipment 2,393 605 -
Changes in operating assets and liabilities:
Accounts receivable (86,528) (65,683) (23,527)
Other current assets 4,172 (6,659) (1,709)
Accounts payable and accrued expenses 59,345 70,882 32,843
Deferred revenue 18,277 17,086 11,613
Net cash and cash equivalents provided by operating activities 178,276 158,171 107,481
Investing Activities
Investments of excess cash:
Purchases of held-to-maturity securities - (144,517) (124,102)
Purchases of available-for-sale securities (152,179) (4,303) (111,923)
Maturities of held-to-maturity securities - 83,159 106,513
Maturities of available-for-sale securities 126,137 6,104 -
Sales of available-for-sale securities 83,696 27,261 140,866
Purchases of strategic investments (12,737) (1,000) (1,623)
Proceeds from sales of strategic investments 7,299 - -
Purchase of property and equipment (148,270) (56,500) (25,747)
Proceeds from disposal of property and equipment 1,929 288 -
Additions to software costs (32,381) (23,977) (15,048)
Business combinations, net of cash acquired (4,340) (38,413) (8,799)
Other (14,541) (5,757) (721)
Net cash and cash equivalents used in investing activities (145,387) (157,655) (40,584)
Financing Activities
Proceeds from issuance of common stock, net 24,357 27,898 15,836
Principal payments on capital leases (1,025) (442) (1,342)
Acquisition of common stock (2,388) - (22,141)
Reissuance of treasury stock 578 - 7,915
Net cash and cash equivalents provided by financing activities 21,522 27,456 268
Effect of exchange rate changes on cash and cash equivalents 7,792 4,050 307
Increase in cash and cash equivalents 62,203 32,022 67,472
Cash and cash equivalents at beginning of year 164,305 132,283 64,811
Cash and cash equivalents at end of year $ 226,508 $ 164,305 $ 132,283
</TABLE>
(Note) Amounts presented above applicable to the prior periods have been
restated to reflect the Company's business combination with Illustra
Information Technologies, Inc. as a pooling-of-interests.
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unrealized Foreign
Additional Gain on Currency
Common Stock Paid-in Treasury Stock Retained Available-for- Translation
(in thousands) Shares Amount Capital Shares Amount Earnings Sale Securities Adjustment Totals
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1993 133,286 $1,333 $127,176 (266) $ (2,431) $ 84,030 $ - $(2,527) $207,581
Exercise of stock options 1,170 11 3,557 3,568
Sale of stock to employees under
employee stock purchase plan 90 1 1,052 1,053
Issuance of stock, net of costs 5,608 55 11,499 11,554
Tax benefits related to stock options 10,062 10,062
Foreign currency translation adjustment 929 929
Acquisition of treasury stock (3) (2,723) (22,139) (22,142)
Reissuance of treasury stock 2,989 24,570 (16,655) 7,915
Unrealized gain on available-for-sale
securities, net of tax 665 665
Net income 61,948 61,948
Balances at December 31, 1994 140,154 1,400 153,343 - - 129,323 665 (1,598) 283,133
Exercise of stock options 4,377 44 13,712 13,756
Sale of stock to employees under
employee stock purchase plan 349 3 6,603 6,606
Issuance of stock, net of costs 2,571 28 7,508 7,536
Tax benefits related to stock options 21,291 21,291
Acquisition of STG 533 5 1,991 (170) 1,826
Foreign currency translation adjustment (4,626) (4,626)
Unrealized gain on available-for-sale
securities, net of tax 3,399 3,399
Net income 97,644 97,644
Balances at December 31, 1995 147,984 1,480 204,448 - - 226,797 4,064 (6,224) 430,565
Exercise of stock options 2,182 22 13,343 13,365
Sale of stock to employees under
employee stock purchase plan 616 6 10,986 10,992
Acquisition of treasury stock - - - (100) (2,388) (2,388)
Reissuance of treasury stock - - - 100 2,388 (1,810) 578
Tax benefits related to stock options 14,787 14,787
Foreign currency translation adjustment (2,629) (2,629)
Unrealized gain on available-for-sale
securities, net of tax 7,626 7,626
Net income 97,818 97,818
Balances at December 31, 1996 150,782 $1,508 $243,564 - $ - $322,805 $11,690 $(8,853) $570,714
</TABLE>
(Note) Data presented above applicable to the prior periods has
been restated to reflect the Company's business combination with
Illustra Information Technologies, Inc. as a pooling-of-interests.
See Notes to Consolidated Financial Statements.
Note 1 - Summary of Significant Accounting Policies
Organization and Operations. Informix Corporation ("the Company") is a
multinational supplier of high-performance, parallel processing database
technology for open systems. The Company's products also include
application development tools for creating client/server production
applications, decision-support systems, ad-hoc query interfaces, and
software that allows information to be shared transparently from
personal computers to mainframes within the corporate computing
environment. In addition to software products, the Company offers
training, consulting, and post-contract support to its customers. The
principal geographic markets for the Company's products are North
America, Europe, Asia/Pacific, Japan, and Latin America. Customers
include large-, medium- and small-sized corporations in the
manufacturing, financial services, telecommunications, retail/wholesale,
hospitality, and government services sectors.
Use of Estimates. The preparation of financial statements in conformity
with general accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from those estimates.
Principles of Consolidation. The consolidated financial statements
include the accounts of Informix Corporation and its wholly owned
subsidiaries. All material intercompany accounts, transactions, and
profits have been eliminated in consolidation.
Restatement of Prior Year Data. As more fully described in Note 9, in
February 1996, Informix merged with Illustra Information Technologies,
Inc. (Illustra). The merger has been accounted for as a pooling of
interests and the historical consolidated financial statements of
Informix for all periods prior to the merger have been restated to
include the financial position, results of operations, and cash flows of
Illustra. Costs of the merger are included in the consolidated results
of operations in 1996.
Foreign Currency Translation. For foreign operations with the local
currency as the functional currency, assets and liabilities are
translated at year-end exchange rates, and statements of income are
translated at the average exchange rates during the year. Exchange gains
or losses arising from translation of foreign currency denominated
assets and liabilities are included as a component of stockholders'
equity.
For foreign operations with the U.S. dollar as the functional
currency, certain assets and liabilities are remeasured at the year-end
exchange rates. Statements of income are remeasured at the average
exchange rates during the year. Gains and losses resulting from foreign
currency remeasurement and realized gains and losses are included in
other expense, net.
The Company enters into forward foreign exchange contracts
primarily to hedge the value of accounts receivable or accounts payable
denominated in foreign currencies (mainly European and Asian foreign
currencies) against fluctuations in exchange rates until such
receivables are collected or such payables are disbursed. The Company
operates, on a limited basis, in certain countries in Latin America,
Eastern Europe, and Asia Pacific where there are limited forward
currency exchange markets and thus the Company has limited unhedged
transaction exposures in these currencies. Gains and losses associated
with exchange rate fluctuations on forward foreign exchange contracts
are recorded currently as income or loss as they offset corresponding
gains and losses on the foreign currency denominated assets and
liabilities being hedged. The costs of the forward foreign exchange
contracts are recorded as other expense, net. See Note 3 of Notes to
Consolidated Financial Statements.
Revenue Recognition. The Company generally recognizes license revenue
from sales of software licenses upon delivery of the software product to
a customer. However, for certain computer hardware manufacturers and
end-user licensees with amounts payable within twelve months, the
Company will recognize revenue at the time the customer makes a
contractual commitment for a minimum non-refundable license fee, if such
computer hardware manufacturers and end-user licensees meet certain
criteria established by the Company. License revenue from resellers
(such as distributors and application vendors) and from other computer
hardware manufacturers and end users may be recognized at the earlier of
either payment of the license fee or the shipment of the software media
on a per-unit basis. However, in no case is revenue recognized unless a
master or first copy is delivered to the customer.
Maintenance contracts generally call for the Company to provide
technical support and software updates to customers. Maintenance
contract revenue is recognized ratably over the term of the maintenance
contract, generally on a straight-line basis. Where maintenance revenue
is not separately invoiced, it is unbundled from license fees and
deferred for revenue recognition purposes. Other service revenue,
primarily training and consulting, is generally recognized at the time
the service is performed.
The Company's revenue recognition policy is in compliance with the
provisions of the American Institute of Certified Public Accountants'
Statement of Position 91-1, "Software Revenue Recognition."
The Company sold approximately $55 million of software licenses to
certain vendors during 1996 where the Company concurrently committed to
acquire goods or services in approximately the same dollar amount. These
transactions have been accounted for at their fair market value.
No single customer accounted for 10 percent or more of consolidated
revenues in 1996, 1995 or 1994.
Income Taxes. The Company accounts for income taxes in accordance with
the provisions of the Financial Accounting Standards Board Statement No.
109 (FAS 109) "Accounting for Income Taxes." Under FAS 109, the
liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on
differences between the financial reporting and income tax bases of
assets and liabilities, and are measured by applying enacted tax rates
and laws to the taxable years in which such differences are expected to
reverse.
Inventories. Inventories, which consist primarily of software product
components, finished software products, and marketing and promotional
materials, are carried at the lower of cost (first in, first out) or
market value, and are included in other current assets.
Software Costs. The Company capitalizes software development costs
incurred in developing a product once technological feasibility of the
product has been determined. Software costs also include amounts paid
for purchased software and outside development on products which have
reached technological feasibility. All software costs are amortized as a
cost of software distribution either on a straight-line basis over the
remaining estimated economic life of the product or on the basis of each
product's projected revenues, whichever results in greater amortization.
The Company recorded amortization of $14.6 million, $12.0 million, and
$7.8 million of software costs in 1996, 1995, and 1994, respectively, in
cost of software distribution.
Property and Equipment. Depreciation of property and equipment is
calculated using the straight-line method over its estimated useful
life, generally the shorter of the applicable lease term or three-to-
seven years for financial reporting purposes.
Businesses Acquired. The purchase price of businesses acquired,
accounted for as purchased business combinations, is allocated to the
tangible and specifically identifiable intangible assets acquired based
on their fair values with any amount in excess of such allocations being
designated as goodwill. Intangible assets are amortized over their
estimated useful lives, which to date have been five to seven years. The
carrying values of goodwill and specified intangible assets are reviewed
if the facts and circumstances suggest that they may be impaired. If
this review indicates that the asset will not be recoverable, as
determined based on the undiscounted cash flows of the acquired business
over the remaining amortization period, the Company's carrying value is
reduced to net realizable value. There were no writedowns of intangible
assets in 1996, 1995 or 1994. As of December 31, 1996 and 1995, the
Company had $50.6 million and $48.4 million of intangible assets, with
accumulated amortization of $15.9 million and $7.7 million,
respectively, as a result of these acquisitions.
Net Income per Common Share. Net income per common share is based on the
weighted average number of common and dilutive common equivalent shares
outstanding during each year. All stock options are considered common
stock equivalents and are included in the weighted average computations
when the effect is dilutive.
Concentration of Credit Risk. The Company designs, develops,
manufactures, markets, and supports computer software systems to
customers in diversified industries and in diversified geographic
locations. The Company performs ongoing credit evaluations of its
customers' financial condition and generally requires no collateral.
Other Concentrations. In 1996, the Company derived half of its revenue
from software license agreements with resellers including original
computer equipment manufacturers (OEMs), distributors and value added
resellers (VARs) including application vendors. The Company estimates
that slightly less than half of the licenses sold to these resellers in
1996 were not resold to end users prior to December 31, 1996. If these
resellers do not commit to licensing the same level of products for
resale to end users in 1997, the Company's revenues in future periods
could be adversely affected.
Cash, Cash Equivalents, Short-Term Investments, and Long-Term
Investments. The Company considers liquid investments purchased with a
maturity of three months or less to be cash equivalents. The Company
considers investments with a maturity of more than three months but
less than one year to be short-term investments. Investments with an
original maturity of more than one year are considered long-term
investments. Short-term and long-term investments are classified as
available-for-sale and are carried at fair value. Cash equivalents are
carried at amortized cost.
The Company invests its excess cash in accordance with its short-
term and long-term investments policy, which is approved by the Board of
Directors. The policy authorizes the investment of excess cash in
government securities, municipal bonds, time deposits, certificates of
deposit with approved financial institutions, commercial paper rated A-
1/P-1 (a small portion of the portfolio may consist of commercial paper
rated A-2/P-2), and other specific money market instruments of similar
liquidity and credit quality. The Company has not experienced any
significant losses related to these investments.
Securities Held-to-Maturity and Available-for-Sale. Management
determines the appropriate classification of debt securities at the time
of purchase and re-evaluates such designation as of each balance sheet
date. Debt securities are classified as held-to-maturity when the
Company has the positive intent and the ability to hold the securities
until maturity. Held-to-maturity securities are stated at amortized
cost, adjusted for amortization of premiums and accretion of discounts
to maturity. Such amortization, as well as any interest on the
securities, is included in interest income.
Marketable equity securities and debt securities not classified as
held-to-maturity are classified as available-for-sale. Available-for-
sale securities are carried at fair value, with the unrealized gains and
losses, net of tax, reported in a separate component of stockholders'
equity. The amortized cost of debt securities in this category is
adjusted for amortization of premiums and accretion of discounts to
maturity. Such amortization is included in interest income. Realized
gains and losses and declines in value judged to be other-than-temporary
on available-for-sale securities are included in other expense, net. The
cost of securities sold is based on the specific identification method.
Interest on securities classified as available-for-sale are included in
interest income. There were no material gross realized gains or losses
from sales of securities during the year.
Fair Value of Financial Instruments. Fair values of cash, cash
equivalents, short and long term investments, other assets, and currency
forward contracts are based on quoted market price.
Reclassifications. Certain previously reported amounts have been
reclassified to conform to the current presentation format.
Note 2 -Financial Instruments
The following is a summary of available-for-sale debt and equity
securities:
<TABLE>
<CAPTION>
December 31, 1996 Available-for-sale securities
(In thousands) Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 61,308 $ - $ (20) $ 61,288
Commercial Paper 15,872 14 (2) 15,884
Municipal Bonds 27,317 10 (48) 27,279
Auctioned Preferred Stock 4,504 - (4) 4,500
Total Debt Securities 109,001 24 (74) 108,951
U.S. Equity Securities 15,404 18,490 - 33,894
$124,405 $18,514 $ (74) $142,845
Amounts included in cash and cash equivalents $ 67,806 $ - $ (6) $ 67,800
Amounts included in short-term investments 34,548 19 (55) 34,512
Amounts included in long-term investments 6,647 5 (13) 6,639
Amounts included in other assets 15,404 18,490 - 33,894
$124,405 $18,514 $ (74) $142,845
</TABLE>
The maturity dates of the financial instruments included in long-term
investments vary from 1998 to 2026.
<TABLE>
<CAPTION>
December 31, 1995 Available-for-sale securities
(In thousands) Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 5,608 $ - $ - $ 5,608
Commercial Paper 51,288 146 (88) 51,346
Municipal Bonds 82,096 71 (213) 81,954
Auctioned Preferred Stock 2,506 - (5) 2,501
Total Debt Securities 141,498 217 (306) 141,409
U.S. Equity Securities 6,110 7,500 (831) 12,779
$147,608 $ 7,717 $(1,137) $154,188
Amounts included in cash and cash equivalents $ 42,724 $ - $ - $ 42,724
Amounts included in short-term investments 89,072 137 (305) 88,904
Amounts included in long-term investments 9,702 80 (1) 9,781
Amounts included in other assets 6,110 7,500 (831) 12,779
$147,608 $ 7,717 $(1,137) $154,188
</TABLE>
In the fourth quarter of 1995, the Company re-evaluated the initial
designation of certain of its investments in debt securities as held-to-
maturity based on the Company's current ability and intent to hold such
securities to their contractual maturity. As a result, in December 1995,
these securities were transferred from held-to-maturity to available-
for-sale at their estimated fair value of $125.7 million. The difference
between amortized cost of $125.8 million and estimated fair value of
these securities at the date of transfer, $0.1 million, was charged to a
separate component of stockholders' equity.
Note 3 - Derivative Financial Instruments
The Company enters into forward foreign exchange contracts
primarily to hedge the value of accounts receivable or accounts payable
denominated in foreign currencies against fluctuations in exchange rates
until such receivables are collected or payables are disbursed. The
purpose of the Company's foreign exchange exposure management policy and
practices is to attempt to minimize the impact of exchange rate
fluctuations on the value of the foreign currency denominated assets and
liabilities being hedged. Substantially all forward foreign exchange
contracts entered into by the Company have maturities of 360 days or
less. The Company's practice is to settle all foreign exchange contracts
within ten calendar days of year end and thus there is no material
difference between the contract value and the fair value of the
contracts at December 31, 1996 and 1995. At December 31, 1996 and 1995,
the Company had approximately $168.6 million and $77.2 million of
forward foreign exchange contracts outstanding, respectively. The table
below summarizes by currency the contractual amounts of the Company's
forward foreign exchange contracts at December 31, 1996 and December 31,
1995.
<TABLE>
<CAPTION>
FORWARD CONTRACTS
At December 31, 1996 (In thousands) Face Value Unrealized Gain/(Loss)
<S> <C> <C>
Forward currency contracts sold:
Deutsche Mark $ 55,815 $ (24)
Japanese Yen 41,384 (143)
British Pound 16,051 (12)
French Franc 8,252 -
Malaysian Ringgit 5,914 1
Taiwanese NT 5,609 (2)
Italian Lira 4,555 (9)
Singapore Dollar 3,600 (8)
Holland Guilder 3,558 1
Sweden Krona 2,246 1
Swiss Franc 1,622 1
Portuguese Escudo 1,574 -
Other (under $1 million) 2,240 (1)
Total $152,420 $ (195)
Forward currency contracts purchased:
British Pound $ 10,501 $ (192)
Deutsche Mark 4,198 6
Other (under $1 million) 1,472 (7)
Total $ 16,171 $ (193)
Grand Total $168,591 $ (388)
</TABLE>
<TABLE>
<CAPTION>
FORWARD CONTRACTS
At December 31, 1995 (In thousands) Face Value Unrealized Gain/(Loss)
<S> <C> <C>
Forward currency contracts sold:
Deutsche Mark $ 25,356 $ (14)
Japanese Yen 21,817 (74)
Spanish Peseta 6,178 (4)
French Franc 4,807 (7)
Singapore Dollars 4,326 6
Italian Lira 2,403 4
British Pound 2,329 22
Malaysian Ringgit 2,287 (2)
Dutch Guilder 1,550 1
Portuguese Escudo 1,369 (1)
Austrian Schilling 1,361 -
Other 3,369 (1)
Total $ 77,152 $ (70)
</TABLE>
Other than the use of forward foreign exchange contracts as
discussed immediately above, the Company does not currently invest in or
hold any other financial instruments defined as derivative financial
instruments by FAS 119.
Note 4 - Stock-based Benefit Plans
Option Plans
Under the Company's 1986 Employee Stock Option Plan, options are
granted at fair market value on the date of the grant. Options are
generally exercisable in cumulative annual installments over three to
five years. Payment for shares purchased upon exercise of options may be
by cash or, with Board approval, by full recourse promissory note or by
exchange of shares of the Company's common stock at fair market value on
the exercise date. Options under the 1986 Plan expired on July 29, 1996,
which was 10 years after the date of grant.
Additionally, 1,600,000 shares were authorized for issuance under
the 1989 Outside Directors Stock Option Plan, whereby non-employee
directors are automatically granted non-qualified stock options upon
election or re-election to the Board of Directors. At December 31, 1996,
675,000 shares were available for grant under this Plan.
In April 1994, the Company adopted the 1994 Stock Option and Award
Plan; 8,000,000 shares were authorized for grant under this Plan.
Options can be granted to employees on terms substantially equivalent to
those described above. The 1994 Stock Option and Award Plan also allows
the Company to award performance shares of the Company's common stock to
be paid to recipients on the achievement of certain performance goals
set with respect to each recipient. At December 31, 1996, 788,783 shares
were available for grant under this Plan.
In February 1996, on acquisition of Illustra, all of Illustra's
outstanding options were converted into options to purchase 2.4 million
shares of Informix common stock. All stock options were restated to
include Illustra's options under the pooling-of-interests method. There
were 172,677 shares available for grant under this Plan at December 31,
1996.
Following is a summary of activity for all stock option plans for
the three years ended December 31, 1996:
<TABLE>
<CAPTION>
Number Options
of Shares Price per Share
<S> <C> <C>
Outstanding at December 31, 1993 15,739,957 $ 0.06 to $13.13
Options granted 4,029,815 0.19 to 14.44
Options exercised (3,627,468) 0.06 to 12.75
Options canceled (1,128,532) 0.06 to 11.88
Outstanding at December 31, 1994 15,013,772 0.06 to 14.44
Options granted and assumed 5,456,927 0.19 to 34.00
Options exercised (3,852,697) 0.19 to 13.88
Options canceled (864,920) 0.06 to 32.75
Outstanding at December 31, 1995 15,753,082 0.06 to 34.00
</TABLE>
<TABLE>
<CAPTION
Weighted Average Price
<S> <C> <C>
Options granted and assumed 5,850,225 $ 24.3456
Options exercised (2,927,260) 4.6069
Options canceled (1,561,800) 17.1483
Outstanding at December 31, 1996 17,114,247 $ 13.4495
</TABLE>
<TABLE>
<CAPTION>
The following table summarizes information about options outstanding
at December 31, 1996:
Options Outstanding Options Exercisable
______________________________________________________ ____________________________________
Number Weighted-Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise Prices at December 31, 1996 Contractual Life Exercise Price at December 31, 1996 Exercise Price
<S> <C> <C> <C> <C> <C>
$ 0.0700 - $ 0.6719 2,304,968 6.63 $ 0.3911 2,304,968 $ 0.3911
$ 0.6875 - $ 0.7500 380,100 4.38 $ 0.7447 380,100 $ 0.7447
$ 0.7656 - $ 3.5938 1,731,085 5.08 $ 3.2936 1,730,236 $ 3.2943
$ 3.7188 - $ 7.5000 1,888,065 6.88 $ 6.7008 1,087,165 $ 6.1130
$ 7.5938 - $ 8.6250 1,871,601 6.26 $ 8.6012 1,286,801 $ 8.6017
$ 8.6875 - $10.7813 420,675 6.79 $10.0854 184,300 $10.1559
$10.8750 - $18.2500 2,761,139 8.24 $17.8675 723,415 $17.6530
$18.3750 - $23.1250 2,001,650 9.74 $22.1668 37,750 $20.9894
$23.2500 - $24.1250 2,766,288 9.33 $24.0838 59,116 $23.8057
$24.2500 - $34.7500 988,676 9.08 $30.3152 194,325 $28.4078
$ 0.0700 - $34.7500 17,114,247 7.61 $13.4495 7,988,176 $ 5.8788
</TABLE>
In connection with all stock option plans, 18,750,708 shares of
common stock were reserved for issuance as of December 31, 1996. At
December 31, 1995, 4,898,537 options were exercisable.
Employee Stock Purchase Plan
The Company also has a qualified Employee Stock Purchase Plan
(ESPP) under which 7,600,000 shares of common stock, in the aggregate,
have been authorized for issuance. Under the terms of the Plan,
employees may contribute, through payroll deductions, up to 10 percent
of their base pay and purchase up to 500 shares per quarter (with the
limitation of purchases of $25,000 annually in fair market value of the
shares). Employees may elect to withdraw from the Plan during any
quarter and have their contributions for the period returned to them.
Also, employees may elect to reduce the rate of contribution one time in
each quarter. The price at which employees may purchase shares is 85
percent of the lower of the fair market value of the stock at the
beginning or end of the quarter. The Plan is qualified under Section 423
of the Internal Revenue Code of 1986, as amended. During 1996, 1995, and
1994 the Company issued 616,128 shares, 347,743 shares, and 484,756
shares, respectively, under this Plan. In connection with the Employee
Stock Purchase Plan, 650,587 shares were reserved for issuance as of
December 31, 1996.
Stock Repurchase Authorization
The Board of Directors had authorized the purchase of up to 8
million shares of the Company's common stock in the open market to
satisfy requirements under Stock Option and Stock Purchase Plans under a
stock repurchase plan. In 1996, the Company rescinded the stock
repurchase authorization.
Stock Based Compensation
As permitted under FASB Statement No.123, "Accounting for Stock-Based
Compensation" (FASB 123), the Company has elected to continue to follow
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" (APB 25) in accounting for stock-based awards to
employees. Under APB 25, the Company generally recognizes no
compensation expense with respect to such awards.
Pro forma information regarding the net income and earnings per
share is required by FASB 123 for awards granted or modified after
December 31, 1994 as if the Company had accounted for its stock based
awards to employees under the fair value method of FASB 123. The fair
value of the Company's stock-based awards to employees was estimated
using a Black-Scholes option pricing model. The Black-Scholes option
valuation model was developed for use in estimating the fair value of
traded options which have no vesting restrictions and are fully
transferable. In addition, the Black-Scholes model requires the input
of highly subjective assumptions including the expected stock price
volatility. Because the Company's stock-based awards to employee have
characteristics significantly different from those of traded options,
and because changes in the subjective assumptions can materially affect
the fair value estimate, in management's opinion, the existing models do
not necessarily provide a reasonable single measure of the fair value of
its stock-based awards to employees. The fair value of the Company's
stock-based awards was estimated assuming no expected dividends and the
following weighted-average assumptions:
<TABLE>
<CAPTION>
Options ESPP
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Expected life (years) 4.5 year 4.5 year .25 year .25 year
Expected volatility (percent) .5822 - .6327 .5642 - .6239 .5765 - .9662 .4170 - .7295
Risk-free interest rate (percent) 5.20 - 6.09 5.82 - 7.72 5.01 - 5.85 5.49 - 6.07
</TABLE>
For pro forma purposes, the estimated fair value of the Company's
stock based awards is amortized over the award's vesting period (for
options) and the three month purchase period (for stock purchases under
the ESPP). The Company's pro forma information follows (in thousands
except for net income per share information):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C> <C>
Net income As reported $ 97,818 $ 97,644
Pro forma $ 77,187 $ 87,696
Net income per share As reported $ 0.63 $ 0.65
Pro forma $ 0.50 $ 0.58
</TABLE>
FASB 123 is applicable only to awards granted subsequent to
December 31, 1994, therefore its pro forma effect will not be fully
reflected until approximately 1998.
Calculated under FASB 123, the weighted-average fair value of the
options granted during 1996 and 1995 was $13.04 and $10.39 per share,
respectively. The weighted average fair value of employee stock
purchase rights granted under the ESPP during 1996 and 1995 were $7.47
and $5.27, respectively.
Note 5 - 401(k) Plan
The Company has a 401(k) plan covering substantially all of its
U.S. employees. Under this plan, participating employees may defer up to
15 percent of their pre-tax earnings, subject to the Internal Revenue
Service annual contribution limit ($9,500 for 1996). In 1996, the
Company matched 50 percent of each employee's contribution up to a
maximum of $2,000. The Company's matching contributions to this 401(k)
plan for 1996, 1995 and 1994 were $3.8 million, $2.5 million and $1.4
million, respectively.
Note 6 - Commitments
The Company leases certain computer and office equipment under
capital leases having terms of three-to-five years. Amounts capitalized
for such leases are included on the consolidated balance sheets as
follows:
<TABLE>
<CAPTION>
(In thousands) December 31, 1996 December 31, 1995
<S> <C> <C>
Computer equipment $ 8,825 $ 7,924
Office equipment 2,474 1,636
11,299 9,560
Less: accumulated amortization 8,985 7,716
$ 2,314 $ 1,844
</TABLE>
During 1996 and 1995, the Company financed approximately $1,800,000
and $1,677,000, respectively, of equipment purchases under capital lease
arrangements. Amortization with respect to leased equipment is
included in depreciation expense.
The Company leases certain of its office facilities and equipment
under non-cancelable operating leases and total rent expense was $42.4
million, $19.7 million and $17.3 million in 1996, 1995 and 1994,
respectively.
The Company plans on relocating its corporate headquarters to Santa
Clara, California approximately 15 miles to the south of the Company's
current headquarters. To facilitate the move, in January 1997, the
Company entered into a two-year lease for twenty seven acres of
undeveloped commercial real estate ("the Real Estate Lease"). Upon
termination of the lease term, the Company will have the option to
purchase the land, or if such purchase option is not exercised, arrange
for the sale of the parcels to an unrelated third party. In the event
the later option is exercised, the Company is required to pay the lessor
any difference between the net sales proceeds and the lessor's
investment in the parcels, approximately $61.5 million. In order to
secure performance of its obligation under the lease, the Company was
required to pledge certain cash collateral to the lessor throughout the
full term of the lease. Accordingly, in January 1997, the Company
deposited $60 million in cash into a non-interest bearing collateral
account controlled by an affiliate of the lessor. Interest on these
deposits computed at market rates, otherwise due to the Company, have
been assigned by the Company to the lessor in order to reduce the gross
monthly lease payments due under the lease. The resulting net monthly
lease payments will be recognized by the Company as rent expense over
the lease term. The real estate lease also includes certain financial
performance criteria which must be met by the Company during the lease
term.
In addition, in November 1996, the Company leased approximately
200,000 square feet of office space in Santa Clara adjacent to the
twenty seven acres described above. The lease term is for fifteen years
and minimum lease payments amount to $96.0 million over the term. The
minimum lease payments increase within a contractual range based on
changes in the Consumer Price Index.
As of December 31, 1996, the Company has spent approximately $63
million and is contractually obligated to additionally purchase
approximately $45 million in various computer equipment related to its
Superstores from certain vendors who have concurrently licensed the
Company's software. These transactions are consummated at fair market
value.
Future minimum payments, by year and in the aggregate, under the
capital and non-cancelable operating leases as of December 31, 1996, are
as follows:
<TABLE>
<CAPTION>
Year Ending December 31 Capital Non-Cancelable
(In thousands) Leases Operating Leases
<S> <C> <C>
1997 $ 1,265 $ 45,941
1998 803 44,591
1999 386 41,244
2000 153 23,438
2001 - 16,396
Thereafter - 88,904
Total payments 2,607 $260,514
Less: amount representing interest 279
Present value of minimum lease payments 2,328
Less current portion 866
$ 1,462
</TABLE>
Note 7 - Geographic Information
Net revenues, operating income, and identifiable assets for the
Company's U.S., European, Asia/Pacific and other foreign operations are
summarized below by year:
<TABLE>
<CAPTION>
(In thousands) United States Europe Asia/Pacific Other Eliminations Total
<S> <C> <C> <C> <C> <C> <C>
1996:
Net revenues $471,559 $346,797 $119,757 $ 57,939 $ (56,741) $939,311
Operating income 43,169 72,754 10,554 11,876 (1,009) 137,344
Identifiable assets 699,285 250,773 116,160 45,182 (207,558) 903,842
1995:
Net revenues $383,746 $241,009 $ 97,884 $ 44,619 $ (53,039) $714,219
Operating income 96,321 31,313 12,607 6,990 (1,405) 145,826
Identifiable assets 620,966 227,058 85,712 29,445 (272,035) 691,146
1994:
Net revenues $261,336 $145,899 $ 50,008 $ 27,948 $ (15,079) $470,112
Operating income 38,708 15,969 31,045 10,322 (953) 95,091
Identifiable assets 387,785 109,939 19,394 16,658 (84,231) 449,545
</TABLE>
Sales and transfers between geographic areas are accounted for at
prices which the Company believes are arm's length prices, and which in
general are in accordance with the rules and regulations of the
respective governing tax authorities.
Export revenues consisting of sales from the Company's U.S.
operating subsidiary to non-affiliated customers were as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Canada $ 7,521 $ 6,216 $ 5,600
Latin America 6,556 6,817 6,641
Asia/Pacific 3,391 7,887 32,820
Other 3,437 1,301 3,015
Total $ 20,905 $ 22,221 $ 48,076
</TABLE>
Note 8 - Income Taxes
The provision for income taxes applicable to income before income
taxes consists of the following:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Currently payable:
Federal $ 16,252 $ 43,286 $ 27,150
State 3,219 6,999 4,548
Foreign 11,511 13,181 6,160
30,982 63,466 37,858
Deferred:
Federal 19,147 285 (16)
State 3,082 523 386
Foreign (2,820) (9,110) (4,154)
19,409 (8,302) (3,784)
$ 50,391 $ 55,164 $ 34,074
</TABLE>
In 1996, 1995 and 1994, the Company recognized tax benefits related
to stock option plans of $14.8 million, $21.3 million and $10.1 million,
respectively. Such benefits were recorded as an increase to additional
paid-in capital.
Income before income taxes consists of the following:
<TABLE>
<CAPTION
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Domestic $ 67,906 $119,136 $ 85,253
Foreign 80,303 33,672 10,769
$148,209 $152,808 $ 96,022
</TABLE>
The provision for income taxes differs from the amount computed by
applying the federal statutory income tax rate to income before income
taxes. The sources and tax effects of the differences are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
(In thousands) Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Computed tax at federal statutory rate $ 51,873 35.0% $ 53,483 35.0% $ 33,608 35.0%
Losses which resulted in no current tax benefit - - - - 908 0.9%
Research and development credits (1,457) (1.0%) (1,435) (0.9%) (1,241) (1.3%)
State income taxes, net of federal tax benefit 3,972 2.7% 4,846 3.2% 3,171 3.3%
Benefit from net earnings of foreign subsidiaries
considered to be permanently reinvested
in non-U.S. operations (5,625) (3.8%) (3,000) (2.0%) (2,000) (2.1%)
Other, net 1,628 1.1% 1,270 0.8% (372) (0.3%)
$ 50,391 34.0% $ 55,164 36.1% $ 34,074 35.5%
</TABLE>
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial statement purposes and the amounts used for income tax
purposes. Significant components of the Company's deferred tax assets
and liabilities as of December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C> <C>
Deferred Tax Assets:
Reserves and accrued expenses $ 9,519 $ 8,600
Deferred revenue 2,717 3,432
Foreign net operating loss carryforwards 9,182 6,964
Domestic net operating loss carryforwards 7,984 7,984
Foreign taxes in excess of taxes at U.S. rate - 3,226
Other 555 646
Total deferred tax assets 29,957 30,852
Valuation allowance for deferred tax assets (908) (908)
Net deferred tax assets 29,049 29,944
Deferred Tax Liabilities:
Capitalized software 17,704 10,329
Revenue recognition 1,612 1,612
Taxes on unremitted foreign earnings 14,990 3,850
Valuation of investment portfolio 6,454 2,501
Total deferred tax liabilities 40,760 18,292
Net deferred tax assets (liabilities) $(11,711) $11,652
</TABLE>
Cumulative undistributed earnings of the Company's Irish subsidiary
for which no U.S. income taxes have been provided aggregated
approximately $45.9 million at December 31, 1996. These earnings are
considered to be permanently reinvested in non-U.S. operations.
Additional taxes of approximately $11.5 million would have to be
provided if these earnings were repatriated to the U.S.
At December 31, 1996, the Company had approximately $23.7 million,
$21.0 million and $10.5 million of foreign, federal and state net
operating loss carryforwards. The foreign and state net operating loss
carryovers expire at various dates beginning in 1998. The federal net
operating loss carryovers expire at various dates beginning in 2008.
Income taxes paid amounted to $22.7 million, $18.6 million and $22.5
million in 1996, 1995 and 1994, respectively.
Note 9 - Business Combinations
In January 1995, the Company acquired a 90 percent interest in the
database division of ASCII Corporation, a distributor of its products in
Japan. The Company acquired the remaining 10 percent interest in January
1996. The acquisition was recorded as a purchase. The purchase price of
ASCII's database division was approximately $46.0 million, of which
approximately $35.4 million has been allocated to intangible assets
acquired.
In April 1995, the Company acquired an 80 percent interest in the
database division of Daou Corporation, a distributor of its products in
Korea. The acquisition was recorded as a purchase. The Company has
acquired the remaining 20 percent in January 1997 for approximately $1
million. The initial purchase price of this business was approximately
$4.6 million, and was increased by approximately $3.0 million in January
1997 due to performance incentives outlined in the agreement, of which
approximately $7.0 million has been allocated to intangible assets
acquired.
The operating results of these businesses have not been material in
relation to those of the Company and are included in the Company's
consolidated results of operations from the date of acquisition.
In February 1996, the Company acquired Illustra Information
Technologies, Inc. (Illustra), a company that provides dynamic content
management database software and tools for managing complex data in the
Internet, multimedia/entertainment, financial services, earth sciences
and other markets. Approximately 12.7 million shares of Informix common
stock were issued to acquire all outstanding shares of Illustra common
stock. An additional 2.4 million shares of Informix common stock were
reserved for issuance in connection the assumption of Illustra's
outstanding stock options and warrants. The transaction has been
accounted for as a pooling of interests, and accordingly, the
consolidated financial statements for all prior periods presented have
been restated to include the accounts and operations of Illustra as if
the merger was consummated at the beginning of the earliest period
presented. Merger fees of approximately $5.9 million were recorded in
the first quarter of 1996. The following table presents the separate
operating results for Informix Corporation and Illustra for the periods
prior to the acquisition date (because the operating results of Illustra
for the period January 1, 1996 to the effective date of the merger were
immaterial to the combined Company, for the purposes of this table an
acquisition date of January 1, 1996 is assumed).
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1995 December 31, 1994
<S> <C> <C>
Net revenues:
Informix $708,985 $468,697
Illustra 5,234 1,415
Combined $714,219 $470,112
Net income (loss):
Informix $105,333 $ 66,196
Illustra (7,689) (4,248)
Combined $ 97,644 $ 61,948
</TABLE>
Note 10 - Litigation
In the ordinary course of business, various lawsuits and claims are
filed against the Company. It is the Company's opinion that the
resolution of such litigation will not have a material effect on the
Company's financial position, results of operations, or cash flows.
Note 11 - Selected Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth
(In thousands, except per-share data) Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1996:
Net revenues $204,021 $226,282 $238,180 $270,828
Gross profit 160,584 178,474 189,003 218,342
Net income 15,891 21,628 26,181 34,118
Net income per share 0.10 0.14 0.17 0.22
1995:
Net revenues $148,037 $164,068 $182,701 $219,413
Gross profit 121,893 134,042 150,183 178,396
Net income 17,646 20,184 23,896 35,918
Net income per share 0.12 0.14 0.16 0.23
</TABLE>
INFORMIX CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
(amounts in thousands)
Additions
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
of Period Expenses Accounts Deductions Period
(1) (2)
<S> <C> <C> <C> <C> <C>
Allowance For Doubtful Accounts
Year ended December 31, 1996 $ 12,854 $ 15,329 $ - $ 6,754 $ 21,429
Year ended December 31, 1995 $ 6,049 $ 8,247 $ 261 $ 1,703 $ 12,854
Year ended December 31, 1994 $ 3,181 $ 1,937 $ 1,900 $ 969 $ 6,049
</TABLE>
(1) Charged to net revenues
(2) Uncollectible accounts written off, net of recoveries
(Note) Data at December 31, 1995 and December 31, 1994 have been
restated to reflect the Company's business combination with Illustra
Information Technologies, Inc. as a pooling-of-interests.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors and Stockholders - Informix Corporation
We have audited the accompanying consolidated balance sheets of
Informix Corporation as of December 31, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1996. Our
audits also included the financial statement schedule listed in the
Index at Item 14(a). These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedule based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Informix Corporation at December 31, 1996 and 1995, and the consolidated
results of its operations and its cash flows for each of the three years
in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
/s/Ernst & Young LLP
San Jose, California
February 3, 1997
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors is incorporated herein by reference
from the section entitled "Election of Directors" of the Company's proxy
statement to be filed pursuant to Regulation 14A for its Annual
Stockholders Meeting to be held on May 22, 1997. For information
regarding executive officers of the Company, see the information
appearing under the caption "Executive Officers" in Part I, Item 1 of
this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is incorporated herein
by reference from the section entitled "Executive Compensation" of the
Company's proxy statement to be filed pursuant to Regulation 14A for its
Annual Stockholders Meeting to be held on May 22, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Information regarding security ownership is incorporated herein by
reference from the section entitled "Stock Ownership of Certain Beneficial
Owners and Management" of the Company's proxy statement to be filed
pursuant to Regulation 14A for its Annual Stockholders Meeting to be held
on May 22, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related
transactions is incorporated herein by reference from the sections
entitled "Stock Ownership of Certain Beneficial Owners and Management",
"Executive Compensation" and "Transactions with Management" of the
Company's proxy statement to be filed pursuant to Regulation 14A for its
Annual Stockholders Meeting to be held on May 22, 1997.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a)1. Financial Statements
The following financial statements are filed as a part of this Annual
Report:
Financial Statements Covered by Report of Independent Auditors:
Report of Ernst & Young LLP, Independent Auditors
Consolidated Financial Statements:
Balance Sheets at December 31, 1996 and 1995
Statements of Income for each of the three years in the
period ended December 31, 1996
Statements of Stockholders' Equity for each of the three
years in the period ended December 31, 1996
Statements of Cash Flows for each of the three years in
the period ended December 31, 1996
Notes to Consolidated Financial Statements (except Note
11)
Supplementary Financial Data Not Covered By Report of Independent
Auditors:
Note 11 of Notes to Consolidated Financial Statements
(a)2. Financial Statement Schedule
The following financial statement schedule is filed as a part of
this Annual Report:
Financial Statement Schedule Covered By Report of Independent
Auditors:
Schedule as of and for the three years in the period ended
December 31, 1996, as applicable:
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
omitted because they are not required under the related instructions or
are not applicable.
(a)3. Exhibits
<TABLE>
<CAPTION>
<S> <C>
3.1 (1) Restated Certificate of Incorporation, as amended.
3.2 (1) By-Laws, as amended.
4.1 (2) Amended and Restated Preferred Share Rights Agreement.
10.1 (3) Form of Indemnity Agreement.
10.2 (4) Form of Amended Indemnity Agreement.
10.3 (5) 1989 Directors Stock Option Plan.
10.4 (6) Amendment to the 1989 Directors Stock Option Plan.
10.5 Purchase Agreement dated as of January 6, 1997 between the
Company and BPN Leasing Corporation ("BPN").
10.6 Lease Agreement dated as of January 6, 1997 between the
Company and BPN.
10.7 Pledge Agreement dated as of January 6, 1997 between the
Company, BPN and Banque Nationale de Paris.
11 Schedule re: Computation of Per Share Earnings.
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
24 Power of Attorney (set forth on signature page).
27 Financial Data Schedules.
_______________
(1) Incorporated by reference to exhibits to the Form 10-Q of
Informix Corporation for the fiscal quarter ended July 2,
1995
(2) Incorporated by reference to exhibits to the Form 8-A/A
Registration Statement filed on August 11, 1995.
(3) Incorporated by reference to exhibits to the Form S-1
Registration Statement No. 33-8006.
(4) Incorporated by reference to exhibits to the Form 10-K of
Informix Corporation for the fiscal year ended December
31, 1988.
(5) Incorporated by reference to exhibits to the Form S-8
Registration Statement No. 33-31116.
(6) Incorporated by reference to exhibits to the Form S-8
Registration Statement No. 33-50608.
</TABLE>
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the fourth quarter
of the fiscal year ended December 31, 1996.
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant, Informix Corporation, has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on March 28, 1997.
INFORMIX CORPORATION
By: /s/ PHILLIP E. WHITE
Phillip E. White, Chairman
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David H. Stanley, Alan S.
Henricks and Karen Blasing, jointly and severally, his or her
attorneys-in-fact, each with the power of substitution, for him or her
in any and all capacities, to sign any amendments to this Report on Form
10-K, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact,
or his or her substitute or substitutes, may do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Phillip E. White Chairman, President, March 28, 1997
(Phillip E. White) Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Alan S. Henricks Executive Vice President, and March 28, 1997
(Alan S. Henricks) Chief Financial Officer
(Principal Financial Officer)
/s/ Albert F. Knorp, Jr. Director March 28, 1997
(Albert F. Knorp, Jr.)
/s/ James L. Koch Director March 28, 1997
(James L. Koch)
/s/ Thomas A. McDonnell Director March 28, 1997
(Thomas A. McDonnell)
/s/ Cyril J. Yansouni Director March 28, 1997
(Cyril J. Yansouni)
/s/ Karen Blasing Corporate Controller March 28, 1997
(Karen Blasing) (Principal Accounting Officer
</TABLE>
$61,500,000
PURCHASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION,
("BNPLC")
AND
INFORMIX CORPORATION,
("Informix")
EFFECTIVE AS OF JANUARY 6, 1997
(Freedom Circle Property)
PURSUANT TO AND AS MORE PARTICULARLY PROVIDED IN PARAGRAPH 17 OF THIS
AGREEMENT, THE LEASE REFERENCED HEREIN AND THIS PURCHASE AGREEMENT
ARE TO CONSTITUTE, FOR INCOME TAX PURPOSES ONLY, A FINANCING
ARRANGEMENT OR CONDITIONAL SALE. AS PROVIDED IN PARAGRAPH 17 OF THIS
AGREEMENT, BNPLC AND INFORMIX EXPECT THAT INFORMIX (AND NOT BNPLC)
SHALL BE TREATED AS THE TRUE OWNER OF THE PROPERTY FOR INCOME TAX
PURPOSES, THEREBY ENTITLING INFORMIX (AND NOT BNPLC) TO TAKE
DEPRECIATION DEDUCTIONS AND OTHER TAX BENEFITS AVAILABLE TO THE OWNER.
TABLE OF CONTENTS
Page
1. Definitions 1
"Applicable Purchaser" 1
"Deposit Taker Losses" 1
"Designated Sale Date" 1
"Direct Payments to Participants" 2
"Fair Market Value" 2
"Purchase Price" 2
"Remarketing Notice" 2
"Required Documents" 2
"Shortage Amount" 2
2. Informix's Options and Obligations on the Designated Sale Date 3
(a) Choices 3
(b) Election by Informix 3
(c) Termination of Informix's Option To Purchase 4
(d) Payment to BNPLC 4
(e) Effect of Options on Subsequent Title Encumbrances 4
3. Terms of Conveyance Upon Purchase 5
4. Survival of Informix's Obligations 5
(a) Status of this Agreement 5
(b) Remedies Under the Lease and the Environmental Indemnity 6
5. Remedies Cumulative 6
6. No Implied Waiver 6
7. Attorneys' Fees and Legal Expenses 6
8. Estoppel Certificate 7
9. Notices 7
10. Severability 9
11. Entire Agreement 9
12. Paragraph Headings 9
13. Gender and Number 9
14. GOVERNING LAW 9
15. Successors and Assigns 9
16. WAIVER OF JURY TRIAL 9
17. Income Tax Reporting 10
18. Security for Informix's Obligations; Return of Collateral and
Escrowed Proceeds 11
19. Security for BNPLC's Obligations 11
20. Not a Partnership, Etc 11
Exhibits and Schedules
Exhibit A Legal Description
Exhibit B Grant Deed
Exhibit C Preliminary Change of Ownership Form
Exhibit D Bill of Sale and Assignment
Exhibit E Acknowledgement and Disclaimer
Exhibit F Documentary Transfer Tax Request
Exhibit G Secretary's Certificate
Exhibit H Instruction Letter to Title Insurer
Exhibit I Certificate Concerning Tax Withholding
Exhibit J Indemnity for Prohibited Encumbrances
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement") is made as of January 6,
1997, by INFORMIX CORPORATION, a Delaware corporation ("Informix") 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 Informix pursuant to that certain Lease Agreement
(as from time to time supplemented, amended or restated, the "Lease")
between Informix and BNPLC dated as of the date hereof. (The land
described in Exhibit A and any and all other real or personal property
from time to time covered by the Lease and included within the "Leased
Property" as defined therein are hereinafter collectively referred to as
the "Property".)
B. BNPLC is also concurrently herewith receiving a separate
environmental indemnity from Informix pursuant to an Environmental
Indemnity Agreement (as from time to time supplemented, amended or
restated, the "Environmental Indemnity") between Informix and BNPLC
dated as of the date hereof.
C. As a condition to BNPLC's acquisition of any of the land
described in Exhibit A, BNPLC requires the agreements of Informix, on
and subject to the terms and conditions set out herein, to protect BNPLC
against certain losses that BNPLC may suffer if (1) the value of the
Property covered from time to time under the Lease is or becomes less
than BNPLC's investment in such Property.
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 "BNPLC", "Environmental
Indemnity", "Informix", "Property" and "Lease" 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 Informix to
purchase the interest of BNPLC in the Property as provided in Paragraph
2(a)(ii) below.
"Deposit Taker Losses" shall have the meaning assigned to it in the
Pledge Agreement.
"Designated Sale Date" means the earlier of:
(1) December 31, 1998.
(2) the date specified as the effective date of termination of the Lease
in any notice to BNPLC given by Informix pursuant to Paragraph 2 of the
Lease;
(3) any Business Day designated by BNPLC in a written notice given by
BNPLC to Informix when an Event of Default by Informix is continuing,
provided the notice is given by BNPLC at least thirty (30) days before
the Business Day so designated; or
(4) any Business Day designated by Informix in a written irrevocable and
unconditional notice given by Informix to BNPLC pursuant to the last
sentence of subparagraph 13(a) of the Lease (which concerns the right of
Informix to cure certain Events of Default by delivering such a notice);
provided, the Business Day so designated by Informix must be no earlier
than sixty (60) days after the date of such notice, unless an Event of
Default has occurred and is continuing on the date of such notice, in
which case the Business Date so designated must be no earlier than
fifteen (15) days after the date of such notice and no later than thirty
(30) days after the date of such notice.
If BNPLC sends a notice to Informix pursuant to the preceding clause (3)
properly designating a Designated Sale Date, and Informix sends a notice
to BNPLC pursuant to the preceding clause (2) or clause (4) properly
designating a different Designated Sale Date, the earlier of the two
dates so designated shall be the "Designated Sale Date" hereunder
regardless of which notice was first sent.
"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
Informix 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 Informix has maintained the Property
in compliance with the Lease and all Applicable Laws [including
Environmental Laws]; that Informix 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 Informix
has repaired and restored the Property after any damage following fire
or other casualty to the extent required by the Lease; that Informix has
restored the remainder of the Property after any partial taking by
eminent domain to the extent required by the Lease; that Informix 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; 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 Informix has cured any
title defects affecting the Property, 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.
"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.
"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 Informix, rather
than by the Applicable Purchaser, pursuant to clause 2(a)(ii) below.
2. Informix's Options and Obligations on the Designated Sale Date.
(a) Choices. On the Designated Sale Date, regardless of whether an
Event of Default shall have occurred and be continuing, Informix 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 set by
Informix, but in no event shall Informix set a net cash price below
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, pursuant to the
preceding sentence Informix sets a net cash price below fifteen percent
(15%) of Stipulated Loss Value and below the Purchase Price, BNPLC may
elect to keep the Property and any Escrowed Proceeds rather than sell
to the Applicable Purchaser, in which case Informix 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, Informix 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 Informix 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 Informix,
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 Informix to BNPLC,
Informix 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, Informix shall pay
interest on the past due amount computed at the Default Rate from the
Designated Sale Date. However, Tenant shall be entitled to a reduction
of the interest required by the preceding sentence equal to the Base
Rent, if any, paid by Tenant as provided in Paragraph 17 of the Lease
for any holdover period after the Designated Sale Date.
(b) Election by Informix. Informix 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:
(i) 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, Informix must, unless
Informix 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 Informix 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 Informix 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 Informix 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 clauses (2), (3) or (4) of the
definition of Designated Sale Date above) Informix 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.
(ii) To give BNPLC the opportunity to prepare the Required Documents
before the Designated Sale Date, Informix 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 Informix fails to so specify an Applicable Purchaser, Informix
shall be deemed to have irrevocably elected to satisfy the obligations
set forth in clause (i) of Paragraph 2(a).
(c) Termination of Informix's Option To Purchase. Without limiting
BNPLC's right to require Informix to satisfy the obligations imposed by
Paragraph 2(a), Informix shall have no further option hereunder to
purchase the Property if either:
(i) Informix shall have elected to satisfy its obligations under clause
(ii) of Paragraph 2(a) on the Designated Sale Date and BNPLC shall have
elected to keep the Property in accordance with clause (ii) of Paragraph
2(a); or
(ii) Informix shall have failed on the 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 the Designated Sale Date, Informix 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 Informix and, if applicable, by the
Applicable Purchaser must be paid directly to BNPLC, and no payment on
behalf of or for the account of BNPLC 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 Informix must pay all amounts then due to BNPLC under the Lease.
BNPLC will remit any excess amounts due Informix 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 Informix that any conveyance of the Property to
Informix 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 (as defined in the Lease) 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 Informix hereby. Further,
Informix 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 actual or attempted prior
conveyance or assignment by BNPLC, voluntary or otherwise, of any right
or interest in this Agreement or the Property; neither Informix nor any
Applicable Purchaser shall be responsible for the proper distribution or
application of any such payments by BNPLC; and any such payment to BNPLC
shall discharge the obligation of Informix to cause such payment to be
made to all Persons claiming an interest in such payment.
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), (A) deliver Escrowed Proceeds, if any, and (b) convey the
interest in the Property received by BNPLC pursuant to the Existing
Contract (save and except any interest in or any part of the Property
previously taken by eminent domain) by grant deed to Informix 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 then due BNPLC or
that may thereafter become due to BNPLC under the Lease, the
Environmental Indemnity or this Agreement 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 Applicable Purchaser or
Informix , 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 Informix 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 Informix 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, (8) a
certificate concerning tax withholding in the form attached as Exhibit
I, and (9) if applicable, an Indemnity for Prohibited Encumbrances in
the form attached hereto as Exhibit J. The Indemnity for Prohibited
Encumbrances described in the preceding sentence shall be required if,
but only if, before the other Required Documents are tendered by BNPLC
in accordance with this Agreement, Informix shall have identified,
provided a written list to BNPLC of, and been unable to obtain a
commitment for title insurance against, any title encumbrances that
Informix believes in good faith may constitute Prohibited Encumbrances
and that, if valid, would constitute Prohibited Encumbrances. Any such
Indemnity will be completed by attaching a list of such identified
encumbrances as Annex B thereto.
4. Survival of Informix's Obligations.
(a) Status of this Agreement. Except as expressly provided herein,
this Agreement shall not terminate, nor shall Informix or BNPLC or any
of their successors or assigns have any right to terminate this
Agreement, nor shall Informix be entitled to any reduction of the
Purchase Price hereunder, nor shall the obligations of Informix or BNPLC
hereunder (including the obligations of Informix 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 Informix'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 Informix or any
party claiming under Informix by paramount title or otherwise (provided,
if Informix is wrongfully evicted by BNPLC or by any third party
exercising its rights under a Prohibited Encumbrance, then Informix will
have the remedies described in the last sentence of this Paragraph), (v)
Informix'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 Informix
hereunder (including Informix'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, subject only to the tender by BNPLC
of Required Documents and of any Escrowed Proceeds (if such tender is
not excused because of an election by BNPLC to keep the Property under
Paragraph 2(a)(ii)), 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 Informix hereunder shall continue
unaffected by any breach of this Agreement by BNPLC. However, nothing
in this subparagraph, nor the performance without objection by Informix
of its obligations hereunder, shall be construed as a waiver by Informix
of any right Informix may have at law or in equity, following (A) any
failure by BNPLC to tender any Escrowed Proceeds or a grant deed and the
other Required Documents as required by Paragraph 3 (if such tender is
not excused because of an election by BNPLC to keep the Property under
Paragraph 2(a)(ii)) upon the tender by Informix 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, or (B) any failure by BNPLC to remove all Prohibited
Encumbrances before conveying the Property pursuant to this Agreement,
(i) to recover monetary damages proximately caused by such failure of
BNPLC if BNPLC does not cure the failure within thirty (30) days after
Informix demands a cure by written notice to BNPLC, or (ii) to obtain a
decree compelling specific performance of BNPLC's obligation hereunder.
(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 Informix of its liabilities and obligations hereunder, all
of which shall survive the exercise of remedies under the Lease and
Environmental Indemnity. Informix acknowledges that the consideration
for this Agreement is separate and independent of the consideration for
the Lease and the Environmental Indemnity, and Informix's obligations
hereunder shall not be affected or impaired by any event or circumstance
that would excuse Informix 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. Informix 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 Informix 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 Informix 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: Informix (Freedom Circle Property)
or at such other place and in such other manner as BNPLC may designate
in a notice to Informix (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 Informix pursuant to the last sentence of clause
(ii) of Paragraph 2(a) shall be paid to Informix in immediately
available funds by wire by wire transfer to: Informix Software, Inc.,
Account No.: 12330-09815, Bank of America, 1850 Gateway Boulevard,
Concord, California 94520, ABA#: 121000358; or as Informix may otherwise
direct by written notice sent to Agent in accordance herewith (provided
Informix will not unreasonably designate a method of payment other than
wire transfer).
(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 Rafael Lumanlan
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 Informix:
INFORMIX CORPORATION
4100 Bohannon Drive
Menlo Park , California 94025
Attn: Treasurer
Telecopy: (415) 926-6564
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill
Palo Alto, California 94304-1050
Attention: Real Estate Department/BOB
Telecopy: (415) 493-6811
10. Severability. Each and every covenant and agreement of Informix
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 Informix hereunder, to the maximum extent possible, shall be deemed
to be separate, independent and in addition to, not in lieu of, the
obligations of Informix 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
WITHOUT REGARD TO CONFLICTS OR CHOICE OF LAWS.
15. Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon Informix and BNPLC and their
respective permitted successors and assigns and shall inure to the
benefit of Informix and BNPLC and all permitted transferees, mortgagees,
successors and assignees of Informix and BNPLC with respect to the
Property; provided, that the rights of BNPLC hereunder shall not pass to
Informix 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 and the other Purchase Documents
(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, the other Purchase Documents 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, the other Purchase Documents and the Lease on and subject to
the express terms set out herein and therein, BNPLC shall thereby be
released from any further obligations hereunder or thereunder, and
Informix will look solely to each successor in interest of BNPLC for
performance of such obligations.
16. WAIVER OF JURY TRIAL. BNPLC AND INFORMIX 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. Informix 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. Informix 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. Income Tax Reporting. BNPLC and Informix intend this Agreement and
the Lease to have a form for income taxes which is different than the
form of this Agreement and the Lease for other purposes, and thus the
parties acknowledge and agree as follows:
(i) For purposes of determining their respective federal, state and
local income tax obligations, BNPLC and Informix believe and intend that
this Agreement and the Lease constitute a financing arrangement or
conditional sale. Both BNPLC and Informix agree to report this
Agreement and the Lease as a financing arrangement or conditional sale
on their respective income tax returns (the "Required Reporting"),
unless such Required Reporting is challenged in writing by the Internal
Revenue Service or another governmental authority with jurisdiction (a
"Tax Challenge"). Consistent with the foregoing, BNPLC and Informix
expect that Informix (and not BNPLC) shall be treated as the true owner
of the Property for income tax purposes, thereby entitling Informix (and
not BNPLC) to take depreciation deductions and other tax benefits
available to the owner. Informix shall also report all interest earned
on Escrowed Proceeds or any collateral pledged pursuant to the Purchase
Documents as Informix's income for federal, state and local income tax
purposes. REFERENCES IN THIS AGREEMENT OR IN THE LEASE TO A "LEASE" OF
THE "PROPERTY" ARE NOT INTENDED FOR INCOME TAX PURPOSES TO REFLECT THE
INTENT OF BNPLC OR INFORMIX AS TO THE FORM OF THE TRANSACTIONS COVERED
BY, OR THE PROPER CHARACTERIZATION OF, THIS AGREEMENT AND THE LEASE.
(ii) For all other purposes, including the determination of the
appropriate financial accounting for this Agreement and the
determination of their respective rights and remedies under state law,
BNPLC and Informix believe and intend that (i) the Lease constitutes a
true Lease, not a mere financing arrangement, enforceable in accordance
with its express terms (and neither this Paragraph 17 nor the provisions
referencing this Paragraph on the title page of this Agreement nor the
corresponding provisions in the Lease are intended to affect the
enforcement of any other provisions of this Agreement or the Lease) and
(ii) this Agreement shall constitute a separate and independent
contract, enforceable in accordance with the express terms and
conditions set forth herein. In this regard, Informix acknowledges that
Informix asked BNPLC to participate in the transactions evidenced by
this Agreement and the Lease as a landlord and owner of the Property,
not as a lender. Although other transactions might have been used to
accomplish similar results, Informix expects to receive certain material
accounting and other advantages through the use of a lease transaction.
Accordingly, and notwithstanding the Required Reporting for income tax
purposes, Informix cannot equitably deny that this Agreement and the
Lease should be construed and enforced in accordance with their
respective terms, rather than as a mortgage or other security device, in
any action brought by BNPLC to enforce this Agreement or the Lease.
In the event of a Tax Challenge, BNPLC and Informix shall each provide
to the other copies of all notices from the Internal Revenue Service or
any other governmental authority presenting the Tax Challenge. Further,
before changing from the Required Reporting because of a Tax Challenge,
BNPLC and Informix shall each consider in good faith any reasonable
suggestions received from the other party to this Agreement about an
appropriate response to the Tax Challenge; provided, however, that the
suggestions are set forth in a notice delivered no later than thirty
Business Days after the suggesting party is first notified of the Tax
Challenge; and, provided further, that when presented with a Tax
Challenge, BNPLC shall have the right to change from the Required
Reporting rather than participate in any litigation or other legal
proceeding against the Internal Revenue Service or another governmental
authority. In any event, Informix shall indemnify BNPLC and defend and
hold BNPLC harmless from and against all Losses imposed on or asserted
against or incurred by BNPLC by reason of, in connection with or arising
out of any such challenge or any resulting recharacterization of this
Agreement or the Lease required by the Internal Revenue Service or
another governmental authority, including any additional taxes that may
become due upon any sale under this Agreement, to the extent (if any)
that such Losses are not offset by tax savings to BNPLC resulting from
additional depreciation deductions or other tax benefits of the
recharacterization.
18. Security for Informix's Obligations; Return of Collateral and
Escrowed Proceeds. Informix'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 and
the custodian 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 Informix of Informix'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 Informix breach this Agreement. If Informix 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 Informix, require
the collateral agent and the custodian to immediately apply the proceeds
of any disposition of the Collateral (and any cash included in the
Collateral) to amounts then due hereunder from Informix. BNPLC shall be
entitled to return any Collateral not sold or used to satisfy the
obligations secured by the Pledge Agreement directly to Informix
notwithstanding any prior actual or attempted conveyance or assignment
by Informix, voluntary or otherwise, of any right to receive the same;
neither BNPLC not the collateral agent named in the Pledge Agreement
shall be responsible for the proper distribution or application by
Informix of any such Collateral returned to Informix; and any such
return of Collateral to Informix shall discharge any obligation of BNPLC
to deliver such Collateral to all Persons claiming an interest in the
Collateral. Further, BNPLC shall be entitled to deliver any Escrowed
Proceeds it holds on the Designated Sale Date directly to Informix or to
any Applicable Purchaser purchasing BNPLC's interest in the Property and
the Escrowed Proceeds pursuant to this Agreement notwithstanding any
prior actual or attempted conveyance or assignment by Informix,
voluntary or otherwise, of any right to receive the same; BNPLC shall
not be responsible for the proper distribution or application by
Informix or any Applicable Purchaser of any such Escrowed Proceeds paid
over to Informix or the Applicable Purchaser; and any such payment of
Escrowed Proceeds to Informix or an Applicable Purchaser shall discharge
any obligation of BNPLC to deliver the same to all Persons claiming an
interest therein.
19. Security for BNPLC's Obligations. To secure Informix'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 Informix a lien and
security interest against all rights, title and interests of BNPLC from
time to time in and to the Property. Informix may enforce such lien and
security interest judicially after any such breach by BNPLC, but not
otherwise. Informix 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,
Informix 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 Informix 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 INFORMIX. 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 INFORMIX.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Purchase Agreement as
of the date first above written.
"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 January 6, 1997]
"Informix"
INFORMIX CORPORATION, a Delaware corporation
By: /s/ Margaret Brauns
Margaret Brauns, Vice President and Treasurer
Exhibit A
Legal Description
REAL PROPERTY in the City of Santa Clara, County of Santa Clara, State
of California, described as follows:
PARCEL ONE:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map
being a resubdivision of lands of Marriott Corporation, Successor by
Merger to Fespar Enterprises, Inc., and Marriott Hotels, Inc., and
Stephen & Mary Dorcich as shown on Record of Survey recorded on January
12, 1977 in Book 386 of Maps, at Page 54, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on December 29, 1977 in Book
410 of Maps, at Pages 29 and 30.
PARCEL TWO:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map
being all of Parcel 3, as shown on that certain `Parcel Map', recorded
in Book 410 of Maps, at Pages 29 and 30, Santa Clara County Records",
which Map was filed for Record in the Office of the Recorder of the
County of Santa Clara, State of California, on May 18, 1979 in Book 442
of Maps, at Page 8.
PARCEL THREE:
All of Parcel 6, as shown upon that certain Map entitled, "Parcel Map
being a Resubdivision of lands of Marriott Corporation, Successor by
Merger to Fespar Enterprises, Inc., and Marriott Hotels, Inc., and
Stephen & Mary Dorcich as shown on Record of Survey recorded on January
12, 1977 in Book 386 of Maps, at Page 54, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on December 29, 1977 in Book
410 of Maps, at Pages 29 and 30.
PARCEL FOUR:
All of Parcel 1, as shown upon that certain Map entitled, "Parcel Map
being all of Parcel 3, as shown on that certain `Parcel Map', recorded
in Book 410 of Maps, at Pages 29 and 30, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on May 18, 1979 in Book 442
of Maps, at Page 8.
Exhibit B
CORPORATION GRANT DEED
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
NAME: [Informix Corporation or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
MAIL TAX STATEMENTS TO:
NAME: [Informix 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 [Informix or the Applicable Purchaser] 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 payable after the date hereof;
3. Liens, claims, easements, covenants, restrictions, encumbrances
and other matters of record;
4. Zoning ordinances and regulations;
5. Public Utility Drainage and Highway easements, whether or not of
record;
6. Rights of parties in possession; and
7. 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
REAL PROPERTY in the City of Santa Clara, County of Santa Clara, State
of California, described as follows:
PARCEL ONE:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map
being a resubdivision of lands of Marriott Corporation, Successor by
Merger to Fespar Enterprises, Inc., and Marriott Hotels, Inc., and
Stephen & Mary Dorcich as shown on Record of Survey recorded on January
12, 1977 in Book 386 of Maps, at Page 54, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on December 29, 1977 in Book
410 of Maps, at Pages 29 and 30.
PARCEL TWO:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map
being all of Parcel 3, as shown on that certain `Parcel Map', recorded
in Book 410 of Maps, at Pages 29 and 30, Santa Clara County Records",
which Map was filed for Record in the Office of the Recorder of the
County of Santa Clara, State of California, on May 18, 1979 in Book 442
of Maps, at Page 8.
PARCEL THREE:
All of Parcel 6, as shown upon that certain Map entitled, "Parcel Map
being a Resubdivision of lands of Marriott Corporation, Successor by
Merger to Fespar Enterprises, Inc., and Marriott Hotels, Inc., and
Stephen & Mary Dorcich as shown on Record of Survey recorded on January
12, 1977 in Book 386 of Maps, at Page 54, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on December 29, 1977 in Book
410 of Maps, at Pages 29 and 30.
PARCEL FOUR:
All of Parcel 1, as shown upon that certain Map entitled, "Parcel Map
being all of Parcel 3, as shown on that certain `Parcel Map', recorded
in Book 410 of Maps, at Pages 29 and 30, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on May 18, 1979 in Book 442
of Maps, at Page 8.
Annex B
Permitted Encumbrances
[NOTE: TO THE EXTENT THAT SPECIFIC ENCUMBRANCES (OTHER THAN "PROHIBITED
ENCUMBRANCES") 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. UCH ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES
APPROVED BY BNPLC AS "PERMITTED ENCUMBRANCES" FROM TIME TO TIME BECAUSE
OF INFORMIX'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 Lease referenced in the
Purchase Agreement pursuant to which this Deed is being delivered),
including general and special taxes and assessments, and including the
following matters to the extent the same are still valid and in force:
1. The fact that the ownership of said land does not include any
right of ingress or egress to or from the highway contiguous thereto,
said right having been relinquished by deed
From: Marriott Hotels, Inc., a Delaware Corporation
To: The City of Santa Clara, California, A Municipal Corporation
Recorded: May 28, 1974 in Book 0915 at Page 395 of Official Records of
Santa Clara County, California
Said matter affects: Parcels Two, Three and Four
2. An easement affecting the portion of said land and for the
purposes stated herein, and incidental purposes,
In Favor Of: City of Santa Clara, California, A Municipal
Corporation
Recorded: June 11, 1975 in Book B457 at Page 125 Official
Records of Santa Clara County, California
(A) For: Wire Clearance Easement and Right-of-Way
Affects: The Easterly 5 feet of Parcels One and Two
(B) For: Right-of-Way and Maintenance Easement
Affects: A 5 foot strip of land immediately adjacent to
the easement described in (A) above.
(C) For: Installing, constructing, maintaining,
repairing and replacing underground
anchors
Affects: As follows:
A strip of land 2 feet in width and 15 feet in length, the centerline of
said strip being a line bearing South 86 deg 06' 57" West from the
Northerly terminus of that course North 0 deg 02' 09" West 469.34 feet
in the boundary description of the thereinabove described Parcel 1, the
Easterly terminus being the Westerly line of thereinabove described
Parcel 3.A strip of land 2 feet in width and 15 feet in length, the
centerline of said strip being a line bearing South 86 deg 21' 20" West
from the Northerly terminus of that course North 7 deg 43' 57" West
400.11 feet in the boundary description of the thereinabove described
Parcel 1, the Easterly terminus being said Westerly line of thereinabove
described Parcel 3.
A strip of land 2 feet in width and 15 feet in length, the centerline of
said strip being a line bearing North 87 deg 41' 54" West from the
Northerly terminus of that course North 0 deg 26' 38" East 303.60 feet
in the boundary description of the thereinabove described Parcel 1, the
Easterly terminus being said Westerly line of thereinabove described
Parcel 3.
Said matter affects: Parcels One and Two
3. An easement affecting the portion of said land and for the
purposes stated herein, and incidental purposes,
In Favor Of: City of Santa Clara, California, A Municipal Corporation
For: Storm Drainage Easements
Recorded: July 14, 1977 in Book C992 at Page 1 Official Records of
Santa Clara County, California
Affects: As follows:
Beginning at a point on the Westerly line of the lands of the City of
Santa Clara, A Municipal Corporation, as said lands are described as
Parcel 1 in the Grant Deed, recorded on June 11, 1975 in Book B457
Official Records of Santa Clara County, at Page 125; said Point of
Beginning being distant on said Westerly line North 0 deg 02' 09" West
33.39 feet from the Northeast corner of Parcel 2 as described in last
said Grant Deed; thence from said Point of Beginning leaving last said
line South 79 deg 45' 07" West 168.22 feet to a point on the general
Northeasterly line of lands of the City of Santa Clara, A Municipal
Corporation, as described in the Grant Deed recorded on May 28, 1974 in
Book 0915 Official Records of Santa Clara, at Page 395; thence
Northwesterly along last said line North 70 deg 14' 53" West 865.00 feet
to a point thereon; thence leaving last said line North 19 deg 45' 07"
East 35.00 feet; thence Southeasterly along a line parallel with and
perpendicularly distant 35.00 feet Northeasterly from said general
Northeasterly line of lands of the City of Santa Clara South 70 deg 14'
53" East 855.62 feet to a point thereon; thence leaving said parallel
line North 79 deg 45' 07" East 165.14 feet to a point of the above
mentioned Westerly line of lands of the City of Santa Clara described in
Parcel 1; thence Southerly along last said line South 0 deg 02' 09" East
35.56 feet to the Point of Beginning.
Said matter affects: Parcels One, Two and Four
4. An easement affecting the portion of said land and for the
purposes stated herein, and incidental
purposes,
In Favor Of: City of Santa Clara, California, A Municipal Corporation
For: Landscaping Purposes
Recorded: July 14, 1977 in Book C992 at Page 12 Official Records of
Santa Clara County, California
Affects: The Easterly 10 feet of Parcel Three; the Northerly and
Westerly 10 feet of Parcel One; the Westerly 10 feet of Parcel Two; and
the Northerly 10 feet of Parcel Four
5. An easement affecting the portion of said land and for the
purposes stated herein, and incidental purposes,
In Favor Of: City of Santa Clara, California, A Municipal Corporation
For: Underground Electrical Easements
Recorded: July 14, 1977 in Book C992 at Page 22 Official Records of
Santa Clara County, California
Affects: The Northerly and Westerly 10 feet of Parcel One; the
Northerly 10 feet of Parcel Four; the Westerly 10 feet of Parcel Two;
and the Easterly 10 feet of Parcel Three
6. An unrecorded Agreement, affecting said land, for the purposes,
stated herein, upon the terms, covenants and conditions referred to therein,
between the parties named herein
For: Real Estate Purchase Agreement
Dated: October 27, 1977
Executed By: Marriott Corporation, a Delaware corporation and Intel
Corporation, a California corporation
Said Agreement, among other things, has conditions for special
Architectural Standards as to all parcels and conditions for the Sign
Parcel and Easements described in said agreement affecting Parcel Four.
7. An easement affecting the portion of said land for the purposes
stated herein, and incidental purposes, shown or dedicated by the Map
recorded in Book 410 of Maps of Santa Clara County, California, at Pages
29 and 30:
For: Proposed Sign Easement
Affects: The Southeasterly portion of Parcel Four
The above easement was reserved for the benefit of Marriot Corporation,
a corporation by Deed recorded December 30, 1977, in Book D380, Page 36,
of Official Records of Santa Clara County, California.
8. An easement affecting the portion of said land and for the
purposes stated herein, and incidental
purposes,
In Favor Of: City of Santa Clara, California, A Municipal Corporation
For: Street and Utility Purposes
Recorded: April 11, 1979 in Book E409 at Page 570 Official Records
of Santa Clara County, California
Affects: As follows:
All that certain Parcel of land lying within Parcel 6 of the Parcel Map
filed for Record December 29, 1977 in Book 410 of Maps, Pages 29 & 30,
in the Records of Santa Clara County, California, being more
particularly described as follows:
Beginning at the Northwest corner of said Parcel 6:
Thence North 89 deg. 44' 31" East, along the Northerly line of said
Parcel 6, a distance of 640.02 feet, to the Northeast corner of said
Parcel 6;
Thence, South 0 deg. 02' 19" West, along the Easterly line of said
Parcel 6, a distance of 35.86 feet to a non-tangent curve concave to the
Southwest having a radius of 35.00 feet and a beginning tangent bearing
North 30 deg. 57' 51" West;
Thence, Northwesterly along said curve, 19.01 feet, through a central
angle of 31 deg. 07' 02" to a non-tangent line parallel with and 23.00
feet Southerly of, measured at right angles to, said Northerly line of
said Parcel 6;
Thence, South 89 deg. 44' 31" West, along said parallel line a distance
of 620.80 feet, to the Westerly line of said Parcel 6;
Thence, North 17 deg. 37' 57" West along said Westerly line of Parcel 6,
a distance of 17.46 feet;
Thence, continuing along said Westerly line of Lot 6, North 0 deg. 02'
46" West, 6.34 feet, to the point of beginning.
Said matter affects: Parcel Three
9. An easement affecting the portion of said land for the purposes
stated herein, and incidental purposes, shown or dedicated by the Map
recorded in Book 442 of Maps of Santa Clara County, California, at Page 8
For: Underground Electrical Easement
Affects: The Westerly portion of Said Land
Said matter affects: Parcel Four
10. An easement affecting the portion of said land and for the
purposes stated herein, and incidental purposes,
In Favor Of: Marriott Corporation, a Delaware Corporation
For: Ingress and Egress to an existing sign
Recorded: May 18, 1979 in Book E506 at Page 74 Official
Records of Santa Clara County, California
Affects: As follows:
Commencing on the Southerly line of Freedom Circle at the Northerly
common corner of Parcels 3 and 4 as said circle and Parcels are shown on
that Parcel Map filed in Book 410 of Maps at Pages 29 and 30, Santa
Clara County Records; thence Northeasterly along the Southerly line of
Freedom Circle on a curve to the left with a radius of 336 feet through
a central angle of 0 deg 54' 9" an arc distance of 5.29 feet to the True
Point of Beginning of this description; thence from said True Point of
Beginning continuing along said curve to the left with a radius of 336
feet through a central angle of 3 deg 38' 21" an arc distance of 21.34
feet; thence South 15 deg 11' 58" West 134.19 feet; thence South 14 deg
48' 02" East 40.00 feet; thence South 15 deg 11' 58" West 233.34 feet;
thence South 70 deg 14' 53" East 207.87 feet to the Westerly line of a
50 foot by 40 foot sign easement as shown on the above mentioned parcel
map; thence along the Westerly line of said 50 foot by 40 foot sign
easement, South 19 deg 45' 07" West 20.00 feet to the Northerly line of
a 35 foot wide storm drainage easement as shown on the above mentioned
parcel map; thence along the Northerly line of said 35 foot wide storm
drainage easement North 70 deg 14' 53" West 226.21 feet; thence North 15
deg 11' 58" East 246.30 feet; thence North 14 deg 48' 02" West 40.00
feet; thence North 15 deg 11' 58" East 131.73 feet to the Point of
Beginning.
Said matter affects: Parcel Four
11. A Lease, affecting the premises herein stated, executed by and
between the parties named herein, for the term and upon the terms,
covenants and conditions therein provided,
Dated: July 17, 1978, amended on May 1, 1979 and on May
15, 1979
Lessor: John Arrillaga, Trustee, or his successor trustee,
under Trust Agreement dated July 20, 1977 (John
Arrillaga Separate Property Trust) as amended, and
Richard T. Peery, Trustee, or his successor
trustee, under Trust Agreement dated July 20, 1977
(Richard T. Peery Separate Property Trust)
Lessee: Pedro's Food Systems, Incorporated, a California
Corporation and Peter S. Ramirez, Individually and
Peter O. Ramirez, Individually, Jointly and
Severally
Term: Twenty-five (25) Years commencing on June 1, 1979
Disclosed by: Short Form of Lease
Recorded: May 18, 1979 in Book E506 At Page 82 Of Official
Records of Santa Clara County, California
Affects: Parcel Four
An Assignment of the Lessee's interest in said lease was
Executed By: Peter S. Ramirez, as individual (Ramirez), and
Pedro's Food Systems, Inc., a California
Corporation
To: Brookside Development, Inc., a California
Corporation ("BD"); and Michael R. Martinez, an
individual ("Martinez"), Pedro's Management
Systems, Inc., a California Corporation
Recorded: August 11, 1987 in Book K256 at Page 1114 of
Official Records of Santa Clara County, California
An un-recorded assignment of the lessee's interest in said lease was
Executed By: Brookside Development, Inc., a California
Corporation and Michael R. Martinez and Pedro's
Management Systems Inc.
To: Pedro Management Systems, Inc.
Dated: November 17, 1987
An un-recorded assignment of the lessee's interest in said lease was
Executed By: Pedro Management Systems, Inc.
To: Golden State Restaurants, Inc.
Dated: February 18, 1992
Memorandum of Amendment and Assignment of Ground Lease
Dated: February 18, 1992
Executed By: John Arrillaga, Trustee or his Successor Trustee,
under Trust Agreement dated July 20, 1977 ("John Arrillaga Separate
Property Trust"), as amended and Richard T. Peery, Trustee or
his Successor Trustee, under Trust Agreement dated July 20,
1977 ("Richard T. Peery Separate Property Trust") and Golden
State Restaurants, Inc.
Recorded:
February 20, 1992 in Book M054 at Page 0873 of Official
Records of Santa Clara County, California
No representation is made as to the present ownership of said leasehold
or matters affecting the rights or interests of the lessor or lessee arising
out of or occasioned by said lease.
12. Release Agreement and Covenant Not to Sue executed and
acknowledged by Informix Corporation, a Delaware corporation
("Informix"), Peery Private Investment Company - WP, L.P., a California
limited partnership, as to an undivided 1/4 interest, Peery Public
Investment Company - WP, L.P., a California limited partnership, as to
an undivided 1/4 interest, and John Arrillaga, Trustee, or Successor
Trustee under Trust Agreement dated July 20, 1977 (The Arrillaga Family
Trust) as amended, as to an undivided 2/4 interest (collectively, "P/A")
and BNP Leasing Corporation, a Delaware corporation ("BNP") to be filed
for record in the Official Records of Santa Clara County, California.
13. Agreement Containing Covenants Running with the Land executed
and acknowledged by Informix, P/A and BNP to be filed for record in the
Official Records of Santa Clara County, California.
EXHIBIT C
PRELIMINARY CHANGE OF OWNERSHIP REPORT (uncompleted form)
EXHIBIT D
BILL OF SALE, ASSIGNMENT OF CONTRACT
RIGHTS AND INTANGIBLE ASSETS
Reference is made to that certain ______________ dated _______, 1996
(the "Agreement") between Informix Corporation, a __________ Corporation,
and _____________________, a ______________ ("Prior Owner"), pursuant to
which Informix Corporation named BNP LEASING CORPORATION ("Assignor") as
its designee and Prior Owner conveyed to Assignor the real property
described in Annex A attached hereto (the "Property).
Assignor hereby sells, transfers and assigns unto [INFORMIX 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 Prior Owner
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 Escrowed Proceeds, as defined in that certain Purchase
Agreement between Assignor and Informix Corporation dated as of January 6,
1997 (the "Purchase Agreement") (pursuant to which this document is being
delivered), and 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 the Purchase
Agreement, (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 any Prohibited Encumbrances (as defined in the
Lease described in the Purchase Agreement referenced above), but not
otherwise.
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:
[INFORMIX, OR THE APPLICABLE PURCHASER], a _________ corporation
By:________________________
Its:_______________________
ANNEX A
Legal Description
REAL PROPERTY in the City of Santa Clara, County of Santa Clara, State
of California, described as follows:
PARCEL ONE:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map
being a resubdivision of lands of Marriott Corporation, Successor by
Merger to Fespar Enterprises, Inc., and Marriott Hotels, Inc., and
Stephen & Mary Dorcich as shown on Record of Survey recorded on January
12, 1977 in Book 386 of Maps, at Page 54, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on December 29, 1977 in Book
410 of Maps, at Pages 29 and 30.
PARCEL TWO:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map
being all of Parcel 3, as shown on that certain `Parcel Map', recorded
in Book 410 of Maps, at Pages 29 and 30, Santa Clara County Records",
which Map was filed for Record in the Office of the Recorder of the
County of Santa Clara, State of California, on May 18, 1979 in Book 442
of Maps, at Page 8.
PARCEL THREE:
All of Parcel 6, as shown upon that certain Map entitled, "Parcel Map
being a Resubdivision of lands of Marriott Corporation, Successor by
Merger to Fespar Enterprises, Inc., and Marriott Hotels, Inc., and
Stephen & Mary Dorcich as shown on Record of Survey recorded on January
12, 1977 in Book 386 of Maps, at Page 54, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on December 29, 1977 in Book
410 of Maps, at Pages 29 and 30.
PARCEL FOUR:
All of Parcel 1, as shown upon that certain Map entitled, "Parcel Map
being all of Parcel 3, as shown on that certain `Parcel Map', recorded
in Book 410 of Maps, at Pages 29 and 30, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on May 18, 1979 in Book 442
of Maps, at Page 8.
EXHIBIT E
Acknowledgment of Disclaimer of Representations and Warranties
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
(this "Certificate") is made as of ___________________, ____, by
[INFORMIX 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 Misconduct of
BNPLC or any Participant. For purposes hereof, "Misconduct" shall have
the meaning assigned to it the Lease Agreement between BNPLC and
Informix Corporation dated January 6, 1997. Such Lease Agreement is
referenced in the Purchase Agreement of even date therewith between
BNPLC and Informix Corporation, pursuant to which the Conveyancing
Documents are being delivered.
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
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 , .
[signature]
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Purchase Agreement (herein called the
"Purchase Agreement") dated as of January 6, 1997, by and between BNP
Leasing Corporation (the "Corporation") and [INFORMIX 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 [Informix 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 [Informix 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 J
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement") is made as of
_________________, _____, by INFORMIX CORPORATION, a Delaware
corporation ("Purchaser") [OR THE APPLICABLE PURCHASER] and BNP LEASING
CORPORATION, a Delaware corporation ("Seller") and ________________________
("Title Company").
R E C I T A L S
A. Purchaser is acquiring the land described in Annex A attached
hereto and any improvements located thereon (the "Property") pursuant to
the terms and conditions of that certain Purchase Agreement dated
January 6, 1997 by between Seller and Purchaser [or Informix
Corporation] (the "Purchase Agreement").
B. In connection with its acquisition of the Property, Seller has
been notified as contemplated by the Purchase Agreement that the matters
described in Annex B attached hereto (the "Relevant Encumbrances") have
been identified as encumbrances upon title to the Property and that such
matters, to the extent valid, constitute Prohibited Encumbrances as
defined in the Lease referenced in the Purchase Agreement.
C. Because of such notice to Seller, Seller is required by the
Purchase Agreement to tender this Indemnity Agreement to Purchaser.
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:
Seller must promptly remove any of the Relevant Encumbrances that
constitute "Prohibited Encumbrances" (which for purposes of this
Indemnity Agreement shall have the meaning assigned to it in the
Purchase Agreement by reference to a Lease Agreement described therein).
Seller must also pay, indemnify and hold harmless Purchaser, the Title
Company, the Purchaser's successors and assigns as to the Property and
the Title Company's successors and assigns as to any title insurance
policy issued to Purchaser by the Title Company covering the Property
from and against any and all liabilities, damages, claims, actions,
judgments, costs and expenses (including, without limitation, reasonable
attorneys' fees) caused by Seller's failure to promptly remove any of
the Relevant Encumbrances that constitute Prohibited Encumbrances.
Nothing herein shall be construed as an admission by Seller that
any of the Relevant Encumbrances do constitute Prohibited Encumbrances
or as imposing a duty upon Seller to remove or defend against claims
arising out of any Relevant Encumbrances that do not constitute
Prohibited Encumbrances. Nothing herein contained shall limit
Purchaser's rights or remedies under the Purchase Agreement because of
any failure by BNPLC to remove all Prohibited Encumbrances before
conveying the Property.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES.
SELLER, PURCHASER AND THE TITLE COMPANY EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER DOCUMENT, OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT
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. Purchaser, Seller and the Title Company 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. Purchaser, Seller and the Title Company 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 OR THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial
by the court.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"Seller"
BNP LEASING CORPORATION, a Delaware corporation
By:____________________________
Lloyd G. Cox, Vice President
"Purchaser"
INFORMIX CORPORATION, a Delaware corporation
By:_____________________________
Name: ______________________
Title: ______________________
"Title Company"
________________________________, a
________________________________
By:
Name: ______________________
Title: ______________________
ANNEX A
Legal Description
REAL PROPERTY in the City of Santa Clara, County of Santa Clara, State
of California, described as follows:
PARCEL ONE:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map
being a resubdivision of lands of Marriott Corporation, Successor by
Merger to Fespar Enterprises, Inc., and Marriott Hotels, Inc., and
Stephen & Mary Dorcich as shown on Record of Survey recorded on January
12, 1977 in Book 386 of Maps, at Page 54, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on December 29, 1977 in Book
410 of Maps, at Pages 29 and 30.
PARCEL TWO:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map
being all of Parcel 3, as shown on that certain `Parcel Map', recorded
in Book 410 of Maps, at Pages 29 and 30, Santa Clara County Records",
which Map was filed for Record in the Office of the Recorder of the
County of Santa Clara, State of California, on May 18, 1979 in Book 442
of Maps, at Page 8.
PARCEL THREE:
All of Parcel 6, as shown upon that certain Map entitled, "Parcel Map
being a Resubdivision of lands of Marriott Corporation, Successor by
Merger to Fespar Enterprises, Inc., and Marriott Hotels, Inc., and
Stephen & Mary Dorcich as shown on Record of Survey recorded on January
12, 1977 in Book 386 of Maps, at Page 54, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on December 29, 1977 in Book
410 of Maps, at Pages 29 and 30.
PARCEL FOUR:
All of Parcel 1, as shown upon that certain Map entitled, "Parcel Map
being all of Parcel 3, as shown on that certain `Parcel Map', recorded
in Book 410 of Maps, at Pages 29 and 30, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on May 18, 1979 in Book 442
of Maps, at Page 8.
ANNEX B
Relevant Encumbrances
[This Annex is to be completed by a list of possible Prohibited
Encumbrances identified by Informix and against which Informix has not
been able to obtain title insurance.]
$61,500,000
LEASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION,
AS LANDLORD
AND
INFORMIX CORPORATION,
AS TENANT
EFFECTIVE AS OF JANUARY 6, 1997
(Freedom Circle Property)
PURSUANT TO AND AS MORE PARTICULARLY PROVIDED IN SUBPARAGRAPH 18.(l) OF
THIS LEASE, THIS LEASE AND THE PURCHASE AGREEMENT REFERENCED HEREIN
ARE TO CONSTITUTE, FOR INCOME TAX PURPOSES ONLY, A FINANCING
ARRANGEMENT OR CONDITIONAL SALE. AS PROVIDED IN SUBPARAGRAPH 18.(l) OF
THIS LEASE, LANDLORD AND TENANT EXPECT THAT TENANT (AND NOT LANDLORD)
SHALL BE TREATED AS THE TRUE OWNER OF THE PROPERTY FOR INCOME TAX
PURPOSES, THEREBY ENTITLING TENANT (AND NOT LANDLORD) TO TAKE
DEPRECIATION DEDUCTIONS AND OTHER TAX BENEFITS AVAILABLE TO THE OWNER.
TABLE OF CONTENTS
Page
1. Definitions 2
(a) Accounts 2
(b) Active Negligence 2
(c) Additional Rent 2
(d) Administrative Fee 2
(e) Affiliate 2
(f) Applicable Laws 2
(g) Applicable Purchaser 2
(h) Attorneys' Fees 3
(i) Banking Rules Change 3
(j) Base Rent 3
(k) Base Rent Date 3
(l) Base Rent Period 3
(m) Breakage Costs 3
(n) Business Day 3
(o) Capital Adequacy Charges 3
(p) Closing Costs 4
(q) Change of Control Event 4
(r) Code 4
(s) Collateral 4
(t) Collateral Percentage 4
(u) Debt 4
(v) Default 5
(w) Default Rate 5
(x) Designated Sale Date 5
(y) Effective Rate 5
(z) Environmental Cutoff Date 5
(aa) Environmental Indemnity 5
(bb) Environmental Laws 5
(cc) Environmental Losses 5
(dd) Environmental Report 6
(ee) ERISA 6
(ff) ERISA Affiliate 6
(gg) ERISA Termination Event 6
(hh) Escrowed Proceeds 6
(ii) Eurocurrency Liabilities 7
(jj) Eurodollar Rate Reserve Percentage 7
(kk) Event of Default 7
(ll) Excluded Taxes 7
(mm) Fair Market Value 7
(nn) Fed Funds Rate 7
(oo) Funding Advances 7
(pp) GAAP 8
(qq) Hazardous Substance 8
(rr) Hazardous Substance Activity 8
(ss) Impositions 8
(tt) Improvements 8
(uu) Indemnified Party 8
(vv) Initial Funding Advance 9
(ww) Landlord's Parent 9
(xx) LIBOR 9
(yy) Lien 9
(zz) Losses 9
(aaa) Misconduct 10
(bbb) Participant 10
(ccc) Participation Agreement 10
(ddd) Permitted Encumbrances 10
(eee) Permitted Hazardous Substance Use 10
(fff) Permitted Hazardous Substances 11
(ggg) Permitted Transfer 11
(hhh) Person 11
(iii) Plan 11
(jjj) Pledge Agreement 11
(kkk) Prime Rate 12
(lll) Prohibited Encumbrances 12
(mmm) Purchase Agreement 12
(nnn) Purchase Price 12
(ooo) Qualified Payments 12
(ppp) Remaining Proceeds 13
(qqq) Rent 13
(rrr) Responsible Financial Officer 13
(sss) Stipulated Loss Value 13
(ttt) Subsidiary 13
(uuu) Tenant's Knowledge 13
(vvv) Term 13
(www) Unfunded Benefit Liabilities 13
(xxx) Upfront Fee 14
(yyy) Other Terms and References 14
2. Term 14
3. Rental 15
(a) Base Rent 15
(b) Upfront Fee 15
(c) Administrative Fees 16
(d) Additional Rent 16
(e) Interest and Order of Application 16
(f) Net Lease 16
(g) Withholding Taxes 16
(h) No Demand or Setoff 17
4. Insurance and Condemnation Proceeds 17
5. No Lease Termination 19
(a) Status of Lease 19
(b) Waiver By Tenant 19
6. Purchase Documents and Environmental Indemnity 20
7. Use and Condition of Leased Property 20
(a) Use 20
(b) Condition 20
(c) Consideration of and Scope of Waiver 21
8. Other Representations, Warranties and Covenants of Tenant 21
(a) Financial Matters 21
(b) Existing Contract and Pedro's Ground Lease 21
(c) No Default or Violation 21
(d) Compliance with Covenants and Laws 22
(e) Environmental Representations 22
(f) No Suits 22
(g) Condition of Property 22
(h) Organization 23
(i) Enforceability 23
(j) Not a Foreign Person 23
(k) Omissions 23
(l) Existence 23
(m) Tenant Taxes 23
(n) Operation of Property 23
(o) Debts for Construction 24
(p) Impositions 25
(q) Repair, Maintenance, Alterations and Additions 25
(r) Insurance and Casualty 25
(s) Condemnation 25
(t) Protection and Defense of Title 26
(u) No Liens To Secure Payment or Performance on the Leased Property 27
(v) Books and Records 27
(w) Financial Statements; Required Notices; Certificates as to Default28
(x) Further Assurances 29
(y) Fees and Expenses; General Indemnification; Increased Costs; and
Capital Adequacy Charges 29
(aa) Permitted Encumbrances 31
(bb) Environmental 31
(z) Liability Insurance 31
(cc) Affirmative Financial Covenants 33
(dd) Negative Covenants 34
(i) Liens 34
(ii) Transactions with Affiliates 36
(iii) Mergers; Sales of Assets 36
(v) Change of Business 36
(ee) ERISA 37
9. Representations, Warranties and Covenants of Landlord 37
(a) Removal of Prohibited Encumbrances 37
(b) Actions Required of the Title Holder 37
(i) General Requirements. 37
(ii) Examples of Actions Tenant May Require. 38
(iii) Partial Release Provisions. 38
(c) No Default or Violation 40
(d) No Suits 40
(e) Organization 40
(f) Enforceability 40
(g) Existence 40
(h) Not a Foreign Person 40
(i) Estoppel Certificates. 40
(j) Compliance With the Pedro's Ground Lease and the Documents Executed
by Landlord at the Closing Under the Existing Contract 41
10. Assignment and Subletting 41
(a) Consent Required 41
(b) Standard for Landlord's Consent to Assignments and Certain Other
Matters 41
(c) Consent Not a Waiver 41
(d) Landlord's Assignment 41
11. Environmental Indemnification 42
(a) Indemnity 42
(b) Assumption of Defense 42
(c) Notice of Environmental Losses 42
(d) Rights Cumulative 43
(e) Survival of the Indemnity 43
12. Landlord's Right of Access 43
13. Events of Default 44
(a) Definition of Event of Default 44
(b) Remedies 45
(c) Enforceability 47
(d) Remedies Cumulative 47
(e) Waiver by Tenant 47
(f) No Implied Waiver 47
14. Default by Landlord 47
15. Quiet Enjoyment 48
16. Surrender Upon Termination 48
17. Holding Over by Tenant 48
18. Miscellaneous 49
(a) Notices 49
(b) Severability 50
(c) No Merger 50
(d) NO IMPLIED REPRESENTATIONS BY LANDLORD 50
(e) Entire Agreement 50
(f) Binding Effect 50
(g) Time is of the Essence 51
(h) Termination of Prior Rights 51
(i) Governing Law 51
(j) Waiver of a Jury Trial 51
(k) Not a Partnership, Etc 51
(l) Income Tax Reporting 51
Exhibits and Schedules
Exhibit A Legal Description
Exhibit B Encumbrance List
Exhibit C List of Environmental Reports
Exhibit D Covenant Compliance Certificate
LEASE AGREEMENT
This LEASE AGREEMENT (this "Lease"), made to be effective as of January
6, 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 ("Landlord"), and INFORMIX
CORPORATION, a Delaware corporation ("Tenant");
W I T N E S E T H T H A T:
WHEREAS, pursuant to a Purchase and Sale Agreement and Escrow
Instructions dated as of December ___, 1996 (the "Existing Contract")
between Tenant and Peery Private Investment Company - WP, L.P., a
California limited partnership, Peery Public Investment Company - WP,
L.P., a California limited partnership, and John Arrillaga, Trustee, or
Successor Trustee under Trust Agreement dated July 20, 1977 (The
Arrillaga Family Trust ) as amended (collectively, "Seller"), concerning
the land described in Exhibit A attached hereto (the "Land") and the
improvements on such Land, if any, Landlord is acquiring the Land and
any improvements thereon from Seller contemporaneously with the
execution of this Lease;
WHEREAS, in anticipation of Landlord's acquisition of the Land, any
improvements on the Land and other rights and interests hereinafter
described, Landlord and Tenant have reached agreement as to the terms
and conditions upon which Landlord is willing to lease the same to
Tenant, and by this Lease Landlord and Tenant desire to evidence such
agreement;
NOW, THEREFORE, in consideration of the rent to be paid and the
covenants and agreements to be performed by Tenant, as hereinafter set
forth, Landlord does hereby LEASE, DEMISE and LET unto Tenant for the
term hereinafter set forth the Land, together with:
(i) Landlord's interest in any and all buildings and improvements
now or hereafter erected on the Land, including, but not limited to, the
fixtures, attachments, appliances, equipment, machinery and other
articles attached to any such buildings and improvements (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 0.(a)(i) through
0.(a)(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 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".
In addition to conveying the leasehold in the Real Property and the
rights to use and enjoy any Personal Property as described above,
Landlord hereby assigns to Tenant for the term of this Lease all rights
of the lessor under the Ground Lease described in Exhibit B attached
hereto, pursuant to which the current lessee thereunder is operating a
Pedro's Restaurant (the "Pedro's Ground Lease"), including the right to
receive and collect directly from such lessee all rent required by the
Pedro's Ground Lease.
The Real Property, the Personal Property and the rights of the lessor
under the Pedro's Ground Lease 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 defined below) and to any other claims not
constituting Prohibited Encumbrances (as defined below).
The Leased Property is leased by Landlord to Tenant and is accepted and
is to be used and possessed by Tenant upon and subject to the following
terms, provisions, covenants, agreements and conditions:
1. Definitions. As used herein, the terms "Landlord," "Tenant,"
"Existing Contract," "Seller," "Land," "Improvements," "Real Property,"
"Personal Property," "Pedro's Ground Lease" and "Leased Property" shall
have the meanings indicated above and the terms listed immediately below
shall have the following meanings:
(a) Accounts. "Accounts" shall have the meaning assigned to it in
the Pledge Agreement.
(b) Active Negligence. "Active Negligence" of any Person (including
Landlord) means, and is limited to, the negligent conduct of activities
on the Leased Property by such Person or by others acting and authorized
to act on such Person's behalf 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.
(c) Additional Rent. "Additional Rent" shall have the meaning
assigned to it in subparagraph 3.(d) below.
(d) Administrative Fee. "Administrative Fee" shall have the meaning
assigned to it in subparagraph 3.(c).
(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 8.(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) 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
reasonable 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 reasonable 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.
(i) Banking Rules Change. "Banking Rules Change" means either: (1)
the introduction of or any change after the date hereof (other than any
change by way of imposition or increase of reserve requirements included
in the Eurodollar Rate Reserve Percentage) in any law or regulation, in
the generally accepted interpretation by the institutional lending
community of any law or regulation or in the interpretation of any law
or regulation asserted by any regulator, court or other governmental
authority or (2) the compliance with any new guideline or new request
after the date hereof from any central bank or other governmental
authority (whether or not having the force of law).
(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 the first Business Day
of every calendar month, beginning with February 3, 1997; provided, the
last Base Rent Date shall be December 31, 1998.
(l) Base Rent Period. "Base Rent Period" means a period for which
Base Rent must be paid under the Lease. The first Base Rent Period
shall begin on and include the date of this Lease and shall end on but
not include the February 3, 1997, the first Base Rent Date. Each
successive Base Rent Period shall (1) begin on and include the Base Rent
Date upon which the preceding Base Rent Period ends, and (2) end on but
not include the next Base Rent Date.
(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 or
maintain Funding Advances upon any application of a Qualified Payment,
any sale of the Leased Property pursuant to the Purchase Agreement or
any termination of this Lease by Tenant pursuant to Paragraph 2, if such
application, sale or termination 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 application, sale or
termination as compared to LIBOR used to determine the Effective Rate
then in effect. (However, if in connection with the application, sale
or termination, Landlord's Parent or the applicable Participant actually
receives a profit because of a corresponding liquidation or redeployment
of deposits held by it as Collateral, then such profit will be offset
against costs or expenses that would otherwise be charged as Breakage
Costs under this Lease.) Each determination by Landlord's 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 8.(y)(iv).(p) Closing Costs. "Closing
Costs" means the excess of $61,500,000 over the sums actually paid by
Landlord for or in connection with Landlord's acquisition of the Leased
Property (including the payment of amounts secured by any lien to which
the Real Property may be subject when it is conveyed to Landlord) at the
closing under the Existing Contract, which excess will be advanced by or
on behalf of Landlord to pay Attorneys' Fees and other costs 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 use such excess to pay expenses incurred by Landlord in
connection with the preparation and negotiation of such documents, the
remainder thereof will be advanced to Tenant, with the expectation that
Tenant shall use any such amount advanced for one or more of the
following purposes: (1) the payment or reimbursement of expenses
incurred by Tenant in connection with the preparation and negotiation of
this Lease, the Purchase Documents, the Environmental Indemnity and
related documents; (2) the payment or reimbursement of planning, design,
engineering and other expenses incurred by Tenant in connection with
activities required for the future development of the Leased Property by
Tenant, including (to the extent in accordance with the requirements and
limitations imposed by this Lease) subdivision, demolition and grading
activities, as appropriate; (3) the maintenance of the Leased Property;
(4) the payment of the Upfront Fee and the first Administrative Fee; (5)
the payment of Rents next due; the payment of Impositions; or (6) the
payment to BNP on any Base Rent Date of a Qualified Payments.
(q) Change of Control Event. "Change of Control Event"
means the occurrence of any merger or consolidation or sale of assets
involving Tenant or its Subsidiaries that is prohibited by subparagraph
8.(dd)(iii).
(r) Code. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(s) Collateral. "Collateral" shall have the meaning assigned to it
in the Pledge Agreement.
(t) Collateral Percentage. "Collateral Percentage" for each Base
Rent Period means one hundred percent (100%), which is the minimum
Collateral Percentage established by (and as defined in) the Pledge
Agreement; provided, however, for purposes of this Lease, the Collateral
Percentage for any Base Rent Period shall not exceed a fraction; the
numerator of which fraction shall equal the value (determined as
provided in the Pledge Agreement) of all Collateral (a) that is, on the
first day of such Base Rent Period, held by the Deposit Takers under
(and as defined in) the Pledge Agreement subject to a first priority,
perfected security interest and pledge in favor of Landlord and the
Participants under the Pledge Agreement, and (b) that is 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 Base Rent Period.
(u) 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 or to otherwise 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.
(v) 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.
(w) 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.
(x) Designated Sale Date. "Designated Sale Date" shall have the
meaning assigned to it in the Purchase Agreement.
(y) Effective Rate. "Effective Rate" means for each Base Rent
Period the per annum rate determined by adding (1) forty-seven and one-
half basis points (.475 of 1%), plus (2) the quotient derived by
dividing (A) LIBOR for such period, by (B) 100% minus the Eurodollar
Rate Reserve Percentage for such period. If LIBOR or the Eurodollar
Rate Reserve Percentage changes from Base Rent Period to Base Rent
Period, then the Effective Rate shall be automatically increased or
decreased, as the case may be, upon the commencement of such 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 Base Rent Period in accordance with the preceding sentences, then
the "Effective Rate" for that Base Rent 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.
(z) Environmental Cutoff Date. "Environmental Cutoff Date" means the
later of the dates upon which (i) this Lease terminates, (ii) Tenant
surrenders possession of the Leased Property or (iii) Tenant ceases to
have any leasehold or other interest in the Leased Property under this
Lease or otherwise.
(aa) 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
in accordance with its terms.
(bb) 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").
(cc) Environmental Losses. "Environmental Losses" means Losses
suffered or incurred by any Indemnified Party relating to or arising out
of, based on or as a result of: (i) any Hazardous Substance Activity
that occurs or is alleged to have occurred on or prior to the
Environmental Cutoff Date; (ii) any violation of Environmental Laws on
or prior to the Environmental Cutoff Date relating to the Leased
Property or to the ownership, use, occupancy or operation thereof; (iii)
any investigation, inquiry, order, hearing, action, or other proceeding
by or before any governmental or quasi-governmental agency or authority
in connection with any Hazardous Substance Activity that occurs or is
alleged to have occurred in whole or in part on or prior to the
Environmental Cutoff Date; or (iv) any claim, demand, cause of action or
investigation, or any action or other proceeding, whether meritorious or
not, brought or asserted against any Indemnified Party which 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.(cc), or any
allegation of any such matters. For purposes of determining whether
Losses constitute "Environmental Losses," as the term is used in this
Lease, any actual or alleged Hazardous Substance Activity or violation
of Environmental Laws relating to the Leased Property will be presumed
to have occurred prior to the Environmental Cutoff Date unless Tenant
establishes by clear and convincing evidence to the contrary that the
relevant Hazardous Substance Activity or violation of Environmental Laws
did not occur or commence prior to the Environmental Cutoff Date. Even
if Losses are incurred by or asserted against a particular Indemnified
Party after the Environmental Cutoff Date, to the extent that such
Losses would not have been incurred or asserted but for any matter
described in clauses (i), (ii) or (iii) of this subparagraph 1.(cc), or
an allegation of any such matter, such Losses will constitute
Environmental Losses.
(dd) Environmental Report. "Environmental Report" means,
collectively, the reports listed on Exhibit C attached hereto.
(ee) 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.
(ff) 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.
(gg) 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.
(hh) Escrowed Proceeds. "Escrowed Proceeds" means 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 sale of a Parcel pursuant to subparagraph
9.(b)(iii) or 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 as a Qualified Payment or as
reimbursement of Breakage 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 Breakage 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 Breakage 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.
(ii) 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.
(jj) Eurodollar Rate Reserve Percentage. "Eurodollar
Rate Reserve Percentage" means, for purposes of determining the
Effective Rate for any Base Rent 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 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.
(kk) Event of Default. "Event of Default" shall have the
meaning assigned to it in subparagraph 13.(a) below.
(ll) Excluded Taxes. "Excluded Taxes" means (1) all Federal, state
and local income taxes upon the Base Rent, the Upfront Fee, the
Administrative Fees and any interest paid to Landlord pursuant to
subparagraph 3.(e), and any additional compensation claimed by Landlord
pursuant to subparagraph 8.(y)(iv); (2) all federal, state and local
income taxes upon any amounts paid as reimbursement for or to satisfy
Losses incurred by Landlord under this Lease or otherwise to the extent
such taxes are offset by a corresponding reduction of Landlord's income
taxes because of Landlord's deduction of the reimbursed Losses from
Landlord's taxable income or because of any tax credits attributable
thereto; (3) any taxes imposed by any governmental authority outside the
United States; and (4) any transfer or change of ownership taxes
assessed because of Landlord's transfer or conveyance to any third party
of any rights or interests in this Lease, the Purchase Documents or the
Leased Property, but excluding any such taxes assessed because of any
Permitted Transfer.
For purposes of this definition, income taxes shall include without
limitation any income taxes (whether or not so designated) imposed under
the Code or California Bank and Corporation Tax Law as well as Texas
corporate franchise taxes.
(mm) Fair Market Value. "Fair Market Value" shall have the meaning
assigned to it in the Purchase Agreement.
(nn) 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.
(oo) Funding Advances. "Funding Advances" means the Initial Funding
Advance and any subsequent advances made by Landlord's Parent or any
other Participant to or on behalf of Landlord in replacement of or
renewal and extension of all or part of the Initial Funding Advance.
For example, if after the date hereof a new Participant advances funds
to or on behalf of Landlord to Landlord's Parent in repayment of all or
part of the Initial Funding Advance, such advance of funds by the new
Participant shall constitute a Funding Advance hereunder.
(pp) 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 8.(w) (except for changes
concurred in by Tenant's independent auditors).
(qq) 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 or
substance," "infectious waste," "toxic substance," "toxic pollutant," or
any other formulation intended to define, list or classify substances by
reason of deleterious properties addressed by Environmental Laws,
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.
(rr) Hazardous Substance Activity. "Hazardous Substance Activity"
means any actual, proposed or threatened use, storage, holding, 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 resulting
residual Hazardous Substance contamination in, on or under the Leased
Property. "Hazardous Substance Activity" also means any existence of
Hazardous Substances on the Leased Property that would cause the Leased
Property or the owner or operator thereof to be in violation of, or that
would 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.
(ss) Impositions. "Impositions" shall have the meaning assigned to
it in subparagraph 8.(p) below.
(tt) 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 and any
replacements, substitutions or restorations thereof.
(uu) Indemnified Party. "Indemnified Party" means each of (1)
Landlord and any of Landlord's permitted 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 the Applicable Purchaser), (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.
(vv) Initial Funding Advance. "Initial Funding Advance" means the
advance of $61,500,000 made by Landlord's Parent to or on behalf of
Landlord on or prior to the date of this Lease to cover the cost of
Landlord's acquisition of the Leased Property and Closing Costs.
(ww) Landlord's Parent. "Landlord's Parent" means Landlord's
Affiliate, Banque Nationale de Paris, a bank organized and existing
under the laws of France and any successors of such bank and such
Affiliates.
(xx) LIBOR. "LIBOR" means, for purposes of determining the
Effective Rate for each Base Rent 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 Base Rent 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 Base Rent Period, and (iii) for a period
of time equal or comparable to the Base Rent 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. If for any
reason Landlord's Parent determines that it is impossible or
unreasonably difficult to determine LIBOR with respect to a given Base
Rent 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 Base Rent Period for which Base
Rent is computed by reference to LIBOR, then "LIBOR" for that Base Rent
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.
(yy) 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.
(zz) 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. FOR PURPOSES OF DETERMINING THE
LIABILITY OF TENANT UNDER THE INDEMNITIES AND AGREEMENTS TO PAY OR
PROVIDE REIMBURSEMENT FOR LOSSES (INCLUDING, BUT NOT LIMITED TO
"ENVIRONMENTAL LOSSES") SET FORTH HEREIN OR IN THE OTHER DOCUMENTS
REFERENCED HEREIN, THE TERM "LOSSES" SHALL INCLUDE LOSSES, LIABILITIES,
DAMAGES, DEMANDS, CLAIMS, ACTIONS, JUDGMENTS, CAUSES OF ACTION,
ASSESSMENTS, FINES, PENALTIES, COSTS, AND OUT-OF-POCKET EXPENSES
INCURRED BY OR ASSERTED AGAINST ANY PARTICULAR INDEMNIFIED PARTY EVEN
WHEN CAUSED BY THE NEGLIGENCE OR STRICT LIABILITY OF THAT PARTICULAR OR
ANY OTHER INDEMNIFIED PARTY; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL
LOSSES, LIABILITIES, DAMAGES, DEMANDS, CLAIMS, ACTIONS, JUDGMENTS,
CAUSES OF ACTION, ASSESSMENTS, FINES, PENALTIES, COSTS, AND OUT-OF-
POCKET EXPENSES INCURRED BY OR ASSERTED AGAINST A PARTICULAR INDEMNIFIED
PARTY AND PROXIMATELY CAUSED BY (AND ATTRIBUTED BY ANY APPLICABLE
PRINCIPLES OF COMPARATIVE FAULT TO) MISCONDUCT OF THAT INDEMNIFIED PARTY
CONSTITUTE "LOSSES" OF SUCH INDEMNIFIED PARTY FOR PURPOSES OF THIS LEASE
AND THE OTHER DOCUMENTS REFERENCED HEREIN; AND PROVIDED, FURTHER, THAT
(EXCEPT AS USED IN THE DEFINITION OF "EXCLUDED TAXES" HEREIN) "LOSSES"
SHALL NOT IN ANY EVENT INCLUDE EXCLUDED TAXES.
(aaa) Misconduct. "Misconduct" of a Person means, and is limited
to: (1) if the Person is subject to the terms of this Lease or the
Purchase Documents, a breach by such Person of the express provisions of
this Lease or the Purchase Documents that continues beyond any period
for cure provided herein or therein, and (2) any Active Negligence or
wilful misconduct of such Person or its Affiliates or of the officers,
employees or employers of such Person or its Affiliates. Misconduct of
one Indemnified Party shall not be attributed to a second Indemnified
Party if the second Indemnified Party is not an Affiliate, officer,
employee or employer of the first. Negligence which does not constitute
Active Negligence shall not constitute Misconduct.
(bbb) 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 Participant is Landlord's Parent, but 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 shall qualify as a Participant for purposes of this Lease, the
Purchase Documents or any other agreement to which Informix is a party
unless, with Informix's prior written approval (such approval not to be
unreasonably withheld) 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.
(ccc) Participation Agreement. "Participation Agreement" means the
Participation Agreement dated the date hereof between Landlord and
Landlord's Parent, pursuant to which Landlord's Parent has agreed to
participate in certain risks and rewards to Landlord of this Lease and
the Purchase Documents, as such Participation Agreement may be extended,
supplemented, amended, restated or otherwise modified from time to time
in accordance with its terms.
(ddd) 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 that survived closing
thereunder, and (iii) any easement agreement or other document affecting
title to the Leased Property executed by Landlord pursuant to the
Existing Contract or pursuant to a document executed in accordance with
the Existing Contract or otherwise executed by Landlord at the written
request of or with the written consent of Tenant.
(eee) 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 any
Improvements permitted by this Lease or for the operation of the Leased
Property for the purposes expressly permitted under subparagraph 7.(a);
or
(2) include any disposal, discharge or other release of Hazardous
Substances in any manner that poses a significant risk of allowing 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 in a manner which requires a RCRA treatment, storage or
disposal facility permit, including but not limited to a landfill,
incinerator or other waste disposal facility.
(fff) 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 7.(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.
(ggg) 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 other
Participants in accordance with subparagraph 1.(bbb);
(2) 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 Documents 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.
(hhh) 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.
(iii) 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.
(jjj) 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 other
collateral 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.
(kkk) 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 either Bank of America National Trust & Savings Association 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.
(lll) Prohibited Encumbrances. "Prohibited Encumbrances" means, and
is limited to, Liens encumbering the Leased Property that are asserted
(1) other than as contemplated by this Lease or the Purchase Documents
by Landlord itself, (2) by third parties lawfully claiming through or
under Landlord (which for purposes of this Lease shall include any
judgment lien established against the Leased Property because of a
judgment rendered against Landlord and shall also include any lien
established against the Leased Property to secure past due Excluded
Taxes), or (3) by third parties claiming under a deed or other
instrument duly executed by Landlord; provided, however, Prohibited
Encumbrances shall not include (A) any Permitted Encumbrances
(regardless of whether claimed through or under Landlord), (B) this
Lease, the Purchase Documents or any other document executed by Landlord
contemporaneously with the execution of this Lease, (C) Liens which are
neither lawfully claimed through or under Landlord (as described above)
nor claimed under a deed or other instrument duly executed by Landlord,
(D) Liens claimed by, through or under Tenant, (E) Liens arising because
of Landlord's compliance or good faith attempt to comply with Applicable
Law, the Existing Agreement, subparagraph 9.(b) below or any request
made by Tenant, (F) Liens securing the payment of property taxes or
other amounts assessed against the Leased Property by any governmental
authority, other than to secure the payment of Excluded Taxes which
Landlord owes but has failed to pay or damages caused by (and attributed
by any applicable principles of comparative fault to) Landlord's own
Misconduct, or (G) Liens arising because of any breach by Tenant of this
Lease or the Purchase Documents.
(mmm) 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.
(bo) Purchase Documents. "Purchase Documents" means collectively the
Purchase Agreement and the Pledge Agreement.
(nnn) Purchase Price. "Purchase Price" shall have the meaning
assigned to it in the Purchase Agreement.
(ooo) Qualified Payments. "Qualified Payments" means any payment
designated as such and made by Tenant to Landlord as provided in the
definition of Closing Costs set forth above and 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 sale of a Parcel pursuant to subparagraph
9.(b)(iii) or 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, Breakage
Costs 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) 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 as provided in subparagraph
4.(c).
(ppp) Remaining Proceeds. "Remaining Proceeds" shall have the
meaning assigned to it in subparagraph 4.(a)(ii).
(qqq) Rent. "Rent" means the Base Rent and all Additional Rent.
(rrr) Responsible Financial Officer. "Responsible Financial
Officer" means the chief financial officer, the controller, the
treasurer or the assistant treasurer of Tenant.
(sss) Stipulated Loss Value. "Stipulated Loss Value" means the
amount computed from time to time in accordance with the formula
specified in this definition. Such amount shall equal the Initial
Funding Advance (i.e., $61,500,000), LESS the amount (if any) of
Qualified Payments paid to Landlord on or prior to such date. Thus, for
example, if a determination of Stipulated Loss Value is required under
subparagraph 3.(a) on the first day of the applicable Base Rent Period,
but a portion of the Leased Property has been condemned with the result
that $500,000 of net condemnation proceeds have been paid to Landlord
and retained by Landlord as Qualified Payments, then the Stipulated Loss
Value as of the date of the required determination shall be $61,000,000.
Under no circumstances will any payment of Base Rent or the Upfront Fee
or any Administrative Fee reduce Stipulated Loss Value.
(ttt) Subsidiary. "Subsidiary" means any corporation of which
Tenant 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.
(uuu) 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: Howard H.
Graham, Senior Vice President, Finance and Chief Financial Officer (with
respect to matters arising on or prior to December 31, 1996); Alan S.
Henricks, Senior Vice President, Finance and Chief Financial Officer (as
to matters arising after December 31, 1996); Margaret R. Brauns, Vice
President and Treasurer; David H. Stanley, Vice President, Legal
Corporate Services, General Counsel and Secretary; Karen Blasing,
Corporate Controller and Chief Accounting Officer; and Clive Merredew,
Director, Worldwide Real Estate and Facilities. 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.
(vvv) Term. "Term" shall have the meaning assigned to it in
Paragraph 2 below.
(www) 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.
(xxx) Upfront Fee. "Upfront Fee" shall have the meaning assigned to
it in subparagraph 3.(b).
(yyy) Other Terms and References. Words of any gender used in this
Lease shall be held and construed to include any other gender, and words
in the singular number shall be held to include the plural and vice
versa, unless the context otherwise requires. References herein to
Paragraphs, subparagraphs or other subdivisions shall refer to the
corresponding Paragraphs, subparagraphs or subdivisions of this Lease,
unless specific reference is made to another document or instrument.
References herein to any Schedule or Exhibit shall refer to the
corresponding Schedule or Exhibit attached hereto, which shall be made a
part hereof by such reference. All capitalized terms used in this Lease
which refer to other documents shall be deemed to refer to such other
documents as they may be renewed, extended, supplemented, amended or
otherwise modified from time to time, provided such documents are not
renewed, extended or modified in breach of any provision contained
herein or therein or, in the case of any other document to which
Landlord is a party or of which Landlord is an intended beneficiary,
without the consent of Landlord. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. The words
"this Lease", "herein", "hereof", "hereby", "hereunder" and words of
similar import refer to this Lease as a whole and not to any particular
subdivision unless expressly so limited. The phrases "this Paragraph"
and "this subparagraph" and similar phrases refer only to the Paragraphs
or subparagraphs hereof in which the phrase occurs. The word "or" is
not exclusive. Other capitalized terms are defined in the provisions
that follow.
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 December 31, 1998, 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 December 31, 1998, 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 thirty (30) 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 all accrued
unpaid Rent and any 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 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.
If Tenant or any other Applicable Purchaser purchases Landlord's
interest in the Leased Property pursuant to the Purchase Agreement, any
Base Rent for the Base Rent Period ending on the date of purchase (or if
the date of Purchase is not a Base Rent Date, then pro rated Base Rent
for the Base Rent Period which included the date of purchase) and all
outstanding Additional Rent shall be due on the Designated Sale Date 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) the Collateral Percentage for such Base Rent Period, times (C)
twenty two and one-half basis points (0.225 of 1%), 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) one minus the Collateral Percentage for such Base Rent Period,
times (C) the Effective Rate for such Base Rent Period, times (D) the
number of days in such Base Rent Period, divided by (E) three hundred
sixty (360).
Assume, only for the purpose of illustration: that a hypothetical Base
Rent Period contains exactly ninety (90) days; that prior to the first
day of such Base Rent Period a total of $31,500,000 of Qualified
Payments have been received by Landlord, leaving a Stipulated Loss Value
of $30,000,000 (the Initial Funding Advance of $61,500,000 less the
Qualified Payments of $31,500,000); that the Collateral Percentage for
such Base Rent Period is forty percent (40%); and that the Effective
Rate for the applicable Base Rent Period is 6%. Under such assumptions,
the Base Rent for the hypothetical Base Rent Period will equal:
$30,000,000 x 60% x 6% x 90/360, or $270,000, PLUS
$30,000,000 x 40% x .225% x 90/360, or $6,750 = $276,750
(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 November 15, 1996 from Landlord to
Tenant, as amended by a letter sent to Landlord on behalf of Tenant
dated December 2, 1996 (less the deposit already paid by Tenant pursuant
to that letter which will be applied against the Upfront Fee). The
Upfront Fee
shall represent Additional Rent for the first Base Rent Period.
(c) Administrative Fees. Upon execution and delivery of this Lease
by Landlord, and again on each anniversary of the date hereof prior to
the Designated Sale Date, Tenant shall pay Landlord an administrative
fee (an "Administrative Fee") as provided in the letter dated November
15, 1996 from Landlord to Tenant, as amended by a letter sent to
Landlord on behalf of Tenant dated December 2, 1996. Each payment of an
Administrative Fee shall represent Additional Rent for the Base Rent
Period during which it first becomes due.
(d) 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").
(e) 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.
(f) 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 during the Term, 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.(f), 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.
However, the preceding sentence shall not be construed to make Tenant
liable for (1) damages suffered by Landlord because of (and attributed
by any applicable principles of comparative fault to) its own
Misconduct, (2) Excluded Taxes, (3) withholding taxes permitted by
subsection 3.(g), (4) general overhead or internal administrative
expenses of Landlord, Landlord's Parent or any Participant, except to
the extent allowed by subparagraph 8.(y)(iii) because of changes
described in that subparagraph after the date of this Lease, or (5)
Environmental Losses for which Tenant is not responsible or required to
indemnify Landlord pursuant to Paragraph 11 or the other express
provisions of this Lease.
(g) Withholding Taxes. Subject to the provisions of this
subparagraph 3.(g), but notwithstanding anything else to the contrary in
this Lease, to the extent required by law Tenant may deduct United
States and California withholding taxes imposed as a way of collecting
or in lieu of Excluded Taxes on payments of the Upfront Fee,
Administrative Fees, Base Rent, any interest payable pursuant to
subparagraph 3.(e) or any additional compensation claimed by Landlord
pursuant to subparagraph 8.(y)(iv) (collectively, "Income Payments")
from Income Payments, without obligation to gross up, indemnify or
otherwise increase payments in consequence thereof. Such withholding
will be permitted if, but only if:
(i) in the case of withholding for Excluded Taxes imposed by the
United States, the Person entitled to receive Income Payments (whether
the original Landlord named herein or an assignee of the original
Landlord's rights hereunder, a "Payee") is not exempt from withholding
by reason of having been organized under the laws of the United States
or any State thereof, and such Person shall not have provided Tenant
with three (3) counterparts of each of the forms prescribed by the
Internal Revenue Service (Form 1001 or 4224, or successor forms, as the
case may be) claiming for Payee an exemption from federal withholding on
all Income Payments;
(ii) in the case of withholding for Excluded Taxes imposed by the
State of California, the Payee is not exempt from withholding by reason
of having been qualified to do business in California, and such Person
shall not have provided Tenant with three (3) counterparts of the forms
(if any) prescribed by the California taxing authorities claiming for
Payee an exemption from California withholding on all Income Payments;
(iii) at least thirty (30) days prior to any withholding from or
reduction of Income Payments, Tenant shall have notified the Payee that
Tenant believes the withholding is required and permitted by this
subparagraph; and
(iv) the withholding taxes on the Income Payments would have been
assessed even if the applicable taxing authorities had characterized the
transactions evidenced by this Lease and the Purchase Agreement as a
mere financing arrangement.
Any Payee exempt from withholding for Excluded Taxes imposed by the
United States by reason of having been organized under the laws of the
United States or any State thereof shall provide to Tenant statements
conforming to the requirements of Treasury Regulation 1.1441-5(b) or any
successor thereto (which statements may be made on a Form W-9). If
Tenant shall ever be required to pay Excluded Taxes that Landlord has
failed to pay when due because of Tenant's failure to withhold from
payments made under this Lease, Landlord shall reimburse Tenant for such
Excluded Taxes. Nothing in this subparagraph 3.(g) shall excuse Tenant
from its obligation under subparagraph 8.(y)(iii) to compensate Landlord
for increased costs attributable to any change in law relating to
withholding taxes after the date hereof.
(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.
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 8.(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 then applied as follows:
(i) First, such proceeds shall be used to reimburse Landlord for any
costs and expenses, including Attorneys' Fees, incurred in connection
with the collection of such proceeds.
(ii) Second, the remainder of such proceeds (the "Remaining
Proceeds"), shall be held by Landlord as Escrowed Proceeds and applied
to reimburse Tenant for the actual cost of the repair, restoration or
replacement of the Leased Property. However, any Remaining Proceeds not
needed for such purpose shall be applied by Landlord as Qualified
Payments, as provided in subparagraph 4.(c), after Tenant notifies
Landlord that they are not needed for repairs, restoration or
replacement.
(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 as the applicable repair, restoration or replacement progresses
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, as evidenced by invoices or other
documentation reasonably satisfactory to Landlord, 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, either:
(1) promptly restore or improve the Leased Property or the
remainder thereof to a value no less than sixty percent (60%) of
Stipulated Loss Value (computed after the application of any Remaining
Proceeds as a Qualified Payment) and to a reasonably safe and sightly
condition; or
(2) promptly restore the Leased Property to a reasonably safe and
sightly condition and pay to Landlord for application as a Qualified
Payment the amount (if any), as determined by Landlord, needed to reduce
Stipulated Loss Value (computed after the application of such amount and
any available Remaining Proceeds as Qualified Payments) to no more than
one hundred sixty-six percent (166%) of the then-current market value of
the Leased Property or remainder thereof.
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 part (1) of the preceding sentence
shall be considered a taking of substantially all the Leased Property
for purposes of this Paragraph 4.
(c) Notwithstanding the foregoing, if an Event of Default shall have
occurred and be continuing, Landlord shall be entitled to receive and
collect all insurance or condemnation proceeds payable with respect to
the Leased Property, and:
(i) Landlord shall apply the Remaining Proceeds received by Landlord
as a Qualified Payment (or as reimbursement for Breakage Costs incurred
in connection with such Qualified Payment) within ten (10) Business Days
after Landlord receives a written notice from Tenant unconditionally
directing Landlord to so apply the same; and
(ii) in the absence of such a notice from Tenant to Landlord,
Landlord shall be entitled to either, at the discretion of Landlord, (A)
hold all Remaining 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 as Qualified
Payments when and to the extent deemed appropriate by Landlord.
When no Event of Default shall have occurred and be continuing, Landlord
shall apply any Remaining Proceeds paid to it or other amounts which are
to be applied as a Qualified Payment (or as reimbursement for Breakage
Costs incurred in connection with a Qualified Payment) within three (3)
Business Days after Landlord receives a written notice from Tenant
unconditionally directing Landlord to so apply the same. In any event,
Landlord may deduct Breakage Costs incurred in connection with a
Qualified Payment from the Remaining Proceeds or other amounts available
to Landlord for application as the Qualified Payment, and Tenant will
reimburse Landlord upon request for any such Breakage Costs that
Landlord incurs but does not so deduct. If Remaining Proceeds held by
Landlord exceed Stipulated Loss Value and any Rent payable by Tenant,
Tenant may get the excess by terminating this Lease in accordance with
Paragraph 2 and purchasing any remaining interest of Landlord in the
Leased Property and the Escrowed Proceeds, pursuant to the Purchase
Agreement.
(d) 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.
(e) Nothing herein contained shall be construed to prevent Tenant
from obtaining a separate award from any condemning authority for a
taking of Tenant's personal property, for moving expenses, for severance
damages to other real property owned by Tenant adjacent to the Land or
for 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.
(f) Without limiting Landlord's obligations under the other
provisions of this Paragraph 4 or Tenant's obligations to make repairs
under other provisions of this Lease, 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.(f) 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 exercising its rights under a Prohibited Encumbrance, then Tenant
will have the remedies described in Paragraph 14 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 14, (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. 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.
7. 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 continued operation
of the Pedro's Restaurant or another restaurant or as reasonably
necessary to develop the Land for use for the following purposes and
other lawful purposes incidental thereto:
(i) administrative and office space; and
(ii) research and development of software and other computer-related
products;
(iii) distribution and warehouse storage of software and other computer-
related products; and
(iv) assembly of computer-related products using components manufactured
elsewhere, but not including the manufacture of computer chips on-site;
(v) cafeteria, library, fitness center and other support function uses
that Tenant may provide to its employees; and
(vi) other lawful purposes approved in advance and in writing by
Landlord, which approval will not be unreasonably withheld (but Tenant
acknowledges that Landlord's withholding of such approval shall be
reasonable if Landlord determines in good faith that (1) giving the
approval may materially increase Landlord's risk of liability for any
existing or future environmental problem, or (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).
Although the term "computer-related 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 9.(a).
Landlord shall not be responsible for any latent or other defect or
change of condition in the Land, or Improvements, fixtures and personal
property (if any) 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 7.(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.
8. 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 September 29, 1996.
(b) Existing Contract and Pedro's Ground Lease. Except to the
extent required of Landlord under subparagraph 9.(b), Tenant shall
satisfy all surviving obligations of the "Buyer" (as the term "Buyer" is
used in the Existing Contract) under the Existing Contract and under all
other documents, the execution of which is required by or in connection
with the Existing Contract. To the extent required during the Term,
Tenant shall also satisfy all obligations of the lessor under the
Pedro's Ground Lease. 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 Pedro's Ground Lease. Because
Tenant hereby assumes and agrees to satisfy all surviving obligations of
the Buyer under the Existing Contract and all obligations of the lessor
under the Pedro's Ground Lease, no failure by Landlord to take any
action required by the Existing Contract (save and except any actions
required of Landlord under subparagraph 9.(b)) or by the Pedro's Ground
Lease shall, for the purposes of this indemnity, be deemed to be caused
by the 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.
Notwithstanding anything herein to the contrary, so long as no Event of
Default has occurred and is continuing, Tenant may terminate the Pedro's
Ground Lease at any time (and at Tenant's sole expense) during the Term
by agreement with the lessee thereunder or by the lawful exercise of any
right of termination therein provided to the lessor.
(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 not contemplated by this Lease
or the Purchase Documents 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) 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;
(ii) neither Tenant nor any prior owner or operator of the Leased
Property has received from any federal, state or local governmental
authority any warning, citation, notice of violation 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 which has not been
completely rectified; and (iii) 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
prohibited by this Lease. Further, Tenant represents that to Tenant's
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
Brian Kangos Foulk, dated 12-4-96, 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 future
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 future development of the Land).
No extraordinary circumstances (including any use of the Land as a
habitat for endangered species) exists that would materially and
adversely affect the future development of the Land. 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 Delaware and is duly qualified to do business in the
State of California. Tenant has all requisite power and has procured or
will procure on a timely basis all governmental certificates of
authority, licenses, permits, qualifications and other documentation
required to lease and operate the Leased Property. Tenant has the
corporate power and adequate authority, rights and franchises to own
Tenant's property and to carry on Tenant's business as now conducted and
is duly qualified and in good standing in each state in which the
character of Tenant's business makes such qualification necessary
(including, without limitation, the State of California) or, if it is
not so qualified in a state other than California, such failure does not
have a material adverse effect on the properties, assets, operations or
businesses of Tenant and its Subsidiaries, taken as a whole.
(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
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 existence and
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, other than Excluded Taxes. 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 (but only
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 be prohibited by this Lease from: (i) initiating
or permitting any zoning reclassification of the Leased Property; (ii)
seeking any variance under existing zoning ordinances applicable to the
Leased Property; (iii) using or permitting 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) executing or filing any subdivision plat
affecting the Leased Property; (v) consenting to the annexation of the
Leased Property to any municipality; or (v) taking other comparable
action in anticipation of the future development of the Land. 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 required by any
municipality or other governmental entity in connection with any
rezoning, replatting or development by Tenant otherwise permitted by
this Lease or 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 are threatened or instituted
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; provided, nothing in this subparagraph will be construed to make
Tenant liable for Prohibited Encumbrances or Excluded Taxes.
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 8.(t) or 8.(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 $500,000 (individually or in the
aggregate) (2) Tenant diligently prosecutes such contest to completion
in a manner reasonably satisfactory to Landlord, and (3) Tenant promptly
causes to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all costs and interest thereon, promptly
after such judgment becomes final; provided, however, that in any event
each such contest shall be concluded and the lien, interest and costs
shall be paid prior to the date (i) any criminal action may be
instituted against Landlord or its directors, officers or employees
because of the nonpayment thereof or (ii) any writ or order is issued
under which any property owned by Landlord (including the Leased
Property) may be seized or sold or any other action is threatened or
instituted 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,
excluding only Prohibited Encumbrances and Excluded Taxes (collectively,
all such taxes, levies, fees, charges, surcharges, assessments or
penalties, other than Prohibited Encumbrances and Excluded Taxes, are
herein called the "Impositions"). 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.
Notwithstanding the foregoing, 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 8.(t) or 8.(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 $500,000 because of the contested
Imposition, (2) Tenant diligently prosecutes such contest to completion
in a manner reasonably satisfactory to Landlord, and (3) Tenant promptly
causes to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all costs, penalties and interest thereon,
promptly after such judgment becomes final; provided, however, that in
any event each such contest shall be concluded and the Impositions,
penalties, interest and costs shall be paid prior to the date (i) any
criminal action may be instituted against Landlord or its directors,
officers or employees because of the nonpayment thereof or (ii) any writ
or order is issued under which any property owned by Landlord (including
the Leased Property) may be seized or sold or any other action is
threatened or instituted 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. Further, Tenant
shall not, without the prior written consent of Landlord, construct or
make any alteration to any Improvements which significantly reduce the
fair market value of the Leased Property. However, nothing in this
subparagraph 8.(q) shall be construed to prohibit lawful construction or
other development activities by Tenant otherwise permitted by this
Lease. Further, nothing in this subparagraph 8.(q) or other provisions
of this Lease shall be construed to prohibit the demolition by Tenant of
the improvements presently used for the operation of Pedro's Restaurant
after the termination of the Pedro's Ground Lease.
(r) Insurance and Casualty. Throughout the Term, Tenant will keep
any valuable Improvements insured against damage by fire and other
casualty (earthquake excepted) in a commercially reasonable manner.
(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, each party shall notify the
other (provided, however, Landlord shall have no liability for its
failure to provide such notice) 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 as Escrowed Proceeds for application
as provided in Paragraph 4 above. Landlord is hereby authorized, in the
name of Tenant, at any time when an Event of Default shall have occurred
and be continuing, or with Tenant's prior written consent (which consent
will not be unreasonably withheld), 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 8.(s),
following any condemnation or sale in lieu of condemnation involving the
Leased Property, Tenant shall be entitled to receive directly and hold
such condemnation or sale proceeds, so long as the Pledge Agreement
continues in force and no Event of Default shall have occurred and be
continuing and so long as Tenant applies such proceeds to the
restoration, replacement and repair of the remainder of the Leased
Property to the extent 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 and
Prohibited Encumbrances and this Lease) 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 8.(o) or subparagraph 8.(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 8.(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 8.(o)
or 8.(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 are threatened or instituted 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 To Secure Payment or Performance 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 which secures any payment or performance obligation
(except Prohibited Encumbrances, the lien for property taxes on the
Leased Property which are not delinquent and any Lien Tenant is
contesting as expressly permitted by and in accordance with subparagraph
8.(o) or subparagraph 8.(p)), against or covering the Leased Property or
any part thereof 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 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 operation of any Improvements)
to be inspected and copied by Landlord and its duly accredited
representatives during reasonable business hours and after five business
days advance notice.
To the extent, if any, that any such books and records contain
proprietary information of Tenant that Tenant identifies as such at the
time of inspection, Landlord shall use reasonable efforts to keep such
proprietary information confidential. For purposes of this Lease
"proprietary information" includes Tenant's intellectual property and
trade secrets of value to Tenant about, among other things, Tenant's
products, marketing and corporate strategies, but in no event will
"proprietary information" include any disclosure of substances and
materials (and their chemical composition) which are or previously have
been present in, on or under the Leased Property at the time of any
inspections by Landlord, nor will "proprietary information" include any
additional disclosures reasonably required to permit Landlord to
determine whether the presence of such substances and materials has
constituted a violation of Environmental Laws. In addition, under no
circumstances shall Tenant have any obligation to disclose to Landlord
or any other party any proprietary information of Tenant (including,
without limitation, any pending applications for patents or trademarks,
any research and design and any trade secrets) except if and to the
limited extent reasonably necessary to comply with the express
provisions of this Lease. Notwithstanding the foregoing, Landlord shall
not be prohibited from disclosures of proprietary information: (i)
specifically and previously authorized in writing by Tenant; (ii) to any
assignee of Landlord claiming through a Permitted Transfer as to any
interest in the Leased Property; (iii) to legal counsel, accountants,
auditors, environmental consultants and other professional advisors to
Landlord so long as Landlord shall inform such persons in writing (if
practicable) of the confidential nature of such information and shall
direct them to treat such information confidentially; (iv) to regulatory
officials having jurisdiction over Landlord or any Participant; (v) as
required by legal process; and (vi) of information which has previously
become publicly available through the actions or inactions of a person
other than Landlord not, to Landlord's knowledge, in breach of an
obligation of confidentiality to Tenant.
This subparagraph shall not be construed as requiring Tenant to
regularly maintain separate books and records relating exclusively to
the Leased Property; provided, however, that upon request, Tenant shall
construct or abstract from its regularly maintained books and records
information required by this subparagraph relating to the Leased
Property.
(w) Financial Statements; 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 (100) 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 independent auditors 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
independent auditors that Tenant delivers to its stockholders;
(ii) as soon as available and in any event within fifty (50) 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 Form SEC 10-Q filed with
the Securities and Exchange Commission;
(iii) together with the financial statements furnished in accordance
with subparagraph 8.(w)(ii) and 8.(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 8 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 8.(cc);
(iv) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements, reports and 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;
(v) 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 8.(cc) or the
Negative Covenants described in subparagraph 8.(dd), 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;
(vi) 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
(vii) 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 8.(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 error 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
Initial Funding Advance 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, Environmental Indemnity or the
Participation Agreement (excluding the negotiation or administration of
the Participation Agreement between Landlord and Landlord's Parent), or
(C) Informix's request for assistance in identifying any new Participant
pursuant to Section 4.3 of the Pledge 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; but will not include an allocation of general overhead
or internal administrative expenses of Landlord, Landlord's Parent or
any other Participant, except to the extent allowed by subparagraph
8.(y)(iii) because of a Banking Rules Change after the date of this
Lease, and will not include costs incurred in connection with the
negotiation and execution of agreements between Landlord and
Participants. 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 of any of Landlord's rights and 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 costs,
expenses or damages or for any allocation of general overhead or
internal administrative expenses of Landlord, Landlord's Parent or any
other Participant except to the extent allowed by subparagraph
8.(y)(iii) because of a Banking Rules Change after the date of this
Lease.) 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 or
personal 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.
(iii) If, after the date hereof, there shall be any increase in the cost
to Landlord's Parent or any other Participant agreeing to make or
maintain Funding Advances to Landlord in connection with the Leased
Property because of any Banking Rules Change, 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. A certificate as to the amount of
such increased cost, submitted to Landlord and Tenant by Landlord's
Parent or the Participant, shall be conclusive and binding for purposes
of determining Tenant's obligations hereunder, absent clear and
demonstrable error. An increase in costs resulting from any imposition
or increase of reserve requirements applicable to Collateral held in
Accounts maintained from time to time by Landlord's Parent or other
Participants pursuant to the Pledge Agreement would be an increase
covered by this subparagraph.
(iv) Any Participant (including Landlord's Parent) may demand additional
payments (herein called "Capital Adequacy Charges") if the Participant
determines that any Banking Rules Change 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 by it to permit
Landlord to maintain Landlord's investment in the Leased Property. To
the extent that any Participant demands Capital Adequacy Charges as
compensation for the additional capital requirements reasonably
allocable to such advances, Tenant shall pay to Landlord for the account
of the Participant the amount so demanded. Without limiting the
foregoing, Landlord and Tenant hereby acknowledge and agree that the
provisions for calculating Base Rent set forth herein reflect the
assumption that the Pledge Agreement will cause a twenty percent (20%)
risk weight to be assigned to a percentage (equal to the Collateral
Percentage) of the collective investment of Landlord and the
Participants in the Leased Property pursuant to 12 Code of Federal
Regulations, part 225, as from time to time supplemented or amended, or
pursuant to any other similar or successor statute or regulation
applicable to Landlord and the Participants. If and so long as such
risk weight is increased because of a Banking Rules Change, Capital
Adequacy Charges may be collected to yield the same rate of return to
Landlord, Landlord's Parent and any other Participants (net of their
costs of maintaining required capital) that they would have enjoyed from
this Lease absent such increase.
(v) Any amount to be paid to Landlord, Landlord's Parent or any other
Indemnified Party under this subparagraph 8.(y) shall be a demand
obligation owing by Tenant. Tenant's indemnities and obligations under
this subparagraph 8.(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
$500,000 self-insured retention. Such commercial general liability
insurance shall include blanket contractual liability coverage which
insures contractual liability under the indemnifications set forth in
this Lease for Losses attributable to bodily injury, personal injury or
property damage (other than the indemnifications set forth in Paragraph
11 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). 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 fifteen (15)
days notice to Landlord. Not less than ten (10) 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 9.(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.
(bb) 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 8.(bb)(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 11.(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 threatened or 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
8.(bb)(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 8.(bb)(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 8.(bb)(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 8.(bb)(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 8.(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 8.(bb)(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.
(cc) 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 8.(cc), "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. As used herein "Long-Term
Investments" means those investments listed below (to the extent that
they are not classified as short term investments in accordance with
GAAP):
(1) Securities issued or fully guaranteed or fully insured by the
United States government, or by any agency thereof and backed by the
full faith and credit of the United States, provided that such
investments shall have maturities of not longer than two years;
(2) Certificates of deposit, time deposits, eurodollar time
deposits, repurchase agreements, or banker's acceptances with maturities
of not longer than two years which are issued by a bank that is rated
not less than A- by Standard & Poor's Corporation or less than A by
Moody's Investors Service, Inc. and that is 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 with maturities of not longer than two
years and rated not less than A- by Standard & Poor's Corporation or
less than A by Moody's Investors Service, Inc. (For purposes hereof, the
maturity of any such municipal bond shall be considered to be the
earliest date upon which the holder of the bond can require the obligor
on the bond to pay or redeem the bond at par value, whether pursuant to
a put option in favor of the holder or because of the expiration of the
stated term of the bond.)
As used in this subparagraph 8.(cc), "Current Liabilities" means, with
respect to any Person, all liabilities of such Person treated as current
liabilities in accordance with GAAP and any obligations of such Person
that, although not classified as a liability of such Person according to
GAAP, are of the kind described in clause (v) of subparagraph 1.(u)
(which sets forth the definition of "Debt") and that must be paid within
one year of the date of determination. Current Liabilities will
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) 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 as of September 29, 1996; 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 December 31, 1996, and ending with the quarter which,
at such time, is the most recently ended fiscal quarter; and plus (C)
any increase in the Consolidated Tangible Net Worth of Tenant that
results from a sale or issuance of the stock of Tenant or its
Subsidiaries after September 29, 1996. As used in this subparagraph
8.(cc):
"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 auditors concur; provided, however, for purposes of this
Lease Intangible Assets shall not include capitalized software costs.
(dd) 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 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;
k) Liens not otherwise permitted by this subsection 8.(dd)(i) (and not
encumbering the Leased Property or any Collateral) which secure the
payment of Debt, provided that (1) at no time does the sum of the
aggregate amount of all outstanding Debt secured by such Liens exceed
twenty percent (20%) of Consolidated Tangible Net Worth, and (2) 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
l) Liens incurred in connection with any renewals, extensions or
refunding of any Debt secured by Liens described in the other clauses of
this subsection 8.(dd)(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 8.(dd), 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 8.(dd), 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) 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; b) 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; or c)
other sales of receivables in the ordinary course of Tenant's business
and in a manner consistent with past and current practices as of the
date this Lease.
(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 8.(dd)(iii),
Tenant or any of its Subsidiaries 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:
(1) 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; or
(2) merge with another entity if the corporation surviving the merger is
Tenant or a Subsidiary of Tenant; or
(3) acquire the assets or business of another Person.
(ee) 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 8.(ee)(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.
9. Representations, Warranties and Covenants of Landlord. Landlord
represents, warrants and covenants as follows:
(a) Removal of Prohibited Encumbrances. If a Prohibited Encumbrance
is claimed against the Leased Property, including without limitation any
judgment lien resulting from a judgment rendered against Landlord,
Landlord will at its own cost and expense remove the Prohibited
Encumbrance. However, Landlord shall not be responsible for any Lien
that is expressly excluded from the definition of Prohibited
Encumbrances above.
(b) Actions Required of the Title Holder.
(i) General Requirements. 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;
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.
(ii) Examples of Actions Tenant May Require. The actions Landlord shall
perform if reasonably requested by Tenant will include, without
limitation, but subject to the conditions set forth in the proviso of
the preceding subsection 9.(b)(i), executing or consenting to, or
exercising or assisting Tenant to exercise rights under any (I) grant of
easements, licenses, rights of way, and other rights in the nature of
easements encumbering the Real Property, (II) release or termination of
easements, licenses, rights of way or other rights in the nature of
easements which are for the benefit of the Real Property or any portion
thereof, (III) dedication or transfer of portions of the Real Property
not improved with a building, for road, highway or other public
purposes, (IV) agreements for the use and maintenance of common areas,
for reciprocal rights of parking, ingress and egress and amendments to
any covenants and restrictions affecting the Real Property or any
portion thereof, (V) documents required to create or administer a
governmental special benefit district or assessment district for public
improvements and collection of special assessments, (VI) modifications
of Permitted Encumbrances, (VII) development agreements, permit
applications or other documents required to accommodate the future
construction of office improvements on the Land with a density not to
exceed approximately 990,000 square feet of building area (or such
greater building area as Landlord may approve, which approval shall not
be unreasonably withheld) and of structured parking to serve such office
improvements, which agreements may provide a master plan for the
development of all the Land, or may cover only a portion of the Land,
and may provide for phased build-out, (VIII) agreements or other
documents required for the demolition of the Pedro's Restaurant on the
Land, (IX) confirmations of Tenant's rights under any particular
provisions of this Lease which Tenant may wish to provide to a third
party or (X) parcel maps subdividing the Real Property into lots or
parcels. However, the determination of whether any such action is
reasonably requested or reasonably objectionable to Landlord may depend
in whole or in part upon the extent to which the requested action shall
result in a lien to secure payment or performance obligations against
Landlord's interest in the Leased Property, shall cause a decrease in
the value of the Leased Property to less than forty-five percent (45%)
of Stipulated Loss Value after any Qualified Payments that may result
from such action are taken into account, or shall impose upon Landlord
any present or future obligations greater than the obligations Landlord
is willing to accept in reliance on the indemnifications provided by
Tenant hereunder.
(iii) Partial Release Provisions. So long as no Event of Default shall
have occurred and be continuing, Tenant shall have the option from time
to time during the Term to purchase one or more undeveloped portions of
the Real Property, consisting of one or more tracts or lots of the Land
which can be sold under Applicable Laws separate and apart from the rest
of the Land (each, a "Parcel"), for an amount equal to the Release Price
(as defined below) with respect thereto. Tenant may exercise such
option by delivering to Landlord not less than ninety (90) days prior
written notice, which written notice shall describe the Parcel or
Parcels to be purchased, the date such Parcels are to be conveyed by
Landlord and an estimate by Tenant of the Release Price to be paid by
Tenant. In each case Landlord's obligation to convey such Parcels to
Tenant shall be subject to Tenant's satisfaction of each of the
following conditions:
a) Landlord and Tenant shall have agreed upon, entered into and
recorded such reciprocal easements relating to the Land and the Parcel
to be so sold as they shall deem necessary or reasonably required to
preserve usefulness of the Parcels and the remaining Land after the
conveyance;
b) Tenant shall have paid to Landlord the Release Price for such
Parcels; and
c) Tenant shall have reimbursed Landlord for, and Landlord shall
have received, any new appraisal that Landlord believes it should obtain
in connection with the sale to satisfy regulatory requirements
applicable to Landlord, Landlord's Parent or other Participants.
d) In addition to the Release Price, Tenant shall have paid all
costs and expenses necessary to consummate the sale, including all legal
fees of Landlord.
Upon Tenant's satisfaction of each of the foregoing conditions, Landlord
shall convey such Parcel or Parcels to Tenant pursuant to a quitclaim
transfer of all of Landlord's right, title and interest therein on as
"as is, where is, with all faults" basis free and clear of Prohibited
Encumbrances, but otherwise without recourse, representation or warranty
of any kind.
As used in this subparagraph 9.(b), the "Release Price" with respect to
any Parcel or Parcels means the higher of (1) $61,500,000 times a
fraction, the numerator of which is the square footage of such Parcel or
Parcels, and the denominator of which is the total square footage of all
Land described in Exhibit A, and (2) the sales price that Landlord must
receive for the Parcel or Parcels if, following the Landlord's sale of
thereof and application of the net sales proceeds paid to Landlord as a
Qualified Payment, the remaining Leased Property is to have a Remaining
Value (as defined below) of no less than forty-five percent (45%) of
Stipulated Loss Value.
As used in this subparagraph 9.(b), "Remaining Value" means the market
value of the Leased Property that Landlord will retain, taking into
account any loss of visibility, accessibility or development potential
that may result from Landlord's compliance with this subparagraph.
Remaining Value will be determined by Chris Carneghi, MAI Certified
General Real Estate Appraiser, State of California No. AG001685, if he
is then willing and available to make such a determination promptly for
Landlord and Tenant; otherwise, Remaining Value will be determined in
accordance with the following procedure, unless Landlord and Tenant upon
a different procedure or method of determination in a particular case:
(A) Landlord and Tenant shall each, within seven (7) days after
written notice from either to the other, select an appraiser. If either
Landlord or Tenant fails to select an appraiser within the required
period, then the appraiser who has been timely selected shall
conclusively determine the Remaining Value in accordance with this
clause subparagraph within thirty (30) days after his or her selection.
(B) Upon the selection of the two appraisers as provided above, such
appraisers shall proceed to determine the Remaining Value of the Leased
Property that Landlord will retain after any sale required by this
subparagraph. Such appraisals shall be submitted in writing no later
than thirty (30) days after selection of the second appraiser. If the
Remaining Value as determined by such appraisers is identical, such sum
they determine shall be the Remaining Value. In the event the lower
appraisal is not lower than five percent (5%) below the higher
appraisal, then Remaining Value shall be the sum of the two appraisal
figures divided by two (2). If either appraiser fails to timely submit
his or her appraisal, the timely submitted appraisal shall be
determinative of Remaining Value.
(C) In the event the lower appraisal is lower than five percent (5%)
below the higher appraisal figure, then the two appraisers previously
selected shall select a third appraiser. The name of such appraiser
shall be submitted at the same time the written appraisals are due.
Such third appraiser shall then review the previously submitted
appraisals and select the one that, in his professional opinion, more
closely reflects the market value of the Leased Property that Landlord
will retain, such selection to be submitted in writing no later than
seven (7) days after selection of the third appraiser. Such selection
shall be determinative of Remaining Value.
(D) In making any such determination of Remaining Value, the
appraisers shall assume that neither this Lease nor the Purchase
Agreement add any value to the Leased Property. Each appraiser selected
hereunder shall be an independent MAI-designated appraiser with not less
than ten (10) years' experience in commercial real estate appraisal in
Santa Clara County, California and surrounding areas.
Any Losses (including appraisal fees) incurred by Landlord because of
any action taken pursuant to this subparagraph 9.(b) shall be covered by
the indemnification set forth in subparagraph 8.(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 closing of any sale of a
Parcel by Landlord pursuant to the foregoing provisions.
(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 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 right to do business in the State of California to the extent
necessary for the performance of Landlord's obligations hereunder.
(h) Not a Foreign Person. Landlord is not a "foreign person" within
the meaning of the 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).
(i) Estoppel Certificates. From time to time, if requested by Tenant,
Landlord shall provide to Tenant 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 Landlord 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 Landlord may be relied upon
by any permitted sublessee or assign of Tenant or by any with whom
Tenant may desire to merge as provided in subparagraph 8.(dd)(v).
(j) Compliance With the Pedro's Ground Lease and the Documents Executed
by Landlord at the Closing Under the Existing Contract. Landlord shall
not itself knowingly violate any material provision of the Pedro's
Ground Lease or of any document executed by Landlord in favor of the
Seller at the closing under the Existing Contract.
10. 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 restaurant 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 of the space in any completed
Improvements shall be subleased without Landlord's prior consent to any
Person (or group of Persons) 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 10 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 materially 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
Documents.) 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.
11. 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 11.(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 11
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 11 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 11 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 11, 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 11;
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 11.(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 11 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 11 shall survive the termination or expiration of this Lease.
All obligations of Tenant under this Paragraph 11 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.
12. 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 causes Landlord or any director,
officer, employee or Affiliate of Landlord to be threatened with
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 [and attributed by any
applicable principles of comparative fault to] the Misconduct of
Landlord in connection therewith), and the obligations of Tenant under
this Lease shall not thereby be affected in any manner.
13. 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 in writing of the delinquency 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 13.(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 13.(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 threatened or 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 threatened or 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
ninety (90) 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 the Purchase Documents expressly
provide 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 13.(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 $5,000,000
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) A final judgment or order for the payment of money in an amount
(not covered by insurance) which exceeds $3,000,000 shall be rendered
against Tenant or any of its Subsidiaries and within sixty (60) days
after the entry thereof, such judgment or order is not discharged or
execution thereof stayed pending appeal, or within thirty (30) days
after the expiration of any such stay, such judgment is not discharged.
(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.
Notwithstanding the foregoing, any Default that could become an Event of
Default under clause 13.(a)(ii) may be cured within the earlier of the
periods described in parts (A) and (B) of clause 13.(a)(ii) 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 any
Business Day which is at least fifteen (15) days after the date of such
notice and not later than thirty (30) 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 Breakage Costs
and other Losses 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 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 8.(y) and the environmental
indemnity set forth in Paragraph 11 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 13.(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 13.(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 in
any manner not prohibited by Applicable Law 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 Documents.
The "worth at the time of award" of the amounts referred to in
subparagraph 13.(b)(iii)a) and subparagraph 13.(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
13.(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
13.(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 13 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
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.
14. 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.
15. 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 to the Permitted
Encumbrances and any other claims or encumbrances not constituting
Prohibited Encumbrances. 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.
16. 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 any fixtures and
furnishings included in the Leased Property, but not including movable
furniture and other 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.
17. Holding Over by Tenant. Should Tenant not purchase Landlord's
right, title and interest in the Leased Property as provided in the
Purchase Agreement, but nonetheless continue to hold the Leased Property
after the termination of this Lease 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 (1%);
(2) for any day on which or within ninety (90) 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 (90) days described in the preceding
clause, a rate which is three percent (3%) above the per annum Prime
Rate.
18. 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: Informix (Freedom Circle Street Property)
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 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 Rafael Lumanlan
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:
INFORMIX CORPORATION
4100 Bohannon Drive
Menlo Park , California 94025
Attn: Treasurer
Telecopy: (415) 926-6564
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill
Palo Alto, California 94304-1050
Attention: Real Estate Department/BOB
Telecopy: (415) 493-6811
(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 13.(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, without regard to
conflict of laws principals.
(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) Income Tax Reporting. Landlord and Tenant intend this Lease and
the Purchase Agreement to have a form for income taxes which is
different than the form of this Lease and the Purchase Agreement for
other purposes, and thus the parties acknowledge and agree as follows:
a) For purposes of determining their respective federal, state and
local income tax obligations, Landlord and Tenant believe and intend
that this Lease and the Purchase Agreement constitute a financing
arrangement or conditional sale. Both Landlord and Tenant agree to
report this Lease and the Purchase Agreement as a financing arrangement
or conditional sale on their respective income tax returns (the
"Required Reporting"), unless such Required Reporting is challenged in
writing by the Internal Revenue Service or another governmental
authority with jurisdiction (a "Tax Challenge"). Consistent with the
foregoing, Landlord and Tenant expect that Tenant (and not Landlord)
shall be treated as the true owner of the Property for income tax
purposes, thereby entitling Tenant (and not Landlord) to take
depreciation deductions and other tax benefits available to the owner.
Tenant shall also report all interest earned on Escrowed Proceeds or the
collateral covered by the Pledge Agreement as Tenant's income for
federal, state and local income tax purposes. REFERENCES IN THIS LEASE
OR IN THE PURCHASE AGREEMENT TO A "LEASE" OF THE "LEASED PROPERTY" ARE
NOT INTENDED FOR INCOME TAX PURPOSES TO REFLECT THE INTENT OF LANDLORD
OR TENANT AS TO THE FORM OF THE TRANSACTIONS COVERED BY, OR THE PROPER
CHARACTERIZATION OF, THIS LEASE AND THE PURCHASE AGREEMENT.
b) For all other purposes, including the determination of the
appropriate financial accounting for this Lease and the determination of
their respective rights and remedies under state law, Landlord and
Tenant believe and intend that (i) this Lease constitutes a true Lease,
not a mere financing arrangement, enforceable in accordance with its
express terms (and neither this subparagraph 18.(l) nor the provisions
referencing this subparagraph on the title page of this Lease nor the
corresponding provisions in the Purchase Agreement are intended to
affect the enforcement of any other provisions of this Lease or the
Purchase Agreement) and (ii) the Purchase Agreement shall constitute a
separate and independent contract, enforceable in accordance with the
express terms and conditions set forth therein. In this regard, Tenant
acknowledges that Tenant asked Landlord to participate in the
transactions evidenced by this Lease and the Purchase Agreement as a
landlord and owner of the Leased Property, not as a lender. Although
other transactions might have been used to accomplish similar results,
Tenant expects to receive certain material accounting and other
advantages through the use of a lease transaction. Accordingly, and
notwithstanding the Required Reporting for income tax purposes, Tenant
cannot equitably deny that this Lease and the Purchase Agreement should
be construed and enforced in accordance with their respective terms,
rather than as a mortgage or other security device, in any action
brought by Landlord to enforce this Lease or the Purchase Agreement.
In the event of a Tax Challenge, Landlord and Tenant shall each provide
to the other copies of all notices from the Internal Revenue Service or
any other governmental authority presenting the Tax Challenge. Further,
before changing from the Required Reporting because of a Tax Challenge,
Landlord and Tenant shall each consider in good faith any reasonable
suggestions received from the other party to this Lease about an
appropriate response to the Tax Challenge; provided, however, that the
suggestions are set forth in a written notice delivered no later than
thirty (30) Business Days after the suggesting party is first notified
of the Tax Challenge; and, provided further, that when presented with a
Tax Challenge, Landlord and Tenant shall each have the right to change
from the Required Reporting rather than participate in any litigation or
other legal proceeding against the Internal Revenue Service or another
governmental authority. In any event, Tenant must indemnify and hold
harmless Landlord from and against all liabilities, costs, additional
taxes and other expenses that may arise or become due because of any
challenge to the Required Reporting or because of any resulting
recharacterization of this Lease or the Purchase Agreement required by
the Internal Revenue Service or another governmental authority,
including any additional taxes that may become due upon any sale under
the Purchase Agreement, to the extent (if any) that such liabilities,
costs, additional taxes and other expenses are not offset by tax savings
resulting from additional depreciation deductions or other tax benefits
to Landlord of the recharacterization.
[The signature pages follow.]
IN WITNESS WHEREOF, this Lease Agreement is hereby executed in multiple
originals as of the effective date above set forth.
"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 January 6, 1997]
"Tenant"
INFORMIX CORPORATION, a Delaware corporation
By: /s/ Margaret Brauns
Margaret Brauns, Vice President and Treasurer
Exhibit A
Legal Description
REAL PROPERTY in the City of Santa Clara, County of Santa Clara, State
of California, described as follows:
PARCEL ONE:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map
being a resubdivision of lands of Marriott Corporation, Successor by
Merger to Fespar Enterprises, Inc., and Marriott Hotels, Inc., and
Stephen & Mary Dorcich as shown on Record of Survey recorded on January
12, 1977 in Book 386 of Maps, at Page 54, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on December 29, 1977 in Book
410 of Maps, at Pages 29 and 30.
PARCEL TWO:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map
being all of Parcel 3, as shown on that certain `Parcel Map', recorded
in Book 410 of Maps, at Pages 29 and 30, Santa Clara County Records",
which Map was filed for Record in the Office of the Recorder of the
County of Santa Clara, State of California, on May 18, 1979 in Book 442
of Maps, at Page 8.
PARCEL THREE:
All of Parcel 6, as shown upon that certain Map entitled, "Parcel Map
being a Resubdivision of lands of Marriott Corporation, Successor by
Merger to Fespar Enterprises, Inc., and Marriott Hotels, Inc., and
Stephen & Mary Dorcich as shown on Record of Survey recorded on January
12, 1977 in Book 386 of Maps, at Page 54, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on December 29, 1977 in Book
410 of Maps, at Pages 29 and 30.
PARCEL FOUR:
All of Parcel 1, as shown upon that certain Map entitled, "Parcel Map
being all of Parcel 3, as shown on that certain `Parcel Map', recorded
in Book 410 of Maps, at Pages 29 and 30, Santa Clara County Records",
which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California, on May 18, 1979 in Book 442
of Maps, at Page 8.
Exhibit B
Permitted Encumbrances
This conveyance is subject to the following matters, but only to the
extent the same are still valid and in full force and effect:
1. General and Special Taxes and Assessments, if any, for the fiscal
year 1996-97
Assessment No.: 104-40-018
Code No.: 07-117
First Installment: $7,231.56 Paid
Includes Assessment of $3,253.81 (50P)
Second Installment: $7,231.56 Payable, but not yet due
Includes Assessment of $3,253.81 (50P)
Assessed Valuation Of Personal
Property: NONE
Homeowners Exemption: $None
Said matter affects: Parcel One
2. General and Special Taxes and Assessments, if any, for the fiscal
year 1996-97
Assessment No.: 104-40-021
Code No.: 07-117
First Installment: $11,391.08 Paid
Includes Assessment of $5,125.04 (50P)
Second Installment: $11,391.08 Payable, but not yet due
Includes Assessment of $5,125.04 (50P)
Assessed Valuation Of Personal
Property: NONE
Homeowners Exemption: $None
Said matter affects: Parcel Two
3. General and Special Taxes and Assessments, if any, for the fiscal
year 1996-97
Assessment No.: 104-40-023
Code No.: 07-117
First Installment: $14,673.16 Paid
Includes Assessment of $6,601.96 (50P)
Second Installment: $14,673.16 Payable, but not yet due
Includes Assessment of $6,601.96 (50P)
Assessed Valuation Of Personal
Property: NONE
Homeowners Exemption: $None
Said matter affects: Parcel Three
4. General and Special Taxes and Assessments, if any, for the fiscal
year 1996-97
Assessment No.: 104-40-020
Code No.: 07-117
First Installment: $17,531.64 Paid
Second Installment: $17,531.64 Payable, but not yet due
Assessed Valuation Of Personal
Property: NONE
Homeowners Exemption: $None
Said matter affects: Parcel Four
5. Diagram Assessment collected with County Taxes under Act of 1915
as follows:
Designation: Assessment No.: 437
Assessment Code: 50P
Assessment District: Bayshore North
Improvement District #163
Remaining Balance of Principal: $16,914.37
Remaining Balance of Interest: $2,401.14
The above amount of Principal and Interest to be collected with taxes
for the tax year.
Said matter affects: Parcel One
6. Diagram Assessment collected with County Taxes under Act of 1915
as follows:
Designation: Assessment No.: 508
Assessment Code: 50P
Assessment District: Bayshore North
Improvement District #163
Remaining Balance of Principal: $26,653.65
Remaining Balance of Interest: $3,783.70
The above amount of Principal and Interest to be collected with taxes
for the tax year.
Said matter affects: Parcel Two
7. Diagram Assessment collected with County Taxes under Act of 1915
as follows:
Designation: Assessment No.: 441
Assessment Code: 50P
Assessment District: Bayshore North
Improvement District #163
Remaining Balance of Principal: $34,340.61
Remaining Balance of Interest: $4,874.95
The above amount of Principal and Interest to be collected with taxes
for the tax year.
Said matter affects: Parcel Three
8. Diagram Assessment collected with County Taxes under Act of 1915
as follows:
Designation: Assessment No.: 507
Assessment Code: 50P
Assessment District: Bayshore North
Improvement District #163
Remaining Balance of Principal: $10,526.42
Remaining Balance of Interest: $1,494.32
The above amount of Principal and Interest to be collected with taxes
for the tax year.
Said matter affects: Parcel Four
9. The lien of Supplemental taxes, if any, assessed as a result of
transfer of interest and/or new construction, said supplemented taxes
being assessed pursuant to Chapter 3.5 commencing with Section 75 of
California Revenue and Taxation code, for which no Notice of Assessment
has been issued, as of the date hereof.
10. The fact that the ownership of said land does not include any
right of ingress or egress to or from the highway contiguous thereto,
said right having been relinquished by deed
From: Marriott Hotels, Inc., a Delaware Corporation
To: The City of Santa Clara, California, A Municipal Corporation
Recorded: May 28, 1974 in Book 0915 at Page 395 of Official Records of
Santa Clara County, California
Said matter affects: Parcels Two, Three and Four
11. An easement affecting the portion of said land and for the
purposes stated herein, and incidental purposes,
In Favor Of: City of Santa Clara, California, A Municipal Corporation
Recorded: June 11, 1975 in Book B457 at Page 125 Official Records
of Santa Clara County, California
(A) For: Wire Clearance Easement and Right-of-Way
Affects: The Easterly 5 feet of Parcels One and Two
(B) For: Right-of-Way and Maintenance Easement
Affects: A 5 foot strip of land immediately adjacent to the
easement described in (A) above.
(C) For: Installing, constructing, maintaining, repairing
and replacing underground anchors
Affects: As follows:
A strip of land 2 feet in width and 15 feet in length, the centerline of
said strip being a line bearing South 86 deg 06' 57" West from the
Northerly terminus of that course North 0 deg 02' 09" West 469.34 feet
in the boundary description of the thereinabove described Parcel 1, the
Easterly terminus being the Westerly line of thereinabove described
Parcel 3.
A strip of land 2 feet in width and 15 feet in length, the centerline of
said strip being a line bearing South 86 deg 21' 20" West from the
Northerly terminus of that course North 7 deg 43' 57" West 400.11 feet
in the boundary description of the thereinabove described Parcel 1, the
Easterly terminus being said Westerly line of thereinabove described
Parcel 3.
A strip of land 2 feet in width and 15 feet in length, the centerline of
said strip being a line bearing North 87 deg 41' 54" West from the
Northerly terminus of that course North 0 deg 26' 38" East 303.60 feet
in the boundary description of the thereinabove described Parcel 1, the
Easterly terminus being said Westerly line of thereinabove described
Parcel 3.
Said matter affects: Parcels One and Two
12. An easement affecting the portion of said land and for the
purposes stated herein, and incidental purposes,
In Favor Of: City of Santa Clara, California, A Municipal Corporation
For: Storm Drainage Easements
Recorded: July 14, 1977 in Book C992 at Page 1 Official Records of
Santa Clara County, California
Affects: As follows:
Beginning at a point on the Westerly line of the lands of the City of
Santa Clara, A Municipal Corporation, as said lands are described as
Parcel 1 in the Grant Deed, recorded on June 11, 1975 in Book B457
Official Records of Santa Clara County, at Page 125; said Point of
Beginning being distant on said Westerly line North 0 deg 02' 09" West
33.39 feet from the Northeast corner of Parcel 2 as described in last
said Grant Deed; thence from said Point of Beginning leaving last said
line South 79 deg 45' 07" West 168.22 feet to a point on the general
Northeasterly line of lands of the City of Santa Clara, A Municipal
Corporation, as described in the Grant Deed recorded on May 28, 1974 in
Book 0915 Official Records of Santa Clara, at Page 395; thence
Northwesterly along last said line North 70 deg 14' 53" West 865.00 feet
to a point thereon; thence leaving last said line North 19 deg 45' 07"
East 35.00 feet; thence Southeasterly along a line parallel with and
perpendicularly distant 35.00 feet Northeasterly from said general
Northeasterly line of lands of the City of Santa Clara South 70 deg 14'
53" East 855.62 feet to a point thereon; thence leaving said parallel
line North 79 deg 45' 07" East 165.14 feet to a point of the above
mentioned Westerly line of lands of the City of Santa Clara described in
Parcel 1; thence Southerly along last said line South 0 deg 02' 09" East
35.56 feet to the Point of Beginning.
Said matter affects: Parcels One, Two and Four
13. An easement affecting the portion of said land and for the
purposes stated herein, and incidental purposes,
In Favor Of: City of Santa Clara, California, A Municipal Corporation
For: Landscaping Purposes
Recorded: July 14, 1977 in Book C992 at Page 12 Official Records of
Santa Clara County, California
Affects: The Easterly 10 feet of Parcel Three; the Northerly and
Westerly 10 feet of Parcel One; the Westerly 10 feet of
Parcel Two; and the Northerly 10 feet of Parcel Four
14. An easement affecting the portion of said land and for the
purposes stated herein, and incidental purposes,
In Favor Of: City of Santa Clara, California, A Municipal Corporation
For: Underground Electrical Easements
Recorded: July 14, 1977 in Book C992 at Page 22 Official Records of
Santa Clara County, California
Affects: The Northerly and Westerly 10 feet of Parcel One; the
Northerly 10 feet of Parcel Four; the Westerly 10 feet of
Parcel Two; and the Easterly 10 feet of Parcel Three
15. An unrecorded Agreement, affecting said land, for the purposes,
stated herein, upon the terms, covenants and conditions referred to therein,
between the parties named herein
For: Real Estate Purchase Agreement
Dated: October 27, 1977
Executed By: Marriott Corporation, a Delaware corporation and Intel
Corporation, a California corporation
Said Agreement, among other things, has conditions for special
Architectural Standards as to all parcels and conditions for the Sign
Parcel and Easements described in said agreement affecting Parcel Four.
16. An easement affecting the portion of said land for the purposes
stated herein, and incidental purposes, shown or dedicated by the Map
recorded in Book 410 of Maps of Santa Clara County, California, at Pages
29 and 30:
For: Proposed Sign Easement
Affects: The Southeasterly portion of Parcel Four
The above easement was reserved for the benefit of Marriot Corporation,
a corporation by Deed recorded December 30, 1977, in Book D380, Page 36,
of Official Records of Santa Clara County, California.
17. An easement affecting the portion of said land and for the
purposes stated herein, and incidental purposes,
In Favor Of: City of Santa Clara, California, A Municipal Corporation
For: Street and Utility Purposes
Recorded: April 11, 1979 in Book E409 at Page 570 Official Records
of Santa Clara County, California
Affects: As follows:
All that certain Parcel of land lying within Parcel 6 of the Parcel Map
filed for Record December 29, 1977 in Book 410 of Maps, Pages 29 & 30,
in the Records of Santa Clara County, California, being more
particularly described as follows:
Beginning at the Northwest corner of said Parcel 6:
Thence North 89 deg. 44' 31" East, along the Northerly line of said
Parcel 6, a distance of 640.02 feet, to the Northeast corner of said
Parcel 6;
Thence, South 0 deg. 02' 19" West, along the Easterly line of said
Parcel 6, a distance of 35.86 feet to a non-tangent curve concave to the
Southwest having a radius of 35.00 feet and a beginning tangent bearing
North 30 deg. 57' 51" West;
Thence, Northwesterly along said curve, 19.01 feet, through a central
angle of 31 deg. 07' 02" to a non-tangent line parallel with and 23.00
feet Southerly of, measured at right angles to, said Northerly line of
said Parcel 6;
Thence, South 89 deg. 44' 31" West, along said parallel line a distance
of 620.80 feet, to the Westerly line of said Parcel 6;
Thence, North 17 deg. 37' 57" West along said Westerly line of Parcel 6,
a distance of 17.46 feet;
Thence, continuing along said Westerly line of Lot 6, North 0 deg. 02'
46" West, 6.34 feet, to the point of beginning.
Said matter affects: Parcel Three
18. An easement affecting the portion of said land for the purposes
stated herein, and incidental purposes, shown or dedicated by the Map
recorded in Book 442 of Maps of Santa Clara County, California, at Page
8
For: Underground Electrical Easement
Affects: The Westerly portion of Said Land
Said matter affects: Parcel Four
19. An easement affecting the portion of said land and for the
purposes stated herein, and incidental purposes,
In Favor Of: Marriott Corporation, a Delaware Corporation
For: Ingress and Egress to an existing sign
Recorded: May 18, 1979 in Book E506 at Page 74 Official Records
of Santa Clara County, California
Affects: As follows:
Commencing on the Southerly line of Freedom Circle at the Northerly
common corner of Parcels 3 and 4 as said circle and Parcels are shown
on that Parcel Map filed in Book 410 of Maps at Pages 29 and 30, Santa
Clara County Records; thence Northeasterly along the Southerly line of
Freedom Circle on a curve to the left with a radius of 336 feet through
a central angle of 0 deg 54' 9" an arc distance of 5.29 feet to the True
Point of Beginning of this description; thence from said True Point of
Beginning continuing along said curve to the left with a radius of 336
feet through a central angle of 3 deg 38' 21" an arc distance of 21.34
feet; thence South 15 deg 11' 58" West 134.19 feet; thence South 14 deg
48' 02" East 40.00 feet; thence South 15 deg 11' 58" West 233.34 feet;
thence South 70 deg 14' 53" East 207.87 feet to the Westerly line of a
50 foot by 40 foot sign easement as shown on the above mentioned parcel
map; thence along the Westerly line of said 50 foot by 40 foot sign
easement, South 19 deg 45' 07" West 20.00 feet to the Northerly line of
a 35 foot wide storm drainage easement as shown on the above mentioned
parcel map; thence along the Northerly line of said 35 foot wide storm
drainage easement North 70 deg 14' 53" West 226.21 feet; thence North 15
deg 11' 58" East 246.30 feet; thence North 14 deg 48' 02" West 40.00
feet; thence North 15 deg 11' 58" East 131.73 feet to the Point of
Beginning.
Said matter affects: Parcel Four
20. A Lease, affecting the premises herein stated, executed by and
between the parties named herein, for the term and upon the terms,
covenants and conditions therein provided,
Dated: July 17, 1978, amended on May 1, 1979 and on May
15, 1979
Lessor: John Arrillaga, Trustee, or his successor trustee,
under Trust Agreement dated July 20, 1977 (John
Arrillaga Separate Property Trust) as amended, and
Richard T. Peery, Trustee, or his successor trustee,
under Trust Agreement dated July 20, 1977 (Richard T.
Peery Separate Property Trust)
Lessee: Pedro's Food Systems, Incorporated, a California
Corporation and Peter S. Ramirez, Individually and
Peter O. Ramirez, Individually, Jointly and Severally
Term: Twenty-five (25) Years commencing on June 1, 1979
Disclosed by: Short Form of Lease
Recorded: May 18, 1979 in Book E506 At Page 82 Of Official
Records of Santa Clara County, California
Affects: Parcel Four
An Assignment of the Lessee's interest in said lease was
Executed By: Peter S. Ramirez, as individual (Ramirez), and Pedro's
Food Systems, Inc., a California Corporation
To: Brookside Development, Inc., a California Corporation
("BD"); and Michael R. Martinez, an individual
("Martinez"), Pedro's Management Systems, Inc., a
California Corporation
Recorded: August 11, 1987 in Book K256 at Page 1114 of Official
Records of Santa Clara County, California
An un-recorded assignment of the lessee's interest in said lease was
Executed By: Brookside Development, Inc., a California Corporation
and Michael R. Martinez and Pedro's Management Systems
Inc.
To: Pedro Management Systems, Inc.
Dated: November 17, 1987
An un-recorded assignment of the lessee's interest in said lease was
Executed By: Pedro Management Systems, Inc.
To: Golden State Restaurants, Inc.
Dated: February 18, 1992
Memorandum of Amendment and Assignment of Ground Lease
Dated: February 18, 1992
Executed By: John Arrillaga, Trustee or his Successor Trustee, under
Trust Agreement dated July 20, 1977 ("John Arrillaga
Separate Property Trust"), as amended and Richard T.
Peery, Trustee or his Successor Trustee, under Trust
Agreement dated July 20, 1977 ("Richard T. Peery
Separate Property Trust") and Golden State Restaurants,
Inc.
Recorded: February 20, 1992 in Book M054 at Page 0873 of Official
Records of Santa Clara County, California
No representation is made as to the present ownership of said leasehold
or matters affecting the rights or interests of the lessor or lessee
arising out of or occasioned by said lease.
21. Release Agreement and Covenant Not to Sue executed and
acknowledged by Informix Corporation, a Delaware corporation
("Informix"), Peery Private Investment Company - WP, L.P., a California
limited partnership, as to an undivided 1/4 interest, Peery Public
Investment Company - WP, L.P., a California limited partnership, as to
an undivided 1/4 interest, and John Arrillaga, Trustee, or Successor
Trustee under Trust Agreement dated July 20, 1977 (The Arrillaga Family
Trust) as amended, as to an undivided 2/4 interest (collectively, "P/A")
and BNP Leasing Corporation, a Delaware corporation ("BNP") to be filed
for record in the Official Records of Santa Clara County, California.
22. Agreement Containing Covenants Running with the Land executed
and acknowledged by Informix, P/A and BNP to be filed for record in the
Official Records of Santa Clara County, California.
Exhibit C
List of Environmental Reports
1. Phase I report titled "Final Preliminary Site Assessment" for
Parcel #104-40-018, Santa Clara, California, dated December 17, 1996,
prepared by Harza Consulting Engineers and Scientists.
2. Phase I report titled "Final Preliminary Site Assessment" for
Parcel #104-40-021, Santa Clara, California, dated November 17, 1996,
prepared by Harza Consulting Engineers and Scientists.
3. Phase I report titled "Final Preliminary Site Assessment" for
Parcel #104-40-023, Santa Clara, California, dated November 17, 1996,
prepared by Harza Consulting Engineers and Scientists.
4. Phase I report titled "Final Preliminary Site Assessment" for
3935 Freedom Circle Santa Clara, California, dated November 17, 1996,
prepared by Harza Consulting Engineers and Scientists.
Exhibit D
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 Rafael Lumanlan
Re: Informix/BNP Lease Agreement (Freedom Circle Property)
Gentlemen:
I, the undersigned, the [chief financial officer, controller, treasurer
or the assistant treasurer] of INFORMIX CORPORATION, do hereby certify,
represent and warrant that:
1. This Certificate is furnished pursuant to subparagraph 8.(w)(iii)
of that certain Lease Agreement dated as of January 6, 1997 (the "Lease
Agreement," the terms defined therein being used herein as therein
defined) between INFORMIX 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 ______________, 199__.
INFORMIX CORPORATION
Name:_________________________
Title:________________________
[cc all Participants]
Annex 1 To Compliance Certificate
For the _________________ Ended ________________, 199__
I. PARAGRAPH 8.(cc)(i): Quick Ratio
A. Unencumbered Cash and Cash Equivalents
and other "Quick Assets" as defined in
Paragraph 8.(cc)(i) of the Lease: $_____________
B. "Current Liabilities" as defined in
Paragraph 8.(cc)(i) of the Lease: $_____________
C. Ratio of A to B: _____ to 1.00
F. Minimum ratio computed as provided in
Paragraph 8.(cc)(i) of the Lease: 1.00 to 1.00
II. PARAGRAPH 8.(cc)(ii): Minimum Tangible Net Worth
A. Reported stockholders equity: $_____________
B. "Intangible Assets" as
defined in Paragraph 8.(cc)(ii)
of the Lease: $_____________
D. Consolidated Tangible Net Worth
(A - B): $_____________
E. Minimum computed as
provided in Paragraph 8.(cc)(ii)
of the Lease: $_____________
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "Agreement") is made as of January 6,
1997, by INFORMIX CORPORATION, a Delaware corporation ("Informix"); BNP
LEASING CORPORATION, a Delaware corporation ("BNPLC"); BANQUE NATIONALE
DE PARIS as a "Participant"; and BANQUE NATIONALE DE PARIS, acting in
its capacity as agent for BNPLC and the Participants (in such capacity,
"Agent").
RECITALS
A. Informix and BNPLC are parties to: (i) a Lease Agreement
dated the date hereof (the "Lease"), pursuant to which BNPLC has agreed
to lease certain property to Informix; and (ii) a Purchase Agreement
dated the date hereof (the "Purchase Agreement") pursuant to which
Informix has agreed to purchase BNPLC's interest in such property or to
cause such property to be purchased from BNPLC by a third party.
B. Pursuant to a Participation Agreement dated the date hereof
(the "Participation Agreement"), BNP has agreed with BNPLC to
participate in the risks and rewards to BNPLC of the Lease and the
Purchase Agreement, and the parties to this Agreement anticipate that
other financial institutions may become parties to the Participation
Agreement as Participants, agreeing to participate in the risks and
rewards to BNPLC of the Lease and the Purchase
Agreement.
C. To reduce the Base Rent required by the Lease as therein
provided, Informix may from time to time deliver cash collateral for its
obligations to BNPLC under the Purchase
Agreement and for BNPLC's corresponding obligations to Participants
under the Participation Agreement. This Agreement sets forth the terms
and conditions governing such cash collateral.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for
other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
1 Definitions and Interpretation.
Section 1.1 Definitions. When used in this Agreement, the
following terms shall have the following respective meanings:
"Account" shall mean any deposit account maintained by a
Deposit Taker into which Cash Collateral may be deposited at any time,
excluding the Transition Account.
"Account Office" shall mean, with respect to any Account
maintained by any Deposit Taker, the office of such Deposit Taker at
which such Account is maintained.
"Agent" shall have the meaning given to that term in the
introductory paragraph hereof.
"BNPLC" shall have the meaning given to that term in the
introductory paragraph hereof.
"BNPLC's Corresponding Obligations to Participants" shall mean
BNPLC's obligations under the Participation Agreement to pay
Participants their respective Percentages of (or amounts equal to their
respective Percentages of) sums "actually received by BNPLC" (as defined
in the Participation Agreement) in satisfaction of Informix's Purchase
Agreement Obligations; provided, however, any modification of the
Participation Agreement executed after the date hereof without
Informix's consent shall not be considered for purposes of determining
BNPLC's Corresponding Obligations to Participants under this Agreement.
"Cash Collateral" shall mean (i) all funds of Informix which
Informix has delivered to Agent for deposit with a Deposit Taker
pursuant to this Agreement, and (ii) any additional funds delivered to
Agent as Collateral pursuant to Section 0.
"Certificate of Deposit" shall mean a certificate of deposit
issued by a Deposit Taker as required by Section 0 below to evidence an
Account into which Cash Collateral has been deposited pursuant to this
Agreement. Each Certificate of Deposit shall be issued in an amount
equal to the Value of the Account which it evidences and shall otherwise
be in the form set forth as Attachment 1.
"Collateral" shall have the meaning given to that term in
Section 0 hereof.
"Collateral Adjustment Fee" means the amount of $7,500,
payable to BNPLC as additional Rent under the Lease, if and to the
extent required from time to time by this Agreement.
"Collateral Imbalance" shall mean on any date prior to the
Designated Sale Date that the Value (without duplication) of Accounts
maintained by and Certificates of Deposit issued by the Deposit Taker
for any Participant (other than a Disqualified Deposit Taker) does not
equal such Participant's Percentage, multiplied by the lesser of (1) the
Minimum Collateral Value in effect on such date, or (2) the aggregate
Value of all Collateral subject to this Agreement on such date. For
purposes of determining whether a Collateral Imbalance exists, the Value
of any Accounts maintained by a bank that is acting as Deposit Taker for
two or more Participants will be deemed to be held for them in
proportion to their respective Percentages, and the Value of any
Accounts maintained by a bank as Deposit Taker for both a Participant
and BNPLC (as in the case of BNP acting as Deposit Taker for itself, as
a Participant, and for BNPLC) will be deemed to be held for the
Participant only to the extent necessary to prevent or mitigate a
Collateral Imbalance and otherwise for BNPLC.
"Collateral Percentage" shall mean the percentage designated
by Informix pursuant to Section 0.
"Default" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the
passage of any requisite periods of time, constitute an Event of
Default.
"Deposit Taker" for BNPLC shall mean BNP and for each
Participant shall mean the Participant itself; provided, that each of
BNPLC and the Participants, for itself only, may from time to time
designate another Deposit Taker as provided in Sections 0 and 0 below.
"Deposit Taker Losses" shall mean the Value of any Cash
Collateral delivered to a Deposit Taker that will not be returned to
Informix and will not be disposed of or applied by the Agent as provided
herein or as required by applicable law.
"Deposit Taker's Acknowledgment and Agreement" shall have the
meaning given to that term in subsection 0 hereof.
"Disqualified Deposit Taker" shall mean any Deposit Taker with
whom Agent may decline to deposit Collateral pursuant to Section 0.
"Event of Default" shall mean the occurrence of any of the
following:
(a) the failure by Informix to pay all or any part of
Informix's Purchase Agreement Obligations when due, after giving effect
to any applicable notice and grace periods expressly provided for in the
Purchase Agreement;
(b) the failure by Informix to provide funds as and
when required by Section 0 of this Agreement, if within three (3)
Business Days after such failure commences Informix does not (1) cure
such failure by delivering the funds required by Section 0, and (2) pay
to BNPLC as additional Rent under the Lease an amount equal to interest
at the Default Rate (as defined in the Lease) on such funds for the
period from which they were first due to the date of receipt by Agent,
and (3) pay to BNPLC a Collateral Adjustment Fee;
(c) the failure by Informix timely and properly to
observe, keep or perform any covenant, agreement, warranty or condition
herein required to be observed, kept or performed (other than a failure
described in another clause of this definition of Event of Default), if
such failure is not cured within thirty (30) days after Agent gives
Informix written notice thereof;
(d) the failure of any representation made by
Informix in subsection 0 to be true, if within fifteen (15) days after
Informix becomes aware of such failure, Informix does not (1) notify
Agent, BNPLC and the Participants of such failure, and (2) cure such
failure, and (3) pay to BNPLC any additional Base Rent that has accrued
under the Lease because of (or that would have accrued if BNPLC had been
aware of) such failure, and (4) pay to BNPLC interest at the Default
Rate on any such additional Base Rent, and (5) pay to BNPLC a Collateral
Adjustment Fee;
(e) the failure of any representation herein by
Informix to be true (other than a failure described in another clause of
this definition of Event of Default), if such failure is not cured
within thirty (30) days after Agent gives Informix written notice
thereof;
(f) the failure of the pledge or security interest
contemplated herein in the Transition Account or any Account,
Certificate of Deposit or Cash Collateral to be a valid, perfected,
first priority pledge or security interest (regardless of the
characterization of the Transition Account or any Accounts, Certificates
of Deposit or Cash Collateral as deposit accounts, instruments or
general intangibles under the UCC), if within fifteen (15) days after
Informix becomes aware of such failure, Informix does not (1) notify
Agent, BNPLC and the Participants of such failure, and (2) cure such
failure, and (3) pay to BNPLC any additional Base Rent that has accrued
under the Lease because of (or that would have accrued if BNPLC had been
aware of) such failure, and (4) pay to BNPLC interest at the Default
Rate on any such additional Base Rent, and (5) pay to BNPLC a Collateral
Adjustment Fee; and
(g) the failure by BNPLC to pay when due any of
BNPLC's Corresponding Obligations to Participants, after giving effect
to any applicable notice and grace periods expressly provided for in the
Participation Agreement.
Notwithstanding the foregoing, if ever the aggregate Value of Cash
Collateral held by Agent and the Deposit Takers exceeds the Minimum
Collateral Value then in effect, a failure of the pledge or security
interest contemplated herein in such excess Cash Collateral to be a
valid, perfected, first priority pledge or security interest shall not
constitute an Event of Default under this Agreement.
"Informix" shall have the meaning given to that term in the
introductory paragraph hereof.
"Informix's Purchase Agreement Obligations" shall mean all of
Informix's obligations under the Purchase Agreement, including (i)
Informix's obligation to pay the entire Purchase Price and Shortage
Amount, if any, as the case may be, as required under Paragraph 2(a) of
the Purchase Agreement if BNPLC elects to enforce specific performance
of the Purchase Agreement, and (ii) any damages incurred by BNPLC
because of (A) Informix's breach of the Purchase Agreement or (B) the
rejection by Informix of the Purchase Agreement in any bankruptcy or
insolvency proceeding.
"Lien" shall mean, with respect to any property or assets, any
right or interest therein of a creditor to secure indebtedness of any
kind which is owed to him or any other arrangement with such creditor
which provides for the payment of such indebtedness out of such property
or assets or which allows him to have such indebtedness satisfied out of
such property or assets prior to the general creditors of any owner
thereof, including any lien, mortgage, security interest, pledge,
deposit, production payment, rights of a vendor under any title
retention or conditional sale agreement or lease substantially
equivalent thereto, tax lien, mechanic's or materialman's lien, or any
other charge or encumbrance for security purposes, whether arising by
law or agreement or otherwise, but excluding any right of offset which
arises without agreement in the ordinary course of business. "Lien"
also means any filed financing statement, any registration with an
issuer of uncertificated securities, or any other arrangement which
would serve to perfect a Lien described in the preceding sentence,
regardless of whether such financing statement is filed, such
registration is made, or such arrangement is undertaken before or after
such Lien exists.
"Minimum Collateral Value" shall mean (1) as of the Designated
Sale Date or any prior date, an amount equal to the Collateral
Percentage multiplied by the Stipulated Loss Value determined as of that
date in accordance with the Lease; and (2) as of any date after the
Designated Sale Date, an amount equal to the Purchase Price plus any
unpaid interest on past due amounts that has accrued pursuant to
Paragraph 2(a) of the Purchase Agreement.
"Notice of Security Interest" shall have the meaning given to
that term in Subsection 0 hereof.
"Other Liable Party" shall mean any Person, other than
Informix, who may now or may at any time hereafter be primarily or
secondarily liable for any of the Secured Obligations or who may now or
may at any time hereafter have granted to Agent a Lien upon any of the
Collateral.
"Participants" shall mean BNP and any other financial
institutions which may hereafter become parties to (i) this Agreement by
completing, executing and delivering to Informix and Agent a Supplement,
and (ii) the Participation Agreement.
"Participation Agreement" shall have the meaning given to such
term in Recital B hereof.
"Percentage" shall mean with respect to each Participant and
the Deposit Taker for such Participant, such Participant's "Percentage"
as defined in the Participation Agreement.
"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, Informix 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.
"Secured Obligations" shall mean and include both Informix's
Purchase Agreement Obligations and BNPLC's Corresponding Obligations to
Participants.
"Supplement" shall mean a supplement to this Agreement in the
form of Attachment 2.
"Transaction Documents" shall mean, collectively, this
Agreement, the Lease, the Purchase Agreement and the Participation
Agreement.
"Transition Account" shall have the meaning given it in
Section 5.2.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of California from time to time, and the Uniform Commercial
Code as in effect in any other jurisdiction which governs the perfection
or non-perfection of the pledge of and security interests in the
Collateral created by this Agreement.
"Value" shall mean with respect to any Account, Certificate of
Deposit or Cash Collateral on any date, a dollar value determined as
follows (without duplication):
(a) cash shall be valued at its face amount on such
date;
(b) an Account shall be valued at the principal
balance thereof on such date; and
(c) a Certificate of Deposit shall be valued at the face
amount thereof.
Section 1.2 Other Definitions. Reference is hereby made to the
Lease, the Purchase Agreement and the Participation Agreement for a
statement of the terms thereof. All capitalized terms used in this
Agreement which are defined in the Lease or the Purchase Agreement and
not otherwise defined herein shall have the same meanings herein as set
forth therein. All terms used in this Agreement which are defined in
the UCC and not otherwise defined herein shall have the same meanings
herein as set forth therein, except where the context otherwise
requires.
Section 1.3 Attachments. All attachments to this Agreement are a
part hereof for all purposes.
Section 1.4 Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in
this Agreement to a particular agreement, instrument or document
(including references to the Lease, Purchase Agreement and Participation
Agreement) also refer to and include all valid renewals, extensions,
amendments, modifications, supplements or restatements of any such
agreement, instrument or document; provided that nothing contained in
this Section shall be construed to authorize any Person to execute or
enter into any such renewal, extension, amendment, modification,
supplement or restatement.
Section 1.5 References and Titles. All references in this
Agreement to Attachments, Articles, Sections, subsections, and other
subdivisions refer to the Attachments, Articles, Sections, subsections
and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any subdivision are for
convenience only and do not constitute any part of any such subdivision
and shall be disregarded in construing the language contained in this
Agreement. The words "this Agreement", "herein", "hereof", "hereby",
"hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited.
The phrases "this Article," "this Section" and "this subsection" and
similar phrases refer only to the Articles, Sections or subsections
hereof in which the phrase occurs. The word "or" is not exclusive, and
the word "including" (in all of its forms) means "including without
limitation". Pronouns in masculine, feminine and neuter gender shall be
construed to include any other gender, and words in the singular form
shall be construed to include the plural and vice versa unless the
context otherwise requires.
2 Pledge and Grant of Security Interest. As security for the
Secured Obligations, Informix hereby pledges and assigns to Agent (for
the ratable benefit of BNPLC and the Participants) and grants to Agent
(for the ratable benefit of BNPLC and the Participants) a continuing
security interest in all right, title and interest of Informix in and to
the following property, whether now owned or hereafter acquired by
Informix (collectively and severally, the "Collateral"):
(a) All Cash Collateral, all Accounts, the Transition
Account and all Certificates of Deposit issued from time to time and
general intangibles arising therefrom or relating thereto (provided,
however, in no event shall such general intangibles be deemed to include
any general intangibles not related to the foregoing, including, without
limitation, any intellectual property of Informix); and all documents,
instruments and agreements evidencing the same; all extensions,
renewals, modifications and replacements of the foregoing; and any
interest or other amounts payable in connection therewith; and
(b) All proceeds of the foregoing (including whatever is
receivable or received when Collateral or proceeds is invested, sold,
collected, exchanged, returned, substituted or otherwise disposed of,
whether such disposition is voluntary or involuntary, including rights
to payment and return premiums and insurance proceeds under insurance
with respect to any Collateral, and all rights to payment with respect
to any cause of action affecting or relating to the Collateral).
The pledge, assignment and grant of a security interest made by Informix
hereunder is for security of the Secured Obligations only; the parties
to this Agreement do not intend that Informix's delivery of the
Collateral to Agent as herein provided will constitute an advance
payment of any Secured Obligations or liquidated damages, nor do the
parties intend that the Collateral increase the dollar amount of the
Secured Obligations.
3 Setting the Collateral Percentage. Effective as of the date of
this Agreement, and so long as any portion of the Secured Obligations
remain outstanding, the Collateral Percentage is one hundred percent
(100%).
4 Provisions Concerning Deposit Takers.
Section 4.1 Qualification of Deposit Takers Generally. Agent may
decline to deposit or maintain Collateral hereunder with any Person
designated as a Deposit Taker, if such Person has failed to satisfy or
no longer satisfies the following requirements:
4.1.1 Such Person must have received from Agent and Informix
a completed, executed Notice of Security Interest in the form of
Attachment 3 (a "Notice of Security Interest") which specifically
identifies any and all Accounts in which such Person shall hold Cash
Collateral delivered to it pursuant to this Agreement and which
designates Account Offices with respect to all such Accounts in
California, New York, Illinois or another location approved by Agent and
Informix.
4.1.2 Such Person must have executed the Acknowledgement and
Agreement at the end of such Notice of Security Interest (the "Deposit
Taker's Acknowledgement and Agreement") and returned the same to Agent.
Further, such Person must have complied with the Deposit Taker's
Acknowledgement and Agreement, and the representations set forth therein
with respect to such Person must continue to be true and correct.
4.1.3 Such Person must be a commercial bank, organized under
the laws of the United States of America or a state thereof or under the
laws of another country which is doing business in the United States of
America; must be authorized to maintain deposit accounts for others
through Account Offices in California or New York (as specified in the
Deposit Taker's Acknowledgement and Agreement); must be an Affiliate of
BNPLC or the Participant for whom such Person will act as Deposit Taker
or must have a combined capital, surplus and undivided profits of at
least $500,000,000.
4.1.4 Such Person must have complied with the provisions in
this Agreement applicable to Deposit Takers, including the provisions of
Section 0 concerning the issuance and redemption of Certificates of
Deposit.
Section 4.2 Existing Deposit Takers. As of the date of this
Agreement, BNP (as Deposit Taker for itself and for BNPLC) has satisfied
the requirements set forth in the preceding Section for Deposit Takers.
Section 4.3 Replacement of Participants Proposed by Informix. 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 Informix 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; (B) the new Participant
will agree (by executing Supplements to this Agreement and to the
Participation Agreement as contemplated herein and therein and by other
agreements as may be reasonably required by BNPLC and Informix) to
become a party to the Participation Agreement and to this Agreement, to
designate a Qualified Deposit Taker as the Deposit Taker for it under
this 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 Informix) will provide the funds required to pay
the termination fee by Section 6.4 of the Participation Agreement to
accomplish the substitution; (D) Informix (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 this 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); (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); and (F) in no event will BNPLC be required to approve a
substitution pursuant to this Section 0 which will replace a Participant
that is an Affiliate of BNPLC. BNPLC shall attempt in good faith to
assist (and cause its Affiliate, Banque Nationale de Paris, to attempt
in good faith to assist) Informix in identifying a new Participant that
Informix may propose to substitute for an existing Participant pursuant
to this Paragraph, as Informix 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.
Section 4.4 Mandatory Substitution for Disqualified Deposit
Takers. If any Deposit Taker shall cease to satisfy the requirements
set forth in Section 0, the party for whom such Disqualified Deposit
Taker has been designated as Deposit Taker (i.e., BNPLC or the
applicable Participant) shall promptly (1) provide notice thereof to
Agent and Informix, and (2) designate a substitute Deposit Taker and
cause the substitute to satisfy the requirements set forth in Section 0.
Pending the designation of the substitute and the satisfaction by it of
the requirements set forth in Section 0, Agent may withdraw Collateral
held by the Disqualified Deposit Taker and deposit such Collateral with
other Deposit Takers, subject to Section 0 below.
Section 4.5 Voluntary Substitution of Deposit Takers. With the
written approval of Agent, which approval will not be unreasonably
withheld, the Deposit Taker for BNPLC or any Participant shall be
replaced by any Person designated by BNPLC or the applicable
Participant, as the case may be; provided, such Person has satisfied the
requirements set forth in Section 0; and, provided further, unless the
replacement is required by Section 0, at the time of the replacement
such Person must be a Qualified Deposit Taker.
Section 4.6 Delivery of Notice of Security Interest by Informix
and Agent. To the extent required to permit the substitution or
replacement of a Deposit Taker for BNPLC or any Participant as provided
in Sections 0 and 0, Informix and Agent shall promptly execute and
deliver any properly completed Notice of Security Interest requested by
BNPLC or the applicable Participant.
Section 4.7 Constructive Possession of Collateral. The possession
by a Deposit Taker of any deposit accounts, money, instruments, chattel
paper or other property constituting Collateral or evidencing Collateral
shall be deemed to be possession by Agent or a person designated by
Agent, for purposes of perfecting the security interest granted to Agent
hereunder pursuant to the UCC, to the extent applicable; and
notifications to a Deposit Taker by other Persons holding any such
property, and acknowledgements, receipts or confirmations from any such
Persons delivered to a Deposit Taker, shall be deemed notifications to,
or acknowledgements, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of such Deposit Taker
for the benefit of Agent for the purposes of perfecting such security
interests under Applicable Law.
Section 4.8 Attempted Offset by Deposit Takers. By delivery of a
Deposit Taker's Acknowledgement and Agreement, each Deposit Taker shall
be required to agree not to setoff or attempt a setoff, without in each
case first obtaining the prior written authorization of Agent, amounts
owed to it, including any Secured Obligations, against any Collateral
held by it from time to time. Any Deposit Taker for BNPLC or a
Participant shall not be permitted by BNPLC or the applicable
Participant, as the case may be, to violate such agreement. However,
Informix acknowledges and agrees that Agent shall not be responsible
for, or be deemed to have taken any action against Informix because of,
any Deposit Taker's violation of such agreement; and, neither BNPLC nor
any Participant shall be responsible for, or be deemed to have taken any
action against Informix because of, any violation of such agreement by a
Deposit Taker for another party.
Section 4.9 Deposit Taker Losses. Agent shall not be responsible
for any Deposit Taker Losses. If for any reason, however, Deposit Taker
Losses with respect to a Deposit Taker for a particular Participant will
exceed the amount of payments in satisfaction of Secured Obligations
that such Participant would have been entitled to receive under the
Participation Agreement absent such Deposit Takers Losses, then such
Participant shall promptly pay the excess to Agent as additional
Collateral hereunder.
5 Delivery and Maintenance of Cash Collateral.
Section 5.1 Delivery of Funds by Informix. On the date hereof and
on each Base Rent Date, Informix must deliver to Agent, subject to the
pledge and security interest created hereby, funds as Cash Collateral
then needed (if any) to cause the Value of the Collateral to be no less
than the Minimum Collateral Value. Each delivery of funds required by
the preceding sentence must be received by Agent no later than 12:00
noon (San Francisco time) on the Base Rent Date it is required; if
received after 12:00 noon it will be considered for purposes of the
Lease as received on the next following Business Day. At least ten (10)
Business Days prior to any Base Rent Date upon which it is expected that
Informix will be required to deliver additional funds pursuant to this
Section, Informix shall notify BNPLC, Agent and each of the Participants
thereof and of the amount Informix expects to deliver to Agent as Cash
Collateral on the applicable Base Rent Date. In addition to required
deliveries of Cash Collateral as provided in the foregoing provisions,
Informix may on any date (whether or not a Base Rent Date) deliver
additional Cash Collateral to Agent as necessary to prevent any Default
from becoming an Event of Default. Upon receipt of any funds delivered
to it by Informix as Cash Collateral, Agent shall immediately deposit
the same with the Deposit Takers in accordance with the requirements of
Sections 0 and 0 below.
Section 5.2 Transition Account. Pending deposit in the Accounts
or other application as provided herein, all Cash Collateral received by
Agent shall be credited to and held by Agent in an account (the
"Transition Account") styled "Informix Collateral Account, held for the
benefit of BNPLC and the Participants," separate and apart from all
other property and funds of Informix or other Persons, and no other
property or funds shall be deposited in the Transition Account. The
books and records of Agent shall reflect that the Transition Account and
all Cash Collateral on deposit therein are owned by Informix, subject to
a pledge and security interest in favor of Agent for the benefit of
BNPLC and Participants.
Section 5.3 Allocation of Cash Collateral Among Deposit Takers.
Funds received by Agent from Informix as Cash Collateral will be
allocated for deposit among the Deposit Takers as follows:
first, to the extent possible the funds will be allocated as
required to rectify and prevent any Collateral Imbalance; and
second, the funds will be allocated to the Deposit Taker for BNPLC,
unless the Deposit Taker for BNPLC has become a Disqualified Deposit
Taker, in which case the funds will be allocated to other Deposit Takers
who are not Disqualified Deposit Takers as Agent deems appropriate.
Further, if for any reason a Collateral Imbalance is determined by Agent
to exist, Agent shall, as required to rectify or mitigate the Collateral
Imbalance, promptly reallocate Collateral among Deposit Takers by
withdrawing Cash Collateral from some Accounts and redepositing it in
other Accounts. (If any party to this Agreement believes that the Value
of the Accounts held by a particular Deposit Taker causes a Collateral
Imbalance to exist, that party will promptly notify BNPLC, Informix and
Agent.) Subject to the foregoing, and provided that Agent does not
thereby create or exacerbate a Collateral Imbalance, Agent may withdraw
and redeposit Cash Collateral in order to reallocate the same among
Deposit Takers from time to time as Agent deems appropriate. For
purposes of illustration only, examples of the allocations required by
this Section are set forth in Attachment 4.
Section 5.4 Issuance and Redemption of Certificates of Deposit.
Upon the receipt of any deposit of Cash Collateral from Agent, each
Deposit Taker shall issue a Certificate of Deposit evidencing the
Account into which such deposit is made and deliver such Certificate of
Deposit to Agent for the benefit of BNPLC and the Participants. Upon
depositing any Cash Collateral into an Account that is already evidenced
by an outstanding Certificate of Deposit, Agent will surrender the
outstanding Certificate of Deposit, and in exchange the Deposit Taker
receiving the deposit will issue a new Certificate of Deposit,
evidencing the total amount of Cash Collateral in the Account after the
deposit. A Deposit Taker that has issued a Certificate of Deposit may
require the surrender of the Certificate of Deposit as a condition to a
withdrawal from the Account evidenced thereby, including any withdrawal
required or permitted by this Agreement. Upon surrender of a
Certificate of Deposit in connection with a withdrawal of less than all
of the Cash Collateral in the Account evidenced thereby, the applicable
Deposit Taker will concurrently issue a new Certificate of Deposit to
Agent, evidencing the balance of the Cash Collateral remaining on
deposit in the Account after the withdrawal. Notwithstanding the
foregoing, if any Certificate of Deposit held by Agent shall be
destroyed, lost or stolen, the Deposit Taker that issued the
Certificate, upon the written request of Agent, shall issue a new
Certificate of Deposit to Agent in lieu of and in substitution for the
Certificate of Deposit so destroyed, lost or stolen. However, as
applicant for the substituted Certificate of Deposit, Agent must
indemnify the applicable Deposit Taker against any liability on the
Certificate of Deposit destroyed, lost or stolen, and Agent shall
furnish to the Deposit Taker an affidavit of an officer of Agent setting
forth the fact of destruction, loss or theft and confirming the status
of Agent as holder of the Certificate of Deposit immediately prior to
the destruction, loss or theft. If any Certificate of Deposit held by
Agent shall become mutilated, the Deposit Taker that issued the
Certificate, upon the written request of Agent, shall issue a new
Certificate of Deposit to Agent in exchange and substitution for the
mutilated Certificate of Deposit. Agent shall hold all Certificates of
Deposit for the benefit of BNPLC and the Participants, subject to the
pledge and security interest created hereby.
Section 5.5 Status of the Accounts Under the Reserve Requirement
Regulations. Deposit Takers shall be permitted to structure the
Accounts as nonpersonal time deposits under 12 C.F.R., Part II, Chapter
204 (commonly known as "Regulation D"). Accordingly, each Deposit Taker
may require at least seven days advance notice of any withdrawal or
transfer of funds from Accounts it maintains and may limit the number of
withdrawals or transfers from such Accounts to no more than six in any
calendar month, notwithstanding anything to the contrary herein or in
any deposit agreement that Informix and any Deposit Taker may enter into
with respect to any Account. As necessary to satisfy the seven days
notice requirement with respect to withdrawals by Agent when required by
Informix pursuant to the provisions below, Agent shall notify Deposit
Takers promptly after receipt of any notice from Informix described in
subsection 0 or 0 or in Section 0.
Section 5.6 Acknowledgment by Informix that Requirements of this
Pledge Agreement are Commercially Reasonable. Informix acknowledges and
agrees that the requirements set forth herein concerning receipt,
deposit, withdrawal, allocation, application and distribution of Cash
Collateral by Agent, including the requirements and time periods set
forth in the next Article, are commercially reasonable.
6 Withdrawal of Cash Collateral. Informix may not withdraw Cash
Collateral, except as follows:
Section 6.1 Withdrawal of Collateral Prior to the Designated Sale
Date. Informix may require Agent to present Certificates of Deposit for
payment and withdraw Cash Collateral from Accounts on any date prior to
the Designated Sale Date and to deliver such Cash Collateral to
Informix, free and clear of all liens and security interests hereunder;
provided, however, that in each case:
6.1.1 Such withdrawal and delivery of the Cash Collateral to
Informix will not cause the Value of the remaining Collateral to be less
than the Minimum Collateral Value.
6.1.2 by a notice in the form of Attachment 5, Informix must
give Agent, BNPLC and the Participants notice of the required withdrawal
at least ten (10) Business Days prior to the date upon which the
withdrawal is to occur.
6.1.3 No Default or Event of Default shall have occurred and
be continuing at the time Informix gives the notice required by the
preceding subsection or on the date upon which the withdrawal is
required.
6.1.4 Informix must pay to Agent any and all costs incurred
by Agent in connection with the withdrawal, including (if applicable)
any early withdrawal penalties and other breakage charges specified at
or prior to the time any Account was initially established.
6.1.5 Agent shall determine the Accounts from which to make
any withdrawal required by Informix pursuant to this Section as
necessary to prevent or mitigate any Collateral Imbalance.
Section 6.2 Withdrawal and Application of Cash Collateral to
Reduce or Satisfy the Secured Obligations to the Participants. To
reduce the Purchase Price under and as defined in the Purchase Agreement
(and, thus, the Secured Obligations), Informix may require Agent to
withdraw a percentage (equal to the aggregate of all Participants'
Percentages) of the total Cash Collateral then held by or for Agent
pursuant to this Agreement on the Designated Sale Date (regardless of
whether an Event of Default shall have occurred and be continuing on the
Designated Sale Date) and to deliver the same, free and clear of all
liens and security interests hereunder, directly to the Participants in
proportion to their respective Percentages; provided, that:
6.2.1 by a notice in the form of Attachment 6, Informix must
have notified Agent, BNPLC and each of the Participants of the required
withdrawal and payment to Participants at least ten (10) Business Days
prior to the Designated Sale Date upon which it is to occur; and
6.2.2 the required withdrawal shall be made as determined by
Agent, first, from the Accounts maintained by the Deposit Takers for the
Participants, and then (to the extent necessary) from other Accounts.
Section 6.3 Withdrawal and Application of Cash Collateral to
Reduce or Satisfy the Secured Obligations to BNPLC. To satisfy
Informix's Purchase Agreement Obligations, Informix may require Agent to
withdraw any Cash Collateral held by the Deposit Taker for BNPLC
pursuant to this Agreement on the Designated Sale Date (regardless of
whether an Event of Default shall have occurred and be continuing on the
Designated Sale Date) and to deliver the same, free and clear of all
liens and security interests hereunder, directly to BNPLC as a payment
on behalf of Informix of amounts due under the Purchase Agreement;
provided, that by a notice in the form of Attachment 7, Informix must
have notified Agent and BNPLC of the required withdrawal and payment to
BNPLC at least ten (10) Business Days prior to the Designated Sale Date.
Section 6.4 Withdrawal of Cash Collateral From Accounts Maintained
by Disqualified Deposit Takers. Informix may from time to time require
Agent to withdraw any or all Cash Collateral from any Account maintained
by a Disqualified Deposit Taker and deposit it, still subject to the
pledge and grant of security interest hereunder, with other Deposit
Takers who are not Disqualified Deposit Takers (in accordance with the
requirements of Section 0 and 0) on any date prior to the Designated
Sale Date; provided, that by a notice in the form of Attachment 8,
Informix must have notified Agent, BNPLC and each of the Participants of
the required withdrawal at least ten (10) Business Days prior to the
date upon which it is to occur.
Section 6.5 Withdrawal and Application of Cash Collateral to Pay
the Release Price Required by Paragraph 9(b) of the Lease. To pay the
Release Price under and as defined in the Lease (and to thereby reduce
Stipulated Loss Value under and as defined in the Lease, which will in
turn reduce the Secured Obligations), Informix may require Agent to
present Certificates of Deposit for payment and withdraw Cash Collateral
from Accounts on any date the Release Price must be paid and to deliver
such Cash Collateral to BNPLC for application against the Release Price
then due, free and clear of all liens and security interests hereunder;
provided, however, that in each case:
6.5.1 Such withdrawal and delivery of the Cash Collateral to
BNPLC will not cause the Value of the remaining Collateral to be less
than the Minimum Collateral Value (computed after any payment of the
Release Price in connection therewith).
6.5.2 by a notice in the form of Attachment 9, Informix must
give Agent, BNPLC and the Participants notice of the required withdrawal
at least ten (10) Business Days prior to the date upon which the
withdrawal is to occur.
6.5.3 No Default or Event of Default shall have occurred and
be continuing at the time Informix gives the notice required by the
preceding subsection or on the date upon which the withdrawal is
required.
6.5.4 Informix must pay to Agent any and all costs incurred
by Agent in connection with the withdrawal, including (if applicable)
any early withdrawal penalties and other breakage charges specified at
or prior to the time any Account was initially established.
6.5.5 Agent shall determine the Accounts from which to make
any withdrawal required by Informix pursuant to this Section as
necessary to prevent or mitigate any Collateral Imbalance.
7 Representations and Covenants of Informix.
Section 7.1 Representations of Informix. Informix represents to
BNPLC, Agent and the Participants as follows:
7.1.1 Informix is the legal and beneficial owner of the
Collateral (or, in the case of after-acquired Collateral, at the time
Informix acquires rights in the Collateral, will be the legal and
beneficial owner thereof). No other Person has (or, in the case of
after-acquired Collateral, at the time Informix acquires rights therein,
will have) any right, title, claim or interest (by way of Lien, purchase
option or otherwise) in, against or to the Collateral.
7.1.2 Agent has (or in the case of after-acquired Collateral,
at the time Informix acquires rights therein, will have) a valid, first
priority, perfected pledge of and security interest in the Collateral,
regardless of the characterization of the Collateral as deposit
accounts, instruments or general intangibles under the UCC, but assuming
that the representations of each Deposit Taker in its Deposit Taker's
Acknowledgment and Agreement are true.
7.1.3 Informix has delivered to Agent, together with all
necessary stock powers, endorsements, assignments and other necessary
instruments of transfer, the originals of all documents, instruments and
agreements evidencing Accounts, Certificates of Deposit or Cash
Collateral.
7.1.4 Informix's chief executive office is located at the
address of Informix set forth in Section 12.1(b) hereof.
7.1.5 To the knowledge of Informix, neither the ownership or
the intended use of the Collateral by Informix, nor the pledge of
Accounts or the grant of the security interest by Informix to Agent
herein, nor the exercise by Agent of its rights or remedies hereunder,
will (i) violate any provision of (a) Applicable Law, (b) the articles
or certificate of incorporation, charter or bylaws of Informix, or (c)
any agreement, judgment, license, order or permit applicable to or
binding upon Informix, or (ii) result in or require the creation of any
Lien, charge or encumbrance upon any assets or properties of Informix
except as expressly contemplated in this Agreement. Except as expressly
contemplated in this Agreement, to the knowledge of Informix no consent,
approval, authorization or order of, and no notice to or filing with any
court, governmental authority or third party is required in connection
with the pledge or grant by Informix of the security interest
contemplated herein or the exercise by Agent of its rights and remedies
hereunder.
Section 7.2 Covenants of Informix. Informix hereby agrees as
follows:
7.2.1 Informix, at Informix's expense, shall promptly
procure, execute and deliver to Agent all documents, instruments and
agreements and perform all acts which are necessary or desirable, or
which Agent may request, to establish, maintain, preserve, protect and
perfect the Collateral, the pledge thereof to Agent or the security
interest granted to Agent therein and the first priority of such pledge
or security interest or to enable Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the preceding sentence, Informix shall (A)
procure, execute and deliver to Agent all stock powers, endorsements,
assignments, financing statements and other instruments of transfer
requested by Agent, (B) deliver to Agent promptly upon receipt all
originals of Collateral consisting of instruments, documents and chattel
paper and (C) cause the security interest of Agent in any Collateral
consisting of securities to be recorded or registered in the books of
any financial intermediary or clearing corporation requested by Agent.
7.2.2 Informix shall not use or permit any Collateral to be
used in violation of any provision of the this Agreement or any other
Transaction Document or any Applicable Law.
7.2.3 Informix shall pay promptly when due all taxes and
other governmental charges, all Liens and all other charges now or
hereafter imposed upon, relating to or affecting any Collateral (but
this provision shall not be construed to make Informix for taxes on net
income earned by any Deposit Taker).
7.2.4 Without thirty (30) days' prior written notice to
Agent, Informix shall not change Informix's name or place of business
(or, if Informix has more than one place of business, its chief
executive office).
7.2.5 Informix shall appear in and defend, on behalf of
Agent, any action or proceeding which may affect Informix's title to or
Agent's interest in the Collateral.
7.2.6 Subject to the express rights of Informix under Article
0, Informix shall not surrender or lose possession of (other than to
Agent or a Deposit Taker pursuant hereto), sell, encumber, lease, rent,
option, or otherwise dispose of or transfer any Collateral or right or
interest therein, and Informix shall keep the Collateral free of all
Liens.
7.2.7 Informix will not take any action which would in any
manner impair the value or enforceability of Agent's pledge of or
security interest in any Collateral, nor will Informix fail to take any
action which is required to prevent (and which Informix knows is
required to prevent) an impairment of the value or enforceability of
Agent's pledge of or security interest in any Collateral.
7.2.8 Informix shall pay (and shall indemnify and hold
harmless Agent from and against) all Losses incurred by Agent in
connection with or because of (A) the interest acquired by Agent in any
Collateral pursuant to this Agreement, or (B) the negotiation or
administration of this Agreement, whether such Losses are incurred at
the time of execution of this Agreement or at any time in the future.
Costs and expenses included in such Losses may include, without
limitation, all filing and recording fees, taxes, Uniform Commercial
Code search fees and Attorneys' Fees incurred by Agent with respect to
the Collateral. As used in this subsection the term "Agent" shall refer
not only to the Person designated as such in the introductory paragraph
of this Agreement, but also to each director, officer, agent, attorney,
employee, representative and Affiliate of such Person.
8 Authorized Action by Agent. Informix hereby irrevocably appoints
Agent as its attorney-in-fact for the purpose of authorizing Agent to
perform (but Agent shall not be obligated to and shall incur no
liability to Informix or any third party for failure to perform) any act
which Informix is obligated by this Agreement to perform, and to
exercise, consistent with the other provisions of this Agreement, such
rights and powers as Informix might exercise with respect to the
Collateral during any period in which a Default or Event of Default has
occurred and is continuing, including the right to (a) collect by legal
proceedings or otherwise and endorse, receive and receipt for all
dividends, interest, payments, proceeds and other sums and property now
or hereafter payable on or on account of the Collateral; (b) enter into
any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply
other property in exchange for the Collateral; (c) insure, process,
preserve and enforce the Collateral; (d) make any compromise or
settlement, and take any action it deems advisable, with respect to the
Collateral; (e) pay any indebtedness of Informix relating to the
Collateral; and (f) execute UCC financing statements and other
documents, instruments and agreements required hereunder. Informix
agrees that such care as Agent gives to the safekeeping of its own
property of like kind shall constitute reasonable care of the Collateral
when in Agent's possession; provided, however, that Agent shall not be
obligated to Informix to give any notice or take any action to preserve
rights against any other Person in connection with the Secured
Obligations or with respect to the Collateral.
9 Default and Remedies. In addition to all other rights and
remedies granted to Agent, BNPLC or the Participants by this Agreement,
the Lease, the Purchase Agreement, the Participation Agreement, the UCC
and other Applicable Laws, Agent may, upon the occurrence and during the
continuance of any Event of Default, exercise any one or more of the
following rights and remedies, all of which will be in furtherance of
its rights as a secured party under the UCC:
(a) Agent may collect, receive, appropriate or realize
upon the Collateral or otherwise foreclose or enforce the pledge of or
security interests in any or all Collateral in any manner permitted by
Applicable Law or in this Agreement; and
(b) Agent may notify any or all Deposit Takers to pay all
or any portion of the Collateral held by such Deposit Taker(s) directly
to Agent.
Agent shall distribute the proceeds of all Collateral received by Agent
after the occurrence of an Event of Default to BNPLC and the
Participants for application to the Secured Obligations. If any
proceeds of Collateral remain after all Secured Obligations have been
paid in full, Agent will deliver or direct the Deposit Takers to deliver
such proceeds to Informix or other Persons entitled thereto. In any
case where notice of any sale or disposition of any Collateral is
required, Informix hereby agrees that seven (7) Business Days notice of
such sale or disposition is reasonable.
10 Other Recourse. To the fullest extent permitted by applicable
law, Informix waives any right to require that Agent, BNPLC or the
Participants proceed against any other Person, exhaust any Collateral or
other security for the Secured Obligations, or to have any Other Liable
Party joined with Informix in any suit arising out of the Secured
Obligations or this Agreement, or pursue any other remedy in their
power. Informix waives any and all notice of acceptance of this
Agreement. Informix further waives notice of the creation,
modification, rearrangement, renewal or extension for any period of any
of the Secured Obligations of any Other Liable Party from time to time
and any defense arising by reason of any disability or other defense of
any Other Liable Party or by reason of the cessation from any cause
whatsoever of the liability of any Other Liable Party. Until all of the
Secured Obligations shall have been paid in full, Informix shall have no
right to subrogation, reimbursement, contribution or indemnity against
any Other Liable Party and Informix waives the right to enforce any
remedy which Agent, BNPLC or any Participant has or may hereafter have
against any Other Liable Party, and waives any benefit of and any right
to participate in any other security whatsoever now or hereafter held by
Agent, BNPLC or any Participant. Informix authorizes Agent, BNPLC and
the Participants, without notice or demand and without any reservation
of rights against Informix and without affecting Informix's liability
hereunder or on the Secured Obligations, from time to time to (a) take
or hold any other property of any type from any other Person as security
for the Secured Obligations, and exchange, enforce, waive and release
any or all of such other property, (b) after any Event of Default, apply
or require the application of the Collateral (in accordance with this
Agreement) or such other property in any order they may determine and to
direct the order or manner of sale thereof as they may determine, (c)
renew, extend for any period, accelerate, modify, compromise, settle or
release any of the obligations of any Other Liable Party with respect to
any or all of the Secured Obligations or other security for the Secured
Obligations, and (d) release or substitute any Other Liable Party.
11 Provisions Concerning Agent. In the event of any conflict
between the following and other provisions in this Agreement, the
following will control:
Section 11.1 Appointment and Authority. BNPLC and each
Participant hereby irrevocably authorizes Agent, and Agent hereby
undertakes, to take all actions and to exercise such powers under this
Agreement as are specifically delegated to Agent by the terms hereof,
together with all other powers reasonably incidental thereto. The
relationship of Agent to the Participants is only that of one commercial
bank acting as collateral agent for others, and nothing herein shall be
construed to constitute Agent a trustee or other fiduciary for any
Participant or anyone claiming through or under a Participant nor to
impose on Agent duties and obligations other than those expressly
provided for in this Agreement. With respect to any matters not
expressly provided for in this Agreement and any matters which this
Agreement places within the discretion of Agent, Agent shall not be
required to exercise any discretion or take any action, and it may
request instructions from BNPLC and Participants with respect to any
such matter, in which case it shall be required to act or to refrain
from acting (and shall be fully protected and free from liability to all
Participants in so acting or refraining from acting) upon the
instructions of the Majority, as defined in the Participation Agreement,
including itself as a Participant and BNPLC; provided, however, that
Agent shall not be required to take any action which exposes it to a
risk of personal liability that it considers unreasonable or which is
contrary to this Agreement or the other documents referenced herein or
to Applicable Law.
Section 11.2 Exculpation, Agent's Reliance, Etc. Neither Agent
nor any of its directors, officers, agents, attorneys, or employees
shall be liable for any action taken or omitted to be taken by any of
them under or in connection with this Agreement, INCLUDING THEIR
NEGLIGENCE OF ANY KIND, except that this sentence shall not excuse any
such Person from liability for its own Misconduct. Without limiting the
generality of the foregoing, Agent (1) may treat the rights of any
Participant under its Participation Agreement as continuing until Agent
receives written notice of the assignment or transfer of those rights in
accordance with such Participation Agreement, signed by such Participant
and in form satisfactory to Agent; (2) may consult with legal counsel
(including counsel for Informix), independent public accountants and
other experts selected by it and shall not be liable for any action
taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts, unless the action taken
or omitted constitutes Misconduct; (3) makes no warranty or
representation and shall not be responsible for any statements,
warranties or representations made in or in connection with this
Agreement or the other documents referenced herein; (4) shall not have
any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of the Transaction
Documents on the part of any party thereto, or to inspect the property
(including the books and records) of any party thereto; (5) shall not be
responsible to any Participant for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any
Transaction Document or any instrument or document furnished in
connection therewith; (6) may rely upon the representations and
warranties of Informix, Participants and Deposit Takers in exercising
its powers hereunder; and (6) shall incur no liability under or in
respect of the Transaction Documents by acting upon any notice, consent,
certificate or other instrument or writing (including any telecopy,
telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper Person or Persons.
Section 11.3 Participant's Credit Decisions. Each Participant
acknowledges that it has, independently and without reliance upon Agent
or any other Participant, made its own analysis of Informix and the
transactions contemplated hereby and its own independent decision to
enter into the Transaction Documents to which it is a party. Each
Participant also acknowledges that it will, independently and without
reliance upon Agent or any other Participant and based on such documents
and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the
Transaction Documents.
Section 11.4 Indemnity. Each Participant agrees to indemnify
Agent (to the extent not reimbursed by Informix within ten (10) days
after demand) from and against such Participant's Percentage of any and
all Losses of any kind or nature whatsoever which to any extent (in
whole or in part) may be imposed on, incurred by, or asserted against
Agent growing out of, resulting from or in any other way associated with
any of the Collateral, the Transaction Documents and the transactions
and events (including the enforcement thereof) at any time associated
therewith or contemplated therein. THE FOREGOING INDEMNIFICATION SHALL
APPLY WHETHER OR NOT SUCH LOSSES ARE IN ANY WAY OR TO ANY EXTENT OWED,
IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR
ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY
KIND BY AGENT, PROVIDED ONLY THAT NO PARTICIPANT SHALL BE OBLIGATED
UNDER THIS SECTION TO INDEMNIFY AGENT FOR THAT PORTION, IF ANY, OF ANY
LOSS WHICH IS PROXIMATELY CAUSED BY AGENT'S OWN INDIVIDUAL MISCONDUCT,
AS DETERMINED IN A FINAL JUDGMENT RENDERED AGAINST AGENT. Cumulative of
the foregoing, each Participant agrees to reimburse Agent promptly upon
demand for such Participant's Percentage Share of any costs and expenses
to be paid to Agent by Informix hereunder to the extent that Agent is
not timely reimbursed by Informix as provided in the subsection 0. As
used in this Section the term "Agent" shall refer not only to the Person
designated as such in the introductory paragraph of this Agreement, but
also to each director, officer, agent, attorney, employee,
representative and Affiliate of such Person.
Section 11.5 Rights as Participant and Deposit Taker. In its
capacity as a Participant, Agent shall have the same rights and
obligations as any Participant and may exercise such rights as though it
were not Agent. In its capacity as a Deposit Taker, Agent shall have
the same rights and obligations as any Deposit Taker and may exercise
such rights as though it were not Agent. Agent and any of its
Affiliates may accept deposits from, lend money to, act as Trustee under
indentures of, and generally engage in any kind of business with
Informix or its Affiliates, all as if Agent were not designated as the
Agent hereunder and without any duty to account therefor to any other
Participant.
Section 11.6 Investments. Whenever Agent in good faith determines
that it is uncertain about how to distribute any funds which it has
received hereunder, or whenever Agent in good faith determines that
there is any dispute among BNPLC and Participants about how such funds
should be distributed, Agent may choose to defer distribution of the
funds which are the subject of such uncertainty or dispute. If Agent in
good faith believes that the uncertainty or dispute will not be promptly
resolved, or if Agent is otherwise required to invest funds pending
distribution, Agent shall invest such funds pending distribution, all
interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the
same Persons as such investment. All moneys received by Agent for
distribution to BNPLC or Participants shall be held by Agent pending
such distribution solely as Agent hereunder, and Agent shall have no
equitable title to any portion thereof.
Section 11.7 Benefit of Section 0. The provisions of this Article
0 (other than the following Section 0) are intended solely for the
benefit of Agent, BNPLC and Participants, and Informix shall not be
entitled to rely on any such provision or assert any such provision in a
claim or defense against Agent, BNPLC or any Participant. Agent, BNPLC
and Participants may waive or amend such provisions as they desire
without any notice to or consent of Informix.
Section 11.8 Resignation. Agent may resign at any time by giving
written notice thereof to BNPLC, Participants and Informix. Upon any
such resignation the Majority (as defined in the Participation
Agreement) shall have the right to appoint a successor Agent, subject to
Informix's consent, such consent not to be unreasonably withheld. A
successor must be appointed for any retiring Agent, and such Agent's
resignation shall become effective when such successor accepts such
appointment. If, within thirty days after the date of the retiring
Agent's resignation, no successor Agent has been appointed and has
accepted such appointment, then the retiring Agent may appoint a
successor Agent, which shall be a commercial bank organized or licensed
to conduct a banking or trust business under the laws of the United
States of America or of any state thereof. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, the retiring Agent
shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation hereunder, the
provisions of this Article 0 shall continue to inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent.
12 Miscellaneous.
Section 12.1 Payments. All payments and deliveries of funds
required to be made by Informix to Agent hereunder shall be paid or
delivered to Agent in immediately available funds by wire transfer to:
Federal Reserve Bank of San Francisco
Account: Banque Nationale de Paris (for further
credit to Informix Collateral Account
held for the benefit of BNPLC and
Participants)
ABA #: 121027234
Reference: Informix (Receipts of Collateral).
or at such other place and in such other manner as Agent may designate
in a notice sent to Informix in accordance herewith (provided BNPLC will
not unreasonably designate a method of payment other than wire
transfer). Time is of the essence as to all payments and deliveries of
funds by Informix to Agent under this Agreement. Any payments or return
of funds required to be made by Agent to Informix pursuant to this
Agreement shall be paid to Informix in immediately available funds by
wire transfer to: Informix Software, Inc., Account No.: 12330-09815,
Bank of America, 1850 Gateway Boulevard, Concord, California 94520,
ABA#: 121000358; or as Informix may otherwise direct by written notice
sent to Agent in accordance herewith (provided Informix will not
unreasonably designate a method of payment other than wire transfer).
Section 12.2 Notices. 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 Informix:
Informix Corporation
4100 Bohannon Drive
Menlo Park, California 94025
Attn: Treasurer
Telecopy: (415) 926-6564
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill
Palo Alto, California 94304-1050
Attention: Real Estate Department/BOB
Telecopy: (415) 493-6811
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
Rafael Lumanlan
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 Agent:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho or
Rafael Lumanlan
Telecopy: (415) 296-8954
With a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
Address of Participants:
As set forth in Schedule 1
to the Participation Agreement
Section 12.3 Waivers; Amendments. Any term, covenant, agreement
or condition of this Agreement may be amended or waived only in writing
and signed by the parties hereto. No failure or delay by Agent, BNPLC
or any Participant in exercising any right hereunder shall operate as a
waiver thereof or of any other right nor shall any single or partial
exercise of any such right preclude any other further exercise thereof
or of any other right. Unless otherwise specified in any such waiver or
consent, a waiver or consent given hereunder shall be effective only in
the specific instance and for the specific purpose for which given.
Section 12.4 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of Informix, Agent, BNPLC and the
Participants which become parties hereto and their respective permitted
successors and assigns pursuant to a Permitted Transfer; provided,
however, that Participants may sell, assign and delegate their
respective rights and obligations hereunder only as permitted by the
Participation Agreement and the Lease.
Section 12.5 Partial Invalidity. If at any time any provision of
this Agreement is or becomes illegal, invalid or unenforceable in any
respect under the law or any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions of this Agreement
nor the legality, validity or enforceability of such provision under the
law of any other jurisdiction shall in any way be affected or impaired
thereby.
Section 12.6 Cumulative Rights, etc. Except as herein expressly
provided to the contrary, the rights, powers and remedies of Agent,
BNPLC and the Participants under this Agreement shall be in addition to
all rights, powers and remedies given to them by virtue of any
Applicable Law, any other Transaction Document or any other agreement,
all of which rights, powers, and remedies shall be cumulative and may be
exercised successively or concurrently without impairing their
respective rights hereunder. Informix waives any right to require
Agent, BNPLC or any Participant to proceed against any Person or to
exhaust any Collateral or to pursue any remedy in Agent's, BNPLC's or
such Participant's power.
Section 12.7 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California
without reference to conflicts of law rules (except to the extent
otherwise provided in the UCC).
Section 12.8 Survival of Agreements. All representations and
warranties of Informix herein, and all covenants and agreements herein
shall survive the execution and delivery of this Agreement, the
execution and delivery of any other Transaction Documents and the
creation of the Secured Obligations and continue until terminated or
released as provided herein.
Section 12.9 Other Liable Party. Neither this Agreement nor the
exercise by Agent or the failure of Agent to exercise any right, power
or remedy conferred herein or by law shall be construed as relieving any
Other Liable Party from liability on the Secured Obligations or any
deficiency thereon. This Agreement shall continue irrespective of the
fact that the liability of any Other Liable Party may have ceased or
irrespective of the validity or enforceability of any other agreement
evidencing or securing the Secured Obligations to which Informix or any
Other Liable Party may be a party, and notwithstanding the
reorganization, death, incapacity or bankruptcy of any Other Liable
Party, or any other event or proceeding affecting any Other Liable
Party.
Section 12.10 Termination. Following the Designated Sale Date,
upon satisfaction in full of all Secured Obligations and upon written
request for the termination hereof delivered by Informix to Agent, (i)
this Agreement and the pledge and security interest created hereby shall
terminate and all rights to the Collateral shall revert to Informix and
(ii) Agent will, upon Informix's request and at Informix's expense
execute and deliver to Informix such documents as Informix shall
reasonably request to evidence such termination and release.
Section 12.11 Counterparts. This Agreement may be separately
executed in any number of counterparts, all of which when so executed
shall be deemed to constitute one and the same Pledge Agreement.
[The signature pages follow.]
IN WITNESS WHEREOF, Informix, BNPLC, Agent and the Participants
whose signatures appear below have caused this Agreement to be executed
as of the day and year first above written.
"Informix"
INFORMIX CORPORATION
By: /s/Margaret R. Brauns
Margaret Brauns, Vice President and Treasurer
[Continuation of signature pages to Pledge Agreement dated to be
effective January 6, 1997]
"BNPLC"
BNP LEASING CORPORATION
By: /s/Lloyd G. Fox
Lloyd G. Cox, Vice President
[Continuation of signature pages to Pledge Agreement dated to be
effective January 6, 1997]
"AGENT"
BANQUE NATIONALE DE PARIS
By: /s/Jennifer Cho
Jennifer Cho, Vice President
By: /s/Charles Day
Charles Day, Assistant Vice President
"PARTICIPANT"
BANQUE NATIONALE DE PARIS
By: /s/Jennifer Cho
Jennifer Cho, Vice President
By: /s/Charles Day
Charles Day, Assistant Vice President
ATTACHMENT 1
TO PLEDGE AGREEMENT
CERTIFICATE OF DEPOSIT
(No. _________)
[_________, _____]
[NAME OF THE ISSUING
DEPOSIT TAKER AND THE
ADDRESS OF ITS APPLICABLE
ACCOUNT OFFICE]
Payable to
the order of: BANQUE NATIONALE DE PARIS, as Agent under the Pledge
Agreement dated January 6, 1997 between it, BNP
Leasing Corporation, Informix Corporation and others
Dollars
in current funds, without interest, seven days after presentment of this
certificate properly endorsed.
The bank issuing this certificate certifies that on the date
indicated above the payee deposited the dollar amount indicated above,
and that such amount shall be payable as provided above.
Authorized Signature
ATTACHMENT 2
TO PLEDGE AGREEMENT
SUPPLEMENT TO PLEDGE AGREEMENT
[__________, ____]
Banque Nationale de Paris
____________________
____________________
____________________
Informix Corporation
____________________
____________________
____________________
1. Reference is made to the Pledge Agreement dated as of
January 6, 1997 (the "Pledge Agreement") among Informix Corporation
("Informix"), BNP Leasing Corporation ("BNPLC"), the financial
institutions which are from time to time participants under and as
defined in such Pledge Agreement (collectively, the "Participants") and
Banque Nationale de Paris, acting in its capacity as agent for BNPLC and
the Participants (in such capacity, "Agent"). Unless otherwise defined
herein, all capitalized terms used in this Supplement have the
respective meanings given to those terms in the Pledge Agreement.
2. The undersigned hereby certifies to Agent and Informix that
the undersigned has become a party to the Participation Agreement by
executing a supplement as provided therein and that its Percentage
thereunder is ______%.
3. The undersigned, by executing and delivering this Supplement
to Informix and Agent, hereby agrees to become a party to the Pledge
Agreement and agrees to be bound by all of the terms thereof applicable
to Participants. The Deposit Taker for the undersigned shall be
_________________, until such time as another Deposit Taker for the
undersigned shall be designated in accordance with Sections 0 or 0 of
the Pledge Agreement. The undersigned certifies to Agent and Informix
that such Deposit Taker is a Qualified Deposit Taker and satisfies the
requirements for a Deposit Taker set forth in Section 0 of the Pledge
Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Supplement as
of the day and year indicated above.
[ ]
By:
Name:
Title:
ATTACHMENT 3
TO PLEDGE AGREEMENT
NOTICE OF SECURITY INTEREST
[_________, _____]
[Name of Deposit Taker]
[Address of Deposit Taker]
1. Reference is made to the Pledge Agreement dated as of
January 6, 1997 (the "Pledge Agreement") among Informix Corporation
("Informix"), BNP Leasing Corporation ("BNPLC"), the financial
institutions which are from time to time Participants under and as
defined in such Pledge Agreement (collectively, the "Participants") and
Banque Nationale de Paris, acting in its capacity as agent for BNPLC and
the Participants (in such capacity, "Agent"). Unless otherwise defined
herein, all capitalized terms used in this Supplement have the
respective meanings given to those terms in the Pledge Agreement.
2. Informix has informed Agent that Informix has established
with the addressee of this Notice (the "Deposit Taker") the following
non-interest bearing Account(s) to be maintained at the following
Account Office(s):
Account Account Account
Type Office Number
Time Deposit
Time Deposit
Time Deposit
Informix has further informed Agent that Informix intends to maintain
Cash Collateral in such Account(s), and that to evidence such Account(s)
and the amount of Cash Collateral held therein from time to time,
Informix has authorized the Deposit Taker to issue Certificates of
Deposit payable to the order of Agent as provided in the Pledge
Agreement.
3. Informix and Agent hereby notify Deposit Taker that,
pursuant to the Pledge Agreement, Informix has granted to Agent, for the
ratable benefit of BNPLC and the Participants as security for the
Secured Obligations, a pledge of and security interest in all Accounts
and other Collateral maintained by Informix with Deposit Taker,
including the Account(s) described in paragraph 2 above.
4. In furtherance of such grant, Informix and Agent hereby
authorize and direct Deposit Taker to:
(a) hold all Collateral for Agent and as Agent's bailee,
separate and apart from all other property and funds of Informix and all
other Persons and to permit no other funds to be deposited or credited
to the Account(s);
(b) make a notation in its books and records of the
interest of Agent in the Collateral and that the Account(s) and all
deposits therein or sums credited thereto are subject to a pledge and
security interest in favor of Agent;
(c) issue and redeem Certificates of Deposit evidencing the
Account(s), as directed by Agent pursuant to the Pledge Agreement;
(d) take such other steps as Agent may reasonably request
to record, maintain, validate and perfect its pledge of and security
interest in the Collateral; and
(e) upon receipt of notice from Agent that an Event of
Default has occurred, transfer and deliver to Agent or its nominee,
together with all necessary endorsements, all or such portion of the
Collateral held by Deposit Taker as Agent shall direct; provided,
however, that in connection therewith the Deposit Taker may require
compliance by Agent with the provisions in Section 0 of the Pledge
Agreement for redemption of any outstanding Certificates of Deposit
which evidence the Account(s).
5. Informix and Agent agree that (a) the possession by Deposit
Taker of all money, instruments, chattel paper and other property
constituting Collateral shall be deemed to be possession by Agent or a
person designated by Agent, for purposes of perfecting the security
interest granted to Agent hereunder pursuant to Section 9305, 8313 or
8321 of the UCC, as the case may be, and (b) notifications by Deposit
Taker to other Persons holding any such property, and acknowledgements,
receipts or confirmations from such Persons delivered to Deposit Taker,
shall be deemed notifications to, or acknowledgements, receipts or
confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Deposit Taker for the benefit of Agent for the
purposes of perfecting such security interests under applicable law.
6. As contemplated by the Pledge Agreement, please acknowledge
Deposit Taker's receipt of, and consent to, this notice and confirm the
representations and agreements set forth in the Acknowledgement and
Agreement attached hereto by executing the same and returning this
letter to Agent. For your files, a copy of this letter is enclosed
which you may retain. The authorizations and directions set forth
herein may not be revoked or modified without the written consent of
Agent.
"AGENT"
BANQUE NATIONALE DE PARIS
By:
Name:
Title:
By:
Name:
Title:
"Informix"
INFORMIX CORPORATION
By:
Name:
Title:
ACKNOWLEDGEMENT AND AGREEMENT
OF DEPOSIT TAKER
Deposit Taker hereby acknowledges receipt of, and consents to, the
above notice, acknowledges that it will hold the Collateral for Agent
and as Agent's bailee, agrees to comply with the authorizations and
directions set forth above and represents to and agrees with Informix
and Agent as follows:
(a) Deposit Taker is a commercial bank, organized under
the laws of the United States of America or a state thereof or under the
laws of another country which is doing business in the United States of
America. Deposit Taker is authorized to maintain deposit accounts for
others through the Account Offices specified in the above notice, and
Deposit Taker will not move the accounts described in the above notice
to other offices without the prior written authorization of Agent and
Informix.
(b) Deposit Taker has a combined capital, surplus and
undivided profits of at least $500,000,000.
(c) The information set forth above regarding the
Account(s) is accurate. Such Account(s) is (are) currently open and
Deposit Taker has no prior notice of any other pledge, security
interest, Lien, adverse claim or interest in such Account(s).
(d) To the knowledge of the undersigned representative of
Deposit Taker, all actions necessary to perfect the pledge to Agent of
and security interest of Agent in such Account(s) have been taken under
the laws of the jurisdiction in which the applicable Account Office(s)
is (are) located.
(e) Deposit Taker shall promptly notify Informix and Agent
if the representations made by Deposit Taker above cease to be true and
correct.
(f) Deposit Taker shall not (i) allow the withdrawal of
funds from any Account by any Person other than Agent or (ii) without in
each case first obtaining the prior written authorization of Agent,
setoff or attempt to setoff any amounts owed to Deposit Taker, including
any Secured Obligations, against any Collateral held from time to time
by Deposit Taker.
[ ]
By:
Name:
Title:
[Date]
ATTACHMENT 4
TO PLEDGE AGREEMENT
EXAMPLES OF CALCULATIONS REQUIRED
TO AVOID A COLLATERAL IMBALANCE
The examples below are provided to illustrate the calculations
required for allocations of Cash Collateral in a manner that will avoid
a Collateral Imbalance. The examples are not intended to reflect actual
numbers under this Pledge Agreement or actual Percentages of BNPLC or
any of the Participants; nor are the examples intended to provide a
formula for the allocations that would be appropriate in every case.
The examples also reflect adjustments that would be appropriate if the
Collateral Percentage were adjusted from time to time, although this
Agreement provides that such percentage is to remain at 100% so long as
this Agreement remains in force.
EXAMPLE NO. 1
Assumptions:
1. Two Participants ("Participant A" and "Participant B") are
parties to the Participation Agreement with BNPLC. Participant A's
Percentage is 50% and Participant B's Percentage is 45%, leaving BNPLC
with a Percentage of 5%.
2. On the date of this Pledge Agreement, the Initial Funding Advance
under the Lease was provided as follows, resulting in a Stipulated Loss
Value of $50,000,000:
A. Landlord's Parent (providing BNPLC's share) (5%) $2,500,000
B. Participant A (50%) 22,500,000
C. Participant B (45%) 25,000,000
TOTAL $50,000,000
3. The Minimum Collateral Value on the date of this Pledge Agreement
was $30,000,000 (reflecting a Collateral Percentage of 60% times
Stipulated Loss Value).
4. On the date of this Pledge Agreement, Informix delivered to Agent
Cash Collateral of $30,000,000, equal to the Minimum Collateral Value,
as required by Section 0 of this Pledge Agreement.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance
under these assumptions, Agent would be required to allocate the
$30,000,000 to the Deposit Takers for BNPLC and the Participants as
follows:
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value) $1,500,000
B. Participant A's Deposit Taker 15,000,000
(50% of Minimum Collateral Value)
C. Participant B's Deposit Taker 13,500,000
(45% of Minimum Collateral Value)
TOTAL $30,000,000
EXAMPLE NO. 2
Assumptions: Assume the same facts as in Example No. 1, and in addition
assume that:
1. Effective as of the first Base Rent Date, Informix increased its
Collateral Percentage from 60% to 80%, raising the Minimum Collateral
Value to $40,000,000. Because of such increase, Informix also delivered
an additional $10,000,000 as Cash Collateral to Agent on the first Base
Rent Date, bringing the total of all Cash Collateral delivered by
Informix to $40,000,000 as required by Section 0 of this Pledge
Agreement.
2. Also effective as of the first Base Rent Date, a new Participant
approved by Informix ("Participant C") became a party to the Pledge
Agreement and the Participation Agreement, taking a Percentage of 20%.
Simultaneously, Participant A and Participant B entered into supplements
to the Participation Agreement which reduced their Percentages to 40%
and 35%, respectively.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance
under these assumptions, Agent would be required to allocate the Cash
Collateral as required to leave the Deposit Takers for BNPLC and the
Participants with the following amounts:
A. BNPLC's Deposit Taker $2,000,000
(5% of Minimum Collateral Value)
B. Participant A's Deposit Taker 16,000,000
(40% of Minimum Collateral Value)
C. Participant B's Deposit Taker 14,000,000
(35% of Minimum Collateral Value)
D. Participant C's Deposit Taker 8,000,000
(20% of Minimum Collateral Value)
TOTAL $40,000,000
Thus, to prevent a Collateral Imbalance, Agent would have to allocate
the $10,000,000 of additional Cash Collateral it received on the first
Base Rent Date as follows:
A. BNPLC's Deposit Taker $500,000
($2,000,000 less $1,500,000 already on deposit)
B. Participant A's Deposit Taker 1,000,000
($16,000,000 less $15,000,000 already on deposit)
C. Participant B's Deposit Taker 500,000
($14,000,000 less $13,500,000 already on deposit)
D. Participant C's Deposit Taker 8,000,000
($8,000,000 less $0 already on deposit)
TOTAL $10,000,000
EXAMPLE NO. 3
Assumptions: Assume the same facts as in Example No. 2, except that:
1. Instead of increasing its Collateral Percentage from 60% to 80%,
Informix increased its Collateral Percentage to 70% on the first Base
Rent Date, raising the Minimum Collateral Value to $35,000,000. Because
of such increase, Informix delivered an additional $5,000,000 as
additional Cash Collateral to Agent on the first Base Rent Date,
bringing the total of all Cash Collateral delivered by Informix to
$35,000,000 as required by Section 0 of this Pledge Agreement.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance
under these assumptions, Agent would be required to allocate the Cash
Collateral as required to leave the Deposit Takers for BNPLC and the
Participants with the following amounts:
A. BNPLC's Deposit Taker $1,750,000
(5% of Minimum Collateral Value)
B. Participant A's Deposit Taker 14,000,000
(40% of Minimum Collateral Value)
C. Participant B's Deposit Taker 12,250,000
(35% of Minimum Collateral Value)
D. Participant C's Deposit Taker 7,000,000
(20% of Minimum Collateral Value)
TOTAL $35,000,000
Thus, to prevent a Collateral Imbalance, Agent would have to allocate
the $5,000,000 of additional Cash Collateral it received on the first
Base Rent Date as follows:
A. BNPLC's Deposit Taker $250,000
($1,750,000 less $1,500,000 already on deposit)
B. Participant A's Deposit Taker (1,000,000)
($14,000,000 less $15,000,000 already on deposit)
C. Participant B's Deposit Taker (1,250,000)
($12,250,000 less $13,500,000 already on deposit)
D. Participant C's Deposit Taker 7,000,000
($7,000,000 less $0 already on deposit)
TOTAL $5,000,000
NOTE: THE NEGATIVE AMOUNTS (IN PARENTHESIS) ABOVE REPRESENT REQUIRED
WITHDRAWALS RATHER THAN DEPOSITS. AS EXAMPLE NO. 3 ILLUSTRATES, TO
AVOID A COLLATERAL IMBALANCE AGENT MAY FROM TIME TO TIME HAVE TO
WITHDRAW CASH COLLATERAL HELD BY THE DEPOSIT TAKER FOR ONE PARTICIPANT
AND DEPOSIT IT IN AN ACCOUNT MAINTAINED BY A DEPOSIT TAKER FOR ANOTHER
PARTICIPANT.
ATTACHMENT 5
TO PLEDGE AGREEMENT
NOTICE OF INFORMIX'S REQUIREMENT TO
WITHDRAW EXCESS CASH COLLATERAL
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement dated January 6, 1997, between Informix
Corporation, BNP Leasing Corporation, Banque Nationale de Paris and any
other financial institutions that have become Participants as described
therein
Gentlemen:
Capitalized terms used in this letter are intended to have the
meanings assigned to them in the Pledge Agreement referenced above.
This letter constitutes notice to you, as Agent under the Pledge
Agreement, that pursuant to Section 0 of the Pledge Agreement, Informix
requires you to withdraw from the Accounts and return to Informix the
following amount:
____________________________ Dollars ($__________)
on the following date:
__________, ____
To assure you that Informix has satisfied the conditions to its
right to require such withdrawal, and to induce you to comply with this
notice, Informix certifies to you that:
1. Your withdrawal and delivery of the amount specified above
to Informix will not cause the Value of the remaining Collateral to be
less than the Minimum Collateral Value. After giving effect to such
withdrawal, the Collateral remaining in the Accounts maintained by the
Deposit Takers will be:
____________________________ Dollars ($__________),
and the Minimum Collateral Value on the date specified above will
equal:
____________________________ Dollars ($__________).
Such Minimum Collateral Value equals the Collateral Percentage of:
__________ percent (___%),
times the Stipulated Loss Value of:
____________________________ Dollars ($__________).
2. Informix is giving this notice to you, BNPLC and the
Participants at least ten (10) Business Days prior to the Base Rent Date
specified above.
3. No Default or Event of Default has occurred and is
continuing as of the date of this notice, and Informix does not
anticipate that any Default or Event of Default will have occurred and
be continuing on the date upon which the withdrawal is required.
4. Informix shall pay to you any and all costs incurred by
you in connection with the withdrawal, including (if applicable) any
early withdrawal penalties and other breakage charges specified at or
prior to the time any Account was initially established.
5. Informix agrees that you may determine the Accounts from
which to make any withdrawal required by Informix pursuant to this
Section as necessary to prevent or mitigate any Collateral Imbalance.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE
STATEMENTS ABOVE ARE NOT CORRECT OR IF THE DATE FOR WITHDRAWAL SPECIFIED
ABOVE IS LESS THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF THIS NOTICE.
HOWEVER, WE ASK THAT YOU NOTIFY INFORMIX IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Please remember that the express terms of Certificates of Deposit
issued pursuant to the Pledge Agreement require presentment of the
Certificates of Deposit seven days before Cash Collateral is to be
withdrawn from the Accounts they evidence. Accordingly, you must
present Certificates of Deposit to Deposit Takers seven days prior to
the withdrawal of Cash Collateral required by this notice. For your
convenience, we have attached a letter as Annex 1 to this notice that
you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth
the amounts Informix believes you must withdraw from each Account to
avoid a Collateral Imbalance.
INFORMIX CORPORATION
Name:_________________________
Title:________________________
[cc BNPLC and all Participants]
Annex 1
TO INFORMIX'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH EXCESS COLLATERAL
[_________, _____]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement dated January 6, 1997, between Informix
Corporation, BNP Leasing Corporation, Banque Nationale de Paris and any
other financial institutions that have become Participants as described
therein
Gentlemen:
Capitalized terms used in this letter are intended to have the
meanings assigned to them in the Pledge Agreement referenced above.
This letter constitutes notice from the undersigned, as Agent under the
Pledge Agreement, that pursuant to Section 0 of the Pledge Agreement,
Informix requires Agent to withdraw from the Accounts and return to
Informix the amounts listed below on the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in
connection with such withdrawal:
Deposit Taker Account No. Amount
1. $
2. $
3. $
4. $
TOTAL WITHDRAWALS: $
BANQUE NATIONALE DE PARIS, AS AGENT
Name:_________________________
Title:________________________
[cc BNPLC and Informix]
ATTACHMENT 6
TO PLEDGE AGREEMENT
NOTICE OF INFORMIX'S REQUIREMENT OF
DIRECT PAYMENTS TO PARTICIPANTS
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement dated January 6, 1997, between Informix
Corporation, BNP Leasing Corporation, Banque Nationale de Paris and any
other financial institutions that have become Participants as described
therein
Gentlemen:
Capitalized terms used in this letter are intended to have the
meanings assigned to them in the Pledge Agreement referenced above.
This letter constitutes notice to you, as Agent under the Pledge
Agreement, that pursuant to Section 0 of the Pledge Agreement, Informix
requires you to withdraw from the Accounts and pay directly to the
Participants (in proportion to their respective Percentages) the
following amount:
____________________________ Dollars ($__________)
on the following date (i.e., the Designated Sale Date):
__________, ____
The amount specified above equals the following percentage (equal
to the aggregate of all Participant's Percentages):
__________ percent (___%),
times the total of all Cash Collateral presently pledged under the
Pledge Agreement:
____________________________ Dollars ($__________).
To assure you that Informix has satisfied the conditions to its
right to require such withdrawal, and to induce you to comply with this
notice, Informix certifies to you that Informix is giving this notice to
you, BNPLC and the Participants at least ten (10) Business Days prior to
the Designated Sale Date specified above.
Please remember that the express terms of Certificates of Deposit
issued pursuant to the Pledge Agreement require presentment of the
Certificates of Deposit seven days before Cash Collateral is to be
withdrawn from the Accounts they evidence. Accordingly, you must
present Certificates of Deposit to Deposit Takers seven days prior to
the withdrawal of Cash Collateral required by this notice. For your
convenience, we have attached a letter as Annex 1 to this notice that
you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth
the amounts Informix believes you must withdraw from each Account to
comply with subsection 0 of the Pledge Agreement.
INFORMIX CORPORATION
Name:_________________________
Title:________________________
[cc BNPLC and all Participants]
Annex 1
TO INFORMIX'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH COLLATERAL FOR
DIRECT PAYMENTS TO PARTICIPANTS
[_________, _____]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement dated January 6, 1997, between Informix
Corporation, BNP Leasing Corporation, Banque Nationale de Paris and any
other financial institutions that have become Participants as described
therein
Gentlemen:
Capitalized terms used in this letter are intended to have the
meanings assigned to them in the Pledge Agreement referenced above.
This letter constitutes notice from the undersigned, as Agent under the
Pledge Agreement, that pursuant to Section 6.2 of the Pledge Agreement,
Informix requires Agent to withdraw from the Accounts and pay to the
Participants (in proportion to their respective Percentages) the amounts
listed below on the following date (i.e., the Designated Sale Date):
__________, ____
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in
connection with such withdrawal:
Deposit Taker Account No. Amount
1. $
2. $
3. $
4. $
TOTAL WITHDRAWALS: $
BANQUE NATIONALE DE PARIS, AS AGENT
Name:_________________________
Title:________________________
[cc BNPLC and Informix]
ATTACHMENT 7
TO PLEDGE AGREEMENT
NOTICE OF INFORMIX'S REQUIREMENT OF
DIRECT PAYMENT TO BNPLC
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement dated January 6, 1997, between Informix
Corporation, BNP Leasing Corporation, Banque Nationale de Paris and any
other financial institutions that have become Participants as described
therein
Gentlemen:
Capitalized terms used in this letter are intended to have the
meanings assigned to them in the Pledge Agreement referenced above.
This letter constitutes notice to you, as Agent under the Pledge
Agreement, that pursuant to Section 0 of the Pledge Agreement, Informix
requires you to withdraw from the Account maintained by the Deposit
Taker for BNPLC and pay directly to BNPLC on behalf of Informix as a
payment required by the Purchase Agreement the following amount:
____________________________ Dollars ($__________)
on the following date (i.e., the Designated Sale Date):
__________, ____
To assure you that Informix has satisfied the conditions to its
right to require such withdrawal, and to induce you to comply with this
notice, Informix certifies to you that Informix is giving this notice to
you and BNPLC at least ten (10) Business Days prior to the Designated
Sale Date specified above and that the amount specified above.
Please remember that the express terms of Certificates of Deposit
issued pursuant to the Pledge Agreement require presentment of the
Certificates of Deposit seven days before Cash Collateral is to be
withdrawn from the Accounts they evidence. Accordingly, you must
present Certificates of Deposit to the Deposit Taker for BNPLC seven
days prior to the withdrawal of Cash Collateral required by this notice.
For your convenience, we have attached a letter as Annex 1 to this
notice that you might execute and send to the Deposit Taker for BNPLC to
advise it of your intent to withdraw and of your presentment of
Certificates of Deposit as required in connection therewith. The
attached letter also sets forth the amount Informix believes you must
withdraw to comply with Section 0 of the Pledge Agreement.
INFORMIX CORPORATION
Name:_________________________
Title:________________________
[cc BNPLC]
Annex 1
TO INFORMIX'S NOTICE OF REQUIREMENT OF
DIRECT PAYMENT TO BNPLC
[_________, _____]
[Name of the Deposit Taker for BNPLC]
[Address of such Deposit Taker]
Re: Pledge Agreement dated January 6, 1997, between Informix
Corporation, BNP Leasing Corporation, Banque Nationale de Paris and any
other financial institutions that have become Participants as described
therein
Gentlemen:
Capitalized terms used in this letter are intended to have the
meanings assigned to them in the Pledge Agreement referenced above.
This letter constitutes notice from the undersigned, as Agent under the
Pledge Agreement, that pursuant to Section 0 of the Pledge Agreement,
Informix requires Agent to withdraw from the Account maintained by you,
as Deposit Taker for BNPLC, the sum of:
____________________________ Dollars ($__________)
and pay the same to BNPLC as a payment required by the Purchase
Agreement on the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw such
amount from the following Account maintained by you as Deposit Taker for
BNPLC, and with this letter the undersigned is presenting Certificate(s)
of Deposit as required in connection with such withdrawal.
BANQUE NATIONALE DE PARIS, AS AGENT
Name:_________________________
Title:________________________
[cc BNPLC and Informix]
ATTACHMENT 8
TO PLEDGE AGREEMENT
NOTICE OF INFORMIX'S REQUIREMENT OF A WITHDRAWAL
OF CASH COLLATERAL FROM
A DISQUALIFIED DEPOSIT TAKER
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement dated January 6, 1997, between Informix
Corporation, BNP Leasing Corporation, Banque Nationale de Paris and any
other financial institutions that have become Participants as described
therein
Gentlemen:
Capitalized terms used in this letter are intended to have the
meanings assigned to them in the Pledge Agreement referenced above.
This letter constitutes notice to you, as Agent under the Pledge
Agreement, that pursuant to Section 0 of the Pledge Agreement, Informix
requires you to withdraw from the following Account maintained by the
following Deposit Taker:
Deposit Taker Account No.
Cash Collateral in the following amount:
____________________________ Dollars ($__________)
and to deposit such Cash Collateral with other Deposit Takers who are
not Disqualified Deposit Takers no later than ten (10) Business Days
after the date upon which you receive this notice.
To assure you that Informix has the right to require such
withdrawal, and to induce you to comply with this notice, Informix
certifies to you that the Deposit Taker specified above has become a
Disqualified Deposit Taker because it no longer satisfies the
requirements listed in Section 0 of the Pledge Agreement. Specifically,
such Deposit Taker no longer satisfies the following requirements:
[Informix MUST INSERT HERE A DESCRIPTION OF WHICH REQUIREMENTS THE
DEPOSIT TAKER NO LONGER SATISFIES AND HOW Informix HAS DETERMINED THAT
THE REQUIREMENTS ARE NO LONGER SATISFIED, ALL IN SUFFICIENT DETAIL TO
PERMIT THE PARTICIPANT FOR WHOM SUCH DEPOSIT TAKER HAS BEEN MAINTAINING
AN ACCOUNT TO RESPOND IF IT BELIEVES THAT Informix IS IN ERROR.]
Please remember that the express terms of Certificates of Deposit
issued pursuant to the Pledge Agreement require presentment of the
Certificates of Deposit seven days before Cash Collateral is to be
withdrawn from the Accounts they evidence. Accordingly, you must
present Certificates of Deposit to the Deposit Taker specified above
seven days prior to the withdrawal of Cash Collateral required by this
notice. For your convenience, we have attached a letter as Annex 1 to
this notice that you might execute and send to such Deposit Taker to
advise it of your intent to withdraw and of your presentment of
Certificates of Deposit as required in connection therewith. The
attached letter also sets forth the amount Informix believes you must
withdraw to comply with Section 0 of the Pledge Agreement.
INFORMIX CORPORATION
Name:_________________________
Title:________________________
[cc BNPLC]
Annex 1
TO INFORMIX'S NOTICE OF REQUIREMENT OF A WITHDRAWAL
OF CASH COLLATERAL FROM
A DISQUALIFIED DEPOSIT TAKER
[_________, _____]
[Name of the Deposit Taker for BNPLC]
[Address of such Deposit Taker]
Re: Pledge Agreement dated January 6, 1997, between Informix
Corporation, BNP Leasing Corporation, Banque Nationale de Paris and any
other financial institutions that have become Participants as described
therein
Gentlemen:
Capitalized terms used in this letter are intended to have the
meanings assigned to them in the Pledge Agreement referenced above.
This letter constitutes notice from the undersigned, as Agent under the
Pledge Agreement, that pursuant to Section 0 of the Pledge Agreement,
Informix has advised Agent that you are a Disqualified Deposit Taker,
and Informix requires Agent to withdraw from the Account maintained by
you, as a Deposit Taker under the Pledge Agreement, the sum of:
____________________________ Dollars ($__________)
no later than the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw such
amount from the Account maintained by you as Deposit Taker (Account No.
__________), and with this letter the undersigned is presenting
Certificate(s) of Deposit as required in connection with such
withdrawal.
BANQUE NATIONALE DE PARIS, AS AGENT
Name:_________________________
Title:________________________
[cc BNPLC and Informix]
ATTACHMENT 9
TO PLEDGE AGREEMENT
NOTICE OF INFORMIX'S REQUIREMENT TO
WITHDRAW CASH COLLATERAL FOR PAYMENT OF THE RELEASE PRICE
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement dated January 6, 1997, between Informix
Corporation, BNP Leasing Corporation, Banque Nationale de Paris and any
other financial institutions that have become Participants as described
therein
Gentlemen:
Capitalized terms used in this letter are intended to have the
meanings assigned to them in the Pledge Agreement referenced above.
This letter constitutes notice to you, as Agent under the Pledge
Agreement, that pursuant to Section 0 of the Pledge Agreement, Informix
requires you to withdraw from the Accounts and pay to BNPLC for
application against the Release Price required by Lease the following
amount:
____________________________ Dollars ($__________)
on the following date:
__________, ____
To assure you that Informix has satisfied the conditions to its
right to require such withdrawal, and to induce you to comply with this
notice, Informix certifies to you that:
1. Your withdrawal and delivery of the amount specified above
to Informix will not cause the Value of the remaining Collateral to be
less than the Minimum Collateral Value (computed after payment of the
Release Price in connection therewith). After giving effect to such
withdrawal, the Collateral remaining in the Accounts maintained by the
Deposit Takers will be:
____________________________ Dollars ($__________),
and the Minimum Collateral Value on the date specified above will
equal:
____________________________ Dollars ($__________).
Such Minimum Collateral Value equals the Collateral Percentage of:
__________ percent (___%),
times the projected Stipulated Loss Value of:
____________________________ Dollars ($__________).
2. Informix is giving this notice to you, BNPLC and the
Participants at least ten (10) Business Days prior to the date for
payment of the Release Price specified above.
3. No Default or Event of Default has occurred and is
continuing as of the date of this notice, and Informix does not
anticipate that any Default or Event of Default will have occurred and
be continuing on the date upon which the withdrawal is required.
4. Informix shall pay to you any and all costs incurred by
you in connection with the withdrawal, including (if applicable) any
early withdrawal penalties and other breakage charges specified at or
prior to the time any Account was initially established.
5. Informix agrees that you may determine the Accounts from
which to make any withdrawal required by Informix pursuant to this
Section as necessary to prevent or mitigate any Collateral Imbalance.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE
STATEMENTS ABOVE ARE NOT CORRECT OR IF THE DATE FOR WITHDRAWAL SPECIFIED
ABOVE IS LESS THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF THIS NOTICE.
HOWEVER, WE ASK THAT YOU NOTIFY INFORMIX IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Please remember that the express terms of Certificates of Deposit
issued pursuant to the Pledge Agreement require presentment of the
Certificates of Deposit seven days before Cash Collateral is to be
withdrawn from the Accounts they evidence. Accordingly, you must
present Certificates of Deposit to Deposit Takers seven days prior to
the withdrawal of Cash Collateral required by this notice. For your
convenience, we have attached a letter as Annex 1 to this notice that
you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth
the amounts Informix believes you must withdraw from each Account to
avoid a Collateral Imbalance.
INFORMIX CORPORATION
Name:_________________________
Title:________________________
[cc BNPLC and all Participants]
Annex 1
TO INFORMIX'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH EXCESS COLLATERAL
[_________, _____]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement dated January 6, 1997, between Informix
Corporation, BNP Leasing Corporation, Banque Nationale de Paris and any
other financial institutions that have become Participants as described
therein
Gentlemen:
Capitalized terms used in this letter are intended to have the
meanings assigned to them in the Pledge Agreement referenced above.
This letter constitutes notice from the undersigned, as Agent under the
Pledge Agreement, that pursuant to Section 0 of the Pledge Agreement,
Informix requires Agent to withdraw from the Accounts and pay to BNPLC
the amounts listed below on the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in
connection with such withdrawal:
Deposit Taker Account No. Amount
1. $
2. $
3. $
4. $
TOTAL WITHDRAWALS: $
BANQUE NATIONALE DE PARIS, AS AGENT
Name:_________________________
Title:________________________
[cc BNPLC and Informix]
INFORMIX CORPORATION
EXHIBIT 11.1
STATEMENT RE: COMPUTATION OF NET INCOME PER-SHARE
<TABLE>
<CAPTION>
(in thousands, except per-share data)
FOR THE YEARS ENDED DECEMBER 31,
1996 1995 (1) 1994 (1) (2)
<S> <C> <C> <C>
Net income used for earnings per-share calculation $ 97,818 $ 97,644 $ 61,913
Net Income Per Common Share:
Weighted average outstanding shares 149,310 145,062 137,742
Net effect of outstanding options 6,263 5,565 5,040
Weighted average common and common
equivalent shares outstanding 155,573 150,627 142,782
Net income per-share $ 0.63 $ 0.65 $ 0.43
</TABLE>
Fully diluted computation not presented since such amounts differ by less
than 3 percent of the net income per share amounts shown above.
Notes:
(1) Amounts presented have been restated to reflect the Company's
business combination with Illustra Information Technologies, Inc.
as a pooling-of-interests.
(2) Share and per-share information has been restated to reflect a
two-for-one stock split (effected in the form of a stock dividend) which
was effective June 26, 1995.
EXHIBIT 21
<TABLE>
<CAPTION>
SUBSIDIARIES OF THE REGISTRANT
NAME PARENT JURISDICTION
OF
INCORPORATION
<S> <S> <S>
Illustra Information Technologies, Inc. Informix Corporation Delaware
Informix Software, Inc. Informix Corporation Delaware
Informix International, Inc. Informix Software, Inc. Delaware
Informix Credit Company Informix Software, Inc. Delaware
Picasso Systems, Inc. Illustra Information Technologies, Inc. Delaware
Stanford Technology Group, Inc. Informix Corporation California
Informix Software Argentina, S.A. Informix International, Inc. Argentina
Informix Software GmbH Informix International, Inc. Austria
Informix Software Pty. Ltd. Informix International, Inc. Australia
Informix Software NV Informix International, Inc. Belgium
Informix do Brasil Comercio e Servicios Ltda. Informix International, Inc. Brazil
Informix Software (Canada), Inc. Informix International, Inc. Canada
Informix Software de Chile, S.A. Informix International, Inc. Chile
Informix Software (China) Co., Ltd Informix International, Inc. China
Informix Software de Columbia S.A. Informix International, Inc. Columbia
Informix Software sro Informix International, Inc. Czech Republic
Informix Software A/S Informix International, Inc. Denmark
Illustra Information Technologies, Ltd. Illustra Information Technologies, Inc. England
Informix Software Ltd. Informix International, Inc. England
Innovative Software Ltd. Informix Software Ltd. England
Illustra Information Technologies, SA Illustra Information Technologies, Inc. France
Informix Software SARL Informix International, Inc. France
Informix Software GmbH Informix International, Inc. Germany
Informix GmbH Informix Software GmbH Germany
Gamhausen & Partners, GmbH Informix International, Inc. Germany
Informix Software (Hong Kong) Ltd. Informix International, Inc. Hong Kong
Informix Holdings Company Informix Software Ireland Limited Ireland
Informix Software Ireland Limited Informix International, Inc. Ireland
Informix Software SpA Informix International, Inc. Italy
Informix Kabushiki Kaisha Informix Holdings Company Japan
Informix Software Kabushiki Kaisha Informix International, Inc. Japan
Informix Korea Ltd. Informix Holdings Company Korea
Informix Software (Korea) Ltd. Informix International, Inc. Korea
Informix Sdn Bhd Informix International, Inc. Malaysia
Informix Software de Mexico S.A. de C.V. Informix International, Inc. Mexico
Informix Software B.V. Informix International, Inc. Netherlands
Informix Software Limited Informix International, Inc. New Zealand
Informix Software AS Informix International, Inc. Norway
Informix Software de Peru S.A. Informix International, Inc. Peru
Informix Software Spolka z.o.o. Informix International, Inc. Poland
Informix Software Portugal Ltda. Informix International, Inc. Portugal
Informix Software Limited Liability Company Informix International, Inc. Russia
Informix Software Asia-Pacific Pte. Ltd. Informix International, Inc. Singapore
Informix Software, SPOL. s.r.o. Informix Software GmbH Slovakia
I.N.I.X. South Africa (Pty.) Limited Informix International, Inc. South Africa
Informix Software Iberica, S.A. Informix International, Inc. Spain
Informix Software AB Informix International, Inc. Sweden
Informix Software AG Informix International, Inc. Switzerland
Informix Software (Taiwan) Inc. Informix International, Inc. Taiwan
Informix Software (Thailand) Limited Informix International, Inc. Thailand
Informix Software, V.I., Inc. Informix International, Inc. Virgin Islands
Informix Software de Venezuela, S.A. Informix International, Inc. Venezuela
</TABLE>
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements (Form S-8 Nos. 33-46715, 33-50610, 33-50608, 33-50607, 333-
01409; and Form S-4 No. 333-143) and in the related Prospectuses of our
report dated February 3, 1997, with respect to the consolidated
financial statements and schedule of Informix Corporation included in
this Annual Report (Form 10-K) for the year ended December 31, 1996.
/s/ERNST & YOUNG LLP
San Jose, California
March 28, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the financial statements contained in the Company's Form 10-K for the
periods ending December 31, 1996, 1995 and 1994 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995 DEC-31-1994
<PERIOD-END> DEC-31-1996 DEC-31-1995 DEC-31-1994
<CASH> 226,508 164,305 132,283
<SECURITIES> 41,151 98,685 66,347
<RECEIVABLES> 275,525 198,306 138,100
<ALLOWANCES> 21,429 12,854 6,049
<INVENTORY> 3,678 2,801 1,922
<CURRENT-ASSETS> 557,924 486,089 351,647
<PP&E> 293,318 152,942 98,315
<DEPRECIATION> 106,591 71,310 52,753
<TOTAL-ASSETS> 903,842 691,146 449,545
<CURRENT-LIABILITIES> 229,566 233,247 150,828
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 1,508 1,480 1,422
<OTHER-SE> 569,206 429,085 281,711
<TOTAL-LIABILITY-AND-EQUITY> 903,842 691,146 449,545
<SALES> 708,035 539,733 364,661
<TOTAL-REVENUES> 939,311 714,219 470,112
<CGS> 48,058 38,165 24,773
<TOTAL-COSTS> 192,908 129,705 71,572
<OTHER-EXPENSES> 609,059 438,688 303,449
<LOSS-PROVISION> 14,983 8,508 3,837
<INTEREST-EXPENSE> 2,617 1,154 441
<INCOME-PRETAX> 148,209 152,808 96,022
<INCOME-TAX> 50,391 55,164 34,074
<INCOME-CONTINUING> 97,818 97,644 61,948
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 97,818 97,644 61,948
<EPS-PRIMARY> 0.63 0.65 0.43
<EPS-DILUTED> 0.63 0.65 0.43
<FN>
<F1> FINANCIAL DATA FOR THE 12-MONTH PERIODS ENDING DECEMBER 31, 1995 AND
1994 HAVE BEEN RESTATED TO REFLECT THE COMPANY'S BUSINESS COMBINATION WITH
ILLUSTRA INFORMATION TECHNOLOGIES, INC. AS A POOLING-OF-INTERESTS.
</FN>
</TABLE>
