<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 29, 1996
------------------------------------
OR
[X] 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 1-10606
CADENCE DESIGN SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0148231
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
555 River Oaks Parkway, San Jose, California 95134
(Address of principal executive offices) (Zip Code)
(408) 943-1234
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-- --
At August 2, 1996 there were 77,852,577 shares of the registrant's Common Stock,
$0.01 par value outstanding.
<PAGE> 2
CADENCE DESIGN SYSTEMS, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets:
June 29, 1996 and December 30, 1995 1
Condensed Consolidated Statements of Income:
Three and Six Months Ended June 29, 1996 and July 1, 1995 2
Condensed Consolidated Statements of Cash Flows:
Six Months Ended June 29, 1996 and July 1, 1995 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 15
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CADENCE DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 29, December 30,
1996 1995
---------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash investments $ 88,646 $ 84,867
Short-term investments 10,433 11,774
Accounts receivable, net 93,955 88,503
Inventories 6,726 8,203
Prepaid expenses and other 21,747 13,576
---------- ---------
Total current assets 221,507 206,923
Property, Plant and Equipment, net 139,117 124,103
Software Development Costs, net 24,643 25,793
Purchased Software and Intangibles, net 11,170 8,268
Other Assets 16,091 8,948
---------- ---------
Total assets $ 412,528 $ 374,035
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 3,025 $ 1,497
Accounts payable and accrued liabilities 95,300 91,999
Income taxes payable 6,259 14,524
Deferred revenue 115,139 92,407
---------- ---------
Total current liabilities 219,723 200,427
---------- ---------
Long-Term Liabilities
Long-term debt 19,898 1,619
Deferred income taxes 3,809 7,307
Minority interest liability 14,113 12,167
Other long-term liabilities 16,494 18,434
---------- ---------
Total long-term liabilities 54,314 39,527
---------- ---------
Stockholders' Equity:
Common stock and capital in excess of par value 332,167 299,544
Treasury stock at cost (38,686 and 35,231 shares,
respectively) (369,413) (290,884)
Retained earnings 176,728 124,471
Accumulated translation adjustment (991) 950
---------- ---------
Total stockholders' equity 138,491 134,081
---------- ---------
Total liabilities and stockholders' equity $ 412,528 $ 374,035
========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE> 4
CADENCE DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
--------- --------- --------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUE
Product $ 98,376 $ 65,687 $ 188,558 $ 127,797
Service 26,529 16,895 49,627 27,372
Maintenance 52,121 45,957 102,271 89,403
--------- --------- --------- ---------
Total revenue 177,026 128,539 340,456 244,572
--------- --------- --------- ---------
COSTS AND EXPENSES
Cost of product 12,885 10,664 23,772 22,517
Cost of service 18,605 14,508 36,202 23,721
Cost of maintenance 6,275 4,279 11,430 8,176
Marketing and sales 52,961 42,612 105,154 84,832
Research and development 29,221 22,652 55,234 43,515
General and administrative 13,646 9,707 26,658 19,205
--------- --------- --------- ---------
Total costs and expenses 133,593 104,422 258,450 201,966
--------- --------- --------- ---------
INCOME FROM OPERATIONS 43,433 24,117 82,006 42,606
Other income (expense), net (764) 207 (1,159) (216)
--------- --------- --------- ---------
Income before provision for income taxes
42,669 24,324 80,847 42,390
Provision for income taxes 14,081 7,353 26,680 11,869
--------- --------- --------- ---------
NET INCOME $ 28,588 $ 16,971 $ 54,167 $ 30,521
========= ========= ========= ==========
NET INCOME PER SHARE $ .31 $ .18 $ .59 $ .33
========= ========= ========= ==========
Weighted average common and common
equivalent shares outstanding 91,841 92,880 91,557 93,807
========= ========= ========= ==========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
CADENCE DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
June 29, July 1,
1996 1995
--------- ---------
(Unaudited)
<S> <C> <C>
CASH AND CASH INVESTMENTS AT
BEGINNING OF PERIOD $ 84,867 $ 75,011
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 54,167 30,521
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 24,665 22,856
Deferred income taxes, noncurrent (3,408) 1,585
Write-offs of equipment and other long-term assets 1,690 419
Other long-term liabilities and minority interest
expense 17 (763)
Changes in current assets and liabilities:
Accounts receivable (14,390) 24,104
Inventories (2,229) (1,364)
Prepaid expenses and other (678) (4,263)
Accrued liabilities and payables 20,161 6,109
Deferred revenue 23,680 12,282
--------- ---------
Net cash provided by operating activities 103,675 91,486
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of short-term investments 8,200 25,829
Purchases of short-term investments (6,859) (17,431)
Purchases of property and equipment (24,554) (12,091)
Capitalization of software development costs (6,897) (5,895)
Increase in purchased software and intangibles
and other assets (14,459) (7,086)
Sale of put warrants 3,425 --
Purchase of call options (3,425) --
--------- ---------
Net cash used for investing activities (44,569) (16,674)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on capital lease obligations
and long-term debt (1,016) (1,957)
Net proceeds from issuance of long-term debt 19,763 --
Sale of common stock 13,169 16,221
Purchase of treasury stock (80,905) (91,242)
Purchase of warrant (4,347) (12,125)
--------- ---------
Net cash used for financing activities (53,336) (89,103)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,991) 2,284
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH
INVESTMENTS
3,779 (12,007)
--------- ---------
CASH AND CASH INVESTMENTS AT END OF PERIOD $ 88,646 $ 63,004
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. However, the Company believes that the
disclosures are adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in conjunction with
the financial statements and the notes thereto included in the Company's annual
report on Form 10-K for the fiscal year ended December 30, 1995.
The unaudited condensed consolidated financial statements included herein
reflect all adjustments (which include only normal, recurring adjustments) that
are, in the opinion of management, necessary to state fairly the results for the
periods presented. The results for such periods are not necessarily indicative
of the results to be expected for the full fiscal year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The Company's fiscal year is determined based upon the 52 - 53 week period
ending on the Saturday closest to December 31.
NEW ACCOUNTING STANDARD
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock Based
Compensation" which was adopted by the Company this year. SFAS No. 123 allows
companies that have stock-based compensation arrangements with employees to
adopt a new fair-value basis of accounting for stock options and other equity
instruments, or to continue to apply the existing rules under Accounting
Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees" but with additional financial statement disclosure. The Company
continues to account for employee stock-based compensation arrangements under
APB Opinion No. 25, and therefore SFAS No. 123 did not have a material impact on
its financial position, results of operations or cash flows.
NET INCOME PER SHARE
Net income per share for each period is calculated by dividing net income by the
weighted average shares of common stock and common stock equivalents outstanding
during the period (calculated using the modified treasury stock method). Common
stock equivalents consist of dilutive shares issuable upon the exercise of
outstanding common stock options and warrants. Fully diluted net income per
share is substantially the same as primary net income per share.
4
<PAGE> 7
INVENTORIES
Inventories, which consist primarily of test equipment, are stated at the lower
of cost (first-in, first-out method) or market. Cost includes labor, material
and manufacturing overhead. Inventories consisted of the following (in
thousands):
<TABLE>
<CAPTION>
June 29, December 30,
1996 1995
-------- --------
(Unaudited)
<S> <C> <C>
Raw materials and supplies $ 3,325 $ 2,335
Work-in-process 2,664 3,825
Finished goods 737 2,043
-------- --------
Total $ 6,726 $ 8,203
======== ========
</TABLE>
NOTE PAYABLE
In May 1996, the Company's wholly owned real estate partnership, River Oaks
Place Associates L.P. (the Partnership), entered into a $20 million long-term
financing arrangement (the Loan) with a bank. The financing agreement expires on
December 31, 2005, and requires quarterly principal payments beginning on
September 30, 1996 in amounts ranging from $.4 million to $.7 million. The
Partnership has the option to pay interest at the London Interbank Offering Rate
(LIBOR) plus 1.5% or the higher of the bank's prime rate plus 0.5% or the
Federal Funds rate plus 1.5%. The Loan is secured by the real and personal
properties of the Partnership. In connection with the Loan agreement, the
Company extended its lease agreements with the Partnership until December 31,
2005 and minimum lease payments under the agreements have been assigned as
security under the Loan agreement.
LINE OF CREDIT
In April 1996, the Company entered into a senior secured revolving credit
facility (the Facility) which allows the Company to borrow up to $120.0 million
through April 1999. The security for the Facility includes the majority of the
Company's property, plant and equipment, cash, investments, intangibles, and
certain other assets. The Company has the option to pay interest based upon
LIBOR plus 1.5%, or the higher of the federal funds effective rate plus .5% or
prime. The Company must comply with certain financial covenants and conditions
as defined in the Facility which the Company was in compliance with at June 29,
1996. As of June 29, 1996, the Company had no outstanding borrowings under the
Facility.
COMMITMENTS AND CONTINGENCIES
The Company is involved in various disputes and litigation matters which have
arisen in the ordinary course of business. These include disputes and lawsuits
related to intellectual property, contract law and employee relations matters.
The Company filed a complaint in the United States District Court for the
Northern District of California on December 6, 1995 against Avant! Corporation
(Avant!, formed by a merger of companies formerly known as ArcSys, Inc. and ISS,
Inc.) and certain of its employees for misappropriation of trade secrets,
copyright infringement, conspiracy and other illegalities.
On January 16, 1996, Avant! filed various counterclaims against the Company and
the Company's President and CEO, and on April 12, 1996, Avant! filed a First
Amended Counterclaim. The amended counterclaim alleges, inter alia, that the
Company and its President and CEO had cooperated with the Santa Clara County
District Attorney and initiated and pursued its complaint against Avant! for
anticompetitive reasons, engaged in wrongful activity in an attempt to
manipulate Avant!'s stock price and utilized certain pricing policies and other
acts to unfairly compete against Avant! in the marketplace. The amended
counterclaim also alleges that certain Company insiders engaged in illegal
insider trading with respect to Avant!'s stock. The Company and its President
and CEO continue to believe that each has meritorious defenses to Avant!'s
amended counterclaims, and each intends to defend such action vigorously. By an
order dated July 13, 1996, the court bifurcated Avant!'s counterclaim from the
Company's complaint.
5
<PAGE> 8
On April 19, 1996, the Company filed a motion seeking a preliminary injunction
to prevent Avant! from continuing to market ArcCell and ArcCell XO, two software
lines which the Company alleges were misappropriated. A hearing on the motion is
anticipated to take place in the third quarter of 1996.
Management believes that the ultimate resolution of the disputes and litigation
matters discussed above will not have a material adverse effect on the Company's
financial position or results of operations.
PUT WARRANTS AND CALL OPTIONS
The Company has an authorized stock repurchase program. In total, as of June 29,
1996, the Company had authorized the repurchase of 55.6 million shares, of which
approximately 44.0 million shares had been repurchased. Included in the
authorized 55.6 million shares are 4.5 million shares authorized for repurchase
by the Board of Directors in May 1996, that are subject to certain constraints.
The Company repurchases common stock in part to satisfy estimated requirements
for shares to be issued under its employee stock option and stock purchase plans
as well as in connection with acquisitions.
Since 1994, as part of its authorized stock repurchase program, the Company has
sold 15.7 million put warrants through private placement. As of June 29, 1996,
15.1 million of these warrants had expired out of the money. The remaining
outstanding .6 million warrants entitle the holder to sell one share of common
stock to the Company on a specified date at $34.92 per share. Additionally,
during this same period, the Company purchased approximately 11.8 million call
options that entitled the Company to buy on a specified date one share of common
stock, at a specified price. As of June 29, 1996, the Company had repurchased
11.4 million common shares pursuant to the exercise of call options for $125.1
million. The remaining .4 million outstanding call options have a price of
$35.17 per share. Subsequent to June 29, 1996 the Company sold an additional 1.9
million put warrants which entitle the holder to sell one share of common stock
to the Company on a specified date at a specified price ranging from $34.39 to
$36.11 per share and purchased 1.4 million call options that entitle the Company
to buy on a specified date one share of common stock, at a specified price
ranging from $34.64 to $36.36 per share.
The Company has the right to settle the put warrants with stock, cash or a
combination of stock and cash equal to the difference between the exercise price
and the fair value at the date of exercise. Settlement of the put warrants with
stock could cause the Company to issue a substantial number of shares, depending
on the exercise price of the put warrants and the per share fair value of the
Company's common stock at the time of exercise. In addition, settlement of put
warrants in stock or cash could lead to the disposition by put warrant holders
of shares of the Company's common stock that such holders may have accumulated
in anticipation of the exercise of the put warrants or call options, which may
impact the trading price of the Company's common stock. At June 29, 1996, the
Company had both the unconditional right and the intent to settle these put
warrants with stock, and therefore, no amount was classified out of
stockholders' equity in the accompanying balance sheet. The effect of the
exercise of these put warrants and call options is reported in stockholders'
equity.
STOCK SPLIT
In May, 1996, the Company's Board of Directors effected a three-for-two stock
split, which was paid May 31, 1996, in the form of a dividend of one additional
share of the Company's common stock for every two shares owned by stockholders
as of the record date, May 16, 1996. Par value remained at $0.01 per share. The
stock split resulted in the issuance of approximately 38.5 million additional
shares of common stock from authorized but unissued shares. All share and per
share data have been adjusted to reflect the stock split.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Except for the historical information contained herein, the following
discussion contains forward looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below in Factors That May
Affect Future Results.
RESULTS OF OPERATIONS
REVENUE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 29, 1996 July 1, 1995 % Change June 29, 1996 July 1, 1995 % Change
------------- ------------ -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
(In millions)
Product $ 98.4 $ 65.7 50% $ 188.6 $ 127.8 48%
Service 26.5 16.9 57% 49.6 27.4 81%
Maintenance 52.1 45.9 13% 102.3 89.4 14%
--------- --------- -------- --------
Total revenue $ 177.0 $ 128.5 38% $ 340.5 $ 244.6 39%
========= ========= ======== ========
Sources of Revenue as a Percent of Total Revenue
Product 56% 51% 55% 52%
Service 15% 13% 15% 11%
Maintenance 29% 36% 30% 37%
</TABLE>
International revenue was approximately $91.1 million and $61.9 million or 51%
and 48% of total revenue for the three months ended June 29, 1996 and July 1,
1995, respectively. For the six month period ended June 29, 1996, revenue from
international sources was $166.0 million, representing 49% of total revenue as
compared to $125.0 million, representing 51% of total revenue for the comparable
period in 1995. The increases in revenue from international sources when
comparing 1996 results to the comparable 1995 periods are attributable to sales
growth and new Spectrum service contracts in all regions. The increase in
international revenue in the second quarter of 1996 compared with the second
quarter of 1995 more than offset the negative impact of $7.3 million on revenue
as the result of the weakening of certain foreign currencies, primarily the
Japanese yen, in relation to the U.S. dollar.
The increase in product revenue for the three and six months ended June 29, 1996
as compared with the same periods of the prior year was primarily the result of
increased demand for the Company's products which enable customers to meet
complex design challenges, including deep sub-micron IC design. This was
exemplified by increased sales volume of its automatic place and route, physical
verification and timing-driven design process tools.
Service revenue increased for the three and six months ended June 29, 1996 as
compared with the same periods of the prior year. The increase in service
revenue was the result of increased demand for the Company's Spectrum Services
offerings. Additionally, revenue for the six months ended June 29, 1996 included
a full six months of revenue related to the March 1995 outsourcing agreement
with Unisys Corporation (Unisys) to assume substantial portions of Unisys'
internal silicon design operation.
The increase in maintenance revenue for the three and six month periods ended
June 29, 1996 as compared to the three and six month periods ended July 1, 1995,
was attributable to an increase in the Company's installed base of products.
7
<PAGE> 10
COST OF REVENUE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- ----------------
June 29, 1996 July 1, 1995 % Change June 29, 1996 July 1, 1995 % Change
------------- ------------ -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
(In millions)
Product $ 12.9 $ 10.7 21% $ 23.8 $ 22.5 6%
Service $ 18.6 $ 14.5 28% $ 36.2 $ 23.7 53%
Maintenance $ 6.3 $ 4.3 47% $ 11.4 $ 8.2 40%
Cost of Revenue as a Percent of Related Revenue
Product 13% 16% 13% 18%
Service 70% 86% 73% 87%
Maintenance 12% 9% 11% 9%
</TABLE>
Cost of product revenue includes costs of production personnel, packaging and
documentation, amortization of capitalized software development costs and
purchased software costs and costs of the Company's automated test equipment
hardware business. The increase in cost of product in absolute dollars for the
quarter and six months ended June 29, 1996 as compared to the quarter and six
months ended July 1, 1995 was due to higher amortization of purchased software
costs resulting from 1996 purchases and the write-off of approximately $1.6
million of capitalized software development costs related to products at the end
of their life cycle. The decrease in cost of product as a percentage of product
revenue for the quarter and six months ended June 29, 1996 as compared to the
quarter and six months ended July 1, 1995 was primarily due to consolidation and
centralization of the Japanese production process.
Cost of service revenue includes personnel and related costs associated with
providing services to customers and the infrastructure to manage a service
organization, as well as costs to recruit, develop and retain service
professionals. Cost of service increased in total dollars due to increased
service revenue and the continued development of this line of business.
Additionally, the costs for the six months ended June 29, 1996 included a full
six months of expenses related to the March 1995 outsourcing agreement with
Unisys to assume substantial portions of Unisys' internal silicon design
operation. As part of this agreement, the Company retained approximately 180
hardware and software designers and acquired fixed assets and certain
intangibles. While primarily focused on serving the needs of Unisys, the design
and service resources acquired by the Company are also intended to be used to
support other customers' design needs. In the first half of 1996, as the Company
utilized more of its design and service resources to generate revenue, cost of
service as a percentage of service revenue decreased as compared to the prior
year. However, until these design and service resources are fully utilized
through additional revenue contracts or until further operating efficiencies are
obtained, service gross margins could continue to be negatively impacted.
Additionally, the cost of integrating new services professionals performing a
growing number of service offerings will also put pressure on service gross
margins until operating efficiencies are obtained.
Cost of maintenance revenue includes the cost of customer services such as
hot-line and on-site support and the production cost of the maintenance renewal
process. Cost of maintenance increased in total dollars and as a percentage of
maintenance revenue due to additional on-site support costs necessary to support
a larger installed base.
8
<PAGE> 11
OPERATING EXPENSES
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- ----------------
June 29, 1996 July 1, 1995 % Change June 29, 1996 July 1, 1995 % Change
------------- ------------ -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
(In millions)
Marketing and sales $ 53.0 $ 42.6 24% $ 105.2 $ 84.8 24%
Research and development $ 29.2 $ 22.7 29% $ 55.2 $ 43.5 27%
General and administrative $ 13.6 $ 9.7 41% $ 26.7 $ 19.2 39%
Expenses as a Percent of Total Revenue
Marketing and sales 30% 33% 31% 35%
Research and development 17% 18% 16% 18%
General and administrative 8% 8% 8% 8%
</TABLE>
The increase in marketing and sales expenses, for the three and six month
periods ended June 29, 1996, as compared to the same periods in the prior year,
was primarily the result of increases in employee related expenses attributable
to increased headcount. Weakening of certain foreign currencies in relation to
the U.S. dollar favorably impacted marketing and sales expenses by approximately
$2.3 million and $3.1 million for the three and six month periods ended June 29,
1996, respectively, as compared to the prior year.
The Company's investment in research and development, prior to the reduction for
capitalization of software development costs, was $32.9 million and $25.6
million for the quarters ended June 29, 1996 and July 1, 1995, respectively,
representing 19% and 20% of total revenue. Capitalization of software
development costs for the quarters ended June 29, 1996 and July 1, 1995 was $3.7
million and $2.9 million, respectively, which represented 11% of total research
and development expenditures made in each of those periods. For the six months
ended June 29, 1996, gross research and development expenses were $62.1 million
compared to $49.4 million for the same period in 1995, after capitalization of
$6.9 million and $5.9 million which represented 11% and 12% of total research
and development expenditures made in those periods, respectively. The expense
increases for the three and six month periods of 1996 as compared to 1995 were
primarily attributable to increases in salary related costs due to increased
headcount and higher consulting and other outside service costs. In any given
period, the amount of capitalized software development costs may vary depending
on the exact nature of the development performed.
General and administrative expenses increased in the three and six month periods
ended June 29, 1996 as compared to the same periods of the prior year primarily
as a result of higher legal costs of $1.8 million and $3.7 million,
respectively. In addition, the Company incurred higher outside service and
consulting costs and increased headcount related expenses.
Net other expense for the quarter ended June 29, 1996 was $.8 million of expense
compared with $.2 million of income for the same period in 1995. For the six
months ended June 29, 1996, net other expense was $1.2 million of expense
compared with $.2 million of expense for the same period in 1995. The increase
in net other expense for the three and six month periods ended June 29, 1996 was
primarily the result of a $.9 million and $1.5 million increase, respectively,
in minority interest expense primarily related to Integrated Measurement
Systems, Inc., the Company's majority-owned subsidiary.
The Company's estimated annual effective tax rate for fiscal 1996 is 33% as
compared to an annual effective tax rate of 28% for fiscal 1995. This estimated
increase in the tax rate is based on the limited availability of net operating
losses and tax credits and the potential effect of earnings generated in
countries which have a tax rate greater than the U.S. tax rate.
9
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
At June 29, 1996, the Company's principal sources of liquidity consisted of
$99.1 million of cash and short-term investments as compared to $76.5 million at
July 1, 1995 and a three-year, $120 million secured revolving line of credit
agreement. As of June 29, 1996, the Company had no borrowings under the
revolving line of credit.
Cash generated from operating activities increased $12.2 million for the six
months ended June 29, 1996, as compared to the six months ended July 1, 1995.
The increase was due to higher net income and an increase in accrued liabilities
and payables and deferred revenue; offset by an increase in accounts receivable.
At June 29, 1996, the Company had a working capital surplus of $1.8 million
compared with $6.5 million at December 30, 1995. The primary reasons for the
decrease were increases in deferred revenue of $22.7 million, partly offset by a
decrease in income tax payable of $8.3 million and an increase in prepaid
expenses and other current assets of $8.2 million. The increase in deferred
revenue was attributable to increased maintenance renewals and an increase in
deferred product revenue in accordance with the American Institute of Certified
Public Accountants Statement of Position 91-1 entitled "Software Revenue
Recognition." The increase in prepaid expenses and other current assets was due
to an increase in other receivables.
In addition to its short-term investments, the Company's primary investing
activities were purchases of property and equipment, purchases of software and
intangibles and the capitalization of software development costs, which
combined, represented $45.9 million and $25.1 million of cash used for investing
activities in the six months ended June 29, 1996 and July 1, 1995, respectively.
The Company has an authorized stock repurchase program. In total, as of June 29,
1996, the Company had authorized the repurchase of 55.6 million shares, of which
approximately 44.0 million shares had been repurchased. Included in the
authorized 55.6 million shares are 4.5 million shares authorized for repurchase
by the Board of Directors in May 1996, that are subject to certain constraints.
The Company repurchases common stock in part to satisfy estimated requirements
for shares to be issued under the Company's employee stock option and stock
purchase plans as well as in connection with acquisitions. Past repurchase
activity should not be considered as an indicator of future repurchases.
Since 1994, as part of its authorized stock repurchase program, the Company has
sold 15.7 million put warrants and purchased 11.8 million call options through
private placements. The Company had a maximum potential obligation related to
the put warrants at June 29, 1996 to buy back .6 million shares of its common
stock at an aggregate price of approximately $20.0 million. The put warrants
will expire in June 1997. Subsequent to June 29, 1996, the Company sold an
additional 1.9 million put warrants which entitle the holder to sell one share
of common stock to the Company on a specified date at a specified price ranging
from $34.39 to $36.11 per share and purchased 1.4 million call options that
entitle the Company to buy on a specified date one share of common stock, at a
specified price ranging from $34.64 to $36.36 per share.
Anticipated cash requirements for fiscal 1996 include the purchase of treasury
stock through the exercise of call options and in the open market and the
contemplated additions of property, plant and equipment of approximately $32.0
million.
As part of its overall investment strategy, the Company has committed to
participating in a venture capital partnership as a limited partner. The
Company's total committed investment of at least $25.0 million will be made over
the next three to four years. As of June 29, 1996, the Company had contributed
approximately $5.0 million, which is reflected in other assets in the
accompanying balance sheet.
The Company anticipates that current cash and short-term investment balances,
cash flows from operations, and the $120 million revolving line of credit will
be sufficient to meet its working capital and capital expenditure requirements
on a short and long-term basis.
10
<PAGE> 13
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company competes in the highly competitive EDA market which continues to be
characterized by aggressive pricing practices, rapid technological change and
new market entrants. The Company's success is dependent upon its ability to
develop innovative, cost-competitive EDA software products and services, and to
bring them to market in a timely manner.
The Company's future operating results are dependent on the Company's ability to
successfully implement its strategy to help its customers meet their business
objectives by developing custom solutions that leverage and improve the people,
process and technology they use for product development. The Company
accomplishes this through a combination of technology and services. Inherent in
implementing this strategy are a number of risks that the Company must manage
and that could affect its future operating results. These risks include the
ability to successfully recruit, train and retain its skilled service
professionals and the ability to profitably deliver solutions to increasingly
complex customer design challenges. Growth of the service business is
constrained by the Company's ability to hire and train service professionals to
keep pace with demand. The Company's profitability could be adversely affected
if it is unable to develop its service business as expected.
It is anticipated that international revenue will continue to constitute a
significant portion of total revenue. International revenue is subject to
certain additional risks normally associated with international operations,
including, among others, adoption and expansion of government trade
restrictions, volatile foreign exchange rates, currency conversion risks,
limitations on repatriation of earnings and reduced protection of intellectual
property rights.
The Company enters into foreign currency forward contracts to hedge the impact
of foreign currency fluctuations. Though the Company attempts to reduce the
impact of foreign currency fluctuations, significant exchange rate movements may
have a material adverse impact on the Company's results of operations.
The Company's operating expenses are partially based on its expectations of
future revenue. The Company's results of operations may be adversely affected if
revenue does not materialize in a quarter as expected. Since expense levels are
usually committed in advance of revenues and because only a small portion of
expenses vary with revenue, the Company's operating results may be impacted
significantly by lower revenue. Based on the Company's operating history and
factors that may cause fluctuations in the quarterly results, quarter to quarter
comparisons should not be relied upon as indicators of future performance.
Due to the foregoing, as well as other factors, past financial performance
should not be considered an indicator of future performance. In addition, the
Company's participation in a highly dynamic industry often results in
significant volatility of the Company's common stock price. Any change in
revenues or operating results below levels expected by securities analysts for
the Company or its competitors, and the timing of the announcement of such
shortfalls, could have an immediate and significant adverse effect on the
trading price of the Company's common stock in any given period.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various disputes and litigation matters which have
arisen in the ordinary course of business. These include disputes and lawsuits
related to intellectual property, contract law and employee relations matters.
The Company filed a complaint in the United States District Court for the
Northern District of California on December 6, 1995 against Avant! Corporation
(Avant!, formed by a merger of companies formerly known as ArcSys, Inc. and ISS,
Inc.) and certain of its employees for misappropriation of trade secrets,
copyright infringement, conspiracy and other illegalities.
On January 16, 1996, Avant! filed various counterclaims against the Company and
the Company's President and CEO, and on April 12, 1996, Avant! filed a First
Amended Counterclaim. The amended counterclaim alleges, inter alia, that the
Company and its President and CEO had cooperated with the Santa Clara County
District Attorney and initiated and pursued its complaint against Avant! for
anticompetitive reasons, engaged in wrongful activity in an attempt to
manipulate Avant!'s stock price and utilized certain pricing policies and other
acts to
11
<PAGE> 14
unfairly compete against Avant! in the marketplace. The amended counterclaim
also alleges that certain Company insiders engaged in illegal insider trading
with respect to Avant!'s stock. The Company and its President and CEO continue
to believe that each has meritorious defenses to Avant!'s amended counterclaims,
and each intends to defend such action vigorously. By an order dated July 13,
1996, the court bifurcated Avant!'s counterclaim from the Company's complaint.
On April 19, 1996, the Company filed a motion seeking a preliminary injunction
to prevent Avant! from continuing to market ArcCell and ArcCell XO, two software
lines which the Company alleges were misappropriated. A hearing on the motion is
anticipated to take place in the third quarter of 1996.
Management believes that the ultimate resolution of the disputes and litigation
matters discussed above will not have a material adverse effect on the Company's
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders held May 3, 1996, the stockholders of the
Company approved the following matters.
1. A proposal to elect nine (9) directors of the Company to
serve for the ensuing year and until their successors are
elected or until such directors earlier resignation or
removal.
<TABLE>
<CAPTION>
NOMINEE IN FAVOR WITHHELD
<S> <C> <C>
Carol Bartz 40,361,324 2,317,396
Joseph B. Costello 40,360,291 2,318,429
Henry E. Johnston 40,361,011 2,317,709
Leonard Y.W. Liu 40,359,373 2,319,347
Donald L. Lucas 40,360,312 2,318,408
Alberto Sangiovanni-Vincentelli 40,361,303 2,317,417
George M. Scalise 40,359,426 2,319,294
John B. Shoven 40,360,853 2,317,867
James E. Solomon 40,361,978 2,316,742
</TABLE>
2. A proposal for the approval of the adoption of the
Company's 1995 Directors Stock Option Plan, as amended,
was approved by a vote of 31,726,853 for, 10,404,510
opposed and 140,934 withheld.
3. A proposal for the approval of the adoption of the
Company's Chief Executive Officer Bonus Plan was approved
41,075,969 for, 931,729 opposed and 264,599 withheld.
4. A proposal for the ratification of the selection of Arthur
Andersen LLP as independent public accountants was
approved by a vote of 42,623,573 for, 35,123 opposed and
20,024 withheld.
12
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE LOCATION
- ------- ------------- --------
<C> <C> <C>
10.32 Term loan dated May 31, 1996, by and between Credit Lyonnais and River Oaks Place
Associates L.P. (ROPA), a California limited partnership (the Term Loan). 16
10.33 Deed of Trust, Security Agreement, Assignment of Leases and Rents, Fixture Filing and
Financing Statement dated May 31, 1996, Schedule to Term Loan. 74
10.34 Assignment of Leases and Rents dated May 31, 1996, Schedule to Term Loan. 100
10.35 Assignment of Partnership Interests Seeley Properties, Inc. dated May 31, 1996,
Schedule to Term Loan. 109
10.36 Assignment of Partnership Interests Cadence Design Systems, Inc. dated May 31, 1996,
Schedule to Term Loan. 118
10.37 Environmental Indemnity dated May 31, 1996, Schedule to Term Loan. 127
10.38 Amendment dated August 2, 1996, to Registrant's 1987 Stock Option Plan (incorporated by
reference to Exhibit 4.01 to the Registrant's Form S-8 Registration Statement (No.
33-53913) filed on May 31, 1994). 135
10.39 Amendment dated August 2, 1996, to Registrant's 1993 Non Statutory Stock Option Plan
(incorporated by reference to the Registrant's Form 10-Q for the third quarter ended
September 30, 1994). 141
10.40 Amendment Number 1, dated May 31, 1996, to Lease Agreement for the Registrant's
executive offices at 555 River Oaks Parkway, San Jose, California, by and between ROPA
and the Registrant (incorporated by reference to Exhibit 10.14 to the Registrant's Form
10-K for the fiscal year ended December 31, 1990 (the 1990 Form 10-K)). 147
10.41 Amendment Number 2, dated May 31, 1996, to Lease Agreement for the Registrant's
executive offices at 555 River Oaks Parkway, San Jose, California, by and between ROPA
and the Registrant (incorporated by reference to Exhibit 10.14 to the 1990 Form 10-K). 149
10.42 Amendment Number 1, dated May 31, 1996, to Lease Agreement for the Registrant's offices
at 575 River Oaks Parkway, San Jose, California, by and between ROPA and the Registrant
(incorporated by reference to Exhibit 10.16 to the 1990 Form 10-K). 151
10.43 Amendment Number 2, dated May 31, 1996, to Lease Agreement for the Registrant's offices
at 575 River Oaks Parkway, San Jose, California, by and between ROPA and the Registrant
(incorporated by reference to Exhibit 10.16 to the 1990 Form 10-K). 153
10.44 Amendment Number 1, dated May 31, 1996, to Lease Agreement for the Registrant's offices
at 535 and 545 River Oaks Parkway, San Jose, California, by and between ROPA and the
Registrant (incorporated by reference to Exhibit 10.17 to the 1990 Form 10-K). 155
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE LOCATION
- ------- ------------- --------
<C> <C> <C>
10.45 Amendment Number 2, dated May 31, 1996, to Lease Agreement for the Registrant's offices
at 535 and 545 River Oaks Parkway, San Jose, California, by and between ROPA and the
Registrant (incorporated by reference to Exhibit 10.17 to the 1990 Form 10-K). 157
27.1 Financial data schedule for the period ended June 29, 1996.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended June 29, 1996.
</TABLE>
14
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CADENCE DESIGN SYSTEMS, INC.
(REGISTRANT)
DATE: August 12, 1996 By: /s/ Joseph B. Costello
---------------- --------------------------------------
JOSEPH B. COSTELLO
President and Chief Executive Officer
DATE: August 12, 1996 By: /s/ H. Raymond Bingham
---------------- --------------------------------------
H. RAYMOND BINGHAM
Executive Vice President
and Chief Financial Officer
15
<PAGE> 1
LOAN AGREEMENT
BY AND BETWEEN
CREDIT LYONNAIS NEW YORK BRANCH
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019
AND
RIVER OAKS PLACE ASSOCIATES, L.P.
c/o Cadence Design Systems, Inc.
555 River Oaks Parkway
San Jose, California 95134
With Regard to
Cadence Design Systems, Inc.
Headquarters Buildings
San Jose, California
16
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1.
INCORPORATION OF RECITALS AND EXHIBITS.......................................................................... 1
1.1 Incorporation of Recitals..................................................................... 1
1.2 Incorporation of Exhibits..................................................................... 1
ARTICLE 2.
DEFINITIONS..................................................................................................... 2
2.1 Definitions................................................................................... 2
2.2 Use of Defined Terms.......................................................................... 9
2.3 Use of Recital, Article, Section and Exhibit References....................................... 9
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES.................................................................................. 9
3.1 Representations and Warranties of Borrower.................................................... 9
3.2 Effective Date of Representations and Warranties.............................................. 14
ARTICLE 4.
TERMS OF LOAN AND DOCUMENTS..................................................................................... 15
4.1 Agreement to Borrow and Lend.................................................................. 15
4.2 Loan Documents................................................................................ 15
4.3 Interest Rate................................................................................. 16
4.4 Term of the Loan.............................................................................. 16
4.5 Amortization Payments......................................................................... 16
4.6 Voluntary Prepayments......................................................................... 16
4.7 Acceleration of the Indebtedness.............................................................. 16
ARTICLE 5.
LOAN EXPENSES AND ADVANCES;
SECURITY OF DEED OF TRUST FOR SAME.............................................................................. 17
5.1 Loan Expenses................................................................................. 17
5.2 Lender's Origination Fee...................................................................... 17
5.3 Time of Payment of Fees....................................................................... 17
5.4 Expenses and Advances Secured by Loan Documents............................................... 17
ARTICLE 6.
CONDITIONS PRECEDENT
TO THE CLOSING OF THE LOAN...................................................................................... 18
6.1 Conditions Precedent.......................................................................... 18
ARTICLE 7.
LENDER'S OBLIGATION TO DISBURSE PROCEEDS OF THE LOAN............................................................ 22
7.1 Closing....................................................................................... 22
7.2 Disbursements Into An Escrow.................................................................. 22
ARTICLE 8.
BORROWER'S AGREEMENTS........................................................................................... 23
8.1 Borrower's Agreements......................................................................... 23
8.1.1 Compliance with Conditions Precedent.......................................................... 23
8.1.2 Compliance with Requirements of Governmental Authorities...................................... 23
8.1.3 Inspection by Lender.......................................................................... 23
8.1.4 Mechanics' Liens and Contest Thereof.......................................................... 23
8.1.5 Renewal of Insurance.......................................................................... 23
8.1.6 Payment of Taxes.............................................................................. 24
8.1.7 Personal Property............................................................................. 24
8.1.8 Proceedings to Enjoin or Prevent Operation of the Project..................................... 24
</TABLE>
17
<PAGE> 3
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
8.1.9 Lender's Attorneys' Fees and Expenses......................................................... 25
8.1.10 Lender's Action for its Own Protection Only................................................... 25
8.1.11 Furnishing Information........................................................................ 26
8.1.12 Documents of Further Assurance................................................................ 26
8.1.13 Furnishing Reports............................................................................ 27
8.1.14 Operation of Project.......................................................................... 27
8.1.15 Leasing....................................................................................... 27
8.1.16 Management Agents' and Brokers' Contracts..................................................... 27
8.1.17 Furnishing Notices............................................................................ 27
8.1.18 Correction of Defects......................................................................... 27
8.1.19 No Additional Debt............................................................................ 28
8.1.20 Indemnification............................................................................... 28
8.1.21 Insurance Reporting Requirements.............................................................. 29
8.1.22 Partnership Agreement......................................................................... 29
8.1.23 Lost Note..................................................................................... 29
8.1.24 Hazardous Material............................................................................ 29
8.1.25 Appraisals.................................................................................... 30
8.1.26 Access to the Project and Right to Cure Defaults
Under Leases and Easement Agreements. ........................................................ 30
8.1.27 Payments to Affiliates; Prohibition Against Cash
Distributions; Application of Cash Flow. ..................................................... 31
8.1.28 Single Purpose Entity......................................................................... 31
8.1.29 Use of Loan Proceeds.......................................................................... 31
8.1.30 ERISA......................................................................................... 31
8.1.31 Control and Ownership of Seeley............................................................... 31
ARTICLE 9.
CASUALTIES...................................................................................................... 31
9.1 Lender's Election to Apply Insurance Proceeds on Indebtedness................................. 31
9.2 Borrower's Obligation to Rebuild; Use of Insurance Proceeds................................... 32
ARTICLE 10.
ASSIGNMENTS..................................................................................................... 33
10.1 Lender's Right to Assign...................................................................... 33
10.1.1 Assignment.................................................................................... 33
10.1.2 Participants.................................................................................. 33
10.1.3 Availability of Records; Further Assurances................................................... 33
10.1.4 Lender as Lead Agent.......................................................................... 33
10.1.5 Co-Agents..................................................................................... 33
10.1.6 Successor Co-Agent............................................................................ 34
10.1.7 Lender's Right to Re-Book the Loan............................................................ 34
10.2 Prohibition of Assignments by Borrower........................................................ 34
10.3 Prohibition of Transfers in Violation of ERISA................................................ 34
10.4 Successors and Assigns........................................................................ 34
ARTICLE 11.
EVENTS OF DEFAULT............................................................................................... 35
ARTICLE 12.
LENDER'S REMEDIES IN EVENT OF DEFAULT........................................................................... 37
12.1 Remedies Conferred Upon Lender................................................................ 37
</TABLE>
18
<PAGE> 4
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
12.2 Non-Waiver of Remedies.......................................................................... 37
ARTICLE 13.
GENERAL PROVISIONS.............................................................................................. 37
13.1 Captions........................................................................................ 37
13.2 Notices......................................................................................... 38
13.3 Entire Agreement; Modification; Waiver.......................................................... 39
13.4 Governing Law................................................................................... 40
13.5 Acquiescence Not to Constitute Waiver of Lender's Requirements.................................. 40
13.6 Disclaimer by Lender............................................................................ 40
13.7 Right of Lender to Make Advances to Cure Borrower's Defaults.................................... 41
13.8 Definitions Included in Amendment............................................................... 41
13.9 Time Is of the Essence.......................................................................... 41
13.10 Execution in Counterparts....................................................................... 41
13.11 Waiver of Consequential Damages................................................................. 41
13.12 Claims Against Lender........................................................................... 41
13.13 Jurisdiction; Service of Process................................................................ 42
13.14 Severability.................................................................................... 42
13.15 Waiver of Jury Trial............................................................................ 42
13.16 Survival of Indemnities......................................................................... 42
13.17 Conflicts....................................................................................... 43
13.18 Confidentiality................................................................................. 43
Exhibit A - Description of Land
Exhibit B - Permitted Exceptions
Exhibit C - Form of Surveyor's Certification
Exhibit D - Form of Legal Opinion
</TABLE>
19
<PAGE> 5
LOAN AGREEMENT
Cadence Design Systems, Inc.
Headquarters Buildings
San Jose, California
THIS LOAN AGREEMENT is made as of May 31, 1996, by and between RIVER
OAKS PLACE ASSOCIATES, L.P., a California limited partnership, having an office
address c/o Cadence Design Systems, Inc., 555 River Oaks Parkway, San Jose,
California 95134, Attention: Treasurer ("Borrower"), and CREDIT LYONNAIS NEW
YORK BRANCH, a branch, licensed under the laws of the State of New York, of a
banking corporation organized under the laws of the Republic of France, having
an office c/o Credit Lyonnais New York Branch, at Credit Lyonnais Building, 1301
Avenue of the Americas, New York, New York 10019 ("Lender"), and its successors
and assigns.
RECITALS
A. Borrower is the owner of certain real property located at 535, 545,
555 and 575 River Oaks Parkway, in the City of San Jose, County of Santa Clara,
State of California, the legal description of which is set forth in Exhibit A
annexed hereto (the "Land").
B. Borrower is the owner of four commercial office buildings commonly
known as the Cadence Design Systems, Inc. River Oaks Campus, consisting of
approximately 268,000 square feet of office/research and development space on
the Land, together with surface parking for automobiles and certain other
structures and improvements (collectively, the "Buildings"). The Land, the
Buildings and all related improvements and facilities, together with all rights,
privileges, easements, hereditaments and appurtenances thereunto relating or
appertaining, and all fixtures and equipment (other than that owned by the
lessee leasing space in the Buildings) required for, or otherwise intended for
use in connection with, the operation thereof, are herein collectively called
the "Project."
C. Borrower has applied to Lender for a loan (the "Loan") in the
maximum principal amount of TWENTY MILLION DOLLARS ($20,000,000), and Lender has
agreed to make the Loan, on the terms and subject to the conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. INCORPORATION OF RECITALS AND EXHIBITS
1.1 Incorporation of Recitals. The foregoing preambles and all other
recitals set forth herein are made a part of this Agreement.
1.2 Incorporation of Exhibits. The Exhibits hereto are incorporated
herein and expressly made a part hereof.
2. DEFINITIONS
2.1 Definitions. The following terms as used herein shall have the
following meanings:
ADA: The Americans with Disabilities Act.
Additional Interest: The meaning set forth in Section 8 of the Note.
20
<PAGE> 6
Affiliate: When used with respect to any Person, shall mean
any other Person directly or indirectly Controlling or Controlled by, or under
direct or indirect common Control with, such Person.
Agent: The meaning set forth in Section 10.1.4.
Agreement: This Loan Agreement, as originally executed or as
may be hereafter supplemented, amended or restated in accordance with its terms
from time to time in writing.
Amortization Payments: The payments required to be made by
Borrower under Section 4.5 of this Agreement.
Applicable Rate: The per annum rate of interest at which the
Loan or any portion thereof bears interest from time to time pursuant to Section
2, Section 3 or Section 11 of the Note, whichever is applicable.
Appraised Value: As of a particular date, the then current
value of the Project as shown by an appraisal prepared by the Appraiser.
Appraiser: Koeppel Tener Real Estate Services, Inc., or such
other appraiser who is qualified under the requirements of FIRREA, as Lender may
from time to time designate.
Assignee: As defined in Section 10.1.1.
Assignment of Ancillary Documents: The collateral assignment
of ancillary documents, dated as of the date hereof, assigning to Lender all of
Borrower's (but not any Affiliate of Borrower's) right, title and interest in,
to and under (i) all building permits, governmental permits, licenses and
authorizations issued from time to time in connection with the use, management,
maintenance, repair and operation of the Project; (ii) all trademarks, trade
names, logos and all other materials used to identify or advertise the Project,
to the extent set forth therein; (iii) the Plans and Specifications and all
other plans and specifications pertaining to the Project; and (iv) any and all
tests, studies, surveys, audits, results and reports performed or prepared in
connection with the Project.
Assignment of Leases and Rents: The collateral assignment of
rents and leases, dated as of the date hereof, assigning to Lender all of
Borrower's right, title and interest in, to and under Leases, licenses,
concessions and other similar contracts and agreements relating to or connected
with the use and/or operation of the Project now or hereafter entered into,
including the Cadence Leases, and any rents, issues, revenues, proceeds and
profits therefrom to the extent set forth therein;
Assignment of Maintenance and Management Documents: The
collateral assignment of maintenance and management documents, dated as of the
date hereof, assigning to Lender all of Borrower's right, title and interest in,
to and under (i) all management, maintenance, service, supply or other
agreements relating to the use and operation of the Project, and all warranties
and guaranties issued in connection therewith, and (ii) all brokerage or leasing
agreements relating to the Project to the extent set forth therein.
Assignment of Partnership Interests: The collateral
assignments of the partnership interests of Cadence and Seeley in Borrower.
Base Rate: As determined by Lender on a daily basis, the sum
of (a) the higher of (i) the rate per annum established by Lender from time to
time as the reference rate for short-term commercial loans in Dollars to
domestic corporate borrowers (which Borrower acknowledges is not necessarily
Lender's lowest rate), and (ii) a rate per annum equal to one (1.00) percentage
point (100 basis points) above the effective overnight Federal Funds Rate as
published for such day by the Federal Reserve Bank, plus in either case (b)
one-half (.50) percentage point (50 basis points) per annum.
Branch: Credit Lyonnais New York Branch.
Building or Buildings: The meaning set forth in Recital B.
21
<PAGE> 7
Business Day: Any day other than (i) a Saturday or Sunday or
other day on which commercial banks are required or permitted to close in New
York City, or (ii) any day on which commercial banks are not open for
international business (including dealings in Dollar deposits on the London
Interbank Market) in London, England.
Cadence: Cadence Design Systems, Inc., a Delaware corporation,
Borrower's limited partner and the lessee of the Project pursuant to the Cadence
Leases.
Cadence Leases: Those certain Leases of space in the Project,
dated June 29, 1989, by and between Borrower and Cadence, as may be supplemented
or amended from time to time with the prior written approval of Lender.
Closing or Closing of the Loan: The first disbursement of Loan
proceeds in accordance with the terms of this Agreement.
Closing Date: The date of the Closing.
Code: The Internal Revenue Code of 1986, as the same may be
amended from time to time, and the regulations promulgated thereunder from time
to time.
Control: Including the correlative meanings of the terms
"Controlled by" and "under common Control with", means, with respect to any
Person, the possession, directly or indirectly, of the power to direct or cause
the direction of the management policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
Debt: Means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar instruments,
(iii) obligations to pay the deferred purchase price of property or services
(other than trade payables incurred in the ordinary course of business either
(A) not overdue by more than 60 days, or (B) if overdue by more than 60 days,
which are being contested in good faith and with respect to which adequate
reserves have been established), (iv) obligations as lessee under leases which
shall have been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases, and (v) obligations under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in
clause (i) through (iv) above.
Debt Service: The product obtained by multiplying (x) the
outstanding principal balance of the Loan by (y) the Applicable Rate as of such
date.
Debt Service Coverage Ratio: With respect to a particular
period of time, the amount calculated by dividing (x) Net Rent for such period
by (y) Debt Service for such period.
Deed of Trust: The deed of trust, security agreement,
assignment of leases and rents and financing statement, dated as of the date
hereof, granted by Borrower to Lender, encumbering the Project, securing the
obligations of Borrower under the Loan Documents and granting Lender a security
interest in all fixtures, furniture, furnishings and equipment and any other
personal property (tangible and intangible) now or hereafter owned by Borrower
and located in, or used in connection with the operation of, the Project, and
subject only to the Permitted Exceptions.
Default or default: Any event or circumstance which
constitutes or, if it were to continue uncured, after notice, lapse of time or
both would constitute, an Event of Default.
Default Rate: As determined by Lender, a rate per annum equal
to the Base Rate plus two (2) percentage points (200 basis points).
Deposit: As defined in Section 5.2.
Dollars and $: Dollars in lawful money of the United States of
America.
22
<PAGE> 8
Engineering Report: An engineering and building inspection
report of the Project prepared at Borrower's sole cost and expense by a
qualified, licensed engineer/architect acceptable to Lender in its sole
discretion, in form and substance acceptable to Lender. The Engineering Report
shall, at a minimum, contain a review and evaluation of the Plans and
Specifications in detail satisfactory to Lender, disclose any existing or
potential building code violations, or any violations of any Laws of any
Governmental Authority, and shall include the results of any tests or
inspections performed to determine the adequacy of the construction of the
Project for their present use, and the uses contemplated by any of the Leases
entered into prior to the Closing Date.
Environmental Indemnity: An indemnity given by Borrower,
Cadence and Seeley, to Lender with respect to certain environmental
representations, warranties and covenants, as originally executed or as the same
hereafter may be supplemented, amended or restated from time to time in writing.
Environmental Laws: All Federal, state and local environmental
Laws, rules, regulations and common law, including, without limitation, those
relating to Hazardous Material, as such Laws, rules and regulations may be
amended from time to time, to the extent such Laws, rules, regulations and
common law apply to the use, management, maintenance, repair or occupancy of the
Project or any portion thereof.
Environmental Proceedings: The meaning set forth in Section
3.1.26.
Environmental Report: A Phase I or other environmental site
assessment of the Project prepared at Borrower's sole cost and expense by an
environmental consultant reasonably acceptable to Lender, in form and substance
reasonably acceptable to Lender.
ERISA: Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder from time to time.
Event of Default: The meaning set forth in Section 11.1.
FIRREA: Financial Institutions, Reform, Recovery and
Enforcement Act, as amended, and the regulations promulgated thereunder from
time to time.
Form 4224: The meaning set forth in Section 10.1.10.
Funding Losses: In the event of a prepayment of any portion of
the Loan bearing interest at a LIBOR Rate, Lender's cost of re-employing funds
incurred or expected to be incurred by Lender in connection with, collectively
(a) any prepayment (whether voluntary or involuntary) of all or any portion of
the Loan, (b) any acceleration of the Maturity Date, (c) any failure by Borrower
to have drawn down all or any portion of the Loan, (d) the conversion (for any
reason whatsoever, whether voluntary or involuntary) of a LIBOR Rate to any
other Applicable Rate on a date other than the last day of the Interest Period
for such LIBOR Rate and (e) any other set of circumstances not attributable to
Lender's acts. Subject to the foregoing, Funding Losses shall not include any
diminution in yield suffered by Lender upon re-lending or re-investing the
principal of the Loan after any prepayment of the Loan.
GAAP: Generally accepted accounting principles, consistently
applied.
Governmental Approvals: The meaning set forth in Section
3.1.16.
Governmental Authority: Any federal, state, county or
municipal government, or political subdivision thereof, any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality, or public body, or any court, administrative tribunal or public
utility, whether foreign or domestic.
Hazardous Material: Gasoline, petroleum and other petroleum
by-products, asbestos, explosives, PCBs, radioactive materials or any
"hazardous" or "toxic" material, substance or waste which is defined by those or
similar terms or is regulated as such under any statute, law, ordinance, rule or
regulation of any Governmental Authority having jurisdiction over the Project or
any portion thereof or its use, including any material, substance or waste which
is: (a) defined as a "hazardous substance" under Section 311 of the Federal
Water Pollution
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<PAGE> 9
Control Act (33 U.S.C. Section 1321), as amended; (b) defined as a "hazardous
waste" under Section 1004 of the Resource Conservation and Recovery Act of 1976,
42 U.S.C. Section 6901 et seq., as amended; (c) defined as a "hazardous
substance" or "hazardous waste" under Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Reauthorization Act of 1986, 42 U.S.C. Section 9601 et seq., or
any so-called "superfund" or "superlien" law, including the judicial
interpretations thereof; (d) defined as a "pollutant" or "contaminant" under 42
U.S.C.A. Section 9601(33); (e) defined as "hazardous waste" pursuant to 40
C.F.R. Part 260; (f) defined as a "hazardous chemical" under 29 C.F.R. Part
1910; or (g) subject to any other law or other past (and still in effect),
present or future requirement of any Governmental Authority regulating or
imposing obligations, liability or standards of conduct concerning, the
protection of human health, plant life, animal life, natural resources, property
or the enjoyment of life or property free from the presence in the environment
of any solid, liquid, gas, odor or any form of energy from whatever source.
Hazardous Materials Claims: The meaning set forth in Section
8.1.24(b)(2).
Include or including: Including but not limited to.
Indemnified Persons: Lender, its officers, directors,
shareholders, employees and agents, and any successor to any interest of Lender
in or to the Project or the Loan and such successor's officers, directors,
shareholders, employees, agents, partners and principals.
Independent Counterparty: The meaning set forth in Section
4.8.1.
Interest Period: The period commencing on the date specified
in Borrower's notice to Lender of an election to exercise the LIBOR Rate Option
as set forth in Section 3 of the Note and ending either thirty (30) days, sixty
(60) days, ninety (90) days, or, if available to Lender, one hundred eighty
(180) days or three hundred sixty (360) days thereafter, as specified in such
notice, which ending date in any event shall be on or prior to the Maturity
Date.
Internal Revenue Code: The Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder
from time to time.
Knowledge: When used to modify a representation or warranty,
actual knowledge or such knowledge as a person under the circumstances should
have after diligent inquiry and investigation.
Land: The meaning set forth in Recital A.
Laws: Collectively, all federal, state and local laws,
statutes, codes, ordinances, orders, rules and regulations, including judicial
opinions or precedent setting authority in the applicable jurisdiction, and all
directions, requirements, orders and notices of violation of any governmental or
quasi-governmental agency, body or office having or asserting jurisdiction over
the Project or any party to any of the Loan Documents.
Leases: All present and future leases of space at the Project,
including, without limitation, the Cadence Leases, and all subleases, rental
agreements, licenses, concessions, tenancies, occupancy agreements and any other
similar agreements, together with all modifications, extensions and renewals
thereof.
LIBOR Rate: The rate of interest displayed on Telerate page
3750 (or such page as may replace such page on that service for the purpose of
displaying interest rates at which Dollar deposits are offered by prime banks in
the London Interbank Market), as quoted by Lender's London, England office as of
11:00 a.m., New York time, on the day which is three (3) Business Days before
the first day of the applicable Interest Period, for deposits in Dollars,
immediately available funds, in amounts approximately equal to the amount for
which the LIBOR Rate Option has been exercised on such date, and for durations
approximately equal to the relevant Interest Period, plus one and one-half
percentage points (1.50%) (150 basis points) per annum. Each LIBOR Rate shall be
adjusted from time to time for the aggregate reserve requirements (including,
without limitation, all basic, supplemental, marginal and other reserve
requirements and taking into account any transitional adjustments or other
scheduled changes in reserve requirements during any Interest Period) which are
required to be maintained by Lender and/or its Assignees and/or Participants
with respect to "Eurocurrency liabilities" (as presently defined in Regulation
D) of the same term under Regulation D of the Board of Governors of the Federal
Reserve System, or any subsequent regulations of similar effect, provided,
however, that Lender and each Assignee and Participant
24
<PAGE> 10
shall take reasonable steps to mitigate Borrower's liability to Lender or such
Assignee or Participant for any such adjustments to a LIBOR Rate for reserve
requirements, provided further, however, that it shall not be a defense to the
payment of any such adjustment to a LIBOR Rate for reserve requirements that
such adjustment could have been avoided, unless such adjustment would have been
avoided by taking such reasonable steps, in which event the failure to take such
reasonable steps shall only be a defense to the payment of any such adjustment.
Borrower shall not be responsible for any adjustments to a LIBOR Rate for
reserve requirements if such adjustments result from Lender or any Assignee or
Participant voluntarily funding or rebooking all or a portion of the Loan from
or in another branch or Affiliate of Lender or such Assignee or Participant
(which funding or rebooking may be done by Lender or such Assignee or
Participant at any time in its sole discretion provided the same does not result
in any other increased costs or liability to Borrower).
LIBOR Rate Option: The meaning set forth in Section 3 of the
Note.
Loan: The meaning set forth in Recital C.
Loan Documents: Collectively, this Agreement, the documents
and instruments listed in Section 4.2, and all other documents, instruments or
certificates delivered to Lender herewith or from time to time to evidence or
secure the Loan and the payment and performance of Borrower's obligations
hereunder, as the same may be amended, modified or restated from time to time
with the prior written consent of Lender.
Loan to Value Ratio: The percentage derived by dividing (x)
$20,000,000 by (y) the Appraised Value of the Project.
Maturity Date: December 31, 2005.
Minimum Net Rent: The meaning set forth in Section 6.1.3(h).
Minimum Standards: The meaning set forth in Section 6.1.3(d).
Net Rent: All rent and other income payable to Borrower
pursuant to the Leases (including, without limitation, the Cadence Leases), net
of any and all property operating, maintenance, taxes and capital expenses which
are the sole responsibility of Cadence or any other tenant under the Leases.
Note: The note or notes aggregating the principal amount of
the Loan, dated as of the date hereof, as originally executed or as may be
hereafter supplemented, amended or restated from time to time in writing.
Origination Fee: The meaning set forth in Section 5.2.
Participant: The meaning set forth in Section 10.1.2.
Permitted Exceptions: Those matters listed in Exhibit B
hereto, to which the interest of Borrower in the Real Estate is permitted to be
subject at the Closing Date and thereafter, and such other title exceptions or
objections, if any, as Lender, or its counsel, may approve in advance in
writing. Matters which are not listed on Exhibit B hereto but over which the
Title Insurer has agreed to insure Lender pursuant to endorsements to, or
affirmative insurance coverage in, the Title Policy (which endorsements or
affirmative insurance coverage shall be in form and substance reasonably
satisfactory to Lender) may also be deemed Permitted Exceptions if approved in
writing by Lender.
Person: Any individual, partnership, corporation, trust,
unincorporated association, joint venture, government or any department or
agency thereof, or any other entity.
Plans and Specifications: A complete set of "as-built" plans
and specifications of the Project, certified as being true, complete and correct
by Borrower.
Proceeding: The meaning set forth in Section 13.13.
Prohibited Transaction: A "prohibited transaction" as
described under Section 406 of ERISA and Section 4975 of the Internal Revenue
Code.
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<PAGE> 11
Project: The meaning set forth in Recital B.
Real Estate: That portion of the Project legally constituting
real estate, including the Land and all easements and rights appurtenant
thereto.
Register: The meaning set forth in Section 10.1.9.
Remedial Actions: The meaning set forth in Section 8.1.24.
REMIC: The meaning set forth in Section 10.1.7.
Roll Over Date: With respect to a particular Interest Period,
the last day of such Interest Period.
Routine Uses: Refers to the use of Hazardous Materials at the
Project in connection with the routine operation of a first-class commercial
office project, including cleaning and maintenance fluids, office supplies and
other similar items, in each case used in accordance with, and so as not to
cause a violation of, Environmental Laws and in quantities and in a manner which
do not pose a hazard to persons on or about the Project.
Security: The meaning set forth in Section 13.16.2.
Seeley: Seeley Properties, Inc., a California corporation,
Borrower's general partner.
Subordination Agreements: Subordination, nondisturbance and
attornment agreements between Borrower, Lender and each of the tenants under the
Leases, in such form as is reasonably satisfactory to Lender.
Survey: The meaning set forth in Section 6.1(d).
Term: The period of time from the date hereof through and
including the Maturity Date.
Third Party Agreement: The meaning set forth in Section 4.8.
Title Insurer: Santa Clara Land Title Company, or such other
title insurance company licensed in the State of California, as may be approved
by Lender.
Title Policy: The Title Policy described and defined in
Section 6.1.3(c).
Transfer: The meaning set forth in Section 4.7.
Transferee: The meaning set forth in Section 10.1.7.
UCC Statements: The Uniform Commercial Code Financing
Statements, dated as of the date hereof, naming Borrower as debtor and Lender as
secured party.
Withholding Payment: The meaning set forth in Section 6(c) of
the Note.
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<PAGE> 12
2.2 Use of Defined Terms. Defined terms may be used in the
singular or the plural. When used in the singular preceded by "a", "an", or
"any", such term shall be taken to indicate one or more members of the relevant
class. When used in the plural, such term shall be taken to indicate all members
of the relevant class.
2.3 Use of Recital, Article, Section and Exhibit References. The
use herein of references to Recitals, Articles, Sections and Exhibits shall
refer to the referenced Recital, Article or Section in, or Exhibit annexed to,
this Agreement.
3. REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Borrower. To induce
Lender to execute and deliver this Agreement and to perform the obligations of
Lender hereunder, Borrower hereby represents and warrants to Lender as follows:
3.1.1 From and after the Closing Date, Borrower will have good
and marketable title to the Real Estate, subject only to the Permitted
Exceptions.
3.1.2 Borrower is a limited partnership duly and validly
formed and validly existing under the laws of the State of California.
Borrower has full power and authority to execute, deliver and perform
the obligations and carry out the duties imposed upon Borrower by this
Agreement and the other Loan Documents to which it is a party, and
Borrower has taken all action necessary to carry out Borrower's
obligations and duties in connection with the Loan.
3.1.3 Cadence is a corporation duly and validly formed, and
validly existing and in good standing under the laws of the State of
Delaware. Cadence has full power and authority to execute, deliver and
perform the obligations and carry out the duties imposed upon Cadence
by the Environmental Indemnity and Assignment of Partnership Interests,
and has taken all action necessary in connection therewith.
3.1.4 Seeley is a corporation duly and validly formed, and
validly existing and in good standing under the laws of the State of
California. Seeley has full power and authority to execute and deliver
the Loan Documents on behalf of Borrower, and full power and authority
to execute, deliver and perform the obligations and carry out the
duties imposed upon Seeley by the Environmental Indemnity and
Assignment of Partnership Interests and has taken all action necessary
in connection therewith. Seeley is a corporation wholly owned and
Controlled by Cadence.
3.1.5 Each of the Loan Documents executed by Borrower, Cadence
and Seeley, as the case may be, have been duly and properly executed
and delivered by such parties.
3.1.6 This Agreement, the Note, the Deed of Trust, the
Environmental Indemnity and all of the other Loan Documents each
constitute legal, valid and binding obligations of Borrower, Seeley
and/or Cadence, as the case may be, and each of the Loan Documents and
the security interests granted therein are enforceable in accordance
with their respective terms, except as such enforceability may be
affected by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditor's rights generally,
and limitations imposed by general principles of equity.
3.1.7 When duly recorded or filed in the appropriate public
records, the Deed of Trust and the UCC Statements delivered to Lender
pursuant to Section 4.2 shall each create in favor of Lender a valid
and perfected lien upon the property purportedly subject thereto, to
the extent that a security interest can be perfected by filing, and no
further action will be required to perfect such lien.
3.1.8 No provision of any deed of trust, mortgage, indenture,
agreement, contract, or other instrument requires the consent or
authorization of any other person, firm or corporation as a condition
precedent to the consummation of the transactions contemplated herein
or in any of the other Loan Documents.
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<PAGE> 13
3.1.9 No approvals, consents or permits are required in
connection with the execution, delivery and performance by Borrower,
Seeley or Cadence of this Agreement or any of the other Loan Documents,
or in connection with the performance or consummation of any of the
transactions contemplated hereby or thereby, or if required, such
approvals, consents or permits have been obtained.
3.1.10 The execution, delivery and performance of the Loan
Documents, the granting of the security interests therein, and the
compliance with the provisions of this Agreement and the other Loan
Documents, (i) have not constituted (and will not, upon the giving of
notice or lapse of time or both, constitute) either (A) a material
breach or default under any organizational document of Borrower,
Cadence or Seeley, or any indenture, mortgage, deed of trust,
franchise, permit, license, note or any other agreement or instrument
to which Borrower, Cadence or Seeley is a party or by which Borrower,
Cadence or Seeley, or any of their respective properties (including the
Project) may be bound or affected, or (B) a violation of any Law, court
order, writ, injunction or other decree which may affect Borrower,
Cadence, Seeley or the Project, any part thereof, any interest therein,
or the use thereof, in any material respect and (ii) will not result in
a lien against any property or assets of Borrower (other than liens in
favor of Lender pursuant to the Loan Documents), Cadence or Seeley.
3.1.11 To Borrower's knowledge, no actions, suits or
proceedings are pending, or to Borrower's knowledge are threatened,
involving the Project or against Borrower, Cadence or Seeley which (i)
might reasonably be likely to affect the validity or priority of the
lien of the Deed of Trust or the security interests created thereby the
other Loan Documents, or (ii) might affect the ability of Borrower,
Seeley or Cadence to perform their respective obligations pursuant to
and as contemplated by the terms and provisions of this Agreement and
the other Loan Documents.
3.1.12 To Borrower's knowledge, there are no pending, or to
Borrower's knowledge threatened, actions, suits or proceedings to
revoke, attack, invalidate, rescind or modify the zoning of the Project
or any part thereof, or any building or other permits heretofore issued
with respect thereto, or asserting that such zoning or permits do not
permit the continued use of the Buildings and the Project as a
first-class commercial office project and as contemplated by the
Cadence Leases and this Agreement.
3.1.13 The execution, delivery and performance of this
Agreement and the other Loan Documents have not constituted (and will
not, upon the giving of notice or lapse of time or both, constitute)
either (i) a material breach or default under any other agreement to
which Borrower, Cadence or Seeley is a party or by which Borrower,
Cadence or Seeley may be bound, or (ii) a violation of any Law or court
order which may affect the Project, any part thereof, any interest
therein, or the use thereof.
3.1.14 Except as otherwise disclosed to Lender in writing,
Borrower and its agents have not entered into any lease or leases or
other arrangements for occupancy of space within the Project other than
the Cadence Leases; the Cadence Leases are in full force and effect;
neither Borrower nor Cadence has defaulted in the performance of its
respective obligations under the Cadence Leases; Borrower has not given
or received a notice of default under the any of the Cadence Leases and
Borrower is not aware of any matter which, with the giving of notice or
the passage of time, or both, would constitute a default or event of
default by Borrower or Cadence under any of the Cadence Leases;
Borrower has not collected rent under the Cadence Leases more than one
(1) month in advance, and the Cadence Leases are not terminable by
either Borrower or Cadence prior to the Maturity Date, except pursuant
to provisions of the Cadence Leases relating to defaults, condemnation
or casualties.
3.1.15 To Borrower's knowledge, (i) No condemnation of any
portion of the Project, (ii) no condemnation or relocation of any
roadways abutting the Project and (iii) no proceeding to deny access to
the Project, has commenced or, to Borrower's knowledge, is
contemplated.
3.1.16 All financial statements furnished to Lender by
Borrower, Cadence or any Affiliate of Borrower or Cadence fairly
present the financial condition of Borrower, Cadence or such Affiliate
of Borrower or Cadence, and all other information previously furnished
by Borrower, Cadence or any Affiliate of Borrower or Cadence to Lender
in connection with the transactions contemplated by the Loan Documents
is true, correct and complete in all material respects and does not
fail to state any material fact necessary to make the statements made
not misleading. None of Borrower, Cadence or any Affiliate of Borrower
or Cadence has any liability, contingent or otherwise, not disclosed in
such financial statements
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<PAGE> 14
or such other information which would reasonably be likely to affect
Borrower's or Cadence's ability to perform or discharge their
respective obligations under the Loan Documents.
3.1.17 Borrower is in compliance with, and the use of the
Project as a first-class commercial office project and related uses is
in compliance with and does not violate (i) Laws of any kind whatsoever
(including, without limitation, ADA, zoning and building Laws,
environmental protection Laws and wetlands protection Laws), or (ii)
any building permits or other approvals, restrictions of record, or any
agreement affecting the Project or any part thereof. Neither the zoning
or any other right to use the Project is to any extent dependent upon
or related to any real property other than the Project. Without
limiting the generality of the foregoing, all consents, licenses and
permits and all other authorizations or approvals, including all
permits issued by the State of California, the City of San Jose and the
County of Santa Clara concerning the use and occupancy of the Project
(collectively, "Governmental Approvals"), required to operate the
Project as the Project is now operated have been obtained, have been
paid for and are in full force and effect; and all Laws of the State of
California or any subdivision thereof relating to the operation of the
Project by Borrower have been observed.
3.1.18 The Project, as the Project is now operated, has
adequate water, gas and electrical supply, storm and sanitary sewerage
facilities, other required public utilities, fire and police
protection, and means of access between the Project and public
highways; and all such facilities comply with all applicable Laws,
including all environmental protection or control Laws.
3.1.19 None of Borrower, Cadence, Seeley or any of their
Affiliates has dealt with any brokers in connection with this Loan
transaction or the Cadence Leases, and no brokerage fees or commissions
are payable by or to any person in connection with any of the Loan
Documents, the Cadence Leases, or the transactions contemplated
thereby.
3.1.20 No building or other improvement in the Project
encroaches upon any building line, setback line, side yard line or any
recorded or visible easement, or other easement of which Borrower is
aware or has reason to believe may exist with respect to such Project.
3.1.21 The Project is taxed separately without regard to any
other property, and for all purposes the Project may be mortgaged,
conveyed and otherwise dealt with as an independent parcel. Borrower
has paid all taxes and assessments affecting the Project or otherwise
payable by Borrower which are due on or before the date hereof.
3.1.22 Borrower is not in the business of extending credit for
the purpose of purchasing or carrying any stock other than the stock of
Cadence Design Systems, Inc., or "margin stock" within the meaning of
Regulation G, T, U or X issued by the Board of Governors of the Federal
Reserve System, as at any time amended, and none of the proceeds of the
Loan will be used for the purpose of purchasing or carrying any stock
other than the stock of Cadence Design Systems, Inc., or to extend
credit to others for the purpose of purchasing or carrying any margin
stock other than the stock of Cadence Design Systems, Inc., and
Borrower agrees to execute all instruments necessary to comply with all
the requirements of Regulation U of the Federal Reserve System, as at
any time amended.
3.1.23 The Loan and the execution and performance of the Loan
Documents do not constitute a Prohibited Transaction under ERISA;
Borrower does not, and while the Loan is outstanding Borrower will not,
have an "employee benefit plan" as defined in Section 3(3) of ERISA;
Borrower is not, and while the Loan is outstanding Borrower will not
be, a party in interest to any "employee benefit plan"; the assets of
Borrower do not constitute "plan assets" within the meaning of 29
C.F.R. Section 2510.3-101; and Borrower is a "real estate operating
company" as defined in ERISA.
3.1.24 Neither Cadence nor Seeley is in violation of any of
the provisions of ERISA.
3.1.25 No aspect of the Loan transaction violates or will
violate any usury laws or laws regarding the validity of agreements to
pay interest in effect on the date hereof.
3.1.26 Except as disclosed in the Environmental Reports, none
of Borrower, the Project, Cadence or Seeley is in violation of any
Environmental Law; none of Borrower, Cadence or Seeley has
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<PAGE> 15
received any written notice of any such violation or claimed violation
and Borrower is not aware of any circumstances which could give rise to
the issuance of any such notice. Except as disclosed in the
Environmental Reports, there are no pending civil (including actions by
private parties), criminal or administrative actions, suits or
proceedings affecting Borrower, the Project, Cadence or Seeley relating
to environmental matters ("Environmental Proceedings"), and Borrower
has no knowledge of any threatened Environmental Proceedings or any
facts or circumstances which could give rise to any future
Environmental Proceedings. Except in connection with Routine Uses and
as disclosed in the Environmental Reports, none of Borrower, Cadence,
Seeley or any of their Affiliates has ever caused or permitted any
Hazardous Material to be released, transported, placed, held, located
or disposed of over, on, under or at the Project, or any part thereof,
or any other property adjacent thereto, or any other property owned by
Borrower, Cadence, or Seeley, or any part thereof, or used the Project
or any such other property permanently or temporarily as a dump site or
storage site for any Hazardous Material. To Borrower's knowledge,
except in connection with Routine Uses and as disclosed in the
Environmental Reports, no other person has ever caused or permitted any
Hazardous Material to be released, transported, placed, held, located
or disposed of over, on, under, adjacent to or at the Project, or any
part thereof, or any other property owned by Borrower, Cadence, or
Seeley, or any part thereof, or used the Project or any such other
property permanently or temporarily as a dump site or storage site for
any Hazardous Material. Except in connection with Routine Uses and as
disclosed by the Environmental Reports, the Project and all parts
thereof are free of all Hazardous Material.
3.1.27 All statements set forth in the Recitals are true and
correct.
3.1.28 Borrower is not a "foreign person" within the meaning
of Section 1445 or 7701 of the Internal Revenue Code.
3.1.29 Borrower uses no trade name and has not and does not do
business under any name other than its actual name set forth herein.
The principal place of business of Borrower is c/o Cadence Design
Systems, Inc., 555 River Oaks Parkway, San Jose, California 95134.
3.1.30 Borrower is, and at all times during the term of the
Loan shall remain, a single purpose entity whose sole purpose is to own
and operate the Project.
3.1.31 Neither Borrower, Cadence or Seeley is a "Public
Utility Holding Company" as defined in The Public Utility Holding
Company Act of 1935, as amended.
3.1.32 The Buildings and other improvements in the Project are
structurally sound and there are no defects in any of the foregoing
which would render the Project unfit for use as a first-class
commercial office project; the Buildings are equipped with fixtures,
furnishings, machinery and equipment of high quality and all such items
are in good working order and free from defects; and no material
capital expenditure with respect to the Project is being incurred or is
contemplated as of the date hereof.
3.1.33 Except for the telephone switching equipment located at
2655 Seely Road, Building 7, San Jose, California, all fixtures,
attachments and equipment necessary for the operation, use and
occupancy of the Project have been installed or incorporated into the
Project and, except as otherwise disclosed by Borrower to Lender,
Borrower is the absolute owner of all of said property free and clear
of all chattel mortgages, conditional vendor's liens and other liens,
encumbrances and security interests.
3.1.34 No notices of any claimed violations of Laws arising
from the operation, use or occupancy of the Project which have not been
cured have been served upon Borrower, Cadence, Seeley, or any of their
agents or representatives, and Borrower is not aware of any
circumstances which could give rise to the issuance of any such notice
of claimed violation. None of Borrower, Cadence, Seeley or the Project
is involved in any investigation by or before any Governmental
Authority, nor to Borrower's knowledge has any such investigation been
threatened.
3.1.35 No Default or Event of Default has occurred and is
continuing.
3.1.36 The copies of the organizational documents of Borrower,
Cadence and Seeley furnished to Lender are true, correct and complete
copies thereof and are all in full force and effect. No
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<PAGE> 16
default has occurred under any of the organizational documents of
Borrower, Cadence or Seeley and no event has occurred which with the
giving of notice or lapse of time or both would result in any default
thereunder.
3.1.37 The information provided by Borrower to Lender in
connection with the Project, Borrower, Cadence and Seeley does not
include an untrue statement of a material fact or omit to state any
material fact or any other fact which is necessary to make the
statements contained therein (in the light of the circumstances under
which they were made) not misleading. Without limiting the generality
of the foregoing, Lender acknowledges that the financial statements and
related financial information provided by Borrower to Lender in
connection herewith concerning the Project, Borrower and Cadence have
been prepared by officers of Borrower and Cadence and have not been
audited or reviewed by outside accountants.
3.1.38 Borrower has delivered to Lender any and all consents
and confirmations required by the terms of any lease, license,
contract, agreement, permit or other document in order to effectuate
and render valid, binding and enforceable all the assignments and
collateral assignments as may be required pursuant to Article 4 of this
Agreement.
3.1.39 Borrower has executed and delivered all UCC Statements
and similar instruments that are advisable or necessary to perfect or
notify third parties of the security interests intended to be created
by the Loan Documents.
3.2. Effective Date of Representations and Warranties. Borrower agrees that
all of its representations and warranties set forth in Section 3.1 and elsewhere
in this Agreement and the other Loan Documents will be true at the Closing Date.
4. TERMS OF LOAN AND DOCUMENTS
4.1 Agreement to Borrow and Lend. Subject to all of the terms, provisions
and conditions set forth in this Agreement and the other Loan Documents, Lender
agrees to make and Borrower agrees to accept the Loan. The maximum principal
amount of the Loan disbursed to Borrower shall in no event exceed an amount
equal to $20,000,000.
4.2 Loan Documents. In consideration of Lender's entry into this Agreement
and Lender's agreement to make the Loan, Borrower shall, in sufficient time for
review by Lender and its counsel prior to the Closing Date, execute and deliver,
or cause to be executed and delivered, to Lender the following documents and
instruments (collectively with this Agreement, the "Loan Documents") in form and
substance acceptable to Lender and its counsel:
4.2.1 the Note;
4.2.2 the Deed of Trust;
4.2.3 the Assignment of Rents and Leases;
4.2.4 the Environmental Indemnity;
4.2.5 the UCC Statements;
4.2.6 the Assignment of Ancillary Documents;
4.2.7 the Assignment of Maintenance and Management
Documents;
4.2.8 the Assignment of Partnership Interests of
Cadence;
4.2.9 the Assignment of Partnership Interests of
Seeley;
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<PAGE> 17
4.2.10 Subordination Agreements from Cadence;
4.2.11 Estoppel Certificates from Cadence;
4.2.12 To the extent required by Lender, all
necessary consents to each of the foregoing assignments and collateral
assignments by (i) the other parties to the Leases, licenses, contracts
and agreements being assigned and (ii) any guarantors of the
performance of the obligations and liabilities of such other parties
under such Leases, licenses, contracts and agreements, together with
the confirmation by each such other party and guarantor that they will
continue to perform and guarantee performance of such Leases, licenses,
contracts and agreements, as the case may be, after enforcement of
and/or realization on such assignment or collateral assignment by
Lender; and
4.2.13 Such other papers, documents and instruments
as may be required by this Agreement or as Lender may reasonably
require.
4.3 Interest Rate. The Loan will bear interest at the Applicable Rate.
Interest on the Loan shall be computed on the principal sum of the entire amount
of the Loan from time to time outstanding on the basis of a 360-day year, as set
forth in the Note, but shall be charged for the actual number of days within the
period for which interest is being charged. Upon default or delinquency in the
making of payments when due hereunder or under the Note, following the
expiration of any applicable cure period, the interest rate under the Loan shall
be at the Default Rate.
4.4 Term of the Loan. Without limiting the provisions of the Note, the
unpaid principal balance, together with any accrued and unpaid interest and all
other sums then due and payable under the Note and under the other Loan
Documents, if not sooner paid, whether by reason of acceleration or otherwise,
shall be paid in full on December 31, 2005 (the "Maturity Date").
4.5 Amortization Payments. Commencing on the quarter ending September 30,
1996, and continuing until the Loan is paid in full, Borrower shall make
quarterly principal reduction payments ("Amortization Payments") as follows: (a)
during the first (1st) year of the term of the Loan, four (4) quarterly payments
each in the amount of $375,000; (b) during the second (2nd) year of the term of
the Loan, four (4) quarterly payments each in the amount of $425,000; (c) during
the third (3rd) year of the term of the Loan, four (4) quarterly payments each
in the amount of $325,000; (d) during the fourth (4th) year of the term of the
Loan, four (4) quarterly payments each in the amount of $400,000; (e) during the
fifth (5th) year of the term of the Loan, four (4) quarterly payments each in
the amount of $450,000; (f) during the sixth (6th) year of the term of the Loan,
four (4) quarterly payments each in the amount of $500,000; (g) during the
seventh (7th) year of the term of the Loan, four (4) quarterly payments each in
the amount of $600,000; (h) during the eighth (8th) year of the term of the
Loan, four (4) quarterly payments each in the amount of $625,000; (i) during the
ninth (9th) year of the term of the Loan, four (4) quarterly payments each in
the amount of $625,000; and (j) during the tenth (10th) year of the term of the
Loan, four (4) quarterly payments each in the amount of $675,000. The first such
payment shall be made on September 30, 1996, and thereafter such payment shall
be made on each successive December 31, March 31 and June 30, until the Loan is
paid in full (except for the final amortization payment due under the Loan,
which payment shall be due and payable on the Maturity Date). If any
Amortization Payment is not made on a date due, in addition to any interest
payable at the Default Rate pursuant to Section 11 of the Note, the Applicable
Rate for any portion of the Loan then bearing interest at the LIBOR Rate shall
revert to the Base Rate two (2) calendar days after the date such Amortization
Payment was due (unless such Amortization Payment is made before such date) and
provided Lender has given Borrower at least one (1) Business Day notice that the
Amortization Payment was not made and the LIBOR Rate shall revert to the Base
Rate and Borrower shall pay to Lender the amount of any Funding Losses incurred
in connection with such conversion.
4.6 Voluntary Prepayments. Upon five (5) Business Days prior written
notice to Lender, Borrower shall have the right to make voluntary prepayments of
the Loan in whole or in increments of $1,000,000 in accordance with the terms of
the Note. Principal amounts of the Loan which are repaid for any reason may not
be reborrowed.
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<PAGE> 18
4.7 Acceleration of the Indebtedness. The unpaid principal balance, all
accrued and unpaid interest and all other sums due and payable under the Note
and the other Loan Documents, if not sooner paid, shall be paid in full upon the
sale, transfer, conveyance, alienation, pledge, assignment, encumbrance,
hypothecation or other disposition (a "Transfer") by Borrower of (i) all or any
portion of the Project, (ii) all or any portion of the Borrower's right, title
and interest in and to the Project, or (iii) any interest in Borrower other than
a one-time Transfer during the term of the Loan to another single purpose
California limited partnership wholly owned by Cadence as limited partner and
Seeley (or another wholly owned Affiliate of Cadence approved by Lender, which
approval shall not be unreasonably withheld or delayed) as general partner,
holding the same proportionate share of the beneficial interest in such limited
partnership as now exists, whose sole asset shall be the Project.
5. LOAN EXPENSES AND ADVANCES;
SECURITY OF DEED OF TRUST FOR SAME
5.1 Loan Expenses. Borrower agrees to pay all expenses of the Loan,
including all amounts payable pursuant to Sections 5.2 below, and also including
all recording charges, title insurance charges, costs of surveys, costs of
appraisals, costs for certified copies of instruments and cash deposits required
to be made with the Title Insurer or other escrowee for administering Loan
disbursements, all fees, expenses and charges of appraisal, architectural,
engineering, environmental, insurance and other consultants, reasonable travel,
all brokerage fees and commissions, and all fees and expenses (including word
processing and photocopying expenses) of Lender's attorneys, including all costs
and expenses incurred by Lender in connection with the determination of whether
or not Borrower has performed its obligations hereunder and under the other Loan
Documents or has satisfied the conditions precedent to the obligations of Lender
hereunder. All such expenses, charges, costs and fees shall be Borrower's
obligation regardless of whether the Loan is disbursed in whole or in part.
5.2 Lender's Origination Fee. In consideration of Lender's agreement to
engage in discussions regarding the Loan, to commit Lender's resources to
approve Borrower's application for the Loan, to draft and negotiate the Loan
Documents, to undertake and perform legal due diligence, to review relevant
documentation and to have various consultants and engineers undertake the review
work necessary to close the Loan, Borrower has paid the sum of Fifty Thousand
Dollars ($50,000) (the "Deposit") to Lender on account of an origination fee for
the Loan equal to Two Hundred Fifty Thousand Dollars ($250,000) (the
"Origination Fee"). The Deposit was paid by Borrower to Lender on October 20,
1995. The balance of the Origination Fee, in the amount ofLender's Origination
Fee.; In consideration of Lender's agreement to engage in discussions regarding
the Loan, to commit Lender's resources to approve Borrower's application for the
Loan, to draft and negotiate the Loan Documents, to undertake and pe
5.3 Time of Payment of Fees. Borrower shall pay all fees and expenses
incurred by Lender at the Closing out of the proceeds of the Loan and on demand
at such subsequent times as Lender may determine.
5.4 Expenses and Advances Secured by Loan Documents. Lender is hereby
authorized, without any specific request or direction by Borrower, to make
disbursements of Loan proceeds from time to time to pay for, or to reimburse
Lender for the payment of, all Loan expenses or fees whether or not at such time
there may be any undisbursed Loan proceeds. All advances or payments made by
Lender under this Agreement or any of the other Loan Documents from time to
time, and all amounts expended by Lender pursuant to Section 12.1.2(a) or for
Lender's various consultants' fees and attorneys' fees and expenses, if any, and
all other Loan expenses shall, as and when advanced or incurred by Lender,
constitute additional indebtedness evidenced by the Note and secured by the Deed
of Trust and the other Loan Documents to the same extent and effect as if the
terms and provisions of this Agreement were set forth therein, whether or not
the aggregate of such indebtedness shall exceed the aggregate face amount of the
Note.
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<PAGE> 19
6. CONDITIONS PRECEDENT
TO THE CLOSING OF THE LOAN
6.1 Conditions Precedent. Borrower shall perform and satisfy all of the
following conditions precedent on or before the Closing Date, and Borrower
agrees that Lender's obligation to disburse the Loan is conditioned upon
Borrower's performance or satisfaction of all such conditions precedent:
6.1.1 No Default or Event of Default by Borrower, Cadence or
Seeley shall exist under this Agreement or any of the other Loan
Documents.
6.1.2 Borrower shall have executed and delivered or caused to
be executed and delivered to Lender all of the Loan Documents as
required by, and in accordance with, Section 4.2, duly and properly
executed by the respective parties thereto, and Borrower shall have
paid all amounts required to be paid by Borrower out of the proceeds of
the Loan on or before the Closing Date pursuant to Article 5.
6.1.3 Borrower shall have furnished to Lender the following,
in sufficient time for review by Lender and its counsel prior to the
Closing Date, all of which shall be in form and substance reasonably
satisfactory to Lender and its counsel:
a. A certified copy of the Certificate of Limited
Partnership and Agreement of Limited Partnership for Borrower, and good
standing certificates for Borrower, Cadence and Seeley from the State
of California.
b. Evidence satisfactory to Lender that the Loan and
the execution and performance of this Agreement and the other Loan
Documents are authorized and that the individuals executing this
Agreement and the other Loan Documents on behalf of Borrower, Cadence
and Seeley, as the case may be, have been duly authorized by all
appropriate action to execute and deliver this Agreement and the Loan
Documents on behalf of Borrower, Cadence and Seeley, as the case may
be.
c. An ALTA (1970) Loan Policy of Title Insurance (the
"Title Policy") in the amount of the Loan, issued by the Title Insurer
to Lender, insuring the Deed of Trust as a valid and subsisting first
mortgage lien on the Real Estate and all appurtenant easements as
required by Lender, to the extent of the Loan, subject only to the
Permitted Exceptions. If required by Lender, and provided the same may
be included in loan policies of title insurance in the jurisdiction in
which the Project is located, the Title Policy shall (A) contain a
so-called "comprehensive endorsement" satisfactory to Lender; (B)
contain a mechanic's lien endorsement satisfactory to Lender; (C)
specifically insure Lender that (1) no restrictions of record affecting
the Real Estate have been violated, (2) the Survey is accurate and
accurately depicts the same real estate as is covered by the Title
Policy, and (3) the Loan does not violate any applicable usury Laws or
other Laws concerning the payment of interest; and (D) contain such
other endorsements or affirmative insurance as Lender may reasonably
require, including endorsements or affirmative insurance with respect
to contiguity, access, encroachments, lack of reversionary interests,
compliance with subdivision control ordinances and subordinate matters.
Borrower shall deliver to Lender a legible copy of each underlying
document and instrument referred to in the Title Policy or in any
preliminary title report or commitment, which underlying documents and
instruments shall be obtained from the office of the recorder of deeds
or other appropriate source. Appropriate provisions for reinsurance
with direct access agreements shall also be obtained if required by
Lender, in amounts and with other title insurance companies
satisfactory to Lender. Borrower agrees to deliver to the Title Insurer
such other papers, instructions and documents as the Title Insurer may
require for the issuance of the Title Policy.
d. "As-built" plats of survey of the Land (the
"Survey"), made by a registered or certified land surveyor satisfactory
to Lender, in triplicate, showing the outline of the Land, all
buildings, structures and other improvements thereon, and all paving,
driveways, parking spaces and fences, if any, in place. The Survey
shall be currently dated and shall be prepared in accordance with the
"Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys," jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping in 1992
(the "Minimum Standards"). The Survey shall bear a certificate by the
surveyor substantially in the form
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<PAGE> 20
attached hereto as Exhibit C, which certificate shall include the legal
description of the Land and shall be made in favor of Lender and the
Title Insurer. In addition, the certificate shall certify that the
foundations of all buildings on the Land comply with all applicable set
back requirements and do not violate any easements or covenants
applicable to the Project. The Survey shall contain all additional
items set forth in Table A to the Minimum Standards, except as
otherwise approved by Lender, and shall meet the accuracy requirements
for a Class "A" survey. The Survey shall also show (A) the square
footage of the Land; (B) all buildings, improvements, foundations and
other structures on the Land, all of which must be within the lot lines
and in compliance with all restrictions of record or ordinances
relating to the location thereof; (C) that there are no encroachments
by improvements located on adjoining property onto the Land or by
buildings, improvements, foundations or other structures on the Land
onto adjoining property; (D) that there is adequate means of access
between the Project and public highways; (E) the number of the parking
spaces at the Project; (F) the flood area designation of the Land shown
on the official maps of the Secretary of Housing and Urban Development;
(G) whether any portion of the Land lies within a federally designated
wetlands protection area as determined by the maps of the Army Corps of
Engineers; and (H) such additional information as may be required by
Lender or the Title Insurer.
e. Property and casualty insurance coverages as
required by this Section 6.1.3(e), such coverage to be evidenced by
certificates of insurance, together with evidence that the premiums for
such policies have been paid current. Such insurance policies shall
insure the Project for 100% of its full replacement cost (or such
sublimits as may be acceptable to Lender) in so-called "all-risk" form
and with coverage for floods, earthquakes and such other hazards
(including "collapse" and "explosion") as Lender may require and which
are then routinely being required for first-class commercial office
projects in Santa Clara County, California, with sublimits for floods
and earthquakes as agreed with the Lender but not less than the least
of the Loan balance or the replacement cost of the buildings. Such
insurance policies shall contain replacement cost and agreed amount
endorsements (with no reduction for depreciation), an endorsement
providing Building Ordinance Coverages and an endorsement covering the
costs of demolition and increased costs of construction due to the
enforcement of building codes or ordinances. Borrower shall also
furnish insurance providing boiler and machinery comprehensive coverage
for all mechanical and electrical equipment at the Project insuring
against breakdown or explosion of such equipment on a replacement cost
value basis, and shall not contain any exclusions for testing
procedures. The property insurance and boiler and machinery insurance
required under this Section 6.1.3(e) shall include "underground
hazards" coverage; "time element" coverage by which Lender shall be
assured payment of all amounts due under the Note, this Agreement and
the other Loan Documents; "extra expense" (i.e., soft costs) coverage;
and "expediting expense" coverage. Borrower shall also furnish business
interruption or loss of rental income insurance in connection with all
policies covering property and boiler and machinery insurance on an
actual loss sustained basis and in amounts not less than one (1) year's
100% value and endorsed to provide a 180 day extended period of
indemnity. Notwithstanding any provision set forth in this Section
6.1.3(e) or in Section 6.1.3(f) to the contrary, all insurance required
under this Section 6.1.3(e) and under Section 6.1.3(f) shall be with
companies and in amounts and with coverage and deductibles satisfactory
to Lender, and all insurance required under this Section 6.1.3(e) shall
include endorsements naming Lender as loss payee, and shall have
endorsed thereon the standard mortgagee or its equivalent clause in
favor of Lender. All companies issuing policies required under this
Section 6.1.3(e) and under Section 6.1.3(f) shall have a current Best
Insurance Reports rating of "A- X" or better and shall be licensed to
do business in the State of California. All policies required under
this Section 6.1.3(e) and under Section 6.1.3(f) shall provide that (y)
the insurance evidenced thereby shall not be cancelled or modified
without, in the case of non-payment of premiums, at least ten (10)
days' prior written notice from the insurance carrier to Lender, or, in
any other circumstance, at least sixty (60) days' prior written notice
from the insurance carrier to Lender, and (z) no act or thing done by
Borrower, Cadence, Seeley, or any Affiliate of any of them shall
invalidate the policy as against Lender. Borrower shall deliver renewal
certificates of all policies of insurance required under this Section
6.1.3(e) and under Section 6.1.3(f), together with written evidence
that the premiums are paid current, at least ten (10) days prior to the
expiration of the then current policy.
f. Liability and worker's compensation insurance as
required by this Section 6.1.3(f), such coverage to be evidenced by
original or certified copies of insurance policies, or binders for such
insurance, together with evidence that the premiums for such policies
have been paid current. Such insurance shall provide for (A) commercial
general liability (including contractual liability) covering the
Project and Borrower's operations in an amount not less than $1,000,000
per occurrence and than
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<PAGE> 21
$2,000,000 in the aggregate; (B) commercial automobile liability with a
limit not less than $1,000,000 combined single limit and be endorsed to
cover owned, hired and non-owned automobiles; and (C) worker's
compensation insurance covering all of Borrower's employees and other
employees situated at the Project in accordance with the statutory
requirements of the State of California and including an endorsement
for employer's liability coverage. Borrower shall also furnish umbrella
liability coverage in excess of the foregoing liability coverage with a
limit of not less than $50,000,000 or such higher limits as Lender may
require and which are then being routinely required for first-class
commercial office projects comparable to the Project in the City of San
Jose, California. The commercial general liability and automobile
policies and umbrella liability policy shall name Lender as an
additional insured. Such policies shall also contain a so-called
"products-completed operations endorsement." If any part of the Project
is now or hereafter used for the sale or dispensing of beer, wine or
any other alcoholic beverages, so called "Dram Shop" or "Liquor Law
Liability" insurance against claims or liability arising directly or
indirectly to persons or property on account of such sale or dispensing
of beer, wine or other alcoholic beverages shall also be furnished,
including in such coverage loss of means of support, all in amounts as
may be required by law or as the Lender may specify. Special coverages
must also be furnished for other operations of Borrower or any tenants
at the Project, if applicable, including garage operations, asbestos
removal and any other operation as may be designated by Lender from
time to time. All such special coverages shall name Lender as an
additional insured.
g. The following opinions of counsel and Borrower and
Cadence hereby direct their respective attorneys to deliver to Lender
the following opinions: (A) opinions from counsel to Borrower and
Cadence satisfactory to Lender, and generally in the form attached
hereto as Exhibit D, and (B) such other opinions as Lender may
reasonably require.
h. A copy of the Cadence Leases, together with all
amendments thereto, certified as being in full force and effect, and
true, correct and complete by Borrower. The Cadence Leases shall (A) be
non-cancelable Leases with terms expiring no earlier than the Maturity
Date; (B) provide for Cadence to pay all expenses thereunder; and (C)
provide for minimum aggregate Net Rent ("Minimum Net Rent") during the
Term in amounts not less than the following:
<TABLE>
<CAPTION>
Year Minimum Net Rent
<S> <C> <C>
1 $3,500,000
2 $3,500,000
3 $3,000,000
4 $3,090,000
5 $3,182,700
6 $3,278,181
7 $3,376,526
8 $3,477,822
9 $3,582,157
10 $3,689,622; and
</TABLE>
(D) contain provisions whereby aggregate Net Rent payable thereunder
shall increase automatically monthly, in arrears, in proportion to any
increase in the Applicable Rate, so that at all times during the Term
the Debt Service Coverage Ratio shall be not less than 1.05. If the
Applicable Rate decreases following any such increase in Net Rent, Net
Rent may decrease in proportion to the decrease in the Applicable Rate;
provided, however, at no time shall the annual aggregate Net Rent
payable under the Leases be less than the Minimum Net Rent.
i. A copy of any management agreement and any
brokerage agreement relating to the Project, and, if not terminable on
sixty (60) days' notice, a statement as to any commissions payable upon
the happening of certain stated events, all of which shall be approved
by Lender.
j. Copies of all existing soil test reports relating
to the Project that are available to Borrower.
k. The Environmental Report and copies of all
existing environmental reports and
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<PAGE> 22
phase I surveys relating to the Project that are available to Borrower.
l. The Engineering Report.
m. Evidence satisfactory to Lender that the Project
is benefited by such easements or other rights as may be necessary for
vehicular and pedestrian ingress and egress, the maintenance of
utilities, parking and other site improvements and the operation of the
Project, including any reciprocal easement and/or operating agreement
for the Project. Such evidence may include information shown on the
survey and endorsements to the Title Policy.
n. Current tax lien, bankruptcy and judgment searches
against Borrower, Cadence and Seeley. Current searches of all Uniform
Commercial Code financing statements filed with such offices as
Lender's counsel designates, with respect to Borrower, Cadence and
Seeley, respectively, as debtor, which searches shall show that no
Uniform Commercial Code financing statements are filed or recorded
against any of Borrower, Cadence and Seeley or in which the collateral
is described as personal property or fixtures constituting a part of,
or used in connection with, the Project.
o. A copy of the most recent annual financial
statement of Cadence, which financial statement shall have been
certified by the chief financial officer, chief accounting officer or
partner of Cadence as being true, complete and correct, prepared in
accordance with GAAP, consistently applied, and fully disclosing any
and all contingent liabilities.
p. The Plans and Specifications.
q. An Appraisal of the Project prepared by the
Appraiser, or other evidence satisfactory to Lender, demonstrating to
Lender's satisfaction that the Loan to Value Ratio does not exceed
eighty percent (80%).
r. With respect to the assignments described in
Section 4.2.3, Section 4.2.6 and Section 4.2.7, Borrower shall have
delivered to Lender advance consents to such assignments from such
third parties as Lender may require, and all other parties as Lender
may reasonably designate.
s. Such other evidence, documents and instruments as
may be required under this Agreement or as Lender may reasonably
require.
7. LENDER'S OBLIGATION TO DISBURSE PROCEEDS OF THE LOAN
7.1 Closing. Upon Borrower's compliance with and satisfaction of all
conditions precedent to the Closing, Lender shall disburse the Loan proceeds to
Borrower.
7.2 Disbursements Into An Escrow. If the Loan Proceeds are disbursed into
an escrow by Lender, the Loan Proceeds shall be considered to be disbursed to
Borrower from the date of deposit into the escrow, and interest shall accrue on
the Loan Proceeds from and after that date.
8. BORROWER'S AGREEMENTS
8.1 Borrower's Agreements;. Borrower further covenants and agrees to and
with Lender as followsLender as follows:
8.1.1 Compliance with Conditions Precedent. All conditions precedent
to the disbursement of the Loan proceeds will be complied with or waived by
Lender so that the Loan will be ready to be closed on or prior to the Closing
Date.
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<PAGE> 23
8.1.2 Compliance with Requirements of Governmental
Authorities. At all times after the Closing Date, Borrower will comply in all
material respects with, and will cause the Project to in all material respects
be in compliance with, all applicable Laws and requirements of Governmental
Authorities, including all requirements and conditions set forth in all permits,
licenses and other approvals which have been obtained or are required to be
obtained from Governmental Authorities for the operation, use or occupancy of
the Project.
8.1.3. Inspection by Lender. Borrower will cooperate, and will
cause all lessees and any managing agent to cooperate, with Lender in arranging
for inspections, from time to time, of the Project by Lender and its agents and
representatives at any time during normal business hours following reasonable
notice, except in the case of an emergency when no notice shall be required.
8.1.4 Mechanics' Liens and Contest Thereof. Borrower will not
suffer or permit any mechanics' lien or claim to be filed or otherwise asserted
against the Project, and will promptly discharge the same, or cause the same to
be discharged, by payment, bonding or otherwise. Without limiting the generality
of the foregoing, Borrower may contest such lien or claim in good faith and by
bona fide proceedings; provided, however, in the event Borrower contests any
such mechanics' lien or claim, Borrower shall maintain reserves adequate to pay
all contested liabilities in accordance with prudent business practices, which
reserves shall not be less than 150% of the amount of the contested liabilities.
8.1.5 Renewal of Insurance. Throughout the term of the Loan,
Borrower shall maintain in full force and effect all insurance which Borrower is
required to furnish to Lender pursuant to Section 6.1.3(e) and Section 6.1.3(f).
Borrower shall timely pay, or cause to be paid, all premiums on all insurance
policies required under this Agreement from time to time. When and as additional
insurance is required from time to time during the term of the Loan and when and
as any policies of insurance may expire, Borrower shall furnish, or cause to be
furnished, to Lender, with the premiums therefor prepaid, additional and renewal
insurance policies in companies, coverage and amounts satisfactory to Lender,
all in accordance with Section 6.1.3(e) and Section 6.1.3(f). Without limiting
the foregoing, not less than ten (10) days prior to the expiration, termination
or cancellation of any insurance policy which Borrower is required to maintain
hereunder or under any other Loan Document, Borrower shall obtain a replacement
policy, which shall be effective no later than the date of the expiration,
termination or cancellation of the previous policy, and shall deliver to Lender
either the original replacement policy or certified copies and endorsements in
respect of such policy in the same form and containing the same information as
required to be delivered by Borrower pursuant to Section 6.1.3(e) or Section
6.1.3(f) hereof. Notwithstanding this Section 8.1.5, in the event of Borrower's
failure to maintain insurance as required under this Agreement or any of the
other Loan Documents, Lender shall have the right (but not the obligation), if
such failure shall continue after five (5) Business Days' written notice to
Borrower, to place and maintain the insurance required to be placed and
maintained by Borrower hereunder and treat the amounts expended therefor as
additional indebtedness evidenced by the Note (even if the total amount of such
indebtedness would then exceed the face amount of the Note), payable on demand
and secured by the Deed of Trust and other Loan Documents.
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<PAGE> 24
8.1.6 Payment of Taxes. Borrower shall pay, or cause to be
paid, all general and special taxes, real estate taxes, assessments and charges,
sales and excise taxes, any tax that is due or becomes due in respect of the
issuance of the Note or the recording of the Deed of Trust, and any other taxes
that materially adversely affect the Project or the ability of Borrower, Cadence
or Seeley to discharge their respective obligations under the Loan Documents
before the same become delinquent, and shall, upon request, furnish to Lender
copies of the receipts therefor; provided, however, that Borrower shall have the
right to pay any such tax under protest, or to otherwise contest any such tax or
assessment or charge, but only if (i) such contest has the effect of preventing
the collection of such taxes so contested (if applicable law permits such
contest to be conducted prior to the payment in full of the disputed tax or
assessment) and also preventing the sale or forfeiture of the Project or any
part thereof or any interest therein, (ii) Borrower has notified Lender in
writing in advance of its intent to contest such taxes, and (iii) Borrower
either (A) has deposited security in form and amount reasonably satisfactory to
Lender, in its judgment, and increases the amount of such security so deposited
promptly after Lender's request therefor, or (B) shall maintain reserves
adequate to pay all contested taxes in accordance with prudent business
practices, which reserves shall not be less than 150% of the amount of the
contested taxes. If Borrower fails to commence such contest or, having commenced
to contest the same, and having deposited such security required by Lender for
its full amount, or having reserved an amount not less than 150% of the amount
of the contested taxes, shall thereafter fail to prosecute such contest in good
faith or with due diligence, or, upon adverse conclusion of any such contest,
shall fail to pay such tax, assessment or charge, Lender may, at its election
(but shall not be obligated to), if such failure shall continue after five (5)
Business Days' written notice to Borrower, pay and discharge any such tax,
assessment or charge, and any interest or penalty thereon, and any amounts so
expended by Lender shall be deemed to constitute additional indebtedness
evidenced by the Note (even if the total amount of such indebtedness would then
exceed the face amount of the Note), payable on demand and secured by the Deed
of Trust and other Loan Documents.
8.1.7 Personal Property. (i) All of Borrower's respective
personal property, fixtures, furnishings, furniture, attachments and equipment
located on or used in connection with the Project (other than that which is
owned by the lessee leasing space in the Buildings), shall generally remain at
the Project and shall also be kept free and clear of all chattel mortgages,
conditional vendor's liens and all other liens, encumbrances and security
interests of any kind whatever, (ii) Borrower will be the absolute owner of said
personal property, fixtures, attachments and equipment and (iii) Borrower shall,
from time to time on demand by Lender, furnish Lender with evidence of such
ownership satisfactory to Lender, including searches of applicable public
records.
8.1.8 Proceedings to Enjoin or Prevent Operation of the
Project. If any action, suit or proceeding is filed or otherwise commenced
seeking to enjoin or otherwise prevent or declare unlawful the operation, use or
occupancy of the Project or any portion thereof, or if any other action, suit or
proceeding of the nature described in Section 3.1.11 is filed or otherwise
commenced, Borrower shall give immediate notice thereof to Lender, and, at its
sole expense (i) cause such proceedings to be vigorously contested in good faith
and (ii) in the event of an adverse ruling or decision, prosecute all allowable
appeals therefrom. Without limiting the generality of the foregoing, Borrower
shall resist the entry or seek the stay of any temporary or permanent injunction
that may be entered and use its best efforts to bring about a favorable and
speedy disposition of all such proceedings, as well as any other proceedings of
the nature described in Section 3.1.11 above.
8.1.9 Lender's Attorneys' Fees and Expenses. In case of any
default under this Agreement or any of the other Loan Documents, Borrower (in
addition to Lender's attorneys' fees and expenses to be paid by Borrower under
Section 5.1) shall pay all of Lender's attorneys' fees and expenses in
connection with the enforcement of this Agreement and the other Loan Documents
and with the collection of all amounts payable hereunder and thereunder. In
addition to, and without limiting the generality of the foregoing, if at any
time hereafter prior to repayment of the Loan in full, Lender employs counsel
for advice or other representation (whether or not any suit has been, or shall
thereafter be, filed and whether or not other legal proceedings have been, or
shall thereafter be, instituted, whether or not Lender shall be a party thereto)
with respect to the Loan, the Project or any part thereof, this Agreement or any
of the other Loan Documents, or to protect, collect, lease, sell, take
possession of, foreclose upon or liquidate any portion of the Project, or to
attempt to enforce any security interest or lien in the Project, or to enforce
any rights of Lender or any of Borrower's obligations hereunder or under any of
the other Loan Documents, or any obligations of any other person, firm or
corporation (including Cadence or Seeley) which may be obligated to Lender by
virtue of this Agreement or any other agreement, instrument or document
heretofore or hereafter delivered to Lender by or for the benefit of Borrower,
then, in any such event, all of the attorneys' fees and expenses arising from
such services, and all expenses, costs and charges
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relating thereto, shall be paid by Borrower on demand and, if Borrower fails to
pay such fees, costs and expenses, payment thereof by Lender shall be deemed to
constitute additional indebtedness evidenced by the Note (even if the total
amount of such indebtedness would then exceed the face amount of the Note),
payable on demand and secured by the Deed of Trust and other Loan Documents.
8.1.10 Lender's Action for its Own Protection Only. The
authority herein conferred upon Lender, and any action taken by Lender, to
inspect the Project and to approve leases and all other documents and
instruments submitted to Lender, will be exercised and taken by Lender and by
Lender's employees, agents and representatives for their own protection only and
may not be relied upon by Borrower or any other party for any purposes whatever;
and neither Lender nor Lender's employees, agents and representatives shall be
deemed to have assumed any responsibility to Borrower or any other party with
respect to any such action herein authorized or taken by Lender or Lender's
employees, agents and representatives. Any review, investigation or inspection
conducted by Lender, any architectural, engineering or other consultants
retained by Lender or any agent or representative of Lender in order to verify
independently Borrower's satisfaction of any conditions precedent to the
disbursement of Loan proceeds under this Agreement, Borrower's performance of
any of the other covenants, agreements and obligations of Borrower under this
Agreement, or the validity of any representations and warranties made by
Borrower hereunder (regardless of whether or not the party conducting such
review, investigation or inspection should have discovered that any of such
conditions precedent were not satisfied or that any such covenants, agreements
or obligations were not performed or that any such representations or warranties
were not true), shall not affect (or constitute a waiver by Lender of) (i) any
of Borrower's representations and warranties under this Agreement or Lender's
reliance thereon or (ii) Lender's reliance upon any certifications of Borrower,
or any other party required under this Agreement, or any other facts,
information or reports furnished to Lender by Borrower or any other party.
8.1.11 Furnishing Information. Borrower shall deliver or cause
to be delivered to Lender quarterly unaudited financial statements (which shall
include operating statements for the Project) for Borrower as soon as available,
but in no event later than sixty (60) days after the close of each fiscal
quarter. Borrower shall deliver or cause to be delivered to Lender audited
annual financial statements for Borrower, Cadence and Seeley as soon as
available, but in no event later than one hundred and twenty (120) days after
the close of their respective fiscal years. All financial statements shall be
prepared in accordance with GAAP, and shall fully disclose all contingent
liabilities. The quarterly unaudited financial statements of Borrower shall be
certified as true, complete and correct by an authorized financial or accounting
officer of Seeley. The annual statements of Borrower, Cadence and Seeley shall
be certified by Arthur Andersen & Co. or another nationally recognized certified
public accountant reasonably acceptable to Lender, as fairly presenting the
financial condition of the entity to which they relate. Additionally, Borrower
will:
a. promptly supply Lender with such information
concerning Borrower, Cadence and Seeley relating to the operation of
the Project as Lender may reasonably request from time to time
hereafter, including information reasonably requested by Lender to
verify calculation of Gross Revenues, Operating Expenses, and Monthly
Excess Cash Flow by Borrower;
b. promptly notify Lender of any condition or event
which constitutes (or which upon the giving of notice or lapse of time,
or both, would constitute) a breach, Default, or Event of Default of
any term, covenant, condition, warranty, representation or provision of
this Agreement or of any of the other Loan Documents, including any
event or circumstance which causes any information which has previously
been provided by it to Lender to include an untrue statement of
material fact or to omit to state any material fact or any fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and, in such
event, Borrower, Cadence, and/or Seeley (as may be appropriate) shall
promptly furnish to Lender updated or revised information which will
correct such untrue statement or include such omitted fact;
c. at any time during regular business hours
following reasonable notice, permit Lender and any of its agents or
representatives to have access to and examine the Project and all of
the books and records regarding the operation of the Project, and
permit Lender to copy and make abstracts from any and all of such books
and records;
d. promptly notify Lender of the institution of any
action, suit or proceeding involving the Project, Borrower; and
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e. promptly furnish to Lender copies of all other
information concerning the Borrower, the Project, Cadence, and/or
Seeley (but in the case of Cadence and/or Seeley, only to the extent
related to the Borrower or the Project) as is reasonably requested from
time to time by Lender.
8.1.12 Documents of Further Assurance. From time to time,
Borrower shall execute, deliver, record and furnish such documents as may be
reasonably necessary or desirable to (i) perfect and maintain perfected as valid
liens upon the Project, the liens granted by Borrower to Lender under the Deed
of Trust and the collateral assignments and other security interests under the
other Loan Documents as contemplated by this Agreement, (ii) correct any errors
of a typographical nature or inconsistencies which may be contained in any of
the Loan Documents and (iii) consummate fully the transaction contemplated under
this Agreement.
8.1.13 Furnishing Reports. Borrower shall provide to Lender,
promptly after Borrower's receipt thereof, copies of all inspections, reports,
test results and other information received by Borrower from time to time from
its employees, agents, representatives, architects, engineers and any other
parties involved in the operation of the Project, which in any way relate to the
Project or any part thereof.
8.1.14 Operation of Project. As long as any portion of the
Loan remains outstanding, the Project shall be operated as a first-class
commercial office project. Borrower shall fully and faithfully perform all of
its covenants, agreements and obligations under any Leases of space in the
Project.
8.1.15 Leasing. Borrower shall not enter into any Lease of all
or any portion of the Project or materially modify or amend, waive any provision
of, terminate or cancel any Lease of space in the Project, or approve any
sublease which under the terms of the underlying Lease must be approved by
Borrower, except in the ordinary course of business, without, in each instance,
the prior written consent of Lender, which consent shall not be unreasonably
withheld or delayed. All tenants under Leases shall be required, at Lender's
election, to execute estoppel certificates (stating, among other things, that
there are no rights of set-off, defenses, counterclaims or disputes under the
applicable Lease and that such Lease is in full force and effect) and
subordination, non-disturbance and attornment agreements in form and substance
reasonably satisfactory to Lender. All Leases and guarantees of Leases,
including the Cadence Leases, shall be assigned to the Lender (together with
security deposits) as additional security for the Loan. Upon Lender's request,
Borrower shall promptly deliver to Lender originals or true certified copies of
all Leases.
8.1.16 Management Agents' and Brokers' Contracts. Borrower
shall not enter into, or modify, amend or waive any material provision of, or
terminate or cancel, any management contracts for the Project, without, in each
instance, the prior written approval of Lender which approval shall not be
unreasonably withheld or delayed.
8.1.17 Furnishing Notices. Borrower shall deliver to Lender a
copy of any notice received or given by Borrower (or its agents or
representatives) regarding a material breach under any Lease within three (3)
Business Days after such notice is given or received. Borrower shall also
provide Lender with copies of all material notices pertaining to the Project or
any part thereof received by Borrower (or its agents or representatives) from
any Governmental Authority or from any insurance company providing insurance on
any portion of, or any interest in, the Project within three (3) Business Days
after such notice is received.
8.1.18 Correction of Defects. Within five (5) days after
Borrower acquires knowledge of or receives notice of a defect in the Project
that presents a material adverse threat to public health or safety, or that
materially adversely affects the Project or the ability of Borrower, Cadence or
Seeley to discharge their respective obligations under the Loan Documents before
the same become delinquent, Borrower shall proceed with diligence to correct
such defect. Borrower shall complete such correction within thirty (30) days
after Borrower acquires such knowledge or is given such notice, or, if such
correction cannot be completed within thirty (30) days, such additional period
of time as it shall take with diligence to complete such corrections. Upon
Borrower acquiring knowledge of such defect (other than as a result of written
notice to Borrower from Lender), Borrower shall promptly advise Lender in
writing of such matter and the measures being taken to make such corrections
along with an estimate of the time of completion.
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8.1.19 No Additional Debt. Borrower shall not, without the
prior written consent of Lender, which consent may be withheld in Lender's
reasonable discretion, create, incur, assume or suffer to exist any Debt,
whether personal or nonrecourse, secured or unsecured, subordinate or otherwise,
that would materially adversely affect the ability of Borrower to discharge its
obligations under the Loan Documents to which it is a party.
8.1.20 Indemnification. Borrower agrees to indemnify and hold
harmless Lender and each of its Affiliates and each director, officer, employee,
attorney, assignee, participants or agent of any of the foregoing persons (each
such Person, an "Indemnified Person") from any losses, claims, costs, damages,
expenses or liabilities (or actions, suits or proceedings, including any inquiry
or investigation, with respect thereto) (collectively, "Claims") to which any
Indemnified Person may become subject, insofar as such Claims arise out of, in
any way relate to, or result from, this Agreement or any other Loan Document or
any of the transactions contemplated hereby and thereby and to reimburse upon
demand each Indemnified Person for any and all reasonable legal and other
expenses incurred in connection with investigating, preparing to defend or
defending any such Claim; provided, however, that:
(a) Excluded Claims. Borrower shall not have any
obligation (i) to any Indemnified Person to the extent of any Claim
made or prosecuted against such Indemnified Person by Borrower, or (ii)
to any Indemnified Person for any Claim based on or arising from the
gross negligence or willful misconduct of such Indemnified Person;
(b) Notice. Borrower shall be given prompt notice of
the commencement of any action or proceeding on any Claim and of any
overt written threat of litigation on any Claim, but the failure to
receive such notice shall not relieve Borrower from any of its
obligations under this Section 8.1.20, except to the extent Borrower
has been actually damaged thereby;
(c) Selection of Counsel. Borrower shall have the
right, with the consent of the Indemnified Person (which shall not
unreasonably be withheld), to select a firm of attorneys as legal
counsel to defend any Claim, and Borrower shall pay the fees, expenses
and disbursements of such counsel and any special or local counsel; and
if the Indemnified Person or such legal counsel determines in good
faith that representing such Indemnified Person would or could result
in a conflict of interest, or that a defense, crossclaim or
counterclaim is available to such Indemnified Person that is not
available to any other Person represented by such legal counsel in the
same proceeding, then to the extent reasonably necessary to avoid such
a conflict of interest or to permit unqualified assertion of such a
defense, crossclaim or counterclaim, such Indemnified Person shall be
entitled to separate representation, at Borrower's expense, by legal
counsel selected by such Indemnified Person and reasonably acceptable
to Borrower, with all such legal counsel using reasonable efforts to
avoid unnecessary duplication of effort by counsel;
(d) Separate Counsel. Each Indemnified Person shall
have the right to be represented by counsel of its own choosing (i) at
Borrower's expense whenever any Event of Default is continuing, except
that the Borrower shall be obligated under this Section 8.1.20 only to
pay the reasonable fees and expenses of one firm of attorneys chosen by
Lender to represent its interests and the other Indemnified Person as a
group, (ii) when such Indemnified Person is entitled to separate
representation at Borrower's expense as set forth in Section 8.1.20(c),
and (iii) at any time and under any circumstances at such Indemnified
Person's expense; and Borrower and the attorneys selected by Borrower
shall cooperate in all reasonable respects with such counsel; and
(e) Settlement. Borrower shall be entitled to settle
any Claim, at Borrower's sole cost and expense, without the consent of
the Indemnified Person if (i) no Event of Default under the Loan is
continuing, (ii) the settlement does not and will not, under any
circumstances, impose any present or future payment or performance
obligation upon the Indemnified Person, and (iii) the settlement
includes the giving by the claimant to the Indemnified Person of an
unconditional and irrevocable release from all liability in respect of
such Claim; and otherwise only upon the prior written consent of the
Indemnified Person, which shall not unreasonably be withheld.
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8.1.21 Insurance Reporting Requirements. Borrower shall
promptly notify its insurance carrier or agent therefor (with a copy of such
notification being provided to Lender) if there is any (i) occurrence which,
under the terms of any insurance policy then in effect with respect to the
Project, requires such notification, (ii) increase in any hazard theretofore
anticipated, or any new or otherwise unanticipated hazard at, or relating to the
Project or (iii) Transfer of ownership.
8.1.22 Partnership Agreement. Except as otherwise permitted
herein, without the prior written consent of Lender, which consent shall not be
unreasonably withheld or delayed, Borrower shall not permit or suffer any
material amendment or modification of partnership agreement, or suffer the
admission of any new partner.
8.1.23 Lost Note. If the Note is mutilated, destroyed, lost,
or stolen, Borrower shall promptly deliver to Lender, in substitution therefor,
a new promissory note containing the same terms and conditions as the Note with
a notation thereon (i) of the unpaid principal and accrued and unpaid interest
and (ii) stating that such promissory note is a duplicate original of the Note,
intended to replace the Note. If Borrower executes a replacement promissory note
at Lender's request, Lender will indemnify and hold Borrower harmless from any
claims made under the original Note.
8.1.24 Hazardous Material. Except for Routine Uses (but only
to the extent such materials are properly contained, labeled and used in
accordance with all applicable Laws), Borrower shall (i) keep, and shall cause
all tenants, subtenants and managers to keep, the Project free of all Hazardous
Material, (ii) comply in all material respects, and shall cause Cadence, its
Affiliates, and all tenants, subtenants and managers to comply in all material
respects, with all Environmental Laws, (iii) pay promptly when due such costs of
removal or remediation of any Hazardous Material in, over, on or under, or
emanating from, the Project as shall be required by any Governmental Authority
with jurisdiction over the Project, except that Borrower may, at its sole cost
and expense, in good faith and by appropriate proceedings, contest the recovery
of such costs by any Governmental Authority, (iv) keep the Project free of any
lien imposed pursuant to such Environmental Laws and (v) complete the remedial
actions required by any Governmental Authority with jurisdiction over the
Project within the time periods required, and if no time periods have been
required, within a reasonable period of time not to exceed any time period
required by Law (collectively, "Remedial Actions").
Without limiting the generality of the foregoing:
a. Borrower shall not release or dispose of, or allow
the release or disposal of, any Hazardous Material at or from the
Project. At Lender's reasonable request, Borrower shall conduct an
environmental audit of the Project at Borrower's sole cost and expense;
provided, however, so long as no Event of Default remains uncured,
Borrower shall not be required to bear the cost and expense of more
than one such environmental audit per calendar year. Borrower shall
cooperate in the conduct of all such environmental audits and shall
cause any tenants to, give Lender and its agents and its employees
access to the Project to conduct such audits.
b. Borrower shall promptly advise Lender in writing
upon Borrower's notice of the following:
(1) any enforcement, cleanup, removal or
other governmental or regulatory action at or relating to the
Project instituted pursuant to any applicable Environmental
Laws;
(2) any claim or threatened claim of which
Borrower has knowledge made by any third party against
Borrower or the Project relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from any
violation or claimed violation of any Environmental Laws at or
relating to the Project (the matters set forth in clauses (1)
and (2) are hereinafter referred to as "Hazardous Materials
Claims"); and
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(3) Borrower's discovery of any occurrence
or condition on any real property adjoining or in the vicinity
of the Project that would be reasonably likely to result in
the Project, or any part thereof, being subject to the
imposition of any lien or encumbrance, any restrictions on the
ownership, occupancy, transferability or use of the Project
under any applicable Environmental Laws.
c. Lender shall have the right (but shall not be
obligated) to join and participate in, as a party if it so elects, any
legal proceedings or actions initiated in connection with any Hazardous
Materials Claims and to have all attorneys' fees and disbursements and
all other expenses reasonably incurred by Lender in connection
therewith paid by Borrower.
8.1.25 Appraisals. If required by FIRREA, any other applicable
Law, or any Governmental Authority, Lender shall be entitled to obtain, at
Borrower's expense but no more frequently than once in any twelve (12) month
period, an update of the Appraisal or a new appraisal complying in form and
substance with the requirements of the Appraisal and FIRREA. Such update of the
Appraisal or new appraisal shall be performed for, and certified to, Lender by
the Appraiser, in conformity with the requirements of FIRREA and on a basis and
using a methodology satisfactory to Lender. Lender shall have the option of
requesting Borrower to provide the update of the Appraisal or a new appraisal,
or of ordering the same directly.
8.1.26 Access to the Project and Right to Cure Defaults Under
Leases and Easement Agreements. So long as Borrower is in default under the
terms of any Lease, including the Cadence Leases, Lender shall have the right
(but not the obligation) to cure or cause the cure of such default five (5)
calendar days' after notice to Borrower has been received or deemed received,
and, if in order to effect such cure, Lender must enter upon and/or take
possession of the Project, or any portion thereof, Lender may, and Borrower
hereby grants Lender the right to, enter in and upon and take exclusive
possession of the Project, or such portion thereof, for the purpose of curing
such default. Any costs incurred by Lender in curing such default shall be
deemed to constitute additional indebtedness evidenced by the Note (even if the
total amount of such indebtedness would then exceed the face amount of the
Note), payable on demand and secured by the Deed of Trust and other Loan
Documents. Borrower shall not enter into, modify, amend, waive any material
provision of, terminate or cancel any agreements containing appurtenant
easements relating to the Project, and Borrower shall fully and faithfully
perform all of its covenants, agreements and obligations under such documents.
8.1.27 Payments to Affiliates; Prohibition Against Cash
Distributions; Application of Cash Flow. Borrower shall not pay any Affiliate
(nor any affiliates of any such persons or entities) any overhead fees, leasing
fees, management fees, marketing fees, consulting fees (or any fees similar to
the foregoing) during the term of the Loan, except to the extent such fees do
not exceed the amount that would have been paid to non-affiliated parties for
the same services in an arms-length transaction. Borrower shall apply all cash
flow from the Project to pay the following items in the order of priority listed
to the extent necessary to pay such items: (i) Operating Expenses, including
amounts due to Lender pursuant to the Loan Documents (other than interest due on
the Loan), but only to the extent such amounts are reasonable and customary, and
(ii) interest due on the Loan, any Amortization Payments, and any other payments
to Lender on account of the Loan paid during such month. All cash flow from the
Project in excess of what is required to pay the items set forth in clauses (i)
and (ii) above, as and when such items are due, may be distributed by Borrower
to its constituent partners on a current basis.
8.1.28 Single Purpose Entity. Borrower shall engage solely in
the business of operating the Project, and shall not acquire any material assets
or properties except in connection with the operation of such business on the
Project.
8.1.29 Use of Loan Proceeds. Borrower shall not use or permit
any Loan proceeds to be used for the purpose of purchasing or carrying any stock
other than the stock of Cadence Design Systems, Inc., or margin stock (within
the meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System) or to extend credit to others for the purpose of purchasing or
carrying any margin stock.
8.1.30 ERISA. Each of Borrower, Cadence and Seeley covenants
that it will not perform any act (including, but not limited to, the exercise or
failure to exercise any rights it may have under any Loan Document or with
respect to any other assets it holds) which would cause the making of the Loan,
the holding of the Loan or the exercise of any of its or Lender's rights under
this Agreement or any other Loan Document to constitute a Prohibited
Transaction. If the Loan becomes a Prohibited Transaction, Lender, and each of
Cadence,
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Seeley and Borrower agree to cooperate to mitigate any liability or exposure to
liability of Lender including, without limitation, by applying for, at
Borrower's sole expense, a Prohibited Transaction exemption from the Department
of Labor for any act or failure to act on the part of Borrower, Cadence or
Seeley, or to cause a reversal of the Loan transaction.
8.1.31 Control and Ownership of Seeley. At all times during
the Term of the Loan, Cadence shall maintain one-hundred percent (100%)
ownership and Control of Seeley (or other wholly owned Affiliate of Cadence
approved by Lender, which approval shall not be unreasonably withheld or
delayed).
9. CASUALTIES
9.1 Lender's Election to Apply Insurance Proceeds on Indebtedness.
Borrower shall give prompt written notice to Lender of any fire or other
casualty at the Project. In the event of any loss or damage to the Project due
to fire or other casualty, Lender shall have the right, but not the obligation,
to settle insurance claims in amounts in excess of $500,000; if Lender elects
not to settle any such claim, Borrower shall settle such claim; provided,
however, any settlement reached by Borrower shall be subject to Lender's prior
written approval, which approval shall not be unreasonably withheld or delayed.
Borrower shall have the right to settle claims of $500,000 or less.
Notwithstanding the foregoing provisions of this Section 9.1 to the contrary,
Lender shall have the right to settle such claim that Borrower has not settled
within ninety (90) days after the date of the related loss, unless Borrower in
good faith and with due diligence has been and is pursuing from the date of the
loss an investigation or settlement of such claim. Provided that (a) no default
exists hereunder or under any other Loan Document at the time any insurance
proceeds are to be disbursed; (b) in Lender's reasonable judgment, the
construction, repairs and renovations can be completed six (6) months prior to
the Maturity Date; and (c) Borrower complies with the conditions set forth in
Section 9.2(a) and (b), Borrower shall be entitled to use the insurance proceeds
to rebuild the Project. In all other cases, Lender shall have the right (but not
the obligation) to collect, retain and apply to the indebtedness of Borrower
under this Agreement and the other Loan Documents all insurance proceeds (after
deduction of all expenses of collection and settlement, including attorneys'
fees and disbursements and adjusters' fees and expenses); and, if such insurance
proceeds are insufficient to pay such indebtedness in full, to declare the
balance remaining unpaid on the Note, the Deed of Trust and the other Loan
Documents to be due and payable forthwith and to avail itself of any of the
remedies afforded thereby and hereby as in the case of any default thereunder
and hereunder. Any insurance proceeds remaining after application to the
indebtedness of Borrower shall be paid by Lender to Borrower or to the party
then entitled thereto. Notwithstanding anything in this Section to the contrary,
Lender shall not apply any proceeds of insurance to any indebtedness prior to
the occurrence of an Event of Default.
9.2 Borrower's Obligation to Rebuild; Use of Insurance Proceeds. If (a)
Lender is entitled to but does not elect to apply insurance proceeds to the
indebtedness, as provided under Section 9.1, or (b) under the provisions of
Section 9.1, Borrower is entitled to have the proceeds of insurance applied to
restore the Project, Lender shall have the right (but not the obligation) to
retain such proceeds, and after deduction of all expenses of collection and
settlement incurred by Lender (including attorneys' fees and disbursements and
adjusters' fees and expenses), to release and disburse the same to Borrower as
Borrower Borrower's Obligation to Rebuild; Use of Insurance Proceeds.; If (a)
Lender is entitled to but does not elect to apply insurance proceeds to the
indebtedness, as provided under Section 9.1, or (b) under the provisions of
Section 9.1, Borrower is enti
a. Expeditiously repair and restore all damage
resulting from such fire or other casualty, so that the Project will be
completed, or repaired or restored, as the case may be, in accordance
with the Plans and Specifications; and
b. If the proceeds of insurance are, in Lender's
reasonable judgment, insufficient to complete the repair and
restoration of the Project, then Borrower shall promptly deposit with
Lender the amount of such deficiency.
Any request by Borrower for a disbursement by Lender of insurance
proceeds and funds deposited by Borrower pursuant to this Section 9.2 shall be
subject to the performance by Borrower of such conditions as Lender may require,
in its reasonable discretion, in order to adequately insure the proper
rebuilding or restoration of the Project.
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10. ASSIGNMENTS
Lender's Right to Assign.;
10.1.1 Assignment. So long as Lender remains the lead agent
with respect to the Loan, on behalf of itself and as agent for itself and the
Assignees, Lender shall have the right, without the consent of Borrower, to
Transfer this Agreement and any of its rights and security hereunder and under
the Loan Documents, including the Note, the Deed of Trust and any of the other
Loan Documents, to any other party (an "Assignee"). Borrower hereby agrees that,
upon assumption of the Loan by Assignee, all of the rights and remedies of
Lender in connection with the interest so assigned shall be enforceable against
Borrower by an Assignee with the same force and effect and to the same extent as
the same would have been enforceable by Lender but for such assignment.
10.1.2 Participants. Lender shall have the right, without the
consent of Borrower, to syndicate or sell participations to one or more other
lenders (a "Participant") in or to all or a portion of its rights and
obligations under the Loan and the Loan Documents.
10.1.3 Availability of Records; Further Assurances. Borrower
acknowledges and agrees that Lender may provide to any Assignee or Participant,
originals or copies of this Agreement, the Note, the Deed of Trust, any other
Loan Documents and any other documents, instruments, certificates, opinions,
insurance policies, letters of credit, reports, requisitions and other materials
and information of every nature or description, and may communicate all oral
information, at any time submitted by or on behalf of Borrower or Cadence, or
received by Lender in connection with the Loan, Borrower, Cadence or any
Affiliate of Borrower or Cadence, provided that prior to any such delivery or
communication, such Assignees or Participants shall agree to preserve the
confidentiality of any of the foregoing to the same extent that the Lender
agreed to preserve such confidentiality. In order to facilitate assignments to
Assignees and sales to Participants, Borrower shall execute such further
documents, instruments or agreements as Lender may reasonably require. In
addition, Borrower agrees to cooperate fully with Lender in the exercise of
Lender's rights pursuant to this Section 10.1, including providing such
information and documentation regarding Borrower, Cadence and their businesses
and finances as Lender or any potential Assignee or Participant may reasonably
request in connection with evaluating any proposed assignment or participation
and to meet with potential Assignees or Participants.
10.1.4 Lender as Lead Agent. Borrower acknowledges, that
Lender, as lead agent for itself and any Assignees, shall have the sole and
exclusive authority to execute and perform this Agreement and each other Loan
Document on behalf of itself, as Lender, and as agent for itself and the
Assignees. Except as otherwise provided herein, Borrower shall have no
obligation to recognize or take any action or to deal directly with any
Assignee, and no Assignee shall have any right to take any action or to deal
directly with Borrower with respect to the rights, benefits and obligations of
Borrower under this Agreement, the other Loan Documents or any one or more
documents or instruments in respect thereof. Borrower may rely conclusively on
the actions of Lender as lead agent to bind Lender and the Assignees,
notwithstanding that the particular action in question may, pursuant to this
Agreement or any other agreement, be subject to the consent or direction of any
Assignee or any Co-Agent appointed pursuant to the succeeding paragraph.
10.1.5 Co-Agents. Lender may, at its sole option and from time
to time, appoint any Assignee or any affiliate of Lender as a co-agent
("Co-Agent"). If any Co-Agent is appointed, such Co-Agent and Lender shall
allocate among themselves, as they may agree from time to time, and so exercise
and perform, the rights and duties of Lender to administer the Loan, so long as
Lender remains lead agent.
10.1.6 Successor Co-Agent. Any Co-Agent may resign as co-agent
of the Assignees, at its discretion, without the consent of Borrower. Upon any
such resignation of any Co-Agent, Lender may replace such Co-Agent with a
successor Co-Agent. Upon the acceptance of any appointment as co-agent hereunder
by a successor co-agent, such successor co-agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
co-agent, and the retiring co-agent shall be discharged from its duties and
obligations under this Agreement.
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10.1.7 Lender's Right to Re-Book the Loan. In addition to, and
not in limitation of, any of Lender's rights under this Section 10.1, Lender, in
its sole discretion, shall have the right, from time to time, to re-book the
Loan with, or assign or transfer the Loan to, any branch of Credit Lyonnais or
any other Affiliate of Credit Lyonnais, in which case such branch of Credit
Lyonnais or other Affiliate of Credit Lyonnais shall, from and after the date of
any such re-booking, assignment or transfer, (i) succeed to all of the rights
and remedies and be subject to all of the obligations of Lender under this
Agreement and the other Loan Documents and (ii) constitute the "Lender" under
this Agreement and the other Loan Documents. The branch of Credit Lyonnais or
the Affiliate of Credit Lyonnais designated as the "Lender" immediately prior to
such re-booking, assignment or transfer shall, upon the occurrence of such
re-booking, assignment or transfer, be released from its rights and obligations
hereunder and under the other Loan Documents. Borrower shall execute any
documents reasonably necessary or, in Lender's reasonable opinion, desirable in
order to effectuate or evidence such re-booking, assignment or transfer.
10.2 Prohibition of Assignments by Borrower. Borrower shall not assign
or attempt to assign its rights under this Agreement. Except as provided in
Section 4.7, Borrower will not suffer or permit any of its interest or rights in
the Project to be assigned, sold, pledged, encumbered, transferred, hypothecated
or otherwise disposed of until the provisions of this Agreement have been fully
complied with and the Loan and all other sums evidenced by the Note and/or
secured by the Deed of Trust and the other Loan Documents, have been paid in
full.
10.3 Prohibition of Transfers in Violation of ERISA. In addition to the
prohibitions set forth above in Section 10.2 and in the Deed of Trust and in the
other Loan Documents, and not in limitation thereof, Borrower shall not assign,
sell, pledge, encumber, transfer, hypothecate or otherwise dispose of its
interest or rights in this Agreement or in the Project, or attempt to do any of
the foregoing or suffer any of the foregoing, nor shall any party owning a
direct or indirect interest in Borrower assign, sell, pledge, encumber,
transfer, hypothecate or otherwise dispose of any of its rights or interest
(direct or indirect) in Borrower, attempt to do any of the foregoing or suffer
any of the foregoing, if such action would cause the Loan, or the exercise of
any of Lender's rights in connection therewith, to constitute a prohibited
transaction under ERISA or the Internal Revenue Code or otherwise result in
Lender being deemed in violation of any applicable provision of ERISA or the
Internal Revenue Code.
10.4 Successors and Assigns. Subject to the foregoing restrictions on
transfer and assignment contained in this Article 10, this Agreement shall inure
to the benefit of and shall be binding on the parties hereto and their
respective heirs, executors, legal representatives, successors and permitted
assigns.
11. EVENTS OF DEFAULT
11.1 The occurrence of any one or more of the following shall
constitute an "Event of Default," as such term is used herein:
11.1.1 If Borrower fails to pay the unpaid principal amount of
the Loan when due, whether at the Maturity Date or upon acceleration or
otherwise as provided herein and in the Note;
11.1.2 If Borrower fails to pay any installment of interest
under the Note within three (3) Business Days from when due;
11.1.3 If Borrower fails to observe or perform any covenant,
agreement or obligation hereunder or under the other Loan Documents
involving the payment of money to Lender, other than the payment of
principal or interest under the Note, and such failure shall continue
for five (5) Business Days after written notice from Lender;
11.1.4 If Borrower fails to perform any of its non-monetary
covenants, agreements and obligations under this Agreement other than
those set forth in Section 8.1.24, or has otherwise breached any of the
covenants, agreements and conditions of this Agreement other than those
set forth in Section 8.1.24, and such failure or breach shall continue
for thirty (30) days after written notice thereof from Lender;
provided, however, that if such failure or breach by its nature can be
cured but cannot be cured within such thirty (30) day period, then the
same shall not constitute an Event of Default so long as
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Borrower commences cure within such thirty (30) day period and
diligently and in good faith prosecutes such cure to completion within
ninety (90) days of said written notice from Lender to Borrower;
11.1.5 If Borrower shall default in the performance or
observance of any of its obligations under Section 8.1.24 of this
Agreement, and such default shall continue after notice to Borrower and
after the first to occur of (i) thirty (30) days after such notice
thereof from Lender; provided, however, that if such failure or breach
by its nature can be cured but cannot be cured within such thirty (30)
day period, then the same shall not constitute an Event of Default so
long as Borrower commences cure within such thirty (30) day period and
diligently prosecutes such cure to completion, or (ii) the expiration
of the cure period permitted under applicable Law;
11.1.6 If any of the Cadence Leases are terminated or if an
event occurs which entitles Cadence to terminate any of the Cadence
Leases;
11.1.7 If at any time or times hereafter any representation or
warranty (including the representations and warranties of Borrower,
Cadence and Seeley set forth in Article 3 of this Agreement),
statement, report or certificate now or hereafter made or delivered by
Borrower, Cadence or Seeley, or any Affiliate thereof (i) proves to
have been untrue, incorrect or misleading in any material respect when
made or delivered or (ii) thereafter becomes untrue, incorrect or
misleading in any material respect, unless, if the representation or
warranty is of a nature that can be made to be true or correct,
Borrower duly notifies Lender of such fact and diligently proceeds to
and does make such representation or warranty true and correct and not
misleading, within any applicable grace period contained herein, or, if
no grace period is provided herein, within thirty (30) days; provided,
however, that nothing herein shall be deemed to extend any applicable
grace period beyond the Maturity Date;
11.1.8 If all or substantially all of the assets of Borrower
or Cadence are attached, seized, subjected to a writ of distress
warrant, or are levied upon, or come into the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors,
and the same is not vacated, stayed, dismissed, set aside or otherwise
remedied within sixty (60) days after the occurrence thereof;
11.1.9 If Borrower is enjoined, restrained or in any way
prevented by any court order from operating the Project, or if a notice
of lien, levy or assessment is filed of record with respect to all or
any part of the property of Borrower or Cadence by any Governmental
Authority, which could affect the performance of the obligations of
such parties hereunder or under the other Loan Documents, as the case
may be, or if any proceeding is filed or commenced seeking to enjoin,
restrain or in any way prevent the foregoing parties from conducting
all or a substantial part of their respective business affairs, and in
any of such events, the affected party shall fail to cause the same to
be vacated, stayed, dismissed, set aside or remedied within thirty (30)
days after the occurrence thereof;
11.1.10 If (i) any petition is filed by or against the
Project, Borrower, Cadence or Seeley under the Federal Bankruptcy Code
or any similar state or federal law, whether now or hereafter existing
(and, in the case of involuntary proceedings, either failure to cause
the same to be vacated, stayed or set aside within sixty (60) days
after filing or the entry of an order for relief); or (ii) Borrower,
Cadence or Seeley makes an assignment for the benefit of creditors or
admits in writing its inability to pay its debts as they become due;
11.1.11 If any Transfer is made in violation of Section 4.7,
Section 10.2, or Section 10.3, or in violation of prohibitions against
disposition of any interest in Borrower contained in the Deed of Trust,
including, without limitation, Section 26 thereof;
11.1.12 If Borrower, Cadence, Seeley, or any Affiliate thereof
shall fail to pay when due any Debt owed by it to Lender or is in
default under any agreement with Lender and such failure or default
continues after any applicable grace period specified in the instrument
or agreement relating thereto;
11.1.13 If Cadence or Seeley repudiates any of its obligations
under, or denies the validity or enforceability of all or any portion
of the Environmental Indemnity;
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11.1.14 If Cadence ceases to Control, manage, wholly own, or
maintain one hundred percent (100%) ownership of Seeley (or other
wholly owned Affiliate of Cadence approved by Lender, which approval
shall not be unreasonably withheld or delayed); or
11.1.15 If a default occurs under any of the other Loan
Documents and continues beyond the applicable grace period, if any,
contained therein.
12. LENDER'S REMEDIES IN EVENT OF DEFAULT
12.1 Remedies Conferred Upon Lender.
12.1.1 Upon the occurrence of an Event of Default under clause
(i) of Section 11.1.10, the Note shall immediately and automatically become due
and payable in full without notice, presentment, demand, protest or other action
of any kind, all of which Borrower hereby expressly waives, and Lender shall, in
addition to the foregoing and all other remedies conferred upon Lender by law
and by the terms of the Note, the Deed of Trust and the other Loan Documents,
have the right, but not the obligation, to pursue one or more of the remedies
set forth in Section 12.1.2), concurrently or successively, it being the intent
hereof that all of such remedies shall be cumulative and that no such remedy
shall be to the exclusion of any other.
12.1.2 Upon the occurrence and during the continuance of any
Event of Default, Lender shall, in addition to all other remedies conferred upon
Lender by law and by the terms of the Note, the Deed of Trust and the other Loan
Documents, have the right but not the obligation to pursue any one or more of
the following remedies, concurrently or successively, it being the intent hereof
that all such remedies shall be cumulative and that no such remedy shall be to
the exclusion of any other:
a. Take any action which, in Lender's sole judgment,
is necessary or appropriate to effect observance and performance of the
covenants, agreements and obligations of Borrower under this Agreement
and the other Loan Documents;
b. Withhold further disbursement of the proceeds of
the Loan (if any);
c. Declare the Note to be immediately due and
payable;
d. Use and apply any monies deposited by Borrower
with Lender, regardless of the purpose for which the same was
deposited, to cure any default or to apply on account of any
indebtedness under this Agreement which is due and owing to Lender; and
e. Exercise or pursue any other right or remedy
permitted under this Agreement or any of the other Loan Documents or
conferred upon Lender by operation of Law.
12.2 Non-Waiver of Remedies. No waiver of any breach or default of any
provision of this Agreement or any other Loan Document shall constitute or be
construed as a waiver by Lender of any subsequent or prior breach or default or
of any breach or default of any other provision of this Agreement or such other
Loan Document.
13. GENERAL PROVISIONS
13.1 Captions. The captions and headings of various Articles and Sections of
this Agreement and Exhibits pertaining hereto are for convenience only and are
not to be considered as defining or limiting in any way, the scope or intent of
the provisions hereof.
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13.2 Notices. Any notice, demand, request or other communication which any
party hereto may be required or may desire to give hereunder shall be in writing
and shall be deemed to have been properly given and received: (a) if hand
delivered, on the day so delivered to the address set forth below; (b) if
mailed, on the third Business Day after the day on which it is deposited in the
United States mails in the continental United States, registered or certified
mail, postage prepaid, return receipt requested, addressed as set forth below;
(c) if by Federal Express or other reputable express courier service, on the
next Business Day after delivery to such express courier service, addressed as
set forth below; or (d) if by telecopy transmission, on the day and at the time
on which delivered to such party at the address and the telecopier number set
forth below; provided, if by telecopy transmission, a hardcopy is transmitted
concurrently by one of the other means allowed under this section:
If to Borrower:
c/o Cadence Design Systems, Inc.
2655 Seely Road, Building 5, MS 5B2
San Jose, California 95134
Telephone:
Telecopier:
Attention: Treasurer
with a copy to:
Cooley Godward Castro Huddleson & Tatum
One Maritime Plaza
20th Floor
San Francisco, California 94111-3580
Telephone: 415-693-2000
Telecopier: 415-951-3699
Attention: Felice Liang, Esq.
If to Lender:
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019-6092
Telephone: (212) 261-7000
Telecopier: (212) 261-7890
Attention: Real Estate Group
with copies to:
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019-6092
Telephone: (212) 261-7050
Telecopier: (212) 459-3187
Attention: Legal Department
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and:
Sonnenschein Nath & Rosenthal
601 South Figueroa Street
15th Floor
Los Angeles, California 90017
Telephone: (213) 623-9300
Telecopier: (213) 623-9924
Attention: Charles R. Campbell, Jr., Esq.
and:
Sonnenschein Nath & Rosenthal
1221 Avenue of the Americas
24th Floor
New York, New York 10020-1089
Telephone: (212) 768-6700
Telecopier: (212) 391-1247
Attention: Mark R. Lehrer, Esq.
or at such other address or to such other addressee as the party to be served
with notice may have furnished in writing to the party seeking or desiring to
serve notice as a place for the service of notice.
13.3 Entire Agreement; Modification; Waiver. This Agreement and the
other Loan Documents and instruments delivered in connection herewith
constitute the entire agreement among the parties with respect to the Project
and the Loan and supersede all prior agreements, written and oral, relating to
the subject matter hereof. Neither Lender nor any employee of Lender has made
or is authorized to make any representation or agreement upon which Borrower
may rely unless such matter is made for the benefit of Borrower and is in
writing signed by an authorized officer of Lender. Borrower agrees that it has
not and will not rely on any custom or practice of Lender, or on any course of
dealing with Lender, in connection with the Loan unless such matter is set
forth in this Agreement or the other Loan Documents or in a written instrument
made for the benefit of Borrower and signed by an authorized officer of Lender.
No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is in writing and signed by the party against
whom the enforcement of such modification, waiver, amendment, discharge or
change is sought.
13.4 Governing Law. THIS AGREEMENT IS A CONTRACT ENTERED INTO AND TO
BE PERFORMED IN THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE INTERNAL LAWS (AS OPPOSED TO THE LAWS OF CONFLICTS) OF THE STATE OF
CALIFORNIA.
13.5 Acquiescence Not to Constitute Waiver of Lender's Requirements.
Each and every covenant and condition for the benefit of Lender contained in
this Agreement may be waived by Lender; provided, however, that to the extent
Lender may have acquiesced in any noncompliance with any conditions, covenants
or obligations of Borrower contained herein, such acquiescence shall not be
deemed to constitute a waiver by Lender of the performance by Borrower of any
subsequent conditions, covenants or obligations to be performed by Borrower
hereunder.
13.6 Disclaimer by Lender.
13.6.1 This Agreement is made for the sole benefit of Borrower
and Lender (and Lender's successors and assigns and participants, if any), and
no other person or persons shall have any benefits, rights or remedies under or
by reason of this Agreement, or by reason of any actions taken by Lender
pursuant to this Agreement. Lender shall not be liable to any party for any
debts or claims accruing in favor of any such party against Borrower or others
or against the Project. Borrower is not and shall not be an agent of the Lender
for any purposes. Except as expressly set forth in the Loan Documents, Lender is
not and shall not be an agent of Borrower for any purposes. Lender, by making
the Loan or any action taken pursuant to any of the Loan Documents, shall not be
deemed a partner or a joint venturer with Borrower or fiduciary of Borrower.
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13.6.2 By accepting or approving anything required to be
observed, performed, fulfilled or given to Lender pursuant to the Loan
Documents, including, without limitation, the Environmental Report, the
Engineering Report and any certificate, statement of profit and loss or other
financial statement, survey, appraisal, lease or insurance policy, Lender shall
not be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof, and such acceptance or approval thereof shall not constitute
(i) a warranty or representation to anyone with respect thereto by Lender or
(ii) a waiver of any of Borrower's, Cadence's or Seeley's obligations or
liabilities under this Agreement or any of the other Loan Documents with respect
to any facts, matters or circumstances disclosed in any of the reports or other
documents described in this Section 13.6.2.
13.6.3 Lender neither undertakes nor assumes any
responsibility or duty to Borrower to select, review, inspect, supervise, pass
judgment upon or inform Borrower of any matter in connection with the Project,
and Borrower shall rely entirely upon its own judgment with respect to such
matters, and any review, inspection, supervision, exercise of judgment or supply
of information to Borrower by Lender in connection with such matters is for the
protection of Lender only and neither Borrower nor any third party is entitled
to rely thereon.
13.6.4 Lender owes no duty of care to protect Borrower with
respect to any matter reviewed or investigated by Lender in connection with the
Loan.
13.6.5 Unless caused by the gross negligence or willful
misconduct of Lender, Lender shall not be directly or indirectly liable or
responsible for any loss, claim, cause of action, liability, indebtedness,
damage or injury of any kind or character to any person or property arising from
any activity on, or occupancy or use of, all or any portion of the Project,
including any loss, claim, cause of action, liability, indebtedness, damage or
injury caused by, or arising from: (i) any defect in any building, structure,
grading, fill, landscaping or other improvements thereon or in any on-site or
offsite improvement or other facility therein, thereon or relating thereto
irrespective of whether or not any such defect was disclosed in any of the
reports or other documents described in Section 13.6.2 above; (ii) any act or
omission of Borrower, Cadence, Seeley, any Affiliate of Borrower, Cadence or
Seeley or any of Borrower's agents, employees, independent contractors,
licensees or invitees; (iii) any accident at the Project or any fire, flood or
other casualty or hazard thereon; (iv) the failure of Borrower, any of
Borrower's licensees, employees, invitees, agents, independent contractors or
other representatives to maintain all or any portion of the Project in a safe
condition; and (v) any nuisance made or suffered on any part of the Project.
13.7 Right of Lender to Make Advances to Cure Borrower's Defaults. If
(i) Borrower shall fail to perform in a timely fashion any of Borrower's
covenants, agreements or obligations contained in this Agreement or the other
Loan Documents, or (ii) Lender determines in good faith that an emergency or
other exigent circumstances exist, Lender may (but shall not be obligated to)
perform any of such covenants, agreements and obligations. Any amounts expended
by Lender to cure Borrower's defaults, including any amounts expended by Lender
pursuant to Section 12.1.2(a), shall constitute additional indebtedness
evidenced by the Note (even if the total amount of such indebtedness would then
exceed the face amount of the Note), payable on demand and secured by the Deed
of Trust and the other Loan Documents.
13.8 Definitions Included in Amendment. Definitions contained in this
Agreement which identify documents, including the other Loan Documents, shall be
deemed to include all amendments and supplements to such documents from the date
hereof, and all future amendments and supplements thereto entered into from time
to time to satisfy the requirements of this Agreement or otherwise with the
consent of Lender. Reference to this Agreement contained in any of the foregoing
documents shall be deemed to include all amendments and supplements to this
Agreement.
13.9 Time Is of the Essence. Time is hereby declared to be of the
essence of this Agreement and of every part hereof.
13.10 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
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13.11 Waiver of Consequential Damages. In no event shall Lender be
liable to Borrower for consequential damages, whatever the nature of a breach by
Lender of its obligations under this Agreement or any of the other Loan
Documents, and Borrower for itself and all of its Affiliates hereby waives all
claims for consequential damages.
13.12 Claims Against Lender. Lender shall not be in default under this
Agreement, or under any other Loan Documents, unless a written notice
specifically setting forth the claim of Borrower shall have been given to Lender
within thirty (30) days after Borrower first had knowledge of, or reasonably
should have had knowledge of, the occurrence of the event which Borrower alleges
gave rise to such default and Lender does not remedy or cure the default (if
any) with reasonable promptness. If it is determined in any proceedings that
Lender has improperly failed to grant its consent or approval, where such
consent or approval is required by this Agreement or any other Loan Document to
be obtained, Borrower's sole remedy shall be to obtain declaratory relief
determining such withholding to have been improper, and Borrower hereby waives,
for itself and all of its Affiliates, all claims for damages or set-off against
Lender resulting from any withholding of consent or approval by Lender.
13.13 Jurisdiction: Service of Process.WITH RESPECT TO ANY SUIT, ACTION
OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE PROJECT OR ANY OTHER LOAN
DOCUMENT (EACH, A "PROCEEDING"), BORROWER AND LENDER IRREVOCABLY (A) SUBMIT TO
THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA LOCATED
IN THE COUNTY OF SANTA CLARA AND THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF CALIFORNIA; AND (B) WAIVE ANY OBJECTION WHICH THEY MAY HAVE
AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT,
WAIVE ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM
AND FURTHER WAIVE THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT
SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT
SHALL PRECLUDE LENDER FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR
WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE
BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION. BORROWER AND LENDER FURTHER
AGREE AND CONSENT THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS
PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN
ANY CALIFORNIA STATE OR UNITED STATES COURT SITTING IN THE CITY OF SAN JOSE AND
COUNTY OF SANTA CLARA MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, DIRECTED TO BORROWER OR LENDER AT THEIR RESPECTIVE ADDRESSES
INDICATED ABOVE, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; PROVIDED,
HOWEVER, THAT IF DELIVERY IS REFUSED, SERVICE SHALL BE DEEMED COMPLETE FIVE (5)
DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.
13.14 Severability. The parties hereto intend and believe that each
provision in this Agreement comports with all applicable local, state and
federal laws and judicial decisions. However, if any provision or provisions, or
if any portion of any provision or provisions, in this Agreement is found by a
court of law to be in violation of any applicable local, state, or federal law,
statute, ordinance, administrative or judicial decision, or public policy, and
if such courts declare such portion, provision, or provisions of this Agreement
to be illegal, invalid, unlawful, void or unenforceable as written, then it is
the intent of all parties hereto that such portion, provision, or provisions
shall be given force to the fullest possible extent that they are legal, valid
and enforceable, and that the remainder of this Agreement shall be construed as
if such illegal, invalid, unlawful, void, or unenforceable portion, provision,
or provisions were not contained therein, and that the rights, obligations, and
interests of Borrower and Lender under the remainder of this Agreement shall
continue in full force and effect.
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13.15 Waiver of Jury Trial. BORROWER AND LENDER EACH HEREBY WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS OR RELATING THERETO OR
ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS AGREEMENT AND
AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
13.16 Survival of Indemnities. All indemnities of Borrower contained in
this Agreement shall survive in perpetuity (or for such period as may be
permitted by Law), notwithstanding the payment in full and the performance of
all obligations under the Loan Documents.
13.17 Conflicts. In the event of any conflict between the terms and
conditions of this Agreement and the terms and conditions of any other Loan
Document, the terms and conditions of this Agreement shall control.
13.18 Confidentiality.
13.18.1 Lender agrees that it will not, without the prior
consent of Borrower, disclose any information with respect to Borrower which is
furnished to Lender pursuant to this Agreement and which Borrower has notified
Lender, in writing, constitutes confidential information, except (i) to Lender's
directors, officers, employees, agents and financial and legal advisors under
instructions to maintain confidentiality, (ii) to any actual or prospective
Assignee or Participant under Section 10, so long as such Assignee or
Participant agrees to be bound by the provisions of this Section 13.18, (iii)
information that is known to Lender or its directors, officers, employees or
advisors prior to its disclosure by Borrower, (iv) information that has become
publicly available other than by Lender's improper disclosure, (v) information
that is obtained from any source other than Borrower or its Affiliates, unless
Lender has actual knowledge that such source disclosed such information to it in
breach of an obligation of confidentiality, and (vi) as may be required or
appropriate in any proceeding to collect any amounts owing under the Note, the
Loan Agreement or any other Loan Documents, or to protect or enforce any right
or remedy of Lender under the Loan Documents or in defense of any claim asserted
against Lender, or in any other litigation or for compliance with any applicable
law or any subpoena, discovery request or other legal process, so long as Lender
(if not prohibited or prevented from doing so) gives Borrower at least three (3)
Business Days' prior notice thereof.
13.18.2 Borrower acknowledges and agrees that the terms,
conditions and provisions of this Agreement, the Note, and each of the other
Loan Documents, are strictly confidential. Borrower agrees that it will not,
without the prior consent of Lender, disclose any of the terms, conditions and
provisions of this Agreement, the Note, or any of the other Loan Documents,
except (i) to Borrower's and its Affiliates' partners, directors, officers,
employees, agents and financial and legal advisors under instructions to
maintain confidentiality, (ii) terms, conditions and provisions that have become
publicly available other than by Borrower's improper disclosure, (iii) terms,
conditions and provisions that are disclosed by any source other than Borrower
or its Affiliates, unless Lender has actual knowledge that such source disclosed
such information to it in breach of an obligation of confidentiality, and (iv)
as may be required or appropriate in any proceeding to protect or enforce any
right or remedy of Borrower under the Loan Documents or in defense of any claim
asserted against Borrower, or in any other litigation or for compliance with any
applicable law or any subpoena, discovery request or other legal process, so
long as Borrower (if not prohibited or prevented from doing so) gives Lender at
least three (3) Business Days' prior notice thereof.
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<PAGE> 40
Borrower and Lender have executed this Agreement as of the day and
year first set forth above.
BORROWER: RIVER OAKS PLACE ASSOCIATES, L.P.,
a California limited partnership
By SEELEY PROPERTIES, INC.
a California corporation
Its General Partner
By
-------------------------------
Its
-------------------------------
LENDER: CREDIT LYONNAIS NEW YORK BRANCH,
a branch of a French banking corporation
By:
-------------------------------
Print Name:
-------------------------------
Title: Vice President
55
<PAGE> 41
EXHIBIT A
TO LOAN AGREEMENT
DESCRIPTION OF THE LAND
All that certain property situate in the City of San Jose, County of Santa
Clara, State of California, described as follows:
Parcels 1 and 2, as shown on that Parcel Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on February 22,
1991, in Book 624 of Maps, page(s) 23 and 24.
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<PAGE> 42
EXHIBIT B
TO LOAN AGREEMENT
PERMITTED EXCEPTIONS
57
<PAGE> 43
EXHIBIT C
TO LOAN AGREEMENT
FORM OF SURVEYOR'S CERTIFICATION
The undersigned, a registered land surveyor in the State of California,
hereby certifies to CREDIT LYONNAIS NEW YORK BRANCH, a branch licensed under the
laws of the State of New York, of a banking corporation organized under the laws
of the Republic of France, and Santa Clara Land Title Company, a California
corporation, their respective successors and assigns, as follows:
14. The survey entitled ______________________________________(the
"Survey") was an on the ground instrument survey made under my supervision and
the information, courses and distances shown thereon are correct according to
the record description of the parcel(s) shown on the Survey; all improvements
located on such parcel(s) lie wholly within the lot lines and are located as
shown on the Survey; the Survey was made in compliance with the "Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys," jointly
established and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, meets the accuracy requirements for a
Class "A" Survey as defined therein and includes items numbered 3-5 and 7-12 as
set forth in Table A thereof; all encroachments, building line restrictions,
setback lines, easements, drainage or flowage rights, rights-of-way or uses
which affect said parcel(s) or which are encroachments by said parcel(s) upon
adjoining property are fully shown on the Survey and, to the extent such matters
are of record, the respective recording references are noted thereon; and there
are no violations of zoning ordinances, set back lines, easements, covenants, or
other rules, regulations or restrictions with reference to the location of
buildings and improvements.
15. Municipal water services, storm sewer, sanitary sewer facilities,
and telephone, electric and gas service are available to serve the parcel(s) at
the lot lines of the parcel(s) from the point of origin through public
rights-of-way or recorded easements. These lines do not run through or under any
buildings or improvements other than pavement.
16. Unless otherwise shown and detailed on the Survey, no easements or
rights of way over land of others are required for:
(a) access to the parcel;
(b) drainage of surface or other water off the parcel(s);
(c) any utilities which serve the parcel(s) and said
improvements, such as water, electricity, gas and
telephone; or
(d) storm sewer and sanitary sewer facilities serving the
parcel(s) and said improvements.
If the Survey delineates off-site easements being required over the
land of others to serve the parcel(s) and said improvements, duly recorded
easements have been obtained from all land owners whose property is affected in
the areas shown on the Survey.
17. As of the date of the Survey, said parcel(s) does not lie within
(a) any flood plain or flood-prone area designated on the official maps of the
Secretary of Housing and Urban Development, or a flood plain area having special
flood hazards identified as such under the Flood Disaster Protection Act of
1983, (b) any federal, state or local flood or wetlands or aquifer district, or
(c) an earthquake hazard area.
By:
--------------------------------
Print Name:
--------------------------------
<PAGE> 44
Dated:
------------------------------------
Registration No.
--------------------
59
<PAGE> 45
EXHIBIT D
TO LOAN AGREEMENT
FORM OF LEGAL OPINION
[ON THE LETTERHEAD OF COUNSEL]
August 7, 1996
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019
Re: $20,000,000 Loan Secured by the Cadence Design Systems, Inc.
Headquarters Building, 535, 545, 555 and 575 River
Oaks Parkway, San Jose, California (the "Project")
Ladies and Gentlemen:
We have acted as counsel for RIVER OAKS PLACE ASSOCIATES, L.P., a
California limited partnership ("Borrower"), and CADENCE DESIGN SYSTEMS, INC.
("Cadence"), having an office address c/o Cadence Design Systems, Inc., 555
River Oaks Parkway, San Jose, California 95134, in connection with a loan (the
"Loan") by Credit Lyonnais New York Branch, a branch, licensed under the laws of
the State of New York, of a banking corporation organized under the laws of the
Republic of France, ("Lender") to Borrower in the principal amount of
$20,000,000, made pursuant to a loan agreement dated as of even date herewith
(the "Loan Agreement"). As counsel for Borrower and Cadence, we have examined
the documents and agreements forming Borrower and Cadence, and the originals or
copies, certified or otherwise authenticated to our satisfaction, of the records
of Borrower and Cadence, and such other documents or certificates which we have
deemed necessary for the opinions expressed herein. Unless otherwise defined
herein or unless the context otherwise requires, terms defined in the Loan
Agreement shall have the same meanings herein.
We have examined the original or a copy certified or otherwise
identified to our satisfaction as a true copy of each of the following
documents:
(a) Loan Agreement;
(b) Note;
(c) Assignment of Rents and Leases;
(d) Environmental Indemnity;
(e) UCC Statements;
(f) Assignment of Ancillary Documents;
(g) Assignment of Maintenance and Management Documents;
(h) Assignment of Partnership Interests of Cadence;
(i) Assignment of Partnership Interests of Seeley
Properties, Inc. ("Seeley");
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<PAGE> 46
(j) Subordination Agreement from Cadence;
(k) Estoppel Certificate from Cadence;
(l) Consents (the "Consents") to each of the foregoing
assignments and collateral assignments by (i) the other parties to the
Leases, licenses, contracts and agreements being assigned and (ii) all
guarantors of the performance of the obligations and liabilities of
such other parties under such Leases, licenses, contracts and
agreements; and
[REVISE DOCUMENTS LIST AS NECESSARY]
The Loan Agreement, Note, Deed of Trust, Assignment of Rents and
Leases, Environmental Indemnity, UCC Statements, Assignment of Ancillary
Documents, Assignment of Maintenance and Management Documents, Assignment of
Partnership Interests of Cadence, Assignment of Partnership Interest of Seeley,
Subordination Agreement from Cadence, Estoppel Certificate from Cadence,
Consents, and the other documents which evidence and secure the Loan are
hereinafter collectively referred to as the "Loan Documents".
We have participated in the preparation of, and have assisted Borrower
and Cadence in their activities relative to the transactions contemplated by, or
referred to in, the Loan Documents. Borrower and Cadence have requested that we
render to you the opinion set forth in this letter, pursuant to the requirements
of the Loan Agreement. Based upon our examination of the Loan Documents and such
other documents, materials, certificates and information as we have deemed
appropriate or relevant for the purpose of delivering this opinion, we are of
the following opinions, subject to the qualifications set forth herein:
1. All Loan Documents executed by Borrower have been duly and properly
executed and delivered by Borrower.
2. The Environmental Indemnity has been duly and properly executed and
delivered by Borrower, Cadence and Seeley.
3. Borrower is a limited partnership duly and validly formed and
validly existing under the laws of the State of California. Borrower has full
power and authority to perform the obligations and carry out the duties imposed
upon Borrower by the Loan Documents, and Borrower has taken all action necessary
to carry out Borrower's obligations and duties in connection with the Loan
Documents and the Loan.
4. Seeley is a corporation duly and validly formed and validly existing
under the laws of the State of California, and in good standing in the State of
California. Seeley has full power and authority to execute and deliver the Loan
Documents on behalf of Borrower, and has taken all action necessary in
connection therewith. Cadence is a corporation duly and validly formed and
existing under the laws of the State of Delaware, and in good standing in the
State of California.
5. Both Cadence and Seeley have full power and authority to execute,
deliver and perform the obligations and carry out the duties imposed upon them
by the Environmental Indemnity, and both Cadence and Seeley have taken all
action necessary to carry out their obligations and duties in connection with
the Environmental Indemnity and the Loan.
6. The Loan Agreement, Environmental Indemnity, and all of the other
Loan Documents each constitute legal, valid and binding obligations of Borrower,
Cadence and Seeley, as the case may be, and are enforceable in accordance with
their respective terms subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally and limitations imposed by general principles of
equity.
7. When duly recorded or filed in the appropriate public records, the
Deed of Trust, the Assignment of Rents and Leases and UCC Statements will each
create in favor of Lender a valid and perfected lien upon the property
purportedly subject thereto and no further action will be required to perfect
such lien.
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<PAGE> 47
8. No provision of any mortgage, deed of trust, indenture, agreement,
contract, or other instrument requires the consent or authorization of any other
person, firm or corporation as a condition precedent to the consummation of the
transactions contemplated in any of the Loan Documents.
9. No approval of, or consent from, any Governmental Authority is
required in connection with the execution and delivery by Borrower, Cadence or
Seeley of the Loan Documents or in connection with the performance or
consummation of any of the transactions contemplated thereby, or if required,
such consent or approval has been obtained.
10. The execution, delivery and performance of the Loan Documents by
Borrower, Cadence and Seeley, as the case may be, and compliance with the
provisions of such Loan Documents by Borrower, Cadence and Seeley, as the case
may be, will not, to our knowledge, conflict with or result in a breach of the
provisions of, or constitute a default under the terms of any indenture,
mortgage, deed of trust, franchise, permit, license, note, agreement or other
instrument to which Borrower, Cadence or Seeley, is a party or by which it or
they may be bound.
11. The execution, delivery and performance of the Loan Documents
referred to herein will not, to our knowledge, violate any provision of any
statute, regulation, rule, order or other legal requirement applicable to or for
the benefit of Borrower, Cadence or Seeley.
12. No aspect of the Loan transaction violates or will violate any
usury laws or laws regarding the validity of agreements to pay interest in
effect on the date hereof.
13. None of Borrower, Cadence, Seeley nor the property encumbered by
the Deed of Trust is involved in, nor are we aware of the threat of, any
proceeding, claim, lawsuit, or investigation conducted or threatened by or
before any Governmental Authority.
14. The Project does not violate in any respect (a) any applicable
zoning, environmental control, or land use Law, including any Law protecting
so-called wetlands, or (b) any covenant or restriction of record.
Very truly yours,
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<PAGE> 48
PROMISSORY NOTE
New York, New York
U.S. $ 20,000,000.00 May 31, 1996
FOR VALUE RECEIVED, RIVER OAKS PLACE ASSOCIATES, L.P., a
California limited partnership, having an office address c/o Cadence Design
Systems, Inc., 555 River Oaks Parkway, San Jose, California 95134, Attention:
Treasurer ("Borrower"), promises to pay to the order of CREDIT LYONNAIS NEW YORK
BRANCH, a branch, licensed under the laws of the State of New York, of a banking
corporation organized under the laws of the Republic of France, having an office
at Credit Lyonnais Building, 1301 Avenue of the Americas, New York, New York
10019, it successors and assigns ("Lender"), the principal sum of TWENTY MILLION
DOLLARS ($20,000,000.00), together with (1) interest at the Applicable Rate on
the principal balance of such amount to the date this Note is paid in full and
(2) all other sums due under this Note and the other Loan Documents, including
all Additional Interest. Partial payments of principal shall be payable as set
forth in the Loan Agreement dated as of even date herewith between Borrower and
Lender, and referred to herein as the "Loan Agreement").
All accrued and unpaid interest on the principal balance hereof,
payable in arrears, shall be due and payable monthly beginning on July 1, 1996,
and continuing on the first day of each calendar month thereafter to and
including the calendar month in which the Maturity Date (defined below) occurs.
The principal balance hereof, together with all accrued and unpaid interest
thereon and all other sums due under this Note and the other Loan Documents,
including all Additional Interest, shall, if not required to be paid on an
earlier date by acceleration or otherwise, be due and payable on December 31,
2005 (the "Maturity Date").
This Note is secured by, among other things, a Deed of Trust
encumbering certain property more particularly described therein, and by certain
other Loan Documents.
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<PAGE> 49
1. DEFINITIONS. Capitalized terms used and not
otherwise defined herein shall have the meanings given to them in the Loan
Agreement.
2. INTEREST.
(a) The principal amount hereof outstanding from time
to time shall bear interest until paid in full at the Applicable Rate. Except as
provided in Section 11 below, the Applicable Rate shall be the Base Rate, unless
and to the extent Borrower exercises the LIBOR Rate Option pursuant to Section
3.
(b) Interest at the Base Rate shall be calculated on
the principal sum of the entire amount from time to time outstanding hereunder,
from and including the date of each advance of the Loan to, but not including,
the date of repayment, for the actual number of days elapsed on the basis of a
360-day year.
3. LIBOR RATE OPTION.
(a) Provided that no Event of Default has occurred,
Borrower shall have the option (the "LIBOR Rate Option"), from time to time in
the manner and subject to the conditions hereinafter set forth, to elect a LIBOR
Rate as the Applicable Rate for all or any portion of the Loan which would
otherwise bear interest at the Base Rate.
(b) The only manner in which Borrower may exercise
the LIBOR Rate Option is by giving Lender irrevocable notice of such exercise by
telephone not later than 1:00 P.M. New York time on the third (3rd) Business Day
prior to the proposed commencement of the relevant Interest Period, such
telephone notice to be confirmed by Borrower by the end of the day on which it
is given by telex or facsimile, which notice shall specify: (i) the outstanding
portion of the Loan with respect to which Borrower is electing the LIBOR Rate
Option; (ii) the Business Day upon which such Interest Period is to commence;
and (iii) the duration of such Interest Period. Lender shall, as soon as
practicable after 10:00 a.m. New York time on the second (2nd) day prior to the
commencement of the Interest Period, determine the LIBOR Rate applicable to the
outstanding portion of the Loan specified in such notice and inform Borrower of
the same, and such rate shall be the Applicable Rate therefor during the
Interest Period. The Applicable Rate for any portion of the Loan with respect to
which Borrower has elected a LIBOR Rate shall revert to the Base Rate as of the
Roll Over Date applicable thereto (unless Borrower has once again exercised the
LIBOR Rate Option for such portion of the Loan pursuant to the terms hereof).
Lender shall be under no duty to notify Borrower that the Applicable Rate on any
portion of the Loan is about to revert from a LIBOR Rate to the Base Rate. The
LIBOR Rate Option may be exercised by Borrower only with respect to an
outstanding portion of the Loan in accordance with the requirements of the Loan
Agreement, and then only if such portion of the Loan (A) would bear interest at
the Base Rate on the date of commencement of the applicable Interest Period, but
for the exercise by Borrower of the LIBOR Rate Option, and (B) is equal to or in
excess of $1,000,000.
(c) If Lender in good faith determines (which
determination shall be conclusive and binding upon Borrower) that (i) Dollar
deposits in an amount approximately equal to the portion of the Loan with
respect to which Borrower has exercised the LIBOR Rate Option for the relevant
Interest Period are not generally available at such time in the New York
interbank eurodollar market for deposits in eurodollars, or (ii) the rate at
which such deposits are being offered will not adequately and fairly reflect the
cost to Lender of maintaining a LIBOR Rate on such portion of the Loan or of
funding the same in such market for such Interest Period, or (iii) reasonable
means do not exist for ascertaining a LIBOR Rate, or (iv) a LIBOR Rate would be
in excess of the maximum interest rate which Borrower may by law pay, then in
any such event Lender shall so notify Borrower and such portion of the Loan
shall bear interest at the Base Rate.
(d) No Interest Period shall commence other than on
a Business Day. If any Interest Period shall end on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless the next such succeeding Business Day would fall in the
next calendar month, in which event such Interest Period shall end on the next
preceding Business Day.
<PAGE> 50
(e) Interest at the LIBOR Rate shall be calculated
for the actual number of days elapsed on the basis of a 360-day year and from
and including the first date of the relevant Interest Period to, but not
including, the date of repayment. Each determination of the LIBOR Rate shall be
made by Lender and shall be conclusive and binding upon Borrower absent manifest
error.
(f) If the introduction of or any change in any law,
regulation or treaty, or in the interpretation thereof by any governmental
authority charged with the administration or interpretation thereof, shall make
it unlawful for Lender to maintain the Applicable Rate at a LIBOR Rate with
respect to the Loan or any portion thereof, or to fund the Loan or any portion
thereof in the New York interbank eurodollar market, or to give effect to its
obligations regarding the LIBOR Rate Option as contemplated by this Note, then
the LIBOR Rate Option shall immediately terminate and the Applicable Rate for
any portion of the Loan for which the Applicable Rate is then a LIBOR Rate shall
automatically be converted to the Base Rate and Borrower shall pay to Lender the
amount (if any) which would be due under Section 7 hereof as if Borrower had
prepaid such portion of the Loan bearing interest at a LIBOR Rate.
(g) At any one time there shall not be, in the
aggregate, more than five (5) Interest Periods in effect with regard to various
portions of the Loan prior to the Maturity Date.
4. PAYMENT TERMS.
(a) All sums payable to Lender hereunder shall be
payable in Dollars in immediately available funds without deduction, set-off or
counterclaim no later than 3:00 p.m. New York time on the date when due by wire
transfer to The Federal Reserve Bank, New York, in favor of Credit Lyonnais New
York Branch, ABA #0260-0807-3, Reference: River Oaks Place Associates, L.P., or
to such other account or address as Lender may from time to time designate in a
written notice to Borrower.
(b) When any payment hereunder is due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall be included in the computation of
interest.
(c) If at any time Borrower is required by law to
make any deduction or withholding in respect of any taxes, duties or other
charges from any payment due hereunder, the sum due from Borrower in respect of
such payment shall be increased to the extent necessary to ensure that, after
the making of such deduction or withholding, Lender receives and retains a net
sum equal to the sum which Lender would have received had no such deduction or
withholding been required to be made. Borrower shall promptly deliver to Lender
receipts, certificates or other proof evidencing the amounts (if any) paid or
payable in respect of any such deduction or withholding.
5. INCREASED COSTS AND CAPITAL ADEQUACY.
(a) Borrower recognizes that the cost to Lender of
maintaining the Loan or any portion thereof may fluctuate and Borrower agrees to
pay Lender, within ten (10) Business Days notice thereof by Lender, such
additional amounts as Lender reasonably shall determine will compensate Lender
for costs incurred in maintaining the Loan or any portion thereof outstanding or
for the reduction of any amounts received or receivable as a result of:
(i) any change in any applicable law,
regulation or treaty, or in the interpretation or administration thereof by any
domestic or foreign governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law), or by any
domestic or foreign court, (A) changing the basis of taxation of payments to
Lender (other than taxes imposed on all or any portion of the overall net income
of Lender by the State of New York, or the United States or by any political
subdivision or taxing authority of the State of New York, or the United States);
or (B) imposing, modifying or applying any
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<PAGE> 51
reserve, special deposit or similar requirement against assets of, deposits with
or for the account of, credit extended by, or any other acquisition of funds for
loans by Lender; or (C) imposing on Lender or the New York interbank eurodollar
market, any other condition affecting this Note or the Loan; provided that the
result of the foregoing is to increase the cost to Lender of maintaining the
Loan or any portion thereof or to reduce the amount of any sum received or
receivable by Lender under this Note or the Loan Documents (whether principal,
interest or otherwise), but without duplication for payments required under
subsection (ii) below; or
(ii) the imposition of, or a change in, or
the actual maintenance by Lender of reserves in accordance with, reserve
requirements promulgated by the Board of Governors of the Federal Reserve System
of the United States or any other Governmental Authority having jurisdiction
(without duplication for reserves already accounted for in the calculation of a
LIBOR Rate pursuant to the terms hereof).
(b) If Lender reasonably shall determine that the
application of any law, rule, regulation or guideline adopted or arising out of
the July 1988 report of the Basle Committee on Banking Regulations and
Supervisory Practices entitled "International Convergence of Capital Measurement
and Capital Standards", or the adoption of any other law, rule, regulation or
guideline regarding capital adequacy, or any change in any of the foregoing, or
in the interpretation or administration thereof by any domestic or foreign
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender, or any
lending office of Lender, or the holding company of Lender, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on Lender's capital or increasing the cost
to Lender to a level below that which Lender would have achieved but for such
application, adoption, change or compliance (taking into consideration the
policies of Lender with respect to capital adequacy), then from time to time
Borrower shall pay to Lender such additional amounts as will compensate Lender
for such reduction with respect to any portion of the Loan outstanding.
(c) Any amount payable by Borrower pursuant to
subsection (a)(i) or (ii) or subsection (b) of this Section 5 shall be paid to
Lender within ten (10) Business Days of receipt by Borrower of a certificate
signed by an officer of Lender setting forth the amount due and the basis for
the determination of such amount, which statement shall be conclusive and
binding upon Borrower absent manifest error. Failure on the part of Lender to
demand payment from Borrower for any such amount attributable to any particular
period shall not constitute a waiver of Lender's right to demand payment of such
amount for any subsequent or prior period.
6. PREPAYMENTS. Borrower shall have the right to prepay the
Loan without penalty in whole or in part in multiples of $1,000,000 upon not
less than five (5) Business Days prior written notice to Lender. Any prepayment
shall be made together with the payment of all accrued and unpaid interest on
the Loan through the date of prepayment and any amount owing to Lender under
Section 7 as a result of such prepayment.
7. FUNDING LOSSES.
(a) Borrower shall pay to Lender, within ten
(10) Business Days following Lender's delivery of the statement described in
subsection (b), below, such amounts as shall, in the determination of Lender,
compensate Lender for any Funding Losses.
(b) Lender shall deliver to Borrower a statement
setting forth the amount and basis of determination of any Funding Losses, it
being agreed that such statement and the method of calculation shall be
conclusive and binding on Borrower absent manifest error.
8. ADDITIONAL INTEREST. All sums which may or shall become due
and payable by Borrower in accordance with the provisions of Sections 5 and 7 of
this Note shall constitute "Additional Interest" hereunder, shall be payable on
demand, shall be evidenced by this Note and shall be secured by the Deed of
Trust and the other Loan Documents.
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9. ASSIGNEES AND PARTICIPANTS. Borrower acknowledges (a) the
existence of Lender's rights under Section 10.1 of the Loan Agreement to assign,
negotiate, pledge or otherwise grant participations in the Loan and the Loan
Documents, and to sell and assign all or portions of the Loan and Lender's
rights, benefits, entitlements, obligations and liabilities under the Loan
Documents to one or more Assignees, and (b) Borrower's obligation to cooperate
fully with Lender in the exercise of such rights.
10. ACCELERATION UPON EVENT OF DEFAULT. Upon the happening of
an Event of Default, the entire outstanding principal amount hereof and all
accrued and unpaid interest, Additional Interest and other amounts owing
hereunder or under any other Loan Document shall become immediately due and
payable, as provided in Section 11.1.1 of the Loan Agreement.
11. DEFAULT INTEREST.
(a) Notwithstanding any provision of this Note to the
contrary, (i) if any amount due under this Note (other than unpaid payments of
principal and interest due hereunder), the Deed of Trust or any of the other
Loan Documents is not paid when due and such failure shall continue for five (5)
Business Days after written notice from Lender, (ii) if any monthly installment
of principal and interest under this Note is not paid within three (3) Business
Days from when due, or (iii) if there shall occur any Event of Default
(including, without limitation, the failure to pay the entire unpaid principal
amount when due hereunder, whether on the Maturity Date or upon acceleration as
provided hereunder), then Borrower shall pay interest on such amount (in the
case of (i) and (ii) above), or on the entire outstanding and unpaid principal
balance of the Loan, and to the extent permitted by Law, any unpaid interest (in
the case of (iii) above), from and after the date on which such amount first
becomes due or the date on which such Event of Default shall occur, as the case
may be, until the same is paid in full or cured, as the case may be, at the
Default Rate, such interest to be payable on demand.
(b) If any payment provided for herein or in the
other Loan Documents, other than the payment of the unpaid principal balance of
the Loan due on the Maturity Date, shall become overdue for a period in excess
of ten (10) days, a late charge of three cents ($.03) for each dollar (or any
part thereof) so overdue shall become immediately due to Lender for the purpose
of defraying the expenses incident to handling such delinquent payment, and such
charge shall be secured by the lien of, and the security interests created by,
the Deed of Trust and the other Loan Documents. Late charges shall be payable
with the next installment of principal and/or interest due hereunder.
12. WAIVERS. Borrower hereby waives presentment and demand for
payment, notice of dishonor, protest and notice of protest of this Note. No
release of any security for the payment of this Note or extension of time for
payment of any amount due hereunder and no alteration, amendment or waiver of
any provision of this Note or any Loan Document made by agreement between Lender
and any other person or party shall release, discharge, modify, change or affect
the liability of Borrower or any guarantor under any Loan Documents.
13. COSTS AND EXPENSES. In addition to and without limiting
any provision in any other Loan Document, any payment under this Note is not
made when due, Borrower agrees to pay all costs and expenses of collection when
incurred (including, without limitation, attorneys' fees and disbursements). Any
costs and expenses owed Lender under this section shall be added to the amount
due under this Note, be receivable therewith and be secured by the lien of, and
other security interests created by, the Deed of Trust and the other Loan
Documents.
14. USURY SAVINGS PROVISION. This Note is subject to the
express condition that at no time shall Borrower be obligated or required to pay
interest at a rate which could subject Lender to either civil or criminal
liability, or which could adversely affect the rights of Lender hereunder or
under any of the other Loan Documents, as a result of such rate being in excess
of the maximum rate which Borrower is permitted by law to
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contract or agree to pay. If by the terms of this Note or any other instrument
Borrower is at any time required or obligated to pay interest at a rate in
excess of such maximum rate, the rate of interest under this Note shall be
deemed to be immediately reduced to such maximum rate, interest payable
hereunder shall be computed (or recomputed) at such maximum rate and the portion
of all prior interest payments in excess of such maximum rate shall be refunded
to Borrower.
15. LOAN DOCUMENTS. This Note is secured by the liens and
security interests created by the Deed of Trust and the other Loan Documents.
16. GOVERNING LAW: JURISDICTION. THIS NOTE SHALL BE GOVERNED
BY AND CONSTRUED UNDER THE INTERNAL LAWS (AS OPPOSED TO THE LAWS OF CONFLICTS)
OF THE STATE OF CALIFORNIA. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS
RELATING TO THIS NOTE (EACH, A "PROCEEDING"), BORROWER AND LENDER IRREVOCABLY
(A) SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
HAVING JURISDICTION IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA AND STATE OF
CALIFORNIA, AND (B) WAIVE ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE
LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVE ANY CLAIM
THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVE
THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT
HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS NOTE SHALL PRECLUDE LENDER
FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A
PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A
PROCEEDING IN ANY OTHER JURISDICTION. BORROWER AND LENDER FURTHER AGREE AND
CONSENT THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR
UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY CALIFORNIA
STATE OR UNITED STATES COURT SITTING IN THE CITY OF SAN JOSE AND COUNTY OF SANTA
CLARA MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
DIRECTED TO BORROWER OR LENDER AT THEIR RESPECTIVE ADDRESSES INDICATED ABOVE,
AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF DELIVERY IS
REFUSED, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL
HAVE BEEN SO MAILED.
17. WAIVER OF JURY TRIAL. BORROWER AND LENDER EACH HEREBY
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS OR RELATING
THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS
AGREEMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
18. AMENDMENTS. This Note may not be modified, amended,
changed or terminated orally, but only by an agreement in writing signed by the
party against whom enforcement of such modification, amendment, change or
termination is sought.
19. NO JOINT VENTURE. Borrower and Lender intend that the
relationship created under this Note, the Deed of Trust and the other Loan
Documents be solely that of debtor and creditor or trustor and beneficiary, as
the case may be. Nothing herein or in the other Loan Documents is intended to
create a joint venture, partnership, tenancy-in-common or joint tenancy
relationship between Borrower and Lender, nor to grant Lender any interest in
the Premises or Borrower.
20. BINDING EFFECT. This Note shall be binding upon and shall
inure to the benefit of Lender, Borrower and their respective successors and
permitted assigns.
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21. SEVERABILITY. If any one or more of the provisions
contained in this Note shall be invalid, illegal or unenforceable in any respect
under any applicable law, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired.
22. NOTICES. All notices and other communications hereunder
to Borrower or Lender shall be sent as set forth in Section 13.2 of the Loan
Agreement, except that notice by telephone and by facsimile or telex shall be
permitted pursuant to the terms of Section 3 hereof.
IN WITNESS WHEREOF, Borrower has duly executed this Note on the day and
year first above written.
"Borrower":
RIVER OAKS PLACE ASSOCIATES, L.P.,
a California limited partnership
By SEELEY PROPERTIES, INC.,
a California corporation
Its General Partner
By
----------------------
Its
----------------------
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RECORDING REQUESTED BY:
AND AFTER RECORDING RETURN TO:
SONNENSCHEIN NATH & ROSENTHAL
601 SOUTH FIGUEROA STREET
SUITE 1500
LOS ANGELES, CALIFORNIA 90017
ATTENTION: CHARLES R. CAMPBELL, JR.
Space Above for Recorder's Use Only
DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS,
FIXTURE FILING AND FINANCING STATEMENT
ATTENTION COUNTY RECORDER: THIS INSTRUMENT COVERS GOODS THAT ARE OR ARE TO
BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN AND IS TO BE FILED FOR
RECORD IN THE RECORDS WHERE DEEDS OF TRUST ON REAL ESTATE ARE RECORDED.
ADDITIONALLY, THIS INSTRUMENT SHOULD BE APPROPRIATELY INDEXED, NOT ONLY AS A
DEED OF TRUST, BUT ALSO AS A FINANCING STATEMENT COVERING GOODS THAT ARE OR ARE
TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN. THE MAILING ADDRESSES
OF THE TRUSTOR AND BENEFICIARY ARE SET FORTH IN SECTION 27 OF THIS DEED OF
TRUST.
Dated: As of May 31, 1996
in the amount of $20,000,000
MADE BY
RIVER OAKS PLACE ASSOCIATES, L.P.,
- TO -
CREDIT LYONNAIS NEW YORK BRANCH
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TABLE OF CONTENTS
PAGE
71
<PAGE> 57
<TABLE>
<S> <C>
1. Assignment of Rents, Income and Profits................................................................. 4
2. Representations, Warranties and Covenants of Trustor Concerning the Property............................ 7
3. Maintenance, Repair and Restoration of the Property, Payment of Liens, Etc.............................. 7
4. Intentionally Left Blank................................................................................ 8
5. Tax Deposits............................................................................................ 8
6. Evidence of Replacement Cost and Insurance Premium Deposits............................................. 8
7. Beneficiary's Interest In and Use of Deposits........................................................... 9
8. Intentionally Left Blank................................................................................ 9
9. Stamp Tax............................................................................................... 9
10. Effect of Changes in Laws Regarding Taxation............................................................ 9
11. Prepayment Privilege.................................................................................... 9
12. Effect of Extensions of Time and Amendments............................................................. 9
13. Beneficiary's Performance of Defaulted Acts; Subrogation................................................ 10
14. Beneficiary's Reliance on Tax Bills, Etc................................................................ 10
15. Acceleration of Indebtedness in Case of Default......................................................... 11
16. Acceleration Upon Default; Additional Remedies.......................................................... 11
17. Foreclosure By Power of Sale............................................................................ 12
18. Appointment of Receiver................................................................................. 12
19. Application of Funds.................................................................................... 13
20. Cumulative Remedies; No Waiver.......................................................................... 13
21. Request for Notice...................................................................................... 14
22. Beneficiary's Right of Possession in Case of Default.................................................... 14
23. Beneficiary's Right of Inspection....................................................................... 15
24. Condemnation............................................................................................ 15
25. Release................................................................................................. 15
26. Due on Sale or Further Encumbrance...................................................................... 15
27. Giving of Notice........................................................................................ 15
</TABLE>
<PAGE> 58
<TABLE>
<C> <C>
28. Indemnification......................................................................................... 17
29. Estoppel Affidavits..................................................................................... 18
30. Binding on Successors and Assigns....................................................................... 18
31. Definitions of "Trustor," "Beneficiary" and Certain Other Terms......................................... 18
32. No Third Parties Benefitted............................................................................. 19
33. Maintenance of Trustor's and Affiliated Parties' Interests.............................................. 19
34. Captions; No Oral Changes............................................................................... 20
35. Security Agreement...................................................................................... 20
35.1 Assignment........................................................................................ 20
35.2 Collateral........................................................................................ 20
35.3 Representations and Warranties.................................................................... 21
35.4 Covenants by Trustor.............................................................................. 22
35.5 Events of Default................................................................................. 23
35.6 Remedies.......................................................................................... 23
35.7 Sale of Collateral................................................................................ 24
35.8 Facilitation of Rights and Remedies............................................................... 25
35.9 Application of Proceeds........................................................................... 25
35.10 Beneficiary's Costs and Expenses.................................................................. 25
35.11 Obligations Unconditional......................................................................... 26
35.12 Non-liability of Beneficiary...................................................................... 26
35.13 Miscellaneous Waivers............................................................................. 26
35.14 Successors and Assigns............................................................................ 26
35.15 .................................................................................................. 26
35.16 Notices........................................................................................... 26
35.17 Definitions....................................................................................... 26
36. Terms Subject to Applicable Law; Partial Invalidity; Maximum Allowable Rate of Interest................. 26
37. Further Assurances...................................................................................... 27
38. Nonforeign Entity....................................................................................... 27
39. Truth-in-Lending........................................................................................ 28
40. No Offsets.............................................................................................. 28
41. Declaration of Subordination............................................................................ 28
42. Appointment of Successor Trustee........................................................................ 28
43. Governing Law........................................................................................... 28
</TABLE>
Exhibit A: Description of the Land
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DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS, AND
FINANCING STATEMENT
(River Oaks Place Associates, L.P.)
THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS,
AND FINANCING STATEMENT (this "Deed of Trust") is made as of May 31, 1996, by
RIVER OAKS PLACE ASSOCIATES, L.P., a California limited partnership, having an
office address c/o Cadence Design Systems, Inc., 555 River Oaks Parkway, San
Jose, California 95134, Attention: Treasurer ("Trustor"), to SANTA CLARA LAND
TITLE COMPANY, a corporation duly organized and validly existing under the laws
of the State of California and having its office at 701 Miller Street, San Jose,
California, 95110, as trustee ("Trustee"), for the benefit of CREDIT LYONNAIS
NEW YORK BRANCH, a branch, licensed under the laws of the State of New York, of
a banking corporation organized under the laws of the Republic of France, having
an office at Credit Lyonnais Building, 1301 Avenue of the Americas, New York,
New York, 10019, it successors and assigns ("Beneficiary"). All capitalized
terms not expressly defined in this Deed of Trust shall have the meanings given
to them in the "Loan Agreement" (as hereinafter defined).
RECITAL:
Pursuant to that certain Loan Agreement of even date herewith (the
"Loan Agreement"), Beneficiary has agreed to make the Loan to Trustor in the
original principal amount of TWENTY MILLION DOLLARS ($20,000,000). The Loan is
evidenced by the Note, in the original principal amount of the Loan, which Note
has a stated Maturity Date of December 31, 2005, unless extended in accordance
with the terms of the Loan Agreement. The Note and any and all modifications,
extensions, renewals and replacements thereof are by this reference made a part
hereof. All of said principal and interest is made payable at such place as the
holder or holders of the Note may from time to time, in writing appoint, and in
absence of such appointment, then by bank wire to Beneficiary's account at
Credit Lyonnais New York Branch, at Credit Lyonnais Building, 1301 Avenue of the
Americas, New York, New York 10019.
NOW, THEREFORE, in consideration of the debt evidenced by the Note, and
to secure the timely payment of both principal and interest in accordance with
the terms and provisions of the Note, and payment of all other obligations
incurred pursuant to or in connection with all of the Loan Documents, and to
secure the performance of the covenants and agreements contained herein and in
the Loan Documents to be performed by Trustor, Trustor, intending to be legally
bound, does hereby absolutely and irrevocably GIVE, GRANT, BARGAIN AND SELL,
ALIENATE, MORTGAGE, CONVEY, CONFIRM, TRANSFER AND ASSIGN TO TRUSTEE, ITS
SUCCESSORS AND ASSIGNS, FOR THE BENEFIT OF BENEFICIARY, ITS SUCCESSORS AND
ASSIGNS UNTO THE TRUSTEE, IN TRUST, WITH POWER OF SALE AND RIGHT OF ENTRY AND
POSSESSION, all of Trustor's right, title and interest in that certain real
estate situate, lying, and being in the County of Santa Clara, California, and
more particularly described in Exhibit A attached hereto and made a part hereof
(the "Land") and all of Trustor's estate, right, title and interest therein,
which Land, together with all the property hereinafter described, is herein
referred to as the "Property";
TOGETHER with all of Trustor's right, title and interest in easements,
rights of way, strips and gores of land, vaults, streets, alleys, water rights,
mineral rights and rights used in connection with the Land and/or Property or to
provide a means of access thereto, or to provide service thereto, privileges,
franchises, development, air and other rights and appendages now or in the
future belonging to or in any way appertaining to the Property, and all of
Trustor's right, title and interest in all tenements, hereditaments and
appurtenances thereof
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and thereto pertaining or belonging, and all of Trustor's right, title and
interest in all underground and overhead passageways and licenses in connection
therewith;
TOGETHER with all of Trustor's right, title and interest in any and all
leasehold estates, leases, subleases, rental agreements, management agreements,
arrangements, concessions or agreements, written or oral, relating to the use
and occupancy of the Land and improvements on the Land or any portion thereof,
now or hereafter existing or entered into, as any of the foregoing may be
amended, extended, renewed or modified from time to time, which grant is made
subsequent in time and priority to the rights granted to Beneficiary pursuant to
Section 1 hereof;
TOGETHER with all of Trustor's right, title and interest in all rents,
issues and profits of the Property for so long and during all such times as
Trustor may be entitled thereto (which are pledged primarily and on a parity
with said real estate and not secondarily), which grant is made subsequent in
time and priority to the rights granted to Beneficiary pursuant to Section 1
hereof;
TOGETHER with all of Trustor's right, title and interest, if any, in
and to any and all buildings and improvements now or hereafter erected on the
Land, including, without limitation, the fixtures, attachments, appliances,
equipment, machinery and other articles attached to said buildings and
improvements and all tangible or intangible personal property owned by Trustor
now or any time hereafter located on or at the Land or used in connection
therewith, including, but not limited to, all goods, machinery, tools, equipment
(including, without limitation, fire sprinklers and alarm systems, air
conditioning, heating, boilers, refrigerating, electronic monitoring, water,
lighting, power, sanitation, waste removal, entertainment, recreational, window
or structural cleaning rigs, maintenance and all other equipment of every kind),
indoor or outdoor furniture (including, without limitation, tables, chairs,
planters, desks, sofas, shelves, lockers and cabinets), furnishings, appliances,
inventory, rugs, carpets and other floor coverings, draperies, drapery rods and
brackets, awnings, venetian blinds, partitions, chandeliers and other lighting
fixtures, and all other fixtures, apparatus, equipment, furniture, furnishings,
and articles, any plans and specifications pertaining to the Property,
including, without limitation, mechanical, structural and electrical performance
standards, all installations, fixtures and furnishings specifically designed for
any part of the Property, including, without limitation, communications systems,
computer systems, hardware and software, HVAC and other utility installations,
all appraisals, engineering, soils, environmental and other reports and studies
relating to the Property, all permits, licenses and contract rights, warranties,
guarantees, catalogues, tenant lists, correspondence with present or prospective
tenants or suppliers, advertising materials and telephone exchange numbers as
identified in such materials, it being understood that the enumeration of any
specific articles of property shall not result in or be held to exclude any
items of property not specifically mentioned;
TOGETHER with all the estate, interest, right, title, other claim or
demand, including claims or demands with respect to the proceeds of insurance in
effect with respect thereto, which Trustor now has or may hereinafter acquire in
or with respect to the Property, and any and all awards made for the taking by
eminent domain, or by any proceedings or purchase in lieu thereof, of the whole
or any part of the Property, including, without limitation, any awards resulting
from the change of grade of streets and awards for severance damages; and
TOGETHER with all proceeds and avails of the conversion, voluntarily or
involuntarily, of any of the foregoing into cash or liquidated claims, including
but not limited to proceeds of insurance and of any conveyance of the Property
or any part thereof,
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TO HAVE AND TO HOLD the Property, unto Beneficiary, its successors and
assigns, forever for the purposes and uses herein set forth and in each and
every case subject to the provisions of this Deed of Trust. All of the land,
estate and property hereinabove described, real, personal and mixed, whether
affixed or annexed or not (except where otherwise hereinabove specified), and
all rights hereby conveyed and mortgaged, are intended so to be as a unit and
are hereby understood, agreed and declared to form a part and parcel of the real
estate and to be appropriated to the use of the real estate, and shall for the
purposes of this Deed of Trust be deemed to be real estate and conveyed and
encumbered hereby.
FOR THE PURPOSE OF SECURING THE FOLLOWING OBLIGATIONS (the "Secured
Obligations"), in such order of priority as Beneficiary may elect, and without
limiting the generality of the foregoing provisions of this Deed of Trust:
(a) payment of indebtedness in the total principal amount of
Twenty Million Dollars ($20,000,000), together with interest thereon, as
evidenced by the Note;
(b) performance of every obligation, covenant or agreement of
Trustor contained herein and in each of the Loan Documents (other than
the Environmental Indemnity), and all supplements, amendments and
modifications thereto and all extensions and renewals thereof; and
(c) performance of every obligation, covenant and agreement of
Trustor contained in any instrument or agreement relating to the Loan
now or hereafter executed by Trustor at the request of Beneficiary which
recites that the obligations thereunder are secured by this Deed of
Trust.
TRUSTOR FURTHER AGREES TO THE FOLLOWING:
1. Assignment of Rents, Income and Profits.
1.1 Trustor hereby absolutely and irrevocably assigns to
Beneficiary all of its right, title and interest in and to each of the
following: (a) all leases, subleases, rental agreements and other grants of
possessory interests of any nature now or hereafter in existence which relate to
all or any portion of the Property (collectively, the "Leases"), whether
Trustor's interest therein is as lessor, lessee, sublessee, landlord, tenant or
subtenant, and all guaranties of every nature now or hereafter held with respect
to any of the same; (b) all rents, issues, profits, royalties, income and other
proceeds and similar benefits (collectively, the "Rents") derived from the
Property, including (without limitation) sale proceeds and any cash or other
consideration received as a condition to the termination of any such lease; (c)
all income, revenues, receipts, credits, rights to refunds, and other benefits
of whatever nature and however characterized arising from the conduct of any
business now or hereafter engaged in upon the Land by Trustor or within the
improvements located thereon (collectively, the "Income") ; together with (d)
any and all deposit accounts, credit accounts, merchant accounts and other
accounts of whatever denomination, deposits, licenses, franchises, and other
rights of whatever nature held in connection with any such business conducted by
Trustor, all to the fullest extent that the same may be so assigned. Trustor
hereby agrees to obtain any approvals or consents required or requested by
Beneficiary to validate the assignment of any of the foregoing. Notwithstanding
any variation in the terms of the Secured Obligations, including the increase or
decrease in the interest rates applicable under the Note, or any extension of
time for the payment thereof, or any change in the other security therefor, the
Leases, the Rents and the Income shall be and remain as security for the Secured
Obligations in accordance with the terms hereof.
1.2 Notwithstanding and without limiting the foregoing
assignment of the Leases, the Rents and the Income, so long as no Event of
Default (as defined below) has occurred, Trustor shall have the license to
collect all Rents and Income, and to retain and enjoy the same. Notwithstanding
such license, Trustor agrees that Beneficiary (and not Trustor) shall be and
shall be deemed to be the creditor of each third party to any
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lease or other document or agreement any portion of Trustor's interest in which
is assigned to Beneficiary hereunder in the case of any assignment for the
benefit of creditors or any bankruptcy, reorganization, insolvency, dissolution,
receivership or similar proceeding in any way affecting or relating to such
lease or other document or agreement. However, Beneficiary shall have no
obligation to file or make timely filings of any claim in connection with any
such proceeding. The license contemplated herein shall immediately and
automatically terminate, without notice or other act of Beneficiary or any third
party being required, upon the occurrence of an Event of Default.
1.3 While any Event of Default remains uncured, (a) Beneficiary
may (but shall have no obligation to), without notice, in person, by agent or by
court-appointed receiver, and without regard to the adequacy of any security for
the Secured Obligations, enter upon any portion of the Property and/or, with or
without taking possession thereof, in its own name sue for or otherwise collect
the Rents and the Income (including past due amounts), and (b) promptly
following demand by Beneficiary therefor, Trustor shall deliver to Beneficiary
all prepaid Rents and Income, deposits relating thereto, and all other Rents or
Income then held by or thereafter collected by Trustor. Any Rents or Income
collected by or delivered to Beneficiary may be applied by Beneficiary against
the Secured Obligations, in such order as Beneficiary shall determine in its
sole and absolute discretion. No application of Rents or Income against any
Secured Obligation or other action taken by Beneficiary under this Section 1.3
shall be deemed or construed to be an election of remedies nor to cure or waive
any Event of Default, or to invalidate any other action taken or which may later
be taken in response to such default, nor to make Beneficiary a
mortgagee-in-possession of the Property, and Beneficiary shall not be a
mortgagee-in-possession unless or until it shall take actual possession of the
Property.
1.4 Upon demand by Beneficiary from time to time, Trustor shall
promptly execute and deliver to Beneficiary, in form and substance reasonably
satisfactory to Beneficiary, recordable assignments of Trustor's interest in any
leases, subleases, contracts, licenses, permits, franchises, and other documents
and agreements to which Rents or Income relate. No such assignment shall be
construed to impose upon Beneficiary any obligation with respect thereto.
Trustor shall not make any further assignment, pledge or other hypothecation of
any nature of any interest covered hereby to any third party, and any attempt to
do so in violation hereof shall be void. Beneficiary shall be free to assign, in
whole or in part, the interests held by it hereunder to any subsequent holder(s)
of the Note or any interest therein.
1.5 The assignment of the Leases, the Rents and the Income to
Beneficiary hereunder shall terminate and be of no further force and effect
following the satisfaction in full of all Secured Obligations and the
reconveyance of this Deed of Trust.
1.6 Except as otherwise agreed in writing by Beneficiary from
time to time, Trustor agrees as follows:
1.6.1 Trustor shall promptly pay and in all material
respects perform all of its obligations under each Lease, and shall
immediately notify Beneficiary in writing of any notice of a material
default received by Trustor from the any other party thereto.
1.6.2 Trustor shall use its reasonable efforts to
enforce the prompt payment and performance of all of the obligations of
all other parties to each Lease and all guaranties relating thereto;
shall not waive any default or waive, release or discharge any other
party of or from any such obligation; and shall not materially amend,
supplement, renew, extend or otherwise modify any Lease or any guaranty
relating thereto, without Beneficiary's prior written consent, which
consent shall not be unreasonably withheld or delayed.
1.6.3 With respect to each of the Leases with respect
to which any portion of the landlord's or comparable party's interest is
assigned to Beneficiary under this Deed of Trust:
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A. Trustor shall not collect the rents (or any
other amounts) due from the tenant or other comparable party
(herein, the "Tenant") under the Lease more than one (1) month
in advance of the date due.
B. Trustor hereby irrevocably authorizes and
directs each Tenant under all Leases to pay all amounts owing to
Trustor thereunder to Beneficiary following receipt of any
written notice from Beneficiary which states that an Event of
Default has occurred and remains uncured and that all such
amounts are to be paid to Beneficiary. Trustor hereby covenants
to confirm such authorization and direction in writing to each
Tenant under all Leases upon the request of Beneficiary. Upon
the occurrence of an Event of Default, Trustor further
authorizes and directs all Tenants to pay all such amounts to
Beneficiary without any right or obligation to inquire as to the
validity of Beneficiary's notice and regardless of the fact that
Trustor has notified any such Tenant that Beneficiary's notice
is invalid or has then directed any such Tenant not to pay such
amounts to Beneficiary.
C. Upon the foreclosure of this Deed of Trust
(whether by judicial action or non-judicial proceedings), no
Lease shall be destroyed or terminated by application of the
doctrine of merger or as a matter of law unless Beneficiary or
any other purchaser at the foreclosure sale (as applicable) so
elects. No act by or on behalf of Beneficiary or any such
purchaser shall constitute a termination of any Lease, whether
the same is junior or senior in priority to the lien of this
Deed of Trust, unless Beneficiary or such other purchaser
specifically so elects by notice to the Tenant in question. Such
an election shall not be implied or inferred, and no notice
shall be deemed to have been given by Beneficiary or other
purchaser at the foreclosure sale, by reason of any action at or
following the foreclosure sale unless or until a specific
written notice explicitly addressing the issue is served upon
the Tenant by Beneficiary or other purchaser at the foreclosure
sale; provided, that, after the foreclosure sale, the purchaser
at the foreclosure sale shall notify the Tenant of its election
within 30 days after receipt of a written request from the
Tenant that the purchaser do so.
E. Trustor hereby represents and warrants to
Beneficiary, with respect to each Lease that is presently in
effect (collectively, the "Current Leases"), (a) that Trustor
has not accepted any payment of rent (or other charge) under any
Current Lease that is not due until on or after the 31st day
following the execution hereof; and (b) that no material default
by Trustor or, to the best of Trustor's knowledge, any other
person under any Current Lease has occurred and remains uncured
except as has been disclosed to Beneficiary by Trustor.
F. Any Lease entered into in the future
(collectively, "Future Leases"), shall comply in all material
respects with Section 8.1.16 of the Loan Agreement.
1.7 Trustor hereby indemnifies Beneficiary, and agrees to defend
and hold Beneficiary harmless from and with respect to any cost, claim, demand,
obligation, liability or damage which Beneficiary may incur by reason of the
assignment of the Leases, the Rents or the Income, or Beneficiary's exercise of
any right or remedy provided for herein or available at law, or by reason of any
alleged obligation or undertaking of Beneficiary relating to any Lease, except
as a result of the gross negligence or wilful misconduct of Beneficiary or its
agents. Nothing herein shall constitute or be deemed to constitute a commitment
by Beneficiary to perform any act contemplated by any Lease or to otherwise
impose any obligation upon Beneficiary, including (without limitation) honoring
the covenant of quiet enjoyment under any Lease in the event the Tenant is
dispossessed following any foreclosure hereunder.
2. Representations, Warranties and Covenants of Trustor Concerning the
Property. Trustor represents, warrants and covenants to and with Beneficiary
that: (a) it is lawfully seized of the Property; (b) it has good and marketable
title to the Property, subject only to the Permitted Exceptions; (c) it has good
right, full
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power and lawful authority to convey and mortgage the Property; and (d) it will
warrant and forever defend the Property and the quiet and peaceful possession of
the same against the claims of all persons whomsoever.
3. Maintenance, Repair and Restoration of the Property, Payment of Liens,
Etc. Trustor shall: (a) promptly repair, restore or rebuild any buildings or
improvements now or hereafter on the Land which may become damaged or be
destroyed; (b) constantly maintain the Property in good condition and repair,
without waste; (c) except as permitted by the Loan Agreement, not suffer or
permit any liens, encumbrances or charges (including mechanics' liens) to be
filed or otherwise asserted against the Property, and shall promptly discharge
the same if any claims for lien or any proceedings for the enforcement thereof
are filed or commenced; (d) pay when due any indebtedness which may be secured
by a lien or charge on the Property and comply with all requirements of all loan
documents evidencing or securing such indebtedness, and, upon request, exhibit
evidence satisfactory to Beneficiary of the discharge of such indebtedness; (e)
timely complete any building or buildings or any improvements now or at any time
in the process of erection upon the Land and any renovation of existing
buildings; (f) comply with all requirements of Laws and all restrictions of
record; (g) not initiate or acquiesce in any zoning variation or
reclassification of the Property or any part thereof without Beneficiary's prior
written consent, which consent shall not be unreasonably withheld or delayed;
(h) pay each item of indebtedness and perform and fulfill each of the
obligations secured by this Deed of Trust when due or required according to the
terms of the Note or this Deed of Trust; and (i) suffer or permit no change in
the general nature of the occupancy of the Property without Beneficiary's prior
written consent, which consent shall not be unreasonably withheld or delayed.
4. Intentionally Left Blank.
5. Tax Deposits. Following the occurrence and during the continuance of an
Event of Default, and on the first day of each month thereafter until the
satisfaction or extinguishment of the Secured Obligations, Trustor covenants and
agrees to deposit at such place as Beneficiary may from time to time in writing
appoint, and in the absence of such appointment, then at the office of
Beneficiary in New York, New York, a sum equal to one-twelfth of the last total
annual taxes and assessments (general and special) on the Property for the last
ascertainable year (unless said taxes and assessments were based on a valuation
which excluded the improvements or any part thereof constructed on the Property,
in which event the amount of such deposits shall be based upon Beneficiary's
reasonable estimate of the amount of taxes and assessments which will be levied
based upon a valuation which includes the improvements or parts thereof which
had been so excluded). Such deposits are to be held in trust without any
allowance of interest and are to be used for the payment of taxes and
assessments (general and special) on the Property next due and payable when they
become due. If the funds so deposited are insufficient to pay any such taxes or
assessments (general and special) for any year when the same shall become due
and payable, Trustor shall, within five (5) Business Days after receipt of
demand therefor from Beneficiary, deposit such additional funds as may be
necessary to pay such taxes and assessments (general and special) in full. If
the funds so deposited exceed the amount required to pay such taxes and
assessments (general and special) for any year, the excess shall be applied
toward a subsequent deposit or deposits due from Trustor, or, in the event that
no subsequent deposits shall be due, such excess shall be returned to Trustor
within five (5) Business Days of reconciliation by Beneficiary.
6. Evidence of Replacement Cost and Insurance Premium Deposits.
6.8 Within ninety (90) days following the end of each fiscal
year of Trustor, at the request of Beneficiary, Trustor agrees to furnish
evidence of replacement costs, without cost to Beneficiary, such as are
regularly and ordinarily made by insurance companies to determine the then
replacement cost of Property.
6.2 Following the occurrence and during the continuance of an
Event of Default, upon Beneficiary's written demand, and on the first day of
each month thereafter until the indebtedness secured by this Deed of Trust is
fully paid, Trustor covenants and agrees to deposit at such place as Beneficiary
may from time to time in writing appoint, an installment of the premium or
premiums that will become due and payable to renew the
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insurance as required pursuant to this Section . Each of such installments shall
be in an amount which, by the payment of approximately equal installments, will
result in there accumulating in the hands of the depositary a sufficient amount
to pay renewal premiums upon such policies of insurance, at least one month
prior to the expiration date or dates of the policy or policies to be renewed;
such deposits are to be held without any allowance of interest, may be
commingled with the general funds of Beneficiary and are to be used for renewal
of such insurance policies. If the funds so deposited are insufficient to pay
all premiums for such renewals, Trustor shall within ten (10) days after receipt
of demand therefor from Beneficiary, deposit such additional funds as may be
necessary to pay such premiums. If the funds so deposited exceed the amount
required to pay such premiums, the excess shall be applied toward a subsequent
deposit or deposits due from Trustor, or, in the event that no subsequent
deposits shall be due, such excess shall be returned to Trustor within five (5)
Business Days of reconciliation by Beneficiary.
7. Beneficiary's Interest In and Use of Deposits. Anything in the Note
or this Deed of Trust to the contrary notwithstanding, upon the occurrence and
during the continuance of an Event of Default, Beneficiary shall have the right
(but not the obligation) to apply any monies at the time on deposit pursuant to
any provision of this Deed of Trust on account of any of Trustor's obligations
under the Note or under this Deed of Trust, in such order and manner as
Beneficiary may elect. When the indebtedness secured hereby has been fully paid,
any remaining deposits shall be paid to Trustor or to the party entitled
thereto. All such deposits are hereby pledged as additional security for the
indebtedness hereunder and shall be held to be irrevocably applied by the
depositary for the purposes for which made hereunder and shall not be subject to
the direction or control of Trustor; provided, however, that neither Beneficiary
nor said depositary shall be liable for any failure to apply to the payment of
taxes, assessments or insurance premiums any amount so deposited unless Trustor,
while not in default under the Note or this Deed of Trust, shall have requested
said depositary in writing to make application of such funds to the payment of
the particular taxes, assessments or insurance premiums, as the case may be, for
which the same were deposited, accompanied by the bills for such taxes,
assessments or insurance premiums.
8. Intentionally Left Blank.
9. Stamp Tax. If, by the laws of the United States of America, or of
any state or political subdivision having jurisdiction over Trustor, any tax is
due or becomes due in respect of the issuance of the Note or the recording of
this Deed of Trust, Trustor covenants and agrees to pay such tax in the manner
required by any such law. Trustor further covenants to defend and hold harmless
and agrees to indemnify Beneficiary, its successors or assigns, against any
liability incurred by reason of the imposition of any tax on the issuance of the
Note or the recording of this Deed of Trust.
10. Effect of Changes in Laws Regarding Taxation. In the event of the
enactment after the date of this Deed of Trust of any law of the State of
California or any political subdivision thereof deducting from the value of land
for the purpose of taxation any lien thereon, or imposing upon Beneficiary the
payment of the whole or any part of the taxes or assessments or charges or liens
herein required to be paid by Trustor, or changing in any way the laws relating
to the taxation of mortgages or debts secured by mortgages or the Beneficiary's
interest in the property, or the manner of collection of taxes, so as to affect
this Deed of Trust or the debt secured hereby or the holder hereof, then, and in
any such event, Trustor, upon demand by Beneficiary, shall pay such taxes or
assessments, or reimburse Beneficiary therefor; provided, however, that if in
the opinion of counsel for Beneficiary (i) it might be unlawful to require
Trustor to make such payment or (ii) the making of such payment might result in
the imposition of interest beyond the maximum amount permitted by law, then, and
in either such event, Beneficiary may elect, by notice in writing given to
Trustor, to declare all of the indebtedness secured hereby to be and become due
and payable (without penalty or premium) sixty (60) days from the giving of such
notice.
11. Prepayment Privilege. Trustor shall have the privilege of making
prepayment on the principal of any Note, in whole or in part, in accordance with
the terms of such Note.
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12. Effect of Extensions of Time and Amendments. If the payment of the
indebtedness or the performance of any of the other obligations secured by this
Deed of Trust, or any part thereof, is extended or varied, or if any part of the
security is released, all persons now or at any time hereafter liable therefor,
or interested in the Property, shall be held to, and deemed to have assented to,
such extension, variation or release, and their liability hereunder, and the
lien and all provisions hereof, shall continue in full force, the right of
recourse, if any, against all such persons being expressly reserved by
Beneficiary notwithstanding any such extension, variation or release. Without
limiting the generality of Section 26, any person or entity taking a junior
mortgage or other lien upon the Property or any interest therein, shall take
such lien subject to the rights of Beneficiary herein to amend, modify and
supplement the Note, this Deed of Trust, or any other document or instrument
evidencing, securing, or guaranteeing the indebtedness hereby secured, and to
vary the rate of interest and the method of computing the same, and to impose
additional fees and other charges, and to extend the maturity of said
indebtedness, and to grant partial releases of the lien of this Deed of Trust,
in each and every case without obtaining the consent of the holder of such
junior lien and without the lien of this Deed of Trust losing its priority over
the rights of any such junior lien. Nothing in this Section 12 contained shall
be construed as waiving any provision contained herein which provides, among
other things, that it shall constitute an Event of Default if the Property are
sold, conveyed or encumbered or if Trustor or any Affiliate transfers any
interests in the Property, Trustor, or otherwise, unless expressly permitted by
Beneficiary.
13. Beneficiary's Performance of Defaulted Acts; Subrogation. If Trustor
fails to perform any of its covenants and agreements herein or in the Note,
Beneficiary may (but shall not be obligated to), upon five (5) Business Days'
prior notice to Trustor (except in the case of an emergency, when only
reasonable notice shall be required), make any payment or perform any act herein
or therein required of Trustor, in any form and manner deemed expedient by
Beneficiary, and may (but shall not be obligated to) make full or partial
payments of principal or interest on prior encumbrances, if any, and purchase,
discharge, compromise or settle any tax lien or other prior lien or title or
claim thereof, and redeem from any tax sale or forfeiture affecting the Property
and contest any tax or assessment. Beneficiary and any person designated by
Beneficiary shall have the right, and is hereby granted the right, upon
reasonable notice, to enter upon the Property for the foregoing purposes. All
moneys paid for any of the purposes herein authorized and all expenses paid or
incurred in connection therewith, including, without limitation, attorneys' fees
and disbursements, and any other moneys advanced by Beneficiary to protect the
Property and the lien hereof, shall be so much additional indebtedness secured
hereby, shall become immediately due and payable without notice and with
interest thereon at a rate per annum, determined by Beneficiary, equal to the
Default Rate, and shall be secured by this Deed of Trust. Inaction of
Beneficiary shall never be deemed to be a waiver of any right accruing to it on
account of any default on the part of the Trustor.
If the proceeds of the Note or any part thereof, or any amount paid out
or advanced hereunder by Beneficiary, are used directly or indirectly to pay
off, discharge or satisfy, in whole or in part, any lien or encumbrance upon the
Property or any part thereof on a parity with or prior or superior to the lien
hereof, then as added security hereunder, Beneficiary shall be subrogated to any
and all rights, equal or superior titles, liens and equities, owned or claimed
by any owner or holder of said lien or encumbrance, however remote, regardless
of whether said lien or encumbrance is acquired by assignment or has been
released of record by the holder thereof upon payment.
14. Beneficiary's Reliance on Tax Bills, Etc. Beneficiary, in making any
payment authorized by the Note or this Deed of Trust: (a) relating to taxes and
assessments, may do so according to any bill, statement or estimate procured
from the appropriate public office, without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof; or (b) for the purchase,
discharge, compromise or settlement of any other lien, may do so without inquiry
as to the validity or amount of any claim for lien which may be asserted.
15. Acceleration of Indebtedness in Case of Default. The occurrence of
any one or more of the following shall constitute an "Event of Default" under
this Deed of Trust:
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15.1 The occurrence of Default or an Event of Default under the
Note, the Loan Agreement or any other Loan Document that shall not have been
cured within the applicable grace period provided therefor, if any; or
15.2 If a default shall be made by Trustor with respect to
covenants, agreements and obligations of Trustor hereunder involving the payment
of money other than interest and/or principal under the Note for a period of
five (5) Business Days after written notice from Beneficiary that the same is
due and payable (which notice may be in the form of routine billing), or (ii)
for a period of thirty (30) days after written notice from Beneficiary to
observe or perform any non-monetary covenant or condition contained in this Deed
of Trust or any other Loan Documents; provided that if any such failure
concerning a non-monetary covenant or condition is susceptible to cure and
cannot reasonably be cured within said thirty (30) day period, then Trustor
shall have an additional thirty (30) day period to cure such failure and no
Event of Default shall be deemed to exist hereunder so long as (x) Trustor
commences such cure within the initial thirty (30) day period and diligently and
in good faith pursues such cure to completion within such thirty (30) day
period, and (y) the existence of such uncured default will not result in any
tenant under a Lease having the right to terminate such Lease due to such
uncured default; provided, however, if a different notice or grace period is
specified with respect to a particular breach under any other subsection of this
Section 15.2, the specific provision shall control.
16. Acceleration Upon Default; Additional Remedies. Upon the occurrence
of any Event of Default, Beneficiary may, at its option, but without obligation
to, declare all Secured Obligations to be immediately due and payable without
presentment, demand, protest or notice of any kind. Whether or not Beneficiary
exercises such option, Beneficiary may do any or all of the following:
16.1 In person or by agent (with or without bringing any action
or proceeding) or by court-appointed receiver, and without regard to the
adequacy of its security: enter upon and take possession of the Property, or any
part thereof, in its own name or in the name of the Trustee; take any action
which it deems necessary or desirable to preserve the value, marketability or
rentability of the Property, increase the income therefrom, or protect the
security hereof; and, with or without taking possession of the Property, sue for
or otherwise collect the Rents and the Income, including those amounts past due
and unpaid, and apply the same, less costs and expenses of operation and
collection (including attorneys' fees), against any Secured Obligation, all in
such order as Beneficiary may determine.
16.2 Commence an action to foreclose this Deed of Trust as a
mortgage, appoint a receiver, or specifically enforce any of the covenants
hereof.
16.3 Deliver to Trustee a written declaration of default and
demand for sale, and a written notice of default and election to cause Trustor's
interest in the Property to be sold, which notice Trustee or Beneficiary shall
cause to be duly filed for record in the Official Records of Santa Clara County,
California, and exercise the power of sale under California law.
16.4 Exercise all other rights and remedies provided in the Note
or in this Deed of Trust or other document or agreement now or hereafter secured
hereby, or in any document that now or hereafter secures all or any portion of
the Secured Obligations, or provided by law.
17. Foreclosure By Power of Sale.
17.1 Should Beneficiary elect to foreclose by exercise of the
power of sale contained herein, Beneficiary shall notify Trustee and deposit
with Trustee this Deed of Trust and the Note and such receipts and evidence of
expenditures made and secured hereby as Trustee may reasonably require.
17.2 Upon receipt of any such notice from Beneficiary, Trustee
shall cause to be recorded, published and delivered to Trustor such Notice of
Default and Election to Sell as is then required (and as such
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terms are defined) by California law and by this Deed of Trust. Trustee shall,
without demand on Trustor, after lapse of such time as may then be required by
law and after recordation of such Notice of Default and after Notice of Sale has
been given as required by law, sell the Property at the time and place of sale
fixed in such Notice of Sale, either as a whole or in separate lots, parcels or
items and in such order as Beneficiary may direct, at public auction to the
highest bidder for cash in lawful money of the United States payable at the time
of sale. Trustee shall deliver to such purchaser(s) good and sufficient deed or
deeds conveying the property so sold, but without any covenant or warranty
express or implied. The recitals in such deed of any matter or fact shall be
conclusive proof of the truthfulness thereof. Any person, including Trustor,
Trustee or Beneficiary, may purchase at any such sale, and Trustor shall warrant
and defend the title of such purchaser(s).
17.3 After deducting all costs, fees and expenses of Beneficiary
and Trustee, including costs of evidence of title in connection with any such
sale, Beneficiary shall apply the proceeds of sale, in the following order of
priority, to payment of (i) first, all amounts expended under the terms hereof
and not then repaid, with accrued interest, (ii) second, all other amounts then
secured hereby, in such order as Beneficiary shall determine in its sole and
absolute discretion, and (iii) the remainder, if any, to the person(s) legally
entitled thereto.
17.4 To the extent permitted by applicable law, Trustee may
postpone the sale of all or any portion of the Property by public announcement
at the time and place of sale, and from time to time thereafter may again
postpone such sale by public announcement or subsequently noticed sale, and
without further notice may make such sale at the time fixed by the last
postponement or may, in its discretion, give a new notice of sale.
17.5 A sale of less than all of the Property or any defective or
irregular sale made hereunder shall not exhaust the power of sale provided for
herein, and subsequent sales may be made hereunder until all Secured Obligations
have been satisfied or the entire Property sold, without defect or irregularity.
18. Appointment of Receiver. While any Event of Default remains uncured,
Beneficiary, as a matter of right and without notice to Trustor or anyone
claiming under Trustor, and without regard to the value of the Property or
Trustor's interest therein, may apply to any court having jurisdiction to
appoint a receiver or receivers of the Property, and Trustor hereby irrevocably
consents to such appointment and waives notice of any application therefor. Any
such receiver or receivers shall have the usual powers and duties of receivers
in similar cases and all the powers and duties of Beneficiary in case of entry
as provided herein, and shall continue as such and exercise such powers until
the date of confirmation of sale of the Property (unless such receivership is
sooner terminated). If the Property includes lots or other units held by Trustor
for sale, any receiver specifically may be authorized by the court to process
and complete any pending sale transaction theretofore entered into by Trustor,
and to hold the proceeds of any such sale as additional collateral for the
Secured Obligations.
19. Application of Funds. Except as otherwise provided herein, while any
Event of Default remains uncured, Beneficiary may at any time without notice,
apply any amounts received by Beneficiary to pay insurance premiums or taxes, or
as Rents, or as insurance or condemnation proceeds, and all other amounts
received by Beneficiary from or on account of Trustor or the Property or
otherwise, upon any Secured Obligation, in such manner and order as Beneficiary
may elect, notwithstanding that any such obligation may not yet be due. The
receipt, use or application of any such amount shall not be construed to affect
the maturity of any Secured Obligation, any of the rights or powers of
Beneficiary or Trustee under the Note or this Deed of Trust, or any of the
obligations of Trustor or any guarantor of the Note; nor to cure or waive any
default under the Note or this Deed of Trust; nor to invalidate any act of
Trustee or Beneficiary.
20. Cumulative Remedies; No Waiver
20.1 Trustee and Beneficiary shall each be entitled to enforce
payment and performance of any Secured Obligation and to exercise all rights and
powers under the Note or under this Deed of Trust or other agreement or any law
now or hereafter in force, notwithstanding that some or all of the Secured
Obligations may
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now or hereafter be otherwise secured, whether by guaranty, mortgage, deed of
trust, pledge, lien, assignment or otherwise. Neither the acceptance or
enforcement of this Deed of Trust, whether by court action or pursuant to the
power of sale or other powers contained herein, shall prejudice or affect
Trustee's or Beneficiary's right to realize upon or enforce any other security
now or hereafter held by Trustee or Beneficiary, it being agreed that Trustee
and Beneficiary shall each be entitled to enforce this Deed of Trust and any
such other security in such order and manner as they may in their absolute
discretion determine. Trustee's and Beneficiary's rights and remedies under the
Note and this Deed of Trust are cumulative and shall be in addition to all
rights and remedies provided by law or otherwise from time to time. Every power
or remedy given by the Note or this Deed of Trust to Trustee or Beneficiary or
to which either of them is otherwise entitled may be exercised, concurrently or
independently, from time to time and as often as may be deemed expedient by
Trustee or Beneficiary, and either of them may pursue inconsistent remedies. No
waiver by Beneficiary of any default shall be implied from any omission by
Beneficiary to take action on account of such default if such default persists
or is repeated. No waiver by Beneficiary of any default shall affect any default
other than the default expressly waived, and any such waiver shall be operative
only for the time and to the extent stated. No waiver of any covenant or
condition of any of the Note or of this Deed of Trust shall be construed as a
waiver of any subsequent breach of the same covenant or condition. Beneficiary's
consent to or approval of any act by Trustor requiring further consent or
approval shall not be deemed to waive or render unnecessary Beneficiary's
consent to or approval of any subsequent act. Beneficiary's acceptance of the
late payment or performance of any Secured Obligation shall not constitute a
waiver by Beneficiary of the right to require prompt payment and performance of
all further payments and other Secured Obligations. Beneficiary's acceptance of
any payment or performance following the filing of a notice of default hereunder
shall not constitute a waiver of Beneficiary's right to proceed with the
exercise of its remedies for any unfulfilled obligations. Beneficiary's
acceptance of any partial payment or performance shall not constitute a waiver
by Beneficiary of any rights relating to the unfulfilled portion of the
applicable obligation.
20.2 TRUSTOR HEREBY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THE ENFORCEMENT OF THIS DEED OF
TRUST.
21. Request for Notice. Trustor hereby requests that a copy of any
notice of default and a copy of any notice of sale hereunder be mailed to it at
the address set forth in the first paragraph of this Deed of Trust.
22. Beneficiary's Right of Possession in Case of Default. While any
Event of Default remains uncured, whether before or after the whole principal
sum secured hereby is declared to be immediately due as aforesaid, or whether
before or after the institution of legal proceedings to foreclose the lien
hereof or before or after sale thereunder, Trustor shall forthwith, upon demand
of Beneficiary, surrender to Beneficiary and Beneficiary shall be entitled to
take actual possession of the Property or any part thereof, personally, or by
its agent or attorneys. In such event Beneficiary, in its sole discretion, may,
to the extent permitted by law, with or without force and with or without
process of law, enter upon and take and maintain possession of all or any part
of the Property, together with all documents, books, records, papers and
accounts of Trustor or the then owner of the Property relating to the Property,
but not to the business of Cadence or any other tenant therein, and may exclude
Trustor, its agents and servants, wholly therefrom and may, in its own name as
Beneficiary and under the powers herein granted, hold, operate, manage and
control the Property, either personally or by its agents, and with full power to
use such measures, legal or equitable, as in its discretion or in the discretion
of its successors or assigns may be deemed proper or necessary to enforce the
payment or security of the avails, rents, issues and profits of the Property,
including actions for the recovery of rent, actions in forcible detainer and
actions in distress for rent, and with full power, in each case to the fullest
extent permitted by law, among other things: (i) to cancel or terminate any
Lease or sublease for any cause or on any ground which would entitle Trustor to
cancel the same; (ii) to elect to disaffirm any Lease or sublease which is then
subordinate to the lien hereof; (iii) to extend or modify any then existing
Leases and to make new Leases, which extensions, modifications and new Leases
may provide for terms to expire, or for options to lessees to extend or renew
terms to expire, beyond the maturity date of the indebtedness hereunder and
beyond the date of the issuance of a deed to any purchaser at a foreclosure
sale, it being understood and agreed that any such Leases, and the options or
other such provisions to
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be contained therein, shall be binding upon Trustor and all persons whose
interests in the Property are subject to the lien hereof and upon any purchaser
at any foreclosure sale, notwithstanding any redemption from sale, discharge of
the Deed of Trust indebtedness, satisfaction of any foreclosure decree or
issuance of any certificate of sale or deed to any purchaser; (iv) to enter into
any management, leasing or brokerage agreements covering the Property; (v) to
make all necessary or proper repairs, decorations, renewals, replacements,
alterations, additions, betterments and improvements to the Property as to it
may seem judicious; (vi) to insure and reinsure the same and all risks
incidental to Beneficiary's possession, operation and management thereof; and
(vii) to receive all of such avails, rents, issues and profits; Trustor hereby
granting full power and authority to exercise each and every of the rights,
privileges and powers herein granted at any and all times hereafter, without
notice to Trustor.
Unless and until Beneficiary shall take possession of the
Property, Beneficiary shall not be obligated to perform or discharge, nor does
it hereby undertake to perform or discharge, any obligation, duty or liability
under any Lease. Trustor shall and does hereby agree to indemnify and hold
harmless Beneficiary of and from any and all liability, loss or damage which it
may or might incur by reason of its performance of any action authorized under
this Section 22 and of and from any and all claims and demands whatsoever which
may be asserted against it by reason of any alleged obligations or undertakings
on its part to perform or discharge any of the terms, covenants or agreements of
Trustor, except for liability, loss, damage, claims and demands resulting from
the gross negligence or intentional misconduct of Beneficiary. Should
Beneficiary incur any such liability, loss or damage by its performance or
nonperformance of actions authorized by this Section 22, or in the defense of
any claims or demands, the amount thereof, including costs, expenses and
reasonable attorneys' fees and disbursements, together with interest on any such
amount at the Default Rate, shall be secured by this Deed of Trust, and Trustor
shall reimburse Beneficiary therefor immediately upon demand.
23. Beneficiary's Right of Inspection. Beneficiary shall have the right
to inspect the Property and access thereto shall be permitted for that purpose.
24. Condemnation. Trustor hereby assigns, transfers and sets over unto
Beneficiary its entire interest in the proceeds (the "Condemnation Proceeds") of
any award or any claim for damages to the Property or any part thereof taken or
damaged under the power of eminent domain or by condemnation or any transaction
in lieu of condemnation ("Condemnation"). Provided that (a) no Event of Default
exists hereunder or under any other Loan Document at the time any Condemnation
Proceeds are to be awarded; and (b) Trustor complies with all conditions set
forth in Section 8.2 for the payment of insurance proceeds following a casualty,
then, subject to Section 8.2, Trustor shall be entitled to use the Condemnation
Proceeds to restore the Property. In all other cases, Beneficiary shall have the
right (but not the obligation) to collect, retain and apply to the indebtedness
of Trustor under the Loan Agreement, this Deed of Trust and the other Loan
Documents all Condemnation Proceeds (after deduction of all reasonable expenses
of collection and settlement, including attorneys' fees and disbursements); and,
if such Condemnation Proceeds are insufficient to pay such indebtedness in full,
to declare the balance remaining unpaid on the Note, this Deed of Trust and the
other Loan Documents to be due and payable forthwith and to avail itself of any
of the remedies afforded thereby and hereby as in the case of any default
thereunder and hereunder. Any Condemnation Proceeds remaining after application
to the indebtedness of Trustor shall be paid by Beneficiary to Trustor or to the
party then entitled thereto.
25. Release. If Trustor shall fully pay all principal and interest on
the Note and all other indebtedness secured hereby, and shall perform and
observe all of the other terms and provisions of the Note and this Deed of Trust
to be performed and observed by Trustor, then Beneficiary shall release this
Deed of Trust and the lien hereof by proper instrument upon payment and
discharge of all indebtedness secured hereby and payment of any filing fee in
connection with such release.
26. Due on Sale or Further Encumbrance. Except as expressly permitted by
the terms of the Loan Agreement, if the Property or any interest therein shall
be sold, transferred, mortgaged, assigned, further encumbered or leased, whether
voluntarily, involuntarily or by operation of law (a "Transfer"), without the
prior
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written consent of Beneficiary, Beneficiary, at its sole option, may
declare the Secured Obligations hereby immediately due and payable.
27. Giving of Notice. Any notice, demand, request or other communication
which any party hereto may be required or may desire to give hereunder shall be
in writing and shall be deemed to have been properly given and received: (a) if
hand delivered, on the day so delivered to the address set forth below; (b) if
mailed, on the third Business Day after the day on which it is deposited in the
United States mails in the continental United States, registered or certified
mail, postage prepaid, return receipt requested, addressed as set forth below;
(c) if by Federal Express or other reputable express courier service, on the
next Business Day after delivery to such express courier service, addressed as
set forth below; or (d) if by telecopy transmission, on the day and at the time
on which delivered to such party at the address and the telecopier number set
forth below; provided, if by telecopy transmission, a hardcopy is transmitted
concurrently by one of the other means allowed under this section:
If to Trustor:
c/o Cadence Design Systems, Inc.
2655 Seely Road, Building 5, MS 5B2
San Jose, California 95134
Telephone:
Telecopier:
Attention: Treasurer
with a copy to:
Cooley Godward Castro Huddleson & Tatum
One Maritime Plaza
20th Floor
San Francisco, California 94111-3580
Telephone: 415-693-2000
Telecopier: 415-951-3699
Attention: Felice Liang, Esq.
If to Beneficiary:
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019-6092
Telephone: (212) 261-7000
Telecopier: (212) 261-7890
Attention: Real Estate Group
with copies to:
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019-6092
Telephone: (212) 261-7050
Telecopier: (212) 459-3187
Attention: Legal Department
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and:
Sonnenschein Nath & Rosenthal
601 South Figueroa Street
15th Floor
Los Angeles, California 90017
Telephone: (213) 623-9300
Telecopier: (213) 623-9924
Attention: Charles R. Campbell, Jr., Esq.
and:
Sonnenschein Nath & Rosenthal
1221 Avenue of the Americas
24th Floor
New York, New York 10020-1089
Telephone: (212) 768-6700
Telecopier: (212) 391-1247
Attention: Mark R. Lehrer, Esq.
or at such other address or to such other addressee as the party to be served
with notice may have furnished in writing to the party seeking or desiring to
serve notice as a place for the service of notice.
28. Indemnification. Trustor agrees to indemnify and hold harmless
Beneficiary and each of its Affiliates and each director, officer, employee,
attorney, assignee, participants or agent of any of the foregoing persons (each
such Person, an "Indemnified Person") from any losses, claims, costs, damages,
expenses or liabilities (or actions, suits or proceedings, including any inquiry
or investigation, with respect thereto) (collectively, "Claims") to which any
Indemnified Person may become subject, insofar as such Claims arise out of, in
any way relate to, or result from, this Agreement or any other Loan Document or
any of the transactions contemplated hereby and thereby and to reimburse upon
demand each Indemnified Person for any and all reasonable legal and other
expenses incurred in connection with investigating, preparing to defend or
defending any such Claim; provided, however, that:
(a) Excluded Claims. Trustor shall not have any
obligation (i) to any Indemnified Person to the extent of any Claim made
or prosecuted against such Indemnified Person by Trustor, or (ii) to any
Indemnified Person for any Claim based on or arising from the gross
negligence or willful misconduct of such Indemnified Person;
(b) Notice. Trustor shall be given prompt notice of the
commencement of any action or proceeding on any Claim and of any overt
written threat of litigation on any Claim, but the failure to receive
such notice shall not relieve Trustor from any of its obligations under
this Section 28, except to the extent Trustor has been actually damaged
thereby;
(c) Selection of Counsel. Trustor shall have the right,
with the consent of the Indemnified Person (which shall not unreasonably
be withheld), to select a firm of attorneys as legal counsel to defend
any Claim, and Trustor shall pay the fees, expenses and disbursements of
such counsel and any special or local counsel; and if the Indemnified
Person or such legal counsel determines in good faith that representing
such Indemnified Person would or could result in a conflict of interest,
or that a defense, crossclaim or counterclaim is available to such
Indemnified Person that is not available to any other Person represented
by such legal counsel in the same proceeding, then to the extent
reasonably necessary to
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avoid such a conflict of interest or to permit unqualified assertion of
such a defense, crossclaim or counterclaim, such Indemnified Person
shall be entitled to separate representation, at Trustor's expense, by
legal counsel selected by such Indemnified Person and reasonably
acceptable to Trustor, with all such legal counsel using reasonable
efforts to avoid unnecessary duplication of effort by counsel;
(d) Separate Counsel. Each Indemnified Person shall
have the right to be represented by counsel of its own choosing (i) at
Trustor's expense whenever any Event of Default is continuing, except
that the Trustor shall be obligated under this Section 28 only to pay
the reasonable fees and expenses of one firm of attorneys chosen by
Beneficiary to represent its interests and the other Indemnified Person
as a group, (ii) when such Indemnified Person is entitled to separate
representation at Trustor's expense as set forth in Section 28(c), and
(iii) at any time and under any circumstances at such Indemnified
Person's expense; and Trustor and the attorneys selected by Trustor
shall cooperate in all reasonable respects with such counsel; and
(e) Settlement. Trustor shall be entitled to settle any
Claim, at Trustor's sole cost and expense, without the consent of the
Indemnified Person if (i) no Event of Default under the Loan is
continuing, (ii) the settlement does not and will not, under any
circumstances, impose any present or future payment or performance
obligation upon the Indemnified Person, and (iii) the settlement
includes the giving by the claimant to the Indemnified Person of an
unconditional and irrevocable release from all liability in respect of
such Claim; and otherwise only upon the prior written consent of the
Indemnified Person, which shall not unreasonably be withheld.
29. Estoppel Affidavits. Trustor, within ten (10) days after written
request from Beneficiary, shall furnish a written statement, duly acknowledged,
setting forth the unpaid principal of, and interest on, the indebtedness secured
hereby and whether or not any offset or defense exists against such
indebtedness, and covering such other matters as Beneficiary may reasonably
require.
30. Binding on Successors and Assigns. The covenants contained in this
Deed of Trust shall run with the Land and shall bind Trustor, the successors and
assigns of Trustor, all subsequent owners, encumbrancers, tenants and subtenants
of the Property, and all persons claiming under or through Trustor, and shall
inure to the benefit of Beneficiary, the successors and assigns of the
Beneficiary and all subsequent holders of this Deed of Trust.
31. Definitions of Trustor, Beneficiary and Certain Other Terms.
Unless the context clearly indicates a contrary intent or unless otherwise
specifically provided herein, words used in this Deed of Trust shall be used
interchangeably in singular or plural form. The word "Trustor" when used herein
shall include the original Trustor named in the first paragraph hereof, the
original Trustor's successors and assigns and all owners from time to time of
the Property. The word "Beneficiary" when used herein shall include all
successors and assigns of the original Beneficiary identified in the first
paragraph hereof. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa. The
terms "herein," "hereof" or "hereunder" or similar terms used in this Deed of
Trust refer to this entire Deed of Trust and not to the particular provision in
which the term is used. This Deed of Trust may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to
constitute but one and the same instrument. The terms of this Deed of Trust
supersede the terms of any and all prior instruments consolidated herein.
Notwithstanding anything stated herein, to the extent the phrase "an Event of
Default exists hereunder" or "the existence of an Event of Default hereunder" is
used herein, nothing herein shall require Beneficiary to accept a cure of any
default beyond the applicable grace, notice and cure periods, provided herein,
if any.
32. No Third Parties Benefitted. This Deed of Trust is made and entered
into for the sole protection and benefit of Beneficiary, and Trustor, their
successors and assigns, and no other person or persons shall have any right to
action hereon or rights to the funds evidenced by the Note at any time.
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33. Maintenance of Trustor's and Affiliated Parties' Interests. In
determining whether or not to make the Note secured hereby, Beneficiary examined
the creditworthiness of Trustor, found it acceptable and relied and continues to
rely upon Trustor for performance of Trustor's obligations under this Deed of
Trust. Beneficiary also evaluated the background and experience of Trustor in
developing, owning and operating property such as the Property, found it
acceptable and relied and continues to rely upon same as the means of
maintaining the value of the Property which is Beneficiary's security for the
Note secured hereby. Trustor is an entity controlled by individuals or entities
well-experienced in borrowing money and owning and operating property such as
the Property, was ably represented by a licensed attorney at law in the
negotiation and documentation of the Note secured hereby and bargained at arm's
length and without duress of any kind for all of the terms and conditions of the
Note, including this provision. Trustor recognizes that Beneficiary is entitled
to keep its loan portfolio at current interest rates by either making new loans
at such rates or collecting assumption fees and/or increasing the interest rate
on a loan, the security for which is purchased by a party other than the
original Trustor. Trustor further recognizes that any secondary or junior
financing placed upon the Property (i) may divert funds which would otherwise be
used to pay the Note secured hereby; (ii) could result in acceleration and
foreclosure by any such junior encumbrances which would force Beneficiary to
take measures and incur expenses to protect the security; (iii) would detract
from the value of the Property should Beneficiary come into possession thereof
with the intention of selling same; and (iv) impair Beneficiary's right to
accept a deed in lieu of foreclosure, as a foreclosure by Beneficiary would be
necessary to clear the title to the Property.
In consequence of the foregoing and for the purposes of: (i)
protecting Beneficiary's security, both of repayment by Trustor and of value of
the Property; (ii) giving Beneficiary the full benefit of its bargain and
contract with Trustor; (iii) allowing Beneficiary to raise the interest rate
and/or collect assumption fees; and (iv) keeping the Property free of
subordinate financing liens, Trustor agrees that if the provisions of this
Section 33 are deemed to be a restraint on alienation, that the same is
reasonable, and that, except as provided in Section 4.7 of the Loan Agreement,
any sale, conveyance, assignment, further encumbrance or other transfer of title
to the Property or any interest therein (whether voluntary or by operation of
law) without Beneficiary's prior written consent shall be an Event of Default
hereunder. For the purpose of, and without limiting the generality of, the
preceding sentence, it shall be deemed to be an unpermitted transfer of title to
the Property and therefore an Event of Default hereunder, giving Beneficiary the
right at its election under Section 16 hereof, to declare immediately due and
payable the entire indebtedness secured hereby, if without Beneficiary's prior
written consent:
33.1 Trustor shall transfer, convey, alien, pledge, hypothecate
or mortgage the Property or any part thereof, or if Trustor shall contract for
or commit to any of the foregoing, except as provided in Section 4.7 of the Loan
Agreement; or
33.2 Any Affiliate of Trustor shall Transfer any interest in
Trustor in violation of the Loan Agreement; or
33.3 Trustor Transfers any development rights, "air" rights or
other rights to erect or alter any structure on all or any part of the Property,
or otherwise permits or suffers any such development rights or suffers any
change of the zoning of the Property or part thereof or interest therein or the
use which may be made thereof, or enters into any agreement contemplating any of
the foregoing.
Any consent by Beneficiary, or any waiver of an Event of Default, under this
Section 33 shall not constitute a consent to, or waiver of any right, remedy or
power of the Beneficiary upon a subsequent Event of Default under this Section
33.
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34. Captions; No Oral Changes. The cover page, the table of contents
and the captions and headings of various sections of this Deed of Trust are for
convenience only and are not to be construed as defining or limiting, in any
way, the scope or intent of the provisions hereof. This Deed of Trust may only
be modified or amended by an agreement in writing signed by Trustor and
Beneficiary, and may only be released, discharged or satisfied of record by an
agreement in writing signed by Beneficiary.
35. Security Agreement. As to all Property owned by Trustor
(collectively, the "Collateral") located upon or held in connection with the
Property which are of such a nature that, as to them, a security interest may be
created under the California Uniform Commercial Code, this Deed of Trust shall
also constitute a security agreement between Trustor, as debtor, and
Beneficiary, as secured party. As to the Collateral, the following provisions
shall apply:
35.1 Assignment. For valuable consideration, Trustor hereby
assigns to Beneficiary (and grants to Beneficiary, pursuant to Division 9 of the
California Commercial Code, a security interest in and to, and a lien upon) all
of Trustor's right, title and interest, whether now existing or hereafter
arising, in and to all of the Collateral, both tangible and intangible property
described in Section 35.2 below, as security for the prompt payment and
performance of each of the Secured Obligations.
35.2 Collateral. The Collateral consists of the following:
35.2.1 Except as may be owned by any Tenant of the
Property, Trustor's interest in all present and future inventory and equipment,
as those terms are defined in the Uniform Commercial Code as in effect in the
State of California, and all other present and future personal property of any
kind or nature whatsoever, now or hereafter located at, upon or about the
Property, or used or to be used in connection with or relating or arising with
respect to the Property and/or the use thereof or any improvements thereto,
including without limitation all present and further furniture, furnishings,
fixtures, goods, machinery, plumbing and plumbing material and supplies,
concrete, lumber, hardware, electrical wiring and electrical material and
supplies, heating and air conditioning material and supplies, roofing material
and supplies, window material and supplies, doors, paint, drywall, insulation,
cabinets, ceramic material and supplies, flooring, carpeting, appliance,
fencing, landscaping and all other materials, supplies and property of every
kind and nature.
35.2.2 Except as may be owned by any Tenant of the
Property, Trustor's interest in all present and future accounts, general
intangibles, chattel paper, contract rights, deposit accounts, instruments and
documents as those terms are defined in the Uniform Commercial Code as in effect
in the State of California, now or hereafter relating or arising with respect to
the Property and/or the use thereof or any improvements thereto, including
without limitation: (i) all rights to the payment of money, including escrow
proceeds arising out of the sale or other disposition of all or any portion of
the Property, and any accounts arising out of any business conducted on the
Property; (ii) all plans, specifications and drawings relating to the
development of the Property and/or any construction thereon; (iii) all use
permits, occupancy permits, construction and building permits, and all other
permits and approvals required by any governmental or quasi-governmental
authority in connection with the development, construction, use, occupancy or
operation of the Property; (iv) any and all agreements relating to the
development, construction, use, occupancy and/or operation of that Property
between manager or supervisor, architect, engineer, laborer or supplier of
materials; (v) all lease or rental agreements; (vi) all revenues from the
business conducted on the Property, of whatever nature; (vii) all names under
which the Property is now or hereafter known, and all rights to carry on
business under any such names or any variant thereof and any other fictitious
business names used by Trustor in connection with the Property or any business
conducted thereon; (viii) all trademarks relating to the Property and/or the
development, construction, use, occupancy or operation thereof; (ix) all
goodwill relating to the Property and/or the development, construction, use,
occupancy or operation thereof; (x) all insurance proceeds and condemnation
awards arising out of or incidental to the ownership, development, construction,
use, occupancy or operation of the Property; (xi) all reserves, deferred
payments, deposits, refunds, costs savings, bonds, insurance policies, insurance
premiums and insurance payments of any kind relating to the Property; (xii) all
loan commitments issued to Trustor in connection with any
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sale or financing of the Property; (xiii) all water stock, if any, relating to
any Property and all shares of stock or other evidence of ownership of any part
of or interest in any Property that is owned by Trustor in common with others;
(xiv) any manufacturers', builders' or others' guaranties or warranties of any
nature relating to Property or anything located on or relating to it; (xv) any
claim or chose in action with respect to any of the foregoing; and (xvi) all
supplements, modifications and amendments to the foregoing.
35.2.3 All fixtures located upon or within the Property
or now or hereafter attached to, installed in, or used or intended for use in
connection with the Property, including without limitation any and all
partitions, generators, screens, awnings, boilers, furnaces, pipes, plumbing,
elevators, cleaning, call and sprinkler systems, fire extinguishing apparatus
and equipment, water tanks, heating, ventilating, air conditioning and air
cooling equipment, and gas and electric machinery and equipment.
35.2.4 All present and future accessories, additions,
attachments, replacements and substitutions of or to any or all of the
foregoing.
35.2.5 All proceeds and products of any or all of the
foregoing, including without limitation all monies, deposit accounts, insurance
proceeds and other tangible or intangible property received upon a sale or other
disposition of any of the foregoing.
35.3 Representations and Warranties. Trustor hereby represents
and warrants that:
35.3.1 Trustor is the true and lawful owner of and has
good and marketable title to the Collateral, subject only to the rights of
Beneficiary under this Section 35.
35.3.2 Trustor's principal place of business and
accounting offices are located at the address specified in this document for the
service of notices upon Trustor.
35.4 Trustor hereby agrees that:
35.4.1 Prior to or simultaneously with Trustor's
execution hereof, Trustor will execute and deliver to Beneficiary, UCC-1
financing statements in form and substance satisfactory to Beneficiary and as
required by California law. Thereafter at any time and from time to time, upon
demand of Beneficiary, Trustor shall give, execute, acknowledge, file and record
any notice, financing statement, continuation statement, assignment, instrument,
document or agreement that Beneficiary reasonably deems necessary or desirable
to create, preserve, continue, perfect or validate any security interest
intended to be created under this Section 35 or to enable Beneficiary to enforce
its rights with respect to any such security interest.
35.4.2 Trustor shall notify Beneficiary prior to
changing its principal place of business and accounting offices from the
location referred to in Section 35.3.2 above.
35.4.3 Trustor shall at all times maintain the
Collateral in good condition and will from time to time make all needed and
proper replacements, repairs, renewals and improvements so that the value of the
Collateral is not impaired.
35.4.4 Trustor shall keep the Collateral free of all
liens, claims, security interests and encumbrances other than those described in
Section 35.3.1, above.
35.4.5 Notwithstanding Beneficiary's claim to proceeds,
Trustor shall not sell, lease or otherwise transfer or dispose of any material
amount of Collateral (and shall not permit any such act) unless Trustor promptly
replaces such items of Collateral with items of comparable value and quality.
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35.4.6 Trustor shall not, without Beneficiary's prior
written consent, remove any material amount of the Collateral from the Property
unless Trustor promptly replaces such items of Collateral with items of
comparable value and quality.
35.4.7 Trustor shall, at Trustor's own cost, defend any
and all actions, proceedings and claims affecting the Collateral, including
without limitation actions, proceedings and claims challenging Trustor's title
to the Collateral or the validity or priority of Beneficiary's security interest
under this Section 35.
35.4.8 Trustor shall promptly pay all taxes,
assessments, license fees and other public or private charges levied or assessed
against any Collateral or any promissory note (including the Note) evidencing
any debt secured hereunder.
35.4.9 Intentionally left blank.
35.4.10 Trustor shall not use any Collateral in
violation of any applicable law, rule or regulation now or hereafter applicable
to the Collateral or its use, including (without limitation) laws relating to
human health and safety and the protection of the environment. Trustor shall
cause any necessary alterations or improvements to the Collateral to put the
Collateral into compliance with any such law, rule or regulation.
35.4.11 All of the Collateral shall at all times remain
personal property, unless and to the extent that the same constitutes real
property or fixtures encumbered by the lien of the Deed of Trust.
35.4.12 Trustor shall fully perform all of its duties
with respect to the Collateral and shall diligently enforce all of the
Collateral and shall diligently enforce all of the obligations of each obligor
thereunder.
35.4.13 Trustor will at all times keep accurate and
complete records with respect to the Collateral and agrees that the
representatives of Beneficiary shall have the right, at any time during normal
business hours or at any other reasonable time, and from time to time, to call,
following reasonable notice, at Trustor's places of business where the
Collateral or any part thereof may be located or the records pertaining to the
Collateral may be kept and to inspect the Collateral and/or examine such records
and to make abstracts therefrom or copies thereof.
35.4.14 Monies received because of any court or
arbitration award or settlement or insurance payment, for any loss or damage to
the Collateral, and proceeds from any condemnation award or settlement relating
to the Collateral shall be treated as provided in the Deed of Trust for
recoveries relating to the property encumbered thereby.
35.4.15 As soon as practicable, and in any event within
10 days, Trustor shall notify Beneficiary of:
A. Any attachment or other legal process
levied against any of the Collateral in excess of $500,000;
B. Any information received by Trustor which
may in any manner materially and adversely affect the value of the Collateral or
the rights and remedies of Beneficiary with respect thereto; and
C. The removal of any material amount of the
Collateral to a new location and the removal of any records of Trustor relating
to the Collateral to any location other than that set forth in Section 35.3.2,
above.
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Any notice delivered pursuant to this Section 35.4.15 shall set forth the nature
of such event and the action which Trustor proposes to take with respect
thereto.
35.5 Events of Default. The occurrence of any Event of Default
under Section 15 of the Deed of Trust shall also constitute an Event of Default
for purposes of this Section 35.
35.6 Remedies. In the event of any Event of Default, Beneficiary
shall have all of the following rights and remedies with respect to the
Collateral, each of which may be exercised with or without further notice to
Trustor:
35.6.1 To notify and all obligors on any and all
accounts assigned hereunder (collectively, the "Accounts") that the Accounts
have been assigned to Beneficiary and/or that all payments on the Accounts are
to be made directly to Beneficiary;
35.6.2 To settle, compromise or release on terms accept
able to Beneficiary, in whole or in part, any amounts owing on any or all
Accounts;
35.6.3 To enforce payment and prosecute any action or
proceeding with respect to any and all Accounts;
35.6.4 To extend the time of payment, make allowances
and adjustments and issue credits with respect to Accounts in Beneficiary's
name;
35.6.5 To foreclose the liens and security interests
created under this Section 35 or under any other agreement relating to
any Collateral by any available judicial procedure or without judicial process;
35.6.6 To sell, assign, lease, or otherwise dispose of
the Collateral or any part thereof, either at public or private sale, in lots or
in bulk, for cash, on credit, or otherwise, with or without representations or
warranties, and upon such terms as shall be acceptable to Beneficiary, all at
Beneficiary's sole option and as Beneficiary may deem advisable in its sole
discretion;
35.6.7 To declare all Secured Obligations immediately
due and payable; and
35.6.8 To exercise any and all other rights and
remedies that Beneficiary may have in any jurisdiction where enforcement of this
Section 35 is sought, including without limitation all rights and remedies of a
secured party under any applicable section of the California Commercial Code.
Beneficiary shall have the right to enforce one or more of Beneficiary's
remedies successively or concurrently, and such action shall neither estop nor
prevent Beneficiary from pursuing any and all further remedies that it may have.
In the event that Trustor fails to perform any obligation set forth in this
Section 35, Beneficiary may, but shall not be obligated to, perform the same,
and the cost thereof shall be payable by Trustor on demand and shall bear
interest at the default rate of interest set forth in the Note. No failure on
the part of Beneficiary to exercise, and no delay in exercising, any right or
remedy shall operate as a waiver thereof or of any default, nor shall any single
or partial exercise of any right or remedy preclude any other or further
exercise thereof or the exercise of any other right or remedy.
35.7 Sale of Collateral. The following shall apply with respect to
any sale, assignment, lease or other disposition of the Collateral by
Beneficiary pursuant to Section 35.6, above.
35.7.1 Trustor shall, at Beneficiary's request,
assemble any and all Collateral and make it available to Beneficiary at such
places as Beneficiary designates that are reasonably convenient to both parties,
whether at the premises of Trustor or elsewhere, and shall make available to
Beneficiary all premises and
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facilities of Trustor for the purpose of Beneficiary's taking possession of the
Collateral or removing or putting the Collateral in saleable form.
35.7.2 If any Collateral requires repair, maintenance,
preparation or the like, or is in process or other unfurnished state,
Beneficiary shall have the right to perform all repairs, maintenance,
preparation and other processing and completion of manufacture required to put
the same in such saleable form as Beneficiary deems appropriate, but Beneficiary
shall also have the right to sell or dispose of such Collateral without any such
repairs, maintenance, preparation or processing.
35.7.3 Beneficiary shall give Trustor no less than five
(5) Business Days prior written notice of any such sale, assignment, lease or
other disposition. Trustor agrees that such notice is commercially reasonable
and Trustor hereby waives all other notices, demands and advertisements of any
kind.
35.7.4 Beneficiary may bid or purchase at any such sale,
if public, free from any right or redemption that Trustor may have, which right
of redemption is hereby waived, and Beneficiary may restrict the prospective
bidders or purchasers at any such sale to persons who will represent and warrant
that they are acquiring the Collateral for their own account and otherwise in
compliance with the federal Securities Act of 1933, as amended.
35.7.5 Because of present or future circumstances, a
question may arise under the federal Securities Act of 1933, as amended, as now
or hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such act and any such similar statute as from time to time in
effect being hereinafter called the "Federal Securities Laws") with respect to
any disposition of the Collateral. Trustor acknowledges that compliance with the
Federal Securities Laws may strictly limit Beneficiary's course of conduct in
disposing of all or any part of the Collateral and may also limit the extent to
which or the manner in which may subsequent transferee of the Collateral may
dispose of the same, and that there may be other legal restrictions or
limitations affecting Beneficiary in any attempts to dispose of all or any part
of the Collateral under applicable "Blue Sky" or other state securities laws or
similar laws analogous in purpose or effect.
35.8 Facilitation of Rights and Remedies. To facilitate the
exercise by Beneficiary of the rights and remedies set forth in this Section 35,
Trustor authorizes Beneficiary to exercise any or all of the following powers
following the occurrence of an Event of Default:
35.8.1 To enter any premises where any Collateral may
be located for the purpose of taking possession of or removing such Collateral,
to remove from any premises where any Collateral may be located the Collateral
and any and all documents, instruments, files and records relating to the
Collateral, and any receptacles and cabinets containing the same (it being
understood that the Collateral shall not include any property of Cadence or any
other tenant of the Property); and
35.8.2 To take or bring, in Beneficiary's name or in
the name of Trustor, all steps, actions, suits or proceedings deemed reasonably
necessary or desirable by Beneficiary to effect collection or to realize upon
Accounts and any other Collateral.
35.9 Application of Proceeds. The net cash proceeds resulting from
any collection, liquidation, sale or other disposition of the Collateral by
Beneficiary pursuant to this Section 35 shall be applied first to the expenses
(including reasonable attorneys' fees) of retaking, holding, storing,
processing, preparing for sale, selling, collecting, liquidating and the like,
and then to the satisfaction of other indebtedness and obligations owing by
Trustor to Beneficiary, application as to particular obligations or against
principal or interest to be in Beneficiary's absolute discretion.
35.10 Beneficiary's Costs and Expenses. Trustor shall reimburse
Beneficiary on demand for all costs and expenses (including attorneys' fees)
incurred by Beneficiary in connection with the enforcement of
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Beneficiary's rights under this Section 35, regardless of whether any suit is
filed, including without limitation all costs and expenses incurred in checking,
retaking, holding, handling, preparing for sale and selling or otherwise
disposing of any and all Collateral. Such reimbursement obligations shall bear
interest from the date of demand at the default rate of interest set forth in
the Note.
35.11 Obligations Unconditional. Trustor's obligation to perform
and observe the agreements and covenants contained in this Section 35 shall be
absolute and unconditional. Until such time as all Secured Obligations have been
fully paid and performed, Trustor (a) shall perform and observe all of its
agreements and covenants contained in this Section 35; and (b) shall not
terminate this security agreement for any cause, including without limitation
any acts or circumstances that may constitute failure of consideration,
destruction or, or damage to, the Collateral, commercial frustration of purpose,
any change in the laws of the United States of America or of the State of
California or any political subdivision of either, or any failure of Beneficiary
to perform or observe any agreement, whether express or implied, or any duty,
liability or obligation, arising out of or in connection with this Section 35 or
otherwise.
35.12 Non-liability of Beneficiary. Trustor hereby agrees that
neither Beneficiary's acceptance of the security interests granted under this
Section 35 nor any exercise by Beneficiary of its rights and remedies under this
Section 35 shall be deemed to be an assumption by Beneficiary of any of
Trustor's obligations and liabilities under the terms of any of the Collateral.
35.13 Miscellaneous Waivers. Presentment, protest, notice of
protest, notice of dishonor and notice of nonpayment are waived with respect to
any proceeds to which Beneficiary is entitled under this Section 35.
35.14 Successors and Assigns. Subject to any applicable
restrictions on assignment contained elsewhere in this document or in the Note,
this Section 35 shall bind, and shall inure to the benefit of, the respective
heirs, executors, administrators, successors and assigns of Trustor and
Beneficiary. The term "Beneficiary" shall include any holder or owner from time
to time (including any pledge or assignee) of the Note or any other Secured
Obligation.
35.15 Intentionally left blank.
35.16 Notices. All notices or communications herein required or
permitted to be given shall be in writing and shall be governed in all respects
by the notice provisions of the Note and Deed of Trust.
35.17 Definitions. Unless otherwise defined herein or in the Note,
words used in this Section 35 shall have the meanings given them in the
California Commercial Code.
36. Terms Subject to Applicable Law; Partial Invalidity; Maximum
Allowable Rate of Interest
36.1 Trustor and Beneficiary intend and believe that each
provision in this Deed of Trust comports with all applicable local, state and
federal Laws and judicial decisions. However, if any provision or provisions, or
if any portion of any provision or provisions, in this Deed of Trust is found by
a court of law to be in violation of any applicable local, state or federal
ordinance, statute, law, administrative or judicial decision, or public policy,
and if such court should declare such portion, provision or provisions of this
Deed of Trust to be illegal, invalid, unlawful, void or unenforceable as
written, then it is the intent both of Trustor and Beneficiary that such
portion, provision or provisions shall be given force to the fullest possible
extent that they are legal, valid and enforceable, and that the remainder of
this Deed of Trust and the Note shall be construed as if such illegal, invalid,
unlawful, void or unenforceable portion, provision or provisions were not
contained herein or therein, and that the rights, obligations and interests of
Trustor and Beneficiary under the remainder of this Deed of Trust shall continue
in full force and effect.
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36.2 All agreements herein and in the Note are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
advancement of the proceeds hereof, acceleration of maturity of the unpaid
principal balance of the Note, or otherwise, shall the amount paid or agreed to
be paid to the holders of the Note for the use, forbearance or detention of the
money to be advanced hereunder exceed the highest lawful rate permissible under
applicable usury laws. If, from any circumstances whatsoever, fulfillment of any
provision hereof or of the Note or any other agreement referred to herein, at
the time performance of such provision shall be due, shall involve transcending
the limit of validity prescribed by law which a court of competent jurisdiction
may deem applicable hereto, then, ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity and if from any circumstance the
holders of the Note shall ever receive as interest an amount which would exceed
the highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the unpaid principal balance due under the Note and
not to the payment of interest.
37. Further Assurances. Trustor and Beneficiary agree to do, and to
cause to be done, such further acts and things and to execute and deliver, or to
cause to be executed and delivered, such additional assignments, agreements,
powers and instruments, as any of them may reasonably require or deem advisable
to keep valid and effective the charges and lien hereof, to carry into effect
the purposes of this Deed of Trust or to better assure and confirm unto any of
them their rights, powers and remedies hereunder; and, upon request by
Beneficiary, Trustor shall supply evidence of fulfillment of each of the
covenants herein contained concerning which a request for such evidence has been
made.
38. Nonforeign Entity. Section 1445 of the Internal Revenue Code of
1986, as amended ("IRC") provides that a transferee of a U.S. real property
interest must withhold tax if the transferor is a foreign person. To inform
Beneficiary whether or not withholding of tax will be required in the event of
the disposition of the Property or the improvements constructed thereon pursuant
to the terms of this Deed of Trust, Trustor hereby certifies, under penalty of
perjury, that:
38.1 Trustor is not a foreign corporation, foreign partnership,
foreign trust or foreign estate, as those terms are defined in the IRC
and the regulations promulgated thereunder;
38.2 Trustor's U.S. employer identification number is
-----------
; and
38.3 Trustor's principal place of business is c/o Cadence Design
Systems, Inc., 555 River Oaks Parkway, San Jose, California 95134,
Attention: Treasurer.
It is understood that Beneficiary may disclose the contents of this
certification to the Internal Revenue Service, and that any false statement
contained herein could be punished by fine, imprisonment or both. Trustor
covenants and agrees to execute such further certificates, which shall be signed
under penalty of perjury, as Beneficiary shall reasonably require. The covenant
set forth herein shall survive the foreclosure of the lien of this Deed of Trust
or acceptance of a deed in lieu thereof.
39. Truth-in-Lending. Trustor represents and agrees that the obligation
secured hereby is an exempt transaction under the Truth-in-Lending Act, 15
U.S.C., Section 1601 et seq.
40. No Offsets. No offset or claim that Trustor now has or may have in
the future against Beneficiary shall relieve Trustor from paying any amounts due
under the Note or hereunder or from performing any other obligations contained
herein or secured hereby.
41. Declaration of Subordination. At the option of Beneficiary, this
Deed of Trust shall become subject and subordinate, in whole or in part (but not
with respect to priority of entitlement to insurance proceeds or any
Condemnation Proceeds), to any Lease of all or any part of the Property upon the
execution by Beneficiary and recording of a unilateral declaration to that
effect.
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42. Appointment of Successor Trustee. Trustee or any successor acting
hereunder may resign and thereupon be discharged of the trust created hereunder
upon 30 days' prior written notice to Beneficiary. Regardless of whether such
resignation occurs, Beneficiary may, from time to time, substitute a successor
or successors to any Trustee named herein or acting hereunder in accordance with
any statutory procedure for such substitution; or if Beneficiary, in its sole
discretion, so elects, and if permitted by law, Beneficiary may substitute such
successor or successors by recording, in the office of the recorder of the
county where the Property are located, a document executed by Beneficiary and
containing the name of the original Trustor and Beneficiary hereunder, the book
and page where this Deed of Trust is recorded (and/or instrument number, as
applicable) and the name of the new Trustee, which instrument shall be
conclusive proof of proper substitution of such successor Trustee or Trustees,
who shall, without conveyance from the predecessor Trustee, succeed to the
rights, powers and duties of the predecessor Trustee hereunder.
43. Governing Law. THIS DEED OF TRUST, THE NOTE, AND ALL OTHER
INSTRUMENTS EVIDENCING AND SECURING THE LOAN SECURED HEREBY WERE ENTERED INTO,
AND ARE TO BE PERFORMED IN, THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY AND
CONSTRUED UNDER THE INTERNAL LAWS (AS OPPOSED TO THE LAWS OF CONFLICTS) OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust on
the day and year first above written.
TRUSTOR: RIVER OAKS PLACE ASSOCIATES, L.P.,
a California limited partnership
By SEELEY PROPERTIES, INC.,
a California corporation
Its General Partner
By
---------------
Its
--------------
[Attach Notarial Acknowledgment]
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<PAGE> 83
STATE OF
--------------------
COUNTY OF
-------------------
On _____________, 199__, before me,_______________________ , personally appeared
_____, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature ___________________________
My commission expires: _____________
[seal]
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EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
All that certain property situate in the City of San Jose, County of Santa
Clara, State of California, described as follows:
Parcels 1 and 2, as shown on that Parcel Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on February 22,
1991, in Book 624 of Maps, page(s) 23 and 24.
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RECORDING REQUESTED BY:
AND AFTER RECORDING RETURN TO:
SONNENSCHEIN NATH & ROSENTHAL
601 SOUTH FIGUEROA STREET
SUITE 1500
LOS ANGELES, CALIFORNIA 90017
ATTENTION: CHARLES R. CAMPBELL, JR.
Space Above for Recorder's Use Only
ASSIGNMENT OF LEASES AND RENTS
Dated: As of May 31, 1996
in the amount of $20,000,000
MADE BY
RIVER OAKS PLACE ASSOCIATES, L.P.,
- TO -
CREDIT LYONNAIS NEW YORK BRANCH
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ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT OF LEASES AND RENTS (this "Assignment") is
made as of May __, 1996, by RIVER OAKS PLACE ASSOCIATES, L.P., a California
limited partnership, having an office address c/o Cadence Design Systems, Inc.,
555 River Oaks Parkway, San Jose, California 95134, Attention: Treasurer
("Assignor"), for the benefit of CREDIT LYONNAIS NEW YORK BRANCH, a branch,
licensed under the laws of the State of New York, of a banking corporation
organized under the laws of the Republic of France, having an office at Credit
Lyonnais Building, 1301 Avenue of the Americas, New York, New York 10019, and
its successors and assigns ("Assignee").
RECITALS:
A. Assignor and Assignee are parties to that certain Loan
Agreement of even date herewith (the "Loan Agreement"), pursuant to which
Assignee has agreed to make a loan to Assignor in the principal amount of
$20,000,000 (the "Loan"). All capitalized terms used but not defined in this
Assignment shall have the respective meanings given to them in the Loan
Agreement.
B. The Loan is to be secured by, among other things, the Deed
of Trust, which Deed of Trust encumbers, among other things, the real property
described on EXHIBIT A attached hereto, together with all improvements thereon
(collectively, the "Project"). The Project is and will be the subject of
"Leases" (as hereinafter defined) now or hereafter made by or on behalf of
Assignor, or the then owner of the Project, as landlord.
C. It is a condition precedent to Assignee's making the Loan
that Assignor assign, transfer and set over to Assignee, all right, title and
interest of Assignor in, to and under the Leases and the "Rents" (as hereinafter
defined), as additional security and collateral for the payment and performance
by Assignor of the Loan and all of Assignor's obligations under the Loan
Documents.
NOW, THEREFORE, Assignor, intending to be legally bound,
agrees as follows:
FOR VALUE RECEIVED, Assignor hereby assigns, transfers and
sets over to Assignee, all right, title and interest of Assignor in, to and
under the following:
(i) all leases, subleases, licenses, concessions, tenancies,
rental agreements, occupancy agreements and any other agreements demising,
leasing or otherwise creating the right of possession or right of use without
transfer of title, whether written or oral, now or hereafter existing, covering
all or any part of the Project, including, without limitation, those certain
leases of space in the Project, dated June 29, 1989, by and between Assignor and
Cadence Design Systems, Inc., a Delaware corporation, as may be supplemented or
amended from time to time with the prior written approval of Lender (all such
leases, subleases, licenses, concessions, tenancies, rental agreements,
occupancy agreements and any other agreements, together with all modifications,
extensions and renewals thereof, are collectively referred to herein as the
"Leases"), together with all the right, power and authority of Assignor to
alter, modify or change the terms of the Leases, or to surrender, cancel or
terminate the Leases;
(ii) all guarantees which may exist from time to time of the
obligations of the lessees (each a "Lessee" and collectively the "Lessees")
under the Leases; and
(iii) the immediate and continuing right to collect and
receive all of the rents, income, receipts, revenues, issues and profits now due
or which may become due, or to which Assignor may now or shall hereafter
(whether upon the expiration of any applicable period of redemption, or
otherwise) be or become entitled, or may demand or claim, arising or issuing
from or out of the Leases, of any guarantee thereof, or from or out of the
Project or any part thereof, or from any accounts into which the same may have
been or may be deposited, including, but not limited to: minimum rents,
additional rents, escalation rents, percentage rents, parking charges and fees,
tax and insurance contributions and deposits, payments in respect of and/or
proceeds from the sale of electricity, gas, chilled and heated water and other
utilities and services, deficiency rents, damages and/or liquidated damages
following default, premiums payable upon the exercise of a termination or
cancellation privilege provided for in any Lease and all proceeds payable under
any policy of insurance covering loss of rents
<PAGE> 87
or business interruption with respect to the Leases or the Project, together
with any and all rights and claims of any kind which Assignor now has or may
hereafter have against any Lessee under any Lease or any subtenants or occupants
of the Project (all of the foregoing being collectively hereinafter referred to
as "Rents").
IT IS THE INTENTION OF ASSIGNOR AND ASSIGNEE THAT THE
FOREGOING ASSIGNMENT ESTABLISH A PRESENT AND ABSOLUTE TRANSFER AND ASSIGNMENT TO
ASSIGNEE OF ALL LEASES AND RENTS.
IT IS FURTHER UNDERSTOOD AND AGREED THAT:
1. Subject to Section 5 below, Assignor hereby constitutes and
appoints Assignee and its successors and assigns and its agents and attorneys as
its true and lawful attorney, coupled with an interest, in the name, place and
stead of Assignor, with or without taking possession of the Project, personally
or by receiver (as provided in the Deed of Trust), at the option of Assignee at
any time and from time to time,
(a) to rent, lease or let all or any portion of the Project to
any party or parties at such rental and upon such terms as Assignee shall, in
its sole discretion, determine and to demand, sue for, attach, levy, settle,
compromise, recover, collect and receive all Rents and any premium or penalty
payable upon the exercise by any Lessee under any Lease of a privilege of
cancellation originally provided in such Lease and give proper receipts,
releases and acquittances therefor and to avail itself of and pursue all
remedies for the enforcement of the Leases and Assignor's rights in and under
the Leases, all in the same manner as Assignor might have done but for this
Assignment; and
(b) to subject and subordinate at any time and from time to
time any of the Leases or any part thereof to the lien and security interest of
the Deed of Trust or any other mortgage, deed of trust or security agreement on,
or to any ground lease, of the Project, or to request or require such
subordination, where such reservation, option or authority was reserved to
Assignor under any such Lease, or in any case where Assignor otherwise would
have the right, power or privilege so to do.
The foregoing appointment is irrevocable and continuing and
such rights, powers and privileges shall be exclusive in Assignee, its
successors and assigns so long as any part of the indebtedness secured by the
Deed of Trust remains unpaid and undischarged. Assignor hereby ratifies and
confirms all that its said attorneys or Assignee shall do or cause to be done by
virtue of the powers granted hereby.
2. Assignor represents and warrants to, and covenants with,
Assignee as follows: Assignor is the lessor, and possesses all of the rights of
the lessor, under each of the Leases; Assignor has not heretofore assigned or
pledged the Leases or Rents or any interest therein; as of the date hereof, the
Leases are in full force and effect; as of the date hereof, no default exists on
the part of Assignor, as lessor, or, to Assignor's knowledge, on the part of any
of the Lessees except as disclosed to Assignee, in the performance of the terms,
covenants, provisions or agreements in the Leases and Assignor knows of no
condition which, with the giving of notice or the passage of time, or both,
would constitute such a default except as disclosed to Assignee; no Rents have
been paid by any Lessee for more than one (1) month in advance; and the payment
of none of the Rents to accrue under the Leases has been or will be waived,
released, reduced, discounted or otherwise discharged or compromised by
Assignor.
3. Assignor agrees as follows:
(a) The Leases shall remain in full force and effect
irrespective of any merger of the interest of the
Lessor and Lessee thereunder;
(b) except in the ordinary course of business, or as
otherwise permitted under the Loan Agreement,
Assignor shall not in any material respect modify or
amend any Lease or any of the terms thereof, or grant
any concessions in connection therewith, either
orally or in writing, or accept a surrender thereof,
without, in each instance, the prior written consent
of Assignee, and any attempted material modification
or amendment, any grant of any concession or any
acceptance of a surrender of, or in respect of, any
of the Leases without such prior written consent
shall be null and void;
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(c) Assignor shall not collect any of the Rents arising
or accruing under any of the Leases in advance of the
time when the same become due, except as may be
permitted by the Deed of Trust;
(d) Assignor shall not discount any future accruing
Rents;
(e) Assignor shall not execute any other assignments of
any of the Leases or any interest therein or in any
of the Rents;
(f) Assignor shall perform all of Assignor's covenants
and agreements as lessor under the Leases;
(g) Assignor shall not suffer or permit to occur any
release of liability of any of the Lessees and shall
not permit any of the Lessees to withhold payment of
Rent;
(h) Assignor shall give prompt notices to Assignee of any
notice of default on the part of Assignor with
respect to any Lease received from the Lessee
thereunder, and shall furnish Assignee with complete
copies of said notices;
(i) Assignor shall, if so requested by Assignee, enforce
the Leases and all remedies available to Assignor
against the Lessees, in case of default under any of
the Leases by any of the Lessees;
(j) none of the rights or remedies of Assignee under the
Deed of Trust shall be delayed or in any way
prejudiced by this Assignment;
(k) notwithstanding any variation of the terms of the
Deed of Trust or any extension of time for payment
thereunder or any release of part or parts of the
real estate conveyed thereunder, the Leases and
benefits hereby assigned shall continue as additional
security in accordance with the terms of this
Assignment until the indebtedness secured hereby is
repaid in full;
(l) Assignor shall not in any material respect alter,
modify or change the terms of any guarantees of any
of the Leases or cancel or terminate such guarantees
without the prior written consent of Assignee;
(m) Assignor shall not consent to any assignments of any
of the Leases, or any subletting thereunder, without
the prior written consent of Assignee, except in
accordance with their respective terms and the terms
of the Loan Agreement;
(n) Assignor shall not request, consent to, agree to or
accept a subordination of any of the Leases to any
mortgage or other encumbrance now or hereafter
affecting the Project, except as provided in Section
6 below; and
(o) no Lease shall contain any right of first refusal or
option to purchase all or any portion of the Project.
4. This Assignment is given as additional security for the
payment of the Note, all sums due under the Loan Agreement and all other sums
secured by the Deed of Trust. The security of this Assignment is and shall be
primary and on a parity with the real estate conveyed by the Deed of Trust and
not secondary. All amounts collected hereunder, after deducting the expenses of
operation of the Project and after deducting the expenses of collection, shall
be applied on account of the indebtedness secured by the Deed of Trust and the
other Loan Documents, or in such other manner as may be provided for in the Deed
of Trust or the Loan Agreement, or in any general assignment of rents given as
additional security for said indebtedness.
5. Notwithstanding anything in this Assignment to the
contrary, but without limiting the generality of the present and absolute
assignment hereby established, it is expressly understood and agreed that, until
the occurrence of an Event of Default, Assignee shall not exercise any of the
rights or powers herein
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conferred upon it and Assignor shall have the right, under a license (revocable
under the terms of this Section ) granted hereby, and Assignee hereby grants to
Assignor such a revocable license, to collect, but not more than one (1) month
in advance, all of the Rents and to use and apply the Rents in any manner not
inconsistent with this Assignment, the Note, the Loan Agreement, the Deed of
Trust or any of the other Loan Documents, but only as trustee for the benefit of
Assignee. Upon the occurrence and during the continuance of an Event of Default,
the license granted hereby shall be revoked automatically (and without the
necessity of taking any action) and Assignee shall be entitled, upon notice to
Lessees, to all Rents and other amounts then due or thereafter accruing under
the Leases. This Assignment shall constitute a direction to and full authority
to Lessees to pay all such amounts to Assignee without proof of the default
relied upon. Lessees are hereby irrevocably authorized to rely upon and comply
with (and shall be fully protected in so doing) any notice or demand by Assignee
for the payment to Assignee of any rental or other sums which may be or
thereafter become due under the Leases, or any of them, or for the performance
of any of Lessees' undertakings under the Leases and shall have no right or duty
to inquire as to whether any default under the Deed of Trust has actually
occurred or is then existing.
6. Upon issuance of a deed or deeds pursuant to foreclosure of
the Deed of Trust, all right, title and interest of Assignor in and to the
Leases shall, by virtue of this instrument, thereupon vest in and become the
absolute property of the grantee or grantees in such deed or deeds without any
further act or assignment by Assignor.
7. In the exercise of the powers herein granted to Assignee,
no liability shall be asserted or enforced against Assignee, all such liability
being hereby expressly waived and released by Assignor, unless such liability
results from Assignee's acts constituting gross negligence or willful misconduct
on the part of Assignee or its employees or agents. Assignee shall not be
obligated to perform or discharge any obligation, duty or liability under any of
the Leases or under or by reason of this Assignment. Assignor shall and does
hereby agree to defend and indemnify Assignee and to hold it harmless of and
from any and all liability, loss or damage which it may or might incur under any
of the Leases or under or by reason of this Assignment and of and from any and
all claims and demands whatsoever which may be asserted against it by reason of
any alleged obligations or undertakings on its part to perform or discharge any
of the terms, covenants or agreements contained in any of the Leases, unless the
liability, loss or damage results from Assignee's acts constituting gross
negligence or willful misconduct on the part of Assignee. Should the Assignee
incur any such liability, loss or damage under any of the Leases or under or by
reason of this Assignment, other than liability, loss or damage arising from the
gross negligence or willful misconduct of Assignee or its employees or agents,
or in the defense of any such claims or demands, the amount thereof, including
costs, expenses and reasonable attorneys' fees, shall be secured by the Deed of
Trust and the other Loan Documents, and Assignor shall reimburse Assignee
therefor immediately upon demand.
8. The acceptance by Assignee of the assignment provided
herein, together with all of the rights, powers, privileges and authority
created herein or in the Deed of Trust, shall not, prior to entry upon and
taking possession of the Project by Assignee, be deemed or construed to
constitute Assignee as a trustee or "mortgagee-in-possession", nor thereafter or
at any time or in any event obligate Assignee to appear in or defend any action
or proceeding relating to the Leases, the Rents or the Project or to take any
action hereunder or to expend any money or incur any expenses or perform or
discharge any obligation, duty or liability under any Lease or to assume any
obligation or responsibility for any security deposits delivered to Assignor by
any Lessee, nor shall Assignee be liable in any way for any injury or damage to
person or property sustained by any person or persons, firm or corporation in or
about the Project, except for gross negligence or willful misconduct.
9. Any amounts received by Assignor or its agents for
performance of any actions prohibited by the terms of this Assignment, including
any amounts received in connection with any cancellation, modification or
amendment of any of the Leases prohibited by the terms of this Assignment, and
any amounts received by Assignor as Rents income, issues, or profits from the
Project from and after the occurrence of any Event of Default under the Loan
Agreement or under any of the other Loan Documents, shall be held by Assignor as
trustee for Assignee and all such amounts shall be accounted for to Assignee and
shall not be commingled with other funds of Assignor. Any person acquiring or
receiving all or any portion of such trust funds shall acquire or receive the
same in trust for Assignee as if such person had actual or constructive notice
that such funds were impressed with a trust in accordance herewith; by way of
example and not of limitation, such notice may be given by an instrument
recorded in the Office of the County Recorder for the County of Santa Clara,
State of California, stating that Assignor has received or will receive such
amounts in trust for Assignee.
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10. In the event any Lessee should be the subject of any
proceeding under the Federal Bankruptcy Code, as amended from time to time, or
any other federal, state, or local statute which provides for the possible
termination or rejection of the Leases assigned hereby, Assignor covenants and
agrees that if any of the Leases is so terminated or rejected, no settlement for
damages shall be made without the prior written consent of Assignee, and any
check in payment of damages for termination or rejection of any such lease will
be made payable both to Assignor and Assignee. Assignor hereby assigns any such
payment to Assignee and further covenants and agrees that upon the request of
Assignee, it will duly endorse to the order of Assignee any such check, the
proceeds of which will be applied to the indebtedness secured by this
Assignment.
11. This Assignment is intended to be supplementary to and not
in substitution for or in derogation of any assignment of rents to secure said
indebtedness contained in the Deed of Trust or in any other document. In the
event of any inconsistency between the terms and provisions of this Assignment
and the Deed of Trust, the terms and provisions of this Assignment shall govern;
provided, however, that it shall not be deemed an inconsistency that the rights
and remedies under the two agreements are not identical, in which case the terms
and provisions providing the maximum protection and benefit to Assignee shall
govern.
12. No remedy herein or in any of the other Loan Documents
conferred upon or reserved to Assignee is intended to be exclusive of any other
remedy or remedies, and each and every such remedy shall be cumulative, and
shall be in addition to every other remedy given hereunder and under the other
Loan Documents, or now or hereafter existing at law or in equity or by statute.
No delay or omission of Assignee in exercising any right or power granted
hereunder shall impair any such right or power, or shall be construed to be a
waiver of any default, or any acquiescence therein.
13. This Assignment shall include any extensions,
modifications and renewals of the Leases, and any reference herein to the Leases
shall be construed as including any such extensions, modifications and renewals.
14. This Assignment shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto. All
words and phrases shall be taken to include the singular or plural, and the
masculine, feminine or neuter gender, as may fit the case. This Assignment shall
be construed without regard to any presumption or rule requiring construction
against the party causing this instrument to be drafted.
15. THIS ASSIGNMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE LAWS OF CONFLICTS) OF THE
STATE OF CALIFORNIA, APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. TO THE GREATEST EXTENT
PERMITTED BY LAW, ASSIGNOR HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE
MARSHALLING OF ASSETS BY ASSIGNEE.
16. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING
TO THIS ASSIGNMENT, THE PROJECT OR ANY OTHER DOCUMENT EVIDENCING OR SECURING THE
LOAN (EACH, A "PROCEEDING"), ASSIGNOR AND ASSIGNEE IRREVOCABLY (A) SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA LOCATED IN
THE COUNTY OF SANTA CLARA AND THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF CALIFORNIA; AND (B) WAIVE ANY OBJECTION WHICH IT MAY HAVE AT ANY
TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVE
ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND
FURTHER WAIVE THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH
COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT
SHALL PRECLUDE ASSIGNEE FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR
WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE
BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION. ASSIGNOR AND ASSIGNEE
FURTHER AGREE AND CONSENT THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS
PROVIDED FOR UNDER
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APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY CALIFORNIA STATE
OR UNITED STATES COURT SITTING IN THE CITY OF SAN JOSE AND COUNTY OF SANTA CLARA
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED
TO ASSIGNOR OR ASSIGNEE AT THEIR RESPECTIVE ADDRESSES INDICATED ABOVE, AND
SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; PROVIDED, HOWEVER, THAT IF
DELIVERY SHALL BE REFUSED, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER
THE SAME SHALL HAVE BEEN SO MAILED.
17. All of the rights, powers, privileges and immunities
herein granted and assigned to Assignee shall also inure to its successors and
assigns, including all holders, from time to time, of the Note.
18. ASSIGNOR AND ASSIGNEE EACH HEREBY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS ASSIGNMENT OR ANY OTHER LOAN DOCUMENTS OR RELATING THERETO OR ARISING FROM
THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS ASSIGNMENT AND AGREE THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
IN WITNESS WHEREOF, Assignor has executed this Assignment as
of the date and year first written above.
ASSIGNOR:
RIVER OAKS PLACE ASSOCIATES, L.P.,
a California limited partnership
By SEELEY PROPERTIES, INC.,
a California corporation
Its General Partner
By
---------------
Its
--------------
[Attach Notarial Acknowledgment]
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STATE OF ___________
COUNTY OF __________________
On _______________, 1996, before me,__________________________________,
personally appeared _____, personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature _________________________________
My commission expires: __________________
[seal]
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EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
All that certain property situate in the City of San Jose, County of Santa
Clara, State of California, described as follows:
Parcels 1 and 2, as shown on that Parcel Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on February 22,
1991, in Book 624 of Maps, page(s) 23 and 24.
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ASSIGNMENT OF PARTNERSHIP INTERESTS
SEELEY PROPERTIES, INC.
THIS ASSIGNMENT OF PARTNERSHIP INTERESTS ("Assignment") made as of May
___, 1996, between SEELEY PROPERTIES, INC., a California corporation
("Assignor"), and CREDIT LYONNAIS NEW YORK BRANCH, a branch, licensed under the
laws of the State of New York, of a banking corporation organized under the laws
of The Republic of France, having an office at Credit Lyonnais Building, 1301
Avenue of the Americas, New York, New York 10019 ("Assignee"), its successors
and assigns.
R E C I T A L S:
A. RIVER OAKS PLACE ASSOCIATES, L.P., a California limited partnership
("Borrower"), and Assignee are parties to a certain Loan Agreement of even date
herewith (as the same may be amended from time to time, the "Loan Agreement"),
pursuant to which Assignee has agreed to make a loan to Borrower in the
principal amount of $20,000,000 (the "Loan"). All capitalized terms used but not
defined in this Assignment shall have the respective meanings given to them in
the Loan Agreement.
B. To evidence the Loan, Borrower has executed and delivered in favor
of Assignee a promissory note, of even date herewith (as the same may be amended
from time to time, the "Note"). To secure payment of the Note and the
performance of Borrower's obligations under the Loan Agreement, Borrower has
executed and delivered to Assignee, among other things, a Deed of Trust,
Security Agreement, Assignment of Leases and Rents, Fixture Filing and Financing
Statement, of even date herewith (as the same may be amended from time to time,
the "Deed of Trust"). The Deed of Trust is a first lien on the real property
described on Exhibit A annexed hereto and made a part hereof and all buildings
and other improvements now or hereafter located thereon (collectively, the
"Premises").
C. Assignor is the general partner of Borrower and will therefore
derive financial benefit from the making of the Loan.
D. As a condition to the making of the Loan, Assignee has required that
Assignor assign, transfer and set over to Assignee, and Assignor has agreed to
assign, transfer and set over to Assignee, all right, title and interest of
Assignor in and to its partnership interests in Borrower as additional security
and collateral for the payment and performance by Borrower of the Loan and all
of Borrower's obligations under the Loan Documents.
A G R E E M E N T:
Accordingly, the parties hereto agree as follows:
1. Definitions. As used herein, the term:
"Collateral" shall have the meaning ascribed thereto in
Section 3 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated
thereunder from time to time.
"Event of Default" shall have the meaning ascribed thereto in
Section 5 hereof.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder from time to time.
"Lien" shall mean any lien, pledge, charge, security interest
or encumbrance of any kind, including, without limitation, any
conditional sale agreement or other title retention agreement.
"Partnership Agreement" shall have the meaning ascribed to it
in Section 2(g) hereof.
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"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Secured Obligations" shall mean, collectively, the prompt
payment and performance in full when due, whether at stated maturity or
otherwise of all obligations of Borrower now existing or hereafter
arising under or in respect of the Loan.
"Transfer" shall have the meaning ascribed to it in Section
4(b) hereof.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State of California from time to time.
2. Representations and Warranties. Assignor represents and warrants to
Assignee that:
(a) Assignor is Borrower's sole general partner, and Assignor
owns a one percent (1%) interest in Borrower;
(b) Assignor is not insolvent and no litigation or proceedings
are pending, or to the best of Assignor's knowledge threatened, against
Assignor which if determined adversely to Assignor would, either
individually or in the aggregate, materially and adversely affect the
financial condition, business or affairs of Assignor;
(c) the Collateral is free of all Liens except for the
security interests granted to Assignee pursuant to this Assignment;
(d) neither the execution and delivery of this Assignment, the
assignment of the Collateral contained herein, the performance by
Assignor of its obligations and covenants hereunder, nor the exercise
by Assignee of its remedies hereunder do or will conflict with, cause a
default under or create a state of facts which, with notice or passage
of time, or both, would constitute a default under, (i) any document,
agreement, undertaking or obligation of Assignor or by which Assignor
is bound, (ii) the Partnership Agreement or any other agreements
creating or governing Borrower, or (iii) any agreement affecting the
Premises;
(e) no consent, approval or waiver of any Person is required
for the execution and delivery by Assignor of this Assignment or the
performance by Assignor of its obligations and covenants hereunder;
(f) Assignor has the right to assign the Collateral;
(g) the Agreement of Limited Partnership of RIVER OAKS PLACE
ASSOCIATES, L.P., a California limited partnership, dated as of April
1, 1996 (the "Partnership Agreement"), constitutes the only documents
creating or governing Borrower, and same has not been modified or
amended in any respect;
(h) none of the assets of Assignor are "plan assets" of any
employee benefit plan covered by ERISA or Section 4975 of the Internal
Revenue Code; and
(i) Assignor has a place of business at 555 River Oaks
Parkway, San Jose, California 95134.
3. Collateral. As collateral security for the prompt payment and
performance in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations, Assignor hereby assigns and grants to
Assignee a continuing first priority Lien on and security interest in and to (a)
its entire general partnership interest in Borrower, including, without
limitation, all of its voting rights, (b) all of its right, title and interest
in and to any and all distributions, profits, surplus, assets and capital of
Borrower, and (c) all of the proceeds of the foregoing (collectively, the
"Collateral").
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4. Covenants. Assignor hereby covenants to Assignee as follows:
(a) Assignor will not permit the Partnership Agreement to be
materially amended or modified without the written consent of Assignee,
which shall not be unreasonably withheld or delayed;
(b) Except as permitted in the Loan Agreement, Assignor shall
not sell, assign, pledge, grant a security interest in, transfer,
mortgage or otherwise hypothecate (any of the foregoing being referred
to herein as a "Transfer") any of the Collateral, or any interest
therein, or attempt to do so, nor permit or suffer to exist any levy,
judicial seizure, attachment, garnishment or other security interest
thereof or therein, without the written consent of Assignee;
(c) Except as expressly permitted by the terms of the Loan
Agreement, Assignor will not suffer or permit Borrower to sell or
assign or otherwise transfer, either in whole or in part, the Premises
or any interest therein;
(d) Assignor will pay promptly when due all taxes and
assessments upon or with respect to the Collateral (including, without
limitation, the income or profits therefrom), this Assignment or any
other agreement or instrument executed pursuant thereto or hereto;
(e) Assignor shall, at its sole cost and expense, defend the
Collateral against all claims and demands of all Persons other than
Assignee at any time claiming any interest in the Collateral;
(f) To the extent permitted by law, all rights of Assignee and
all obligations of Assignor hereunder shall be absolute and
unconditional irrespective of, and shall not in any manner be affected
or impaired by:
(i) any lack of validity or enforceability of the
Note, the Loan Agreement or any other Loan Document; or
(ii) any failure to perfect or continue perfection or
lack of priority of Assignee's security interest in any of the
Collateral or any other collateral security for the Secured
Obligations; or
(iii) the acceptance by Assignee or any other holder
of any of the Secured Obligations of any other security for or
guaranty of the Secured Obligations; or
(iv) except in connection with the full repayment of
the Loan, any sale, pledge, surrender, compromise, settlement,
release, renewal, extension, indulgence, alteration,
substitution, exchange, change in, modification or disposition
of any of the Secured Obligations, or of any collateral
security therefor, or of any guaranty thereof, or of the Note,
the Loan Agreement or any of the other Loan Documents executed
in connection therewith; or
(v) any change in the time, manner or place of
payment of, or any other term of, all or any portion of the
Secured Obligations; or
(vi) any failure, neglect or omission on the part of
Assignee or any other holder of any of the Secured Obligations
to realize upon or protect any of the Secured Obligations or
any collateral security therefor; or
(vii) any failure of Assignee to give notice of sale
or other disposition of the Collateral to any Person (except
Assignor) or any defect in any notice that may be given to any
Person (except Assignor) in connection with any sale or
disposition of Collateral; or
(viii) any other amendment, modification, extension
or waiver of, or consent to any departure from, the Note, the
Loan Agreement or any other security for the Secured
Obligations.
(g) Assignor shall give, execute, deliver, file and/or record
any financing statement, notice, instrument, document, agreement or
other papers that may be necessary or desirable (in the
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reasonable judgment of Assignee) to (i) create, preserve, perfect or
validate any security interest granted pursuant hereto, (ii) put third
parties on notice of the rights and obligations of the parties
hereunder, or (iii) enable Assignee to exercise and enforce its rights
hereunder with respect to such security interest after the occurrence
of an Event of Default, including, without limitation, causing any or
all of the Collateral to be transferred of record into the name of
Assignee or its nominee;
(h) Assignor shall, and shall cause Borrower to, keep full and
accurate books and records relating to the Collateral and stamp or
otherwise mark such books and records in such manner as Assignee may
reasonably require in order to reflect the security interest granted by
this Agreement;
(i) Assignor shall, and shall cause Borrower to, permit
representatives of Assignee, upon reasonable notice, at any time during
normal business hours to inspect and make abstracts of their books and
records pertaining to the Collateral, and permit representatives of
Assignee to be present at Assignor's and Borrower's places of business
to receive copies of all communications and remittances relating to the
Collateral, and forward copies of any notices or communications by
Assignor with respect to the Collateral, all in such manner as Assignee
may reasonably require;
(j) provided that no Event of Default shall have occurred,
Assignor shall have the right to exercise all voting, management and
other powers pertaining to the Collateral for all purposes not
inconsistent with the terms of this Assignment or any of the other Loan
Documents or any other document, instrument or agreement referred to
herein or therein;
(k) provided that the Event of Default Date shall not have
occurred, Assignor, subject always to the terms and conditions of the
Loan Agreement, the other Loan Documents, and any other agreements,
documents or instruments (including any guaranties or indemnities)
executed in connection therewith, shall be entitled to receive and
retain any distributions, profits, surplus, assets and capital of
Borrower; and
(l) upon the Event of Default Date and at any time thereafter,
and whether or not Assignee exercises any available right to declare
any Secured Obligation due and payable or seeks or pursues any other
relief or remedy available to it under applicable Law or under any
agreement relating to such Secured Obligation, all distributions,
profits, surplus, assets and capital of Borrower shall be paid directly
to Assignee and retained by Assignee as part of the Collateral, subject
to the terms of this Assignment, and, if Assignee shall so request in
writing, Assignor shall execute and deliver to Assignee appropriate
additional orders and documents to that end.
5. Events of Default. Assignor shall be in default under this
Assignment if any of the following events (each, an "Event of Default") shall
occur:
(a) any Event of Default as defined or delineated as such in
any of the other Loan Documents occurs under any such other Loan
Documents; or
(b) any default by Assignor in the observance or performance
of any obligation, covenant, condition or agreement hereof which is not
cured within thirty (30) days after written notice thereof from
Assignee, unless such default by its nature cannot be cured within such
thirty (30) day period, in which event the same shall not constitute an
Event of Default so long as Assignor commences the cure thereof within
such thirty (30) day period and diligently and in good faith prosecutes
such cure to completion within ninety (90) days after written notice
thereof from Assignee;
(c) if at any time or times hereafter any representation or
warranty made by Assignor herein proves to have been untrue, incorrect
or misleading in any material respect when made or delivered, unless,
if the representation or warranty is of a nature that can be made to be
true, correct or not misleading, Assignor duly notifies Assignee of
such fact and diligently proceeds to and does make such representation
or warranty true, correct and not misleading within (y) any applicable
grace period contained herein, or (z) if no grace period is provided
herein, within thirty (30) days; provided, however, that nothing herein
shall be deemed to extend any applicable grace period beyond the
Maturity Date; and
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(d) any of the Collateral is further encumbered, foreclosed or
levied upon, seized or attached and any such encumbrance, levy or
attachment is not terminated or otherwise removed within thirty (30)
days after notice thereof from Assignee; provided, however, it shall be
an immediate Event of Default if any Assignor voluntarily grants or
enters into any such encumbrance; or
(e) there is a Transfer of all or any portion of the
Collateral except as may be permitted hereunder or under the Loan
Agreement.
6. Remedies Upon Default. From and after the occurrence of an Event of
Default:
(a) Assignee shall have all of the rights and remedies with
respect to the Collateral of a secured party under the Uniform
Commercial Code (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted, including, without limitation, the
right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral,
as if Assignee were the sole and absolute owner thereof (and Assignor
agrees to take all such action as may be appropriate to give effect to,
and to refrain from taking any action inconsistent with, such right);
(b) Assignee shall have all and any of its other rights and
remedies pursuant to the Loan Agreement and the other Loan Documents;
and
(c) all rights and remedies hereunder, or under the Loan
Agreement or any of the other Loan Documents, or under any agreement,
document or instrument executed pursuant thereto, shall be cumulative
and shall be in addition to any other rights and remedies of Assignee
under applicable Law or otherwise.
7. Assignee Not a Partner. Nothing in this Assignment shall be deemed
to constitute Assignee a partner in Borrower with respect to Assignor's
partnership interests in Borrower or to impose on Assignee any liability or
responsibility whatsoever in connection with the Collateral or Assignor's
obligations with respect to the Collateral.
8. Termination. When all Secured Obligations shall have been paid in
full, this Assignment shall terminate, and Assignee shall forthwith cause to be
assigned, transferred and delivered, against receipt but without any recourse,
warranty or representation whatsoever, any remaining Collateral, including money
received in respect thereof, to or on the order of Assignor. Assignee shall also
execute and deliver to Assignor upon such termination such Uniform Commercial
Code termination statements and such other documentation as shall be reasonably
requested by Assignor to effect the termination and release of the Liens on the
Collateral.
9. Expenses. Assignor agrees to pay to Assignee on demand all
out-of-pocket expenses (including expenses for legal services of every kind) of,
or incident to, the enforcement of any of the provisions hereof, or performance
by Assignee of any obligations of Assignor in respect of the Collateral which
Assignor has failed or refused to perform, or any actual or attempted sale, or
any exchange, enforcement, collection, compromise or settlement in respect of
any of the Collateral, or for the care of the Collateral and defending or
asserting rights and claims of Assignee in respect thereof, by litigation or
otherwise, including expenses of insurance, and, until so paid, all such
expenses shall be Secured Obligations, the payment of which is secured by this
Assignment and the other Loan Documents.
10. Further Assurances. Assignor agrees that, from time to time upon
the written request of Assignee, Assignor will execute and deliver such further
documents and do such other acts and things as Assignee may reasonably request
in order fully to effect the purposes of this Assignment.
11. No Waiver. No failure on the part of Assignee or any of its agents
to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by Assignee or any of its
agents of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder
or under the Loan Agreement or any of the other Loan Documents. The remedies
herein are cumulative and are not exclusive of any remedies provided in the
other Loan Documents, at law or in equity.
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12. GOVERNING LAW. THIS ASSIGNMENT IS ENTERED INTO AND IS TO BE
PERFORMED IN THE STATE OF CALIFORNIA, AND SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE INTERNAL LAWS (AS OPPOSED TO THE LAWS OF CONFLICTS) OF THE STATE OF
CALIFORNIA.
13. Notices. Any notice, demand, request or other communication which
any party hereto may be required or may desire to give hereunder shall be in
writing and shall be deemed to have been properly given and received: (a) if
hand delivered, on the day so delivered to the address set forth below; (b) if
mailed, on the third Business Day after the day on which it is deposited in the
United States mails in the continental United States, registered or certified
mail, postage prepaid, return receipt requested, addressed as set forth below;
(c) if by Federal Express or other reputable express courier service, on the
next Business Day after delivery to such express courier service, addressed as
set forth below; or (d) if by telecopy transmission, on the day and at the time
on which delivered to such party at the address and the telecopier number set
forth below; provided, if by telecopy transmission, a hardcopy is transmitted
concurrently by one of the other means allowed under this section:
If to any Assignor:
c/o Cadence Design Systems, Inc.
Seeley Properties, Inc.
2655 Seely Road, Building 5, MS 5B2
San Jose, California 95134
Telephone:
Telecopier:
Attention: Treasurer
with a copy to:
Cooley Godward Castro Huddleson & Tatum
One Maritime Plaza
20th Floor
San Francisco, California 94111-3580
Telephone: 415-693-2000
Telecopier: 415-951-3699
Attention: Felice Liang, Esq.
If to Assignee:
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019-6092
Telephone: (212) 261-7000
Telecopier: (212) 261-7890
Attention: Real Estate Group
with copies to:
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019-6092
Telephone: (212) 261-7050
Telecopier: (212) 459-3187
Attention: Legal Department
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and:
Sonnenschein Nath & Rosenthal
601 South Figueroa Street
15th Floor
Los Angeles, California 90017
Telephone: (213) 623-9300
Telecopier: (213) 623-9924
Attention: Charles R. Campbell, Jr., Esq.
and:
Sonnenschein Nath & Rosenthal
1221 Avenue of the Americas
24th Floor
New York, New York 10020-1089
Telephone: (212) 768-6700
Telecopier: (212) 391-1247
Attention: Mark R. Lehrer, Esq.
or at such other address or to such other addressee as the party to be served
with notice may have furnished in writing to the party seeking or desiring to
serve notice as a place for the service of notice. Notices shall be deemed to
have been rendered or given on the date received or on the date they are deemed
to be received as hereinafter set forth. The inability to deliver notices
because of changed address of which no notice was given, or rejection or refusal
to accept any notice offered for delivery, shall be deemed to be receipt of the
notice on the date of such inability to deliver or rejection or refusal to
accept delivery.
14. Waivers. The terms of this Assignment may be waived, altered or
amended only by an instrument in writing duly executed by Assignor and Assignee.
15. Successors and Assigns. This Assignment shall be binding upon and
inure to the benefit of the respective heirs, executors, legal and personal
representatives, successors and assigns of Assignor, Assignee and each holder of
the Secured Obligations (provided, however, that Assignor shall not, except as
permitted in the Loan Agreement, assign or transfer its rights or delegate their
obligations hereunder without the prior written consent of Assignee, which shall
not be unreasonably withheld or delayed).
16. Counterparts. This Assignment may be executed in any number of
counterparts, all of which together shall constitute one and the same instrument
and any of the parties hereto may execute this Assignment by signing any such
counterpart.
17. Severability. Assignor and Assignee intend and believe that each
provision in this Assignment comports with all applicable Laws. However, if any
provision or provisions, or if any portion of any provision or provisions, in
this Assignment is found by a court of law to be in violation of any applicable
Law or public policy, and if such court declares such portion, provision, or
provisions of this Assignment to be illegal, invalid, unlawful, void or
unenforceable as written, as such portion, provision or provisions apply to any
party hereto or any other person or entity, then it is the intent both Assignor
and Assignee that such portion, provision, or provisions shall be given force
and shall be applied to all persons and entities to the fullest possible extent
that they are legal, valid and enforceable, and that the remainder of this
Assignment shall be construed as if such illegal, invalid, unlawful, void, or
unenforceable portion, provision, or provisions were not contained herein, that
the enforceability or validity of such portion, provision or provisions of this
Assignment as applied to any person or entity, other than those as to whom the
application of such portion, provision or provisions is determined to be
illegal, invalid, unlawful, void or enforceable, will not be affected, and that
the rights, obligations, and interests of Assignor and Assignee under the
remainder of this Assignment shall continue in full force and effect.
18. JURISDICTION; SERVICE OF PROCESS. WITH RESPECT TO ANY SUIT, ACTION
OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE PROJECT OR ANY OTHER LOAN
DOCUMENT (EACH, A "PROCEEDING"), BORROWER AND LENDER IRREVOCABLY (A) SUBMIT TO
THE NON-EXCLUSIVE JURISDICTION OF THE
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COURTS OF THE STATE OF CALIFORNIA LOCATED IN THE COUNTY OF SANTA CLARA AND THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA; AND (B)
WAIVE ANY OBJECTION WHICH THEY MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF
ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVE ANY CLAIM THAT ANY PROCEEDING
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVE THE RIGHT TO OBJECT,
WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER
SUCH PARTY. NOTHING IN THIS AGREEMENT SHALL PRECLUDE LENDER FROM BRINGING A
PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN
ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER
JURISDICTION. BORROWER AND LENDER FURTHER AGREE AND CONSENT THAT, IN ADDITION TO
ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE
OF PROCESS IN ANY PROCEEDING IN ANY CALIFORNIA STATE OR UNITED STATES COURT
SITTING IN THE CITY OF SAN JOSE AND COUNTY OF SANTA CLARA MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER OR
LENDER AT THEIR RESPECTIVE ADDRESSES INDICATED ABOVE, AND SERVICE SO MADE SHALL
BE COMPLETE UPON RECEIPT; PROVIDED, HOWEVER, THAT IF DELIVERY IS REFUSED,
SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
MAILED.
19. Loan Agreement Controls. Any provision in the Loan Agreement that
pertains to this Assignment shall be deemed to be incorporated herein as if such
provision were fully set forth in this Assignment. In the event of any conflict
between the terms of this Assignment and the terms of the Loan Agreement, the
terms of the Loan Agreement shall prevail. A provision in this Assignment shall
not be deemed to be inconsistent with the Loan Agreement by reason of the fact
that no provision in the Loan Agreement covers such provision in this
Assignment.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment of
Partnership Interests to be duly executed as of the day and year first above
written.
ASSIGNOR:
SEELEY PROPERTIES, INC.,
a California corporation
By
----------------------
Its
---------------------
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EXHIBIT A
The Premises
All that certain property situate in the City of San Jose, County of Santa
Clara, State of California, described as follows:
Parcels 1 and 2, as shown on that Parcel Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on February 22,
1991, in Book 624 of Maps, page(s) 23 and 24.
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ASSIGNMENT OF PARTNERSHIP INTERESTS
CADENCE DESIGN SYSTEMS, INC.
THIS ASSIGNMENT OF PARTNERSHIP INTERESTS ("Assignment") made as of May
___, 1996, between CADENCE DESIGN SYSTEMS, INC., a Delaware corporation
("Assignor"), and CREDIT LYONNAIS NEW YORK BRANCH, a branch, licensed under the
laws of the State of New York, of a banking corporation organized under the laws
of The Republic of France, having an office at Credit Lyonnais Building, 1301
Avenue of the Americas, New York, New York 10019 ("Assignee"), its successors
and assigns.
R E C I T A L S:
A. RIVER OAKS PLACE ASSOCIATES, L.P., a California limited partnership
("Borrower"), and Assignee are parties to a certain Loan Agreement of even date
herewith (as the same may be amended from time to time, the "Loan Agreement"),
pursuant to which Assignee has agreed to make a loan to Borrower in the
principal amount of $20,000,000 (the "Loan"). All capitalized terms used but not
defined in this Assignment shall have the respective meanings given to them in
the Loan Agreement.
B. To evidence the Loan, Borrower has executed and delivered in favor
of Assignee a promissory note, of even date herewith (as the same may be amended
from time to time, the "Note"). To secure payment of the Note and the
performance of Borrower's obligations under the Loan Agreement, Borrower has
executed and delivered to Assignee, among other things, a Deed of Trust,
Security Agreement, Assignment of Leases and Rents, Fixture Filing and Financing
Statement, of even date herewith (as the same may be amended from time to time,
the "Deed of Trust"). The Deed of Trust is a first lien on the real property
described on Exhibit A annexed hereto and made a part hereof and all buildings
and other improvements now or hereafter located thereon (collectively, the
"Premises").
C. Assignor is the limited partner of Borrower and will therefore
derive financial benefit from the making of the Loan.
D. As a condition to the making of the Loan, Assignee has required that
Assignor assign, transfer and set over to Assignee, and Assignor has agreed to
assign, transfer and set over to Assignee, all right, title and interest of
Assignor in and to its partnership interests in Borrower as additional security
and collateral for the payment and performance by Borrower of the Loan and all
of Borrower's obligations under the Loan Documents.
A G R E E M E N T:
Accordingly, the parties hereto agree as follows:
1. Definitions. As used herein, the term:
"Collateral" shall have the meaning ascribed thereto in
Section 3 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated
thereunder from time to time.
"Event of Default" shall have the meaning ascribed thereto in
Section 5 hereof.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder from time to time.
"Lien" shall mean any lien, pledge, charge, security interest
or encumbrance of any kind, including, without limitation, any
conditional sale agreement or other title retention agreement.
"Partnership Agreement" shall have the meaning ascribed to it
in Section 2(g) hereof.
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"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust,
unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).
"Secured Obligations" shall mean, collectively, the prompt
payment and performance in full when due, whether at stated maturity or
otherwise of all obligations of Borrower now existing or hereafter
arising under or in respect of the Loan.
"Transfer" shall have the meaning ascribed to it in Section
4(b) hereof.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State of California from time to time.
2. Representations and Warranties. Assignor represents and warrants to
Assignee that:
(a) Assignor is Borrower's sole limited partner, and Assignor
owns a ninety-nine percent (99%) interest in Borrower;
(b) Assignor is not insolvent and no litigation or proceedings
are pending, or to the best of Assignor's knowledge threatened, against
Assignor which if determined adversely to Assignor would, either
individually or in the aggregate, materially and adversely affect the
financial condition, business or affairs of Assignor;
(c) the Collateral is free of all Liens except for the
security interests granted to Assignee pursuant to this Assignment;
(d) neither the execution and delivery of this Assignment, the
assignment of the Collateral contained herein, the performance by
Assignor of its obligations and covenants hereunder, nor the exercise
by Assignee of its remedies hereunder do or will conflict with, cause a
default under or create a state of facts which, with notice or passage
of time, or both, would constitute a default under, (i) any document,
agreement, undertaking or obligation of Assignor or by which Assignor
is bound, (ii) the Partnership Agreement or any other agreements
creating or governing Borrower, or (iii) any agreement affecting the
Premises;
(e) no consent, approval or waiver of any Person is required
for the execution and delivery by Assignor of this Assignment or the
performance by Assignor of its obligations and covenants hereunder;
(f) Assignor has the right to assign the Collateral;
(g) the Agreement of Limited Partnership of RIVER OAKS PLACE
ASSOCIATES, L.P., a California limited partnership, dated as of April
1, 1996 (the "Partnership Agreement"), constitutes the only documents
creating or governing Borrower, and same has not been modified or
amended in any respect;
(h) none of the assets of Assignor are "plan assets" of any
employee benefit plan covered by ERISA or Section 4975 of the Internal
Revenue Code; and
(i) Assignor has a place of business at 555 River Oaks
Parkway, San Jose, California 95134.
3. Collateral. As collateral security for the prompt payment and
performance in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations, Assignor hereby assigns and grants to
Assignee a continuing first priority Lien on and security interest in and to (a)
its entire limited partnership interest in Borrower including, without
limitation, all of its voting rights, (b) all of its right, title and interest
in and to any and all distributions, profits, surplus, assets and capital of
Borrower, and (c) all of the proceeds of the foregoing (collectively, the
"Collateral").
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4. Covenants. Assignor hereby covenants to Assignee as follows:
(a) Assignor will not permit the Partnership Agreement to be
materially amended or modified without the written consent of Assignee,
which shall not be unreasonably withheld or delayed;
(b) Except as permitted in the Loan Agreement, Assignor shall
not sell, assign, pledge, grant a security interest in, transfer,
mortgage or otherwise hypothecate (any of the foregoing being referred
to herein as a "Transfer") any of the Collateral, or any interest
therein, or attempt to do so, nor permit or suffer to exist any levy,
judicial seizure, attachment, garnishment or other security interest
thereof or therein, without the written consent of Assignee;
(c) Except as expressly permitted by the terms of the Loan
Agreement, Assignor will not suffer or permit Borrower to sell or
assign or otherwise transfer, either in whole or in part, the Premises
or any interest therein;
(d) Assignor will pay promptly when due all taxes and
assessments upon or with respect to the Collateral (including, without
limitation, the income or profits therefrom), this Assignment or any
other agreement or instrument executed pursuant thereto or hereto;
(e) Assignor shall, at its sole cost and expense, defend the
Collateral against all claims and demands of all Persons other than
Assignee at any time claiming any interest in the Collateral;
(f) To the extent permitted by law, all rights of Assignee and
all obligations of Assignor hereunder shall be absolute and
unconditional irrespective of, and shall not in any manner be affected
or impaired by:
(i) any lack of validity or enforceability of the
Note, the Loan Agreement or any other Loan Document; or
(ii) any failure to perfect or continue perfection or
lack of priority of Assignee's security interest in any of the
Collateral or any other collateral security for the Secured
Obligations; or
(iii) the acceptance by Assignee or any other holder
of any of the Secured Obligations of any other security for or
guaranty of the Secured Obligations; or
(iv) except in connection with the full repayment of
the Loan, any sale, pledge, surrender, compromise, settlement,
release, renewal, extension, indulgence, alteration,
substitution, exchange, change in, modification or disposition
of any of the Secured Obligations, or of any collateral
security therefor, or of any guaranty thereof, or of the Note,
the Loan Agreement or any of the other Loan Documents executed
in connection therewith; or
(v) any change in the time, manner or place of
payment of, or any other term of, all or any portion of the
Secured Obligations; or
(vi) any failure, neglect or omission on the part of
Assignee or any other holder of any of the Secured Obligations
to realize upon or protect any of the Secured Obligations or
any collateral security therefor; or
(vii) any failure of Assignee to give notice of sale
or other disposition of the Collateral to any Person (except
Assignor) or any defect in any notice that may be given to any
Person (except Assignor) in connection with any sale or
disposition of Collateral; or
(viii) any other amendment, modification, extension
or waiver of, or consent to any departure from, the Note, the
Loan Agreement or any other security for the Secured
Obligations.
(g) Assignor shall give, execute, deliver, file and/or record
any financing statement, notice, instrument, document, agreement or
other papers that may be necessary or desirable (in the
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reasonable judgment of Assignee) to (i) create, preserve, perfect or
validate any security interest granted pursuant hereto, (ii) put third
parties on notice of the rights and obligations of the parties
hereunder, or (iii) enable Assignee to exercise and enforce its rights
hereunder with respect to such security interest after the occurrence
of an Event of Default, including, without limitation, causing any or
all of the Collateral to be transferred of record into the name of
Assignee or its nominee;
(h) Assignor shall, and shall cause Borrower to, keep full and
accurate books and records relating to the Collateral and stamp or
otherwise mark such books and records in such manner as Assignee may
reasonably require in order to reflect the security interest granted by
this Agreement;
(i) Assignor shall, and shall cause Borrower to, permit
representatives of Assignee, upon reasonable notice, at any time during
normal business hours to inspect and make abstracts of their books and
records pertaining to the Collateral, and permit representatives of
Assignee to be present at Assignor's and Borrower's places of business
to receive copies of all communications and remittances relating to the
Collateral, and forward copies of any notices or communications by
Assignor with respect to the Collateral, all in such manner as Assignee
may reasonably require;
(j) provided that no Event of Default shall have occurred,
Assignor shall have the right to exercise all voting, management and
other powers pertaining to the Collateral for all purposes not
inconsistent with the terms of this Assignment or any of the other Loan
Documents or any other document, instrument or agreement referred to
herein or therein;
(k) provided that the Event of Default Date shall not have
occurred, Assignor, subject always to the terms and conditions of the
Loan Agreement, the other Loan Documents, and any other agreements,
documents or instruments (including any guaranties or indemnities)
executed in connection therewith, shall be entitled to receive and
retain any distributions, profits, surplus, assets and capital of
Borrower; and
(l) upon the Event of Default Date and at any time thereafter,
and whether or not Assignee exercises any available right to declare
any Secured Obligation due and payable or seeks or pursues any other
relief or remedy available to it under applicable Law or under any
agreement relating to such Secured Obligation, all distributions,
profits, surplus, assets and capital of Borrower shall be paid directly
to Assignee and retained by Assignee as part of the Collateral, subject
to the terms of this Assignment, and, if Assignee shall so request in
writing, Assignor shall execute and deliver to Assignee appropriate
additional orders and documents to that end.
5. Events of Default. Assignor shall be in default under this
Assignment if any of the following events (each, an "Event of Default") shall
occur:
(a) any Event of Default as defined or delineated as such in
any of the other Loan Documents occurs under any such other Loan
Documents; or
(b) any default by Assignor in the observance or performance
of any obligation, covenant, condition or agreement hereof which is not
cured within thirty (30) days after written notice thereof from
Assignee, unless such default by its nature cannot be cured within such
thirty (30) day period, in which event the same shall not constitute an
Event of Default so long as Assignor commences the cure thereof within
such thirty (30) day period and diligently and in good faith prosecutes
such cure to completion within ninety (90) days after written notice
thereof from Assignee;
(c) if at any time or times hereafter any representation or
warranty made by Assignor herein proves to have been untrue, incorrect
or misleading in any material respect when made or delivered, unless,
if the representation or warranty is of a nature that can be made to be
true, correct or not misleading, Assignor duly notifies Assignee of
such fact and diligently proceeds to and does make such representation
or warranty true, correct and not misleading within (y) any applicable
grace period contained herein, or (z) if no grace period is provided
herein, within thirty (30) days; provided, however, that nothing herein
shall be deemed to extend any applicable grace period beyond the
Maturity Date; and
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(d) any of the Collateral is further encumbered, foreclosed or
levied upon, seized or attached and any such encumbrance, levy or
attachment is not terminated or otherwise removed within thirty (30)
days after notice thereof from Assignee; provided, however, it shall be
an immediate Event of Default if any Assignor voluntarily grants or
enters into any such encumbrance; or
(e) there is a Transfer of all or any portion of the
Collateral except as may be permitted hereunder or under the Loan
Agreement.
6. Remedies Upon Default. From and after the occurrence of an Event of
Default:
(a) Assignee shall have all of the rights and remedies with
respect to the Collateral of a secured party under the Uniform
Commercial Code (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted, including, without limitation, the
right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral,
as if Assignee were the sole and absolute owner thereof (and Assignor
agrees to take all such action as may be appropriate to give effect to,
and to refrain from taking any action inconsistent with, such right);
(b) Assignee shall have all and any of its other rights and
remedies pursuant to the Loan Agreement and the other Loan Documents;
and
(c) all rights and remedies hereunder, or under the Loan
Agreement or any of the other Loan Documents, or under any agreement,
document or instrument executed pursuant thereto, shall be cumulative
and shall be in addition to any other rights and remedies of Assignee
under applicable Law or otherwise.
7. Assignee Not a Partner. Nothing in this Assignment shall be deemed
to constitute Assignee a partner in Borrower with respect to Assignor's
partnership interests in Borrower or to impose on Assignee any liability or
responsibility whatsoever in connection with the Collateral or Assignor's
obligations with respect to the Collateral.
8. Termination. When all Secured Obligations shall have been paid in
full, this Assignment shall terminate, and Assignee shall forthwith cause to be
assigned, transferred and delivered, against receipt but without any recourse,
warranty or representation whatsoever, any remaining Collateral, including money
received in respect thereof, to or on the order of Assignor. Assignee shall also
execute and deliver to Assignor upon such termination such Uniform Commercial
Code termination statements and such other documentation as shall be reasonably
requested by Assignor to effect the termination and release of the Liens on the
Collateral.
9. Expenses. Assignor agrees to pay to Assignee on demand all
out-of-pocket expenses (including expenses for legal services of every kind) of,
or incident to, the enforcement of any of the provisions hereof, or performance
by Assignee of any obligations of Assignor in respect of the Collateral which
Assignor has failed or refused to perform, or any actual or attempted sale, or
any exchange, enforcement, collection, compromise or settlement in respect of
any of the Collateral, or for the care of the Collateral and defending or
asserting rights and claims of Assignee in respect thereof, by litigation or
otherwise, including expenses of insurance, and, until so paid, all such
expenses shall be Secured Obligations, the payment of which is secured by this
Assignment and the other Loan Documents.
10. Further Assurances. Assignor agrees that, from time to time upon
the written request of Assignee, Assignor will execute and deliver such further
documents and do such other acts and things as Assignee may reasonably request
in order fully to effect the purposes of this Assignment.
11. No Waiver. No failure on the part of Assignee or any of its agents
to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by Assignee or any of its
agents of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder
or under the Loan Agreement or any of the other Loan Documents. The remedies
herein are cumulative and are not exclusive of any remedies provided in the
other Loan Documents, at law or in equity.
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12. GOVERNING LAW. THIS ASSIGNMENT IS ENTERED INTO AND IS TO BE
PERFORMED IN THE STATE OF CALIFORNIA, AND SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE INTERNAL LAWS (AS OPPOSED TO THE LAWS OF CONFLICTS) OF THE STATE OF
CALIFORNIA.
13. Notices. Any notice, demand, request or other communication which
any party hereto may be required or may desire to give hereunder shall be in
writing and shall be deemed to have been properly given and received: (a) if
hand delivered, on the day so delivered to the address set forth below; (b) if
mailed, on the third Business Day after the day on which it is deposited in the
United States mails in the continental United States, registered or certified
mail, postage prepaid, return receipt requested, addressed as set forth below;
(c) if by Federal Express or other reputable express courier service, on the
next Business Day after delivery to such express courier service, addressed as
set forth below; or (d) if by telecopy transmission, on the day and at the time
on which delivered to such party at the address and the telecopier number set
forth below; provided, if by telecopy transmission, a hardcopy is transmitted
concurrently by one of the other means allowed under this section:
If to any Assignor:
Cadence Design Systems, Inc.
2655 Seely Road, Building 5, MS 5B2
San Jose, California 95134
Telephone:
Telecopier:
Attention: Treasurer
with a copy to:
Cooley Godward Castro Huddleson & Tatum
One Maritime Plaza
20th Floor
San Francisco, California 94111-3580
Telephone: 415-693-2000
Telecopier: 415-951-3699
Attention: Felice Liang, Esq.
If to Assignee:
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019-6092
Telephone: (212) 261-7000
Telecopier: (212) 261-7890
Attention: Real Estate Group
with copies to:
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019-6092
Telephone: (212) 261-7050
Telecopier: (212) 459-3187
Attention: Legal Department
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and:
Sonnenschein Nath & Rosenthal
601 South Figueroa Street
15th Floor
Los Angeles, California 90017
Telephone: (213) 623-9300
Telecopier: (213) 623-9924
Attention: Charles R. Campbell, Jr., Esq.
and:
Sonnenschein Nath & Rosenthal
1221 Avenue of the Americas
24th Floor
New York, New York 10020-1089
Telephone: (212) 768-6700
Telecopier: (212) 391-1247
Attention: Mark R. Lehrer, Esq.
or at such other address or to such other addressee as the party to be served
with notice may have furnished in writing to the party seeking or desiring to
serve notice as a place for the service of notice. Notices shall be deemed to
have been rendered or given on the date received or on the date they are deemed
to be received as hereinafter set forth. The inability to deliver notices
because of changed address of which no notice was given, or rejection or refusal
to accept any notice offered for delivery, shall be deemed to be receipt of the
notice on the date of such inability to deliver or rejection or refusal to
accept delivery.
14. Waivers. The terms of this Assignment may be waived, altered or
amended only by an instrument in writing duly executed by Assignor and Assignee.
15. Successors and Assigns. This Assignment shall be binding upon and
inure to the benefit of the respective heirs, executors, legal and personal
representatives, successors and assigns of Assignor, Assignee and each holder of
the Secured Obligations (provided, however, that Assignor shall not, except as
permitted in the Loan Agreement, assign or transfer its rights or delegate their
obligations hereunder without the prior written consent of Assignee, which shall
not be unreasonably withheld or delayed).
16. Counterparts. This Assignment may be executed in any number of
counterparts, all of which together shall constitute one and the same instrument
and any of the parties hereto may execute this Assignment by signing any such
counterpart.
17. Severability. Assignor and Assignee intend and believe that each
provision in this Assignment comports with all applicable Laws. However, if any
provision or provisions, or if any portion of any provision or provisions, in
this Assignment is found by a court of law to be in violation of any applicable
Law or public policy, and if such court declares such portion, provision, or
provisions of this Assignment to be illegal, invalid, unlawful, void or
unenforceable as written, as such portion, provision or provisions apply to any
party hereto or any other person or entity, then it is the intent both Assignor
and Assignee that such portion, provision, or provisions shall be given force
and shall be applied to all persons and entities to the fullest possible extent
that they are legal, valid and enforceable, and that the remainder of this
Assignment shall be construed as if such illegal, invalid, unlawful, void, or
unenforceable portion, provision, or provisions were not contained herein, that
the enforceability or validity of such portion, provision or provisions of this
Assignment as applied to any person or entity, other than those as to whom the
application of such portion, provision or provisions is determined to be
illegal, invalid, unlawful, void or enforceable, will not be affected, and that
the rights, obligations, and interests of Assignor and Assignee under the
remainder of this Assignment shall continue in full force and effect.
18. JURISDICTION; SERVICE OF PROCESS. WITH RESPECT TO ANY SUIT, ACTION
OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE PROJECT OR ANY OTHER LOAN
DOCUMENT (EACH, A "PROCEEDING"), BORROWER AND LENDER IRREVOCABLY (A) SUBMIT TO
THE NON-EXCLUSIVE JURISDICTION OF THE
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COURTS OF THE STATE OF CALIFORNIA LOCATED IN THE COUNTY OF SANTA CLARA AND THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA; AND (B)
WAIVE ANY OBJECTION WHICH THEY MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF
ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVE ANY CLAIM THAT ANY PROCEEDING
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVE THE RIGHT TO OBJECT,
WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER
SUCH PARTY. NOTHING IN THIS AGREEMENT SHALL PRECLUDE LENDER FROM BRINGING A
PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN
ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER
JURISDICTION. BORROWER AND LENDER FURTHER AGREE AND CONSENT THAT, IN ADDITION TO
ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE
OF PROCESS IN ANY PROCEEDING IN ANY CALIFORNIA STATE OR UNITED STATES COURT
SITTING IN THE CITY OF SAN JOSE AND COUNTY OF SANTA CLARA MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER OR
LENDER AT THEIR RESPECTIVE ADDRESSES INDICATED ABOVE, AND SERVICE SO MADE SHALL
BE COMPLETE UPON RECEIPT; PROVIDED, HOWEVER, THAT IF DELIVERY IS REFUSED,
SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
MAILED.
19. Loan Agreement Controls. Any provision in the Loan Agreement that
pertains to this Assignment shall be deemed to be incorporated herein as if such
provision were fully set forth in this Assignment. In the event of any conflict
between the terms of this Assignment and the terms of the Loan Agreement, the
terms of the Loan Agreement shall prevail. A provision in this Assignment shall
not be deemed to be inconsistent with the Loan Agreement by reason of the fact
that no provision in the Loan Agreement covers such provision in this
Assignment.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment of
Partnership Interests to be duly executed as of the day and year first above
written.
ASSIGNOR:
CADENCE DESIGN SYSTEMS, INC.,
a Delaware corporation
By
------------------------
Its
-----------------------
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EXHIBIT A
The Premises
All that certain property situate in the City of San Jose, County of Santa
Clara, State of California, described as follows:
Parcels 1 and 2, as shown on that Parcel Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on February 22,
1991, in Book 624 of Maps, page(s) 23 and 24.
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ENVIRONMENTAL INDEMNITY
THIS ENVIRONMENTAL INDEMNITY (this "Indemnity") is made as of
as of May ___, 1996 by RIVER OAKS PLACE ASSOCIATES, L.P., a California limited
partnership ("Borrower"), CADENCE DESIGN SYSTEMS, INC., a Delaware corporation
("Cadence"), and SEELEY PROPERTIES, INC., a California corporation ("Seeley")
(Borrower, Cadence and Seeley being hereinafter collectively referred to as
"Indemnitor"), for the benefit of CREDIT LYONNAIS NEW YORK BRANCH, a branch,
licensed under the laws of the State of New York, of a banking corporation
organized under the laws of the Republic of France, having an office at Credit
Lyonnais Building, 1301 Avenue of the Americas, New York, New York 10019, it
successors and assigns ("Lender") and, to the extent not otherwise referenced,
the "Indemnified Parties" (as hereinafter defined).
RECITALS
A. Borrower and Lender are parties to that certain Loan
Agreement of even date herewith, pursuant to which Lender has agreed to make a
Loan to Borrower in the principal amount of $20,000,000, the proceeds of which
are to be used by Borrower to refinance the Project. All capitalized terms used
but not defined in this Assignment shall have the respective meanings given to
them in the Loan Agreement.
B. Cadence is the limited partner of Borrower. As a result of
such affiliation, Cadence will derive financial benefit from the Loan.
C. Seeley is the general partner of Borrower. As a result of
such affiliation, Seeley will derive financial benefit from the Loan.
D. It is a condition precedent to Lender's making the Loan
that this Indemnity be executed and delivered by Indemnitor and Lender is making
the Loan in reliance upon this Indemnity.
NOW, THEREFORE, in consideration of the foregoing Recitals,
which Recitals are incorporated herein and made a part hereof, and Lender's
agreement to make the Loan, and for other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Indemnitor hereby agrees as
follows:
1. (a) "Hazardous Materials" means gasoline, petroleum and
other petroleum by-products, asbestos, explosives, PCBs, radioactive materials
or any "hazardous" or "toxic" material, substance or waste which is defined by
those or similar terms or is regulated as such under any statute, law,
ordinance, rule or regulation of any Governmental Authority having jurisdiction
over the Project or any portion thereof or its use, including any material,
substance or waste which is: (i) defined as a "hazardous substance" under
Section 311 of the Federal Water Pollution Control Act (33 U.S.C. Section 1321),
as amended; (ii) defined as a "hazardous waste" under Section 1004 of the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et seq.,
as amended; (iii) defined as a "hazardous substance" or "hazardous waste" under
Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Reauthorization Act of 1986,
42 U.S.C. Section 9601 et seq. or any so-called "superfund" or "superlien" law,
including the judicial interpretations thereof; (iv) defined as a "pollutant" or
"contaminant" under 42 U.S.C.A. Section 9601(33); (v) defined as "hazardous
waste" pursuant to 40 C.F.R. Part 260; (vi) defined as a "hazardous chemical"
under 29 C.F.R. Part 1910; or (vii) subject to any other law or other past (and
still in effect), present or future requirement of any Governmental Authority
regulating or imposing obligations, liability or standards of conduct concerning
the protection of human health, plant life, animal life, natural resources,
property or the enjoyment of life or property free from the presence in the
environment of any solid, liquid, gas, odor or any form of energy from whatever
source.
(b) "Laws" means collectively, all federal, state and
local laws, statutes, codes, ordinances, orders, rules and regulations,
including judicial opinions or precedent setting authority in the applicable
jurisdiction, and all directions, requirements, orders and notices of violation
of any governmental or quasi-governmental agency, body or office having or
asserting jurisdiction over the Project.
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2. (a) Indemnitor hereby agrees to indemnify, keep
indemnified, and hold harmless Lender, Lender's directors, shareholders,
officers, agents and employees, and any successor to any interest of Lender in
or to the Project and such successor's directors, shareholders, officers,
agents, employees, partners and principals (all of the foregoing are
individually referred to herein as an "Indemnified Party" and collectively
referred to herein as the "Indemnified Parties") and to defend, hold and save
the Indemnified Parties harmless from and against, and shall reimburse the
Indemnified Parties for any and all liabilities, damages (including indirect and
consequential damages), losses, claims, injunctive relief, injuries to person,
property or natural resources, fines, penalties, and costs, charges and expenses
of whatsoever kind or nature, including, without limitation, removal and
containment costs, litigation costs, attorneys' fees, expenses, disbursements
and court costs, actions and causes of action arising directly or indirectly, in
whole or in part, out of, by reason of or in connection with all or any one of
the following (collectively, "Costs and Liabilities"): (i) the release,
discharge, deposit, transportation or presence, or alleged release, alleged
discharge, alleged deposit, alleged transportation or alleged presence, of any
Hazardous Materials at, on, over, under or from the Project, or in or adjacent
to any part of the Project, or in the soil, groundwater or soil vapor on, over
or under the Project, whether or not known to any Indemnitor, whether
foreseeable or unforeseeable, regardless of the source of such release,
discharge, deposit, transportation or presence and regardless of when such
release, discharge, deposit, transportation or presence occurred, unless caused
by the gross negligence or wilful misconduct of Lender or its agents; (ii) the
filing of any lien by or on behalf of any governmental or regulatory authority
relating to the existence or removal of any Hazardous Materials related to the
Project; (iii) the failure of Borrower and/or Indemnitor to comply in all
respects with all of the provisions of any environmental Law including, without
limitation, the "Comprehensive Environmental Response, Compensation and
Liability Act," and/or any so-called "Superfund" or "Superlien" law; (iv) the
current falsity, or current or future violation of any of the representations,
warranties and covenants of Borrower respecting environmental matters set forth
in the Loan Documents, including, without limitation, those set forth in the
Loan Agreement, and any of the representations, warranties and covenants of
Indemnitor set forth in Section 5 of this Indemnity, all of which are
incorporated by reference as if set forth fully herein; (v) any assertion
against any Indemnified Party of any claim in connection with any Hazardous
Materials or environmental Law now or hereafter related to or arising out of the
Project; (vi) the determination of whether the Project is in compliance with
applicable environmental Laws and the costs expended in efforts to bring the
Project in compliance with same; (vii) the covenant of Borrower to complete all
Remedial Actions in a timely manner as provided in Section 8.1.24 of the Loan
Agreement; and (viii) to the extent any Indemnified Party shall prevail in an
action or judicial proceeding brought by an Indemnified Party to enforce any
rights under this Indemnity, such Indemnified Party shall be entitled to all
attorneys' fees and all costs (including but not limited to litigation and court
costs), expenses and disbursements incurred in connection with such action. The
foregoing indemnity and such Costs and Liabilities shall include, without
limitation, all costs of clean-up, removal, containment, remediation and
restoration of any kind, and disposal of any Hazardous Materials, all costs of
determining whether the Project is in compliance, and causing the Project to be
or become in compliance, with all applicable environmental Laws, all costs and
liabilities associated with claims for damages to persons, property or natural
resources, and all environmental consultants' and attorneys' fees and costs.
(b) Upon demand by any Indemnified Party, Indemnitor
shall defend any investigation, action or proceeding in connection with any
claim or liability, or alleged claim or liability covered by the foregoing
indemnification provisions (whether or not the Indemnified Parties are actually
joined therein), such defense to be at the sole cost and expense of Indemnitor
and by counsel reasonably approved by such Indemnified Party, which counsel may,
without limiting the rights of an Indemnified Party pursuant to the next
succeeding sentence of this Section 2(b), also represent Indemnitor in such
investigation, action or proceeding. In the alternative, an Indemnified Party
may elect to conduct its own defense through counsel of its own choosing and at
the expense of Indemnitor, provided that such Indemnified Party determines in
good faith that its best interests so require. Nothing contained herein shall be
construed as requiring any Indemnified Party to expend funds or incur costs to
defend any claim in connection with the matters contained herein.
(c) The obligations of Indemnitor hereunder shall
specifically include the obligation to expend its own funds, to incur costs in
its own name and to perform all actions (including, without limitation,
completing the Remedial Actions in a timely manner in the event Borrower fails
to do so) as may be reasonably necessary to protect the Indemnified Parties from
the necessity of expending their own funds, incurring costs or performing any
actions in connection with the matters contained herein. Subject to the
foregoing limitations, and the other terms and conditions of this Indemnity,
Indemnitor may take any lawful action in good faith to contest any Costs and
Liabilities; provided, however, Indemnitor shall not have the right to contest
any such actions if so doing would result in (i) a risk of imposition of any
criminal liability upon any Indemnified Party, (ii) an
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immediate and imminent material danger to the health and safety of persons or
immediate and imminent material damage to property, (iii) the impairment of
Borrower's ability to timely repay the Loan and to perform its other obligations
set forth in the Loan Documents, (iv) the impairment of Indemnitor's ability to
discharge its obligations or meet its liabilities under this Indemnity, or (v) a
material adverse affect on the operation of the Project as a first class
commercial office building and otherwise in accordance with the Loan Documents.
(d) If Lender (or any nominee or affiliate) takes
title to or possession of all or any part of Project, this Agreement shall not
apply to any loss or cost incurred thereafter by Lender (or any nominee or
affiliate) that Indemnitor establishes arises out of any release of Hazardous
Materials at or from the Project after the date Lender (or any nominee or
affiliate) takes title to or possession of all or any part of the Project that
is the sole and direct result of materials brought on the Project by Lender, or
caused by the gross negligence or wilful misconduct of Lender; provided,
however, that this Agreement shall otherwise remain in full force and effect,
including, but not limited to, with respect to any loss or cost arising out of a
release or a threatened release of any Hazardous Materials existing at or about
the Project, whether known or unknown, when Lender takes title or possession.
For purposes of this section (but by no means to be construed as an admission of
liability), a release of Hazardous Materials shall be rebuttably presumed to
arise out of the actions or inactions of the Borrower or any third party and not
Lender (or any nominee or affiliate) if (a) the Borrower or third party caused
or contributed in any way to a release at, to, or from all or any part of the
Project of Hazardous Materials, or (b) a release at, to, or from the Project of
Hazardous Materials of the same kind occurred before Lender (or any nominee or
affiliate) took title or possession or the release is part of a course of
conduct which began prior to such party taking title to or possession of all or
any part of the Project. Nothing herein shall act to release Lender from
liability for any act that shall have caused or contributed in any way to a
release at, to, or from all or any part of the Project of Hazardous Materials.
3. Without limiting any other provision of this Indemnity, the
obligations of Indemnitor hereunder shall apply to all Costs and Liabilities
that arise out of or are attributable to, whether directly or indirectly, in
whole or in part, any claim or allegation against or involving an Indemnified
Party relating to any act or omission of Borrower or Indemnitor in respect of
the Loan or the Project, or in connection with any exercise of such Indemnified
Party's rights under any of the Loan Documents, unless the same results from
such Indemnified Party's acts or omissions constituting gross negligence or
willful misconduct.
4. The obligations of Indemnitor hereunder are independent of
any indemnification or other obligations of Borrower or any other indemnitor.
The rights and remedies of the Indemnified Parties under this Indemnity shall be
in addition to any other rights and remedies of such Indemnified Parties under
the Loan Documents and any guaranty or any other document or instrument now or
hereafter executed in connection with the Loan or at law or in equity.
5. Before signing this Indemnity, Indemnitor acknowledges that
it has researched and inquired into the previous uses and ownership of the
Project, and into the physical condition of the Project. Based on that due
diligence, Indemnitor represents and warrants that, to Indemnitor's knowledge,
except as disclosed in the Environmental Report, and for Routine Uses of
Hazardous Materials used in the ordinary course of construction or operation of
the Project (but only to the extent such materials are properly contained,
labeled and used in accordance with all applicable Law), no Hazardous Materials
have been disposed of or released or otherwise exist in, on, under, over or
within the Project. The requirement that Borrower and/or Indemnitor perform the
Remedial Actions: (a) shall not in any way (i) alter, impair, diminish or waive
(or be deemed to alter, impair, diminish or waive) Indemnitor's obligation to
indemnify Lender and the other Indemnified Parties as provided herein, or (ii)
constitute a waiver of any of Lender's rights or remedies with respect to the
presence of Hazardous Materials, and (b) is for the protection of Lender and the
Indemnified Parties only and may not be relied upon by Indemnitor, Borrower or
any other person or entity for any purposes whatever; and neither Lender nor any
other Indemnified Party shall be deemed to have assumed any responsibility, nor
made any representation or warranty to Indemnitor or any other person or entity
with respect thereto.
6. Any expense incurred by an Indemnified Party pursuant to
this Indemnity which is not paid by Indemnitor upon demand made by such
Indemnified Party shall bear interest at the Default Rate.
7. Until the Loan is repaid in full, each party constituting
Indemnitor agrees not to assert any claim (within the meaning of 11 U.S.C.
Section 101) which such Indemnitor may have against Borrower arising from a
payment made by such Indemnitor under this Agreement and agrees not to assert or
take advantage of any
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subrogation rights of Indemnitor or any right of such Indemnitor to proceed
against Borrower for reimbursement, contribution or indemnity. It is expressly
understood that waivers and agreements of Indemnitor set forth above constitute
additional and cumulative benefits given to Lender for its security and as an
inducement for its extension of credit to Borrower.
8. The liability of any Indemnitor under this Indemnity shall
in no way be limited or impaired by any amendment or modification of the
provisions of any of the other Loan Documents and, further, shall in no way be
limited or impaired by any occurrence or event whatsoever, including without
limitation: (a) any extensions of time for performance required by any of the
Loan Documents; (b) subject to Section 2(d) above, any sale, assignment or
foreclosure of the Note, the Deed of Trust or any of the other Loan Documents,
or any deed in lieu of foreclosure or other sale or transfer of all or any part
of the Project; (c) the accuracy or inaccuracy of any representations and
warranties made by Borrower or Indemnitor under any of the Loan Documents; (d)
the release of any other Indemnitor, Borrower or any other person or entity from
performance or observance of any of the agreements, covenants, terms or
conditions contained in this Indemnity or any of the other Loan Documents by
operation of law, Indemnified Party's voluntary act, or otherwise; (e) the
release or substitution, in whole or in part, of any security for the Note; or
(f) the failure to record the Deed of Trust or file any UCC financing statements
(or Lender's improper recording or filing of any thereof) or to otherwise
perfect, protect, secure or insure any security interest or lien given as
security for the Note; and, in any such case, whether with or without notice to
the Indemnitor and with or without consideration.
9. Indemnitor waives any right or claim of right to cause a
marshalling of its assets or to cause Lender to proceed against any security for
the Loan or to exercise any other remedy, whether under the Loan Documents or
pursuant to applicable Law or otherwise, before proceeding under this Indemnity.
Indemnitor expressly waives and relinquishes all rights and remedies accorded by
applicable law to indemnitor, sureties or guarantors.
10. THIS INDEMNITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
11. This Indemnity shall be continuing, irrevocable and
binding upon Indemnitor and its successors and assigns. In the event Indemnitor
is comprised of multiple parties, (a) the obligations of all such parties shall
be joint and several and (b) each reference herein to "Indemnitor" shall be
deemed to refer to each such parties where the context shall require.
12. In the event of any inconsistencies or conflicts between
the terms of this Indemnity and the terms of the other Loan Documents (including
any exculpatory language contained herein or therein), the terms of this
Indemnity shall control.
13. A separate right of action hereunder shall arise each time
an Indemnified Party acquires knowledge of any matter described herein. Separate
and successive actions may be brought hereunder to enforce any of the provisions
hereof at any time and from time to time. No action hereunder shall preclude any
subsequent action, and Indemnitor hereby waives and covenants not to assert any
defense in the nature of splitting of causes of action or merger of judgments.
14. Lender and Indemnitor intend and believe that each
provision in this Indemnity comports with all applicable local, state and
federal laws and judicial decisions. However, if any provision or provisions, or
if any portion of any provision or provisions, in this Indemnity shall be found
by a court of law to be in violation of any applicable local, state or federal
ordinance, statute, law, administrative or judicial decision or public policy,
and if such court should declare such portion, provision or provisions of this
Indemnity to be illegal, invalid, unlawful, void or unenforceable as written, or
if such court should declare such portion, provision or provisions of this
Indemnity to be illegal, invalid, unlawful, void or unenforceable as such
portion, provision or provisions apply to Indemnitor, or any other person or
entity, then it is the intent of all parties hereto that such portion, provision
or provisions shall be given force and shall be applied to all persons and
entities to the fullest possible extent that they are legal, valid and
enforceable, that the remainder of this Indemnity shall be construed as if such
illegal, invalid, unlawful, void or unenforceable portion, provision or
provisions were not contained
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herein, that the enforceability or validity of such portion, provision or
provisions of this Indemnity, as applied to Indemnitor or any other person or
entity, other than those as to whom the application of such portion, provision
or provisions is determined to be illegal, invalid, unlawful, void or
unenforceable, will not be affected, and that the rights, of Lender or any
holder of the Note, and the obligations and liabilities of Indemnitor under the
remainder of this Indemnity shall continue in full force and effect.
15. Indemnitor's obligations hereunder shall in no way be
impaired, reduced or released by reason of (a) an Indemnified Party's omission
or delay in exercising any right described herein or (b) any act or omission of
an Indemnified Party in connection with any notice, demand, warning or claim
regarding violations of codes, laws or ordinances governing the Project.
16. Any notice, demand, request or other communication which
any party hereto may be required or may desire to give hereunder shall be in
writing and shall be deemed to have been properly given and received: (a) if
hand delivered, on the day so delivered to the address set forth below; (b) if
mailed, on the third Business Day after the day on which it is deposited in the
United States mails in the continental United States, registered or certified
mail, postage prepaid, returned receipt requested, addressed as set forth below;
(c) if by Federal Express or other reputable express courier service, on the
next Business Day after the date delivered to such express courier service,
addressed as set forth below; or (d) if by telecopy transmission, on the day and
at the time on which delivered to such party at the address and the telecopier
number set forth below; provided, if by telecopy transmission, a hardcopy is
transmitted concurrently by one of the other means allowed under this section:
If to the Indemnitor:
c/o Cadence Design Systems, Inc.
2655 Seely Road, Building 5, 5B2
San Jose, California 95134
Telephone:
Telecopier:
Attention: Treasurer
with a copy to:
Cooley Godward Castro Huddleson & Tatum
One Maritime Plaza, 20th Floor
San Francisco, California 94111-3580
Telephone: 415-693-2000
Telecopier: 415-951-3699
Attention: Felice Liang, Esq.
If to Lender:
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019-6092
Telephone: (212) 261-7000
Telecopier: (212) 261-7890
Attention: Real Estate Group
with copies to:
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019-6092
Telephone: (212) 261-7050
Telecopier: (212) 459-3187
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Attention: Legal Department
and:
Sonnenschein Nath & Rosenthal
601 South Figueroa Street
15th Floor
Los Angeles, California 90017
Telephone: (213) 623-9300
Telecopier: (213) 623-9924
Attention: Charles R. Campbell, Jr., Esq.
and:
Sonnenschein Nath & Rosenthal
1221 Avenue of the Americas
24th Floor
New York, New York 10020-1089
Telephone: (212) 768-6700
Telecopier: (212) 391-1247
Attention: Mark R. Lehrer, Esq.
or at such other address or to such other addressee as the party to be served
with notice may have furnished in writing to the party seeking or desiring to
serve notice as a place for the service of notice.
17. Lender shall have the right (but not the obligation) to
conduct an environmental audit of the Project, if, in Lender's reasonable
judgment, it is appropriate under the circumstances (including in connection
with any action to foreclose the Deed of Trust), and Indemnitor shall cooperate
in the conduct of such environmental audit and pay the cost of such audit.
18. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING RELATING TO
THIS INDEMNITY (A "PROCEEDING"), INDEMNITOR AND THE INDEMNIFIED PARTIES
IRREVOCABLY (A) SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS WITH JURISDICTION IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA AND
STATE OF CALIFORNIA AND (B) WAIVE ANY OBJECTION WHICH THEY MAY HAVE AT ANY TIME
TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVE ANY
CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER
WAIVE THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES
NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS INDEMNITY SHALL PRECLUDE
LENDER AND THE INDEMNIFIED PARTIES FROM BRINGING A PROCEEDING IN ANY OTHER
JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE
JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION.
INDEMNITOR AND THE INDEMNIFIED PARTIES FURTHER AGREE AND CONSENT THAT, IN
ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW,
ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY CALIFORNIA STATE OR UNITED
STATES COURT SITTING IN THE CITY OF SAN JOSE AND COUNTY OF SANTA CLARA MAY BE
MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO
INDEMNITOR OR THE INDEMNIFIED PARTIES AT THEIR RESPECTIVE ADDRESSES INDICATED
ABOVE, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; PROVIDED, HOWEVER,
THAT IF DELIVERY SHALL BE REFUSED, SERVICE SHALL BE DEEMED COMPLETE FIVE (5)
DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.
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19. INDEMNITOR WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS INDEMNITY OR
RELATING THERETO OR ARISING FROM THE RELATIONSHIP WHICH IS THE SUBJECT OF THIS
INDEMNITY AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
20. Indemnitor shall not, without the prior written consent of
Lender, which consent may be withheld in Lender's reasonable discretion, create,
incur, assume or suffer to exist any Debt, whether personal or nonrecourse,
secured or unsecured, subordinate or otherwise, that would materially adversely
affect the ability of Indemnitor to discharge its obligations under this
Indemnity.
IN WITNESS WHEREOF, this Indemnity is executed as of the day
and year above written.
"Indemnitor":
RIVER OAKS PLACE ASSOCIATES, L.P.,
a California limited partnership
By SEELEY PROPERTIES, INC.,
a California corporation
Its General Partner
By
------------------------------
Its
------------------------------
CADENCE DESIGN SYSTEMS, INC.,
a Delaware corporation
By
------------------------------
Its
------------------------------
SEELEY PROPERTIES, INC.,
a California corporation
By
------------------------------
Its
------------------------------
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EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
All that certain property situate in the City of San Jose, County of Santa
Clara, State of California, described as follows:
Parcels 1 and 2, as shown on that Parcel Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on February 22,
1991, in Book 624 of Maps, page(s) 23 and 24.
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CADENCE DESIGN SYSTEMS, INC.
1987 STOCK OPTION PLAN
AS ADOPTED APRIL 24, 1987
AS AMENDED MAY 4, 1993
AS AMENDED AUGUST 2, 1996 TO BECOME EFFECTIVE AUGUST 15, 1996
PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the employees of the Company
and any parent or subsidiary corporations, and to promote the success of the
Company's business.
Options granted hereunder may be either "incentive stock
options," as defined in Section 422 of the Internal Revenue Code of 1986, as
amended, or "non-statutory stock options," at the discretion of the Board and as
reflected in the terms of the written option agreement.
Awards granted under this Plan shall be exempt from the
requirements of Section 162(m) of the Code until the date of the Company's 1997
Annual Meeting of Stockholders or until the Plan is materially amended,
whichever first occurs.
DEFINITIONS. As used herein, the following definitions shall apply:
"BOARD" shall mean the Committee, if one has been
appointed, or the Board of Directors of the Company, if no Committee is
appointed.
"CODE" shall mean the Internal Revenue Code of 1986,
as amended.
"COMMON STOCK" shall mean the Common Stock of the
Company.
"COMPANY" shall mean CADENCE DESIGN SYSTEMS, INC., a
Delaware corporation.
"COMMITTEE" shall mean the Committee appointed by the
Board of Directors in accordance with paragraph (a) of Section 4 of the Plan,
if one is appointed.
"CONSULTANT" shall mean any consultants, independent
contractors or advisers (provided that such persons render bona fide services
not in connection with the offering and sale of securities in capital raising
transactions) rendering services to the Company or a Parent or Subsidiary.
"CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT"
shall mean the absence of any interruption of termination of service, whether as
an Employee or Consultant. Continuous Status as an Employee or Consultant shall
not be considered interrupted in the case of sick leave, military leave, or any
other leave of absence.
"EMPLOYEE" shall mean any person, including officers
and directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a director's fee or other compensation paid solely on
account of service as a director by the Company shall not be sufficient to
constitute "employment" by the Company.
(i) "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
"OPTION" shall mean a stock option granted pursuant
to the Plan.
"OPTIONED STOCK" shall mean the Common Stock subject
to an Option.
"OPTIONEE" shall mean an Employee or Consultant who
receives an Option.
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"PARENT" shall mean a "parent corporation," whether
now or hereafter existing, as defined in Section 424(e) of the Internal Revenue
Code of 1986, as amended.
"PLAN" shall mean this 1987 Stock Option Plan.
"RULE 16B-3" shall mean Rule 16b-3 of the Securities
Exchange Act of 1934, as amended, or any successor to Rule 16b-3, as in effect
when discretion is being exercised with respect to the Plan.
"SHARE" shall mean a share of Common Stock, as
adjusted in accordance with Section 11 of the Plan.
"SUBSIDIARY" shall mean a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended.
STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of shares which may be
optioned and sold under the Plan is 13,069,009 shares of Common Stock*. The
Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan.
ADMINISTRATION OF THE PLAN.
PROCEDURE. The Plan shall be administered by the
Board of Directors of the Company.
The Board of Directors may appoint a Committee
consisting of not less than two members of the Board of Directors to administer
the Plan on behalf of the Board of Directors, subject to such terms and
conditions as the Board of Directors may prescribe. One or more of these members
may be "Non-Employee Directors" (a director who is receiving no compensation
from the Company other than for service on the Board of Directors or who does
not receive such additional compensation which exceeds the limits specified in
the definition of such term under Rule 16b-3). Once appointed, the Committee
shall continue to serve until otherwise directed by the Board of Directors. From
time to time the Board of Directors may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause), and
appoint new members in substitution therefor, fill vacancies however caused and
remove all members of the Committee, and thereafter directly administer the
Plan. Notwithstanding anything in this Section 4 to the contrary, at any time
the Board or the Committee may delegate to a committee of one or more members of
the Board of Directors the authority to grant Options to all Employees and
Consultants or any portion or class thereof.
Members of the Board who are either eligible for
Options or have been granted Options may vote on any matters affecting the
administration of the Plan or grant of any Options pursuant to the Plan, except
that no such member shall act upon the granting of an Option to himself, but any
such member may be counted in determining the existence of a quorum at any
meeting of the Board during which action is taken with respect to the granting
of Options to him.
POWERS OF THE BOARD. Subject to the provisions of the
Plan, the Board shall have the authority, in its discretion: (i) to grant
Incentive Stock Options, in accordance with Section 422 of the Internal Revenue
Code of 1986, as amended, or "non-statutory stock options"; (ii) to determine,
upon review of relevant information and in accordance with Section 8(b) of the
Plan, the fair market value of the Common Stock; (iii) to determine the exercise
price per share of Options to be granted, which exercise price shall be
determined in accordance with Section 8(a) of the Plan; (iv) to determine the
Employees or Consultants to whom, and the time or times at which, Options shall
be granted and the number of shares to be represented by each Option; (v) to
interpret the Plan; (vi) to prescribe, amend and rescind rules and regulations
relating to the Plan; (vii) to determine the terms and provisions of each Option
granted (which need not be identical) in accordance with the Plan, and, with the
consent of the holder thereof with respect to any adverse change, modify or
amend each Option; (viii) to
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accelerate or defer (the latter with the consent of the Optionee) the exercise
date of any Option; (ix) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option previously
granted by the Board; and (x) to make all other determinations deemed necessary
or advisable for the administration of the Plan.
EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
ELIGIBILITY. Options may be granted only to Employees or
Consultants as defined in Section 2 hereof. An Employee or Consultant who has
been granted an Option may, if he is otherwise eligible, be granted an
additional Option or Options.
Incentive Stock Options may only be granted to Employees. The
aggregate fair market value (determined at the time the Option is granted) of
the stock with respect to which Incentive Stock Options are exercisable for the
first time by such individual during any calendar year (under this Plan or under
any other incentive stock option plan of the Company or any Parent or Subsidiary
of the Company) shall not exceed $100,000. To the extent that the grant of an
Option exceeds this limit, the portion of the Option which exceeds such limit
shall be treated as a non-statutory stock option.
The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consultancy by the Company, nor shall
it interfere in any way with his right or the Company's right to terminate his
employment at any time or his consultancy pursuant to the terms of the
Consultant's agreement with the Company.
TERM OF THE PLAN. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its approval by
vote of the holders of a majority of the outstanding shares of the Company
entitled to vote on the adoption of the Plan. It shall continue in effect for a
term of ten (10) years unless sooner terminated under Section 13 of the Plan.
TERM OF OPTION. The term of each Option shall be ten (10)
years from the date of grant thereof or such shorter term as may be provided in
the Stock Option Agreement. However, in the case of an Incentive Stock Option
granted to an Employee who immediately before the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant
thereof or such shorter time as may be provided in the Stock Option Agreement.
EXERCISE PRICE AND CONSIDERATION.
The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Board, but shall be subject to the following:
In the case of an Incentive Stock Option:
Granted to an Employee who, immediately before
the grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the fair market value per Share on the date of grant.
Granted to any Employee, the per Share exercise
price shall be no less than 100% of the fair market value per Share on the date
of grant.
In the case of an Option granted on or after the
effective date of registration of any class of equity security of the Company
pursuant to Section 12 of the Exchange Act and prior to six months after the
termination of such registration, the per Share exercise price shall be not less
than 100% of the fair market value per Share on the date of grant.
Notwithstanding the foregoing, an Option (whether an
Incentive Stock Option or non-statutory stock option) may be granted with an
exercise price lower than set forth in the preceding paragraphs
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if such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of the Code.
The fair market value shall be determined by the
Board in its discretion: provided however, that where there is a public market
for the Common Stock, the fair market value per Share shall be the average of
the high and low prices of the Common Stock on the date of grant, as reported on
the New York Stock Exchange.
The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Board and may consist entirely of cash, check, promissory
note, other Shares of Common Stock having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
option shall be exercised, or any combination of such methods of payment, or
such other consideration and method of payment for the issuance of Shares to the
extent permitted under applicable law. In making its determination as to the
type of consideration to accept, the Board shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.
EXERCISE OF OPTION.
PROCEDURE FOR EXERCISE RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the board, including performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of the Plan.
An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Board, consist
of any consideration and method of payment allowable under Section 8(c) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT.
If an employee ceases to serve as an Employee or Consultant, he may, but only
within thirty (30) days (or such other period of time not exceeding three (3)
months as is determined by the Board) after the date he ceases to be an Employee
or Consultant of the Company, exercise his Option to the extent that he was
entitled to exercise it at the date of such termination. To the extent that he
was not entitled to exercise the Option at the date of such termination, or if
he does not exercise such Option (which he was entitled to exercise) within the
time specified herein, the Option shall terminate.
DEATH OF OPTIONEE. In the event of the death of an
Optionee:
during the term of the Option who is at the
time of his death an Employee or Consultant of the Company and who shall have
been in Continuous Status as an Employee or Consultant since the date of grant
of the Option, the Option may be exercised at any time within three (3) months
following the date of death, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that would have accrued had the Optionee
continued living three (3) months after the date of death; or
within one (1) month after the termination of
Continuous Status as an Employee or Consultant, the Option may be exercised, at
any time within three (3) months following the date of death, by the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent of the right to exercise that had accrued
at the date of termination.
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NON-TRANSFERABILITY OF OPTIONS. Except as otherwise expressly
provided in the terms of an individual Option which is a non-statutory stock
option, the Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. Notwithstanding the foregoing, the person to
whom the Option is granted may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party who, in the event of
the death of the Optionee, shall thereafter be entitled to exercise the Option.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject
to any required action by the shareholders of the Company, the number of shares
of Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split or the payment of a stock dividend with
respect to the Common Stock or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustments shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, or in the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, the Option will terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that any Option
shall terminate as of a date fixed by the Board and give each Optionee the right
to exercise his Option as to all or any part of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable. If the Board,
at its sole discretion, permits acceleration as to all or any part of the
Optioned Stock, the aggregate fair market value (determined at the time an
Option is granted) of stock with respect to which Incentive Stock Options first
become exercisable in the year of such dissolution, liquidation, sale of assets
or merger cannot exceed $100,000. Any remaining accelerated Incentive Stock
Options shall be treated as non-statutory stock options.
TIME OF GRANTING OPTIONS. The date of grant of an Option
shall, for all purposes, be the date on which the Board makes the determination
granting such Option. Notice of the determination shall be given to each
Employee or Consultant to whom an Option is so granted within a reasonable time
after the date of such grant.
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AMENDMENT AND TERMINATION OF THE PLAN.
AMENDMENT AND TERMINATION. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the holders of a majority of the outstanding shares of the Company entitled to
vote:
any increase in the number of Shares subject to the
Plan, other than in connection with an adjustment under Section 11 of the Plan;
or
any change in the designation of the class of
employees or other persons eligible to be granted Options; or
if the Company has a class of equity security
registered under Section 12 of the Exchange Act at the time of such revision or
amendment, any change which requires stockholder approval in order to comply
with Rule 16b-3.
EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not adversely affect Options already granted and
such Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of the law, including without limitation, the Securities Act
of 1933, as amended; the Securities Exchange Act of 1934, as amended; the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company. such a representation is required by any of
the aforementioned relevant provisions of law.
RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
EFFECTIVE DATE. The Plan, as amended and restated herein, shall
become effective on August 15, 1996.
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CADENCE DESIGN SYSTEMS, INC.
1993 NON-STATUTORY STOCK OPTION PLAN
AS ADOPTED SEPTEMBER 17, 1993
AS AMENDED MAY 3, 1996
AS AMENDED AUGUST 2, 1996 TO BECOME EFFECTIVE AUGUST 15, 1996
PURPOSES OF THE PLAN. The purposes of this Stock Option Plan
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to the Employees and
Consultants (as such terms are defined below) of the Company and any parent or
subsidiary corporation, and to promote the success of the Company's business.
Only "non-statutory stock options" may be granted hereunder.
Awards granted under this Plan shall be exempt from the
requirements of Section 162(m) of the Code until the date of the Company's 1997
Annual Meeting of Stockholders or until the Plan is materially amended,
whichever first occurs.
DEFINITIONS. As used herein, the following definitions shall
apply:
"BOARD" shall mean the Committee, if one has been
appointed, or the Board of Directors of the Company, if no Committee is
appointed.
"CODE" shall mean the Internal Revenue Code of 1986,
as amended.
"COMMON STOCK" shall mean the Common Stock of the
Company.
"COMPANY" shall mean CADENCE DESIGN SYSTEMS, INC., a
Delaware corporation.
"COMMITTEE" shall mean the Committee appointed by the
Board of Directors in accordance with paragraph (a) of Section 4 of the Plan, if
one is appointed.
"CONSULTANT" shall mean any consultants, independent
contractors or advisers to the Company or a Parent or Subsidiary (provided that
such persons render bona fide services not in connection with the offering and
sale of securities in capital raising transactions) excluding officers and
directors of the Company and shareholders beneficially owning 10% or more of the
Company's Common Stock.
"CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT"
shall mean the absence of any interruption or termination of service, whether as
an Employee or Consultant. Continuous Status as an Employee or Consultant shall
not be considered interrupted in the case of sick leave, military leave, or any
other leave of absence.
"EMPLOYEE" shall mean any person employed by the
Company or by any Parent or Subsidiary, excluding officers and directors of the
Company and shareholders beneficially owning 10% or more of the Company's Common
Stock.
"OPTION" shall mean a non-statutory stock option
granted pursuant to the Plan.
"OPTIONED STOCK" shall mean the Common Stock subject
to an Option.
"OPTIONEE" shall mean an Employee or Consultant who
receives an Option.
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"PARENT" shall mean a "parent corporation", whether
now or hereafter existing, as defined in Section 424(e) of the Internal Revenue
Code of 1986, as amended.
"PLAN" shall mean this 1993 Non-Statutory Stock
Option Plan.
"SHARE" shall mean a share of Common Stock, as
adjusted in accordance with Section 11 of the Plan.
"SUBSIDIARY" shall mean (i) any corporation (other
than the employer corporation) in an unbroken chain of corporations beginning
with the employer corporation if, at the time of the granting of the option,
each of the corporations other than the last corporation in the unbroken chain
owns stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain; or
(ii) any other subsidiary corporation as the Board may designate from time to
time, in its sole and absolute discretion.
STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of shares which may be
optioned and sold under the Plan is 2,500,000 shares of Common Stock. The Shares
may be authorized, but unissued, or reacquired Common Stock. If an Option should
expire or become unexercisable for any reason without having been exercised in
full, the unpurchased Shares which were subject thereto shall, unless the Plan
shall have been terminated, become available for future grant under the Plan.
ADMINISTRATION OF THE PLAN.
Procedure. The Plan shall be administered by the
Board of Directors of the Company. The Board of Directors may appoint a
Committee consisting of not less than two members of the Board of Directors to
administer the Plan on behalf of the Board of Directors, subject to such terms
and conditions as the Board of Directors may prescribe. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board of
Directors. From time to time the Board of Directors may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause), and appoint new members in substitution therefor, fill vacancies
however caused and remove all members of the Committee, and thereafter directly
administer the Plan. Notwithstanding anything in this Section 4 to the contrary,
at any time the Board or the Committee may delegate to a committee of one or
more members of the Board of Directors the authority to grant Options to all
Employees and Consultants or any portion or class thereof.
Powers of the Board. Subject to the provisions of the
Plan, the Board shall have the authority, in its discretion: (i) to grant
options under the Plan, provided, however, that only non-statutory options may
be granted under the Plan, (ii) to determine, upon review of relevant
information and in accordance with Section 8(b) of the Plan, the fair market
value of the Common Stock; (iii) to determine the exercise price per share of
Options to be granted, which exercise price shall be determined in accordance
with Section 8(a) of the Plan; (iv) to determine the Employees or Consultants to
whom, and the time or times at which, Options shall be granted and the number of
shares to be represented by each Option provided that no Options may be granted
to persons who are neither employees or consultants; (v) to interpret the Plan;
(vi) to prescribe, amend and rescind rules and regulations relating to the Plan;
(vii) to determine the terms and provisions of each Option granted (which need
not be identical) in accordance with the Plan, and, with the consent of the
holder thereof with respect to any adverse change, modify or amend each option;
(viii) to accelerate or defer (the latter with the consent of the Optionee) the
exercise date of any Option; (ix) to authorize any person to execute on behalf
of
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the Company any instrument required to effectuate the grant of an Option
previously granted by the Board; and (x) to make all other determinations deemed
necessary or advisable for the administration of the Plan.
Effect of Board's Decision. All decisions,
determinations and interpretations of the Board shall be final and binding on
all Optionees and any other holders of any Options granted under the Plan.
ELIGIBILITY. Options may be granted only to Employees or
Consultants as defined in Section 2 hereof. An Employee or Consultant who has
been granted an Option may, if he is otherwise eligible, be granted an
additional Option or Options.
The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consultancy by the Company, nor shall
it interfere in any way with his right or the Company's right to terminate his
employment at any time or his consultancy pursuant to the terms of the
Consultant's agreement with the Company.
TERM OF THE PLAN. The Plan shall become effective upon its
adoption by the Board of Directors. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 13 of the Plan.
TERM OF OPTION. The term of each Option shall be ten (10)
years from the date of grant thereof or such shorter term as may be provided in
the Stock Option Agreement.
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EXERCISE PRICE AND CONSIDERATION.
The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be no less than 100% of the fair
market value per Share on the date of grant.
Notwithstanding the foregoing, an Option may be
granted with an exercise price lower than set forth above if such Option is
granted pursuant to an assumption or substitution for another option in a manner
which substantially satisfies the provisions of Section 424(a) of the Code.
The fair market value shall be determined by the
Board in its discretion; provided however, that where there is a public market
for the Common Stock, the fair market value per Share shall be the average of
the high and low prices of the Common Stock on the date of grant, as reported on
the New York Stock Exchange.
The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Board and may consist entirely of cash, check, promissory
note, other Shares of Common Stock having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
option shall be exercised, or any combination of such methods of payment, or
such other consideration and method of payment for the issuance of Shares to the
extent permitted under applicable law. In making its determination as to the
type of consideration to accept, the Board shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.
EXERCISE OF OPTION.
Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder, shall be exercisable at such times and under such
conditions as determined by the Board, including performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of the Plan.
An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Board, consist
of any consideration and method of payment allowable under Section 8(c) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee or Consultant (or
while an officer or director of the Company) to exercise the Option as to any
part or all of the shares subject to the Option, subject to a repurchase right
in favor of the Company on such terms as the Board shall establish.
Termination of Status as an Employee or Consultant.
If an employee ceases to serve as an Employee or Consultant, he may, but only
within thirty (30) days (or such other period of time as is determined by the
Board) after the date he ceases to be an Employee or Consultant of the Company,
exercise his
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Option to the extent that he was entitled to exercise it at the date of such
termination. To the extent that he was not entitled to exercise the Option at
the date of such termination, or if he does not exercise such Option (which he
was entitled to exercise) within the time specified herein, the Option shall
terminate.
Death of Optionee. In the event of the death of an
Optionee:
during the term of the Option who is at the time of
his death an Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Option may be exercised at any time within three (3) months (or such
other period of time as is determined by the Board) following the date of death,
by the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent of the right to
exercise that would have accrued had the Optionee continued living three (3)
months after the date of death; or
within one (1) month after the termination of
Continuous Status as an Employee or Consultant, the Option may be exercised, at
any time within three (3) months (or such other period of time as is determined
by the Board) following the date of death, by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that had accrued at the date of
termination.
NON-TRANSFERABILITY OF OPTIONS. Except as otherwise expressly
provided in the terms of an individual Option, the Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee. Notwithstanding the
foregoing, the person to whom the Option is granted may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionee, shall thereafter be
entitled to exercise the Option.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. The
number of shares of Common Stock covered by each outstanding Option, and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split or the payment of a
stock dividend with respect to the Common Stock or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration". Such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, or in the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, the Option will terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that any Option
shall terminate as of a date fixed by the Board and give each Optionee the right
to exercise his Option as to all or any part of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable.
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TIME OF GRANTING OPTIONS. The date of grant of an Option
shall, for all purposes, be the date on which the Board makes the determination
granting such Option. Notice of the determination shall be given to each
Employee or Consultant to whom an Option is so granted within a reasonable time
after the date of such grant.
AMENDMENT AND TERMINATION OF THE PLAN.
Amendment and Termination. The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable.
Effect of Amendment or Termination. Any such
amendment or termination of the Plan shall not affect Options already granted
and such Options shall remain in full force and effect as if this Plan had not
been amended or terminated, unless mutually agreed otherwise between the
Optionee and the Board, which agreement must be in writing and signed by the
Optionee and the Company.
CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of the law, including without limitation, the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
EFFECTIVE DATE. The Plan, as amended and restated herein,
shall become effective on August 15, 1996.
146
<PAGE> 132
AMENDMENT NO. 1 TO BUILDING II LEASE
(555 RIVER OAKS PARKWAY)
This Amendment No. 1 to Lease, dated May 31, 1996, hereby amends that
certain Building II Lease ("Lease"), dated June 29, 1989, between RIVER OAKS
PLACE ASSOCIATES, a California limited partnership, as Landlord, and CADENCE
DESIGN SYSTEMS, INC., a Delaware corporation, as Tenant, as follows:
Article 3.4(a) is amended to read in its entirety as follows:
"3.4 Extension of Term.
"(a) Automatic Extension. When the term of the Phase II
Lease commences, the Initial Term hereof shall be
automatically extended so as to expire on December 31, 2005."
Except as set forth above, the Lease continues in full force and effect
according to its terms.
147
<PAGE> 133
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 to Building II Lease as of the date first above appearing.
RIVER OAKS PLACE ASSOCIATES, a California limited partnership,
By: Seeley Properties, Inc., a California corporation
By:
---------------------------------
(signature)
---------------------------------
(print or type name)
---------------------------------
(title)
General Partner
CADENCE DESIGN SYSTEMS, INC., a Delaware corporation
By:
---------------------------------
(signature)
---------------------------------
(print or type name)
---------------------------------
(title)
148
<PAGE> 134
AMENDMENT NO. 2 TO BUILDING II LEASE
(555 RIVER OAKS PARKWAY)
This Amendment No. 2 to Lease, dated May 31, 1996, hereby amends that
certain Building II Lease, dated June 29, 1989, between RIVER OAKS PLACE
ASSOCIATES, L.P., a California limited partnership, as Landlord, and CADENCE
DESIGN SYSTEMS, INC., a Delaware corporation, as Tenant, as amended by that
certain Amendment No. 1 to Building II Lease dated as of May 31, 1996
(collectively, the "Lease"), as follows:
1. Article 4.1 is amended to read in its entirety as follows:
(A) BASE RENT. Commencing June 1, 1996, the monthly base rent ("Base
Rent") for the Premises shall be calculated as one-twelfth of the
following annual base rents, calculated with the years noted herein as
calendar years beginning on June 1 and ending on June 1 of each
respective year (except that Year 10 shall end on the expiration date
of this Lease):
<TABLE>
<CAPTION>
Year Minimum Net Rent
---- ----------------
<S> <C>
1 $1,115,800
2 $1,115,800
3 $ 956,400
4 $ 985,092
5 $1,014,645
6 $1,045,085
7 $1,076,437
8 $1,108,730
9 $1,141,992
10 $1,176,252
</TABLE>
Except as set forth above, the Lease continues in full
force and effect according to its terms.
149
<PAGE> 135
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
2 to Phase II Lease as of the date first above appearing.
RIVER OAKS PLACE ASSOCIATES, L.P., a California limited partnership,
By: Seeley Properties, Inc., a California corporation
By:
---------------------------------
(signature)
---------------------------------
(print or type name)
---------------------------------
(title)
General Partner
CADENCE DESIGN SYSTEMS, INC., a Delaware corporation
By:
---------------------------------
(signature)
---------------------------------
(print or type name)
---------------------------------
(title)
150
<PAGE> 136
AMENDMENT NO. 1 TO BUILDING I LEASE
(575 RIVER OAKS PARKWAY)
This Amendment No. 1 to Lease, dated May 31, 1996, hereby amends that
certain Building I Lease ("Lease"), dated June 29, 1989, between RIVER OAKS
PLACE ASSOCIATES, a California limited partnership, as Landlord, and CADENCE
DESIGN SYSTEMS, INC., a Delaware corporation, as Tenant, as follows:
Article 3.1(a) is amended to read in its entirety as follows:
"3.1 Initial Term.
"(a) Substantial Completion. Unless sooner terminated in
accordance with the provisions hereof, the Initial Term shall
commence upon the date of Substantial Completion of the Tenant
Improvements (the "Commencement Date") and shall expire,
unless sooner terminated in accordance with the provisions
hereof, on December 31, 2005."
Except as set forth above, the Lease continues in full force and effect
according to its terms.
151
<PAGE> 137
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 to Building I Lease as of the date first above appearing.
RIVER OAKS PLACE ASSOCIATES, a California limited partnership,
By: Seeley Properties, Inc., a California corporation
By:
---------------------------------
(signature)
---------------------------------
(print or type name)
---------------------------------
(title)
General Partner
CADENCE DESIGN SYSTEMS, INC., a Delaware corporation
By:
---------------------------------
(signature)
---------------------------------
(print or type name)
---------------------------------
(title)
152
<PAGE> 138
AMENDMENT NO. 2 TO BUILDING I LEASE
(575 RIVER OAKS PARKWAY)
This Amendment No. 2 to Lease, dated May 31, 1996, hereby amends that
certain Building I Lease, dated June 29, 1989, between RIVER OAKS PLACE
ASSOCIATES, L.P., a California limited partnership, as Landlord, and CADENCE
DESIGN SYSTEMS, INC., a Delaware corporation, as Tenant, as amended by that
certain Amendment No. 1 to Building I Lease dated as of May 31, 1996
(collectively, the "Lease"), as follows:
1. Article 4.1 is amended to read in its entirety as follows:
4.1. BASE RENT. Commencing June 1, 1996, the monthly base rent ("Base
Rent") for the Premises shall be calculated as one-twelfth of the
following annual base rents, calculated with the years noted herein as
calendar years beginning on June 1 and ending on June 1 of each
respective year (except that Year 10 shall end on the expiration date
of this Lease):
<TABLE>
<CAPTION>
Year Minimum Net Rent
---- ----------------
<S> <C>
1 $766,500
2 $766,500
3 $657,000
4 $676,710
5 $697,011
6 $717,922
7 $739,459
8 $761,643
9 $784,493
10 $808,028
</TABLE>
Except as set forth above, the Lease continues in full force and effect
according to its terms.
153
<PAGE> 139
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
2 to Building I Lease as of the date first above appearing.
RIVER OAKS PLACE ASSOCIATES, L.P., a California limited partnership,
By: Seeley Properties, Inc., a California corporation
By:
---------------------------------
(signature)
---------------------------------
(print or type name)
---------------------------------
(title)
General Partner
CADENCE DESIGN SYSTEMS, INC., a Delaware corporation
By:
---------------------------------
(signature)
---------------------------------
(print or type name)
---------------------------------
(title)
154
<PAGE> 140
AMENDMENT NO. 1 TO PHASE II LEASE
(535-545 RIVER OAKS PARKWAY)
This Amendment No. 1 to Lease, dated May 31, 1996, hereby amends that
certain Phase II Lease ("Lease"), dated June 29, 1989, between RIVER OAKS PLACE
ASSOCIATES, a California limited partnership, as Landlord, and CADENCE DESIGN
SYSTEMS, INC., a Delaware corporation, as Tenant, as follows:
Article 3.1 is amended to read in its entirety as follows:
"3.1 Commencement of Term. Unless sooner termination in
accordance with the provisions hereof, the Initial Term shall
commence upon the earlier of Partial Substantial Completion,
or Substantial Completion, of the Improvements (the
"Commencement Date") and shall expire, unless sooner
terminated in accordance with the provisions hereof, on
December 31, 2005."
Except as set forth above, the Lease continues in full force and effect
according to its terms.
155
<PAGE> 141
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 to Phase II Lease as of the date first above appearing.
RIVER OAKS PLACE ASSOCIATES, a California limited partnership,
By: Seeley Properties, Inc., a California corporation
By:
---------------------------------
(signature)
---------------------------------
(print or type name)
---------------------------------
(title)
General Partner
CADENCE DESIGN SYSTEMS, INC., a Delaware corporation
By:
---------------------------------
(signature)
---------------------------------
(print or type name)
---------------------------------
(title)
156
<PAGE> 142
AMENDMENT NO. 2 TO PHASE II LEASE
(535-545 RIVER OAKS PARKWAY)
This Amendment No. 2 to Lease, dated May 31, 1996, hereby amends that
certain Phase II Lease, dated June 29, 1989, between RIVER OAKS PLACE
ASSOCIATES, L.P., a California limited partnership, as Landlord, and CADENCE
DESIGN SYSTEMS, INC., a Delaware corporation, as Tenant, as amended by that
certain Amendment No. 1 to Phase II Lease dated as of May 31, 1996
(collectively, the "Lease"), as follows:
1. Article 4.1 is amended to read in its entirety as follows:
4.1. BASE RENT. Commencing June 1, 1996, the monthly base rent ("Base
Rent") for the Premises shall be calculated as one-twelfth of the
following annual base rents, calculated with the years noted herein as
calendar years beginning on June 1 and ending on June 1 of each
respective year (except that Year 10 shall end on the expiration date
of this Lease):
<TABLE>
<CAPTION>
Year Minimum Net Rent
---- ----------------
<S> <C>
1 $1,617,700
2 $1,617,700
3 $1,386,600
4 $1,428,198
5 $1,471,044
6 $1,515,176
7 $1,560,630
8 $1,607,449
9 $1,655,673
10 $1,705,343
</TABLE>
2. Article 4.2 is amended to read in its entirety as follows:
4.2. ESCALATION OF BASE RENT.
(a) In the event that, at any time, the ratio (the "Debt Service
Coverage") of (i) the sum, for any time period, of (A) the Base Rent,
(B) the base rent under that certain Building I Lease dated June 29,
1989 between Landlord and Tenant, as amended, and (C) the base rent
under that certain Building II Lease dated June 29, 1989 between
Landlord and Tenant, as amended, to (ii) the sum of interest and
principal payments due from Landlord under the ROPA Loan for such time
period, would otherwise decrease to below 1.05:1.00, the Base Rent
shall automatically increase proportionately such that the Debt Service
Coverage shall always remain at least 1.05:1.00. For the purposes of
this paragraph, the "ROPA Loan" shall mean the loan by Credit Lyonnais
New York Branch, a Branch, licensed under the laws of the State of New
York, of a banking corporation organized under the laws of the Republic
of France ("Bank"), to Landlord in the maximum principal amount of
Twenty Million Dollars ($20,000,000) evidenced by that certain Loan
Agreement dated as of May __, 1996 by and between Landlord and Bank.
(b) In the event that, at any time, the Base Rent escalates in
accordance with Article 4.2(a) above, and the Debt Service Coverage
subsequently declines, Base Rent shall automatically decrease to the
higher of (i) an amount such that the Debt Service Coverage shall equal
at least 1.05:1.00 and (ii) the amounts set forth in Article 4.1 of
this Lease.
(c) Base Rent shall be adjusted monthly in arrears.
Except as set forth above, the Lease continues in full force and effect
according to its terms.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
2 to Phase II Lease as of the date first above appearing.
RIVER OAKS PLACE ASSOCIATES, L.P., a California limited partnership,
By: Seeley Properties, Inc., a California corporation
157
<PAGE> 143
By:
---------------------------------
(signature)
---------------------------------
(print or type name)
---------------------------------
(title)
General Partner
CADENCE DESIGN SYSTEMS, INC., a Delaware corporation
By:
---------------------------------
(signature)
---------------------------------
(print or type name)
---------------------------------
(title)
158
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> JUN-29-1996
<CASH> 88646
<SECURITIES> 10433
<RECEIVABLES> 93955
<ALLOWANCES> 5217
<INVENTORY> 6726
<CURRENT-ASSETS> 221507
<PP&E> 254624
<DEPRECIATION> 115507
<TOTAL-ASSETS> 412528
<CURRENT-LIABILITIES> 219723
<BONDS> 0
0
0
<COMMON> (37246)
<OTHER-SE> 175737
<TOTAL-LIABILITY-AND-EQUITY> 412528
<SALES> 177026
<TOTAL-REVENUES> 177026
<CGS> 37765
<TOTAL-COSTS> 37765
<OTHER-EXPENSES> 95828
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 390
<INCOME-PRETAX> 42669
<INCOME-TAX> 14081
<INCOME-CONTINUING> 28588
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28588
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
