<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from__________ to ___________
Commission file number 0-16071
CALCOMP TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0888312
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2411 W. La Palma Avenue
Anaheim, California 92803
(Address of principal executive offices) (Zip Code)
(714) 821-2000
(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, and (2) has been subject to such filing requirements
for the past 90 days.
YES [X] NO [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding at July 25, 1997
--------------------- ----------------------------
$ .01 par value 46,898,650
<PAGE>
CALCOMP TECHNOLOGY, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
------------------------------
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements Page
----
<S> <C>
Condensed Consolidated Balance Sheets for the periods ended
June 29, 1997 and December 29, 1996.......................... 1
Condensed Consolidated Statements of Operations for the three
and six months ended June 29, 1997 and June 30, 1996......... 2
Condensed Consolidated Statements of Cash Flows for the six
months ended June 29, 1997 and June 30, 1996................. 3
Notes to Condensed Consolidated Financial Statements......... 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................ 11
Signatures........................................................... 12
</TABLE>
<PAGE>
CALCOMP TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
--------------
<TABLE>
<CAPTION>
June 29, December 29,
1997 1996
(Unaudited)
-------------- ------------
ASSETS: (In thousands)
<S> <C> <C>
Current Assets:
Cash $ 8,568 $ 15,290
Accounts receivable, net 42,533 48,230
Accounts receivable from affiliates, net 3,420 3,929
Inventories (Note 3) 57,740 57,765
Net assets held for sale (Note 6) --- 15,119
Prepaids and other current assets 3,286 5,866
--------- ---------
Total Current Assets 115,547 146,199
Property, plant and equipment, net 28,733 26,891
Goodwill, net 82,522 82,080
Other assets 19,644 20,915
--------- ---------
Total Assets $ 246,446 $ 276,085
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable $ 19,470 $ 27,554
Deferred revenue 8,556 9,217
Accrued restructuring costs 4,000 9,355
Accrued reorganization costs (Note 2) 7,056 5,595
Other accrued liabilities 9,393 10,871
Line of credit --- 2,948
Line of credit with Majority Shareholder
(Note 4) 36,611 ---
Other current liabilities 19,149 19,428
--------- ---------
Total Current Liabilities 104,235 84,968
Other long-term liabilities 8,445 9,733
Line of Credit with Majority Shareholder (Note
4) --- 28,880
Stockholders' Equity:
Preferred stock, $.01 par value, 5,000,000 shares
authorized --- ---
Common stock,$.01 par value, 60,000,000 shares
authorized, 46,898,650 shares issued on June 29,
1997 and December 29, 1996 469 469
Additional paid-in capital 286,860 286,860
Accumulated deficit (158,771) (141,957)
Cumulative translation adjustment 5,673 7,597
Less: Treasury stock, at cost, 49,000 shares (465) (465)
--------- ---------
Total Stockholders' Equity 133,766 152,504
--------- ---------
Total Liabilities and Stockholders' Equity $ 246,446 $ 276,085
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
1
<PAGE>
CalComp Technology, Inc.
Condensed Consolidated Statements of Operations
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
June 29, June 30, June 29, June 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(In Thousands, except share and per share data)
NET REVENUE $ 52,060 $ 46,954 $ 112,583 $ 102,806
Cost applicable to revenues 41,824 39,285 90,420 80,668
----------- ----------- ----------- -----------
Gross Profit 10,236 7,669 22,163 22,138
EXPENSES:
Selling 9,556 11,718 20,516 23,428
Research and development 5,628 5,027 9,266 10,098
General and administrative 6,297 4,105 10,932 8,341
Corporate expenses from Majority Shareholder 725 56 1,450 2,362
Gain on disposal of facility (Note 6) (5,873) --- (5,873) ---
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (6,097) (13,237) (14,128) (22,091)
Interest expense (1,130) --- (2,011) ---
Other (expense) income, net 136 102 (148) 742
----------- ----------- ----------- -----------
LOSS BEFORE INCOME TAXES (7,091) (13,135) (16,287) (21,349)
Provision for (Benefit of) income taxes 234 (283) 527 618
----------- ----------- ----------- -----------
NET LOSS $ (7,325) $ (12,852) $ (16,814) $ (21,967)
=========== =========== =========== ===========
NET LOSS PER SHARE OF COMMON STOCK $ (0.16) $ (0.32) $ (0.36) $ (0.54)
WEIGHTED-AVERAGE SHARES OUTSTANDING 46,898,650 40,742,957 46,898,650 40,742,957
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
CalComp Technology, Inc.
Condensed Consolidated Statements of Cash Flows
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------------
June 29, 1997 June 30, 1996
------------- -------------
(In thousands)
<S> <C> <C>
Operating activities:
Net loss $(16,814) $(21,967)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 5,939 4,612
Gain on disposal of facility (5,873) --
Restructuring payments (5,355) --
Reorganization payments (1,679) --
Investee income (523) (383)
Net changes in operating assets and liabilities (3,850) 10,415
-------- --------
Net cash used in operating activities (28,155) (7,323)
Investing activities:
Net Proceeds on disposal of facility 21,121 --
Purchase of property, plant and equipment (4,678) (2,267)
Proceeds from disposition of property, plant and equipment 635 66
Dividends received 168 311
-------- --------
Net cash provided (used) by investing activities 17,246 (1,890)
Financing activities:
Proceeds from line of credit with Majority Shareholder 7,731 --
Repayment of revolving credit line (2,948) --
Net cash received from Majority Shareholder -- 8,889
-------- --------
Net cash provided by financing activities 4,783 8,889
Effect of exchange rate changes on cash (596) (136)
-------- --------
Change in cash (6,722) (460)
Cash at beginning of period 15,290 14,574
Cash at end of period $ 8,568 $ 14,114
======== ========
Supplementary disclosures of cash flow information:
Net income taxes (received) paid $ (361) $ 93
Interest paid $ 2,116 $ --
</TABLE>
See accompanying notes to condensed consolidated financial statements
3
<PAGE>
CalComp Technology, Inc.
Notes to Condensed Consolidated Financial Statements
--------------------------------------------------
June 29, 1997
------------------------------------
(Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month and six
month periods ended June 29, 1997, are not necessarily indicative of the results
that may be expected for the Company's fiscal year or any other interim period.
Certain reclassifications of prior year amounts have been made to conform to the
current year presentation.
It is suggested that the financial statements be read in conjunction with the
information contained in the Company's Annual Report on Form 10-K, for the year
ended December 29, 1996, filed with the Securities and Exchange Commission.
2. Merger of Summagraphics Corporation with CalComp, Inc.
CalComp Technology, Inc. (the "Company") completed a Plan of Reorganization
(the "Exchange")for the exchange of Stock of CalComp Inc. for Stock of
Summagraphics Corporation as of July 23, 1996. Pursuant to the Exchange, the
Company issued to Lockheed Martin Corporation ("Majority Shareholder")
40,742,957 shares of Common Stock of the Company, representing 89.7% of the
total outstanding shares of Common Stock of the Company following such issuance,
in exchange for all of the outstanding capital stock of CalComp Inc. As a
result of the Exchange, Lockheed Martin Corporation acquired control of the
Company and CalComp Inc. became a wholly-owned subsidiary of the Company. In
connection with the Exchange, the Company changed its name from Summagraphics
Corporation to CalComp Technology, Inc. and changed its year end from May 31 to
a fifty-two, fifty-three week fiscal year ending on the last Sunday of December.
The purchase was accounted for as a "reverse acquisition" whereby CalComp Inc.
was deemed to have acquired CalComp Technology, Inc. (formerly Summagraphics
Corporation) for financial reporting purposes. However, CalComp Technology, Inc.
remains the continuing legal entity and registrant for Securities and Exchange
Commission filing purposes. Consistent with reverse acquisition accounting, the
historical financial statements of the Company presented for the three month and
six periods ended June 30, 1996, are the consolidated financial statements of
CalComp Inc. and differ from the consolidated financial statements of the
Company previously reported.
4
<PAGE>
During the three-month period ended June 29, 1997, the purchase price
allocation for the exchange was adjusted to reflect differences between the
current and preliminary estimate of costs incurred to terminate facility leases
and to reflect actual costs incurred related to various acquisition liabilities.
The purchase price allocation adjustment resulted in an adjustment to increase
goodwill by $3,140,000.
3. Inventories
Inventories, net of reserves, as of June 29, 1997 and December 29, 1996 are as
follows:
<TABLE>
<CAPTION>
June 29, December 29,
1997 1996
-------- ------------
(in thousands)
<S> <C> <C>
Raw materials and purchased components $13,601 $ 16,719
Work in process 853 699
Finished goods 43,286 40,347
------- --------
$57,740 $ 57,765
======= ========
</TABLE>
4. Line of Credit and Cash Management Agreements with Majority Shareholder
Revolving Credit Agreement: In July 1996, the Company and the Majority
Shareholder entered into a Revolving Credit Agreement, which was subsequently
amended and restated ("Agreement"), pursuant to which the Majority Shareholder
will provide, from time to time, financing of up to $73,000,000 for repayment of
specified indebtedness and general corporate purposes including, without
limitation, financing the working capital needs of the Company and its
subsidiaries. Among other things the Agreement provides for a grant of a
general security interest in the Company's assets to the Majority Shareholder.
The Agreement has a termination date of July 22, 1998, however, the commitment
of the Majority Shareholder to make loans to the Company may be canceled, with
120 days prior written notice, at any time after the first anniversary date of
the Agreement dated December 20, 1996.
The Agreement bears interest, at the Company's option, at either (1) a rate
per annum equal to the higher of the Federal Funds Rate as published in the
Federal Reserve System plus 0.5% or the rate publicly announced from time to
time by Morgan Guaranty Trust Company of New York as its "prime" rate or (2)
LIBOR plus 2.0%. The Agreement contains certain negative and affirmative
covenants. There is no required prepayment or scheduled reduction of
availability of loans under the Agreement.
Cash Management Agreement: Additionally, in July 1996, the Company and the
Majority Shareholder entered into a cash management agreement, whereby the
Majority Shareholder will provide cash advances up to $2,000,000 to the Company
for cash shortfalls. This agreement has a termination date of June 1, 1998 and
bears interest at the Federal Funds Rate.
As of June 29, 1997 the Company has an aggregate balance of $36,611,000 on the
Revolving Credit and Cash Management Agreements, with an interest rate of 7.7%.
5
<PAGE>
5. Per Share Data
Net loss per share has been calculated by dividing net loss by the weighted
average number of common shares outstanding during the period. All common stock
equivalents have been excluded from the calculation of weighted average common
shares outstanding because their inclusion would be anti-dilutive or decrease
the loss per share amount otherwise computed. In February 1997, the Financial
Accounting Standards Board Issued Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings Per Share", which establishes new standards for
computing and disclosing earnings per share. The Statement requires dual
presentation of "basic" and "diluted" earnings per share, each as defined
therein, which replace primary and fully diluted earnings per share,
respectively, required under current guidance. SFAS No. 128 is effective for
financial statements for both interim and annual periods ending after December
15, 1997. Early adoption is not permitted; however, after the effective date,
all prior period earnings per share data presented will be required to be
restated to conform to the provisions of the new statement. Management does not
currently anticipate that earnings per share computed under the new standard
will differ materially from earnings per share computed and disclosed under
current guidance.
6. Disposal of Headquarters Facility
On June 24, 1997, the Company completed the sale of its 27.9 acre headquarters
facility, including ten buildings, in Anaheim, California, to Lincoln Property
Company, Inc. of Dallas, Texas, and D.L.J. Real Estate Capital Partners for
$21.5 million, less associated costs to sell. During the fourth quarter of
1996, the Company had previously estimated it would incur a loss on the facility
and had written the facility down to its then current appraised value of $15.1
million. As a result of this write-down and the subsequent sale of the facility
for $21.5 million, less associated costs to sell, the Company recognized a gain
on the sale of $5.9 million.
Under terms of the transaction, the Company will lease back approximately
138,500 square feet of space, or two of the ten buildings located on the
property, for one year, with an option to continue the lease for an additional
year. The sale of the Anaheim property is part of the Company's previously
announced program to reduce operating expenses and streamline its
infrastructure.
Proceeds from the sale of the property were used to reduce outstanding
borrowings under a line of credit the Company has with the Majority Shareholder.
7. Contingencies
Legal: On November 18, 1996, the Company acquired all the outstanding common
stock of Topaz Technologies, Inc. ("Topaz"), a privately held company in
Sunnyvale, California. Topaz is a developer and manufacturer of a proprietary
inkjet printing technology.
6
<PAGE>
A complaint was filed on January 25, 1997 by Raster Graphics, Inc. ("Raster
Graphics"), against Topaz, the former shareholders of Topaz, Andreas Bibl, Deane
Gardner and John Higginson (the former "Topaz Shareholders"), and the Company in
California Superior Court in Santa Clara County. The complaint alleged, among
other things, misappropriation of trade secrets, breach of fiduciary duty,
unfair competition, breach of contract and conversion arising from the
employment by Raster Graphics of the former Topaz Shareholders who founded
Raster Graphics in 1987 while they participated in the development of certain
inkjet technology. On April 18, 1997, Raster Graphics filed an amended
complaint, dismissing its claims against the Company and amending the complaint
to focus on technology relating to a test fixture that had been developed at
Raster Graphics. The complaint seeks unspecified compensatory damages, punitive
damages, costs and injunctive relief. The Company continues to believe that the
inkjet printing technology developed by Topaz is proprietary to Topaz and is not
based on Raster Graphics technology, and that this suit is without merit.
The Company is also party to other legal actions in the normal course of its
business. The Company does not believe that the disposition of these matters
will have a material adverse effect on its financial position or results of
operations taken as a whole.
Environmental Matters: In connection with the sale of the Company's
headquarters facility in Anaheim, California, the Company has agreed to remain
obligated to address certain environmental conditions, which existed at the
site, prior to the closing of the sale, if remediation is required by
appropriate governmental authorities. In addition, Lockheed Martin, the
Company's Majority Shareholder has guaranteed the performance of the Company
under this environmental agreement. The Company's environmental status to date
includes the 1988 submision of a plan to the California Regional Water Quality
Control Board (the Water Board) relating the Company's facility in Anaheim.
This plan includes continuing monitoring of several ground water sampling wells
at the site. No remediation has been ordered to date by the Water Board and,
therefore, no liability has been recorded for any such activities. Due to the
nature of the contingency, management is unable to estimate a possible range of
costs, if any, that may be incurred should remediation be required. The Company
is currently conducting a study to evaluate possible remediation techniques in
the event of any future governmental requirements.
Effective January 1, 1997, the Company adopted the American Institute of
Certified Public Accountants' Statement of Position (SOP) No. 96-1,
"Environmental Remediation Liabilities." In addition to providing a
nonauthoritative discussion of major federal legislation dealing with
environmental matters, SOP 96-1 also provides authoritative guidance on certain
remediation liabilities. The impact of the adoption of this SOP was not
material to the Company's consolidated results of operations, financial position
or disclosures.
7
<PAGE>
CalComp Technology, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations:
On July 23, 1996, Summagraphics Corporation ("Summagraphics") and CalComp Inc.
("CalComp"), a wholly-owned subsidiary of Lockheed Martin Corporation, effected
a plan of reorganization for the exchange of CalComp stock for Summagraphics
stock, after which Summagraphics changed its name to CalComp Technology, Inc.
(the "Company"). The newly reorganized company adopted a fiscal year ending on
the last Sunday of December. For accounting purposes, CalComp was treated as
the acquiring company. Therefore, the financial statements for the prior year
periods are those of CalComp and the financial statements for the current year
reflect CalComp's acquisition of Summagraphics as of July 23, 1996.
During the quarter ended June 29, 1997, the purchase price allocation for the
Exchange was adjusted to reflect differences between the current and preliminary
estimate of costs incurred to terminate facility leases and to reflect actual
costs incurred related to various acquisition liabilities. The purchase price
allocation revision resulted in an adjustment to increase goodwill by $3.1
million.
Revenues
Net revenues for the quarter ended June 29, 1997 were $52.1 million as
compared to $47 million for the same period in 1996, an increase of 11%.
Product and services revenues increased 13% and 1%, respectively, versus the
same period in 1996. Product revenues for the quarter were favorably impacted
by the addition of the Summagraphics' Cutter and Digitizer product lines and the
Summagraphics' CAD Warehouse business. Service revenues declined to 17% of
total revenue during the period versus 19% during the prior period due primarily
to the transition to lower cost products, which traditionally do not capture the
same level of service contract revenue as higher cost products, and a lower rate
of service contract renewals as older generation products were retired from
service.
Net revenues for the six months ended June 29, 1997 were $112.6 million as
compared to $102.8 million for the same period in 1996, an increase of 9.5%.
Product revenues were up 16% while service revenues were down by 15% versus the
same period in 1996. The increase in product revenue was primarily associated
with the acquisition of the Summagraphics' Cutter and Digitizer product lines
and the CAD Warehouse business. Service contract revenues were down for the six
months for the same reasons discussed above for the quarter.
Gross Profit
Gross profit as a percentage of net revenue was 20% for the second quarter of
1997, compared to 16% for the second quarter of 1996. The improvement in
margin versus the prior year relates primarily to improved exchange rates on
yen denominated purchases during the period which lowered cost of goods sold,
as well as discounting of selling prices in the prior year to counter
competitive end of life pricing, which was not required during the current
period. On a year to date basis, gross profit for 1997 was 20% of net revenue
versus 22% for the comparable period in the prior year. This decrease was
primarily attributable to: continued competitive pricing pressure; continued
shift in the mix of products sold towards lower cost, lower margin products; the
phase out of mature, end of life products at reduced selling prices; and the
continued deterioration in service gross margins primarily due to decreased
service revenues without corresponding cost reductions.
The companies that participate in the industry are highly competitive.
Reduced unit selling prices and shortened product life cycles are expected to
continue to place pressure on the Company's margins.
8
<PAGE>
Operating Expenses:
Expenses for the quarter decreased 22% or $4.6 million to $16.3 million,
compared to the prior year quarter, primarily due to the recognition of the one
time gain of $5.9 million from the sale of the Company's headquarters facility
during the period. Excluding such gain, expenses increased 6% or $1.3 million
for the quarter.
Selling expenses as a percentage of net revenue declined to 18% for the
second quarter and first six months compared to 25% and 23% of net revenues for
the second quarter and first six months of 1996, respectively, primarily from
the benefits of facility and staffing consolidations as well as reductions in
advertising and marketing expenditures.
Development expenses as a percentage of net revenue were 11% for the second
quarter and 8% for the first six months of 1997, compared to 11% for the second
quarter and 10% for the first six months of 1996, respectively. The quarter to
quarter spending, while substantially flat, reflects increases in spending
associated with the Company's focus on new inkjet technologies substantially
offset by spending reductions in mature technologies.
General and administrative expenses increased as a percentage of net revenue
to 12% for the second quarter and 10% for the first six months of 1997 as
compared to 9% for the second quarter and 8% for the first six months of 1996,
respectively, primarily attributable to: increases in expenses relating to new
management information systems; increases in goodwill and intangible
amortization expenses resulting from the Summagraphics and Topaz acquisitions;
and relocation and facility consolidation expenses required as a result of the
sale of the headquarters facility; partially offset by expense reductions
resulting from cost reduction and restructuring actions taken during 1996 and
1997. Corporate expenses decreased to $0.7 million for the quarter and $1.5
million year to date, or to 1% of net revenues for the period, versus 2% in the
prior year as a result of decreases in expense allocations to the Company by its
Majority Shareholder.
Interest Expense
Interest expense was $1.1 million for the quarter and $2.0 million year to
date, representing 2% of net revenues for the periods, while there was no
interest expense for the same periods in the prior year. This is a result of
borrowings during the first half of 1997 not required in the prior year.
Income Taxes
Income taxes were $0.2 million for the second quarter versus an income tax
benefit of $0.3 million for the same quarter last year. Income taxes for the
first six months of 1997 were $0.5 million versus $0.6 million for the same
period in 1996. These taxes result primarily from provision of foreign taxes
for profitable foreign locations.
Liquidity and Capital Resources
When possible, the Company finances its working capital needs and capital
expenditure requirements from internally generated funds. At June 29, 1997, the
Company had cash of $8.6 million consisting primarily of foreign cash balances.
During the six months ended June 29, 1997, the Company used $28.2 million in
operations primarily to fund its $16.8 million net loss, net of depreciation and
amortization and gain on disposal of facility, and $7.0 million in payments
relating to the Company's reorganization and restructuring plans announced in
1996. In addition, the Company used $4.7 million for investments in plant and
equipment and $2.9 million to repay preexisting Summagraphics debt. Those uses
of cash were funded primarily by borrowings from the Company's Majority
Shareholder of $7.7 million, pursuant to the Revolving Credit Agreement and Cash
Management Agreement ("Credit Agreements") and $21.1 million in net proceeds
from the sale of the Company's headquarters facility in Anaheim, California.
9
<PAGE>
In connection with these Credit Agreements, the Company has access to $75
million of general purpose financing. The Credit Agreements contain typical
covenants with respect to the conduct of the Company's business and require the
maintenance of various financial balances and ratios. As of June 29, 1997, the
Company was in compliance with all such covenants. As of June 29, 1997, the
Company has utilized $36.6 million of amounts available under its Credit
Agreements.
During the first six months of 1997, the Company spent $0.7 million in the
implementation of its management information systems and $3.4 million for new
equipment to support its new line of large format digital imaging products. It
expects to spend $1.0 million during the remainder of 1997 on its management
information systems and an additional $2.0 million on equipment to support its
new line of large format digital imaging products. The Company anticipates that
cash generated from operations and funds available under the Credit Agreements
should be sufficient to fund the Company's anticipated operating needs for the
foreseeable future.
Restructuring
During the fourth quarter of 1996, the Company incurred a one time
restructuring charge of $21.0 million consisting of $10.9 million for the write
down of the Company's headquarters facility to its estimated fair market value,
lease termination and fixed asset disposition costs of $3.2 million related to
the company exiting from certain facilities, and severance costs of $6.9 million
associated with the elimination of 285 positions worldwide. Year to date, the
Company has spent $5.4 million against these accruals to cover primarily
severance actions and the elimination and consolidation of facilities occurring
during the period.
In June 1997, the Company completed the sale of its 27.9 acre headquarters
facility in Anaheim, California for $21.5 million, less associated costs to
sell. During the fourth quarter of 1996, the Company had previously estimated it
would incur a loss on the facility and had written the facility down to its then
current appraised value of $15.1 million. As a result of this write-down and the
subsequent sale of the facility, the Company recognized a gain on the sale of
$5.9 million. Pursuant to the transaction, the Company will lease back
approximately 138,500 square feet of space for one year, with an option to
extend for a second year. Proceeds from the sale of the property were used to
reduce outstanding borrowings under the Credit Agreements with the Company's
Majority Shareholder. The sale of the Anaheim property is part of the Company's
previously announced program to reduce operating expenses and streamline the
Company's infrastructure.
This Report on Form 10-Q contains statements which, to the extent that they
are not recitations of historical facts, constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. All forward
looking statements involve risks and uncertainties. The forward looking
statements in this Report on Form 10-Q have been made subject to the safe harbor
protections provided by Sections 27A and 21E.
10
<PAGE>
CalComp Technology, Inc.
PART II. OTHER INFORMATION
-------------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - The following exhibits are included herein:
10.25 Headquarters Lease Agreement dated as of June 24, 1997
between the Company and Lincoln - RECP Anaheim OPCO, LLC.
10.26 Agreement of Purchase and Sale and Joint Escrow
Instructions dated as of April 4, 1997 between
the Company and Lincoln Property Company, N.C., Inc.
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
11
<PAGE>
CalComp Technology, Inc.
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.
CALCOMP TECHNOLOGY, INC
-----------------------
(Registrant)
Date: August 8, 1997
/s/ John C. Batterton
---------------------
John C. Batterton
President and Chief Executive Officer
/s/ John J. Millerick
---------------------
John J. Millerick
Senior Vice President, Finance
and Chief Financial Officer
12
<PAGE>
EXHIBIT 10.25
LEASE AGREEMENT
PART I
This Part I contains Key Definitions (designated by " ") setting forth
major key words or phrases and the meaning to be ascribed when used in Part II
of the Lease. This Section I also contains Lease Reference Information which is
included for convenience and ease of reference only for lease administration and
does not constitute a definition or a substantive lease provision or govern the
substantive lease provisions set forth in Part II of the Lease.
"Landlord": LINCOLN - RECP ANAHEIM OPCO, LLC, a Delaware limited liability
company
"Tenant": CALCOMP TECHNOLOGY, INC., a Delaware corporation
2411 West La Palma Avenue
Anaheim, CA 92801
"Buildings": 2411-1 West La Palma Avenue ("Building 1")
2411-5 West La Palma Avenue ("Building 5")
2411-9 West La Palma Avenue ("Building 9")
"Premises": Building 1 and Building 5 and those portions of Building 9 shown on
the attached Exhibit A, plus, on a temporary basis, the Temporary
---------
Storage Space areas more particularly described in Sections 32 and
33 of Part II and shown on the attached Exhibit A.
---------
"Project": The real property more particularly described on Exhibit A attached
---------
hereto of which the Premises are a part, together with the ten (10)
buildings located thereon (including the Buildings) containing in the
aggregate approximately 432,149 square feet of rentable space,
formerly known as CalComp Complex, associated parking areas and
related improvements located thereon and appurtenances thereto.
"Rentable Square Feet of Premises":
Building 1 Approximately 75,735 rentable square feet
Building 5 Approximately 62,748 rentable square feet
Building 9 Approximately 12,640 rentable square feet
Total Approximately 151,123 rentable square feet
"Rentable Square Feet
of Project": Approximately 396,193 rentable square feet (the parties
hereby agreeing that the rentable square footage of the
Project shall not include the square footage of Buildings
7 and 8).
"Tenant's Proportionate
Share" (of the Project): Initially, thirty-eight percent (38%). Such percentage
is based upon a fraction, the numerator of which is
the total approximate rentable square footage of the
Premises (excluding the Temporary Storage Space and
Additional Temporary Storage Space described in
Sections 32 and 33 of Part II, respectively) and the
denominator of which is the total approximate rentable
square footage of the Project. Tenant's Proportionate
Share shall be increased or decreased, as appropriate,
with any change in the total square footage of the
Premises or the Project, including, without
limitation, the decrease in the size of the Premises
following the
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Building 9 Termination Date (as more particularly set
forth in Section 25 of Part II); in no event, however,
shall the denominator ever be reduced below 396,193
rentable square feet.
"Purchase Agreement": That certain Agreement of Purchase and Sale and Joint
Escrow Instructions dated April 4, 1997 by and between
CalComp, Inc. and Sanders Development Corporation, on the
one hand, and Lincoln Property Company, N.C., Inc.
("Lincoln"), on the other hand.
"Commencement Date": The date on which the Close of Escrow (as defined in the
Purchase Agreement) occurs.
"Expiration Date": The date which is one year after the Commencement Date.
"Annual Base Rent": $906,738 (based on $6.00 per rentable square foot per
year)
"Monthly Base Rent" $75,561.50 (based on $0.50 per rentable square foot per
month), plus, as applicable, the monthly rent payable
with respect to the Temporary Storage Space as described
in Section 32 of Part II and the monthly rent payable
with respect to the Additional Temporary Storage Space as
described in Section 33 of Part II.
Option to Renew: Option to renew for up to one (1) year on all of Building
1 or all of Building 5 or all of both Buildings 1 and 5,
at the same rate ($0.50 per rentable square foot per
month).
"Permitted Use": General office use, software development, manufacturing,
assembly, warehousing, storage and distribution of
computer graphics peripherals and related equipment,
repair and refurbishment of same, and related ancillary
uses as permitted by applicable law.
PART II
THIS LEASE AGREEMENT (this "Lease") is made and entered into this _____ day
of June 1997, by and between LINCOLN - RECP ANAHEIM OPCO, LLC, a Delaware
limited liability company ("Landlord"), and CALCOMP TECHNOLOGY, INC., a Delaware
corporation ("Tenant").
For and in consideration of the mutual entry into this Lease, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Landlord and Tenant agree as follows:
1. Leased Premises.
---------------
1.1 Landlord leases to Tenant and Tenant leases from Landlord the
Premises, including all fixtures and improvements located thereon or therein,
together with (i) the right to use 377 vehicle parking spaces (based on 2.5
spaces for each 1,000 rentable square feet of Premises) within the Project (50
of such vehicle parking spaces shall be exclusive to Tenant, as outlined on
Exhibit A, and the remaining 327 of such vehicle parking spaces shall be non-
- ---------
exclusive in common with other tenants), (ii) the exclusive right to use the
loading and unloading areas ("Loading Areas") and trash areas ("Trash Areas")
appurtenant to Building 5 (and, prior to the termination date for the Temporary
Storage Space, as hereinafter defined, the trash area appurtenant to Building 7)
depicted on Exhibit A (provided, however, that Tenant shall not have the
---------
exclusive right, but rather the right shared in common with others, to the
access areas leading to and from the Loading Areas and the Trash Areas), (iii)
the non-
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exclusive right to use the loading and unloading areas and trash areas
appurtenant to Building 9, (iv) the exclusive right to use the chemical storage
area appurtenant to Building 5 (the "Chemical Storage Area") depicted on Exhibit
-------
A for the purpose of storing chemical waste and related materials (some or all
- -
of which may constitute "Hazardous Substances," as hereinafter defined), (v) the
non-exclusive right to use the scrap area south of the parking lot immediately
south of Building 5 (the "Scrap Area") depicted on Exhibit A for the purpose of
---------
storing of scrap and related materials (other than Hazardous Substances), (vi)
the non-exclusive use of the common areas of the Project (which for purposes of
this Lease shall include all exterior areas of the Project designed for use in
common by Tenant and other tenants which are not specified herein as being
exclusive to Tenant or to other tenants of the Project, (vii) so long as the
portion of the Premises located in Building 9 (the "Building 9 Premises") are
part of the Premises under this Lease, the non-exclusive use of the restrooms
and other common facilities in Building 9, (viii) reasonable rights of ingress
and egress to and from the Premises and over and across the common areas, and
(ix) for up to the first thirty (30) days following the Commencement Date, the
exclusive use of those areas within the two (2) telephone closets within
Building 9 currently serving the Premises and non-exclusive construction
easements at the Project as reasonably necessary for Tenant to complete any
Consolidation Alterations (as hereinafter defined) which may be located outside
the Premises. Tenant's use of the Building 5 and 7 Trash Areas shall include
the right of Tenant to keep and use thereon Tenant's trash compacting equipment.
Notwithstanding the above clauses (iv) and (v), Tenant agrees that its right to
use the Scrap Area shall expire at such time as Landlord physically removes the
Scrap Area and that its right to use the Chemical Storage Area shall expire at
such time as Landlord physically removes the Chemical Storage Area, such removal
in each case to be after not less than 30 days prior notice to Tenant and, in
the case of removal of the Chemical Storage Area, only if Landlord first
provides to Tenant, at no out-of-pocket cost to Tenant, an alternative chemical
storage area within the Project reasonably acceptable to Tenant.
1.2 The parties acknowledge that prior to entering into this Lease
Tenant has occupied the Premises for many years and that, accordingly, neither
Landlord nor any of Landlord's agents, representatives or employees has made any
representations or warranties as to the condition of the Premises or the
suitability or fitness of the Premises for the conduct of Tenant's business,
including, but not limited to, any representations or warranties regarding
zoning or other land use matters, or for any other purpose. In addition, except
as otherwise expressly provided in this Lease, Tenant accepts the Premises "as-
is" and Landlord shall have no obligation to alter, remodel, improve, renovate,
redecorate or paint all or any part of the Premises.
2. Term of Lease. The term of this Lease (the "Term") shall be for a
-------------
period of twelve (12) months commencing on the Commencement Date and ending
on the Expiration Date. For the purposes of this Lease, "Lease Year" means (i)
the period commencing on the Commencement Date and terminating on the first
(1st) anniversary of the last day of the calendar month containing the
Commencement Date, and (ii) each successive period of twelve (12) calendar
months thereafter during the Term.
3. Rent. Rent for the Premises shall be the sum of Base Rent, Additional
----
Rent (as hereinafter defined) and all other sums due Landlord hereunder (all of
which is hereinafter referred to collectively as "Rent"). In that regard,
Tenant shall pay to Landlord the following:
3.1 Base Rent. "Base Rent" for the Term shall be payable in equal
---------
monthly installments of $75,561.50, which amount represents $0.50 per rentable
square foot per month, plus the monthly rental payable with respect to the
Temporary Storage Space as described in Section 32, below, plus the monthly
rental payable with respect to the Additional Temporary Storage Space as
described in Section 33, below.
3.2 Additional Rent. "Additional Rent" for the Term shall be payable
---------------
as described in Paragraph 4 below.
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3.3 Payment of Rent. Rent shall be paid in equal monthly installments
---------------
in advance, without prior notice or demand, and without abatement, offset,
deduction or claim except as otherwise expressly set forth in this Lease, on the
first day of each calendar month during the Term at the office of Landlord
located at 30 Executive Park, Suite 100, Irvine, CA 92623-9693, or at such other
place as Landlord may designate from time to time in writing. In the event that
this Lease shall commence or end on any day other than the first day of a
calendar month, the rental payments for the partial month in which this Lease
commences and/or ends shall be prorated to reflect the actual number of days the
Premises were under lease during such partial month.
4. Additional Rent.
---------------
4.1 Tenant shall pay to Landlord as Additional Rent an amount equal to
Tenant's Proportionate Share of Operating Costs incurred by Landlord during the
Term.
4.2 The term "Operating Costs" means the sum of all costs reasonably
incurred by Landlord with respect to the operation, repair, management and
maintenance of the Project and shall include, without limitation, the following
costs:
4.2.1 Project supplies;
4.2.2 Utility costs incurred in connection with all energy
sources for the common areas of the Project;
4.2.3 Water and sewer service;
4.2.4 Maintenance and repair of all fire and life safety systems;
4.2.5 General repair and maintenance of the Project, including
but not limited to the heating and air conditioning of all buildings within the
Project, provided such costs, under generally acceptable accounting principles
("GAAP"), would not be capitalized;
4.2.6 Landscaping and maintenance of the common areas of the
Project;
4.2.7 Maintenance, repair, and striping of all parking areas used
by tenants of the Project, provided such costs, under GAAP, would not be
capitalized;
4.2.8 Costs of "all risk" property damage insurance on the
Project and commercial general liability insurance covering the common areas of
the Project and such other insurance as Landlord reasonably deems prudent or
necessary for the Project;
4.2.9 Labor costs incurred in the operation and maintenance of
the Project, including wages and other payments to employees, costs to Landlord
for workmen's compensation and disability insurance, payroll taxes and fringe
benefits to employees not above the level of Building Manager;
4.2.10 Professional building management fees not to exceed two
percent (2%) of Base Rent;
4.2.11 Legal, accounting, inspection, and consultation fees
incurred in connection with the prudent management of the Project, excluding (i)
any costs associated with any existing or suspected environmental conditions at
the Project and (ii) legal fees incurred in connection with any lease and/or
financing of all or any portion of the Premises;
4.2.12 Provided (and to the extent) the same actually reduce
Operating Costs payable by Tenant, capital expenditures or repairs of an energy
conservation or security nature required by any change in laws, rules,
regulations, orders, or any other governmental or
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quasi-governmental authority having jurisdiction, in which case such
expenditures shall be amortized on a straight-line basis over the useful life of
the item in accordance with GAAP;
4.2.13 All real property taxes and assessments affecting all or
any part of the Project, including but not limited to (A) any form of real
property assessment (including so-called "special assessments"), imposed by any
competent authority having the direct power to tax, including any city, county,
state, or federal government, or any school, agricultural, lighting, water,
drainage, or other improvement or special district thereof, against the Project
and (B) any assessment or tax in substitution, partially or totally of or in
addition to any assessment, or tax which may be imposed by competent
governmental agencies for such services as fire protection, street, sidewalk and
road maintenance, refuse removal and for other governmental service.
Notwithstanding anything to the contrary, Tenant shall not be obligated to pay
any increase in real property taxes which is occasioned by Landlord's sale or
transfer of the Project or any portion thereof. If at any time during the term
of this Lease, there is a "change of ownership" (as that term is used in respect
of tax reassessments) of the Project or Premises (excluding, however, the change
of ownership occasioned by Landlord's purchase of the Project pursuant to the
Purchase Agreement), any increase in real property taxes occasioned by such
change of ownership shall be the sole obligation of Landlord or Landlord's
successor in interest.
4.3 Exclusions from Operating Costs. Notwithstanding the foregoing,
the following items shall not be included within the definition of Operating
Costs and shall be the sole responsibility of the Landlord:
4.3.1 Cost of alterations of tenant premises, including leasehold
improvements at the Premises (which leasehold improvements at the Premises shall
be Tenant's sole responsibility and cost as more fully hereinafter set forth);
4.3.2 Cost of capital improvements, replacements, repairs,
alterations, equipment, tools, additions, and/or changes (other than those
expressly allowed above) and the costs of curing construction defects, if any;
4.3.3 Depreciation and amortization (except on any capital
improvements and expenditures specifically allowed above);
4.3.4 Interest and principal payments on mortgages, deeds of
trust, and any other debt costs, if any;
4.3.5 Any leasing commission or compensation or costs or expenses
incurred for leasing, renovating, or improving any tenant space;
4.3.6 Any cost or expenditure (or portion thereof) for which
Landlord is reimbursed, whether by insurance proceeds or otherwise;
4.3.7 Cost of any service furnished to any other occupant of the
Project which Landlord does not provide to Tenant hereunder;
4.3.8 Any federal, state, or local income tax, and any franchise,
gift, transfer, excise, or inheritance tax;
4.3.9 Salaries, bonuses, or benefits for any employee above the
level of Building Manager;
4.3.10 Attorney's fees or other professional fees incurred by
Landlord in any dispute with, or litigation brought by or against, any tenant,
including Tenant, and any attorneys' or other professional fees incurred by
Landlord in connection with any lease and any act of negligence or wilful
misconduct by Landlord, its employees, agents, and contractors;
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4.3.11 Costs incurred because Landlord or any other tenant
violates any lease, unless the violation would have interfered with Tenant's
reasonable and effective use of the Buildings or any other non-violating
tenant's (including Tenant's) use of the common areas of the Project;
4.3.12 Insurance deductibles;
4.3.13 Expenditures for items covered by insurance, and items
which are required to be covered under this Lease by insurance;
4.3.14 Any fines, penalties, or costs incurred because Landlord,
its employees, contractors, or agents violated any law or other authority,
including any Environmental Laws (as defined in the Environmental Agreement);
provided, however, that nothing contained herein shall affect or limit
Landlord's or Tenant's rights or obligations, if any, under that certain
Agreement for Environmental Remediation and Site Access of near or even date
herewith ("Environmental Agreement");
4.3.15 Any costs incurred in connection with complying with health
and safety laws including OSHA and ADA and any corrective action, investigation
of site conditions, cleanup, removal, remedial, or restorative work required
pursuant to any Environmental Laws, except to the extent such costs resulted
from or arose in connection with any act or omission of Tenant following the
Commencement Date; in that regard, Tenant shall be responsible, at Tenant's sole
cost and expense, for complying with any directive of a governmental entity or
authority with respect to ADA requirements applicable to the interior of the
Premises as a result of any particular Alterations (as hereinafter defined)
following the Commencement Date or any particular Consolidation Alterations (as
hereinafter defined);
4.3.16 Any ground rent;
4.3.17 Costs associated with the financing or refinancing of the
Project or any part thereof;
4.3.18 Cost of any repair and replacement incurred in connection
with any casualty or condemnation;
4.3.19 Intentionally omitted
4.3.20 Advertising and promotional expenditures, and costs of
signs in or on the Project identifying Landlord or other tenants' signs;
4.3.21 Marketing costs including leasing commissions, attorneys'
fees and other consultant fees in connection with the negotiation and
preparation of leases and related agreements;
4.3.22 Expenses in connection with services, supplies or other
benefits which are not provided to Tenant or for which Tenant is charged
directly by Landlord or an independent contractor or a utility, but which are
provided to another tenant or occupant of the Project the cost of which is
included as Operating Expenses;
4.3.23 Overhead and profit increment paid to Landlord or to
subsidiaries or affiliates of Landlord for goods and/or services in the Project
to the extent the overhead and profit increment exceeds the costs of such goods
and/or services rendered by unaffiliated third parties on a competitive basis
for projects similar to the Project;
4.3.24 Services provided, taxes attributable to, and costs
incurred in connection with any retail operations;
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4.3.25 Costs arising from the presence of Hazardous Substances,
as defined by Environmental Laws in existence as of the date of this Lease, in
or about the Buildings or Project, including, without limitation, Hazardous
Substances in the ground water or soil except to the extent placed thereon by
Tenant after the date of this Lease (provided, however, that nothing contained
herein shall affect or limit Landlord's or Tenant's rights and obligations, if
any, under the Environmental Agreement); and costs arising from defects in the
base, shell or core of the improvements at the Project or tenant improvements or
repair thereof; and
4.3.26 Reserves for future expenditures.
4.4 Landlord shall not collect or be entitled to collect Operating
Costs from Tenant in an amount which is in excess of Tenant's Proportionate
Share of the Operating Costs actually paid by Landlord. Landlord shall make no
profit from Landlord's collections of such Operating Costs, and Landlord shall
not "double recover" any Operating Costs.
4.5 Rather than bill and collect the Additional Rent set forth in this
Paragraph after the expenses are incurred, Landlord may reasonably estimate
Tenant's Proportionate Share of the Operating Costs for the first Lease Year in
advance, and may collect and impound such estimated Tenant's Proportionate Share
in advance on a monthly basis commencing on the Commencement Date. As soon as
reasonably possible (but in no event later than 120 days) after the first Lease
Year, Landlord shall provide to Tenant a reconciliation of the Operating Cost
impounds for the first Lease Year. Said reconciliation shall set forth in
reasonable detail the Operating Costs paid by Landlord and shall include a
computation as to Tenant's Proportionate Share. If Tenant has overpaid,
Landlord shall refund such overpayment to Tenant concurrently with the mailing
of the statement of reconciliation, and if Tenant has underpaid, Tenant shall
pay to Landlord the amount of said underpayment within thirty (30) days after
the date of mailing of the statement of reconciliation. The foregoing
reconciliation and refund/payment shall apply even though the Term of this Lease
may have expired or been terminated.
4.6 For the protection of Tenant, Landlord shall maintain books of
account which shall be open to Tenant and its representatives for audit or
inspection, at Tenant's sole expense during Landlord's business hours and upon
reasonable advance notice (at least 15 days); provided, however, that Tenant
shall not be entitled to audit Landlord's books more than once each calendar
year without first showing good cause. These books of account shall be
available to Tenant for one (1) year after billing for all Operating Costs.
Landlord shall refund any sums due to Tenant within thirty (30) days after a
determination that any sum is actually due. In addition, if the audit reveals
that Tenant has been overcharged by Landlord by more than five percent (5%),
Landlord will reimburse Tenant for the reasonable cost of the audit (not to
exceed $2,000) within thirty (30) days. This provision shall survive the
expiration or earlier termination of this Lease. If Tenant disputes the amount
of Additional Rent that Landlord determines is payable by Tenant for any period,
Tenant shall nonetheless pay Landlord the amount of Additional Rent as shown on
Landlord's statement under protest pending resolution of such dispute.
4.7 Even though the Term of this Lease may have expired or been
terminated, when the final determination is made of Tenant's Proportionate Share
of Operating Costs for the year in which this Lease expires or is terminated,
Tenant shall, within thirty (30) days of demand therefor, pay Tenant's
Proportionate Share of Operating Costs over the estimated amounts already paid.
Failure of Landlord to submit statements as called for herein shall not be
deemed to be a waiver of Tenant's requirement to pay sums as herein provided,
unless Landlord fails to submit a final invoice within six (6) months after this
Lease expires or is terminated. In the event that Tenant paid more than its
Proportionate Share of Operating Costs for the year in which this Lease expires
or is terminated, Landlord shall pay such excess to Tenant within thirty (30)
days after the amount thereof is determined. Landlord shall have six (6) months
after this Lease expires or is terminated to make such determination.
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5. Modified Full Service Lease. Landlord and Tenant intend that this
---------------------------
Lease be a "modified full service" lease with Landlord providing all service,
maintenance and repair to the Buildings, including, without limitation,
utilities, elevator service, electrical transformers and all maintenance and
repair to the Project's and Premises' structural components, fixtures, all
Building systems and equipment, lighting, roads, grounds and common areas and
with Tenant being responsible for maintenance and repair of the Premises, at its
own cost, to the extent expressly set forth in Section 7.5 below; provided,
however, that (i) Tenant shall be responsible for its own telephone service,
(ii) electricity is separately metered to Building 1 and shall be paid for
directly by Tenant to the appropriate supplier as determined by such meter,
(iii) electricity shall be separately metered to Building 6 by Landlord at its
expense promptly following the Commencement Date and shall substantially
concurrently therewith be submetered to Building 5 by Landlord (the cost of such
submetering to be paid by Tenant within 30 days of Landlord's invoice therefor)
and electricity for Building 5 shall be paid for directly by Tenant to the
appropriate supplier as determined by such submeter, (iv) domestic water may, at
Landlord's option, be separately metered to Building 1 and/or Building 5 by
Landlord at its expense and paid for directly by Tenant to the appropriate
supplier as determined by such meter, (v) Tenant shall be responsible for its
own janitorial service at the Premises, (vi) Tenant shall be responsible for its
own security service at the Premises, (vii) Tenant shall pay to Landlord, with
respect to the Building 9 Premises and other portions of the Premises that are
not separately metered, its share of electricity and water (including both
domestic and chilled and hot water serving the HVAC system(s)) charges
applicable to the Building 9 Premises and such other not-separately-metered
portions of the Premises, such share to be based on the electrical and water
usage of the portion of the Premises in question compared to the entire
electrical and water usage of the portions of the Project covered by the same
utility bill. Regarding clause (vii) above, the parties hereby acknowledge that
the Building 9 Premises and certain other portions of the Premises will not be
separately metered for electricity or water and agree that the formula for
determining Tenant's electrical and water usage for such not-separately-metered
portions of the Premises shall be agreed to between Tenant and Landlord within
90 days after the Commencement Date.
6. Option to Extend. Tenant shall have the option to extend the Term of
----------------
this Lease as to all of Building 1 or all of Building 5 or all of both Buildings
1 and 5, for one additional term of up to twelve (12) months (the "Extended
Term"). The Extended Term shall be upon the same terms, conditions and
provisions contained in this Lease, including, without limitation, the amount of
Rent payable hereunder, except Additional Rent for the Extended Term shall be
based upon new reasonable Landlord estimates. Tenant shall give Landlord
written notice of exercise of its option to extend this Lease at to Building 1
or Building 5 or both at least six (6) months prior to the expiration of the
initial Term (which notice shall specify the length of the Extended Term for
Building 1, if any, and the length of the Extended Term for Building 5, if any,
the parties hereby acknowledging that the Extended Term may be of different
lengths with respect to each Building). Without Landlord's written consent
(which may be withheld in Landlord's sole discretion), Tenant shall have no
right to remain in possession of the Premises for the Extended Term (or any
portion thereof) if (i) Tenant does not exercise its extension option in a
timely manner as required hereunder, or (ii) Tenant is in default beyond
applicable notice and cure periods under this Lease either at the time it
exercises such extension option or at any time thereafter prior to the
commencement of the Extended Term.
7. Alterations, Additions, Improvements, Maintenance and Repair.
------------------------------------------------------------
7.1 Alterations, Additions and Improvements by Tenant.
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7.1.1 Except as set forth otherwise herein, Tenant shall not make any
alterations, additions or improvements to the Premises (collectively,
"Alterations") without Landlord's prior written consent (which shall not be
unreasonably withheld, conditioned, and/or delayed) except for the Consolidation
Alterations (as hereinafter defined) and non-structural Alterations which do not
materially adversely affect any Building systems or equipment or involve roof
penetrations and which do not exceed Fifty Thousand Dollars ($50,000) in cost
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cumulatively over any consecutive 6-month period and which are not visible from
the outside of the Premises. Landlord acknowledges that Tenant has recently
converted or is in the process of converting substantial portions of Building 5
to office and R&D space, and that Tenant has demised or is in the process of
demising the Building 9 Premises and constructing or installing within Building
1 and Building 9 and/or other portions of the Project in connection with
Tenant's consolidation into the Premises (collectively, the "Consolidation
Alterations"). The Consolidation Alterations have been described in that
certain letter dated June 2, 1997 from Tenant to Lincoln (the "Consolidation
Letter"), which Consolidation Letter is hereby incorporated into this Lease by
this reference. The Consolidation Alterations have been and are hereby agreed
to by Landlord (whether or not the same have been commenced or completed prior
to the Commencement Date) on the terms set forth in the above-described letter,
and none of the later provisions of this Section 7.1 shall apply to the
Consolidation Alterations, except that all Consolidation Alterations shall be
completed by Tenant, at its sole cost and expense, in a lien-free, good and
workmanlike manner by qualified and licensed contractors or mechanics, and in
accordance with all applicable laws, building codes and regulations governing
the construction thereof. In addition, Tenant agrees to complete all
Consolidation Alterations within the Premises by the date which is six (6)
months following the Commencement Date and to complete all Consolidation
Alterations outside the Premises by the date which is thirty (30) days following
the Commencement Date.
7.1.2 All Alterations shall be done in a good and workmanlike manner,
in conformity with all laws and regulations applicable to such Alterations, and
by one or more licensed bondable contractors reasonably approved by Landlord in
advance. In addition, the following conditions (the "Construction Conditions")
shall apply to all Alterations for which Landlord's consent is required
hereunder, and Tenant shall fully comply with such Construction Conditions as
applied to such Alterations:
a. Approval of Plans. Tenant shall deliver to Landlord for
-----------------
Landlord's approval, which approval shall not be unreasonably withheld or
delayed (failure of Landlord to disapprove, with specificity, within 10 business
days after receipt, shall be deemed approval), preliminary construction plans
and specifications for the Alterations prepared by an architect or engineer
licensed to practice as such in the State of California, including
architectural, mechanical and electrical drawings as applicable, all sufficient
to enable Landlord to make an informed judgment. It shall be deemed
unreasonable for Landlord to disapprove (i.e., Landlord must approve) the plans
----
and specifications for the Alterations to the extent the same conform with any
preliminary schematics approved by Landlord and applicable laws, building codes
and restrictions. Tenant shall designate a construction supervisor and approval
or disapproval shall be communicated to the construction supervisor at Tenant's
notice address in the manner provided for notices. If Landlord disapproves the
plans and specifications, Landlord and Tenant shall meet from time to time in
good faith promptly following Landlord's notice of disapproval to address
Landlord's objections to the preliminary plans and specifications and shall
exercise reasonable good-faith diligence in attempting to resolve any such
objections.
b. Changes to Plans. As soon as practicable after Landlord and
----------------
Tenant have resolved any objections to the preliminary plans and specifications
as set forth above and have agreed on any necessary revisions, Tenant shall make
the appropriate revisions to the preliminary plans and specifications and submit
same to Landlord for its final review and approval, which approval shall not be
unreasonably withheld or delayed (failure of Landlord to disapprove, with
specificity, within five (5) business days after receipt, shall be deemed
approval). Concurrently with the above review and approval process, Tenant may
submit the preliminary plans and specifications to the appropriate governmental
agencies in an attempt to expedite the approval and issuance of all necessary
permits to construct the Alterations as shown on the preliminary plans and
specifications. Any material changes which are required by any governmental
agencies shall be immediately submitted to Landlord for Landlord's review, and
Tenant shall promptly notify Landlord of such required changes. Tenant shall
prepare final working plans and specifications conforming to the final
preliminary plans and specifications previously approved by Landlord, submit
them to the appropriate governmental agencies for
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approval, and deliver to Landlord one complete set as approved by the
governmental agencies.
c. Work Standards. Prior to commencement of construction, Tenant
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shall notify Landlord in writing of the date Tenant will commence construction
and shall deliver to Landlord certificates of insurance evidencing the existence
of insurance by the general contractor in customary form and amount (at least
$2,000,000 commercial general liability, workers' compensation, automobile
liability, and naming Landlord as additional insured). Tenant shall be solely
responsible for the engineering and construction methods used by its contractors
in construction and it shall be Tenant's responsibility to satisfy all building
and safety inspectors' requirements with respect to the particular Alterations
(but not with respect to the Buildings, which shall remain Landlord's
responsibility). Landlord shall have the right at all times to post at the
Premises or Buildings any notices permitted or required by law, or that Landlord
may deem proper, for the protection of Landlord, the Premises and any other
party having an interest therein, from mechanics' and materialmens' liens. All
construction shall be performed by qualified and licensed contractors or
mechanics, in a good and workmanlike manner, and in accordance with all
applicable laws, building codes and regulations and any restrictions governing
the construction thereof. Tenant shall submit to Landlord, prior to the
commencement of construction, the name, address and telephone number of the
contractor and the construction supervisor. As soon as practicable after
construction is completed, Tenant shall file of record a Notice of Completion
with respect to such work, and deliver to Landlord "as-built" plans for the
Alterations. With respect to the Consolidation Alterations, within sixty (60)
days after Tenant initially commences its business at the converted portions of
Building 5 and the Building 9 Premises, Tenant shall deliver to Landlord a copy
of the original Certificate of Occupancy issued by the appropriate governmental
agency with respect thereto.
7.2 Removal of Alterations. Landlord may require Tenant to remove
----------------------
Alterations (whether or not made with Landlord's consent) upon the expiration of
the Lease and to repair any damage caused by such removal, all at Tenant's
expense, but only if the Alterations which Landlord directs to be removed are
Special Purpose Alterations (as hereinafter defined) and, with respect to the
Alterations for which Tenant submits final plans to Landlord for approval, only
if at the time Landlord approves the final plans for such Alterations Landlord
notifies Tenant in writing that Landlord will require Tenant to remove some or
all of the Special Purpose Alterations disclosed by such plans (Landlord shall
designate in such notice which items are Special Purpose Alterations and which
of those are to be removed) at the end of the Term and Tenant's vacation of the
Premises. As used herein, "Special Purpose Alterations" shall mean Alterations
which are specific to Tenant's particular use of, or activities at, the Premises
(e.g., vaults, tanks, special equipment pads) as opposed to items commonly found
----
in occupied single-tenant facilities (e.g., offices, conference rooms,
----
laboratory rooms, computer rooms, restrooms and other rooms, sprinkler systems,
HVAC systems, and other occupancy improvements generally included in comparable
buildings or required by standard building codes for the occupancy in question);
provided, however, that none of the improvements existing at the Premises on the
date of this Lease first written above shall be deemed Special Purpose
Alterations. Tenant shall have the right to accept any designation by Landlord
of Alterations as "Special Purpose Alterations" under protest by notifying
Landlord of such acceptance under protest within ten (10) days of Landlord's
designation. In such event, either Landlord or Tenant may submit to arbitration
under the rules of the American Arbitration Association ("Arbitration") the
issue of whether Landlord's designation was proper. If Tenant does not object
to Landlord's designation within such ten (10) day period, Landlord's
designation shall be deemed approved. All Alterations which Tenant is not
required to remove by the provisions hereof shall become Landlord's property and
shall be surrendered to Landlord upon the expiration or earlier termination of
the Lease except for any Alterations which Tenant is permitted (and elects) to
remove by the provisions hereof. In no event, however, shall Tenant remove any
of the following materials or equipment (which shall be deemed Landlord's
property) without Landlord's prior written consent: any power wiring or power
panels; inset or recessed lighting or lighting fixtures; wall coverings; drapes,
blinds or other window coverings; carpets or other floor coverings; heaters, air
conditioners or any other heating or air conditioning equipment which are not
portable; electrical, plumbing or sanitary equipment; or fencing or security
gates;
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fire and life safety sprinkler systems; or ceiling tiles; provided, however,
that the foregoing list shall not include (and Tenant may, but shall not be
required to, remove, provided Tenant repairs any damage caused by such removal)
any of its demountable wall panels and any materials or equipment that Tenant
has installed specifically for use in connection with Tenant's business
processes (such as intercom systems, security systems, computer equipment,
computer wiring and/or computer flooring, table or floor lamps, racking,
microwave ovens, refrigerators, stand-alone heaters or fans, laboratory
equipment, telephone switching equipment and electrical devices and the like).
7.3 Removal of Personal Property. Notwithstanding anything in this
----------------------------
Lease to the contrary, at any time during the Term of this Lease, Tenant may
(and at the expiration of the Term of this Lease Tenant shall), at its expense,
remove any or all trade fixtures, furniture, furnishings, signs (excluding
monument or pylon signs), equipment, inventory and any and all items of personal
property placed in, or about the Premises by Tenant or its subtenants,
affiliates, licensees or permittees. Tenant shall repair any damage to the
Premises occasioned by the removal of any such items, but such obligation shall
not extend to redecorating the Premises. Title of all such trade fixtures,
furniture, furnishings, signs (excluding monument or pylon signs), equipment,
machinery, inventory and any and all items of personal property shall remain in
Tenant and Tenant alone shall be entitled to claim depreciation therefor. Any
such items which are not removed within 30 days after expiration of the Term
shall be deemed abandoned by Tenant and Landlord may remove, store and/or
dispose of the same. Landlord hereby waives, releases and relinquishes any and
all rights of distraint, levy, attachment or recourse to the trade fixtures,
furnishings, signs, equipment, machinery, inventory and personal property in the
Premises. Although the foregoing waiver, release and relinquishment shall be
self-operative without the necessity for any further instrument or document,
Landlord hereby agrees to furnish Tenant or any vendor or other supplier under
any conditional sale, chattel mortgage or other security arrangement, any
cosigner, and holder of reserved title or any holder of a security interest,
upon written request from time to time, waivers of Landlord's right to
distraint, levy, attachment or recourse with respect thereto and exempting the
same from distraint, levy, attachment or recourse.
7.4 Alterations, Additions, and Improvements by Landlord. When
----------------------------------------------------
Landlord makes alterations, additions or improvements in the Premises at the
request of Tenant, Landlord shall obtain the construction services on a
competitive and not single source basis. Construction services obtained on a
single source basis shall require the advance written concurrence of the Tenant.
If such work is performed by Landlord, Tenant shall reimburse Landlord at
Landlord's actual cost. No such alterations, additions or improvements shall be
made by Landlord without prior written approval from Tenant.
7.5 Tenant's Repair Obligations. Without limitation on Landlord's
---------------------------
obligations set forth elsewhere in this Lease and without limitation on Tenant's
rights regarding Alterations described in Article 7 above, Tenant shall, at
Tenant's sole cost and expense, maintain the following described portions of the
interior of the Premises in the condition existing on the later of the
Commencement Date or the date of installation of the item in question
(reasonable wear and tear, casualty, condemnation and matters covered by
Landlord's insurance excepted): all tenant improvements, tenant alterations,
utility meters, all special or supplemental HVAC systems, all fixtures,
furniture and equipment, Tenant's signs, locks, closing devices, security
devices, windows, window sashes, casements and frames, floor and floor
coverings, shelving, kitchen and/or restroom facilities and appliances located
within the Premises to the extent such facilities and appliances are intended
for the exclusive use of Tenant, if any, and any custom lighting within the
Premises. Tenant shall replace, at its expense, any and all plate and other
glass in and about the Premises which is damaged or broken from any cause
whatsoever except due to the negligence or wilful misconduct of Landlord, its
agents or employees.
8. Liens. Tenant shall keep the Premises free of mechanics, materialmen's
-----
and all other liens arising out of any construction or other work done for or
debts incurred by Tenant. Not less than seven (7) calendar days prior to the
commencement of any construction, alteration or
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addition to the Premises, Tenant shall notify Landlord in writing of its
intention to commence the same and Landlord shall have the right to post and
maintain on the Premises such notices of non-responsibility as are provided for
under applicable law.
9. Surrender of Premises at End of Term. At the end of this Lease, Tenant
------------------------------------
will surrender the Premises in the same condition as received except for (i)
ordinary wear and tear, (ii) Alterations which Landlord is not entitled under
this Lease to require Tenant to remove, (iii) Alterations (if any) which
Landlord is entitled under this Lease, but does not, require Tenant to remove,
and items (if any) which Tenant is entitled under this Lease, and elects, to
remove, (iv) damage or destruction caused by casualty or condemnation, (v)
matters which are Landlord's obligation to maintain, repair or replace pursuant
to any other provision of this Lease, and (vi) any of the personal property and
other items described in Section 7.2 or 7.3 which Tenant is entitled and elects
not to remove.
10. Additional Obligations and Restrictions.
---------------------------------------
10.1 Manner of Use. The Premises may be used by Tenant and its
-------------
employees, representatives, agents, invitees, licensees, customers or
contractors (collectively, "Tenant's Representatives") for the Permitted Use,
and for no other uses or purposes without Landlord's prior written consent. The
use of the Premises by Tenant and Tenant's Representatives shall be subject to,
and at all times in compliance with, all laws, ordinances, statutes, orders, and
regulations regulating Tenant's or Tenant's Representative's manner of use or
occupancy of the Premises, as the same exist from time to time ("Applicable
Laws"); provided, however, that (A) Tenant's violation of, or failure to comply
with, Applicable Laws regulating Tenant's employment practices shall not be
considered a default under this Section 10.1; (B) Tenant shall not be deemed in
default under this Section 10.1 to the extent that the particular violation or
compliance in question would be remedied or performed, as the case may be, by
Landlord's discharge of its obligations under other provisions of this Lease;
and (C) Tenant's compliance with laws obligations with respect to Hazardous
Substances shall be governed exclusively by Section 24. Tenant may initiate
proceedings to contest any complaints by any governmental authority having
jurisdiction with respect to Tenant's compliance with Applicable Laws or any
other matter set forth in this Lease. If required by law, Landlord shall join
in the proceedings brought by Tenant. However, Tenant shall pay all costs of
the proceedings, including any costs or fees incurred by Landlord. Upon the
final determination of any proceeding or contest, Tenant shall immediately
comply with the judgment or order rendered in connection with the contest, and
shall pay all amounts owed, together with all costs, charges, interest and
penalties incidental to the proceedings. Pending the outcome of such
proceedings, Tenant shall comply with the orders of the governmental authorities
under protest if such compliance under protest is reasonably necessary to
prevent the Premises from being condemned or otherwise materially affected by
governmental action. Tenant shall indemnify, protect, defend and hold harmless
Landlord and the Premises from and against any and all costs (including, without
limitation, attorneys' fees and court costs), expenses, liabilities, damages and
claims arising out of or in connection with any such contest or proceeding. In
the event that any governmental authority having jurisdiction issues a final
order or other final judgment that Tenant is in compliance with a particular
Applicable Law (or that a particular law, statute, ordinance or governmental
rule, regulation, order or requirement has not been violated, as the case may
be), such order or judgment shall be conclusive on Landlord for purposes of this
Section 10.1.
10.2 Rules and Regulations. Tenant shall not use the Premises or
---------------------
permit anything to be done in or about the Premises or the Project nor keep or
bring anything therein which will in any way increase the existing rate of any
policy of fire or other insurance upon the Buildings or any of its contents, or
cause a cancellation of any insurance policy; provided, however, that the
foregoing prohibition shall not apply to any use of the Premises by Tenant
consistent with its use prior to the date of this Lease. Tenant shall not do or
permit anything to be done in or about the Premises which will materially
interfere with the rights of Landlord, other tenants or occupants of the Project
or Buildings 9, or other persons or businesses in the area, or allow the
Premises to be used for any unlawful purpose. Tenant shall not cause,
12
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maintain or permit any private or public nuisance in, on or about the Premises,
Building, and/or the common areas of the Project, including, but not limited to,
any offensive odors, noises, fumes or vibrations; provided, however, that the
foregoing prohibition shall not apply to any use of the Premises by Tenant
consistent with its use prior to the date of this Lease. Tenant shall not
damage or deface or otherwise commit or suffer to be committed any waste in,
upon or about the Premises. Tenant shall not place or store, nor permit any
other person or entity to place or store, any property, equipment, materials,
supplies, personal property or any other items or goods outside of the Premises,
except in designated areas, for any period of time. Tenant shall place no loads
upon the floors, walls, or ceilings in excess of the maximum designed load
permitted by the applicable Uniform Building Code; nor place any harmful liquids
in the drainage systems; nor dump or store waste materials, refuse or other such
materials, or allow such to remain outside the Buildings, except in refuse
dumpsters, chemical storage/waste facilities or in any enclosed trash areas
provided. Tenant shall honor the terms of all matters recorded prior to the date
of this Lease relating to the Premises. Tenant shall comply with the Rules and
Regulations applicable to the Project attached to this Lease as Schedule 1,
----------
together with such reasonable, nondiscriminatory amendments or supplements
thereto which may be promulgated by Landlord from time to time, provided
however, that such amendments or supplements shall not materially increase
Tenant's obligations or materially decrease Tenant's rights under this Lease.
10.3 In addition to Landlord's obligations set forth elsewhere in this
Lease, Landlord shall have the following obligations (subject to being
reimbursed by Tenant for Tenant's Proportionate Share of Operating Costs with
respect thereto to the extent described in Article 4):
10.3.1 To timely pay when due all assessments and tap fees and
charges for water, sewer, and utility charges levied against the Project and all
charges for heating, cooling, gas, power, light, and all other services and
utilities supplied to the Premises (except telephone and janitorial service to
the Premises, electricity to Building 1 and Building 5, and security services,
as provided above);
10.3.2 To repair and maintain all exterior and interior
improvements of the Project (including lighting, landscaping and blacktop) and
the structural portions of the Premises and Project, to keep the common areas,
landscaping and exterior of the Project clean and neat in appearance and in good
order and repair, and to keep all Building systems, equipment and roofs in good
order and repair, and to repair, maintain, replace, and/or alter the Premises
and Project, as necessary, in accordance with all applicable laws, including,
without limitation, all Environmental Laws (as defined in the Environmental
Agreement), and the Americans With Disabilities Act (except as expressly set
forth as in Section 4.3.15 as Tenant's responsibility); provided, however, that
nothing contained herein shall affect or limit Tenant's obligations, if any,
under the Environmental Agreement;
10.3.3 To provide Tenant with reasonable access to and from the
Premises twenty-four hours per day, seven days a week, 365 days a year.
10.3.4 To maintain and repair the fire and life safety systems
serving the Premises and Project, including, without limitation, fire alarm
monitoring consistent with Tenant's existing practices at the Project prior to
the Commencement Date; and in that regard, Tenant shall assign or transfer to
Landlord, and Landlord shall assume from Tenant, effective as of the
Commencement Date, all of Tenant's right, title and interest in and to the
existing fire and life safety systems maintenance and operation contract(s) to
the extent Tenant has the right and power to assign or transfer the same.
10.3.5 Tenant acknowledges and agrees that Landlord may make any
and all changes to the common areas of the Project and/or any buildings or other
improvements in the Project (excluding the "No Build Areas" designated on
Exhibit A attached hereto, which Landlord may not change during the term of this
- ---------
Lease), including, without limitation, additions
13
<PAGE>
to or demolition of any existing improvements and addition of new improvements,
without the consent of Tenant; provided, however, that no such changes shall
materially interfere with Tenant's use of the Premises for the Permitted Use and
provided further that no such change shall materially increase Tenant's
obligations under this Lease or decrease Tenant's rights under this Lease; in
addition, Landlord agrees that Landlord shall not, prior to the Building 9
Termination Date (as hereinafter defined), make any additions or alterations to,
or perform any construction at or on, the portion of Building 9 designated on
Exhibit A as "No Construction Zone" without Tenant's prior written consent.
- ---------
Furthermore, if Landlord expands the parking areas adjacent to Building 5,
Landlord shall provide handicapped parking spaces and access ramps serving
Building 1 and 5 as required by applicable law, and in no event shall Landlord
remove or otherwise materially alter the existing delivery ramp serving Building
5 or the walkways between Buildings 1 and 5 without providing a substitute
delivery ramp and walkways, as applicable, reasonably acceptable to Tenant.
11. Failure of Landlord to Perform. If Landlord shall fail to perform any
------------------------------
obligation required to be performed by Landlord under the express terms of this
Lease and such failure materially affects the use and enjoyment of the Premises
or any part thereof by Tenant, then Tenant may give to Landlord written notice
of Landlord's failure and may further state that Tenant intends to assume and
perform such obligation of Landlord if Landlord fails to perform the same. If
within fifteen (15) days from Landlord's receipt of Tenant's notice, Landlord
shall fail to commence the performance of such obligation and thereafter
diligently prosecute such performance to completion, then Tenant may promptly
thereafter give to Landlord a second notice reiterating Landlord's failure and
Tenant's election, stating Landlord's failure to respond to the previous notice,
and referring to the provisions of this Section 11 by attaching a copy of this
Section 11 to Tenant's second notice. If (x) Landlord's failure continues for a
period of ten (10) days after receipt of Tenant's second notice and (y) Landlord
is not then diligently prosecuting the completion of such obligation, then
Tenant shall have the right to assume and perform such obligation. If Tenant so
performs Landlord's obligations, Landlord shall reimburse Tenant, upon
presentation of a statement from Tenant for the actual and reasonable cost and
expense incurred by Tenant in the performance of such obligations, less the
amount, if any, which Tenant would have been obligated to pay Landlord pursuant
to the terms of this Lease if Landlord had performed such obligations
("Landlord's Net Cost"). Landlord's Net Cost of Tenant's performance of such
obligations, together with interest at ten percent (10%) per annum from the date
the cost is incurred until paid, shall be paid by Landlord to Tenant upon
demand, upon presentation to Landlord of supporting evidence reflecting such
expenditures by Tenant. If Landlord shall fail (i) to pay to Tenant Landlord's
Net Cost within fifteen (15) days after receipt by Landlord of a statement
therefor, then Tenant may deduct from each payment of Rent until Tenant has
recovered Landlord's Net Cost. Notwithstanding the time and notice requirements
set forth above, in the case of an emergency where there exists a substantial
risk of injury to persons or property or to Tenant's business and where there is
not sufficient time to give notice to Landlord or to wait for Landlord to
commence and complete its obligations, Tenant shall be entitled to take such
reasonable action as is necessary and appropriate, using due care, to abate such
risks without giving prior notice to Landlord (provided, however, that Tenant
shall give Landlord prompt written notice as soon as is reasonably practical of
such emergency) and the provisions above with respect to payment by Landlord of
Landlord's Net Cost shall apply with respect to the costs incurred by Tenant in
abating such risks, to the extent that such abatement was a Landlord obligation
under this Lease. Notwithstanding anything to the contrary set forth above in
this Section 11, a "Dispute" shall be deemed to have arisen under this Section
11 if either (A) Landlord delivers to Tenant, within ten (10) days of Tenant's
second notice (or, in emergency situations in which the notice provisions do not
apply, within ten (10) days of the Tenant Invoice with respect thereto) an
objection notice claiming that the purported corrective action did not have to
be taken by Landlord pursuant to the terms of the Lease (and setting forth in
reasonable detail Landlord's reasons for its claim), and if Tenant elects to
perform the disputed obligation under this Section 11 irrespective of Landlord's
objection notice with respect thereto; or (B) Landlord delivers to Tenant,
within thirty (30) days after receipt of a Tenant Invoice, an objection notice
to the payment of such Tenant Invoice on the grounds that the charges are not
reasonable (in which case Landlord shall pay the amount it contends is
14
<PAGE>
reasonable), and Tenant notifies Landlord that Tenant disagrees with Landlord's
objection. If a Dispute arises, the parties shall meet promptly thereafter and
shall use good faith efforts to resolve the Dispute in an expeditious manner.
Any Dispute which is not resolved at such meeting shall be submitted to
resolution by Arbitration upon notice by either party. Until such Dispute is
resolved, Tenant shall deposit into an independent escrow account all deductions
that Tenant makes to Rent under this Section 11 with respect to the subject of
the Dispute, and the disposition of such escrowed Rent deductions shall be
determined by the arbitrator under the Arbitration unless Landlord and Tenant
mutually otherwise agree. Except as expressly set forth herein, Tenant hereby
waives any right to repair the Premises or any portion of the Project at the
expense of Landlord under any applicable laws, rules or regulations (including,
without limitation, the provisions of Section 1942 of the California Civil Code,
as amended or recodified from time to time).
12. Indemnification; Insurance
--------------------------
12.1 Indemnification by Tenant. Tenant hereby agrees to indemnify,
-------------------------
defend and hold harmless Landlord, its successors, assigns, subsidiaries,
directors, officers, agents and employees from and against any and all damage,
loss, liability or expense including, but not limited to, attorneys' fees and
legal costs suffered by same directly or by reason of any claim, suit or
judgment brought by or in favor of any person or persons for damage, loss or
expense due to, but not limited to, bodily injury, including death arising any
time therefrom, and property damage, sustained by such person or persons which
arises out of, is occasioned by or attributable to the use or occupancy of the
Premises by Tenant, the acts or omissions of Tenant, its subtenants,
concessionaires, agents, employees or any other contractors brought onto the
Premises by Tenant ("Tenant Employees"), or any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease, except to the extent caused by the negligence or the willful
misconduct of Landlord, its employees, agents, contractors or concessionaires
("Landlord's Employees"). If any proceeding is brought against Landlord by
reason of such claim, Tenant upon notice from Landlord, shall defend same at
Tenant's expense by counsel satisfactory to Landlord.
12.2 Indemnification by Landlord. Landlord hereby agrees to
---------------------------
indemnify, defend and hold harmless Tenant, its successors, assigns,
subsidiaries, directors, officers, agents and employees from and against any and
all damage, loss, liability or expense including, but not limited to, attorneys'
fees and legal costs suffered by same directly or by reason of any claim, suit
or judgment brought by or in favor of any person or persons for damage, loss or
expense due to, but not limited to, bodily injury, including death arising any
time therefrom and property damage sustained by such person or persons which
arises out of, is occasioned by or attributable to the acts or omissions of
Landlord or any Landlord Employees or any breach or default in the performance
of any obligation on Landlord's part to be performed under the terms of this
Lease, except to the extent caused by the negligence or the willful misconduct
of Tenant or any Tenant Employees. If any proceeding is brought against Tenant
by reason of such claim, Landlord upon notice from Tenant, shall defend same at
Landlord's expense by counsel satisfactory to Tenant.
12.3 Survival. The foregoing indemnities shall survive the expiration
--------
of the Term of, or any termination of, the Lease. Notwithstanding the
foregoing, Landlord and Tenant agree that neither party hereto is indemnifying
the other for the acts of third parties who are not Landlord Employees (for whom
Landlord shall bear responsibility) or Tenant Employees (for whom Tenant shall
bear responsibility). Each party's agreement to indemnify and hold the other
party harmless pursuant to the foregoing is not intended to and shall not
relieve any insurance carrier of its obligations under policies required to be
maintained under this Lease by Tenant or Landlord, with the indemnitor in each
such case having the right to the benefit of any available insurance proceeds as
a setoff and/or mitigation of any indemnity amounts paid.
12.4 Tenant's Insurance. Tenant shall, at Tenant's own expense,
------------------
obtain and keep in full force and effect, during the term of this Lease for the
protection of Tenant, Landlord and Landlord's property manager (as additional
insureds), a policy of "Commercial General Liability
15
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Insurance" against any claim for bodily injury, including death arising at any
time therefrom, and property damage arising out of the use and occupancy of the
Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing single limit coverage in an amount of not less than
Two Million Dollars ($2,000,000) per occurrence and shall be primary and
noncontributing to any insurance carried by Landlord. The amount of such
insurance, however, shall not limit the liability of Tenant nor be deemed to
relieve Tenant of any obligations hereunder. Tenant may carry, for the
protection of Tenant, property insurance covering Tenant's personal property on
or about the Premises but Tenant is not obligated to do so and may self insure
against such loss. Landlord shall not, however, be prejudiced in allowing
Tenant to self-insure and it is expressly agreed that Landlord shall have the
same benefit of setoff and/or mitigation against an indemnifiable claim by
Tenant that would have been available as insurance proceeds for an otherwise
insurable loss but for Tenant's self insurance.
12.5 Landlord's Insurance. Landlord shall obtain and keep in full
--------------------
force and effect, during the term of this Lease for the protection of Landlord
and Tenant: (i) A policy of "Commercial General Liability Insurance" against any
claim for bodily injury, including death arising at any time therefrom, or
property damage arising out of the ownership, use, occupancy or maintenance of
the Project (including the Premises) and all areas appurtenant thereto. Such
insurance shall be on an occurrence basis providing single limit coverage in an
amount of not less than Two Million Dollars ($2,000,000) per occurrence and
shall be primary and noncontributing to any insurance carried by Tenant. The
amount of such insurance, however, shall not limit the liability of Landlord nor
be deemed to relieve Landlord of any obligations hereunder; and (ii) an "All
Risk" (special-causes-of-loss) broad form property insurance covering one
hundred percent (100%) of the full replacement cost valuation of the Project
(including the Premises), the tenant improvements, the Alterations, and
Landlord's fixtures and equipment.
12.6 Insurance Generally. All insurance required to be maintained by
-------------------
the parties under this Lease shall be issued by insurance companies authorized
to do business in the state of the location of the Project with a financial
Best's rating of at least B+VII, or in the case of Lloyd's syndicates an S&P
rating of at least "four crowns". All insurance required hereunder may be
subject to commercially reasonable deductibles or retentions which are usual and
customary for the respective types of insurance and that said
deductibles/retentions shall be for the insuring party's account. Prior to the
Commencement Date, each party shall provide to the other certificates of
insurance, signed by its brokers or insurers, documenting compliance with all
insurance requirements contained herein. Such certificates shall state that the
insured's brokers or insurers will provide the certificate holder with 30 days
advance notice of the cancellation, non-renewal or material modification of the
coverages evidenced therein.
12.7 Waiver of Subrogation. Without affecting any other rights or
---------------------
remedies, Landlord and Tenant (each a "Waiving Party") hereby release and
relieve the other (including their officers, directors, agent's,
representatives, employees, affiliated corporations, partners, managers,
successors and assigns) and waive their entire right to recover damages (whether
in contract or tort) against the other, for loss or damage to the Waiving
Party's property, arising out of or incident to the perils required to be
insured against herein. Landlord and Tenant shall each cause their respective
property insurers to include a waiver of subrogation clause in their property
insurance policy consistent with the foregoing sentence.
13. Limitation of Liability. Notwithstanding any provision in this Lease
-----------------------
(including, without limitation, Sections 12.1 and 12.2), neither party shall be
liable to the other party for special, consequential, indirect or incidental
damages (including loss of business income) as a result of any breach of a Lease
provision or negligent act or omission.
14. Casualty Damage.
----------------
14.1 Casualty. If the Premises or any part thereof (excluding Tenant's
furniture, fixtures and equipment), or the parking areas or access therefor,
shall be damaged or destroyed by fire or other casualty, Tenant shall give
immediate written notice thereof to Landlord. Within
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<PAGE>
thirty (30) days after receipt by Landlord of such notice, Landlord shall notify
Tenant, in writing, whether the necessary repairs, restoration, replacement or
rebuilding of the Premises to a value, condition and character equal to the that
immediately prior to the damage or destruction (the "Restoration") can
reasonably be completed: (a) within 120 days of the date Landlord receives
Tenant's written notice of such casualty; or (b) in more than 120 days of the
date Landlord receives Tenant's written notice of such casualty.
14.1.1 Minor Insured Damage. If the Premises are damaged only to such
---------------------
extent that the Restoration can be reasonably completed within 120 days of the
date Landlord receives Tenant's written notice of such casualty, this Lease
shall not terminate and Landlord shall perform Restoration of the Premises to
substantially the same condition that existed prior to the occurrence of such
casualty, except Landlord shall not be required to rebuild, repair or replace
any part of Tenant's furniture, furnishings or fixtures and equipment. The Rent
payable hereunder shall be abated proportionately (to the extent the Premises
are unfit for Tenant's use) from the date of the casualty until the Restoration
is fully completed and Tenant is again given use of the Premises.
14.1.2 Major Insured Damage; Damage Near End of Term. If the Premises
---------------------------------------------
are damaged to such extent that Restoration cannot be reasonably completed
within 120 days of the date Landlord receives Tenant's written notice of such
casualty, or if the Premises are damaged or destroyed during the last ninety
(90) days of the then applicable term of this Lease, then either Landlord or
Tenant may terminate this Lease by notice to the other given within five (5)
days after Landlord's notice, effective upon the occurrence of such damage, in
which event the Rent shall be abated from the date of termination. If neither
party elects to terminate this Lease, Landlord shall perform Restoration of the
Premises (and Rent shall abate) as and to the extent provided in Section 14.1.1.
14.1.3 Uninsured Casualty. If any portion of the Premises is
-------------------
materially damaged by a peril not covered by insurance carried or required to be
carried by Landlord (and Tenant elects not to pay any such difference), then
Landlord shall have the right to terminate this Lease by notice to the other
given within five (5) days after Landlord's notice, effective upon the
occurrence of such damage. If Landlord does not elect to terminate this Lease,
Landlord shall perform Restoration of the Premises (and Rent shall abate) as and
to the extent provided in Section 14.1.1; and, if any portion of the Premises is
damaged or destroyed due to the fault, negligence or breach of this Lease by
Tenant or any of Tenant's Employees and Landlord does not elect to terminate
this Lease as may be permitted hereunder, then Tenant shall be responsible for
the cost of the repair caused thereby to the extent such costs would not be
covered by the "All Risk" property insurance required to be maintained by
Landlord as specified in this Lease, including the payment by Tenant of a
reasonable deductible under such policy, not to exceed $50,000.
14.2 Limitation on Termination. If the casualty affects only one of
-------------------------
the Buildings under this Lease, then any termination by Landlord under this
Section 14 shall be limited to the particular Building in question. In
addition, Landlord shall exercise its termination rights under this Section 14
in good faith, and not merely to gain the benefit of higher market rates or a
longer lease term; and Landlord will not terminate Tenant unless it terminates
all other tenants similarly situated.
14.3 Tenant's Waiver. Landlord shall not be liable for any
---------------
inconvenience or annoyance to Tenant, injury to the business of Tenant, loss of
use of any part of the Premises by Tenant or loss of Tenant's personal property,
resulting in any way from damage or destruction or the Restoration thereof
(except to the extent attributable to Landlord's gross negligence or wilful
misconduct), except that, Landlord shall allow Tenant a fair diminution of Rent
during the time and to the extent the Premises are unfit for occupancy as
specifically provided above in this Section 14. With respect to any damage or
destruction for which Landlord is obligated to perform the Restoration or may
elect to perform the Restoration, Tenant hereby waives all rights to terminate
this Lease or offset any amounts against Rent pursuant to
17
<PAGE>
rights accorded Tenant by any law currently existing or hereafter enacted,
including but not limited to, all rights pursuant to the provisions of Sections
1932(2.), 1933(4.), 1941 and 1942 of the California Civil Code, as the same may
be amended or recodified from time to time.
15. Condemnation.
------------
15.1 Total Condemnation. If all of the Premises, at any time during
------------------
the Term, shall be taken by the exercise of a power of eminent domain, this
Lease shall terminate as of the date of title vesting in such proceeding, all
Rent shall be paid up to that date, whereupon all future obligations on the part
of both parties hereto shall cease and neither Landlord nor Tenant shall incur
any further obligations whatsoever from and after such termination of this
Lease.
15.2 Partial Condemnation. In the event of a partial taking which
--------------------
leaves the Premises or applicable parking areas reasonably unfit for the normal
and proper conduct of the business of Tenant (as reasonably determined by
Tenant), then Tenant shall have the right to terminate this Lease effective upon
the date of the actual partial taking. Tenant must exercise such option to
terminate by providing Landlord with written notice thereof no later than thirty
(30) business days after the date of such partial taking. All Rent shall be
paid up to the date of termination specified in Tenant's notice, whereupon all
future obligations on the part of both parties hereto shall cease. If this
Lease shall not be terminated as above provided, it shall continue in effect and
the rental after such partial taking shall be prorated to be that part of the
Rent which the value of the untaken part of the Premises, immediately after the
taking, bears to the value of the entire Premises immediately before the taking.
If Tenant's continued use of the Premises requires alterations and repairs by
reason of a partial taking, or if any other part of a Building other than the
Premises be taken so that alterations and repairs must be made, Landlord may
elect to terminate this Lease within thirty (30) calendar days after the date of
the actual taking, or, subject to Tenant's right of termination above provided,
may elect to continue it, in which event the Landlord shall promptly make all
necessary alterations and repairs at its expense which are required because of
such partial taking. Until such alterations and repairs are completed, an
equitable abatement of Rent shall be made to Tenant for any portion of the
Premises unfit for occupancy and use in the conduct of Tenant's business (as
mutually agreed by Landlord and Tenant) for the period during which same is
unfit for such occupancy and use.
15.3 Condemnation Award. Except as otherwise set forth herein, in the
------------------
event of any condemnation or taking, whether whole or partial, Tenant shall not
be entitled to any part of the award paid for such condemnation and Tenant
hereby expressly waives any right or claim to any part of such award. Although
all damages awarded in the event of any condemnation belong to the Landlord,
whether such damages are awarded as compensation for diminution in value of the
leasehold or to the fee of the Premises, Tenant shall have the right to claim
and recover from the condemning authority, but not from the Landlord, such
compensation as may be separately awarded or recoverable by Tenant in Tenant's
own right on account of any and a!l damage to Tenant's business or property by
reason of the condemnation and for or on account of any cost or loss suffered by
Tenant in removing Tenant's merchandise, furniture, fixtures, leasehold
improvements and equipment.
16. Holding Over. Should Tenant, or any of its successors in interest,
------------
hold over the Premises, or any part thereof, after the expiration or earlier
termination of this Lease, unless otherwise specifically agreed to in writing
signed by both parties, such holding over shall constitute and be construed as a
tenancy from month to month only, subject to all conditions and obligations
required to be performed by Tenant hereunder; provided, however, that if such
holdover continues for more than thirty (30) days, the Base Rent for such
holdover period beyond thirty (30) days shall be increased to 125% of the Base
Rent in effect immediately prior to the holdover period.
18
<PAGE>
17. Default.
-------
17.1 Default of Tenant. Tenant shall be in default of this Lease if
-----------------
any of the following events occur:
17.1.1 Tenant fails to make payment when due of any Rent required to
be paid by Tenant under this Lease and such failure continues for ten (10)
calendar days after receipt from Landlord of written notice of such failure;
17.1.2 Tenant fails to perform any of Tenant's non-monetary
obligations under this Lease for a period of thirty (30) calendar days after
written notice from Landlord; provided that if more than thirty (30) calendar
days are required to complete such performance, Tenant shall not be in default
if Tenant commences such performance within the thirty (30)-day period and
thereafter diligently pursues its completion.
17.1.3 A petition is filed by or against Tenant seeking a bankruptcy
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future federal, state or local statute,
law or regulation, and is not dismissed within ninety (90) calendar days, or if
any trustee, receiver, or liquidator of Tenant of all or any substantial part of
its properties or of the Premises shall be appointed with or without the consent
or acquiescence of Tenant and such appointment remains unvacated for an
aggregate of ninety (90) calendar days; or
17.1.4 If Tenant vacates and abandons the Premises during the Term
hereof, without payment of Rent.
17.2 Landlord's Remedies. If Tenant is in default beyond applicable
-------------------
notice and cure periods as provided in subparagraph 17.1 above, Landlord shall
have the following options, without further notice to Tenant or further demand
for performance:
17.2.1 Terminate Tenant's right to possession of the Property by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Property to Landlord. In such event,
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default, including (i) the worth at the time of
the award of the unpaid Rent which Landlord had earned at the time of the
termination; (ii) the worth at the time of the award of the amount by which the
unpaid Rent which Landlord would have earned after termination until the time of
the award exceeds the amount of such rental loss that Tenant proves Landlord
could have reasonably avoided; (iii) the worth at the time of the award of the
amount by which the unpaid Rent which Tenant would have paid for the balance of
the Term after the time of award exceeds the amount of such rental loss that
Tenant proves Landlord could have reasonably avoided; and (iv) any other amount
reasonably necessary to compensate Landlord for all the detriment proximately
caused by Tenant's failure to perform its obligations under the Lease or which
in the ordinary course of things would be likely to result therefrom. As used
in subparts (i) and (ii) above, the "worth at the time of the award" is computed
by allowing interest on unpaid amounts at the rate of ten percent (10%) per
annum, or such lesser amount as may they be the maximum lawful rate. As used in
subpart (iii) above, the "worth at the time of the award" is computed by
discounting such amount at the rate of ten percent (10%) per annum;
17.2.2 Even though an event of default may have occurred, this Lease
shall continue in effect for so long as Landlord does not terminate Tenant's
right to possession; and Landlord may enforce all of Landlord's rights and
remedies under this Lease, including the remedy described in California Civil
Code Section 1951.4 (lessor may continue Lease in effect after lessee's breach
and abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations) to recover Rent as it
becomes due. Landlord, without terminating this Lease, may, during the period
Tenant is in default, enter the Premises and relet the same, or any portion
thereof, to third parties for Tenant's account and
19
<PAGE>
Tenant shall be liable to Landlord for all costs Landlord incurs in reletting
the Premises, including, without limitation, brokers' commissions, expenses of
remodeling the Premises and like costs. Reletting may be for a period shorter or
longer than the remaining Term. Tenant shall continue to pay the Rent on the
date the same is due. No act by Landlord hereunder, including acts of
maintenance, preservation or efforts to lease the Premises or the appointment of
a receiver upon application of Landlord to protect Landlord's interest under
this Lease, shall terminate this Lease unless Landlord notifies Tenant in
writing that Landlord elects to terminate this Lease. In the event that Landlord
elects to relet the Premises, the rent that Landlord receives from reletting
shall be applied to the payment of, first, any indebtedness from Tenant to
Landlord other than Base Rent and Additional Rent; second, all costs, including
maintenance, incurred by Landlord in reletting; and, third, Base Rent and
Additional Rent under this Lease. After deducting the payments referred to
above, any sum remaining from the rental Landlord receives from reletting shall
be held by Landlord and applied in payment of future Rent as Rent becomes due
under this Lease. In no event, and notwithstanding anything in the Assignment
and Subletting sections of this Lease to the contrary, shall Tenant be entitled
to any excess rent received by Landlord. If, on the date Rent is due under this
Lease, the rent received from the reletting is less than the Rent due on that
date, Tenant shall pay to Landlord, in addition to the remaining Rent due, all
costs, including maintenance, which Landlord incurred in reletting the Premises
that remain after applying the rent received from reletting as provided
hereinabove.
17.3 Default of Landlord. Landlord shall be in default of this Lease
-------------------
if any of the following events occur:
17.3.1 Landlord fails to make payment of any sums required to be
paid by Landlord under this Lease when and as the same shall become due and
payable, where such failure continues for ten (10) days after written notice
from Tenant.
17.3.2 Landlord fails to perform any of Landlord's non-monetary
obligations under this Lease for a period of thirty (30) days after written
notice from Tenant; provided that if more than thirty (30) days are required to
complete such performance, Landlord shall not be in default if Landlord
commences such performance within the thirty (30)-day period and thereafter
diligently pursues its completion.
17.4 General Provisions Upon Default. The enumeration of the
-------------------------------
foregoing remedies does not exclude any other remedy, but all remedies are
cumulative and shall be in addition to every other remedy now or hereafter
existing at law or in equity. No failure by either party to insist upon the
strict performance of any covenant, agreement, term or condition of this Lease
or to exercise any right or remedy consequent upon a breach thereof, and no
acceptance of full or partial rent during the continuance of any such breach,
shall constitute a waiver of any such breach or of such covenant, agreement,
term or condition. No covenant, agreement, term or condition of this Lease to
be performed or complied with by either party, and no breach thereof, shall be
waived, altered, modified or terminated except by written instrument executed by
either party. No waiver of any breach shall affect or alter this Lease, but
each and every covenant, agreement, term and condition of this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent breach thereof.
18. Quiet Enjoyment, Non-Disturbance & Subordination. Provided Tenant is
------------------------------------------------
not in default beyond applicable notice and cure periods, Tenant's quiet
possession shall not be disturbed by any ground lessor, encumbrancer or the
beneficiary of any deed(s) of trust against all or any portion of the Premises
or anyone claiming under or through them. Upon written request by Landlord,
Tenant agrees, subject to receipt of a commercially reasonable Subordination,
Non-Disturbance and Attornment Agreement described below (the "SNDA"), to
subordinate its rights under this Lease to the lien of a deed of trust
encumbering all or any part of the Premises. Tenant shall execute and return to
Landlord the SNDA delivered by Landlord pursuant to the foregoing within twenty
(20) days of receipt thereof. However, as a condition to Tenant's subordination
to any future lenders (Landlord hereby representing to Tenant that there will be
no deed of trust or mortgage made by or through Landlord encumbering the Project
20
<PAGE>
or any part of the Premises as of the Commencement Date), Landlord shall deliver
to Tenant a commercially reasonable recordable SNDA signed by Landlord and the
applicable lender providing in substance that, as long as Tenant shall discharge
its obligations under this Lease: (1) its tenancy shall not be disturbed; (2)
this Lease shall not be affected by any default under the mortgage or deed of
trust; and (3) in the event of foreclosure, this Lease shall continue in full
force and effect and the lender or other purchaser shall recognize this Lease
and all of Tenant's rights hereunder.
19. Entry by Landlord. Subject to Tenant's security, safety, and export
-----------------
control requirements, Landlord reserves, and shall during reasonable business
hours have, the right to enter the Premises to inspect the same, to exhibit said
Premises to prospective lenders, purchasers or tenants, to post notices of
nonresponsibility, to post signs, to make repairs, alterations, improvements and
additions to the Premises or any portion of a Building of which the Premises are
a part that Landlord may deem necessary or desirable, without abatement of rent,
and may for that purpose erect scaffolding and other necessary structures where
reasonably required by the character of the work to be performed, always
providing that the entrance to the Premises shall not be blocked, and further
providing that the business of Tenant shall not be interfered with unreasonably.
Unless in an emergency, Landlord shall first give notice of its intent to enter
the Premises and obtain Tenant's consent thereto. In the event of an emergency,
Landlord shall have the right to use any and all means which Landlord may deem
proper to open all doors in order to obtain entry to the Premises without
liability to Tenant except for any failure to exercise due care for Tenant's
personal property located on such premises.
20. Signage. No signs or advertisement shall be placed or printed upon
-------
the outer walls, doors, windows, roof or land area of the Premises, except those
signs and locations allowed by applicable codes, ordinances and other
governmental regulations and approved in writing by Landlord for the duration of
the Lease Term ("Tenant's Permitted Signs"). Landlord's approval shall not be
unreasonably withheld, conditioned, and/or delayed; and without limitation on
other approvals hereunder, Landlord hereby approves one parapet sign on each of
Building 1 and Building 5 and entry door signs on any or all portions of the
Premises, provided that the precise location, size, design and quality of such
parapet signs are subject to Landlord's reasonable approval. Landlord reserves
the right at any and all times to place its advertising signs upon any portion
of the Project other than the Premises. The precise location, size, design and
quality of Tenant's Permitted Signs shall be approved in writing by Landlord
prior to installation. Tenant's Permitted Signs shall be installed, maintained
and removed by Tenant at its sole cost and expense and in compliance with
applicable codes, ordinances and regulations.
21. Notices. All notices, demands, requests or other instruments required
-------
in this Lease to be given by Tenant to Landlord or Landlord to Tenant shall be
in writing, hand delivered, sent by prepaid certified or registered mail of the
United States, or by reliable overnight or local courier to the address listed
below or such other place as the parties may designate from time to time by
written notice.
Landlord: c/o Lincoln Property Company
30 Executive Park
Suite 100
Irvine, CA 92623-9693
Tenant: CALCOMP TECHNOLOGY, INC.
Attn: Corporate Secretary
Mail: 2411 West La Palma Avenue
Building 1
Anaheim, CA 92801
Any party may from time to time, by written notice to the other, designate a
different address which shall be substituted for that specified above. Each
such notice, demand, approval, consent, or other communication shall be deemed
effective and given (i) five (5) business days
21
<PAGE>
after deposit in the United States mail in the State of California, if sent by
certified or registered mail with postage prepaid, return receipt requested, or
(ii) upon receipt if delivered or sent in any other way. Refusal to accept
delivery of any notice shall be deemed to be delivery thereof.
22. Authority of Parties. Each individual executing this Lease on behalf
--------------------
of its principal represents and warrants that he is duly authorized to execute
and deliver this Lease on behalf of said party.
23. No Brokers. Each party represents and warrants to the other that, to
----------
its knowledge, no broker or finder (a) negotiated or was instrumental in
negotiating or consummating this Lease on its behalf, and (b) is or might be
entitled to a commission or compensation or fee in connection with this Lease.
Landlord and Tenant each agree to promptly indemnify, protect, defend and hold
harmless the other from and against any and all claims, damages, judgments,
suits, causes of action, losses, liabilities, penalties, fines, expenses and
costs (including attorneys' fees and court costs) resulting from any breach by
the indemnifying party of the foregoing representation, including, without
limitation, any claims that may be asserted by any broker, agent or finder
undisclosed by the indemnifying party. The foregoing mutual indemnity shall
survive the expiration or earlier termination of this Lease.
24. Environmental.
-------------
24.1 As used in this Lease, the term "Hazardous Substance" shall have
the same meaning as set forth in the Environmental Agreement. Tenant shall not
cause or permit any Hazardous Substance to be released, handled, generated,
produced, brought upon, used, stored, treated or disposed of in or about the
Premises by Tenant, its agents, employees, contractors, sublessees or invitees
in violation of any Environmental Laws (as defined in the Environmental
Agreement). Responsibility for Hazardous Substances on, at, about, under or
from the Premises or Project prior to the date of this Lease shall be governed
exclusively by the Environmental Agreement.
24.2 Subject to Tenant's reasonable security requirements, Landlord
shall have reasonable access to the Premises at reasonable times and upon
reasonable notice to Tenant for the purpose of, among other things, reasonably
testing, monitoring, auditing and inspecting the Premises and Tenant's
compliance with the provisions of this Lease. Tenant shall promptly notify
Landlord of the violation of any Environmental Law of which Tenant becomes aware
whether such violation relates to an environmental condition existing before or
after the Commencement Date. Concurrently with the Commencement Date, Tenant
shall provide Landlord with a written list of all Hazardous Substances (other
than normal office supplies used in ordinary amounts) that Tenant is then using
at the Premises, and Tenant shall provide Landlord with an updated list promptly
following any material change in or addition to such list. Landlord shall
exercise its rights under this Section 24.2 in a manner designed to minimize, to
the extent reasonably practicable, any interference with Tenant's use and
occupancy of, and business operations at, the Premises. Tenant hereby agrees to
indemnify, protect, defend (with counsel reasonably acceptable to Landlord), and
hold harmless Landlord, Landlord's property manager and their respective
partners, officers, directors, shareholders, agents and employees from and
against any and all damages, liabilities, judgments, fines, penalties, costs,
claims, liens, expenses, loss of permits and attorney's and consultant's fees
arising out of (whether during or after the term of this Lease) or involving the
presence or existence of any Hazardous Substance on, under or about the Premises
or the Project resulting from any act or negligent failure to act by Tenant or
any Tenant Employees which occurs during the term of this Lease. Tenant's
indemnity hereunder includes, but is not limited to, the effects of any
contamination or injury to person, property or the environment caused (whether
during or after the term of this Lease) by any act of or negligent failure to
act by Tenant or any Tenant Employees which occurs during the term of this
Lease, and the cost of investigation (including consultant's and attorney's fees
and testing), removal, remediation, restoration and/or abatement thereof, or of
any contamination therein involved, and shall survive the expiration or earlier
termination of this Lease.
22
<PAGE>
25. Early Partial Termination. Notwithstanding anything in this Lease to
-------------------------
the contrary, this Lease shall automatically terminate as to the Building 9
Premises only on September 30, 1997 (the "Building 9 Termination Date"), at
which time Landlord and Tenant shall be discharged from all of their obligations
under this Lease with respect to such Building 9 Premises from and after the
Building 9 Termination Date (except for indemnity obligations which expressly
survive the termination of the Lease). Upon the Building 9 Termination Date,
Tenant's monthly Base Rent under this Lease shall be reduced by $6,320 and
Tenant's Proportionate Share shall be recalculated to account for the reduction
in square footage of the Premises resulting from the elimination of the Building
9 Premises.
26. General Provisions.
------------------
26.1 Legal Costs and Expenses. The prevailing party shall recover
------------------------
from the other party all costs and expenses, including reasonable attorneys'
fees, in any court action brought to recover any rent or other sums due and
unpaid under the terms hereof, or for the breach of any of the terms and
conditions herein contained, whether or not court action shall proceed to
judgment.
26.2 Severability. If any clause or provision of this Lease is
------------
illegal, invalid or unenforceable under present or future laws effective during
the term of this Lease or any Extended Term then and in that event, it is the
intention of the parties hereto that the remainder of this Lease shall not be
affected thereby and it is also the intention of the parties to this Lease that
if any clause or provision is illegal, invalid or unenforceable, there be added
as a part of this Lease a clause or provision as similar in terms to such
illegal, invalid or unenforceable clause or provision as may be possible and be
legal, valid, and enforceable.
26.3 Headings. The headings of the provisions hereof are intended for
--------
convenience of reference only and shall not be used in interpreting the terms
hereof.
26.4 Successors and Assigns. Subject to Section 27 below (Assignment
----------------------
and Subletting), the obligations of this Lease shall run with the land, and this
Lease shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
26.5 Time. Time is of the essence in all of the provisions of this
----
Lease.
26.6 Governing Law. This Lease shall be governed and construed in
-------------
accordance with the laws of California.
27. Assignment and Subletting. This Lease may not be assigned nor the
-------------------------
Premises sublet by Tenant without the prior written consent of Landlord, which
consent Landlord shall not unreasonably withhold beyond ten (10) business days
after receipt of Tenant's request; provided, however, that Landlord hereby
agrees, without the necessity of further consent, to permit Tenant to assign or
sublet this Lease to, or share the Premises with, (i) any parent or subsidiary
corporation of Tenant or to any existing (as of the date of this Lease)
stockholder of Tenant or to any entity which acquires all or a substantial part
of Tenant's assets, or which is acquired in whole or in substantial part by
Tenant, or which is controlled directly or indirectly by Tenant, or which entity
controls, directly or indirectly, Tenant ("affiliate"), so long as such
transaction was not entered into as a subterfuge to avoid the obligations and
restrictions of this Lease, and (ii) as long as Tenant occupies at least 50% of
its Premises, Tenant may allow others who are providing services to, or who are
engaged in business with, or who own part of, or who are owned in part by,
Tenant, to occupy portions of its Premises as long as such arrangement was not
created as a subterfuge to avoid the obligations and restrictions of this Lease
and as long as such use does not violate the terms of this Lease (collectively,
a "Permitted Transfer"). Tenant at all times shall remain primarily liable to
perform all covenants and conditions of this Lease, notwithstanding any
Permitted Transfer or unpermitted transfer. Tenant shall give Landlord written
notice of a Permitted Transfer prior to the effective date of such Permitted
Transfer, and shall provide Landlord with a fully executed assignment or
sublease agreement, as the case may
23
<PAGE>
be. Any Permitted Transfer shall in no way relieve Tenant of any liability
Tenant may have under this Lease.
28. Landlord's Personal Liability. The liability of Landlord to Tenant for
------------------------------
any default by Landlord under the terms of this Lease shall be limited to the
actual interest of Landlord and its present or future partners in the Project
and Tenant agrees to look solely to the Project and the rent, issues, profits
and proceeds therefrom for satisfaction of any liability and shall not look to
other assets of Landlord nor seek any recourse against the assets of the
individual partners, directors, officers, shareholders, agents or employees of
Landlord; it being intended that Landlord and the individual partners,
directors, officers, shareholders, agents or employees of Landlord shall not be
personally liable in any manner whatsoever for any judgment or deficiency. The
liability of Landlord under this Lease is limited to its actual period of
ownership of title to the Premises, and Landlord shall be automatically released
from future performance under this Lease and from all further unaccrued
liabilities and expenses hereunder upon transfer of Landlord's interest in the
Premises provided the "successor in interest" to Landlord shall have assumed all
of Landlord's obligations under this Lease pursuant to an agreement between
Landlord and the successor in interest that expressly provides that the
successor in interest acknowledges and recognizes that this Lease exists between
Landlord and Tenant for the Premises, and that successor in interest assumes in
writing Landlord's obligations under the Lease.
29. Estoppel Certificate. Tenant shall execute (and acknowledge if required
---------------------
by any lender or ground lessor) and deliver to Landlord, within not less than
ten (10) days after Landlord provides such to Tenant, a statement in writing
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification), the date to which the Rent
and other charges are paid in advance, if any, acknowledging that there are not,
to Tenant's knowledge, any uncured defaults on the part of Landlord or Tenant
hereunder or specifying such defaults as are claimed, and such other matters as
Landlord may reasonably require. Any such statement may be conclusively relied
upon by Landlord and any prospective purchaser or encumbrancer of the Premises.
Tenant's failure to deliver such statement within ten (10) days after a second
notice shall be conclusive upon the Tenant that (a) this Lease is in full force
and effect, without modification except as may be represented by Landlord; (b)
there are no uncured defaults in Landlord's performance; and (c) not more than
one month's Rent has been paid in advance. Failure by Tenant to so deliver such
certified estoppel certificate shall be a default of the provisions of this
Lease.
30. Sale of Premises. In the event of any sale of the Premises by Landlord,
-----------------
Landlord shall be entirely released from any and all of its future unaccrued
obligations under this Lease and from all unaccrued liability hereunder as of
the date of such sale or other cessation of ownership provided the "successor in
interest" to Landlord shall have assumed all of Landlord's obligations under
this Lease pursuant to an agreement between Landlord and the successor in
interest that expressly provides that the successor in interest acknowledges and
recognizes that this Lease exists between Landlord and Tenant for the Premises,
and that successor in interest assumes in writing Landlord's obligations under
the Lease. A ground lease or similar long term lease by Landlord of the entire
Building, of which the Premises are a part, shall be deemed a sale within the
meaning of this Section 30. Tenant agrees to attorn to such new owner in the
same manner and on the same conditions as provided in Section 18 above.
31. Late Charge and Interest. The late payment of any Rent will cause
-------------------------
Landlord to incur additional costs, including administration and collection
costs and processing and accounting expenses and increased debt service
("Delinquency Costs"). If Landlord has not received any installment of Rent
within five (5) days after such amount is due, Tenant shall pay a late charge of
five percent (5%) of the delinquent amount, which is agreed to represent a
reasonable estimate of the Delinquency Costs incurred by Landlord; provided,
however, that Landlord shall not charge any Delinquency Costs unless Landlord
has in the previous 6 months notified Tenant in writing of a 5-day or more
delinquent payment. All Delinquency Costs not billed within 90 days of when due
are hereby waived. In addition, all amounts not paid within fifteen (15) days
24
<PAGE>
of when due shall bear interest from the date such amount was due until paid in
full at a rate per annum ("Applicable Interest Rate") equal to the lesser of (a)
the maximum interest rate permitted by law or (b) five percent (5%) above the
rate publicly announced by Bank of America, N.A. (or if Bank of America, N.A.
ceases to exist, the largest bank then headquartered in the State of California
("Bank") as its "Reference Rate. " If the use of the announced Reference Rate is
discontinued by the Bank, then the term Reference Rate shall mean the announced
rate charged by the Bank which is, from time to time, substituted for the
Reference Rate. Landlord and Tenant recognize that the damage which Landlord
shall suffer as a result of Tenant's failure to pay such amounts is difficult to
ascertain and said late charge and interest are the best estimate of the damage
which Landlord shall suffer in the event of late payment.
32. Lease of Temporary Storage Space. The parties hereby agree that
--------------------------------
Tenant shall lease, commencing on the Commencement Date and continuing until the
date which is three (3) months thereafter (the "Temporary Storage Space
Expiration Date"), all of Building 7 and Building 8 (collectively, the
"Temporary Storage Space") within the Project at the monthly rate of $.50 per
rentable square foot of floor area comprising the Temporary Storage Space. The
parties acknowledge that the Temporary Storage Space consists of approximately
35,956 rentable square feet of floor area, for a monthly rent of $17,978. From
the Commencement Date until the Temporary Storage Space Expiration Date (as the
same may be extended as set forth below), all of the terms and conditions of
this Lease shall apply with respect to the Temporary Storage Space (i.e., the
----
Temporary Storage Space shall be deemed part of the "Premises" under this Lease)
except that (i) the Temporary Storage Space shall not be considered in
calculating Tenant's Proportionate Share of Operating Costs and Tenant shall
have no "Additional Rent" obligations with respect to the Temporary Storage
Space, (ii) Tenant shall have no right to construct or install any Alterations
in or otherwise alter or improve the Temporary Storage Space, and (iii) Tenant's
remedies set forth in Section 11 of this Lease shall not apply with respect to
the Temporary Storage Space. The Temporary Storage Space Expiration Date shall
be automatically extended on a month-to-month basis; provided, however, that
either of Landlord or Tenant may terminate this Lease as to the Temporary
Storage Space by giving the other at least 60 days prior written notice of such
termination (the "Termination Notice"), which Termination Notice shall set forth
the date for such termination (the "Termination Date"). The Termination Date
must be the last day of a calendar month and may not be prior to the initial
Temporary Storage Space Expiration Date. Upon the Termination Date, Tenant
shall surrender the Temporary Storage Space to Landlord in the condition
required by Section 9 of this Lease.
33. Lease of Additional Temporary Storage Space. The parties hereby agree
-------------------------------------------
that Tenant shall lease, commencing on the Commencement Date and continuing
until the date which is thirty (30) days thereafter (the "Additional Temporary
Storage Space Expiration Date"), those portions of Building 3 and Building 9
generally designated on Exhibit A as "Additional Temporary Storage Space")
---------
(collectively, the "Additional Temporary Storage Space") at the monthly rate of
$.50 per rentable square foot of floor area comprising the Additional Temporary
Storage Space. The parties acknowledge that the Additional Temporary Storage
Space designation on Exhibit A is approximate only and that the precise location
---------
and actual rentable square footage of the Additional Temporary Storage Area
shall be determined, measured and validated between Landlord and Tenant prior to
the Commencement Date. From the Commencement Date until the Additional
Temporary Storage Space Expiration Date, all of the terms and conditions of this
Lease shall apply with respect to the Additional Temporary Storage Space (i.e.,
----
the Additional Temporary Storage Space shall be deemed part of the "Premises"
under this Lease) except that (i) the Additional Temporary Storage Space shall
not be considered in calculating Tenant's Proportionate Share of Operating Costs
and Tenant shall have no "Additional Rent" obligations with respect to the
Additional Temporary Storage Space, (ii) Tenant shall have no right to construct
or install any Alterations in or otherwise alter or improve the Additional
Temporary Storage Space, and (iii) Tenant's remedies set forth in Section 11 of
this Lease shall not apply with respect to the Additional Temporary Storage
Space. Upon the Additional Temporary Storage Space Expiration Date, Tenant
shall surrender the Additional Temporary Storage Space to Landlord in the
condition required by Section 9 of this Lease.
25
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the date and year first above written.
Landlord:
LINCOLN - RECP ANAHEIM OPCO, LLC
BY:_____________________________________________
ITS:____________________________________________
Tenant: CALCOMP TECHNOLOGY, INC.
BY:_____________________________________________
ITS:____________________________________________
26
<PAGE>
SCHEDULE 1
ATTACHED TO AND MADE A PART OF
LEASE RULES AND REGULATIONS
(To the extent of any conflict between these rules and regulations
and the Lease, the Lease shall control)
1. The sidewalks, entrances, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or used for
any purpose other than ingress and egress. The halls, passages, entrances,
elevators, stairways, balconies and roof are not for the use of the general
public, and Landlord shall in all cases retain the right to control and prevent
access thereto by all persons whose presence, in the judgment of Landlord, shall
be prejudicial to the safety, character, reputation or interests of the Building
and its tenants, provided that nothing herein contained shall be construed to
prevent such access by persons with whom tenants normally deal in the ordinary
course of their business, unless such persons are engaged in illegal activities.
No tenant and no employees of any tenant shall go upon the roof of the Building.
2. No awnings or other projections shall be attached to the outside
walls of the Building. No hanging planters, television sets or other objects
shall be attached to or suspended from ceilings without the prior written
consent of Landlord. Except as otherwise specifically approved by Landlord, all
electrical ceiling fixtures hung in offices or spaces along the perimeter of the
Building must be fluorescent, of a quality, type, design and bulb color approved
by Landlord.
3. No sign, advertisement or notice shall be exhibited, painted or
affixed by any tenant on any part of, or so as to be seen from the outside of, a
tenant's premises or the Building without the prior written consent of Landlord.
In the event of the violation of the foregoing by any tenant, Landlord may
remove same without any liability, and may charge the expense incurred in such
removal to the tenant violating this rule. Interior signs on doors and walls
shall be inscribed, painted or affixed for each tenant by Landlord at the
expense of such tenant, and shall be of a size, color, location and style
acceptable to Landlord.
4. The wash room partitions, mirrors, wash basins and other plumbing
fixtures shall not be used for any purpose other than those for which they were
constructed, and no sweepings, rubbish, rags, or other substances shall be
thrown therein.
5. No vehicles or animals of any kind shall be brought into or kept
in or about any tenant's premises and no cooking (with the exception of the use
of existing kitchen equipment, microwave ovens and the like) shall be done or
permitted by any tenant in its premises except that the preparation of coffee,
tea, hot chocolate and similar items for the tenant and its employees and
business visitors shall be permitted. No tenant shall cause or permit any
unusual or objectionable odors to escape from its premises.
6. No tenant shall occupy or permit any portion of its premises to
be occupied as an office for a public stenographer or typist, or for the
manufacture or sale of liquor, narcotics, or tobacco in any form, or as a
medical office, or as a barber shop, manicure shop or employment agency. No
tenant shall engage or pay any employees on its premises except those actually
working for such tenant on its premises, nor advertise for laborers giving an
address at its premises. No tenant's premises shall be used for lodging or
sleeping or for any immoral or illegal purposes.
7. No tenant shall make, or permit to be made, any unseemly or
disturbing noises, sounds or vibrations, or disturb or interfere with occupants
of this or neighboring buildings or premises or those having business with them,
whether by the use of any musical
27
<PAGE>
instrument, radio, phonograph, unusual noise, or in any other way. The
foregoing shall not apply to Tenant's permitted uses.
8. No tenant shall throw anything out of doors or down the
passageways.
9. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by any tenant, nor shall any changes be made in existing
locks or the mechanisms thereof. Each tenant must, upon the termination of its
tenancy, restore to Landlord all keys of stores, offices, and toilet rooms,
whether furnished to or otherwise procured by tenant, and in the event of the
loss of any keys so furnished, such tenant shall pay to the Landlord the cost of
replacing the same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such a change.
10. Landlord reserves the right to prohibit or impose conditions upon
the installation of heavy objects which might overload the Building floors.
11. No tenant shall purchase or otherwise obtain for use in its
premises, janitorial, maintenance or other services of any kind except from
persons authorized by Landlord, and at hours and under regulations fixed by
Landlord.
12. Landlord shall have the right to prohibit any advertising by any
tenant which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability as an office building. Upon written notice from
Landlord, any tenant shall refrain from or discontinue such advertising.
13. Any persons employed by any tenant to do janitorial work, shall,
while in the Building and outside of the tenant's premises, be subject to and
under the control and direction of the manager of the Building (but not as an
agent or servant of said manager or of Landlord, and the tenant shall be
responsible for all acts of such persons).
14. All doors opening into public corridors or lobbies shall be kept
closed, except when in use for ingress and egress.
15. Canvassing, soliciting and peddling in the Building, unless
approved by Landlord, are prohibited and each tenant shall cooperate to prevent
the same.
16. There shall not be used in any space, or the public halls of the
Building, either by tenants or others, any hand trucks except those equipped
with rubber tires and side guards.
17. All parking areas, pedestrian walkways, plazas and other public
areas forming a part of the Building shall be under the sole and absolute
control of Landlord with the exclusive right to regulate and control these
areas. Tenant agrees to conform to the reasonable rules and regulations that
may be established by Landlord for these areas from time to time.
18. Landlord shall have the right, exercisable without notice and
without liability to Tenant (except for stationery and printing costs), to
change the name and street of the Building of which the Premises are a part.
19. Landlord shall have the right to control and operate the public
portions of the Building, and the public facilities, as well as facilities
furnished for the common use of the tenants, in such manner as it reasonably
deems best for the benefit of the tenants generally.
20. The sashes, sash doors, skylights, windows, and doors that
reflect or admit light and air into halls, passageways or other public places in
the Building shall not be covered or obstructed by any tenant, nor shall any
bottles, parcels or other articles be placed on the window sills. Tenant shall
see that the windows, transoms and doors of the premises are closed
28
<PAGE>
and securely locked before leaving the Building and must observe strict care not
to leave windows open when it rains. Tenant shall exercise care and caution
that all water faucets or water apparatus are entirely shut off before tenant or
tenant's employees leave the Building, and that all electricity, gas or air
shall likewise be carefully shut off as appropriate so as to prevent waste or
damage.
21. The term "personal goods or services vendors" as used herein
means persons who periodically enter the Building for the purpose of selling
goods or services to a tenant, other than goods or services which are used by
the tenant only for the purpose of conducting its business on the Premises.
"Personal goods or services" include, but are not limited to, drinking water and
other beverages, food, barbering services, and shoe shining services. Landlord
reserves the right to prohibit personal goods and services vendors from access
to the Building except upon such reasonable terms and conditions as are related
to the safety, care and cleanliness of the Building, the preservation of good
order therein, and the relief of any financial or other burden on the Landlord
occasioned by the presence of such vendors or the sale by them of personal goods
or services to the Tenant or its employees. If necessary for the accomplishment
of these purposes, Landlord may exclude a particular vendor entirely or limit
the number of vendors who may be present at any one time in the Building.
22. Landlord may at any time revoke, supplement or modify these Rules
an Regulations, or any portion thereof, whenever in Landlord's reasonable
opinion such changes are required for the care, cleanliness, safety or
preservation of good order in the Building. All such changes shall be effective
five (5) days after delivery to tenant of written notice thereof, except in the
event of emergency, in which event they shall be effective immediately upon
notice to tenant.
23. Landlord will not be responsible for any lost or stolen personal
property, equipment, money, or jewelry from the Premises or from public rooms,
regardless of whether such loss occurs when the area is locked against entry.
24. No birds or animals shall be brought onto the Project, and no
bicycles or vehicles shall be brought into or kept in the Building.
25. No draperies, shutters, or window coverings shall be installed on
exterior windows or on windows or doors facing public corridors without
Landlord's prior written approval.
26. Employees of Landlord shall not receive or carry messages for or
to any tenant or other occupant on the Property, nor shall they contract to
render free or paid services to any tenant or any tenant's agents, employees, or
invitees; if any of Landlord's employees perform any such services, such
employees shall be deemed the agent of the tenant for whom the services are
being performed, regardless of whether or how payment is arranged for services,
and Landlord is expressly relieved from any and all liability for any injury to
persons or damage to property (or any other damages) in connection with any such
services.
27. Directories will be placed by Landlord, at its own expense, in
conspicuous places in the Building. No other directories shall be permitted,
unless previously consented to by Landlord in writing.
28. Tenant shall place, affix, or attach on any door or wall of the
Building exposed to the public only those identification markers and other signs
pre-approved by Landlord as to style, size, lettering and color. Landlord
reserves the right to place any such identification markers and signs on
Tenant's doors and walls and the cost thereof shall be billed to Tenant.
29
<PAGE>
EXHIBIT 10.26
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
<PAGE>
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
-----------------------------
Table of Contents
-----------------
<TABLE>
<CAPTION>
Paragraph
Number Page
- --------- ----
<S> <C>
1. Purchase and Sale................................................ 2
2. Purchase Price................................................... 2
3. Payment of Purchase Price........................................ 2
4. Escrow........................................................... 3
5. Condition of Title............................................... 3
6. Title Policy..................................................... 4
7. Conditions to Close of Escrow.................................... 4
8. Deposits by Seller............................................... 8
9. Deposits by Buyer................................................ 9
10. Costs and Expenses............................................... 9
11. Prorations....................................................... 9
12. Disbursements and Other Actions by Escrow Holder................. 10
13. Covenants of Seller.............................................. 10
14. Representations and Warranties; As-Is............................ 12
15. Remedies......................................................... 14
16. Damage or Condemnation Prior to Closing.......................... 15
17. Notices.......................................................... 16
18. Brokers.......................................................... 17
19. Legal Fees....................................................... 18
20. Assignment....................................................... 18
21. Miscellaneous.................................................... 18
SIGNATURES............................................................. 20
</TABLE>
EXHIBITS
- --------
Exhibit "A-1" - Legal Description of the Land
Exhibit "A-2" - Personal Property List
Exhibit "B" - Grant Deed
Exhibit "C" - Bill of Sale
Exhibit "D" - Transferor's Certification of Non-Foreign Status
Exhibit "E" - General Assignment Agreement
Exhibit "X" - Disclosure Statement
<PAGE>
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
-----------------------------
TO: Chicago Title Company Escrow No.:__________________________
700 South Flower Street, Suite 900 Escrow Officer: Maggie Watson
Los Angeles, California 90017 Title Order No.: 00730051 M07
Title Officer:_______________________
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS
("Agreement") is made and entered into as of this 4th day of April 1997, by and
- -----------
among SANDERS DEVELOPMENT CORPORATION, a Delaware corporation ("Sanders
-------
Development"), and CALCOMP INC., a California corporation ("CalComp"), on the
- ----------- -------
one hand; and LINCOLN PROPERTY COMPANY, N.C., INC., a Texas corporation
("Buyer"), on the other hand, with respect to the following. CalComp and
-----
Sanders Development are collectively referred to as "Seller."
------
R E C I T A L S :
----------------
A. Seller desires to sell and convey to Buyer the following:
1. That certain real property located in the City of Anaheim,
County of Orange, State of California, more particularly described on Exhibit
-------
"A-1" attached hereto (the "Land"), together with the ten (10) buildings located
- ----- ----
thereon, containing in the aggregate approximately 432,149 square feet of
leasable space, commonly known as CalComp Complex (the "Buildings"), associated
---------
parking areas, and all other improvements located thereon (collectively, the
"Improvements");
- -------------
2. All of Seller's interest (if any) in all rights, privileges,
easements and appurtenances benefiting the Land and/or the Improvements,
including, without limitation, all mineral and water rights and all easements,
rights-of-way and other appurtenances used or connected with the beneficial use
or enjoyment of the Land and/or the Improvements (the Land, the Improvements and
all such rights, privileges, easements and appurtenances are sometimes
collectively hereinafter referred to as the "Real Property");
-------------
3. All personal property, equipment, supplies and fixtures
described in Exhibit "A-2" attached hereto (collectively, the "Personal
------------- --------
Property"); and
4. All of Seller's interest in any intangible property
appurtenant to the foregoing, including, without limitation, warranties,
guaranties, licenses, permits, entitlements, governmental approvals and
certificates of occupancy which benefit the Real Property and/or the Personal
Property to the extent assignable without the payment of money or the consent of
third parties (the "Intangible Personal Property"). The Real Property, the
----------------------------
Personal Property, Seller's interest as landlord under the Leases, and the
Intangible Personal Property are collectively hereinafter referred to as the
"Property."
- ---------
B. Seller desires to sell the Property to Buyer and Buyer desires to
purchase the Property from Seller upon the terms and conditions hereinafter set
forth.
A G R E E M E N T :
------------------
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein
<PAGE>
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer agree that the
terms and conditions of this Agreement and the instructions to Chicago Title
Company ("Escrow Holder") with regard to the escrow ("Escrow") created pursuant
------------- ------
hereto are as follows:
1. Purchase and Sale. Seller hereby agrees to sell the Property to
-----------------
Buyer, and Buyer hereby agrees to purchase the Property from Seller, upon the
terms and conditions herein set forth.
2. Purchase Price. The purchase price ("Purchase Price") for the
-------------- --------------
Property shall be Twenty-One Million Five Hundred Thousand Dollars
($21,500,000).
3. Payment of Purchase Price. The Purchase Price for the Property
-------------------------
shall be payable by Buyer as follows:
(a) Initial Deposit. Concurrently with the Opening of Escrow (as
---------------
defined in Paragraph 4(a) below), Buyer shall deposit with Escrow Holder, in
immediately available funds, the sum of Two Hundred Fifty Thousand Dollars
($250,000.00) (the "Initial Deposit"). The Initial Deposit shall be fully
---------------
refundable to Buyer up until the expiration of the Contingency Period (as
defined in Paragraph 7(a)(ii) below). Provided Buyer has not previously
terminated this Agreement, then from and after the expiration of the Contingency
Period, the Initial Deposit shall be nonrefundable to Buyer in the event this
Agreement and the Escrow are cancelled unless any of the following circumstances
occur, in which event the Initial Deposit shall be refunded to Buyer upon the
termination of this Agreement: (i) the Close of Escrow (as defined in Paragraph
4(b) below) fails to occur by reason of the failure of a condition to the
closing for Buyer's benefit, or (ii) Seller fails to convey the Property to
Buyer as provided herein.
(b) Second Deposit; Release of Initial Deposit. On the first
------------------------------------------
business day after the expiration of the Contingency Period, provided Buyer has
not previously terminated this Agreement: (i) Buyer shall deposit or cause to be
deposited with Escrow Holder, in immediately available funds, the additional sum
of Two Hundred Fifty Thousand Dollars ($250,000.00) (the "Second Deposit"); and
--------------
(ii) Escrow Holder shall release the Initial Deposit to Seller. The Initial
Deposit and the Second Deposit, together with all interest accrued thereon, are
hereinafter collectively referred to as the "Deposits" and sometimes
--------
individually referred to as a "Deposit." Upon Escrow Holder's receipt of each
-------
Deposit, Escrow Holder shall immediately invest it in an interest bearing
account of a federally insured bank or savings and loan association acceptable
to Buyer. The Second Deposit shall be nonrefundable to Buyer unless either of
the following circumstances occur, in which event the Second Deposit shall be
refunded to Buyer upon the termination of this Agreement: (i) the Close of
Escrow (as defined in Paragraph 4(b) below) fails to occur by reason of the
failure of a condition to the closing for Buyer's benefit, or (ii) Seller fails
to convey the Property to Buyer as provided herein. The Deposits and all
interest which shall accrue thereon shall be applied to the payment of the
Purchase Price upon the Close of Escrow. No interest will accrue on the Initial
Deposit after its release to Seller.
(c) Closing Funds. At least one (1) day prior to the Close of
-------------
Escrow, Buyer shall deposit or cause to be deposited with Escrow Holder, in
immediately available funds, the balance of the Purchase Price, plus or minus
Buyer's share of closing costs, prorations and charges payable pursuant to this
Agreement.
4. Escrow.
------
(a) Opening of Escrow. For purposes of this Agreement, the
-----------------
Escrow shall be deemed opened on the date Escrow Holder shall have received a
fully executed original or originally executed counterparts of this Agreement
from both Buyer and Seller (such date being referred to hereinafter as the
"Opening of Escrow").
-----------------
(b) Close of Escrow. For purposes of this Agreement, the "Close
--------------- -----
of Escrow" shall be the date that the grant deed, the form of which is attached
- ---------
hereto as Exhibit "B" (the "Grant Deed"), conveying the Real Property to Buyer,
---------- ----------
is recorded in the Official Records of Orange County, California (the
-2-
<PAGE>
"Official Records"). Unless extended in writing by Buyer and Seller, the Close
----------------
of Escrow shall occur on or before June 13, 1997 (the "Closing Date"). Seller
------------
shall deliver possession of the Property to Buyer upon the Close of Escrow,
subject only to the "Approved Condition of Title" (as defined in Paragraph 5
---------------------------
below).
5. Condition of Title. It shall be a condition to the Close of
------------------
Escrow for Buyer's benefit that title to the Real Property be conveyed to Buyer
by Seller by the Grant Deed subject only to the following approved condition of
title ("Approved Condition of Title"):
---------------------------
(a) a lien to secure payment of real estate taxes and
assessments, not delinquent;
(b) the lien of supplemental taxes assessed pursuant to Chapter
3.5 commencing with Section 75 of the California Revenue and Taxation Code
("Code");
----
(c) matters affecting the Real Property created by or with the
written consent of Buyer (including the CalComp Lease, as hereinafter defined);
and
(d) exceptions which are disclosed by the Report described in
Paragraph 7(a)(i) hereof and which are approved or deemed approved by Buyer in
accordance with such Paragraph 7(a)(i).
Seller covenants that, from and after the expiration of the
Contingency Period, it will not intentionally cause title to the Real Property
to differ from the Approved Condition of Title described in this Paragraph 5,
provided that (i) the foregoing clause shall not limit Seller's rights under
Paragraph 21(o) (Continued Marketing Efforts) and (ii) Seller shall have no
obligation to remove any liens or other encumbrances affecting title to the
Property except for item numbers 18 and 19 on that certain Preliminary Title
Report dated February 10, 1997 prepared by Title Company (as hereinafter
defined) under Order No. 007300051 which Seller shall cause to be removed as of
the Close of Escrow. Any liens, encumbrances, encroachments, easements,
restrictions, conditions, covenants, rights, rights-of-way or other matters
affecting the Approved Condition of Title which may appear of record or be
revealed after the date of the Report described in Paragraph 7(a)(i) below shall
also be subject to Buyer's approval as a condition to the Close of Escrow for
Buyer's benefit.
6. Title Policy. Title shall be evidenced by the willingness of the
------------
"Title Company" (as defined in Paragraph 7(a)(i) hereof) to issue its ALTA (Form
B-1970) Owner's Policy of Title Insurance ("Title Policy") in the amount of the
------------
Purchase Price, showing title to the Real Property vested in Buyer (or its
assignee), subject only to the Approved Condition of Title. If Buyer does not
obtain a survey during the Title Review Period, Buyer will be deemed to have
approved the standard survey exception on the Title Policy.
7. Conditions to Close of Escrow.
-----------------------------
(a) Conditions to Buyer's Obligations. The Close of Escrow and
---------------------------------
Buyer's obligation to consummate the transaction contemplated by this Agreement
are subject to the satisfaction of the following conditions (or Buyer's written
waiver thereof, it being agreed that Buyer may waive in writing any or all of
such conditions) for Buyer's benefit on or prior to the dates designated below
for the satisfaction of such conditions. In the event Buyer terminates this
Agreement and the Escrow due to the nonsatisfaction of any such conditions, then
Buyer shall be entitled to the immediate return of the Deposits:
(i) Title. Buyer shall have approved, as determined in
-----
Buyer's sole and absolute discretion, the legal description of the Land and any
matters of title as disclosed by the following documents (collectively, the
"Title Documents") prepared at Seller's sole cost and expense and to be
---------------
delivered to Buyer on or before the dates designated below (other than the
Survey, as hereinafter defined, which shall be obtained by Buyer at Buyer's
expense): (A) within three (3) days following the Opening of Escrow, a standard
preliminary title report dated on or after the date of this Agreement issued by
Escrow
-3-
<PAGE>
Holder, in its capacity as title insurer (the "Title Company"), with respect to
-------------
the Real Property, as such report may be amended or supplemented from time to
time to reflect additional title matters or survey exceptions (the "Report");
------
and (B) within three (3) days following the Opening of Escrow, legible copies of
all documents, whether recorded or unrecorded, referred to in the Report to the
extent legible copies are available to Seller. Buyer may also cause an ALTA "as
built" survey of the Property ("Survey") to be prepared at Buyer's sole cost and
expense.
Buyer shall have from the Opening of Escrow until 5:00 p.m. on May 27,
1997 (the "Title Review Period") to give Seller and Escrow Holder written notice
-------------------
("Buyer's Title Notice") of Buyer's disapproval of the legal description or any
--------------------
matters shown in or disclosed by the Title Documents or the Survey.
The failure of Buyer to give Buyer's Title Notice on or
before the expiration of the Title Review Period shall be deemed to constitute
Buyer's disapproval of the respective matters relating thereto. If Buyer
disapproves or conditionally approves any of the foregoing matters, Seller may,
within five (5) business days after its receipt of Buyer's Title Notice, elect
to eliminate or ameliorate to Buyer's satisfaction such disapproved or
conditionally approved matters. Within such five (5) business day period, Seller
shall give Buyer written notice (which shall hereinafter be referred to as
"Seller's Title Notice"), of those disapproved or conditionally approved
---------------------
matters, if any, which Seller covenants and agrees to either eliminate from the
Title Policy as exceptions to title to the Property or to ameliorate to Buyer's
satisfaction by the Closing Date as a condition to the Close of Escrow for
Buyer's benefit. If Seller does not elect in Seller's Title Notice to eliminate
or ameliorate any disapproved or conditionally approved matters as provided
above, or if Seller elects to ameliorate (as determined in Buyer's sole and
absolute discretion) but not eliminate any disapproved or conditionally approved
matters, then Buyer shall have the right, in Buyer's sole and absolute
discretion, by a writing delivered to Seller and Escrow Holder not less than
five (5) business days after receipt of Seller's Title Notice, to (A) waive its
prior disapproval, in which event said disapproved matter(s) shall be deemed
approved, or (B) terminate this Agreement and the Escrow created pursuant
hereto, in which event the Deposits shall be immediately returned to Buyer, and
this Agreement, the Escrow and the rights and obligations of the parties
hereunder shall terminate. Buyer's failure to terminate this Agreement in
accordance with the preceding sentence will be deemed Buyer's approval of the
Title Documents. If Seller fails to timely deliver Seller's Title Notice, then
Seller will be deemed to have elected not to eliminate or ameliorate to Buyer's
satisfaction any disapproved or conditionally approved matters set forth in
Buyer's Title Notice on or before the Close of Escrow. Notwithstanding anything
to the contrary contained in this Agreement, Buyer hereby disapproves all liens
evidencing monetary encumbrances (other than liens for non-delinquent real
property taxes or assessments). If after expiration of the Title Review Period,
the Title Company supplements the Title Report by adding new exceptions or
changing or modifying any existing exceptions thereto, Buyer shall have five (5)
business days to review and approve, disapprove or conditionally approve such
matters. If Buyer disapproves or conditionally approves of any such new or
changed exception, Seller and Buyer shall proceed in accordance with the
provisions of this paragraph with respect to the procedures for Buyer's review
and Seller's response to such new or changed title matters.
(ii) Review and Approval of Documents and Materials. Seller
----------------------------------------------
shall deliver to Buyer, or shall make available to Buyer for review and
photocopying at the Property, within seven (7) business days after the Opening
of Escrow (or, in the case of items described in clause (F) below, following
Buyer's request for such items) the documents and materials respecting the
Property set forth below, to the extent in the possession and control of Seller
(collectively, the "Documents and Materials"). Buyer shall have the right to
-----------------------
review and approve or disapprove, in its sole and absolute discretion, any or
all of the Documents and Materials during the period commencing at the Opening
of Escrow and ending on 5:00 p.m. on June 3, 1997 (the "Contingency Period").
------------------
The failure of Buyer to give Seller written notice terminating this Agreement on
or before the expiration of the Contingency Period shall be deemed to constitute
Buyer's approval thereof.
(A) Improvement Plans. Plans, drawings and
-----------------
specifications relating to all of the Improvements;
-4-
<PAGE>
(B) Agreements. Legible copies of any and all existing
----------
management contracts, maintenance contracts, service contracts, reciprocal
easement agreements, if any, and any other existing contracts or agreements
affecting or relating to the leasing, ownership, operation, maintenance,
construction or development of the Property which may remain in effect following
the Close of Escrow (collectively, the "Contracts");
(C) Environmental, Soils and Engineering Reports. All
--------------------------------------------
existing soils, environmental (including any and all Phase I and/or Phase II
environmental assessment reports) and building reports and engineering data
pertaining to the Real Property or any portion thereof and any and all
architectural studies, grading plans, topographical maps and similar data
respecting the Real Property;
(D) Tax Statements and Utility Bills. Legible copies of
--------------------------------
the most recently issued bills for all real property taxes or assessments
payable with respect to the Property or any portion thereof or interest therein
and copies of all utility bills for the past twelve (12) months;
(E) Copies of Expense Statements or Bills. Copies of
-------------------------------------
all expense reports and statements or bills relative to the following
information and/or data with respect to the Property: (i) maintenance and repair
costs during calendar years 1995 and 1996; and (ii) any material extraordinary
or periodic expenses, repairs, replacements or other improvements incurred in
connection with the ownership, operation, maintenance or repair of the Property
during calendar years 1995 and 1996; and
(F) Miscellaneous. Such other documents in Seller's
-------------
possession and control which relate to the Property (excluding, however,
Seller's appraisal(s) of the Property and other proprietary or privileged
information).
Buyer acknowledges that the Documents and Materials delivered
or made available to Buyer under this Section 7(a)(ii) have been delivered or
made available for Buyer's convenience, but that Seller makes no representations
or warranties of any kind regarding their accuracy, completeness or thoroughness
(other than as expressly set forth in Paragraph 14(a) below).
(iii) Inspections and Studies. On or before the expiration
-----------------------
of the Contingency Period, Buyer shall have the right to approve or disapprove,
in Buyer's sole and absolute discretion, the results of any and all inspections,
investigations, tests and studies, including, without limitation, investigations
with regard to zoning, building codes and other governmental regulations;
architectural inspections; engineering tests; soils, seismic and geologic
reports; inspections of all or any portion of the Improvements (including,
without limitation, structural, mechanical and electrical systems, roofs,
pavement, landscaping and public utilities); inspections, investigations, tests
and studies with respect to the environmental condition of the Property; and any
other physical inspections and/or investigations as Buyer may elect to make or
obtain. The failure of Buyer to give Seller written notice of Buyer's
termination of this Agreement prior to the expiration of the Contingency Period
shall be deemed to constitute Buyer's approval of the Property.
Except as provided in the following sentence, during the term
of this Escrow, Buyer, its agents, consultants, contractors and subcontractors
shall have the right, at Buyer's sole cost and expense, to enter upon the Real
Property to conduct or make any and all inspections and tests (including,
without limitation, environmental assessments of the Real Property) as may be
necessary or desirable in Buyer's discretion, provided that such inspections and
tests do not materially interfere with Seller's use or enjoyment of the
Property. Neither Buyer nor its agents, consultants, contractors or
subcontractors shall be entitled to drill or bore on or through the surface of
the Property without Seller's prior consent, which may be given or withheld in
Seller's reasonable discretion. Any consent given by Seller to environmental
investigations is hereby conditioned upon Buyer's agreement to (i) provide
Seller with copies of all information and reports resulting from such
investigations and (ii) "split samples" of any materials taken on or from the
Property. Prior to the exercise of the right of entry, and at all times while
Buyer or its agents are present upon the Real Property, Buyer shall arrange for,
keep and maintain in full
-5-
<PAGE>
force and effect (and shall provide Seller a copy of or certificate evidencing)
a policy of commercial general liability insurance with a per occurrence limit
of not less than $1,000,000 and an aggregate single limit of at least
$1,000,000, which policy shall be issued by an insurer reasonably acceptable to
Seller and shall name Seller as an additional insured. Buyer shall promptly
repair any damage to the Property which is directly caused by the entry onto the
Property by Buyer, its agents, contractors or subcontractors. Buyer shall keep
the Property free of all liens arising directly out of such entry onto the
Property. Buyer hereby indemnifies and holds Seller and the Property harmless
from and against any and all costs, losses, damages, liabilities, liens, claims
and expenses arising out of or resulting from entry by Buyer or its agents,
consultants, contractors and subcontractors on the Property.
To the maximum extent permitted by law, prior to the Close of
Escrow, Buyer shall keep strictly confidential the information about Seller and
the Property obtained by or made available to it except that Buyer may provide
such information to (1) an agency or other party to which Buyer may be required
by law to disclose such information and (2) its representatives, proposed
financial partners, consultants and attorneys engaged in connection with Buyer's
acquisition of the Property if Buyer requires and causes such parties to
maintain the confidentiality of such information. If the transaction
contemplated by this Agreement is not consummated for any reason, Buyer promptly
shall deliver, and instruct its representatives, consultants and attorneys to
deliver, to Seller all copies and originals of information and materials
received or developed by Seller, Buyer or its or their consultants with respect
to Seller or the Property. The provisions of this Section shall survive any
termination of this Agreement.
(iv) Representations, Warranties and Covenants of Seller.
---------------------------------------------------
Seller shall have duly performed each and every covenant and agreement to be
performed by Seller pursuant to this Agreement as of the Close of Escrow, and
Seller's representations, warranties and covenants set forth in Paragraph 14(a)
hereof shall be true and correct in all material respects as of the Close of
Escrow.
(v) CalComp Lease. On or before that date which is thirty
-------------
(30) days following the Opening of Escrow (the "Lease Review Period"), Buyer and
-------------------
Seller shall have mutually approved the form and content of a written lease
agreement (the "CalComp Lease") wherein Seller shall lease from Buyer that
-------------
portion of the Property commonly known as Building 1 (containing approximately
75,735 rentable square feet) and Building 5 (containing approximately 62,748
rentable square feet). The CalComp Lease shall provide, among other things: (1)
for a lease term of twelve (12) full months commencing as of the Close of
Escrow; (2) an option for Seller to renew the initial term of such lease with
respect to one or both Buildings leased for an additional twelve (12) months
upon the same terms and conditions existing for the initial lease term, provided
that Seller gives at least six (6) months prior written notice of an election to
exercise such renewal option, and provided further, that Seller is not then in
default in its obligations under the Lease after expiration of any applicable
notice and cure periods at the time of its exercising of the renewal option or
at the time such renewal term is to take effect; (3) a base rental rate of fifty
cents (50c) per square foot (with an appropriate pass through of operating
expenses); and (4) Seller's acceptance of the leased premises "AS IS" without
any duty or obligation of Buyer to make any improvements, alterations or other
changes (structural, nonstructural or otherwise) to such premises prior to the
effective date of the CalComp Lease. The failure of Buyer and Seller to approve
the form and content of the CalComp Lease, as determined in each party's sole
and absolute discretion, prior to the expiration of the Lease Review Period
shall be deemed to constitute the nonsatisfaction of this condition, in which
event either Buyer or Seller may terminate this Agreement by delivering written
notice to the other of such election to terminate on or before the expiration of
the Lease Review Period. Notwithstanding the foregoing, Buyer shall have the
right during the Lease Review Period to review and approve, in its sole
discretion, the precise entity or entities that will constitute the "tenant"
under the CalComp Lease.
(vi) HVAC and Other Building Systems. As of the Close of
-------------------------------
Escrow, the heating, ventilation and air conditioning systems, the elevators,
the fire sprinkler and fire life safety systems and all major electrical systems
serving the Improvements shall be operational.
(b) Conditions to Seller's Obligations. For the benefit of Seller,
----------------------------------
the Close of Escrow shall be conditioned upon the timely performance by Buyer of
all of the obligations required by the terms of this Agreement to be performed
by Buyer (or Seller's waiver thereof, it being agreed that Seller
-6-
<PAGE>
may waive such condition), Buyer's representations and warranties set forth in
Paragraph 14(b) hereof shall be true and correct in all material respects as of
the Close of Escrow and Seller's approval of the form of the CalComp Lease, on
or before the expiration of the Lease Review Period, in Seller's sole and
absolute discretion.
(c) Environmental Agreement. On or before that date which is ten (10)
-----------------------
days following the Opening of Escrow (the "Environmental Agreement Review
------------------------------
Period"), Buyer, on the one hand, and Seller and Lockheed Martin Corporation
- ------
("LMC"), on the other hand, shall have mutually approved the form and content of
---
written agreements (the "Environmental Agreements") with respect to the parties'
------------------------
duties and obligations concerning the past, present and future presence or
existence of hazardous materials on, under or about the Property (or any portion
thereof). The failure of Buyer, Seller and LMC to approve the form and content
of the Environmental Agreements on or before the expiration of the Environmental
Agreement Review Period shall be deemed to constitute the failure of this
condition, in which event either Buyer or Seller may terminate this Agreement by
delivering written notice to the other of such termination on or before the
expiration of the Environmental Agreements Review Period. Buyer's approval of
the Environmental Agreements shall not constitute or be deemed to constitute
Buyer's acceptance and/or approval of the environmental condition of the
Property.
8. Deposits by Seller. At least one (1) business day prior to the
------------------
Close of Escrow, Seller shall deposit or cause to be deposited with Escrow
Holder the following documents and instruments (except for the items listed in
subparagraphs (b) and (e), which Seller shall cause to be delivered to Buyer
outside of the Escrow on or before the Close of Escrow):
(a) Grant Deed. The Grant Deed conveying the Real Property to
----------
Buyer, duly executed as appropriate by Seller, acknowledged and in recordable
form in the form attached hereto as Exhibit "B";
----------
(b) Warranties and Manuals. Any and all original warranties
----------------------
related to any part of the Improvements, if any, and all operating manuals for
all building systems and components to the extent the same are in Seller's
possession;
(c) Bill of Sale. A Bill of Sale ("Bill of Sale"), duly executed
------------ ------------
by Seller, in the form attached hereto as Exhibit "C", conveying all of Seller's
----------
right, title and interest in and to the Personal Property;
(d) Transferor's Certification of Non-Foreign Status. The
------------------------------------------------
Transferor's Certification of Non-Foreign Status in the form attached hereto as
Exhibit "D", duly executed by Seller ("Firpta Certificate");
- ----------- ------------------
(e) Permits, Entitlements and the Like. Any and all original
----------------------------------
building and development permits, certificates of occupancy, utility will serve
letters, use permits and other governmental approvals and/or entitlements
relative to the Property, to the extent the same are in Seller's possession;
(f) General Assignment. A General Assignment ("General
------------------ -------
Assignment"), duly executed by Seller, in the form attached herein as Exhibit
- ---------- -------
"E", conveying all of Seller's right, title and interest in and to the
-
Intangible Personal Property;
(g) CalComp Lease. The CalComp Lease, duly executed by Seller;
-------------
and
(h) Environmental Agreements. The Environmental Agreements, duly
------------------------
executed by Seller and LMC.
(i) Other Instruments. Such other instruments and documents as
-----------------
are described in Paragraph 21(b) herein.
-7-
<PAGE>
9. Deposits by Buyer. Buyer shall deposit or cause to be deposited
-----------------
with Escrow Holder the funds which are to be applied towards the payment of the
Purchase Price in the amounts and at the times designated in Paragraph 3 above
(as adjusted by the prorations and credits hereinafter provided). In addition,
Buyer shall deposit with Escrow Holder prior to the Close of Escrow the
following documents and instruments:
(a) General Assignment. A counterpart of the General Assignment,
------------------
duly executed by Buyer; and
(b) CalComp Lease. A counterpart of the CalComp Lease, duly
-------------
executed by Buyer.
(c) Environmental Agreements. A counterpart of the Environmental
------------------------
Agreements, duly executed by Buyer.
(d) Other Instruments. Such other instruments and documents as
-----------------
are described in Paragraph 21(b) herein.
10. Costs and Expenses. The cost and expense of the Title Policy
------------------
allocable to a CLTA title policy shall be paid by Seller, provided that Buyer
shall pay for any additional premium allocable to an ALTA title policy and the
cost of all endorsements to the Title Policy. The escrow fee of Escrow Holder
shall be paid equally by Seller and Buyer. Seller shall pay all documentary
transfer taxes payable in connection with the recordation of the Grant Deed.
Buyer and Seller shall pay, respectively, the Escrow Holder's customary charges
to buyers and sellers for document drafting, recording and miscellaneous
charges. If, as a result of no fault of Buyer or Seller, Escrow fails to close,
Buyer and Seller shall share equally all of Escrow Holder's fees and charges.
11. Prorations. The following prorations between Seller and Buyer
----------
shall be made by Escrow Holder computed as of the Close of Escrow:
(a) Taxes. Real and personal property taxes and assessments on
-----
the Property shall be prorated on the basis that Seller is responsible for (i)
all such taxes for the fiscal year of the applicable taxing authorities
occurring prior to the "Current Tax Period" (as hereinafter defined) and (ii)
that portion of such taxes for the Current Tax Period determined on the basis of
the number of days which have elapsed from the first day of the Current Tax
Period up to the Close of Escrow, whether or not the same shall be payable prior
to the Close of Escrow. The phrase "Current Tax Period" refers to the fiscal
------------------
year of the applicable taxing authority in which the Close of Escrow occurs. In
the event that as of the Close of Escrow the actual tax bills for the year or
years in question are not available and the amount of taxes to be prorated as
aforesaid cannot be ascertained, then rates and assessed valuation of the
previous year, with known changes, shall be used, and when the actual amount of
taxes and assessments for the year or years in question shall be determinable,
then such taxes and assessments will be reprorated between the parties to
reflect the actual amount of such taxes and assessments. Seller shall be
responsible for, and shall indemnify, protect, defend (with counsel chosen by
Buyer) and hold harmless Buyer and the Real Property from and against any and
all supplemental taxes assessed pursuant to the Code, to the extent that such
taxes relate to events (including, without limitation, any changes in ownership
and/or new construction) occurring prior to the Close of Escrow.
(b) Utilities. Gas, water, electricity, heat, fuel, sewer and
---------
other utilities and the operating expenses relating to the Real Property shall
be prorated as of the Close of Escrow. If the parties are unable to obtain final
meter readings as of the Close of Escrow, such expenses shall be estimated as of
the Close of Escrow on the basis of the prior operating history of the Real
Property.
At least one (1) business day prior to the Close of Escrow, the parties shall
agree upon all of the prorations to be made and submit a statement to Escrow
Holder setting forth the same. In the event that any prorations, apportionments
or computations made under this Paragraph 11 shall require final adjustment,
then the parties shall make the appropriate adjustments promptly when accurate
information becomes
-8-
<PAGE>
available and either party hereto shall be entitled to an adjustment to correct
the same. Any corrected adjustment or proration shall be paid in cash to the
party entitled thereto. The provisions of this Paragraph 11 shall survive the
Close of Escrow and the recordation of the Grant Deed.
12. Disbursements and Other Actions by Escrow Holder. Upon the Close
------------------------------------------------
of Escrow, Escrow Holder shall promptly undertake all of the following in the
following manner:
(a) Prorations. Prorate all matters referenced in Paragraph 11
----------
based upon the statement delivered into Escrow signed by the parties;
(b) Recording. Cause the Grant Deed and any other documents which
---------
the parties hereto may mutually direct, to be recorded in the Official Records
in the order directed by the parties;
(c) Funds. Disburse from funds deposited by Buyer with Escrow
-----
Holder towards payment of all items (including, without limitation, the Purchase
Price) chargeable to the account of Buyer pursuant hereto in payment of such
costs and disburse the balance of such funds, if any, to Buyer;
(d) Documents to Seller. Deliver to Seller counterparts of the
-------------------
General Assignment, the Environmental Agreement and the CalComp Lease, executed
by Buyer;
(e) Documents to Buyer. Deliver to Buyer originals of the Bill of
------------------
Sale, the Firpta Certificate and counterparts of the General Assignment, the
Environmental Agreement and the CalComp Lease appropriately executed by Seller
and any other documents which are to be delivered to Buyer hereunder; and
(f) Title Policy. Direct the Title Company to issue the Title
------------
Policy to Buyer.
13. Covenants of Seller. Seller hereby covenants with Buyer, as
-------------------
follows:
(a) From and after the expiration of the Contingency Period,
Seller shall not, without the prior written consent of Buyer, enter into any
maintenance contract, service contract, listing agreement or any other contract
affecting or relating to the Property or any portion thereof which will survive
the Close of Escrow or will otherwise affect the use, operation or enjoyment of
the Property after the Close of Escrow;
(b) From and after expiration of the Contingency Period, Seller
shall not enter into any lease or contract or binding proposal for a lease or
contract which will bind the Property after the Close of Escrow, without the
prior written consent of Buyer which may be withheld in Buyer's sole and
absolute discretion. Further, Seller shall terminate on or before the Close of
Escrow all contracts and leases which Buyer disapproves;
(c) From the date of this Agreement until the Close of Escrow,
Seller shall operate, manage, maintain and repair the Property consistent with
Seller's existing business practices (including, without limitation, maintaining
in full force and effect all insurance policies carried by Seller with respect
to the Property and in effect as of the date of this Agreement). Buyer
acknowledges, however, that Seller shall be entitled to make any and all
alterations to the Property (which are the subject of the CalComp Lease) in
order to consolidate the operations of Seller in Buildings 1 and 5 during the
term hereof so long as (i) such alterations are performed in a workmanlike
manner and (ii) Seller promptly pays and discharges all claims for labor
performed, supplies furnished and services rendered relative to the alterations
and keeps the Property free of all mechanics' and materialmen's liens in
connection therewith. Notwithstanding the preceding sentence, Seller shall not
make any material alterations or changes to the Property (or any portion
thereof) from and after the expiration of the Contingency Period, except to the
extent that such alterations (i) relate to the consolidation of Seller's
operations into Building 1 and Building 5 and (ii) (A) were disclosed to Buyer
in writing prior to the expiration of the Contingency Period
-9-
<PAGE>
or (B) are disclosed to Buyer after the expiration of the Contingency Period and
approved by Buyer in writing. If Seller makes any changes to the Property (or
any portion thereof) after the expiration of the Contingency Period (except as
expressly permitted in the foregoing sentence), then Buyer may either terminate
this Agreement, in which event Buyer shall be entitled to the return of the
Deposits, or elect to consummate its acquisition of the Property, in which event
Buyer shall be deemed to have accepted title to and possession of the Property
subject to such changes made by Seller. Nothing contained in this Section 13(c)
shall be deemed to limit Seller's right to make alterations in connection with
outstanding repairs or in emergencies;
(d) From and after the date of this Agreement, Seller shall not
alienate, lien, encumber or otherwise transfer all or any portion of or interest
in the Property (other than to Buyer at the Close of Escrow and except as
provided otherwise in Section 21(o)). All Personal Property shall be conveyed
to Buyer by Seller at the Close of Escrow free from any liens, encumbrances or
security interests of any kind or nature;
(e) Seller shall, promptly upon becoming aware of any such
occurrence, notify Buyer of any event or circumstance which makes any
representation or warranty of Seller to Buyer under this Agreement materially
untrue or misleading, and of any covenant of Seller under this Agreement which
Seller will be incapable of performing (hereinafter, a "Materially Changed
------------------
Condition"). If Seller notifies Buyer of any Materially Changed Condition, Buyer
- ---------
shall have five (5) business days following receipt of written notice from
Seller of such condition to review the events and circumstances giving rise to
such condition and the Contingency Period shall be deemed to be extended during
such five (5) business day period. If Buyer disapproves the Materially Changed
Condition (as determined in Buyer's sole and absolute discretion), Buyer may
terminate this Agreement in which event Buyer shall be entitled to the return of
the Deposits. If Buyer does not elect to terminate this Agreement and elects to
consummate its acquisition of the Property, it shall be deemed to have accepted
title to and possession of the Property subject to the Materially Changed
Condition.
(f) As of the Close of Escrow, the heating, ventilation and air
conditioning systems, the elevators, the fire sprinkler and fire life safety
systems and all major electrical systems serving the Improvements shall be
operational.
14. Representations and Warranties; As-Is.
-------------------------------------
(a) By Seller. In consideration of Buyer entering into this
---------
Agreement and as an inducement to Buyer to purchase the Property, each Seller
makes the following representations and warranties (subject to the matters
disclosed on the Disclosure Statement attached hereto as Exhibit "X"
----------
("Disclosure Statement"), each of which is material and is being relied upon by
--------------------
Buyer (and the continued truth and accuracy of which shall constitute a
condition precedent to Buyer's obligations hereunder):
(i) Representations Regarding Seller's Authority.
--------------------------------------------
(A) Seller has the legal power, right and authority to
enter into this Agreement and the instruments referenced herein, and to
consummate the transaction contemplated hereby;
(B) All requisite action (corporate, trust, partnership
or otherwise) has been taken by Seller in connection with the entering into this
Agreement, the instruments referenced herein, and the consummation of the
transaction contemplated hereby. No consent of any partner, shareholder,
trustee, trustor, beneficiary, creditor, investor, judicial or administrative
body, governmental authority or other party is required or, if required, has
been obtained; and
(C) The individuals executing this Agreement and the
instruments referenced herein on behalf of Seller and the members of Seller have
the legal power, right, and actual authority to bind Seller to the terms and
conditions hereof and thereof.
-10-
<PAGE>
(ii) Threatened Actions. Except as disclosed in the
------------------
Disclosure Statement attached hereto as Exhibit "X" or as otherwise disclosed to
----------
Buyer by Seller in writing prior to the expiration of the Contingency Period,
there are no pending, and to the best of Seller's knowledge no threatened,
actions, suits, arbitrations, claims or proceedings, at law, in equity or
otherwise, affecting, or which may affect, all or any portion of the Property or
in which Seller is or will be a party by reason of Seller's ownership of the
Property, including, but not limited to, judicial, municipal or administrative
proceedings in eminent domain, collection actions, claims relating to alleged
building code violations or health and safety violations, federal, state or
local agency actions regarding environmental matters, lease disputes, claims
relating to federal environmental protection agency or zoning violations, or
actions relating to personal injuries or property damages alleged to have
occurred at the Real Property or by reason of the condition or use of or
construction on the Real Property;
(iii) No Contracts. Other than the Contracts and the matters
------------
disclosed in the Title Documents, to Seller's actual knowledge, there are no
leases, surface or subsurface use agreements, tenancy arrangements, service
contracts, management agreements, or other agreements, instruments or
encumbrances created by Seller, or to Seller's knowledge created by any other
person or entity, which will be in force or effect as of the Close of Escrow
that grant to any person whomsoever or any entity whatsoever any right, title,
interest or benefit in or to all or any part of the Property or any right
relating to the ownership, use, operation, management, maintenance, enjoyment or
repair of all or any part of the Property, and no person or entity has any
rights to acquire any of the foregoing by virtue of the acts of Seller;
(iv) Compliance with Law. Except as disclosed in the
-------------------
Disclosure Statement attached hereto as Exhibit "X" or as otherwise disclosed to
----------
Buyer by Seller in writing prior to the expiration of the Contingency Period,
Seller has received no written notice and is not aware of any violation of any
applicable laws, ordinances, rules, requirements, regulations and building codes
of any governmental agency, body or subdivision thereof bearing on the Property;
(v) Seller's Relationship to LMC. LMC is the majority
----------------------------
shareholder of CalComp Technology, Inc., a California corporation ("CTI");
---
CalComp is a wholly-owned subsidiary of CTI; and Sanders Development is a
wholly-owned subsidiary of CalComp.
(vi) Taxes. Seller has no knowledge, and Seller has received
-----
no notice to the contrary, of any special assessments or charges which have been
levied against the Property or which will result from work, activities or
improvements done to or for the benefit of the Property except as may be shown
on the Report. Seller has no knowledge, and Seller has received no notice to the
contrary, of any intended public improvements which will result in any charge
being levied against, or in the creation of any lien upon, the Property or any
portion thereof, except as may be shown in the Report;
(vii) HVAC and Other Building Systems. As of the Close of
-------------------------------
Escrow, the heating, ventilation and air conditioning systems, the elevators,
the fire sprinkler and fire life safety systems and all major electrical systems
serving the Improvements shall be operational.
(viii) Representations and Warranties at Closing. Subject to
-----------------------------------------
Seller's right to deliver its notice to Buyer of a Materially Changed Condition
as set forth in Paragraph 13(e) above, the representations and warranties of
Seller set forth in this Agreement shall be deemed to be remade and restated by
Seller on and as of the Close of Escrow.
As used in this Agreement, the term, "to Seller's actual knowledge"
means the current actual knowledge of John J. Millerick, Executive Vice
President and Chief Financial Officer of CalComp and CTI, Kevin Coleman, Manager
of Human Resources for CTI, Philip Loberg, Vice President and Controller of CTI,
and William F. Porter, Jr., Esq., General Counsel of CalComp and CTI, provided
that such persons shall not have personal liability for any inaccuracy of any
representation or warranty contained herein. Each Seller represents that the
foregoing individuals are the individuals with the most knowledge regarding the
representations and warranties given by Seller herein. All of the foregoing
representations and warranties are qualified by any written disclosures made by
Seller to Buyer prior to the Close of
-11-
<PAGE>
Escrow, which shall constitute notice to Buyer of the precise matter(s)
disclosed. If Buyer thereafter consummates the transaction contemplated hereby,
Seller shall have no further liability with respect thereto but only to the
extent that the written disclosures given by Seller to Buyer expressly cover the
representations or warranties Buyer is claiming to be qualified.
(b) By Buyer. In consideration of Seller entering into this
--------
Agreement and as an inducement to Seller to sell the Property, Buyer makes the
following representations and warranties, each of which is material and is being
relied upon by Seller (and the continued truth and accuracy of which shall
constitute a condition precedent to Seller's obligations hereunder):
(i) Representations Regarding Buyer's Authority.
-------------------------------------------
(A) Buyer has the legal power, right and authority to
enter into this Agreement and the instruments referenced herein, and to
consummate the transaction contemplated hereby;
(B) All requisite action (corporate, trust, partnership
or otherwise) has been taken by Buyer in connection with the entering into this
Agreement, the instruments referenced herein, and the consummation of the
transaction contemplated hereby. No consent of any partner, shareholder,
trustee, trustor, beneficiary, creditor, investor, judicial or administrative
body, governmental authority or other party is required; and
(C) The individuals executing this Agreement and the
instruments referenced herein on behalf of Buyer and the partners of Buyer, if
any, have the legal power, right, and actual authority to bind Buyer to the
terms and conditions hereof and thereof.
(c) AS-IS. Except as specifically provided in Paragraph 14(a)
-----
above, Buyer acknowledges and agrees that Seller has not made, does not make and
specifically negates and disclaims any representations, warranties, promises,
covenants, agreements or guaranties of any kind or character whatsoever, whether
express or implied, oral or written, past, present or future, of, concerning or
with respect to (A) the value, nature, quality or condition of the Property, (B)
the suitability of the Property for any and all activities and uses which Buyer
may conduct thereon, (C) the presence or absence of any Hazardous Materials or
other environmental condition, or the violation of, or the compliance of or by,
the Property with any laws, rules, ordinances or regulations of any applicable
governmental authority or body, or (D) any other matter with respect to the
Property. Buyer further acknowledges and agrees that having been given the
opportunity to inspect the Property, Buyer is relying solely on Buyer's own
investigations and not on any information provided or to be provided by Seller.
Buyer further acknowledges and agrees the sale of the Property as provided for
herein, is made on an "AS-IS" condition and basis with all faults, provided that
the foregoing provision shall not affect, limit or impair Buyer's or Seller's
duties and obligations under the CalComp Lease following the Close of Escrow.
15. Remedies.
--------
(a) LIQUIDATED DAMAGES. PROVIDED BUYER HAS NOT ELECTED TO
------------------
TERMINATE THIS AGREEMENT PURSUANT TO ANY OF BUYER'S RIGHTS TO DO SO CONTAINED
HEREIN, IF THE CLOSE OF ESCROW FAILS TO OCCUR BY REASON OF BUYER'S DEFAULT, THEN
ESCROW HOLDER MAY BE INSTRUCTED BY SELLER TO CANCEL THE ESCROW AND SELLER SHALL
THEREUPON BE RELEASED FROM ITS OBLIGATIONS HEREUNDER. BUYER AND SELLER AGREE
THAT BASED UPON THE CIRCUMSTANCES NOW EXISTING, KNOWN AND UNKNOWN, IT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT TO ESTABLISH SELLER'S DAMAGE BY REASON OF
BUYER'S FAILURE TO PURCHASE THE PROPERTY IN ACCORDANCE WITH THIS AGREEMENT.
ACCORDINGLY, BUYER AND SELLER AGREE THAT IT WOULD BE REASONABLE AT SUCH TIME TO
AWARD SELLER "LIQUIDATED DAMAGES" EQUAL TO THE AMOUNT OF THE DEPOSITS PREVIOUSLY
PLACED INTO ESCROW BY BUYER PURSUANT TO PARAGRAPHS 3(A) AND 3(B) HEREOF.
-12-
<PAGE>
SELLER AND BUYER ACKNOWLEDGE AND AGREE THAT THE FOREGOING AMOUNT
IS REASONABLE AS LIQUIDATED DAMAGES AND SHALL BE SELLER'S SOLE AND EXCLUSIVE
REMEDY IN LIEU OF ANY OTHER RELIEF, RIGHT OR REMEDY, AT LAW OR IN EQUITY, TO
WHICH SELLER MIGHT OTHERWISE BE ENTITLED BY REASON OF BUYER'S FAILURE TO
PURCHASE THE PROPERTY IN ACCORDANCE WITH THIS AGREEMENT. ACCORDINGLY, IF THE
CLOSE OF ESCROW FAILS TO OCCUR SOLELY BY REASON OF A DEFAULT BY BUYER, SELLER
MAY INSTRUCT THE ESCROW HOLDER TO CANCEL THE ESCROW, WHEREUPON SELLER SHALL BE
RELIEVED FROM ALL LIABILITY HEREUNDER, AND, PROMPTLY FOLLOWING ESCROW HOLDER'S
RECEIPT OF SUCH INSTRUCTION, ESCROW HOLDER SHALL (i) CANCEL THE ESCROW, AND (ii)
DISBURSE TO SELLER THE DEPOSITS. WITHOUT LIMITING THE FOREGOING PROVISIONS OF
THIS PARAGRAPH, SELLER WAIVES ANY AND ALL RIGHTS WHICH SELLER OTHERWISE WOULD
HAVE HAD UNDER CALIFORNIA CIVIL CODE SECTION 3389, OR OTHERWISE, TO SPECIFICALLY
ENFORCE BUYER'S PURCHASE OBLIGATIONS UNDER THIS AGREEMENT. IF THE CLOSE OF
ESCROW FAILS TO OCCUR FOR ANY REASON OTHER THAN BUYER'S DEFAULT UNDER THIS
AGREEMENT, THEN ESCROW HOLDER SHALL IMMEDIATELY RETURN TO BUYER THE DEPOSITS,
TOGETHER WITH ALL INTEREST ACCRUED THEREON. SELLER AND BUYER ACKNOWLEDGE THAT
THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS PARAGRAPH 15 AND BY THEIR
INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS. NOTHING IN THIS
SECTION IS INTENDED TO LIMIT SELLER'S RIGHTS OR REMEDIES WITH RESPECT TO A
BREACH BY BUYER OF ITS INDEMNITY OBLIGATIONS OR OTHER OBLIGATIONS UNDER
PARAGRAPH 7(a)(iii).
Seller's Initials Buyer's Initials
_________________ ________________
(b) Buyer's Remedies. Buyer and Seller hereby agree that, if the
----------------
sale contemplated by this Agreement is not completed as herein provided by
reason of any default of Seller hereunder, then in addition to the return of the
Deposits, Buyer shall be entitled to pursue any remedy available under this
Agreement or available at law or in equity, including, without limitation, the
right to specifically enforce this Agreement (but excluding rescission if the
Close of Escrow occurs); provided, however, in any action for damages, Buyer
shall be limited to its actual damages but not any consequential or punitive
damages. In connection with any post-Closing remedy which Buyer may have against
Seller, if Buyer purchases the Property as contemplated herein, Buyer shall be
entitled to pursue any remedy available under this Agreement or available at law
or in equity; provided, however, in any action for damages, Buyer shall be
limited to its actual damages but not any consequential or punitive damages.
16. Damage or Condemnation Prior to Closing.
---------------------------------------
(a) In the event that prior to the Close of Escrow, the
Improvements, or any material portion thereof, are destroyed or materially
damaged, Buyer shall have the right, exercisable by giving written notice to
Seller within fifteen (15) days after receipt of written notice of such damage
or destruction, either (i) to terminate this Agreement, in which event the
Deposits and all interest accrued thereon shall be immediately returned to
Buyer, any other money or documents in Escrow shall be returned to the party
depositing the same, and neither party hereto shall have any further rights or
obligations hereunder, or (ii) to accept the Real Property in its then condition
and to proceed with the consummation of the transaction contemplated by this
Agreement with an abatement or reduction in the Purchase Price equal to the
amount of the deductible for the applicable insurance coverage, and to receive
an assignment of all of Seller's rights to any insurance proceeds payable by
reason of such damage or destruction. If Buyer elects to proceed under clause
(ii) above, Seller shall not compromise, settle or adjust any claims to such
proceeds without Buyer's prior written consent, which consent may be withheld in
Buyer's sole and absolute discretion.
(b) In the event that prior to the Close of Escrow there is any
non-material damage to the Improvements, or any part thereof, this Agreement
shall not terminate, the Escrow shall remain in full force and effect and: (i)
Seller shall not compromise, settle or adjust any claims to such
-13-
<PAGE>
proceeds without Buyer's prior written consent, which consent may be withheld in
Buyer's sole and absolute discretion; (ii) Buyer shall accept the Real Property
in its then condition with an abatement or reduction in the Purchase Price equal
to the amount of the deductible for the applicable insurance coverage and
proceed with the transaction contemplated by this Agreement; and (iii) Buyer
shall be entitled to an assignment of all of Seller's rights to any insurance
proceeds payable by reason of such damage or destruction.
(c) In the event that prior to the Close of Escrow, all or any
material portion of the Real Property is subject to a taking by a public or
governmental authority, Buyer shall have the right, exercisable by giving
written notice to Seller within fifteen (15) days after receiving written notice
of such taking, either (i) to terminate this Agreement, in which event the
Deposits and all interest accrued thereon shall be immediately returned to
Buyer, any other money or documents in Escrow shall be returned to the party
depositing the same, and neither party hereto shall have any further rights or
obligations hereunder, or (ii) to accept the Real Property in its then
condition, without a reduction in the Purchase Price, and to receive an
assignment of all of Seller's rights to any condemnation award or proceeds
payable by reason of such taking. If Buyer elects to proceed under clause (ii)
above, Seller shall not compromise, settle or adjust any claims to such award
without Buyer's prior written consent, which consent may be withheld in Buyer's
sole and absolute discretion.
(d) In the event that prior to the Close of Escrow, any non-
material portion of the Real Property is subject to a taking by any public or
governmental authority, Buyer shall accept the Real Property in its then
condition and proceed with the consummation of the transaction contemplated by
this Agreement, in which event Buyer shall be entitled to an assignment of all
of Seller's rights to any award or proceeds payable in connection with such
taking. In the event of any such non-material taking, Seller shall not
compromise, settle or adjust any claims to such award without Buyer's prior
written consent, which consent may be withheld in Buyer's sole and absolute
discretion.
(e) For purposes of this Paragraph 16, damage to the Real
Property or a taking of a portion thereof shall be deemed to involve a material
portion thereof if the estimated cost of restoration or repair of such damage or
the amount of the condemnation award with respect to such taking shall exceed
Two Hundred Fifty Thousand Dollars ($250,000.00) or if the damage or taking
materially affects access to or parking for the Real Property.
(f) Seller agrees to give Buyer prompt written notice of any
taking of, proposed taking of, damage to or destruction of the Real Property.
17. Notices. All notices or other communications required or permitted
-------
hereunder shall be in writing, and shall be either (a) personally delivered, (b)
sent by overnight mail (Federal Express or the like), (c) sent by registered or
certified mail, postage prepaid, return receipt requested, or (d) sent by fax;
and shall be deemed received upon the earlier of (i) if personally delivered,
the date of delivery to the address of the person to receive such notice, (ii)
if sent by overnight mail, the business day following its deposit in such
overnight mail facility, (iii) if mailed, four (4) business days after the date
of posting by the United States post office, or (iv) if given by fax, when sent
during business hours with confirmation of receipt. Any notice, request, demand,
direction or other communication sent by fax must be confirmed within forty-
eight (48) hours by letter mailed or delivered in accordance with the foregoing.
To Buyer: Lincoln Property Company, N.C., Inc.
30 Executive Park, Suite 100
P.O. Box 19693
Irvine, California 92623-9693
Attention: Mr. Erik Hansen
Phone No. (714) 261-2100
Fax No. (714) 261-1178
-14-
<PAGE>
With a copy to: Allen, Matkins, Leck, Gamble & Mallory LLP
18400 Von Karman, Fourth Floor
Irvine, California 92612-1597
Attention: Michael A. Alvarado, Esq.
Phone No. (714) 553-1313
Fax No. (714) 553-8354
To Seller: CalComp Inc.
Sanders Development Corporation
2411 La Palma Avenue
Anaheim, California 92801
Attention: John J. Millerick
Phone No. (714) 821-2500
Fax No. (714) 821-2470
With a copy to: O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
Attention: Ann C. Menard, Esq.
Phone No. (213) 669-6000
Fax No. (213) 669-6407
To Escrow Holder: Chicago Title Company
700 South Flower Street, Suite 900
Los Angeles, California 90017
Attention: __________________
Phone No. (213) 488-4300
Fax No. (213) ________
Notice of change of address shall be given by written notice in the manner
detailed in this Paragraph. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given
shall be deemed to constitute receipt of the notice, demand, request or
communication sent.
18. Brokers. Upon the Close of Escrow, Seller shall pay a real
-------
estate brokerage commission to CB Commercial Real Estate Group, Inc. ("Broker")
------
equal to one and 5/10ths percent (1.5%) of the Purchase Price at Close of Escrow
and Buyer shall pay any other commission payable to Broker (if any). If any
other claims for broker's or finders' fees or commissions for the consummation
of this Agreement arise, then Buyer hereby agrees to indemnify, protect, save
harmless and defend Seller from and against such claims if they are based upon
any statement, representation or agreement made by Buyer, and Seller hereby
agrees to indemnify, protect, save harmless and defend Buyer from and against
such claims if they are based upon any statement, representation or agreement
made by Seller.
19. Legal Fees. In the event of the bringing of any action or suit
----------
by a party hereto against another party hereunder by reason of any breach of any
of the covenants or agreements or any inaccuracies in any of the representations
and warranties on the part of the other party arising out of this Agreement,
then in that event, the prevailing party in such action or dispute, whether by
final judgment or out of court settlement, shall be entitled to have and recover
of and from the other party all costs and expenses of suit, including actual
attorneys' fees. Any judgment or order entered in any final judgment shall
contain a specific provision providing for the recovery of all costs and
expenses of suit, including actual attorneys' fees (collectively "Costs")
-----
incurred in enforcing, perfecting and executing such judgment. For the purposes
of this paragraph, Costs shall include, without limitation, attorneys' fees,
costs and expenses incurred in (i) postjudgment motions, (ii) contempt
proceeding, (iii) garnishment, levy, and debtor and third party examination,
(iv) discovery, and (v) bankruptcy litigation.
20. Assignment. Seller may assign, transfer or convey its rights or
----------
obligations under
-15-
<PAGE>
this Agreement, provided that its assignee assumes in writing the obligations of
Seller hereunder. Buyer, without being relieved of liability hereunder and
without obtaining Seller's consent, shall have the right to assign its rights
and obligations hereunder to a new or existing entity in which Buyer or DLJ Real
Estate Capital Partners, L.P. ("DLJ") maintains directly or indirectly a
---
controlling ownership interest provided that such entity assumes in writing the
obligations of Buyer hereunder and that both Buyer and DLJ, directly or
indirectly, maintain an ownership interest in such entity.
21. Miscellaneous.
-------------
(a) Survival of Covenants. The covenants, representations and
---------------------
warranties of both Buyer and Seller set forth in this Agreement shall survive
the recordation of the Grant Deed and the Close of Escrow for a period of one
(1) year.
(b) Required Actions of Buyer and Seller. Buyer and Seller agree
------------------------------------
to execute such instruments and documents and to diligently undertake such
actions as may be required in order to consummate the purchase and sale herein
contemplated and shall use their commercially reasonable efforts to accomplish
the Close of Escrow in accordance with the provisions hereof.
(c) Computation of Time Periods. If the date upon which the
---------------------------
Contingency Period expires, the Closing Date or any other date or time period
provided for in this Agreement is or ends on a Saturday, Sunday or federal,
state or legal holiday, then such date shall automatically be extended until 5
p.m. Pacific Time of the next day which is not a Saturday, Sunday or federal,
state or legal holiday.
(d) Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute but one and the same instrument.
(e) Captions. Any captions to, or headings of, the paragraphs or
--------
subparagraphs of this Agreement are solely for the convenience of the parties
hereto, are not a part of this Agreement, and shall not be used for the
interpretation or determination of the validity of this Agreement or any
provision hereof.
(f) No Obligations to Third Parties. This Agreement shall not be
-------------------------------
deemed to confer any rights upon, nor obligate any of the parties hereto, to any
person or entity other than the parties hereto.
(g) Exhibits. The Exhibits attached hereto are hereby
--------
incorporated herein by this reference for all purposes.
(h) Amendment to this Agreement. The terms of this Agreement may
---------------------------
not be modified or amended except by an instrument in writing executed by each
of the parties hereto.
(i) Waiver. The waiver or failure to enforce any provision of
------
this Agreement shall not operate as a waiver of any future breach of any such
provision or any other provision hereof.
(j) Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of California.
(k) Fees and Other Expenses. Except as otherwise provided herein,
-----------------------
each of the parties hereto shall pay its own fees and expenses in connection
with this Agreement.
(l) Entire Agreement. This Agreement supersedes any prior
----------------
agreements, negotiations and communications, oral or written, and contains the
entire agreement between Buyer and Seller as to the subject matter hereof. No
subsequent agreement, representation, or promise made by either party hereto, or
by or to an employee, officer, agent or representative of either party hereto
shall be of any effect unless it is in writing and executed by the party to be
bound thereby.
-16-
<PAGE>
(m) Successors and Assigns. Subject to the restrictions set forth
----------------------
in Paragraph 20 hereof, this Agreement shall be binding upon and shall inure to
the benefit of the successors and assigns of the parties hereto.
(n) Construction. The parties hereto hereby acknowledge and agree
------------
that (i) each party hereto is of equal bargaining strength, (ii) each such party
has actively participated in the drafting, preparation and negotiation of this
Agreement, (iii) each such party has consulted with such party's own,
independent counsel, and such other professional advisors as such party has
deemed appropriate, relative to any and all matters contemplated under this
Agreement, (iv) each such party and such party's counsel and advisors have
reviewed this Agreement, (v) each such party has agreed to enter into this
Agreement following such review and the rendering of such advice, and (vi) any
rule of construction to the effect that ambiguities are to be resolved against
the drafting parties shall not apply in the interpretation of this Agreement, or
any portions hereof, or any amendments hereto.
(o) Continued Marketing Efforts. Seller hereby retains that right
---------------------------
to market the Property after the date hereof and to receive, negotiate for, and
accept offers for the Property, provided that such acceptance shall be expressly
subject to Buyer's rights hereunder.
(p) Time of Essence. Time is of the essence of each and every
---------------
term, provision, covenant and obligation of the parties under this Agreement.
(q) Waste Generator Number. If Buyer is required to have a waste
----------------------
generator number from any governmental agency with respect to Buyer's
acquisitions, ownership or use of the Property, Buyer shall obtain a new,
separate number and Seller shall retain its existing number. The provisions of
this Section shall survive the Close of Escrow.
(r) Joint and Several Liability. Each party executing this
---------------------------
Agreement as "Seller" shall be jointly and severally liable for the covenants,
conditions, provisions, agreements and obligations of this Agreement to be kept,
observed and performed by Seller, and the act or signature of, notice from or
to, any one or more of them with respect to this Agreement shall be binding upon
each and all of the parties executing this Agreement as "Seller" with the same
force and effect as if each and all of them had so acted or signed, or given or
received such notice.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
"Buyer"
LINCOLN PROPERTY COMPANY, N.C., INC.,
a Texas corporation
By:__________________________________
Name:_____________________________
Title:____________________________
"Seller"
SANDERS DEVELOPMENT CORPORATION,
a Delaware corporation
By:__________________________________
Name:_____________________________
Title:____________________________
-17-
<PAGE>
CALCOMP INC.,
a California corporation
By:__________________________________
Name:_____________________________
Title:____________________________
-18-
<PAGE>
Acceptance by Escrow Holder:
CHICAGO TITLE COMPANY hereby acknowledges that it has received a fully
executed original or original executed counterparts of the foregoing Agreement
of Purchase and Sale and Joint Escrow Instructions and agrees to act as Escrow
Holder thereunder and to be bound by and strictly perform the terms thereof as
such terms apply to Escrow Holder.
Dated: ____________, 1997 CHICAGO TITLE COMPANY
By:__________________________________
Its: Authorized Agent
-19-
<PAGE>
LEGAL DESCRIPTION OF THE LAND
-----------------------------
[To Be Provided]
EXHIBIT "A-1"
-------------
<PAGE>
PERSONAL PROPERTY LIST
----------------------
[To Be Provided By Seller]
EXHIBIT "A-2"
-------------
<PAGE>
WHEN RECORDED MAIL TO:
Allen, Matkins, Leck, Gamble & Mallory LLP
18400 Von Karman, Fourth Floor
Irvine, California 92612
Attention: Michael A. Alvarado, Esq.
MAIL TAX STATEMENTS TO:
Lincoln Property Company, N.C., Inc.
30 Executive Park, Suite 100
P.O. Box 19693
Irvine, California 92623-9693
Attention: Mr. Erik Hansen
================================================================================
(Above Space for Recorder's Use Only)
GRANT DEED
----------
The undersigned grantor declares:
Documentary Transfer Tax not shown pursuant
to Section 11932 of the Revenue and
Taxation Code, as amended
County of Orange
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
_____________________________________, a _______________, hereby GRANTS
to ____________________, a ____________________, that certain real property in
the City of Anaheim, County of Orange, State of California, which is more
particularly described on Exhibit "A" attached hereto, together with all
----------
improvements thereon and appurtenances thereto, subject to all liens and
encumbrances of record as of the date hereof.
///
///
///
EXHIBIT "B"
-----------
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Grant Deed to
be executed as of the _____ day of _____________, 1997.
By:__________________________________
Name:_____________________________
Title:____________________________
[ATTACH APPROPRIATE JURATS]
EXHIBIT "B"
-----------
Page 2
<PAGE>
DESCRIPTION OF REAL PROPERTY CONVEYED
-------------------------------------
[To Be Provided]
EXHIBIT "A"
----------
to EXHIBIT "B"
-------------
<PAGE>
Document No. ______________________
Recorded ____________________, 1997
STATEMENT OF TAX DUE AND REQUEST THAT TAX DECLARATION NOT BE MADE A
PART OF THE PERMANENT RECORD IN THE OFFICE OF THE COUNTY RECORDER
(PURSUANT TO SECTION 11932 OF THE CALIFORNIA REVENUE AND TAXATION
CODE)
TO: Recorder
County of Orange
Request is hereby made in accordance with the provisions of the
Documentary Transfer Tax Act that the amount of the tax due not be shown on the
original document which names:
Grantor: _____________________________________, a _________ corporation
Grantee: ___________________________________
The property described in the accompanying document is located in the
City of Anaheim, County of Orange.
The amount of tax due on the accompanying document is $________________.
X Computed on full value of property conveyed.
- ---------
_________ Or Computed on full value, less liens and encumbrances remaining
at the time of sale.
-----------------------------------------------
(Signature of Declarant or Agent)
-----------------------------------------------
(Firm Name)
Note: After the permanent record is made, this form will be affixed to the
conveying document and returned with it.
EXHIBIT "A"
-----------
to EXHIBIT "B"
--------------
<PAGE>
BILL OF SALE
------------
THIS BILL OF SALE ("Bill of Sale") is made this _____ day of
------------
_____________, 1997 by _____________________________________, a _________
corporation ("Seller"), in favor of ___________________________ ("Buyer").
------ -----
W I T N E S S E T H:
- - - - - - - - - -
A. Seller and Lincoln Property Company, N.C., Inc. entered into that
certain Agreement of Purchase and Sale and Joint Escrow Instructions dated as of
February __, 1997 ("Agreement") respecting the sale of certain "Property" (as
---------
defined in the Agreement).
B. Under the Agreement, Seller is obligated to transfer to Buyer any
and all of Seller's right, title and interest in and to all equipment,
appliances, tools, machinery, supplies, building materials and other personal
property described in Exhibit "I" attached hereto (collectively, the "Personal
----------- --------
Property").
- --------
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller does hereby absolutely and
unconditionally give, grant, bargain, sell, transfer, set over, assign, convey,
release, confirm and deliver to Buyer all of the Personal Property described on
Exhibit "1" attached hereto. The foregoing conveyance is made without warranty,
- -----------
express or implied, except such warranties, if any, as are expressly set forth
in the Agreement.
1. Seller hereby covenants that Seller will, at any time and from
time to time upon written request therefor, execute and deliver to Buyer,
Buyer's successors, nominees or assigns, such documents as Buyer or they may
reasonably request in order to fully assign and transfer to and vest the
Personal Property in Buyer or Buyer's successors, nominees and assigns, and to
protect Buyer's or their right, title and interest in and to all of the Personal
Property and the rights of Seller intended to be transferred and assigned
hereby, or to enable Buyer, Buyer's successors, nominees and assigns to realize
upon or otherwise enjoy such rights and property.
2. This Bill of Sale shall be binding upon and inure to the benefit
of the successors, assigns, personal representatives, heirs and legatees of
Buyer and Seller.
3. This Bill of Sale shall be governed by, interpreted under, and
construed and enforceable in accordance with, the laws of the State of
California.
IN WITNESS WHEREOF, Seller has executed and delivered this Bill of
Sale as of the date first written above.
"Seller"
_____________________________________,
a _________ corporation
By:__________________________________
Name:_____________________________
Title:____________________________
EXHIBIT "C"
-----------
<PAGE>
[Attach Description of Personal Property
as Exhibit "1"]
-----------
EXHIBIT "C"
-----------
Page 2
<PAGE>
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
------------------------------------------------
To inform ___________________________________________, a _____________
(the "Transferee") that withholding of tax under Section 1445 of the Internal
Revenue Code of 1986, as amended ("Code") will not be required upon the transfer
by _____________________________________, a _________ corporation
("Transferor"), of certain interests in real property to the Transferee, the
----------
undersigned hereby certifies the following on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership,
foreign trust, foreign estate or foreign person (as those terms are defined in
the Code and the Income Tax Regulations promulgated thereunder); and
2. The Transferor's U.S. employer or tax (social security)
identification number is ________________________.
The Transferor understands that this Certification may be disclosed to
the Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury I declare that I have examined this
Certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Transferor.
"TRANSFEROR"
_____________________________________,
a _________ corporation
By:__________________________________
Name:_____________________________
Title:____________________________
Dated: ___________________, 1997
EXHIBIT "D"
-----------
<PAGE>
GENERAL ASSIGNMENT AGREEMENT
----------------------------
THIS GENERAL ASSIGNMENT AGREEMENT ("Assignment"), is made as of the
_____ day of _______________, 1997, by and among ______________________________,
a _________ corporation ("Assignor"), and ______________________________
--------
("Assignee").
--------
W I T N E S S E T H :
-------------------
Assignor is the owner of that certain land (the "Land") located in the
----
City of Anaheim, County of Orange, State of California more particularly
described in Exhibit "A" attached hereto, and all rights, privileges and
-----------
easements appurtenant to the Land (the "Appurtenances"), and all buildings and
-------------
other improvements thereon (the "Improvements"). The Land, the Appurtenances
------------
and the Improvements are hereinafter referred to collectively as the "Real
----
Property." The Real Property is being conveyed by Assignor to Assignee pursuant
- --------
to a grant, bargain and sale deed ("Grant Deed") of on or about even date
----------
herewith.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Assignor hereby grants, assigns, transfers, conveys and delivers
to Assignee all of Assignor's right, title, interest, benefits and privileges in
and to the following described property to the extent assignable without payment
of money or consent of third parties (collectively, the "Rights"):
------
(a) All construction, engineering, consulting, architectural and other
similar contracts, and any and all amendments and modifications thereto,
concerning the design or construction of any or all of the Real Property and all
warranties with respect thereto (including all statutory, express and implied
warranties);
(b) All architectural drawings, plans, specifications, soils tests,
appraisals, engineering reports and similar materials relating to any or all of
the Real Property;
(c) All payment and performance bonds or guaranties and any and all
modifications and extensions thereof relating to the Real Property;
(d) All governmental entitlements (including, but not limited to, all
environmental impact reports, negative declarations, map approvals, conditional
use permits, building permits and certificates of occupancy for the
Improvements), permissions, environmental clearances, authority to subdivide the
Land, rights, licenses and permits which relate to all or any of the Real
Property;
(e) All general intangibles relating to the development or use of the
Real Property, including, without limitation, all names under which or by which
the Real Property or any portion thereof may at any time be operated or known,
all rights to carry on business under any such names or any variant thereof, and
all trademarks and goodwill in any way relating to the Real Property;
(f) All refunds and payments of any kind relating to the construction,
operation, occupancy, use and/or disposition of any or all of the Real Property;
and
(g) All proceeds and claims arising on account of any damage to or
taking of
EXHIBIT "E"
-----------
<PAGE>
the Real Property or any part thereof, and all causes of action and recoveries
for any loss or diminution in the value of the Real Property.
2. Assignee hereby accepts the grant, assignment, transfer,
conveyance and delivery of the Rights set forth in Paragraph 1 hereof, effective
as of the recordation of the Grant Deed.
3. This Assignment shall be binding upon and inure to the benefit of
the successors, assigns, personal representatives, heirs and legatees of the
respective parties hereto.
4. In the event of the bringing of any action or suit by a party
hereto against another party hereunder by reason of any breach of any of the
covenants, conditions, agreements or provisions on the part of the other party
arising out of this Assignment, then in that event the prevailing party shall be
entitled to have and recover of and from the other party all costs and expenses
of the action or suit, including reasonable attorneys' fees.
5. This Assignment shall be governed by, interpreted under, and
enforced and construed in accordance with the laws of the State of California.
6. This Assignment may be executed in multiple counterparts, each of
which shall be deemed an original, but all of which together shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this instrument
as of the date first hereinabove written.
"Assignor"
_____________________________________,
a _________ corporation
By:__________________________________
Name:_____________________________
Title:____________________________
"Assignee"
_____________________________________,
a __________________
By:__________________________________
Its:___________________
EXHIBIT "E"
-----------
Page 2
<PAGE>
LEGAL DESCRIPTION OF THE PROPERTY
---------------------------------
[To Be Provided]
EXHIBIT "A"
-----------
to EXHIBIT "E"
--------------
<PAGE>
DISCLOSURE STATEMENT
--------------------
All capitalized terms used herein but not otherwise defined shall have
the meanings given them in the Agreement.
1. Information disclosed in the Phase I Environmental Site Assessment for the
CalComp Inc. Property dated February 7, 1997 and prepared by Radian
International, LLC.
EXHIBIT "X"
-----------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-28-1997 DEC-29-1996
<PERIOD-START> DEC-30-1996 JAN-01-1996
<PERIOD-END> JUN-29-1997 JUN-30-1997
<CASH> 8,568 15,290
<SECURITIES> 0 0
<RECEIVABLES> 50,716 56,762
<ALLOWANCES> 4,763 4,603
<INVENTORY> 57,740 57,765
<CURRENT-ASSETS> 115,547 146,199
<PP&E> 66,752 60,843
<DEPRECIATION> 38,019 33,952
<TOTAL-ASSETS> 246,446 276,085
<CURRENT-LIABILITIES> 104,235 84,968
<BONDS> 0 0
0 0
0 0
<COMMON> 469 469
<OTHER-SE> 133,297 152,035
<TOTAL-LIABILITY-AND-EQUITY> 246,446 276,085
<SALES> 112,583 102,806
<TOTAL-REVENUES> 112,583 102,806
<CGS> 90,420 80,668
<TOTAL-COSTS> 90,420 80,668
<OTHER-EXPENSES> 36,291 44,229
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,011 0
<INCOME-PRETAX> (16,287) (21,349)
<INCOME-TAX> 527 618
<INCOME-CONTINUING> (16,814) (21,967)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (16,814) (21,967)
<EPS-PRIMARY> (0.36) (0.54)
<EPS-DILUTED> (0.36) (0.54)
</TABLE>
