<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 26, 1999.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO _________
COMMISSION FILE NUMBER 1-11098
SOLECTRON CORPORATION
(Exact Name of Registrant as specified in its Charter)
Delaware 94-2447045
(State or other jurisdiction (IRS Employer
of Incorporation or Organization) Identification Number)
777 Gibraltar Drive, Milpitas, California 95035
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: (408) 957-8500
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
At March 31, 1999, 252,314,362 shares of Common Stock of the Registrant were
outstanding.
<PAGE> 2
SOLECTRON CORPORATION
INDEX TO FORM 10-Q
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
February 28, 1999 and August 31, 1998 3
Condensed Consolidated Statements of Income
for the three months and six months ended
February 28, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows
for the six months ended February 28, 1999
and 1998 5 - 6
Notes to Condensed Consolidated Financial
Statements 7 - 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12 - 28
Item 3. Quantitative and Qualitative Disclosures About 28
Market Risk
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 29
Item 2. Changes in Securities 29
Item 3. Defaults Upon Senior Securities 29
Item 4. Submission of Matters to a Vote of Security Holders 29 - 30
Item 5. Other Information 30
Item 6. Exhibits and Reports on Form 8-K 30 - 31
Signature 32
</TABLE>
2
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
SOLECTRON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
<TABLE>
<CAPTION>
February 28, August 31,
1999 1998
------------ ----------
<S> <C> <C>
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $ 736.6 $ 308.8
Accounts receivable, net 877.9 670.2
Inventories 929.4 788.5
Prepaid expenses and other
current assets 135.8 120.0
-------- --------
Total current assets 2,679.7 1,887.5
Net property and equipment 559.2 448.0
Other assets 144.6 75.0
-------- --------
Total assets $3,383.5 $2,410.5
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 11.4 $ --
Accounts payable 769.8 666.5
Accrued employee compensation 69.8 72.1
Accrued expenses 53.0 34.9
Other current liabilities 42.4 67.3
-------- --------
Total current liabilities 946.4 840.8
Long-term debt 1,140.0 385.5
Other long-term liabilities 7.2 2.9
-------- --------
Total liabilities 2,093.6 1,229.2
-------- --------
Commitments
Stockholders' equity:
Common stock 0.1 0.1
Additional paid-in capital 560.8 510.8
Retained earnings 806.7 677.4
Accumulated other comprehensive income -
cumulative translation adjustment (77.7) (7.0)
-------- --------
Total stockholders' equity 1,289.9 1,181.3
-------- --------
Total liabilities and
stockholders' equity $3,383.5 $2,410.5
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
SOLECTRON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
February 28, February 28,
------------------------- -------------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $1,908.1 $1,186.8 $3,853.8 $2,323.6
Cost of sales 1,729.7 1,060.7 3,499.5 2,073.7
-------- -------- -------- --------
Gross profit 178.4 126.1 354.3 249.9
Operating expenses:
Selling, general and
administrative 69.4 48.0 140.2 99.9
Research and
Development 7.5 4.9 15.4 9.3
Acquisition costs 2.9 -- 2.9 --
-------- -------- -------- --------
Operating income 98.6 73.2 195.8 140.7
Interest income 5.1 6.5 9.5 13.0
Interest expense (9.5) (6.3) (15.0) (12.8)
-------- -------- -------- --------
Income before
income taxes 94.2 73.4 190.3 140.9
Income tax expense 28.7 24.6 60.9 47.2
-------- -------- -------- --------
Net income $ 65.5 $ 48.8 $ 129.4 $ 93.7
======== ======== ======== ========
Net income per share:
Basic $ 0.28 $ 0.21 $ 0.55 $ 0.41
======== ======== ======== ========
Diluted $ 0.26 $ 0.20 $ 0.52 $ 0.39
======== ======== ======== ========
Shares used to compute
net income per share:
Basic 238.1 230.8 237.5 230.2
======== ======== ======== ========
Diluted 261.6 252.3 259.8 252.2
======== ======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
SOLECTRON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
<TABLE>
<CAPTION>
Six Months Ended
February 28,
------------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 129.4 $ 93.7
Adjustments to reconcile net income
to net cash (used in) provided by operating
activities:
Depreciation and amortization 82.3 61.2
Tax benefit associated with the
exercise of stock options 14.5 0.3
Other (1.1) 7.8
Changes in operating assets and
liabilities:
Accounts receivable (222.4) (61.2)
Inventories (133.1) (87.4)
Prepaid expenses and other
current assets (16.0) (10.8)
Accounts payable 106.4 59.3
Accrued expenses and other
current liabilities (7.9) (8.1)
-------- --------
Net cash (used in) provided by operating
activities (47.9) 54.8
-------- --------
Cash flows from investing activities:
Sales and maturities of short-term
investments 93.2 137.5
Purchases of short-term investments (282.5) (162.4)
Acquisition of manufacturing location (100.5) --
Capital expenditures (222.8) (143.5)
Proceeds from sale of property and equipment 10.2 18.3
Other (3.9) (1.5)
-------- --------
Net cash used in investing
activities (506.3) (151.6)
-------- --------
</TABLE>
(continued on next page)
5
<PAGE> 6
SOLECTRON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In millions)
<TABLE>
<CAPTION>
Six Months Ended
February 28,
----------------------
1999 1998
------ ------
<S> <C> <C>
Cash flows from financing activities:
Net proceeds from short-term debt 11.4 --
Net proceeds from long-term debt 732.6 --
Repayments of long-term debt -- (2.0)
Net proceeds from sale of common stock 35.4 16.6
Other 6.3 (0.1)
------ ------
Net cash provided by financing
activities 785.7 14.5
------ ------
Effect of exchange rate changes on
cash and cash equivalents 6.9 0.6
------ ------
Net increase (decrease) in cash and
cash equivalents 238.4 (81.7)
Cash and cash equivalents at
beginning of period 225.2 225.1
------ ------
Cash and cash equivalents at
end of period $463.6 $143.4
====== ======
SUPPLEMENTAL DISCLOSURES
Cash paid during the period:
Income taxes $ 47.1 $ 37.8
Interest $ 13.2 $ 2.4
Non-cash investing and financing activities:
Issuance of common stock upon
conversion of long-term debt $ 0.1 $ --
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE> 7
SOLECTRON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - Basis of Presentation
The accompanying unaudited condensed consolidated balance sheets as of February
28, 1999 and August 31, 1998, and the related unaudited condensed consolidated
statements of income for the three- and six-month periods ended February 28,
1999 and 1998, and the unaudited condensed consolidated statements of cash flows
for the six months ended February 28, 1999 and 1998 have been prepared on
substantially the same basis as the annual consolidated financial statements.
Management believes the financial statements reflect all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of the
Company's financial position, operating results and cash flows for the periods
presented. The results of operations for the three- and six-month periods ended
February 28, 1999 are not necessarily indicative of results to be expected for
the entire year. These condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
for the year ended August 31, 1998 included in the Company's Annual Report to
Stockholders.
For clarity of presentation, the Company has indicated its second fiscal
quarters as ending on February 28, and its fiscal year as ending on August 31,
whereas in fact, the Company's second quarter of fiscal 1999 ended on February
26, 1999, its second quarter of fiscal 1998 ended on February 27, 1998 and its
1998 fiscal year ended on August 28, 1998.
NOTE 2 - Inventories
Inventories consisted of (in millions):
<TABLE>
<CAPTION>
February 28, August 31,
1999 1998
------------ ----------
<S> <C> <C>
Raw materials $ 702.6 $ 577.8
Work-in-process 226.8 210.7
-------- --------
Total $ 929.4 $ 788.5
======== ========
</TABLE>
NOTE 3 - Net Income Per Share
Basic net income per share is calculated using the weighted average number of
common shares outstanding during the period. Diluted net income per share is
calculated using the weighted average number of common shares plus dilutive
common equivalent shares outstanding during the period. Common equivalent shares
consist of stock options that are computed using the treasury stock method and
shares issuable upon conversion of the Company's outstanding convertible
subordinated notes. The shares issuable upon conversion of the Company's
convertible senior notes were not included in the calculation because the effect
would have been antidilutive. Share and per-share data presented reflect the
two-for-one stock split effective February 24, 1999. The following table sets
forth the computation of basic and diluted net income per share for the three-
and six-month periods ended February 28, 1999 and 1998.
7
<PAGE> 8
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
February 28, February 28,
-------------------- -------------------
1999 1998 1999 1998
------ ------ ------ ------
(in millions, except per share data)
<S> <C> <C> <C> <C>
Net income - basic $ 65.5 $ 48.8 $129.4 $ 93.7
Interest expense from
convertible subordinated
notes, net of taxes 2.5 2.4 4.9 4.8
------ ------ ------ ------
Net income - diluted $ 68.0 $ 51.2 $134.3 $ 98.5
====== ====== ====== ======
Weighted average shares - basic 238.1 230.8 237.5 230.2
Common stock equivalents
- stock options 9.9 7.9 8.7 8.4
Common shares issuable upon
assumed conversion of
convertible subordinated
notes 13.6 13.6 13.6 13.6
------ ------ ------ ------
Weighted average shares - diluted 261.6 252.3 259.8 252.2
====== ====== ====== ======
Net income per share - basic $ 0.28 $ 0.21 $ 0.55 $ 0.41
====== ====== ====== ======
Net income per share - diluted $ 0.26 $ 0.20 $ 0.52 $ 0.39
====== ====== ====== ======
</TABLE>
For the three- and six-month periods ended February 28, 1999, options to
purchase 660,000 shares of common stock with exercise prices greater than the
average fair market value of the Company's stock for the period of $41.19 and
$33.86, respectively, were not included in the calculation because the effect
would have been antidilutive. For the three- and six-month periods ended
February 28, 1998, options to purchase 2.7 million shares of common stock with
exercise prices greater than the average fair market value of the Company's
stock for the period of $20.12 and $20.41, respectively, were not included in
the calculation because the effect would have been antidilutive.
Note 4 - Comprehensive income
Effective in the first quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards No. 130 (SFAS No. 130), "Reporting Comprehensive
Income," which requires the Company to report and display certain information
related to comprehensive income. Comprehensive income includes net income and
other comprehensive income. Other comprehensive income is classified separately
into foreign currency items, minimum pension liability adjustments, and
unrealized gains and losses on certain investments in debt and equity
securities. Solectron's other comprehensive income is comprised solely of
foreign currency translation adjustments. The components of comprehensive income
were as follows:
8
<PAGE> 9
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
February 28, February 28,
--------------------- ---------------------
1999 1998 1999 1998
------ ------ ------ ------
(in millions)
<S> <C> <C> <C> <C>
Net income $ 65.5 $ 48.8 $129.4 $ 93.7
Other comprehensive income (loss)
foreign currency translation adjustments (72.9) (3.5) (70.7) 1.0
------ ------ ------ ------
Comprehensive income (loss) $ (7.4) $ 45.3 $ 58.7 $ 94.7
====== ====== ====== ======
</TABLE>
For both the three- and six-month periods of fiscal 1999, the loss in foreign
currency translation was primarily due to the recent devaluation of the
Brazilian Real. In addition, the foreign currency translation adjustments are
not currently adjusted for income taxes since they relate to investments which
are permanent in nature.
NOTE 5 - Asset Securitization & Accounts Receivable Financing
The Company has an asset securitization arrangement with a bank under which it
may sell up to $220 million of eligible accounts receivable. The arrangement
expires in August 1999 and is subject to certain financial covenants and
management representations. During the second quarter of fiscal year 1999, the
Company borrowed $72 million against its eligible accounts receivable under the
arrangement and paid off the amount within the same quarter.
NOTE 6 - Commitments
The Company leases various facilities under operating lease agreements. The
facility leases expire at various dates through 2006. Substantially all leases
require the Company to pay property taxes, insurance and normal maintenance
costs. Payments under certain leases are periodically adjusted based on LIBOR
rates. The leases for certain Solectron's facilities in Milpitas and San Jose,
California; Everett, Washington; and Suwanee, Georgia, provide the Company with
the option at the end of each of the leases of either acquiring the property at
its original cost or arranging for the property to be acquired. The Company is
contingently liable under a first loss clause for a decline in market value of
these leased facilities totaling up to $143 million in the event the Company
does not purchase the properties at the end of the respective lease terms. The
Company must also maintain compliance with financial covenants similar to its
credit facilities.
In fiscal 1998, Solectron entered into an arrangement with a third-party leasing
company under which the Company sold fixed assets with a carrying value of
approximately $31.3 million and leased them back from the leasing company. The
Company is accounting for these leases as operating leases.
Future minimum payments related to lease obligations are $39.5 million, $29.8
million, $20.9 million, $65.1 million and $44.9 million in each of the years in
the five-year period ending August 31, 2003 and an aggregate $2.6 million for
periods after that date.
9
<PAGE> 10
NOTE 7 - Acquisitions of IBM Assets in Texas
On February 1, 1999, the Company acquired IBM's Electronic Card Assembly and
Test (ECAT) manufacturing assets in Austin, Texas. Additionally, the Company
acquired the non-exclusive rights to use certain IBM intellectual property. The
total purchase price for the manufacturing assets and intellectual property
rights was approximately $75 million, subject to adjustment. The transaction was
accounted for as a purchase of assets, and the purchase price was allocated to
the assets acquired based on the relative fair values of the assets at the date
of acquisition. Under the terms of the agreements, Solectron will provide
printed circuit board (PCB) assembly for motherboards used in IBM's mobile
products manufactured worldwide for the next three years. This includes physical
design, early prototyping, new product launch, PCB assembly and test, volume
production, end-of-life support, field return services and life-cycle
management. Solectron will also provide IBM's worldwide design teams a full
range of integrated New Product Introduction (NPI) services which involve
pre-manufacturing support, such as design and layout, component and concurrent
engineering, test development, prototype, procurement and assembly. In addition,
the Company has hired approximately 1,300 IBM design, test, and manufacturing
associates.
Note 8 - Convertible Debt
In January 1999, Solectron issued 1,656,000 zero-coupon convertible senior notes
to qualified institutional investors in a private placement at an issue price of
$452.89 per note which resulted in gross proceeds to the Company approximately
$750 million. These notes are unsecured and unsubordinated indebtedness of the
Company with a maturity value aggregating $1.656 billion. There will be no
interest payment by the Company prior to maturity. Each note has a yield of 4%
with a maturity value of $1,000 on January 27, 2019. The Company is amortizing
the issue discount using the effective interest method over the term of the
notes. Each note is convertible at any time by the holder at a conversion rate
of 7.472 shares per note, adjusted for the two-for-one stock split effective
February 24, 1999. Holders may require the Company to purchase all or a portion
of their notes on January 27, 2002 and January 27, 2009, at a price of $510.03
and $672.97 per note, respectively. Also, each holder may require the Company to
repurchase all or a portion of such holder's notes upon a change in control of
the Company occurring on or before January 27, 2002. The Company, at its option,
may redeem all or a portion of the notes at any time on or after January 27,
2003. In addition, the Company has agreed to file with the Securities Exchange
Commission (SEC) within 90 days and to use reasonable efforts to have declared
effective within 180 days after the issuance, a registration statement under the
Securities Act to register resales of the notes and the common stock issuable
upon conversion thereof. Such registration statement was filed with the SEC on
April 7, 1999.
10
<PAGE> 11
In February 1996, the Company issued convertible subordinated notes for an
aggregate principal amount of $230 million. The notes are in denominations of
and have a maturity value of $1,000 each, payable on March 1, 2006. Interest is
payable semi-annually at 6%. Each note is convertible at any time by the holder
into shares of common stock at a conversion price of $16.90 per share as
adjusted for the two-for-one stock split effective February 24, 1999. The notes
are redeemable at the option of the Company beginning on March 3, 1999. During
February and March 1999, all of the convertible subordinated notes were
voluntarily converted into 5,914 and 13,603,514 shares of common stock,
respectively.
11
<PAGE> 12
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain statements contained in the following Management's Discussion and
Analysis of Financial Condition and Results of Operations, including, without
limitation, statements containing the words "believes," "anticipates,"
"estimates," "expects," and words of similar import, constitute forward-looking
statements which involve risks and uncertainties. Solectron's actual results
could differ materially from those anticipated in these forward looking
statements as a result of certain factors, including those factors set forth
under "Trends and Uncertainties" below.
General
Solectron's net sales are derived from sales to electronics systems original
equipment manufacturers (OEMs). The majority of Solectron's customers compete in
the networking, data and voice communications, workstation, personal computer
and computer peripheral segments of the electronics industry. The Company
provides integrated solutions that span the entire product life cycle - from
pre-production planning and design, to manufacturing, distribution and
end-of-life product service and support. Solectron offers its customers
competitive outsourcing advantages, such as access to advanced manufacturing
technologies, shortened time-to-market, reduced cost of production and more
effective asset utilization. A discussion of some of the potential fluctuations
in operating results is included under "Trends and Uncertainties."
The Company has manufacturing operations in locations throughout the world,
including North America, Europe, Asia/Pacific and Latin America. Solectron also
has its Asia/Pacific headquarters office in Taipei, Taiwan and program offices
located in Japan and Israel. The Company's subsidiaries, Force Computers and
Fine Pitch Technologies, are both headquartered in San Jose, California. Force's
European headquarters and a significant portion of its operations are located in
Munich, Germany. In addition to its headquarters' locations, Force has sales
support offices in various locations in the United States and internationally.
During 1997, the Company established a strategic, global manufacturing
partnership with Ericsson Telecom AB's Business Area Infocom Systems (Ericsson).
The Company established a New Product Introduction center in Sweden, and
production from certain Ericsson plants worldwide was transferred to Solectron
manufacturing sites around the world. In October 1997, Solectron acquired
certain assets, primarily equipment and inventory, of Ericsson's printed circuit
board assembly operation located in Sao Paulo, Brazil. In addition, Solectron's
subsidiary, Solectron Brasil Ltda., hired approximately 370 associates formerly
employed by Ericsson Telecomunicacoes S.A. in Brazil.
In April 1998, the Company acquired NCR Corporation's (NCR) manufacturing assets
in three cities for a purchase price of approximately $91 million. The
acquisition was accounted for as a purchase of assets and the purchase price was
allocated to the assets acquired based on the relative fair values of the assets
at the date of acquisition. Under the terms of the agreement, NCR will outsource
the manufacturing of certain computer components to Solectron for at least five
years. Solectron also hired approximately 1,200 NCR manufacturing and related
support associates.
12
<PAGE> 13
In June 1998, the Company acquired International Business Machines Corporation's
(IBM) Electronic Card Assembly and Test (ECAT) manufacturing assets in
Charlotte, North Carolina and non-exclusive rights to certain IBM intellectual
property for a purchase price of approximately $96 million. The acquisition was
accounted for as a purchase of assets and the purchase price was allocated to
the assets acquired, including the intellectual property rights, based on their
relative fair values at the date of acquisition. Under the terms of the
agreement, Solectron hired approximately 700 IBM manufacturing and related
support associates and the Company will provide printed circuit board assembly
services to IBM in North America for the next three years. In addition, IBM has
made available to Solectron 115 patents and 51 disclosures (collectively the
intellectual property rights) covering a wide spectrum of technologies and
capabilities. IBM will also provide to Solectron failure analysis and
characterization tools for process development and manufacturing, including
fault detection and isolation.
In October 1998, the Company acquired the wireless telephone manufacturing
assets of Mitsubishi Consumer Electronics America, Inc.'s (MCEA) Cellular Mobile
Telephone (CMT) division in Braselton, Georgia. MCEA is a subsidiary of
Mitsubishi Electric Corporation (Mitsubishi). The acquisition was accounted for
as a purchase of assets and the purchase price of approximately $25 million was
allocated to the acquired assets based on their relative fair values at the date
of acquisition. Under the terms of the agreement, the Company will provide
MCEA-CMT with a full range of manufacturing services for five years, including
New Product Introduction management, printed circuit board assembly and full
systems assembly for MCEA's branded and private-label cellular products sold
within North America. In addition, Solectron hired approximately 400 MCEA-CMT
manufacturing and support associates.
Also in October 1998, the Company signed a definitive agreement with Ingram
Micro Inc. under which the two companies entered into a strategic alliance to
provide global build-to-order and configure-to-order assembly services for
personal computers, servers and related products in the United States, Canada,
Europe, Asia and Latin America. The alliance will be managed by both companies
under a joint management matrix that will include a sales and marketing staff,
program management, materials management, information technology resources and
test and process engineers and will, in most part, utilize existing facilities,
systems and personnel. The companies expect that shipments to customers will
begin in the second quarter of calendar 1999.
On February 1, 1999, the Company acquired IBM's Electronic Card Assembly and
Test (ECAT) manufacturing assets in Austin, Texas and non-exclusive rights to
certain IBM intellectual property for a purchase price of approximately $75
million, subject to adjustment. The transaction was accounted for as a purchase
of assets, and the purchase price was allocated to the assets acquired based on
the relative fair values of the assets at the date of acquisition. Under the
terms of the agreements, Solectron will provide printed circuit board (PCB)
assembly for motherboards used in IBM's mobile products manufactured worldwide
for the next three years. This includes physical design, early prototyping, new
product launch, PCB assembly and test, volume production, end-of-life support,
field return services and life-cycle management. Solectron will also provide
IBM's worldwide design teams a full range of integrated New Product Introduction
(NPI) services which involve pre-manufacturing support, such as design and
layout, component and concurrent engineering, test development, prototype,
procurement and assembly. In addition, the Company has hired approximately 1,300
IBM design, test, and manufacturing associates.
13
<PAGE> 14
Results of Operations
The electronics industry is subject to rapid technological change, product
obsolescence and price competition. These and other factors affecting the
electronics industry, or any of Solectron's major customers in particular, could
have an adverse material effect on Solectron's results of operations. See
"Trends and Uncertainties -- Potential Fluctuations in Operating Results" and
"Competition" for further discussion of potential fluctuations in operating
results.
The following table sets forth, for the periods indicated, certain items in the
Consolidated Statements of Income as a percentage of net sales. The financial
information and the discussion below should be read in conjunction with the
Condensed Consolidated Financial Statements and Notes thereto.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
February 28, February 28,
---------------------- ----------------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 90.7 89.4 90.8 89.2
------ ------ ------ ------
Gross profit 9.3 10.6 9.2 10.8
Operating expenses:
Selling, general and
administrative 3.6 4.0 3.6 4.3
Research and development 0.4 0.4 0.4 0.4
Acquisition costs 0.2 -- 0.1 --
------ ------ ------ ------
Operating income 5.1 6.2 5.1 6.1
Net interest income (expense) (0.2) -- (0.1) --
------ ------ ------ ------
Income before income taxes 4.9 6.2 5.0 6.1
Income taxes 1.5 2.1 1.6 2.1
------ ------ ------ ------
Net income 3.4% 4.1% 3.4% 4.0%
====== ====== ====== ======
</TABLE>
Net Sales
Net sales for the three- and six-month periods of fiscal 1999 grew to $1.9
billion and $3.9 billion, respectively, increases of 60.8% and 65.9%,
respectively, compared to the corresponding periods in fiscal 1998. The sales
growth was primarily attributable to significant increases in sales volume from
both existing and new customers worldwide, as well as from the acquisitions of
Ericsson, NCR, and IBM ECAT in Charlotte, North Carolina during fiscal 1998 and
Mitsubishi in the first quarter of fiscal 1999. Sales resulting from the
acquisition of IBM ECAT in Austin, Texas on February 1, 1999 were not recognized
in the second quarter of fiscal 1999 since the Company's Texas site reports
consistently its results one month in arrears.
Within the Americas, the acquired sites from NCR and IBM ECAT in Charlotte and
the new site in Mexico were the largest contributors to the strong growth in the
fiscal 1999 periods as compared to the fiscal
14
<PAGE> 15
1998 periods. The sales growth at the Texas site was particularly strong
resulting from new programs. The Milpitas, California site also experienced
sales growth, although the demand increase was partially offset by the planned
transfer of personal computer printed circuit board programs and computer
peripherals systems assembly programs to Mexico and networking business to
Penang, which are a part of management's efforts to improve global load
balancing through specific product program transitioning.
Sales of the Company's European and Asian operations increased in fiscal 1999
periods over the same periods of fiscal 1998 principally as a result of core
business growth and new accounts. In addition, the sales growth at the Penang
site was significant due primarily to increased demand from personal computer
customers and networking business transferred in from California. The growth at
the Scotland site was also strong primarily due to increased demand from its
telecommunications customers. Although the Company does not currently anticipate
any future decline in sales, to lessen the potential impact of any possible
future declines related to customers within any particular region or market
segment, the Company is committed to seeking diversification of its customer
base among many countries, market segments and product lines within market
segments.
Several of the Company's customers accounted for more than 10% of the Company's
net sales in the three- and six-month periods of fiscal 1999 and 1998. The
following table details these customers and the percentage of net sales
attributed to them.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
February 28, February 28,
--------------------- ---------------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Hewlett-Packard Company(HP) 11.6% 13.8% 11.9% 14.6%
Cisco Systems, Inc. 10.8% 11.4% 10.1% 10.3%
Sun Microsystems, Inc. * 12.3% * 11.2%
</TABLE>
- -----------
* Less than 10%
No other customer accounted for more than 10% of net sales during any of the
periods presented.
Solectron's top ten customers accounted for 72.8% and 67.1% of consolidated net
sales in the first six months of fiscal 1999 and 1998, respectively. Solectron
is still dependent upon continued revenues from HP and the rest of its top ten
customers and there can be no guarantee that these or any other customers will
not increase or decrease as a percentage of consolidated net sales either
individually or as a group. Consequently, any material decrease in sales to
these or other customers could have an adverse material effect on Solectron's
results of operations.
In the first half of fiscal 1999, international locations contributed 39.4% of
consolidated net sales compared to 34.5% in the same period of fiscal 1998. In
addition to the sales growth factors for Europe and Asia noted above, the
Company's international sales also benefited from the addition of the Mexico and
Brazil sites during the first quarter of fiscal 1998 and the acquisition of the
Ireland site from NCR in April 1998. As a result of Solectron's international
sales and facilities, Solectron's operations are subject to risks of doing
business abroad.
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<PAGE> 16
While to date these dynamics have not had an adverse material effect on
Solectron's results of operations, there can be no assurance that there will not
be such an impact in the future. See "Trends and Uncertainties -- International
Operations" for a further discussion of potential fluctuations in operating
results associated with the risks of doing business abroad.
Solectron's operations in Milpitas, California contributed a substantial portion
of Solectron's net sales and operating income during the first half of fiscal
1999 and fiscal 1998. Although management has been undertaking deliberate
actions to achieve improved global load balancing by transferring certain
projects from the Milpitas site to other sites worldwide, the performance of the
Milpitas operation is expected to continue as a significant factor in the
overall financial performance of Solectron. Any adverse material change to the
customer base, product mix, efficiency, or other attributes of this site could
have an adverse material effect on Solectron's consolidated results of
operations.
Solectron believes that its ability to continue to achieve growth will depend
upon growth in sales to existing customers for their current and future product
generations, successful marketing to new customers and future geographic
expansion. Customer contracts can be canceled and volume levels can be changed
or delayed. The timely replacement of delayed, canceled or reduced orders with
new business cannot be assured. In addition, there can be no assurance that any
of Solectron's current customers will continue to utilize Solectron's services.
Because of these factors, there can be no assurance that Solectron's historical
revenue growth rate will continue. See "Trends and Uncertainties" for a
discussion of certain factors affecting the management of growth, geographic
expansion and potential fluctuations in sales and results of operations.
Gross Profit
The gross margin percentage declined to 9.2% for the first half of fiscal 1999
period from 10.8% for the same period of fiscal 1998. The decrease was primarily
attributable to a shift toward higher volume projects and systems build projects
which typically yield lower margins. Also, gross margins of the newly acquired
NCR operations are lower than the overall average margins of the rest of the
Company primarily due to the fact that the majority of its net sales are derived
from systems integration activities, which normally generate lower gross margins
than printed circuit board assembly.
For the foreseeable future, Solectron's gross margin is expected to depend
primarily on product mix, production efficiencies, utilization of manufacturing
capacity, start-up and integration costs of new and acquired businesses, the
percentage of sales derived from systems build projects, pricing within the
electronics industry and the cost structure at individual sites. Over time,
gross margins at the individual sites and for the Company as a whole may
continue to fluctuate. The Company anticipates that a larger percentage of its
sales may be derived from systems build projects in future periods. Systems
build projects typically have lower gross margin percentages than printed
circuit board assembly projects. Increases in systems build business, additional
costs associated with new projects and price erosion within the electronics
industry could adversely affect the Company's gross margin. Additionally,
changes in product mix could cause the Company's gross margin to fluctuate.
Also, while the availability of raw materials appears adequate to meet the
Company's current revenue projections for the foreseeable future, component
availability is still subject to lead
16
<PAGE> 17
time and other constraints that could possibly limit the Company's revenue
growth. Because of these factors and others discussed under "Trends and
Uncertainties" below, there can be no assurance that the Company's gross margin
will not fluctuate or decrease in future periods.
Selling, General and Administrative Expenses
In absolute dollars, selling, general and administrative (SG&A) expenses
increased 44.6% and 40.3%, respectively, for the three- and six-months of fiscal
1999 over the same periods of fiscal 1998. The increase in fiscal 1999 period
was primarily due to investment in infrastructure such as personnel and related
departmental expenses at all manufacturing locations as well as continuing
investment in information systems to support the increased size and complexity
of the Company's business. As a percentage of net sales, SG&A expenses were 3.6%
for both the three- and six-month periods in the fiscal 1999 and 4.0% and 4.3%,
respectively, in the comparable fiscal 1998 periods. The primary reason for the
fiscal 1999 decrease in SG&A expenses as a percentage of net sales is the
significant increase in the sales base offset partially by the costs associated
with investments in starting up new sites and investments in the Company's
information systems. The Company anticipates SG&A expenses will continue to
increase in terms of absolute dollars in the future, and may possibly increase
as a percentage of net sales, as the Company continues to build the
infrastructure necessary to support its current and prospective business.
Research and Development Expenses
With the exception of its Force Computers operation, the Company's research and
development (R&D) activities have been focused primarily on the development of
prototype and engineering design capabilities, fine pitch interconnecting
technologies (which include ball-grid array, tape-automated bonding, multichip
modules, chip-on-flex, chip-on-board and flip chip), high reliability
environmental stress test technology and the implementation of environmentally
friendly assembly processes, such as VOC-free and no-clean. Force's R&D efforts
are concentrated on new product development and improvement of product designs
through improvements in functionality and the use of microprocessors in embedded
applications. Research and development expenses, as a percentage of net sales,
were 0.4% in each of the fiscal 1999 and fiscal 1998 periods. In absolute
dollars, R&D expenses increased 52.7% and 65.8%, respectively, for the three-
and six-month periods of fiscal 1999 over the same periods in fiscal 1998. The
increases were primarily due to increased R&D expenditures at Force. The Company
expects that R&D expenses will increase in absolute dollars in the future and
may possibly increase as a percentage of net sales as Force continues to invest
in its R&D efforts and additional R&D projects are undertaken at certain sites.
Acquisition Costs
A one-time charge for acquisition costs of approximately $2.9 million related to
personnel benefit expenses was incurred as a result of the acquisition of IBM
ECAT operations in Austin, Texas on February 1, 1999.
Net Interest Income (Expense)
Net interest expense was $4.4 million and $5.5 million, respectively, for the
three- and six-month periods of fiscal 1999 compared to net interest income of
$0.2 million for the same periods of fiscal 1998. The interest expense in the
fiscal 1999 periods included $6.2 million per quarter of interest expense for
the Company's 6% convertible
17
<PAGE> 18
subordinated notes and 7 3/8% senior notes, as well as one-month interest
expense of $2.6 million resulting from the new issuance of zero-coupon
convertible senior notes. The net interest expense primarily reflects the
interest expense associated with the Company's long-term debt offset by interest
income earned on undeployed cash and investments and the capitalization of
interest expense. In the first half of fiscal 1999, the Company capitalized $2.4
million of interest expense related to the costs of computer software developed
for internal use and the facility construction projects at the Brazil and China
sites. Solectron expects to utilize more of the undeployed cash during fiscal
1999 in order to fund anticipated future growth. See "Trends and Uncertainties
- -- Management of Growth," and "Potential Fluctuations in Operating Results."
Income Taxes
Income taxes increased to $60.9 million in the first half of fiscal 1999 from
$47.2 million in the fiscal 1998 period primarily due to increased income before
income taxes. For the first half of fiscal 1999, Solectron's effective income
tax rate was 32.0% compared to 33.5% for the corresponding period in fiscal
1999. While the Company's effective tax rate is substantially affected by the
proportion of income before taxes derived from domestic and international
operations, the tax rate reduction in fiscal 1999 resulted from increased income
before taxes from the foreign operations which have been taxed at a lower rate
than in the United States. This is primarily due to the tax holiday granted to
the Company's Malaysia sites. The Malaysian tax holiday is effective through
January 31, 2002, subject to certain conditions. The Company has also been
granted various tax holidays in China, which are effective for various terms and
are subject to certain conditions.
Liquidity and Capital Resources
Working capital was $1.7 billion at February 28, 1999 compared to $1.0 billion
at the end of fiscal 1998. During the same period, cash, cash equivalents and
short-term investments increased to $736.6 million from $308.8 million. The
increase was primarily due to proceeds from the completion of the private
placement of the 4% yield zero-coupon convertible senior notes, offset by
required investments in working capital and capital expenditures to support
sales growth. The notes have a maturity date in January 2019, and no interest
payment will be made during the term. In addition, the Company used
approximately $25 million for the purchase of manufacturing assets of MCEA's CMT
division in the first quarter of fiscal 1999 and approximately $75 million for
the acquisition of manufacturing assets and rights to certain intellectual
property from IBM ECAT in Austin, Texas during the second quarter of fiscal
1999. As Solectron continues to grow, it is expected that the Company will
require greater amounts of working capital to support its operations. The
Company believes that its current level of working capital and the Company's
available credit facilities will provide adequate working capital for the
foreseeable future. However, the Company may need to raise additional funds to
finance more rapid expansion, including establishing new locations or financing
additional acquisitions. There can be no assurance that such funds, if needed,
will be available on terms acceptable to the Company or at all.
Inventory levels fluctuate directly with the volume of the Company's
manufacturing. Changes or significant fluctuations in product market demands can
cause fluctuations in inventory levels which may result in changes in levels of
inventory turns and liquidity. Historically, the Company has been able to manage
its inventory levels with regard to
18
<PAGE> 19
these fluctuations. However, should material fluctuations occur in product
demand, the Company could experience slower turns and reduced liquidity.
In the first half of fiscal 1999, the Company invested approximately $223
million in capital expenditures. A large portion of these expenditures related
to the purchase of new equipment, primarily surface mount assembly and test
equipment, to meet current and expected production levels, as well as to replace
or upgrade older equipment which was retired or sold. Significant expenditures
were also made for the acquisition of land and buildings for the Company's
manufacturing sites, principally in Brazil and Mexico. The Company expects total
capital expenditures in fiscal 1999 to be in the range of $275 million to $325
million.
In addition to working capital as of February 28, 1999, which includes cash and
cash equivalents of $463.6 million and short-term investments of $273.0 million,
the Company has available a $100 million unsecured multicurrency revolving
credit facility and a $220 million asset securitization arrangement. Both of
these facilities are subject to financial covenants. The Company also has
approximately $93 million in unused foreign credit facilities available.
"Year 2000" Issues
The Company is aware of and is addressing the issues associated with the
programming code in existing computer systems as the year 2000 approaches. The
Year 2000 problem is pervasive and complex, as many computer systems,
manufacturing equipment and industrial control systems will be affected in some
way by the rollover of the two-digit year value to 00. Systems that do not
properly recognize such dates could generate erroneous information or cause a
system to fail. The Year 2000 issue creates risk for the Company from unforeseen
problems in its own systems and from third parties with whom the Company deals
on business transactions worldwide. Failures of the Company's and/or third
parties' computer systems, manufacturing equipment and industrial control
systems would have an adverse material impact on the Company's ability to
conduct its business.
The Company has formed a worldwide task force and has implemented a
comprehensive program to analyze the Company's internal systems as well as all
external systems (such as vendor, customer, banking systems, etc.) upon which
the Company is dependent, to identify and evaluate any potential Year 2000
issues. This task force meets regularly and tracks progress against the program,
modifying it as needed to help ensure timely completion. The Company is
committed to achieving Year 2000 compliance; however, because a significant
portion of the problem is external to the Company and therefore outside of its
direct control, there can be no assurance that the Company will be fully or even
significantly Year 2000 compliant at the critical juncture. In addition, as full
testing of Year 2000 functionality must occur in a simulated environment, the
Company will not be able to test full system Year 2000 interfaces and
capabilities prior to the Year 2000.
As of February 28, 1999, the Company had completed an inventory, assessment and,
for the most part, remediation of internal systems, hardware, software,
manufacturing equipment and embedded chips in industrial control instruments.
Each of these items was identified as mission critical, mission essential,
mission impaired or mission non-critical. The Company is in the process of
prioritizing and evaluating
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<PAGE> 20
mission critical and mission essential items, identifying fixes and resources as
appropriate, and performing and testing corrective measures. While the Company
believes that its evaluation has been comprehensive, there can be no assurance
that all systems critical to Year 2000 compliance have been identified, or that
the corrective actions identified will be completed on time.
As of February 28, 1999, the Company had inventoried every key supplier of goods
and services to the Company, and considered the potential impact on the Company
and its customers of Year 2000 compliance by these suppliers. Also, the Company
had evaluated the key suppliers' responses to its mailing surveys and is in the
process of auditing these suppliers. The Company plans to disqualify potentially
non-compliant sources, look for alternative sources and re-qualify new suppliers
to help mediate potential business disruptions. The Company is also involved
with various geographic Year 2000 consortiums worldwide, with the intent to
leverage contacts and information for commonly used suppliers and services such
as utility companies. In addition, the Company is in the process of reviewing
EDI linkages and data transmission for its customers and suppliers. While the
Company believes that it will be able to qualify alternative suppliers as
needed, until all supplier and customer survey responses have been received and
evaluated, the Company can not fully evaluate the extent of potential problems
and the costs associated with corrective actions.
The Company estimates the cost to complete its current compliance program to be
in the range of $28 million to $42 million. Of this amount, approximately $7
million is associated with the replacement of capital equipment, of which
approximately half is being purchased to replace non-compliant systems that
would not otherwise have been replaced at this time. The variability in these
estimates depends largely on the response from the Company's suppliers and the
extent to which supplier re-qualification is needed. Cost estimates will also be
re-evaluated as the status of the overall compliance program is updated. There
can be no assurance that actual costs will not be materially higher than
currently anticipated. A significant portion of these costs is not likely to be
incremental costs to the Company, but rather will represent the redeployment of
existing information technology resources. Certain other information technology
projects have been delayed due to the focus on Year 2000 issues. The potential
costs of the redeployment of personnel and delays in implementing other projects
is not known but could be substantial. The total amount spent on the compliance
program this fiscal year through February 28, 1999 was $11 million, of which $7
million pertained to payroll costs for personnel involved in the program and
costs of outside consultants, and $4 million principally pertained to the
replacement of capital equipment. Prior to fiscal 1999, costs of software and
hardware applications incurred for Year 2000 compliance were not material and
related payroll costs for the Company's information systems group were not
tracked separately.
Although the Company has identified general contingency plans, such as the
replacement and re-qualification of suppliers, the stockpiling of supplies and
purchase of generators, a formal contingency plan will not be established until
July of 1999 when the audit of suppliers is expected to be completed. The
Company is unable to determine what effect the failure of systems because of
Year 2000 issues by the Company or its suppliers or customers would have, but
any significant failures could have an adverse material effect on the Company's
results of operations and financial condition.
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<PAGE> 21
Trends and Uncertainties
Customer Concentration; Dependence on the Electronics Industry
In the first half of fiscal 1999 and for the full years of fiscal 1998, 1997 and
1996, the Company's ten largest customers accounted for as much as 72.8% of
consolidated net sales. The Company is dependent upon continued revenues from
its top ten customers. Any material delay, cancellation or reduction of orders
from these or other significant customers could have an adverse material effect
on the Company's results of operations. During the first half of fiscal 1999, HP
and Cisco accounted for 11.9% and 10.1%, respectively, of net sales compared to
14.6% for HP and 10.3% for Cisco during the same period of fiscal 1998. During
fiscal 1998, HP, Cisco and Sun accounted for 13.9%, 10.7% and 10.5%,
respectively, of net sales, compared to 13.5% for HP and less than 10% for each
of Cisco and Sun during fiscal 1997. There can be no assurance that the Company
will continue to do business with HP, Cisco, Sun or any other customers.
The percentage of the Company's sales to its major customers may fluctuate from
period to period. Significant reductions in sales to any of these customers
would have an adverse material effect on the Company's results of operations.
The Company has long-term contracts (generally for terms of three to five years)
with Ericsson, NCR, IBM and Mitsubishi under which these customers have
committed to source production of certain products and components from the
Company. However, these commitments to source production do not include firm
volume purchase commitments. In addition, the Company has no firm long-term
volume purchase commitments from its other customers, and over the past few
years has experienced reduced lead times in customer orders. Also, customer
contracts can be canceled and volume levels can be changed or delayed. The
timely replacement of canceled, delayed or reduced contracts with new business
cannot be assured. These risks are increased because a majority of the Company's
sales are to customers in the electronics industry, which is subject to rapid
technological change and product obsolescence. The factors affecting the
electronics industry in general, or any of the Company's major customers in
particular, could have an adverse material effect on the Company's results of
operations.
There can be no assurance that sales to customers within any particular market
segment will not experience decreases which could have an adverse material
effect on the Company's sales.
Management of Growth; Geographic Expansion
The Company has experienced substantial growth over the last five fiscal years,
with net sales increasing from $1.5 billion in fiscal 1994 to $5.3 billion in
fiscal year 1998. Additionally, Solectron reported net sales of $3.9 billion for
the first half of fiscal 1999. In recent years, the Company has acquired or
established facilities in many locations. In the first quarter of fiscal 1998,
the Company announced the opening of its Asia/Pacific headquarters office in
Taipei, Taiwan, began operations in Guadalajara, Mexico, and as further
discussed in "Partnership with Ericsson and Related Transactions," established a
manufacturing facility near Sao Paulo, Brazil and opened a New Product
Introduction center in Sweden. In April 1998, the Company announced plans to
open a manufacturing facility in Timisoara, Romania, and in May 1998, announced
the establishment of a program office in Israel. In addition, in April, June and
October 1998, the Company completed its acquisitions of certain manufacturing
assets from NCR, IBM and
21
<PAGE> 22
Mitsubishi, respectively. (See "Acquisition of NCR, IBM and Mitsubishi Assets.")
In October 1998, the Company signed a definitive agreement with Ingram Micro,
Inc. under which the two companies entered into a strategic alliance. (See
"Alliance with Ingram Micro.") In the first quarter of fiscal 1999, the Company
announced plans to build new manufacturing facilities in Romania and Suwanee,
Georgia. On February 1, 1999, it signed agreements with IBM to acquire IBM's
Electronic Card Assembly and Test (ECAT) manufacturing assets in Austin, Texas.
(See "Acquisition of NCR, IBM and Mitsubishi Assets.") During March 1999, the
Company announced the grand opening of the first phase of its new facility in
Brazil.
The Company continually evaluates growth and acquisition opportunities and may
pursue additional opportunities over time. There can be no assurance that the
Company's historical revenue growth will continue or that the Company will
successfully manage the facilities in China, Mexico, Brazil and Romania, the
partnership with and acquisitions from Ericsson, the acquisitions from NCR, IBM
and Mitsubishi, the alliance with Ingram Micro or any other businesses or assets
it may acquire in the future. As the Company manages its existing operations and
expands geographically, it may experience certain inefficiencies as it
integrates new operations and manages geographically dispersed operations. In
addition, the Company's results of operations could be adversely affected if its
new facilities do not achieve growth sufficient to offset increased expenditures
associated with geographic expansion. The Company's expenses and working capital
requirements will continue to increase as the new facilities become fully
operational. Should the Company increase its expenditures in anticipation of a
future level of sales that does not materialize, its profitability would be
adversely affected. On occasion, customers may require rapid increases in
production that can place an excessive burden on the Company's resources.
Partnership with Ericsson and Related Transactions
During 1997, the Company established a strategic, global manufacturing
partnership with Ericsson Telecom AB's Business Area Infocom Systems. The
Company established a New Product Introduction center in Sweden, and production
from certain Ericsson plants worldwide was transferred to Solectron
manufacturing sites around the world. In October 1997, Solectron acquired
certain assets, primarily equipment and inventory, of Ericsson's printed circuit
board assembly operation located in Brazil. In addition, Solectron's subsidiary,
Solectron Brasil Ltda., hired approximately 370 associates formerly employed by
Ericsson Telecomunicacoes S.A. in Brazil. Under the terms of the agreement,
Ericsson contracted for Solectron's services from Solectron Brasil Ltda. through
September 1999. Thereafter, Solectron will bear the risk of filling the
manufacturing capacity at the site with renewed business from Ericsson and new
business from other customers.
The transactions with Ericsson entail a number of risks, including successfully
managing the integration of the operations, retention of key associates,
integrating purchasing operations and information systems, managing an
increasingly larger and more geographically disparate business and renewing the
Ericsson business or replacing it with new business after expiration of the
Ericsson commitment. In addition, the completion of the transactions with
Ericsson has increased Solectron's expenses and working capital requirements and
there is no assurance that Solectron will achieve sufficient revenue to offset
the increased expenses. There can be no assurance that Solectron will
successfully manage the risks of these transactions.
22
<PAGE> 23
Acquisitions of NCR, IBM and Mitsubishi Assets
On April 27, 1998, the Company acquired NCR's manufacturing assets in three
cities, two in the United States and one in Ireland, for a purchase price of
approximately $91 million. As part of the transaction, Solectron hired
approximately 1,200 NCR manufacturing and related support associates currently
employed at these locations. Under the terms of the agreement, NCR will
outsource the manufacturing of certain computer, computer peripheral and server
components to Solectron for at least five years. Thereafter, Solectron will bear
the risk of filling the manufacturing capacity at the sites with renewed
business from NCR and new business from other customers.
On June 1, 1998, the Company acquired IBM's ECAT manufacturing assets in
Charlotte, North Carolina and non-exclusive rights to certain IBM intellectual
property for a purchase price of approximately $96 million. Under the terms of
the agreement, Solectron hired approximately 700 IBM manufacturing and related
support associates and the Company will provide printed circuit board assembly
services to IBM in North America for the next three years. In addition, IBM has
made available to Solectron 115 patents and 51 disclosures (collectively the
intellectual property rights) covering a wide spectrum of technologies and
capabilities. IBM will also provide to Solectron failure analysis and
characterization tools for process development and manufacturing, including
fault detection and isolation.
On October 1, 1998, the Company acquired the wireless telephone manufacturing
assets of Mitsubishi Consumer Electronics America, Inc.'s (MCEA) Cellular Mobile
Telephone (CMT) division in Braselton, Georgia. MCEA is a subsidiary of
Mitsubishi Electric Corporation (Mitsubishi). The purchase price was
approximately $25 million. Under the terms of the agreement, the Company will
provide MCEA-CMT with a full range of manufacturing services for five years,
including New Product Introduction management, printed circuit board assembly
and full systems assembly for MCEA's branded and private-label cellular products
sold within North America. In addition, Solectron hired approximately 400
MCEA-CMT manufacturing and support associates.
On February 1, 1999, the Company acquired IBM's ECAT manufacturing assets in
Austin, Texas and non-exclusive rights to use certain IBM intellectual property
for a purchase price of approximately $75 million, subject to adjustment. Under
the terms of the agreements, Solectron will provide printed circuit board (PCB)
assembly for motherboards used in IBM's mobile products manufactured worldwide
for the next three years. This includes physical design, early prototyping, new
product launch, PCB assembly and test, volume production, end-of-life support,
field return services and life-cycle management. Solectron will also provide
IBM's worldwide design teams a full range of integrated New Product Introduction
(NPI) services which involve pre-manufacturing support, such as design and
layout, component and concurrent engineering, test development, prototype,
procurement and assembly. Additionally, the Company has hired approximately
1,300 IBM design, test, and manufacturing associates.
The transactions with NCR, IBM and Mitsubishi entail a number of risks,
including successfully managing the integration of the operations, retention of
key associates, integrating purchasing operations and information systems,
managing an increasingly larger and more geographically disparate business,
obtaining customers other than NCR, IBM and Mitsubishi for these facilities and
renewing each of the NCR,
23
<PAGE> 24
IBM and Mitsubishi business or replacing it with new business after expiration
of NCR's, IBM's and Mitsubishi's respective commitments. In addition, the
transactions with NCR, IBM and Mitsubishi will increase Solectron's expenses and
working capital requirements and there is no assurance that Solectron will
achieve sufficient revenue to offset the increased expenses. There can be no
assurance that Solectron will successfully manage the risks of these
transactions.
Alliance with Ingram Micro
On October 1, 1998, the Company announced that it signed a definitive agreement
with Ingram Micro Inc. under which the two companies entered into a strategic
alliance to provide global build-to-order and configure-to-order assembly
services for personal computers, servers and related products in the United
States, Canada, Europe, Asia and Latin America. The alliance will be managed by
both companies under a joint management matrix that will include a sales and
marketing staff, program management, materials management, information
technology resources and test and process engineers and will, in most part,
utilize existing facilities, systems and personnel.
The alliance with Ingram Micro entails a number of risks, including successfully
establishing the joint management matrix for the alliance, retention of key
associates, integrating purchasing operations and information systems and
obtaining customers for the services to be provided by the alliance. In
addition, the alliance with Ingram Micro will increase Solectron's expenses and
working capital requirements and there is no assurance that Solectron will
achieve sufficient revenue to offset the increased expenses. There can be no
assurance that Solectron will successfully manage the risks of this alliance or
that the terms of the alliance will be finalized.
International Operations
As a result of its international sales and facilities, the Company's operations
are subject to risks of doing business abroad, including but not limited to,
fluctuations in the value of currency, export duties, changes to import and
export regulations (including quotas), possible restrictions on the transfer of
funds, associate turnover, labor unrest, longer payment cycles, greater
difficulty in collecting accounts receivable, the burdens and costs of
compliance with a variety of foreign laws and in certain parts of the world,
political instability. In addition, the Company has operations in several
locations that are considered to have highly inflationary economies or volatile
currencies, including Mexico, Brazil, China and Romania. In fact, the Company
recorded a $77.7 million cumulative foreign exchange translation loss on
its balance sheet as of February 28, 1999 which was primarily the result of the
recent devaluation of the Brazilian Real. While, to date, these factors have
not had a significant adverse impact on the Company's results of operations,
there can be no assurance that there will not be such an impact. Furthermore,
while the Company may adopt measures to reduce the impact of losses resulting
from volatile currencies and other risks of doing business abroad, no assurance
may be given that such measures will be adequate.
Southeast Asia and Latin America are currently experiencing currency, economic
and political instability. To date, the Company's operations have not
experienced significant adverse effects from this instability. However, to the
extent the Company's worldwide customers sell the products manufactured by
Solectron into the Southeast Asia and Latin America markets, the customers'
sales may be adversely affected, which
24
<PAGE> 25
could decrease demand for the Company's manufacturing services. The Company
cannot predict whether such a decrease in demand will materialize and if it
does, whether it will have an adverse material effect on the Company's results
of operations.
The Malaysian government recently adopted currency exchange controls, including
controls on ringgit held outside Malaysia, and established a fixed exchange rate
for the ringgit against the U.S. dollar. The Company does not hold ringgit
outside of Malaysia and therefore will not be affected by these controls. The
fixed exchange rate, when applied to local expenses denominated in ringgit, will
result in higher expenses when translated to U.S. dollars. However, such local
expenses represent a small percentage of the Company's total costs and therefore
the Company's results of operations will not be significantly affected in the
near future. The long term impact of such controls is not predictable due to
dynamic economic conditions that also affect or are affected by other regional
or global economies.
The Company has been granted a tax holiday for its Malaysia sites which is
effective through January 31, 2002, subject to certain conditions. The Company
has also been granted various tax holidays in China. These tax holidays are
effective for various terms and are subject to certain conditions. There is no
assurance that the current tax holidays will not be terminated or modified or
that any future tax holidays that the Company may seek will be granted. If the
current tax holidays are terminated or modified or if additional tax holidays
are not granted in the future, the Company's effective income tax rate would
likely increase.
Foreign Exchange Rate Sensitivity
The Company does not use derivative financial instruments for speculative
purposes. The Company's policy is to hedge its foreign currency denominated
transactions in a manner that substantially offsets the effects of changes in
foreign currency exchange rates. The Company uses foreign currency borrowings
and foreign currency forward contracts to hedge the currency risks of
transactions denominated in foreign currencies. Gains and losses on these
foreign currency hedges are generally offset by corresponding losses and gains
on the underlying transaction. The Company does not hold or issue foreign
exchange contracts for trading purposes. At February 28, 1999, all of its
foreign currency hedging contracts mature in three months or less and there were
no material deferred gains or losses. In addition, the Company's international
operations in some instances act as a natural hedge because both operating
expenses and a portion of sales are denominated in local currency. In these
instances including the Company's experience involving the recent devaluation of
the Brazilian Real, although an unfavorable change in the exchange rate of a
foreign currency against the U.S. dollar will result in lower sales when
translated to U.S. dollars, operating expenses will also be lower in these
circumstances. However, because less than 10% of net sales are denominated in
currencies other than the U.S. dollar, the Company does not believe its total
exposure to be significant. (See "International Operations.")
Euro Conversion Issues
Effective January 1, 1999, 11 of the 15 member countries of the European Union
(the participating countries) established fixed conversion rates between their
existing sovereign currencies and the euro. For three years after the
introduction of the euro, the participating countries
25
<PAGE> 26
can perform financial transactions in either the euro or their original local
currencies. This will result in a fixed exchange rate among the participating
countries, whereas the euro (and the participating countries' currencies in
tandem) will continue to float freely against the U.S. dollar and other
currencies of non-participating countries.
The Company has a task force which is constantly evaluating the effects of the
euro conversion on the Company. Solectron does not believe that significant
modifications of its information technology systems are needed in order to
handle euro transactions and reporting, and the Company is in the process of
evaluating its tax positions and all outstanding contracts in currencies of the
participating countries to determine the effects, if any, of the euro
conversion. The Company does not expect the euro conversion to have a
significant impact on its derivatives as the Company has already modified its
hedging policies to take the euro conversion into account. While the Company
currently believes that the effects of the conversion do not have a significant
adverse material effect on the Company's business and operations, there can be
no assurances that such conversion will not have an adverse material effect on
the Company's results of operations and financial position due to competitive
and other factors that may be affected by the conversion that cannot be
predicted by the Company.
Availability of Components
A substantial portion of the Company's net sales is derived from turnkey
manufacturing in which the Company provides both materials procurement and
assembly. In turnkey manufacturing, the Company potentially bears the risk of
component price increases, which could adversely affect the Company's gross
profit margins. At various times there have been shortages of components in the
electronics industry. If significant shortages of components should occur, the
Company may be forced to delay manufacturing and shipments, which could have an
adverse material effect on the Company's results of operations.
Potential Fluctuations in Operating Results
The Company's operating results are affected by a number of factors, including
the mix of turnkey and consignment projects, the mix of printed circuit board
assembly and systems build projects, capacity utilization, price competition,
the degree of automation that can be used in the assembly process, the
efficiencies that can be achieved by the Company in managing inventories and
fixed assets, the timing of orders from major customers, fluctuations in demand
for customer products, the timing of expenditures in anticipation of increased
sales, customer product delivery requirements, and increased costs and shortages
of components or labor. Turnkey manufacturing currently represents a substantial
portion of Solectron's sales. Turnkey projects, in which Solectron procures some
or all of the components necessary for production, typically generate higher net
sales and higher gross profits with lower gross margin percentages than
consignment projects due to the inclusion in Solectron's operating results of
sales and costs associated with the purchase and sale of components. Solectron
assembles products with varying degrees of material content, which may cause
Solectron's gross margin to fluctuate. In addition, the degree of start-up costs
and inefficiencies associated with new sites and new customer projects may
affect Solectron's gross margin. All of these factors can cause fluctuations in
the Company's operating results.
26
<PAGE> 27
Interest Rate Sensitivity
The primary objective of the Company's investment activities is to preserve
principal while at the same time maximizing yields without significantly
increasing risk. To achieve this objective, the Company maintains its portfolio
of cash-equivalents and short-term investments in a variety of securities,
including both government and corporate obligations, certificates of deposit and
money market funds. As of February 28, 1999, approximately 66% of the Company's
portfolio mature in less than 6 months. Because the Company's investments are
diversified and of relatively short maturity, a hypothetical 10% increase in
interest rates would not have a material effect on the Company's financial
position.
The Company has entered into an interest rate swap transaction under which
Solectron pays a fixed rate of interest hedging against the variable interest
rates charged by the lessor for the facility lease at Milpitas, California. The
interest rate swap expires in the year of 2002 which coincides with the maturity
date of the lease term. As the Company intends to hold the interest rate swap
until the maturity date, the Company is not subject to market risk. In fact,
such interest rate swap has fixed the interest rate for the facility lease
reducing interest rate risk.
The Company's debt instruments are subject to fixed interest rates and, in the
case of the convertible notes, to fixed conversion ratios into the Company's
common stock. In addition, the amount of principal to be repaid at maturity is
also fixed. Therefore, the Company is not subject to market risk from its debt
instruments.
Competition
The electronics manufacturing services industry is comprised of a large number
of companies, several of which have achieved substantial market share. The
Company also faces competition from current and prospective customers that
evaluate Solectron's capabilities against the merits of manufacturing products
internally. Solectron competes with different companies depending on the type of
service or geographic area. Certain competitors may have greater manufacturing,
financial, research and development and/or marketing resources than the Company.
The Company believes that the primary bases of competition in its targeted
markets are manufacturing technology, quality, responsiveness, the provision of
value-added services and price. To be competitive, the Company must provide
technologically advanced manufacturing services, high product quality levels,
flexible delivery schedules and reliable delivery of finished products on a
timely and price competitive basis. The Company currently may be at a
competitive disadvantage as to price when compared to manufacturers with lower
cost structures, particularly with respect to manufacturers with established
facilities where labor costs are lower.
Intellectual Property Protection
The Company's ability to compete may be affected by its ability to protect its
proprietary information. The Company holds a limited number of U.S. patents
related to the process and equipment used in its surface mount technology. The
Company's subsidiary, Force Computers, also holds a number of patents related to
VME technology. The Company believes these patents are valuable. However, there
can be no assurance that these patents will provide meaningful protection for
the Company's manufacturing process and equipment innovations or Force's
technology.
27
<PAGE> 28
There can be no assurance that third parties will not assert infringement claims
against the Company or its customers in the future, either against the patents
the Company holds itself or against the IBM patents and other intellectual
property rights that the Company has the right to practice. In the event a third
party does assert an infringement claim, the Company may be required to expend
significant resources to develop a non-infringing manufacturing process or
technology or to obtain licenses to the manufacturing process or technology that
is the subject of litigation. There can be no assurance that the Company would
be successful in such development or that any such licenses would be available
on commercially acceptable terms, if at all. In addition, such litigation could
be lengthy and costly and could have an adverse material effect on the Company's
financial condition regardless of the outcome of such litigation.
Environmental Compliance
The Company is subject to a variety of environmental regulations relating to the
use, storage, discharge and disposal of hazardous chemicals used during its
manufacturing process. Any failure by the Company to comply with present and
future regulations could subject it to future liabilities or the suspension of
production. In addition, such regulations could restrict the Company's ability
to expand its facilities or could require the Company to acquire costly
equipment or to incur other significant expenses to comply with environmental
regulations.
Dependence on Key Personnel and Skilled Associates
The Company's continued success depends to a large extent upon the efforts and
abilities of key managerial and technical associates. The loss of services of
certain key personnel could have an adverse material effect on the Company. The
Company's business also depends upon its ability to continue to attract and
retain senior managers and skilled associates. Failure to do so could adversely
affect the Company's operations.
Possible Volatility of Market Price of Common Stock
The trading price of the common stock is subject to significant fluctuations in
response to variations in quarterly operating results, general conditions in the
electronics industry and other factors. In addition, the stock market is subject
to price and volume fluctuations that affect the market price for many high
technology companies in particular, and that often are unrelated to operating
performance.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See Management's Discussion and Analysis of Financial Condition and Results of
Operations "Trends and Uncertainties -- Interest Rate Sensitivity" and "--
Foreign Exchange Rate Sensitivity."
28
<PAGE> 29
SOLECTRON CORPORATION AND SUBSIDIARIES
Part II. OTHER INFORMATION
Item 1: Legal Proceedings
None
Item 2: Changes in Securities
None
Item 3: Defaults upon Senior Securities
None
Item 4: Submission of Matters to a Vote of Security Holders
a) The Company held its Annual Meeting of Stockholders on January
12, 1999.
b) At the meeting, the following proposals received the votes listed
below:
Proposal I: Election of ten (10) Directors
<TABLE>
<S> <C>
Dr. Koichi Nishimura Votes for: 105,947,215
Votes withheld: 370,481
Dr. Winston H. Chen Votes for: 105,958,550
Vote withheld: 359,146
Richard A. D'Amore Votes for: 105,963,938
Votes withheld: 353,758
Charles A. Dickinson Votes for: 105,992,337
Votes withheld: 325,359
Heinz Fridrich Votes for: 105,956,128
Votes withheld: 361,568
Dr. Philip Gerdine Votes for: 105,998,670
Votes withheld: 319,026
William Hasler Votes for: 105,675,397
Votes withheld: 642,299
Dr. Kenneth E. Haughton Votes for: 105,953,453
Votes withheld: 364,243
Dr. Paul R. Low Votes for: 105,890,522
Votes withheld: 427,174
Osamu Yamada Votes for: 105,958,180
Votes withheld: 359,516
</TABLE>
29
<PAGE> 30
Proposal II: Approval of an amendment to the Company's
Certification of Incorporation increasing the number of
authorized shares of Common Stock of the Company from
200,000,000 to 400,000,000 shares
Votes for: 102,660,341
Votes against: 3,512,413
Abstentions: 144,942
Proposal III: Approval of an amendment to the Company's 1992
Stock Option Plan to increase the number of shares reserved
for issuance by 5,700,000 shares
Votes for: 61,582,606
Votes against: 44,487,757
Abstentions: 247,333
Proposal IV: Approval of ratification of the appointment of
KPMG Peat Marwick LLP as independent accountants of the
Company for the fiscal year ended August 31, 1999
Votes for: 105,694,561
Votes against: 156,197
Abstentions: 466,938
Item 5: Other Information
None
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Certificate of Incorporation of the Company
3.2 Bylaws of the Company
10.1 Amended and Restated Lease Agreement between BNP Leasing
Corporation and Solectron Washington, Inc., dated July 1, 1998
10.2 Amended and Restated Purchase Agreement between BNP Leasing
Corporation and Solectron Washington, Inc., dated July 1, 1998
10.3 Amended and Restated Guaranty from Solectron Corporation in
favor of BNP Leasing Corporation, effective as of July 1, 1998
10.4 Amended and Restated Lease Agreement between BNP Leasing
Corporation and Force Computers, Inc., dated July 16, 1998
10.5 Amended and Restated Purchase Agreement between BNP Leasing
Corporation and Force Computers, Inc., dated July 16, 1998
10.6 Amended and Restated Guaranty from Solectron Corporation in
favor of BNP Leasing Corporation, effective as of July 16,
1998
30
<PAGE> 31
10.7 Lease Agreement between BNP Leasing Corporation and Solectron
Georgia Corporation, dated October 20, 1998
10.8 Purchase Agreement between BNP Leasing Corporation and
Solectron Georgia Corporation, dated October 20, 1998
10.9 Guaranty from Solectron Corporation in favor of BNP Leasing
Corporation, effective as of October 20, 1998
27.1 Financial Data Schedule - Six Months Ended February 26, 1999
27.2 Amended Financial Data Schedule - Twelve Months Ended
August 28, 1998
27.3 Amended Financial Data Schedule - Twelve Months Ended
August 29, 1997
27.4 Amended Financial Data Schedule - Twelve Months Ended
August 30, 1996
27.5 Amended Financial Data Schedule - Six Months Ended
February 27, 1998
27.6 Amended Financial Data Schedule - Six Months Ended
February 28, 1997
(b) Reports on Form 8-K
On January 26, 1999, the Company filed a Current Report on
Form 8-K regarding the offer and sale of convertible senior
notes.
On February 18, 1999, the Company filed a Current Report on
Form 8-K regarding the redemption of its 6 percent convertible
subordinated notes.
31
<PAGE> 32
SOLECTRON CORPORATION
SIGNATURE
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.
SOLECTRON CORPORATION
(Registrant)
Date: April 12, 1999 By: /s/ Susan Wang
----------------------------------------
Susan S. Wang
Senior Vice President, Chief
Financial Officer and Secretary
(Principal Financial and
Accounting Officer)
32
<PAGE> 33
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit # Document
- --------- --------------------------------------------------------------------
<S> <C>
3.1 Certificate of Incorporation of the Company
3.2 Bylaws of the Company
10.1 Amended and Restated Lease Agreement between BNP Leasing
Corporation and Solectron Washington, Inc., dated July 1, 1998
10.2 Amended and Restated Purchase Agreement between BNP Leasing
Corporation and Solectron Washington, Inc., dated July 1, 1998
10.3 Amended and Restated Guaranty from Solectron Corporation in favor of
BNP Leasing Corporation, effective as of July 1, 1998
10.4 Amended and Restated Lease Agreement between BNP Leasing
Corporation and Force Computers, Inc., dated July 16, 1998
10.5 Amended and Restated Purchase Agreement between BNP Leasing
Corporation and Force Computers, Inc., dated July 16, 1998
10.6 Amended and Restated Guaranty from Solectron Corporation in favor of
BNP Leasing Corporation, effective as of July 16, 1998
10.7 Lease Agreement between BNP Leasing Corporation and Solectron
Georgia Corporation, dated October 20, 1998
10.8 Purchase Agreement between BNP Leasing Corporation and Solectron
Georgia Corporation, dated October 20, 1998
10.9 Guaranty from Solectron Corporation in favor of BNP Leasing
Corporation, effective as of October 20, 1998
27.1 Financial Data Schedule - Six Months Ended February 26, 1999
27.2 Amended Financial Data Schedule - Twelve Months Ended
August 28, 1998
27.3 Amended Financial Data Schedule - Twelve Months Ended
August 29, 1997
27.4 Amended Financial Data Schedule - Twelve Months Ended
August 30, 1996
27.5 Amended Financial Data Schedule - Six Months Ended
February 27, 1998
27.6 Amended Financial Data Schedule - Six Months Ended
February 28, 1997
</TABLE>
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Solectron Corporation, a corporation organized and existing under the by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That at a meeting of the Board of Directors of Solectron
Corporation, resolutions were duly adopted setting forth a proposed amendment to
the Certificate of Incorporation of said corporation, declaring said amendment
to be advisable and calling a meeting of the stockholders of said corporation
for consideration thereof. The resolution setting forth the proposed amendment
is as follows:
RESOLVED, That the Certificate of Incorporation of this
corporation be amended by changing the Article Fourth thereof so
that, as amended, said Article shall be and read as follows:
"This corporation is authorized to issue two classes of
shares: Common Stock and Preferred Stock. The total number of
shares which this corporation is authorized to issue is four
hundred one million two hundred thousand (401,200,000) shares.
The number of shares of Common Stock authorized is four hundred
million (400,000,000) shares, $.001 par value. The number of
shares of Preferred Stock authorized is one million two hundred
thousand (1,200,000) shares, $.001 par value.
The shares of Preferred Stock authorized by this
Certificate of Amendment of Certificate of Incorporation may be
issued from time to time in one or more series. For any wholly
unissued series of Preferred Stock, the Board of Directors is
hereby authorized to fix and alter the dividend rights, dividend
rates, conversion rights, voting rights, rights and terms of
redemption (including sinking fund provisions), redemption
prices, liquidation preferences, the number of shares
constituting any such series and the designation thereof, or any
of them.
<PAGE> 2
For any series of Preferred Stock having issued and
outstanding shares, the Board of Directors is hereby authorized
to increase or decrease the number of shares of such series when
the number of shares of such series was originally fixed by the
Board of Directors, but such increase or decrease shall be
subject to the limitations and restrictions stated in the
resolution of the Board of Directors originally fixing the
number of shares of such series.
If the number of shares of any series is so decreased,
then the shares constituting such decrease shall resume the
status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Solectron Corporation has caused this
certificate to be signed by Susan Wang, its Senior Vice President, Chief
Financial Officer and Secretary, this 27th day of January, 1999.
By: /s/ SUSAN WANG
-------------------------------------
Susan Wang
Senior Vice President,
Chief Financial Officer and Secretary
-2-
<PAGE> 3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Solectron Corporation, a corporation organized and existing under the by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That at a meeting of the Board of Directors of Solectron
Corporation, resolutions were duly adopted setting forth a proposed amendment to
the Certificate of Incorporation of said corporation, declaring said amendment
to be advisable and calling a meeting of the stockholders of said corporation
for consideration thereof. The resolution setting forth the proposed amendment
is as follows:
RESOLVED, That the Certificate of Incorporation of this
corporation be amended by changing the Article Fourteenth
thereof so that, as amended said Article shall be and read as
follows:
"Stockholders of the Corporation may take action by
written consent in lieu of a meeting."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE> 4
IN WITNESS WHEREOF, said Solectron Corporation has caused this
certificate to be signed by Susan Wang, its Senior Vice President, Chief
Financial Officer and Secretary, this 30th day of January, 1998.
By: /s/ SUSAN WANG
-------------------------------------
Susan Wang
Senior Vice President,
Chief Financial Officer and Secretary
-2-
<PAGE> 5
EXHIBIT A
CORRECTED
CERTIFICATE OF INCORPORATION
OF
SOLECTRON CORPORATION
FIRST: The name of the Corporation is Solectron Corporation (the
"Corporation").
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at such address is
The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: This corporation is authorized to issue two classes of shares: Common
Stock and Preferred Stock. The total number of shares which this
corporation is authorized to issue is two hundred one million two
hundred thousand (201,200,000) shares. The number of shares of Common
Stock authorized is two hundred million (200,000,000) shares, $.001
par value. The number of shares of Preferred Stock authorized is one
million two hundred thousand (1,200,000) shares, $.001 par value.
The shares of Preferred Stock authorized by this Certificate of
Incorporation may be issued from time to time in one or more series.
For any wholly unissued series of Preferred Stock, the Board of
Directors is hereby authorized to fix and alter the dividend rights,
dividend rates, conversion rights, voting rights, rights and terms of
redemption (including sinking fund provisions), redemption prices,
liquidation preferences, the number of shares constituting any such
series and the designation thereof, or any of them.
For any series of Preferred Stock having issued and outstanding
shares, the Board of Directors is hereby authorized to increase or
decrease the number of shares of such series when the number of shares
of such series was originally fixed by the Board of Directors, but
such increase or decrease shall be subject to the limitations and
restrictions stated in the resolution of the Board of Directors
originally fixing the number of shares of such series.
If the number of shares of any series is so decreased, then the shares
constituting such decrease shall resume the status that they had prior
to the adoption of the resolution originally fixing the number of
shares of such series.
<PAGE> 6
FIFTH: The name and mailing address of the incorporator are as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
Susan Wang Solectron Corporation
847 Gibraltar Drive, Building 5
Milpitas, CA 95035
</TABLE>
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: Elections of directors need not be by written ballot unless a
stockholder demands election by written ballot at the meeting and
before voting begins.
EIGHTH: A. At each annual meeting of stockholders, directors of the
Corporation shall be elected to hold office until the expiration of
the term for which they are elected, and until their successors have
been duly elected and qualified; except that if any such election
shall not be so held, such election shall take place at a
stockholders' meeting called and held in accordance with the Delaware
General Corporation Law.
B. Vacancies occurring on the Board of Directors may be filled by vote
of a majority of the remaining members of the Board of Directors,
although less than a quorum, at a meeting of the Board of Directors. A
person so elected by the Board of Directors to fill a vacancy shall
hold office until the next succeeding annual meeting of stockholders
of the Corporation at which the directorship is to be elected and
until his or her successor shall have been duly elected and qualified.
NINTH: The number of directors which constitute the whole Board of Directors
of the Corporation shall be designated in the Bylaws of the
Corporation.
TENTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make,
alter, amend or repeal the Bylaws of the Corporation.
ELEVENTH: A. To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or as it may hereafter be amended, no director
of the Corporation shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as
a director.
B. Neither any amendment nor repeal of this Article, nor the adoption
of any provision of this Certificate of Incorporation inconsistent
with this Article, shall eliminate or reduce the effect of this
Article in respect of any matter occurring, or any cause of action,
suit or claim that, but for this Article, would accrue or arise, prior
to such amendment, repeal or adoption of an inconsistent provision.
-2-
<PAGE> 7
TWELFTH: At the election of directors of the Corporation, each holder of stock
of any class or series shall be entitled to as many votes as shall
equal the number of votes which (except for such provision as to
cumulative voting) he would be entitled to cast for the election of
directors with respect to his shares of stock multiplied by the number
of directors to be elected by him, and he may cast all of such votes
for a single director or may distribute them among the number to be
voted for, or for any two or more of them as he may see fit, so long
as the name of the candidate for director shall have been placed in
nomination prior to the voting and the stockholder, or any other
holder of the same class or series of stock, has given notice at the
meeting prior to the voting of the intention to cumulate votes.
THIR- Meetings of stockholders may be held within or without the State of
TEENTH: Delaware, as the Bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside
of the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the Bylaws of the
Corporation.
FOUR- Stockholders of the Corporation may not take action by written consent
TEENTH: in lieu of a meeting but must take any actions at a duly called annual
or special meeting.
FIF- Advance notice of stockholder nomination for the election of directors
TEENTH: and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner
provided in the Bylaws of the Corporation.
SIX- The Corporation reserves the right to amend, alter, change or repeal
TEENTH: any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights
conferred upon stockholders herein are granted subject to this
reservation.
-3-
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
TO THE BYLAWS OF
SOLECTRON CORPORATION
The undersigned, being the Secretary of Solectron Corporation, a Delaware
corporation, hereby certifies that the Board of Directors of the Corporation
approved an amendment to the Bylaws of the Corporation that reads as follows,
effective as of the date indicated below:
"3.2 NUMBER OF DIRECTORS
The Board of Directors shall consist of ten (10) members. The number of
directors may be changed by an amendment to this Bylaw, duly adopted by the
Board of Directors or by the stockholders, or by duly adopted amendment to the
certificate of incorporation."
Date: May 13, 1998
/s/ SUSAN WANG
------------------------------------
Susan Wang, Secretary
<PAGE> 2
CERTIFICATE OF AMENDMENT
TO THE BYLAWS OF
SOLECTRON CORPORATION
The undersigned, being the Secretary of Solectron Corporation, a
Delaware corporation, hereby certifies that Article IV, Section 4.1 of the
Bylaws of this Corporation was amended by the Board of Directors effective
January 13, 1999 to provide in its entirety as follows:
"4.1 COMMITTEES OF DIRECTORS
The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more committees, with each committee to consist of
one or more of the directors of the corporation. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors or in the bylaws of the corporation, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board of Directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets (iv) recommend
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or (v) amend the bylaws of the corporation; and, unless the board
resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware."
/s/ SUSAN WANG
------------------------------------
Susan Wang, Secretary
<PAGE> 3
AMENDED AND RESTATED
BYLAWS
OF
SOLECTRON CORPORATION
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation in the State of Delaware shall
be in the City of Wilmington, County of New Castle, State of Delaware. The name
of the registered agent of the corporation at such location is CT Corporation.
1.2 OTHER OFFICES
The Board of Directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at the principal executive office
of the corporation, within or outside the State of Delaware, unless some other
appropriate and convenient location be designated for that purpose from time to
time by the Board of Directors.
2.2 ANNUAL MEETING
Annual meetings of the Stockholders shall be held, each year, at the
time and on the day as designated by resolution of the Board of Directors.
At the annual meeting, the stockholders shall elect a Board of
Directors, consider reports of the affairs of the corporation and transact such
other business as may be properly brought before the meeting.
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2.3 SPECIAL MEETINGS
A special meeting of the stockholders may be called at any time by the
Board of Directors, the Chairman of the Board, the President, the Secretary, or
holders of shares entitled to cast not less than ten (10) percent of the votes
at the meeting. Except as next provided, notice shall be given as for the annual
meeting.
Upon receipt of a written request addressed to the Chairman, President,
or Secretary, mailed or delivered personally to such officer by any person
(other than the Board) entitled to call a special meeting of stockholders, such
officer shall cause notice to be given, to the stockholders entitled to vote,
that a meeting will be held at a time requested by the person or persons calling
the meeting, not less than twenty five nor more than sixty days after the
receipt of such request.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.6 of these bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.
Notice of meetings, annual or special, shall be given in writing not
less than ten (10) nor more than sixty (60) days before the date of the meeting,
to stockholders entitled to vote thereat by the Secretary or an assistant
secretary, or if there be no such officer, or in the case of his neglect or
refusal, by any director or stockholder.
Such notices or any reports shall be given personally or by mail or
other means of written communication and shall be sent to the stockholder's
address appearing on the books of the corporation, or supplied by him to the
corporation for the purpose of notice.
Notice of any meeting of stockholders shall specify the place, the day
and the hour of meeting, and (1) in case of a special meeting, the general
nature of the business to be transacted and no other business may be transacted,
or (2) in the case of an annual meeting, those matters which the Board at date
of mailing, intends to present for action by the stockholders. At any meetings
where directors are to be elected, notice shall include the names of the
nominees, if any, intended at date of Notice to be presented by management for
election.
If a shareholder supplies no address, notice shall be deemed to have
been given to him if mailed to the place where the principal executive office of
the Company, inside or outside the State of Delaware, is situated, or published
at least once in some newspaper of general circulation in the County of said
principal office.
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2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS
To be properly brought before an annual meeting or special meeting,
nominations for the election of director or other business must be (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (b) otherwise properly brought before the
meeting by or at the direction of the Board of Directors, or (c) otherwise
properly brought before the meeting by a stockholder. For such nominations or
other business to be considered properly brought before the meeting by a
stockholder such stockholder must have given timely notice and in proper form of
his intent to bring such business before such meeting. To be timely, such
stockholder's notice must be delivered to or mailed and received by the
Secretary of the corporation not less than ninety (90) days prior to the
meeting; provided, however, that in the event that less than one-hundred (100)
days notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. To be in proper form, a stockholder's notice to the secretary shall set
forth:
(i) the name and address of the stockholder who intends to make
the nominations or propose the business and, as the case may be, the
name and address of the person or persons to be nominated or the nature
of the business to be proposed;
(ii) a representation that the stockholder is a holder of record
of stock of the corporation entitled to vote at such meeting and, if
applicable, intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice or introduce the
business specified in the notice;
(iii) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder;
(iv) such other information regarding each nominee or each matter
of business to be proposed by such stockholder as would be required to
be included in a proxy statement filed pursuant to the proxy rules of
the Securities and Exchange Commission had the nominee been nominated,
or intended to be nominated, or the matter been proposed, or intended to
be proposed by the Board of Directors; and
(v) if applicable, the consent of each nominee to serve as
director of the corporation if so elected.
The chairman of the meeting may refuse to acknowledge the nomination of
any person or the proposal of any business not made in compliance with the
foregoing procedure.
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2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the Secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.7 QUORUM
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At such adjourned meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally noticed.
If a quorum be initially present, the stockholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders required initially to constitute a quorum.
When a quorum is present or represented at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provisions of the statutes or
of the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of the question.
2.8 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than forty-five (45) days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting.
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2.9 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.12 and Section 2.14
of these bylaws, subject to the provisions of Sections 217 and 218 of the
General Corporation Law of Delaware (relating to voting rights of fiduciaries,
pledgers and joint owners of stock and to voting trusts and other voting
agreements).
Except as may otherwise be provided in the certificate of incorporation
or the last paragraph of this Section 2.9, each stockholder shall be entitled to
one vote for each share of capital stock held by such stockholder.
At a stockholders' meeting at which directors are to be elected, or at
elections held under special circumstances, a stockholder shall be entitled to
cumulate votes (i.e., cast for any candidate a number of votes greater than the
number of votes which such stockholder normally is entitled to cast). Each
holder of stock of any class or series who elects to cumulate votes shall be
entitled to as many votes as equals the number of votes which (absent this
provision as to cumulative voting) he would be entitled to cast for the election
of directors with respect to his shares of stock multiplied by the number of
directors to be elected by him, and he may cast all of such votes for a single
director or may distribute them among the number to be voted for, or for any two
or more of them, as he may see fit, so long as the name of the candidate for
director shall have been placed in nomination prior to the voting and the
stockholder, or any other holder of the same class or series of stock, has given
notice at the meeting prior to the voting of the intention to cumulate votes.
2.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any
action required by this chapter to be taken at any annual or special meeting of
stockholders of a corporation, or any action that may be taken at any annual or
special meeting of such stockholders, may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding stock having not less
than the minimum number of
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votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof
or entitled to express consent or dissent to corporate action in writing without
a meeting (if otherwise permitted by these bylaws and the corporation's
certificate of incorporation), or entitled to receive payment of any dividend or
other distribution or allotment of any rights or entitled to exercise any rights
in respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall be not more than sixty (60) nor less than ten (10) days before
the date of such meeting, nor more than sixty (60) days prior to any other
action.
If the Board of Directors does not so fix a record date, the fixing of
such record date shall be governed by the provisions of Section 213 of the
General Corporation Law of Delaware.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
2.13 PROXIES
Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the Secretary, but no such proxy shall be voted
or acted upon after three (3) years from its date, unless the proxy provides for
a longer period. A proxy shall be deemed signed if the stockholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the stockholder or the stockholder's
attorney-in-fact. The revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of Section 212(e) of the General
Corporation Law of Delaware.
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2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list of stockholders or the books of the
corporation, or to vote in person or by proxy at any meeting of stockholders and
of the number of shares held by each such stockholder.
2.15 CONDUCT OF BUSINESS
Meetings of stockholders shall be presided over by the Chairman of the
Board, if any, or in his absence by the President, or in his absence by a Vice
President, or in the absence of the foregoing persons by a chairman designated
by the Board of Directors, or in the absence of such designation by a chairman
chosen at the meeting. The Secretary shall act as secretary of the meeting, but
in his absence the chairman of the meeting may appoint any person to act as
secretary of the meeting. The chairman of any meeting of stockholders shall
determine the order of business and the procedures at the meeting, including
such matters as the regulation of the manner of voting and conduct of business.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware and
any limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the Board of Directors.
Each director shall exercise such powers and otherwise perform such
duties in good faith, in the manner such director believes to be in the best
interests of the corporation, and with such care, including reasonable inquiry,
using ordinary prudence, as a person in a like position would use under similar
circumstances.
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3.2 NUMBER OF DIRECTORS
The Board of Directors shall consist of eight (8) members. The number of
directors may be changed by an amendment to this bylaw, duly adopted by the
Board of Directors or by the stockholders, or by a duly adopted amendment to the
certificate of incorporation.
3.3 ELECTION QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, at each annual
meeting of stockholders, directors of the corporation shall be elected to hold
office until the expiration of the term for which they are elected, and until
their successors have been duly elected and qualified; except that if any such
election shall not be so held, such election shall take place at a stockholders'
meeting called and held in accordance with the Delaware General Corporation Law.
The term of office of a director shall begin immediately after election.
Directors need not be stockholders unless so required by the certificate
of incorporation or these bylaws, wherein other qualifications for directors may
be prescribed. Election of directors need not be by written ballot unless a
stockholder demands election by written ballot at the meeting and before voting
begins.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the
corporation. Any vacancy occurring in the Board of Directors because of
resignation or death of a director may be filled by a majority of the remaining
members of the Board of Directors, although such majority is less than a quorum,
or by a sole remaining director, and each director so elected shall hold office
until his successor is elected at the next succeeding annual meeting of
stockholders at which the class to which the directorship belongs is to be
elected or at a special meeting called for that purpose.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by
a majority of the directors then in office, although less than a quorum,
or by a sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the
provisions of the certificate of incorporation, vacancies and newly
created directorships of such class or classes or series may be filled
by a majority of the directors elected by such class or classes or
series thereof then in office, or by a sole remaining director so
elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or
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guardian of a stockholder, or other fiduciary entrusted with like responsibility
for the person or estate of a stockholder may apply to the Court of Chancery for
a decree summarily ordering an election as provided in Section 211 of the
General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The Board of Directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware, at such
place as is designated in the notice of the meeting.
Unless otherwise restricted by the certificate of incorporation or these
bylaws, members of the Board of Directors, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
Accurate minutes of any meeting of the Board of Directors or any
committee thereof shall be maintained by the Secretary or other office
designated for that purpose.
3.6 FIRST MEETINGS
The first meeting of each newly elected Board of Directors shall be held
immediately following the adjournment of the annual meetings of the
stockholders.
3.7 REGULAR MEETINGS
Regular meetings of the Board of Directors may be held without notice at
the corporate offices or such other place, within or without the State of
Delaware, at such time and place as the Board designates.
3.8 SPECIAL MEETINGS; NOTICE
Special meetings of the Board may be called at any time by the President
or, if he is absent or unable or refuses to act, by any vice president or the
Secretary or by any two directors, or by one director if only one is provided.
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At least forty-eight (48) hours notice of the time and place of special
meetings shall be delivered personally to the directors or personally
communicated to them by a corporate officer by telephone or telegraph. If the
notice is sent to a director by letter, it shall be addressed to him at his
address as it is shown upon the records of the corporation (or if it is not so
shown on such records or is not readily ascertainable, at the place in which the
meetings of the directors are regularly held). In case such notice is mailed, it
shall be deposited in the United States mail, postage prepaid, in the place in
which the principal executive office of the corporation is located, at least
four (4) days prior to the time of the holding of the meeting. Such mailing,
telegraphing, telephoning or delivery as above provided shall be due, legal and
personal notice to such director.
When all of the directors are present at any directors' meeting, however
called or noticed, and either (i) sign a written consent thereto on the records
of such meeting, or (ii) if a majority of the directors is present and if those
not present sign a waiver of notice of such meeting or a consent to holding the
meeting or an approval of the minutes thereof, whether prior to or after the
holding of such meeting, which said waiver, consent or approval shall be filed
with the Secretary of the corporation or (iii) if a director attends a meeting
without notice, but without protesting, prior thereto or at its commencement,
the lack of notice to him, then the transactions thereof are as valid as if had
at a meeting regularly called and noticed.
3.9 QUORUM
A majority of the number of directors as fixed by the certificate of
incorporation or bylaws, shall be necessary to constitute a quorum for the
transaction of business, and the action of a majority of the directors present
at any meeting at which there is a quorum, when duly assembled, is valid as a
corporate act; provided that a minority of the directors, in the absence of a
quorum, may adjourn from time to time, but may not transact any business. A
meeting at which a quorum is initially present may continue to transact
business, notwithstanding the withdrawal of directors, if any action taken is
approved by a majority of the required quorum for such meeting.
3.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
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3.11 ADJOURNED MEETING; NOTICE
Notice of the time and place of holding an adjourned meeting need not
be given to absent directors if the time and place be fixed at the meeting
adjourned and held within twenty-four (24) hours, but if adjourned more than
twenty-four (24) hours, notice shall be given to all directors not present at
the time of the adjournment.
3.12 CONDUCT OF BUSINESS
Meetings of the Board of Directors shall be presided over by the
Chairman of the Board, if any, or in his absence by the President, or in their
absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting. The chairman of any
meeting shall determine the order of business and the procedures at the meeting.
3.13 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
Board of Directors, or of any committee thereof, may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the Board or committee.
3.14 FEES AND COMPENSATION OF DIRECTORS
Directors, as such, shall not receive any stated salary for their
services, but by resolution of the Board, a fixed sum and expense of attendance,
if any, may be allowed for attendance at each regular and special meeting of the
Board; provided that nothing herein contained shall be construed to preclude any
director from serving the Company in any other capacity and receiving
compensation therefor.
3.15 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section shall be deemed to deny, limit
or restrict the powers of guaranty or warranty of the corporation at common law
or under any statute.
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3.16 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire Board of Directors
may be removed with or without cause by the holders of a majority of the shares
then entitled to vote at an election of directors; provided, however, that, so
long as stockholders of the corporation are entitled to cumulative voting, no
individual director may be removed without cause (unless the entire board is
removed) if the number of votes cast against such removal would be sufficient to
elect the director if then cumulatively voted at an election of the class of
directors of which the director is a part. Whenever the holders of any class or
series are entitled to elect one or more directors by the certificate of
incorporation, such director or directors may be removed without cause only if
there are sufficient votes by the holders of the outstanding shares of that
class or series. A vacancy created by the removal of a director may be filled
only by the approval of the stockholders.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such director's term
of office.
3.17 ADVISORY DIRECTORS
The Board of Directors from time to time may elect one or more persons
to be Advisory Directors who shall not by such appointment be members of the
Board of Directors. Advisory Directors shall be available from time to time to
perform special assignments specified by the President, to attend meetings of
the Board of Directors upon invitation and to furnish consultation to the Board.
The period during which the title shall be held may be prescribed by the Board
of Directors. If no period is prescribed, the title shall be held at the
pleasure of the Board.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more committees, with each committee to consist of
two or more of the directors of the corporation. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors or in the bylaws of the corporation, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers that may
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require it; but no such committee shall have the power or authority to (i) amend
the certificate of incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of Directors as provided in Section 151(a) of the
General Corporation Law of Delaware, fix any of the preferences or rights of
such shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets (iv) recommend
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or (v) amend the bylaws of the corporation; and, unless the board
resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report
the same to the Board of Directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.7 (regular
meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum),
Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of
adjournment), Section 3.12 (conduct of business) and Section 3.13 (action
without a meeting), with such changes in the context of those bylaws as are
necessary to substitute the committee and its members for the Board of Directors
and its members; provided, however, that the time of regular meetings of
committees may also be called by resolution of the Board of Directors and that
notice of special meetings of committees shall also be given to all alternate
members, who shall have the right to attend all meetings of the committee. The
Board of Directors may adopt rules for the government of any committee not
inconsistent with the provisions of these bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be chairman of the board or a
president or both, a secretary, and a chief financial officer. The corporation
may also have, at the discretion of the Board
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of Directors, one or more vice presidents, one or more assistant secretaries,
and any such other officers as may be appointed in accordance with the
provisions of Section 5.2 of these bylaws. Any number of offices may be held by
the same person.
5.2 ELECTION OF OFFICERS
Except as otherwise provided in this Section 5.2, the officers of the
corporation shall be chosen annually by the Board of Directors, and each shall
hold his office until he shall resign or shall be removed or otherwise
disqualified to serve, or his successor shall be elected and qualified.
The Board of Directors may appoint such officers and agents of the
business as the corporation may require, each of whom shall hold office for such
period, have such authority, and perform such duties as are provided in these
bylaws or as the Board of Directors may from time to time determine. Any vacancy
occurring in any office of the corporation shall be filled in the manner
prescribed in the Bylaws for regular appointments to such office.
5.3 REMOVAL AND RESIGNATION OF OFFICERS
Any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the Board of Directors at any regular or
special meeting of the Board or, except in the case of an officer chosen by the
Board of Directors, by any officer upon whom such power of removal may be
conferred by the Board of Directors or, in the case of an officer appointed by
the President, by the President.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective.
5.4 CHAIRMAN OF THE BOARD
The Chairman of the Board, if such an officer be elected, shall, if
present, preside at meetings of the Board of Directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
Board of Directors or as may be prescribed by these bylaws.
5.5 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the
Board of Directors to the Chairman of the Board, if there be such an officer,
the President, unless otherwise determined by the Board of Directors, shall be
the chief executive officer of the corporation and shall, subject to the control
of the Board of Directors, have general supervision, direction, and control of
the business and the officers of the corporation. He shall preside at all
meetings of the stockholders and, in the absence or nonexistence of a chairman
of the board, at all meetings of the Board of Directors. He
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shall have the general powers and duties of management usually vested in the
office of president of a corporation and shall have such other powers and duties
as may be prescribed by the Board of Directors or these bylaws.
5.6 VICE PRESIDENTS
In the absence or disability of the President, the Vice Presidents, if
any, in order of their rank as fixed by the Board of Directors or, if not
ranked, a Vice President designated by the Board of Directors, shall perform all
the duties of the President and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the President. The Vice Presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the Board of Directors, these bylaws,
the President or the Chairman of the Board.
5.7 SECRETARY
The Secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the Board of
Directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the Board of
Directors, a share register, or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the Board of Directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors or by these bylaws.
5.8 CHIEF FINANCIAL OFFICER
The Chief Financial Officer shall keep and maintain, or cause to be
kept and maintained in accordance with generally accepted accounting principles,
adequate and correct books and records of accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings
and shares. The books of account shall at all reasonable times be open to
inspection by any director.
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The Chief Financial Officer shall deposit all monies and other
valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the Board of Directors. He shall disburse
the funds of the corporation as may be ordered by the Board of Directors, shall
render to the President and directors, whenever they request it, an account of
all of his transactions as Chief Financial Officer and of the financial
condition of the corporation, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or these bylaws.
ARTICLE VI
INDEMNITY
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware, indemnify each of its
directors and officers against expenses (including attorneys' fees), judgments,
fines, settlements, and other amounts actually and reasonably incurred in
connection with any proceeding, arising by reason of the fact that such person
is or was an agent of the corporation. For purposes of this Section 6.1, a
"director" or "officer" of the corporation includes any person (i) who is or was
a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, including, without
limitation, any direct or indirect subsidiary of the corporation, or (iii) who
was a director or officer of a corporation which was a predecessor corporation
of the corporation or of another enterprise at the request of such predecessor
corporation.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the extent and in the manner
permitted by the General Corporation Law of Delaware, to indemnify each of its
employees and agents (other than directors and officers) against expenses
(including attorneys' fees), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Section 6.2, an "employee" or "agent" of the corporation (other
than a director or officer) includes any person (i) who is or was an employee or
agent of the corporation, (ii) who is or was serving at the request of the
corporation as an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including, without limitation, any direct or
indirect subsidiary of the corporation, or (iii) who was an employee or agent of
a corporation which was a predecessor corporation of the corporation or of
another enterprise at the request of such predecessor corporation.
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6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of Delaware and this Section 6.
6.4 PAYMENT OF EXPENSES IN ADVANCE
Expenses incurred in defending any civil or criminal action or
proceeding for which indemnification is required pursuant to Section 6.1, or for
which indemnification is permitted pursuant to Section 6.2 following
authorization thereof by the Board of Directors, may be paid by the corporation
in advance of the final disposition of such action or proceeding upon receipt of
an undertaking by or on behalf of the indemnified party to repay such amount if
it shall ultimately be determined that the indemnified party is not entitled to
be indemnified as authorized in this Section 6.
6.5 INDEMNITY NOT EXCLUSIVE
The indemnification provided by this Section 6 shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, to the extent that such
additional rights to indemnification are authorized in the certificate of
incorporation.
6.6 CONFLICTS
No indemnification or advance shall be made under this Section 6, except
where such indemnification or advance is mandated by law or the order, judgment
or decree of any court of competent jurisdiction, in any circumstance where it
appears:
(a) That it would be inconsistent with a provision of the certificate of
incorporation, these bylaws, a resolution of the stockholders or an agreement in
effect at the time of the accrual of the alleged cause of the action asserted in
the proceeding in which the expenses were incurred or other amounts were paid,
which prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly imposed
by a court in approving a settlement.
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<PAGE> 20
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the Board of Directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The Chairman of the Board, the President, any Vice President, the Chief
Financial Officer, the Secretary, or any other person authorized by the Board of
Directors or the President or a Vice President, is authorized to vote,
represent, and exercise on behalf of this corporation all rights incident to any
and all shares of any other corporation or corporations standing in the name of
this corporation. The authority granted herein may be exercised either by such
person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
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<PAGE> 21
7.4 SUBSIDIARY CORPORATIONS
Shares of this corporation owned by a subsidiary shall not be entitled
to vote on any matter. A subsidiary for these purposes is defined as a
corporation, the shares of which possessing more than 25% of the total combined
voting power of all classes of shares entitled to vote, are owned directly or
indirectly through one or more subsidiaries.
ARTICLE VIII
GENERAL MATTERS
8.1 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of a corporation shall be represented by certificates,
provided that the Board of Directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the Board of
Directors, every holder of stock represented by certificates and, upon request,
every holder of uncertificated shares, shall be entitled to have a certificate
signed by, or in the name of the corporation by the Chairman of the Board of
Directors, or the President or Vice President, and by the Chief Financial
Officer or the secretary of such corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, or upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.2 LOST CERTIFICATES
Except as provided in this Section 8.2, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnity it against any claim that may be
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made against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate or uncertificated shares.
8.3 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
8.4 DIVIDENDS
The directors of the corporation, subject to any restrictions contained
in the certificate of incorporation, may declare and pay dividends upon the
shares of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the corporation's
capital stock.
The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve.
8.5 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors and may be changed by the Board of Directors.
8.6 SEAL
The corporation may adopt a corporate seal, which may be altered at
pleasure, and may use the same by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.
8.7 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.8 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the General Corporation Law of Delaware.
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8.9 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
8.10 EXECUTION OF CONTRACTS
The Board of Directors, except as in the Bylaws otherwise provided, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute and instrument in the name of and on behalf of the corporation. Such
authority may be general or confined to specific instances. Unless so authorized
by the Board of Directors, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or agreement, or to pledge its
credit, or to render it liable for any purpose or to any amount, except as
provided in Sec. 142 of Delaware General Corporation Law.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended
or repealed by a majority of the stockholders entitled to vote; provided,
however, that the corporation may, in its certificate of incorporation, confer
the power to adopt, amend or repeal bylaws upon the directors. The fact that
such power has been so conferred upon the directors shall not divest the
stockholders of the power, nor limit their power to adopt, amend or repeal
bylaws.
Whenever an amendment or new bylaw is adopted, it shall be copied in
the book of bylaws with the original bylaws, in the appropriate place. If any
bylaw is repealed, the fact of repeal with the date of the meeting at which the
repeal was enacted or written assent was filed shall be stated in said book.
ARTICLE X
DISSOLUTION
If it should be deemed advisable in the judgment of the Board of
Directors of the corporation that the corporation should be dissolved, the
Board, after the adoption of a resolution to that effect by a majority of the
whole Board at any meeting called for that purpose, shall cause notice to be
mailed to each stockholder entitled to vote thereon of the adoption of the
resolution and of a meeting of stockholders to take action upon the resolution.
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At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's becoming
effective in accordance with Section 103 of the General Corporation Law of
Delaware, the corporation shall be dissolved.
ARTICLE XI
CUSTODIAN
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
The Court of Chancery, upon application of any stockholder, may appoint
one or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:
(i) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect successors
to directors whose terms have expired or would have expired upon
qualification of their successors; or
(ii) the business of the corporation is suffering or is
threatened with irreparable injury because the directors are so divided
respecting the management of the affairs of the corporation that the
required vote for action by the Board of Directors cannot be obtained
and the stockholders are unable to terminate this division; or
(iii) the corporation has abandoned its business and has failed
within a reasonable time to take steps to dissolve, liquidate or
distribute its assets.
11.2 DUTIES OF CUSTODIAN
The custodian shall have all the powers and title of a receiver
appointed under Section 291 of the General Corporation Law of Delaware, but the
authority of the custodian shall be to continue the business of the corporation
and not to liquidate its affairs and distribute its assets, except when the
Court of Chancery otherwise orders and except in cases arising under Sections
226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.
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CERTIFICATE OF ADOPTION
OF
AMENDED AND RESTATED BY LAWS OF
SOLECTRON CORPORATION
Certificate by Secretary of Adoption by Incorporator
The undersigned hereby certifies that she is the duly elected,
qualified, and acting Secretary of Solectron Corporation and that the foregoing
Amended and Restated Bylaws, comprising twenty-two (22) pages, were adopted as
the Bylaws of the corporation on January 14, 1998, by the Board of Directors.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand and
affixed the corporate seal this 14th day of January 1998.
/s/ SUSAN WANG
------------------------------------
Susan Wang, Secretary
<PAGE> 26
AMENDED AND RESTATED
BYLAWS
OF
SOLECTRON CORPORATION
Effective as of January 14, 1998
<PAGE> 27
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C> <C>
ARTICLE I CORPORATE OFFICES ............................................................ 1
1.1 REGISTERED OFFICE ............................................................ 1
1.2 OTHER OFFICES ................................................................ 1
ARTICLE II MEETINGS OF STOCKHOLDERS ..................................................... 1
2.1 PLACE OF MEETINGS ............................................................ 1
2.2 ANNUAL MEETING ............................................................... 1
2.3 SPECIAL MEETINGS ............................................................. 2
2.4 NOTICE OF STOCKHOLDERS' MEETINGS ............................................. 2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS .............. 3
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE ................................. 4
2.7 QUORUM ....................................................................... 4
2.8 ADJOURNED MEETING; NOTICE .................................................... 4
2.9 VOTING ....................................................................... 5
2.10 WAIVER OF NOTICE ............................................................. 5
2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING ...................... 5
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS .................. 6
2.13 PROXIES ...................................................................... 6
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE ........................................ 7
2.15 CONDUCT OF BUSINESS .......................................................... 7
ARTICLE III DIRECTORS .................................................................... 7
3.1 POWERS ....................................................................... 7
3.2 NUMBER OF DIRECTORS .......................................................... 8
3.3 ELECTION QUALIFICATION AND TERM OF OFFICE OF DIRECTORS ....................... 8
3.4 RESIGNATION AND VACANCIES .................................................... 9
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE ..................................... 9
3.6 FIRST MEETINGS ............................................................... 9
3.7 REGULAR MEETINGS ............................................................. 9
3.8 SPECIAL MEETINGS; NOTICE ..................................................... 9
3.9 QUORUM ....................................................................... 10
3.10 WAIVER OF NOTICE ............................................................. 10
3.11 ADJOURNED MEETING; NOTICE .................................................... 11
3.12 CONDUCT OF BUSINESS .......................................................... 11
3.13 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING ............................ 11
3.14 FEES AND COMPENSATION OF DIRECTORS ........................................... 11
</TABLE>
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<PAGE> 28
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<S> <C> <C>
3.15 APPROVAL OF LOANS TO OFFICERS ................................................ 11
3.16 REMOVAL OF DIRECTORS ......................................................... 12
3.17 ADVISORY DIRECTORS ........................................................... 12
ARTICLE IV COMMITTEES ................................................................... 12
4.1 COMMITTEES OF DIRECTORS ...................................................... 12
4.2 COMMITTEE MINUTES ............................................................ 13
4.3 MEETINGS AND ACTION OF COMMITTEES ............................................ 13
ARTICLE V OFFICERS ..................................................................... 13
5.1 OFFICERS ..................................................................... 13
5.2 ELECTION OF OFFICERS ......................................................... 14
5.3 REMOVAL AND RESIGNATION OF OFFICERS .......................................... 14
5.4 CHAIRMAN OF THE BOARD ........................................................ 14
5.5 PRESIDENT .................................................................... 14
5.6 VICE PRESIDENTS .............................................................. 15
5.7 SECRETARY .................................................................... 15
5.8 CHIEF FINANCIAL OFFICER ...................................................... 15
ARTICLE VI INDEMNITY .................................................................... 16
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS .................................... 16
6.2 INDEMNIFICATION OF OTHERS .................................................... 16
6.3 INSURANCE .................................................................... 17
6.4 PAYMENT OF EXPENSES IN ADVANCE ............................................... 17
6.5 INDEMNITY NOT EXCLUSIVE ...................................................... 17
6.6 CONFLICTS .................................................................... 17
ARTICLE VII RECORDS AND REPORTS .......................................................... 18
7.1 MAINTENANCE AND INSPECTION OF RECORDS ........................................ 18
7.2 INSPECTION BY DIRECTORS ...................................................... 18
7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS ............................... 18
7.4 SUBSIDIARY CORPORATIONS ...................................................... 19
</TABLE>
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<PAGE> 29
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<S> <C> <C>
ARTICLE VIII GENERAL MATTERS ............................................................... 19
8.1 STOCK CERTIFICATES; PARTLY PAID SHARES ....................................... 19
8.2 LOST CERTIFICATES ............................................................ 19
8.3 CONSTRUCTION; DEFINITIONS .................................................... 20
8.4 DI6DENDS ..................................................................... 20
8.5 FISCAL YEAR .................................................................. 20
8.6 SEAL ......................................................................... 20
8.7 TRANSFER OF STOCK ............................................................ 20
8.8 STOCK TRANSFER AGREEMENTS .................................................... 20
8.9 REGISTERED ................................................................... 21
8.10 EXECUTION OF CONTRACTS ....................................................... 21
ARTICLE IX AMENDMENTS ................................................................... 21
ARTICLE X DISSOLUTION .................................................................. 21
ARTICLE XI CUSTODIAN .................................................................... 22
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES .................................. 22
11.2 DUTIES OF CUSTODIAN .......................................................... 22
</TABLE>
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<PAGE> 1
EXHIBIT 10.1
================================================================================
$25,000,000
AMENDED AND RESTATED
LEASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
SOLECTRON WASHINGTON, INC.
("SOLECTRON")
JULY 1, 1998
(EVERETT, WASHINGTON)
================================================================================
PURSUANT TO AND AS MORE PARTICULARLY PROVIDED IN SUBPARAGRAPH 26 OF THIS LEASE,
THIS LEASE AND THE PURCHASE AGREEMENT REFERENCED HEREIN ARE TO CONSTITUTE, FOR
INCOME TAX PURPOSES ONLY, A FINANCING ARRANGEMENT OR CONDITIONAL SALE. AS
PROVIDED IN SUBPARAGRAPH 26 OF THIS LEASE, BNPLC AND SOLECTRON EXPECT THAT
SOLECTRON (AND NOT BNPLC) SHALL BE TREATED AS THE TRUE OWNER OF THE PROPERTY FOR
INCOME TAX PURPOSES, THEREBY ENTITLING SOLECTRON (AND NOT BNPLC) TO TAKE
DEPRECIATION DEDUCTIONS AND OTHER TAX BENEFITS AVAILABLE TO THE OWNER.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. TERM.................................................................................2
2. NO LEASE TERMINATION.................................................................3
(a) Status of Lease...............................................................3
(b) Waiver by Solectron...........................................................3
3. USE AND CONDITION OF THE PROPERTY....................................................4
(a) Use...........................................................................4
(b) Condition of the Property.....................................................4
(c) Consideration for and Scope of Waiver.........................................5
4. RENT.................................................................................5
(a) Base Rent Generally...........................................................5
(b) Calculation of and Due Dates for Base Rent....................................5
(i) Amount Payable On the Base Rent Commencement Date......................5
(ii) Determination of Payment Due Dates After the Base
Rent Commencement Date.................................................5
(iii) Base Rent Formula......................................................6
(c) Additional Rent...............................................................6
(d) Commitment Fees...............................................................6
(e) Administrative Agency Fees....................................................7
(f) No Demand or Setoff...........................................................7
(g) Default Interest and Order of Application.....................................7
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY........................7
(a) "Net" Lease Generally.........................................................7
(b) Impositions...................................................................7
(c) Increased Costs; Capital Adequacy Charges.....................................8
(d) Solectron's Payment of Other Losses; General Indemnification..................8
(e) Withholding Taxes............................................................11
6. CONSTRUCTION........................................................................12
(a) Advances; Outstanding Construction Allowance.................................12
(b) Calculation of Carrying Costs................................................12
(c) Limits on the Amount of Carrying Costs................................13
(d) Construction Projects........................................................13
(i) Preconstruction Approvals by BNPLC....................................13
(ii) Scope Changes.........................................................14
(iii) Failure by BNPLC to Respond to a Request for Approval.................14
(iv) Responsibility for Construction.......................................14
(v) Construction Warranty by Solectron....................................15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
(vi) Value Added...........................................................15
(vii) Estoppel Letters Required.............................................15
(viii) Advances Not a Waiver.................................................16
(e) Conditions to Solectron's Right to Receive Construction Advances.............16
(i) Prior Notice..........................................................16
(ii) Amount of the Advances................................................16
a) Limit Dependent Upon the Maximum Construction Allowance.........16
b) Limit Dependent Upon Costs Previously Incurred by Solectron.....16
c) Limit Dependent Upon Projected Costs Yet to be Incurred.........16
d) Minimum Amount Imposed for Administrative Convenience...........16
(iii) Insurance.............................................................17
a) Title Insurance.................................................17
b) Builder's Risk Insurance........................................17
(iv) Progress of Construction..............................................17
(v) Evidence of Costs and Expenses to be Reimbursed.......................17
(vi) No Sale of BNPLC's Interest...........................................17
(vii) No Landlord's Election to Continue Construction or Event of Default...17
(viii) Certificate of No Default and Other Matters...........................17
(ix) Funding by Participants...............................................18
(f) Breakage Costs for Construction Advances Requested But Not Taken.............19
(g) Completion Notice............................................................19
(h) Landlord's Election to Continue Construction.................................19
(i) Take Control of the Property..........................................20
(ii) Continuation of Construction..........................................20
(iii) Arrange for Turnkey Construction......................................21
(iv) Suspension or Termination of Construction.............................21
7. OTHER OBLIGATIONS OF AND LIMITED REPRESENTATIONS BY BNPLC...........................21
(a) Cooperation of BNPLC to Facilitate Construction and Development..............21
(b) Actions Permitted by Solectron Without BNPLC's Consent.......................23
(c) Waiver of Landlord's Liens...................................................23
(d) Limited Representations by BNPLC Concerning Accounting Matters...............24
(e) Other Limited Representations by BNPLC.......................................25
(i) No Default or Violation...............................................25
(ii) No Suits..............................................................25
(iii) Enforceability........................................................25
(iv) Organization..........................................................25
(v) Not a Foreign Person..................................................25
(f) Keeping Proprietary Information Confidential.................................26
8. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC............................26
9. ENVIRONMENTAL.......................................................................27
(a) Environmental Covenants by Solectron.........................................27
(b) Right of BNPLC to do Remedial Work Not Performed by Solectron................27
(c) Environmental Inspections and Reviews........................................28
(d) Communications Regarding Environmental Matters...............................28
10. INSURANCE REQUIRED AND CONDEMNATION.................................................29
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
(a) Liability Insurance..........................................................29
(b) Property Insurance...........................................................29
(c) Failure to Obtain Insurance..................................................30
(d) Condemnation.................................................................30
11. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS..................................31
(a) Collection of Insurance and Condemnation Proceeds Generally..................31
(b) Administration of Remaining Proceeds; Solectron's Obligation to Restore......31
(c) Special Provisions Concerning Event of Defaults and Qualified Payments.......32
(d) Takings of All or Substantially All of the Property..........................32
(e) Waiver of Subrogation........................................................32
12. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF SOLECTRON CONCERNING THE
PROPERTY............................................................................33
(a) Compliance with Covenants and Laws...........................................33
(b) Operation of Property........................................................33
(c) Debts for Construction, Maintenance, Operation or Development................34
(d) Repair, Maintenance, Alterations and Additions...............................34
(e) Compliance With Permitted Encumbrances and Development Contracts.............35
(f) Modification of Permitted Encumbrances and Development Contracts.............35
(g) Books and Records Concerning the Property....................................35
13. ASSIGNMENT AND SUBLETTING BY SOLECTRON..............................................35
(a) BNPLC's Consent Required.....................................................35
(b) Standard for BNPLC's Consent to Assignments and Certain Other Matters........36
(c) Consent Not a Waiver.........................................................36
14. ASSIGNMENT BY BNPLC.................................................................36
(a) Restrictions on Transfers....................................................36
(b) Effect of Permitted Transfer or other Assignment by BNPLC....................36
15. BNPLC'S RIGHT OF ACCESS.............................................................37
16. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF SOLECTRON........................37
(a) Negative Covenants...........................................................37
(i) Multi employer ERISA Plans............................................37
(ii) Prohibited ERISA Transaction..........................................38
(b) Financial Statements; Required Notices; Certificates as to Default...........38
(c) No Default or Violation......................................................39
(d) No Suits.....................................................................39
(e) Enforceability...............................................................39
(f) Financial Matters............................................................39
(g) Organization.................................................................40
(h) ERISA........................................................................40
(i) Use of Proceeds..............................................................40
(j) Investment Company Act.......................................................40
(k) Omissions....................................................................40
(l) Not a Foreign Person.........................................................40
(m) Further Assurances...........................................................41
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
17. EVENTS OF DEFAULT...................................................................41
(a) Definition of Events of Default..............................................41
18. REMEDIES............................................................................43
(a) Basic Remedies...............................................................43
(b) Enforceability...............................................................45
(c) Remedies Cumulative..........................................................45
19. DEFAULT BY BNPLC....................................................................45
20. QUIET ENJOYMENT.....................................................................45
21. SURRENDER UPON TERMINATION..........................................................46
22. HOLDING OVER BY SOLECTRON...........................................................46
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE PURCHASE AGREEMENT AND CLOSING CERTIFICATE.46
24. WAIVER OF JURY TRIAL................................................................47
25. MISCELLANEOUS.......................................................................47
(a) Notices......................................................................47
(b) Severability.................................................................49
(c) No Merger....................................................................49
(d) No Implied Waiver............................................................49
(e) NO IMPLIED REPRESENTATIONS BY BNPLC..........................................49
(f) Entire Agreement.............................................................49
(g) Binding Effect...............................................................50
(h) Time is of the Essence.......................................................50
(i) Governing Law................................................................50
(j) Paragraph Headings...........................................................50
(k) Other Terms and References...................................................50
(l) Not a Partnership, Etc.......................................................50
26. INCOME TAX REPORTING................................................................50
27. PROPRIETARY INFORMATION AND CONFIDENTIALITY.........................................52
</TABLE>
(iv)
<PAGE> 6
EXHIBITS AND SCHEDULES
<TABLE>
<S> <C>
Exhibit A....................................................................Legal Description
Exhibit B...........................................................Permitted Encumbrance List
Exhibit C......................................Description of the initial Construction Project
Exhibit D.........................................................Contractor's Estoppel Letter
Exhibit E..........................................................Architect's Estoppel Letter
Exhibit F...................................................................Draw Request Forms
Exhibit G.......................................Standard Notice of Request for Action by BNPLC
Exhibit H....................................Notice of Request Requiring an Expedited Response
Exhibit I................................................................Intentionally Deleted
Exhibit J...............................................................Compliance Certificate
Exhibit K...........................................................Libor Period Election Form
Schedule 1.......................................................List of Development Documents
Schedule 2...........................List of Claims Pending or Threatened Against the Property
List of Defined Terms.......................................................Shared Definitions
</TABLE>
(v)
<PAGE> 7
AMENDED AND RESTATED
LEASE AGREEMENT
This AMENDED AND RESTATED LEASE AGREEMENT (this "LEASE"), by and between
BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), and SOLECTRON
WASHINGTON, INC., a California corporation ("SOLECTRON"), is dated as of July 1,
1998, the Effective Date. ("EFFECTIVE Date" and other capitalized terms used and
not otherwise defined in this Lease are intended to have the meanings assigned
to them in the List of Defined Terms attached to and made a part of this Lease.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC acquired the Land and any appurtenances thereto from Seller on
or about December 1, 1997. Contemporaneously with the purchase of the Land,
BNPLC leased it to Solectron pursuant to a Lease Agreement dated as of December
1, 1997 (the "PRIOR LEASE").
This Lease is intended to amend, restate and replace the Prior Lease in
its entirety as of the Effective Date.
GRANTING CLAUSES
In consideration of the rent to be paid and the covenants and agreements
to be performed by Solectron, as hereinafter set forth, BNPLC does hereby LEASE,
DEMISE and LET unto Solectron for the term hereinafter set forth all right,
title and interest of BNPLC, now owned or hereafter acquired, in and to:
(1) the Land;
(2) any and all Improvements;
(3) all easements and other rights appurtenant to the Land or to
the Improvements, whether now owned or hereafter acquired by BNPLC; and
(4) (A) any land lying within the right-of-way of any street,
open or proposed, adjoining the Land, (B) any sidewalks and alleys
adjacent to the Land and (C) any strips and gores between the Land and
abutting land.
BNPLC's interest in all property described in clauses (1) through (4) above are
hereinafter referred to collectively as the "REAL PROPERTY".
To the extent, but only to the extent, that assignable rights or
interests in, to or under the following have been or will be acquired by BNPLC
under the Existing Contract or acquired by BNPLC pursuant to Paragraph 8 below,
BNPLC also hereby grants and assigns to Solectron for the term of this Lease the
right to use and enjoy (and, in the case of contract rights, to enforce) such
rights or interests of BNPLC:
<PAGE> 8
(a) any goods, equipment, furnishings, furniture and other
tangible personal property of whatever nature that are located on the
Real Property and all renewals or replacements of or substitutions for
any of the foregoing;
(b) the benefits, if any, conferred upon the owner of the Real
Property by the Permitted Encumbrances and Development Documents; and
(c) any permits, licenses, franchises, certificates, and other
rights and privileges against third parties related to the Real
Property.
Such rights and interests of BNPLC, whether now existing or hereafter arising,
are hereinafter collectively called the "PERSONAL PROPERTY". The Real Property
and the Personal Property are hereinafter sometimes collectively called the
"PROPERTY."
However, the leasehold estate conveyed hereby and Solectron's rights
hereunder are expressly made subject and subordinate to the terms and conditions
of this Lease, to the matters listed in Exhibit B and all other Permitted
Encumbrances, and to any other claims or encumbrances not constituting Liens
Removable by BNPLC.
GENERAL TERMS AND CONDITIONS
The Property is leased by BNPLC to Solectron and is accepted and is to
be used and possessed by Solectron upon and subject to the following terms and
conditions:
1. TERM. The term of this Lease (the "TERM") shall commence on and
include the Effective Date, and end on the first Business Day of July, 2003,
unless sooner terminated as expressly herein provided. Solectron shall be
entitled to accelerate the Designated Sale Date (and thus accelerate the
purchase of BNPLC's interest in the Property by Solectron or by an Applicable
Purchaser pursuant to the Purchase Agreement) by sending a notice to BNPLC as
provided in clause (2) of the definition of "Designated Sale Date" in the List
of Defined Terms. In the event, because of Solectron's election to so accelerate
the Designated Sale Date or for any other reason, the Designated Sale Date
occurs before the end of the scheduled Term, Solectron may terminate this Lease
on or after the Designated Sale Date; provided, however, as a condition to any
such termination by Solectron, Solectron must have done the following prior to
the termination:
(a) purchased or caused an Applicable Purchaser to purchase the
Property pursuant to the Purchase Agreement and satisfied all of Solectron's
other obligations under the Purchase Agreement;
(b) paid to BNPLC all Base Rent, all Commitment Fees, all
Administrative Agency Fees and all other Rent accrued through the Designated
Sale Date; and
(c) paid any Breakage Costs caused by BNPLC's sale of the Property
pursuant to the Purchase Agreement.
The Term may be extended at the option of Solectron for two successive
periods of five (5) years each; provided, however, that prior to any such
extension the following conditions must have been satisfied: (A) at least one
hundred eighty (180) days prior to the commencement of any such extension, BNPLC
and Solectron must have agreed in writing upon, and received the written consent
and approval of BNPLC's Parent and all other Participants to (1) a corresponding
extension not only to the date for the expiration of the Term specified above in
this Section,
2
<PAGE> 9
but also to the date specified in clause (1) of the definition of Designated
Sale Date in the List of Defined Terms attached hereto, and (2) an adjustment to
the Rent that Solectron will be required to pay for the extension, it being
expected that the Rent for the extension may be different than the Rent required
for the original Term, and it being understood that the Rent for any extension
must in all events be satisfactory to both BNPLC and Solectron, each in its sole
and absolute discretion; (B) there must be no Event of Default continuing
hereunder at the time of Solectron's exercise of its option to extend; and (C)
immediately prior to any such extension, this Lease must remain in effect. With
respect to the condition that BNPLC and Solectron must have agreed upon the Rent
required for any extension of the Term, neither Solectron nor BNPLC is willing
to submit itself to a risk of liability or loss of rights hereunder for being
judged unreasonable. Accordingly, both Solectron and BNPLC hereby disclaim any
obligation express or implied to be reasonable in negotiating the Rent for any
such extension. Subject to the changes to the Rent payable during any extension
of the Term as provided in this Paragraph, if Solectron exercises its option to
extend the Term as provided in this Paragraph, this Lease shall continue in full
force and effect, and the leasehold estate hereby granted to Solectron shall
continue without interruption and without any loss of priority over other
interests in or claims against the Property that may be created or arise after
the date hereof and before the extension.
2. NO LEASE TERMINATION.
(a) Status of Lease. Except as expressly provided herein, this Lease
shall not terminate, nor shall Solectron have any right to terminate this Lease,
nor shall Solectron be entitled to any abatement of the Rent, nor shall the
obligations of Solectron under this Lease be excused, for any reason whatsoever,
including any of the following: (i) any damage to or the destruction of all or
any part of the Property from whatever cause, (ii) the taking of the Property or
any portion thereof by eminent domain or otherwise for any reason, (iii) the
prohibition, limitation or restriction of Solectron's use of all or any portion
of the Property or any interference with such use by governmental action or
otherwise, (iv) any eviction of Solectron or of anyone claiming through or under
Solectron (provided, that if Solectron is wrongfully evicted by BNPLC or by any
third party lawfully exercising its rights under a Lien Removable by BNPLC, then
Solectron will have the remedies described in Paragraph 19 below), (v) any
default on the part of BNPLC under this Lease or under any other agreement to
which BNPLC and Solectron are parties, (vi) the inadequacy in any way whatsoever
of the design, construction, assembly or installation of any improvements,
fixtures or tangible personal property included in the Property, it being
understood that BNPLC has not made, does not make and will not make any
representation express or implied as to the adequacy thereof, (vii) any latent
or other defect in the Property or any change in the condition thereof or the
existence with respect to the Property of any violations of Applicable Laws or
(viii) any other cause whether similar or dissimilar to the foregoing. It is the
intention of the parties hereto that the obligations of Solectron hereunder
shall be separate and independent of the covenants and agreements of BNPLC, that
the Base Rent and all other sums payable by Solectron hereunder shall continue
to be payable in all events and that the obligations of Solectron hereunder
shall continue unaffected, unless the requirement to pay or perform the same
shall have been terminated or limited pursuant to an express provision of this
Lease.
(b) Waiver by Solectron. Without limiting the foregoing, Solectron
waives to the extent permitted by Applicable Laws, except as otherwise expressly
provided herein, all rights to which Solectron may now or hereafter be entitled
by law (including any such rights arising because of any implied "warranty of
suitability" or other warranty under Applicable Laws) (i) to quit, terminate or
surrender this Lease or the Property or any part thereof or (ii) to any
abatement, suspension, deferment or reduction of the Rent.
3
<PAGE> 10
However, nothing in this Paragraph 2 shall be construed as a waiver by
Solectron of any right Solectron may have at law or in equity to the following
remedies, whether because of BNPLC's failure to remove a Lien Removable by BNPLC
or because of any other default by BNPLC under this Lease that continues beyond
the period for cure provided in Paragraph 19: (i) the recovery of monetary
damages, (ii) injunctive relief in case of the violation, or attempted or
threatened violation, by BNPLC of any of the express covenants, agreements,
conditions or provisions of this Lease which are binding upon BNPLC (including
the confidentiality provisions set forth in subparagraph 7.(f) below), or (iii)
a decree compelling performance by BNPLC of any of the express covenants,
agreements, conditions or provisions of this Lease which are binding upon BNPLC.
3. USE AND CONDITION OF THE PROPERTY.
(a) Use. Subject to the Permitted Encumbrances, the Development
Documents and the terms hereof, Solectron may use and occupy the Property during
the Term, but only for the following purposes and other lawful purposes
incidental thereto:
(i) manufacturing, engineering, assembly, warehousing and
laboratory-based research and development of circuit boards,
computer-related and other electronic products;
(ii) administrative and office space;
(iii) cafeteria, library, and other support function uses that
Solectron may provide to its employees; and
(iv) other lawful uses approved in advance and in writing by
BNPLC, which approval will not be unreasonably withheld after completion
of the initial Construction Project (but Solectron acknowledges that
BNPLC's withholding of such approval shall be reasonable if BNPLC
determines in good faith that (i) giving the approval may materially
increase BNPLC's risk of liability for any existing or future
environmental problem, or (ii) giving the approval is likely to
substantially increase BNPLC's administrative burden of complying with
or monitoring Solectron's compliance with the requirements of this
Lease).
Although the term "products" in this subparagraph may include products designed
to detect, monitor, neutralize, handle or process Hazardous Substances, the use
of the Property by Solectron shall not include bringing Hazardous Substances
onto the Property for the purpose of testing or demonstrating any such products.
(b) Condition of the Property. SOLECTRON ACKNOWLEDGES THAT IT HAS
CAREFULLY AND FULLY INSPECTED THE PROPERTY AND ACCEPTS THE PROPERTY IN ITS
PRESENT STATE, AS IS, AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE CONDITION OF SUCH PROPERTY OR AS TO THE USE WHICH MAY BE MADE
THEREOF. SOLECTRON ALSO ACCEPTS THE PROPERTY WITHOUT ANY COVENANT,
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, BY BNPLC OR ITS AFFILIATES
REGARDING THE TITLE THERETO OR THE RIGHTS OF ANY PARTIES IN POSSESSION OF ANY
PART THEREOF, EXCEPT AS EXPRESSLY SET FORTH IN PARAGRAPH 20. BNPLC SHALL NOT BE
RESPONSIBLE FOR ANY LATENT OR OTHER DEFECT OR CHANGE OF CONDITION IN THE LAND,
IMPROVEMENTS, FIXTURES AND PERSONAL PROPERTY FORMING A PART OF THE PROPERTY OR
FOR ANY VIOLATIONS WITH RESPECT THERETO OF APPLICABLE LAWS. NOR SHALL BNPLC BE
REQUIRED TO FURNISH TO SOLECTRON ANY FACILITIES OR SERVICES OF ANY KIND,
INCLUDING WATER, STEAM, HEAT, GAS, AIR CONDITIONING, ELECTRICITY, LIGHT OR
POWER.
4
<PAGE> 11
(c) Consideration for and Scope of Waiver. The provisions of
subparagraph 3.(b) above have been negotiated by BNPLC and Solectron after due
consideration for the Rent payable hereunder and are intended to be a complete
exclusion and negation of any representations or warranties of BNPLC or its
Affiliates, express or implied, with respect to the Property that may arise
pursuant to any law now or hereafter in effect or otherwise, except as expressly
set forth herein.
However, such exclusion of representations and warranties by BNPLC and
its Affiliates is not intended to impair any representations or warranties made
by other parties, including any architects, engineers or contractors engaged to
work on Construction Projects, the benefit of which is to pass to Solectron
during the Term because of the definition of Personal Property and Property
above.
4. RENT.
(a) Base Rent Generally. On the Base Rent Commencement Date and on
each Base Rent Date through the end of the Term, Solectron shall pay BNPLC rent
("BASE RENT"). Each payment of Base Rent must be received by BNPLC no later that
10:00 a.m. (Central time) on the date it becomes due; if received after 10:00
a.m. (Central time) it will be considered for purposes of this Lease as received
on the next following Business Day. BNPLC shall notify Solectron of the amount
of each payment of Base Rent (calculated as provided in subparagraph 4.(b)) at
least three days before the date upon which it first becomes due. However, any
failure by BNPLC to so notify Solectron shall not constitute a waiver of BNPLC's
right to payment, but absent such notice Solectron shall not be in default for
any underpayment resulting therefrom if Solectron, in good faith, reasonably
estimates the payment required, makes a timely payment of the amount so
estimated and corrects any underpayment within three Business Days after being
notified by BNPLC of the underpayment.
(b) Calculation of and Due Dates for Base Rent. Payments of Base Rent
shall be calculated and become due as follows:
(i) Amount Payable On the Base Rent Commencement Date. The Base
Rent payable on the Base Rent Commencement Date shall equal the
difference (if any) between (a) the total amount that would have been
added to the Outstanding Construction Allowance as Carrying Costs on
such date if not for the limit set forth in subparagraph 6.(c), and (b)
the Carrying Costs actually added on such date to the Outstanding
Construction Allowance.
(ii) Determination of Payment Due Dates After the Base Rent
Commencement Date. For all Base Rent Periods subject to a LIBOR Period
Election of one month or three months, Base Rent shall be due in one
installment on the Base Rent Date upon which the Base Rent Period ends.
For Base Rent Periods subject to a LIBOR Period Election of six months,
Base Rent shall be payable in two installments, with the first
installment becoming due on the Base Rent Date that occurs on the first
Business Day of the third calendar month following the commencement of
such Base Rent Period, and with the second installment becoming due on
the Base Rent Date upon which the Base Rent Period ends. Notwithstanding
the foregoing, if Solectron or any Applicable Purchaser purchases
BNPLC's interest in the Property pursuant to the Purchase Agreement, any
accrued unpaid Base Rent and all outstanding Additional Rent shall be
due on the date of purchase in addition to the purchase price and other
sums due BNPLC under the Purchase Agreement.
(iii) Base Rent Formula. Each installment of Base Rent payable
for any Base Rent Period shall equal:
5
<PAGE> 12
- Stipulated Loss Value on the first day of such Base Rent
Period, times
- the sum of (a) the Effective Rate with respect to such Base
Rent Period, plus (b) the Spread for the period from and
including the preceding Base Rent Date to but not including
the Base Rent Date upon which the installment is due, times
- the number of days in the period from and including the
preceding Base Rent Date to but not including the Base Rent
Date upon which the installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that prior to the
first day of a Base Rent Period subject to a LIBOR Period Election of
one month the Construction Allowance has been fully funded, but a total
of $10,000,000 of Qualified Payments have been received by BNPLC,
leaving a Stipulated Loss Value of $15,000,000; that the Effective Rate
for such Base Rent Period is 6%; that the Spread for such period is
thirty-two and one-half basis points (32.5/100 of 1%); and that such
Base Rent Period contains exactly thirty days. Under such assumptions,
the Base Rent for the hypothetical Base Rent Period will equal:
$15,000,000 x (6% + .325%) x 30/360 = $79,062.50
(c) Additional Rent. All amounts which Solectron is required to pay
to or on behalf of BNPLC pursuant to this Lease, together with every charge,
premium, interest and cost set forth herein which may be added for nonpayment or
late payment thereof, shall constitute rent (all such amounts, other than Base
Rent, are herein called "ADDITIONAL RENT", and together Base Rent and Additional
Rent are herein sometimes called "RENT").
(d) Commitment Fees. For each Construction Period Solectron shall
pay BNPLC a fee (a "COMMITMENT FEE") equal to:
- twelve and one-half basis points (12.5/100 of 1%), times an
amount equal to:
(i) the Maximum Construction Allowance, less
(ii) the Funded Construction Allowance on the first day of
such Construction Period; times
- the number of days in such Construction Period; divided by
- three hundred sixty.
Solectron shall pay Commitment Fees in arrears on the first Business Day of
February, May, August and November of each calendar year, beginning with August
1, 1998 and continuing regularly throughout the Term so long as Commitment Fees
have accrued and remain unpaid. However, if any Commitment Fees shall have
accrued and remain unpaid on the Designated Sale Date, such accrued unpaid
Commitment Fees shall be due on the Designated Sale Date. With the first payment
of Commitment Fees required under this Lease, calculated as described above,
Solectron shall also pay Commitment Fees accrued but unpaid under and as defined
in the Prior Lease.
6
<PAGE> 13
(e) Administrative Agency Fees. Upon execution and delivery of this
Lease by BNPLC, and again on each anniversary of the date hereof, Solectron
shall pay to BNPLC an administrative fee (an "ADMINISTRATIVE AGENCY FEE") in the
amount set forth in the letter agreement dated as of April 22, 1998 between
BNPLC, Solectron and Guarantor and other affiliates of Solectron. Each
Administrative Agency Fee shall represent Additional Rent for the Construction
Period or Base Rent Period during which it is paid.
(f) Demand or Setoff. Except as expressly provided herein, Solectron
shall pay all Rent without notice or demand and without counterclaim, deduction,
setoff or defense.
(g) Default Interest and Order of Application. All Rent shall bear
interest, if not paid when first due, at the Default Rate in effect from time to
time from the date due until paid; provided, that nothing herein contained will
be construed as permitting the charging or collection of interest at a rate
exceeding the maximum rate permitted under Applicable Laws. BNPLC shall be
entitled to apply any amounts paid by or on behalf of Solectron against any Rent
then past due in the order the same became due or in such other order as BNPLC
may elect.
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.
(a) "Net" Lease Generally. It is the intention of BNPLC and
Solectron that the Base Rent, Commitment Fees, Administrative Agency Fees and
other payments herein specified shall be absolutely net to BNPLC and that
Solectron shall pay all costs, expenses and obligations of every kind relating
to the Property or this Lease which may arise or become due, including: (i) any
taxes payable by virtue of BNPLC's receipt of amounts paid to or on behalf of
BNPLC in accordance with this Paragraph 5; (ii) any amount for which BNPLC is or
becomes liable with respect to the Permitted Encumbrances or the Development
Documents; and (iii) any costs incurred by BNPLC (including Attorneys' Fees)
because of BNPLC's acquisition or ownership of any interest in the Property or
because of this Lease or the transactions contemplated herein.
However, the preceding sentence shall not be construed to make Solectron
liable for (1) damages, costs, expenses or obligations suffered by BNPLC because
of (and attributed by any applicable principles of comparative fault to) BNPLC's
own Established Misconduct, (2) Excluded Taxes, (3) withholding of taxes
permitted by subparagraph 5.(e) or (4) general overhead or internal
administrative expenses of BNPLC or any other Interested Party, except to the
extent allowed by subparagraph 5.(c)(i) because of changes described in that
subparagraph after the Effective Date.
(b) Impositions. Solectron shall pay or cause to be paid prior to
delinquency all ad valorem taxes assessed against the Property and other
Impositions. If requested by BNPLC from time to time, Solectron shall furnish
BNPLC with receipts showing payment of all Impositions at least ten days prior
to the applicable default date therefor.
Notwithstanding the foregoing, Solectron may in good faith, by
appropriate proceedings, contest the validity, applicability or amount of any
asserted Imposition, and pending such contest Solectron shall not be deemed in
default hereunder because of the Imposition if (1) Solectron diligently
prosecutes such contest to completion in a manner reasonably satisfactory to
BNPLC, and (2) Solectron promptly causes to be paid any amount adjudged by a
court of competent jurisdiction to be due, with all costs, penalties and
interest thereon, promptly after such judgment becomes final; provided, however,
in any event each such contest shall be concluded and the contested Impositions
must be paid by Solectron prior to the earlier of (i) the date that any criminal
action is overtly threatened or instituted against BNPLC or its directors,
officers or employees because of the nonpayment thereof
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<PAGE> 14
or (ii) the date any writ or order is issued under which any property owned or
leased by BNPLC (including the Property) may be seized or sold or any other
action is taken or overtly threatened against BNPLC or against any property
owned or leased by BNPLC because of the nonpayment thereof, or (iii) any
Designated Sale Date upon which, for any reason, Solectron or an Affiliate of
Solectron or any Applicable Purchaser shall not purchase BNPLC's interest in the
Property pursuant to the Purchase Agreement for a net price to BNPLC (when taken
together with any additional payments made by Solectron pursuant to Paragraph
1(a)(ii) of the Purchase Agreement, in the case of a purchase by an Applicable
Purchaser) equal to Stipulated Loss Value.
(c) Increased Costs; Capital Adequacy Charges.
(i) If, after the Effective Date, there shall be any increase in the
cost to BNPLC's Parent or any other Participant agreeing to make or
making, funding or maintaining advances to BNPLC in connection with the
Property because of any Banking Rules Change, then Solectron shall from
time to time, pay to BNPLC for the account of BNPLC's Parent or such
other Participant, as the case may be, additional amounts sufficient to
compensate BNPLC's Parent or the Participant for such increased cost. A
certificate as to the amount of such increased cost, submitted to BNPLC
and Solectron by BNPLC's Parent or the other Participant, shall be
conclusive and binding upon Solectron, absent clear and demonstrable
error.
(ii) BNPLC's Parent or any other Participant may demand additional
payments ("CAPITAL ADEQUACY CHARGES") if BNPLC's Parent or the other
Participant determines that any Banking Rules Change affects the amount
of capital to be maintained by it and that the amount of such capital is
increased by or based upon the existence of advances made or to be made
to BNPLC to permit BNPLC to maintain BNPLC's investment in the Property
or to make Construction Advances. To the extent that BNPLC's Parent or
another Participant demands Capital Adequacy Charges as compensation for
the additional capital requirements reasonably allocable to such
investment or advances, Solectron shall pay to BNPLC for the account of
BNPLC's Parent or the other Participant, as the case may be, the amount
so demanded.
(iii) Any amount to be paid by Solectron under this subparagraph
5.(c) shall be due within ten days after a demand for such payment is
made upon Solectron.
(d) Solectron's Payment of Other Losses; General Indemnification.
(i) Except for costs paid by BNPLC with the proceeds of the Initial
Funding Advance as part of the Transaction Expenses, all Losses
(including Environmental Losses) asserted against or incurred or
suffered by BNPLC or other Interested Parties at any time and from time
to time by reason of, in connection with or arising out of (A) their
ownership or alleged ownership of any interest in the Property or the
Rents, (B) the use and operation of the Property, (C) the negotiation or
administration of this Lease, the Closing Certificate, or the Purchase
Agreement, (D) the making of Funding Advances, (E) any Construction
Project, (F) the breach by Solectron of this Lease or any other document
executed by Solectron in connection herewith, (G) any failure of the
Property or Solectron itself to comply with Applicable Laws, (H)
Hazardous Substance Activities, including those occurring prior to the
Effective Date, or (I) any bodily or personal injury or death or
property damage occurring in or upon or in the vicinity of the Property
through any cause whatsoever, shall be paid by Solectron, and Solectron
shall indemnify and defend BNPLC and other Interested Parties from and
against all such Losses. (However, the indemnity in the preceding
sentence shall not be construed to make Solectron liable to both BNPLC
and any Participant or other party claiming through BNPLC for the same
costs, expenses or damages, nor for any allocation of general overhead
or internal administrative expenses of BNPLC, BNPLC's Parent or any
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<PAGE> 15
other Interested Party except to the extent allowed by subparagraph
5.(c)(i) because of a Banking Rules Change after the date of this
Lease.)
(ii) SUBJECT ONLY TO SUBPARAGRAPH 5.(d)(vi), THE INDEMNITIES AND
RELEASES PROVIDED HEREIN FOR THE BENEFIT OF BNPLC AND OTHER INTERESTED
PARTIES, INCLUDING THE INDEMNITY SET FORTH IN THE PRECEDING SUBPARAGRAPH
5.(D)(I), SHALL APPLY EVEN IF AND WHEN THE SUBJECT MATTERS OF THE
INDEMNITIES AND RELEASES ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OR
STRICT LIABILITY OF BNPLC OR ANOTHER INTERESTED PARTY.
(iii) Costs and expenses for which Solectron shall be responsible
pursuant to this subparagraph 5.(d) will include appraisal fees, filing
and recording fees, inspection fees, survey fees, taxes, brokerage fees
and commissions, abstract fees, title policy fees, Uniform Commercial
Code search fees, escrow fees and Attorneys' Fees incurred by BNPLC with
respect to the Property, whether such costs and expenses are incurred at
the time of execution of this Lease or at any time during the Term. Such
costs and expenses will also include Attorneys' Fees or other costs
incurred to evaluate lien releases and other information submitted by
Solectron with requests for Construction Advances.
(iv) Subject to the limitations set forth in subparagraph 5.(d)(vi),
Solectron's obligations under this subparagraph 5.(d) shall survive the
termination or expiration of this Lease. Any amount to be paid by
Solectron under this subparagraph 5.(d) shall be due within ten days
after a demand for such payment is made upon Solectron.
(v) If an Interested Party notifies Solectron of any claim or
proceeding included in, or any investigation or allegation concerning,
Losses for which Solectron is responsible pursuant to this subparagraph
5.(d), Solectron shall assume on behalf of the Interested Party and
conduct with due diligence and in good faith the investigation and
defense thereof and the response thereto with counsel selected by
Solectron, but reasonably satisfactory to the Interested Party;
provided, that the Interested Party shall have the right to be
represented by advisory counsel of its own selection and at its own
expense; and provided further, that if any such claim, proceeding,
investigation or allegation involves both Solectron and the Interested
Party and the Interested Party shall have been advised in writing by
counsel that there may be legal defenses available to it which are
inconsistent with those available to Solectron, then the Interested
Party shall have the right to select separate counsel to participate in
the investigation and defense of and response to such claim, proceeding,
investigation or allegation on its own behalf, and Solectron shall pay
or reimburse the Interested Party for all Attorney's Fees incurred by
the Interested Party because of the selection of such separate counsel.
If Solectron fails to assume promptly (and in any event within fifteen
days after being notified of the applicable claim, proceeding,
investigation or allegation) the defense of the Interested Party, then
the Interested Party may contest (or settle, with the prior written
consent of Solectron, which consent will not be unreasonably withheld)
the claim, proceeding, investigation or allegation at Solectron's
expense using counsel selected by the Interested Party. Moreover, if any
such failure by Solectron continues for thirty days or more after
Solectron is notified of any such claim, proceeding, investigation or
allegation, the Interested Party may elect not to contest or continue
contesting the same and instead settle (or pay in full) all claims
related thereto without Solectron's consent and without releasing
Solectron from any obligations to the Interested Party under this
subparagraph 5.(d) so long as, in the written opinion of reputable
counsel to the Interested Party, the settlement (or payment in full) is
clearly advisable.
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<PAGE> 16
(vi) Notwithstanding the foregoing, Solectron shall not be required
by this subparagraph 5.(d) or by subparagraph 5.(a) to pay:
a) costs and expenditures incurred or paid by or on behalf of
BNPLC after any Landlord's Election to Continue Construction to
complete or continue construction as provided in subparagraph 6.(h),
to the extent that such costs and expenditures are considered to be
Construction Advances pursuant to subparagraph 6.(h);
b) Losses incurred or suffered by Participants in connection
with their negotiation or execution of the Participation Agreement
(or supplements making them parties thereto) or in connection with
any due diligence they may undertake before entering into the
Participation Agreement;
c) Excluded Taxes;
d) Losses incurred or suffered by any Interested Party that are
proximately caused by (and attributed by any applicable principles
of comparative fault to) the Established Misconduct of that
Interested Party; or
e) Losses incurred or suffered by any Interested Party after,
and not proximately caused by events or circumstances that actually
or allegedly occurred or existed on or before, the later of the
dates upon which (i) this Lease terminates or expires, or (ii)
Solectron surrenders possession of the Property.
Further, if an Interested Party receives a written notice of Losses that
such Interested Party believes are covered by the indemnity in
subparagraph 5.(d)(i), then such Interested Party will be expected to
promptly furnish a copy of such notice to Solectron. The failure to so
provide a copy of the notice to Solectron shall not excuse Solectron
from its obligations under subparagraph 5.(d)(i); provided, that if
Solectron is unaware of the matters described in the notice and such
failure renders unavailable defenses that Solectron might otherwise
assert, or precludes actions that Solectron might otherwise take, to
minimize its obligations, then Solectron shall be excused from its
obligation to indemnify such Interested Party (and any Affiliate of such
Interested Party) against the Losses, if any, which would not have been
incurred or suffered but for such failure. For example, if BNPLC fails
to provide Solectron with a copy of a notice of an obligation covered by
the indemnity set out in subparagraph 5.(d)(i) and Solectron is not
otherwise already aware of such obligation, and if as a result of such
failure BNPLC becomes liable for penalties and interest covered by the
indemnity in excess of the penalties and interest that would have
accrued if Solectron had been promptly provided with a copy of the
notice, then Solectron will be excused from any obligation to BNPLC (or
any Affiliate of BNPLC) to pay the excess.
(e) Withholding Taxes. Notwithstanding anything else to the
contrary in this Paragraph 5, but subject to the provisions of this subparagraph
5.(e), to the extent required by law Solectron may deduct United States and
Washington withholding taxes imposed as a way of collecting or in lieu of
Excluded Taxes on payments of Base Rent, Commitment Fees, Administrative Agency
Fees, any interest payable pursuant to subparagraph 4.(g) or any additional
compensation claimed by BNPLC pursuant to subparagraph 5.(c)(ii) (collectively,
"INCOME PAYMENTS") from Income Payments, without obligation to gross up,
indemnify or otherwise increase payments in consequence thereof. Such
withholding, without obligation to gross up, indemnify or otherwise increase
payments in consequence thereof, will be permitted if, but only if:
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(i) in the case of withholding for Excluded Taxes imposed by the
United States of America, the Person entitled to receive Income Payments
(whether BNPLC, as the original landlord named herein, or an assignee of
the original landlord's rights hereunder, a "PAYEE") is not exempt from
withholding by reason of having been organized under the laws of the
United States of America or any State thereof, and such Person shall not
have provided Solectron with three counterparts of each of the forms
prescribed by the Internal Revenue Service (Form 1001 or 4224, or
successor forms, as the case may be) claiming for Payee an exemption
from federal withholding on all Income Payments;
(ii) in the case of withholding for Excluded Taxes imposed by the
State of Washington, the Payee is not exempt from withholding by reason
of having been qualified to do business in Washington or otherwise, and
such Person shall not have provided Solectron with three (3)
counterparts of the forms (if any) prescribed by the Washington taxing
authorities claiming for Payee an exemption from Washington withholding
on all Income Payments;
(iii) at least thirty days prior to any withholding from or
reduction of Income Payments, Solectron shall have notified the Payee
that Solectron believes the withholding is required and permitted by
this subparagraph; and
(iv) the withholding taxes on the Income Payments would have been
assessed even if the applicable taxing authorities had characterized the
transactions evidenced by this Lease and the Purchase Agreement as a
financing arrangement.
Any Payee exempt from withholding for Excluded Taxes imposed by the United
States of America by reason of having been organized under the laws of the
United States of America or any State thereof shall provide to Solectron
statements conforming to the requirements of Treasury Regulation 1.1441-5(b) or
any successor thereto (which statements may be made on a Form W-9). If Solectron
shall ever be required to pay Excluded Taxes that BNPLC has failed to pay when
due because of Solectron's failure to withhold from payments made under this
Lease, BNPLC shall reimburse Solectron for such Excluded Taxes and for any
penalties or interest thereon charged to Solectron. Nothing in this subparagraph
5.(e) shall excuse Solectron from its obligation under subparagraph 5.(c)(i) to
compensate BNPLC for increased costs attributable to any change in law relating
to withholding taxes after the Effective Date.
6. CONSTRUCTION.
(a) Advances; Outstanding Construction Allowance. Subject to the
conditions set forth below, BNPLC shall make advances ("CONSTRUCTION ADVANCES")
on Advance Dates from time to time as requested by Solectron to pay or reimburse
Solectron for Commitment Fees and costs of the initial Construction Project not
already paid or reimbursed from the Initial Funding Advance. Costs for which
Solectron may request Construction Advances pursuant to this subparagraph will
include not only hard costs incurred to construct the Improvements described in
Exhibit C, but also the following costs to the extent reasonably incurred in
connection with the initial Construction Project:
- soft costs, such as architectural fees, consulting fees,
Attorneys' Fees, design costs, fees and costs paid in connection
with obtaining project permits and approvals required by
governmental authorities or the Development Documents (including
application and processing fees), and the Commitment Fees to the
extent that Solectron from time to time
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<PAGE> 18
requests payment of the Commitment Fees in any written request
for any Construction Advance,
- environmental investigation, protection and remediation costs,
- site preparation costs, and
- costs of offsite and other public improvements required as
conditions of governmental approvals for the initial
Construction Project.
As used herein, references to the "OUTSTANDING CONSTRUCTION ALLOWANCE" mean the
amount on the date in question (but not less than zero) equal to: (A) the total
Construction Advances made hereunder by or on behalf of BNPLC on or prior to the
date in question, plus (B) all Carrying Costs added hereunder on or prior to the
date in question, less (C) any funds received and applied as Qualified Payments
on or prior to the date in question; provided, that BNPLC will not be under any
obligation to readvance any portion of the Construction Allowance repaid by
Qualified Payments. Charges ("CARRYING COSTS") shall accrue as described below
for each Construction Period and will be added to (and thereafter be included
in) the Outstanding Construction Allowance on the last day of such Construction
Period (i.e., generally on the Advance Date upon which such Construction Period
ends). Notwithstanding the foregoing, if for any reason Stipulated Loss Value
(and thus the Outstanding Construction Allowance included as a component
thereof) must be determined as of any date between Advance Dates, the
Outstanding Construction Allowance determined on such date shall include not
only Carrying Costs added on or before the immediately preceding Advance Date
computed as described below, but also Carrying Costs accruing on and after such
preceding Advance Date to but not including the date in question.
(b) Calculation of Carrying Costs. Carrying Costs shall accrue for
each Construction Period and shall equal:
- Stipulated Loss Value on the first day of such Construction
Period, times
- the sum of (a) the Effective Rate with respect to such
Construction Period, plus (b) the Spread for such Construction
Period, times
- the number of days in the period from and including the
preceding Advance Date to but not including the Advance Date
upon which the period ends, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that on the first day
of such Construction Period Stipulated Loss Value is $15,000,000; that
the Effective Rate for the Construction Period is 6%; that the Spread
for such Construction Period is thirty-two and one-half basis points
(32.5/100 of 1%); and that such Construction Period contains exactly
thirty days. Under such assumptions, the Carrying Costs for the
hypothetical Construction Period will equal:
$15,000,000 x (6% + .325%) x 30/360 = $79,062.50
(c) Limits on the Amount of Carrying Costs. Notwithstanding the
foregoing, however, Solectron agrees that Carrying Costs added to the
Outstanding Construction Allowance on the Base Rent
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<PAGE> 19
Commencement Date shall not exceed the amount that can be added without causing
the Funded Construction Allowance to exceed the Maximum Construction Allowance.
The limits set forth in the preceding sentence are imposed because the
Construction Allowance available under this Lease is limited (prior to any
Landlord's Election to Continue Construction) to the Maximum Construction
Allowance.
(d) Construction Projects.
(i) Preconstruction Approvals by BNPLC. Prior to the execution of
this Lease, Solectron submitted and obtained BNPLC's approval of
descriptions of the initial Construction Project that Solectron expects
to construct with the Construction Allowance. Solectron shall submit and
obtain BNPLC's written approval of plans or renderings for any
subsequent Construction Project prior to commencement of the subsequent
Construction Project. Absent any prior Landlord's Election to Continue
Construction or the occurrence and continuation of an Event of Default,
BNPLC may disapprove of such plans or renderings only if BNPLC believes
in good faith that the Construction Project proposed by Solectron will
(1) fail to satisfy the requirements set forth in subparagraph
6.(d)(vi), (2) change the general character of the Property from that
needed to accommodate the uses permitted by subparagraph 3.(a) or (3)
cause Solectron or the Property to violate some other express provision
of this Lease; but no approval given by BNPLC in connection with any
Construction Project, prior to or after the Effective Date, shall
constitute a waiver of subparagraph 6.(d)(vi) or of any other provision
of this Lease. Any items hereafter submitted by Solectron to satisfy
this subparagraph shall be sufficiently detailed to allow BNPLC to make
a reasonable determination of whether the applicable Construction
Project will satisfy subparagraph 6.(d)(vi), but need not include all
detailed construction specifications and drawings of the work to be
included in the Construction Project. All Construction Projects
commenced by Solectron, including the initial Construction Project
(which is described in Exhibit C), and all construction contracts and
other agreements executed or adopted by Solectron in connection
therewith, must be not materially inconsistent with the plans or other
items heretofore or hereafter submitted to and approved by BNPLC as
described above in this subparagraph, except to the extent otherwise
provided by any Scope Changes approved by BNPLC as described below and
except as otherwise provided in subparagraph 6.(h) if BNPLC should make
a Landlord's Election to Continue Construction.
(ii) Scope Changes. Before making a Scope Change to any
Construction Project, Solectron shall provide to BNPLC a reasonably
detailed written description of the Scope Change, a revised construction
budget and a copy of any changes to the drawings, plans and
specifications for the Improvements required in connection therewith,
all of which must be approved in writing by BNPLC (or by any
construction representative appointed by BNPLC from time to time) before
the Scope Change is implemented. BNPLC may disapprove of any Scope
Change to any Construction Project if (and, in the case of a
Construction Project other than the initial Construction Project, only
if) (A) any Event of Default has occurred and is continuing, (B) any
prior Landlord's Election to Continue Construction has occurred, or (C)
BNPLC believes in good faith that the Construction Project proposed by
Solectron, as modified by the Scope Change, will (1) fail to satisfy the
requirements set forth in subparagraph 6.(d)(vi), (2) change the general
character of the Property from that needed to accommodate the uses
permitted by subparagraph 3.(a) or (3) cause Solectron or the Property
to violate some other express provision of this Lease; but in any event
BNPLC's approval shall not constitute a waiver of subparagraph 6.(d)(vi)
or of any other provision of this Lease.
(iii) Failure by BNPLC to Respond to a Request for Approval. If
Solectron submits any request for BNPLC's approval of a Construction
Project or a Scope Change pursuant to the preceding
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subparagraphs after the completion of the initial Construction Project
and more than twenty-four months before the scheduled end of the Term,
yet BNPLC fails to respond to such request within twenty days after
BNPLC's receipt of the request, then Solectron may proceed as if BNPLC
had approved the applicable Construction Project or Scope Change;
provided, however:
a) Solectron may not proceed if any Event of Default has
occurred and is continuing or any prior Landlord's Election to
Continue Construction has occurred.
b) Solectron must notify BNPLC that Solectron will proceed
with the Construction Project or Scope Change, notwithstanding
BNPLC's failure to respond, and in the notice Solectron must
certify that in Solectron's good faith judgement BNPLC cannot, in
accordance with the criteria specified in subparagraph 6.(d)(i)
or subparagraph 6.(d)(ii), as the case may be, decline to give
its approval.
c) If Solectron does proceed without BNPLC's express
approval, BNPLC may at any time within six months prior to the
scheduled end of the Term obtain an appraisal of the Property in
form and scope reasonably satisfactory to BNPLC from an
independent MAI Certified General Real Estate Appraiser
satisfactory to BNPLC, and if the appraisal indicates that the
Construction Project for which Solectron requested the approval
did not (or when completed will not) satisfy the requirements of
subparagraph 6.(d)(vi), then Solectron must upon demand pay to
BNPLC as a Qualified Payment any amount needed to reduce the sum
of (A) Stipulated Loss Value, plus (B) Carrying Costs (if any)
projected by BNPLC to accrue prior to completion of the
applicable Construction Project, to no more than one hundred
sixty-seven percent (167%) of the market value of the Property
indicated by such appraisal.
(iv) Responsibility for Construction. Subject to BNPLC's rights
under subparagraph 6.(h), Solectron shall have sole responsibility for
contracting for and administering all Construction Projects, it being
understood that although title to all Improvements will pass directly to
BNPLC (as more particularly provided in Paragraph 8), BNPLC's obligation
with respect to Construction Projects shall be limited to the making of
advances under and subject to the conditions set forth in this Paragraph
6. No contractor or other third party shall be entitled to require BNPLC
to make advances as a third party beneficiary of this Lease or
otherwise.
(v) Construction Warranty by Solectron. Notwithstanding delays
beyond Solectron's control, and even if the Construction Allowance is
not sufficient to pay for completion of the initial Construction
Project, Solectron warrants that on the Designated Sale Date it shall
have (1) caused the initial Construction Project and any subsequent
Construction Projects which are commenced prior to such date to have
been completed in a good and workmanlike manner, substantially in
accordance with Applicable Laws, and otherwise in compliance with (x)
the provisions of this Lease, (y) the material provisions of the
Permitted Encumbrances and (z) the material provisions of the
Development Documents, and (2) obtained with respect to then existing
Improvements any final certificates of occupancy required for the use
and occupancy thereof. (The warranty set forth in the preceding sentence
is hereinafter called the "CONSTRUCTION Warranty", and any payments
required from Solectron to BNPLC as compensation for the diminution in
value to BNPLC's interest in the Property caused solely by reason of
Solectron's failure to perform the Construction Warranty are hereinafter
called "CONSTRUCTION WARRANTY PAYMENTS".) However, without limiting
Solectron's other obligations under this Lease, the Purchase Agreement
or the Closing Certificate (including, for example, obligations to pay
Base Rent or reimburse BNPLC for
14
<PAGE> 21
Impositions), Solectron's aggregate liability for any Construction
Warranty Payments that become due because of Solectron's failure to
complete the initial Construction Project shall be limited to:
(a) 100% less the Residual Risk Percentage, times
(b) the total of all Construction Advances and Carrying
Costs and any other costs or expenditures not considered
Construction Advances that may have been incurred by or on behalf
of BNPLC to continue or complete construction of the initial
Construction Project after a Landlord's Election to Continue
Construction as contemplated in subparagraph 6.(h), computed as
of the earlier of the date upon which the initial Construction
Project is finally complete or the date upon which BNPLC obtains
a judgment for such Construction Warranty Payments.
Further, in no event will any Construction Warranty Payments required by
this Lease, when added to the payments received by BNPLC under the
Purchase Agreement (exclusive of any interest accruing after the
Designated Sale Date on past due payments under the Purchase Agreement),
exceed the payments to which BNPLC is entitled on the Designated Sale
Date according to the Purchase Agreement.
(vi) Value Added. Each Construction Project undertaken and
administered by Solectron (in contrast to the initial Construction
Project if the construction thereof is continued by BNPLC as provided in
subparagraph 6.(h) after a Landlord's Election to Continue
Construction), upon completion and taken as a whole, must enhance the
value of the Property such that the market value of BNPLC's interest in
the Property shall be no less than sixty percent (60%) of Stipulated
Loss Value when the Construction Project is complete.
(vii) Estoppel Letters Required. Within thirty days after any
written request by BNPLC, Solectron shall, with respect to each material
general construction contract for the initial Construction Project and
any material subsequent Construction Projects, cause the contractor
thereunder to execute and deliver to BNPLC an estoppel letter
substantially in the form of Exhibit D attached hereto. Within thirty
days after any written request by BNPLC, Solectron shall also cause the
architect and engineer under any material architectural or engineering
contract for the initial Construction Project and any material
subsequent Construction Project to execute and deliver to BNPLC an
estoppel letter substantially in the form of Exhibit E attached hereto.
(viii) Advances Not a Waiver. No funding of Construction Advances
and no failure of BNPLC to object to any Construction Project proposed
or constructed by Solectron shall constitute a waiver by BNPLC of the
requirements contained in this subparagraph 6.(d).
(e) Conditions to Solectron's Right to Receive Construction
Advances. BNPLC's obligation to provide Construction Advances to Solectron from
time to time under this Paragraph 6 shall be subject to the following terms and
conditions, all of which terms and conditions are intended for the sole benefit
of BNPLC, and none of which terms and conditions shall limit in any way the
right of BNPLC to treat costs or expenditures incurred or paid by or on behalf
of it as Construction Advances pursuant to subparagraph 6.(h):
(i) Prior Notice. Solectron must make a request in substantially
the form attached to this Lease as Exhibit F for any Construction
Advance at least five Business Days prior to the Advance Date upon which
the advance is to be paid. BNPLC shall consider in good faith any
changes to the Construction Advance request forms attached hereto that
Solectron may reasonably request for a particular Construction
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<PAGE> 22
Project, provided the requested changes do not impair BNPLC's rights or
create or increase any liability BNPLC may have in connection with the
applicable Construction Project.
(ii) Amount of the Advances.
a) Limit Dependent Upon the Maximum Construction Allowance.
Solectron shall not be entitled to require any Construction
Advance that would cause the Funded Construction Allowance to
exceed the Maximum Construction Allowance.
b) Limit Dependent Upon Costs Previously Incurred by
Solectron. Solectron shall not be entitled to require any
Construction Advance in excess of (1) the actual costs and
expenses previously incurred or paid by Solectron (in addition to
expenses already included in Transaction Expenses) for the
preparation, negotiation and execution of this Lease, the Closing
Certificate, and the Purchase Agreement, for Commitment Fees and
for the initial Construction Project (including soft costs and
other costs listed in subparagraph 6.(a)), less (2) the sum of
all prior Construction Advances made under this Paragraph 6 to
Solectron as reimbursement for such costs and expenses.
c) Limit Dependent Upon Projected Costs Yet to be Incurred.
Solectron shall not be entitled to require any Construction
Advance that would cause the cost of completing the initial
Construction Project, as reasonably estimated by BNPLC in good
faith, to exceed the difference computed by subtracting (1) the
Carrying Costs then projected by BNPLC to be added to the
Construction Allowance, from (2) the excess, if any, of the
Maximum Construction Allowance over the Funded Construction
Allowance.
d) Minimum Amount Imposed for Administrative Convenience.
Solectron shall not request any Construction Advance (other than
the final Construction Advance) for an amount less than $500,000.
(iii) Insurance. Solectron shall have obtained and provided
certificates (or, in the case of clause a) below, title policies or
binders) reasonably satisfactory to BNPLC evidencing insurance covering
the Property as follows (in addition to the liability insurance required
under subparagraph 10.(a)):
a) Title Insurance. An owner's title insurance policy (or
binder committing the applicable title insurer to issue an
owner's title insurance policy, without the payment of further
premiums) in the amount of no less than $21,000,000, in form and
substance reasonably satisfactory to BNPLC, written by one or
more title insurance companies reasonably satisfactory to BNPLC
and insuring BNPLC's fee interest in the Land and Improvements to
be constructed on the Land; and
b) Builder's Risk Insurance. Builder's Completed Value Risk
and such other hazard insurance as is reasonably required to
protect BNPLC's and Solectron's interests in the Improvements
under construction against risks of physical loss, such insurance
to be maintained by Solectron at all times until completion of
the initial Construction Project or any subsequent Construction
Projects in accordance with the standards and requirements for
such insurance that Solectron would observe with respect to the
construction of any substantial improvements on land owned by it
or its Affiliates.
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(iv) Progress of Construction. Each Construction Project which
has commenced but not yet been completed shall be progressing in a good
and workmanlike manner and substantially in accordance with Applicable
Laws, with Permitted Encumbrances, with Development Documents and with
the requirements of this Lease, and Solectron shall have corrected or be
diligently pursuing the correction of any significant defect in the
construction thereof of which Solectron has received notice.
(v) Evidence of Costs and Expenses to be Reimbursed. To the
extent contemplated by the Construction Advance request forms attached
as Exhibit F, or otherwise reasonably required by BNPLC at the time a
Construction Advance is to be made, Solectron shall have submitted
invoices, requests for payment from contractors and other evidence that
the costs and expenses for which Solectron requests reimbursement
constitute actual costs and expenses incurred by Solectron for a
Construction Project.
(vi) No Sale of BNPLC's Interest. No sale of BNPLC's interest in
the Property shall have occurred pursuant to the Purchase Agreement.
(vii) No Landlord's Election to Continue Construction or Event of
Default. No prior Landlord's Election to Continue Construction shall
have occurred, and no Event of Default shall have occurred and be
continuing.
(viii) Certificate of No Default and Other Matters. Solectron
shall have provided to BNPLC, with the notice requesting the
Construction Advance described in clause (i) above, a current
certificate of an officer of Solectron in the form included in Exhibit F
and shall have provided a copy of such certificate to the Participants.
Without limiting the foregoing, BNPLC may decline to advance any amount
when Solectron is unable to truthfully certify, as contemplated in
Exhibit F, that no liens are being asserted against any part of or
interest in the Property that in the aggregate secure or allegedly
secure more than $5,000,000 of claims by Potential Lien Claimants,
regardless of whether any such liens have caused an Event of Default to
occur hereunder or are being contested by Solectron as permitted by
subparagraph 12.(c). (As used in this subparagraph a lien will be
considered as "being asserted" if a claim of lien relating thereto shall
have been recorded and not discharged by payment or settlement.)
(ix) Funding by Participants. None of the Participants or their
successors under the Participation Agreement shall have failed to
advance to BNPLC their pro rata shares of the Construction Advance being
requested. However, any such failure shall excuse BNPLC's obligation to
provide the Construction Advance requested only to the extent of the
funds that the applicable Participant or Participants should have
advanced (but did not advance) to BNPLC, and in the event of any such
failure:
a) BNPLC will immediately notify Solectron if any
Participant refuses or fails to advance its pro rata share of any
Construction Advance, but BNPLC will not in any event be liable
to Solectron for BNPLC's failure to do so.
b) BNPLC will, to the extent possible, postpone reductions
of Construction Advances because of the failure by any one or
more Participants ("NONFUNDING PARTICIPANTS") to make required
advances under the Participation Agreement (a "PARTICIPANT
DEFAULT") by adjusting (and readjusting from time to time, as
required) the funding "Percentages" of other Participants, and by
requesting the other Participants to make advances to BNPLC on
the basis of such adjusted Percentages, in each case as provided
in the Participation Agreement; however, so long as a Participant
Default continues, no Construction Advance shall be required that
would cause the
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Outstanding Construction Allowance to exceed (1) the Maximum
Construction Allowance available under this Lease, less (2) all
amounts that should have been, but because of a continuing
Participant Default have not been, advanced by any one or more of
the Participants to BNPLC under the Participation Agreement with
respect to Construction Advances.
c) Further, after a Participant Default, and so long as no
Event of Default has occurred and is continuing, BNPLC shall do
the following as reasonably requested by Solectron, provided that
nothing in this provision shall require BNPLC to take any action
that would violate Applicable Laws, that would constitute a
breach of BNPLC's obligations under the Participation Agreement,
or that would require BNPLC to waive any rights or remedies it
has under this Lease, the Purchase Agreement, the Closing
Certificate, the Guaranty or BNPLC's other agreements with
Solectron or Guarantor concerning the Property:
(1) BNPLC shall promptly make a written demand upon the
Nonfunding Participants for the cure of the Participant
Default.
(2) BNPLC shall, to the extent BNPLC has the right to do
so under the Participation Agreement, decline to allow the
Nonfunding Participants to exercise voting, consent or
notification rights under the Participation Agreement.
(3) BNPLC shall not unreasonably withhold its approval
for the substitution of any new participant proposed by
Solectron for Nonfunding Participants, if (A) the proposed
substitution does not require BNPLC to waive rights against
the Nonfunding Participants, (B) the new participant will
agree (by executing supplement to the Participation
Agreement as provided in the Participation Agreement) to
provide funds to replace the payments that would otherwise
be required of the Nonfunding Participants with respect to
future Construction Advances, (C) the new participant (or
Solectron) provides the funds (if any) needed to terminate
the Nonfunding Participants' rights to receive payments of
"Net Cash Flow" (as defined in the Participation Agreement)
that BNPLC will be required to pay the new participant under
the terms of the substitution reasonably proposed by
Solectron, (D) the new participant (or Solectron) provides
and agrees in writing to provide funds needed to reimburse
BNPLC for any and all Losses incurred by BNPLC in connection
with or because of the substitution of the new participant
for the Nonfunding Participants, including any cost of
defending and paying any claim asserted by Nonfunding
Participants because of the substitution (but not including
any liability of BNPLC to the Nonfunding Participants for
damages caused by BNPLC's bad faith or gross negligence in
the performance of BNPLC's obligations to the Nonfunding
Participants), (E) the obligations of BNPLC to the new
participant per dollar of the new participant's "investment"
(it being understood that such investment will be computed
in a manner consistent with the examples set forth in
Exhibit A of the Participation Agreement, but net of
reimbursements to BNPLC under clause (D) preceding) shall
not exceed the obligations per dollar of investment by the
Nonfunding Participants that BNPLC would have had to the
Nonfunding Participants if there had been no Participant
Default, and (F) the new participant shall be a reputable
financial institution having a net worth of no less than
seven and one half percent (7.5%) of total assets and total
assets of no less than $10,000,000,000.00 (all according to
then recent audited financial statements).
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(f) Breakage Costs for Construction Advances Requested But Not
Taken. If Solectron requests but thereafter declines to accept any Construction
Advance, or if Solectron requests a Construction Advance that it is not
permitted to take because of its failure to satisfy any of the conditions
specified in subparagraph 6.(e), Solectron shall pay upon demand any resulting
Breakage Costs. However, for purposes of this subparagraph, a request for a
Construction Advance by Solectron will be considered as if it had never been
made if BNPLC and each Participant actually receives written notice from
Solectron, no later than four Business Days prior to the Advance Date upon which
the requested advance is to be made, stating that Solectron unconditionally
rescinds the request.
(g) Completion Notice. Solectron shall provide a notice (a
"COMPLETION NOTICE") to BNPLC promptly after construction of the initial
Construction Project is substantially complete, advising BNPLC of the
substantial completion.
(h) Landlord's Election to Continue Construction. Without
limiting BNPLC's other rights and remedies under this Lease, and without
terminating this Lease or Solectron's obligations hereunder or under any of the
other documents referenced herein, if any Event of Default occurs before
Solectron completes the initial Construction Project, BNPLC shall be entitled
(but not obligated) to take whatever action it deems necessary or appropriate by
the use of legal proceedings or otherwise to continue or complete the
construction of the initial Construction Project in a manner substantially
consistent (to the extent practicable under Applicable Laws) with the general
description of the initial Construction Project set forth in Exhibit C and the
permitted use of the Property set forth in subparagraph 3.(a). (As used herein,
"LANDLORD'S ELECTION TO CONTINUE CONSTRUCTION" means any election by BNPLC to
continue or complete the construction of the initial Construction Project
pursuant to the preceding sentence.) After giving Solectron no less than ninety
days notice that BNPLC is considering a Landlord's Election to Continue
Construction (which notice must reference this subparagraph 6.(h) and state that
it is given pursuant to this subparagraph), BNPLC may do any one or more of the
following pursuant to this subparagraph without further notice and regardless of
whether any Event of Default is then continuing:
(i) Take Control of the Property. BNPLC may cause Solectron and
any contractors or other parties on the Property to vacate the Property
until the initial Construction Project is complete or BNPLC elects to no
longer continue work on the initial Construction Project.
(ii) Continuation of Construction. BNPLC may perform or cause to
be performed any work to complete or continue the construction of the
initial Construction Project. In this regard, so long as work ordered or
undertaken by BNPLC is substantially consistent (to the extent
practicable under Applicable Laws) with the general description of the
initial Construction Project set forth in Exhibit C and the permitted
use of the Property set forth in subparagraph 3.(a), BNPLC shall have
complete discretion to:
a) proceed with construction according to such plans and
specifications as BNPLC may from time to time approve;
b) establish and extend construction deadlines as BNPLC from
time to time deems appropriate;
c) hire, fire and replace architects, engineers,
contractors, construction managers and other consultants as BNPLC
from time to time deems appropriate, without obligation to use,
consider or compensate architects, engineers, contractors,
construction managers or other consultants previously selected or
engaged by Solectron;
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d) determine the compensation that any architect, engineer,
contractor, construction manager or other consultant engaged by
BNPLC will be paid, and the terms and conditions that will govern
the payment of such compensation (including whether payment will
be due in advance, over the course of construction or on some
other basis and including whether contracts will be let on a
fixed price basis, a cost plus a fee basis or some other basis),
as BNPLC from time to time deems appropriate;
e) pay, settle or compromise existing or future bills and
claims which are or may be liens against the Property or as BNPLC
considers necessary or desirable for the completion of the
initial Construction Project or the removal of any clouds on
title to the Property;
f) prosecute and defend all actions or proceedings in
connection with the construction of the initial Construction
Project;
g) select and change interior and exterior finishes for the
Improvements and landscaping as BNPLC from time to time deems
appropriate; and
h) generally do anything that Solectron itself might have
done or asked BNPLC to do pursuant to subparagraphs 7.(a) or
7.(b) if Solectron had satisfied or obtained BNPLC's waiver of
the conditions specified therein.
(iii) Arrange for Turnkey Construction. Without limiting the
generality of the foregoing, BNPLC may engage any contractor or real
estate developer BNPLC believes to be reputable to take over and
complete construction of the initial Construction Project on a "turnkey"
basis.
(iv) Suspension or Termination of Construction. Notwithstanding
any Landlord's Election to Continue Construction, BNPLC may subsequently
elect at any time to suspend or terminate further construction without
obligation to Solectron.
For purposes of this Lease and the Purchase Agreement (including the
determination of the Outstanding Construction Allowance and other amounts
dependent upon the Outstanding Construction Allowance, like Stipulated Loss
Value and the Break Even Price), after any Landlord's Election to Continue
Construction and the expiration of the ninety-day notice period described above
in this subparagraph 6.(h), all costs and expenditures incurred or paid by or on
behalf of BNPLC to complete or continue construction as provided in this
subparagraph shall be considered Construction Advances, regardless of whether
they cause the Outstanding Construction Allowance to exceed the Maximum
Construction Allowance. Further, as used in the preceding sentence, "costs
incurred" by BNPLC will include costs that BNPLC has become obligated to pay to
any third party that is not an Affiliate of BNPLC (including any contractor),
even if the payments for which BNPLC has become so obligated will constitute
prepayments for work or services to be rendered after payment and
notwithstanding that BNPLC's obligations for the payments may be conditioned
upon matters beyond BNPLC's control. For example, even if a construction
contract between BNPLC and a contractor excused BNPLC from making further
progress payments to the contractor upon Solectron's breach of the Purchase
Agreement, the obligation to make a progress payment would nonetheless be
"incurred" by BNPLC, for purposes of determining whether BNPLC has incurred
costs considered to be Construction Advances, when BNPLC's obligation to pay it
became subject only to Solectron's compliance with the Purchase Agreement or
other conditions beyond BNPLC's control. If and to the extent BNPLC does incur
costs considered as Construction Advances under this subparagraph, but (1) BNPLC
does not actually pay the costs and after incurring them BNPLC is fully and
finally excused from the obligation to pay them
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for any reason other than a breach by Solectron of this Lease, the Closing
Certificate or the Purchase Agreement, or (2) BNPLC receives a refund of such
costs, then the costs BNPLC is excused from paying or refunded to BNPLC shall be
considered Qualified Payments
BNPLC's rights under this subparagraph 6.(h) shall be deemed to be powers
coupled with an interest which cannot be revoked.
7. OTHER OBLIGATIONS OF AND LIMITED REPRESENTATIONS BY BNPLC.
(a) Cooperation of BNPLC to Facilitate Construction and Development.
During the Term BNPLC shall take any action reasonably requested by Solectron to
facilitate the construction or use of the Property permitted by this Lease;
provided, however, that:
(i) This subparagraph 7.(a) shall not impose upon BNPLC the
obligation to take any action that can be taken by Solectron,
Solectron's Affiliates or anyone else other than BNPLC as the owner of
the Land, the Improvements or any other interests in the Property.
(ii) BNPLC shall not be required by this subparagraph 7.(a) to
make any payment to another Person unless BNPLC shall first have
received funds from Solectron, in excess of any other amounts due from
Solectron hereunder, sufficient to make the payment. (This clause (ii)
will not be construed as limiting the right of Solectron to obtain
additional Construction Advances, on and subject to the terms and
conditions set forth in Paragraph 6, for payments Solectron itself may
pay or incur an obligation to pay to another Person.)
(iii) BNPLC shall have no obligations whatsoever under this
subparagraph at any time after a Landlord's Election to Continue
Construction or when an Event of Default shall have occurred and be
continuing.
(iv) Solectron must request any action to be taken by BNPLC
pursuant to this subparagraph, and such request must be specific and in
writing, if required by BNPLC at the time the request is made. A
suggested form for such a request is attached as Exhibit G.
(v) No action may be required of BNPLC pursuant to this
subparagraph 7.(a) that could constitute a violation of any Applicable
Laws or compromise or constitute a waiver of BNPLC's rights under other
provisions of this Lease, the Closing Certificate or the Purchase
Agreement or that for any other reason is reasonably objectionable to
BNPLC.
The actions BNPLC shall take pursuant to this subparagraph 7.(a) if
reasonably requested by Solectron will include, subject to the conditions listed
in the proviso above, joining in or consenting to any (I) grant of easements,
licenses, rights of way, and other rights in the nature of easements encumbering
the Real Property, (II) release or termination of easements, licenses, rights of
way or other rights in the nature of easements which are for the benefit of the
Real Property or any portion thereof, (III) dedication or transfer of portions
of the Land not improved with a building, for road, highway or other public
purposes, (IV) agreements (other than with Solectron or its Affiliates) for the
use and maintenance of common areas, for reciprocal rights of parking, for
ingress and egress and for amendments to any Permitted Encumbrances or
Development Documents (including amendments to the Development Documents that
Solectron may reasonably request to facilitate construction or development on
land owned by it or its Affiliates other than the Land), (V) instruments
necessary or desirable for the exercise or
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enforcement of rights under the Permitted Encumbrances, the Development
Documents or any contract, permit, license, franchise or other right included
within the term "Property", (VI) permit applications or other documents
reasonably required to accommodate the construction or alteration of
Improvements otherwise permitted by this Lease, (VII) confirmations of
Solectron's rights under any particular provisions of this Lease which Solectron
may wish to provide to a third party, (IX) execution or filing of a tract or
parcel map subdividing the Real Property into lots or parcels or reconfiguring
existing parcels, (X) agreements providing development incentives or tax
abatements with respect to the Property. However, the determination of whether
any such action is reasonably requested or reasonably objectionable to BNPLC may
depend in whole or in part upon the extent to which the requested action shall
result in a lien to secure payment or performance obligations against BNPLC's
interest in the Property, shall cause a decrease in the value of the Property to
less than sixty percent (60%) of Stipulated Loss Value after any Qualified
Payments that may result from such action are taken into account, or shall
impose upon BNPLC any present or future obligations greater than the obligations
BNPLC is willing to accept in reliance on the indemnifications provided by
Solectron hereunder.
Upon request by Solectron, BNPLC shall also provide a statement in
writing certifying that this Lease is unmodified and in full effect (or, if
there have been modifications, that this Lease is in full effect as modified,
and setting forth such modifications), certifying the dates to which the Base
Rent and other amounts payable by Solectron hereunder have been paid, stating
whether BNPLC is aware of any default by Solectron that may exist hereunder and
confirming BNPLC's agreements concerning landlord's liens and other matters set
forth in subparagraph 7.(c); it being intended that any such statement by BNPLC
may be relied upon by anyone with whom Solectron may intend to enter into an
agreement for construction of the Improvements or other significant agreements
concerning the Property.
Any Losses incurred by BNPLC because of any action taken pursuant to
this subparagraph 7.(a) shall be covered by the indemnification set forth in
subparagraph 5.(d). Further, for purposes of such indemnification, any action
taken by BNPLC will be deemed to have been made at the request of Solectron if
made pursuant to any request of counsel to or any officer of Solectron (or with
their knowledge, and without their objection) in connection with the execution
or administration of this Lease or the Purchase Agreement.
To avoid construction delays or for other reasonable cause, Solectron
may ask BNPLC for an expedited response to any request for action made by
Solectron pursuant to this subparagraph 7.(a) by delivering such request with a
notice substantially in the form attached hereto as Exhibit H. BNPLC shall
endeavor in good faith to respond promptly to any such notice after the receipt
of any such notice by an officer of BNPLC.
(b) Actions Permitted by Solectron Without BNPLC's Consent. No
refusal by BNPLC to execute or join in the execution of any agreement,
application or other document requested by Solectron pursuant to the preceding
subparagraph 7.(a) shall preclude Solectron from itself executing such
agreement, application or other document; provided, that in doing so Solectron
is not purporting to act for BNPLC and does not thereby create or expand any
obligations or restrictions that encumber the Property. Further, subject to the
other terms and conditions of this Lease, Solectron shall be entitled to do any
of the following in Solectron's own name and to the exclusion of BNPLC during
the Term without any notice to or consent of BNPLC so long as no Landlord's
Election to Continue Construction has occurred, so long as no Event of Default
has occurred and is continuing and so long as Solectron is not purporting to act
for BNPLC and does not thereby create or expand any obligations or restrictions
that encumber the Property:
(i) perform obligations arising under and exercise and enforce
the rights of Solectron or the owner of the Real Property under the
Development Documents and Permitted Encumbrances;
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(ii) perform obligations arising under and exercise and enforce
the rights of Solectron or the owner of the Real Property with respect
to any other contracts or documents (such as building permits) included
within the Personal Property; and
(iii) recover and retain any monetary damages or other benefit
inuring to Solectron or the owner of the Real Property through the
enforcement of any rights, contracts or other documents included within
the Personal Property (including the Development Documents and Permitted
Encumbrances); provided, that to the extent any such monetary damages
may become payable as compensation for an adverse impact on value of the
Property, the rights of BNPLC and Solectron hereunder with respect to
the collection and application of such monetary damages shall be the
same as for condemnation proceeds payable because of a taking of all or
any part of the Property.
(c) Waiver of Landlord's Liens. BNPLC waives any security interest,
statutory landlord's lien or other interest BNPLC may have in or against
computer equipment and other tangible personal property placed on the Land from
time to time that Solectron or its Affiliates own or lease from other lessors;
provided, however, that BNPLC does not waive its interest in or rights with
respect to equipment or other property included within the "Property" as
described in Paragraph 8. Although computer equipment or other tangible personal
property may be "bolted down" or otherwise firmly affixed to Improvements, it
shall not by reason thereof become part of the Improvements if it can be removed
without causing structural or other material damage to the Improvements and
without rendering HVAC or other major building systems inoperative and if it
does not otherwise constitute "Property" as provided in Paragraph 8.
(d) Limited Representations by BNPLC Concerning Accounting Matters.
BNPLC is not expected or required to represent or warrant that this Lease or the
Purchase Agreement will qualify for any particular accounting treatment under
GAAP. However, to permit Solectron to determine for itself the appropriate
accounting for this Lease and the Purchase Agreement, BNPLC does represent to
Solectron as of the Effective Date:
(i) Equity capital invested in BNPLC is greater than three
percent (3%) of the aggregate of all lease funding amounts (including
participations) of BNPLC. Such equity capital investments constitute
equity in legal form and are reflected as shareholders' equity in the
financial statements and accounting records of BNPLC.
(ii) BNPLC is one hundred percent (100%) owned by French American
Bank Corporation, which is one hundred percent (100%) owned by BNPLC's
Parent.
(iii) BNPLC leases properties of substantial value to more than
fifteen tenants.
(iv) All parties to whom BNPLC has any material obligations known
to BNPLC are (and are expected to be) Affiliates of BNPLC's Parent,
Participants, or participants with BNPLC in other leasing deals or loans
made by BNPLC, or other tenants or borrowers in such other leasing deals
or loans.
(v) BNPLC has substantial assets in addition to the Property,
assets which BNPLC believes to have a value far in excess of the value
of the Property.
(vi) Other than any Funding Advances provided from time to time
by Participants under the Participation Agreement, BNPLC expects to
obtain all Funding Advances from Banque Nationale de Paris
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or other Affiliates of BNPLC (including Funding Advances to cover
Carrying Costs and other amounts to be capitalized as part of the
Outstanding Construction Allowance, and assuming that Solectron uses the
Maximum Construction Allowance under this Lease), and to the extent that
Banque Nationale de Paris or such other Affiliates themselves borrow or
accept bank deposits to obtain the funds needed to provide such Funding
Advances, the obligation to repay such funds shall not be limited, by
agreement or corporate structure, to payments collected from Solectron
or otherwise recovered from the Property.
(vii) BNPLC has not obtained residual value insurance or a
residual value guarantee from any third party to ensure the recovery of
its investment in the Property.
(viii) BNPLC does not intend to take any action during the term
of this Lease that would change, or anticipate any change in, any of the
facts listed above in this subparagraph.
Solectron shall have the right to ask BNPLC questions from time to time
concerning BNPLC's financial condition, concerning matters relevant to the
proper accounting treatment of this Lease on Solectron's financial statements
and accounting records (including the amount of BNPLC's equity capital as a
percentage of the aggregate of all lease funding amounts [including
participations] by BNPLC) or concerning BNPLC's ability to perform under this
Lease or the Purchase Agreement, to which questions BNPLC shall promptly
respond. Such response, however, may be limited to a statement that BNPLC will
not provide requested information; provided, however, BNPLC must notify
Solectron in writing if at any time during the Term BNPLC ceases to be 100%
owned, directly or indirectly, by Banque Nationale de Paris, or if at any time
during the Term BNPLC believes it could not represent that the statements in
clauses (i), (v) and (vii) above continue to be accurate, whether because of a
change in the capital structure of BNPLC, a purchase of residual value insurance
with respect to the Property or otherwise.
(e) Other Limited Representations by BNPLC. BNPLC represents that:
(i) No Default or Violation. The execution, delivery and
performance by BNPLC of this Lease and the Purchase Agreement do not and
will not constitute a breach or default under any material contract or
agreement to which BNPLC is a party or by which BNPLC is bound and do
not, to the knowledge of BNPLC, violate or contravene any law, order,
decree, rule or regulation to which BNPLC is subject. (As used in this
subparagraph 7.(e), "BNPLC'S KNOWLEDGE" means the present actual
knowledge of Lloyd Cox, the current officer of BNPLC having primary
responsibility for the negotiation of this Lease.)
(ii) No Suits. There are no judicial or administrative actions,
suits, proceedings or investigations pending or, to BNPLC's knowledge,
threatened against BNPLC that are reasonably likely to affect BNPLC's
interest in the Property or the validity, enforceability or priority of
this Lease or the Purchase Agreement, and BNPLC is not in default with
respect to any order, writ, injunction, decree or demand of any court or
other governmental or regulatory authority that could materially and
adversely affect the business or assets of BNPLC or its interest in the
Property.
(iii) Enforceability. The execution, delivery and performance of
this Lease and the Purchase Agreement by BNPLC are duly authorized, are
not in contravention of or conflict with any term or provision of
BNPLC's articles of incorporation or bylaws and do not, to BNPLC's
knowledge, require the consent or approval of any governmental body or
other regulatory authority that has not heretofore been obtained or
conflict with any Applicable Laws. This Lease and the Purchase Agreement
are valid, binding and legally enforceable obligations of BNPLC except
as such enforcement is affected by bankruptcy,
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insolvency and similar laws affecting the rights of creditors,
generally, and equitable principles of general application; provided,
BNPLC makes no representation or warranty that conditions imposed by
zoning ordinances or other state or local Applicable Laws to the
purchase, ownership, lease or operation of the Property have been
satisfied.
(iv) Organization. BNPLC is duly incorporated and legally
existing under the laws of Delaware and is duly qualified to do business
in the State of Washington. BNPLC has or will obtain on a timely basis,
at Solectron's expense to the extent so provided in the other provisions
of this Lease, all requisite power and all governmental certificates of
authority, licenses, permits, qualifications and other documentation
necessary to own and lease the Property and to perform its obligations
under this Lease.
(v) Not a Foreign Person. BNPLC is not a "foreign person" within
the meaning of Sections 1445 and 7701 of the Code (i.e., BNPLC is not a
non-resident alien, foreign corporation, foreign partnership, foreign
trust or foreign estate as those terms are defined in the Code and
regulations promulgated thereunder).
(f) Keeping Proprietary Information Confidential. BNPLC agrees to
use reasonable precautions to keep confidential any "proprietary information"
(as defined in Paragraph 27) that BNPLC may receive from Solectron or otherwise
discover with respect to Solectron or Solectron's business pursuant to this
Lease or any investigation by BNPLC hereunder, except for disclosures: (i)
specifically and previously authorized in writing by Solectron; (ii) to any
permitted assignee of BNPLC as to any interest in the Property so long as the
assignee has agreed in writing to use its reasonable efforts to keep such
information confidential in accordance with the terms of this subparagraph;
(iii) to legal counsel, accountants, auditors, environmental consultants and
other professional advisors to BNPLC so long as BNPLC shall inform such persons
in writing (if practicable) of the confidential nature of such information and
shall direct them to treat such information confidentially; (iv) to regulatory
officials having jurisdiction over BNPLC or BNPLC's Parent (provided that the
disclosing party shall request confidential treatment of the disclosed
information, if practicable); (v) as required by legal process (provided that
the disclosing party shall request confidential treatment of the disclosed
information, if practicable); (vi) of information which has previously become
publicly available through the actions or inactions of a Person other than BNPLC
not, to BNPLC's knowledge, in breach of an obligation of confidentiality to
Solectron; and (vii) to any Participant so long as the Participant has not
repudiated the confidentiality provision concerning Solectron's proprietary
information set forth in the Participation Agreement.
8. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC. Subject in
each case to Solectron's rights under the other provisions of this Lease, all
Improvements constructed during the term of this Lease shall be owned by BNPLC
and shall constitute "Property" covered by this Lease. Further, subject in each
case to Solectron's rights under the other provisions of this Lease, all
furnishings, furniture, chattels, permits, licenses, franchises, certificates
and other personal property of whatever nature shall have been acquired on
behalf of BNPLC by Solectron, shall be owned by BNPLC and shall constitute
"Property" covered by this Lease, to the extent heretofore or hereafter
acquired, in whole or in part, with any portion of the Initial Funding Advance
provided to Solectron or with any Construction Advances or other funds for which
Solectron has received or hereafter receives reimbursement from the Initial
Funding Advance or Construction Advances, as shall all renewals or replacements
of or substitutions for any such Property. Solectron shall not authorize or
permit the transfer of title to the Improvements or to any other such Property
to pass through Solectron or Solectron's Affiliates before it is transferred to
BNPLC from contractors, suppliers, vendors or other third Persons. Nothing
herein shall constitute authorization of Solectron by BNPLC to bind BNPLC to any
construction contract or other agreement with a third Person, but any
construction contract or other agreement executed by Solectron for the
acquisition or
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construction of Improvements or other components of the Property may provide for
the transfer of title as required by the preceding sentence. Upon request of
BNPLC made when any Event of Default has occurred and is continuing, Solectron
shall deliver to BNPLC an inventory describing all significant items of Personal
Property (and, in the case of tangible personal property, showing the make,
model, serial number and location thereof) other than Improvements, with a
certification by Solectron that such inventory is true and complete and that all
items specified in the inventory are covered by this Lease free and clear of any
Lien other than the Permitted Encumbrances or Liens Removable by BNPLC.
9. ENVIRONMENTAL.
(a) Environmental Covenants by Solectron. Solectron covenants that:
(i) Solectron shall not conduct or permit others to conduct
Hazardous Substance Activities, except Permitted Hazardous Substance Use
and Remedial Work.
(ii) Solectron shall not discharge or permit the discharge of
anything on or from the Property that would require any permit under
applicable Environmental Laws, other than (1) storm water runoff, (2)
waste water discharges through a publicly owned treatment works, (3)
discharges that are a necessary part of any Remedial Work, and (4) other
similar discharges consistent with the definition herein of Permitted
Hazardous Substance Use, in each case in strict compliance with
Environmental Laws.
(iii) Following any discovery that Remedial Work is
required by Environmental Laws or otherwise reasonably required, and to
the extent not inconsistent with the other provisions of this Lease,
Solectron shall promptly perform and diligently and continuously pursue
such Remedial Work, in each case in strict compliance with Environmental
Laws.
(iv) If requested by BNPLC in connection with any significant
Remedial Work required by this subparagraph, Solectron shall retain an
independent Environmental Consultant or Industrial Hygienist, as
appropriate, to evaluate any significant new information generated
during Solectron's implementation of the Remedial Work and to discuss
with Solectron whether such new information indicates the need for any
additional measures that Solectron should take to protect the health and
safety of persons (including, without limitation, employees, contractors
and subcontractors and their employees) or to protect the environment.
Solectron shall implement any such additional measures to the extent
required with respect to the Property by Environmental Laws or otherwise
reasonably required and to the extent not inconsistent with the other
provisions of this Lease.
(b) Right of BNPLC to do Remedial Work Not Performed by Solectron. If
Solectron's failure to cure any breach of the covenants set forth in
subparagraph 9.(a) continues beyond the Environmental Cure Period (as defined
below), BNPLC may, in addition to any other remedies available to it, after
notifying Solectron of the Remedial Work BNPLC believes is needed, conduct all
or any part of the Remedial Work. To the extent that Remedial Work done by BNPLC
pursuant to the preceding sentence (including any removal of Hazardous
Substances) is reasonably required, or is required or believed by BNPLC in good
faith to be required by Applicable Law or by any demand, regulation or guideline
of any governmental authority (whether or not having the force of law), the cost
thereof shall be a demand obligation owing by Solectron to BNPLC. As used in
this subparagraph, "ENVIRONMENTAL CURE PERIOD" means the period ending on the
earlier of: (1) one hundred twenty days after Solectron is notified of the
breach which must be cured within such period, (2) the date that any writ or
order is issued for the levy or sale of any property owned by BNPLC (including
the Property) because of such
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breach, (3) the date that any criminal action is overtly threatened or
instituted against BNPLC or any of its directors, officers or employees because
of such breach, or (4) any Designated Sale Date upon which, for any reason,
Solectron or an Affiliate of Solectron or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a net price to BNPLC (when taken together with any additional payments made by
Solectron pursuant to Paragraph 1(a)(ii) of the Purchase Agreement, in the case
of a purchase by an Applicable Purchaser) equal to Stipulated Loss Value.
(c) Environmental Inspections and Reviews. BNPLC reserves the right
to retain an Environmental Consultant or Industrial Hygienist to review any
report prepared by Solectron or to conduct BNPLC's own investigation to confirm
whether Solectron is complying with the requirements of this Paragraph 9.
Solectron grants to BNPLC and to BNPLC's agents, employees, consultants and
contractors the right during reasonable business hours and after reasonable
notice to enter upon the Property to inspect the Property and to perform such
tests as BNPLC deems necessary or appropriate to review or investigate Hazardous
Substances in, on, under or about the Property or any discharge or suspected
discharge of Hazardous Substances into groundwater or surface water from the
Property. Solectron shall promptly reimburse BNPLC for the reasonable fees of
its Environmental Consultants and Industrial Hygienists and the costs of any
such inspections and tests; provided, however, BNPLC's right to reimbursement
for the reasonable fees of any consultant engaged as provided in this
subparagraph or for the costs of any inspections or test undertaken as provided
in this subparagraph shall be limited to the following circumstances: (1) an
Event of Default shall have occurred; (2) BNPLC shall have retained the
consultant to establish the condition of the Property just prior to any
conveyance thereof pursuant to the Purchase Agreement or just prior to the
expiration of this Lease; (3) BNPLC shall have retained the consultant to
satisfy any regulatory requirements applicable to BNPLC or its Affiliates; or
(4) BNPLC shall have retained the consultant because BNPLC has been notified of
a violation of Environmental Laws concerning the Property or BNPLC otherwise
reasonably believes that Solectron has not complied with the requirements of
this Paragraph 9.
(d) Communications Regarding Environmental Matters.
(i) Solectron shall immediately advise BNPLC and Participants of
(1) any discovery of any event or circumstance which would render any of
the representations of Solectron herein or in the Closing Certificate
concerning environmental matters materially inaccurate or misleading if
made at the time of such discovery and assuming that Solectron was aware
of all relevant facts, (2) any Remedial Work (or change in Remedial
Work) required or undertaken by Solectron or its Affiliates in response
to any (A) discovery of any Hazardous Substances on, under or about the
Property other than Permitted Hazardous Substances or (B) any claim for
damages resulting from Hazardous Substance Activities, (3) Solectron's
discovery of any occurrence or condition on any real property adjoining
or in the vicinity of the Property which would or could reasonably be
expected to cause the Property or any part thereof to be subject to any
ownership, occupancy, transferability or use restrictions under
Environmental Laws, or (4) any investigation or inquiry of any failure
or alleged failure by Solectron to comply with Environmental Laws
affecting the Property by any governmental authority responsible for
enforcing Environmental Laws. In such event, Solectron shall deliver to
BNPLC within thirty days after BNPLC's request (or such longer period as
may be reasonably required, but in any event within ninety days after
BNPLC's request), a preliminary written environmental plan setting forth
a general description of the action that Solectron proposes to take with
respect thereto, if any, to bring the Property into compliance with
Environmental Laws or to correct any breach by Solectron of this
Paragraph 9, including any proposed Remedial Work, the estimated cost
and time of completion, the name of the contractor and a copy of the
construction contract, if any, and such additional data, instruments,
documents, agreements or other materials or information as BNPLC may
reasonably request.
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(ii) Solectron shall provide BNPLC and Participants with
copies of all material written communications with federal, state and
local governments, or agencies relating to the matters listed in the
preceding clause (i). Solectron shall also provide BNPLC and
Participants with copies of any correspondence from third Persons which
threaten litigation over any significant failure or alleged significant
failure of Solectron to maintain or operate the Property in accordance
with Environmental Laws.
(iii) Prior to Solectron's submission of a Material
Environmental Communication to any governmental or regulatory agency or
third party, Solectron shall, to extent practicable, deliver to BNPLC
and Participants a draft of the proposed submission (together with the
proposed date of submission), and in good faith assess and consider any
comments of BNPLC regarding the same. Promptly after BNPLC's request,
Solectron shall meet with BNPLC to discuss the submission, shall provide
any additional information reasonably requested by BNPLC and shall
provide a written explanation to BNPLC addressing the issues raised by
comments (if any) of BNPLC regarding the submission, including a
reasoned analysis supporting any decision by Solectron not to modify the
submission in accordance with comments of BNPLC.
10. INSURANCE REQUIRED AND CONDEMNATION.
(a) Liability Insurance. Throughout the Term Solectron shall
maintain commercial general liability insurance against claims for bodily and
personal injury, death and property damage occurring in or upon or resulting
from any occurrence in or upon the Property, in standard form and with an
insurance company or companies reasonably acceptable to BNPLC (and BNPLC may
reasonably require that such insurance be provided through insurance or
reinsurance companies rated by the A.M. Best Company of Oldwick, New Jersey as
having a policyholder's rating of A- or better and a reported financial
information rating of VI or better), such insurance to afford immediate
protection, to the limit of not less than $20,000,000 combined single limit for
bodily and personal injury, death and property damage in respect of any one
accident or occurrence, with not more than $3,000,000 self-insured retention.
Such commercial general liability insurance shall include blanket contractual
liability coverage which insures contractual liability under the
indemnifications set forth in this Lease, but such coverage or the amount
thereof shall in no way limit such indemnifications. The policy evidencing such
insurance shall name as additional insureds BNPLC and all Participants of which
Solectron has been notified (including BNPLC's Parent). Solectron shall maintain
with respect to each policy or agreement evidencing such commercial general
liability insurance such endorsements as may be reasonably required by BNPLC and
shall at all times deliver and maintain with BNPLC written confirmation (in form
reasonably satisfactory to BNPLC) with respect to such insurance from the
applicable insurer or its authorized agent, which confirmation must provide that
insurance coverage will not be canceled or reduced without at least thirty days
notice to BNPLC. Not less than thirty days prior to the expiration date of each
policy of insurance required of Solectron pursuant to this subparagraph,
Solectron shall deliver to BNPLC a certificate evidencing a paid renewal policy
or policies.
(b) Property Insurance. Throughout the Term Solectron will keep all
Improvements (including all alterations, additions and changes made to the
Improvements) insured under an "all-risk" property insurance policy (not
excluding from coverage perils normally included within the definitions of
extended coverage, vandalism, malicious mischief and, if the Property is in a
flood zone, flood) in the amount no less than eighty percent (80%) of the
replacement value (exclusive of land, foundation, footings, excavations and
grading) with endorsements for contingent liability from operation of building
laws, increased cost of construction and demolition costs which may be necessary
to comply with building laws. Subject to the reasonable approval of BNPLC,
Solectron will be responsible for determining the amount of property insurance
to be maintained from time to time, but Solectron must maintain such coverage on
an agreed value basis to eliminate the effects of coinsurance. Such
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insurance must be issued by an insurance company or companies reasonably
acceptable to BNPLC, and BNPLC may reasonably require that the insurance or
reinsurance companies providing such insurance be rated by the A.M. Best Company
of Oldwick, New Jersey as having (1) a policyholder's rating of A- or better,
(2) a reported financial information rating of no less than VI, and (3) in the
case of each such company, a reported financial information rating which
indicates an adjusted policyholders' surplus equal to or greater than the
underwriting exposure that such company has under the insurance or reinsurance
it is providing for the Property. Any deductible applicable to such insurance
shall not exceed $3,000,000. Such insurance shall cover not only the value of
Solectron's interest in the Improvements, but also the interest of BNPLC, and
such insurance shall include provisions that BNPLC must be notified at least
thirty days prior to any cancellation or reduction of insurance coverage. The
policies under which Solectron maintains such insurance may be "blanket"
policies covering not only the Property but other properties occupied or owned
by Solectron; however, all policies must provide that proceeds paid thereunder
with respect to the Property will be payable to BNPLC and Solectron as their
interests may appear, it being understood between BNPLC and Solectron that such
proceeds shall be paid to BNPLC as Escrowed Proceeds and will be applied in
accordance with Paragraph 11 of this Lease. In the event any of the Property is
destroyed or damaged by fire, explosion, windstorm, hail or by any other
casualty against which insurance shall have been required hereunder, (i) BNPLC
may, but shall not be obligated to, make proof of loss if not made promptly by
Solectron after notice from BNPLC, (ii) each insurance company concerned is
hereby authorized and directed to make payment for such loss directly to BNPLC
for application as required by Paragraph 11, and (iii) BNPLC may settle, adjust
or compromise any and all claims for loss, damage or destruction under any
policy or policies of insurance (provided, that so long as no Landlord's
Election to Continue Construction shall have occurred and no Event of Default
shall have occurred and be continuing, BNPLC must obtain Solectron's consent to
any such settlement). If any casualty shall result in damage to or loss or
destruction of the Property, Solectron shall give immediate notice thereof to
BNPLC and Paragraph 11 shall apply.
Notwithstanding the foregoing, however, Solectron shall have the right
as Solectron deems appropriate to settle, adjust or compromise any insurance
claim for damage to the Property that cannot reasonably be asserted for more
than $3,000,000 so long as no Landlord's Election to Continue Construction shall
have occurred and no Event of Default shall have occurred and be continuing; and
Solectron may directly receive and hold the proceeds of such claim so long as no
Landlord's Election to Continue Construction shall have occurred and no Event of
Default shall have occurred and be continuing and so long as Solectron applies
such proceeds as required by subparagraph 11.(b).
(c) Failure to Obtain Insurance. If Solectron fails to obtain any
insurance or to provide confirmation of any such insurance as required by this
Lease, BNPLC shall be entitled (but not required) to obtain the insurance that
Solectron has failed to obtain or for which Solectron has not provided the
required confirmation and, without limiting BNPLC's other remedies under the
circumstances, BNPLC may require Solectron to reimburse BNPLC for the cost of
such insurance and to pay interest thereon computed at the Default Rate from the
date such cost was paid by BNPLC until the date of reimbursement by Solectron.
(d) Condemnation. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Property or any
portion thereof, or any other similar governmental or quasi-governmental
proceedings arising out of injury or damage to the Property or any portion
thereof, each party shall notify the other (provided, however, BNPLC shall have
no liability for its failure to provide such notice) of the pendency of such
proceedings. Solectron shall, at its expense, diligently prosecute any such
proceedings and shall consult with BNPLC, its attorneys and experts and
cooperate with them as reasonably requested in the carrying on or defense of any
such proceedings. All proceeds of condemnation awards or proceeds of sale in
lieu of condemnation with respect to the Property and all judgments, decrees and
awards for injury or damage to the
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Property shall be paid to BNPLC as Escrowed Proceeds for application as provided
in Paragraph 11. BNPLC is hereby authorized, in the name of Solectron, at any
time when an Event of Default shall have occurred and be continuing, or
otherwise with Solectron's prior consent, to execute and deliver valid
acquittances for, and to appeal from, any such judgment, decree or award
concerning condemnation of any of the Property. BNPLC shall not be in any event
or circumstances liable or responsible for failure to collect, or to exercise
diligence in the collection of, any such proceeds, judgments, decrees or awards.
Notwithstanding the foregoing provisions of this subparagraph, Solectron
shall have the right as Solectron deems appropriate to settle, adjust or
compromise any claim for any taking of less than all or substantially all of the
Property if the claim cannot reasonably be asserted for more than $3,000,000 and
if no Landlord's Election to Continue Construction shall have occurred and no
Event of Default shall have occurred and be continuing; and Solectron may
directly receive and hold the proceeds of any such claim so long as no
Landlord's Election to Continue Construction shall have occurred and no Event of
Default shall have occurred and be continuing and so long as Solectron applies
such proceeds as required by subparagraph 11.(b).
11. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.
(a) Collection of Insurance and Condemnation Proceeds Generally.
Subject to BNPLC's rights under this Paragraph 11, and so long as no Landlord's
Election to Continue Construction shall have occurred and no Event of Default
shall have occurred and be continuing, Solectron shall be entitled to use all
property insurance and condemnation proceeds payable with respect to the
Property during the Term for the restoration and repair of the Property or any
remaining portion thereof. Except as provided in the last sentence of
subparagraph 10.(b) and the last sentence of subparagraph 10.(d), all insurance
and condemnation proceeds received with respect to the Property (including
proceeds payable under any insurance policy covering the Property which is
maintained by Solectron) shall be paid to BNPLC and then applied as follows:
(i) First, such proceeds shall be used to reimburse BNPLC for
any costs and expenses, including Attorneys' Fees, incurred in
connection with the collection of such proceeds.
(ii) Second, the remainder of such proceeds (the "REMAINING
PROCEEDS") shall be held by BNPLC as Escrowed Proceeds and used to
reimburse Solectron for the actual cost of the repair, restoration or
replacement of the Property. However, any Remaining Proceeds not needed
for such purpose shall be applied by BNPLC as Qualified Payments, as
provided in subparagraph 11.(c), after Solectron notifies BNPLC that
they are not needed for repairs, restoration or replacement.
(b) Administration of Remaining Proceeds; Solectron's Obligation to
Restore. Any Remaining Proceeds held by BNPLC as Escrowed Proceeds shall be
deposited by BNPLC in an interest bearing account as provided in the definition
of Escrowed Proceeds in the attached List of Defined Terms and shall be paid to
Solectron or to third parties as Solectron may direct as the applicable repair,
restoration or replacement progresses and upon compliance by Solectron with such
terms, conditions and requirements as may be reasonably imposed by BNPLC, but in
no event shall BNPLC be required to pay Escrowed Proceeds to Solectron in excess
of the actual cost to Solectron of the applicable repair, restoration or
replacement, as evidenced by invoices or other documentation reasonably
satisfactory to BNPLC, it being understood that BNPLC may retain and apply any
such excess as a Qualified Payment. In any event, Solectron will not be entitled
to any abatement or reduction of the Base Rent or any other amount due hereunder
except to the extent that such excess Remaining Proceeds result in Qualified
Payments which reduce Stipulated Loss Value (and thus payments computed on the
basis of Stipulated Loss Value) as provided in the definitions set out in the
attached List of Defined Terms. Further, notwithstanding
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the inadequacy of the Remaining Proceeds held by BNPLC as Escrowed Proceeds, if
any, or anything herein to the contrary, Solectron must, after any taking of
less than all or substantially all of the Property by condemnation and after any
damage to the Property by fire or other casualty, either:
(i) promptly restore or improve the Property or the remainder
thereof to a value no less than sixty percent (60%) of Stipulated Loss
Value (computed after the application of any Remaining Proceeds as a
Qualified Payment) and to a reasonably safe and sightly condition; or
(ii) promptly restore the Property to a reasonably safe and
sightly condition and pay to BNPLC for application as a Qualified
Payment the amount (if any), as determined by BNPLC, needed to reduce
Stipulated Loss Value (computed after the application of such amount and
any available Remaining Proceeds as Qualified Payments) to no more than
one hundred sixty-seven percent (167%) of the then-current market value
of the Property or remainder thereof.
(c) Special Provisions Concerning Event of Defaults and Qualified
Payments. If an Event of Default shall have occurred and be continuing, then
notwithstanding the foregoing, BNPLC shall be entitled to receive and collect
all insurance or condemnation proceeds payable with respect to the Property, and
BNPLC shall be entitled to either, at the discretion of BNPLC, (A) hold all
Remaining Proceeds as Escrowed Proceeds until paid to Solectron as reimbursement
for the actual and reasonable cost of repairing, restoring or replacing the
Property when Solectron has completed such repair, restoration or replacement,
or (B) apply such proceeds as Qualified Payments when and to the extent deemed
appropriate by BNPLC.
When no Landlord's Election to Continue Construction shall have occurred
and no Event of Default shall have occurred and be continuing, BNPLC shall apply
any Remaining Proceeds paid to it (or other amounts available for application as
a Qualified Payment) as a Qualified Payment on any date that BNPLC is directed
to do by a notice from Solectron; provided, that if such a notice from Solectron
specifies an effective date for a Qualified Payment that is less than five
Business Days after BNPLC's actual receipt of the notice, BNPLC may postpone the
date of the Qualified Payment to any date not later than five Business Days
after BNPLC's receipt of the notice. In any event, except when BNPLC is required
by the preceding sentence to apply Remaining Proceeds or other amounts as a
Qualified Payment on an Advance Date or Base Rent Date, BNPLC may deduct
Breakage Costs incurred in connection with any Qualified Payment from the
Remaining Proceeds or other amounts available for application as the Qualified
Payment, and Solectron will reimburse BNPLC upon request for any such Breakage
Costs that BNPLC incurs but does not deduct.
(d) Takings of All or Substantially All of the Property. In the
event of any taking of all or substantially all of the Property, BNPLC shall be
entitled to apply all Remaining Proceeds as a Qualified Payment, notwithstanding
the foregoing. In addition, if Stipulated Loss Value immediately prior to any
taking of all or substantially all of the Property by condemnation exceeds the
sum of the Remaining Proceeds resulting from such condemnation, then BNPLC shall
be entitled to recover the excess from Solectron upon demand as an additional
Qualified Payment, whereupon this Lease shall terminate. Any taking of so much
of the Real Property as, in BNPLC's reasonable good faith judgment, makes it
impracticable to restore or improve the remainder thereof as required by part
(1) of subparagraph 11.(b) shall be considered a taking of substantially all the
Property for purposes of this Paragraph 11.
(e) Waiver of Subrogation. Without limiting Solectron's obligations
to make repairs under other provisions of this Lease, BNPLC and Solectron each
waive any right of recovery against the other, and the other's agents, officers
or employees, for any damage to the Property or to the personal property
situated from time
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to time in or on the Real Property resulting from fire or other casualty covered
by a valid and collectible insurance policy; provided, however, that the waiver
set forth in this subparagraph 11.(e) shall be effective insofar, but only
insofar, as compensation for such damage or loss is actually recovered by the
waiving party (net of costs of collection) under the policy notwithstanding the
waivers set out in this subparagraph. Solectron shall cause the insurance
policies required of Solectron by this Lease to be properly endorsed, if
necessary, to prevent any loss of coverage because of the waivers set forth in
this subparagraph. If such endorsements are not available at commercially
reasonable rates, the waivers set forth in this subparagraph shall be
ineffective to the extent that such waivers would cause required insurance with
respect to the Property to be impaired.
12. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF SOLECTRON
CONCERNING THE PROPERTY. Solectron represents, warrants and covenants as
follows:
(a) Compliance with Covenants and Laws. The use of the Property
permitted by this Lease complies, or will comply after Solectron obtains
available permits as the tenant under this Lease, in all material respects with
all Applicable Laws. Solectron has obtained or will promptly obtain all utility,
building, health and operating permits as may be required by any governmental
authority or municipality having jurisdiction over the Property for the
construction contemplated herein and the use of the Property permitted by this
Lease.
(b) Operation of Property. Solectron shall operate the Property in a
good and workmanlike manner and in a manner that causes it to comply in all
material respects with Applicable Laws. (For purposes of this Lease, "material"
noncompliance with Applicable Law will include any noncompliance, the correction
of which has been requested by a governmental authority, or because of which a
threat of action against the Property or BNPLC has been asserted by a
governmental authority.) Solectron shall not use or occupy or allow the use or
occupancy of the Property in any manner which violates any Applicable Law in any
material respect or which constitutes a public or private nuisance or which
makes void, voidable or cancelable any insurance then in force with respect
thereto. To the extent that any of the following could, individually or in the
aggregate, reduce the value of the Property and leave the Property with a value
of less than sixty percent (60%) of Stipulated Loss Value, Solectron shall not:
(i) initiate or permit any zoning reclassification of the Property; (ii) seek
any variance under existing zoning ordinances applicable to the Property; (iii)
use or permit the use of the Property in a manner that would result in such use
becoming a nonconforming use under applicable zoning ordinances or similar laws,
rules or regulations; (iv) execute or file any subdivision plat affecting the
Property; or (v) consent to the annexation of the Property to any municipality.
If a change in the zoning or other Applicable Laws affecting the permitted use
or development of the Property shall occur that BNPLC determines will reduce the
then-current market value of the Property, and if after such reduction the
then-current market value of the Property shall be less than sixty percent (60%)
of Stipulated Loss Value in the reasonable judgment of BNPLC, then Solectron
shall before the Designated Sale Date pay BNPLC an amount equal to such excess
for application as a Qualified Payment. Solectron shall not cause or consent to
any drilling or exploration for, or extraction, removal or production of,
minerals from the surface or subsurface of the Property. If Solectron receives a
notice or claim from any federal, state or other governmental authority that the
Property is not in compliance with any Applicable Law in any material respect,
or that any action may be taken against BNPLC because the Property does not
comply with any Applicable Law, Solectron shall promptly furnish a copy of such
notice or claim to BNPLC.
Notwithstanding the foregoing, Solectron may in good faith, by
appropriate proceedings, contest the validity and applicability of any
Applicable Law with respect to the Property, and pending such contest Solectron
shall not be deemed in default hereunder because of the violation of such
Applicable Law, if Solectron diligently prosecutes such contest to completion in
a manner reasonably satisfactory to BNPLC, and if Solectron promptly causes the
Property to comply with any such Applicable Law upon a final determination by a
court of competent
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jurisdiction that the same is valid and applicable to the Property; provided,
however, in any event such contest shall be concluded and the violation of such
Applicable Law must be corrected by Solectron and any claims asserted against
BNPLC or the Property because of such violation must be paid by Solectron, all
prior to the earlier of (i) the date that any criminal action is overtly
threatened or instituted against BNPLC or any of its directors, officers or
employees because of such violation, (ii) the date that any action is taken or
overtly threatened by any governmental authority against BNPLC or any property
owned by BNPLC (including the Property) because of such violation, or (iii) any
Designated Sale Date upon which, for any reason, Solectron or an Affiliate of
Solectron or any Applicable Purchaser shall not purchase BNPLC's interest in the
Property pursuant to the Purchase Agreement for a net price to BNPLC (when taken
together with any additional payments made by Solectron pursuant to Paragraph
1(a)(ii) of the Purchase Agreement, in the case of a purchase by an Applicable
Purchaser) equal to Stipulated Loss Value.
(c) Debts for Construction, Maintenance, Operation or Development.
Solectron shall cause all debts and liabilities incurred in the construction,
maintenance, operation or development of the Property, including all debts and
liabilities for labor, material and equipment and all debts and charges for
utilities servicing the Property, to be promptly paid; provided, nothing in this
subparagraph will be construed to make Solectron liable for Liens Removable by
BNPLC or Excluded Taxes.
Notwithstanding the foregoing, Solectron may in good faith, by
appropriate proceedings, contest the validity, applicability or amount of any
asserted mechanic's or materialmen's lien and pending such contest Solectron
shall not be deemed in default under this subparagraph because of the contested
lien if (1) within thirty days after being asked to do so by BNPLC, Solectron
bonds over to BNPLC's reasonable satisfaction all such contested liens against
the Property alleged to secure an amount in excess of $5,000,000 (individually
or in the aggregate), (2) Solectron diligently prosecutes such contest to
completion in a manner reasonably satisfactory to BNPLC, and (3) Solectron
promptly causes to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all costs and interest thereon, promptly after such
judgment becomes final; provided, however, that in any event each such contest
shall be concluded and the lien, interest and costs must be paid by Solectron
prior to the earlier of (i) the date that any criminal action is overtly
threatened or instituted against BNPLC or its directors, officers or employees
because of the nonpayment thereof, (ii) the date that any writ or order is
issued under which the Property or any other property in which BNPLC has an
interest may be seized or sold or any other action is taken or overtly
threatened against BNPLC or any property in which BNPLC has an interest because
of the nonpayment thereof, or (iii) any Designated Sale Date upon which, for any
reason, Solectron or an Affiliate of Solectron or any Applicable Purchaser shall
not purchase BNPLC's interest in the Property pursuant to the Purchase Agreement
for a net price to BNPLC (when taken together with any additional payments made
by Solectron pursuant to Paragraph 1(a)(ii) of the Purchase Agreement, in the
case of a purchase by an Applicable Purchaser) equal to Stipulated Loss Value.
(d) Repair, Maintenance, Alterations and Additions. Solectron shall
keep the Property in good order, operating condition and appearance, causing all
necessary repairs, renewals and replacements to be promptly made, and will not
allow any of the Property to be materially misused, abused or wasted. To the
extent that any of the following could, individually or in the aggregate, reduce
the value of the Property and leave the Property with a value of less than sixty
percent (60%) of Stipulated Loss Value, Solectron shall not: (i) fail to
promptly replace any worn-out fixtures or material items of tangible Personal
Property covered by this Lease with fixtures or other tangible Personal Property
comparable to the replaced fixtures or Personal Property when new, (ii) remove
from the Property any fixtures or tangible Personal Property of significant
value covered by this Lease except such as are replaced by Solectron by articles
of equal suitability and value, free and clear of any Lien other than Permitted
Encumbrances or Liens Removable by BNPLC, or (iii) make any significant
alterations to any
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Improvements after they are completed. Without limiting the foregoing, Solectron
will notify BNPLC before making any alterations to the Improvements which could
materially reduce the market value of the Property or which change the general
character of the Property or which impair in any significant manner the useful
life or utility of any Improvements.
Nothing in this subparagraph is intended to limit Solectron's rights and
obligations under other provisions of this Lease with respect to the
construction of the initial or any subsequent Construction Project permitted by
other provisions of this Lease.
(e) Compliance With Permitted Encumbrances and Development
Contracts. Solectron shall comply with and will cause to be performed all of the
covenants, agreements and obligations imposed upon the owner of any interest in
the Property by the Permitted Encumbrances or the Development Contracts. Without
limiting the foregoing, Solectron shall cause all amounts to be paid when due,
the payment of which is secured by any Lien against the Property created by the
Permitted Encumbrances.
(f) Modification of Permitted Encumbrances and Development
Contracts. Solectron shall not enter into, initiate, approve or consent to any
modification of any Permitted Encumbrance or Development Contract that would
create or expand or purport to create or expand obligations or restrictions
which would encumber the Property without the prior consent of BNPLC. Whether
BNPLC must give any such consent requested by Solectron during the term of this
Lease shall be governed by subparagraph 7.(a).
(g) Books and Records Concerning the Property. Solectron shall keep
books and records that are accurate and complete in all material respects for
the Property and will, subject to Paragraph 27, permit all such books and
records (including all contracts, statements, invoices, bills and claims for
labor, materials and services supplied for the construction and operation of any
Improvements) to be inspected and copied by BNPLC.
13. ASSIGNMENT AND SUBLETTING BY SOLECTRON.
(a) BNPLC's Consent Required. Without the prior consent of BNPLC,
Solectron shall not assign, transfer, mortgage, pledge or hypothecate this Lease
or any interest of Solectron hereunder and shall not sublet all or any part of
the Property, by operation of law or otherwise; provided, that, so long as no
Landlord's Election to Continue Construction has occurred and no Event of
Default has occurred and is continuing, Solectron shall be entitled without the
consent of BNPLC to (1) assign Solectron's rights under this Lease and the
Purchase Agreement to an Affiliate of Solectron (including any Affiliate of
Solectron that is the surviving entity after a merger permitted by subsection
3.04(a) of Schedule A attached to the Guaranty) pursuant to a written assignment
unconditionally providing that the Affiliate assumes Solectron's obligations
hereunder and thereunder and (unless Solectron has been merged into the
Affiliate pursuant to a merger permitted by subsection 3.04(a) of Schedule A
attached to the Guaranty) that Solectron ratifies and confirms for the benefit
of BNPLC Solectron's responsibility and liability to BNPLC under this Lease and
the Purchase Agreement, and (2) sublet all or any portion of the Property if:
(i) any sublease by Solectron is made expressly subject and
subordinate to the terms hereof;
(ii) no sublease purports to grant the subtenant thereunder
rights to use or occupy the Property after the expiration or termination
of this Lease, other than rights expressly conditioned upon a purchase
by Solectron of the Property pursuant to the Purchase Agreement;
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(iii) the uses permitted by such sublease are limited to uses
expressly permitted by subparagraph 3.(a) above; and
(iv) less than forty-nine percent (49%) of any completed
Improvements are at any time subleased by Solectron to anyone other than
its own Affiliates.
(b) Standard for BNPLC's Consent to Assignments and Certain Other
Matters. Consents and approvals of BNPLC which are required by this Paragraph 13
will not be unreasonably withheld, but Solectron acknowledges that BNPLC's
withholding of such consent or approval shall be reasonable if BNPLC determines
in good faith that (1) giving the approval may materially increase BNPLC's risk
of liability for any existing or future environmental problem, (2) giving the
approval is likely to substantially increase BNPLC's administrative burden of
complying with or monitoring Solectron's compliance with the requirements of
this Lease, or (3) any transaction for which Solectron has requested the consent
or approval would negate Solectron's representations in this Lease regarding
ERISA or cause this Lease or the other documents referenced herein to constitute
a violation of any provision of ERISA.
(c) Consent Not a Waiver. No consent by BNPLC to a sale, assignment,
transfer, mortgage, pledge or hypothecation of this Lease or Solectron's
interest hereunder, and no assignment or subletting of the Property or any part
thereof in accordance with this Lease or otherwise with BNPLC's consent, shall
release Solectron from liability hereunder; and any such consent shall apply
only to the specific transaction thereby authorized and shall not relieve
Solectron from any requirement of obtaining the prior consent of BNPLC to any
further sale, assignment, transfer, mortgage, pledge or hypothecation of this
Lease or any interest of Solectron hereunder.
14. ASSIGNMENT BY BNPLC.
(a) Restrictions on Transfers. Except by a Permitted Transfer, BNPLC
shall not assign, transfer, mortgage, pledge, encumber or hypothecate this Lease
or the Purchase Agreement or any interest of BNPLC in and to the Property during
the Term without the prior consent of Solectron.
(b) Effect of Permitted Transfer or other Assignment by BNPLC. If,
without breaching subparagraph 14.(a), BNPLC sells or otherwise transfers the
Property and assigns all of its rights under this Lease and the Purchase
Agreement, and if BNPLC's successor in interest to all such rights assumes in
writing for the benefit of Solectron BNPLC's obligations under this Lease and
the Purchase Agreement on and subject to the express terms and conditions set
out herein and therein, then BNPLC shall thereby be released from any
obligations arising after such assumption under this Lease (other than any
liability for a breach of the landlord's obligation to provide Construction
Advances) or under the Purchase Agreement, and Solectron shall look solely to
each successor in interest of BNPLC for performance of such obligations.
15. BNPLC'S RIGHT OF ACCESS.
(a) BNPLC and BNPLC's representatives may enter the Property, after
three Business Days advance notice to Solectron (except in the event of an
emergency, when no advance notice will be required), for the purpose of
performing any work BNPLC is authorized to undertake by the next subparagraph or
for the purpose confirming whether Solectron has complied with the requirements
of this Lease at any time BNPLC may reasonably question such compliance. So long
as Solectron remains in possession of the Property, BNPLC or BNPLC's
representative will, before making any such inspection or performing any such
work on the Property, if then
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requested to do so by Solectron to maintain security: (i) sign in at Solectron's
security or information desk if Solectron has such a desk on the premises, (ii)
wear a visitor's badge or other reasonable identification provided by Solectron
when BNPLC or BNPLC's representative first arrives at the Property, (iii) permit
an employee of Solectron to observe such inspection or work, and (iv) comply
with other similar reasonable nondiscriminatory security, health or safety
requirements of Solectron, as Solectron may establish from time to time in
accordance with good industry practices, provided that such other requirements
do not, individually or in the aggregate, substantially interfere with or delay
inspections or work of BNPLC authorized by this Lease.
(b) If Solectron fails to perform any act or to take any action
which hereunder Solectron is required to perform or take, or to pay any money
which hereunder Solectron is required to pay, and if such failure or action
constitutes an Event of Default or causes BNPLC or any director, officer,
employee or Affiliate of BNPLC to be overtly threatened with criminal
prosecution or renders BNPLC's interest in the Property or any part thereof at
risk of forfeiture by forced sale or otherwise, then in addition to any other
remedies specified herein or otherwise available, BNPLC may, perform or cause to
be performed such act or take such action or pay such money. Any expenses so
incurred by BNPLC, and any money so paid by BNPLC, shall be a demand obligation
owing by Solectron to BNPLC. Further, BNPLC, upon making such payment, shall be
subrogated to all of the rights of the person, corporation or body politic
receiving such payment. But nothing herein shall imply any duty upon the part of
BNPLC to do any work which under any provision of this Lease Solectron may be
required to perform, and the performance thereof by BNPLC shall not constitute a
waiver of Solectron's default. BNPLC may during the progress of any such work
permitted by BNPLC hereunder on or in the Property keep and store upon the
Property all necessary materials, tools, and equipment. BNPLC shall not in any
event be liable for inconvenience, annoyance, disturbance, loss of business, or
other damage to Solectron or the subtenants of Solectron by reason of making
such repairs or the performance of any such work on or in the Property, or on
account of bringing materials, supplies and equipment into or through the
Property during the course of such work (except for liability in connection with
death or injury or damage to the property of third parties caused by [and
attributed by any applicable principles of comparative fault to] the Established
Misconduct of BNPLC), and the obligations of Solectron under this Lease shall
not thereby be excused in any manner.
16. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF SOLECTRON.
Solectron represents, warrants and covenants as follows:
(a) Negative Covenants. Without the prior written consent of BNPLC
in each case, neither Solectron nor any of its Affiliates shall:
(i) Multi employer ERISA Plans. Incur or permit any Affiliate to
incur any obligation to contribute to any "Multi employer plan" as
defined in Section 4001 of ERISA.
(ii) Prohibited ERISA Transaction. Enter into any transaction
which would cause this Lease, the Purchase Agreement, the Closing
Certificate or any other document executed in connection herewith (or
any exercise of BNPLC's rights hereunder or thereunder) to constitute a
non-exempt prohibited transaction under ERISA.
(b) Financial Statements; Required Notices; Certificates as to
Default. To the extent not so delivered by Guarantor, Solectron shall deliver to
BNPLC and to each Participant of which Solectron has been notified:
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(i) copies of all financial statements, certificates, notices and
other information that Guarantor is required to provide by Part 2 of
Schedule A attached to the Guaranty prior to the deadlines for delivery
established thereunder;
(ii) together with the annual and quarterly financial statements
furnished in accordance with subparagraph 16.(b)(i), a certificate of a
Responsible Financial Officer of Guarantor in the form attached hereto
as Exhibit J certifying (a) that no Event of Default or material Default
by Solectron has occurred and is continuing (or, if an Event of Default
or material Default by Solectron has occurred, stating the nature
thereof and the action which Solectron proposes to take with respect
thereto), (b) that the representations and warranties by Guarantor and
Solectron contained in the provisions referenced in Exhibit J from this
Lease, the Closing Certificate, the Purchase Agreement and the Guaranty
are true and correct in all material respects on and as of the date of
such certificate as though made on and as of such date, or, if not then
true and correct, a brief statement as to why such representations are
no longer true and correct, and (c) the accuracy of computations
attached thereto demonstrating compliance by Guarantor with the
financial covenants established in Schedule A attached to the Guaranty;
(iii) as soon as possible and in any event within five days after
the occurrence of each Event of Default or material Default known to a
Responsible Financial Officer of Guarantor, a statement setting forth
details of such Event of Default or material Default and the action
which Solectron has taken and proposes to take with respect thereto;
(iv) as soon as practicable and in any event within thirty days
after a Responsible Financial Officer of Solectron knows or has reason
to know that any ERISA Termination Event with respect to any Plan has
occurred, a statement of a Responsible Financial Officer of Solectron
describing such ERISA Termination Event and the action, if any, which
Solectron proposes to take with respect thereto;
(v) upon request by BNPLC, a statement by Solectron and Guarantor
in writing certifying that this Lease and the Guaranty are unmodified
and in full effect (or, if there have been modifications, that this
Lease and the Guaranty are in full effect as modified, and setting forth
such modifications) and the dates to which the Base Rent, Commitment
Fees and Administrative Agency Fees have been paid and either stating
that no default exists hereunder or specifying each such default; it
being intended that any such statement may be relied upon by any
prospective purchaser or mortgagee of the Property or any prospective
Participant;
(vi) promptly after any change in the rating of the Index Debt of
Guarantor by S&P or Moody's, which will result in a change in the Spread
(as defined in the List of Defined Terms), a certificate of a
Responsible Financial Officer of Guarantor advising BNPLC of the ratings
after the change; and
(vii) such other information respecting the condition or
operations, financial or otherwise, of Solectron, of its Affiliates or
of the Property as BNPLC or any Participant may from time to time
reasonably request.
BNPLC is hereby authorized to deliver a copy of any information or certificate
delivered to it pursuant to this subparagraph 16.(b) to any Participant and to
any regulatory body having jurisdiction over BNPLC, BNPLC's Parent or any other
Participant that requires or requests it.
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(c) No Default or Violation. The execution, delivery and performance
by Solectron of this Lease do not and will not constitute a breach or default
under any other material agreement or contract to which Solectron is a party or
by which Solectron is bound or which affects the Property, and do not violate or
contravene any law, order, decree, rule or regulation to which Solectron is
subject, and such execution, delivery and performance by Solectron will not
result in the creation or imposition of (or the obligation to create or impose)
any lien, charge or encumbrance on, or security interest in, Solectron's
property pursuant to the provisions of any of the foregoing.
(d) No Suits. Except as disclosed in Schedule 2, there are no
judicial or administrative actions, suits, proceedings or investigations pending
or, to Solectron's knowledge, threatened that will adversely affect the Property
or the validity, enforceability or priority of this Lease, and Solectron is not
in default with respect to any order, writ, injunction, decree or demand of any
court or other governmental or regulatory authority that could materially and
adversely affect the use, occupancy or operation of the Property. No
condemnation or other like proceedings are pending or, to Solectron's knowledge,
threatened against the Property.
(e) Enforceability. The execution, delivery and performance by
Solectron of this Lease and the Purchase Agreement are duly authorized and do
not require the consent or approval of any governmental body or other regulatory
authority that has not heretofore been obtained and are not in contravention of
or conflict with any applicable laws or any term or provision of Solectron's
articles of incorporation or bylaws. This Lease and the Purchase Agreement are
valid, binding and legally enforceable obligations of Solectron in accordance
with its terms, except as such enforcement is affected by bankruptcy, insolvency
and similar laws affecting the rights of creditors, generally, and equitable
principles of general application.
(f) Financial Matters. Solectron is not "insolvent" on the date
hereof (that is, the sum of Solectron's absolute and contingent liabilities,
including the obligations of Solectron under this Lease, does not exceed the
fair market value of Solectron's assets) and has no outstanding liens, suits,
garnishments or court actions which could render Solectron insolvent or
bankrupt. Solectron's capital is adequate for the businesses in which Solectron
is engaged and intends to be engaged. Solectron has not incurred (whether hereby
or otherwise), nor does Solectron intend to incur or believe that it will incur,
debts which will be beyond its ability to pay as such debts mature. There has
not been filed by or, to Solectron's knowledge, against Solectron a petition in
bankruptcy or a petition or answer seeking an assignment for the benefit of
creditors, the appointment of a receiver, trustee, custodian or liquidator with
respect to Solectron or any significant portion of Solectron's property,
reorganization, arrangement, rearrangement, composition, extension, liquidation
or dissolution or similar relief under the federal Bankruptcy Code or any state
law. The financial statements and all financial data heretofore delivered to
BNPLC relating to Solectron are true, correct and complete in all material
respects.
(g) Organization. Solectron is duly incorporated and legally
existing under the laws of the State of California and is duly qualified to do
business in the State of Washington. Solectron has all requisite power and has
procured or will procure on a timely basis all governmental certificates of
authority, licenses, permits, qualifications and other documentation required to
fulfill its obligations under this Lease. Solectron has the corporate power and
adequate authority, rights and franchises to own Solectron's property and to
carry on Solectron's business as now conducted and is duly qualified and in good
standing in each state in which the character of Solectron's business makes such
qualification necessary or, if it is not so qualified in a state other than
Washington, such failure does not have a material adverse effect on the
properties, assets, operations or businesses of Solectron and its Subsidiaries,
taken as a whole.
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(h) ERISA. Solectron is not and will not become an "employee benefit
plan" (as defined in Section 3(3) of ERISA) which is subject to Title I of
ERISA. The assets of Solectron do not and will not in the future constitute
"plan assets" of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101. Solectron is not and will not become a "governmental plan" within
the meaning of Section 3(32) of ERISA. Transactions by or with Solectron are not
subject to state statutes regulating investments of and fiduciary obligations
with respect to governmental plans. No ERISA Termination Event has occurred with
respect to any Plan of Solectron and Solectron and all its Affiliates are in
compliance with ERISA. Neither Solectron nor any of its Affiliates is required
to contribute to, or has any other absolute or contingent liability in respect
of, any "Multi employer plan" as defined in Section 4001 of ERISA. As of the
Effective Date no "accumulated funding deficiency" (as defined in Section 412(a)
of the Code) exists with respect to any Plan of Solectron, whether or not waived
by the Secretary of the Treasury or his delegate, and the current value of the
benefits of each Plan of Solectron, if any, equals or is less than the current
value of such Plan's assets available for the payment of such benefits.
(i) Use of Proceeds. In no event shall the funds from the Initial
Funding Advance or any Construction Advance be used (nor have they been used)
directly or indirectly for personal, family, household or agricultural purposes
or for the purpose, whether immediate, incidental or ultimate, of purchasing,
acquiring or carrying any "margin stock" or any "margin securities" (as such
terms are defined respectively in Regulation U and Regulation G promulgated by
the Board of Governors of the Federal Reserve System) or to extend credit to
others directly or indirectly for the purpose of purchasing or carrying any such
margin stock or margin securities. Solectron represents and warrants that
Solectron is not engaged principally, or as one of Solectron's important
activities, in the business of extending credit to others for the purpose of
purchasing or carrying such margin stock or margin securities.
(j) Investment Company Act. Solectron is not an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(k) Omissions. None of Solectron's representations or warranties
contained in this Lease or in any other document, certificate or written
statement furnished to BNPLC by or on behalf of Solectron in connection with
this Lease contains any untrue statement of a material fact or omits a material
fact necessary in order to make the statements contained herein or therein (when
taken in their entireties) not misleading.
(l) Not a Foreign Person. Solectron is not a "foreign person" within
the meaning of Sections 1445 and 7701 of the Code (i.e. Solectron is not a
non-resident alien, foreign corporation, foreign partnership, foreign trust or
foreign estate as those terms are defined in the Code and regulations
promulgated thereunder).
(m) Further Assurances. Solectron shall, upon request of BNPLC, (i)
promptly correct any error or omission which may be discovered in the contents
of this Lease or in any other instrument executed in connection herewith or in
the execution or acknowledgment thereof; (ii) execute, acknowledge, deliver and
record or file such further instruments and do such further acts as may be
necessary, desirable or proper to carry out more effectively the purposes of
this Lease and to subject to this Lease any property intended by the terms
hereof to be covered hereby, including any renewals, additions, substitutions,
replacements or appurtenances to the Property; (iii) execute, acknowledge,
deliver, procure and record or file any document or instrument deemed advisable
by BNPLC to protect its rights in and to the Property against the rights or
interests of third persons; and (iv) provide such certificates, documents,
reports, information, affidavits and other instruments and do such further acts
as may be necessary, desirable or proper in the reasonable determination of
BNPLC to enable BNPLC, BNPLC's Parent
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and any other Participants to comply with the requirements or requests of any
agency or authority having jurisdiction over them.
17. EVENTS OF DEFAULT.
(a) Definition of Events of Default. Each of the following events
shall be deemed to be an "EVENT OF DEFAULT" by Solectron under this Lease:
(i) Solectron shall fail to pay when first due any Base Rent,
any Commitment Fees or any Administrative Agency Fees and such failure
shall continue for three Business Days after Solectron is notified
thereof by BNPLC pursuant to a notice that specifically references this
Paragraph 17.(a).
(ii) Solectron shall fail to pay when first due any Rent other
than Base Rent, Commitment Fees or Administrative Agency Fees, or
Solectron shall fail to pay when first due any amount required by the
Closing Certificate, and in either case such failure shall continue for
thirty days after Solectron is notified thereof by BNPLC pursuant to a
notice that specifically references this Paragraph 17.(a).
(iii) Solectron shall fail to comply with any term, provision or
covenant of this Lease or the Closing Certificate, other than as
described in the other clauses of this subparagraph 17.(a), and shall
not cure such failure prior to the earlier of (A) thirty days after
notice thereof is sent to Solectron, or (B) the date any writ or order
is issued for the levy or sale of any property owned by BNPLC (including
the Property) because of such failure or any criminal action is overtly
threatened or instituted against BNPLC or any of its directors, officers
or employees because of such failure; provided, however, that so long as
no such writ or order is issued and no such criminal action is overtly
threatened or instituted, the period within which such failure may be
cured by Solectron shall be extended for a further period (not to exceed
an additional one hundred twenty days) as shall be necessary for the
curing thereof with diligence, if (but only if) (x) such failure is
susceptible of cure but cannot with reasonable diligence be cured within
such thirty day period, (y) Solectron shall promptly have commenced to
cure such failure and shall thereafter continuously prosecute the curing
thereof with reasonable diligence and (z) the extension of the period
for cure will not, in the case of such a failure that occurs or
commences more than thirty-five days prior to the expiration of this
Lease, cause the period for cure to extend beyond five days prior to the
expiration of this Lease.
(iv) Solectron shall fail to comply with any term, provision or
condition of the Purchase Agreement and, if the Purchase Agreement
expressly provide a time within which Solectron may cure such failure,
Solectron shall not cure the failure within such time.
(v) Solectron shall abandon the Property.
(vi) Guarantor, Solectron or any of Guarantor's other
Subsidiaries shall: (1) be in default with respect to any payment
(whether of principal or interest and regardless of amount) in respect
of any "Material Indebtedness" (which as used in this provision shall
mean any Debt of Guarantor or its applicable Subsidiary [as the case may
be] that is owed to BNPLC or BNPLC's Affiliates or that is outstanding
in a principal amount of at least $10,000,000 in the aggregate), and
such default shall continue beyond the applicable grace period, if any,
specified in the agreements or instruments relating to such Material
Indebtedness; or (2) be in default under any agreement or instrument
relating to any Material Indebtedness
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and as a result of such default, the Material Indebtedness shall be
declared to be due and payable prior to the stated maturity thereof.
(vii) Guarantor, Solectron or any of Guarantor's other
Subsidiaries shall generally not pay its debts as such debts become due,
or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against Guarantor, Solectron or any
of Guarantor's other Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or
reorganization, or seeking the entry of an order for the appointment of
a receiver, trustee, custodian or other similar official for it or for
any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of sixty
consecutive days, or any of the actions sought in such proceeding
(including the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official for, it or
for any substantial part of its property) shall occur; or Guarantor,
Solectron or any of Guarantor's other Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in this
clause 17.(a)(vii).
(viii) Any order, judgment or decree is entered in any
proceedings against Guarantor, Solectron or any of Guarantor's other
Subsidiaries decreeing its dissolution and such order, judgment or
decree remains unstayed and in effect for more than sixty days.
(ix) Any order, judgment or decree is entered in any proceedings
against Guarantor decreeing a divestiture of any of its assets that
represent a substantial part, or the divestiture of the stock of
Solectron or any of Guarantor's other Subsidiaries whose assets
represent a substantial part, of the total assets of Guarantor and its
Subsidiaries (determined on a consolidated basis in accordance with
GAAP) or which requires the divestiture of assets, or stock of any of
Guarantor's Subsidiaries, which shall have contributed a substantial
part of the net income of Guarantor and its Subsidiaries (determined on
a consolidated basis in accordance with GAAP) for any of the three
fiscal years then most recently ended, and such order, judgment or
decree remains unstayed and in effect for more than sixty days.
(x) A final judgment or order for the payment of money in an
amount (not covered by insurance) which exceeds $10,000,000 shall be
rendered against Guarantor, Solectron or any of Guarantor's other
Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment, or (ii) within sixty days
after the entry thereof, such judgment or order is not discharged or
execution thereof stayed pending appeal, or within thirty days after the
expiration of any such stay, such judgment is not discharged.
(xi) Any ERISA Termination Event that BNPLC determines in good
faith would constitute grounds for a termination of any Plan of
Solectron or for the appointment by the appropriate United States
district court of a trustee to administer any Plan of Solectron shall
have occurred and be continuing thirty days after notice to such effect
shall have been given to Solectron by BNPLC, or any Plan of Solectron
shall be terminated, or a trustee shall be appointed by an appropriate
United States district court to administer any Plan of Solectron, or the
Pension Benefit Guaranty Corporation shall institute proceedings to
terminate any Plan of Solectron or to appoint a trustee to administer
any Plan of Solectron.
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(xii) Solectron or any of its Affiliates shall enter into any
transaction which would cause this Lease, the Purchase Agreement or any
other document executed in connection herewith (or any exercise of
BNPLC's rights hereunder or thereunder) to constitute a non-exempt
prohibited transaction under ERISA.
(xiii) Guarantor shall breach or repudiate its guarantee of the
obligations of Solectron under this Lease, the Purchase Agreement or the
Closing Certificate or Guarantor shall fail to comply with any other
covenants of Guarantor in the Guaranty including the obligations of
Guarantor set forth Section 10 of the Guaranty.
(xiv) Any breach by Solectron of subparagraph 16.(b)(iii)
resulting from Solectron's failure to notify BNPLC of a material Default
known to a Responsible Financial Officer.
(xv) Any representation of Solectron contained herein, in the
Closing Certificate or in the Purchase Agreement is false or misleading
in any material respect, or any certificate delivered to BNPLC by or on
behalf of Solectron as required by this Lease is false or misleading in
any material respect.
(xvi) Any representation of Guarantor contained in the Guaranty
is false or misleading in any material respect, or any certificate, if
any, delivered to BNPLC by or on behalf of Guarantor as may be required
by the Guaranty is false or misleading in any material respect.
18. REMEDIES.
(a) Basic Remedies. At any time when an Event of Default has
occurred and is continuing, BNPLC may notify Solectron that BNPLC intends after
the expiration of sixty days to exercise remedies provided in this subparagraph
18.(a). At any time more than sixty days after BNPLC has given such a notice to
Solectron, and regardless of whether any Event of Default continues throughout
or after such sixty days, BNPLC shall be entitled at BNPLC's option and without
limiting BNPLC in the exercise of any other right or remedy BNPLC may have, and
without any further demand or notice except as expressly described in this
subparagraph 18.(a), to exercise the following remedies:
(i) By notice to Solectron, BNPLC may terminate Solectron's
right to possession of the Property. A notice given in connection with
unlawful detainer proceedings specifying a time within which to cure a
default shall terminate Solectron's right to possession if Solectron
fails to cure the default within the time specified in the notice.
(ii) Upon termination of Solectron's right to possession and
without further demand or notice, BNPLC may re-enter the Property in any
manner not prohibited by Applicable Law and take possession of all
improvements, additions, alterations, equipment and fixtures thereon and
remove any persons in possession thereof. Any property on the Land or in
the Improvements may be removed and stored in a warehouse or elsewhere
at the expense and risk of and for the account of Solectron.
(iii) Upon termination of Solectron's right to possession, this
Lease shall terminate and BNPLC may recover from Solectron:
a) The worth at the time of award of the unpaid Rent which
had been earned at the time of termination;
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b) The worth at the time of award of the amount by which
the unpaid Rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss
that Solectron proves could have been reasonably avoided;
c) The worth at the time of award of the amount by which
the unpaid Rent for the balance of the scheduled Term after the
time of award exceeds the amount of such rental loss that
Solectron proves could be reasonably avoided; and
d) Any other amount necessary to compensate BNPLC for all
the detriment proximately caused by Solectron's failure to
perform Solectron's obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom,
including, but not limited to, the costs and expenses (including
Attorneys' Fees, advertising costs and brokers' commissions) of
recovering possession of the Property, removing persons or
property therefrom, placing the Property in good order,
condition, and repair, preparing and altering the Property for
reletting, all other costs and expenses of reletting, and any
loss incurred by BNPLC as a result of Solectron's failure to
perform Solectron's obligations under the Purchase Agreement.
The "WORTH AT THE TIME OF AWARD" of the amounts referred to in
subparagraph 18.(a)(iii)a) and subparagraph 18.(a)(iii)b) shall
be computed by allowing interest at ten percent (10%) per annum
or such other rate as may be the maximum interest rate then
permitted to be charged under Washington law at the time of
computation. The "WORTH AT THE TIME OF AWARD" of the amount
referred to in subparagraph 18.(a)(iii)c) shall be computed by
discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one
percent (1%).
e) Such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable
Washington law.
(iv) Even if Solectron breaches this Lease and abandons the
Property, this Lease shall continue in effect for so long as BNPLC does
not terminate Solectron's right to possession, and BNPLC may enforce all
of BNPLC's rights and remedies under this Lease, including the right to
recover the Rent as it becomes due under this Lease. Solectron's right
to possession shall not be deemed to have been terminated by BNPLC
except pursuant to subparagraph 18.(a)(i) hereof. The following shall
not constitute a termination of Solectron's right to possession:
a) Acts of maintenance or preservation or efforts to relet
the Property;
b) The appointment of a receiver upon the initiative of
BNPLC to protect BNPLC's interest under this Lease; or
c) Reasonable withholding of consent to an assignment or
subletting, or terminating a subletting or assignment by
Solectron.
(b) Enforceability. This Paragraph 18 shall be enforceable to the
maximum extent not prohibited by Applicable Law, and the unenforceability of any
provision in this Paragraph shall not render any other provision unenforceable.
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<PAGE> 50
(c) Remedies Cumulative. No right or remedy herein conferred upon
or reserved to BNPLC is intended to be exclusive of any other right or remedy,
and each and every right and remedy shall be cumulative and in addition to any
other right or remedy given hereunder or now or hereafter existing under
Applicable Law or in equity; however, before exercising any right or remedy
available under Applicable Law or in equity to evict Solectron from the Property
or to terminate Solectron's right of occupancy hereunder, BNPLC shall give
Solectron at least sixty days notice as contemplated in the first sentence of
subparagraph 18.(a). In addition to other remedies provided in this Lease, BNPLC
shall be entitled, to the extent permitted by Applicable Law or in equity, to
injunctive relief in case of the violation, or attempted or threatened
violation, of any of the covenants, agreements, conditions or provisions of this
Lease, or to a decree compelling performance of any of the other covenants,
agreements, conditions or provisions of this Lease to be performed by Solectron,
or to any other remedy allowed to BNPLC at law or in equity. Nothing contained
in this Lease shall limit or prejudice the right of BNPLC to prove for and
obtain in proceedings for bankruptcy or insolvency of Solectron by reason of the
termination of this Lease, an amount equal to the maximum allowed by any statute
or rule of law in effect at the time when, and governing the proceedings in
which, the damages are to be proved, whether or not the amount be greater, equal
to, or less than the amount of the loss or damages referred to above. Without
limiting the generality of the foregoing, nothing contained herein shall modify,
limit or impair any of the rights and remedies of BNPLC under the Purchase
Agreement, and BNPLC shall not be required to give the sixty day notice
described in subparagraph 18.(a) as a condition to any acceleration of the
Designated Sale Date or to taking any action to enforce the Purchase Agreement
or the Closing Certificate.
19. DEFAULT BY BNPLC. If BNPLC should default in the performance of any
of its obligations under this Lease, BNPLC shall have the time reasonably
required, but in no event less than thirty days, to cure such default after
receipt of notice from Solectron specifying such default and specifying what
action Solectron believes is necessary to cure the default. If Solectron
prevails in any litigation brought against BNPLC because of BNPLC's failure to
cure a default within the time required by the preceding sentence, then
Solectron shall be entitled to an award against BNPLC for the monetary damages
proximately caused to Solectron by such default.
Notwithstanding the foregoing, BNPLC's right to cure as provided in this
Paragraph 19 will not in any event extend the time within which BNPLC must
remove Liens Removable by BNPLC as required by Paragraph 20 beyond the
Designated Sale Date.
20. QUIET ENJOYMENT. Provided Solectron pays the Base Rent and all
Additional Rent payable hereunder as and when due and payable and keeps and
fulfills all of the terms, covenants, agreements and conditions to be performed
by Solectron hereunder, BNPLC shall not during the Term disturb Solectron's
peaceable and quiet enjoyment of the Property; however, such enjoyment shall be
subject to the terms, provisions, covenants, agreements and conditions of this
Lease, to Permitted Encumbrances, to Development Documents and to any other
claims not constituting Liens Removable by BNPLC. If any Lien Removable by BNPLC
is claimed against the Property, including any judgment lien securing a
Deductible Judgment against BNPLC, BNPLC will remove the Lien Removable by BNPLC
promptly. However, BNPLC shall not be responsible for any Lien that is expressly
excluded from the definition of Liens Removable by BNPLC in the attached List of
Defined Terms. Any breach by BNPLC of this Paragraph shall render BNPLC liable
to Solectron for any monetary damages proximately caused thereby, but as more
specifically provided in Paragraph 2 above, no such breach shall entitle
Solectron to terminate this Lease or excuse Solectron from its obligation to pay
Base Rent and other amounts hereunder.
21. SURRENDER UPON TERMINATION. Unless Solectron or an Applicable
Purchaser purchases BNPLC's entire interest in the Property pursuant to the
terms of the Purchase Agreement, Solectron shall, upon
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<PAGE> 51
the termination of Solectron's right to occupancy, surrender to BNPLC the
Property, including any buildings, alterations, improvements, replacements or
additions constructed by Solectron, with all fixtures and furnishings included
in the Property, but not including movable furniture and movable personal
property not covered by this Lease, free of all Hazardous Substances (including
Permitted Hazardous Substances) and tenancies and, to the extent required by
BNPLC, with all Improvements in substantially the same condition as of the date
the same were initially completed, excepting only (i) ordinary wear and tear
that occurs between the maintenance, repairs and replacements required by other
provisions of this Lease, and (ii) alterations and additions which are expressly
permitted by the terms of this Lease and which have been completed by Solectron
in a good and workmanlike manner in accordance with all Applicable Laws. Any
movable furniture or movable personal property belonging to Solectron or any
party claiming under Solectron, if not removed at the time of such termination
and if BNPLC shall so elect, shall be deemed abandoned and become the property
of BNPLC without any payment or offset therefor. If BNPLC shall not so elect,
BNPLC may remove such property from the Property and store it at Solectron's
risk and expense. Solectron shall bear the expense of repairing any damage to
the Property caused by such removal by BNPLC or Solectron.
22. HOLDING OVER BY SOLECTRON. Should Solectron not purchase BNPLC's
right, title and interest in the Property as provided in the Purchase Agreement,
but nonetheless continue to hold the Property after the termination of this
Lease without BNPLC's consent, whether such termination occurs by lapse of time
or otherwise, such holding over shall constitute and be construed as a tenancy
from day to day only, at a daily Base Rent equal to: (i) Stipulated Loss Value
on the day in question, times (ii) (A) the Prime Rate in effect for such day so
long as the holdover period does not extend beyond ninety days and (B) for each
such day beginning with the ninety-first day after the holdover commences, two
percent (2%) above the Prime Rate; divided by (iii) three hundred and sixty;
subject, however, to all of the terms, provisions, covenants and agreements on
the part of Solectron hereunder. No payments of money by Solectron to BNPLC
after the termination of this Lease shall reinstate, continue or extend the Term
of this Lease and no extension of this Lease after the termination thereof shall
be valid unless and until the same shall be reduced to writing and signed by
both BNPLC and Solectron.
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE PURCHASE AGREEMENT AND
CLOSING CERTIFICATE. Solectron acknowledges and agrees that nothing contained in
this Lease shall limit, modify or otherwise affect any of Solectron's
obligations under the Purchase Agreement or the Closing Certificate, which
obligations are intended to be separate, independent and in addition to, and not
in lieu of, the obligations set forth herein. In the event of any inconsistency
between the terms and provisions of the Purchase Agreement and the terms and
provisions of this Lease, the terms and provisions of the Purchase Agreement
shall control. In the event of any inconsistency between the terms and
provisions of the Closing Certificate and the terms and provisions of this
Lease, the terms and provisions of this Lease shall control; provided, nothing
in this Lease shall be construed to limit or impair the indemnities provided by
Solectron in the Closing Certificate, including the indemnity therein provided
against Environmental Losses.
24. WAIVER OF JURY TRIAL. BNPLC AND SOLECTRON EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS LEASE OR ANY OTHER DOCUMENT OR DEALINGS BETWEEN THEM
RELATING TO THIS LEASE OR THE PROPERTY. The scope of this waiver is intended to
be all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. Solectron and BNPLC each acknowledge that this waiver is a
material inducement to enter into a business relationship, that each has already
relied on the waiver in entering into this Lease and the other documents
referred to herein, and that each will continue to rely on the waiver in their
related future dealings. Solectron and BNPLC
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<PAGE> 52
each further warrants and represents that it has reviewed this waiver with its
legal counsel, and that it knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS LEASE OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS LEASE OR
THE PROPERTY. In the event of litigation, this Lease may be filed as a written
consent to a trial by the court.
25. MISCELLANEOUS.
(a) Notices. Each provision of this Lease, or of any Applicable Laws
with reference to the sending, mailing or delivery of any notice or demand
hereunder or with reference to the making of any payment required hereunder,
shall be deemed to be complied with when and if the following steps are taken:
(i) All Rent required to be paid by Solectron to BNPLC hereunder
shall be paid to BNPLC in immediately available funds by wire transfer
to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ Solectron (Solectron Washington
Synthetic Lease)
or at such other place and in such other manner as BNPLC may designate
in a notice to Solectron.
(ii) All advances paid to Solectron by BNPLC hereunder or in
connection herewith shall be paid to Solectron in immediately available
funds by wire transfer to:
Seafirst Bank
800 Fifth Ave. Seattle, WA 98124
Account Name: Solectron Washington General
Account
Account No.: 67539213
ABA: 125000024
Reference: Washington Synthetic Lease
or at such other place and in such other manner as Solectron may
designate in a notice signed by Solectron's Treasurer or Chief Financial
Officer to BNPLC.
(iii) All notices, demands, approvals, consents and other
communications to be made hereunder to or by the parties hereto must, to
be effective for purpose of this Lease, be in writing. Notices, demands
and other communications required or permitted hereunder are to be sent
to the addresses set forth below (or in the case of communications to
Participants, at the addresses set forth in Schedule 1 to the
Participation Agreement) and shall be given by any of the following
means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex,
telegram or telecopying (if confirmed in writing sent by United States
first class mail, return receipt requested); or (C) registered or
certified first class mail, return receipt requested. Such addresses may
be changed by
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<PAGE> 53
notice to the other parties given in the same manner as provided above.
Any notice or other communication sent pursuant to clause (A) or (C)
hereof shall be deemed received (whether or not actually received) upon
first attempted delivery at the proper notice address on any Business
Day between 9:00 A.M. and 5:00 P.M., and any notice or other
communication sent pursuant to clause (B) hereof shall be deemed
received upon dispatch by electronic means.
Address of BNPLC:
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Telecopy: (214) 969-0060
With a copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Rafael Lumanlan or Stuart Darby
Telecopy: (415) 296-8954
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
Address of Solectron:
Solectron Washington, Inc.
777 Gibraltar Drive, Building #5
Milpitas, CA 95035
Attn: Chief Financial Officer
Telecopy: (408) 956-6059
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<PAGE> 54
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill
Palo Alto, California 94304-1050
Attention: Real Estate Department/DSS
Telecopy: (415) 493-6811
(b) Severability. If any term or provision of this Lease or the
application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of this Lease, or
the application of such term or provision other than to the extent to which it
is invalid or unenforceable, shall not be affected thereby.
(c) No Merger. There shall be no merger of this Lease or of the
leasehold estate created hereby created with any other interest in the Property
by reason of the fact that the same person may acquire or hold, directly or
indirectly, this Lease or the leasehold estate created hereby and any other
interest in the Property, unless all Persons with an interest in the Property
that would be adversely affected by any such merger specifically agree in
writing that such a merger shall occur.
(d) No Implied Waiver. The failure of BNPLC or Solectron to insist
at any time upon the strict performance of any covenant or agreement or to
exercise any option, right, power or remedy contained in this Lease shall not be
construed as a waiver or a relinquishment thereof for the future. The waiver of
or redress for any breach of this Lease shall not prevent a similar subsequent
act from constituting a violation. Any express waiver shall affect only the term
or condition specified in such waiver and only for the time and in the manner
specifically stated therein. A receipt by BNPLC of any Base Rent or other
payment hereunder with knowledge of the breach of any covenant or agreement
contained in this Lease shall not be deemed a waiver of such breach, and no
waiver of any provision of this Lease shall be deemed to have been made unless
expressed in writing and signed by the waiving party.
(e) NO IMPLIED REPRESENTATIONS BY BNPLC. BNPLC AND BNPLC'S AGENTS
HAVE MADE NO REPRESENTATIONS OR PROMISES WITH RESPECT TO THE PROPERTY EXCEPT AS
EXPRESSLY SET FORTH HEREIN AND IN THE PURCHASE AGREEMENT, AND NO RIGHTS,
EASEMENTS OR LICENSES ARE ACQUIRED BY SOLECTRON BY IMPLICATION OR OTHERWISE
EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE AND THE PURCHASE AGREEMENT.
(f) Entire Agreement. This Lease, the Purchase Agreement, the
Closing Certificate, and the other documents dated as of the Effective Date
which are being executed by Solectron and executed or accepted by BNPLC
contemporaneously with the execution of this Lease supersede any prior
negotiations and agreements between BNPLC and Solectron concerning the Property,
and no amendment or modification of this Lease shall be binding or valid unless
expressed in a writing executed by both parties hereto.
(g) Binding Effect. All of the covenants, agreements, terms and
conditions to be observed and performed by the parties hereto shall be
applicable to and binding upon their respective successors and, to the extent
assignment is permitted hereunder, their respective assigns.
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(h) Time is of the Essence. Time is of the essence as to all
obligations of Solectron and BNPLC and all notices required of Solectron and
BNPLC under this Lease.
(i) Governing Law. This Lease shall be governed by and construed in
accordance with the laws of the State of Washington without regard to conflict
or choice of laws.
(j) Paragraph Headings. The paragraph headings contained in this
Lease are for convenience only and shall in no way enlarge or limit the scope or
meaning of the various and several paragraphs hereof.
(k) Other Terms and References. Words of any gender used in this
Lease shall be held and construed to include any other gender, and words in the
singular number shall be held to include the plural and vice versa, unless the
context otherwise requires. References herein to Paragraphs, subparagraphs or
other subdivisions shall refer to the corresponding Paragraphs, subparagraphs or
subdivisions of this Lease, unless specific reference is made to another
document or instrument. References herein to any Schedule or Exhibit shall refer
to the corresponding Schedule or Exhibit attached hereto, which shall be made a
part hereof by such reference. All capitalized terms used in this Lease which
refer to other documents shall be deemed to refer to such other documents as
they may be renewed, extended, supplemented, amended or otherwise modified from
time to time, provided such documents are not renewed, extended or modified in
breach of any provision contained herein or therein or, in the case of any other
document to which BNPLC is a party or of which BNPLC is an intended beneficiary,
without the consent of BNPLC. All accounting terms used but not specifically
defined herein shall be construed in accordance with GAAP. The words "this
Lease", "herein", "hereof", "hereby", "hereunder" and words of similar import
when used in this Lease refer to this Lease as a whole and not to any particular
subdivision unless expressly so limited. The phrases "this Paragraph" and "this
subparagraph" and similar phrases used herein refer only to the Paragraphs or
subparagraphs in which the phrase occurs. As used herein the word "or" is not
exclusive. As used herein the words "include", "including" and similar terms
shall be construed as if followed by "without limitation to".
(l) Not a Partnership, Etc. NOTHING IN THIS LEASE IS INTENDED TO BE
OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE BETWEEN
BNPLC AND SOLECTRON. NEITHER THE EXECUTION OF THIS LEASE NOR THE ADMINISTRATION
OF THIS LEASE OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY OTHER
RIGHT, DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO THIS LEASE OR SUCH
DOCUMENTS IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY OBLIGATIONS OF BNPLC TO
SOLECTRON.
26. INCOME TAX REPORTING. BNPLC and Solectron intend this Lease and the
Purchase Agreement to have a form for income taxes which is different than the
form of this Lease and the Purchase Agreement for other purposes, and thus the
parties acknowledge and agree as follows:
a) FOR PURPOSES OF DETERMINING THEIR RESPECTIVE FEDERAL, STATE
AND LOCAL INCOME TAX OBLIGATIONS, BNPLC and Solectron believe and intend
that this Lease and the Purchase Agreement constitute a financing
arrangement or conditional sale. Both BNPLC and Solectron agree to
report this Lease and the Purchase Agreement as a financing arrangement
or conditional sale on their respective income tax returns (the
"REQUIRED REPORTING"), unless such Required Reporting is challenged in
writing by the Internal Revenue Service or another governmental
authority with jurisdiction (a "TAX CHALLENGE"). Consistent with the
foregoing, BNPLC and Solectron expect that Solectron (and not BNPLC)
shall be treated as the true owner of the Property for income tax
purposes, thereby entitling Solectron (and not BNPLC) to take
depreciation deductions and other
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<PAGE> 56
tax benefits available to the owner. Solectron shall also report all
interest earned on Escrowed Proceeds as Solectron's income for federal,
state and local income tax purposes. REFERENCES IN THIS LEASE OR IN THE
PURCHASE AGREEMENT TO A "LEASE" OR TO "LEASED PROPERTY" ARE NOT INTENDED
FOR INCOME TAX PURPOSES TO REFLECT THE INTENT OF BNPLC OR SOLECTRON AS
TO THE FORM OF THE TRANSACTIONS COVERED BY, OR THE PROPER
CHARACTERIZATION OF, THIS LEASE AND THE PURCHASE AGREEMENT.
b) FOR ALL OTHER PURPOSES, INCLUDING THE DETERMINATION OF THE
APPROPRIATE FINANCIAL ACCOUNTING FOR THIS LEASE AND THE DETERMINATION OF
THEIR RESPECTIVE RIGHTS AND REMEDIES UNDER STATE LAW, BNPLC and
Solectron believe and intend that (i) this Lease constitutes a true
Lease, not a mere financing arrangement, enforceable in accordance with
its express terms (and neither this subparagraph 26 nor the provisions
referencing this subparagraph on the title page of this Lease nor the
corresponding provisions in the Purchase Agreement are intended to
affect the enforcement of any other provisions of this Lease or the
Purchase Agreement) and (ii) the Purchase Agreement shall constitute a
separate and independent contract, enforceable in accordance with the
express terms and conditions set forth therein. In this regard,
Solectron acknowledges that Solectron asked BNPLC to participate in the
transactions evidenced by this Lease and the Purchase Agreement as a
landlord and owner of the Property, not as a lender. Although other
transactions might have been used to accomplish similar results,
Solectron expects to receive certain material accounting and other
advantages through the use of a lease transaction. Accordingly, and
notwithstanding the Required Reporting for income tax purposes,
Solectron cannot equitably deny that this Lease and the Purchase
Agreement should be construed and enforced in accordance with their
respective terms, rather than as a mortgage or other security device, in
any action brought by BNPLC to enforce this Lease or the Purchase
Agreement.
In the event of a Tax Challenge, BNPLC and Solectron shall each provide to the
other copies of all notices from the Internal Revenue Service or any other
governmental authority presenting the Tax Challenge. Further, before changing
from the Required Reporting because of a Tax Challenge, BNPLC and Solectron
shall each consider in good faith any reasonable suggestions received from the
other party to this Lease about an appropriate response to the Tax Challenge;
provided, however, that the suggestions are set forth in a written notice
delivered no later than thirty Business Days after the suggesting party is first
notified of the Tax Challenge; and, provided further, that when presented with a
Tax Challenge, BNPLC and Solectron shall each have the right to change from the
Required Reporting rather than participate in any litigation or other legal
proceeding against the Internal Revenue Service or another governmental
authority. In any event, Solectron must indemnify and hold harmless BNPLC from
and against all liabilities, costs, additional taxes and other expenses that may
arise or become due because of any challenge to the Required Reporting or
because of any resulting recharacterization of this Lease or the Purchase
Agreement required by the Internal Revenue Service or another governmental
authority, including any additional taxes that may become due upon any sale
under the Purchase Agreement, to the extent (if any) that such liabilities,
costs, additional taxes and other expenses are not offset by tax savings
resulting from additional depreciation deductions or other tax benefits to BNPLC
of the recharacterization.
27. PROPRIETARY INFORMATION AND CONFIDENTIALITY. Solectron shall have no
obligation to provide proprietary information (as defined in the next sentence)
to BNPLC, except and to the extent that (1) BNPLC reasonably determines that
BNPLC cannot accomplish the purposes of BNPLC's inspection of the Property
pursuant to the various provisions hereof without evaluating such information,
and (2) before conducting any inspections of the Property permitted hereunder
BNPLC shall, if requested by Solectron, confirm and ratify the
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<PAGE> 57
confidentiality agreements covering such proprietary information set forth in
subparagraph 7.(f). For purposes of this Lease "PROPRIETARY INFORMATION" means
Solectron's intellectual property, trade secrets and other confidential
information of value to Solectron about, among other things, Solectron's
products, marketing and corporate strategies, but in no event will "proprietary
information" include any disclosure of substances and materials (and their
chemical composition) which are or previously have been present in, on or under
the Property at the time of any inspections by BNPLC, nor will "proprietary
information" include any additional disclosures reasonably required to permit
BNPLC to determine whether the presence of such substances and materials has
constituted a violation of Environmental Laws or this Lease. In addition, under
no circumstances shall Solectron have any obligation to disclose to BNPLC or any
other party any proprietary information of Solectron (including, without
limitation, any pending applications for patents or trademarks, any research and
design and any trade secrets) except if and to the limited extent reasonably
necessary to comply with the express provisions of this Lease.
[The signature pages follow.]
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<PAGE> 58
IN WITNESS WHEREOF, Solectron and BNPLC have caused this Amended and
Restated Lease Agreement to be executed as of July 1, 1998.
"SOLECTRON"
SOLECTRON WASHINGTON, INC.
By: /s/ LOUIS F. BIECK
-----------------------------------
Name (print): Louis F. Bieck
Title: Vice President
<PAGE> 59
[Continuation of signature pages to Amended and Restated Lease Agreement dated
to be effective July 1, 1998]
"BNPLC"
BNP LEASING CORPORATION
By: /s/ LLOYD G. COX
------------------------------------
Lloyd G. Cox, Vice President
<PAGE> 60
Exhibit A
LEGAL DESCRIPTION
All that certain real property situate in the City of Everett, County of
Snohomish, State of Washington, being a portion of the Southwest quarter of
Section 2, and a portion of the Southeast quarter of Section 3, all in Township
28 North, Range 4 East, W.M., and also being a portion of Lot 2 Binding Site
Plan/Record of Survey recorded under Snohomish County Recording Number
8910255010, and being more particularly described as follows:
BEGINNING at the quarter corner common to said Sections 2 and 3;
thence from said point of beginning along the East-West centerline of said
Section 2, South 88(Degree) 10'56" East 1192.73 feet;
thence leaving said East-West centerline South 01(Degree) 49'04" West 347.51
feet;
thence South 26(Degree) 07'32" East 208.83 feet;
thence South 12(Degree) 56'43" East 395.73 feet to the Northerly right of way
line of Merrill Creek Parkway as deeded to the City of Everett under Snohomish
County Recording Number 8801270201, Snohomish County records;
thence along said right of way line of Merrill Creek Parkway from a tangent that
bears South 77(Degree) 03'17" West, along the arc of a curve to the left having
a radius of 630.00 feet and a central angle of 37(Degree) 00'43", an arc length
of 406.97 feet;
thence leaving said right of way line North 79(Degree) 36'24" West 1190.79 feet
to the Easterly boundary of the Binding Site Plan/Record of Survey entitled
Seaway Center Two/Intermec recorded under Snohomish County Recording Number
8910255009;
thence along said Easterly boundary North 00(Degree) 50'18" East 955.72 feet to
the East-West centerline of said Section 3;
thence along said East-West centerline South 88(Degree) 33'31" East 136.77 feet
to the point of beginning;
(ALSO KNOWN AS Lot 2F of Binding Site Plan/Record of Survey Seaway Center Five
as recorded under Snohomish County Recording Number 9204015001);
TOGETHER WITH a non-exclusive driveway and access easement as set forth in
document entitled Driveway and Assess Easement Agreement recorded under
Snohomish County Recording Number 9711050088.
Situated in the County of Snohomish, State of Washington
<PAGE> 61
Exhibit B
PERMITTED ENCUMBRANCES
This conveyance is subject to the following matters, but only to the
extent the same are still valid and in full force and effect:
- - Liens securing TAXES AND ASSESSMENTS, not yet due and payable.
- - EASEMENT AND THE TERMS AND CONDITIONS THEREOF:
GRANTEE: Public Utility District No. 1 of Snohomish County
PURPOSE: Underground/overhead electric distribution system
AREA AFFECTED: Ten foot wide strips adjacent to right of way known
as Merrill Creek Parkway as conveyed to the City of
Everett by deed recorded under Snohomish County
Recording Number 8801270201; and the North boundary
of Seaway Blvd., TOGETHER WITH the right to extend
and establish switch cabinets, transformers,
pedestals and other appurtenances beyond said
easement area onto adjacent property of the grantor
RECORDED: July 26, 1988
RECORDING NO.: 8807260343
Contains covenant prohibiting structures over said easement or other
activity which might endanger the underground system.
- - EASEMENT AND THE TERMS AND CONDITIONS THEREOF:
GRANTEE: City of Everett
PURPOSE: Utilities, drainageand detention pond facilities
and appurtenances
AREA AFFECTED: Portions of subject property
RECORDED: December 13, 1988
RECORDING NO.: 8812130477
- - Right to make necessary slopes for cuts or fills upon property herein
described as granted to City of Everett by deed recorded under Recording
No. 8801270201.
- - ALL COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS OR
OTHER SERVITUDES, if any, disclosed by Binding Site Plan/Survey as
recorded under Snohomish County Recording Number 9204015001.
- - The following as and to extent shown on as-built Survey prepared by W &
H Pacific on March 20, 1997, under Job No. 3-2944-0133:
A) Fence from Southerly adjoiner extends 2.2 feet Northerly of our
South property line.
B) Bird feeder post 0.79 feet South of North property line (belongs
to property adjoiner to North).
C) Property adjoiner to the North wood fence extends 0.11 feet South
of subject property's North line.
D) Along Easterly property line - 1/2 light pole onto subject
property.
<PAGE> 62
- - DRIVEWAY AND ACCESS EASEMENT AGREEMENT AND THE TERMS AND CONDITIONS
THEREOF:
GRANTEE: Cintas Sales Corporation, an Ohio Corporation
PURPOSE: Ingress, egress and utilities and related rights as
in said instrument
AREA AFFECTED: Southeasterly portion of subject property
RECORDED: November 5, 1997
RECORDING NO.: 9711050088
Said easement contains a covenant to bear equal share of cost of
construction, maintenance or repair of same.
- - EASEMENT AND THE TERMS AND CONDITIONS THEREOF:
GRANTEE: City of Everett, a municipal corporation
PURPOSE: Sewer system and related rights as in said instrument
AREA AFFECTED: 20 foot wide strip of land within Lot 2F
RECORDED: November 10, 1997
RECORDING NO.: 9711100557
- - EASEMENT AND THE TERMS AND CONDITIONS THEREOF:
GRANTEE: City of Everett, a municipal corporation
PURPOSE: Water system and related rights as in said instrument
AREA AFFECTED: 15 foot wide strips of land within Lot 2F
RECORDED: November 12, 1997
RECORDING NO.: 9711120701
Exhibit B - Page 2
<PAGE> 63
Exhibit C
DESCRIPTION OF THE INITIAL CONSTRUCTION PROJECT
Subject to future Scope Changes, the initial Construction Project will
be substantially consistent with the following description:
Two office/manufacturing buildings connected by a common
office/corporate entrance/cafeteria area totaling approximately 176,000
square feet, together with parking areas for approximately 700 vehicles
and other appurtenant improvements.
<PAGE> 64
Exhibit D
ESTOPPEL FROM CONTRACTORS
_________, 199__
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Re: Assignment of Construction Contract
Ladies and Gentlemen:
The undersigned hereby represents to BNP LEASING CORPORATION, a Delaware
corporation ("BNPLC"), and covenants with BNPLC as follows:
1. The undersigned has entered into that certain [Construction Contract]
(the "CONSTRUCTION CONTRACT") by and between the undersigned and Solectron
Washington, Inc. ("SOLECTRON") dated _______________, 199__ for the construction
of the improvements to be constructed as part of Solectron's Everett campus
leased by Solectron (the "IMPROVEMENTS") on the land described in the Lease
described below (the "LAND" and, together with the Improvements and any other
improvements now on or constructed in the future on the Land, the "PROJECT").
2. The undersigned has also received a copy of the Amended and Restated
Lease Agreement dated as of July 1, 1998 (the "LEASE"), pursuant to which BNPLC
is leasing the Project to Solectron, and BNPLC has agreed, subject to the terms
and conditions of the Lease, to provide a construction allowance for the
construction of the Improvements. The Lease also requires, subject to certain
limitations therein provided, that Solectron fulfill its obligations under the
Construction Contract and related documents and indemnify BNPLC against any
liability arising thereunder, all as more particularly provided in the Lease,
reference to which is hereby made for all purposes.
3. A complete and correct copy of the Construction Contract is attached
to this letter. The Construction Contract is in full force and effect and has
not been modified or amended, except as provided in any written modifications or
amendments which are also attached to this letter.
4. The undersigned has not sent or received any notice of default or any
other notice for the purpose of terminating the Construction Contract, nor does
the undesigned have knowledge of any existing circumstance or event which, but
for the elapse of time or otherwise, would constitute a default by the
undersigned or by Solectron under the Construction Contract.
The undersigned acknowledges and agrees that:
a) Title to all Improvements shall, when constructed on the Land, pass
directly to BNPLC, not to Solectron. BNPLC shall not, however, be held liable
for, and the undersigned shall not assert, any claims, demands or liabilities
against BNPLC arising under or in any way relating to the Construction Contract;
provided, this paragraph will not (1) be construed as a waiver of any statutory
mechanic's or materialmen's liens against the Land or the improvements thereon
that may otherwise exist or arise in favor of the undersigned, or (2) prohibit
the
<PAGE> 65
BNP Leasing Corporation
_______________, 199___
Page 2
undersigned from asserting any claims or making demands against BNPLC under the
Construction Contract if BNPLC elects in writing, pursuant to Paragraph b)
below, to assume the Construction Contract in the event Solectron's right to
possession of the Land is terminated, in which event BNPLC shall be liable for
the unpaid balance of the contract sum due for the work of the undersigned,
payable pursuant to (and subject to the terms and conditions set forth for the
benefit of the owner in) the Construction Contract, but in no event shall BNPLC
otherwise be personally liable for any acts or omissions on the part of
Solectron.
b) Upon any termination of Solectron's right to possession of the
Project under the Lease, including any eviction of Solectron resulting from an
Event of Default (as defined in the Lease), BNPLC may, by notice to the
undersigned and without the necessity of the execution of any other document,
assume Solectron's rights and obligations under the Construction Contract, cure
any defaults by Solectron thereunder and enforce the Construction Contract and
all rights of Solectron thereunder. Within ten days of receiving notice from
BNPLC that Solectron's right to possession has been terminated, the undersigned
shall send to BNPLC a written estoppel letter stating: (i) that the undersigned
has not performed any act or executed any other instrument which invalidates or
modifies the Construction Contract in whole or in part (or, if so, the nature of
such modification); (ii) that the Construction Contract is valid and subsisting
and in full force and effect; (iii) that there are no defaults or events of
default then existing under the Construction Contract and no event has occurred
which with the passage of time or the giving of notice, or both, would
constitute such a default or event of default (or, if there is a default, the
nature of such default in detail); (iv) that the construction contemplated by
the Construction Contract is proceeding in a satisfactory manner in all material
respects (or if not, a detailed description of all significant problems with the
progress of construction); (v) a reasonably detailed report of the then critical
dates projected by the undersigned for work and deliveries required to complete
the Project; (vi) the total amount received by the undersigned for construction
through the date of the letter; (vii) the estimated total cost of completing the
undersigned's work as of the date of the letter, together with a current draw
schedule; and (viii) any other information BNPLC may request to allow it to
decide whether to assume the Construction Contract. BNPLC shall have seven days
from receipt of such written certificate containing all such requested
information to decide whether to assume the Construction Contract. If BNPLC
fails to assume the Construction Contract within such time, the undersigned
agrees that BNPLC shall not be liable for (and the undersigned shall not assert
or bring any action against BNPLC or, except for any statutory lien rights,
against the Land or improvements thereon for) any damages or other amounts
resulting from the breach or termination of the Construction Contract or under
any other theory of liability of any kind or nature, but rather the undersigned
shall look solely to Solectron (and any statutory lien rights) for the recovery
of any such damages or other amounts.
c) If BNPLC notifies the undersigned that BNPLC shall not assume the
Construction Contract pursuant to the preceding paragraph following the
termination of Solectron's right to possession of the Project under the Lease,
the undersigned shall immediately discontinue the work under the Construction
Contract and remove its personnel from the Project, and BNPLC shall be entitled
to take exclusive possession of the Project. The undersigned shall also, upon
request by BNPLC, deliver and assign to BNPLC all plans and specifications and
other contract documents previously delivered to the undersigned (except that
the undersigned may keep an original set of the Construction Contract and other
contract documents executed by Solectron), all other material relating to the
work which belongs to BNPLC or Solectron, and all papers and documents relating
to governmental permits, orders placed, bills and invoices, lien releases and
financial management under the Construction Contract. Notwithstanding the
undersigned's receipt of any notice from BNPLC that BNPLC declines to assume the
Construction Contract, the undersigned shall for a period not to exceed fifteen
days after receipt of such notice take
Exhibit D - Page 2
<PAGE> 66
BNP Leasing Corporation
_______________, 199___
Page 3
such steps, at BNPLC's expense, as are reasonably necessary to preserve and
protect work completed and in progress and to protect materials, equipment and
supplies at the site or in transit.
d) No action taken by BNPLC or the undersigned with respect to the
Construction Contract shall prejudice any other rights or remedies of BNPLC or
the undersigned provided by law, by the Lease, by the Construction Contract or
otherwise against Solectron.
e) The undersigned agrees promptly to notify BNPLC of any material
default or claimed material default by Solectron under the Construction Contract
of which the undersigned is aware, describing with particularity the default and
the action the undersigned believes is necessary to cure the same. The
undersigned will send any such notice to BNPLC prominently marked "URGENT -
NOTICE OF SOLECTRON'S DEFAULT UNDER CONSTRUCTION AGREEMENT WITH SOLECTRON
WASHINGTON, INC. - EVERETT, WASHINGTON" at the address specified for notice
below (or at such other addresses as BNPLC shall designate in notice sent to the
undersigned), by certified or registered mail, return receipt requested.
Following receipt of such notice, the undersigned will permit BNPLC or its
designee to cure any such default within the time period reasonably required for
such cure, but in no event less than thirty days. If it is necessary or helpful
to take possession of all or any portion of the Project to cure a default by
Solectron under the Construction Contract, the time permitted by the undersigned
for cure by BNPLC will include the time necessary to terminate Solectron's right
to possession of the Project and evict Solectron, provided that BNPLC commences
the steps required to exercise such right within sixty days after it is entitled
to do so under the terms of the Lease and applicable law. If the undersigned
incurs additional costs due to the extension of the aforementioned cure period,
the undersigned shall be entitled to an equitable adjustment to the price of the
Construction Contract for such additional costs.
f) Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery or (b) expedited delivery
service with proof of delivery or (c) United States mail, postage prepaid,
registered or certified mail or (d) telegram, telex or telecopy, addressed as
follows:
To the undersigned: _________________________
_________________________
_________________________
Telecopy: (___) ___-_____
To BNPLC: BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Telecopy: (214) 969-0060
Exhibit D - Page 3
<PAGE> 67
BNP Leasing Corporation
_______________, 199___
Page 4
A copy of any such notice or communication will also be sent to Solectron by (a)
personal delivery or (b) expedited delivery service with proof of delivery or
(c) United States mail, postage prepaid, registered or certified mail or (d)
telegram, telex or telecopy, addressed as follows:
Solectron Washington, Inc.
________________________________
________________________________
________________________________
Attention: _____________________
Telecopy: (___) ________________
g) The undersigned acknowledges that it has all requisite authority to
execute this letter. The undersigned further acknowledges that BNPLC has
requested this letter, and is relying on the truth and accuracy of the
representations made herein, in connection with BNPLC's decision to advance
funds for construction under the Lease with Solectron.
Very truly yours,
____________________________________
By: ________________________________
Name: __________________________
Title: _________________________
Solectron joins in the execution of this letter solely for the purpose
of evidencing its consent hereto, including its consent to the provisions that
would allow, but not require, BNPLC to assume the Construction Contract in the
event Solectron is evicted from the Project.
SOLECTRON WASHINGTON, INC.
By: ________________________________
Name: __________________________
Title: _________________________
Exhibit D - Page 4
<PAGE> 68
Exhibit E
ESTOPPEL FROM ARCHITECTS/ENGINEERS
_________, 199__
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Re: Assignment of [Architect's/Engineer's] Agreement
Ladies and Gentlemen:
The undersigned hereby represents to BNP LEASING CORPORATION, a Delaware
corporation ("BNPLC"), and covenants with BNPLC as follows:
1. The undersigned has entered into that certain [Architects/Engineers
Agreement] (the "AGREEMENT") by and between the undersigned and Solectron
Washington, Inc. ("SOLECTRON") dated _______, 199__ for the [design] of the
improvements to be constructed as part of Solectron's Everett campus by
Solectron (the "IMPROVEMENTS") on the land described in the Lease described
below (the "LAND" and, together with the Improvements and any other improvements
now on or constructed in the future on the Land, the "PROJECT").
2. The undersigned has been advised that BNPLC owns the Land.
3. The undersigned has also received a copy of the Amended and Restated
Lease Agreement dated as of July 1, 1998 (the "LEASE"), pursuant to which BNPLC
is leasing the Project to Solectron, and BNPLC has agreed, subject to the terms
and conditions of the Lease, to provide a construction allowance for Solectron's
construction of the Improvements. The Lease also requires Solectron to fulfill
all obligations of Solectron under the Agreement and related documents and to
indemnify BNPLC against any liability arising thereunder, all as more
particularly provided in the Lease, reference to which is hereby made for all
purposes.
4. A complete and correct copy of the Agreement is attached to this
letter. The Agreement is in full force and effect and has not been modified or
amended. The Agreement is in full force and effect and has not been modified or
amended, except as provided in any written modifications or amendments which are
also attached to this letter.
5. The undersigned has not sent or received any notice of default or any
other notice for the purpose of terminating the Agreement, nor does the
undersigned have knowledge of any existing circumstance or event which, but for
the elapse of time or otherwise, would constitute a default by the undersigned
or by Solectron under the Agreement.
The undersigned acknowledges and agrees that:
a) BNPLC shall not be held liable for, and the undersigned shall not
assert, any claims, demands or liabilities against BNPLC or against the Project
arising under or in any way relating to the Agreement; provided, this paragraph
will not prohibit the undersigned from asserting any claims or making demands
under the Agreement
<PAGE> 69
BNP Leasing Corporation
______________, 199____
Page 2
if BNPLC elects in writing, pursuant to Paragraph b) below, to assume the
Agreement in the event Solectron's right to possession of the Land is
terminated, in which event BNPLC shall be liable thereunder for (but only for)
any acts or omissions on the part of BNPLC occurring after the date on which
BNPLC notifies the undersigned of BNPLC's election to assume the Agreement.
b) Upon any termination of Solectron's right to possession of the
Project under the Lease, including any eviction of Solectron resulting from an
Event of Default (as defined in the Lease), BNPLC may, by notice to the
undersigned and without the necessity of the execution of any other document,
assume Solectron's rights and obligations under the Agreement, cure any defaults
by Solectron thereunder and enforce the Agreement and all rights of Solectron
thereunder. Within ten days of receiving notice from BNPLC that Solectron's
right to possession has been terminated, the undersigned shall send to BNPLC a
written estoppel letter stating: (i) that the undersigned has not performed any
act or executed any other instrument which invalidates or modifies the Agreement
in whole or in part (or, if so, the nature of such modification); (ii) that the
Agreement is valid and subsisting and in full force and effect; (iii) that there
are no defaults or events of default then existing under the Agreement and no
event has occurred which with the passage of time or the giving of notice, or
both, would constitute such a default or event of default (or, if there is a
default, the nature of such default in detail); (iv) that the services
contemplated by the Agreement are proceeding in a satisfactory manner in all
material respects (or if not, a detailed description of all significant problems
with the progress of services); (v) a reasonably detailed report of the then
critical dates estimated by the undersigned for services required to complete
the construction project; (vi) the total amount received by the undersigned for
services through the date of the letter; (vii) the estimated total cost of
completing such services as of the date of the letter, together with a current
payment schedule; and (viii) any other information BNPLC may request to allow it
to decide whether to assume the Agreement. BNPLC shall have thirty days from
receipt of such written certificate containing all such requested information to
decide whether to assume the Agreement. If BNPLC fails to assume the Agreement
within such time, the undersigned agrees that BNPLC shall not be liable for (and
the undersigned shall not assert or bring any action against BNPLC or against
the Land or improvements thereon for) any damages or other amounts resulting
from the breach or termination of the Agreement or under any other theory of
liability of any kind or nature, but rather the undersigned shall look solely to
Solectron for the recovery of any such damages or other amounts.
c) If BNPLC notifies the undersigned that BNPLC shall not assume the
Agreement pursuant to the preceding paragraph following the termination of
Solectron's right to possession of the Project under the Lease, the undersigned
shall immediately discontinue the services under the Agreement and remove its
personnel from the Project, and BNPLC shall be entitled to take exclusive
possession of the Project. The undersigned shall also, upon request by BNPLC,
deliver and assign to the following, to the extent that Solectron or BNPLC then
owns or is entitled by the Agreement to the following: (1) all plans and
specifications and other contract documents previously delivered to the
undersigned (except that the undersigned may keep an original set of the
Agreement and other contract documents executed by Solectron); (2) all other
materials or documents relating to the services, and (3) all papers and
documents relating to governmental permits, orders placed, bills and invoices,
lien releases and financial management under the Agreement. Notwithstanding the
undersigned's receipt of any notice from BNPLC that BNPLC declines to assume the
Agreement, the undersigned shall for a period not to exceed fifteen days after
receipt of such notice take such steps as are reasonably necessary to preserve
and protect services completed and in progress.
Exhibit E - Page 2
<PAGE> 70
BNP Leasing Corporation
______________, 199____
Page 3
d) No action taken by BNPLC or the undersigned with respect to the
Agreement shall prejudice any other rights or remedies of BNPLC or the
undersigned provided by law, by the Lease, by the Agreement or otherwise against
Solectron.
e) The undersigned agrees promptly to notify BNPLC of any material
default or claimed material default by Solectron under the Agreement of which
the undersigned is aware, describing with particularity the default and the
action the undersigned believes is necessary to cure the same. The undersigned
will send any such notice to BNPLC prominently marked "URGENT - NOTICE OF
SOLECTRON'S DEFAULT UNDER AGREEMENT WITH SOLECTRON WASHINGTON, INC. - EVERETT,
WASHINGTON" at the address specified for notice below (or at such other
addresses as BNPLC shall designate in notice sent to the undersigned), by
certified or registered mail, return receipt requested. Following receipt of
such notice, the undersigned will permit BNPLC or its designee to cure any such
default within the same time period that Solectron itself would have to cure (if
any) pursuant to the Agreement, but in no event less than thirty days.
f) Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery or (b) expedited delivery
service with proof of delivery or (c) United States mail, postage prepaid,
registered or certified mail or (d) telegram, telex or telecopy, addressed as
follows:
To the undersigned:
-------------------------
-------------------------
-------------------------
Telecopy: (___) ___-_____
To BNPLC: BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Telecopy: (214) 969-0060
A copy of any such notice or communication will also be sent to Solectron by (a)
personal delivery or (b) expedited delivery service with proof of delivery or
(c) United States mail, postage prepaid, registered or certified mail or (d)
telegram, telex or telecopy, addressed as follows:
Solectron Washington, Inc.
--------------------------------
--------------------------------
--------------------------------
--------------------------------
Attention:
----------------------
Telecopy: (___) ________________
Exhibit E - Page 3
<PAGE> 71
BNP Leasing Corporation
_______________, 199___
Page 4
g) The undersigned acknowledges that it has all requisite authority to
execute this letter. The undersigned further acknowledges that BNPLC has
requested this letter, and is relying on the truth and accuracy of the
representations made herein, in connection with BNPLC's decision to advance
funds for construction under the Lease with Solectron.
Very truly yours,
------------------------------------
------------------------------------
By:
---------------------------------
Name:
---------------------------
Title:
--------------------------
Solectron joins in the execution of this letter solely for the purpose of
evidencing its consent hereto, including its consent to the provisions that
would allow, but not require, BNPLC to assume the Agreement in the event
Solectron is evicted from the Project.
SOLECTRON WASHINGTON, INC.
By:
---------------------------------
Name:
---------------------------
Title:
--------------------------
Exhibit E - Page 4
<PAGE> 72
Exhibit F
DRAW REQUEST FORMS
________, 199__
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Re: Construction Advance Request No. __________ by
Solectron Washington, Inc.
Ladies and Gentlemen:
Reference is made to the Amended and Restated Lease Agreement between
BNP Leasing Corporation (herein "BNPLC") and Solectron Washington, Inc. (herein
"SOLECTRON") dated as of July 1, 1998 (herein the "LEASE"). Capitalized terms
defined in the Lease and used but not defined in this letter are intended to
have the meanings assigned to them in the Lease.
Solectron hereby makes request for a Construction Advance in the amount of
$________________ (herein the "CURRENT ADVANCE"). Included herewith are:
1. An Application and Certificate for Payment based on AIA Form G702
(herein the "CONTRACTOR'S APPLICATION") from Solectron's general
contractor or construction manager, attached to which is a schedule
of values listing all subcontractors, suppliers and other parties
to whom the general contractor or construction manager has or will
make payments from the draw requested in the Contractor's
Application. The Contractor's Application evidences an obligation
incurred by (and previously paid by) Solectron for construction of
Improvements and for which Solectron is entitled to reimbursement
from the Current Advance.
2. A list of any costs paid by Solectron, other than to the general
contractor or construction manager, for which Solectron is entitled
to reimbursement from the proceeds of the Current Advance (herein
the "OTHER COSTS LIST").
[NOTE: DRAW REQUESTS NEED INCLUDE THE PARAGRAPHS MARKED BELOW WITH AN ASTERISK,
AND THE INVOICES OR OTHER ITEMS DESCRIBED IN SUCH PARAGRAPHS, ONLY IF AND TO THE
EXTENT THAT BNPLC MAY REQUEST IT AFTER THE LEASE IS EXECUTED]
*3. Invoices and requests for payments from the subcontractors and
others entitled to payment from the general contractor or
construction manager for construction and related work covered by
the Contractor's Application; excluding, however, invoices or
requests from some or all subcontractors and others that, according
to the Contractor's Application, are to be paid less than $200,000
from the
<PAGE> 73
draw requested in Contractor's Application. Such invoices and
requests for payments are consistent with the detail shown in the
schedule of values attached to the Contractor's Application.
*4. Invoices or other evidence of the costs (if any) included in the
Other Costs List.
*5. A list of any "checks on hold" (i.e., payments withheld from
subcontractors or suppliers by Solectron's general contractor or
construction manager because of some defect or deficiency in the
payee's request for payment or in the work or materials provided by
the payee) in excess of $100,000.
6. An up-to-date list of the names and addresses of any contractors or
subcontractors that have actually filed a claim of lien against the
Property, together with, to the extent not already provided with a
prior request for a Construction Advance, a copy of the claim of
lien filed.
7. A certification of an officer of Solectron as required by
subparagraph 6.(e)(viii) of the Lease.
We hereby confirm that BNPLC will not be responsible for the application
of any funds advanced to Solectron or to any other party at our request.
Sincerely,
SOLECTRON WASHINGTON, INC.
By: ________________________________
Name: __________________________
Title: _________________________
Exhibit F - Page 2
<PAGE> 74
CONSTRUCTION ADVANCE CERTIFICATE
Pursuant to subparagraph 6.(e)(viii) of the Amended and Restated Lease Agreement
dated as of July 1, 1998 (the "LEASE") between Solectron Washington, Inc.
("SOLECTRON") and BNP Leasing Corporation ("BNPLC"), Solectron does hereby
represent, warrant and certify to BNPLC in connection with Solectron's request
for Construction Advance No. __________ that:
a) no Event of Default or material Default has occurred and is
continuing,
b) the representations and warranties of Solectron in the following
provisions of the Closing Certificate, the Lease and the Purchase Agreement are
true and correct in all material respects as of the date hereof as though made
on and as of the date hereof:
Subparagraphs 16.(c) through 16.(l) of the Lease.
Subparagraphs 3(A), 3(E) and 4(A) through 4(G) of the
Closing Certificate
Subparagraphs 4(a) through 4(e) of the Purchase Agreement
c) the representations and warranties of Guarantor in Section 9 of the
Guaranty are true and correct in all material respects as of the date hereof as
though made on and as of the date hereof,
d) each Construction Project which has commenced but not yet been
completed is progressing without any significant continuing interruption in a
good and workmanlike manner and substantially in accordance with the
requirements of the Lease and all Applicable Laws and Solectron has corrected or
is diligently pursuing the correction of any significant defect in such
construction,
e) all costs and expenses for which Solectron is requesting
reimbursement by the Construction Advance referenced above constitute actual
costs and expenses incurred by Solectron for a Construction Project, and
f) liens (if any) now being asserted against the Property by Potential
Lien Claimants do not in the aggregate secure or allegedly secure more than
$3,000,000 of claims. (As used in this certificate a lien will be considered as
"being asserted" if a claim of lien relating thereto shall have been recorded
and not discharged by payment or settlement.)
Capitalized terms used herein which are defined in the Lease but not in this
Certificate shall have the meanings assigned to them in the Lease.
In witness whereof, this Certificate is executed by an officer of Solectron
Washington, Inc. as of ______________, 19___.
SOLECTRON WASHINGTON, INC.
By: ________________________________
Name: __________________________
Title: _________________________
Exhibit F - Page 3
<PAGE> 75
LIST OF LIENS FOR WHICH A CLAIM OF LIEN HAS ACTUALLY BEEN FILED
(Construction Advance Request No. ________)
Liens for which a claim of lien has actually been filed are as follows [state
"NONE" if there are none]:
1.
2.
3.
Exhibit F - Page 4
<PAGE> 76
OTHER COSTS LIST
(Construction Advance Request No. ________)
Costs paid - other than to Solectron's general contractor or construction
manager - by Solectron and for which Solectron is entitled to reimbursement from
the Current Advance being requested are as follows [state "NONE" if there are
none]:
1.
2.
3.
Exhibit F - Page 5
<PAGE> 77
Exhibit G
NOTICE OF REQUEST FOR ACTION BY BNPLC
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Re: Amended and Restated Lease Agreement dated as of July 1, 1998,
between Solectron Washington, Inc., as tenant, and
BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Lease referenced above. Pursuant to subparagraph 7.(a)
of the Lease, requests the following of BNPLC:
[INSERT HERE A SPECIFIC DESCRIPTION OF THE ACTION REQUESTED - E.G.,
"PLEASE EXECUTE THE ENCLOSED APPLICATION FOR BUILDING PERMIT REQUIRED BY
THE CITY OF EVERETT IN CONNECTION WITH CONSTRUCTION OF CERTAIN
IMPROVEMENTS WHICH ARE PART OF THE INITIAL CONSTRUCTION PROJECT."]
PLEASE NOTE: SUBPARAGRAPH 7.(A) OF THE LEASE OBLIGATES BNPLC NOT TO UNREASONABLY
REFUSE TO COMPLY WITH THE FOREGOING REQUEST, SUBJECT TO TERMS AND CONDITIONS SET
FORTH IN THAT SUBPARAGRAPH. SOLECTRON HEREBY CERTIFIES TO BNPLC THAT AFTER
CAREFUL CONSIDERATION SOLECTRON BELIEVES THAT ALL SUCH TERMS AND CONDITIONS ARE
SATISFIED IN THE CASE OF THE FOREGOING REQUEST, AND SOLECTRON HEREBY RATIFIES
AND CONFIRMS ITS OBLIGATION TO INDEMNIFY BNPLC AGAINST ANY LOSSES BNPLC MAY
INCUR OR SUFFER BECAUSE OF ITS COMPLIANCE WITH SUCH REQUEST AS PROVIDED IN
SUBPARAGRAPH 5.(D) OF THE LEASE.
Solectron respectfully requests that BNPLC respond to this notice as
soon as reasonably possible.
Executed this _____ day of ______________, 19___.
SOLECTRON WASHINGTON, INC.
By: ________________________________
Name: __________________________
Title: _________________________
<PAGE> 78
Exhibit H
NOTICE OF REQUEST REQUIRING AN EXPEDITED RESPONSE
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Re: Amended and Restated Lease Agreement dated as of July 1, 1998,
between Solectron Washington, Inc., as tenant, and
BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Lease referenced above. Solectron asks for an EXPEDITED
RESPONSE to the following request, which is a request made by Solectron pursuant
to subparagraph 7.(a) of the Lease:
[INSERT HERE A SPECIFIC DESCRIPTION OF THE ACTION REQUESTED - E.G.,
"PLEASE EXECUTE THE ENCLOSED APPLICATION FOR BUILDING PERMIT REQUIRED BY
THE CITY OF EVERETT IN CONNECTION WITH CONSTRUCTION OF CERTAIN
IMPROVEMENTS WHICH ARE PART OF THE INITIAL CONSTRUCTION PROJECT."]
PLEASE NOTE: SUBPARAGRAPH 7.(A) OF THE LEASE OBLIGATES BNPLC NOT TO UNREASONABLY
REFUSE TO COMPLY WITH THE FOREGOING REQUEST, SUBJECT TO TERMS AND CONDITIONS SET
FORTH IN THAT SUBPARAGRAPH. SOLECTRON HEREBY CERTIFIES TO BNPLC THAT AFTER
CAREFUL CONSIDERATION SOLECTRON BELIEVES THAT ALL SUCH TERMS AND CONDITIONS ARE
SATISFIED IN THE CASE OF THE FOREGOING REQUEST, AND SOLECTRON HEREBY RATIFIES
AND CONFIRMS ITS OBLIGATION TO INDEMNIFY BNPLC AGAINST ANY LOSSES BNPLC MAY
INCUR OR SUFFER BECAUSE OF ITS COMPLIANCE WITH SUCH REQUEST AS PROVIDED IN
SUBPARAGRAPH 5.(D) OF THE LEASE.
As you consider the foregoing request, please understand that Solectron must ask
for an expedited request for the following reasons:
[INSERT HERE A BRIEF DESCRIPTION OF THE NEED FOR AN EXPEDITED RESPONSE -
E.G., "TO AVOID CRITICAL PATH DELAYS IN THE CONSTRUCTION CONTEMPLATED BY
THE LEASE, SOLECTRON MUST SUBMIT THE ENCLOSED APPLICATION FOR BUILDING
PERMIT TO THE CITY OF EVERETT WITHIN 15 DAYS, AND UNFORTUNATELY THE CITY
HAS ONLY RECENTLY INDICATED THAT SOLECTRON WILL NEED THE SIGNATURE OF
BNPLC ON THE APPLICATION."]
For the reasons stated above, Solectron respectfully requests that BNPLC respond
to this notice as soon as possible. Although Solectron would appreciate a sooner
response, Solectron believes that it would be unreasonable for BNPLC not to
respond to this notice on or before:
[INSERT HERE A REASONABLE DEADLINE FOR THE RESPONSE - BUT IN NO EVENT
PRIOR TO 10 BUSINESS DAYS AFTER THE DATE OF THIS NOTICE - TAKING INTO
ACCOUNT THE MATERIALS THAT BNPLC WILL HAVE TO REVIEW TO EVALUATE
<PAGE> 79
SOLECTRON'S REQUEST AND THE PARTICULAR REASONS FOR SOLECTRON'S NEED FOR
AN EXPEDITED RESPONSE]
Executed this _____ day of ______________, 19___.
SOLECTRON WASHINGTON, INC.
Name: __________________________
Title: _________________________
Exhibit H - Page 2
<PAGE> 80
Exhibit I
INTENTIONALLY DELETED
<PAGE> 81
Exhibit J
COMPLIANCE CERTIFICATE
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Gentlemen:
The undersigned, as _____________________________ of SOLECTRON
CORPORATION ("Guarantor"), does hereby certify on behalf of Guarantor and
Solectron Washington, Inc. ("Solectron") that the following are true:
1. This Certificate is furnished pursuant to subparagraph 16.(b)(ii) of
that certain Amended and Restated Lease Agreement dated as of July 1, 1998 (the
"LEASE"; the terms defined therein being used herein as therein defined) between
Solectron and you.
2. No Event of Default or material Default by Solectron under the Lease
has occurred and is continuing.
3. The representations and warranties of Solectron in the following
provisions of the Closing Certificate, the Lease and the Purchase Agreement are
true and correct in all material respects as of the date hereof as though made
on and as of the date hereof:
Subparagraphs 16.(c) through 16.(l) of the Lease.
Subparagraphs 3(A), 3(E) and 4(A) through 4(G) of the Closing
Certificate Subparagraphs 4(a) through 4(e) of the Purchase Agreement
4. The representations and warranties of Guarantor in Section 9 of the
Guaranty are true and correct in all material respects as of the date hereof as
though made on and as of the date hereof.
5. Annex 1 attached hereto sets forth financial data and computations
evidencing Guarantor's compliance with certain covenants established in Schedule
A attached to the Guaranty, all of which data and computations are complete,
true and correct.
Executed this _____ day of ______________, 19___.
SOLECTRON CORPORATION
Name: ____________________________
Title: ___________________________
<PAGE> 82
Annex 1 To Compliance Certificate
For the _________________ Ended ________________, 19___
NOTE: References to Sections below are intended to refer to the Sections in Part
3 of Schedule A to the Guaranty.
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C> <C>
1. Section 3.09 - Adjusted Leverage Ratio As of the last day of
each fiscal quarter, the
amount which is not
greater than (a) 1.75 to
1.00 from the Effective
Date through and
including February 28,
1998, (b) 1.50 to 1.00
from May 31, 1998
through and including
February 28, 1999,
(c) 1.25 to 1.00 from
May 31, 1999 through and
including February 28,
2000, and (d) 1.00 to
1.00 thereafter.
Adjusted Leverage Ratio calculation
(A) Consolidated Funded Debt $_______
plus Guarantee obligations ________
plus Indebtedness with respect to ________
synthetic leases and securitized
assets
plus Indebtedness with respect to ________
letters of credit (including the
Letters of Credit)
minus Permitted Subordinated ________
Indebtedness
TOTAL $_______
</TABLE>
Exhibit J - Page 2
<PAGE> 83
<TABLE>
<S> <C> <C>
(B) operating income $_______
plus depreciation and ________
amortization charges
TOTAL $_______
RATIO OF (A) TO (B) ________
2. Section 3.10 - Minimum Consolidated
Tangible Net Worth
As of the last day of each
fiscal quarter following
April 30, 1997, the
amount that is not less than
the sum of (without
duplication) 80% of
Consolidated Tangible Net
Worth measured as of the
end of the fiscal quarter
ended February 28, 1997,
plus 50% of consolidated
net income (without
subtracting losses or
acquisition-related charges)
for each fiscal quarter
the fiscal quarter ended
February 28, 1997, minus 100%
of all acquisition-related
charges if such charges are
recorded in the same fiscal
quarter in which the
applicable acquisition is
consummated.
(A) Consolidated Tangible Net Worth
calculation:
total shareholders' equity $_______
minus intangible assets ________
</TABLE>
Exhibit J - Page 3
<PAGE> 84
<TABLE>
<S> <C> <C>
Consolidated Tangible Net Worth $_______
(B) Minimum Consolidated Tangible Net
Worth calculation:
Beginning minimum amount $_______
plus 50% of quarterly net income _______
for each fiscal quarter subsequent
to the quarter ended February 28,
1997, with no reduction for losses
or acquisition-related charges
minus 100% of all acquisition-
related charges if such charges are
recorded in the same fiscal quarter
in which the applicable acquisition
is consummated
Minimum Consolidated Tangible Net $_______
Worth
(A) MINUS (B) $_______
3. Section 3.11 - Modified Quick Ratio At the end of any fiscal
quarter of Guarantor
when (1) the rating the
rating established by
Moody's for the Index
Debt of Guarantor is
below Ba2 or (2) the
rating established by
S&P for the Index Debt
of Guarantor is below
BB, or (3) neither
Moody's nor S&P
maintains a rating for
the Index Debt of
Guarantor, the Modified
Quick Ratio is to be not
less than 1.0 to 1.0.
(A) Quick Assets calculation:
unencumbered cash $_______
plus unencumbered short term cash ________
investments
</TABLE>
Exhibit J - Page 4
<PAGE> 85
<TABLE>
<S> <C> <C>
plus unencumbered marketable ________
securities which are classified
as short term investments
according to GAAP
plus unencumbered net accounts ________
receivable
plus fair market value of the
following to the extent not
otherwise already included in
Quick Assets and to the extent
having maturities of not longer
than two years:
securities issued or fully ________
guaranteed by the United
States government or any
agency thereof and backed
by the full faith and credit
of the United States
certificates of deposit, time ________
deposits, Eurodollar time
deposits, repurchase
agreements, or banker's
acceptances that are (A)
issued by either one of the 50
largest (in assets) banks in
the United States or by one of
the 100 largest (in assets)
banks in the world and (B)
rated not less than A- by
Standard & Poor's Corporation
or less than A by Moody's
Investors Service, Inc.
corporate or municipal ________
bonds rated not less than A-
by Standard & Poor's
Corporation or less than A by
Moody's Investors Service,
Inc.
TOTAL $_______
</TABLE>
Exhibit J - Page 5
<PAGE> 86
<TABLE>
<S> <C> <C>
(B) Current Liabilities according to $_______
GAAP
(C) Payments not included in Current $_______
Liabilities maturing within 12 months
on Indebtedness or which are the
subject of any Guarantee
RATIO OF (A) TO [(B) +(C)] ________
</TABLE>
Exhibit J - Page 6
<PAGE> 87
Exhibit K
NOTICE OF LIBOR PERIOD ELECTION
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Re: Amended and Restated Lease Agreement dated as of July 1, 1998,
between Solectron Washington, Inc., as tenant, and
BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Lease referenced above. This letter constitutes notice
to you that the LIBOR Period Election under the Lease shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or after:
______________, ____.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE NUMBER OF MONTHS
SPECIFIED ABOVE IS NOT A PERMITTED NUMBER UNDER THE DEFINITION OF "LIBOR PERIOD
ELECTION" IN THE LIST OF DEFINED TERMS ATTACHED TO THE LEASE, OR IF THE DATE
SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF THE LIBOR PERIOD ELECTION IS LESS
THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF THIS NOTICE. HOWEVER, WE ASK THAT
YOU NOTIFY US IMMEDIATELY IF FOR ANY REASON YOU BELIEVE THIS NOTICE IS
DEFECTIVE.
Executed this _____ day of ______________, 19___.
SOLECTRON WASHINGTON, INC.
Name:___________________________
Title:__________________________
[cc all Participants]
<PAGE> 88
Schedule 1
LIST OF DEVELOPMENT DOCUMENTS
- NONE -
<PAGE> 89
Schedule 2
LIST OF CLAIMS PENDING OR THREATENED AGAINST THE PROPERTY
- NONE -
<PAGE> 90
LIST OF DEFINED TERMS
FOR AGREEMENTS BETWEEN
BNP LEASING CORPORATION
AND
SOLECTRON WASHINGTON, INC.
DATED AS OF JULY 1, 1998
<PAGE> 91
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
DEFINED TERM NUMBER
- ------------ ------
<S> <C>
ACTIVE NEGLIGENCE...................................................................................1
ADDITIONAL RENT.....................................................................................1
ADMINISTRATIVE AGENCY FEES..........................................................................1
ADVANCE DATE........................................................................................1
AFFILIATE...........................................................................................1
APPLICABLE LAWS.....................................................................................1
APPLICABLE PURCHASER................................................................................1
ATTORNEYS' FEES.....................................................................................1
BANKING RULES CHANGE................................................................................1
BASE RENT...........................................................................................2
BASE RENT COMMENCEMENT DATE.........................................................................2
BASE RENT DATE......................................................................................2
BASE RENT PERIOD....................................................................................3
BNPLC...............................................................................................3
BNPLC'S PARENT......................................................................................3
BREAKAGE COSTS......................................................................................3
BREAK EVEN PRICE....................................................................................4
BUSINESS DAY........................................................................................4
CAPITAL ADEQUACY CHARGES............................................................................4
CARRYING COSTS......................................................................................4
CLOSING CERTIFICATE.................................................................................4
CODE................................................................................................4
COMMITMENT FEE......................................................................................4
COMPLETION NOTICE...................................................................................4
CONSTRUCTION ADVANCES...............................................................................4
CONSTRUCTION ALLOWANCE..............................................................................5
CONSTRUCTION PERIOD.................................................................................5
CONSTRUCTION PROJECTS...............................................................................5
CONSTRUCTION WARRANTY...............................................................................5
CONSTRUCTION WARRANTY PAYMENTS......................................................................5
DEBT................................................................................................5
DEDUCTIBLE JUDGMENT.................................................................................6
DEFAULT.............................................................................................6
DEFAULT RATE........................................................................................6
DESIGNATED SALE DATE................................................................................6
DEVELOPMENT DOCUMENTS...............................................................................6
EFFECTIVE DATE......................................................................................6
EFFECTIVE RATE......................................................................................6
ENVIRONMENTAL CONSULTANT............................................................................7
ENVIRONMENTAL LAWS..................................................................................7
ENVIRONMENTAL LOSSES................................................................................7
ENVIRONMENTAL REPORTS...............................................................................8
ERISA...............................................................................................8
ERISA AFFILIATE.....................................................................................8
ERISA TERMINATION EVENT.............................................................................8
ESCROWED PROCEEDS...................................................................................8
ESTABLISHED MISCONDUCT..............................................................................8
</TABLE>
-i-
<PAGE> 92
<TABLE>
<CAPTION>
PAGE
DEFINED TERM NUMBER
- ------------ ------
<S> <C>
EUROCURRENCY LIABILITIES............................................................................9
EURODOLLAR RATE RESERVE PERCENTAGE..................................................................9
EVENT OF DEFAULT....................................................................................9
EXCLUDED TAXES......................................................................................9
EXISTING CONTRACT..................................................................................10
FAIR MARKET VALUE..................................................................................10
FED FUNDS RATE.....................................................................................10
FUNDED CONSTRUCTION ALLOWANCE......................................................................10
FUNDING ADVANCES...................................................................................10
GAAP...............................................................................................11
GUARANTOR..........................................................................................11
GUARANTY...........................................................................................11
HAZARDOUS SUBSTANCE................................................................................11
HAZARDOUS SUBSTANCE ACTIVITY.......................................................................11
IMPOSITIONS........................................................................................11
IMPROVEMENTS.......................................................................................12
INDEX DEBT.........................................................................................12
INDUSTRIAL HYGIENIST...............................................................................12
INITIAL FUNDING ADVANCE............................................................................12
INTERESTED PARTY...................................................................................12
LAND...............................................................................................12
LANDLORD'S ELECTION TO CONTINUE CONSTRUCTION.......................................................12
LEASE..............................................................................................12
LIBOR..............................................................................................13
LIBOR PERIOD ELECTION..............................................................................13
LIEN...............................................................................................13
LIENS REMOVABLE BY BNPLC...........................................................................14
LIST OF DEFINED TERMS..............................................................................14
LOSS CUTOFF DATE...................................................................................14
LOSSES.............................................................................................14
MATERIAL ENVIRONMENTAL COMMUNICATION...............................................................14
MAXIMUM CONSTRUCTION ALLOWANCE.....................................................................14
MOODY'S............................................................................................15
OUTSTANDING CONSTRUCTION ALLOWANCE.................................................................15
PARTICIPANT........................................................................................15
PARTICIPATION AGREEMENT............................................................................15
PERMITTED ENCUMBRANCES.............................................................................15
PERMITTED HAZARDOUS SUBSTANCE USE..................................................................15
PERMITTED HAZARDOUS SUBSTANCES.....................................................................16
PERMITTED TRANSFER.................................................................................16
PERSON.............................................................................................16
PERSONAL PROPERTY..................................................................................16
PLAN...............................................................................................16
POTENTIAL LIEN CLAIMANTS...........................................................................16
PRIME RATE.........................................................................................16
PRIOR CLOSING CERTIFICATE..........................................................................17
PRIOR GUARANTY.....................................................................................17
</TABLE>
-ii-
<PAGE> 93
<TABLE>
<CAPTION>
PAGE
DEFINED TERM NUMBER
- ------------ ------
<S> <C>
PRIOR LEASE........................................................................................17
PRIOR PARTICIPATION AGREEMENT......................................................................17
PRIOR PURCHASE AGREEMENT...........................................................................17
PROPERTY...........................................................................................17
PURCHASE AGREEMENT.................................................................................17
QUALIFIED PAYMENTS.................................................................................17
REAL PROPERTY......................................................................................17
REMEDIAL WORK......................................................................................17
RENT...............................................................................................18
RESIDUAL RISK PERCENTAGE...........................................................................18
RESPONSIBLE FINANCIAL OFFICER......................................................................18
S&P................................................................................................18
SCOPE CHANGE.......................................................................................18
SELLER.............................................................................................18
SOLECTRON..........................................................................................18
SOLECTRON'S MAXIMUM REMARKETING OBLIGATION.........................................................18
SPREAD.............................................................................................19
STIPULATED LOSS VALUE..............................................................................19
SUBSIDIARY.........................................................................................20
SUPPLEMENTAL PAYMENT...............................................................................20
TERM...............................................................................................20
TRANSACTION EXPENSES...............................................................................20
UNFUNDED BENEFIT LIABILITIES.......................................................................20
VOLUNTARY RETENTION OF THE PROPERTY................................................................20
</TABLE>
-iii-
<PAGE> 94
LIST OF DEFINED TERMS
As used in the documents to which this List of Defined Terms is
attached:
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is
limited to, the negligent conduct on the Property (and not mere omissions) by
such Person or by others acting and authorized to act on such Person's behalf in
a manner that proximately causes actual bodily injury or property damage for
which Solectron does not carry (and is not obligated by the Lease to carry)
insurance. "ACTIVE NEGLIGENCE" shall not include (1) any negligent failure of
BNPLC to act when the duty to act would not have been imposed but for BNPLC's
status as owner of the Property or as a party to the transactions described in
the Lease, (2) any negligent failure of any other Interested Party to act when
the duty to act would not have been imposed but for such party's contractual or
other relationship to BNPLC or participation or facilitation in any manner,
directly or indirectly, of the transactions described in the Lease, or (3) the
exercise in a lawful manner by BNPLC (or any party lawfully claiming through or
under BNPLC) of any right or remedy provided in or under the Lease, the Purchase
Agreement or the Closing Certificate.
"ADDITIONAL RENT" shall have the meaning assigned to it in subparagraph
4.(c) of the Lease.
"ADMINISTRATIVE AGENCY FEES" shall have the meaning assigned to it in
subparagraph 4.(e) of the Lease.
"ADVANCE DATE" means, regardless of whether any Construction Advance
shall actually be made thereon, the first Business Day of every calendar month,
beginning with July 1, 1998 and continuing regularly thereafter to and including
the Base Rent Commencement Date.
"AFFILIATE" of any Person means any other Person controlling, controlled
by or under common control with such Person. For purposes of this definition,
the term "control" when used with respect to any Person means the power to
direct the management of policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. Notwithstanding the foregoing, for purposes of the Lease and the
Purchase Agreement, Solectron's "Affiliates" will not include any Person
domiciled outside the United States.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to Solectron or the Property or the Lease, the Purchase Agreement or
the Closing Certificate: restrictive covenants; zoning ordinances and building
codes; flood disaster laws; health, safety and environmental laws and
regulations; the Americans with Disabilities Act and other laws pertaining to
disabled persons; and other laws, statutes, ordinances, rules, permits,
regulations, orders, determinations and court decisions.
"APPLICABLE PURCHASER" means any third party designated by Solectron to
purchase BNPLC's interest in the Property and in any Escrowed Proceeds as
provided in the Purchase Agreement.
"ATTORNEYS' FEES" means the reasonable fees and expenses of counsel to
the parties incurring the same, excluding costs or expenses of in-house counsel
(whether or not accounted for as general overhead or administrative expenses),
but otherwise including printing, photostating, duplicating and other expenses,
air freight charges, and fees billed for law clerks, paralegals, librarians and
others not admitted to the bar but performing services under the supervision of
an attorney. Such terms shall also include all such reasonable fees and expenses
incurred with respect to appeals, arbitrations and bankruptcy proceedings, and
whether or not any manner of proceeding is brought with respect to the matter
for which such fees and expenses were incurred.
"BANKING RULES CHANGE" means either: (1) the introduction of or any
change after the Effective Date (other than any change by way of imposition or
increase of reserve requirements included in the Eurodollar Rate
<PAGE> 95
Reserve Percentage) in any law or regulation applicable to BNPLC, BNPLC's Parent
or any other Participant, or in the generally accepted interpretation by the
institutional lending community of any such law or regulation, or in the
interpretation of any such law or regulation asserted by any regulator, court or
other governmental authority or (2) the compliance by BNPLC, BNPLC's Parent or
any other Participant with any new guideline or new request after the Effective
Date from any central bank or other governmental authority (whether or not
having the force of law).
"BASE RENT" means the rent payable by Solectron pursuant to subparagraph
4.(a) of the Lease.
"BASE RENT COMMENCEMENT DATE" means the earlier of (1) the last day that
constitutes first business day of a calendar month and that is no more than 364
days after the Effective Date, (2) the first Business Day of the first calendar
month to follow by ten days or more BNPLC's receipt of the Completion Notice,
(3) the first Business Day of the first calendar month to follow by ten days or
more BNPLC's receipt of a notice from Solectron, setting forth Solectron's
express, unconditional and unequivocal election to accelerate the Base Rent
Commencement Date by delivery such notice, notwithstanding that after the Base
Rent Commencement Date, Solectron shall have no further right to Construction
Advances under the Lease, or (4) the first Business Day of the first calendar
month upon which the Funded Construction Allowance shall equal or exceed the
Maximum Construction Allowance available under the Lease. For example, if on the
first Business Day of October, 1998 construction of the initial Construction
Project is continuing, the Funded Construction Allowance is $15,995,000 (before
adding any Carrying Costs for the preceding month) and the Maximum Construction
Allowance is $16,000,000 (assuming only for purposes of this example that the
was Initial Funding Advance was $9,000,000), and if Carrying Costs of $80,000
would be added to the Funded Construction Allowance on such day if the
Construction Allowance were not limited to the Maximum Construction Allowance,
then such day will be the Base Rent Commencement Date and on such day $5,000
will be added to the Funded Construction Allowance as Carrying Cost and $75,000
will be payable as Base Rent pursuant to subparagraph 4.(b)(i) of the Lease.
"BASE RENT DATE" means a date upon which Base Rent must be paid under
the Lease, all of which dates shall be the first Business Day of a calendar
month. The first Base Rent Date shall be determined as follows:
(a) If a LIBOR Period Election of one month is in effect on the
Base Rent Commencement Date, then the first Business Day of the first
calendar month following the Base Rent Commencement Date shall be the
first Base Rent Date.
(b) If the LIBOR Period Election in effect on the Base Rent
Commencement Date is three months or six months, then the first Business
Day of the third calendar month following the Base Rent Commencement
Date shall be the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date shall be the first
Business Day of the first or third calendar month following the calendar month
which includes the preceding Base Rent Date, determined as follows:
(1) If a LIBOR Period Election of one month is in effect on a
Base Rent Date, then the first Business Day of the first calendar month
following such Base Rent Date shall be the next following Base Rent
Date.
(2) If a LIBOR Period Election of three months or six months is
in effect on a Base Rent Date, then the first Business Day of the third
calendar month following such Base Rent Date shall be the next following
Base Rent Date.
List of Defined Terms - Page 2
<PAGE> 96
Thus, for example, if the Base Rent Commencement Date falls on the first
Business Day of June, 1999 and a LIBOR Period Election of six months commences
on the Base Rent Commencement Date, then the first Base Rent Date shall be the
first Business Day of September, 1999, and the second Base Rent Date shall be
the first Business Day of December, 1999.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the Lease, each of which periods shall correspond to the LIBOR Period Election
for such period. The first Base Rent Period shall begin on and include the Base
Rent Commencement Date, and each successive Base Rent Period shall begin on and
include the Base Rent Date upon which the preceding Base Rent Period ends. Each
Base Rent Period, including the first Base Rent Period, shall end on but not
include the first or second Base Rent Date after the Base Rent Date upon which
such period began, determined as follows:
(1) If the LIBOR Period Election for a Base Rent Period is one
month or three months, then such Base Rent Period shall end on the first
Base Rent Date after the Base Rent Date upon which such period began.
(2) If the LIBOR Period Election for a Base Rent Period is six
months, then such Base Rent Period shall end on the second Base Rent
Date after the Base Rent Date upon which such period began.
The determination of Base Rent Periods can be illustrated by two examples:
(1) If Solectron makes a LIBOR Period Election of three months
for a hypothetical Base Rent Period beginning on the first Business Day
in January, 2000, then such Base Rent Period will end on but not include
the first Base Rent Date after it begins; that is, such Base Rent Period
will end on the first Business Day in April, 2000, the third calendar
month after January, 2000.
(2) If, however, Solectron makes a LIBOR Period Election of six
months for the hypothetical Base Rent Period beginning the first
Business Day in January, 2000, then such Base Rent Period will end on
but not include the second Base Rent Date after it begins; that is, the
first Business Day in July, 2000.
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a
bank organized and existing under the laws of France and any successors of such
bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent (as a Participant or otherwise) or any other
Participant, for which BNPLC's Parent or the Participant shall request
reimbursement from BNPLC, because of the resulting liquidation or redeployment
of deposits or other funds:
(1) used to make or maintain Funding Advances upon application of
a Qualified Payment or upon any sale of the Property pursuant to the
Purchase Agreement, if such application or sale occurs on any day other
than the last day of a Construction Period or Base Rent Period; or
(2) reserved to provide a Construction Advance that Solectron
requests (by a request not rescinded in accordance with subparagraph
6.(f) of the Lease), but thereafter declines to take for any reason, or
that
List of Defined Terms - Page 3
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Solectron requests but is not permitted to take because of its failure
to satisfy any of the conditions specified in subparagraph 6.(e) of the
Lease.
Breakage Costs will include, for example, losses attributable to any decline in
LIBOR as of the effective date of any application described in the clause (1)
preceding, as compared to LIBOR used to determine the Effective Rate then in
effect. Each determination by BNPLC's Parent or the applicable Participant of
Breakage Costs shall, in the absence of clear and demonstrable error, be
conclusive and binding upon Solectron.
"BREAK EVEN PRICE" means an amount equal, on the Designated Sale Date,
to Stipulated Loss Value, plus all costs and expenses (including appraisal
costs, withholding taxes (if any) other than Excluded Taxes, and reasonable
Attorneys' Fees, as defined in the Lease) incurred in connection with any sale
of the Property under the Purchase Agreement or in connection with collecting
sales proceeds due thereunder, and plus any costs not considered as Construction
Advances that may have been incurred by or on behalf of BNPLC to continue or
complete construction of the initial Construction Project after a Landlord's
Election to Continue Construction made pursuant to subparagraph 6.(h) of the
Lease, less the aggregate amounts (if any) of Deductible Judgments.
"BUSINESS DAY" means any day that is (1) not a Saturday, Sunday or day
on which commercial banks are generally closed or required to be closed in New
York City, New York or San Francisco, California, and (2) a day on which
dealings in deposits of dollars are transacted in the London interbank market;
provided that if such dealings are suspended indefinitely for any reason,
"Business Day" shall mean any day described in clause (1).
"CAPITAL ADEQUACY CHARGES" means any additional amounts BNPLC's Parent
or any other Participant requests BNPLC to pay as compensation for an increase
in required capital as provided in subparagraph 5.(c)(ii) of the Lease.
"CARRYING COSTS" means the charges added to and made a part of the
Outstanding Construction Allowance (and thus also added to and made a part of
the Funded Construction Allowance) from time to time on and before the Base Rent
Commencement Date pursuant to and as more particularly described in subparagraph
6.(a) of the Lease.
"CLOSING CERTIFICATE" means the Amended and Restated Closing Certificate
and Agreement dated as of July 1, 1998 executed by Solectron in favor of BNPLC,
as such Closing Certificate may be extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with its terms.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT FEE" shall have the meaning assigned to it in subparagraph
4.(d) of the Lease.
"COMPLETION NOTICE" means the notice required by subparagraph 6.(g) of
the Lease from Solectron to BNPLC, advising BNPLC when construction of the
initial Construction Project is substantially complete.
"CONSTRUCTION ADVANCES" means (1) actual advances of funds made by or on
behalf of BNPLC to or on behalf of Solectron pursuant to subparagraph 6.(a) of
the Lease for the reimbursement to Solectron or payment of Commitment Fees and
of costs, fees and expenses incurred to construct the initial Construction
Project, and (2) amounts otherwise considered as Construction Advances pursuant
to subparagraph 6.(h) of the Lease.
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"CONSTRUCTION ALLOWANCE" means the allowance, consisting of Construction
Advances and Carrying Costs, which is to be provided for the initial
Construction Project as more particularly described in Paragraph 6 of the Lease.
"CONSTRUCTION PERIOD" means each successive period of approximately one
month, with the first Construction Period beginning on and including the
Effective Date and ending on but not including the first Advance Date. Each
successive Construction Period after the first Construction Period shall begin
on and include the day on which the preceding Construction Period ends and shall
end on but not include the next following Advance Date, until the last
Construction Period, which shall end on but not include the earlier of the Base
Rent Commencement Date or the Designated Sale Date.
"CONSTRUCTION PROJECTS" include (1) the "initial Construction Project"
which means the construction of the improvements described in Exhibit C to the
Lease and contemplated by any plans, renderings and budgets referenced in such
Exhibit, consistent with the uses permitted by the Lease, and (2) "subsequent
Construction Projects" which means any other project to be undertaken by
Solectron during the Term and in accordance with the Lease for the construction
of new buildings or other substantial Improvements or for the alteration of then
existing Improvements. Subject to the requirements of subparagraph 6.(d) of the
Lease, a Construction Project may involve demolition of then existing
Improvements which are no longer needed or which must be removed to accommodate
new Improvements. All construction work planned or done contemporaneously shall
constitute a single Construction Project for purposes of the Lease,
notwithstanding that such work may be done in stages or performed by more than
one general contractor. However, it is understood that any number of distinct
Construction Projects may be undertaken by Solectron during the Term of (and in
accordance with the provisions of) the Lease, and that Construction Projects
(including the initial Construction Project) may include offsite and other
public improvements required as conditions of governmental approvals for the
Construction Projects, environmental remediation and other work, dedications,
fees or contributions required by any governmental authority in connection with
the Construction Projects.
Notwithstanding the foregoing, although refinishing, reconfiguring and
refitting space or other interior nonstructural alterations within any completed
building will be subject to subparagraph 12.(d) of the Lease, it will not for
purposes of the Lease constitute a Construction Project if done in a manner that
is not likely to have any material adverse affect on the value of the Property
taken as a whole, unless Solectron expects to receive Construction Advances for
the cost thereof.
"CONSTRUCTION WARRANTY" shall have the meaning assigned to it in
subparagraph 6.(d)(v) of the Lease.
"CONSTRUCTION WARRANTY PAYMENTS" shall have the meaning assigned to it
in subparagraph 6.(d)(v) of the Lease.
"DEBT" of any Person means: (i) indebtedness of such Person for borrowed
money; (ii) obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments; (iii) obligations of such Person to pay the deferred
purchase price of property or services; (iv) obligations of such Person as
lessee under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases; (v) obligations of such Person, contingent or
otherwise, under any lease of real property or related documents (including a
separate purchase agreement) which provide that such Person must purchase or
cause another to purchase any interest in the leased property and thereby
guarantee a minimum residual value of the leased property to the lessor; (vi)
obligations under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a another Person against loss in respect of, indebtedness or obligations
of others
List of Defined Terms - Page 5
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of the kinds referred to in the preceding clauses (i) through (v); (vii)
liabilities of another Person secured by a Lien on, or payable out of the
proceeds of production from, property of such Person even though such obligation
shall not be assumed by such Person (but in the case of such liabilities not
assumed by such Person, the liabilities shall constitute Debt of such Person
only to the extent of the value of such Person's property encumbered by the Lien
securing such liabilities); and (viii) Unfunded Benefit Liabilities.
"DEDUCTIBLE JUDGMENT" means a final, liquidated judgment against BNPLC,
the execution of which has not been and will not be stayed pending appeal by
BNPLC, secured by a judgment lien filed against the Property which constitutes a
Lien Removable by BNPLC.
"DEFAULT" means any event which, with the passage of time or the giving
of notice or both, would (if not cured within any applicable cure period)
constitute an Event of Default.
"DEFAULT RATE" means a floating per annum rate equal to two percent (2%)
above the Prime Rate. However, in no event will the "Default Rate" exceed the
maximum interest rate permitted by law.
"DESIGNATED SALE DATE" means the earlier of:
(1) the first Business Day of July, 2003; or
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by Solectron to BNPLC; provided, the Business
Day so designated by Solectron must be no earlier than sixty days after
the date of such notice; and provided, further, in such notice Solectron
must acknowledge that because of Solectron's election to accelerate the
Designated Sale Date, "Solectron's Maximum Remarketing Obligation" (as
defined below) will equal the Break Even Price, and thus BNPLC shall be
entitled to receive no less than the Break Even Price under the Purchase
Agreement on the Designated Sale Date; or
(3) any Business Day designated as such in a notice given by
BNPLC to Solectron when any Event of Default has occurred and is
continuing or after any breach by Solectron of the Purchase Agreement
(and the expiration without cure of any applicable cure periods which
may be expressly provided in the Purchase Agreement), including any such
breach consisting of a failure to make a payment pursuant to the
Purchase Agreement.
"DEVELOPMENT DOCUMENTS" means the contracts, ordinances and other
documents described in Schedule 1 attached to the Lease, if any, as the same may
be modified from time to time in accordance with the Lease and the Closing
Certificate (including modifications authorized pursuant to subparagraphs 7.(a)
and 7.(b) of the Lease), and any applications, permits or certificates
concerning or affecting the use or development of the Property that may be
submitted, issued or executed from time to time as contemplated in such
contracts, ordinances and other documents or that BNPLC may hereafter execute,
approve or consent to at the request of Solectron.
"EFFECTIVE DATE" means July 1, 1998.
"EFFECTIVE RATE" means for each Construction Period and for each Base
Rent Period, the per annum rate determined by dividing (A) LIBOR for such
Construction Period or Base Rent Period, as the case may be, by (B) one hundred
percent (100%) minus the Eurodollar Rate Reserve Percentage for such
Construction Period or Base Rent Period. If LIBOR or the Eurodollar Rate Reserve
Percentage changes from Construction Period to Construction Period or from Base
Rent Period to Base Rent Period, then the Effective Rate shall be automatically
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increased or decreased as of the date of such change, as the case may be,
without prior notice to Solectron. If for any reason BNPLC determines that it is
impossible or unreasonably difficult to determine the Effective Rate with
respect to a given Construction Period or Base Rent Period in accordance with
the foregoing, then the "EFFECTIVE RATE" for that Construction Period or Base
Rent Period shall equal any published index or per annum interest rate
determined in good faith by BNPLC's Parent to be comparable to LIBOR at the
beginning of the first day of that period. A comparable interest rate might be,
for example, the then existing yield on short term United States Treasury
obligations (as compiled by and published in the then most recently published
United States Federal Reserve Statistical Release H.15(519) or its successor
publication), plus or minus a fixed adjustment based on BNPLC's Parent's
comparison of past eurodollar market rates to past yields on such Treasury
obligations. Any determination by BNPLC of the Effective Rate under this
definition shall, in the absence of clear and demonstrable error, be conclusive
and binding upon Solectron.
"ENVIRONMENTAL CONSULTANT" means a qualified individual employed by a
qualified firm. Individuals shall be deemed qualified if they (i) possess at
least five years of experience in performing environmental, engineering and
consulting services; (ii) have performed or supervised at least five projects
involving remediation of soil contaminated with hazardous substances, including
at least one project similar to the Remedial Work; (iii) have all licenses
required under applicable law for the Remedial Work; and (iv) have at least a
bachelor's degree in the physical sciences or a related field from an accredited
college or university. A firm shall be deemed qualified if it is: (i) a
nationally recognized, reputable environmental and/or engineering firm in the
business of providing professional environmental engineering and consulting
services; (ii) has experience and expertise in projects involving the Remedial
Work; (iii) maintains policies of insurance which are approved by BNPLC in its
reasonable discretion.
"ENVIRONMENTAL LAWS" means any and all existing and future Applicable
Laws pertaining to safety, health or the environment, or to Hazardous Substances
or Hazardous Substance Activities, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, "CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, "RCRA").
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by any
Interested Party relating to or arising out of, based on or as a result of: (i)
any Hazardous Substance Activity that occurs or is alleged to have occurred on
or prior to the Loss Cutoff Date; (ii) any violation on or prior to the Loss
Cutoff Date of Environmental Laws relating to the Property or to the ownership,
use, occupancy or operation thereof; (iii) any investigation, inquiry, order,
hearing, action, or other proceeding by or before any governmental or
quasi-governmental agency or authority in connection with any Hazardous
Substance Activity that occurs or is alleged to have occurred in whole or in
part on or prior to the Loss Cutoff Date; or (iv) any claim, demand, cause of
action or investigation, or any action or other proceeding, whether meritorious
or not, brought or asserted against any Interested Party which relates to,
arises from, is based on, or results from any of the matters described in
clauses (i), (ii) or (iii) of this definition, or any allegation of any such
matters. For purposes of determining whether Losses constitute "Environmental
Losses," any actual or alleged Hazardous Substance Activity or violation of
Environmental Laws relating to the Property will be presumed to have occurred
prior to the Loss Cutoff Date unless Solectron establishes by clear and
convincing evidence to the contrary that the relevant Hazardous Substance
Activity or violation of Environmental Laws did not occur or commence prior to
the Loss Cutoff Date. Even if after the Loss Cutoff Date Losses are incurred by
or asserted against a particular Interested Party that would not have been
incurred or asserted, but for any matter described in clauses (i), (ii) or (iii)
of this definition, or an allegation of any such matter, then such Losses will
constitute Environmental Losses.
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<PAGE> 101
"ENVIRONMENTAL REPORTS" means the following report, which was provided
by Solectron to BNPLC prior to the execution of the Lease: Phase I Environmental
Site Assessment, Lot 2F, Seaway Center, Merrill Creek Parkway, Everett,
Washington, performed by Geotech Consultants, Inc.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA
is a member of Solectron's controlled group, or under common control with
Solectron, within the meaning of Section 414 of the Internal Revenue Code, and
the regulations promulgated and rulings issued thereunder.
"ERISA TERMINATION EVENT" means (i) the occurrence with respect to any
Plan of a reportable event described in Section 4043(c) of ERISA for which any
penalty or notice thereof has not been waived pursuant to regulations, rulings,
or notices issued by the Pension Benefit Guaranty Corporation pursuant to a
waiver by such corporation under Section 4043(a) of ERISA, or (ii) the filing of
a notice of intent to terminate any Plan or the treatment of any Plan amendment
as a termination under Section 4041 of ERISA (other than in connection with a
standard termination of a fully funded Plan pursuant to Section 4041 of ERISA),
or (iii) the institution of proceedings to terminate any Plan by the Pension
Benefit Guaranty Corporation under Section 4042 of ERISA, or (iv) any other
event or condition which would constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"ESCROWED PROCEEDS" means, subject to the exclusions specified in the
next sentence, any money that is received by BNPLC from time to time during the
Term (and any interest earned thereon) from any party (1) under any property
insurance policy as a result of damage to the Property, (2) as compensation for
any restriction imposed by any governmental authority upon the use or
development of the Property or for the condemnation of the Property or any
portion thereof, (3) because of any judgment, decree or award for injury or
damage to the Property or (4) under any title insurance policy or otherwise as a
result of any title defect or claimed title defect with respect to the Property;
provided, however, in determining the amount of "Escrowed Proceeds" there shall
be deducted all expenses and costs of every type, kind and nature (including
Attorneys' Fees) incurred by BNPLC to collect such proceeds. Notwithstanding the
foregoing, "Escrowed Proceeds" will not include (A) any payment to BNPLC by a
Participant or an Affiliate of BNPLC that is made to compensate BNPLC for the
Participant's or Affiliate's share of any Losses BNPLC may incur as a result of
any of the events described in the preceding clauses (1) through (4), (B) any
money or proceeds that have been applied as a Qualified Payment or to pay any
Breakage Costs or other costs incurred in connection with a Qualified Payment,
(C) any money or proceeds that, after no less than ten days notice to Solectron,
BNPLC returns or pays to a third party because of BNPLC's good faith belief that
such return or payment is required by law, (D) any money or proceeds paid by
BNPLC to Solectron or offset against any amount owed by Solectron, or (E) any
money or proceeds used by BNPLC in accordance with the Lease for repairs or the
restoration of the Property or to obtain development rights or the release of
restrictions that will inure to the benefit of future owners or occupants of the
Property. Until Escrowed Proceeds are paid to Solectron pursuant to Paragraph 11
of the Lease, transferred to a purchaser under the Purchase Agreement as therein
provided or applied as a Qualified Payment or as otherwise described in the
preceding sentence, BNPLC shall keep the same deposited in an interest bearing
account, and all interest earned on such account shall be added to and made a
part of Escrowed Proceeds.
"ESTABLISHED MISCONDUCT" of a Person means, and is limited to: (1) if
the Person is bound by the Lease or the Purchase Agreement, a breach by such
Person of the express provisions of the Lease or the Purchase Agreement that
continues beyond any period for cure provided therein, and (2) conduct of such
Person or its
List of Defined Terms - Page 8
<PAGE> 102
Affiliates that has been determined to constitute wilful misconduct or Active
Negligence in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination. Established
Misconduct of one Interested Party shall not be attributed to a second
Interested Party unless the second Interested Party is an Affiliate of the
first. Negligence which does not constitute Active Negligence shall not in any
event constitute Established Misconduct. For purposes of this definition,
"conduct of a Person" will include (1) the conduct of an employee of that
Person, but only to the extent that the employee is acting within the scope of
his employment by that Person, as determined in or as a necessary element of a
final judgment rendered against such Person by a court with jurisdiction to make
such determination, and (2) the conduct of an agent of that Person (such as an
independent environmental consultant engaged by that Person), but only to the
extent that the agent is, as determined in or as a necessary element of a final
judgment rendered against such Person by a court with jurisdiction to make such
determination, (x) acting within the scope of the authority granted to him by
such Person, (y) not acting with the consent or approval of or under the
direction of Solectron or Solectron's Affiliates, employees or agents, and (z)
not acting in good faith to mitigate Losses that such Person may suffer because
of a breach or repudiation by Solectron of the Closing Certificate or Lease or
the Purchase Agreement.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining
the Effective Rate for any Construction Period or Base Rent Period, the reserve
percentage applicable two Business Days before the first day of such period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for BNPLC's Parent with respect to liabilities or deposits
consisting of or including Eurocurrency Liabilities (or with respect to any
other category or liabilities by reference to which LIBOR is determined) having
a term comparable to such period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in subparagraph
17.(a) of the Lease.
"EXCLUDED TAXES" means (1) all federal, state and local income taxes
upon Base Rent, Commitment Fees, Administrative Agency Fees, any interest paid
to BNPLC or any Participant pursuant to subparagraph 4.(g) of the Lease and any
additional compensation claimed by BNPLC pursuant to subparagraph 5.(c)(ii) of
the Lease; (2) all federal, state and local income taxes upon any amounts paid
as reimbursement for or to satisfy Losses incurred by BNPLC or any Participant
to the extent such taxes are offset by a corresponding reduction of BNPLC's or
the applicable Participant's income taxes because of BNPLC's or such
Participant's deduction of the reimbursed Losses from its taxable income or
because of any tax credits attributable thereto; (3) taxes imposed by any
governmental authority outside the United States of America; and (4) any
transfer or change of ownership taxes assessed because of BNPLC's transfer or
conveyance to any third party of BNPLC's rights or interests in the Lease or the
Purchase Agreement or the Property, but excluding any such taxes assessed
because of any transfer described in clauses (4) or (6) of the definition of
Permitted Transfer below. For purposes of this definition, income taxes shall
include any state or local taxes on the net income of BNPLC or a Participant, as
the case may be, whether or not designated as an "income tax" or "franchise tax"
and regardless of any future increase in tax rates used to compute such taxes.
If, however, a change in Applicable Laws after the Effective Date results in an
increase in such taxes for any reason other than an increase in the applicable
tax rates (e.g., a disallowance of deductions that would otherwise be available
against payments described in clause (1) of this definition), then for purposes
of computing the taxes that constitute "Excluded Taxes," the change in law will
not be considered.
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<PAGE> 103
"EXISTING CONTRACT" means the Real Estate Purchase and Sale Agreement
dated as of September 30, 1997 between Solectron Corporation and Seller covering
the Land described in Exhibit A of the Lease.
"FAIR MARKET VALUE" means the fair market value of the Property on or
about the Designated Sale Date (calculated under the assumptions, whether or not
then accurate, that Solectron has fulfilled and can be expected to continue to
fulfill its obligations under the Lease [other than its obligation to complete
the initial Construction Project before the Designated Sale Date]; that
Solectron has maintained the Property in compliance with all Applicable Laws
[including Environmental Laws]; that any Construction Projects [other than the
initial Construction Project] commenced by Solectron but not completed prior to
the Designated Sale Date shall not reduce the value of the Property; that all
Improvements are self-sufficient in the sense that any easements or offsite
facilities needed under the Development Documents or otherwise for the use of
the Improvements will be available at no additional cost to the owner of the
Improvements; that Solectron has repaired and restored the Property after any
damage following fire or other casualty; that Solectron has restored the
remainder of the Property after any partial taking by eminent domain; that
Solectron has completed any contests of and paid any taxes due [other than
Excluded Taxes] or other amounts secured by or allegedly secured by a lien
against the Property, including any assessment liens, but not including Liens
Removable by BNPLC; that no conditions or circumstances on or about the Property
[such as the presence of an endangered species] is discovered that will impede
development of the Property; that development of the Property will not be
hindered or delayed because of the limited availability of utilities or water;
that any purchaser paying fair market value for the Property will receive copies
of all of Solectron's books and records which are necessary or useful to a
future owner's or occupant's use of the Property in the manner permitted by the
Lease, including books and records evidencing the testing and validation of the
Property for the uses permitted by the Lease; that without undue cost or delay
any such purchaser can obtain any necessary permits or licenses needed to use
the Property for the purposes permitted by the Lease; and that Solectron has
cured any title defects affecting the Property other than Liens Removable by
BNPLC, all in accordance with the standards and requirements of the Lease [as
though the Lease were continuing in force], and the Closing Certificate) as
determined by an independent MAI Certified General Real Estate Appraiser
reasonably satisfactory to BNPLC who has five years or more experience
appraising similar properties in and around Everett, Washington.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rates are not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by BNPLC's Parent from three Federal funds brokers of
recognized standing selected by BNPLC's Parent. All determinations of the Fed
Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon Solectron.
"FUNDED CONSTRUCTION ALLOWANCE" means on any day the Outstanding
Construction Allowance on that day, including all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
that day, plus the amount of any Qualified Payments deducted on or prior to that
day in the calculation of such Outstanding Construction Allowance.
"FUNDING ADVANCES" means (1) the Initial Funding Advance and (2) all
future advances made by BNPLC's Parent or any other Participant to or on behalf
of BNPLC to allow BNPLC to provide the Construction Allowance under the Lease.
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<PAGE> 104
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
subparagraph 16.(b) of the Lease (except for changes concurred in by Solectron's
independent public accountants).
"GUARANTOR" means Solectron Corporation, a Delaware corporation.
"GUARANTY" means the Amended and Restated Guaranty dated as of July 1,
1998 given by Guarantor to BNPLC, guaranteeing the obligations of Solectron
under the Lease, Purchase Agreement and Closing Certificate, as such Guaranty
may be extended, supplemented, amended, restated or otherwise modified from time
to time in accordance with its terms.
"HAZARDOUS SUBSTANCE" means (i) any chemical, compound, material,
mixture or substance that is now or hereafter defined or listed in, regulated
under, or otherwise classified pursuant to, any Environmental Laws as a
"hazardous substance," "hazardous material," "hazardous waste," "extremely
hazardous waste or substance," "infectious waste," "toxic substance," "toxic
pollutant," or any other formulation intended to define, list or classify
substances by reason of deleterious properties, including ignitability,
corrosiveness, reactivity, carcinogenicity, toxicity or reproductive toxicity;
(ii) petroleum, any fraction of petroleum, natural gas, natural gas liquids,
liquified natural gas, synthetic gas usable for fuel (or mixtures of natural gas
and such synthetic gas), and ash produced by a resource recovery facility
utilizing a municipal solid waste stream, and drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iii) asbestos and any asbestos
containing material; and (iv) any other material that, because of its quantity,
concentration or physical or chemical characteristics, poses a significant
present or potential hazard to human health or safety or to the environment if
released into the workplace or the environment.
"HAZARDOUS SUBSTANCE ACTIVITY" means any actual, proposed or threatened
use, storage, holding, release (including any spilling, leaking, leaching,
pumping, pouring, emitting, emptying, dumping, disposing into the environment,
and the continuing migration into or through soil, surface water, groundwater or
any body of water), discharge, deposit, placement, generation, processing,
construction, treatment, abatement, removal, disposal, disposition, handling or
transportation of any Hazardous Substance from, under, in, into or on the
Property, including the movement or migration of any Hazardous Substance from
surrounding property, surface water, groundwater or any body of water under, in,
into or onto the Property and any resulting residual Hazardous Substance
contamination in, on or under the Property. "HAZARDOUS SUBSTANCE ACTIVITY" also
means any existence of Hazardous Substances on the Property that would cause the
Property or the owner or operator thereof to be in violation of, or that would
subject the Property to any remedial obligations under, any Environmental Laws,
including CERCLA and RCRA, assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances pertaining to
the Property. "HAZARDOUS SUBSTANCE ACTIVITY" does not, however, include events
or circumstances that do not affect the Property on or about other properties
owned or operated by Solectron.
"IMPOSITIONS" means all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes, levies, fees,
charges, surcharges, assessments or penalties which arise out of or are
attributable to the Lease or which are imposed upon BNPLC or the Property
because of the ownership, leasing, occupancy, sale or operation of the Property,
or any part thereof or interest therein, or relating to or required to be paid
by any of the Permitted Encumbrances or the Development Documents, excluding
only Excluded Taxes. "IMPOSITIONS" shall include real estate taxes imposed
because of a change of use or ownership of the Property on or prior to the date
of any sale by BNPLC pursuant to the Purchase Agreement.
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<PAGE> 105
"IMPROVEMENTS" means any and all (1) buildings and other real property
improvements now or hereafter erected on the Land, and (2) equipment (e.g., HVAC
systems, elevators and plumbing fixtures) attached to the buildings or other
real property improvements, the removal of which would cause structural or other
material damage to the buildings or other real property improvements or would
materially and adversely affect the value or use of the buildings or other real
property improvements.
"INDEX DEBT" means senior, unsecured, long-term indebtedness for
borrowed money of Guarantor that is not guaranteed by any other Person or
subject to any other credit enhancement.
"INDUSTRIAL HYGIENIST" means an industrial hygienist certified by the
American Board of Industrial Hygiene who is experienced with required and
appropriate health and safety standards and good industrial hygiene practice
related to operations at hazardous waste sites.
"INITIAL FUNDING ADVANCE" means, collectively, the advances of made by
BNPLC's Parent (directly or through one or more of its Affiliates) to or on
behalf of BNPLC (1) on or prior to the effective date of the Prior Lease to
cover the cost of BNPLC's acquisition of the Property and certain Transaction
Expenses and other amounts described in this definition, and (2) to cover
Construction Advances and Carrying Costs under (and as defined in) the Prior
Lease. The amount of the Initial Funding Advance may be confirmed by a separate
closing certificate executed by Solectron as of the Effective Date. To the
extent that BNPLC did not itself use the entire Initial Funding Advance to pay
Transaction Expenses incurred by BNPLC or for other purposes described in the
preceding sentence, the remainder thereof was advanced to Solectron, with the
understanding that Solectron would use any such amount advanced for one or more
of the following purposes: (1) the payment or reimbursement of Transaction
Expenses incurred by Solectron; (2) the payment or reimbursement of expenses
incurred by Solectron in connection with the initial Construction Project,
including the planning, design, engineering, construction and permitting of
thereof; (3) the maintenance of the Property; or (4) the payment of Rents next
due.
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) any other Participants and their permitted
successors and assigns under the Participation Agreement; provided, however,
none of the following shall constitute an Interested Party: (a) any Person to
whom BNPLC may transfer an interest in the Property by a conveyance that is not
a Permitted Transfer and others that cannot lawfully claim an interest in the
Property except through or under such a transfer by BNPLC, (b) Solectron or any
Person that cannot lawfully claim an interest in the Property except through or
under a conveyance from Solectron, or (c) any Applicable Purchaser under the
Purchase Agreement and any Person that cannot lawfully claim an interest in the
Property except through or under a conveyance from such Applicable Purchaser.
"LAND" means the land as described in Exhibit A attached to the Lease,
Closing Certificate and Purchase Agreement. However, upon any amendment to the
Lease which modifies the land covered thereby, the land covered by the Closing
Certificate and Purchase Agreement shall automatically be so modified.
"LANDLORD'S ELECTION TO CONTINUE CONSTRUCTION" shall have the meaning
assigned to it in subparagraph 6.(h) of the Lease.
"LEASE" means the Amended and Restated Lease Agreement dated as of July
1, 1998 between BNPLC, as landlord, and Solectron, as tenant, pursuant to which
Solectron has agreed to lease BNPLC's interest in the Property, as such Lease
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
List of Defined Terms - Page 12
<PAGE> 106
"LIBOR" means, for purposes of determining the Effective Rate for each
Construction Period or Base Rent Period, the rate determined by BNPLC's Parent
to be the average rate of interest per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) of the rates at which deposits of dollars are offered or
available to BNPLC's Parent in the London interbank market at approximately
11:00 a.m. (London time) on the second Business Day preceding the first day of
such period. BNPLC shall instruct BNPLC's Parent to consider deposits, for
purposes of making the determination described in the preceding sentence, that
are offered: (i) for delivery on the first day of such Construction Period or
Base Rent Period, as the case may be, (ii) in an amount equal or comparable to
the total (projected on the applicable date of determination by BNPLC's Parent)
Stipulated Loss Value on the first day of such period, and (iii) for a time
equal or comparable to the length of such period. If BNPLC's Parent so chooses,
it may determine LIBOR for any period by reference to the rate reported by the
British Banker's Association on Page 3750 of the Telerate Service at
approximately 11:00 a.m. (London time) on the second Business Day preceding the
first day of such period. If for any reason BNPLC's Parent determines that it is
impossible or unreasonably difficult to determine LIBOR with respect to a given
Construction Period or Base Rent Period in accordance with the foregoing, or if
BNPLC's Parent shall determine that it is unlawful (or any central bank or
governmental authority shall assert that it is unlawful) for BNPLC, BNPLC's
Parent or any Participant to provide or maintain Funding Advances during any
Construction Period or Base Rent Period for which Carrying Costs or Base Rent is
computed by reference to LIBOR, then "LIBOR" for that period shall equal the
rate which is fifty basis points (50/100 of 1%) above the Fed Funds Rate for
that period. All determinations of LIBOR by BNPLC's Parent shall, in the absence
of clear and demonstrable error, be binding and conclusive upon Solectron.
"LIBOR PERIOD ELECTION" for the first Base Rent Period means one month
and for any subsequent Base Rent Period means a period of one month, three
months or six months as designated by Solectron at least ten Business Days prior
to the commencement of such Base Rent Period by a notice given to BNPLC in the
form of Exhibit K attached to the Lease. (For purposes of the Lease a LIBOR
Period Election for any Base Rent Period shall also be considered the LIBOR
Period Election in effect on (1) the Base Rent Commencement Date or Base Rent
Date upon which such Base Rent Period begins and (2) subsequent Base Rent Dates,
if any, which occur before the date upon which such Base Rent Period ends.) Any
LIBOR Period Election so designated by Solectron shall remain in effect for the
entire Base Rent Period specified in Solectron's notice to BNPLC (provided such
Base Rent Period commences at least ten Business Days after BNPLC's receipt of
the notice) and for all subsequent Base Rent Periods until a new designation
becomes effective in accordance with the provisions set forth in this
definition. Notwithstanding the foregoing, however: (1) Solectron shall not be
entitled to designate a LIBOR Period Election that would cause a Base Rent
Period to extend beyond the end of the scheduled Term; (2) changes in the LIBOR
Period Election shall become effective only upon the commencement of a new Base
Rent Period; and (3) if Solectron fails to make a LIBOR Period Election
consistent with the foregoing requirements for any Base Rent Period, or if an
Event of Default shall have occurred and be continuing on the third Business Day
preceding the commencement of any Base Rent Period, the LIBOR Period Election
for such Base Rent Period shall be deemed to be one month.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction). Customary bankers' rights of set-off arising by operation of
law or by contract (however styled, if the contract grants rights no greater
than those arising by operation of law) in connection with working capital
facilities, lines of credit, term loans and letter of credit facilities and
other contractual arrangements entered into with banks in the ordinary course of
business are not "Liens" for the purposes of the Lease.
List of Defined Terms - Page 13
<PAGE> 107
"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering
the Property that are asserted (1) other than as contemplated by the Lease or
the Purchase Agreement, by BNPLC itself, (2) by third parties lawfully claiming
through or under BNPLC (which for purposes of the Lease shall include any
judgment liens established against the Property because of a judgment rendered
against BNPLC and shall also include any liens established against the Property
to secure past due Excluded Taxes), or (3) by third parties lawfully claiming
under a deed or other instrument duly executed by BNPLC; provided, however,
Liens Removable by BNPLC shall not include (A) any Permitted Encumbrances or
Development Documents (regardless of whether claimed through or under BNPLC),
(B) the Closing Certificate, the Lease, the Purchase Agreement or any other
document executed by BNPLC with the knowledge of (and without objection by)
Solectron's counsel contemporaneously with the execution and delivery of the
Closing Certificate, the Lease and the Purchase Agreement, (C) Liens which are
neither lawfully claimed through or under BNPLC (as described above) nor claimed
under a deed or other instrument duly executed by BNPLC, (D) Liens claimed by
Solectron or claimed through or under a conveyance made by Solectron, (E) Liens
arising because of BNPLC's compliance with Applicable Law, the Lease, Permitted
Encumbrances, the Development Documents or any written request made by
Solectron, (F) Liens securing the payment of property taxes or other amounts
assessed against the Property by any governmental authority, other than to
secure the payment of past due Excluded Taxes or to secure damages caused by
(and attributed by any applicable principles of comparative fault to) BNPLC's
own Established Misconduct or the Established Misconduct of BNPLC's Parent or
BNPLC's other Affiliates, or (G) Liens resulting from or arising in connection
with any breach by Solectron of the Closing Certificate, the Lease or the
Purchase Agreement.
"LIST OF DEFINED TERMS" means this List of Defined Terms, which is
attached to and made a part of the Closing Certificate, the Lease, and the
Purchase Agreement.
"LOSS CUTOFF DATE" means the later of the dates upon which (i) the Lease
terminates, (ii) Solectron surrenders possession of the Property or (iii)
Solectron ceases to have any leasehold or other interest in the Property under
the Lease or otherwise.
"LOSSES" means the following, to the extent (but only to the extent)
resulting from, arising out of or in connection with events or circumstances
(including the condition of the Property) that actually or allegedly occurred or
existed or may hereafter occur or exist on or before the Loss Cutoff Date: any
and all losses, liabilities, damages (whether actual, consequential, punitive or
otherwise denominated), demands, claims, administrative or legal proceedings,
actions, judgments, causes of action, assessments, fines, penalties, costs and
expenses (including Attorneys' Fees and the fees of outside accountants and
environmental consultants), of any and every kind or character, foreseeable and
unforeseeable, liquidated and contingent, proximate and remote. For purposes of
determining whether any loss, liability, damage, demand, claim, administrative
or legal proceeding, action, judgment, cause of action, assessment, fine,
penalty, cost or expense constitutes a "Loss," the events or circumstances
relating thereto will be presumed to have occurred prior to the Loss Cutoff Date
unless Solectron establishes by clear and convincing evidence to the contrary
that the relevant events or circumstances did not occur or exist prior to the
Loss Cutoff Date.
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between
Solectron or its agents and a regulatory agency or third party, which causes, or
potentially could cause (whether by implementation of or response to said
communication), a material change in the scope, duration, or nature of any
Remedial Work.
"MAXIMUM CONSTRUCTION ALLOWANCE" means an amount equal to $25,000,000,
less the Initial Funding Advance.
List of Defined Terms - Page 14
<PAGE> 108
"MOODY'S" means Moody's Investor Service, Inc.
"OUTSTANDING CONSTRUCTION ALLOWANCE" shall have the meaning assigned to
it in subparagraph 6.(a) of the Lease.
"PARTICIPANT" means BNPLC's Parent and any other Person that, upon
becoming a party to the Participation Agreement by executing a supplement as
contemplated therein, agrees from time to time to participate in all or some of
the risks and rewards to BNPLC of the Lease, the Purchase Agreement and the
Closing Certificate. As of the Effective Date, the only Participant is BNPLC's
Parent, but BNPLC may agree after the Effective Date to share in risks and
rewards of the Lease, the Purchase Agreement and the Closing Certificate with
other Participants. However, no Person other than BNPLC's Parent and its
Affiliates shall qualify as a Participant for purposes of the Lease, the
Purchase Agreement, the Closing Certificate or other agreements concerning the
Property to which Solectron is a party unless such Person, with Solectron's
prior written approval (which approval will not be unreasonably withheld),
became a party to the Participation Agreement by executing a supplement to that
agreement as contemplated therein.
"PARTICIPATION AGREEMENT" means the Amended and Restated Participation
Agreement dated as of the Effective Date, between BNPLC and BNPLC's Parent and
any other Participants that may become parties thereto as contemplated therein,
pursuant to which BNPLC's Parent has agreed to participate in the risks and
rewards to BNPLC of the Lease and the Purchase Agreement, as such Participation
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"PERMITTED ENCUMBRANCES" means (i) the encumbrances and other matters
affecting the Property that are set forth in Exhibit B attached to the Lease,
(ii) any easement agreement or other document affecting title to the Property
executed by BNPLC at the request of or with the consent of Solectron, and (iii)
any liens from time to time imposed to secure only ad valorem taxes on the
Property which, at the time in question, are not delinquent.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage
and offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not:
(1) exceed that reasonably required for the construction of
Construction Projects permitted by the Lease or for the operation of the
Property for the purposes expressly permitted under subparagraph 3.(a)
of the Lease; or
(2) include any disposal, discharge or other release of
Hazardous Substances from the Property in any manner that might allow
such substances to reach surface water or groundwater, except (i)
through a lawful and properly authorized discharge (A) to a publicly
owned treatment works or (B) with rainwater or storm water runoff in
accordance with Applicable Laws and any permits obtained by Solectron
that govern such runoff; or (ii) any such disposal, discharge or other
release of Hazardous Substances for which no permits are required and
which are not otherwise regulated under applicable Environmental Laws.
Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
List of Defined Terms - Page 15
<PAGE> 109
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for Construction Projects expressly permitted by the Lease
or for the use of the Property by Solectron and its permitted subtenants and
assigns for the purposes expressly permitted by subparagraph 3.(a) of the Lease,
in either case in strict compliance with all Environmental Laws and with due
care given the nature of the Hazardous Substances involved. Without limiting the
generality of the foregoing, Permitted Hazardous Substances shall include usual
and customary office, laboratory and janitorial products.
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance of rights and interests in favor of the BNPLC's Parent or
other Participants pursuant to the terms and conditions of the Participation
Agreement, provided that in any case where rights or interests in the Property
are so created or conveyed, the rights or interests are made expressly subject
to the rights of Solectron under the Lease and the Purchase Agreement; (2) any
assignment or conveyance by BNPLC to any present or future Participant of any
lien or security interest against the Property (in contrast to a conveyance of
BNPLC's fee estate) or of any interest in Rent, payments required by or under
the Purchase Agreement or payments to be generated from the Property after the
Term, provided that such assignment or conveyance is made expressly subject to
the rights of Solectron under the Lease and the Purchase Agreement; (3) any
agreement to exercise or refrain from exercising rights or remedies under the
Lease or the Purchase Agreement made by BNPLC with any present or future
Participant; (4) any assignment or conveyance by BNPLC requested by Solectron or
required by any Permitted Encumbrance, by Development Documents, by the Purchase
Agreement or by Applicable Laws; (5) conveyances or transfers by BNPLC or its
Affiliates to BNPLC or its Affiliates, provided that in the case of any such
conveyance or transfer that covers any interest in the Property, the conveyance
or transfer is made expressly subject to the rights of Solectron under the Lease
and the Purchase Agreement; or (6) any other assignment or conveyance by BNPLC
when an Event of Default shall have occurred and be continuing or after a
Landlord's Election to Continue Construction or after the Designated Sale Date.
"PERSON" means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or agency or political subdivision
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
"PERSONAL PROPERTY" shall have the meaning assigned to it on page 2 of
the Lease.
"PLAN" means at any time an employee pension benefit plan which is
covered under Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and is either (i) maintained by
Solectron, Guarantor or any Subsidiary of Solectron or Guarantor for employees
of Solectron, Guarantor or any Subsidiary of Solectron or Guarantor or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
Solectron, Guarantor or any Subsidiary of Solectron or Guarantor is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions.
"POTENTIAL LIEN CLAIMANTS" means (1) general contractors, or (2) other
parties who have filed any required statutory notices, or who have actually
notified BNPLC or Solectron of claims, in order to preserve or establish their
right to a mechanic's or materialman's lien against the Property in connection
with any Construction Project.
"PRIME RATE" means the prime interest rate or equivalent charged by
BNPLC's Parent in the United States of America as announced or published by
BNPLC's Parent from time to time, which need not be the lowest interest rate
charged by BNPLC's Parent. If for any reason BNPLC's Parent does not announce or
publish a prime rate or equivalent, the prime rate or equivalent announced or
published by either Citibank, N.A. or any New York
List of Defined Terms - Page 16
<PAGE> 110
branch or office of Credit Commercial de France as selected by BNPLC shall be
used to compute the rate describe in the preceding sentence. The prime rate or
equivalent announced or published by such bank need not be the lowest rate
charged by it. The Prime Rate may change from time to time after the Effective
Date without notice to Solectron as of the effective time of each change in
rates described in this definition.
"PRIOR CLOSING CERTIFICATE" shall have the meaning assigned to it on the
first page of the Closing Certificate.
"PRIOR GUARANTY" shall have the meaning assigned to it on the first page
of the Guaranty.
"PRIOR LEASE" shall have the meaning assigned to it on the first page of
the Lease.
"PRIOR PARTICIPATION AGREEMENT" shall have the meaning assigned to it on
the first page of the Participation Agreement.
"PRIOR PURCHASE AGREEMENT" shall have the meaning assigned to it on the
first page of the Purchase Agreement.
"PROPERTY" means the Personal Property and the Real Property,
collectively.
"PURCHASE AGREEMENT" means the Amended and Restated Purchase Agreement
dated as of July 1, 1998 between BNPLC and Solectron pursuant to which Solectron
has agreed to purchase or to arrange for the purchase by a third party of
BNPLC's interest in the Property, as such Purchase Agreement may be extended,
supplemented, amended, restated or otherwise modified from time to time in
accordance with its terms.
"QUALIFIED PAYMENTS" means all payments received by BNPLC from time to
time during the Term from any party (1) under any property insurance policy as a
result of damage to the Property, (2) as compensation for any restriction placed
upon the use or development of the Property or for the condemnation of the
Property or any portion thereof, (3) because of any judgment, decree or award
for injury or damage to the Property or (4) under any title insurance policy or
otherwise as a result of any title defect or claimed title defect with respect
to the Property; provided, however, that (x) in determining the amount of
"Qualified Payments", there shall be deducted all expenses and costs of every
kind, type and nature (including taxes, Breakage Costs and Attorneys' Fees)
incurred by BNPLC with respect to the collection or application of such
payments, (y) "Qualified Payments" shall not include any payment to BNPLC by a
Participant or an Affiliate of BNPLC that is made to compensate BNPLC for the
Participant's or Affiliate's share of any Losses BNPLC may incur as a result of
any of the events described in the preceding clauses (1) through (4) and (z)
"Qualified Payments" shall not include any payments received by BNPLC that BNPLC
has paid to Solectron for the restoration or repair of the Property or that
BNPLC is holding as Escrowed Proceeds. For purposes of computing the total
Qualified Payments (and other amounts dependent upon Qualified Payments, such as
Stipulated Loss Value and the Outstanding Construction Allowance) paid to or
received by BNPLC as of any date, payments described in the preceding clauses
(1) through (4) will be considered as Escrowed Proceeds, not Qualified Payments,
until they are actually applied as Qualified Payments by BNPLC as provided in
subparagraph 11.(c) of the Lease.
"REAL PROPERTY" shall have the meaning assigned to it on page 1 of the
Lease.
"REMEDIAL WORK" means any investigation, monitoring, clean-up,
containment, remediation, removal, payment of response costs, or restoration
work and the preparation and implementation of any closure or other
List of Defined Terms - Page 17
<PAGE> 111
required remedial plans that any governmental agency or political subdivision
requires or approves (or could reasonably be expected to require if it was aware
of all relevant circumstances concerning the Property), whether by judicial
order or otherwise, because of the presence of or suspected presence of
Hazardous Substances in, on, under or about the Property or because of any prior
Hazardous Substance Activity. Without limiting the generality of the foregoing,
Remedial Work also means any obligations imposed upon or undertaken by Solectron
pursuant to Development Documents or any recommendations or proposals made
therein.
"RENT" means the Base Rent and all Additional Rent.
"RESIDUAL RISK PERCENTAGE" means fifteen percent (15%).
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of either Solectron or
Guarantor, as the case may be.
"S&P" means Standard and Poor's Corporation.
"SCOPE CHANGE" means a change to a Construction Project that, if
implemented, will make the quality, function or capacity of the Improvements
affected by such Construction Project "materially different" (as defined below
in this paragraph) than as described or inferred by plans and other items
submitted to BNPLC by Solectron as described in subparagraph 6.(d)(i) of the
Lease. "Scope Change" is not intended to include the mere refinement, correction
or detailing of plans or other items submitted to BNPLC by Solectron. As used in
this definition, a "material difference" means a difference that (a) could
(after completion of the applicable Construction Project and the funding of any
Construction Advances required in connection therewith) significantly reduce any
excess of the market value of the Property over Stipulated Loss Value or
significantly increase any excess of Stipulated Loss Value over the market value
of the Property, or (b) will change the general character of the Improvements
from that needed to accommodate the uses permitted by subparagraph 3.(a) of the
Lease.
"SELLER" means The Quadrant Corporation.
"SOLECTRON" means Solectron Washington, Inc., a California corporation.
"SOLECTRON'S MAXIMUM REMARKETING OBLIGATION" shall have the meaning
indicated in the following provisions:
(1) In the event of a Voluntary Retention of the Property, or if
the Designated Sale Date occurs on the first Business Day of July, 2003
as provided above in clause (1) of the definition of Designated Sale
Date, "SOLECTRON'S MAXIMUM REMARKETING OBLIGATION" will equal (A) (x)
Stipulated Loss Value on the Designated Sale Date, times (y) 100% minus
the Residual Risk Percentage, less (B) the sum of any Escrowed Proceeds
held and to be retained by BNPLC after the Designated Sale Date.
(2) Absent a Voluntary Retention of the Property, if the
Designated Sale Date should occur prior to the first Business Day of
July, 2003 because of Solectron's election to accelerate the Designated
Sale Date as provided above in clause (2) of the definition of
Designated Sale Date, "SOLECTRON'S MAXIMUM REMARKETING OBLIGATION" will
equal the Break Even Price.
(3) Absent a Voluntary Retention of the Property, if the
Designated Sale Date should occur prior to the first Business Day of
July, 2003 for any reason other than as described in the preceding
List of Defined Terms - Page 18
<PAGE> 112
clause (2) (including because of BNPLC's election to accelerate the
Designated Sale Date as provided above in clause (3) of the definition
of Designated Sale Date), "SOLECTRON'S MAXIMUM REMARKETING OBLIGATION"
will equal the Break Even Price.
"SPREAD" means, for each Construction Period or period beginning on and
including a Base Rent Date and ending on but not including the next Base Rent
Date, the amount established as described below in this definition on the date
that is two Business Days prior to such period by reference to the stated (or
published, implied) rating by S&P or by Moody's applicable to the Index Debt on
that date. The Spread shall be established at the Level in the pricing grid
below which corresponds to the rating of S&P and Moody's, respectively,
applicable to the Index Debt; provided that (a) if one, but not both, of Moody's
or S&P shall not have in effect a rating (stated or published, implied) for the
Index Debt, then the Spread shall be determined solely with reference to the
available rating by the rating agency that still rates the Index Debt; (b) if
the ratings established by Moody's and S&P for the Index Debt shall indicate two
different but consecutive Levels, the Spread shall be based on the more
favorable to Guarantor of the two Levels; (c) if the ratings established by
Moody's and S&P for the Index Debt shall indicate two different but
nonconsecutive Levels, the Spread shall be the average of the Spreads
corresponding to such Levels; (d) if the rating established by Moody's or S&P
for the Index Debt shall be changed (other than as a result of a change in the
rating system of Moody's or S&P), such change shall be effective on the date on
which it is first announced by the applicable rating agency; (e) notwithstanding
anything to the contrary in (a) through (d) above, but subject to (f) and (g)
below, if either the rating established by Moody's for the Index Debt of
Guarantor is below Ba2 or the rating established by S&P for the Index Debt of
Guarantor is below BB, the Spread shall be 80.0 basis points; (f)
notwithstanding anything to the contrary in (a) through (e) above, but subject
to (g) below, if Moody's does not establish a rating for the Index Debt of Ba2
or higher (including if Moody's has ceased to establish any rating for the Index
Debt) and S&P does not establish a rating for the Index Debt of BB or higher
(including if S&P has ceased to establish any rating of the Index Debt), the
Spread shall be the difference computed by subtracting the Effective Rate from
the rate that is 50.0 basis points above the Prime Rate; and (g) notwithstanding
anything to the contrary in (a) through (f) above, on any date where an Event of
Default has occurred and is continuing, the Spread shall equal the Default Rate
less the Effective Rate.
<TABLE>
<CAPTION>
======================================================================================================
LEVELS S&P RATING MOODY'S RATING MARGIN
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Level I BBB+ (or better) Baa1 (or better) 32.5 basis points
- ------------------------------------------------------------------------------------------------------
Level II BBB Baa2 40.0 basis points
- ------------------------------------------------------------------------------------------------------
Level III BBB- Baa3 48.75 basis points
- ------------------------------------------------------------------------------------------------------
Level IV BB+ Ba1 67.5 basis points
- ------------------------------------------------------------------------------------------------------
Level V BB Ba2 80.0 basis points
======================================================================================================
</TABLE>
All determinations of the Spread by BNPLC shall, in the absence of clear and
demonstrable error, be binding and conclusive for purposes of the Lease. Further
BNPLC may, but shall not be required, to rely on the determination of the Spread
set forth in any certificate delivered by Guarantor pursuant to subparagraph
16.(b)(ii) of the Lease, and no reduction in the Spread will be effective
because of an improvement in the S&P Rating or the Moody's Rating before the
date that Guarantor has notified BNPLC thereof by delivery of such a
certificate.
"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum
of the Initial Funding Advance, plus the sum of all Construction Advances and
Carrying Costs added to the Outstanding
List of Defined Terms - Page 19
<PAGE> 113
Construction Allowance on or prior to such date, minus all funds received by
BNPLC and applied as Qualified Payments on or prior to such date. Under no
circumstances will any payment of Base Rent, Commitment Fees or Administrative
Agency Fees reduce Stipulated Loss Value.
"SUBSIDIARY" means any corporation of which another corporation owns,
directly or indirectly, such number of outstanding shares as have more than
fifty percent (50%) of the ordinary voting power for the election of directors.
"SUPPLEMENTAL PAYMENT" shall have the meaning assigned to it in
subparagraph 1(a)(ii) of the Purchase Agreement.
"TERM" shall have the meaning assigned to it in Paragraph 1 of the
Lease.
"TRANSACTION EXPENSES" means costs incurred in connection with the
preparation and negotiation of the Lease, the Closing Certificate, the Purchase
Agreement and related documents and the consummation of the transactions
contemplated therein.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan, the
amount (if any) by which the present value of all benefit liabilities (within
the meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the market
value of all Plan assets allocable to such benefit liabilities, as determined on
the most recent valuation date of the Plan and in accordance with the provisions
of ERISA for calculating the potential liability of Solectron or Guarantor or
any ERISA Affiliate of Solectron or Guarantor under Title IV of ERISA.
"VOLUNTARY RETENTION OF THE PROPERTY" means an affirmative election made
by BNPLC to keep the Property pursuant to, and under the circumstances described
in, the second sentence of subparagraph 1(a)(ii) of the Purchase Agreement.
List of Defined Terms - Page 20
<PAGE> 1
EXHIBIT 10.2
================================================================================
$25,000,000
AMENDED AND RESTATED
PURCHASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
SOLECTRON WASHINGTON, INC.
("SOLECTRON")
JULY 1, 1998
(EVERETT, WASHINGTON)
================================================================================
PURSUANT TO AND AS MORE PARTICULARLY PROVIDED IN PARAGRAPH 13 OF THIS AGREEMENT,
THE LEASE REFERENCED HEREIN AND THIS PURCHASE AGREEMENT ARE TO CONSTITUTE, FOR
INCOME TAX PURPOSES ONLY, A FINANCING ARRANGEMENT OR CONDITIONAL SALE. AS
PROVIDED IN PARAGRAPH 13 OF THIS AGREEMENT, BNPLC AND SOLECTRON EXPECT THAT
SOLECTRON (AND NOT BNPLC) SHALL BE TREATED AS THE TRUE OWNER OF THE PROPERTY FOR
INCOME TAX PURPOSES, THEREBY ENTITLING SOLECTRON (AND NOT BNPLC) TO TAKE
DEPRECIATION DEDUCTIONS AND OTHER TAX BENEFITS AVAILABLE TO THE OWNER.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. SOLECTRON'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE......................1
(a) Choices.......................................................................1
(b) Election by Solectron.........................................................2
(c) Termination of Solectron's Option To Purchase.................................3
(d) Payment to BNPLC..............................................................3
(e) Effect of Options on Subsequent Title Encumbrances............................3
2. TERMS OF CONVEYANCE UPON PURCHASE....................................................4
3. SURVIVAL OF SOLECTRON'S OBLIGATIONS..................................................4
(a) Status of this Agreement......................................................4
(b) Remedies Under the Lease and Closing Certificate..............................5
4. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF SOLECTRON.........................5
(a) No Default or Violation.......................................................5
(b) No Suits......................................................................5
(c) Enforceability................................................................5
(d) Organization..................................................................6
(e) Omissions.....................................................................6
5. CERTAIN REMEDIES CUMULATIVE..........................................................6
6. ATTORNEYS' FEES AND LEGAL EXPENSES...................................................6
7. ESTOPPEL CERTIFICATE.................................................................6
8. SUCCESSORS AND ASSIGNS...............................................................6
9. MISCELLANEOUS........................................................................7
(a) Notices.......................................................................7
(b) Severability..................................................................8
(c) No Implied Waiver.............................................................8
(d) NO IMPLIED REPRESENTATIONS BY BNPLC...........................................9
(e) Entire Agreement..............................................................9
(f) Time is of the Essence........................................................9
(g) Governing Law.................................................................9
(h) Paragraph Headings............................................................9
(i) Other Terms and References....................................................9
(j) Not a Partnership, Etc........................................................9
10. WAIVER OF JURY TRIAL................................................................10
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
11. ADDITIONAL RIGHTS OF BNPLC RELATING TO ESCROWED PROCEEDS............................10
12. SECURITY FOR BNPLC'S OBLIGATIONS....................................................10
13. INCOME TAX REPORTING................................................................10
Exhibits and Schedules
Exhibit A....................................................................Legal Description
Exhibit B.................................................................................Deed
Exhibit C.............................................State of Washington Excise Tax Affidavit
Exhibit D..........................................................Bill of Sale and Assignment
Exhibit E........................................................Acknowledgment and Disclaimer
Exhibit F................................................................Intentionally Deleted
Exhibit G..............................................................Secretary's Certificate
Exhibit H..................................................Instruction Letter to Title Insurer
Exhibit I...............................................Certificate Concerning Tax Withholding
Exhibit J...............................................Indemnity for Liens Removable by BNPLC
List of Defined Terms.......................................................Shared Definitions
</TABLE>
(ii)
<PAGE> 4
AMENDED AND RESTATED
PURCHASE AGREEMENT
This AMENDED AND RESTATED PURCHASE AGREEMENT (this "AGREEMENT"), by and
between BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), and SOLECTRON
WASHINGTON, INC., a California corporation ("SOLECTRON"), is dated as of July 1,
1998, the Effective Date. ("EFFECTIVE DATE" and other capitalized terms used and
not otherwise defined in this Agreement are intended to have the meanings
assigned to them in the List of Defined Terms attached to and made a part of
this Agreement.)
RECITALS
Pursuant to the Existing Contract, covering the Land described in
Exhibit A, BNPLC acquired the Land and any appurtenances thereto from Seller
contemporaneously with the execution of a Purchase Agreement between BNPLC and
Solectron dated as of December 1, 1997 (the "PRIOR PURCHASE AGREEMENT") and with
the execution of the Prior Lease by BNPLC and Solectron. This Agreement amends,
restates and replaces the Prior Purchase Agreement in its entirety, as of the
Effective Date.
Pursuant to the Prior Lease, BNPLC leased the Land to Solectron and
agreed to provide funding for the construction of Improvements to be owned by
BNPLC. Contemporaneously with the execution of this Agreement, BNPLC and
Solectron are executing the Lease to amend, restate and replace the Prior Lease
in its entirety as of the Effective Date. (BNPLC's interests in the Land, the
Improvements and in all other real and personal property from time to time
covered by the Lease and included within the "Property" as defined therein are
hereinafter collectively referred to as the "PROPERTY".)
By this Agreement, Solectron and BNPLC intend to evidence the terms and
conditions upon which Solectron will purchase or arrange for the purchase of the
Property.
AGREEMENTS
NOW, THEREFORE, in consideration of the above recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. SOLECTRON'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE.
(a) Choices. On the Designated Sale Date, even if an Event of
Default shall have occurred and be continuing or the Lease shall have been
terminated, Solectron shall have the right and the obligation to either:
(i) purchase or cause an Affiliate of Solectron to
purchase BNPLC's interest in the Property and in Escrowed Proceeds, if
any, for a cash price equal to the Break Even Price; or
(ii) cause an Applicable Purchaser who is not an Affiliate
of Solectron to purchase the Property and Escrowed Proceeds, if any,
from BNPLC for a net cash price set by Solectron at an amount not below
the lesser of (a) Fair Market Value, (b) the Residual Risk Percentage of
Stipulated Loss Value outstanding immediately prior to the purchase, or
(c) the Break Even Price. If, however, pursuant to the
<PAGE> 5
preceding sentence Solectron sets a net cash price below the Residual
Risk Percentage of Stipulated Loss Value and below the Break Even Price
(because Fair Market Value is lower), BNPLC may affirmatively elect to
keep the Property and any Escrowed Proceeds rather than sell to the
Applicable Purchaser, in which case Solectron must pay to BNPLC a
supplemental payment equal to Solectron's Maximum Remarketing
Obligation. Unless BNPLC elects to keep the Property pursuant to the
preceding sentence, Solectron must make a supplemental payment to BNPLC
on the Designated Sale Date equal to the excess (if any) of the Break
Even Price over the total of the cash price actually paid to BNPLC on
the Designated Sale Date by the Applicable Purchaser for the Property
and any Escrowed Proceeds; provided, however, such supplemental payment
shall not exceed Solectron's Maximum Remarketing Obligation. (Any
supplemental payment payable to BNPLC by Solectron, rather than by the
Applicable Purchaser, pursuant to this clause (ii) is herein referred to
as the "SUPPLEMENTAL PAYMENT.") If the cash price actually paid by the
Applicable Purchaser to BNPLC exceeds the Break Even Price and all other
sums that are then due from Solectron to BNPLC under the Lease and
Closing Certificate, Solectron shall be entitled to such excess.
If any amount payable to BNPLC pursuant to this subparagraph 1.(a) is not
actually paid to BNPLC on the Designated Sale Date, Solectron shall pay interest
on the past due amount computed at the Default Rate from the Designated Sale
Date. However, Solectron shall be entitled to a credit against the interest
required by the preceding sentence equal to the Base Rent, if any, actually paid
by Solectron pursuant to the Lease for any period after the Designated Sale
Date.
(b) Election by Solectron. Solectron shall have the right to
elect between satisfying the obligations set out in clause (i) of the preceding
subparagraph 1.(a) or satisfying the obligations set out in clause (ii) of the
preceding subparagraph 1.(a); provided, however:
(i) To give BNPLC the opportunity to have Fair Market
Value determined by an appraiser (as provided in the definition of Fair
Market Value) before the Designated Sale Date, Solectron must, unless
Solectron concedes that Fair Market Value will be no less than the
Residual Risk Percentage of Stipulated Loss Value on the Designated Sale
Date, provide BNPLC with a Remarketing Notice. As used in this
Agreement, "REMARKETING NOTICE" means a notice given by Solectron to
BNPLC (and to each of the Participants) no earlier than two hundred
seventy days before the Designated Sale Date and no later than one
hundred and eighty days before the Designated Sale Date, specifying that
Solectron does not concede that Fair Market Value will be greater than
the Residual Risk Percentage of Stipulated Loss Value. (No Remarketing
Notice will be required if Solectron does concede that Fair Market Value
will equal or exceed the Residual Risk Percentage of Stipulated Loss
Value on the Designated Sale Date.) But if for any reason (including any
acceleration of the Designated Sale Date as provided in the definition
of Designated Sale Date in the List of Defined Terms) Solectron fails to
provide a Remarketing Notice within the time periods specified in the
definition of Remarketing Notice above, Fair Market Value shall, for
purposes of determining any Supplemental Payment required by this
Agreement, be deemed to be no less than the Residual Risk Percentage of
Stipulated Loss Value on the Designated Sale Date.
(ii) To give BNPLC the opportunity to prepare the deed and
other documents that BNPLC must tender pursuant to Paragraph 2
(collectively, the "SALE CLOSING DOCUMENTS") before the Designated Sale
Date, Solectron must, if it is to satisfy the obligations set forth in
subparagraph 1.(a) by causing an Affiliate of Solectron or another
Applicable Purchaser to purchase the Property, irrevocably specify the
Affiliate or other Applicable Purchaser in notice to BNPLC given at
least seven days prior to the Designated Sale Date. If for any reason
Solectron fails to so specify an Affiliate or another Applicable
Purchaser, Solectron shall be deemed to have irrevocably elected to
satisfy the obligations set forth in subparagraph 1.(a)(i) by itself
purchasing the Property.
2
<PAGE> 6
(c) Termination of Solectron's Option To Purchase. Without
limiting BNPLC's right to require Solectron to satisfy the obligations imposed
by subparagraph 1.(a), Solectron shall have no further option hereunder to
purchase the Property if either:
(i) Solectron shall have elected to satisfy its
obligations under subparagraph 1.(a)(ii) on a Designated Sale Date and
BNPLC shall have elected to keep the Property on such Designated Sale
Date in accordance with subparagraph 1.(a)(ii); or
(ii) Solectron shall have failed on a Designated Sale Date
to make or cause to be made all payments to BNPLC required by this
Agreement or by the Lease and such failure shall have continued beyond
the thirty day period for tender specified in the next sentence.
If BNPLC does not receive all payments due under the Lease or hereunder on a
Designated Sale Date, Solectron may nonetheless tender to BNPLC the full Break
Even Price and all amounts then due under the Lease, together with interest on
the total Break Even Price computed at the Default Rate from the Designated Sale
Date to the date of tender, and if presented with such a tender within thirty
days after the applicable Designated Sale Date, BNPLC must accept it and
promptly thereafter deliver any Escrowed Proceeds and the Sale Closing Documents
listed in Paragraph 2.
(d) Payment to BNPLC. All amounts payable under the preceding
subparagraphs 1.(a) or 1.(c) by Solectron and, if applicable, by the Applicable
Purchaser must be paid directly to BNPLC, and no payment to any other party
shall be effective for the purposes of this Agreement. In addition to the
payments required under subparagraph 1.(a), on the Designated Sale Date
Solectron must pay all amounts then due to BNPLC under the Lease. BNPLC will
remit any excess amounts due Solectron pursuant to the last sentence of
subparagraph 1.(a)(ii) promptly after BNPLC's receipt of the same. To the
extent, if any, that Solectron claims and is entitled to claim a reduction in
the Break Even Price because of any Deductible Judgments, as provided in the
definition of Break Even Price in the List of Defined Terms attached to this
Agreement, Solectron must pay such Deductible Judgments for the account of BNPLC
contemporaneously with the payment of the other amounts required by subparagraph
1.(a).
(e) Effect of Options on Subsequent Title Encumbrances. Any
conveyance of the Property to Solectron or any Applicable Purchaser pursuant to
this Agreement shall cut off and terminate any interest in the Land,
Improvements or other Property claimed by, through or under BNPLC, including any
interest claimed by the Participants and including any Liens Removable by BNPLC
(such as, but not limited to, any judgment liens established against the
Property because of a judgment rendered against BNPLC and any leasehold or other
interests conveyed by BNPLC in the ordinary course of BNPLC's business), but not
obligations of Solectron to BNPLC under the indemnities in the Closing
Certificate or under the Lease or this Agreement then due or that may become due
thereafter because of any expense or liability incurred by BNPLC resulting in
whole or in part from events or circumstances occurring before such conveyance.
Anyone accepting or taking any interest in the Property by or through BNPLC
after the date of this Agreement shall acquire such interest subject to the
rights and options granted Solectron hereby. Further, Solectron and any
Applicable Purchaser shall be entitled to pay any payment required by this
Agreement for the purchase of the Property directly to BNPLC notwithstanding any
prior conveyance or assignment by BNPLC, voluntary or otherwise, of any right or
interest in this Agreement or the Property, and neither Solectron nor any
Applicable Purchaser shall be responsible for the proper distribution or
application of any such payments by BNPLC; and any such payment to BNPLC shall
discharge the obligation of Solectron to cause such payment to all Persons
claiming an interest in such payment. The parties shall record a memorandum of
this Agreement for purposes of effecting constructive notice to all Persons of
Solectron's rights under this Agreement, including its rights under this
subparagraph.
3
<PAGE> 7
2. TERMS OF CONVEYANCE UPON PURCHASE. Immediately after Solectron
tenders all payments to BNPLC as required by and pursuant to the preceding
Paragraph 1, BNPLC must, unless it is to keep the Property as permitted by
subparagraph 1.(a)(ii), deliver Escrowed Proceeds, if any, and convey all of its
right, title and interest in the Land, Improvements and other Property by
BNPLC's execution, acknowledgment (where appropriate) and delivery of the Sale
Closing Documents to Solectron or the Applicable Purchaser, as the case may be,
subject only to the Permitted Encumbrances and any other encumbrances that do
not constitute Liens Removable by BNPLC. However, such conveyance shall not
include the right to receive any payment under the indemnities in the Closing
Certificate or under the Lease then due BNPLC or that may become due thereafter
because of any expense or liability incurred by BNPLC resulting in whole or in
part from events or circumstances occurring before such conveyance. All costs of
such purchase and conveyance of every kind whatsoever, both foreseen and
unforeseen, shall be the responsibility of the purchaser. The Sale Closing
Documents used to accomplish such conveyance shall consist of the following: (1)
a Deed in the form attached as Exhibit B, (2) a State of Washington Excise Tax
Affidavit in the form attached as Exhibit C, (3) a Bill of Sale and Assignment
of Lease and Intangible Assets in the form attached as Exhibit D, (4) an
Acknowledgment of Disclaimer of Representations and Warranties in the form
attached as Exhibit E, which Solectron or the Applicable Purchaser must execute
and return to BNPLC, (5) a Secretary's Certificate in the form attached as
Exhibit G, (6) a letter to the title insurance company insuring title to the
Property in the form attached as Exhibit H, (7) a certificate concerning tax
withholding in the form attached as Exhibit I, and (8) if applicable, an
Indemnity for Liens Removable by BNPLC in the form attached hereto as Exhibit J.
The Indemnity for Liens Removable by BNPLC described in the preceding sentence
shall be required if, but only if, before the other Sale Closing Documents are
tendered by BNPLC in accordance with this Agreement, Solectron shall have
identified, provided a written list to BNPLC of, and been unable to obtain a
commitment for title insurance against, any title encumbrances that Solectron
believes in good faith may constitute Liens Removable by BNPLC and that, if
valid, would constitute Liens Removable by BNPLC. Any such Indemnity will be
completed by attaching a list of such identified encumbrances as Annex B
thereto. If for any reason BNPLC fails to tender the Sale Closing Documents as
required by this Paragraph 2, BNPLC may cure such refusal at any time before
thirty days after receipt of a demand for such cure from Solectron.
3. SURVIVAL OF SOLECTRON'S OBLIGATIONS.
(a) Status of this Agreement. Except as expressly provided
herein, this Agreement shall not terminate, nor shall Solectron have any right
to terminate this Agreement, nor shall Solectron be entitled to any reduction of
the Break Even Price or Supplemental Payment hereunder, nor shall the
obligations of Solectron to BNPLC under Paragraph 1 be affected by reason of (i)
any damage to or the destruction of all or any part of the Property from
whatever cause, (ii) the taking of or damage to the Property or any portion
thereof under the power of eminent domain or otherwise for any reason, (iii) the
prohibition, limitation or restriction of Solectron's use of all or any portion
of the Property or any interference with such use by governmental action or
otherwise, (iv) any eviction of Solectron or any party claiming under Solectron
by paramount title or otherwise, (v) Solectron's prior acquisition or ownership
of any interest in the Property, (vi) any default on the part of BNPLC under
this Agreement, the Lease or any other agreement to which BNPLC is a party, or
(vii) any other cause, whether similar or dissimilar to the foregoing, any
existing or future law to the contrary notwithstanding. It is the intention of
the parties hereto that the obligations of Solectron to make payment to and, if
applicable, to cause the Applicable Purchaser to make payment to BNPLC under
Paragraph 1 shall be separate and independent covenants and agreements from
BNPLC's obligations under this Agreement or any other agreement between BNPLC
and Solectron; provided, however, that nothing in this subparagraph shall excuse
BNPLC from its obligation to tender the Sale Closing Documents in substantially
the form attached hereto as exhibits as required by Paragraph 2 and any Escrowed
Proceeds (if such tender is not excused because of an election by BNPLC to keep
the Property under subparagraph 1.(a)(ii)) immediately after the tender by
Solectron and/or the Applicable Purchaser of such payments and of the other
documents to be executed in favor of BNPLC at the closing of the sale.
4
<PAGE> 8
However, nothing in this subparagraph, nor the performance without
objection by Solectron of its obligations hereunder, shall be construed as a
waiver by Solectron of any right Solectron may have at law or in equity,
following (A) any failure by BNPLC to tender any Escrowed Proceeds or the Sale
Closing Documents as required by Paragraph 2 (if such tender is not excused
because of an election by BNPLC to keep the Property under subparagraph
1.(a)(ii)) upon the tender by Solectron or the Applicable Purchaser of the
payments required by Paragraph 1 and of the other documents to be executed in
favor of BNPLC at the closing of the sale hereunder, or (B) any failure by BNPLC
to remove all Liens Removable by BNPLC before conveying the Property pursuant to
this Agreement, (i) to recover monetary damages proximately caused by such
failure of BNPLC if BNPLC does not cure the failure within thirty days after
Solectron demands a cure by written notice to BNPLC, or (ii) to obtain a decree
compelling specific performance of BNPLC's obligation hereunder.
(b) Remedies Under the Lease and Closing Certificate. No
repossession of or re-entering upon the Property or exercise of any other
remedies available to BNPLC under the Lease and Closing Certificate shall
relieve Solectron of its liabilities and obligations hereunder, all of which
shall survive BNPLC's exercise of remedies under the Lease and Closing
Certificate. Solectron acknowledges that the consideration for this Agreement is
separate and independent of the consideration for the Lease and Closing
Certificate, and Solectron's obligations hereunder shall not be affected or
impaired by any event or circumstance that would excuse Solectron from
performance of its obligations under the Lease and Closing Certificate.
4. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF SOLECTRON.
Solectron represents, warrants and covenants as follows:
(a) No Default or Violation. The execution, delivery and
performance by Solectron of this Agreement does not and will not constitute a
breach or default under any other material agreement or contract to which
Solectron is a party or by which Solectron is bound or which affects the
Property, and does not violate or contravene any law, order, decree, rule or
regulation to which Solectron is subject, and such execution, delivery and
performance by Solectron will not result in the creation or imposition of (or
the obligation to create or impose) any lien, charge or encumbrance on, or
security interest in, Solectron's property pursuant to the provisions of any of
the foregoing.
(b) No Suits. Other than matters, if any, disclosed in Schedule
2 attached to the Lease, there are no judicial or administrative actions, suits,
proceedings or investigations pending or, to Solectron's knowledge, threatened
that will adversely affect the Property or the validity, enforceability or
priority of this Agreement, and Solectron is not in default with respect to any
order, writ, injunction, decree or demand of any court or other governmental or
regulatory authority that could materially and adversely affect the use,
occupancy or operation of the Property.
(c) Enforceability. The execution, delivery and performance by
Solectron of this Agreement is duly authorized and does not require the consent
or approval of any governmental body or other regulatory authority that has not
heretofore been obtained and is not in contravention of or conflict with any
applicable laws or any term or provision of Solectron's articles of
incorporation or bylaws. This Agreement is a valid, binding and legally
enforceable obligation of Solectron, in accordance with its terms, except as
such enforcement is affected by bankruptcy, insolvency and similar laws
affecting the rights of creditors, generally, and equitable principles of
general application.
(d) Organization. Solectron is duly incorporated and legally
existing under the laws of the State of California and is duly qualified to do
business in the State of Washington. Solectron has all requisite power and has
procured or will procure on a timely basis all governmental certificates of
authority, licenses, permits, qualifications and other documentation required to
fulfill its obligations under this Agreement.
5
<PAGE> 9
(e) Omissions. None of Solectron's representations or warranties
contained in this Agreement or in any other document, certificate or written
statement furnished to BNPLC by or on behalf of Solectron in connection with
this Agreement contains any untrue statement of a material fact or omits a
material fact necessary in order to make the statements contained herein or
therein (when taken in their entireties) not misleading.
5. CERTAIN REMEDIES CUMULATIVE. No right or remedy herein conferred upon
or reserved to BNPLC is intended to be exclusive of any other right or remedy
BNPLC has with respect to the Property, and each and every right and remedy
shall be cumulative and in addition to any other right or remedy given hereunder
or now or hereafter existing at law or in equity or by statute. In addition to
other remedies available under this Agreement, either party shall be entitled,
to the extent permitted by applicable law, to a decree compelling performance of
any of the other party's agreements hereunder.
6. ATTORNEYS' FEES AND LEGAL EXPENSES. If either party commences any
legal action or other proceeding to enforce any of the terms of this Agreement
or the documents and agreements referred to herein, or because of any breach by
the other party or dispute hereunder or thereunder, the successful or prevailing
party, shall be entitled to recover from the nonprevailing party all Attorneys'
Fees incurred in connection therewith, whether or not such controversy, claim or
dispute is prosecuted to a final judgment. Any such Attorneys' Fees incurred by
either party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from such judgment, and the obligation for such
Attorneys' Fees is intended to be severable from other provisions of this
Agreement and not to be merged into any such judgment.
7. ESTOPPEL CERTIFICATE. Either party to this Agreement will, upon not
less than twenty days' prior request by the other party hereto, execute,
acknowledge and deliver to the requesting party a written statement certifying
that this Agreement is unmodified and in full effect (or, if there have been
modifications, that this Agreement is in full effect as modified, and setting
forth such modification) and either stating that no default exists hereunder or
specifying each such default of which the responding party has knowledge. Any
such statement may be relied upon by any Participant or prospective purchaser or
permitted assignee of BNPLC or Solectron with respect to the Property.
8. SUCCESSORS AND ASSIGNS. The terms, provisions, covenants and
conditions hereof shall be binding upon Solectron and BNPLC and their respective
permitted successors and assigns and shall inure to the benefit of Solectron and
BNPLC and all permitted transferees, mortgagees, successors and assignees of
Solectron and BNPLC with respect to the Property; provided, that the rights of
BNPLC hereunder shall not pass to Solectron or any Applicable Purchaser or any
subsequent owner claiming through Solectron or an Applicable Purchaser. Prior to
the Designated Sale Date, BNPLC may transfer, assign and convey, in whole or in
part, the Property and any and all of its rights under this Agreement (subject
to the terms of this Agreement) by any conveyance that constitutes a Permitted
Transfer, but not otherwise. If BNPLC sells or otherwise transfers the Property
and assigns its rights under this Agreement and the Lease pursuant to a
Permitted Transfer, and if BNPLC's successor in interest assumes in writing for
the benefit of Solectron liability for the obligations imposed upon BNPLC by
this Agreement and the Lease on and subject to the express terms set out herein
and therein, then BNPLC shall thereby be released from any further obligations
arising under this Agreement or the Lease after the date of such assumption, and
Solectron agrees to look solely to each successor in interest of BNPLC for
performance of such obligations.
9. MISCELLANEOUS.
(a) Notices. Each provision of this Agreement, or of any
Applicable Laws with reference to the sending, mailing or delivery of any notice
or demand hereunder, or with reference to the making of any payment required
hereunder, shall be deemed to be complied with when and if the following steps
are taken:
6
<PAGE> 10
(i) All payments required to be paid by Solectron or any
Applicable Purchaser to BNPLC hereunder shall be paid to BNPLC in
immediately available funds by wire transfer to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ Solectron (Solectron Washington
Purchase Agreement)
or at such other place and in such other manner as BNPLC may designate in a
notice to Solectron. Time is of the essence as to all payments of Solectron
under this Agreement.
(ii) All payments required to be made by BNPLC to Solectron pursuant
to the last sentence of subparagraph 1.(a)(ii) shall be paid to Solectron in
immediately available funds at the address of Solectron set forth below or
as Solectron may otherwise direct by notice sent in accordance herewith.
(iii) All notices, demands, approvals, consents and other
communications to be made hereunder to or by the parties hereto must, to be
effective for purpose of this Agreement, be in writing. Notices, demands and
other communications required or permitted hereunder are to be sent to the
addresses set forth below (or in the case of communications to Participants,
at the addresses set forth in Schedule 1 attached to the Participation
Agreement) and shall be given by any of the following means: (A) personal
service, with proof of delivery or attempted delivery retained; (B)
electronic communication, whether by telegram or telecopying (if confirmed
in writing sent by United States first class mail, return receipt
requested); or (C) registered or certified first class mail, return receipt
requested. Such addresses may be changed by notice to the other parties
given in the same manner as provided above. Any notice or other
communication sent pursuant to clause (A) or (C) hereof shall be deemed
received (whether or not actually received) upon first attempted delivery at
the proper notice address on any Business Day between 9:00 A.M. and 5:00
P.M., and any notice or other communication sent pursuant to clause (B)
hereof shall be deemed received upon dispatch by electronic means.
Address of BNPLC:
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Telecopy: (214) 969-0060
With a copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Rafael Lumanlan or Stuart Darby
Telecopy: (415) 296-8954
7
<PAGE> 11
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
Address of Solectron:
Solectron Washington, Inc.
777 Gibraltar Drive, Building #5
Milpitas, CA 95035
Attn: Chief Financial Officer
Telecopy: (408) 956-6059
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill
Palo Alto, California 94304-1050
Attention: Real Estate Department/DSS
Telecopy: (415) 493-6811
(b) Severability. If any term or provision of this Agreement or
the application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of this Agreement,
or the application of such term or provision other than to the extent to which
it is invalid or unenforceable, shall not be affected thereby. Further, the
obligations of Solectron hereunder, to the maximum extent possible, shall be
deemed to be separate, independent and in addition to, not in lieu of, the
obligations of Solectron under the Lease and Closing Certificate. In the event
of any inconsistency between the terms of this Agreement and the terms and
provisions of the Lease and Closing Certificate, the terms and provisions of
this Agreement shall control.
(c) No Implied Waiver. The failure of BNPLC or Solectron to
insist at any time upon the strict performance of any covenant or agreement or
to exercise any option, right, power or remedy contained in this Agreement shall
not be construed as a waiver or a relinquishment thereof for the future. The
waiver of or redress for any breach of this Agreement shall not prevent a
similar subsequent act from constituting a violation. Any express waiver shall
affect only the term or condition specified in such waiver and only for the time
and in the manner specifically stated therein. A receipt by BNPLC of any payment
hereunder with knowledge of the breach of any covenant or agreement contained in
this Agreement shall not be deemed a waiver of such breach, and no waiver of any
provision of this Agreement shall be deemed to have been made unless expressed
in writing and signed by the waiving party.
(d) NO IMPLIED REPRESENTATIONS BY BNPLC. BNPLC AND BNPLC'S AGENTS
HAVE MADE NO REPRESENTATIONS OR PROMISES WITH RESPECT TO THE PROPERTY EXCEPT AS
EXPRESSLY SET FORTH HEREIN AND IN THE LEASE, AND NO RIGHTS, EASEMENTS OR
LICENSES
8
<PAGE> 12
ARE ACQUIRED BY SOLECTRON BY IMPLICATION OR OTHERWISE EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT AND THE LEASE.
(e) Entire Agreement. This Agreement, the Closing Certificate,
the Lease and the other documents dated as of July 1, 1998, which are being
executed by Solectron and executed or accepted by BNPLC contemporaneously with
the execution of this Agreement supersede any prior negotiations and agreements
between BNPLC and Solectron concerning the Property, and no amendment or
modification of this Agreement shall be binding or valid unless expressed in a
writing executed by both parties hereto.
(f) Time is of the Essence. Time is of the essence as to all
obligations of Solectron and BNPLC and all notices required of Solectron and
BNPLC under this Agreement.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington without regard
to conflict or choice of laws.
(h) Paragraph Headings. The paragraph headings contained in this
Agreement are for convenience only and shall in no way enlarge or limit the
scope or meaning of the various and several paragraphs hereof.
(i) Other Terms and References. Words of any gender used in this
Agreement shall be held and construed to include any other gender, and words in
the singular number shall be held to include the plural and vice versa, unless
the context otherwise requires. References herein to Paragraphs, subparagraphs
or other subdivisions shall refer to the corresponding Paragraphs, subparagraphs
or subdivisions of this Agreement, unless specific reference is made to another
document or instrument. References herein to any Schedule or Exhibit shall refer
to the corresponding Schedule or Exhibit attached hereto, which shall be made a
part hereof by such reference. All capitalized terms used in this Agreement
which refer to other documents shall be deemed to refer to such other documents
as they may be renewed, extended, supplemented, amended or otherwise modified
from time to time, provided such documents are not renewed, extended or modified
in breach of any provision contained herein or therein or, in the case of any
other document to which BNPLC is a party or of which BNPLC is an intended
beneficiary, without the consent of BNPLC. All accounting terms used but not
specifically defined herein shall be construed in accordance with GAAP. The
words "this Agreement", "herein", "hereof", "hereby", "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular subdivision unless expressly so limited. The phrases
"this Paragraph" and "this subparagraph" and similar phrases used herein refer
only to the Paragraphs or subparagraphs in which the phrase occurs. As used
herein the word "or" is not exclusive. As used herein the words "include",
"including" and similar terms shall be construed as if followed by "without
limitation to".
(j) Not a Partnership, Etc. NOTHING IN THIS AGREEMENT IS INTENDED
TO BE OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE
BETWEEN BNPLC AND SOLECTRON. NEITHER THE EXECUTION OF THIS AGREEMENT NOR THE
ADMINISTRATION OF THIS AGREEMENT OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC,
NOR ANY OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO THIS
AGREEMENT OR SUCH DOCUMENTS IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY
OBLIGATIONS OF BNPLC TO SOLECTRON.
9
<PAGE> 13
10. WAIVER OF JURY TRIAL. BNPLC AND SOLECTRON EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER DOCUMENT OR DEALINGS BETWEEN THEM
RELATING TO THIS AGREEMENT OR THE PROPERTY. The scope of this waiver is intended
to be all-encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction, including contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. Solectron and BNPLC each acknowledge that this waiver is a
material inducement to enter into a business relationship, that each has already
relied on the waiver in entering into this Agreement and the other documents
referred to herein, and that each will continue to rely on the waiver in their
related future dealings. Solectron and BNPLC each further warrants and
represents that it has reviewed this waiver with its legal counsel, and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS AGREEMENT OR THE
PROPERTY. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
11. ADDITIONAL RIGHTS OF BNPLC RELATING TO ESCROWED PROCEEDS. BNPLC
shall be entitled to deliver any Escrowed Proceeds it holds on the Designated
Sale Date directly to Solectron or to any Applicable Purchaser purchasing
BNPLC's interest in the Property and the Escrowed Proceeds pursuant to this
Agreement notwithstanding any prior actual or attempted conveyance or assignment
by Solectron, voluntary or otherwise, of any right to receive the same; BNPLC
shall not be responsible for the proper distribution or application by Solectron
or any Applicable Purchaser of any such Escrowed Proceeds paid over to Solectron
or the Applicable Purchaser; and any such payment of Escrowed Proceeds to
Solectron or an Applicable Purchaser shall discharge any obligation of BNPLC to
deliver the same to all Persons claiming an interest therein.
12. SECURITY FOR BNPLC'S OBLIGATIONS. To secure Solectron's right to
purchase the Property pursuant to this Agreement and to recover any damages
caused by a breach of Paragraph 2 by BNPLC, including any such breach caused by
a rejection or termination of this Agreement in any bankruptcy or insolvency
proceeding instituted by or against BNPLC, as debtor, BNPLC does hereby grant to
Solectron a lien and security interest against all rights, title and interests
of BNPLC from time to time in and to the Land, Improvements and other Property.
Solectron may enforce such lien and security interest judicially after any such
breach by BNPLC, but not otherwise. Solectron waives any right it has to seek a
deficiency judgement against BNPLC in any action brought for a judicial
foreclosure of such lien and security interest, subject to the condition that
BNPLC unequivocally and effectively waive, following any such judicial
foreclosure of the lien and security interest granted in this paragraph, BNPLC's
right of redemption. Contemporaneously with the execution of this Agreement,
Solectron and BNPLC will execute a memorandum of this Agreement which is in
recordable form and which specifically references the lien granted in this
Paragraph, and Solectron shall be entitled to record such memorandum at any time
prior to the Designated Sale Date.
13. INCOME TAX REPORTING. BNPLC and Solectron intend this Agreement and
the Lease to have a form for income taxes which is different than the form of
this Agreement and the Lease for other purposes, and thus the parties
acknowledge and agree as follows:
(i) FOR PURPOSES OF DETERMINING THEIR RESPECTIVE FEDERAL, STATE
AND LOCAL INCOME TAX OBLIGATIONS, BNPLC and Solectron believe and intend
that this Agreement and the Lease constitute a financing arrangement or
conditional sale. Both BNPLC and Solectron agree to report this
Agreement and the Lease as a financing arrangement or conditional sale
on their respective income tax returns (the "REQUIRED REPORTING"),
unless such Required Reporting is challenged in writing by the Internal
Revenue
10
<PAGE> 14
Service or another governmental authority with jurisdiction (a
"TAX CHALLENGE"). Consistent with the foregoing, BNPLC and Solectron
expect that Solectron (and not BNPLC) shall be treated as the true owner
of the Property for income tax purposes, thereby entitling Solectron
(and not BNPLC) to take depreciation deductions and other tax benefits
available to the owner. Solectron shall also report all interest earned
on Escrowed Proceeds as Solectron's income for federal, state and local
income tax purposes. REFERENCES IN THIS AGREEMENT OR IN THE LEASE TO A
"LEASE" OR THE "LEASED PROPERTY" ARE NOT INTENDED FOR INCOME TAX
PURPOSES TO REFLECT THE INTENT OF BNPLC OR SOLECTRON AS TO THE FORM OF
THE TRANSACTIONS COVERED BY, OR THE PROPER CHARACTERIZATION OF, THIS
AGREEMENT AND THE LEASE.
(ii) FOR ALL OTHER PURPOSES, INCLUDING THE DETERMINATION OF THE
APPROPRIATE FINANCIAL ACCOUNTING FOR THIS AGREEMENT AND THE
DETERMINATION OF THEIR RESPECTIVE RIGHTS AND REMEDIES UNDER STATE LAW,
BNPLC and Solectron believe and intend that (i) the Lease constitutes a
true Lease, not a mere financing arrangement, enforceable in accordance
with its express terms (and neither this Paragraph 13 nor the provisions
referencing this Paragraph on the title page of this Agreement nor the
corresponding provisions in the Lease are intended to affect the
enforcement of any other provisions of this Agreement or the Lease) and
(ii) this Agreement shall constitute a separate and independent
contract, enforceable in accordance with the express terms and
conditions set forth herein. In this regard, Solectron acknowledges that
Solectron asked BNPLC to participate in the transactions evidenced by
this Agreement and the Lease as a landlord and owner of the Property,
not as a lender. Although other transactions might have been used to
accomplish similar results, Solectron expects to receive certain
material accounting and other advantages through the use of a lease
transaction. Accordingly, and notwithstanding the Required Reporting for
income tax purposes, Solectron cannot equitably deny that this Agreement
and the Lease should be construed and enforced in accordance with their
respective terms, rather than as a mortgage or other security device, in
any action brought by BNPLC to enforce this Agreement or the Lease.
In the event of a Tax Challenge, BNPLC and Solectron shall each provide to the
other copies of all notices from the Internal Revenue Service or any other
governmental authority presenting the Tax Challenge. Further, before changing
from the Required Reporting because of a Tax Challenge, BNPLC and Solectron
shall each consider in good faith any reasonable suggestions received from the
other party to this Agreement about an appropriate response to the Tax
Challenge; provided, however, that the suggestions are set forth in a notice
delivered no later than thirty Business Days after the suggesting party is first
notified of the Tax Challenge; and, provided further, that when presented with a
Tax Challenge, BNPLC shall have the right to change from the Required Reporting
rather than participate in any litigation or other legal proceeding against the
Internal Revenue Service or another governmental authority. In any event,
Solectron shall indemnify BNPLC and defend and hold BNPLC harmless from and
against all Losses imposed on or asserted against or incurred by BNPLC by reason
of, in connection with or arising out of any such challenge or any resulting
recharacterization of this Agreement or the Lease required by the Internal
Revenue Service or another governmental authority, including any additional
taxes that may become due upon any sale under this Agreement, to the extent (if
any) that such Losses are not offset by tax savings to BNPLC resulting from
additional depreciation deductions or other tax benefits of the
recharacterization.
[The signature pages follow.]
11
<PAGE> 15
IN WITNESS WHEREOF, Solectron and BNPLC have caused this Agreement to be
executed as of July 1, 1998.
"SOLECTRON"
SOLECTRON WASHINGTON, INC.
By: /s/ LOUIS F. BIECK
------------------------
Name (print): LOUIS F. BIECK
Title: VICE PRESIDENT
<PAGE> 16
[Continuation of signature pages to Amended and Restated Purchase Agreement
dated to be effective July 1, 1998]
"BNPLC"
BNP LEASING CORPORATION
By: /s/ LLOYD G. COX
-------------------------------
Lloyd G. Cox, Vice President
<PAGE> 17
EXHIBIT A
LEGAL DESCRIPTION
All that certain real property situate in the City of Everett, County of
Snohomish, State of Washington, being a portion of the Southwest quarter of
Section 2, and a portion of the Southeast quarter of Section 3, all in Township
28 North, Range 4 East, W.M., and also being a portion of Lot 2 Binding Site
Plan/Record of Survey recorded under Snohomish County Recording Number
8910255010, and being more particularly described as follows:
BEGINNING at the quarter corner common to said Sections 2 and 3;
thence from said point of beginning along the East-West centerline of said
Section 2, South 88(Degree) 10'56" East 1192.73 feet;
thence leaving said East-West centerline South 01(Degree) 49'04" West 347.51
feet;
thence South 26(Degree) 07'32" East 208.83 feet;
thence South 12(Degree) 56'43" East 395.73 feet to the Northerly right of way
line of Merrill Creek Parkway as deeded to the City of Everett under Snohomish
County Recording Number 8801270201, Snohomish County records;
thence along said right of way line of Merrill Creek Parkway from a tangent that
bears South 77 (Degree) 03'17" West, along the arc of a curve to the left having
a radius of 630.00 feet and a central angle of 37(Degree) 00'43", an arc length
of 406.97 feet;
thence leaving said right of way line North 79(Degree) 36'24" West 1190.79 feet
to the Easterly boundary of the Binding Site Plan/Record of Survey entitled
Seaway Center Two/Intermec recorded under Snohomish County Recording Number
8910255009;
thence along said Easterly boundary North 00(Degree) 50'18" East 955.72 feet to
the East-West centerline of said Section 3;
thence along said East-West centerline South 88(Degree) 33'31" East 136.77 feet
to the point of beginning;
(ALSO KNOWN AS Lot 2F of Binding Site Plan/Record of Survey Seaway Center Five
as recorded under Snohomish County Recording Number 9204015001);
TOGETHER WITH a non-exclusive driveway and access easement as set forth in
document entitled Driveway and Assess Easement Agreement recorded under
Snohomish County Recording Number 9711050088.
Situate in the County of Snohomish, State of Washington
<PAGE> 18
EXHIBIT B
DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [Solectron or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
BNP LEASING CORPORATION, a Delaware corporation (hereinafter called
"Grantor"), for and in consideration of the sum of Ten Dollars ($10.00) and
other valuable consideration paid to Grantor by [Solectron or the Applicable
Purchaser] (hereinafter called "Grantee"), the receipt and sufficiency of which
are hereby acknowledged, does hereby GRANT, SELL, CONVEY, ASSIGN and DELIVER to
Grantee the real property described in Annex A attached hereto and hereby made a
part hereof, together with any buildings and other improvements situated
thereon, any fixtures and other property affixed thereto and all right, title
and interest of Grantor in and to adjacent streets, alleys and rights-of-way
(collectively, the "Property"); provided, however, this conveyance is made by
Grantor and accepted by Grantee subject to all zoning and other ordinances
affecting the Property, all general or special assessments due and payable after
the date hereof, all encroachments, variations in area or in measurements,
boundary line disputes, roadways and other matters not of record which would be
disclosed by a current survey and inspection of the Property, and the
encumbrances listed in Annex B attached hereto and made a part hereof
(collectively, the "Permitted Encumbrances").
TO HAVE AND TO HOLD the Property, together with all and singular the
rights and appurtenances thereto in any wise belonging unto Grantee, its
successors and assigns, forever, and Grantor does hereby bind Grantor and
Grantor's successors to warrant and forever defend all and singular the said
premises unto Grantee, its successors and assigns against every person
whomsoever lawfully claiming, or to claim the same, or any part thereof by,
through or under Grantor, but not otherwise; subject, however, to the Permitted
Encumbrances. Except as expressly set forth in the preceding sentence, Grantor
makes no warranty of title, express or implied.
<PAGE> 19
IN WITNESS WHEREOF, this Deed is executed by Grantor on this _____ day
of _________________________________, _______.
The address of Grantee is:
___________________________
___________________________
BNP LEASING CORPORATION
Date: As of ____________ By: ____________________
Its:
Exhibit B - Page 2
<PAGE> 20
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, ______________________, personally
appeared _____________________ and __________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument the person, or the entity upon behalf of which the persons
acted, executed the instrument.
WITNESS my hand and official seal.
Signature _______________________
Exhibit B - Page 3
<PAGE> 21
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LEASE CHANGES FROM
TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH SOLECTRON REQUESTS BNPLC'S CONSENT
OR APPROVAL AS PROVIDED IN THE LEASE, SO TOO WILL THE DESCRIPTION OF THE LAND
BELOW CHANGE. ANY SUCH CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW
AND THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THE DEED TO WHICH THIS
DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
All that certain real property situate in the City of Everett, County of
Snohomish, State of Washington, being a portion of the Southwest quarter of
Section 2, and a portion of the Southeast quarter of Section 3, all in Township
28 North, Range 4 East, W.M., and also being a portion of Lot 2 Binding Site
Plan/Record of Survey recorded under Snohomish County Recording Number
8910255010, and being more particularly described as follows:
BEGINNING at the quarter corner common to said Sections 2 and 3;
thence from said point of beginning along the East-West centerline of said
Section 2, South 88(Degree) 10'56" East 1192.73 feet;
thence leaving said East-West centerline South 01(Degree) 49'04" West 347.51
feet;
thence South 26(Degree) 07'32" East 208.83 feet;
thence South 12(Degree) 56'43" East 395.73 feet to the Northerly right of way
line of Merrill Creek Parkway as deeded to the City of Everett under Snohomish
County Recording Number 8801270201, Snohomish County records;
thence along said right of way line of Merrill Creek Parkway from a tangent that
bears South 77(Degree) 03'17" West, along the arc of a curve to the left having
a radius of 630.00 feet and a central angle of 37(Degree) 00'43", an arc length
of 406.97 feet;
thence leaving said right of way line North 79(Degree) 36'24" West 1190.79 feet
to the Easterly boundary of the Binding Site Plan/Record of Survey entitled
Seaway Center Two/Intermec recorded under Snohomish County Recording Number
8910255009;
thence along said Easterly boundary North 00(Degree) 50'18" East 955.72 feet to
the East-West centerline of said Section 3;
thence along said East-West centerline South 88(Degree) 33'31" East 136.77 feet
to the point of beginning;
(ALSO KNOWN AS Lot 2F of Binding Site Plan/Record of Survey Seaway Center Five
as recorded under Snohomish County Recording Number 9204015001);
TOGETHER WITH a non-exclusive driveway and access easement as set forth in
document entitled Driveway and Assess Easement Agreement recorded under
Snohomish County Recording Number 9711050088.
Situate in the County of Snohomish, State of Washington
Exhibit B - Page 4
<PAGE> 22
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY
BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW, SUCH ADDITIONAL
ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND THIS "DRAFTING NOTE" WILL BE
DELETED BEFORE THIS DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS
"PERMITTED ENCUMBRANCES" UNDER THE LEASE FROM TIME TO TIME OR BECAUSE OF
SOLECTRON'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL TO AN ADJUSTMENT AS PROVIDED
IN THE LEASE.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the List of Defined Terms attached to the
Lease Agreement referenced in item #1 of the list below), including the
following matters to the extent the same are still valid and in force:
- - Amended and Restated Lease Agreement dated as of July 1, 1998, by and
between BNP Leasing Corporation, as lessor, and Solectron Washington,
Inc., as lessee.
- - Liens securing TAXES AND ASSESSMENTS, not yet due and payable.
- - EASEMENT AND THE TERMS AND CONDITIONS THEREOF:
GRANTEE: Public Utility District No. 1 of Snohomish County
PURPOSE: Underground/overhead electric distribution system
AREA AFFECTED: Ten foot wide strips adjacent to right
of way known as Merrill Creek Parkway as conveyed
to the City of Everett by deed recorded under
Snohomish County Recording Number 8801270201; and
the North boundary of Seaway Blvd., TOGETHER WITH
the right to extend and establish switch cabinets,
transformers, pedestals and other appurtenances
beyond said easement area onto adjacent property
of the grantor
RECORDED: July 26, 1988
RECORDING NO.: 8807260343
Contains covenant prohibiting structures over said easement or other
activity which might endanger the underground system.
- - EASEMENT AND THE TERMS AND CONDITIONS THEREOF:
GRANTEE: City of Everett
PURPOSE: Utilities, drainage and detention pond facilities
and appurtenances
AREA AFFECTED: Portions of subject property
RECORDED: December 13, 1988
RECORDING NO.: 8812130477
- - Right to make necessary slopes for cuts or fills upon property herein
described as granted to City of Everett by deed recorded under Recording
No. 8801270201.
Exhibit B - Page 5
<PAGE> 23
- - ALL COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS OR
OTHER SERVITUDES, if any, disclosed by Binding Site Plan/Survey as
recorded under Snohomish County Recording Number 9204015001.
- - The following as and to extent shown on as-built Survey prepared by W&H
Pacific on March 20, 1997, under Job No. 3-2944-0133:
A) Fence from Southerly adjoiner extends 2.2 feet Northerly of our
South property line.
B) Bird feeder post 0.79 feet South of North property line (belongs
to property adjoiner to North).
C) Property adjoiner to the North wood fence extends 0.11 feet South
of subject property's North line.
D) Along Easterly property line - 1/2 light pole onto subject
property.
- - DRIVEWAY AND ACCESS EASEMENT AGREEMENT AND THE TERMS AND CONDITIONS
THEREOF:
GRANTEE: Cintas Sales Corporation, an Ohio Corporation
PURPOSE: Ingress, egress and utilities and related rights
as in said instrument
AREA AFFECTED: Southeasterly portion of subject property
RECORDED: November 5, 1997
RECORDING NO.: 9711050088
Said easement contains a covenant to bear equal share of cost of
construction, maintenance or repair of same.
- - EASEMENT AND THE TERMS AND CONDITIONS THEREOF:
GRANTEE: City of Everett, a municipal corporation
PURPOSE: Sewer system and related rights as in said
instrument
AREA AFFECTED: 20 foot wide strip of land within Lot 2F
RECORDED: November 10, 1997
RECORDING NO.: 9711100557
- - EASEMENT AND THE TERMS AND CONDITIONS THEREOF:
GRANTEE: City of Everett, a municipal corporation
PURPOSE: Water system and related rights as in said
instrument
AREA AFFECTED: 15 foot wide strips of land within Lot 2F
RECORDED: November 12, 1997
RECORDING NO.: 9711120701
Exhibit B - Page 6
<PAGE> 24
EXHIBIT C
See the form of Washington Excise Tax Affidavit attached to and made a part of
this Exhibit C.
<PAGE> 25
EXHIBIT D
BILL OF SALE AND ASSIGNMENT OF
LEASE AND INTANGIBLE ASSETS
Reference is made to: (1) that certain Amended and Restated Purchase
Agreement between BNP Leasing Corporation ("ASSIGNOR") and Solectron Washington,
Inc., dated as of July 1, 1998 (the "PURCHASE AGREEMENT"); (2) that certain
Amended and Restated Lease Agreement between Assignor, as landlord, and
Solectron Washington, Inc., as tenant, dated as of July 1, 1998 (the "LEASE");
and (3) that certain Amended and Restated Closing Certificate and Agreement by
Solectron Washington, Inc. in favor of Assignor, dated as of July 1, 1998 (the
"CLOSING CERTIFICATE"). (Capitalized terms used and not otherwise defined in
this document are intended to have the meanings assigned to them in the List of
Defined Terms attached to and made a part of the Lease.)
As contemplated by the Purchase Agreement, Assignor hereby sells, transfers
and assigns unto [SOLECTRON OR THE APPLICABLE PURCHASER, AS THE CASE MAY BE], a
_____________ ("Assignee"), all of Assignor's right, title and interest in and
to the following property, if any, to the extent such property is assignable:
(a) the Lease;
(b) any pending or future award made because of any condemnation affecting
the Property or because of any conveyance to be made in lieu thereof, and any
unpaid award for damage to the Property and any unpaid proceeds of insurance or
claim or cause of action for damage, loss or injury to the Property; and
(c) all other property included within the definition of "Property" as set
forth in the Purchase Agreement, including but not limited to any of the
following transferred to Assignor by the tenant pursuant to Paragraph 8 of the
Lease or otherwise acquired by Assignor, at the time of the execution and
delivery of the Lease and Purchase Agreement or thereafter, by reason of
Assignor's status as the owner of any interest in the Property: (1) any goods,
equipment, furnishings, furniture, chattels and tangible personal property of
whatever nature that are located on the Property and all renewals or
replacements of or substitutions for any of the foregoing; (ii) the rights of
Assignor, existing at the time of the execution of the Lease and Purchase
Agreement or thereafter arising, under Permitted Encumbrances or Development
Contracts (both as defined in the Lease); and (iii) any other permits, licenses,
franchises, certificates, and other rights and privileges related to the
Property that Assignee would have acquired if Assignee had itself purchased the
land included in the Property.
Provided, however, excluded from this conveyance and reserved to Assignor are
any rights or privileges of Assignor under the following ("EXCLUDED RIGHTS"):
(1) the indemnities set forth in the Lease and the Closing Certificate, whether
such rights are presently known or unknown, including rights of the Assignor to
be indemnified against environmental claims of third parties as provided in the
Closing Certificate which may not presently be known, (2) provisions in the
Lease that establish the right of Assignor to recover any accrued unpaid rent
under the Lease which may be outstanding as of the date hereof, (3) agreements
between Assignor and "BNPLC's Parent" or any "Participant," both as defined in
the Lease, or any modification or extension thereof, or (4) any other instrument
being delivered to Assignor contemporaneously herewith pursuant to the Purchase
Agreement. To the extent that this conveyance does include any rights to receive
future payments under the Lease, such rights ("INCLUDED RIGHTS") shall be
subordinate to Assignor's Excluded Rights, and Assignee hereby waives any rights
to enforce Included Rights until such time as Assignor has received all payments
to which it remains entitled by reason of Excluded Rights. If any amount shall
be paid to Assignee on account of any Included Rights at any time before
Assignor has received all payments to which it is entitled
<PAGE> 26
because of Excluded Rights, such amount shall be held in trust by Assignee for
the benefit of Assignor, shall be segregated from the other funds of Assignee
and shall forthwith be paid over to Assignor to be held by Assignor as
collateral for, or then or at any time thereafter applied in whole or in part by
Assignor against, the payments due to Assignor because of Excluded Rights,
whether matured or unmatured, in such order as Assignor shall elect.
Assignor does for itself and its successors covenant and agree to warrant
and defend the title to the property assigned herein against the just and lawful
claims and demands of any person claiming under or through a Lien Removable by
BNPLC, but not otherwise.
Assignee hereby assumes and agrees to keep, perform and fulfill Assignor's
obligations, if any, relating to any permits or contracts, under which Assignor
has rights being assigned herein.
IN WITNESS WHEREOF, the parties have executed this instrument as
of _______________, ________.
ASSIGNOR:
BNP LEASING CORPORATION a Delaware corporation
By: _________________________
Its: ________________________
ASSIGNEE:
[SOLECTRON OR THE APPLICABLE PURCHASER], a
_______________ corporation
By: _________________________
Its: ________________________
Exhibit D - Page 2
<PAGE> 27
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, ____________________ , personally
appeared ___________________________ and _______________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
persons whose names are subscribed to the within instrument and acknowledged to
me that they executed the same in their authorized capacities, and that by their
signatures on the instrument the person, or the entity upon behalf of which the
persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature ________________________
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me,______________________ , personally
appeared _______________________ and ________________________, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the persons
whose names are subscribed to the within instrument and acknowledged to me that
they executed the same in their authorized capacities, and that by their
signatures on the instrument the person, or the entity upon behalf of which the
persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature _________________________
Exhibit D - Page 3
<PAGE> 28
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LEASE CHANGES FROM
TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH SOLECTRON REQUESTS BNPLC'S CONSENT
OR APPROVAL AS PROVIDED IN THE LEASE, SO TOO WILL THE DESCRIPTION OF THE LAND
BELOW CHANGE. ANY SUCH CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW
AND THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THE DOCUMENT TO WHICH THIS
DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
All that certain real property situate in the City of Everett, County of
Snohomish, State of Washington, being a portion of the Southwest quarter of
Section 2, and a portion of the Southeast quarter of Section 3, all in Township
28 North, Range 4 East, W.M., and also being a portion of Lot 2 Binding Site
Plan/Record of Survey recorded under Snohomish County Recording Number
8910255010, and being more particularly described as follows:
BEGINNING at the quarter corner common to said Sections 2 and 3;
thence from said point of beginning along the East-West centerline of said
Section 2, South 88(Degree) 10'56" East 1192.73 feet;
thence leaving said East-West centerline South 01(Degree) 49'04" West 347.51
feet;
thence South 26(Degree) 07'32" East 208.83 feet;
thence South 12(Degree) 56'43" East 395.73 feet to the Northerly right of way
line of Merrill Creek Parkway as deeded to the City of Everett under Snohomish
County Recording Number 8801270201, Snohomish County records;
thence along said right of way line of Merrill Creek Parkway from a tangent that
bears South 77(Degree) 03'17" West, along the arc of a curve to the left having
a radius of 630.00 feet and a central angle of 37(Degree) 00'43", an arc length
of 406.97 feet; 7 thence leaving said right of way line North 79(Degree) 36'24"
West 1190.79 feet to the Easterly boundary of the Binding Site Plan/Record of
Survey entitled Seaway Center Two/Intermec recorded under Snohomish County
Recording Number 8910255009;
thence along said Easterly boundary North 00(Degree) 50'18" East 955.72 feet to
the East-West centerline of said Section 3;
thence along said East-West centerline South 88(Degree) 33'31" East 136.77 feet
to the point of beginning;
(ALSO KNOWN AS Lot 2F of Binding Site Plan/Record of Survey Seaway Center Five
as recorded under Snohomish County Recording Number 9204015001);
TOGETHER WITH a non-exclusive driveway and access easement as set forth in
document entitled Driveway and Assess Easement Agreement recorded under
Snohomish County Recording Number 9711050088.
Situate in the County of Snohomish, State of Washington
Exhibit D - Page 4
<PAGE> 29
EXHIBIT E
ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES (this
"Certificate") is made as of ___________________, ____, by [Solectron or the
Applicable Purchaser, as the case may be], a ___________________ ("GRANTEE").
Contemporaneously with the execution of this Certificate, BNP Leasing
Corporation, a Delaware corporation ("BNPLC"), is executing and delivering to
Grantee (1) a deed and (2) a Bill of Sale and Assignment of Lease and Intangible
Assets (the foregoing documents and any other documents to be executed in
connection therewith are herein called the "CONVEYANCING DOCUMENTS" and any of
the properties, rights or other matters assigned, transferred or conveyed
pursuant thereto are herein collectively called the "SUBJECT PROPERTY").
NOTWITHSTANDING ANY PROVISION CONTAINED IN THE CONVEYANCING DOCUMENTS TO
THE CONTRARY, GRANTEE ACKNOWLEDGES THAT BNPLC MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY NATURE OR KIND, WHETHER STATUTORY, EXPRESS OR IMPLIED, WITH
RESPECT TO ENVIRONMENTAL MATTERS OR THE PHYSICAL CONDITION OF THE SUBJECT
PROPERTY, AND GRANTEE, BY ACCEPTANCE OF THE CONVEYANCING DOCUMENTS, ACCEPTS THE
SUBJECT PROPERTY "AS IS," "WHERE IS," "WITH ALL FAULTS" AND WITHOUT ANY SUCH
REPRESENTATION OR WARRANTY BY GRANTOR AS TO ENVIRONMENTAL MATTERS, THE PHYSICAL
CONDITION OF THE SUBJECT PROPERTY, COMPLIANCE WITH SUBDIVISION OR PLATTING
REQUIREMENTS OR CONSTRUCTION OF ANY IMPROVEMENTS. Without limiting the
generality of the foregoing, Grantee hereby further acknowledges and agrees that
warranties of merchantability and fitness for a particular purpose are excluded
from the transaction contemplated by the Conveyancing Documents, as are any
warranties arising from a course of dealing or usage of trade. Grantee hereby
assumes all risk and liability (and agrees that BNPLC shall not be liable for
any special, direct, indirect, consequential, or other damages) resulting or
arising from or relating to the ownership, use, condition, location,
maintenance, repair, or operation of the Subject Property, except for damages
proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of BNPLC. As used in the
preceding sentence, "ESTABLISHED MISCONDUCT" is intended to have, and be limited
to, the meaning given to it in the List of Defined Terms attached to the Amended
and Restated Purchase Agreement between BNPLC and Solectron Washington, Inc.
dated as of July 1, 1998, pursuant to which BNPLC is delivering the Conveyancing
Documents.
The provisions of this Certificate shall be binding on Grantee, its
successors and assigns and any other party claiming through Grantee. Grantee
hereby acknowledges that BNPLC is entitled to rely and is relying on this
Certificate.
EXECUTED as of ________________, ____.
[SOLECTRON OR THE APPLICABLE PURCHASER]
By: ___________________________
Name: ______________________
Title:______________________
<PAGE> 30
EXHIBIT F
[Intentionally deleted.]
<PAGE> 31
EXHIBIT G
SECRETARY'S CERTIFICATE
The undersigned, [Secretary or Assistant Secretary] of BNP Leasing
Corporation, a Delaware corporation (the "Corporation"), hereby certifies as
follows:
1. That he is the duly, elected, qualified and acting Secretary [or
Assistant Secretary] of the Corporation and has custody of the corporate
records, minutes and corporate seal.
2. That the following named persons have been properly designated, elected
and assigned to the office in the Corporation as indicated below; that such
persons hold such office at this time and that the specimen signature appearing
beside the name of such officer is his or her true and correct signature.
[THE FOLLOWING BLANKS MUST BE COMPLETED WITH THE NAMES AND SIGNATURES OF THE
OFFICERS WHO WILL BE SIGNING THE DEED AND OTHER SALE CLOSING DOCUMENTS ON BEHALF
OF THE CORPORATION.]
<TABLE>
<CAPTION>
Name Title Signature
- ---- ----- ---------
<S> <C> <C>
_____________________ _____________________ ______________________
_____________________ _____________________ ______________________
</TABLE>
3. That the resolutions attached hereto and made a part hereof were duly
adopted by the Board of Directors of the Corporation in accordance with the
Corporation's Articles of Incorporation and Bylaws. Such resolutions have not
been amended, modified or rescinded and remain in full force and effect.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Corporation on this _____, day of _______________ , _____.
______________________________________
[signature and title]
<PAGE> 32
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Purchase Agreement (herein called the
"Purchase Agreement") dated as of July 1, 1998, by and between BNP Leasing
Corporation (the "Corporation") and Solectron Washington, Inc. ("Purchaser"),
the Corporation agreed to sell and Purchaser agreed to purchase or cause the
Applicable Purchaser (as defined in the Purchase Agreement) to purchase the
Corporation's interest in the property (the "Property") located in Everett,
Washington more particularly described therein.
NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Corporation, in its best business judgment, deems it in the best interest of the
Corporation and its shareholders that the Corporation convey the Property to
Purchaser or the Applicable Purchaser pursuant to and in accordance with the
terms of the Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed in the name and on behalf of the
Corporation to cause the Corporation to fulfill its obligations under the
Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed to take or cause to be taken any and
all actions and to prepare or cause to be prepared and to execute and deliver
any and all deeds and other documents, instruments and agreements that shall be
necessary, advisable or appropriate, in such officer's sole and absolute
discretion, to carry out the intent and to accomplish the purposes of the
foregoing resolutions.
Exhibit G - Page 2
<PAGE> 33
EXHIBIT H
BNP LEASING CORPORATION
717 N. HARWOOD
SUITE 2630
DALLAS, TEXAS 75201
______________, ____________
[Title Insurance Company]
___________________________
___________________________
___________________________
Re: Recording of (1) Deed and (2) Bill of Sale and Assignment of Lease
and Intangible Assets to [SOLECTRON OR THE APPLICABLE PURCHASER] ("Purchaser")
Ladies and Gentlemen:
BNP Leasing Corporation has executed and delivered to Purchaser (1) a
Deed and (2) Bill of Sale and Assignment of Lease and Intangible Assets, each in
the form attached to this letter. You are hereby authorized and directed to
record such documents at the request of Purchaser.
Sincerely,
<PAGE> 34
EXHIBIT I
FIRPTA STATEMENT
Section 1445 of the Internal Revenue Code of 1986, as amended, provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person.
To inform [SOLECTRON OR THE APPLICABLE PURCHASER] (the "Transferee")
that withholding of tax is not required upon the disposition of a real property
interest by transferor, BNP Leasing Corporation (the "Seller"), the undersigned
hereby certifies the following on behalf of the Seller:
1. The Seller is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. The United States employer identification number for the Seller is
75-2252918;
3. The office address of the Seller is ______________
________________________________ .
The Seller understands that this certification may be disclosed to the
Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
The Seller understands that the Transferee is relying on this affidavit
in determining whether withholding is required upon said transfer. The Seller
hereby agrees to indemnify and hold the Transferee harmless from and against any
and all obligations, liabilities, claims, losses, actions, causes of action,
demands, rights, damages, costs, and expenses (including but not limited to
court costs and attorneys' fees) incurred by the Transferee as a result of any
false misleading statement contained herein.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Seller.
Dated: ___________, ____.
BNP LEASING CORPORATION, a Delaware corporation
By: _______________________________________
Name: _________________________________
Title: ________________________________
<PAGE> 35
EXHIBIT J
INDEMNITY FOR LIENS REMOVABLE BY BNPLC
THIS INDEMNITY AGREEMENT (this "AGREEMENT") is made as of
_________________, _____, by SOLECTRON WASHINGTON, INC., a California
corporation ("PURCHASER") [OR THE APPLICABLE PURCHASER] and BNP LEASING
CORPORATION, a Delaware corporation ("SELLER") and ___________________________
("TITLE COMPANY").
R E C I T A L S
A. Purchaser is acquiring the land described in Annex A attached hereto
and any improvements located thereon (the "PROPERTY") pursuant to the terms and
conditions of that certain Amended and Restated Purchase Agreement dated as of
July 1, 1998 by between Seller and Purchaser [or Solectron] (the "PURCHASE
AGREEMENT").
B. In connection with its acquisition of the Property, Seller has been
notified as contemplated by the Purchase Agreement that the matters described in
Annex B attached hereto (the "RELEVANT ENCUMBRANCES") have been identified as
encumbrances upon title to the Property and that such matters, to the extent
valid, constitute Liens Removable by BNPLC (as defined below).
C. Because of such notice to Seller, Seller is required by the Purchase
Agreement to tender this Indemnity Agreement to Purchaser.
NOW, THEREFORE, in consideration of the above recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
Seller must promptly remove any of the Relevant Encumbrances that
constitute "LIENS REMOVABLE BY BNPLC" (which for purposes of this Indemnity
Agreement shall have the meaning assigned to it in the List of Defined Terms
attached to the Purchase Agreement). Seller must also pay, indemnify and hold
harmless Purchaser, the Title Company, the Purchaser's successors and assigns as
to the Property and the Title Company's successors and assigns as to any title
insurance policy issued to Purchaser by the Title Company covering the Property
from and against any and all liabilities, damages, claims, actions, judgments,
costs and expenses (including, without limitation, reasonable attorneys' fees)
caused by Seller's failure to promptly remove any of the Relevant Encumbrances
that constitute Liens Removable by BNPLC.
Nothing herein shall be construed as an admission by Seller that any of
the Relevant Encumbrances do constitute Liens Removable by BNPLC or as imposing
a duty upon Seller to remove or defend against claims arising out of any
Relevant Encumbrances that do not constitute Liens Removable by BNPLC. Nothing
herein contained shall limit Purchaser's rights or remedies under the Purchase
Agreement because of any failure by BNPLC to remove all Liens Removable by BNPLC
before conveying the Property.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF WASHINGTON WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
SELLER, PURCHASER AND THE TITLE COMPANY EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER DOCUMENT, OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT
IS BEING ESTABLISHED. The scope of this waiver is intended to be all-
<PAGE> 36
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including, without limitation,
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Purchaser, Seller and the Title Company each acknowledge
that this waiver is a material inducement to enter into a business relationship,
that each has already relied on the waiver in entering into this Agreement and
the other documents referred to herein, and that each will continue to rely on
the waiver in their related future dealings. Purchaser, Seller and the Title
Company each further warrant and represent that it has reviewed this waiver with
its legal counsel, and that it knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LEASE
OR THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
Exhibit J - Page 2
<PAGE> 37
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"Seller"
BNP LEASING CORPORATION, a Delaware corporation
By: _______________________________
Name: _________________________
Title: ________________________
"Purchaser"
SOLECTRON WASHINGTON, INC., a California
corporation
By: _______________________________
Name: _________________________
Title: ________________________
"Title Company"
_______________________, a
___________________________
By: _______________________________
Name: _________________________
Title: ________________________
Exhibit J - Page 3
<PAGE> 38
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LEASE CHANGES FROM
TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH SOLECTRON REQUESTS BNPLC'S CONSENT
OR APPROVAL AS PROVIDED IN THE LEASE, SO TOO WILL THE DESCRIPTION OF THE LAND
BELOW CHANGE. ANY SUCH CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW
AND THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THE DOCUMENT TO WHICH THIS
DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
All that certain real property situate in the City of Everett, County of
Snohomish, State of Washington, being a portion of the Southwest quarter of
Section 2, and a portion of the Southeast quarter of Section 3, all in Township
28 North, Range 4 East, W.M., and also being a portion of Lot 2 Binding Site
Plan/Record of Survey recorded under Snohomish County Recording Number
8910255010, and being more particularly described as follows:
BEGINNING at the quarter corner common to said Sections 2 and 3;
thence from said point of beginning along the East-West centerline of said
Section 2, South 88(Degree) 10'56" East 1192.73 feet;
thence leaving said East-West centerline South 01(Degree) 49'04" West 347.51
feet;
thence South 26(Degree) 07'32" East 208.83 feet;
thence South 12(Degree) 56'43" East 395.73 feet to the Northerly right of way
line of Merrill Creek Parkway as deeded to the City of Everett under Snohomish
County Recording Number 8801270201, Snohomish County records;
thence along said right of way line of Merrill Creek Parkway from a tangent that
bears South 77(Degree) 03'17" West, along the arc of a curve to the left having
a radius of 630.00 feet and a central angle of 37(Degree) 00'43", an arc length
of 406.97 feet;
thence leaving said right of way line North 79(Degree) 36'24" West 1190.79 feet
to the Easterly boundary of the Binding Site Plan/Record of Survey entitled
Seaway Center Two/Intermec recorded under Snohomish County Recording Number
8910255009;
thence along said Easterly boundary North 00(Degree) 50'18" East 955.72 feet to
the East-West centerline of said Section 3;
thence along said East-West centerline South 88(Degree) 33'31" East 136.77 feet
to the point of beginning;
(ALSO KNOWN AS Lot 2F of Binding Site Plan/Record of Survey Seaway Center Five
as recorded under Snohomish County Recording Number 9204015001);
TOGETHER WITH a non-exclusive driveway and access easement as set forth in
document entitled Driveway and Assess Easement Agreement recorded under
Snohomish County Recording Number 9711050088.
Situate in the County of Snohomish, State of Washington
Exhibit J - Page 4
<PAGE> 39
ANNEX B
Relevant Encumbrances
[THIS ANNEX IS TO BE COMPLETED BY A LIST OF POSSIBLE LIENS REMOVABLE BY BNPLC
IDENTIFIED BY SOLECTRON AND AGAINST WHICH SOLECTRON HAS NOT BEEN ABLE TO OBTAIN
TITLE INSURANCE.]
Exhibit J - Page 1
<PAGE> 1
EXHIBIT 10.3
AMENDED AND RESTATED
GUARANTY
FROM
SOLECTRON CORPORATION,
("GUARANTOR")
IN FAVOR OF
BNP LEASING CORPORATION,
("BNPLC")
EFFECTIVE AS OF JULY 1, 1998
<PAGE> 2
AMENDED AND RESTATED
GUARANTY
THIS AMENDED AND RESTATED GUARANTY is made as of July 1, 1998, by
SOLECTRON CORPORATION, a Delaware corporation ("GUARANTOR"), in favor of BNP
LEASING CORPORATION, a Delaware corporation ("BNPLC").
RECITALS
1. Guarantor owns directly one hundred percent (100%) of the outstanding
shares of capital stock of Solectron Washington, Inc., a California corporation
("SWI").
2. Contemporaneously herewith SWI and BNPLC are executing an Amended and
Restated Lease Agreement dated the date hereof (as from time to time
supplemented, amended or restated, the "LEASE"), pursuant to which BNPLC has
agreed to lease to SWI certain land and improvements thereon which are described
in the Lease. As of the Effective Date, the Lease amends, restates and replaces
a prior Lease Agreement between SWI and BNPLC dated as of December 1, 1997.
3. Contemporaneously herewith SWI and BNPLC are executing an Amended and
Restated Purchase Agreement dated the date hereof (as from time to time
supplemented, amended or restated, the "PURCHASE AGREEMENT"), pursuant to which
SWI has agreed to purchase or arrange for the purchase of the Property as more
particularly provided therein. As of the Effective Date, the Purchase Agreement
amends, restates and replaces a prior Purchase Agreement between SWI and BNPLC
dated as of December 1, 1997.
4. Contemporaneously herewith SWI is executing an Amended and Restated
Closing Certificate and Agreement dated the date hereof (as from time to time
supplemented, amended or restated, the "CLOSING CERTIFICATE"), pursuant to which
SWI has made certain representations to BNPLC concerning the Property and has
agreed to indemnify BNPLC for certain matters relating to the Property. As of
the Effective Date, the Closing Certificate amends, restates and replaces the
prior Closing Certificate and Agreement executed by SWI in favor of BNPLC dated
as of December 1, 1997.
5. As a condition precedent to BNPLC's execution of the Lease and
Purchase Agreement, BNPLC requires that Guarantor execute and deliver to BNPLC
this Guaranty of SWI's obligations under the Lease, Purchase Agreement and
Closing Certificate. As of the Effective Date, this Guaranty amends, restates
and replaces a prior Guaranty executed by Guarantor in favor of BNPLC dated as
of December 1, 1997 (the "PRIOR GUARANTY").
6. The board of directors of Guarantor has determined that Guarantor's
execution, delivery and performance of this Guaranty may reasonably be expected
to benefit Guarantor, directly or indirectly, and are in the best interests of
Guarantor.
NOW, THEREFORE, in consideration of the premises, of the benefits which
will inure to Guarantor from the transactions contemplated by the Lease,
Purchase Agreement and Closing Certificate and of Ten Dollars and other good and
valuable consideration, the receipt and sufficiency of all of which are hereby
acknowledged, and in order to induce BNPLC to enter into the Lease and Purchase
Agreement, Guarantor hereby agrees with BNPLC as follows:
<PAGE> 3
AGREEMENTS
Section 1. Definitions. Reference is hereby made to the Lease, Purchase
Agreement and Closing Certificate for all purposes. All capitalized terms used
in this Guaranty which are defined in the Lease and the List of Defined Terms
attached to the Lease and not otherwise defined herein shall have the same
meanings when used herein. All references herein to any Obligation Document or
other document or instrument refer to the same as from time to time amended,
supplemented or restated. As used herein the following terms shall have the
following meanings:
"Designated Covenants" means, collectively, all of the covenants and
agreements of SWI contained in the Lease, Purchase Agreement and Closing
Certificate.
"Designated Representations" means, collectively, all of the
representations and warranties of SWI contained in the Lease, Purchase Agreement
and Closing Certificate.
"Obligations" means collectively all of the indebtedness, obligations,
and undertakings which are guaranteed by Guarantor, as described in subsections
(a) and (b) of Section 2.
"Obligation Documents" means the Lease, the Purchase Agreement, the
Closing Certificate and all other documents and instruments (other than this
Guaranty) under, by reason of which, or pursuant to which any or all of the
Obligations are evidenced, governed, secured, or otherwise dealt with, and all
other documents, instruments and agreements hereafter delivered in connection
herewith or therewith.
"Obligors" means SWI and any other guarantors or obligors, primary or
secondary, of any or all of the Obligations, excluding Guarantor.
"Security" means any rights, properties, or interests of BNPLC, under
the Obligation Documents or otherwise, which provide recourse or other benefits
to BNPLC in connection with the Obligations or the non-payment or
non-performance thereof.
Section 2. Guaranty. Subject only to Section 3 below:
(a) Guarantor hereby irrevocably, absolutely, and unconditionally
guarantees to BNPLC the prompt, complete, and full payment when due, and no
matter how the same shall become due, of all sums payable under the Lease,
Purchase Agreement and Closing Certificate. Without limiting the generality of
the foregoing, Guarantor's liability hereunder shall extend to and include all
post-petition interest, expenses, and other duties and liabilities of SWI
described above in this subsection (a), or below in the following subsections
(b) and (c), which would be owed by SWI but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization, or similar proceeding involving SWI.
(b) The Guarantor hereby irrevocably, absolutely, and unconditionally
guarantees to BNPLC (i) that each Designated Representation is true and correct
and (ii) that each Designated Covenant will be performed promptly and completely
when due, no matter how the same shall become due.
(c) Without limiting the foregoing, BNPLC shall be entitled to recover
from Guarantor any expenses, losses and damages which BNPLC may incur or suffer
(including but not limited to any loss,
2
<PAGE> 4
reduction or delay in amounts paid to BNPLC) as a result of the failure of any
Designated Representation to be true and correct or as a result of the failure
of Guarantor to cause any Designated Covenant to be performed (without regard to
any event or circumstance which may be asserted by Guarantor as having excused,
prevented or limited such performance by Guarantor). All rights, powers and
remedies of BNPLC for such failure to cause any such covenant or undertaking to
be performed are cumulative.
(d) If either SWI or the Guarantor fails to pay or perform any
Obligation as described in the immediately preceding subsections (a), (b) or
(c), the Guarantor will incur the additional obligation to pay to BNPLC, and the
Guarantor will forthwith upon demand by BNPLC, the amount of any and all
reasonable expenses, including fees and disbursements of BNPLC's counsel, and of
any experts or agents retained by BNPLC, which BNPLC may incur as a result of
such failure.
(e) As between Guarantor and BNPLC, this Guaranty shall be considered a
primary liability of Guarantor.
Section 3. Express Grace and Cure Periods. This Guaranty is not intended
to nullify any grace or cure period expressly provided for the benefit of SWI in
the Lease, Purchase Agreement or Closing Certificate. Accordingly, any payment
required of SWI by the Lease, Purchase Agreement or Closing Certificate, for
which a grace or cure period is expressly provided therein, will not be
considered due for purposes of this Guaranty until such grace or cure period
expires. Similarly, any performance obligation imposed upon SWI by the Lease,
Purchase Agreement or Closing Certificate, for which a grace or cure period is
expressly provided therein, will not be considered to have been breached unless
SWI's failure to perform such obligation continues upon the expiration of such
grace or cure period.
Section 4. Unconditional Guaranty.
(a) No action which BNPLC may take or omit to take in connection with
any of the Obligation Documents, any of the Obligations (or any other
indebtedness owing by SWI to BNPLC), or any Security, and no course of dealing
of BNPLC with any Obligor or any other Person, shall release or diminish
Guarantor's obligations, liabilities, agreements or duties hereunder, affect
this Guaranty in any way, or afford Guarantor any recourse against BNPLC,
regardless of whether any such action or inaction may increase any risks to or
liabilities of BNPLC or any Obligor or increase any risk to or diminish any
safeguard of any Security. Without limiting the foregoing, Guarantor hereby
expressly agrees that BNPLC may, from time to time, without notice to or the
consent of Guarantor, do any or all of the following:
(i) Amend, change or modify, in whole or in part, any one or more
of the Obligation Documents and give or refuse to give any waivers or
other indulgences with respect thereto.
(ii) Neglect, delay, fail, or refuse to take or prosecute any
action for the collection or enforcement of any of the Obligations, to
foreclose or take or prosecute any action in connection with any
Security or Obligation Document, to bring suit against any Obligor or
any other Person, or to take any other action concerning the Obligations
or the Obligation Documents.
(iii) Change, rearrange, extend, or renew the time, rate, terms,
or manner for payment or performance of any one or more of the
Obligations (whether for principal, interest, fees, expenses,
indemnifications, affirmative or negative covenants, or otherwise).
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<PAGE> 5
(iv) Compromise or settle any unpaid or unperformed Obligation or
any other obligation or amount due or owing, or claimed to be due or
owing, under any Obligation Document.
(v) Take, exchange, amend, eliminate, surrender, release, or
subordinate any or all Security for any or all of the Obligations,
accept additional or substituted Security therefor, and perfect or fail
to perfect BNPLC's rights in any or all Security.
(vi) Discharge, release, substitute or add Obligors.
(vii) Apply all monies received from Obligors or others, or from
any Security for any of the Obligations, as BNPLC may determine to be in
its best interest, without in any way being required to marshall
Security or assets or to apply all or any part of such monies upon any
particular Obligations.
(b) No action or inaction of any Obligor or any other Person, and no
change of law or circumstances, shall release or diminish Guarantor's
obligations, liabilities, agreements, or duties hereunder, affect this Guaranty
in any way, or afford Guarantor any recourse against BNPLC. Without limiting the
foregoing, the obligations, liabilities, agreements, and duties of Guarantor
under this Guaranty shall not be released, diminished, impaired, reduced, or
affected by the occurrence of any or all of the following from time to time,
even if occurring without notice to or without the consent of Guarantor:
(i) Any voluntary or involuntary liquidation, dissolution, sale
of all or substantially all assets, marshalling of assets or
liabilities, receivership, conservatorship, assignment for the benefit
of creditors, insolvency, bankruptcy, reorganization, arrangement, or
composition of any Obligor or any other proceedings involving any
Obligor or any of the assets of any Obligor under laws for the
protection of debtors, or any discharge, impairment, modification,
release, or limitation of the liability of, or stay of actions or lien
enforcement proceedings against, any Obligor, any properties of any
Obligor, or the estate in bankruptcy of any Obligor in the course of or
resulting from any such proceedings.
(ii) The failure by BNPLC to file or enforce a claim in any
proceeding described in the immediately preceding subsection (i) or to
take any other action in any proceeding to which any Obligor is a party.
(iii) The release by operation of law of any Obligor from any of
the Obligations or any other obligations to BNPLC.
(iv) The invalidity, deficiency, illegality, or unenforceability
of any of the Obligations or the Obligation Documents, in whole or in
part, any bar by any statute of limitations or other law of recovery on
any of the Obligations, or any defense or excuse for failure to perform
on account of force majeure, act of God, casualty, impossibility,
impracticability, or other defense or excuse whatsoever.
(v) The failure of any Obligor or any other Person to sign any
guaranty or other instrument or agreement within the contemplation of
any Obligor or BNPLC.
(vi) The fact that Guarantor may have incurred directly part of
the Obligations or is otherwise primarily liable therefor.
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(vii) Without limiting any of the foregoing, any fact or event
(whether or not similar to any of the foregoing) which in the absence of
this provision would or might constitute or afford a legal or equitable
discharge or release of or defense to a guarantor or surety other than
the actual payment and performance by Guarantor under this Guaranty.
(c) BNPLC may invoke the benefits of this Guaranty before pursuing any
remedies against any Obligor or any other Person and before proceeding against
any Security now or hereafter existing for the payment or performance of any of
the Obligations. BNPLC may maintain an action against Guarantor on this Guaranty
without joining any Obligor therein and without bringing a separate action
against any Obligor.
(d) If any payment to BNPLC by any Obligor is held to constitute a
preference or a voidable transfer under applicable state or federal laws, or if
for any other reason BNPLC is required to refund such payment to the payor
thereof or to pay the amount thereof to any other Person, such payment to BNPLC
shall not constitute a release of Guarantor from any liability hereunder, and
Guarantor agrees to pay such amount to BNPLC on demand and agrees and
acknowledges that this Guaranty shall continue to be effective or shall be
reinstated, as the case may be, to the extent of any such payment or payments.
(e) This is a continuing guaranty and shall apply to and cover all
Obligations and renewals and extensions thereof and substitutions therefor from
time to time.
Section 5 Waiver. Guarantor waives all notices of the creation,
renewal, extension or accrual of any of the Obligations and notice or proof of
reliance by BNPLC on this Guaranty or acceptance of this Guaranty. The
Obligations shall conclusively be considered to have been created, contracted or
incurred in reliance on this Guaranty, and all dealings between BNPLC and SWI
shall likewise be conclusively presumed to have been had or consummated in
reliance on this Guaranty. Guarantor also waives (to the extent permitted by
applicable law) all requirements of notice, presentment, protest or demand on
it, SWI or any other Person, all other notices and demands whatsoever relating
to the Obligations and any requirement that BNPLC file a claim with a court in
any bankruptcy or similar proceedings of SWI or first proceed against SWI or any
other Person or first realize on any collateral security held by it or otherwise
exhaust any right, power or remedy under any document or against BNPLC or any
other Person before proceeding against Guarantor under this Guaranty. BNPLC
shall have no responsibility to notify Guarantor of SWI's financial condition or
SWI's incurrence or performance of the Obligations. WITHOUT LIMITING THE
GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS GUARANTY,
GUARANTOR HEREBY WAIVES, TO THE MAXIMUM EXTENT SUCH WAIVER IS PERMITTED BY LAW,
ANY AND ALL DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF (A)
CALIFORNIA CIVIL CODE SECTIONS 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2838,
2839, 2845, 2848, 2849, AND 2850, (B) TO THE EXTENT APPLICABLE, CALIFORNIA CODE
OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580c, 580d AND 726, AND (C) TO THE
EXTENT APPLICABLE, CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE. Guarantor
warrants and agrees that each of the waivers set for in this Guaranty is made
with full knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any of such waivers are determined to be contrary to any applicable law
or public policy, such waivers shall be effective only to the maximum extent
permitted by law.
Section 6 Exercise of Remedies. BNPLC shall have the right to enforce,
from time to time, in any order and at BNPLC's sole discretion, any rights,
powers and remedies which BNPLC may have
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under the Obligation Documents, this Guaranty or otherwise. No failure on the
part of BNPLC to exercise, and no delay in exercising, any right hereunder or
under any Obligation Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any right preclude any other or further exercise
thereof or the exercise of any other right. The rights, powers and remedies of
BNPLC provided herein and in the Obligation Documents are cumulative and are in
addition to, and not exclusive of, any other rights, powers or remedies provided
by law or in equity. The rights of BNPLC hereunder are not conditional or
contingent on any attempt by BNPLC to exercise any of its rights under any
Obligation Document against any Obligor or any other Person.
Section 7 Limited Subrogation. Until all of the Obligations have been
paid and performed in full Guarantor shall have no right, by reason of or in
connection with this Guaranty, to exercise any right of subrogation,
reimbursement, indemnity, exoneration, contribution or any other claim which it
may now or hereafter have against or to any Obligor or any Security, and
Guarantor hereby waives any rights to enforce any such remedy which Guarantor
may have against SWI and any right to participate in any Security until such
time. If any amount shall be paid to Guarantor on account of any such
subrogation or other rights, any such other remedy, or any Security at any time
when all of the Obligations and all other expenses guaranteed pursuant hereto
shall not have been paid in full, such amount shall be held in trust for the
benefit of BNPLC, shall be segregated from the other funds of Guarantor and
shall forthwith be paid over to BNPLC to be held by BNPLC as collateral for, or
then or at any time thereafter applied in whole or in part by BNPLC against, all
or any portion of the Obligations, whether matured or unmatured, in such order
as BNPLC shall elect.
Section 8 Successors and Assigns. Guarantor's rights or obligations
hereunder may not be assigned or delegated, but this Guaranty and such
obligations shall pass to and be fully binding upon the successors of Guarantor,
as well as Guarantor. This Guaranty shall apply to and inure to the benefit of
BNPLC and its successors or assigns. Without limiting the generality of the
immediately preceding sentence, BNPLC may assign, grant a participation in, or
otherwise transfer any Obligation held by it or any portion thereof, and BNPLC
may assign or otherwise transfer its rights or any portion thereof under any
Obligation Document, to any other Person, and such other Person shall thereupon
become vested with all of the benefits in respect thereof granted to BNPLC
hereunder unless otherwise expressly provided by BNPLC in connection with such
assignment or transfer.
Section 9 Representations, Warranties and Covenants of Guarantor.
Guarantor hereby represents, warrants and covenants to BNPLC as follows:
(a) The Recitals at the beginning of this Guaranty are true and correct
in all material respects.
(b) The direct or indirect value of the consideration received and to
be received by Guarantor in connection herewith is reasonably worth at least as
much as the liability and obligations of Guarantor hereunder, and the incurrence
of such liability and obligations in return for such consideration may
reasonably be expected to benefit Guarantor, directly or indirectly.
(c) The execution, delivery and performance by Guarantor of this
Guaranty do not and will not constitute a breach or default under any other
material agreement or contract to which Guarantor is a party or by which
Guarantor is bound or which affects the Property, and do not violate or
contravene any law, order, decree, rule or regulation to which Guarantor is
subject, and such execution, delivery and performance by Guarantor will not
result in the creation or imposition of (or the obligation to create or impose)
any lien, charge or encumbrance on, or security interest in, Guarantor's
property pursuant to the provisions of any of the foregoing.
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(d) There are no judicial or administrative actions, suits, proceedings
or investigations pending or, to Guarantor's knowledge, threatened that will
adversely affect the Property or the validity, enforceability or priority of
this Guaranty, and Guarantor is not in default with respect to any order, writ,
injunction, decree or demand of any court or other governmental or regulatory
authority that could materially and adversely affect the use, occupancy or
operation of the Property. No condemnation or other like proceedings are pending
or, to Guarantor's knowledge, threatened against the Property.
(e) The execution, delivery and performance by Guarantor of this
Guaranty are duly authorized and does not require the consent or approval of any
governmental body or other regulatory authority that has not heretofore been
obtained and are not in contravention of or conflict with any applicable laws or
any term or provision of Guarantor's articles of incorporation or bylaws. This
Guaranty is a valid, binding and legally enforceable obligation of Guarantor, in
accordance with its terms, except as such enforcement is affected by bankruptcy,
insolvency and similar laws affecting the rights of creditors, generally, and
equitable principles of general application.
(f) Guarantor is not "insolvent" on the date hereof (that is, the sum
of Guarantor's absolute and contingent liabilities, including the Obligations,
does not exceed the fair market value of Guarantor's assets) and has no
outstanding liens, suits, garnishments or court actions which could render
Guarantor insolvent or bankrupt. Guarantor's capital is adequate for the
businesses in which Guarantor is engaged and intends to be engaged. Guarantor
has not incurred (whether hereby or otherwise), nor does Guarantor intend to
incur or believe that it will incur, debts which will be beyond its ability to
pay as such debts mature. There has not been filed by or, to Guarantor's
knowledge, against Guarantor a petition in bankruptcy or a petition or answer
seeking an assignment for the benefit of creditors, the appointment of a
receiver, trustee, custodian or liquidator with respect to Guarantor or any
significant portion of Guarantor's property, reorganization, arrangement,
rearrangement, composition, extension, liquidation or dissolution or similar
relief under the federal Bankruptcy Code or any state law. The financial
statements and all financial data heretofore delivered to BNPLC relating to
Guarantor are true, correct and complete in all material respects. No material
adverse change has occurred in the financial position of Guarantor and its
Subsidiaries as reflected in Guarantor's financial statements covering the
fiscal period ended December 31, 1997.
(g) Guarantor is duly incorporated and legally existing under the laws
of the State of Delaware. Guarantor has all requisite power and has procured or
will procure on a timely basis all governmental certificates of authority,
licenses, permits, qualifications and other documentation required to fulfill
its obligations under this Guaranty. Guarantor has the corporate power and
adequate authority, rights and franchises to own Guarantor's property and to
carry on Guarantor's business as now conducted and is duly qualified and in good
standing in each state in which the character of Guarantor's business makes such
qualification necessary (including the State of California) or, if it is not so
qualified in a state other than California, such failure does not have a
material adverse effect on the properties, assets, operations or businesses of
Guarantor and its Subsidiaries, taken as a whole.
(h) Guarantor is not and will not become an "employee benefit plan" (as
defined in Section 3(3) of ERISA) which is subject to Title I of ERISA. The
assets of Guarantor do not and will not in the future constitute "plan assets"
of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101.
Guarantor is not and will not become a "governmental plan" within the meaning of
Section 3(32) of ERISA. Transactions by or with Guarantor are not subject to
state statutes regulating investments of and fiduciary obligations with respect
to governmental plans. No ERISA Termination Event has occurred with respect to
any Plan of Guarantor and Guarantor and all its Subsidiaries are in compliance
with ERISA. Neither Guarantor nor any of its Subsidiaries is required
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<PAGE> 9
to contribute to, or has any other absolute or contingent liability in respect
of, any "multi employer plan" as defined in Section 4001 of ERISA. As of the
Effective Date no "accumulated funding deficiency" (as defined in Section 412(a)
of the Code) exists with respect to any Plan of Guarantor, whether or not waived
by the Secretary of the Treasury or his delegate, and the current value of the
benefits of each Plan of Guarantor, if any, equals or is less than the current
value of such Plan's assets available for the payment of such benefits.
(i) None of the representations or warranties of Guarantor or SWI
contained in this Guaranty or the Obligation Documents or any other document,
certificate or written statement furnished to BNPLC by or on behalf of Guarantor
or SWI contains any untrue statement of a material fact or omits a material fact
necessary in order to make the statements contained herein or therein (when
taken in their entireties) not misleading.
(j) Guarantor shall, upon request of BNPLC, (i) promptly correct any
error or omission which may be discovered in the contents of this Guaranty or in
any other instrument executed in connection herewith or in the execution or
acknowledgment thereof; (ii) execute, acknowledge, deliver and record or file
such further instruments and do such further acts as may be necessary, desirable
or proper to carry out more effectively the purposes of this Guaranty and to
subject to this Guaranty any property intended by the terms hereof to be covered
hereby, including any renewals, additions, substitutions, replacements or
appurtenances to the Property; (iii) execute, acknowledge, deliver, procure and
record or file any document or instrument deemed advisable by BNPLC to protect
its rights in and to the Property against the rights or interests of third
persons; and (iv) provide such certificates, documents, reports, information,
affidavits and other instruments and do such further acts as may be necessary,
desirable or proper in the reasonable determination of BNPLC to enable BNPLC,
BNPLC's Parent and any other Participants to comply with the requirements or
requests of any agency or authority having jurisdiction over them.
Section 10 Covenants Incorporated by Reference to Schedule A. So long as
Guarantor shall continue to have any obligations under this Guaranty, Guarantor
shall comply with each and every requirement set forth in Schedule A attached
hereto and made a part hereof; provided, however, to the extent that any of the
Obligations or requirements set forth in other provisions of this Guaranty are
more stringent than the requirements set forth in Schedule A, the more stringent
Obligations or requirements set forth herein shall control.
Section 11 Ownership of SWI. So long as Guarantor shall continue to have
any obligations under this Guaranty, Guarantor shall continue to own directly
one hundred percent (100%) of the outstanding shares of capital stock of SWI.
Section 12 No Oral Change. No amendment of any provision of this
Guaranty shall be effective unless it is in writing and signed by Guarantor and
BNPLC, and no waiver of any provision of this Guaranty, and no consent to any
departure by Guarantor therefrom, shall be effective unless it is in writing and
signed by BNPLC, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 13 Invalidity of Particular Provisions. If any term or provision
of this Guaranty shall be determined to be illegal or unenforceable all other
terms and provisions hereof shall nevertheless remain effective and shall be
enforced to the fullest extent permitted by applicable law.
Section 14 Headings and References. The headings used herein are for
purposes of convenience only and shall not be used in construing the provisions
hereof. The words "this
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<PAGE> 10
Guaranty," "this instrument," "herein," "hereof," "hereby" and words of similar
import refer to this Guaranty as a whole and not to any particular subdivision
unless expressly so limited. The phrases "this section" and "this subsection"
and similar phrases refer only to the subdivisions hereof in which such phrases
occur. The word "or" is not exclusive, and the word "including" (in its various
forms) means "including without limitation". Pronouns in masculine, feminine and
neuter genders shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa, unless
the context otherwise requires.
Section 15 Term. This Guaranty shall be irrevocable until all of the
Obligations have been completely and finally paid and performed, Guarantor shall
have paid all amounts that may be required hereunder, the Obligation Documents
have been terminated, and all obligations and undertakings of SWI under, by
reason of, or pursuant to the Obligation Documents have been completely
performed, and this Guaranty is thereafter subject to reinstatement as provided
in Section 3(d). All extensions of credit and financial accommodations
heretofore or hereafter made by BNPLC to SWI shall be conclusively presumed to
have been made in acceptance hereof and in reliance hereon.
Section 16 Notices. Any notice or communication required or permitted
hereunder shall be given as provided in the Lease and if to Guarantor at its
address set forth below:
TO GUARANTOR: Solectron Corporation
777 Gibraltar Drive, Building #5
Milpitas, California 95035
Attn: Chief Financial Officer
Telecopy: (408) 956-6059
or to such other address or to the attention of such other individual as
hereafter shall be designated in writing by Guarantor to BNPLC sent in
accordance herewith.
Section 17 Counterparts. This Guaranty may be executed in any number of
counterparts, each of which when so executed shall be deemed to constitute one
and the same Guaranty.
SECTION 18 GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 19 Waiver of a Jury Trial. GUARANTOR AND BNPLC EACH HEREBY
WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of this waiver is intended
to be all-encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction, including, without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Guarantor and BNPLC each acknowledge that this
waiver is a material inducement to enter into a business relationship, that
BNPLC has already relied on the waiver in entering into the Lease, Purchase
Agreement and Closing Certificate and the other documents referred to herein,
and that each will continue to rely on the waiver in their related future
dealings. BNPLC and Guarantor each further warrants and represents that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS
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TO THIS GUARANTY OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
GUARANTY. In the event of litigation, this Guaranty may be filed as a written
consent to a trial by the court.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty
as of the date first written above.
SOLECTRON CORPORATION
By: /s/ SUSAN WANG
--------------------------------------
Name (print): Susan Wang
--------------------------------------
Title: Sr. Vice President & CFO
--------------------------------------
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Schedule A
FINANCIAL AND OTHER COVENANTS OF GUARANTOR
PART 1
ADDITIONAL DEFINITIONS
1.01 Definitions Applicable in this Schedule. For purposes of this
Schedule A, the following capitalized terms will have the following respective
meanings:
"Adjusted Leverage Ratio" means with respect to Guarantor and its
Subsidiaries on a consolidated basis at the end of any fiscal quarter, the ratio
of (a) (without duplication) (i) Consolidated Funded Debt plus (ii) Guarantee
obligations plus (iii) Indebtedness with respect to synthetic leases and
securitized assets plus (iv) Indebtedness in respect to letters of credit minus
(v) Permitted Subordinated Indebtedness, to (b) (i) operating income plus (ii)
depreciation and amortization charges, in each case, for the period of the four
fiscal quarters ended on the applicable date of determination.
"Capital Lease Obligations" means the obligations of any Person to pay
rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
"Consolidated Funded Debt" means, as of the last day of any fiscal
quarter, the sum for Guarantor and its Subsidiaries as of such day, of, without
duplication, (a) the aggregate outstanding principal amount of Indebtedness for
borrowed money and (b) the aggregate outstanding capitalized amount of Capital
Lease Obligations, all as determined on a consolidated basis in accordance with
GAAP.
"Consolidated Tangible Assets" means, as of the last day of any fiscal
quarter of Guarantor, all tangible assets on the consolidated balance sheet of
Guarantor and its Subsidiaries, as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Tangible Net Worth" means as of the last day of any fiscal
quarter of Guarantor, (a) total shareholders' equity of Guarantor and its
Subsidiaries minus (b) the aggregate amount of all intangible assets on the
consolidated balance sheet of Guarantor and its Subsidiaries, all as determined
on a consolidated basis in accordance with GAAP.
"Current Liabilities" means, with respect to any Person, all liabilities
of such Person treated as current liabilities in accordance with GAAP, including
without limitation (a) all obligations payable on demand or within one year
after the date in which the determination is made and (b) installment and
sinking fund payments required to be made within one year after the date on
which determination is made, but excluding all such liabilities or obligations
which are renewable or extendable at the option of such Person to a date more
than one year from the date of determination.
"Existing Credit Agreement" means the Credit Agreement dated as of April
29, 1997, among Guarantor as Borrower, Bank of America National Trust and
Savings Association, as Agent and Issuing Bank, and other financial institutions
named therein.
<PAGE> 13
"Guarantee" of or by any Person (the "guarantor") means, for the
purposes of this Schedule only and not for the purposes of the Obligation
Documents, any obligation, contingent or otherwise of the guarantor guaranteeing
or having the economic effect of guaranteeing any Indebtedness or other
obligation of any other Person (the "primary obligor") in any matter, whether
directly or indirectly, and including any obligation of the guarantor, direct or
indirect (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment thereof, (b)
to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment
thereof, (c) to maintain working capital, equity capital or any other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or other obligation, or (d) as an
account party in respect of any letter of credit or letter of guaranty issued to
support such Indebtedness or obligation; provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid (excluding deferred
compensation obligations owed to current and former directors, officers and
employees), (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of property
or services (excluding current accounts payable, measured in accordance with
GAAP, incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty supporting Indebtedness, (j) all obligations, contingent
or otherwise, of such Person in respect of bankers' acceptances, and (k) all
obligations, contingent or otherwise, with respect to synthetic leases or
securitized assets. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
"Lien" means, for the purpose of this Schedule only and not for the
purposes of the Obligation Documents, with respect to any asset (a) a mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance or security interest in,
on or of such asset, and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement relating
to such asset.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
Guarantor and its Subsidiaries taken as a whole, (b) the ability of Guarantor to
perform its obligations under this Guaranty if called upon to do so, or (c) the
ability of SWI to perform its Obligations under the Obligation Documents; or (d)
the rights of or benefits available to BNPLC or the Participants under the
Obligation Documents.
"Modified Quick Ratio" means, as computed with respect to Guarantor and
its Subsidiaries on a consolidated basis, the ratio of (1) their Quick Assets to
(2) the sum (without duplication of any item) of their Current Liabilities and
any payments maturing within 12 months on any Indebtedness of
Schedule A - Page 2
<PAGE> 14
Guarantor or its Subsidiaries or on Indebtedness of any other Person which is
the subject of any Guarantee made by Guarantor or its Subsidiaries.
"Permitted Contest" means a contest of the validity or amount of any
payment claimed to be due from Guarantor or a Subsidiary where (a) the contest
is undertaken by Guarantor or such Subsidiary in good faith by appropriate
proceedings, (b) Guarantor or such Subsidiary shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP, and (c) the
failure to make such payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
"Permitted Encumbrances" means, for the purposes of this Guaranty only
and not for the purposes of the Obligation Documents:
(a) Liens imposed by law by any governmental authority for taxes
that are not yet due or are the subject of a Permitted Contest.
(b) Carriers' warehousemen's, mechanics', material men's,
repairmen's and other like Liens imposed by law, and any other
involuntary, statutory or common law Lien arising in the ordinary course
of business and securing obligations that are not overdue by more than
30 days or are the subject of a Permitted Contest.
(c) Pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations.
(d) Deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the
ordinary course of business.
(e) Easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of Guarantor or any
Subsidiary.
(f) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under the Lease.
(g) Liens which constitute rights of set-off of a customary
nature or banker's Liens with respect to amounts on deposit arising by
operation of law in connection with arrangements entered into with banks
in the ordinary course of business.
(h) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with
the importation of goods.
(i) Leases or subleases and licenses and sublicenses granted to
others in the ordinary course of business not interfering in any
material respect with the business of Guarantor or its Subsidiaries
taken as a whole, and any interest or title of any lessor or licensor
under any lease or license.
Schedule A - Page 3
<PAGE> 15
The term "Permitted Encumbrances" shall not include any Lien securing
Indebtedness.
"Permitted Subordinated Indebtedness" means Indebtedness of Guarantor,
the payment of which is expressly subordinated (on terms satisfactory to BNPLC)
to the Obligations.
"Quick Assets" means the sum (without duplication of any item) of
unencumbered cash, plus unencumbered short term cash investments, plus other
unencumbered marketable securities which are classified as short term
investments according to GAAP, plus unencumbered current net accounts
receivable, plus the fair market value of certain long-term investments
hereinafter described. For purposes of determining Quick Assets, assets will be
deemed to be "unencumbered" if they are actually unencumbered or if they are
encumbered only by Liens, from which, at the time of the determination of Quick
Assets, the owner of the assets (be it Guarantor or one of its Subsidiaries) is
entitled to a release of such assets upon no more than ninety days' notice,
without any payment (other than the payment of ministerial fees and costs),
without subjecting other assets to any Lien and without otherwise satisfying any
condition that is beyond the owner's control. The following assets (and only the
following assets) will qualify as "long-term investments" to be included in
Quick Assets to the extent (and only to the extent) that, at the time of the
determination of Quick Assets, they shall not be classified as short term
investments in accordance with GAAP and shall have maturities of not longer than
two years:
(1) securities issued or fully guaranteed or fully insured
by the United States government or any agency thereof and backed
by the full faith and credit of the United States;
(2) certificates of deposit, time deposits, Eurodollar
time deposits, repurchase agreements, or banker's acceptances
that are (A) issued by either one of the 50 largest (in assets)
banks in the United States or by one of the 100 largest (in
assets) banks in the world and (B) rated not less than A- by
Standard & Poor's Corporation or less than A by Moody's Investors
Service, Inc.; and
(3) corporate or municipal bonds rated not less than A- by
Standard & Poor's Corporation or less than A by Moody's Investors
Service, Inc.
"Special Purpose Subsidiary" means any bankruptcy remote special purpose
subsidiary of Guarantor formed for the purpose of selling undivided interests in
accounts receivable and/or other assets transferred by Guarantor and/or any of
its Subsidiaries to such subsidiary for financing purposes, including Solectron
Funding Corporation, a corporation organized or to be organized under the laws
of the state of Delaware.
"Subsidiary" means, for purposes of this Schedule only and not for the
purposes of the Obligation Documents, with respect to Guarantor or any Special
Purpose Subsidiary (the "parent") at any date, any corporation, limited
liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent's
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date.
Schedule A - Page 4
<PAGE> 16
PART 2
DELIVERY OF INFORMATION
2.01. Financial Statements and Other Information. Guarantor will furnish
to BNPLC and to each Participant of which Guarantor has been notified:
(a) within 90 day's after the end of each fiscal year of
Guarantor, its audited consolidated balance sheet and related statements
of operations, changes in shareholders' equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by KPMG Peat
Marwick or other independent public accountants of recognized national
standing (without a "going concern" or like qualification or exception
and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present
fairly in all material respects the financial condition and results of
operations of Guarantor and consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year of Guarantor, its consolidated
balance sheet and related statements of operations and cash flows as of
the end of and for such fiscal quarter and the then elapsed portion of
the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its senior or executive financial officers as
presenting fairly in all material respects the financial condition and
results of operations of Guarantor and consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under
clauses (a) or (b) above, a completed compliance certificate of a senior
or executive financial officer of Guarantor in form and content
reasonably acceptable to BNPLC;
(d) concurrently with any delivery of consolidated financial
statements under clause (a) above, a certificate of the accounting firm
that reported on such financial statements stating whether they obtained
knowledge during the course of their audit of such consolidated
financial statements of any Event of Default or a Default under the
Obligation Documents insofar as it relates to accounting matters (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials
filed by Guarantor or any Subsidiary with the Securities and Exchange
Commission, or any governmental authority succeeding to any or all of
the functions of said commission, or with any national securities
exchange, or distributed by Guarantor to its shareholders generally, as
the case may be;
(f) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of Guarantor or any Subsidiary, or compliance with the terms
of the Obligation Documents, as the BNPLC or any Participant may
reasonably request; and
(g) promptly upon becoming aware thereof, notice of the
effectiveness of any
Schedule A - Page 5
<PAGE> 17
rating of any Index Debt by S&P or Moody's and notice of the
effectiveness of any change in any rating of any Index Debt by S&P or
Moody's.
2.02. Notices of Material Events. Guarantor will furnish to BNPLC and
each Participant prompt written notice of the following:
(a) The filing or commencement of any action, suit or proceeding
by or before any arbitrator or governmental authority against or
affecting Guarantor or any Subsidiary thereof that could reasonably be
expected to result in a Material Adverse Effect.
(b) The occurrence of any ERISA Termination Event that, alone or
together with any other ERISA Termination Events that have occurred,
could reasonably be expected to result in liability of Guarantor and its
Subsidiaries in an aggregate amount exceeding $5,000,000.
(c) Any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Paragraph 2.02 shall be accompanied by a
statement of a senior or executive financial officer or other executive officer
of Guarantor setting forth the details of the event or development requiring
such notice and any action taken or proposed to be taken with respect thereto.
PART 3
NEGATIVE COVENANTS
3.01. Subsidiary Indebtedness. No Subsidiary will create, incur, assume
or permit to exist any Indebtedness, except:
(a) Indebtedness existing on the Effective Date and set forth in
schedule 6.01 attached to the Existing Credit Agreement (a copy of which
schedule is also attached hereto for convenience) and extensions,
renewals and replacements of any such Indebtedness that do not increase
the outstanding principal amount thereof.
(b) Indebtedness of any Subsidiary to Guarantor or any other
Subsidiary.
(c) Guarantees by any Subsidiary of Indebtedness of Guarantor or
of any other Subsidiary to the extent such Indebtedness is permitted
under the Obligation Documents and other material agreements governing
the Indebtedness of Guarantor.
(d) Indebtedness of any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a Lien
on any such assets prior to the acquisition thereof and extensions,
renewals and replacements of any such Indebtedness that do not increase
the outstanding principal amount thereof; provided that (i) such
Indebtedness is incurred prior to or within 120 days after such
acquisition or the completion of such construction or improvement, and
(ii) the aggregate principal amount of Indebtedness permitted by this
clause (d) when aggregated (without duplication) with all Indebtedness
incurred under clause (g) below, with the aggregate amount of all claims
and obligations secured by Liens permitted pursuant to clauses (d) and
(f) of
Schedule A - Page 6
<PAGE> 18
Paragraph 3.02 and with the aggregate book value or sale price of the
assets sold in sale and leaseback transactions permitted pursuant to
Paragraph 3.03 does not exceed 30% of Consolidated Tangible Assets as of
the last day of the most recent fiscal period in respect of which
financial statements shall have been delivered pursuant to Paragraph
2.01 of this Schedule.
(e) Indebtedness of any Person that becomes a Subsidiary after
April 30, 1997; provided that such Indebtedness exists at the time such
Person becomes a Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Subsidiary.
(f) Indebtedness of any Subsidiary as an account party in respect
of trade letters of credit.
(g) Other unsecured Indebtedness of the Subsidiaries in an
aggregate principal amount outstanding at any time that, when aggregated
(without duplication) with all Indebtedness incurred under clause (d)
above, with the aggregate amount of all claims and obligations secured
by Liens permitted pursuant to clauses (d) and (f) of Paragraph 3.02 and
with the aggregate book value or sale price of the assets sold in sale
and leaseback transactions permitted pursuant to Paragraph 3.03 does not
exceed 30% of Consolidated Tangible Assets as of the last day of the
most recent fiscal period in respect of which financial statements shall
have been delivered pursuant to Paragraph 2.01 of this Schedule.
(h) (i) Indebtedness of any Special Purpose Subsidiary; or (ii)
Indebtedness of any other Subsidiary incurred by such Subsidiary in
connection with the incurrence of Indebtedness by any Special Purpose
Subsidiary.
3.02. Liens. Guarantor will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Lien on any property or asset now
owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
(a) Permitted Encumbrances and Liens securing Capital Lease
Obligations permitted under subparagraph 3.01(d), and any renewal or
extension of any such Permitted Encumbrance or Lien so long as the
principal amount of the obligations secured thereby is not increased;
(b) any Lien on any property or asset of Guarantor or any
Subsidiary existing on April 30, 1997 and set forth in schedule 6.02
attached to the Existing Credit Agreement (a copy of which schedule is
also attached hereto for convenience); provided that (i) such Lien shall
not apply to any other property or asset of Guarantor or any Subsidiary
and (ii) such Lien shall secure only those obligations which it secures
on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by Guarantor or any Subsidiary or existing on any
property or asset (including attachments, accessions, replacements or
proceeds thereof) of any Person that becomes a Subsidiary after April
30, 1997 prior to the time such Person becomes a Subsidiary; provided
that (i) such Lien is not created in contemplation of or in connection
with such acquisition of such Person becoming a Subsidiary, as the case
may be, (ii) such Lien shall not apply to any other property
Schedule A - Page 7
<PAGE> 19
or assets of Guarantor or any Subsidiary, and (iii) such Lien shall
secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case
may be, and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;
(d) Liens on fixed or capital assets acquired, constructed or
improved by Guarantor or any Subsidiary (including replacements or
proceeds of such assets and including any Capital Lease Obligations);
provided that (i) in the case of any Subsidiary, such security interest
secure Indebtedness permitted by clause (d) of Paragraph 3.01, (ii) such
security interests and the Indebtedness secured thereby are incurred
prior to or within 120 days after such acquisition or the completion of
such construction or improvement, (iii) the Indebtedness secured thereby
does not exceed 100% of the cost of acquiring, constructing or improving
such fixed or capital assets, (iv) such security interest shall not
apply to any other property or assets of Guarantor or any Subsidiary,
and (v) the aggregate amount of such Indebtedness when aggregated
(without duplication) with all Indebtedness incurred under clauses (d)
and (g) of Paragraph 3.01, with the aggregate amount of all claims
secured by Liens permitted pursuant to clause (f) below and with the
aggregate book value or sale price of the assets sold in sale and
leaseback transactions permitted pursuant to Paragraph 3.03 does not
exceed 30% of Consolidated Tangible Assets as of the last day of the
most recent fiscal period in respect of which financial statements shall
have been delivered pursuant to Paragraph 2.01;
(e) Liens securing claims of any Special Purpose Subsidiary
against any other Subsidiary and sales or assignments of accounts
receivable (or interests therein) by any Subsidiary to a Special Purpose
Subsidiary and by any Special Purpose Subsidiary; and
(f) other Liens securing claims in an aggregate amount at any
time outstanding that when aggregated (without duplication) with (i) all
obligations of any Special Purpose Subsidiary secured by liens, (ii) all
Indebtedness incurred under clauses (d) and (g) of Paragraph 3.01, (iii)
the aggregate amount of all obligations secured by Liens permitted
pursuant to clause (d) above and (iv) the aggregate book value or sale
price of the assets sold in sale and leaseback transactions permitted
pursuant to Paragraph 6.03, does not exceed 30% of Consolidated Tangible
Assets as of the last day of the most recent fiscal period of Guarantor
in respect of which financial statements shall have been delivered
pursuant to Paragraph 2.01, provided that the dollar amount of claims
and other obligations (other than claims or other obligations of any
Subsidiary in favor of any Special Purpose Subsidiary which is directly
or indirectly wholly owned by Guarantor and inchoate indemnity
obligations) secured by accounts receivable does not exceed the greater
of $130,000,000 or 35% of Guarantor's aggregate accounts receivable
(including such accounts receivable sold to any Special Purpose
Subsidiary) calculated on a consolidated basis.
3.03. Sale and Leaseback Transactions. Guarantor will not, and will not
permit any Subsidiary to, enter into any arrangement, directly or indirectly,
with any Person whereby it shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property which it intends to use for
substantially the same purpose or purposes as the property being sold or
transferred; provided, however, that notwithstanding the above, Guarantor or any
Subsidiary may engage in any sale and leaseback transaction if, immediately
after the consummation of such transaction, the aggregate book value or sale
price of the assets sold in sale and leaseback transactions referred to in this
Paragraph 3.03, when aggregated (without duplication) with all Indebtedness
incurred under clauses (d) and (g) of
Schedule A - Page 8
<PAGE> 20
Paragraph 3.01 and with the aggregate amount of all claims and obligations
secured by Liens permitted pursuant to clauses (d) and (f) of Paragraph 3.02,
does not exceed 30% of Consolidated Tangible Assets as of the last day of the
most recent fiscal period in respect of which financial statements shall have
been delivered pursuant to Paragraph 2.01.
3.04. Fundamental Changes.
(a) Guarantor will not, and will not permit any Subsidiary to,
merge into or consolidate with any other Person, or permit any other
Person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions)
all or any substantial portion of its assets, or all or substantially
all of the capital stock of any of the Subsidiaries (in each case,
whether now owned or hereafter acquired), or liquidate or dissolve,
except that, if at the time thereof and immediately after giving effect
thereto no Event of Default or default under the Obligation Documents
shall have occurred and be continuing (i) any Person may merge into or
consolidate with Guarantor in a transaction in which Guarantor is the
surviving corporation, (ii) any Person may merge into any Subsidiary in
a transaction in which the surviving entity is a Subsidiary, (iii) any
Subsidiary may sell, transfer, lease or otherwise dispose of its assets
to Guarantor or to another Subsidiary, (iv) any Subsidiary may liquidate
or dissolve if Guarantor determines in good faith that such liquidation
or dissolution is in the best interests of Guarantor and is not
materially disadvantageous to BNPLC or the Participants and any
distribution or other transfer of assets in connection with such
liquidation or dissolution is made to Guarantor or another Subsidiary in
an amount consistent with such person's ownership percentage of the
Subsidiary being dissolved or liquidated, (v) Guarantor and the
Subsidiaries may sell, lease or otherwise dispose of property in any
individual transaction not related to any other such transaction if the
aggregate fair market value of the assets sold, leased or otherwise
disposed of in such transaction is less than $2,000,000, (vi) Guarantor
and/or any of the Subsidiaries may sell or otherwise transfer their
accounts receivable and other assets to any Special Purpose Subsidiary
and/or any Special Purpose Subsidiary may sell or otherwise transfer
such accounts receivable or other property (or interests therein) if
otherwise permitted under Paragraph 3.02(f), and (vii) Guarantor and the
Subsidiaries may sell, lease or otherwise dispose of property in any
other transaction in the ordinary course of business, provided that,
with respect to transactions outside of the ordinary course of business,
the aggregate fair market value of all assets sold, leased or otherwise
disposed of in transactions under this clause (vii) shall not when taken
together at the time of each such sale, lease or other disposition
exceed 25% of Consolidated Tangible Assets as of the last day of the
most recent fiscal period in respect of which financial statements shall
have been delivered pursuant to Paragraph 2.01 at such time.
(b) Guarantor will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any line of business
material to Guarantor and the Subsidiaries, taken as a whole, other than
businesses currently conducted by Guarantor and the Subsidiaries and
businesses reasonably related thereto.
3.05 Intentionally Omitted.
3.06. Fiscal Year. Guarantor will not change its fiscal year end from
August 31.
3.07. Restrictive Agreements. Guarantor will not, and will not permit
any of its Subsidiaries to, directly or indirectly, enter into, incur or permit
to exist any agreement or other arrangement that
Schedule A - Page 9
<PAGE> 21
prohibits, restricts or imposes any condition upon (a) the ability of Guarantor
or any Subsidiary to create, incur or permit to exist any Lien upon any of its
property or assets, or (b) the ability of any Subsidiary to pay dividends or
other distributions with respect to any shares of its capital stock or to make
or repay loans or advances to Guarantor or any other Subsidiary or to Guarantee
Indebtedness of Guarantor or any other Subsidiary if any such prohibition,
restriction or condition is more burdensome than any similar prohibition,
restriction or condition contained in this Schedule; provided that (i) the
foregoing shall not apply to restrictions and conditions imposed by law or by
any the Existing Credit Agreement, (ii) the foregoing shall not apply to
restrictions and conditions existing prior to and identified in the schedule
6.07 attached to the Existing Credit Agreement (a copy of which schedule is also
attached hereto for convenience), but shall apply to any amendment or
modification expanding the scope of any such restriction or condition unless
otherwise permitted under this Paragraph 3.07, (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Schedule if such restrictions or conditions apply
only to the property or assets securing such Indebtedness, (v) clause (a) of the
foregoing shall not apply to customary provisions in leases and other contracts
restricting the assignment thereof, (vi) the foregoing shall not apply to such
restrictions and conditions applicable to any Subsidiary acquired after April
30, 1997 if such restrictions and conditions existed at the time such Subsidiary
was acquired and were not created in anticipation of such acquisition, (vii) the
foregoing shall not apply to one or more Subsidiaries having any such
restriction or condition so long as any such Subsidiary individually shall not
account for more than 5% of the gross revenues for the most recently ended
fiscal year of Guarantor and the Subsidiaries, taken as a whole, and each such
Subsidiary together with all other such Subsidiaries in the aggregate shall not
account for more than 10% of the gross revenues for the most recently ended
fiscal year of Guarantor and the Subsidiaries, taken as a whole, (viii) the
foregoing shall not apply to any working capital facility entered into by a
Subsidiary organized under the laws of any foreign country, and (ix) the
foregoing shall not apply to any Special Purpose Subsidiary or to any agreement
or other arrangement entered into by Guarantor or any of the Subsidiaries
incidental to a transaction involving a Special Purpose Subsidiary, which
transaction is otherwise permitted under the terms of this Schedule and the
Obligations Documents.
3.08. Distributions. Guarantor shall not declare or make, and shall not
suffer or permit any of its Subsidiaries to declare or make, any dividend
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any shares of any class of its capital stock, or
purchase, redeem or otherwise acquire for value any shares of its capital stock
or any warrants, rights or options to acquire such shares, now or hereafter
outstanding, if any Event of Default or default under the Existing Credit
Agreement then exists or would result therefrom.
3.09. Adjusted Leverage Ratio. Guarantor will not permit its Adjusted
Leverage Ratio, as calculated as of the last day of each fiscal quarter of
Guarantor, to be greater than (a) 1.50 to 1.00 from the Effective Date through
and including February 28, 1999, (b) 1.25 to 1.00 from May 31, 1999 through and
including February 28, 2000, and (c) 1.00 to 1.00 thereafter.
3.10. Consolidated Tangible Net Worth. Guarantor will not permit its
Consolidated Tangible Net Worth as of the last day of each fiscal quarter of
Guarantor following April 30, 1997 to be less than the sum of (without
duplication) 80% of Consolidated Tangible Net Worth measured as of the end of
the fiscal quarter ended February 28, 1997, plus 50% of consolidated net income
(without subtracting losses or acquisition related charges) for each fiscal
quarter ended after the fiscal quarter
Schedule A - Page 10
<PAGE> 22
ended February 28, 1997, minus 100% of all acquisition-related charges if such
charges are recorded in the same fiscal quarter in which the applicable
acquisition is consummated.
3.11. Modified Quick Ratio. At the end of any fiscal quarter of
Guarantor when (1) the rating established by Moody's for the Index Debt of
Guarantor is below Ba2 or (2) the rating established by S&P for the Index Debt
of Guarantor is below BB, or (3) neither Moody's nor S&P maintains a rating for
the Index Debt of Guarantor, Guarantor shall not permit the Modified Quick Ratio
to be less than 1.0 to 1.0.
Schedule A - Page 11
<PAGE> 23
Schedule 3.13: Copyrights, Patents, Trademarks and Licenses Infringement Claims
None.
Schedule 6.01: Subsidiary Indebtedness
<TABLE>
<CAPTION>
Name of Subsidiary Agreement
------------------ ----------------------------------------------
<S> <C>
Solectron Scotland Limited $4.918 million Credit Facility with Royal Bank
of Scotland
Solectron Technology, Inc. $30.488 million Credit Agreement with Standard
SDN BHD Chartered Bank and DCB Bank
Solectron GmbH $5,000 Credit Agreement with Commerzebank
$7 million L-T note from Landersgirekasse
Oeffentliche Bank
$2 million Credit Agreement with Hewlett Packard
Company for purchase of inventory at acquisition
Solectron Japan, Inc. $22.425 million Credit Agreement with Bank of
Tokyo Mitsubishi Ltd.
Fine Pitch Technology, Inc. $89,000 Equipment Loan from San Jose National
Bank
Force Computers, Inc. $1.038 million Credit Facility with Dresdner
Bank Tokyo
$8.876 million Credit Facility with
Stadtoparkasse Munich
$5.917 million Credit Facility with
Hypobanck Munich
$5.917 million Credit Facility with
Reuschelbank
$655,000 Credit Facility with Barclays Bank
$500,000 Credit Facility with Bank Leumi
$7.5 million Credit Facility with Comerica Bank
</TABLE>
Schedule 6.02: Liens
1. Solectron Corporation
<TABLE>
<CAPTION>
Secretary of State - California
-------------------------------
Secured Party Description of Collateral Filing Date File Number
- ---------------------------------- ------------------------------- ----------- -----------
<S> <C> <C> <C>
Equitable Life Leasing Corporation Specific Equipment and Proceeds 1-26-93 88020525
Xerox Corporation Office Equipment and Proceeds 6-22-92 92137563
</TABLE>
-2-
<PAGE> 24
<TABLE>
<CAPTION>
Secured Party Description of Collateral Filing Date File Number
- ---------------------------------- -------------------------------- ----------- -----------
<S> <C> <C> <C>
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 4-15-94 94074579
Hewlett Packard Company Specific Equipment and Proceeds 5-11-94 94093984
Hewlett Packard Company Specific Equipment and Proceeds 3-2-95 9506661264
Hewlett Packard Company Specific Equipment and Proceeds 8-28-95 9524460015
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 12-19-95 9535560504
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 3-1-96 9606760948
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 7-24-96 9620860481
Associates Leasing, Inc. Computer Equipment and Proceeds 1-10-97 9701360025
Security Pacific Equipment Leasing, Inc. Specific Equipment and Proceeds 5-1-95 85169376
Security Pacific Equipment Leasing, Inc. Computer Equipment and Proceeds 8-21-95 85270060
MNLC/BALTC Leasing Partners Specific Equipment and Proceeds 4-2-92 87117094
Security Pacific Equipment Leasing, Inc. Computer Equipment and Proceeds 5-6-92 87217647
Equitable Life Leasing Corporation Computer Equipment and Proceeds 10-20-92 87314510
G.E. Capital Corporation Specific Equipment and Proceeds 2-18-93 88046793
NEMLC Leasing Associates No. 3 Specific Equipment and Proceeds 1-11-93 88063091
Security Pacific Equipment Leasing Specific Equipment and Proceeds 12-27-94 90067753
Deutsch Credit Corporation Specific Equipment and Proceeds 4-3-95 90101368
Security Pacific Equipment Leasing, Inc. Specific Equipment and Proceeds 5-1-95 90172604
Hewlett Packard Company Computer Equipment and Proceeds 5-4-92 92099518
Lease Plan USA, Inc. Specific Equipment and Proceeds 5-12-92 92107399
Hewlett Packard Company Specific Equipment and Proceeds 7-13-92 92153799
Hewlett Packard Company Specific Equipment and Proceeds 10-6-92 92216939
Hewlett Packard Company Specific Equipment and Proceeds 10-16-92 92223550
Hewlett Packard Company Specific Equipment and Proceeds 10-27-92 92231425
Hewlett Packard Company Specific Equipment and Proceeds 4-1-93 92241883
Equitable Life Leasing Corporation Specific Equipment and Proceeds 1-28-94 93018954
Hewlett Packard Company Specific Equipment and Proceeds 4-22-93 9308147
Hewlett Packard Company Specific Equipment and Proceeds 5-12-93 93096482
MetLife Capital, L.P. Computer Equipment and Proceeds 1-28-94 93113136
Hewlett Packard Company Specific Equipment and Proceeds 6-4-93 93114108
Hewlett Packard Company Specific Equipment and Proceeds 6-16-93 93122297
United States Leasing International, Inc. Computer Equipment and Proceeds 11-5-93 93223327
Capital Preferred Yield Fund - II, L.P. Specific Equipment and Proceeds 4-7-94 93234553
Avnet Computer Technologies, Inc. Specific Equipment and Proceeds 2-4-94 94021647
Hewlett Packard Company Specific Equipment and Proceeds 4-25-94 94081377
Hewlett Packard Company Specific Equipment and Proceeds 5-4-94 94088238
Hewlett Packard Company Specific Equipment and Proceeds 5-20-94 94101661
Hewlett Packard Company Specific Equipment and Proceeds 7-18-94 94145012
</TABLE>
-3-
<PAGE> 25
<TABLE>
<CAPTION>
Secured Party Description of Collateral Filing Date File Number
- -------------------------------- ------------------------------- ----------- -----------
<S> <C> <C> <C>
Hewlett Packard Company Specific Equipment and Proceeds 8-30-94 94178790
BNP Leasing Corporation Specific Equipment and Proceeds 9-8-94 94185412
Hewlett Packard Company Specific Equipment and Proceeds 9-21-94 9428560112
BNP Leasing Corporation Specific Equipment and Proceeds 9-27-94 9429360076
Hewlett Packard Company Specific Equipment and Proceeds 11-28-94 9434761275
Comdisco, Inc. Specific Equipment and Proceeds 12-8-94 9434960578
Hewlett Packard Company Specific Equipment and Proceeds 12-14-94 9500361142
Hewlett Packard Company Specific Equipment and Proceeds 1-26-95 9503360328
Hewlett Packard Company Specific Equipment and Proceeds 2-10-95 9504860699
Hewlett Packard Company Specific Equipment and Proceeds 2-10-95 9504860715
Hewlett Packard Company Specific Equipment and Proceeds 2-21-95 9505960514
Hewlett Packard Company Specific Equipment and Proceeds 3-6-95 9506860234
Hewlett Packard Company Specific Equipment and Proceeds 4-28-95 9512160498
Hewlett Packard Company Specific Equipment and Proceeds 4-28-95 9512160513
Hewlett Packard Company Specific Equipment and Proceeds 6-5-95 9515960516
Hewlett Packard Company Specific Equipment and Proceeds 6-5-95 9515960526
Hewlett Packard Company Specific Equipment and Proceeds 9-5-95 9525560208
Hewlett Packard Company Specific Equipment and Proceeds 9-5-95 9525560219
Hewlett Packard Company Specific Equipment and Proceeds 9-26-95 9527260307
Pitney Bowes Credit Corporation Specific Equipment and Proceeds 1-22-96 9602360211
Hewlett Packard Company Specific Equipment and Proceeds 1-29-96 9603060985
Copelco Capital, Inc. Specific Equipment and Proceeds 4-25-96 9608261042
Copelco Capital, Inc. Specific Equipment and Proceeds 6-19-96 9617660616
Copelco Capital, Inc. Specific Equipment and Proceeds 7-30-96 9621460705
Hewlett Packard Company Specific Equipment and Proceeds 8-9-96 9622661204
Copelco Capital, Inc. Specific Equipment and Proceeds 11-26-96 9633161377
Comdisco, Inc. Specific Equipment and Proceeds 2-10-97 9704260387
Comdisco, Inc. Specific Equipment and Proceeds 2-24-97 9705660119
Hewlett Packard Company Specific Equipment and Proceeds 7-7-93 93138136
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 8-21-95 9523560031
</TABLE>
Liens of the Company pursuant to that Lease Agreement, dated as of September 6,
1994 (as amended from time to time) between BNP Leasing Company and Solectron
Corporation.
2. Solectron Washington, Inc.
Department of Licensing-Washington
-4-
<PAGE> 26
<TABLE>
<CAPTION>
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
GTE Northwest Specific Equipment 9-20-93 93-263-0729
AT&T Capital Services, Inc. Specific Equipment 11-3-95 95-307-0414
3. Solectron Texas, Inc.
</TABLE>
<TABLE>
<CAPTION>
Secretary of State - Texas
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
General Electric Capital Corporation Electronic Equipment 8-26-96 96704367
4. Fine Pitch Technology
</TABLE>
<TABLE>
<CAPTION>
Secretary of State - California
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
San Jose National Bank Specific Equipment 2-29-95 9504660745
San Jose National Bank Specific Equipment 4-3-95 9509560531
San Jose National Bank Specific Equipment 12-13-95 9534860123
5. Force Computers, Inc.
</TABLE>
<TABLE>
<CAPTION>
Secretary of State - California
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
Taylor Made Office Systems, Inc. Specific Equipment 10-11-94 9430660823
Taylor Made Office Systems, Inc. Specific Equipment 8-21-95 9523460666
Taylor Made Office Systems, Inc. Specific Equipment 6-13-94 94119361
6. Solectron Technology, Inc. (Charlotte)
</TABLE>
<TABLE>
<CAPTION>
Secretary of State - North Carolina
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
Hewlett Packard Company Specific Equipment 2-22-93 0000970502
</TABLE>
Schedule 6.07; Restrictive Agreements
Indenture dated as of February 15, 1996 governing the terms of issuance of
7 3/8% Senior Notes due 2006. Contains a covenant restricting the Company's
ability to encumber certain items of its property.
-5-
<PAGE> 27
Lease Agreement dated as of September 6, 1994 (as amended from time to
time) between BNP Leasing Company and Solectron Corporation. Includes all
covenants by cross reference in Article VI of this Credit Agreement.
The Force Computers, Inc. credit facilities contains (1) restrictions on
its ability to pay dividends to Solectron and (2) its ability to encumber any
of its assets except for ordinary course involuntary liens and equipment finance
and purchase money security interests.
-6-
<PAGE> 1
EXHIBIT 10.4
================================================================================
$16,000,000
AMENDED AND RESTATED
LEASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
FORCE COMPUTERS, INC.
("FCI")
JULY 16, 1998
(SAN JOSE, CALIFORNIA)
================================================================================
PURSUANT TO AND AS MORE PARTICULARLY PROVIDED IN SUBPARAGRAPH 26 OF THIS LEASE,
THIS LEASE AND THE PURCHASE AGREEMENT REFERENCED HEREIN ARE TO CONSTITUTE, FOR
INCOME TAX PURPOSES ONLY, A FINANCING ARRANGEMENT OR CONDITIONAL SALE. AS
PROVIDED IN SUBPARAGRAPH 26 OF THIS LEASE, BNPLC AND FCI EXPECT THAT FCI (AND
NOT BNPLC) SHALL BE TREATED AS THE TRUE OWNER OF THE PROPERTY FOR INCOME TAX
PURPOSES, THEREBY ENTITLING FCI (AND NOT BNPLC) TO TAKE DEPRECIATION DEDUCTIONS
AND OTHER TAX BENEFITS AVAILABLE TO THE OWNER.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. TERM.................................................................................2
(a) Scheduled Term................................................................2
(b) Automatic Termination as of the Base Rent Commencement Date Resulting From an
Election by FCI to Terminate the Purchase Option and FCI's Initial Remarketing
Rights and Obligations........................................................2
(c) Election by BNPLC to Terminate After an Issue 97-10 Election..................2
(d) Election by FCI to Terminate After Accelerating the Designated Sale Date......3
(e) Extension of the Term.........................................................3
2. NO LEASE TERMINATION.................................................................3
(a) Status of Lease...............................................................3
(b) Waiver by FCI.................................................................4
3. USE AND CONDITION OF THE PROPERTY....................................................4
(a) Use...........................................................................4
(b) Condition of the Property.....................................................5
(c) Consideration for and Scope of Waiver.........................................5
4. RENT.................................................................................5
(a) Base Rent Generally...........................................................5
(b) Calculation of and Due Dates for Base Rent....................................6
(i) Amount Payable On the Base Rent Commencement Date......................6
(ii) Determination of Subsequent Payment Due Dates..........................6
(iii) Base Rent Formula......................................................6
(c) Additional Rent...............................................................6
(d) Commitment Fees...............................................................7
(e) Administrative Agency Fees....................................................7
(f) Issue 97-10 Prepayments.......................................................7
(g) No Demand or Setoff...........................................................7
(h) Default Interest and Order of Application.....................................7
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY........................7
(a) "Net" Lease Generally.........................................................8
(b) Impositions...................................................................8
(c) Increased Costs; Capital Adequacy Charges.....................................8
(d) FCI's Payment of Other Losses; General Indemnification........................9
(e) Exceptions and Qualifications to Indemnities.................................10
(f) Withholding Taxes............................................................12
6. CONSTRUCTION OF NEW IMPROVEMENTS....................................................13
(a) Advances; Outstanding Construction Allowance.................................13
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
(b) Calculation of Carrying Costs................................................13
(i) Carrying Costs Formula................................................13
(ii) Limits on the Amount of Carrying Costs................................13
(c) FCI's Right to Control the Construction Project..............................14
(d) Landlord's Election to Continue Construction.................................14
(i) Take Control of the Property..........................................14
(ii) Continuation of Construction..........................................14
(iii) Arrange for Turnkey Construction......................................15
(iv) Suspension or Termination of Construction.............................15
(e) Powers Coupled With an Interest..............................................16
(f) Completion Notice............................................................16
7. OTHER OBLIGATIONS OF AND LIMITED REPRESENTATIONS BY BNPLC...........................16
(a) Cooperation of BNPLC to Facilitate Construction and Development..............16
(b) Actions Permitted by FCI Without BNPLC's Consent.............................17
(c) Waiver of Landlord's Liens...................................................18
(d) Limited Representations by BNPLC Concerning Accounting Matters...............18
(e) Other Limited Representations by BNPLC.......................................19
(i) No Default or Violation...............................................19
(ii) No Suits..............................................................19
(iii) Enforceability........................................................19
(iv) Organization..........................................................20
(v) Not a Foreign Person..................................................20
(f) Keeping Proprietary Information Confidential.................................20
8. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC............................20
9. ENVIRONMENTAL.......................................................................21
(a) Environmental Covenants by FCI...............................................21
(b) Right of BNPLC to do Remedial Work Not Performed by FCI......................21
(c) Environmental Inspections and Reviews........................................22
(d) Communications Regarding Environmental Matters...............................22
10. INSURANCE REQUIRED AND CONDEMNATION.................................................23
(a) Liability Insurance..........................................................23
(b) Property Insurance...........................................................23
(c) Failure to Obtain Insurance..................................................24
(d) Condemnation.................................................................24
11. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS..................................24
(a) Collection of Insurance and Condemnation Proceeds Generally..................24
(b) Administration of Remaining Proceeds; FCI's Obligation to Restore............25
(c) Special Provisions Concerning CMA Termination Events, Events of Default and
Qualified Payments...........................................................25
(d) Takings of All or Substantially All of the Property..........................26
(e) Waiver of Subrogation........................................................26
12. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF FCI
CONCERNING THE PROPERTY.............................................................26
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
(a) Compliance with Covenants and Laws...........................................26
(b) Operation of Property........................................................27
(c) Debts for Construction, Maintenance, Operation or Development................27
(d) Repair, Maintenance, Alterations and Additions...............................28
(e) Compliance With Permitted Encumbrances and Development Contracts.............28
(f) Modification of Permitted Encumbrances and Development Contracts.............29
(g) Books and Records Concerning the Property....................................29
13. ASSIGNMENT AND SUBLETTING BY FCI....................................................29
(a) BNPLC's Consent Required.....................................................29
(b) Standard for BNPLC's Consent to Assignments and Certain Other Matters........29
(c) Consent Not a Waiver.........................................................30
14. ASSIGNMENT BY BNPLC.................................................................30
(a) Restrictions on Transfers....................................................30
(b) Effect of Permitted Transfer or other Assignment by BNPLC....................30
15. BNPLC'S RIGHT OF ACCESS.............................................................30
16. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF FCI..............................31
(a) Negative Covenants...........................................................31
(i) Multi employer ERISA Plans............................................31
(ii) Prohibited ERISA Transaction..........................................31
(b) Financial Statements; Required Notices; Certificates as to Default...........31
(c) No Default or Violation......................................................32
(d) No Suits.....................................................................32
(e) Enforceability...............................................................32
(f) Financial Matters............................................................33
(g) Organization.................................................................33
(h) ERISA........................................................................33
(i) Use of Proceeds..............................................................33
(j) Investment Company Act.......................................................34
(k) Omissions....................................................................34
(l) Not a Foreign Person.........................................................34
(m) Further Assurances...........................................................34
17. EVENTS OF DEFAULT...................................................................34
(a) Definition of Events of Default..............................................34
18. REMEDIES............................................................................36
(a) Basic Remedies...............................................................36
(b) Notice Required So Long As FCI 's Purchase Option and Initial Remarketing
Rights and Obligations Continue Under the Purchase Agreement.................38
(c) Enforceability...............................................................38
(d) Remedies Cumulative..........................................................38
19. DEFAULT BY BNPLC....................................................................39
20. QUIET ENJOYMENT.....................................................................39
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C>
21. SURRENDER UPON TERMINATION..........................................................39
22. HOLDING OVER BY FCI.................................................................40
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS..................40
24. WAIVER OF JURY TRIAL................................................................40
25. MISCELLANEOUS.......................................................................41
(a) Notices......................................................................41
(b) Severability.................................................................42
(c) No Merger....................................................................42
(d) No Implied Waiver............................................................42
(e) NO IMPLIED REPRESENTATIONS BY BNPLC..........................................43
(f) Entire Agreement.............................................................43
(g) Binding Effect...............................................................43
(h) Time is of the Essence.......................................................43
(i) Governing Law................................................................43
(j) Paragraph Headings...........................................................43
(k) Other Terms and References...................................................43
(l) Not a Partnership, Etc.......................................................43
26. INCOME TAX REPORTING................................................................44
27. PROPRIETARY INFORMATION AND CONFIDENTIALITY.........................................45
28. USURY SAVINGS CLAUSE................................................................45
</TABLE>
(iv)
<PAGE> 6
EXHIBITS AND SCHEDULES
<TABLE>
<S> <C>
Exhibit A....................................................................Legal Description
Exhibit B...........................................................Permitted Encumbrance List
Exhibit C..........Notice by FCI of Election Not to Make Construction-Period Indemnity Payment
Exhibit D.......................................Standard Notice of Request for Action by BNPLC
Exhibit E....................................Notice of Request Requiring an Expedited Response
Exhibit F...............................................................Insurance Requirements
Exhibit G...............................................................Compliance Certificate
Exhibit H...........................................................Libor Period Election Form
Schedule 1.......................................................List of Development Documents
Schedule 2...........................List of Claims Pending or Threatened Against the Property
List of Defined Terms.......................................................Shared Definitions
</TABLE>
(v)
<PAGE> 7
AMENDED AND RESTATED
LEASE AGREEMENT
This AMENDED AND RESTATED LEASE AGREEMENT (this "LEASE"), by and between
BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), and FORCE COMPUTERS,
INC., a Delaware corporation ("FCI"), is dated as of July 16, 1998, the
Effective Date. ("EFFECTIVE DATE" and other capitalized terms used and not
otherwise defined in this Lease are intended to have the meanings assigned to
them in the List of Defined Terms attached to and made a part of this Lease.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC acquired the Land and any appurtenances thereto from Seller on
or about July 16, 1998. Contemporaneously with the purchase of the Land, BNPLC
leased it to FCI pursuant to a Lease Agreement dated as of July 16, 1998. The
parties wish to amend and restate the Lease Agreement to incorporate certain
changes mutually acceptable to the parties. This Amended and Restated Lease
Agreement incorporates such changes and amends, restates and replaces the prior
Lease Agreement in its entirety as of the Effective Date.
GRANTING CLAUSES
In consideration of the rent to be paid and the covenants and agreements
to be performed by FCI, as hereinafter set forth, BNPLC does hereby LEASE,
DEMISE and LET unto FCI for the term hereinafter set forth all right, title and
interest of BNPLC, now owned or hereafter acquired, in and to:
(1) the Land;
(2) any and all Improvements acquired from Seller pursuant to
the Existing Contract and all Improvements hereafter constructed as
described in the Operative Documents;
(3) all easements and other rights appurtenant to the Land or to
the Improvements, whether now owned or hereafter acquired by BNPLC; and
(4) (A) any land lying within the right-of-way of any street,
open or proposed, adjoining the Land, (B) any sidewalks and alleys
adjacent to the Land and (C) any strips and gores between the Land and
abutting land.
BNPLC's interest in all property described in clauses (1) through (4) above are
hereinafter referred to collectively as the "REAL PROPERTY".
To the extent, but only to the extent, that assignable rights or
interests in, to or under the following have been or will be acquired by BNPLC
under the Existing Contract or acquired by BNPLC pursuant to Paragraph 8 below,
BNPLC also hereby grants and assigns to FCI for the term of this Lease the right
to use and enjoy (and, in the case of contract rights, to enforce) such rights
or interests of BNPLC:
(a) any goods, equipment, furnishings, furniture and other
tangible personal property of whatever nature that are located on the
Real Property and all renewals or replacements of or substitutions for
any of the foregoing;
<PAGE> 8
(b) the benefits, if any, conferred upon the owner of the Real
Property by the Permitted Encumbrances and Development Documents; and
(c) any permits, licenses, franchises, certificates, and other
rights and privileges against third parties related to the Real
Property.
Such rights and interests of BNPLC, whether now existing or hereafter arising,
are hereinafter collectively called the "PERSONAL PROPERTY". The Real Property
and the Personal Property are hereinafter sometimes collectively called the
"PROPERTY."
However, the leasehold estate conveyed hereby and FCI's rights hereunder
are expressly made subject and subordinate to the terms and conditions of this
Lease, to the matters listed in Exhibit B and all other Permitted Encumbrances),
and to any other claims or encumbrances not constituting Liens Removable by
BNPLC.
GENERAL TERMS AND CONDITIONS
The Property is leased by BNPLC to FCI and is accepted and is to be used
and possessed by FCI upon and subject to the following terms and conditions:
1. TERM.
(a) Scheduled Term. This Lease is intended to be an effective
and binding obligation upon BNPLC and FCI throughout the period (the "TERM")
commencing on and including the Effective Date and ending on the first Business
Day of August, 2003, unless extended or sooner terminated as expressly herein
provided; however, the rights of FCI as the tenant hereunder to the use,
occupancy and possession of the Land and the Improvements will not commence
until the Base Rent Commencement Date. Prior to the Base Rent Commencement Date,
FCI's will have the right under and pursuant to the rights and authority granted
to it by the Construction Management Agreement to the use, occupancy and
possession of the Land and the Improvements in its capacity as construction
manager. Such right of FCI as construction manager will be to the exclusion of
BNPLC, but subject to the terms and conditions set forth therein, herein and in
the other Operative Documents, so long as the Construction Management Agreement
remains in force.
(b) Automatic Termination as of the Base Rent Commencement Date
Resulting From an Election by FCI to Terminate the Purchase Option and FCI's
Initial Remarketing Rights and Obligations. If FCI terminates the Purchase
Option and FCI's Initial Remarketing Rights and Obligations prior to the Base
Rent Commencement Date pursuant to subparagraph 4(B) of the Purchase Agreement,
then this Lease shall terminate automatically on the Base Rent Commencement
Date. Just as any such termination of the Purchase Option and FCI's Initial
Remarketing Rights and Obligations shall be subject to the condition (set forth
in subparagraph 4(B) of the Purchase Agreement) that FCI pay an Issue 97-10
Prepayment to BNPLC, so too will the termination of this Lease pursuant to this
subparagraph be subject the condition that FCI make the Issue 97-10 Prepayment
to BNPLC.
(c) Election by BNPLC to Terminate After an Issue 97-10
Election. BNPLC shall be entitled to terminate this Lease, as BNPLC deems
appropriate in its sole and absolute discretion, at any time after receiving a
notice given by FCI to make or attempt to make any Issue 97-10 Election. Upon
any termination of this Lease by BNPLC pursuant to this subparagraph, FCI must
pay to BNPLC an Issue 97-10 Prepayment.
2
<PAGE> 9
(d) Election by FCI to Terminate After Accelerating the
Designated Sale Date. Provided FCI has not made any Issue 97-10 Election, FCI
shall be entitled to accelerate the Designated Sale Date (and thus accelerate
the purchase of BNPLC's interest in the Property by FCI or by an Applicable
Purchaser pursuant to the Purchase Agreement) by sending a notice to BNPLC as
provided in clause (2) of the definition of "Designated Sale Date" in the List
of Defined Terms. In the event, because of FCI's election to so accelerate the
Designated Sale Date or for any other reason, the Designated Sale Date occurs
before the end of the scheduled Term, FCI may terminate this Lease on or after
the Designated Sale Date; provided, however, as a condition to any such
termination by FCI, FCI must have done the following prior to the termination:
(i) purchased or caused an Applicable Purchaser to purchase
the Property pursuant to the Purchase Agreement and satisfied all of
FCI's other obligations under the Purchase Agreement;
(ii) paid to BNPLC all Base Rent, all Commitment Fees, all
Administrative Agency Fees and all other Rent due on or before or
accrued through the Designated Sale Date; and
(iii) paid any Breakage Costs caused by BNPLC's sale of the
Property pursuant to the Purchase Agreement.
(e) Extension of the Term. The Term may be extended at the
option of FCI for two successive periods of five (5) years each; provided,
however, that prior to any such extension the following conditions must have
been satisfied: (A) at least one hundred eighty (180) days prior to the
commencement of any such extension, BNPLC and FCI must have agreed in writing
upon, and received the written consent and approval of BNPLC's Parent and all
other Participants to (1) a corresponding extension not only to the date for the
expiration of the Term specified above in this Section, but also to the date
specified in clause (1) of the definition of Designated Sale Date in the List of
Defined Terms attached hereto, and (2) an adjustment to the Rent that FCI will
be required to pay for the extension, it being expected that the Rent for the
extension may be different than the Rent required for the original Term, and it
being understood that the Rent for any extension must in all events be
satisfactory to both BNPLC and FCI, each in its sole and absolute discretion;
(B) there must be no Event of Default continuing hereunder at the time of FCI's
exercise of its option to extend; (C) prior to any such extension, FCI must have
completed the Construction Project in accordance with the Construction
Management Agreement and must not have made any Issue 97-10 Election; and (D)
immediately prior to any such extension, this Lease must remain in effect. With
respect to the condition that BNPLC and FCI must have agreed upon the Rent
required for any extension of the Term, neither FCI nor BNPLC is willing to
submit itself to a risk of liability or loss of rights hereunder for being
judged unreasonable. Accordingly, both FCI and BNPLC hereby disclaim any
obligation express or implied to be reasonable in negotiating the Rent for any
such extension. Subject to the changes to the Rent payable during any extension
of the Term as provided in this Paragraph, if FCI exercises its option to extend
the Term as provided in this Paragraph, this Lease shall continue in full force
and effect, and the leasehold estate hereby granted to FCI shall continue
without interruption and without any loss of priority over other interests in or
claims against the Property that may be created or arise after the date hereof
and before the extension.
2. NO LEASE TERMINATION.
(a) Status of Lease. Except as expressly provided herein, this
Lease shall not terminate, nor shall FCI have any right to terminate this Lease,
nor shall FCI be entitled to any abatement of the Rent, nor shall the
obligations of FCI under this Lease be excused, for any reason whatsoever,
including any of the following: (i) any damage to or the destruction of all or
any part of the Property from whatever cause, (ii) the taking of the Property or
any portion thereof by eminent domain or otherwise for any reason, (iii) the
3
<PAGE> 10
prohibition, limitation or restriction of FCI's use of all or any portion of the
Property or any interference with such use by governmental action or otherwise,
(iv) any eviction of FCI or of anyone claiming through or under FCI (provided,
that if FCI is wrongfully evicted by BNPLC or by any third party lawfully
exercising its rights under a Lien Removable by BNPLC, then FCI will have the
remedies described in Paragraph 19 below), (v) any default on the part of BNPLC
under this Lease or under any other agreement to which BNPLC and FCI are
parties, (vi) the inadequacy in any way whatsoever of the design, construction,
assembly or installation of any improvements, fixtures or tangible personal
property included in the Property, it being understood that BNPLC has not made,
does not make and will not make any representation express or implied as to the
adequacy thereof, (vii) any latent or other defect in the Property or any change
in the condition thereof or the existence with respect to the Property of any
violations of Applicable Laws, (viii) any breach by Seller of the surviving
provisions of the Existing Contract, or (ix) any other cause whether similar or
dissimilar to the foregoing. It is the intention of the parties hereto that the
obligations of FCI hereunder shall be separate and independent of the covenants
and agreements of BNPLC, that the Base Rent and all other sums payable by FCI
hereunder shall continue to be payable in all events and that the obligations of
FCI hereunder shall continue unaffected, unless the requirement to pay or
perform the same shall have been terminated or limited pursuant to an express
provision of this Lease.
(b) Waiver by FCI. Without limiting the foregoing, FCI waives to
the extent permitted by Applicable Laws, except as otherwise expressly provided
herein, all rights to which FCI may now or hereafter be entitled by law
(including any such rights arising because of any implied "warranty of
suitability" or other warranty under Applicable Laws) (i) to quit, terminate or
surrender this Lease or the Property or any part thereof or (ii) to any
abatement, suspension, deferment or reduction of the Rent.
However, nothing in this Paragraph 2 shall be construed as a waiver by
FCI of any right FCI may have at law or in equity to the following remedies,
whether because of BNPLC's failure to remove a Lien Removable by BNPLC or
because of any other default by BNPLC under this Lease that continues beyond the
period for cure provided in Paragraph 19: (i) the recovery of monetary damages,
(ii) injunctive relief in case of the violation, or attempted or threatened
violation, by BNPLC of any of the express covenants, agreements, conditions or
provisions of this Lease which are binding upon BNPLC (including the
confidentiality provisions set forth in subparagraph 7.(f) below), or (iii) a
decree compelling performance by BNPLC of any of the express covenants,
agreements, conditions or provisions of this Lease which are binding upon BNPLC.
3. USE AND CONDITION OF THE PROPERTY.
(a) Use. Subject to the Permitted Encumbrances, the
Development Documents and the terms hereof, FCI may use and occupy the Property
during the Term, but only for the following purposes and other lawful purposes
incidental thereto:
(i) manufacturing, engineering, assembly, warehousing and
laboratory-based research and development of circuit boards,
computer-related and other electronic products;
(ii) administrative and office space;
(iii) cafeteria, library, and other support function uses
that FCI may provide to its employees; and
(iv) other lawful uses approved in advance and in writing by
BNPLC, which approval will not be unreasonably withheld after completion
of the Construction Project (but FCI acknowledges that
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BNPLC's withholding of such approval shall be reasonable if BNPLC
determines in good faith that (i) giving the approval may materially
increase BNPLC's risk of liability for any existing or future
environmental problem, or (ii) giving the approval is likely to
substantially increase BNPLC's administrative burden of complying with
or monitoring FCI's compliance with the requirements of this Lease or
other Operative Documents).
Although the term "products" in this subparagraph may include products designed
to detect, monitor, neutralize, handle or process Hazardous Substances, the use
of the Property by FCI shall not include bringing Hazardous Substances onto the
Property for the purpose of testing or demonstrating any such products.
(b) Condition of the Property. FCI ACKNOWLEDGES THAT IT HAS
CAREFULLY AND FULLY INSPECTED THE PROPERTY AND ACCEPTS THE PROPERTY IN ITS
PRESENT STATE, AS IS, AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE CONDITION OF SUCH PROPERTY OR AS TO THE USE WHICH MAY BE MADE
THEREOF. FCI ALSO ACCEPTS THE PROPERTY WITHOUT ANY COVENANT, REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, BY BNPLC OR ITS AFFILIATES REGARDING THE TITLE
THERETO OR THE RIGHTS OF ANY PARTIES IN POSSESSION OF ANY PART THEREOF, EXCEPT
AS EXPRESSLY SET FORTH IN PARAGRAPH 20. BNPLC SHALL NOT BE RESPONSIBLE FOR ANY
LATENT OR OTHER DEFECT OR CHANGE OF CONDITION IN THE LAND, IMPROVEMENTS,
FIXTURES AND PERSONAL PROPERTY FORMING A PART OF THE PROPERTY OR FOR ANY
VIOLATIONS WITH RESPECT THERETO OF APPLICABLE LAWS. NOR SHALL BNPLC BE REQUIRED
TO FURNISH TO FCI ANY FACILITIES OR SERVICES OF ANY KIND, INCLUDING WATER,
STEAM, HEAT, GAS, AIR CONDITIONING, ELECTRICITY, LIGHT OR POWER.
(c) Consideration for and Scope of Waiver. The provisions of
subparagraph 3.(b) above have been negotiated by BNPLC and FCI after due
consideration for the Rent payable hereunder and are intended to be a complete
exclusion and negation of any representations or warranties of BNPLC or its
Affiliates, express or implied, with respect to the Property that may arise
pursuant to any law now or hereafter in effect or otherwise, except as expressly
set forth herein.
However, such exclusion of representations and warranties by BNPLC and
its Affiliates is not intended to impair any representations or warranties made
by other parties, including any architects, engineers or contractors engaged to
work on the Construction Project, the benefit of which is to pass to FCI during
the Term because of the definition of Personal Property and Property above.
4. RENT.
(a) Base Rent Generally. On the Base Rent Commencement Date and
on each Base Rent Date through the end of the Term, FCI shall pay BNPLC rent
("BASE RENT"). Each payment of Base Rent must be received by BNPLC no later that
10:00 a.m. (Central time) on the date it becomes due; if received after 10:00
a.m. (Central time) it will be considered for purposes of this Lease as received
on the next following Business Day. BNPLC shall notify FCI of the amount of each
payment of Base Rent (calculated as provided in subparagraph 4.(b)) at least
three days before the date upon which it first becomes due. However, any failure
by BNPLC to so notify FCI shall not constitute a waiver of BNPLC's right to
payment, but absent such notice FCI shall not be in default for any underpayment
resulting therefrom if FCI, in good faith, reasonably estimates the payment
required, makes a timely payment of the amount so estimated and corrects any
underpayment within three Business Days after being notified by BNPLC of the
underpayment.
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(b) Calculation of and Due Dates for Base Rent. Payments of Base
Rent shall be calculated and become due as follows:
(i) Amount Payable On the Base Rent Commencement Date. The Base
Rent payable on the Base Rent Commencement Date shall equal the
difference (if any) between (a) the total amount that would have been
added to the Outstanding Construction Allowance as Carrying Costs on
such date if not for the limit set forth in subparagraph 6.(b)(ii), and
(b) the Carrying Costs actually added on such date to the Outstanding
Construction Allowance.
(ii) Determination of Subsequent Payment Due Dates. For all Base
Rent Periods subject to a LIBOR Period Election of one month or three
months, Base Rent shall be due in one installment on the Base Rent Date
upon which the Base Rent Period ends. For Base Rent Periods subject to a
LIBOR Period Election of six months, Base Rent shall be payable in two
installments, with the first installment becoming due on the Base Rent
Date that occurs on the first Business Day of the third calendar month
following the commencement of such Base Rent Period, and with the second
installment becoming due on the Base Rent Date upon which the Base Rent
Period ends. Notwithstanding the foregoing, if FCI or any Applicable
Purchaser purchases BNPLC's interest in the Property pursuant to the
Purchase Agreement, any accrued unpaid Base Rent and all outstanding
Additional Rent shall be due on the date of purchase in addition to the
purchase price and other sums due BNPLC under the Purchase Agreement.
(iii) Base Rent Formula. Each installment of Base Rent payable
for any Base Rent Period shall equal:
o Stipulated Loss Value on the first day of such Base Rent
Period, times
o the sum of (a) the Effective Rate with respect to such Base
Rent Period, plus (b) the Spread for the period from and
including the preceding Base Rent Date to but not including
the Base Rent Date upon which the installment is due, times
o the number of days in the period from and including the
preceding Base Rent Date to but not including the Base Rent
Date upon which the installment is due, divided by
o three hundred sixty.
Assume, only for the purpose of illustration: that prior to the
first day of a Base Rent Period subject to a LIBOR Period Election of
one month the Construction Allowance has been fully funded, but a total
of $35,000,000 of Qualified Payments have been received by BNPLC,
leaving a Stipulated Loss Value of $15,000,000; that the Effective Rate
for such Base Rent Period is 6%; that the Spread for such period is
thirty-two and one-half basis points (32.5/100 of 1%); and that such
Base Rent Period contains exactly thirty days. Under such assumptions,
the Base Rent for the hypothetical Base Rent Period will equal:
$15,000,000 x (6% + .325%) x 30/360 = $79,062.50
(c) Additional Rent. All amounts which FCI is required to pay to
or on behalf of BNPLC pursuant to this Lease, together with every charge,
premium, interest and cost set forth herein which may be added for nonpayment or
late payment thereof, shall constitute rent (all such amounts, other than Base
Rent,
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are herein called "ADDITIONAL RENT", and together Base Rent and Additional Rent
are herein sometimes called "RENT").
(d) Commitment Fees. For each Construction Period FCI shall pay
BNPLC a fee (a "COMMITMENT FEE") equal to:
o twelve and one-half basis points (12.5/100 of 1%), times an
amount equal to:
(i) the Maximum Construction Allowance, less
(ii) the Funded Construction Allowance on the first day of
such Construction Period; times
o the number of days in such Construction Period; divided by
o three hundred sixty.
FCI shall pay Commitment Fees in arrears on the first Business Day of February,
May, August and November of each calendar year, beginning with August 1, 1998
and continuing regularly throughout the Term so long as Commitment Fees have
accrued and remain unpaid. However, if any Commitment Fees shall have accrued
and remain unpaid on the date BNPLC's interest in the Property is sold pursuant
to the Purchase Agreement, such accrued unpaid Commitment Fees shall be due on
the date of the sale.
(e) Administrative Agency Fees. Upon execution and delivery of
this Lease by BNPLC, and again on each anniversary of the date hereof, FCI shall
pay to BNPLC an administrative fee (an "ADMINISTRATIVE AGENCY FEE") in the
amount set forth in the letter agreement dated as of April 22, 1998 between
BNPLC, FCI and Guarantor and other affiliates of FCI. Each Administrative Agency
Fee shall represent Additional Rent for the Construction Period or Base Rent
Period during which it is paid.
(f) Issue 97-10 Prepayments. Following any Issue 97-10 Election
or any CMA Termination Event under (and as defined in) the Construction
Management Agreement, FCI shall make an Issue 97-10 Prepayment to BNPLC within
three Business Days after receipt of any demand for such a payment. BNPLC may
demand an Issue 97-10 Payment pursuant to this subparagraph at any time and from
time to time (as Project Costs increase) after any Issue 97-10 Election or CMA
Termination Event.
(g) No Demand or Setoff. Except as expressly provided herein,
FCI shall pay all Rent without notice or demand and without counterclaim,
deduction, setoff or defense.
(h) Default Interest and Order of Application. All Rent shall
bear interest, if not paid when first due, at the Default Rate in effect from
time to time from the date due until paid; provided, that nothing herein
contained will be construed as permitting the charging or collection of interest
at a rate exceeding the maximum rate permitted under Applicable Laws. BNPLC
shall be entitled to apply any amounts paid by or on behalf of FCI against any
Rent then past due in the order the same became due or in such other order as
BNPLC may elect.
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.
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(a) "Net" Lease Generally. Subject only to the exceptions listed
in subparagraph 5.(e) below, it is the intention of BNPLC and FCI that the Base
Rent, Commitment Fees, Administrative Agency Fees and other payments herein
specified shall be absolutely net to BNPLC and that FCI shall pay all costs,
expenses and obligations of every kind relating to the Property or this Lease
which may arise or become due, including: (i) any taxes payable by virtue of
BNPLC's receipt of amounts paid to or on behalf of BNPLC in accordance with this
Paragraph 5; (ii) any amount for which BNPLC is or becomes liable with respect
to the Permitted Encumbrances or the Development Documents; and (iii) any costs
incurred by BNPLC (including Attorneys' Fees) because of BNPLC's acquisition or
ownership of any interest in the Property or because of this Lease or the
transactions contemplated herein.
(b) Impositions. FCI shall pay or cause to be paid prior to
delinquency all ad valorem taxes assessed against the Property and other
Impositions. If requested by BNPLC from time to time, FCI shall furnish BNPLC
with receipts showing payment of all Impositions at least ten days prior to the
applicable default date therefor.
Notwithstanding the foregoing, FCI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
Imposition, and pending such contest FCI shall not be deemed in default
hereunder because of the Imposition if (1) FCI diligently prosecutes such
contest to completion in a manner reasonably satisfactory to BNPLC, and (2) FCI
promptly causes to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all costs, penalties and interest thereon, promptly
after such judgment becomes final; provided, however, in any event each such
contest shall be concluded and the contested Impositions must be paid by FCI
prior to the earlier of (i) the date that any criminal action is overtly
threatened or instituted against BNPLC or its directors, officers or employees
because of the nonpayment thereof or (ii) the date any writ or order is issued
under which any property owned or leased by BNPLC (including the Property) may
be seized or sold or any other action is taken or overtly threatened against
BNPLC or against any property owned or leased by BNPLC because of the nonpayment
thereof, (iii) any Designated Sale Date upon which, for any reason, FCI or an
Affiliate of FCI or any Applicable Purchaser shall not purchase BNPLC's interest
in the Property pursuant to the Purchase Agreement for a net price to BNPLC
(when taken together with any additional payments made by FCI pursuant to
Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value, or (iv) any date upon
which the Construction Management Agreement or this Lease or FCI's Initial
Remarketing Rights and Obligations may be terminated because of or following any
Issue 97-10 Election.
(c) Increased Costs; Capital Adequacy Charges.
(i) If, after the Effective Date, there shall be any increase in
the cost to BNPLC's Parent or any other Participant agreeing to make or
making, funding or maintaining advances to BNPLC in connection with the
Property because of any Banking Rules Change, then FCI shall from time
to time, pay to BNPLC for the account of BNPLC's Parent or such other
Participant, as the case may be, additional amounts sufficient to
compensate BNPLC's Parent or the Participant for such increased cost. A
certificate as to the amount of such increased cost, submitted to BNPLC
and FCI by BNPLC's Parent or the other Participant, shall be conclusive
and binding upon FCI, absent clear and demonstrable error.
(ii) BNPLC's Parent or any other Participant may demand
additional payments ("CAPITAL ADEQUACY CHARGES") if BNPLC's Parent or
the other Participant determines that any Banking Rules Change affects
the amount of capital to be maintained by it and that the amount of such
capital is increased by or based upon the existence of advances made or
to be made to BNPLC to permit BNPLC
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to maintain BNPLC's investment in the Property or to make Construction
Advances. To the extent that BNPLC's Parent or another Participant
demands Capital Adequacy Charges as compensation for the additional
capital requirements reasonably allocable to such investment or
advances, FCI shall pay to BNPLC for the account of BNPLC's Parent or
the other Participant, as the case may be, the amount so demanded.
(iii) Any amount to be paid by FCI under this subparagraph
5.(c) shall be due within ten days after a demand for such payment is
made upon FCI.
(d) FCI's Payment of Other Losses; General Indemnification.
(i) Subject only to subparagraph 5.(e), all Losses
(including Environmental Losses) asserted against or incurred or
suffered by BNPLC or other Interested Parties at any time and from time
to time by reason of, in connection with or arising out of (A) their
ownership or alleged ownership of any interest in the Property or the
Rents, (B) the use and operation of the Property, (C) the negotiation or
administration of this Lease or other Operative Documents, (D) the
making of Funding Advances, (E) any Construction Project, (F) the breach
by FCI of this Lease or any other document executed by FCI in connection
herewith, (G) any failure of the Property or FCI itself to comply with
Applicable Laws, (H) Hazardous Substance Activities, including those
occurring prior to the Effective Date, (I) any bodily or personal injury
or death or property damage occurring in or upon or in the vicinity of
the Property through any cause whatsoever, or (J) the Permitted
Encumbrances (including the surviving provisions of the Existing
Contract), shall be paid by FCI, and FCI shall indemnify and defend
BNPLC and other Interested Parties from and against all such Losses.
(However, the indemnity in the preceding sentence shall not be construed
to make FCI liable to both BNPLC and any Participant or other party
claiming through BNPLC for the same costs, expenses or damages. Nor will
such indemnity be construed to make FCI liable for any allocation of
general overhead or internal administrative expenses of BNPLC, BNPLC's
Parent or any other Interested Party except to the extent allowed by
subparagraph 5.(c)(i) because of a Banking Rules Change after the date
of this Lease. Nor will such indemnity be construed to limit FCI's right
to reimbursement for Reimbursable Construction-Period Costs under the
Construction Management Agreement.)
(ii) SUBJECT ONLY TO SUBPARAGRAPH 5.(E), THE INDEMNITIES AND
RELEASES PROVIDED HEREIN FOR THE BENEFIT OF BNPLC AND OTHER INTERESTED
PARTIES, INCLUDING THE INDEMNITY SET FORTH IN THE PRECEDING SUBPARAGRAPH
5.(D)(I), SHALL APPLY EVEN IF AND WHEN THE SUBJECT MATTERS OF THE
INDEMNITIES AND RELEASES ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OR
STRICT LIABILITY OF BNPLC OR ANOTHER INTERESTED PARTY. FURTHER, SUCH
INDEMNITIES AND RELEASES WILL APPLY EVEN IF INSURANCE OBTAINED BY FCI OR
REQUIRED OF FCI BY THIS LEASE OR OTHER OPERATIVE DOCUMENTS IS NOT
ADEQUATE TO COVER LOSSES AGAINST OR FOR WHICH THE INDEMNITIES AND
RELEASES ARE PROVIDED. FCI'S LIABILITY, HOWEVER, FOR ANY FAILURE TO
OBTAIN INSURANCE REQUIRED BY THIS LEASE OR OTHER OPERATIVE DOCUMENTS
WILL NOT BE LIMITED TO LOSSES AGAINST WHICH INDEMNITIES ARE PROVIDED
HEREIN, IT BEING UNDERSTOOD THAT SUCH INSURANCE IS INTENDED TO DO MORE
THAN PROVIDE A SOURCE OF PAYMENT FOR LOSSES AGAINST WHICH BNPLC AND
OTHER INTERESTED PARTIES ARE ENTITLED TO INDEMNIFICATION BY THIS LEASE.
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(iii) Costs and expenses for which FCI shall be responsible
pursuant to this subparagraph 5.(d) will include appraisal fees, filing
and recording fees, inspection fees, survey fees, taxes, brokerage fees
and commissions, abstract fees, title policy fees, Uniform Commercial
Code search fees, escrow fees and Attorneys' Fees incurred by BNPLC with
respect to the Property, whether such costs and expenses are incurred at
the time of execution of this Lease or at any time during the Term. Such
costs and expenses will also include Attorneys' Fees or other costs
incurred to evaluate lien releases and other information submitted by
FCI with requests for Construction Advances.
(iv) Subject to the limitations set forth in subparagraph
5.(e), FCI's obligations under this subparagraph 5.(d) shall survive the
termination or expiration of this Lease. Any amount to be paid by FCI
under this subparagraph 5.(d) shall be due within ten days after a
demand for such payment is made upon FCI.
(v) If an Interested Party notifies FCI of any claim or
proceeding included in, or any investigation or allegation concerning,
Losses for which FCI is responsible pursuant to this subparagraph 5.(d),
FCI shall assume on behalf of the Interested Party and conduct with due
diligence and in good faith the investigation and defense thereof and
the response thereto with counsel selected by FCI, but reasonably
satisfactory to the Interested Party; provided, that the Interested
Party shall have the right to be represented by advisory counsel of its
own selection and at its own expense; and provided further, that if any
such claim, proceeding, investigation or allegation involves both FCI
and the Interested Party and the Interested Party shall have been
advised in writing by counsel that there may be legal defenses available
to it which are inconsistent with those available to FCI, then the
Interested Party shall have the right to select separate counsel to
participate in the investigation and defense of and response to such
claim, proceeding, investigation or allegation on its own behalf, and
FCI shall pay or reimburse the Interested Party for all Attorney's Fees
incurred by the Interested Party because of the selection of such
separate counsel. If FCI fails to assume promptly (and in any event
within fifteen days after being notified of the applicable claim,
proceeding, investigation or allegation) the defense of the Interested
Party, then the Interested Party may contest (or settle, with the prior
written consent of FCI, which consent will not be unreasonably withheld)
the claim, proceeding, investigation or allegation at FCI's expense
using counsel selected by the Interested Party. Moreover, if any such
failure by FCI continues for thirty days or more after FCI is notified
of any such claim, proceeding, investigation or allegation, the
Interested Party may elect not to contest or continue contesting the
same and instead settle (or pay in full) all claims related thereto
without FCI's consent and without releasing FCI from any obligations to
the Interested Party under this subparagraph 5.(d) so long as, in the
written opinion of reputable counsel to the Interested Party, the
settlement (or payment in full) is clearly advisable.
(e) Exceptions and Qualifications to Indemnities.
(i) BNPLC acknowledges and agrees that nothing in the
preceding subparagraphs of this Paragraph 5 shall be construed to
require FCI to pay or reimburse an Interested Party for: (1) Excluded
Taxes; (2) Losses incurred or suffered by such Interested Party that are
proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of that Interested
Party; (3) withholding of taxes permitted by subparagraph 5.(f); (4)
general overhead or internal administrative expenses of BNPLC or any
other Interested Party, except to the extent allowed by subparagraph
5.(c)(i) because of changes described in that subparagraph after the
Effective Date; (5) Losses incurred or suffered by Participants in
connection with their negotiation or execution of the Participation
Agreement (or supplements making them parties thereto) or in connection
with any due
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diligence they may undertake before entering into the Participation
Agreement; (6) Losses incurred or suffered by any Interested Party
after, and not proximately caused by events or circumstances that
actually or allegedly occurred or existed on or before, the later of the
dates upon which (A) this Lease terminates or expires, or (B) FCI
surrenders possession of the Property. Further, without limiting BNPLC's
rights (as provided in other provisions of this Lease and other
Operative Documents) to include the following in the calculation of the
Outstanding Construction Allowance, Stipulated Loss Value, the Break
Even Price and the Maximum Permitted Prepayment (as applicable) or to
collect Base Rent, Issue 97-10 Prepayments, a Supplemental Payment and
other amounts, the calculation of which depends upon the Outstanding
Construction Allowance, Stipulated Loss Value, the Break Even Price and
the Maximum Permitted Prepayment, BNPLC acknowledges and agrees that
nothing in subparagraph 5.(a) or the preceding subparagraphs of this
Paragraph 5 shall be construed to require FCI to pay or reimburse an
Interested Party for:
a) costs paid by BNPLC with the proceeds of the Initial
Funding Advance as part of the Transaction Expenses; or
b) Construction Advances, including costs and expenditures
incurred or paid by or on behalf of BNPLC after any Landlord's
Election to Continue Construction, to the extent that such costs
and expenditures are considered to be Construction Advances
pursuant to subparagraph 6.(d).
(ii) Notwithstanding anything to the contrary in the preceding
subparagraphs of this Paragraph 5, FCI's liability for payments required
by the preceding subparagraphs of this Paragraph 5, and not excused by
the preceding subparagraph 5.(e)(i), prior to substantial completion of
the Construction Project ("CONSTRUCTION-PERIOD INDEMNITY PAYMENTS")
shall be subject to the following provisions:
a) FCI may decline to pay any Construction-Period
Indemnity Payments other than the following (it being understood that
FCI's payment of the following Construction-Period Indemnity Payments
shall not be subject to any abatement or deferral by anything contained
in this subparagraph 5.(e)(ii)):
(1) Construction-Period Indemnity Payments eligible
for reimbursement to FCI under the terms and conditions of
the Construction Management Agreement; and
(2) Construction-Period Indemnity Payments that
constitute Absolute FCI Construction Obligations.
b) Any Construction-Period Indemnity Payment FCI is
excused from paying by this subparagraph 5.(e)(ii), together
with interest thereon at the Default Rate, will be included in
the calculation of the Break Even Price under (and as defined
in) the Purchase Agreement.
(iii) Further, if an Interested Party receives a written notice
of Losses that such Interested Party believes are covered by the
indemnity in subparagraph 5.(d)(i), then such Interested Party will be
expected to promptly furnish a copy of such notice to FCI. The failure
to so provide a copy of the notice to FCI shall not excuse FCI from its
obligations under subparagraph 5.(d)(i); provided, that if FCI is
unaware of the matters described in the notice and such failure renders
unavailable defenses that FCI might otherwise assert, or precludes
actions that FCI might otherwise take, to minimize its
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obligations, then FCI shall be excused from its obligation to indemnify
such Interested Party (and any Affiliate of such Interested Party)
against the Losses, if any, which would not have been incurred or
suffered but for such failure. For example, if BNPLC fails to provide
FCI with a copy of a notice of an obligation covered by the indemnity
set out in subparagraph 5.(d)(i) and FCI is not otherwise already aware
of such obligation, and if as a result of such failure BNPLC becomes
liable for penalties and interest covered by the indemnity in excess of
the penalties and interest that would have accrued if FCI had been
promptly provided with a copy of the notice, then FCI will be excused
from any obligation to BNPLC (or any Affiliate of BNPLC) to pay the
excess.
(f) Withholding Taxes. Notwithstanding anything else to the
contrary in this Paragraph 5, but subject to the provisions of this subparagraph
5.(f), to the extent required by law FCI may deduct United States and California
withholding taxes imposed as a way of collecting or in lieu of Excluded Taxes on
payments of Base Rent, Commitment Fees, Administrative Agency Fees, any interest
payable pursuant to subparagraph 4.(h) or any additional compensation claimed by
BNPLC pursuant to subparagraph 5.(c)(ii) (collectively, "INCOME PAYMENTS") from
Income Payments, without obligation to gross up, indemnify or otherwise increase
payments in consequence thereof. Such withholding, without obligation to gross
up, indemnify or otherwise increase payments in consequence thereof, will be
permitted if, but only if:
(i) in the case of withholding for Excluded Taxes imposed
by the United States of America, the Person entitled to receive Income
Payments (whether BNPLC, as the original landlord named herein, or an
assignee of the original landlord's rights hereunder, a "PAYEE") is not
exempt from withholding by reason of having been organized under the
laws of the United States of America or any State thereof, and such
Person shall not have provided FCI with three counterparts of each of
the forms prescribed by the Internal Revenue Service (Form 1001 or 4224,
or successor forms, as the case may be) claiming for Payee an exemption
from federal withholding on all Income Payments;
(ii) in the case of withholding for Excluded Taxes imposed
by the State of California, the Payee is not exempt from withholding by
reason of having been qualified to do business in California or
otherwise, and such Person shall not have provided FCI with three (3)
counterparts of the forms (if any) prescribed by the California taxing
authorities claiming for Payee an exemption from California withholding
on all Income Payments;
(iii) at least thirty days prior to any withholding from or
reduction of Income Payments, FCI shall have notified the Payee that FCI
believes the withholding is required and permitted by this subparagraph;
and
(iv) the withholding taxes on the Income Payments would have
been assessed even if the applicable taxing authorities had
characterized the transactions evidenced by this Lease and the Purchase
Agreement as a financing arrangement.
Any Payee exempt from withholding for Excluded Taxes imposed by the United
States of America by reason of having been organized under the laws of the
United States of America or any State thereof shall provide to FCI statements
conforming to the requirements of Treasury Regulation 1.1441-5(b) or any
successor thereto (which statements may be made on a Form W-9). If FCI shall
ever be required to pay Excluded Taxes that BNPLC has failed to pay when due
because of FCI's failure to withhold from payments made under this Lease, BNPLC
shall reimburse FCI for such Excluded Taxes and for any penalties or interest
thereon charged to FCI. Nothing in this subparagraph 5.(f) shall excuse FCI from
its obligation under subparagraph 5.(c)(i) to compensate BNPLC for increased
costs attributable to any change in law relating to withholding taxes after the
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Effective Date.
6. CONSTRUCTION OF NEW IMPROVEMENTS.
(a) Advances; Outstanding Construction Allowance. The
Construction Management Agreement entitles FCI to receive from BNPLC - subject
to the terms and conditions set forth in the Construction Management Agreement -
Construction Advances on Advance Dates from time to time to pay or reimburse FCI
for the costs of acquiring any existing Improvements after the Effective Date
pursuant to the Existing Contract, for the costs of the Construction Project and
for certain other costs described in the Construction Management Agreement. In
addition, BNPLC may from time to time make expenditures or incur costs
constituting Construction Advances after a Landlord's Election to Continue
Construction as described in subparagraph 6.(d). As used herein, references to
the "OUTSTANDING CONSTRUCTION ALLOWANCE" mean the difference on the date in
question (but not less than zero) of (A) the total Construction Advances made by
or on behalf of BNPLC on or prior to the date in question, plus (B) all Carrying
Costs added on or prior to the date in question, less (C) any funds received and
applied as Qualified Prepayments on or prior to the date in question. Charges
("CARRYING COSTS") shall accrue as described below for each Construction Period
and will be added to (and thereafter be included in) the Outstanding
Construction Allowance on the last day of such Construction Period (i.e.,
generally on the Advance Date upon which such Construction Period ends).
However, if for any reason Stipulated Loss Value (and thus the Outstanding
Construction Allowance included as a component thereof) must be determined as of
any date between Advance Dates, the Outstanding Construction Allowance
determined on such date shall include not only Carrying Costs added on or before
the immediately preceding Advance Date computed as described below, but also
Carrying Costs accruing on and after such preceding Advance Date to but not
including the date in question.
(b) Calculation of Carrying Costs. Carrying Costs shall be
calculated as follows:
(i) Carrying Costs Formula. Carrying Costs accruing for any
Construction Period shall equal:
o Stipulated Loss Value on the first day of such Construction
Period, times
o the sum of:
(A) the Spread, plus
(B) the Effective Rate with respect to such
Construction Period, times
o the number of days in the period from and including the
preceding Advance Date to but not including the Advance Date
upon which the period ends, divided by
o three hundred sixty.
(ii) Limits on the Amount of Carrying Costs. Notwithstanding the
foregoing, however, because the Construction Allowance available to FCI
under the Construction Management Agreement is limited in amount to the
Maximum Construction Allowance, and because Carrying Costs are to be
charged against the Construction Allowance, Carrying Costs added to the
Outstanding Construction Allowance on the Base Rent Commencement Date
shall not exceed the amount that can be added
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without causing the Funded Construction Allowance to exceed the Maximum
Construction Allowance. If, because of an extension of the Base Rent
Commencement Date by BNPLC (as described in the definition thereof in
the List of Defined Terms) or because of any Landlord's Election to
Continue Construction, the Funded Construction Allowance already exceeds
the Maximum Construction Allowance, then no Carrying Costs will be added
to the Outstanding Construction Allowance on the Base Rent Commencement
Date.
(c) FCI's Right to Control the Construction Project. Subject to
BNPLC's rights under subparagraph 6.(d) of this Lease, the Construction
Management Agreement grants to FCI the sole right and responsibility for
designing and constructing the Construction Project, it being understood that
although title to all Improvements will pass directly to BNPLC (as more
particularly provided in Paragraph 8), BNPLC's obligation with respect to the
Construction Project shall be limited to the making of advances under and
subject to the conditions set forth in the Construction Management Agreement. No
contractor or other third party shall be entitled to require BNPLC to make
advances as a third party beneficiary of this Lease or of the Construction
Management Agreement or otherwise.
(d) Landlord's Election to Continue Construction. Without
limiting BNPLC's other rights and remedies under this Lease, and without
terminating this Lease or FCI's obligations hereunder or under any of the other
documents referenced herein, in the event of any termination of the Construction
Management Agreement as provided in subparagraph 5(D) or subparagraph 5(E)
thereof, BNPLC shall be entitled (but not obligated) to take whatever action it
deems necessary or appropriate by the use of legal proceedings or otherwise to
continue or complete the Construction Project in a manner substantially
consistent (to the extent practicable under Applicable Laws) with the general
description of the Construction Project set forth in Exhibit B to the
Construction Management Agreement and with the permitted use of the Property set
forth in subparagraph 3.(a). (As used herein, "LANDLORD'S ELECTION TO CONTINUE
CONSTRUCTION" means any election by BNPLC to continue or complete the
Construction Project pursuant to the preceding sentence.) After any Landlord's
Election to Continue Construction, BNPLC may do any one or more of the following
pursuant to this subparagraph without further notice and regardless of whether
any Event of Default is then continuing:
(i) Take Control of the Property. BNPLC may cause FCI and any
contractors or other parties on the Property to vacate the Property
until the Construction Project is complete or BNPLC elects not to
continue work on the Construction Project.
(ii) Continuation of Construction. BNPLC may perform or cause to
be performed any work to complete or continue the construction of the
Construction Project. In this regard, so long as work ordered or
undertaken by BNPLC is substantially consistent (to the extent
practicable under Applicable Laws) with the general description of the
Construction Project set forth in Exhibit B to the Construction
Management Agreement and the permitted use of the Property set forth in
subparagraph 3.(a), BNPLC shall have complete discretion to:
a) proceed with construction according to such plans and
specifications as BNPLC may from time to time approve;
b) establish and extend construction deadlines as BNPLC
from time to time deems appropriate, without obligation to adhere
to the deadlines for Construction Milestones set forth in the
Construction Management Agreement;
c) hire, fire and replace architects, engineers,
contractors, construction managers
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and other consultants as BNPLC from time to time deems
appropriate, without obligation to use, consider or compensate
architects, engineers, contractors, construction managers or
other consultants previously selected or engaged by FCI;
d) determine the compensation that any architect,
engineer, contractor, construction manager or other consultant
engaged by BNPLC will be paid, and the terms and conditions that
will govern the payment of such compensation (including whether
payment will be due in advance, over the course of construction
or on some other basis and including whether contracts will be
let on a fixed price basis, a cost plus a fee basis or some other
basis), as BNPLC from time to time deems appropriate;
e) pay, settle or compromise existing or future bills and
claims which are or may be liens against the Property or as BNPLC
considers necessary or desirable for the completion of the
Construction Project or the removal of any clouds on title to the
Property;
f) prosecute and defend all actions or proceedings in
connection with the construction of the Construction Project;
g) select and change interior and exterior finishes for
the Improvements and landscaping as BNPLC from time to time deems
appropriate; and
h) generally do anything that FCI itself might have done
if FCI had satisfied or obtained BNPLC's waiver of the conditions
specified therein.
(iii) Arrange for Turnkey Construction. Without limiting the
generality of the foregoing, BNPLC may engage any contractor or real
estate developer BNPLC believes to be reputable to take over and
complete construction of the Construction Project on a "turnkey" basis.
(iv) Suspension or Termination of Construction.
Notwithstanding any Landlord's Election to Continue Construction, BNPLC
may subsequently elect at any time to suspend or terminate further
construction without obligation to FCI.
For purposes of this Lease and other Operative Documents (including the
determination of the Outstanding Construction Allowance, Stipulated Loss Value,
the Break Even Price and the Maximum Permitted Prepayment), after any Landlord's
Election to Continue Construction, all costs and expenditures incurred or paid
by or on behalf of BNPLC to complete or continue construction as provided in
this subparagraph shall be considered Construction Advances and Project Costs,
regardless of whether they cause the Funded Construction Allowance to exceed the
Maximum Construction Allowance. Further, as used in the preceding sentence,
"costs incurred" by BNPLC will include costs that BNPLC has become obligated to
pay to any third party that is not an Affiliate of BNPLC (including any
contractor), even if the payments for which BNPLC has become so obligated will
constitute prepayments for work or services to be rendered after payment and
notwithstanding that BNPLC's obligations for the payments may be conditioned
upon matters beyond BNPLC's control. For example, even if a construction
contract between BNPLC and a contractor excused BNPLC from making further
progress payments to the contractor upon FCI's failure to make any required
Issue 97-10 Prepayment hereunder, the obligation to make a progress payment
would nonetheless be "incurred" by BNPLC, for purposes of determining whether
BNPLC has incurred costs considered to be Project Costs and Construction
Advances, when BNPLC's obligation to pay it became subject only to FCI's payment
of the Issue 97-10 or other conditions beyond BNPLC's control. If and to the
extent, however, BNPLC does incur costs
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<PAGE> 22
considered as Construction Advances under this subparagraph, but (1) BNPLC does
not actually pay the costs and after incurring them BNPLC is fully and finally
excused from the obligation to pay them for any reason other than a breach by
FCI of this Lease or other Operative Documents, or (2) BNPLC receives a refund
of such costs, then the costs BNPLC is excused from paying or refunded to BNPLC
shall be considered Qualified Prepayments.
(e) Powers Coupled With an Interest. BNPLC's rights under
subparagraph 6.(d) are intended to constitute powers coupled with an interest
which cannot be revoked.
(f) Completion Notice. After any Landlord's Election to Continue
Construction, BNPLC may provide a notice (a "COMPLETION NOTICE") to FCI,
advising FCI that construction of the Construction Project is substantially
complete or that BNPLC no longer intends to continue such construction at that
time.
7. OTHER OBLIGATIONS OF AND LIMITED REPRESENTATIONS BY BNPLC.
(a) Cooperation of BNPLC to Facilitate Construction and
Development. During the Term BNPLC shall take any action reasonably requested by
FCI to facilitate the construction and use of the Property permitted by this
Lease; provided, however, that:
(i) This subparagraph 7.(a) shall not impose upon BNPLC the
obligation to take any action that can be taken by FCI, FCI's Affiliates
or anyone else other than BNPLC as the owner of the Land, the
Improvements or any other interests in the Property.
(ii) BNPLC shall not be required by this subparagraph 7.(a)
to make any payment to another Person unless BNPLC shall first have
received funds from FCI, in excess of any other amounts due from FCI
hereunder, sufficient to make the payment. (This clause (ii) will not be
construed as limiting the right of FCI to obtain additional Construction
Advances, on and subject to the terms and conditions set forth in the
Construction Management Agreement, for payments FCI itself may pay or
incur an obligation to pay to another Person.)
(iii) BNPLC shall have no obligations whatsoever under this
subparagraph at any time after an Issue 97-10 Election by FCI, after a
Landlord's Election to Continue Construction or when an Event of Default
shall have occurred and be continuing.
(iv) FCI must request any action to be taken by BNPLC
pursuant to this subparagraph, and such request must be specific and in
writing, if required by BNPLC at the time the request is made. A
suggested form for such a request is attached as Exhibit D.
(v) No action may be required of BNPLC pursuant to this
subparagraph 7.(a) that could constitute a violation of any Applicable
Laws or compromise or constitute a waiver of BNPLC's rights under other
provisions of this Lease or the other Operative Documents or that for
any other reason is reasonably objectionable to BNPLC.
The actions BNPLC shall take pursuant to this subparagraph 7.(a) if
reasonably requested by FCI will include, subject to the conditions listed in
the proviso above, joining in or consenting to any (I) grant of easements,
licenses, rights of way, and other rights in the nature of easements encumbering
the Real Property, (II) release or termination of easements, licenses, rights of
way or other rights in the nature of easements which
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<PAGE> 23
are for the benefit of the Real Property or any portion thereof, (III)
dedication or transfer of portions of the Land not improved with a building, for
road, highway or other public purposes, (IV) agreements (other than with FCI or
its Affiliates) for the use and maintenance of common areas, for reciprocal
rights of parking, for ingress and egress and for amendments to any Permitted
Encumbrances or Development Documents (including amendments to the Development
Documents that FCI may reasonably request to facilitate construction or
development on land owned by it or its Affiliates other than the Land), (V)
instruments necessary or desirable for the exercise or enforcement of rights
under the Permitted Encumbrances, the Development Documents or any contract,
permit, license, franchise or other right included within the term "Property",
(VI) permit applications or other documents reasonably required to accommodate
the construction or alteration of Improvements otherwise permitted by this
Lease, (VII) confirmations of FCI's rights under any particular provisions of
this Lease which FCI may wish to provide to a third party, (IX) execution or
filing of a tract or parcel map subdividing the Real Property into lots or
parcels or reconfiguring existing parcels, (X) agreements providing development
incentives or tax abatements with respect to the Property. However, the
determination of whether any such action is reasonably requested or reasonably
objectionable to BNPLC may depend in whole or in part upon the extent to which
the requested action shall result in a lien to secure payment or performance
obligations against BNPLC's interest in the Property, shall cause a decrease in
the value of the Property to less than sixty percent (60%) of Stipulated Loss
Value after any Qualified Payments that may result from such action are taken
into account, or shall impose upon BNPLC any present or future obligations
greater than the obligations BNPLC is willing to accept in reliance on the
indemnifications provided by FCI hereunder.
Upon request by FCI, BNPLC shall also provide a statement in writing
certifying that this Lease is unmodified and in full effect (or, if there have
been modifications, that this Lease is in full effect as modified, and setting
forth such modifications), certifying the dates to which the Base Rent and other
amounts payable by FCI hereunder have been paid, stating whether BNPLC is aware
of any default by FCI that may exist hereunder and confirming BNPLC's agreements
concerning landlord's liens and other matters set forth in subparagraph 7.(c);
it being intended that any such statement by BNPLC may be relied upon by anyone
with whom FCI may intend to enter into an agreement for construction of the
Improvements or other significant agreements concerning the Property.
Any Losses incurred by BNPLC because of any action taken pursuant to
this subparagraph 7.(a) shall be covered by the indemnification set forth in
subparagraph 5.(d). Further, for purposes of such indemnification, any action
taken by BNPLC will be deemed to have been made at the request of FCI if made
pursuant to any request of counsel to or any officer of FCI (or with their
knowledge, and without their objection) in connection with the execution or
administration of this Lease or the other Operative Documents.
To avoid construction delays or for other reasonable cause, FCI may ask
BNPLC for an expedited response to any request for action made by FCI pursuant
to this subparagraph 7.(a) by delivering such request with a notice
substantially in the form attached hereto as Exhibit E. BNPLC shall endeavor in
good faith to respond promptly to any such notice after the receipt of any such
notice by an officer of BNPLC.
(b) Actions Permitted by FCI Without BNPLC's Consent. No refusal
by BNPLC to execute or join in the execution of any agreement, application or
other document requested by FCI pursuant to the preceding subparagraph 7.(a)
shall preclude FCI from itself executing such agreement, application or other
document; provided, that in doing so FCI is not purporting to act for BNPLC and
does not thereby create or expand any obligations or restrictions that encumber
the Property. Further, subject to the other terms and conditions of this Lease,
FCI shall be entitled to do any of the following in FCI's own name and to the
exclusion of BNPLC during the Term without any notice to or consent of BNPLC so
long as no Landlord's Election to Continue Construction has occurred, so long as
no Event of Default has occurred and is continuing
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<PAGE> 24
and so long as FCI is not purporting to act for BNPLC and does not thereby
create or expand any obligations or restrictions that encumber the Property:
(i) perform obligations arising under and exercise and
enforce the rights of FCI or the owner of the Real Property under the
Development Documents and Permitted Encumbrances;
(ii) perform obligations arising under and exercise and
enforce the rights of FCI or the owner of the Real Property with respect
to any other contracts or documents (such as building permits) included
within the Personal Property; and
(iii) recover and retain any monetary damages or other
benefit inuring to FCI or the owner of the Real Property through the
enforcement of any rights, contracts or other documents included within
the Personal Property (including the Development Documents and Permitted
Encumbrances); provided, that to the extent any such monetary damages
may become payable as compensation for an adverse impact on value of the
Property, the rights of BNPLC and FCI hereunder with respect to the
collection and application of such monetary damages shall be the same as
for condemnation proceeds payable because of a taking of all or any part
of the Property.
(c) Waiver of Landlord's Liens. BNPLC waives any security
interest, statutory landlord's lien or other interest BNPLC may have in or
against computer equipment and other tangible personal property placed on the
Land from time to time that FCI or its Affiliates own or lease from other
lessors; provided, however, that BNPLC does not waive its interest in or rights
with respect to equipment or other property included within the "Property" as
described in Paragraph 8. Although computer equipment or other tangible personal
property may be "bolted down" or otherwise firmly affixed to Improvements, it
shall not by reason thereof become part of the Improvements if it can be removed
without causing structural or other material damage to the Improvements and
without rendering HVAC or other major building systems inoperative and if it
does not otherwise constitute "Property" as provided in Paragraph 8.
(d) Limited Representations by BNPLC Concerning Accounting
Matters. BNPLC is not expected or required to represent or warrant that this
Lease or the Purchase Agreement will qualify for any particular accounting
treatment under GAAP. However, to permit FCI to determine for itself the
appropriate accounting for this Lease and the Purchase Agreement, BNPLC does
represent to FCI as of the Effective Date:
(i) Equity capital invested in BNPLC is greater than three
percent (3%) of the aggregate of all lease funding amounts (including
participations) of BNPLC. Such equity capital investments constitute
equity in legal form and are reflected as shareholders' equity in the
financial statements and accounting records of BNPLC.
(ii) BNPLC is one hundred percent (100%) owned by French
American Bank Corporation, which is one hundred percent (100%) owned by
BNPLC's Parent.
(iii) BNPLC leases properties of substantial value to more
than fifteen tenants.
(iv) All parties to whom BNPLC has any material obligations
known to BNPLC are (and are expected to be) Affiliates of BNPLC's
Parent, Participants, or participants with BNPLC in other leasing deals
or loans made by BNPLC, or other tenants or borrowers in such other
leasing deals or loans.
(v) BNPLC has substantial assets in addition to the
Property, assets which BNPLC believes to
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<PAGE> 25
have a value far in excess of the value of the Property.
(vi) Other than any Funding Advances provided from time to
time by Participants under the Participation Agreement, BNPLC expects to
obtain all Funding Advances from Banque Nationale de Paris or other
Affiliates of BNPLC (including Funding Advances to cover Carrying Costs
and other amounts to be capitalized as part of the Outstanding
Construction Allowance, and assuming that FCI uses the Maximum
Construction Allowance under this Lease), and to the extent that Banque
Nationale de Paris or such other Affiliates themselves borrow or accept
bank deposits to obtain the funds needed to provide such Funding
Advances, the obligation to repay such funds shall not be limited, by
agreement or corporate structure, to payments collected from FCI or
otherwise recovered from the Property.
(vii) BNPLC has not obtained residual value insurance or a
residual value guarantee from any third party to ensure the recovery of
its investment in the Property.
(viii) BNPLC does not intend to take any action during the
term of this Lease that would change, or anticipate any change in, any
of the facts listed above in this subparagraph.
FCI shall have the right to ask BNPLC questions from time to time concerning
BNPLC's financial condition, concerning matters relevant to the proper
accounting treatment of this Lease on FCI's financial statements and accounting
records (including the amount of BNPLC's equity capital as a percentage of the
aggregate of all lease funding amounts [including participations] by BNPLC) or
concerning BNPLC's ability to perform under this Lease or other Operative
Documents, to which questions BNPLC shall promptly respond. Such response,
however, may be limited to a statement that BNPLC will not provide requested
information; provided, however, BNPLC must notify FCI in writing if at any time
during the Term BNPLC ceases to be 100% owned, directly or indirectly, by Banque
Nationale de Paris, or if at any time during the Term BNPLC believes it could
not represent that the statements in clauses (i), (v) and (vii) above continue
to be accurate, whether because of a change in the capital structure of BNPLC, a
purchase of residual value insurance with respect to the Property or otherwise.
(e) Other Limited Representations by BNPLC. BNPLC
represents that:
(i) No Default or Violation. The execution, delivery and
performance by BNPLC of this Lease and the other Operative Documents do
not and will not constitute a breach or default under any material
contract or agreement to which BNPLC is a party or by which BNPLC is
bound and do not, to the knowledge of BNPLC, violate or contravene any
law, order, decree, rule or regulation to which BNPLC is subject. (As
used in this subparagraph 7.(e), "BNPLC'S KNOWLEDGE" means the present
actual knowledge of Lloyd Cox, the current officer of BNPLC having
primary responsibility for the negotiation of this Lease.)
(ii) No Suits. There are no judicial or administrative
actions, suits, proceedings or investigations pending or, to BNPLC's
knowledge, threatened against BNPLC that are reasonably likely to affect
BNPLC's interest in the Property or the validity, enforceability or
priority of this Lease or the other Operative Documents, and BNPLC is
not in default with respect to any order, writ, injunction, decree or
demand of any court or other governmental or regulatory authority that
could materially and adversely affect the business or assets of BNPLC or
its interest in the Property.
(iii) Enforceability. The execution, delivery and performance
of this Lease and the other
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Operative Documents by BNPLC are duly authorized, are not in
contravention of or conflict with any term or provision of BNPLC's
articles of incorporation or bylaws and do not, to BNPLC's knowledge,
require the consent or approval of any governmental body or other
regulatory authority that has not heretofore been obtained or conflict
with any Applicable Laws. This Lease and the other Operative Documents
are valid, binding and legally enforceable obligations of BNPLC except
as such enforcement is affected by bankruptcy, insolvency and similar
laws affecting the rights of creditors, generally, and equitable
principles of general application; provided, BNPLC makes no
representation or warranty that conditions imposed by zoning ordinances
or other state or local Applicable Laws to the purchase, ownership,
lease or operation of the Property have been satisfied.
(iv) Organization. BNPLC is duly incorporated and legally
existing under the laws of Delaware and is (or will become, if necessary
to lawfully perform hereunder) duly qualified to do business in the
State of California. BNPLC has or will obtain on a timely basis, at
FCI's expense to the extent so provided in the other provisions of this
Lease, all requisite power and all governmental certificates of
authority, licenses, permits, qualifications and other documentation
necessary to own and lease the Property and to perform its obligations
under this Lease.
(v) Not a Foreign Person. BNPLC is not a "foreign person"
within the meaning of Sections 1445 and 7701 of the Code (i.e., BNPLC is
not a non-resident alien, foreign corporation, foreign partnership,
foreign trust or foreign estate as those terms are defined in the Code
and regulations promulgated thereunder).
(f) Keeping Proprietary Information Confidential. BNPLC
agrees to use reasonable precautions to keep confidential any "proprietary
information" (as defined in Paragraph 27) that BNPLC may receive from FCI or
otherwise discover with respect to FCI or FCI's business pursuant to this Lease
or any investigation by BNPLC hereunder, except for disclosures: (i)
specifically and previously authorized in writing by FCI; (ii) to any permitted
assignee of BNPLC as to any interest in the Property so long as the assignee has
agreed in writing to use its reasonable efforts to keep such information
confidential in accordance with the terms of this subparagraph; (iii) to legal
counsel, accountants, auditors, environmental consultants and other professional
advisors to BNPLC so long as BNPLC shall inform such persons in writing (if
practicable) of the confidential nature of such information and shall direct
them to treat such information confidentially; (iv) to regulatory officials
having jurisdiction over BNPLC or BNPLC's Parent (provided that the disclosing
party shall request confidential treatment of the disclosed information, if
practicable); (v) as required by legal process (provided that the disclosing
party shall request confidential treatment of the disclosed information, if
practicable); (vi) of information which has previously become publicly available
through the actions or inactions of a Person other than BNPLC not, to BNPLC's
knowledge, in breach of an obligation of confidentiality to FCI; and (vii) to
any Participant so long as the Participant has not repudiated the
confidentiality provision concerning FCI's proprietary information set forth in
the Participation Agreement.
8. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC. Subject
in each case to FCI's rights under the other provisions of this Lease, any
Improvements sold by Seller pursuant to the Existing Contract and all
Improvements constructed during the term of this Lease shall be owned by BNPLC
and shall constitute "Property" covered by this Lease. Further, subject in each
case to FCI's rights under the other provisions of this Lease, all furnishings,
furniture, chattels, permits, licenses, franchises, certificates and other
personal property of whatever nature shall have been acquired on behalf of BNPLC
by FCI, shall be owned by BNPLC and shall constitute "Property" covered by this
Lease, to the extent heretofore or hereafter acquired, in whole or in part, with
any portion of the Initial Funding Advance provided to FCI or with any
Construction Advances or other funds for which FCI has received or hereafter
receives reimbursement from
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<PAGE> 27
the Initial Funding Advance or Construction Advances, as shall all renewals or
replacements of or substitutions for any such Property. FCI shall not authorize
or permit the transfer of title to the Improvements or to any other such
Property to pass through FCI or FCI's Affiliates before it is transferred to
BNPLC from contractors, suppliers, vendors or other third Persons. Nothing
herein shall constitute authorization of FCI by BNPLC to bind BNPLC to any
construction contract or other agreement with a third Person, but any
construction contract or other agreement executed by FCI for the acquisition or
construction of Improvements or other components of the Property may provide for
the transfer of title as required by the preceding sentence. Upon request of
BNPLC made when any Event of Default has occurred and is continuing, FCI shall
deliver to BNPLC an inventory describing all significant items of Personal
Property (and, in the case of tangible personal property, showing the make,
model, serial number and location thereof) other than Improvements, with a
certification by FCI that such inventory is true and complete and that all items
specified in the inventory are covered by this Lease free and clear of any Lien
other than the Permitted Encumbrances or Liens Removable by BNPLC.
9. ENVIRONMENTAL.
(a) Environmental Covenants by FCI. FCI covenants that:
(i) FCI shall not conduct or permit others to conduct
Hazardous Substance Activities, except Permitted Hazardous Substance Use
and Remedial Work.
(ii) FCI shall not discharge or permit the discharge of
anything on or from the Property that would require any permit under
applicable Environmental Laws, other than (1) storm water runoff, (2)
waste water discharges through a publicly owned treatment works, (3)
discharges that are a necessary part of any Remedial Work, and (4) other
similar discharges consistent with the definition herein of Permitted
Hazardous Substance Use, in each case in strict compliance with
Environmental Laws.
(iii) Following any discovery that Remedial Work is required
by Environmental Laws or otherwise reasonably required, and to the
extent not inconsistent with the other provisions of this Lease, FCI
shall promptly perform and diligently and continuously pursue such
Remedial Work, in each case in strict compliance with Environmental
Laws.
(iv) If requested by BNPLC in connection with any
significant Remedial Work required by this subparagraph, FCI shall
retain an independent Environmental Consultant or Industrial Hygienist,
as appropriate, to evaluate any significant new information generated
during FCI's implementation of the Remedial Work and to discuss with FCI
whether such new information indicates the need for any additional
measures that FCI should take to protect the health and safety of
persons (including, without limitation, employees, contractors and
subcontractors and their employees) or to protect the environment. FCI
shall implement any such additional measures to the extent required with
respect to the Property by Environmental Laws or otherwise reasonably
required and to the extent not inconsistent with the other provisions of
this Lease.
(b) Right of BNPLC to do Remedial Work Not Performed by FCI. If
FCI's failure to cure any breach of the covenants set forth in subparagraph
9.(a) continues beyond the Environmental Cure Period (as defined below), BNPLC
may, in addition to any other remedies available to it, after notifying FCI of
the Remedial Work BNPLC believes is needed, conduct all or any part of the
Remedial Work. To the extent that Remedial Work done by BNPLC pursuant to the
preceding sentence (including any removal of Hazardous Substances) is reasonably
required, or is required or believed by BNPLC in good faith to be required by
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<PAGE> 28
Applicable Law or by any demand, regulation or guideline of any governmental
authority (whether or not having the force of law), the cost thereof shall be a
demand obligation owing by FCI to BNPLC. As used in this subparagraph,
"ENVIRONMENTAL CURE PERIOD" means the period ending on the earlier of: (1) one
hundred twenty days after FCI is notified of the breach which must be cured
within such period, (2) the date that any writ or order is issued for the levy
or sale of any property owned by BNPLC (including the Property) because of such
breach, (3) the date that any criminal action is overtly threatened or
instituted against BNPLC or any of its directors, officers or employees because
of such breach, (4) a Designated Sale Date upon which, for any reason, FCI or an
Affiliate of FCI or any Applicable Purchaser shall not purchase BNPLC's interest
in the Property pursuant to the Purchase Agreement for a net price to BNPLC
(when taken together with any additional payments made by FCI pursuant to
Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value; or (5) any date upon which
the Construction Management Agreement or this Lease or FCI's Initial Remarketing
Rights and Obligations may be terminated because of or following any Issue 97-10
Election
(c) Environmental Inspections and Reviews. BNPLC reserves the
right to retain an Environmental Consultant or Industrial Hygienist to review
any report prepared by FCI or to conduct BNPLC's own investigation to confirm
whether FCI is complying with the requirements of this Paragraph 9. FCI grants
to BNPLC and to BNPLC's agents, employees, consultants and contractors the right
during reasonable business hours and after reasonable notice to enter upon the
Property to inspect the Property and to perform such tests as BNPLC deems
necessary or appropriate to review or investigate Hazardous Substances in, on,
under or about the Property or any discharge or suspected discharge of Hazardous
Substances into groundwater or surface water from the Property. Without limiting
the generality of the foregoing, FCI agrees that BNPLC will have the same right,
power and authority to enter and inspect the Property as is granted to a secured
lender under Section 2929.5 of the California Civil Code. FCI shall promptly
reimburse BNPLC for the reasonable fees of its Environmental Consultants and
Industrial Hygienists and the costs of any such inspections and tests; provided,
however, BNPLC's right to reimbursement for the reasonable fees of any
consultant engaged as provided in this subparagraph or for the costs of any
inspections or test undertaken as provided in this subparagraph shall be limited
to the following circumstances: (1) an Event of Default or CMA Termination Event
shall have occurred; (2) BNPLC shall have retained the consultant to establish
the condition of the Property just prior to any conveyance thereof pursuant to
the Purchase Agreement or just prior to the expiration of this Lease; (3) BNPLC
shall have retained the consultant to satisfy any regulatory requirements
applicable to BNPLC or its Affiliates; or (4) BNPLC shall have retained the
consultant because BNPLC has been notified of a violation of Environmental Laws
concerning the Property or BNPLC otherwise reasonably believes that FCI has not
complied with the requirements of this Paragraph 9.
(d) Communications Regarding Environmental Matters.
(i) FCI shall immediately advise BNPLC and Participants of
(1) any discovery of any event or circumstance which would render any of
the representations of FCI herein or in the Closing Certificate
concerning environmental matters materially inaccurate or misleading if
made at the time of such discovery and assuming that FCI was aware of
all relevant facts, (2) any Remedial Work (or change in Remedial Work)
required or undertaken by FCI or its Affiliates in response to any (A)
discovery of any Hazardous Substances on, under or about the Property
other than Permitted Hazardous Substances or (B) any claim for damages
resulting from Hazardous Substance Activities, (3) FCI's discovery of
any occurrence or condition on any real property adjoining or in the
vicinity of the Property which would or could reasonably be expected to
cause the Property or any part thereof to be subject to any ownership,
occupancy, transferability or use restrictions under Environmental Laws,
or (4) any investigation or inquiry of any failure or alleged failure by
FCI to comply with Environmental
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Laws affecting the Property by any governmental authority responsible
for enforcing Environmental Laws. In such event, FCI shall deliver to
BNPLC within thirty days after BNPLC's request (or such longer period as
may be reasonably required, but in any event within ninety days after
BNPLC's request), a preliminary written environmental plan setting forth
a general description of the action that FCI proposes to take with
respect thereto, if any, to bring the Property into compliance with
Environmental Laws or to correct any breach by FCI of this Paragraph 9,
including any proposed Remedial Work, the estimated cost and time of
completion, the name of the contractor and a copy of the construction
contract, if any, and such additional data, instruments, documents,
agreements or other materials or information as BNPLC may reasonably
request.
(ii) FCI shall provide BNPLC and Participants with
copies of all material written communications with federal, state and
local governments, or agencies relating to the matters listed in the
preceding clause (i). FCI shall also provide BNPLC and Participants with
copies of any correspondence from third Persons which threaten
litigation over any significant failure or alleged significant failure
of FCI to maintain or operate the Property in accordance with
Environmental Laws.
(iii) Prior to FCI's submission of a Material
Environmental Communication to any governmental or regulatory agency or
third party, FCI shall, to extent practicable, deliver to BNPLC and
Participants a draft of the proposed submission (together with the
proposed date of submission), and in good faith assess and consider any
comments of BNPLC regarding the same. Promptly after BNPLC's request,
FCI shall meet with BNPLC to discuss the submission, shall provide any
additional information reasonably requested by BNPLC and shall provide a
written explanation to BNPLC addressing the issues raised by comments
(if any) of BNPLC regarding the submission, including a reasoned
analysis supporting any decision by FCI not to modify the submission in
accordance with comments of BNPLC.
10. INSURANCE REQUIRED AND CONDEMNATION.
(a) Liability Insurance. Throughout the Term FCI shall maintain
commercial general liability insurance against claims for bodily and personal
injury, death and property damage occurring in or upon or resulting from any
occurrence in or upon the Property under one or more insurance policies that
satisfy the requirements set forth in Exhibit ?. FCI shall deliver and maintain
with BNPLC for each liability insurance policy required by this Lease written
confirmation of the policy and the scope of the coverage provided thereby issued
by the applicable insurer or its authorized agent, which confirmation must also
satisfy the requirements set forth in Exhibit ?.
(b) Property Insurance. Throughout the Term FCI will keep all
Improvements (including all alterations, additions and changes made to the
Improvements) insured against fire and other casualty under one or more property
insurance policies that satisfy the requirements set forth in Exhibit ?. FCI
shall deliver and maintain with BNPLC for each property insurance policy
required by this Lease written confirmation of the policy and the scope of the
coverage provided thereby issued by the applicable insurer or its authorized
agent, which confirmation must also satisfy the requirements set forth in
Exhibit ?. If any of the Property is destroyed or damaged by fire, explosion,
windstorm, hail or by any other casualty against which insurance shall have been
required hereunder, (i) BNPLC may, but shall not be obligated to, make proof of
loss if not made promptly by FCI after notice from BNPLC, (ii) each insurance
company concerned is hereby authorized and directed to make payment for such
loss directly to BNPLC for application as required by Paragraph 11, and (iii)
BNPLC may settle, adjust or compromise any and all claims for loss, damage or
destruction under any policy or policies of insurance (provided, that so long as
no FCI has made no Issue 97-10 Election, no
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Landlord's Election to Continue Construction shall have occurred and no Event of
Default shall have occurred and be continuing, BNPLC must obtain FCI's consent
to any such settlement). If any casualty shall result in damage to or loss or
destruction of the Property, FCI shall give immediate notice thereof to BNPLC
and Paragraph 11 shall apply.
Notwithstanding the foregoing, FCI shall have the right as FCI deems
appropriate to settle, adjust or compromise any insurance claim for damage to
the Property that cannot reasonably be asserted for more than $3,000,000 if (and
after) FCI completes the Construction Project pursuant to the Construction
Management Agreement and so long no Event of Default shall have occurred and be
continuing; and FCI may directly receive and hold the proceeds of such claim if
(and after) FCI completes the Construction Project pursuant to the Construction
Management Agreement and so long as no Landlord's Election to Continue
Construction shall have occurred and no Event of Default shall have occurred and
be continuing and so long as FCI applies such proceeds as required by
subparagraph 11.(b).
(c) Failure to Obtain Insurance. If FCI fails to obtain any
insurance or to provide confirmation of any such insurance as required by this
Lease, BNPLC shall be entitled (but not required) to obtain the insurance that
FCI has failed to obtain or for which FCI has not provided the required
confirmation and, without limiting BNPLC's other remedies under the
circumstances, BNPLC may require FCI to reimburse BNPLC for the cost of such
insurance and to pay interest thereon computed at the Default Rate from the date
such cost was paid by BNPLC until the date of reimbursement by FCI.
(d) Condemnation. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Property or any
portion thereof, or any other similar governmental or quasi-governmental
proceedings arising out of injury or damage to the Property or any portion
thereof, each party shall notify the other (provided, however, BNPLC shall have
no liability for its failure to provide such notice) of the pendency of such
proceedings. FCI shall, at its expense, diligently prosecute any such
proceedings and shall consult with BNPLC, its attorneys and experts and
cooperate with them as reasonably requested in the carrying on or defense of any
such proceedings. All proceeds of condemnation awards or proceeds of sale in
lieu of condemnation with respect to the Property and all judgments, decrees and
awards for injury or damage to the Property shall be paid to BNPLC as Escrowed
Proceeds for application as provided in Paragraph 11. BNPLC is hereby
authorized, in the name of FCI, at any time when an Event of Default shall have
occurred and be continuing, or otherwise with FCI's prior consent, to execute
and deliver valid acquittances for, and to appeal from, any such judgment,
decree or award concerning condemnation of any of the Property. BNPLC shall not
be in any event or circumstances liable or responsible for failure to collect,
or to exercise diligence in the collection of, any such proceeds, judgments,
decrees or awards.
Notwithstanding the foregoing provisions of this subparagraph, FCI shall
have the right as FCI deems appropriate to settle, adjust or compromise any
claim for any taking of less than all or substantially all of the Property if
the claim cannot reasonably be asserted for more than $3,000,000 and if (and
after) FCI completes the Construction Project pursuant to the Construction
Management Agreement and if no Event of Default shall have occurred and be
continuing; and FCI may directly receive and hold the proceeds of any such claim
if (and after) FCI completes the Construction Project pursuant to the
Construction Management Agreement and so long as no Event of Default shall have
occurred and be continuing and so long as FCI applies such proceeds as required
by subparagraph 11.(b).
11. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.
(a) Collection of Insurance and Condemnation Proceeds Generally.
Subject to BNPLC's
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rights under this Paragraph 11, and so long as no CMA Termination Event shall
have occurred and no Event of Default shall have occurred and be continuing, FCI
shall be entitled to use all property insurance and condemnation proceeds
payable with respect to the Property during the Term for the restoration and
repair of the Property or any remaining portion thereof. Except as provided in
the last sentence of subparagraph 10.(b) and the last sentence of subparagraph
10.(d), all insurance and condemnation proceeds received with respect to the
Property (including proceeds payable under any insurance policy covering the
Property which is maintained by FCI) shall be paid to BNPLC and then applied as
follows:
(i) First, such proceeds shall be used to reimburse BNPLC
for any costs and expenses, including Attorneys' Fees, incurred in
connection with the collection of such proceeds.
(ii) Second, the remainder of such proceeds (the "REMAINING
Proceeds") shall be held by BNPLC as Escrowed Proceeds and used to
reimburse FCI for the actual cost of the repair, restoration or
replacement of the Property. However, any Remaining Proceeds not needed
for such purpose shall be applied by BNPLC as Qualified Payments, as
provided in subparagraph 11.(c), after FCI notifies BNPLC that they are
not needed for repairs, restoration or replacement.
(b) Administration of Remaining Proceeds; FCI's Obligation to
Restore. Any Remaining Proceeds held by BNPLC as Escrowed Proceeds shall be
deposited by BNPLC in an interest bearing account as provided in the definition
of Escrowed Proceeds in the attached List of Defined Terms and shall be paid to
FCI or to third parties as FCI may direct as the applicable repair, restoration
or replacement progresses and upon compliance by FCI with such terms, conditions
and requirements as may be reasonably imposed by BNPLC, but in no event shall
BNPLC be required to pay Escrowed Proceeds to FCI in excess of the actual cost
to FCI of the applicable repair, restoration or replacement, as evidenced by
invoices or other documentation reasonably satisfactory to BNPLC, it being
understood that BNPLC may retain and apply any such excess as a Qualified
Payment. In any event, FCI will not be entitled to any abatement or reduction of
the Base Rent or any other amount due hereunder except to the extent that such
excess Remaining Proceeds result in Qualified Payments which reduce Stipulated
Loss Value (and thus payments computed on the basis of Stipulated Loss Value) as
provided in the definitions set out in the attached List of Defined Terms.
Further, notwithstanding the inadequacy of the Remaining Proceeds held by BNPLC
as Escrowed Proceeds, if any, or anything herein to the contrary, FCI must,
after any taking of less than all or substantially all of the Property by
condemnation and after any damage to the Property by fire or other casualty,
either:
(i) promptly restore or improve the Property or the
remainder thereof to a value no less than sixty percent (60%) of
Stipulated Loss Value (computed after the application of any Remaining
Proceeds as a Qualified Payment) and to a reasonably safe and sightly
condition; or
(ii) promptly restore the Property to a reasonably safe and
sightly condition and pay to BNPLC for application as a Qualified
Payment the amount (if any), as determined by BNPLC, needed to reduce
Stipulated Loss Value (computed after the application of such amount and
any available Remaining Proceeds as Qualified Payments) to no more than
one hundred sixty-seven percent (167%) of the then-current market value
of the Property or remainder thereof.
(c) Special Provisions Concerning CMA Termination Events, Events
of Default and Qualified Payments. If a CMA Termination Event shall have
occurred, or an Event of Default shall have occurred and be continuing, then
notwithstanding the foregoing, BNPLC shall be entitled to receive and collect
all insurance or condemnation proceeds payable with respect to the Property, and
BNPLC shall be entitled to either, at the discretion of BNPLC, (A) hold all
Remaining Proceeds as Escrowed Proceeds until paid to FCI as
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reimbursement for the actual and reasonable cost of repairing, restoring or
replacing the Property when FCI has completed such repair, restoration or
replacement, or (B) apply such proceeds as Qualified Payments when and to the
extent deemed appropriate by BNPLC.
When no CMA Termination Event shall have occurred and no Event of
Default shall have occurred and be continuing, BNPLC shall apply any Remaining
Proceeds paid to it (or other amounts available for application as a Qualified
Payment) as a Qualified Payment on any date that BNPLC is directed to do so by a
notice from FCI; provided, that if such a notice from FCI specifies an effective
date for a Qualified Payment that is less than five Business Days after BNPLC's
actual receipt of the notice, BNPLC may postpone the date of the Qualified
Payment to any date not later than five Business Days after BNPLC's receipt of
the notice. In any event, except when BNPLC is required by the preceding
sentence to apply Remaining Proceeds or other amounts as a Qualified Payment on
an Advance Date or Base Rent Date, BNPLC may deduct Breakage Costs incurred in
connection with any Qualified Payment from the Remaining Proceeds or other
amounts available for application as the Qualified Payment, and FCI will
reimburse BNPLC upon request for any such Breakage Costs that BNPLC incurs but
does not deduct.
(d) Takings of All or Substantially All of the Property. In the
event of any taking of all or substantially all of the Property, BNPLC shall be
entitled to apply all Remaining Proceeds as a Qualified Payment, notwithstanding
the foregoing. In addition, if Stipulated Loss Value immediately prior to any
taking of all or substantially all of the Property by condemnation exceeds the
sum of the Remaining Proceeds resulting from such condemnation, then BNPLC shall
be entitled to recover the excess from FCI upon demand as an additional
Qualified Payment, whereupon this Lease shall terminate. Any taking of so much
of the Real Property as, in BNPLC's reasonable good faith judgment, makes it
impracticable to restore or improve the remainder thereof as required by part
(1) of subparagraph 11.(b) shall be considered a taking of substantially all the
Property for purposes of this Paragraph 11.
(e) Waiver of Subrogation. Without limiting FCI's obligations to
make repairs under other provisions of this Lease, BNPLC and FCI each waive any
right of recovery against the other, and the other's agents, officers or
employees, for any damage to the Property or to the personal property situated
from time to time in or on the Real Property resulting from fire or other
casualty covered by a valid and collectible insurance policy; provided, however,
that the waiver set forth in this subparagraph 11.(e) shall be effective
insofar, but only insofar, as compensation for such damage or loss is actually
recovered by the waiving party (net of costs of collection) under the policy
notwithstanding the waivers set out in this subparagraph. FCI shall cause the
insurance policies required of FCI by this Lease to be properly endorsed, if
necessary, to prevent any loss of coverage because of the waivers set forth in
this subparagraph. If such endorsements are not available at commercially
reasonable rates, the waivers set forth in this subparagraph shall be
ineffective to the extent that such waivers would cause required insurance with
respect to the Property to be impaired.
12. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF FCI
CONCERNING THE PROPERTY. FCI represents, warrants and covenants as follows:
(a) Compliance with Covenants and Laws. The use of the Property
permitted by this Lease complies, or will comply after FCI obtains available
permits as the tenant under this Lease, in all material respects with all
Applicable Laws. FCI has obtained or will promptly obtain all utility, building,
health and operating permits as may be required by any governmental authority or
municipality having jurisdiction over the Property for the construction
contemplated herein and the use of the Property permitted by this Lease.
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(b) Operation of Property. FCI shall operate the Property in a
good and workmanlike manner and in a manner that causes it to comply in all
material respects with Applicable Laws. (For purposes of this Lease, "material"
noncompliance with Applicable Law will include any noncompliance, the correction
of which has been requested by a governmental authority, or because of which a
threat of action against the Property or BNPLC has been asserted by a
governmental authority.) FCI shall not use or occupy or allow the use or
occupancy of the Property in any manner which violates any Applicable Law in any
material respect or which constitutes a public or private nuisance or which
makes void, voidable or cancelable any insurance then in force with respect
thereto. To the extent that any of the following could, individually or in the
aggregate, reduce the value of the Property and leave the Property with a value
of less than sixty percent (60%) of Stipulated Loss Value, FCI shall not: (i)
initiate or permit any zoning reclassification of the Property; (ii) seek any
variance under existing zoning ordinances applicable to the Property; (iii) use
or permit the use of the Property in a manner that would result in such use
becoming a nonconforming use under applicable zoning ordinances or similar laws,
rules or regulations; (iv) execute or file any subdivision plat affecting the
Property; or (v) consent to the annexation of the Property to any municipality.
If a change in the zoning or other Applicable Laws affecting the permitted use
or development of the Property shall occur that BNPLC determines will reduce the
then-current market value of the Property, and if after such reduction the
then-current market value of the Property shall be less than sixty percent (60%)
of Stipulated Loss Value in the reasonable judgment of BNPLC, then FCI shall pay
BNPLC an amount equal to such excess for application as a Qualified Payment. FCI
shall not cause or consent to any drilling or exploration for, or extraction,
removal or production of, minerals from the surface or subsurface of the
Property. If FCI receives a notice or claim from any federal, state or other
governmental authority that the Property is not in compliance with any
Applicable Law in any material respect, or that any action may be taken against
BNPLC because the Property does not comply with any Applicable Law, FCI shall
promptly furnish a copy of such notice or claim to BNPLC.
Notwithstanding the foregoing, FCI may in good faith, by appropriate
proceedings, contest the validity and applicability of any Applicable Law with
respect to the Property, and pending such contest FCI shall not be deemed in
default hereunder because of the violation of such Applicable Law, if FCI
diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and if FCI promptly causes the Property to comply with
any such Applicable Law upon a final determination by a court of competent
jurisdiction that the same is valid and applicable to the Property; provided,
however, in any event such contest shall be concluded and the violation of such
Applicable Law must be corrected by FCI and any claims asserted against BNPLC or
the Property because of such violation must be paid by FCI, all prior to the
earlier of (i) the date that any criminal action is overtly threatened or
instituted against BNPLC or any of its directors, officers or employees because
of such violation, (ii) the date that any action is taken or overtly threatened
by any governmental authority against BNPLC or any property owned by BNPLC
(including the Property) because of such violation, (iii) a Designated Sale Date
upon which, for any reason, FCI or an Affiliate of FCI or any Applicable
Purchaser shall not purchase BNPLC's interest in the Property pursuant to the
Purchase Agreement for a net price to BNPLC (when taken together with any
additional payments made by FCI pursuant to Paragraph 1(A)(2) of the Purchase
Agreement, in the case of a purchase by an Applicable Purchaser) equal to
Stipulated Loss Value, or (iv) any date upon which the Construction Management
Agreement or this Lease or FCI's Initial Remarketing Rights and Obligations may
be terminated because of or following any Issue 97-10 Election.
(c) Debts for Construction, Maintenance, Operation or
Development. FCI shall cause all debts and liabilities incurred in the
construction, maintenance, operation or development of the Property, including
all debts and liabilities for labor, material and equipment and all debts and
charges for utilities servicing the Property, to be promptly paid; provided,
nothing in this subparagraph will be construed to make
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FCI liable for Liens Removable by BNPLC or Excluded Taxes.
Notwithstanding the foregoing, FCI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
mechanic's or materialmen's lien and pending such contest FCI shall not be
deemed in default under this subparagraph because of the contested lien if (1)
within thirty days after being asked to do so by BNPLC, FCI bonds over to
BNPLC's reasonable satisfaction all such contested liens against the Property
alleged to secure an amount in excess of $5,000,000 (individually or in the
aggregate), (2) FCI diligently prosecutes such contest to completion in a manner
reasonably satisfactory to BNPLC, and (3) FCI promptly causes to be paid any
amount adjudged by a court of competent jurisdiction to be due, with all costs
and interest thereon, promptly after such judgment becomes final; provided,
however, that in any event each such contest shall be concluded and the lien,
interest and costs must be paid by FCI prior to the earlier of (i) the date that
any criminal action is overtly threatened or instituted against BNPLC or its
directors, officers or employees because of the nonpayment thereof, (ii) the
date that any writ or order is issued under which the Property or any other
property in which BNPLC has an interest may be seized or sold or any other
action is taken or overtly threatened against BNPLC or any property in which
BNPLC has an interest because of the nonpayment thereof, (iii) a Designated Sale
Date upon which, for any reason, FCI or an Affiliate of FCI or any Applicable
Purchaser shall not purchase BNPLC's interest in the Property pursuant to the
Purchase Agreement for a net price to BNPLC (when taken together with any
additional payments made by FCI pursuant to Paragraph 1(A)(2) of the Purchase
Agreement, in the case of a purchase by an Applicable Purchaser) equal to
Stipulated Loss Value, or (iv) any date upon which the Construction Management
Agreement or this Lease or FCI's Initial Remarketing Rights and Obligations may
be terminated because of or following any Issue 97-10 Election
(d) Repair, Maintenance, Alterations and Additions. FCI shall
keep the Property in good order, operating condition and appearance, causing all
necessary repairs, renewals and replacements to be promptly made, and will not
allow any of the Property to be materially misused, abused or wasted. To the
extent that any of the following could, individually or in the aggregate, reduce
the value of the Property and leave the Property with a value of less than sixty
percent (60%) of Stipulated Loss Value, FCI shall not: (i) fail to promptly
replace any worn-out fixtures or material items of tangible Personal Property
covered by this Lease with fixtures or other tangible Personal Property
comparable to the replaced fixtures or Personal Property when new, (ii) remove
from the Property any fixtures or tangible Personal Property of significant
value covered by this Lease except such as are replaced by FCI by articles of
equal suitability and value, free and clear of any Lien other than Permitted
Encumbrances or Liens Removable by BNPLC, or (iii) make any significant
alterations to any Improvements after they are completed. Without limiting the
foregoing, FCI will notify BNPLC before making any alterations to the
Improvements which could materially reduce the market value of the Property or
which change the general character of the Property or which impair in any
significant manner the useful life or utility of any Improvements.
Nothing in this subparagraph is intended to limit FCI's rights and
obligations under other provisions of this Lease with respect to the
construction of the initial or any subsequent Construction Project permitted by
other provisions of this Lease.
(e) Compliance With Permitted Encumbrances and Development
Contracts. FCI shall comply with and will cause to be performed all of the
covenants, agreements and obligations imposed upon the owner of any interest in
the Property by the Permitted Encumbrances or the Development Contracts. Without
limiting the foregoing, FCI shall cause all amounts to be paid when due, the
payment of which is secured by any Lien against the Property created by the
Permitted Encumbrances.
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(f) Modification of Permitted Encumbrances and Development
Contracts. FCI shall not enter into, initiate, approve or consent to any
modification of any Permitted Encumbrance or Development Contract that would
create or expand or purport to create or expand obligations or restrictions
which would encumber the Property without the prior consent of BNPLC. Whether
BNPLC must give any such consent requested by FCI during the term of this Lease
shall be governed by subparagraph 7.(a).
(g) Books and Records Concerning the Property. FCI shall keep
books and records that are accurate and complete in all material respects for
the Property and will, subject to Paragraph 27, permit all such books and
records (including all contracts, statements, invoices, bills and claims for
labor, materials and services supplied for the construction and operation of any
Improvements) to be inspected and copied by BNPLC.
13. ASSIGNMENT AND SUBLETTING BY FCI.
(a) BNPLC's Consent Required. Without the prior consent of
BNPLC, FCI shall not assign, transfer, mortgage, pledge or hypothecate this
Lease or any interest of FCI hereunder and shall not sublet all or any part of
the Property, by operation of law or otherwise; provided, that, if (and after)
FCI completes the Construction Project pursuant to the Construction Management
Agreement and so long as no Event of Default has occurred and is continuing, FCI
shall be entitled without the consent of BNPLC to (1) assign FCI's rights under
this Lease and the other Operative Documents to an Affiliate of FCI (including
any Affiliate of FCI that is the surviving entity after a merger permitted by
subsection 3.04(a) of Schedule A attached to the Guaranty) pursuant to a written
assignment unconditionally providing that the Affiliate assumes FCI's
obligations hereunder and thereunder and (unless FCI has been merged into the
Affiliate pursuant to a merger permitted by subsection 3.04(a) of Schedule A
attached to the Guaranty) that FCI ratifies and confirms for the benefit of
BNPLC FCI's responsibility and liability to BNPLC under this Lease and the other
Operative Documents, and (2) sublet all or any portion of the Property if:
(i) any sublease by FCI is made expressly subject and
subordinate to the terms hereof;
(ii) no sublease purports to grant the subtenant
thereunder rights to use or occupy the Property after the expiration or
termination of this Lease, other than rights expressly conditioned upon
a purchase by FCI of the Property pursuant to the Purchase Agreement;
(iii) the uses permitted by such sublease are limited to
uses expressly permitted by subparagraph 3.(a) above; and
(iv) less than forty-nine percent (49%) of any
completed Improvements are at any time subleased by FCI to anyone other
than its own Affiliates.
(b) Standard for BNPLC's Consent to Assignments and Certain
Other Matters. Consents and approvals of BNPLC which are required by this
Paragraph 13 will not be unreasonably withheld, but FCI acknowledges that
BNPLC's withholding of such consent or approval shall be reasonable if BNPLC
determines in good faith that (1) giving the approval may materially increase
BNPLC's risk of liability for any existing or future environmental problem, (2)
giving the approval is likely to substantially increase BNPLC's administrative
burden of complying with or monitoring FCI's compliance with the requirements of
this Lease, or (3) any transaction for which FCI has requested the consent or
approval would negate FCI's representations in this Lease regarding ERISA or
cause this Lease or the other documents referenced herein to constitute a
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violation of any provision of ERISA.
(c) Consent Not a Waiver. No consent by BNPLC to a sale,
assignment, transfer, mortgage, pledge or hypothecation of this Lease or FCI's
interest hereunder, and no assignment or subletting of the Property or any part
thereof in accordance with this Lease or otherwise with BNPLC's consent, shall
release FCI from liability hereunder; and any such consent shall apply only to
the specific transaction thereby authorized and shall not relieve FCI from any
requirement of obtaining the prior consent of BNPLC to any further sale,
assignment, transfer, mortgage, pledge or hypothecation of this Lease or any
interest of FCI hereunder.
14. ASSIGNMENT BY BNPLC.
(a) Restrictions on Transfers. Except by a Permitted Transfer,
BNPLC shall not assign, transfer, mortgage, pledge, encumber or hypothecate this
Lease or the other Operative Documents or any interest of BNPLC in and to the
Property during the Term without the prior consent of FCI.
(b) Effect of Permitted Transfer or other Assignment by BNPLC.
If, without breaching subparagraph 14.(a), BNPLC sells or otherwise transfers
the Property and assigns all of its rights under this Lease and the other
Operative Documents, and if BNPLC's successor in interest to all such rights
assumes in writing for the benefit of FCI BNPLC's obligations under this Lease
and the other Operative Documents on and subject to the express terms and
conditions set out herein and therein, then BNPLC shall thereby be released from
any obligations arising after such assumption under this Lease or the other
Operative Documents (other than any liability for a breach of the landlord's
obligation to provide Construction Advances), and FCI shall look solely to each
successor in interest of BNPLC for performance of such obligations.
15. BNPLC'S RIGHT OF ACCESS.
(a) BNPLC and BNPLC's representatives may enter the Property,
after three Business Days advance notice to FCI (except in the event of an
emergency, when no advance notice will be required), for the purpose of
performing any work BNPLC is authorized to undertake by the next subparagraph or
for the purpose confirming whether FCI has complied with the requirements of
this Lease at any time BNPLC may reasonably question such compliance. So long as
FCI remains in possession of the Property, BNPLC or BNPLC's representative will,
before making any such inspection or performing any such work on the Property,
if then requested to do so by FCI to maintain security: (i) sign in at FCI's
security or information desk if FCI has such a desk on the premises, (ii) wear a
visitor's badge or other reasonable identification provided by FCI when BNPLC or
BNPLC's representative first arrives at the Property, (iii) permit an employee
of FCI to observe such inspection or work, and (iv) comply with other similar
reasonable nondiscriminatory security, health or safety requirements of FCI, as
FCI may establish from time to time in accordance with good industry practices,
provided that such other requirements do not, individually or in the aggregate,
substantially interfere with or delay inspections or work of BNPLC authorized by
this Lease.
(b) If FCI fails to perform any act or to take any action which
hereunder FCI is required to perform or take, or to pay any money which
hereunder FCI is required to pay, and if such failure or action constitutes an
Event of Default or causes BNPLC or any director, officer, employee or Affiliate
of BNPLC to be overtly threatened with criminal prosecution or renders BNPLC's
interest in the Property or any part thereof at risk of forfeiture by forced
sale or otherwise, then in addition to any other remedies specified herein or
otherwise available, BNPLC may, perform or cause to be performed such act or
take such action or pay such money. Any expenses so incurred by BNPLC, and any
money so paid by BNPLC, shall be a demand
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obligation owing by FCI to BNPLC. Further, BNPLC, upon making such payment,
shall be subrogated to all of the rights of the person, corporation or body
politic receiving such payment. But nothing herein shall imply any duty upon the
part of BNPLC to do any work which under any provision of this Lease FCI may be
required to perform, and the performance thereof by BNPLC shall not constitute a
waiver of FCI's default. BNPLC may during the progress of any such work
permitted by BNPLC hereunder on or in the Property keep and store upon the
Property all necessary materials, tools, and equipment. BNPLC shall not in any
event be liable for inconvenience, annoyance, disturbance, loss of business, or
other damage to FCI or the subtenants of FCI by reason of making such repairs or
the performance of any such work on or in the Property, or on account of
bringing materials, supplies and equipment into or through the Property during
the course of such work (except for liability in connection with death or injury
or damage to the property of third parties caused by [and attributed by any
applicable principles of comparative fault to] the Established Misconduct of
BNPLC), and the obligations of FCI under this Lease shall not thereby be excused
in any manner.
16. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF FCI. FCI
represents, warrants and covenants as follows:
(a) Negative Covenants. Without the prior written consent
of BNPLC in each case, neither FCI nor any of its Affiliates shall:
(i) Multi employer ERISA Plans. Incur or permit any
Affiliate to incur any obligation to contribute to any "Multi employer
plan" as defined in Section 4001 of ERISA.
(ii) Prohibited ERISA Transaction. Enter into any
transaction which would cause this Lease or the other Operative
Documents or any other document executed in connection herewith (or any
exercise of BNPLC's rights hereunder or thereunder) to constitute a
non-exempt prohibited transaction under ERISA.
(b) Financial Statements; Required Notices; Certificates as
to Default(b) Financial Statements; Required Notices; Certificates as to
Default. To the extent not so delivered by Guarantor, FCI shall deliver to BNPLC
and to each Participant of which FCI has been notified:
(i) copies of all financial statements, certificates,
notices and other information that Guarantor is required to provide by
Part 2 of Schedule A attached to the Guaranty prior to the deadlines for
delivery established thereunder;
(ii) together with the annual and quarterly financial
statements furnished in accordance with subparagraph 16.(b)(i), a
certificate of a Responsible Financial Officer of Guarantor in the form
attached hereto as Exhibit G certifying (a) that no Event of Default or
material Default by FCI has occurred and is continuing (or, if an Event
of Default or material Default by FCI has occurred, stating the nature
thereof and the action which FCI proposes to take with respect thereto),
(b) that the representations and warranties by Guarantor and FCI
contained in the provisions referenced in Exhibit G from this Lease, the
other Operative Documents and the Guaranty are true and correct in all
material respects on and as of the date of such certificate as though
made on and as of such date, or, if not then true and correct, a brief
statement as to why such representations are no longer true and correct,
and (c) the accuracy of computations attached thereto demonstrating
compliance by Guarantor with the financial covenants established in
Schedule A attached to the Guaranty;
(iii) as soon as possible and in any event within five days
after the occurrence of each Event of Default or material Default known
to a Responsible Financial Officer of Guarantor, a statement
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setting forth details of such Event of Default or material Default and
the action which FCI has taken and proposes to take with respect
thereto;
(iv) as soon as practicable and in any event within thirty
days after a Responsible Financial Officer of FCI knows or has reason to
know that any ERISA Termination Event with respect to any Plan has
occurred, a statement of a Responsible Financial Officer of FCI
describing such ERISA Termination Event and the action, if any, which
FCI proposes to take with respect thereto;
(v) upon request by BNPLC, a statement by FCI and Guarantor
in writing certifying that this Lease and the Guaranty are unmodified
and in full effect (or, if there have been modifications, that this
Lease and the Guaranty are in full effect as modified, and setting forth
such modifications) and the dates to which the Base Rent, Commitment
Fees and Administrative Agency Fees have been paid and either stating
that no default exists hereunder or specifying each such default; it
being intended that any such statement may be relied upon by any
prospective purchaser or mortgagee of the Property or any prospective
Participant;
(vi) promptly after any change in the rating of the Index
Debt of Guarantor by S&P or Moody's, which will result in a change in
the Spread (as defined in the List of Defined Terms), a certificate of a
Responsible Financial Officer of Guarantor advising BNPLC of the ratings
after the change; and
(vii) such other information respecting the condition or
operations, financial or otherwise, of FCI, of its Affiliates or of the
Property as BNPLC or any Participant may from time to time reasonably
request.
BNPLC is hereby authorized to deliver a copy of any information or certificate
delivered to it pursuant to this subparagraph 16.(b) to any Participant and to
any regulatory body having jurisdiction over BNPLC, BNPLC's Parent or any other
Participant that requires or requests it.
(c) No Default or Violation. The execution, delivery and
performance by FCI of this Lease do not and will not constitute a breach or
default under any other material agreement or contract to which FCI is a party
or by which FCI is bound or which affects the Property, and do not violate or
contravene any law, order, decree, rule or regulation to which FCI is subject,
and such execution, delivery and performance by FCI will not result in the
creation or imposition of (or the obligation to create or impose) any lien,
charge or encumbrance on, or security interest in, FCI's property pursuant to
the provisions of any of the foregoing.
(d) No Suits. Except as disclosed in Schedule 2, there are no
judicial or administrative actions, suits, proceedings or investigations pending
or, to FCI's knowledge, threatened that will adversely affect the Property or
the validity, enforceability or priority of this Lease, and FCI is not in
default with respect to any order, writ, injunction, decree or demand of any
court or other governmental or regulatory authority that could materially and
adversely affect the use, occupancy or operation of the Property. No
condemnation or other like proceedings are pending or, to FCI's knowledge,
threatened against the Property.
(e) Enforceability. The execution, delivery and performance by
FCI of this Lease and the other Operative Documents are duly authorized and do
not require the consent or approval of any governmental body or other regulatory
authority that has not heretofore been obtained and are not in contravention of
or conflict with any applicable laws or any term or provision of FCI's articles
of incorporation
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or bylaws. This Lease and the Other Operative Documents are valid, binding and
legally enforceable obligations of FCI in accordance with its terms, except as
such enforcement is affected by bankruptcy, insolvency and similar laws
affecting the rights of creditors, generally, and equitable principles of
general application.
(f) Financial Matters. FCI is not "insolvent" on the date hereof
(that is, the sum of FCI's absolute and contingent liabilities, including the
obligations of FCI under this Lease, does not exceed the fair market value of
FCI's assets) and has no outstanding liens, suits, garnishments or court actions
which could render FCI insolvent or bankrupt. FCI's capital is adequate for the
businesses in which FCI is engaged and intends to be engaged. FCI has not
incurred (whether hereby or otherwise), nor does FCI intend to incur or believe
that it will incur, debts which will be beyond its ability to pay as such debts
mature. There has not been filed by or, to FCI's knowledge, against FCI a
petition in bankruptcy or a petition or answer seeking an assignment for the
benefit of creditors, the appointment of a receiver, trustee, custodian or
liquidator with respect to FCI or any significant portion of FCI's property,
reorganization, arrangement, rearrangement, composition, extension, liquidation
or dissolution or similar relief under the federal Bankruptcy Code or any state
law. The financial statements and all financial data heretofore delivered to
BNPLC relating to FCI are true, correct and complete in all material respects.
(g) Organization. FCI is duly incorporated and legally existing
under the laws of the State of Delaware and is duly qualified to do business in
the State of California. FCI has all requisite power and has procured or will
procure on a timely basis all governmental certificates of authority, licenses,
permits, qualifications and other documentation required to fulfill its
obligations under this Lease. FCI has the corporate power and adequate
authority, rights and franchises to own FCI's property and to carry on FCI's
business as now conducted and is duly qualified and in good standing in each
state in which the character of FCI's business makes such qualification
necessary or, if it is not so qualified in a state other than California, such
failure does not have a material adverse effect on the properties, assets,
operations or businesses of FCI and its Subsidiaries, taken as a whole.
(h) ERISA. FCI is not and will not become an "employee benefit
plan" (as defined in Section 3(3) of ERISA) which is subject to Title I of
ERISA. The assets of FCI do not and will not in the future constitute "plan
assets" of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101. FCI is not and will not become a "governmental plan" within the
meaning of Section 3(32) of ERISA. Transactions by or with FCI are not subject
to state statutes regulating investments of and fiduciary obligations with
respect to governmental plans. No ERISA Termination Event has occurred with
respect to any Plan of FCI and FCI and all its Affiliates are in compliance with
ERISA. Neither FCI nor any of its Affiliates is required to contribute to, or
has any other absolute or contingent liability in respect of, any "Multi
employer plan" as defined in Section 4001 of ERISA. As of the Effective Date no
"accumulated funding deficiency" (as defined in Section 412(a) of the Code)
exists with respect to any Plan of FCI, whether or not waived by the Secretary
of the Treasury or his delegate, and the current value of the benefits of each
Plan of FCI, if any, equals or is less than the current value of such Plan's
assets available for the payment of such benefits.
(i) Use of Proceeds. In no event shall the funds from the
Initial Funding Advance or any Construction Advance be used (nor have they been
used) directly or indirectly for personal, family, household or agricultural
purposes or for the purpose, whether immediate, incidental or ultimate, of
purchasing, acquiring or carrying any "margin stock" or any "margin securities"
(as such terms are defined respectively in Regulation U and Regulation G
promulgated by the Board of Governors of the Federal Reserve System) or to
extend credit to others directly or indirectly for the purpose of purchasing or
carrying any such margin stock or margin securities. FCI represents and warrants
that FCI is not engaged principally, or as one of FCI's important
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activities, in the business of extending credit to others for the purpose of
purchasing or carrying such margin stock or margin securities.
(j) Investment Company Act. FCI is not an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(k) Omissions. None of FCI's representations or warranties
contained in this Lease or in any other document, certificate or written
statement furnished to BNPLC by or on behalf of FCI in connection with this
Lease contains any untrue statement of a material fact or omits a material fact
necessary in order to make the statements contained herein or therein (when
taken in their entireties) not misleading.
(l) Not a Foreign Person. FCI is not a "foreign person" within
the meaning of Sections 1445 and 7701 of the Code (i.e. FCI is not a
non-resident alien, foreign corporation, foreign partnership, foreign trust or
foreign estate as those terms are defined in the Code and regulations
promulgated thereunder).
(m) Further Assurances. FCI shall, upon request of BNPLC, (i)
promptly correct any error or omission which may be discovered in the contents
of this Lease or in any other instrument executed in connection herewith or in
the execution or acknowledgment thereof; (ii) execute, acknowledge, deliver and
record or file such further instruments and do such further acts as may be
necessary, desirable or proper to carry out more effectively the purposes of
this Lease and to subject to this Lease any property intended by the terms
hereof to be covered hereby, including any renewals, additions, substitutions,
replacements or appurtenances to the Property; (iii) execute, acknowledge,
deliver, procure and record or file any document or instrument deemed advisable
by BNPLC to protect its rights in and to the Property against the rights or
interests of third persons; and (iv) provide such certificates, documents,
reports, information, affidavits and other instruments and do such further acts
as may be necessary, desirable or proper in the reasonable determination of
BNPLC to enable BNPLC, BNPLC's Parent and any other Participants to comply with
the requirements or requests of any agency or authority having jurisdiction over
them.
17. EVENTS OF DEFAULT.
(a) Definition of Events of Default. Each of the following
events shall be deemed to be an "EVENT OF DEFAULT" by FCI under this Lease:
(i) FCI shall fail to pay when first due any Base Rent, any
Commitment Fees or any Administrative Agency Fees and such failure shall
continue for three Business Days after FCI is notified thereof by BNPLC
pursuant to a notice that specifically references this Paragraph 17.(a).
(ii) FCI shall fail to pay when first due any Rent other
than Base Rent, Commitment Fees or Administrative Agency Fees, or FCI
shall fail to pay when first due any amount required by the Closing
Certificate, and in either case such failure shall continue for thirty
days after FCI is notified thereof by BNPLC pursuant to a notice that
specifically references this Paragraph 17.(a).
(iii) FCI shall fail to comply with any term, provision or
covenant of this Lease, the Construction Management Agreement or the
Closing Certificate, other than as described in the other clauses of
this subparagraph 17.(a), and shall not cure such failure prior to the
earlier of (A) thirty days after notice thereof is sent to FCI, or (B)
the date any writ or order is issued for the levy or sale of any
property owned by BNPLC (including the Property) because of such failure
or any criminal action is
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overtly threatened or instituted against BNPLC or any of its directors,
officers or employees because of such failure; provided, however, that
so long as no such writ or order is issued and no such criminal action
is overtly threatened or instituted, the period within which such
failure may be cured by FCI shall be extended for a further period (not
to exceed an additional one hundred twenty days) as shall be necessary
for the curing thereof with diligence, if (but only if) (x) such failure
is susceptible of cure but cannot with reasonable diligence be cured
within such thirty day period, (y) FCI shall promptly have commenced to
cure such failure and shall thereafter continuously prosecute the curing
thereof with reasonable diligence and (z) the extension of the period
for cure will not, in the case of such a failure that occurs or
commences more than thirty-five days prior to the expiration of this
Lease, cause the period for cure to extend beyond five days prior to the
expiration of this Lease.
(iv) FCI shall fail to pay the full amount of any
Supplemental Payment on the Designated Sale Date as required by the
Purchase Agreement.
(v) FCI shall abandon the Property.
(vi) Guarantor, FCI or any of Guarantor's other Subsidiaries
shall: (1) be in default with respect to any payment (whether of
principal or interest and regardless of amount) in respect of any
"Material Indebtedness" (which as used in this provision shall mean any
Debt of Guarantor or its applicable Subsidiary [as the case may be] that
is owed to BNPLC or BNPLC's Affiliates or that is outstanding in a
principal amount of at least $10,000,000 in the aggregate), and such
default shall continue beyond the applicable grace period, if any,
specified in the agreements or instruments relating to such Material
Indebtedness; or (2) be in default under any agreement or instrument
relating to any Material Indebtedness and as a result of such default,
the Material Indebtedness shall be declared to be due and payable prior
to the stated maturity thereof.
(vii) Guarantor, FCI or any of Guarantor's other Subsidiaries
shall generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall make
a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against Guarantor, FCI or any of Guarantor's
other Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization, or seeking
the entry of an order for the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted
against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of sixty consecutive days,
or any of the actions sought in such proceeding (including the entry of
an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part
of its property) shall occur; or Guarantor, FCI or any of Guarantor's
other Subsidiaries shall take any corporate action to authorize any of
the actions set forth above in this clause 17.(a)(vii).
(viii) Any order, judgment or decree is entered in any
proceedings against Guarantor, FCI or any of Guarantor's other
Subsidiaries decreeing its dissolution and such order, judgment or
decree remains unstayed and in effect for more than sixty days.
(ix) Any order, judgment or decree is entered in any
proceedings against Guarantor decreeing a divestiture of any of its
assets that represent a substantial part, or the divestiture of the
stock of FCI or any of Guarantor's other Subsidiaries whose assets
represent a substantial part, of the
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total assets of Guarantor and its Subsidiaries (determined on a
consolidated basis in accordance with GAAP) or which requires the
divestiture of assets, or stock of any of Guarantor's Subsidiaries,
which shall have contributed a substantial part of the net income of
Guarantor and its Subsidiaries (determined on a consolidated basis in
accordance with GAAP) for any of the three fiscal years then most
recently ended, and such order, judgment or decree remains unstayed and
in effect for more than sixty days.
(x) A final judgment or order for the payment of money in
an amount (not covered by insurance) which exceeds $10,000,000 shall be
rendered against Guarantor, FCI or any of Guarantor's other Subsidiaries
and either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment, or (ii) within sixty days after the entry
thereof, such judgment or order is not discharged or execution thereof
stayed pending appeal, or within thirty days after the expiration of any
such stay, such judgment is not discharged.
(xi) Any ERISA Termination Event that BNPLC determines in
good faith would constitute grounds for a termination of any Plan of FCI
or for the appointment by the appropriate United States district court
of a trustee to administer any Plan of FCI shall have occurred and be
continuing thirty days after notice to such effect shall have been given
to FCI by BNPLC, or any Plan of FCI shall be terminated, or a trustee
shall be appointed by an appropriate United States district court to
administer any Plan of FCI, or the Pension Benefit Guaranty Corporation
shall institute proceedings to terminate any Plan of FCI or to appoint a
trustee to administer any Plan of FCI.
(xii) FCI or any of its Affiliates shall enter into any
transaction which would cause this Lease or any other Operative Document
or any other document executed in connection herewith (or any exercise
of BNPLC's rights hereunder or thereunder) to constitute a non-exempt
prohibited transaction under ERISA.
(xiii) Guarantor shall breach or repudiate its guarantee of
the obligations of FCI under this Lease, the Construction Management
Agreement, the Purchase Agreement or the Closing Certificate or
Guarantor shall fail to comply with any other covenants of Guarantor in
the Guaranty including the obligations of Guarantor set forth Section 10
of the Guaranty.
(xiv) Any breach by FCI of subparagraph 16.(b)(iii) resulting
from FCI's failure to notify BNPLC of a material Default known to a
Responsible Financial Officer.
(xv) Any representation of FCI contained herein or in the
other Operative Documents is false or misleading in any material
respect, or any certificate delivered to BNPLC by or on behalf of FCI as
required by this Lease is false or misleading in any material respect.
(xvi) Any representation of Guarantor contained in the
Guaranty is false or misleading in any material respect, or any
certificate, if any, delivered to BNPLC by or on behalf of Guarantor as
may be required by the Guaranty is false or misleading in any material
respect.
18. REMEDIES.
(a) Basic Remedies. At any time after an Event of Default and
after BNPLC has given any notice required by subparagraph 18.(b), BNPLC shall be
entitled at BNPLC's option (and without limiting BNPLC in the exercise of any
other right or remedy BNPLC may have, and without any further demand or notice
except as expressly described in this subparagraph 18.(a)), to exercise any one
or more of the following
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remedies:
(i) By notice to FCI, BNPLC may terminate FCI's right
to possession of the Property. A notice given in connection with
unlawful detainer proceedings specifying a time within which to cure a
default shall terminate FCI's right to possession if FCI fails to cure
the default within the time specified in the notice.
(ii) Upon termination of FCI's right to possession and
without further demand or notice, BNPLC may re-enter the Property in any
manner not prohibited by Applicable Law and take possession of all
improvements, additions, alterations, equipment and fixtures thereon and
remove any persons in possession thereof. Any property on the Land or in
the Improvements may be removed and stored in a warehouse or elsewhere
at the expense and risk of and for the account of FCI.
(iii) Upon termination of FCI's right to possession,
this Lease shall terminate and BNPLC may recover from FCI:
a) The worth at the time of award of the unpaid
Rent which had been earned at the time of termination;
b) The worth at the time of award of the amount by
which the unpaid Rent which would have been earned after
termination until the time of award exceeds the amount of such
rental loss that FCI proves could have been reasonably avoided;
c) The worth at the time of award of the amount by
which the unpaid Rent for the balance of the scheduled Term after
the time of award exceeds the amount of such rental loss that FCI
proves could be reasonably avoided; and
d) Any other amount necessary to compensate BNPLC
for all the detriment proximately caused by FCI's failure to
perform FCI's obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom,
including, but not limited to, the costs and expenses (including
Attorneys' Fees, advertising costs and brokers' commissions) of
recovering possession of the Property, removing persons or
property therefrom, placing the Property in good order,
condition, and repair, preparing and altering the Property for
reletting, all other costs and expenses of reletting, and any
loss incurred by BNPLC as a result of FCI's failure to perform
FCI's obligations under the Other Operative Documents.
The "WORTH AT THE TIME OF AWARD" of the amounts referred to in
subparagraph 18.(a)(iii)a) and subparagraph 18.(a)(iii)b) shall
be computed by allowing interest at ten percent (10%) per annum
or such other rate as may be the maximum interest rate then
permitted to be charged under California law at the time of
computation. The "WORTH AT THE TIME OF AWARD" of the amount
referred to in subparagraph 18.(a)(iii)c) shall be computed by
discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one
percent (1%).
e) Such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by applicable
California law.
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(iv) BNPLC shall have the remedy described in California
Civil Code Section 1951.4 (lessor may continue lease in force even after
lessee's breach and abandonment and recover rent as it becomes due, if
lessee has right to sublet or assign, subject only to reasonable
limitations). Accordingly, even if FCI breaches this Lease and abandons
the Property, this Lease shall continue in effect for so long as BNPLC
does not terminate FCI's right to possession, and BNPLC may enforce all
of BNPLC's rights and remedies under this Lease, including the right to
recover the Rent as it becomes due under this Lease. FCI's right to
possession shall not be deemed to have been terminated by BNPLC except
pursuant to subparagraph 18.(a)(i) hereof. The following shall not
constitute a termination of FCI's right to possession:
(a) Acts of maintenance or preservation or efforts to
relet the Property;
(b) The appointment of a receiver upon the initiative
of BNPLC to protect BNPLC's interest under this Lease; or
(c) Reasonable withholding of consent to an
assignment or subletting, or terminating a subletting or
assignment by FCI.
(b) Notice Required So Long As FCI 's Purchase Option and
Initial Remarketing Rights and Obligations Continue Under the Purchase
Agreement. So long as FCI remains in possession of the Property and there has
been no termination of FCI's Purchase Option and FCI's Initial Remarketing
Rights and Obligations as provided Paragraph 4 of the Purchase Agreement,
BNPLC's right to exercise remedies provided in subparagraph 18.(a) will be
subject to the condition precedent that BNPLC shall have notified FCI of BNPLC's
intent to exercise remedies provided in subparagraph 18.(a) at least sixty days
prior to exercising the remedies. The condition precedent is intended to provide
FCI with an opportunity to exercise FCI's Purchase Option or FCI's Initial
Remarketing Rights and Obligations before losing possession of the Property
pursuant to subparagraph 18.(a). The condition precedent is not, however,
intended to extend any period for curing an Event of Default. Accordingly, if an
Event of Default has occurred, and regardless of whether any Event of Default is
then continuing, BNPLC may proceed immediately to exercise remedies provided in
subparagraph 18.(a) at any time after the earlier of (i) sixty days after BNPLC
has given such a notice to FCI, (ii) any date upon which FCI relinquishes
possession of the Property, or (iii) any termination of FCI's Purchase Option
and FCI's Initial Remarketing Rights and Obligations.
(c) Enforceability. This Paragraph 18 shall be enforceable to
the maximum extent not prohibited by Applicable Law, and the unenforceability of
any provision in this Paragraph shall not render any other provision
unenforceable.
(d) Remedies Cumulative. No right or remedy herein conferred
upon or reserved to BNPLC is intended to be exclusive of any other right or
remedy, and each and every right and remedy shall be cumulative and in addition
to any other right or remedy given hereunder or now or hereafter existing under
Applicable Law or in equity; however, before exercising any right or remedy
available under Applicable Law or in equity to evict FCI from the Property or to
terminate FCI's right of occupancy hereunder, BNPLC shall give FCI any sixty
days notice required in subparagraph 18.(b). In addition to other remedies
provided in this Lease, BNPLC shall be entitled, to the extent permitted by
Applicable Law or in equity, to injunctive relief in case of the violation, or
attempted or threatened violation, of any of the covenants, agreements,
conditions or provisions of this Lease, or to a decree compelling performance of
any of the other covenants, agreements, conditions or provisions of this Lease
to be performed by FCI, or to any other remedy allowed to BNPLC at law or in
equity. Nothing contained in this Lease shall limit or prejudice the right of
BNPLC to prove for and
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obtain in proceedings for bankruptcy or insolvency of FCI by reason of the
termination of this Lease, an amount equal to the maximum allowed by any statute
or rule of law in effect at the time when, and governing the proceedings in
which, the damages are to be proved, whether or not the amount be greater, equal
to, or less than the amount of the loss or damages referred to above. Without
limiting the generality of the foregoing, nothing contained herein shall modify,
limit or impair any of the rights and remedies of BNPLC under the Purchase
Agreement, and BNPLC shall not be required to give the sixty day notice
described in subparagraph 18.(a) as a condition to any acceleration of the
Designated Sale Date or to taking any action to enforce the Purchase Agreement
or the Closing Certificate.
19. DEFAULT BY BNPLC. If BNPLC should default in the performance of
any of its obligations under this Lease, BNPLC shall have the time reasonably
required, but in no event less than thirty days, to cure such default after
receipt of notice from FCI specifying such default and specifying what action
FCI believes is necessary to cure the default. If FCI prevails in any litigation
brought against BNPLC because of BNPLC's failure to cure a default within the
time required by the preceding sentence, then FCI shall be entitled to an award
against BNPLC for the monetary damages proximately caused to FCI by such
default.
Notwithstanding the foregoing, BNPLC's right to cure as provided in this
Paragraph 19 will not in any event extend the time within which BNPLC must
remove Liens Removable by BNPLC as required to consummate a conveyance of
BNPLC's interest in the Property required by the Purchase Agreement.
20. QUIET ENJOYMENT. Provided FCI pays the Base Rent and all
Additional Rent payable hereunder as and when due and payable and keeps and
fulfills all of the terms, covenants, agreements and conditions to be performed
by FCI hereunder, BNPLC shall not during the Term disturb FCI's peaceable and
quiet enjoyment of the Property; however, such enjoyment shall be subject to the
terms, provisions, covenants, agreements and conditions of this Lease, to
Permitted Encumbrances, to Development Documents and to any other claims not
constituting Liens Removable by BNPLC. If any Lien Removable by BNPLC is claimed
against the Property, including any judgment lien securing a Deductible Judgment
against BNPLC, BNPLC will remove the Lien Removable by BNPLC promptly. However,
BNPLC shall not be responsible for any Lien that is expressly excluded from the
definition of Liens Removable by BNPLC in the attached List of Defined Terms.
Any breach by BNPLC of this Paragraph shall render BNPLC liable to FCI for any
monetary damages proximately caused thereby, but as more specifically provided
in Paragraph 2 above, no such breach shall entitle FCI to terminate this Lease
or excuse FCI from its obligation to pay Base Rent and other amounts hereunder.
21. SURRENDER UPON TERMINATION. Unless FCI or an Applicable Purchaser
purchases BNPLC's entire interest in the Property pursuant to the terms of the
Purchase Agreement, FCI shall, upon the termination of FCI's right to occupancy,
surrender to BNPLC the Property, including any buildings, alterations,
improvements, replacements or additions constructed by FCI, with all fixtures
and furnishings included in the Property, but not including movable furniture
and movable personal property not covered by this Lease, free of all Hazardous
Substances (including Permitted Hazardous Substances) and tenancies and, to the
extent required by BNPLC, with all Improvements in substantially the same
condition as of the date the same were initially completed, excepting only (i)
ordinary wear and tear that occurs between the maintenance, repairs and
replacements required by other provisions of this Lease, and (ii) alterations
and additions which are expressly permitted by the terms of this Lease and which
have been completed by FCI in a good and workmanlike manner in accordance with
all Applicable Laws. Any movable furniture or movable personal property
belonging to FCI or any party claiming under FCI, if not removed at the time of
such termination and if BNPLC shall so elect, shall be deemed abandoned and
become the property of BNPLC without any payment or offset therefor. If BNPLC
shall not so elect, BNPLC may remove such property from the Property and
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<PAGE> 46
store it at FCI's risk and expense. FCI shall bear the expense of repairing any
damage to the Property caused by such removal by BNPLC or FCI.
22. HOLDING OVER BY FCI. Should FCI not purchase BNPLC's right, title
and interest in the Property as provided in the Purchase Agreement, but
nonetheless continue to hold the Property after the termination of this Lease
without BNPLC's consent, whether such termination occurs by lapse of time or
otherwise, such holding over shall constitute and be construed as a tenancy from
day to day only, at a daily Base Rent equal to: (i) Stipulated Loss Value on the
day in question, times (ii) (A) the Prime Rate in effect for such day so long as
the holdover period does not extend beyond ninety days and (B) for each such day
beginning with the ninety-first day after the holdover commences, two percent
(2%) above the Prime Rate; divided by (iii) three hundred and sixty; subject,
however, to all of the terms, provisions, covenants and agreements on the part
of FCI hereunder. No payments of money by FCI to BNPLC after the termination of
this Lease shall reinstate, continue or extend the Term of this Lease and no
extension of this Lease after the termination thereof shall be valid unless and
until the same shall be reduced to writing and signed by both BNPLC and FCI.
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE
DOCUMENTS. FCI acknowledges and agrees that nothing contained in this Lease
shall limit, modify or otherwise affect any of FCI's obligations under the other
Operative Documents, which obligations are intended to be separate, independent
and in addition to, and not in lieu of, the obligations set forth herein. In the
event of any inconsistency between the terms and provisions of the Purchase
Agreement and the terms and provisions of this Lease, the terms and provisions
of the Purchase Agreement shall control. In the event of any inconsistency
between the terms and provisions of the Closing Certificate or Construction
Management Agreement and the terms and provisions of this Lease, the terms and
provisions of this Lease shall control; provided, nothing in this Lease shall be
construed to limit or impair the indemnities provided by FCI in the Closing
Certificate, including the indemnity therein provided against Environmental
Losses, and nothing herein shall limit the obligations of FCI under the
Construction Management Agreement.
24. WAIVER OF JURY TRIAL. BNPLC AND FCI EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS LEASE OR ANY OTHER DOCUMENT OR DEALINGS BETWEEN THEM
RELATING TO THIS LEASE OR THE PROPERTY. The scope of this waiver is intended to
be all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. FCI and BNPLC each acknowledge that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on the waiver in entering into this Lease and the other documents referred to
herein, and that each will continue to rely on the waiver in their related
future dealings. FCI and BNPLC each further warrants and represents that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LEASE OR TO ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING TO THIS LEASE OR THE PROPERTY. In the event of
litigation, this Lease may be filed as a written consent to a trial by the
court.
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<PAGE> 47
25. MISCELLANEOUS.
(a) Notices. Each provision of this Lease, or of any
Applicable Laws with reference to the sending, mailing or delivery of any notice
or demand hereunder or with reference to the making of any payment required
hereunder, shall be deemed to be complied with when and if the following steps
are taken:
(i) All Rent required to be paid by FCI to BNPLC hereunder shall
be paid to BNPLC in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ Solectron (Force Computers Synthetic Lease)
or at such other place and in such other manner as BNPLC may designate in a
notice to FCI.
(ii) All advances paid to FCI by BNPLC hereunder or in
connection herewith shall be paid to FCI in immediately available funds
at such place and in such manner as FCI may reasonably designate in a
notice signed by FCI's Treasurer or Chief Financial Officer to BNPLC.
(iii) All notices, demands, approvals, consents and other
communications to be made hereunder to or by the parties hereto must, to
be effective for purpose of this Lease, be in writing. Notices, demands
and other communications required or permitted hereunder are to be sent
to the addresses set forth below (or in the case of communications to
Participants, at the addresses set forth in Schedule 1 to the
Participation Agreement) and shall be given by any of the following
means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex,
telegram or telecopying (if confirmed in writing sent by United States
first class mail, return receipt requested); or (C) registered or
certified first class mail, return receipt requested. Such addresses may
be changed by notice to the other parties given in the same manner as
provided above. Any notice or other communication sent pursuant to
clause (A) or (C) hereof shall be deemed received (whether or not
actually received) upon first attempted delivery at the proper notice
address on any Business Day between 9:00 A.M. and 5:00 P.M., and any
notice or other communication sent pursuant to clause (B) hereof shall
be deemed received upon dispatch by electronic means.
Address of BNPLC:
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telecopy: (214) 788-9140
With a copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
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<PAGE> 48
San Francisco, California 94104
Attention: Rafael Lumanlan or Gavin Holles
Telecopy: (415) 296-8954
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
Address of FCI:
Force Computers, Inc.
777 Gibraltar Drive, Building #5
Milpitas, CA 95035
Attn: Chief Financial Officer
Telecopy: (408) 956-6059
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill
Palo Alto, California 94304-1050
Attention: Real Estate Department/DSS
Telecopy: (415) 493-6811
(b) Severability. If any term or provision of this Lease or the
application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of this Lease, or
the application of such term or provision other than to the extent to which it
is invalid or unenforceable, shall not be affected thereby.
(c) No Merger. There shall be no merger of this Lease or of the
leasehold estate created hereby created with any other interest in the Property
by reason of the fact that the same person may acquire or hold, directly or
indirectly, this Lease or the leasehold estate created hereby and any other
interest in the Property, unless all Persons with an interest in the Property
that would be adversely affected by any such merger specifically agree in
writing that such a merger shall occur.
(d) No Implied Waiver. The failure of BNPLC or FCI to insist at
any time upon the strict performance of any covenant or agreement or to exercise
any option, right, power or remedy contained in this Lease shall not be
construed as a waiver or a relinquishment thereof for the future. The waiver of
or redress for any breach of this Lease shall not prevent a similar subsequent
act from constituting a violation. Any express waiver shall affect only the term
or condition specified in such waiver and only for the time and in the manner
specifically stated therein. A receipt by BNPLC of any Base Rent or other
payment hereunder with knowledge of the breach of any covenant or agreement
contained in this Lease shall not be deemed a waiver of such breach, and
42
<PAGE> 49
no waiver of any provision of this Lease shall be deemed to have been made
unless expressed in writing and signed by the waiving party.
(e) NO IMPLIED REPRESENTATIONS BY BNPLC. BNPLC AND BNPLC'S
AGENTS HAVE MADE NO REPRESENTATIONS OR PROMISES WITH RESPECT TO THE PROPERTY
EXCEPT AS EXPRESSLY SET FORTH HEREIN AND IN THE OTHER OPERATIVE DOCUMENTS, AND
NO RIGHTS, EASEMENTS OR LICENSES ARE ACQUIRED BY FCI BY IMPLICATION OR OTHERWISE
EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE AND THE OTHER OPERATIVE DOCUMENTS.
(f) Entire Agreement. This Lease and the other Operative
Documents and the other documents dated as of the Effective Date which are being
executed by FCI and executed or accepted by BNPLC contemporaneously with the
execution of this Lease supersede any prior negotiations and agreements between
BNPLC and FCI concerning the Property, and no amendment or modification of this
Lease shall be binding or valid unless expressed in a writing executed by both
parties hereto.
(g) Binding Effect. All of the covenants, agreements, terms and
conditions to be observed and performed by the parties hereto shall be
applicable to and binding upon their respective successors and, to the extent
assignment is permitted hereunder, their respective assigns.
(h) Time is of the Essence. Time is of the essence as to all
obligations of FCI and BNPLC and all notices required of FCI and BNPLC under
this Lease.
(i) Governing Law. This Lease shall be governed by and construed
in accordance with the laws of the State of California without regard to
conflict or choice of laws.
(j) Paragraph Headings. The paragraph headings contained in this
Lease are for convenience only and shall in no way enlarge or limit the scope or
meaning of the various and several paragraphs hereof.
(k) Other Terms and References. Words of any gender used in this
Lease shall be held and construed to include any other gender, and words in the
singular number shall be held to include the plural and vice versa, unless the
context otherwise requires. References herein to Paragraphs, subparagraphs or
other subdivisions shall refer to the corresponding Paragraphs, subparagraphs or
subdivisions of this Lease, unless specific reference is made to another
document or instrument. References herein to any Schedule or Exhibit shall refer
to the corresponding Schedule or Exhibit attached hereto, which shall be made a
part hereof by such reference. All capitalized terms used in this Lease which
refer to other documents shall be deemed to refer to such other documents as
they may be renewed, extended, supplemented, amended or otherwise modified from
time to time, provided such documents are not renewed, extended or modified in
breach of any provision contained herein or therein or, in the case of any other
document to which BNPLC is a party or of which BNPLC is an intended beneficiary,
without the consent of BNPLC. All accounting terms used but not specifically
defined herein shall be construed in accordance with GAAP. The words "this
Lease", "herein", "hereof", "hereby", "hereunder" and words of similar import
when used in this Lease refer to this Lease as a whole and not to any particular
subdivision unless expressly so limited. The phrases "this Paragraph" and "this
subparagraph" and similar phrases used herein refer only to the Paragraphs or
subparagraphs in which the phrase occurs. As used herein the word "or" is not
exclusive. As used herein the words "include", "including" and similar terms
shall be construed as if followed by "without limitation to".
(l) Not a Partnership, Etc. NOTHING IN THIS LEASE IS INTENDED TO
BE OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE
BETWEEN BNPLC
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<PAGE> 50
AND FCI. NEITHER THE EXECUTION OF THIS LEASE NOR THE ADMINISTRATION OF THIS
LEASE OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY OTHER RIGHT, DUTY
OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO THIS LEASE OR SUCH DOCUMENTS IS
INTENDED TO BE OR TO CREATE ANY FIDUCIARY OBLIGATIONS OF BNPLC TO FCI.
26. INCOME TAX REPORTING. BNPLC and FCI intend this Lease and the
Purchase Agreement to have a form for income taxes which is different than the
form of this Lease and the Purchase Agreement for other purposes, and thus the
parties acknowledge and agree as follows:
(a) FOR PURPOSES OF DETERMINING THEIR RESPECTIVE FEDERAL,
STATE AND LOCAL INCOME TAX OBLIGATIONS, BNPLC and FCI believe and
intend that this Lease and the Purchase Agreement constitute a
financing arrangement or conditional sale. Both BNPLC and FCI
agree to report this Lease and the Purchase Agreement as a
financing arrangement or conditional sale on their respective
income tax returns (the "REQUIRED REPORTING"), unless such
Required Reporting is challenged in writing by the Internal
Revenue Service or another governmental authority with
jurisdiction (a "TAX CHALLENGE"). Consistent with the foregoing,
BNPLC and FCI expect that FCI (and not BNPLC) shall be treated as
the true owner of the Property for income tax purposes, thereby
entitling FCI (and not BNPLC) to take depreciation deductions and
other tax benefits available to the owner. FCI shall also report
all interest earned on Escrowed Proceeds as FCI's income for
federal, state and local income tax purposes. REFERENCES IN THIS
LEASE OR IN THE PURCHASE AGREEMENT TO A "LEASE" OR TO "LEASED
PROPERTY" ARE NOT INTENDED FOR INCOME TAX PURPOSES TO REFLECT THE
INTENT OF BNPLC OR FCI AS TO THE FORM OF THE TRANSACTIONS COVERED
BY, OR THE PROPER CHARACTERIZATION OF, THIS LEASE AND THE
PURCHASE AGREEMENT.
(b) FOR ALL OTHER PURPOSES, INCLUDING THE DETERMINATION OF
THE APPROPRIATE FINANCIAL ACCOUNTING FOR THIS LEASE AND THE
DETERMINATION OF THEIR RESPECTIVE RIGHTS AND REMEDIES UNDER STATE
LAW, BNPLC and FCI believe and intend that (i) this Lease
constitutes a true Lease, not a mere financing arrangement,
enforceable in accordance with its express terms (and neither
this subparagraph 26 nor the provisions referencing this
subparagraph on the title page of this Lease nor the
corresponding provisions in the Purchase Agreement are intended
to affect the enforcement of any other provisions of this Lease
or the Purchase Agreement) and (ii) the Purchase Agreement shall
constitute a separate and independent contract, enforceable in
accordance with the express terms and conditions set forth
therein. In this regard, FCI acknowledges that FCI asked BNPLC to
participate in the transactions evidenced by this Lease and the
Purchase Agreement as a landlord and owner of the Property, not
as a lender. Although other transactions might have been used to
accomplish similar results, FCI expects to receive certain
material accounting and other advantages through the use of a
lease transaction. Accordingly, and notwithstanding the Required
Reporting for income tax purposes, FCI cannot equitably deny that
this Lease and the Purchase Agreement should be construed and
enforced in accordance with their respective terms, rather than
as a mortgage or other security device, in any action brought by
BNPLC to enforce this Lease or the Purchase Agreement.
In the event of a Tax Challenge, BNPLC and FCI shall each provide to the other
copies of all notices from the Internal Revenue Service or any other
governmental authority presenting the Tax Challenge. Further, before changing
from the Required Reporting because of a Tax Challenge, BNPLC and FCI shall each
consider in good faith any reasonable suggestions received from the other party
to this Lease about an appropriate response to the
44
<PAGE> 51
Tax Challenge; provided, however, that the suggestions are set forth in a
written notice delivered no later than thirty Business Days after the suggesting
party is first notified of the Tax Challenge; and, provided further, that when
presented with a Tax Challenge, BNPLC and FCI shall each have the right to
change from the Required Reporting rather than participate in any litigation or
other legal proceeding against the Internal Revenue Service or another
governmental authority. In any event, FCI must indemnify and hold harmless BNPLC
from and against all liabilities, costs, additional taxes and other expenses
that may arise or become due because of any challenge to the Required Reporting
or because of any resulting recharacterization of this Lease or the Purchase
Agreement required by the Internal Revenue Service or another governmental
authority, including any additional taxes that may become due upon any sale
under the Purchase Agreement, to the extent (if any) that such liabilities,
costs, additional taxes and other expenses are not offset by tax savings
resulting from additional depreciation deductions or other tax benefits to BNPLC
of the recharacterization.
27. PROPRIETARY INFORMATION AND CONFIDENTIALITY. FCI shall have no
obligation to provide proprietary information (as defined in the next sentence)
to BNPLC, except and to the extent that (1) BNPLC reasonably determines that
BNPLC cannot accomplish the purposes of BNPLC's inspection of the Property
pursuant to the various provisions hereof without evaluating such information,
and (2) before conducting any inspections of the Property permitted hereunder
BNPLC shall, if requested by FCI, confirm and ratify the confidentiality
agreements covering such proprietary information set forth in subparagraph
7.(f). For purposes of this Lease "PROPRIETARY INFORMATION" means FCI's
intellectual property, trade secrets and other confidential information of value
to FCI about, among other things, FCI's products, marketing and corporate
strategies, but in no event will "proprietary information" include any
disclosure of substances and materials (and their chemical composition) which
are or previously have been present in, on or under the Property at the time of
any inspections by BNPLC, nor will "proprietary information" include any
additional disclosures reasonably required to permit BNPLC to determine whether
the presence of such substances and materials has constituted a violation of
Environmental Laws or this Lease. In addition, under no circumstances shall FCI
have any obligation to disclose to BNPLC or any other party any proprietary
information of FCI (including, without limitation, any pending applications for
patents or trademarks, any research and design and any trade secrets) except if
and to the limited extent reasonably necessary to comply with the express
provisions of this Lease.
28. USURY SAVINGS CLAUSE. Notwithstanding anything to the contrary
contained in this Lease or the other Operative Documents to the contrary, BNPLC
does not intend to contract for, charge or collect any amount of money that
constitutes interest in excess of the Maximum Rate. As used herein, "MAXIMUM
RATE" shall mean, at any time in question, the maximum rate of interest which,
under applicable law, may be charged. If, notwithstanding the intention of the
parties as explained in Paragraph 26, this Lease and the other Operative
Documents should be construed as a financing arrangement under state law, BNPLC
and FCI agree that it is their intent in the execution of this Lease and the
other Operative Documents to contract in strict compliance with applicable law
concerning usury. In furtherance thereof, BNPLC and FCI stipulate and agree that
none of the terms and provisions contained in this Lease or in the other
Operative Documents shall ever be construed to create a contract to pay for the
use, forbearance or detention of money at a rate in excess of the Maximum Rate.
Neither FCI nor any other parties now or hereafter becoming liable to BNPLC
under the terms of this Lease or the other Operative Documents shall ever be
required to pay interest at a rate in excess of the Maximum Rate, and the
provisions of this paragraph shall control over all other provisions of this
Lease and of the other Operative Documents which may be in apparent conflict
herewith. If the Designated Sale Date is accelerated and as a result thereof any
amounts payable by FCI to BNPLC under or in connection with this Lease or the
other Operative Documents are determined to constitute interest for the actual
period of existence of this Lease in excess of the interest that would have
accrued at the Maximum Rate for such period, BNPLC shall, at its option, either
refund to FCI the amount of such excess or credit such excess as a Qualified
Payment (and thus reduce Stipulated Loss Value, the Break Even Price and other
amounts, the determination of which depend upon Qualified Payments
45
<PAGE> 52
credited to FCI) and thereby shall render inapplicable any and all penalties of
any kind provided by applicable laws as a result of such excess interest. If
BNPLC shall receive money (or anything else) which is determined to constitute
interest and which would increase the effective interest rate received by BNPLC
under or in connection with this Lease or the other Operative Documents to a
rate in excess of the Maximum Rate, the amount determined to constitute interest
in excess of the Maximum Rate shall, immediately following such determination,
at the option of BNPLC, be returned to FCI or credited as a Qualified Payment,
in which event any and all penalties of any kind under applicable law as a
result of such excess interest shall be inapplicable. If BNPLC shall not
actually receive, but shall contract for, request or demand, a payment of money
(or anything else) which is determined to constitute interest and which would
increase the effective interest rate contracted for or charged to a rate in
excess of the Maximum Rate, BNPLC shall be entitled, following such
determination, to waive or rescind the contractual claim, request or demand for
the amount determined to constitute interest in excess of the lawful rate, in
which event any and all penalties of any kind under applicable law as a result
of such excess interest shall be inapplicable. By execution of this Lease and
the Purchase Documents, FCI agrees that if, at any time, FCI should have reason
to believe that the transactions evidenced by this Lease or the other Operative
Documents are in fact usurious, it will give BNPLC notice of such condition, and
FCI agrees that BNPLC shall have ninety days in which to make appropriate refund
or other adjustment in order to correct such condition if it in fact exists. The
term "applicable law" as used in this subparagraph shall mean the laws of the
State of California or the laws of the United States, whichever laws allow the
greater rate of interest, as such laws now exist or may be changed or amended or
come into effect in the future.
[The signature pages follow.]
46
<PAGE> 53
IN WITNESS WHEREOF, FCI and BNPLC have caused this Amended and Restated
Lease Agreement to be executed as of July 16, 1998.
"FCI"
FORCE COMPUTERS, INC.
By: /s/ LEONARD J. ZANONI
---------------------------------------
Printed Name: Leonard J. Zanoni
Title: Vice President & Chief FInancial
Officer
<PAGE> 54
[Continuation of signature pages to Amended and Restated Lease Agreement dated
to be effective July 16, 1998]
"BNPLC"
BNP LEASING CORPORATION
By: /s/ LLOYD G. COX
-------------------------------------
Name: LLOYD G. COX
Title: Vice President
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<PAGE> 55
Exhibit A
LEGAL DESCRIPTION
All of that certain real property situated in the City of San Jose, County of
Santa Clara, State of California, described as follows:
Parcel 1 as shown on that Parcel Map filed for record in the office of the
Recorder of the County of Santa Clara, State of California on July 1, 1998 in
Book 704 of Maps at Pages 11-12.
Exhibit A - Page 1
<PAGE> 56
Exhibit B
PERMITTED ENCUMBRANCES
This conveyance is subject to the following matters, but only to the extent
the same are still valid and in full force and effect:
1. Liens securing TAXES AND ASSESSMENTS, not yet due and payable.
2. Easement -
In Favor Of: County of Santa Clara
For: Ingress and egress
Recorded: June 28, 1968 in Book 8174, Page 148, Official Records
Affects: a portion of the Land as follows:
Beginning at the most Northerly corner of that certain 5.545 acre
parcel shown upon that certain Record of Survey recorded October 24,
1950 in Book 29 of Maps, at page 6, Santa Clara County Records;
thence along the Northeasterly line of said 5.545 acre parcel, said
Northeasterly line being also the Southwesterly line of that certain
0.441 acre parcel described as Parcel Two of Exhibit A in the deed
recorded in Book 6500, at pages 101, 102, 103, Official Records of
Santa Clara County S. 17(Degree) E. 26.44 feet to the true point of
beginning and continuing along said Northeasterly and Southwesterly
line S. 17(Degree) E. 34.81 feet; thence leaving said Northeasterly
and Southwesterly line N. 11(Degree) 31' 33" E. 48.16 feet to a point
on the Northeasterly line of said 0.441 acre parcel thence along last
mentioned Northeasterly line N. 17(Degree) W. 18.93 feet to the most
Northerly corner thereof, said Northerly corner also being the most
Northerly corner of that strip of land 23 feet wide, shown parallel
and adjacent to the aforementioned 5.545 acre parcel as shown upon
said Record of Survey; thence leaving last said Northerly corner N.
73(Degree) 00' E. 10.29 feet; thence N. 11(Degree) 31' 33" E. 117.37
feet; thence along the arc of a curve to the left the tangent of
which bears S. 32(Degree) 47' 30" W. having a radius of 300.00 feet
through an angel of 30(Degree) 24' 44" for an arc distance of 159.24
feet to the true point of beginning.
3. Easement -
In Favor Of: City of San Jose, a municipal corporation
For: Public service facilities, slope purposes, sanitary sewer
purposes
Recorded: May 8, 1985 in Book J340, Page 1040, Official Records
Affects: Those street areas of Fontanoso Avenue, Fontanoso Way, Hellyer
Avenue, Branham Lane and Silver Creek Valley Road.
Reference to the records is hereby made for further particulars, as
to the description of the exact location.
4. Easement -
In Favor Of: Pacific Bell
For: Underground communication facilities and necessary fixtures
and appurtenances
Recorded: December 20, 1985 in Book J555, Page 160, Official Records
Affects: those portions shown as 1E on Exhibit "B" to deed from B B &
K, a general partnership, to the City of San Jose, recorded
May 8, 1985 in Book J340, Pages 1045 through 1062.
Exhibit B - Page 1
<PAGE> 57
Exhibit C
NOTICE BY FCI OF ELECTION NOT TO
MAKE CONSTRUCTION-PERIOD
INDEMNITY PAYMENT
- INTENTIONALLY DELETED -
Exhibit C - Page 1
<PAGE> 58
Exhibit D
NOTICE OF REQUEST FOR ACTION BY BNPLC
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Amended and Restated Lease Agreement dated as of July 16, 1998, between
FCI, as tenant, and BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Lease referenced above. Pursuant to subparagraph 7.(a)
of the Lease, requests the following of BNPLC:
[INSERT HERE A SPECIFIC DESCRIPTION OF THE ACTION REQUESTED - E.G., "PLEASE
EXECUTE THE ENCLOSED APPLICATION FOR BUILDING PERMIT REQUIRED BY THE CITY IN
CONNECTION WITH CONSTRUCTION OF CERTAIN IMPROVEMENTS WHICH ARE PART OF THE
CONSTRUCTION PROJECT."]
PLEASE NOTE: SUBPARAGRAPH 7.(a) OF THE LEASE OBLIGATES BNPLC NOT TO UNREASONABLY
REFUSE TO COMPLY WITH THE FOREGOING REQUEST, SUBJECT TO TERMS AND CONDITIONS SET
FORTH IN THAT SUBPARAGRAPH. FCI HEREBY CERTIFIES TO BNPLC THAT AFTER CAREFUL
CONSIDERATION FCI BELIEVES THAT ALL SUCH TERMS AND CONDITIONS ARE SATISFIED IN
THE CASE OF THE FOREGOING REQUEST, AND FCI HEREBY RATIFIES AND CONFIRMS ITS
OBLIGATION TO INDEMNIFY BNPLC AGAINST ANY LOSSES BNPLC MAY INCUR OR SUFFER
BECAUSE OF ITS COMPLIANCE WITH SUCH REQUEST AS PROVIDED IN SUBPARAGRAPH 5.(d) OF
THE LEASE.
FCI respectfully requests that BNPLC respond to this notice as soon as
reasonably possible.
Executed this _____ day of ______________, 19___.
FORCE COMPUTERS, INC.
Name:_________________________
Title:__________________________
Exhibit D - Page 1
<PAGE> 59
Exhibit E
NOTICE OF REQUEST REQUIRING AN EXPEDITED RESPONSE
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Amended and Restated Lease Agreement dated as of July 16, 1998,
between FCI, as tenant, and BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Lease referenced above. FCI asks for an EXPEDITED
RESPONSE to the following request, which is a request made by FCI pursuant to
subparagraph 7.(a) of the Lease:
[INSERT HERE A SPECIFIC DESCRIPTION OF THE ACTION REQUESTED - E.G.,
"PLEASE EXECUTE THE ENCLOSED APPLICATION FOR BUILDING PERMIT REQUIRED BY
THE CITY IN CONNECTION WITH CONSTRUCTION OF CERTAIN IMPROVEMENTS WHICH
ARE PART OF THE CONSTRUCTION PROJECT."]
PLEASE NOTE: SUBPARAGRAPH 7.(a) OF THE LEASE OBLIGATES BNPLC NOT TO UNREASONABLY
REFUSE TO COMPLY WITH THE FOREGOING REQUEST, SUBJECT TO TERMS AND CONDITIONS SET
FORTH IN THAT SUBPARAGRAPH. FCI HEREBY CERTIFIES TO BNPLC THAT AFTER CAREFUL
CONSIDERATION FCI BELIEVES THAT ALL SUCH TERMS AND CONDITIONS ARE SATISFIED IN
THE CASE OF THE FOREGOING REQUEST, AND FCI HEREBY RATIFIES AND CONFIRMS ITS
OBLIGATION TO INDEMNIFY BNPLC AGAINST ANY LOSSES BNPLC MAY INCUR OR SUFFER
BECAUSE OF ITS COMPLIANCE WITH SUCH REQUEST AS PROVIDED IN SUBPARAGRAPH 5.(d) OF
THE LEASE.
As you consider the foregoing request, please understand that FCI must ask for
an expedited request for the following reasons:
[INSERT HERE A BRIEF DESCRIPTION OF THE NEED FOR AN EXPEDITED RESPONSE -
E.G., "TO AVOID CRITICAL PATH DELAYS IN THE CONSTRUCTION CONTEMPLATED BY
THE LEASE, FCI MUST SUBMIT THE ENCLOSED APPLICATION FOR BUILDING PERMIT
TO THE CITY OF WITHIN 15 DAYS, AND UNFORTUNATELY THE CITY HAS ONLY
RECENTLY INDICATED THAT FCI WILL NEED THE SIGNATURE OF BNPLC ON THE
APPLICATION."]
For the reasons stated above, FCI respectfully requests that BNPLC respond to
this notice as soon as possible. Although FCI would appreciate a sooner
response, FCI believes that it would be unreasonable for BNPLC not to respond to
this notice on or before:
Exhibit E - Page 1
<PAGE> 60
[INSERT HERE A REASONABLE DEADLINE FOR THE RESPONSE - BUT IN NO EVENT PRIOR TO
10 BUSINESS DAYS AFTER THE DATE OF THIS NOTICE - TAKING INTO ACCOUNT THE
MATERIALS THAT BNPLC WILL HAVE TO REVIEW TO EVALUATE FCI'S REQUEST AND THE
PARTICULAR REASONS FOR FCI'S NEED FOR AN EXPEDITED RESPONSE]
Executed this _____ day of ______________, 19___.
FORCE COMPUTERS, INC.
Name:_________________________
Title:__________________________
Exhibit E - Page 2
<PAGE> 61
Exhibit F
INSURANCE REQUIREMENTS
I. LIABILITY INSURANCE:
A. FCI must maintain commercial general liability ("CGL") insurance
on an occurrence basis, affording afford immediate protection to the limit of
not less than $20,000,000 combined single limit for bodily and personal injury,
death and property damage in respect of any one occurrence.
B. Any deductible or self-insured retention applicable to the CGL
insurance shall not exceed $1,000 at any time when FCI shall continue to have
the right to exercise any Issue 97-10 Election, or shall have previously
exercised an Issue 97-10 Election. After the expiration of FCI's right to
exercise any Issue 97-10 Election, and provided no Issue 97-10 Election has been
exercised by FCI, FCI may increase any deductible or self-insured retention
applicable to such insurance, but not to an amount in excess of $3,000,000.
C. The forms of insurance policies (including endorsements) used to
provide the CGL insurance required by this Lease, and the insurance company or
companies providing the CGL insurance, must be acceptable to BNPLC. BNPLC shall
have the right from time to time and at any time to review and approve such
policy forms (including endorsements) and the insurance company or companies
providing the insurance. Without limiting the generality of the foregoing, BNPLC
may reasonably require (and unless and until FCI is otherwise notified by BNPLC,
BNPLC does require) that such insurance be provided under forms and by companies
consistent with the following:
(1) Forms: CGL Insurance must be provided on Insurance
Services Office ("ISO") forms CG 0001 1093 or CG 0001
0695.
(2) Rating Requirements: Insurance must be provided through
insurance or reinsurance companies rated by the A.M. Best
Company of Oldwick, New Jersey as having a policyholder's
rating of A- or better and a reported financial
information rating of VI or better.
(3) Required Endorsements: CGL Insurance must be endorsed to
provide or include:
(a) blanket contractual liability coverage which
insures contractual liability under the indemnifications
set forth in this Lease (though such coverage or the
amount thereof shall in no way limit such
indemnifications);
(b) in any policy containing a general aggregate
limit, ISO form amendment "Aggregate Limits of Insurance
Per Location" CG 2504 1185;
(c) a waiver of subrogation, using ISO form CG 2404
1093 (and under the commercial umbrella, if any), in favor
of "BNP Leasing Corporation and other Interested Parties
(as defined in the Amended and Restated Lease Agreement
between Force Computers, Inc. and BNP Leasing Corporation
dated July 16, 1998)";
(d) ISO additional insured form CG 2026 1185, without
modification (and under the
Exhibit F - Page 1
<PAGE> 62
commercial umbrella, if any), designating as additional
insureds "BNPLC and other Interested Parties, as defined
in the Amended and Restated Lease Agreement between Force
Computers, Inc. and BNP Leasing Corporation dated July 16,
1998)"; and
(e) provisions entitling BNPLC to 30 days' notice from
the insurer prior to any cancellation, nonrenewal or
material modification to the CGL coverage.
(4) Other Insurance: Each policy to contain standard CGL
"other insurance" wording, unmodified in any way that
would make it excess over or contributory with the
additional insured's own commercial general liability
coverage.
II. PROPERTY INSURANCE:
A. FCI must maintain property insurance in "special form" or against
"all risks," providing the broadest available coverage for all Improvements and
equipment included in the Property, with no exclusions for vandalism, malicious
mischief, or sprinkler leakage, and including coverage against earthquake and
all coverage perils normally included within the definitions of extended
coverage, vandalism, malicious mischief and, if the Property is in a flood zone,
flood. During any period of significant construction on any Improvements, the
property insurance must include builder's completed value risk insurance for
such Improvements.
B. The property insurance must provide coverage in the amount no
less than replacement value (exclusive of land, foundation, footings,
excavations and grading) with endorsements for contingent liability from
operation of building laws, increased cost of construction and demolition costs
which may be necessary to comply with building laws. Subject to the approval of
BNPLC, FCI will be responsible for determining the amount of property insurance
to be maintained from time to time, but FCI must maintain such coverage on an
agreed value basis to eliminate the effects of coinsurance.
C. Any deductible or self-insured retention applicable to the
property insurance shall not exceed $1,000 at any time when FCI shall continue
to have the right to exercise any Issue 97-10 Election, or shall have previously
exercised an Issue 97-10 Election. After the expiration of FCI's right to
exercise any Issue 97-10 Election, and provided no Issue 97-10 Election has been
exercised by FCI, FCI may increase any deductible or self-insured retention
applicable to such insurance, but not to an amount in excess of $3,000,000.
D. The property insurance shall cover not only the value of FCI's
interest in the Improvements, but also the interest of BNPLC, with BNPLC shown
as an insured as its interests may appear.
E. The forms of insurance policies (including endorsements) used to
provide the property insurance required by this Lease, and the insurance company
or companies providing the property insurance, must be acceptable to BNPLC.
BNPLC shall have the right from time to time and at any time to review and
approve such policy forms (including endorsements) and the insurance company or
companies providing such insurance. Without limiting the generality of the
foregoing, BNPLC may reasonably require (and unless and until FCI is otherwise
notified by BNPLC, BNPLC does require) that such insurance be provided under
forms and by companies consistent with the following:
(1) Rating Requirements: Insurance to be provided through
insurance or reinsurance companies rated by the A.M. Best Company
of Oldwick, New Jersey as having (a) a policyholder's rating of
A- or better, (b) a reported financial information rating of no
less than VI,
Exhibit F - Page 2
<PAGE> 63
and (c) in the case of each insurance or reinsurance company, a
reported financial information rating which indicates an
adjusted policyholders' surplus equal to or greater than the
underwriting exposure that such company has under the insurance
or reinsurance it is providing for the Property.
(2) Required Endorsements: FCI's property Insurance must be
endorsed to provide or include:
(a) a waiver of subrogation in favor of "BNPLC and other
Interested Parties, as defined in the Amended and
Restated Lease Agreement between Force Computers, Inc.
and BNP Leasing Corporation dated July 16, 1998)";
(b) that FCI's insurance is primary, with any policies of
BNPLC or other Interested Parties being excess,
secondary and noncontributing;
(c) that the protection afforded to BNPLC by such insurance
shall not be reduced or impaired by acts or omissions
of FCI or any other beneficiary or insured; and
(d) that BNPLC must be notified at least thirty days prior
to any cancellation, nonrenewal or reduction of
insurance coverage.
III. OTHER INSURANCE RELATED REQUIREMENTS:
A. BNPLC must be notified in writing immediately by FCI of claims
against FCI that might cause a reduction below seventy-five percent (75%) of any
aggregate limit of any policy.
B. FCI's Property insurance must be evidenced by ACORD form 27
"Evidence of Property Insurance" completed and interlineated in a manner
satisfactory to BNPLC to show compliance with the requirements of this Exhibit.
B. FCI's CGL insurance must be evidenced by ACORD form 25
"Certificate of Insurance" completed and interlineated in a manner satisfactory
to BNPLC to show compliance with the requirements of this Exhibit.
C. Such evidence of required insurance must be delivered upon
execution of this Lease and new certificate or evidence of insurance must be
delivered no later than 30 days prior to expiration of existing policy.
D. Copies of endorsements must be attached to ACORD forms 25 and
27 delivered to BNPLC.
Exhibit F - Page 3
<PAGE> 64
Exhibit G
COMPLIANCE CERTIFICATE
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Gentlemen:
The undersigned, as _____________________________ of Solectron
Corporation ("Guarantor"), does hereby certify on behalf of Guarantor and Force
Computers, Inc. ("FCI") that the following are true:
1. This Certificate is furnished pursuant to subparagraph 16.(b)(ii)
of that certain Amended and Restated Lease Agreement dated as of July 16, 1998
(the "LEASE"; the terms defined therein being used herein as therein defined)
between FCI and you.
2. No Event of Default or material Default by FCI under the Lease
has occurred and is continuing.
3. The representations and warranties of FCI in the Operative
Documents are true and correct in all material respects as of the date hereof as
though made on and as of the date hereof.
4. The representations and warranties of Guarantor in Section 9 of
the Guaranty are true and correct in all material respects as of the date hereof
as though made on and as of the date hereof.
5. Annex 1 attached hereto sets forth financial data and
computations evidencing Guarantor's compliance with certain covenants
established in Schedule A attached to the Guaranty, all of which data and
computations are complete, true and correct.
Executed this _____ day of ______________, 19___.
Solectron Corporation
Name:_________________________
Title:________________________
Exhibit G - Page 1
<PAGE> 65
Annex 1 To Compliance Certificate
For the _________________ Ended ________________, 19___
NOTE: References to Sections below are intended to refer to the Sections in Part
3 of Schedule A to the Guaranty.
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C> <C>
1. Section 3.09 - Adjusted Leverage As of the last day of each fiscal
Ratio quarter, the amount which is not
greater than (a) 1.75 to 1.00 from the
Effective Date through and including
February 28, 1998, (b) 1.50 to 1.00
from May 31, 1998 through and
including February 28, 1999, (c) 1.25
to 1.00 from May 31, 1999 through
and including February 28, 2000, and
(d) 1.00 to 1.00 thereafter.
Adjusted Leverage Ratio calculation
(A) Consolidated Funded Debt $
--------
plus Guarantee obligations
--------
plus Indebtedness with respect to
synthetic leases and securitized
assets
plus Indebtedness with respect to
letters of credit (including the --------
Letters of Credit)
minus Permitted Subordinated --------
Indebtedness
TOTAL $
--------
(B) operating income $
--------
plus depreciation and
amortization charges --------
TOTAL $
--------
RATIO OF (A) TO (B)
--------
</TABLE>
Exhibit G - Page 2
<PAGE> 66
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C> <C>
2. Section 3.10 - Minimum
Consolidated Tangible Net Worth As of the last day of each fiscal quarter
following April 30, 1997, the amount
that is not less than the sum of (without
duplication) 80% of Consolidated Tangible
Net Worth measured as of the end of the
fiscal quarter ended February 28, 1997,
plus 50% of consolidated net income
(without subtracting losses or
acquisition-related charges) for each
fiscal quarter ended after the fiscal
quarter ended February 28, 1997, minus
100% of all acquisition-related charges if
such charges are recorded in the same
fiscal quarter in which the applicable
acquisition is consummated.
(A) Consolidated Tangible Net
Worth calculation:
total shareholders' equity $
-------
minus intangible assets
--------
Consolidated Tangible Net Worth $
-------
(B) Minimum Consolidated
Tangible Net Worth calculation:
Beginning minimum amount $
--------
plus 50% of quarterly net income --------
for each fiscal quarter subsequent
to the quarter ended February 28,
1997, with no reduction for losses
or acquisition-related charges
minus 100% of all acquisition-
related charges if such charges are
recorded in the same fiscal quarter
in which the applicable acquisition
is consummated
Minimum Consolidated Tangible $
Net Worth --------
(A) MINUS (B) $
--------
</TABLE>
Exhibit G - Page 3
<PAGE> 67
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C> <C>
3. Section 3.11 - Modified Quick At the end of any fiscal quarter of
Ratio Guarantor when (1) the rating the
rating established by Moody's for
the Index Debt of Guarantor is
below Ba2 or (2) the rating
established by S&P for the Index
Debt of Guarantor is below BB, or
(3) neither Moody's nor S&P
maintains a rating for the Index
Debt of Guarantor, the Modified
Quick Ratio is to be not less than
1.0 to 1.0.
(A) Quick Assets calculation:
unencumbered cash $
--------
plus unencumbered short term cash
investments ---------
plus unencumbered marketable ---------
securities which are classified
as short term investments
according to GAAP
plus unencumbered net accounts ---------
receivable
plus fair market value of the
following to the extent not
otherwise already included in
Quick Assets and to the extent
having maturities of not longer
than two years:
securities issued or fully ---------
guaranteed by the United States
government or any agency
thereof and backed by the full
faith and credit of the United
States
</TABLE>
Exhibit G - Page 4
<PAGE> 68
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C> <C>
certificates of deposit, time --------
deposits, Eurodollar time
deposits, repurchase
agreements, or banker's
acceptances that are (A) issued
by either one of the 50 largest
(in assets) banks in the United
States or by one of the 100
largest (in assets) banks in the
world and (B) rated not less
than A- by Standard & Poor's
Corporation or less than A by
Moody's Investors Service, Inc.
corporate or municipal bonds ---------
rated not less than A- by
Standard & Poor's Corporation
or less than A by Moody's
Investors Service, Inc.
TOTAL
---------
(B) Current Liabilities according to $
GAAP ---------
(C) Payments not included in Current $
Liabilities maturing within 12 ---------
months on Indebtedness or which are
the subject of any Guarantee
RATIO OF (A) TO [(B) +(C)]
---------
</TABLE>
Exhibit G - Page 5
<PAGE> 69
Exhibit H
NOTICE OF LIBOR PERIOD ELECTION
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Amended and Restated Lease Agreement dated as of July 16, 1998,
between Force Computers, Inc., as tenant, and BNP Leasing Corporation, as
landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Lease referenced above. This letter constitutes notice
to you that the LIBOR Period Election under the Lease shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or after:
______________, ____.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE NUMBER OF MONTHS
SPECIFIED ABOVE IS NOT A PERMITTED NUMBER UNDER THE DEFINITION OF "LIBOR PERIOD
ELECTION" IN THE LIST OF DEFINED TERMS ATTACHED TO THE LEASE, OR IF THE DATE
SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF THE LIBOR PERIOD ELECTION IS LESS
THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF THIS NOTICE. HOWEVER, WE ASK THAT
YOU NOTIFY US IMMEDIATELY IF FOR ANY REASON YOU BELIEVE THIS NOTICE IS
DEFECTIVE.
Executed this _____ day of ______________, 19___.
FORCE COMPUTERS, INC.
Name:_________________________
Title:_________________________
[cc all Participants]
Exhibit H - Page 1
<PAGE> 70
Schedule 1
LIST OF DEVELOPMENT DOCUMENTS
-- NONE -
<PAGE> 71
Schedule 2
LIST OF CLAIMS PENDING OR THREATENED AGAINST THE PROPERTY
-- NONE --
<PAGE> 72
LIST OF DEFINED TERMS
FOR AGREEMENTS BETWEEN
BNP LEASING CORPORATION
AND
FORCE COMPUTERS, INC.
DATED AS OF JULY 16, 1998
<PAGE> 73
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
DEFINED TERM NUMBER
- -----------------------------------------------------------------------------------------------------
<S> <C>
ABSOLUTE FCI CONSTRUCTION OBLIGATIONS...............................................................1
ACTIVE NEGLIGENCE...................................................................................1
ADDITIONAL RENT.....................................................................................1
ADMINISTRATIVE AGENCY FEES..........................................................................1
ADVANCE DATE........................................................................................1
AFFILIATE...........................................................................................2
APPLICABLE LAWS.....................................................................................2
APPLICABLE PURCHASER................................................................................2
ATTORNEYS' FEES.....................................................................................2
BALANCE OF UNPAID CONSTRUCTION-PERIOD INDEMNITY PAYMENTS............................................2
BANKING RULES CHANGE................................................................................2
BASE RENT...........................................................................................2
BASE RENT COMMENCEMENT DATE.........................................................................2
BASE RENT DATE......................................................................................3
BASE RENT PERIOD....................................................................................3
BNPLC...............................................................................................4
BNPLC'S PARENT......................................................................................4
BREAKAGE COSTS......................................................................................4
BREAK EVEN PRICE....................................................................................4
BUSINESS DAY........................................................................................4
CAPITAL ADEQUACY CHARGES............................................................................5
CARRYING COSTS......................................................................................5
CLOSING CERTIFICATE.................................................................................5
CMA SUSPENSION EVENT................................................................................5
CMA SUSPENSION NOTICE...............................................................................5
CMA SUSPENSION PERIOD...............................................................................5
CMA TERMINATION EVENT...............................................................................5
CODE................................................................................................5
COMMITMENT FEE......................................................................................5
COMPLETION NOTICE...................................................................................5
CONSTRUCTION ADVANCES...............................................................................5
CONSTRUCTION ADVANCE REQUEST........................................................................5
CONSTRUCTION ALLOWANCE..............................................................................5
CONSTRUCTION MANAGEMENT AGREEMENT...................................................................5
CONSTRUCTION MILESTONE..............................................................................6
CONSTRUCTION PERIOD.................................................................................6
CONSTRUCTION-PERIOD INDEMNITY PAYMENTS..............................................................6
CONSTRUCTION PROJECT................................................................................6
DEBT................................................................................................6
DEDUCTIBLE JUDGMENT.................................................................................6
DEFAULT.............................................................................................6
DEFAULT RATE........................................................................................7
DEFECTIVE WORK......................................................................................7
DESIGNATED SALE DATE................................................................................7
DEVELOPMENT DOCUMENTS...............................................................................7
EFFECTIVE DATE......................................................................................8
</TABLE>
-i-
<PAGE> 74
<TABLE>
<CAPTION>
PAGE
DEFINED TERM NUMBER
- -----------------------------------------------------------------------------------------------------
<S> <C>
EFFECTIVE RATE......................................................................................8
ENVIRONMENTAL CONSULTANT............................................................................8
ENVIRONMENTAL LAWS..................................................................................8
ENVIRONMENTAL LOSSES................................................................................8
ENVIRONMENTAL REPORT................................................................................9
ERISA...............................................................................................9
ERISA AFFILIATE.....................................................................................9
ERISA TERMINATION EVENT.............................................................................9
ESCROWED PROCEEDS...................................................................................9
ESTABLISHED MISCONDUCT.............................................................................10
EUROCURRENCY LIABILITIES...........................................................................10
EURODOLLAR RATE RESERVE PERCENTAGE.................................................................10
EVENT OF DEFAULT...................................................................................10
EXCESS FUNDING COMMITMENT..........................................................................10
EXCLUDED TAXES.....................................................................................10
EXISTING CONTRACT..................................................................................11
FAIR MARKET VALUE..................................................................................11
FCI................................................................................................11
FCI'S EXTENDED REMARKETING PERIOD..................................................................11
FCI'S EXTENDED REMARKETING RIGHT...................................................................12
FCI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS...................................................12
FED FUNDS RATE.....................................................................................12
FOCB NOTICE........................................................................................12
FUNDED CONSTRUCTION ALLOWANCE......................................................................12
FUNDING ADVANCES...................................................................................12
FUTURE WORK........................................................................................12
GAAP...............................................................................................12
GUARANTOR..........................................................................................12
GUARANTY...........................................................................................12
HAZARDOUS SUBSTANCE................................................................................12
HAZARDOUS SUBSTANCE ACTIVITY.......................................................................13
IMPOSITIONS........................................................................................13
IMPROVEMENTS.......................................................................................13
INDEX DEBT.........................................................................................13
INDUSTRIAL HYGIENIST...............................................................................13
INITIAL FUNDING ADVANCE............................................................................14
INTERESTED PARTY...................................................................................14
ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT.....................................14
ISSUE 97-10 ELECTION...............................................................................14
ISSUE 97-10 PREPAYMENT.............................................................................14
LAND...............................................................................................15
LANDLORD'S ELECTION TO CONTINUE CONSTRUCTION.......................................................15
LEASE..............................................................................................15
LIBOR..............................................................................................15
LIBOR PERIOD ELECTION..............................................................................15
LIEN...............................................................................................16
LIENS REMOVABLE BY BNPLC...........................................................................16
</TABLE>
-ii-
<PAGE> 75
<TABLE>
<CAPTION>
PAGE
DEFINED TERM NUMBER
- -----------------------------------------------------------------------------------------------------
<S> <C>
LIST OF DEFINED TERMS...............................................................................16
LOSS CUTOFF DATE....................................................................................16
LOSSES..............................................................................................17
MATERIAL ENVIRONMENTAL COMMUNICATION................................................................17
MAXIMUM CONSTRUCTION ALLOWANCE......................................................................17
MAXIMUM PERMITTED PREPAYMENT........................................................................17
MAXIMUM REMARKETING OBLIGATION......................................................................17
MINIMUM EXTENDED REMARKETING PRICE..................................................................17
MOODY'S.............................................................................................17
NORMAL TENANT IMPROVEMENTS..........................................................................17
NOTICE OF FCI'S INTENT TO TERMINATE.................................................................18
OPERATIVE DOCUMENTS.................................................................................18
OUTSTANDING CONSTRUCTION ALLOWANCE..................................................................18
PARTICIPANT.........................................................................................18
PARTICIPATION AGREEMENT.............................................................................18
PERMITTED ENCUMBRANCES..............................................................................18
PERMITTED HAZARDOUS SUBSTANCE USE...................................................................18
PERMITTED HAZARDOUS SUBSTANCES......................................................................19
PERMITTED TRANSFER..................................................................................19
PERSON..............................................................................................19
PERSONAL PROPERTY...................................................................................19
PLAN................................................................................................19
POTENTIAL LIEN CLAIMANTS............................................................................19
PRIME RATE..........................................................................................20
PRIOR WORK..........................................................................................20
PROJECT COSTS.......................................................................................20
PROJECTED COST OVERRUNS.............................................................................21
PROPERTY............................................................................................21
PURCHASE AGREEMENT..................................................................................21
PURCHASE OPTION.....................................................................................21
QUALIFIED PAYMENTS..................................................................................21
REAL PROPERTY.......................................................................................21
REIMBURSABLE CONSTRUCTION-PERIOD COSTS..............................................................21
REMEDIAL WORK.......................................................................................21
RENT................................................................................................22
RESIDUAL RISK PERCENTAGE............................................................................22
RESPONSIBLE FINANCIAL OFFICER.......................................................................22
S&P.................................................................................................22
SCOPE CHANGE........................................................................................22
SELLER..............................................................................................22
SPREAD..............................................................................................22
STIPULATED LOSS VALUE...............................................................................24
SUBSIDIARY..........................................................................................24
SUPPLEMENTAL PAYMENT................................................................................24
TERM................................................................................................24
THIRD PARTY CONTRACT................................................................................24
THIRD PARTY SALE NOTICE.............................................................................24
</TABLE>
-iii-
<PAGE> 76
<TABLE>
<CAPTION>
PAGE
DEFINED TERM NUMBER
- -----------------------------------------------------------------------------------------------------
<S> <C>
THIRD PARTY SALE PROPOSAL...........................................................................24
THIRD PARTY TARGET PRICE............................................................................24
TRANSACTION EXPENSES................................................................................25
UNFUNDED BENEFIT LIABILITIES........................................................................25
VOLUNTARY FCI CONSTRUCTION CONTRIBUTIONS............................................................25
VOLUNTARY RETENTION OF THE PROPERTY.................................................................25
WORK................................................................................................25
</TABLE>
-iv-
<PAGE> 77
LIST OF DEFINED TERMS
As used in the Lease to which this List of Defined Terms is attached and
in the other Operative Documents (as defined below) into which this List of
Defined Terms is incorporated by reference:
"ABSOLUTE FCI CONSTRUCTION OBLIGATIONS" means the following:
(1) Construction-Period Indemnity Payments required because of or
in connection with or arising out of Environmental Losses incurred or
suffered by any Interested Party;
(2) Construction-Period Indemnity Payments required because of or
in connection with or arising out of Losses incurred or suffered by
BNPLC, when such Losses would not have been incurred or suffered but for
any act or any omission of FCI or of any FCI's contractors or
subcontractors during the period that the Construction Management
Agreement remains in force or during any other period that FCI remains
in possession or control of the Construction Project;
(3) Construction-Period Indemnity Payments required because of or
in connection with or arising out of Losses incurred or suffered by
BNPLC that would not have been incurred but for any fraud,
misapplication of funds (including Construction Advances), illegal acts,
or willful misconduct on the part of the FCI or its employees or agents
or any other party for whom FCI is responsible; and
(4) Construction-Period Indemnity Payments required because of or
in connection with or arising out of Losses incurred or suffered by
BNPLC that would not have been incurred but for any bankruptcy
proceeding involving FCI.
For purposes of this definition, "acts and omissions of FCI" shall include (i)
any decision by FCI to make any Scope Change, (ii) any failure of FCI to
maintain insurance required by the Lease or the Construction Management
Agreement, (iii) any decision not to continue or complete Work under the
Construction Management Agreement because of a change in FCI's facility needs or
in FCI's plans to meet its facility needs (such as, for example, a decision by
FCI to lease or acquire another less expensive facility as an alternative to the
Improvements), (iv) any failure of FCI to correct Defective Work performed prior
to a termination of the Construction Management Agreement as provided in
subparagraphs 5(D) or 5(E) thereof, and (v) any other breach by FCI of the
Construction Management Agreement.
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is
limited to, the negligent conduct on the Property (and not mere omissions) by
such Person or by others acting and authorized to act on such Person's behalf in
a manner that proximately causes actual bodily injury or property damage for
which FCI does not carry (and is not obligated by the Lease to carry) insurance.
"ACTIVE NEGLIGENCE" shall not include (1) any negligent failure of BNPLC to act
when the duty to act would not have been imposed but for BNPLC's status as owner
of the Property or as a party to the transactions described in the Lease, (2)
any negligent failure of any other Interested Party to act when the duty to act
would not have been imposed but for such party's contractual or other
relationship to BNPLC or participation or facilitation in any manner, directly
or indirectly, of the transactions described in the Lease, or (3) the exercise
in a lawful manner by BNPLC (or any party lawfully claiming through or under
BNPLC) of any right or remedy provided in or under the Lease or any other
Operative Document.
"ADDITIONAL RENT" shall have the meaning assigned to it in subparagraph
4.(c) of the Lease.
"ADMINISTRATIVE AGENCY FEES" shall have the meaning assigned to it in
subparagraph 4.(e) of the Lease.
"ADVANCE DATE" means, regardless of whether any Construction Advance
shall actually be made thereon,
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the first Business Day of every calendar month, beginning with July 16, 1998 and
continuing regularly thereafter to and including the Base Rent Commencement
Date.
"AFFILIATE" of any Person means any other Person controlling, controlled
by or under common control with such Person. For purposes of this definition,
the term "control" when used with respect to any Person means the power to
direct the management of policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. Notwithstanding the foregoing, for purposes of the Lease and the
Purchase Agreement, FCI's "Affiliates" will not include any Person domiciled
outside the United States.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to FCI or the Property or the Lease or the other Operative Documents:
restrictive covenants; zoning ordinances and building codes; flood disaster
laws; health, safety and environmental laws and regulations; the Americans with
Disabilities Act and other laws pertaining to disabled persons; and other laws,
statutes, ordinances, rules, permits, regulations, orders, determinations and
court decisions.
"APPLICABLE PURCHASER" means any third party designated by FCI to
purchase BNPLC's interest in the Property and in any Escrowed Proceeds as
provided in the Purchase Agreement.
"ATTORNEYS' FEES" means the reasonable fees and expenses of counsel to
the parties incurring the same, excluding costs or expenses of in-house counsel
(whether or not accounted for as general overhead or administrative expenses),
but otherwise including printing, photostating, duplicating and other expenses,
air freight charges, and fees billed for law clerks, paralegals, librarians and
others not admitted to the bar but performing services under the supervision of
an attorney. Such terms shall also include all such reasonable fees and expenses
incurred with respect to appeals, arbitrations and bankruptcy proceedings, and
whether or not any manner of proceeding is brought with respect to the matter
for which such fees and expenses were incurred.
"BALANCE OF UNPAID CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" shall have
the meaning assigned to it in subparagraph 1(A)(1) of the Purchase Agreement.
"BANKING RULES CHANGE" means either: (1) the introduction of or any
change after the Effective Date (other than any change by way of imposition or
increase of reserve requirements included in the Eurodollar Rate Reserve
Percentage) in any law or regulation applicable to BNPLC, BNPLC's Parent or any
other Participant, or in the generally accepted interpretation by the
institutional lending community of any such law or regulation, or in the
interpretation of any such law or regulation asserted by any regulator, court or
other governmental authority or (2) the compliance by BNPLC, BNPLC's Parent or
any other Participant with any new guideline or new request after the Effective
Date from any central bank or other governmental authority (whether or not
having the force of law).
"BASE RENT" means the rent payable by FCI pursuant to subparagraph 4.(a)
of the Lease.
"BASE RENT COMMENCEMENT DATE" means the earlier of (1) the last day that
constitutes first business day of a calendar month and that is no more than 364
days after the Effective Date, (2) the first Business Day of the first calendar
month to follow by twenty days or more the date upon which any Completion Notice
is given as provided in the Construction Management Agreement or in the Lease,
(3) the first Business Day of the first calendar month to follow by twenty days
or more BNPLC's receipt of a notice from FCI, given before FCI has exercised any
Issue 97-10 Election and setting forth FCI's express, unconditional, unequivocal
and irrevocable (A)
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waiver of any right to make any Issue 97-10 Election, and (B) election to
accelerate the Base Rent Commencement Date by delivery such notice,
notwithstanding that after the Base Rent Commencement Date, FCI shall have no
further right to Construction Advances under the Construction Management
Agreement or the Lease, or (4) the first Business Day of the first calendar
month upon which the Funded Construction Allowance shall equal or exceed the
Maximum Construction Allowance. Notwithstanding the forgoing, if for any reason
(including a termination of the Construction Management Agreement) FCI has not
completed the Construction Project thirty days in advance of the scheduled Base
Rent Commencement Date determined pursuant to the first sentence of this
definition, BNPLC shall be entitled (but not obligated) to extend the Base Rent
Commencement Date one or more times and at any time before the Construction
Project actually is complete and ready for occupancy. To so extend the Base Rent
Commencement Date, BNPLC shall notify FCI thereof and of the date to which the
Base Rent Commencement Date is extended, which may be the first Business Day of
any calendar month designated by BNPLC in the notice of extension, provided that
BNPLC will not so designate any date more than sixty days after the date upon
which the Construction Project is expected by BNPLC (at the time of the
designation) to be complete.
"BASE RENT DATE" means a date upon which Base Rent must be paid under
the Lease, all of which dates shall be the first Business Day of a calendar
month. The first Base Rent Date shall be determined as follows:
(a) If a LIBOR Period Election of one month is in effect on
the Base Rent Commencement Date, then the first Business Day of
the first calendar month following the Base Rent Commencement
Date shall be the first Base Rent Date.
(b) If the LIBOR Period Election in effect on the Base Rent
Commencement Date is three months or six months, then the first
Business Day of the third calendar month following the Base Rent
Commencement Date shall be the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date shall be the first
Business Day of the first or third calendar month following the calendar month
which includes the preceding Base Rent Date, determined as follows:
(1) If a LIBOR Period Election of one month is in effect on
a Base Rent Date, then the first Business Day of the first
calendar month following such Base Rent Date shall be the next
following Base Rent Date.
(2) If a LIBOR Period Election of three months or six
months is in effect on a Base Rent Date, then the first Business
Day of the third calendar month following such Base Rent Date
shall be the next following Base Rent Date.
Thus, for example, if the Base Rent Commencement Date falls on the first
Business Day of June, 1999 and a LIBOR Period Election of six months commences
on the Base Rent Commencement Date, then the first Base Rent Date shall be the
first Business Day of September, 1999, and the second Base Rent Date shall be
the first Business Day of December, 1999.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the Lease, each of which periods shall correspond to the LIBOR Period Election
for such period. The first Base Rent Period shall begin on and include the Base
Rent Commencement Date, and each successive Base Rent Period shall begin on and
include the Base Rent Date upon which the preceding Base Rent Period ends. Each
Base Rent Period, including the first Base Rent Period, shall end on but not
include the first or second Base Rent Date after the Base Rent Date upon which
such period began, determined as follows:
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<PAGE> 80
(1) If the LIBOR Period Election for a Base Rent Period is
one month or three months, then such Base Rent Period shall end
on the first Base Rent Date after the Base Rent Date upon which
such period began.
(2) If the LIBOR Period Election for a Base Rent Period is
six months, then such Base Rent Period shall end on the second
Base Rent Date after the Base Rent Date upon which such period
began.
The determination of Base Rent Periods can be illustrated by two examples:
(1) If FCI makes a LIBOR Period Election of three months
for a hypothetical Base Rent Period beginning on the first
Business Day in January, 2000, then such Base Rent Period will
end on but not include the first Base Rent Date after it begins;
that is, such Base Rent Period will end on the first Business
Day in April, 2000, the third calendar month after January,
2000.
(2) If, however, FCI makes a LIBOR Period Election of six
months for the hypothetical Base Rent Period beginning the first
Business Day in January, 2000, then such Base Rent Period will
end on but not include the second Base Rent Date after it begins;
that is, the first Business Day in July, 2000.
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a
bank organized and existing under the laws of France and any successors of such
bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent (as a Participant or otherwise) or any other
Participant, for which BNPLC's Parent or the Participant shall request
reimbursement from BNPLC, because of the resulting liquidation or redeployment
of deposits or other funds:
(1) used to make or maintain Funding Advances upon
application of a Qualified Payment or upon any sale of the
Property pursuant to the Purchase Agreement, if such application
or sale occurs on any day other than the last day of a
Construction Period or Base Rent Period; or
(2) reserved to provide a Construction Advance that FCI
requests, but thereafter declines to take for any reason, or that
FCI requests but is not permitted to take because of its failure
to satisfy any of the conditions specified in the Construction
Management Agreement.
Breakage Costs will include, for example, losses attributable to any decline in
LIBOR as of the effective date of any application described in the clause (1)
preceding, as compared to LIBOR used to determine the Effective Rate then in
effect. Each determination by BNPLC's Parent or the applicable Participant of
Breakage Costs shall, in the absence of clear and demonstrable error, be
conclusive and binding upon FCI.
"BREAK EVEN PRICE" shall have the meaning assigned to it in subparagraph
1(A)(1) of the Purchase Agreement.
"BUSINESS DAY" means any day that is (1) not a Saturday, Sunday or day
on which commercial banks are generally closed or required to be closed in New
York City, New York or San Francisco, California, and (2) a day
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<PAGE> 81
on which dealings in deposits of dollars are transacted in the London interbank
market; provided that if such dealings are suspended indefinitely for any
reason, "Business Day" shall mean any day described in clause (1).
"CAPITAL ADEQUACY CHARGES" means any additional amounts BNPLC's Parent
or any other Participant requests BNPLC to pay as compensation for an increase
in required capital as provided in subparagraph 5.(c)(ii) of the Lease.
"CARRYING COSTS" means the charges added to and made a part of the
Outstanding Construction Allowance (and thus also added to and made a part of
the Funded Construction Allowance) from time to time on and before the Base Rent
Commencement Date pursuant to and as more particularly described in subparagraph
6.(a) of the Lease.
"CLOSING CERTIFICATE" means the Amended and Restated Closing Certificate
and Agreement dated as of July 16, 1998 executed by FCI in favor of BNPLC, as
such Closing Certificate may be extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with its terms.
"CMA SUSPENSION EVENT" shall have the meaning assigned to it in
subparagraph 5(A) of the Construction Management Agreement.
"CMA SUSPENSION NOTICE" shall have the meaning assigned to it in
subparagraph 5(B)(1) of the Construction Management Agreement.
"CMA SUSPENSION PERIOD" shall have the meaning assigned to it in
subparagraph 5(C) of the Construction Management Agreement.
"CMA TERMINATION EVENT" shall have the meaning assigned to it in
subparagraph 5(B) of the Construction Management Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT FEE" shall have the meaning assigned to it in subparagraph
4.(d) of the Lease.
"COMPLETION NOTICE" means (1) a notice required by subparagraph 1(B) of
the Construction Management Agreement from FCI to BNPLC, advising BNPLC when
construction of the Construction Project is substantially complete, or (2) a
notice permitted by subparagraph 6.(f) of the Lease from BNPLC to FCI, advising
FCI after any Landlord's Election to Complete Construction when construction of
the Construction Project is substantially complete or that BNPLC no longer
intends to continue such construction.
"CONSTRUCTION ADVANCES" means (1) actual advances of funds made by or on
behalf of BNPLC to or on behalf of FCI pursuant to Paragraph 2 of the
Construction Management Agreement, and (2) amounts considered as Construction
Advances pursuant to subparagraph 6.(d) of the Lease.
"CONSTRUCTION ADVANCE REQUEST" shall have the meaning assigned to it in
subparagraph 2(C)(1) of the Construction Management Agreement.
"CONSTRUCTION ALLOWANCE" means the allowance, consisting of Construction
Advances and Carrying Costs, which is to be provided for the Construction
Project as more particularly described in the Construction Management
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<PAGE> 82
Agreement and Paragraph 6 of the Lease.
"CONSTRUCTION MANAGEMENT AGREEMENT" means a Construction Management
Agreement dated as of July 16, 1998 (as from time to time supplemented, amended
or restated) pursuant to which BNPLC has authorized FCI to construct certain
improvements on the Land and agreed to provide a construction allowance for such
construction on and subject to the terms and conditions described therein.
"CONSTRUCTION MILESTONE" shall have the meaning assigned to it in
subparagraph 5(B)(2) of the Construction Management Agreement.
"CONSTRUCTION PERIOD" means each successive period of approximately one
month, with the first Construction Period beginning on and including the
Effective Date and ending on but not including the first Advance Date. Each
successive Construction Period after the first Construction Period shall begin
on and include the day on which the preceding Construction Period ends and shall
end on but not include the next following Advance Date, until the last
Construction Period, which shall end on but not include the earlier of the Base
Rent Commencement Date or any Designated Sale Date upon which FCI or any
Applicable Purchaser shall purchase BNPLC's interest in the Property pursuant to
the Purchase Agreement.
"CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" shall have the meaning assigned
to it in subparagraph 5.(e)(ii) of the Lease.
"CONSTRUCTION PROJECT" means the new buildings or other substantial
Improvements to be constructed, or the alteration of existing Improvements, as
described generally in Exhibit B attached to the Construction Management
Agreement.
"DEBT" of any Person means: (i) indebtedness of such Person for borrowed
money; (ii) obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments; (iii) obligations of such Person to pay the deferred
purchase price of property or services; (iv) obligations of such Person as
lessee under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases; (v) obligations of such Person, contingent or
otherwise, under any lease of real property or related documents (including a
separate purchase agreement) which provide that such Person must purchase or
cause another to purchase any interest in the leased property and thereby
guarantee a minimum residual value of the leased property to the lessor; (vi)
obligations under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a another Person against loss in respect of, indebtedness or obligations
of others of the kinds referred to in the preceding clauses (i) through (v);
(vii) liabilities of another Person secured by a Lien on, or payable out of the
proceeds of production from, property of such Person even though such obligation
shall not be assumed by such Person (but in the case of such liabilities not
assumed by such Person, the liabilities shall constitute Debt of such Person
only to the extent of the value of such Person's property encumbered by the Lien
securing such liabilities); and (viii) Unfunded Benefit Liabilities.
"DEDUCTIBLE JUDGMENT" means a final, liquidated judgment against BNPLC,
the execution of which has not been and will not be stayed pending appeal by
BNPLC, secured by a judgment lien filed against the Property which constitutes a
Lien Removable by BNPLC.
"DEFAULT" means any event which, with the passage of time or the giving
of notice or both, would (if not cured within any applicable cure period)
constitute an Event of Default.
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<PAGE> 83
"DEFAULT RATE" means, for any period prior to the Designated Sale Date,
a floating per annum rate equal to two percent (2%) above the Prime Rate, and
for any period commencing on or after the Designated Sale Date, Default Rate
shall mean a floating per annum rate equal to five percent (5%) above the Prime
Rate. However, in no event will the "Default Rate" at any time exceed the
maximum interest rate permitted by law.
"DEFECTIVE WORK" shall have the meaning assigned to it in subparagraph
1(A)(2)(e) of the Construction Management Agreement.
"DESIGNATED SALE DATE" means the earlier of:
(1) the first Business Day of August, 2003; or
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by FCI to BNPLC before FCI has made an Issue
97-10 Election; provided, that if the Business Day so designated by FCI
is earlier than sixty days after the date of such notice, then the
notice will be of no effect for purposes of this definition; and
provided, further, to be effective for purposes of this definition, the
notice must include an express, unconditional, unequivocal and
irrevocable (A) waiver by FCI of any remaining right FCI may have under
any of the Operative Documents to make any Issue 97-10 Election, and (B)
acknowledgment by FCI that because of FCI's election to accelerate the
Designated Sale Date, the Maximum Remarketing Obligation will equal the
Break Even Price under the Purchase Agreement; or
(3) any Business Day designated as such in an irrevocable,
unconditional notice given by FCI to BNPLC after FCI has made an Issue
97-10 Election (a notice which FCI might give, for example, to force the
commencement of FCI's Extended Remarketing Period); provided, that if
the Business Day so designated by FCI is earlier than sixty days after
the date of such notice or is earlier than the Base Rent Commencement
Date, then the notice will be of no effect for purposes of this
Definition; and provided, further, to be effective for purposes of this
definition, the notice must include an express, unconditional,
unequivocal and irrevocable acknowledgment by FCI that (A) because FCI
has previously made an Issue 97-10 Election, BNPLC has the right to
collect Issue 97-10 Prepayments under the Operative Documents and such
right will continue unaffected by the notice, and (B) because of FCI's
election to accelerate the Designated Sale Date, the Maximum Remarketing
Obligation will equal the Break Even Price under the Purchase Agreement;
or
(4) any Business Day designated as such in a notice given by
BNPLC to FCI after the effective date of any termination of the
Construction Management Agreement as provided in subparagraphs 5(D) or
5(E) thereof; or
(5) any Business Day designated as such in a notice given by
BNPLC to FCI after BNPLC's receipt of a notice from FCI setting forth
FCI's election to terminate the Purchase Option and FCI's Initial
Remarketing Rights and Obligations as provided in subparagraph 4(B)
thereof; or
(6) any Business Day designated as such in a notice given by
BNPLC to FCI when any Event of Default has occurred and is continuing.
"DEVELOPMENT DOCUMENTS" means the contracts, ordinances and other
documents described in Schedule 1 attached to the Lease, if any, as the same may
be modified from time to time in accordance with the Lease and the Closing
Certificate (including modifications authorized pursuant to subparagraphs 7.(a)
and 7.(b) of the Lease),
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<PAGE> 84
and any applications, permits or certificates concerning or affecting the use or
development of the Property that may be submitted, issued or executed from time
to time as contemplated in such contracts, ordinances and other documents or
that BNPLC may hereafter execute, approve or consent to at the request of FCI.
"EFFECTIVE DATE" means July 16, 1998.
"EFFECTIVE RATE" means for each Construction Period and for each Base
Rent Period, the per annum rate determined by dividing (A) LIBOR for such
Construction Period or Base Rent Period, as the case may be, by (B) one hundred
percent (100%) minus the Eurodollar Rate Reserve Percentage for such
Construction Period or Base Rent Period. If LIBOR or the Eurodollar Rate Reserve
Percentage changes from Construction Period to Construction Period or from Base
Rent Period to Base Rent Period, then the Effective Rate shall be automatically
increased or decreased as of the date of such change, as the case may be,
without prior notice to FCI. If for any reason BNPLC determines that it is
impossible or unreasonably difficult to determine the Effective Rate with
respect to a given Construction Period or Base Rent Period in accordance with
the foregoing, then the "EFFECTIVE RATE" for that Construction Period or Base
Rent Period shall equal any published index or per annum interest rate
determined in good faith by BNPLC's Parent to be comparable to LIBOR at the
beginning of the first day of that period. A comparable interest rate might be,
for example, the then existing yield on short term United States Treasury
obligations (as compiled by and published in the then most recently published
United States Federal Reserve Statistical Release H.15(519) or its successor
publication), plus or minus a fixed adjustment based on BNPLC's Parent's
comparison of past eurodollar market rates to past yields on such Treasury
obligations. Any determination by BNPLC of the Effective Rate under this
definition shall, in the absence of clear and demonstrable error, be conclusive
and binding upon FCI.
"ENVIRONMENTAL CONSULTANT" means a qualified individual employed by a
qualified firm. Individuals shall be deemed qualified if they (i) possess at
least five years of experience in performing environmental, engineering and
consulting services; (ii) have performed or supervised at least five projects
involving remediation of soil contaminated with hazardous substances, including
at least one project similar to the Remedial Work; (iii) have all licenses
required under applicable law for the Remedial Work; and (iv) have at least a
bachelor's degree in the physical sciences or a related field from an accredited
college or university. A firm shall be deemed qualified if it is: (i) a
nationally recognized, reputable environmental and/or engineering firm in the
business of providing professional environmental engineering and consulting
services; (ii) has experience and expertise in projects involving the Remedial
Work; (iii) maintains policies of insurance which are approved by BNPLC in its
reasonable discretion.
"ENVIRONMENTAL LAWS" means any and all existing and future Applicable
Laws pertaining to safety, health or the environment, or to Hazardous Substances
or Hazardous Substance Activities, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, "CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, "RCRA").
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by any
Interested Party relating to or arising out of, based on or as a result of: (i)
any Hazardous Substance Activity that occurs or is alleged to have occurred on
or prior to the Loss Cutoff Date; (ii) any violation on or prior to the Loss
Cutoff Date of Environmental Laws relating to the Property or to the ownership,
use, occupancy or operation thereof; (iii) any investigation, inquiry, order,
hearing, action, or other proceeding by or before any governmental or
quasi-governmental agency or authority in connection with any Hazardous
Substance Activity that occurs or is alleged to have occurred in whole
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<PAGE> 85
or in part on or prior to the Loss Cutoff Date; or (iv) any claim, demand, cause
of action or investigation, or any action or other proceeding, whether
meritorious or not, brought or asserted against any Interested Party which
relates to, arises from, is based on, or results from any of the matters
described in clauses (i), (ii) or (iii) of this definition, or any allegation of
any such matters. For purposes of determining whether Losses constitute
"Environmental Losses," any actual or alleged Hazardous Substance Activity or
violation of Environmental Laws relating to the Property will be presumed to
have occurred prior to the Loss Cutoff Date unless FCI establishes by clear and
convincing evidence to the contrary that the relevant Hazardous Substance
Activity or violation of Environmental Laws did not occur or commence prior to
the Loss Cutoff Date. Even if after the Loss Cutoff Date Losses are incurred by
or asserted against a particular Interested Party that would not have been
incurred or asserted, but for any matter described in clauses (i), (ii) or (iii)
of this definition, or an allegation of any such matter, then such Losses will
constitute Environmental Losses.
"ENVIRONMENTAL REPORT" means collectively the following reports, which
were provided by FCI to BNPLC or otherwise obtained by BNPLC prior to the
execution of the Lease: (1) Phase 1 Environmental Site Assessment Report,
Fontanoso Way Property, San Jose, California, Dated April 22, 1998, prepared by
Lita D. Freeman of Kleinfelder, Inc., and (2) Environmental Report dated April
27, 1998, prepared by Elizabeth Ward of Washington Advisors.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA
is a member of FCI's controlled group, or under common control with FCI, within
the meaning of Section 414 of the Internal Revenue Code, and the regulations
promulgated and rulings issued thereunder.
"ERISA TERMINATION EVENT" means (i) the occurrence with respect to any
Plan of a reportable event described in Section 4043(c) of ERISA for which any
penalty or notice thereof has not been waived pursuant to regulations, rulings,
or notices issued by the Pension Benefit Guaranty Corporation pursuant to a
waiver by such corporation under Section 4043(a) of ERISA, or (ii) the filing of
a notice of intent to terminate any Plan or the treatment of any Plan amendment
as a termination under Section 4041 of ERISA (other than in connection with a
standard termination of a fully funded Plan pursuant to Section 4041 of ERISA),
or (iii) the institution of proceedings to terminate any Plan by the Pension
Benefit Guaranty Corporation under Section 4042 of ERISA, or (iv) any other
event or condition which would constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"ESCROWED PROCEEDS" means, subject to the exclusions specified in the
next sentence, any money that is received by BNPLC from time to time during the
Term (and any interest earned thereon) from any party (1) under any property
insurance policy as a result of damage to the Property, (2) as compensation for
any restriction imposed by any governmental authority upon the use or
development of the Property or for the condemnation of the Property or any
portion thereof, (3) because of any judgment, decree or award for injury or
damage to the Property or (4) under any title insurance policy or otherwise as a
result of any title defect or claimed title defect with respect to the Property;
provided, however, in determining the amount of "Escrowed Proceeds" there shall
be deducted all expenses and costs of every type, kind and nature (including
Attorneys' Fees) incurred by BNPLC to collect such proceeds. Notwithstanding the
foregoing, "Escrowed Proceeds" will not include (A) any payment to BNPLC by a
Participant or an Affiliate of BNPLC that is made to compensate BNPLC for the
Participant's or Affiliate's share of any Losses BNPLC may incur as a result of
any of the events described in the preceding clauses (1) through (4), (B) any
money or proceeds that have been applied as a Qualified Payment or to pay any
Breakage
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<PAGE> 86
Costs or other costs incurred in connection with a Qualified Payment, (C) any
money or proceeds that, after no less than ten days notice to FCI, BNPLC returns
or pays to a third party because of BNPLC's good faith belief that such return
or payment is required by law, (D) any money or proceeds paid by BNPLC to FCI or
offset against any amount owed by FCI, or (E) any money or proceeds used by
BNPLC in accordance with the Lease for repairs or the restoration of the
Property or to obtain development rights or the release of restrictions that
will inure to the benefit of future owners or occupants of the Property. Until
Escrowed Proceeds are paid to FCI pursuant to Paragraph 11 of the Lease,
transferred to a purchaser under the Purchase Agreement as therein provided or
applied as a Qualified Payment or as otherwise described in the preceding
sentence, BNPLC shall keep the same deposited in an interest bearing account,
and all interest earned on such account shall be added to and made a part of
Escrowed Proceeds.
"ESTABLISHED MISCONDUCT" of a Person means, and is limited to: (1) if
the Person is bound by the Lease or the Purchase Agreement, a breach by such
Person of the express provisions of the Lease or the Purchase Agreement that
continues beyond any period for cure provided therein, and (2) conduct of such
Person or its Affiliates that has been determined to constitute wilful
misconduct or Active Negligence in or as a necessary element of a final judgment
rendered against such Person by a court with jurisdiction to make such
determination. Established Misconduct of one Interested Party shall not be
attributed to a second Interested Party unless the second Interested Party is an
Affiliate of the first. Negligence which does not constitute Active Negligence
shall not in any event constitute Established Misconduct. For purposes of this
definition, "conduct of a Person" will include (1) the conduct of an employee of
that Person, but only to the extent that the employee is acting within the scope
of his employment by that Person, as determined in or as a necessary element of
a final judgment rendered against such Person by a court with jurisdiction to
make such determination, and (2) the conduct of an agent of that Person (such as
an independent environmental consultant engaged by that Person), but only to the
extent that the agent is, as determined in or as a necessary element of a final
judgment rendered against such Person by a court with jurisdiction to make such
determination, (x) acting within the scope of the authority granted to him by
such Person, (y) not acting with the consent or approval of or under the
direction of FCI or FCI's Affiliates, employees or agents, and (z) not acting in
good faith to mitigate Losses that such Person may suffer because of a breach or
repudiation by FCI of the Closing Certificate or Lease or the Purchase
Agreement.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining
the Effective Rate for any Construction Period or Base Rent Period, the reserve
percentage applicable two Business Days before the first day of such period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for BNPLC's Parent with respect to liabilities or deposits
consisting of or including Eurocurrency Liabilities (or with respect to any
other category or liabilities by reference to which LIBOR is determined) having
a term comparable to such period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in subparagraph
17.(a) of the Lease.
"EXCESS FUNDING COMMITMENT" shall have the meaning assigned to it in
subparagraph 2(C)(2)(b) of the Construction Management Agreement.
"EXCLUDED TAXES" means (1) all federal, state and local income taxes
upon Base Rent, Commitment Fees, Administrative Agency Fees, any interest paid
to BNPLC or any Participant pursuant to subparagraph 4.(h) of the
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Lease and any additional compensation claimed by BNPLC pursuant to subparagraph
5.(c)(ii) of the Lease; (2) all federal, state and local income taxes upon any
amounts paid as reimbursement for or to satisfy Losses incurred by BNPLC or any
Participant to the extent such taxes are offset by a corresponding reduction of
BNPLC's or the applicable Participant's income taxes because of BNPLC's or such
Participant's deduction of the reimbursed Losses from its taxable income or
because of any tax credits attributable thereto; (3) taxes imposed by any
governmental authority outside the United States of America; and (4) any
transfer or change of ownership taxes assessed because of BNPLC's transfer or
conveyance to any third party of BNPLC's rights or interests in the Lease or the
Purchase Agreement or the Property, but excluding any such taxes assessed
because of any transfer described in clauses (4) or (6) of the definition of
Permitted Transfer below. For purposes of this definition, income taxes shall
include any state or local taxes on the net income of BNPLC or a Participant, as
the case may be, whether or not designated as an "income tax" or "franchise tax"
and regardless of any future increase in tax rates used to compute such taxes.
If, however, a change in Applicable Laws after the Effective Date results in an
increase in such taxes for any reason other than an increase in the applicable
tax rates (e.g., a disallowance of deductions that would otherwise be available
against payments described in clause (1) of this definition), then for purposes
of computing the taxes that constitute "Excluded Taxes," the change in law will
not be considered.
"EXISTING CONTRACT" means the Agreement of Purchase and Sale and Joint
Escrow Instructions dated December, 1997 (as amended), originally between Berg &
Berg Enterprises as seller and Solectron Corporation as buyer, covering the Land
described in Exhibit A of the Lease.
"FAIR MARKET VALUE" means the fair market value of the Property on or
about the Designated Sale Date (calculated under the assumptions, whether or not
then accurate, that FCI has fulfilled and can be expected to continue to fulfill
its obligations under the Lease and other Operative Documents; that FCI has
maintained the Property in compliance with all Applicable Laws [including
Environmental Laws]; that any construction commenced on the Land but not
completed prior to the Designated Sale Date shall not reduce the value of the
Property; that all Improvements are self-sufficient in the sense that any
easements or offsite facilities needed under the Development Documents or
otherwise for the use of the Improvements will be available at no additional
cost to the owner of the Improvements; that FCI has repaired and restored the
Property after any damage following fire or other casualty; that FCI has
restored the remainder of the Property after any partial taking by eminent
domain; that FCI has completed any contests of and paid any taxes due [other
than Excluded Taxes] or other amounts secured by or allegedly secured by a lien
against the Property, including any assessment liens, but not including Liens
Removable by BNPLC; that no conditions or circumstances on or about the Property
[such as the presence of an endangered species] is discovered that will impede
development of the Property; that development of the Property will not be
hindered or delayed because of the limited availability of utilities or water;
that any purchaser paying fair market value for the Property will receive copies
of all of FCI's books and records which are necessary or useful to a future
owner's or occupant's use of the Property in the manner permitted by the Lease,
including books and records evidencing the testing and validation of the
Property for the uses permitted by the Lease; that without undue cost or delay
any such purchaser can obtain any necessary permits or licenses needed to use
the Property for the purposes permitted by the Lease; and that FCI has cured any
title defects affecting the Property other than Liens Removable by BNPLC, all in
accordance with the standards and requirements of the Lease [as though the Lease
were continuing in force], and the Closing Certificate) as determined by an
independent MAI Certified General Real Estate Appraiser reasonably satisfactory
to BNPLC who has five years or more experience appraising similar properties in
and around Santa Clara County, California.
"FCI" means Force Computers, Inc., a Delaware corporation.
"FCI'S EXTENDED REMARKETING PERIOD" shall have the meaning assigned to
it in subparagraph 2(A) of the
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<PAGE> 88
Purchase Agreement.
"FCI'S EXTENDED REMARKETING RIGHT" shall have the meaning assigned to it
in subparagraph 2(A) of the Purchase Agreement.
"FCI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS" shall have the
meaning assigned to it in subparagraph 1(A)(2) of the Purchase Agreement.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rates are not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by BNPLC's Parent from three Federal funds brokers of
recognized standing selected by BNPLC's Parent. All determinations of the Fed
Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon FCI.
"FOCB NOTICE" shall have the meaning assigned to it in subparagraph 5(E)
of the Construction Management Agreement.
"FUNDED CONSTRUCTION ALLOWANCE" means on any day the Outstanding
Construction Allowance on that day, including all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
that day, plus the amount of any Qualified Payments deducted on or prior to that
day in the calculation of such Outstanding Construction Allowance, less any
Voluntary FCI Construction Contributions added on or prior to that day in the
calculation of such Qualified Payments.
"FUNDING ADVANCES" means (1) the Initial Funding Advance and (2) all
future advances made by BNPLC's Parent or any other Participant to or on behalf
of BNPLC to allow BNPLC to provide the Construction Allowance under the Lease.
"FUTURE WORK" shall have the meaning assigned to it in subparagraph
2(C)(2)(b) of the Construction Management Agreement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
subparagraph 16.(b) of the Lease (except for changes concurred in by FCI's
independent public accountants).
"GUARANTOR" means Solectron Corporation, a Delaware corporation.
"GUARANTY" means the Amended and Restated Guaranty dated as of July 16,
1998 given by Guarantor to BNPLC, guaranteeing the obligations of FCI under the
Lease, Purchase Agreement and Closing Certificate, as such Guaranty may be
extended, supplemented, amended, restated or otherwise modified from time to
time in accordance with its terms.
"HAZARDOUS SUBSTANCE" means (i) any chemical, compound, material,
mixture or substance that is now or hereafter defined or listed in, regulated
under, or otherwise classified pursuant to, any Environmental Laws as
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<PAGE> 89
a "hazardous substance," "hazardous material," "hazardous waste," "extremely
hazardous waste or substance," "infectious waste," "toxic substance," "toxic
pollutant," or any other formulation intended to define, list or classify
substances by reason of deleterious properties, including ignitability,
corrosiveness, reactivity, carcinogenicity, toxicity or reproductive toxicity;
(ii) petroleum, any fraction of petroleum, natural gas, natural gas liquids,
liquified natural gas, synthetic gas usable for fuel (or mixtures of natural gas
and such synthetic gas), and ash produced by a resource recovery facility
utilizing a municipal solid waste stream, and drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iii) asbestos and any asbestos
containing material; and (iv) any other material that, because of its quantity,
concentration or physical or chemical characteristics, poses a significant
present or potential hazard to human health or safety or to the environment if
released into the workplace or the environment.
"HAZARDOUS SUBSTANCE ACTIVITY" means any actual, proposed or threatened
use, storage, holding, release (including any spilling, leaking, leaching,
pumping, pouring, emitting, emptying, dumping, disposing into the environment,
and the continuing migration into or through soil, surface water, groundwater or
any body of water), discharge, deposit, placement, generation, processing,
construction, treatment, abatement, removal, disposal, disposition, handling or
transportation of any Hazardous Substance from, under, in, into or on the
Property, including the movement or migration of any Hazardous Substance from
surrounding property, surface water, groundwater or any body of water under, in,
into or onto the Property and any resulting residual Hazardous Substance
contamination in, on or under the Property. "HAZARDOUS SUBSTANCE ACTIVITY" also
means any existence of Hazardous Substances on the Property that would cause the
Property or the owner or operator thereof to be in violation of, or that would
subject the Property to any remedial obligations under, any Environmental Laws,
including CERCLA and RCRA, assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances pertaining to
the Property. "HAZARDOUS SUBSTANCE ACTIVITY" does not, however, include events
or circumstances that do not affect the Property on or about other properties
owned or operated by FCI.
"IMPOSITIONS" means all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes, levies, fees,
charges, surcharges, assessments or penalties which arise out of or are
attributable to the Lease or which are imposed upon BNPLC or the Property
because of the ownership, leasing, occupancy, sale or operation of the Property,
or any part thereof or interest therein, or relating to or required to be paid
by any of the Permitted Encumbrances or the Development Documents, excluding
only Excluded Taxes. "IMPOSITIONS" shall include real estate taxes imposed
because of a change of use or ownership of the Property on or prior to the date
of any sale by BNPLC pursuant to the Purchase Agreement.
"IMPROVEMENTS" means any and all (1) buildings and other real property
improvements now or hereafter erected on the Land, and (2) equipment (e.g., HVAC
systems, elevators and plumbing fixtures) attached to the buildings or other
real property improvements, the removal of which would cause structural or other
material damage to the buildings or other real property improvements or would
materially and adversely affect the value or use of the buildings or other real
property improvements.
"INDEX DEBT" means senior, unsecured, long-term indebtedness for
borrowed money of Guarantor that is not guaranteed by any other Person or
subject to any other credit enhancement.
"INDUSTRIAL HYGIENIST" means an industrial hygienist certified by the
American Board of Industrial Hygiene who is experienced with required and
appropriate health and safety standards and good industrial hygiene practice
related to operations at hazardous waste sites.
List of Defined Terms - Page 13
<PAGE> 90
"INITIAL FUNDING ADVANCE" means, collectively, the advances of made by
BNPLC's Parent (directly or through one or more of its Affiliates) to or on
behalf of BNPLC on or prior to the effective date of the Lease to cover the cost
of BNPLC's acquisition of the Property and certain Transaction Expenses and
other amounts described in this definition. The amount of the Initial Funding
Advance may be confirmed by a separate closing certificate executed by FCI as of
the Effective Date. To the extent that BNPLC does not itself use the entire
Initial Funding Advance to pay Transaction Expenses incurred by BNPLC or for
other purposes described in the preceding sentence, the remainder thereof is
being advanced to FCI, with the understanding that FCI will use any such amount
advanced for one or more of the following purposes: (1) the payment or
reimbursement of Transaction Expenses incurred by FCI; (2) the payment or
reimbursement of expenses incurred by FCI in connection with the Construction
Project, including the planning, design, engineering, construction and
permitting of thereof; (3) the maintenance of the Property; or (4) the payment
of Rents next due.
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) any other Participants and their permitted
successors and assigns under the Participation Agreement; provided, however,
none of the following shall constitute an Interested Party: (a) any Person to
whom BNPLC may transfer an interest in the Property by a conveyance that is not
a Permitted Transfer and others that cannot lawfully claim an interest in the
Property except through or under such a transfer by BNPLC, (b) FCI or any Person
that cannot lawfully claim an interest in the Property except through or under a
conveyance from FCI, or (c) any Applicable Purchaser under the Purchase
Agreement and any Person that cannot lawfully claim an interest in the Property
except through or under a conveyance from such Applicable Purchaser.
"ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT" means
an Event of Default that is unrelated to the Property or the use or maintenance
thereof and that results solely from (A) a breach by FCI or Guarantor of a
provision in any Operative Document or the Guaranty, the occurrence of which
breach cannot be objectively determined, or (B) any other event described in
clauses (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiv) or (xvi) of
subparagraph 17(a) of the Lease, the occurrence of which event cannot be
objectively determined. For example, an Event of Default under subparagraph
17.(a)(vii) of the Lease resulting solely from a failure of FCI to "generally"
pay its debts as such debts become due (in contrast to a failure of FCI to pay
Rent to BNPLC as it becomes due under the Lease) would constitute an Issue 97-1
Non-performance-related Subjective Event of Default. In no event, however, will
the term "Issue 97-10 Non-performance-related Subjective Event of Default"
include an Event of Default resulting from (1) a failure of FCI to make any
payment required to BNPLC under the Operative Documents, (2) a breach by
Guarantor of any of sections 3.09, 3.10 or 3.11 of PART 3 of Schedule A attached
to the Guaranty (which set forth financial ratio covenants), (3) any failure of
FCI to use, maintain and insure the Property in accordance with the requirements
of the Lease, or (4) any failure of FCI to pay the full amount of any
Supplemental Payment on the Designated Sale Date as required by the Purchase
Agreement. Except as provided in subparagraph 1(A)(2)(c)(i) of the Purchase
Agreement, the characterization of any Event of Default as an Issue 97-10
Non-performance-related Subjective Event of Default will not affect the rights
or remedies available to BNPLC because of the Event of Default.
"ISSUE 97-10 ELECTION" means any of the following elections by FCI: (1)
an election to terminate the Construction Management Agreement as provided in
subparagraph 5(D) thereof; and (2) an election to terminate FCI's Initial
Remarketing Rights and Obligations as provided in subparagraph 4(B) of the
Purchase Agreement.
"ISSUE 97-10 PREPAYMENT" means a payment to BNPLC, required by
subparagraph 4.(f) of the Lease or by subparagraphs 4(B) or 4(C) of the Purchase
Agreement, equal in each case to (A) the Maximum Permitted Prepayment, computed
as of the date on which the payment becomes due, less (B) the accreted value of
any prior
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<PAGE> 91
payments actually received by BNPLC from FCI constituting Issue 97-10
Prepayments or Voluntary FCI Construction Contributions. For purposes of the
preceding sentence, "accreted value" of a payment shall mean the amount of the
payment plus an amount equal to the interest that would have accrued on the
payment if it bore interest at the Effective Rate.
"LAND" means the land as described in Exhibit A attached to the Lease,
Closing Certificate and Purchase Agreement. However, upon any amendment to the
Lease which modifies the land covered thereby, the land covered by the Closing
Certificate and Purchase Agreement shall automatically be so modified.
"LANDLORD'S ELECTION TO CONTINUE CONSTRUCTION" shall have the meaning
assigned to it in subparagraph 6.(d) of the Lease.
"LEASE" means the Amended and Restated Lease Agreement dated as of July
16, 1998 between BNPLC, as landlord, and FCI, as tenant, pursuant to which FCI
has agreed to lease BNPLC's interest in the Property, as such Lease Agreement
may be extended, supplemented, amended, restated or otherwise modified from time
to time in accordance with its terms.
"LIBOR" means, for purposes of determining the Effective Rate for each
Construction Period or Base Rent Period, the rate determined by BNPLC's Parent
to be the average rate of interest per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) of the rates at which deposits of dollars are offered or
available to BNPLC's Parent in the London interbank market at approximately
11:00 a.m. (London time) on the second Business Day preceding the first day of
such period. BNPLC shall instruct BNPLC's Parent to consider deposits, for
purposes of making the determination described in the preceding sentence, that
are offered: (i) for delivery on the first day of such Construction Period or
Base Rent Period, as the case may be, (ii) in an amount equal or comparable to
the total (projected on the applicable date of determination by BNPLC's Parent)
Stipulated Loss Value on the first day of such period, and (iii) for a time
equal or comparable to the length of such period. If BNPLC's Parent so chooses,
it may determine LIBOR for any period by reference to the rate reported by the
British Banker's Association on Page 3750 of the Telerate Service at
approximately 11:00 a.m. (London time) on the second Business Day preceding the
first day of such period. If for any reason BNPLC's Parent determines that it is
impossible or unreasonably difficult to determine LIBOR with respect to a given
Construction Period or Base Rent Period in accordance with the foregoing, or if
BNPLC's Parent shall determine that it is unlawful (or any central bank or
governmental authority shall assert that it is unlawful) for BNPLC, BNPLC's
Parent or any Participant to provide or maintain Funding Advances during any
Construction Period or Base Rent Period for which Carrying Costs or Base Rent is
computed by reference to LIBOR, then "LIBOR" for that period shall equal the
rate which is fifty basis points (50/100 of 1%) above the Fed Funds Rate for
that period. All determinations of LIBOR by BNPLC's Parent shall, in the absence
of clear and demonstrable error, be binding and conclusive upon FCI.
"LIBOR PERIOD ELECTION" for the first Base Rent Period means one month
and for any subsequent Base Rent Period means a period of one month, three
months or six months as designated by FCI at least ten Business Days prior to
the commencement of such Base Rent Period by a notice given to BNPLC in the form
of Exhibit H attached to the Lease. (For purposes of the Lease a LIBOR Period
Election for any Base Rent Period shall also be considered the LIBOR Period
Election in effect on (1) the Base Rent Commencement Date or Base Rent Date upon
which such Base Rent Period begins and (2) subsequent Base Rent Dates, if any,
which occur before the date upon which such Base Rent Period ends.) Any LIBOR
Period Election so designated by FCI shall remain in effect for the entire Base
Rent Period specified in FCI's notice to BNPLC (provided such Base Rent Period
commences at least ten Business Days after BNPLC's receipt of the notice) and
for all subsequent Base Rent Periods until a new designation becomes effective
in accordance with the provisions set forth in this definition. Notwithstanding
the
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<PAGE> 92
foregoing, however: (1) FCI shall not be entitled to designate a LIBOR Period
Election that would cause a Base Rent Period to extend beyond the end of the
scheduled Term; (2) changes in the LIBOR Period Election shall become effective
only upon the commencement of a new Base Rent Period; and (3) if FCI fails to
make a LIBOR Period Election consistent with the foregoing requirements for any
Base Rent Period, or if an Event of Default shall have occurred and be
continuing on the third Business Day preceding the commencement of any Base Rent
Period, the LIBOR Period Election for such Base Rent Period shall be deemed to
be one month.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction). Customary bankers' rights of set-off arising by operation of
law or by contract (however styled, if the contract grants rights no greater
than those arising by operation of law) in connection with working capital
facilities, lines of credit, term loans and letter of credit facilities and
other contractual arrangements entered into with banks in the ordinary course of
business are not "Liens" for the purposes of the Lease.
"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering
the Property that are asserted (1) other than as contemplated by the Lease or
the Purchase Agreement, by BNPLC itself, (2) by third parties lawfully claiming
through or under BNPLC (which for purposes of the Lease shall include any
judgment liens established against the Property because of a judgment rendered
against BNPLC and shall also include any liens established against the Property
to secure past due Excluded Taxes), or (3) by third parties lawfully claiming
under a deed or other instrument duly executed by BNPLC; provided, however,
Liens Removable by BNPLC shall not include (A) any Permitted Encumbrances or
Development Documents (regardless of whether claimed through or under BNPLC),
(B) any of the Operative Documents or any other document executed by BNPLC with
the knowledge of (and without objection by) FCI's counsel contemporaneously with
the execution and delivery of the Operative Documents, (C) Liens which are
neither lawfully claimed through or under BNPLC (as described above) nor claimed
under a deed or other instrument duly executed by BNPLC, (D) Liens claimed by
FCI or claimed through or under a conveyance made by FCI, (E) Liens arising
because of BNPLC's compliance with Applicable Law, the Lease, Permitted
Encumbrances, the Development Documents or any written request made by FCI, (F)
Liens securing the payment of property taxes or other amounts assessed against
the Property by any governmental authority, other than to secure the payment of
past due Excluded Taxes or to secure damages caused by (and attributed by any
applicable principles of comparative fault to) BNPLC's own Established
Misconduct or the Established Misconduct of BNPLC's Parent or BNPLC's other
Affiliates, (G) Liens resulting from or arising in connection with any breach by
FCI of the Closing Certificate, the Lease or the Purchase Agreement; or (H)
Liens resulting from or arising in connection with any Permitted Transfer that
occurs after any Designated Sale Date upon which, for any reason, FCI or an
Affiliate of FCI or any Applicable Purchaser shall not purchase BNPLC's interest
in the Property pursuant to the Purchase Agreement for a net price to BNPLC
(when taken together with any additional payments made by FCI pursuant to
Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value.
"LIST OF DEFINED TERMS" means this List of Defined Terms, which is
attached to the Lease and incorporated by reference into the other Operative
Documents.
"LOSS CUTOFF DATE" means the later of the dates upon which (i) the Lease
terminates, (ii) FCI surrenders possession of the Property or (iii) FCI ceases
to have any leasehold or other interest in the Property under the Lease or
otherwise.
List of Defined Terms - Page 16
<PAGE> 93
"LOSSES" means the following, to the extent (but only to the extent)
resulting from, arising out of or in connection with events or circumstances
(including the condition of the Property) that actually or allegedly occurred or
existed or may hereafter occur or exist on or before the Loss Cutoff Date: any
and all losses, liabilities, damages (whether actual, consequential, punitive or
otherwise denominated), demands, claims, administrative or legal proceedings,
actions, judgments, causes of action, assessments, fines, penalties, costs and
expenses (including Attorneys' Fees and the fees of outside accountants and
environmental consultants), of any and every kind or character, foreseeable and
unforeseeable, liquidated and contingent, proximate and remote. For purposes of
determining whether any loss, liability, damage, demand, claim, administrative
or legal proceeding, action, judgment, cause of action, assessment, fine,
penalty, cost or expense constitutes a "Loss," the events or circumstances
relating thereto will be presumed to have occurred prior to the Loss Cutoff Date
unless FCI establishes by clear and convincing evidence to the contrary that the
relevant events or circumstances did not occur or exist prior to the Loss Cutoff
Date.
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between FCI
or its agents and a regulatory agency or third party, which causes, or
potentially could cause (whether by implementation of or response to said
communication), a material change in the scope, duration, or nature of any
Remedial Work.
"MAXIMUM CONSTRUCTION ALLOWANCE" means an amount equal to $16,000,000,
less the Initial Funding Advance.
"MAXIMUM PERMITTED PREPAYMENT" as of any date means the amount equal to
the lesser of the following:
(1) the sum of:
(A) eighty-nine and nine-tenths of one percent (89.9%)
of the aggregate of (i) all Project Costs paid or
incurred on or prior to such date, plus (ii)
ninety-seven percent (97%) of Carrying Costs added
to the Outstanding Construction Allowance on or
prior to such date; plus
(B) any amount by which the value of BNPLC's interest
in the Land and its appurtenances are less than the
price paid by BNPLC for the same as determined
reasonably and in good faith by BNPLC after
consulting with an independent appraiser; or
(2) eighty-nine and nine-tenths of one percent (89.9%) of
Stipulated Loss Value on such date.
"MAXIMUM REMARKETING OBLIGATION" shall have the meaning indicated in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"MINIMUM EXTENDED REMARKETING PRICE" shall have the meaning assigned to
it in subparagraph 2(B) of the Purchase Agreement.
"MOODY'S" means Moody's Investor Service, Inc.
"NORMAL TENANT IMPROVEMENTS" shall have the meaning assigned to it in
subparagraph 3(A) of the Construction Management Agreement.
List of Defined Terms - Page 17
<PAGE> 94
"NOTICE OF FCI'S INTENT TO TERMINATE" shall have the meaning assigned to
it in subparagraph 5(D) of the Construction Management Agreement.
"OPERATIVE DOCUMENTS" means the Closing Certificate, the Lease, the
Construction Management Agreement and the Purchase Agreement.
"OUTSTANDING CONSTRUCTION ALLOWANCE" shall have the meaning assigned to
it in subparagraph 6.(a) of the Lease.
"PARTICIPANT" means BNPLC's Parent, Allied Irish Banks PLC, Bank of
America National Trust and Savings Association, Security Pacific Leasing
Corporation, First Union National Bank, Mellon Bank, N.A., Standard Chartered
Bank and any other Person that, upon becoming a party to the Participation
Agreement by executing a supplement thereto as contemplated therein, agrees from
time to time to participate in all or some of the risks and rewards to BNPLC of
the Lease, the Purchase Agreement and the Closing Certificate. As of the
Effective Date, the only Participant is BNPLC's Parent, but BNPLC may agree
after the Effective Date to share in risks and rewards of the Lease, the
Purchase Agreement, and the Closing Certificate with other Participants.
However, no Person other than BNPLC's Parent, Allied Irish Banks PLC, Bank of
America National Trust and Savings Association, Security Pacific Leasing
Corporation, First Union National Bank, Mellon Bank, N.A., Standard Chartered
Bank and their respective Affiliates shall qualify as a Participant for purposes
of the Lease, the Purchase Agreement, the Closing Certificate or other
agreements concerning the Property to which SGC is a party unless such Person
became a party to the Participation Agreement by executing a supplement to that
agreement as contemplated therein and, at the time of execution of the
supplement either (i) such Person had obtained SGC's prior written approval
(which approval will not be unreasonably withheld), or (ii) an Event of Default
had occurred and was continuing.
"PARTICIPATION AGREEMENT" means the Amended and Restated Participation
Agreement dated as of the Effective Date, between BNPLC and the Participants and
any other Participants that may become parties thereto as contemplated therein,
pursuant to which BNPLC's Parent has agreed to participate in the risks and
rewards to BNPLC of the Lease and the Purchase Agreement, as such Participation
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"PERMITTED ENCUMBRANCES" means (i) the encumbrances and other matters
affecting the Property that are set forth in Exhibit B attached to the Lease,
(ii) any easement agreement or other document affecting title to the Property
executed by BNPLC at the request of or with the consent of FCI, (iii) any liens
from time to time imposed to secure only ad valorem taxes on the Property which,
at the time in question, are not delinquent, and (iv) the terms and conditions
of the Existing Contract that survived the conveyance of the Land from Seller to
BNPLC.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage
and offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not:
(1) exceed that reasonably required for the construction of the
Construction Project in accordance with the Lease and the Construction
Management Agreement or for the operation of the Property for the
purposes expressly permitted under subparagraph 3.(a) of the Lease; or
(2) include any disposal, discharge or other release of
Hazardous Substances from the Property in
List of Defined Terms - Page 18
<PAGE> 95
any manner that might allow such substances to reach surface water or
groundwater, except (i) through a lawful and properly authorized
discharge (A) to a publicly owned treatment works or (B) with rainwater
or storm water runoff in accordance with Applicable Laws and any permits
obtained by FCI that govern such runoff; or (ii) any such disposal,
discharge or other release of Hazardous Substances for which no permits
are required and which are not otherwise regulated under applicable
Environmental Laws.
Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for the construction of the Construction Project or for the
use of the Property by FCI and its permitted subtenants and assigns for the
purposes expressly permitted by subparagraph 3.(a) of the Lease, in either case
in strict compliance with all Environmental Laws and with due care given the
nature of the Hazardous Substances involved. Without limiting the generality of
the foregoing, Permitted Hazardous Substances shall include usual and customary
office, laboratory and janitorial products.
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance of rights and interests in favor of the BNPLC's Parent or
other Participants pursuant to the terms and conditions of the Participation
Agreement, provided that in any case where rights or interests in the Property
are so created or conveyed, the rights or interests are made expressly subject
to the rights of FCI under the Lease and the Purchase Agreement; (2) any
assignment or conveyance by BNPLC to any present or future Participant of any
lien or security interest against the Property (in contrast to a conveyance of
BNPLC's fee estate) or of any interest in Rent, payments required by or under
the Purchase Agreement or payments to be generated from the Property after the
Term, provided that such assignment or conveyance is made expressly subject to
the rights of FCI under the Lease and the Purchase Agreement; (3) any agreement
to exercise or refrain from exercising rights or remedies under the Lease or the
Purchase Agreement made by BNPLC with any present or future Participant; (4) any
assignment or conveyance by BNPLC requested by FCI or required by any Permitted
Encumbrance, by Development Documents, by the Purchase Agreement or by
Applicable Laws; (5) conveyances or transfers by BNPLC or its Affiliates to
BNPLC or its Affiliates, provided that in the case of any such conveyance or
transfer that covers any interest in the Property, the conveyance or transfer is
made expressly subject to the rights of FCI under the Lease and the Purchase
Agreement; or (6) any other assignment or conveyance by BNPLC when an Event of
Default shall have occurred and be continuing or after a Landlord's Election to
Continue Construction or after the Designated Sale Date (provided, that if the
assignment or conveyance constitutes a sale of BNPLC's fee estate in the
Property, and if at the time of the sale FCI's Extended Remarketing Right under
Paragraph 2 of the Purchase Agreement has not expired or been terminated as
provided in the Purchase Agreement, then the sale will be subject to FCI's
Extended Remarketing Right.)
"PERSON" means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or agency or political subdivision
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
"PERSONAL PROPERTY" shall have the meaning assigned to it on page 2 of
the Lease.
"PLAN" means at any time an employee pension benefit plan which is
covered under Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and is either (i) maintained by
FCI, Guarantor or any
List of Defined Terms - Page 19
<PAGE> 96
Subsidiary of FCI or Guarantor for employees of FCI, Guarantor or any Subsidiary
of FCI or Guarantor or (ii) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions and to which FCI, Guarantor or any Subsidiary of FCI or Guarantor
is then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
"POTENTIAL LIEN CLAIMANTS" means (1) general contractors, or (2) other
parties who have filed any required statutory notices, or who have actually
notified BNPLC or FCI of claims, in order to preserve or establish their right
to a mechanic's or materialman's lien against the Property in connection with
any Construction Project.
"PRIME RATE" means the prime interest rate or equivalent charged by
BNPLC's Parent in the United States of America as announced or published by
BNPLC's Parent from time to time, which need not be the lowest interest rate
charged by BNPLC's Parent. If for any reason BNPLC's Parent does not announce or
publish a prime rate or equivalent, the prime rate or equivalent announced or
published by either Citibank, N.A. or any New York branch or office of Credit
Commercial de France as selected by BNPLC shall be used to compute the rate
describe in the preceding sentence. The prime rate or equivalent announced or
published by such bank need not be the lowest rate charged by it. The Prime Rate
may change from time to time after the Effective Date without notice to FCI as
of the effective time of each change in rates described in this definition.
"PRIOR WORK" shall have the meaning assigned to it in subparagraph
2(C)(2)(b) of the Construction Management Agreement.
"PROJECT COSTS" means the following:
1. costs incurred for the Work (as defined in the Construction
Management Agreement), including not only hard costs incurred for the
new Improvements described in Exhibit B attached to the Construction
Management Agreement, but also the following costs to the extent
reasonably incurred in connection with the Construction Project:
o soft costs, such as architectural fees, engineering
fees and fees and costs paid in connection with
obtaining project permits and approvals required by
governmental authorities or the Development Documents,
o site preparation costs, and
o costs of offsite and other public improvements required
as conditions of governmental approvals for the
Construction Project;
2. costs incurred to maintain insurance required by (and
consistent with the requirements of) the Lease prior to the Base Rent
Commencement Date;
3. a fraction of the cost of title insurance incurred to
satisfy the condition set forth in subparagraph 5(B)(3)(a) of the
Construction Management Agreement, the numerator of which fraction is
the difference computed by subtracting the price paid by BNPLC for the
Land from the maximum dollar amount of coverage provided by the title
insurance, and the denominator of which fraction is equal to such
maximum dollar amount of coverage;
4. Impositions that have accrued or become due under the Lease
prior to the Base Rent
List of Defined Terms - Page 20
<PAGE> 97
Commencement Date; and
5. cancellation or termination fees or other compensation
payable by FCI or BNPLC pursuant to any contract concerning the
Construction Project made by FCI or BNPLC with any general contractor,
architect, engineer or other third party because of any election by FCI
or BNPLC to cancel or terminate such contract.
"PROJECTED COST OVERRUNS" shall have the meaning assigned to it in
subparagraph 4(A) of the Construction Management Agreement.
"PROPERTY" means the Personal Property and the Real Property,
collectively.
"PURCHASE AGREEMENT" means the Amended and Restated Purchase Agreement
dated as of July 16, 1998 between BNPLC and FCI pursuant to which FCI has agreed
to purchase or to arrange for the purchase by a third party of BNPLC's interest
in the Property, as such Purchase Agreement may be extended, supplemented,
amended, restated or otherwise modified from time to time in accordance with its
terms.
"PURCHASE OPTION" shall have the meaning assigned to it in subparagraph
1(A)(1) of the Purchase Agreement.
"QUALIFIED PAYMENTS" means (A) any Issue 97-10 Prepayments received by
BNPLC, (B) any Voluntary FCI Construction Contributions received by BNPLC
pursuant to subparagraph 4(C) of the Construction Management Agreement, and (C)
any payments received by BNPLC from time to time during the Term (1) under any
property insurance policy as a result of damage to the Property, (2) as
compensation for any restriction placed upon the use or development of the
Property or for the condemnation of the Property or any portion thereof, (3)
because of any judgment, decree or award for injury or damage to the Property or
(4) under any title insurance policy or otherwise as a result of any title
defect or claimed title defect with respect to the Property; provided, however,
that (x) in determining the amount of "Qualified Payments", there shall be
deducted all expenses and costs of every kind, type and nature (including taxes,
Breakage Costs and Attorneys' Fees) incurred by BNPLC with respect to the
collection or application of such payments, (y) "Qualified Payments" shall not
include any payment to BNPLC by a Participant or an Affiliate of BNPLC that is
made to compensate BNPLC for the Participant's or Affiliate's share of any
Losses BNPLC may incur as a result of any of the events described in the
preceding clauses (1) through (4) and (z) "Qualified Payments" shall not include
any payments received by BNPLC that BNPLC has paid or is obligated to pay to FCI
for the restoration or repair of the Property or that BNPLC is holding as
Escrowed Proceeds pursuant to Paragraph 11 of the Lease or any other provision
of the Lease. For purposes of computing the total Qualified Payments (and other
amounts dependent upon Qualified Payments, such as Stipulated Loss Value and the
Outstanding Construction Allowance) paid to or received by BNPLC as of any date,
payments described in the preceding clauses (1) through (4) will be considered
as Escrowed Proceeds, not Qualified Payments, until they are actually applied as
Qualified Payments by BNPLC as provided in subparagraph 11.(c) of the Lease.
"REAL PROPERTY" shall have the meaning assigned to it on page 1 of the
Lease.
"REIMBURSABLE CONSTRUCTION-PERIOD COSTS" shall have the meaning assigned
to it in Paragraph 2 of the Construction Management Agreement.
"REMEDIAL WORK" means any investigation, monitoring, clean-up,
containment, remediation, removal,
List of Defined Terms - Page 21
<PAGE> 98
payment of response costs, or restoration work and the preparation and
implementation of any closure or other required remedial plans that any
governmental agency or political subdivision requires or approves (or could
reasonably be expected to require if it was aware of all relevant circumstances
concerning the Property), whether by judicial order or otherwise, because of the
presence of or suspected presence of Hazardous Substances in, on, under or about
the Property or because of any prior Hazardous Substance Activity. Without
limiting the generality of the foregoing, Remedial Work also means any
obligations imposed upon or undertaken by FCI pursuant to Development Documents
or any recommendations or proposals made therein.
"RENT" means the Base Rent and all Additional Rent.
"RESIDUAL RISK PERCENTAGE" means fifteen percent (15%) or such greater
percentage, but in no event greater than eighteen percent (18%), as is necessary
to cause the Lease to satisfy the FAS 13 "90% test" for an operating lease under
GAAP. At any time after the Base Rent Commencement Date, upon request of either
BNPLC or FCI, the parties will execute a written acknowledgment of the amount of
the Residual Risk Percentage (not less than 15% and not more than 18%)
calculated in accordance with this definition.
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of either FCI or Guarantor,
as the case may be.
"S&P" means Standard and Poor's Corporation.
"SCOPE CHANGE" shall have the meaning assigned to it in subparagraph
1(A)(1)(b) of the Construction Management Agreement.
"SELLER" means Berg & Berg Enterprises.
"SPREAD", means:
(A) From July 16, 1998 through and including November 30, 1998,
for each Construction Period or period beginning on and including a Base Rent
Date and ending on but not including the next Base Rent Date, the amount
established as described below in this definition on the date that is two
Business Days prior to such period by reference to the stated (or published,
implied) rating by S&P or by Moody's applicable to the Index Debt on that date.
The Spread shall be established at the Level in the pricing grid below which
corresponds to the rating of S&P and Moody's, respectively, applicable to the
Index Debt; provided that (a) if one, but not both, of Moody's or S&P shall not
have in effect a rating (stated or published, implied) for the Index Debt, then
the Spread shall be determined solely with reference to the available rating by
the rating agency that still rates the Index Debt; (b) if the ratings
established by Moody's and S&P for the Index Debt shall indicate two different
but consecutive Levels, the Spread shall be based on the more favorable to
Guarantor of the two Levels; (c) if the ratings established by Moody's and S&P
for the Index Debt shall indicate two different but nonconsecutive Levels, the
Spread shall be the average of the Spreads corresponding to such Levels; (d) if
the rating established by Moody's or S&P for the Index Debt shall be changed
(other than as a result of a change in the rating system of Moody's or S&P),
such change shall be effective on the date on which it is first announced by the
applicable rating agency; (e) notwithstanding anything to the contrary in (a)
through (d) above, but subject to (f) and (g) below, if either the rating
established by Moody's for the Index Debt of Guarantor is below Ba2 or the
rating established by S&P for the Index Debt of Guarantor is below BB, the
Spread shall be 80.0 basis points; (f) notwithstanding anything to the contrary
in (a) through (e) above, but subject to (g) below, if Moody's does not
establish a rating for the Index Debt of Ba2 or higher (including if Moody's has
ceased to establish any rating for the Index Debt) and S&P does not
List of Defined Terms - Page 22
<PAGE> 99
establish a rating for the Index Debt of BB or higher (including if S&P has
ceased to establish any rating of the Index Debt), the Spread shall be the
difference computed by subtracting the Effective Rate from the rate that is 50.0
basis points above the Prime Rate; and (g) notwithstanding anything to the
contrary in (a) through (f) above, on any date where an Event of Default has
occurred and is continuing, the Spread shall equal the Default Rate less the
Effective Rate.
<TABLE>
<CAPTION>
LEVELS S&P RATING MOODY'S RATING MARGIN
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Level I BBB+ (or better) Baa1 (or better) 32.5 basis points
Level II BBB Baa2 40.0 basis points
Level III BBB- Baa3 48.75 basis points
Level IV BB+ Ba1 67.5 basis points
Level V BB Ba2 80.0 basis points
</TABLE>
All determinations of the Spread by BNPLC shall, in the absence of clear and
demonstrable error, be binding and conclusive for purposes of the Lease. Further
BNPLC may, but shall not be required, to rely on the determination of the Spread
set forth in any certificate delivered by Guarantor pursuant to subparagraph
16.(b)(ii) of the Lease, and no reduction in the Spread will be effective
because of an improvement in the S&P Rating or the Moody's Rating before the
date that Guarantor has notified BNPLC thereof by delivery of such a
certificate.
(B) From and after December 1, 1998, for each Construction
Period or period beginning on and including a Base Rent Date and ending on but
not including the next Base Rent Date, the amount established as described below
in this definition on the date that is two Business Days prior to such period by
reference to the stated (or published, implied) rating by S&P or by Moody's
applicable to the Index Debt on that date. The Spread shall be established at
the Level in the pricing grid below which corresponds to the rating of S&P and
Moody's, respectively, applicable to the Index Debt; provided that (a) if one,
but not both, of Moody's or S&P shall not have in effect a rating (stated or
published, implied) for the Index Debt, then the Spread shall be determined
solely with reference to the available rating by the rating agency that still
rates the Index Debt; (b) if the ratings established by Moody's and S&P for the
Index Debt shall indicate two different but consecutive Levels, the Spread shall
be based on the more favorable to Guarantor of the two Levels; (c) if the
ratings established by Moody's and S&P for the Index Debt shall indicate two
different but nonconsecutive Levels, the Spread shall be the average of the
Spreads corresponding to such Levels; (d) if the rating established by Moody's
or S&P for the Index Debt shall be changed (other than as a result of a change
in the rating system of Moody's or S&P), such change shall be effective on the
date on which it is first announced by the applicable rating agency; (e)
notwithstanding anything to the contrary in (a) through (d) above, but subject
to (f) and (g) below, if either the rating established by Moody's for the Index
Debt of Guarantor is below Ba2 or the rating established by S&P for the Index
Debt of Guarantor is below BB, the Spread shall be 80.0 basis points; (f)
notwithstanding anything to the contrary in (a) through (e) above, but subject
to (g) below, if Moody's does not establish a rating for the Index Debt of Ba2
or higher (including if Moody's has ceased to establish any rating for the Index
Debt) and S&P does not establish a rating for the Index Debt of BB or higher
(including if S&P has ceased to establish any rating of the Index Debt), the
Spread shall be the difference computed by subtracting the Effective Rate from
the rate that is 50.0 basis points
List of Defined Terms - Page 23
<PAGE> 100
above the Prime Rate; and (g) notwithstanding anything to the contrary in (a)
through (f) above, on any date where an Event of Default has occurred and is
continuing, the Spread shall equal the Default Rate less the Effective Rate.
<TABLE>
<CAPTION>
LEVELS S&P RATING MOODY'S RATING MARGIN
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Level I BBB+ (or better) Baa1 (or better) 40 basis points
Level II BBB Baa2 50 basis points
Level III BBB- Baa3 60 basis points
Level IV BB+ Ba1 75 basis points
Level V BB Ba2 95 basis points
</TABLE>
All determinations of the Spread by BNPLC shall, in the absence of clear and
demonstrable error, be binding and conclusive for purposes of the Lease. Further
BNPLC may, but shall not be required, to rely on the determination of the Spread
set forth in any certificate delivered by Guarantor pursuant to subparagraph
16.(b)(ii) of the Lease, and no reduction in the Spread will be effective
because of an improvement in the S&P Rating or the Moody's Rating before the
date that Guarantor has notified BNPLC thereof by delivery of such a
certificate.
"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum
of the Initial Funding Advance, plus the sum of all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
such date, minus all funds received by BNPLC and applied as Qualified Payments
on or prior to such date. Under no circumstances will any payment of Base Rent,
Commitment Fees or Administrative Agency Fees reduce Stipulated Loss Value.
"SUBSIDIARY" means any corporation of which another corporation owns,
directly or indirectly, such number of outstanding shares as have more than
fifty percent (50%) of the ordinary voting power for the election of directors.
"SUPPLEMENTAL PAYMENT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"TERM" shall have the meaning assigned to it in Paragraph 1.(a) of the
Lease.
"THIRD PARTY CONTRACT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(b) of the Construction Management Agreement.
"THIRD PARTY SALE NOTICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY SALE PROPOSAL" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY TARGET PRICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
List of Defined Terms - Page 24
<PAGE> 101
"TRANSACTION EXPENSES" means costs incurred in connection with the
preparation and negotiation of the Operative Documents and related documents and
the consummation of the transactions contemplated therein.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan, the
amount (if any) by which the present value of all benefit liabilities (within
the meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the market
value of all Plan assets allocable to such benefit liabilities, as determined on
the most recent valuation date of the Plan and in accordance with the provisions
of ERISA for calculating the potential liability of FCI or Guarantor or any
ERISA Affiliate of FCI or Guarantor under Title IV of ERISA.
"VOLUNTARY FCI CONSTRUCTION CONTRIBUTIONS" shall have the meaning
assigned to it in subparagraph 4(C) of the Construction Management Agreement.
"VOLUNTARY RETENTION OF THE PROPERTY" means an affirmative election made
by BNPLC to keep the Property pursuant to, and under the circumstances described
in subparagraph 1(A)(2)(a) of the Purchase Agreement.
"WORK" shall have the meaning assigned to it in subparagraph 1(A)(2)(a)
of the Construction Management Agreement.
List of Defined Terms - Page 25
<PAGE> 1
EXHIBIT 10.5
================================================================================
$16,000,000
AMENDED AND RESTATED
PURCHASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
FORCE COMPUTERS, INC.
("FCI")
JULY 16, 1998
(SAN JOSE, CALIFORNIA)
================================================================================
PURSUANT TO AND AS MORE PARTICULARLY PROVIDED IN PARAGRAPH 15 OF THIS AGREEMENT,
THE LEASE REFERENCED HEREIN AND THIS PURCHASE AGREEMENT ARE TO CONSTITUTE, FOR
INCOME TAX PURPOSES ONLY, A FINANCING ARRANGEMENT OR CONDITIONAL SALE. AS
PROVIDED IN PARAGRAPH 15 OF THIS AGREEMENT, BNPLC AND FCI EXPECT THAT FCI (AND
NOT BNPLC) SHALL BE TREATED AS THE TRUE OWNER OF THE PROPERTY FOR INCOME TAX
PURPOSES, THEREBY ENTITLING FCI (AND NOT BNPLC) TO TAKE DEPRECIATION DEDUCTIONS
AND OTHER TAX BENEFITS AVAILABLE TO THE OWNER.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1 FCI'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE............................1
(A) Right to Purchase; Right and Obligation to Remarket...........................1
(B) Determination of Fair Market Value............................................3
(C) Designation of the Purchaser..................................................3
2 FCI'S RIGHTS AND OPTIONS AFTER THE DESIGNATED SALE DATE..............................3
(A) FCI's Extended Right to Remarket..............................................3
(B) Definition of Minimum Extended Remarketing Price..............................4
(C) BNPLC's Right to Sell.........................................................5
(D) FCI's Right to Excess Sales Proceeds..........................................5
3 TERMS OF CONVEYANCE UPON PURCHASE....................................................5
4 SURVIVAL AND TERMINATION OF THE RIGHTS AND OBLIGATIONS OF FCI AND BNPLC..............6
(A) Status of this Agreement Generally............................................6
(B) Election by FCI to Terminate the Purchase Option and FCI's Initial Remarketing
Rights and Obligations Prior to the Base Rent Commencement Date...............6
(C) Election by BNPLC to Terminate the Purchase Option and FCI's Initial
Remarketing Rights and Obligations............................................7
(D) Automatic Termination of Certain Rights of FCI................................7
(E) Termination of FCI's Extended Remarketing Rights to Permit a Sale by BNPLC....7
(F) Payment Only to BNPLC.........................................................8
(G) Remedies Under the Other Operative Documents..................................8
5 EFFECT OF SALE UPON INTERVENING ENCUMBRANCES.........................................8
6. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF FCI...............................8
(A) No Default or Violation.......................................................8
(B) No Suits......................................................................9
(C) Enforceability................................................................9
(D) Organization..................................................................9
(E) Omissions.....................................................................9
7 CERTAIN REMEDIES CUMULATIVE..........................................................9
8. ATTORNEYS' FEES AND LEGAL EXPENSES...................................................9
9. ESTOPPEL CERTIFICATE.................................................................9
10. SUCCESSORS AND ASSIGNS..............................................................10
11. MISCELLANEOUS.......................................................................10
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
(A) Notices......................................................................10
(B) Severability.................................................................12
(C) No Implied Waiver............................................................12
(D) NO IMPLIED REPRESENTATIONS BY BNPLC..........................................12
(E) Entire Agreement.............................................................12
(F) Time is of the Essence.......................................................12
(G) Governing Law................................................................12
(H) Paragraph Headings...........................................................13
(I) Other Terms and References...................................................13
(J) Not a Partnership, Etc.......................................................13
12. WAIVER OF JURY TRIAL................................................................13
13. ADDITIONAL RIGHTS OF BNPLC RELATING TO ESCROWED PROCEEDS............................14
14. SECURITY FOR BNPLC'S OBLIGATIONS....................................................14
15. INCOME TAX REPORTING................................................................14
Exhibits and Schedules
Exhibit A....................................................................Legal Description
Exhibit B................................................................Special Warranty Deed
Exhibit C...............................................Preliminary Change of Ownership Report
Exhibit D..........................................................Bill of Sale and Assignment
Exhibit E........................................................Acknowledgment and Disclaimer
Exhibit F................................................................Intentionally Deleted
Exhibit G..............................................................Secretary's Certificate
Exhibit H..................................................Instruction Letter to Title Insurer
Exhibit I...................................................................FIRPTA Certificate
Exhibit J...............................................Indemnity for Liens Removable by BNPLC
Exhibit K...............................................Notice by FCI of Election to Terminate
List of Defined Terms.......................................................Shared Definitions
</TABLE>
(ii)
<PAGE> 4
AMENDED AND RESTATED
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "AGREEMENT"), by and between BNP LEASING
CORPORATION, a Delaware corporation ("BNPLC"), and FORCE COMPUTERS, INC., a
Delaware corporation ("FCI"), is dated as of July 16, 1998, the Effective Date.
("EFFECTIVE DATE" and other capitalized terms used and not otherwise defined in
this Agreement are intended to have the meanings assigned to them in the List of
Defined Terms attached to and made a part of the Amended and Restated Lease
Agreement dated of even date herewith between BNPLC, as landlord, and FCI, as
tenant. By this reference, such List of Defined Terms is incorporated into and
made a part of this Agreement for all purposes.)
RECITALS
A. Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC acquired the Land and any appurtenances thereto from Seller
contemporaneously with the execution of a Purchase Agreement dated July 16,
1998.
B. Contemporaneously herewith FCI and BNPLC are executing an Amended and
Restated Lease Agreement dated the date hereof pursuant to which BNPLC has
agreed to lease to FCI certain Land and Improvements thereon which are described
in the Lease and to provide to FCI funding for the construction of Improvements
to be owned by BNPLC. The Amended and Restated Lease (as from time to time
supplemented, amended or restated, the "LEASE") incorporates changes to a prior
Lease Agreement dated July 16, 1998, and supersedes and replaces the prior Lease
Agreement in its entirety. (BNPLC's interests in the Land, the Improvements and
in all other real and personal property from time to time covered by the Lease
and included within the "Property" as defined therein are hereinafter
collectively referred to as the "PROPERTY".)
C. Contemporaneously herewith FCI and BNPLC are executing a Construction
Management Agreement dated the date hereof (as from time to time supplemented,
amended or restated, the "CONSTRUCTION MANAGEMENT AGREEMENT"), pursuant to which
BNPLC has authorized FCI to construct certain improvements on the land covered
by the Lease and agreed to provide a construction allowance for such
construction on and subject to the terms and conditions described therein.
D. Contemporaneously herewith FCI is executing an Amended and Restated
Closing Certificate and Agreement dated the date hereof (as from time to time
supplemented, amended or restated, the "CLOSING CERTIFICATE"), pursuant to which
FCI has made certain representations to BNPLC concerning the Property and has
agreed to indemnify BNPLC for certain matters relating to the Property. The
Amended and Restated Closing Certificate incorporates changes to a prior Closing
Certificate dated as of July 16, 1998, and supersedes and replaces the prior
Closing Certificate in its entirety.
E. FCI and BNPLC are executing this Amended and Restated Purchase
Agreement dated the date hereof (as from time to time supplemented, amended or
restated the "PURCHASE AGREEMENT") pursuant to which FCI has agreed to purchase
or arrange for the purchase of the Property as more particularly provided
herein. The Amended and Restated Purchase Agreement incorporates changes to a
prior Purchase Agreement dated as of July 16, 1998, and supersedes and replaces
the prior Purchase Agreement in its entirety.
AGREEMENTS
1. FCI'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE.
<PAGE> 5
(A) Right to Purchase; Right and Obligation to Remarket. Whether
or not an Event of Default shall have occurred and be continuing or the Lease
shall have been terminated, but subject to Paragraph 4 below:
(1) FCI shall have the right (the "PURCHASE OPTION") to
purchase or cause an Affiliate of FCI to purchase BNPLC's interest in
the Property and in Escrowed Proceeds, if any, on the Designated Sale
Date for a cash price equal to the Break Even Price. As used herein,
"BREAK EVEN PRICE" means an amount equal, on the Designated Sale Date,
to Stipulated Loss Value, plus all costs and expenses (including
appraisal costs, withholding taxes (if any) other than Excluded Taxes,
and Attorneys' Fees) incurred in connection with any sale of BNPLC's
interests in the Property under this Agreement or in connection with
collecting payments due hereunder, and plus an amount equal to the
Balance of Unpaid Construction-Period Indemnity Payments, but less the
amount of any Deductible Judgment that FCI may elect to pay on or before
the Designated Sale Date in order to remove the Deductible Judgment as a
Lien against the Property. As used herein, the "BALANCE OF UNPAID
CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" means an amount equal to the sum
of Construction-Period Indemnity Payments, if any, that FCI elected not
to pay pursuant to subparagraph 5(e)(ii) of the Lease, plus interest
accruing at the Default Rate, compounded annually, on each such payment
from the date such payment would have become but for FCI's election not
to pay it as permitted by subparagraph 5(e)(ii) of the Lease.
(2) If for any reason whatsoever (including any
termination of FCI's Purchase Option as described in subparagraph 4(D)
below), neither FCI nor an Affiliate of FCI purchases BNPLC's interest
in the Property and in any Escrowed Proceeds on the Designated Sale Date
as provided in the preceding subparagraph 1(A)(1), then FCI shall have
the following rights and obligations (collectively, "FCI'S INITIAL
REMARKETING RIGHTS AND OBLIGATIONS"):
(a) First, FCI shall have the right (but not the
obligation) to cause an Applicable Purchaser who is not an
Affiliate of FCI to purchase BNPLC's interest in the Property and
any Escrowed Proceeds on the Designated Sale Date for a net cash
purchase price not below the lesser of (I) Fair Market Value, or
(II) the Break Even Price. If, however, a net cash price actually
tendered or to be tendered to BNPLC by an Applicable Purchaser
identified by FCI in accordance with the preceding sentence is
below the amount equal to the Break Even Price less any
Supplemental Payment tendered by FCI as described below, then
BNPLC may affirmatively elect to decline such tender and to keep
the Property and any Escrowed Proceeds rather than sell to the
Applicable Purchaser (a "VOLUNTARY RETENTION OF THE PROPERTY").
(b) Second, if the cash price actually paid by an
Applicable Purchaser to BNPLC on the Designated Sale Date exceeds
the Break Even Price, FCI shall be entitled to such excess,
subject, however, to BNPLC's right to offset against such excess
any and all sums that are then due from FCI to BNPLC under the
other Operative Documents.
(c) Third, if for any reason whatsoever (including
any failure of FCI to cause an Applicable Purchaser to tender a
purchase price to BNPLC or any Voluntary Retention of the
Property) the amount of the Break Even Price exceeds any cash
sales proceeds actually received by BNPLC on the Designated Sale
Date in connection with a sale of BNPLC's interest in the
Property and any Escrowed Proceeds pursuant to this Agreement
(such excess being hereinafter called a "DEFICIENCY"), then FCI
shall have the obligation to pay to BNPLC on the Designated Sale
Date a supplemental payment (the "SUPPLEMENTAL PAYMENT") equal to
the
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<PAGE> 6
lesser of the (1) the Deficiency or (2) Maximum Remarketing
Obligation. As used herein, "MAXIMUM REMARKETING OBLIGATION"
means a dollar amount determined in accordance with the following
provisions:
(1) "MAXIMUM REMARKETING OBLIGATION" will
equal the product of (i) Stipulated Loss Value on the
Designated Sale Date, times (ii) 100% minus the Residual
Risk Percentage, provided that both of the following
conditions are satisfied:
(x) The Designated Sale Date shall
occur on the first Business Day of August, 2003, as
provided in clause (1) of the definition of
Designated Sale Date in the List of Defined Terms
attached to the Lease; and
(y) No Event of Default, other than
an Issue 97-1 Non-performance-related Subjective
Event of Default, shall occur on or be continuing
on the Designated Sale Date.
(2) If either of the conditions listed in
subparagraph 1) preceding are not satisfied, "MAXIMUM
REMARKETING OBLIGATION" will equal the Break Even Price.
Notwithstanding the foregoing, in the event of any Voluntary
Retention of the Property, the amount of the Supplemental Payment
calculated as provided in this subparagraph (c) will be reduced
(but not below zero) by the amount of any Escrowed Proceeds held
by and that will be retained by BNPLC after the Designated Sale
Date.
If any Supplemental Payment or other amount payable to BNPLC pursuant to this
subparagraph 1(A) is not actually paid to BNPLC on the Designated Sale Date, FCI
shall pay interest on the past due amount computed at the Default Rate from the
Designated Sale Date. However, FCI shall be entitled to a credit against the
interest required by the preceding sentence equal to the Base Rent, if any,
actually paid by FCI pursuant to the Lease for any period after the Designated
Sale Date.
(B) Determination of Fair Market Value. To give BNPLC the
opportunity before the Designated Sale Date to have Fair Market Value determined
by an appraiser (as provided in the definition of Fair Market Value), FCI must,
unless FCI concedes that Fair Market Value will be no less than the Break Even
Price on the Designated Sale Date, provide BNPLC with a Remarketing Notice. As
used in this Agreement, "REMARKETING NOTICE" means a notice given by FCI to
BNPLC (and to each of the Participants) no earlier than two hundred seventy days
before the Designated Sale Date and no later than one hundred and eighty days
before the Designated Sale Date, specifying that FCI does not concede that Fair
Market Value will be greater than the Break Even Price. No Remarketing Notice
will be required if FCI does concede that Fair Market Value will equal or exceed
the Break Even Price on the Designated Sale Date. But if for any reason
(including any acceleration of the Designated Sale Date as provided in the
definition thereof in the List of Defined Terms attached to the Lease) FCI fails
to provide a Remarketing Notice within the time periods specified in the
definition of Remarketing Notice above, Fair Market Value shall, for purposes of
determining any Supplemental Payment required by this Agreement, be deemed to be
no less than the Residual Risk Percentage of Stipulated Loss Value on the
Designated Sale Date.
(C) Designation of the Purchaser. To give BNPLC the opportunity
before the Designated Sale Date to prepare the deed and other documents that
BNPLC must tender pursuant to Paragraph 3
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<PAGE> 7
(collectively, the "SALE CLOSING DOCUMENTS"), FCI must, by a notice to BNPLC
given at least twenty days prior to the Designated Sale Date, specify
irrevocably, unequivocally and with particularity any party who will purchase
BNPLC's interest in the Property as provided in subparagraph 1(A). If for any
reason FCI fails to so specify a party who will in accordance with the terms and
conditions set forth herein purchase BNPLC's interest in the Property (be it FCI
itself, an Affiliate of FCI or another Applicable Purchaser), BNPLC shall be
entitled to postpone the tender of the Sale Closing Documents until a date after
the Designated Sale Date and not more than twenty days after FCI finally does so
specify a party, but such postponement will not relieve or postpone the
obligation of FCI to make a Supplemental Payment on the Designated Sale Date as
provided in Paragraph 1(A)(2)(c).
2. FCI'S RIGHTS AND OPTIONS AFTER THE DESIGNATED SALE DATE.
(A) FCI's Extended Right to Remarket. During the period
commencing on the Designated Sale Date and ending on the second anniversary of
the Designated Sale Date ("FCI'S EXTENDED REMARKETING PERIOD"), FCI shall have
the right ("FCI'S EXTENDED REMARKETING RIGHT") to cause an Applicable Purchaser
who is not an Affiliate of FCI to purchase BNPLC's interest in the Property for
a cash purchase price not below the lesser of (I) the Minimum Extended
Remarketing Price (as defined below), or (II) the Third Party Target Price (as
defined below) specified in any Third Party Sale Notice (as defined below) given
by BNPLC pursuant to subparagraph 2(C)(2) within the ninety days prior to the
date (the "FINAL SALE DATE") upon which BNPLC receives such purchase price from
the Applicable Purchaser. FCI's Extended Remarketing Right shall, however, be
subject to all of the following conditions:
(1) No Event of Default shall occur on or be continuing on
the Designated Sale Date.
(2) BNPLC's interest in the Property and in Escrowed
Proceeds, if any, shall not have been sold on the Designated Sale Date
as provided in Paragraph 1, and on the Designated Sale Date FCI shall
have paid the full amount of any Supplemental Payment to BNPLC required
by subparagraph 1(A)(2)(c). (If, however, as provided in subparagraph
4(B) FCI shall have properly exercised its right to terminate FCI's
Initial Remarketing Rights and Obligations and paid an Issue 97-10
Prepayment to BNPLC, then payment of the Supplemental Payment shall not
be a condition to FCI's Extended Remarketing Right.)
(3) No Voluntary Retention of the Property shall have
occurred as described in subparagraph 1(A)(2)(a).
(4) FCI's Extended Remarketing Right shall not have been
terminated by BNPLC pursuant to subparagraph 4(E) below.
(5) At least thirty days prior to the Final Sale Date, FCI
shall have notified BNPLC of (x) the date proposed by FCI as the Final
Sale Date (which must be a Business Day), (y) the full legal name of the
Applicable Purchaser and such other information as will be required to
prepare the Sale Closing Documents, and (z) the amount of the purchase
price that the Applicable Purchaser will pay (consistent with the
minimum required pursuant to this subparagraph 2(A)) for BNPLC's
interest in the Property.
(B) Definition of Minimum Extended Remarketing Price. As used
herein, "MINIMUM EXTENDED REMARKETING PRICE" means an amount equal to the sum of
the following:
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<PAGE> 8
(1) the amount by which the Stipulated Loss Value computed
on the Designated Sale Date exceeds any Supplemental Payment actually
paid to BNPLC on the Designated Sale Date, together with interest on
such excess computed at the Default Rate from the period commencing on
the Designated Sale Date and ending on the Final Sale Date, plus
(2) all costs and expenses (including withholding taxes
[if any] other than Excluded Taxes and Attorneys' Fees) incurred in
connection with the sale of BNPLC's interest in the Property to the
Applicable Purchaser, and plus
(3) the sum of all Impositions, insurance premiums and
other Losses of every kind suffered or incurred by BNPLC or any other
Interest Party with respect to the ownership, operation or maintenance
of the Property on or after the Designated Sale Date, together with
interest on such Impositions, insurance premiums and other Losses
computed at the Default Rate from the date the paid or incurred to the
Final Sale Date.
Notwithstanding the foregoing, in no event will the Minimum Extended Remarketing
Price be less than the fair market value of the Property if any Balance of
Unpaid Construction-Period Indemnity Payments remains after FCI shall have
properly exercised its right to terminate FCI's Initial Remarketing Rights and
Obligations and paid an Issue 97-10 Prepayment to BNPLC as provided in
subparagraph 4(B).
(C) BNPLC's Right to Sell. After the Designated Sale Date, if the
interest of BNPLC in the Property has not already been sold pursuant to
Paragraph 1 of this Agreement, BNPLC shall have the right to sell the Property
or offer the Property for sale on any terms believed to be appropriate by BNPLC
in its sole good faith business judgment; provided, however, that so long as the
conditions to FCI's Extended Remarketing Rights specified in subparagraph 2(A)
continue to be satisfied:
(1) BNPLC shall not sell the Property to an Affiliate of
BNPLC on terms less favorable than those which BNPLC would require from
a prospective purchaser not an Affiliate of BNPLC;
(2) If BNPLC receives a written proposal (including any
"letter of intent" or other nonbinding expression of interest) outlining
the purchase price and general business terms upon which a prospective
purchaser is interested in a possible purchase of the Property, and if
on the basis of such proposal (the "THIRD PARTY SALE PROPOSAL") BNPLC
intends and desires to enter into further negotiations for a more
definitive purchase and sale agreement with the prospective purchaser,
then BNPLC shall, prior to entering into negotiations for a more
definitive purchase and sale agreement, submit the Third Party Sale
Proposal to FCI with a notice (the "THIRD PARTY SALE NOTICE") explaining
that (A) BNPLC is then prepared to accept a price not below an amount
specified in such Third Party Sale Notice (the "THIRD PARTY TARGET
PRICE") from the prospective purchaser if BNPLC and the prospective
purchaser reach agreement on other terms and conditions to be
incorporated into the more definitive purchase and sale agreement, and
(B) FCI's Extended Remarketing Right may be terminated pursuant to
subparagraph 4(E) of this Agreement unless FCI causes an Applicable
Purchaser to consummate a purchase of BNPLC's interest in the Property
pursuant to this Paragraph 2 within ninety days after the date of such
Third Party Sale Notice.
(D) FCI's Right to Excess Sales Proceeds. If the cash price
actually paid by any third party purchasing the Property from BNPLC prior to the
second anniversary of the Designated Sale Date, including any Applicable
Purchaser purchasing from BNPLC pursuant to this Paragraph 2, exceeds the
Minimum
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<PAGE> 9
Remarketing Price, FCI shall be entitled to such excess: provided, however,
BNPLC shall be entitled to offset against such excess any and all sums that are
then due from FCI to BNPLC under the other Operative Documents; and, provided
further, that BNPLC may deduct and retain any Balance of Unpaid
Construction-Period Indemnity Payments from the excess unless FCI shall have
properly exercised its right to terminate FCI's Initial Remarketing Rights and
Obligations and paid an Issue 97-10 Prepayment to BNPLC as provided in
subparagraph 4(B).
3. TERMS OF CONVEYANCE UPON PURCHASE. Subject to any postponement
permitted by subparagraph 1(C), and provided BNPLC has not affirmatively elected
a Voluntary Retention of the Property as permitted by subparagraph 1(A)(2)(a),
promptly after the tender of the purchase price and any other payments to BNPLC
required by and pursuant to the Paragraph 1 or Paragraph 2, as applicable, BNPLC
must convey all of BNPLC's right, title and interest in the Land, Improvements
and other Property by BNPLC's execution, acknowledgment (where appropriate) and
delivery of the Sale Closing Documents to FCI or the Applicable Purchaser, as
the case may be, subject only to the Permitted Encumbrances and any other
encumbrances that do not constitute Liens Removable by BNPLC. However, such
conveyance shall not include the right to receive any payment under the
indemnities under the Operative Documents then due BNPLC or that may become due
thereafter because of any expense or liability incurred by BNPLC resulting in
whole or in part from events or circumstances occurring or alleged to have
occurred before such conveyance. All costs of such purchase and conveyance of
every kind whatsoever, both foreseen and unforeseen, shall be the responsibility
of the purchaser. The Sale Closing Documents used to accomplish such conveyance
shall consist of the following: (1) a Deed in the form attached as Exhibit B,
(2) a State of California Tax Certificate in the form attached as Exhibit C, (3)
a Bill of Sale and Assignment of Lease and Intangible Assets in the form
attached as Exhibit D, (4) an Acknowledgment of Disclaimer of Representations
and Warranties in the form attached as Exhibit E, which FCI or the Applicable
Purchaser must execute and return to BNPLC, (5) a Secretary's Certificate in the
form attached as Exhibit G, (6) a letter to the title insurance company insuring
title to the Property in the form attached as Exhibit H, (7) a certificate
concerning tax withholding in the form attached as Exhibit I, and (8) if
applicable, an Indemnity for Liens Removable by BNPLC in the form attached
hereto as Exhibit J. The Indemnity for Liens Removable by BNPLC described in the
preceding sentence shall be required if, but only if, before the other Sale
Closing Documents are tendered by BNPLC in accordance with this Agreement, FCI
shall have identified, provided a written list to BNPLC of, and been unable to
obtain a commitment for title insurance against, any title encumbrances that FCI
believes in good faith may constitute Liens Removable by BNPLC and that, if
valid, would constitute Liens Removable by BNPLC. Any such Indemnity will be
completed by attaching a list of such identified encumbrances as Annex B
thereto. If for any reason BNPLC fails to tender the Sale Closing Documents as
required by this Paragraph 3, BNPLC may cure such refusal at any time before
thirty days after receipt of a demand for such cure from FCI.
4. SURVIVAL AND TERMINATION OF THE RIGHTS AND OBLIGATIONS OF FCI AND
BNPLC.
(A) Status of this Agreement Generally. Except as expressly
provided herein, this Agreement shall not terminate, nor shall FCI have any
right to terminate this Agreement, nor shall FCI be entitled to any reduction of
the Break Even Price, Deficiency, Maximum Remarketing Obligation or Supplemental
Payment hereunder, nor shall the obligations of FCI to BNPLC under Paragraph 1
be affected by reason of (i) any damage to or the destruction of all or any part
of the Property from whatever cause, (ii) the taking of or damage to the
Property or any portion thereof by eminent domain or otherwise for any reason,
(iii) the prohibition, limitation or restriction of FCI's use of all or any
portion of the Property or any interference with such use by governmental action
or otherwise, (iv) any eviction of FCI or any party claiming under FCI by
paramount title or otherwise, (v) FCI's prior acquisition or ownership of any
interest in the Property, (vi) any default on the part of BNPLC under this
Agreement, the Lease or any other agreement to which BNPLC is
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<PAGE> 10
a party, or (vii) any other cause, whether similar or dissimilar to the
foregoing, any existing or future law to the contrary notwithstanding. It is the
intention of the parties hereto that the obligations of FCI to make payment to
and, if applicable, to cause the Applicable Purchaser to make payment to BNPLC
under Paragraph 1 shall be separate and independent covenants and agreements
from BNPLC's obligations under this Agreement or any other agreement between
BNPLC and FCI.
(B) Election by FCI to Terminate the Purchase Option and FCI's
Initial Remarketing Rights and Obligations Prior to the Base Rent Commencement
Date. At any time prior to the Base Rent Commencement Date, FCI may elect to
terminate both the Purchase Option and FCI's Initial Remarketing Rights and
Obligations, subject to the following conditions:
(1) To be effective, any such election to terminate must be made
after FCI shall have given Notice of FCI's Election to Terminate
pursuant to Paragraph 5(D) of the Construction Management Agreement, but
prior to the Base Rent Commencement Date.
(2) To be effective, any such election to terminate must be made
by giving BNPLC and the Participants a notice thereof in the form
attached as Exhibit K prior to the Base Rent Commencement Date.
(3) No termination pursuant to this subparagraph 4(B) shall be
effective, notwithstanding any notice FCI may have given as described in
the preceding clause (2), unless contemporaneously with the giving of
the notice (and in any event prior to the Base Rent Commencement Date)
FCI shall deliver to BNPLC an Issue 97-10 Prepayment.
(4) If for any reason whatsoever, including any bona fide dispute
over the amount of any required Issue 97-10 Prepayment, BNPLC does not
receive both the notice described in the preceding clause (2) and a full
Issue 97-10 Prepayment as described in the preceding clause (3) prior to
the Base Rent Commencement Date, then without any notice or other action
by the parties to this Agreement FCI shall cease to have any option to
terminate pursuant to this subparagraph 4(B).
(C) Election by BNPLC to Terminate the Purchase Option and FCI's
Initial Remarketing Rights and Obligations. BNPLC shall be entitled to terminate
both the Purchase Option and FCI's Initial Remarketing Rights and Obligations,
as BNPLC deems appropriate in its sole and absolute discretion, at any time
after receiving a notice given by FCI to make or attempt to make any Issue 97-10
Election. Upon any such termination by BNPLC, FCI shall be required to pay BNPLC
an Issue 97-10 Prepayment.
(D) Automatic Termination of Certain Rights of FCI. Without
limiting BNPLC's right to enforce FCI's obligation to make a Supplemental
Payment and other amounts required by this Purchase Agreement, FCI's Purchase
Option and all rights included in FCI's Initial Remarketing Rights and
Obligations hereunder (to be distinguished from FCI's Extended Remarketing
Right) shall terminate automatically if:
(1) BNPLC shall have elected to keep the Property in
accordance with subparagraph 1(A)(2)(a); or
(2) FCI shall have failed on the Designated Sale Date to
make or cause to be made all payments to BNPLC required by this
Agreement or by the other Operative Documents (including the payment on
the Designated Sale Date of the purchase price required from an
Applicable Purchaser if an Applicable Purchaser is to purchase from
BNPLC as provided in subparagraph 1(A)(2)(a)).
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<PAGE> 11
Notwithstanding the foregoing, if BNPLC does not receive all payments due under
this Agreement or other Operative Documents on the Designated Sale Date, FCI may
nonetheless tender to BNPLC the full Break Even Price and all amounts then due
under the Operative Documents, together with interest on the total Break Even
Price computed at the Default Rate from the Designated Sale Date to the date of
tender, and if presented with such a tender within thirty days after the
Designated Sale Date, BNPLC must accept it and promptly thereafter deliver any
Escrowed Proceeds and the Sale Closing Documents listed in Paragraph 3 to FCI.
(E) Termination of FCI's Extended Remarketing Rights to Permit a
Sale by BNPLC. At any time more than ninety days after BNPLC has delivered a
Third Party Sale Notice to FCI as described in subparagraph 2(C)(2), BNPLC may
terminate FCI's Extended Remarketing Rights contemporaneously with the
consummation of a sale of the Property by BNPLC to any third party (be it the
prospective purchaser named in the Third Party Sale Notice or another third
party) at a price equal to or in excess of the Third Party Target Price
specified in the Third Party Sale Notice, so as to permit the sale of the
Property unencumbered by FCI's Extended Remarketing Rights.
(F) Payment Only to BNPLC. All amounts payable under this
Agreement by FCI and, if applicable, by an Applicable Purchaser must be paid
directly to BNPLC, and no payment to any other party shall be effective for the
purposes of this Agreement. In addition to the payments required under
subparagraph 1(A), on the Designated Sale Date FCI must pay all amounts then due
to BNPLC under the Lease. BNPLC will remit any excess amounts due FCI pursuant
to the last sentence of subparagraph 1(A)(2) or pursuant to subparagraph 2(D)
promptly after BNPLC's receipt of the same. To the extent, if any, that FCI
claims and is entitled to claim a reduction in the Break Even Price because of
any Deductible Judgment, as provided in the definition of Break Even Price
above, FCI must pay such Deductible Judgment for the account of BNPLC
contemporaneously with the payment of the other amounts required by subparagraph
1(A).
(G) Remedies Under the Other Operative Documents. No repossession
of or re-entering upon the Property or exercise of any other remedies available
to BNPLC under the Lease or other Operative Documents shall terminate FCI's
rights or obligations hereunder, all of which shall survive BNPLC's exercise of
remedies under the other Operative Documents. FCI acknowledges that the
consideration for this Agreement is separate and independent of the
consideration for the Lease, the Construction Management Agreement and the
Closing Certificate, and FCI's obligations hereunder shall not be affected or
impaired by any event or circumstance that would excuse FCI from performance of
its obligations under such other Operative Documents.
5. EFFECT OF SALE UPON INTERVENING ENCUMBRANCES. Any conveyance of the
Property to FCI or any Applicable Purchaser pursuant to this Agreement shall cut
off and terminate any interest in the Land, Improvements or other Property
claimed by, through or under BNPLC, including any interest claimed by the
Participants and including any Liens Removable by BNPLC (such as, but not
limited to, any judgment liens established against the Property because of a
judgment rendered against BNPLC and any leasehold or other interests conveyed by
BNPLC in the ordinary course of BNPLC's business), but not obligations of FCI to
BNPLC under the indemnities in the Lease or other Operative Documents then due
or that may become due thereafter because of any expense or liability incurred
by BNPLC resulting in whole or in part from events or circumstances occurring
before such conveyance. Anyone accepting or taking any interest in the Property
by or through BNPLC after the date of this Agreement shall acquire such interest
subject to the rights and options granted FCI hereby. Further, FCI and any
Applicable Purchaser shall be entitled to pay any payment required by this
Agreement for the purchase of the Property directly to BNPLC notwithstanding any
prior conveyance or assignment by BNPLC, voluntary or otherwise, of any right or
interest in this Agreement or the Property, and neither FCI nor any Applicable
Purchaser shall be responsible for the proper distribution or application of
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<PAGE> 12
any such payments by BNPLC; and any such payment to BNPLC shall discharge the
obligation of FCI to cause such payment to all Persons claiming an interest in
such payment. The parties shall record a memorandum of this Agreement for
purposes of effecting constructive notice to all Persons of FCI's rights under
this Agreement, including its rights under this subparagraph.
6. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF FCI. FCI
represents, warrants and covenants as follows:
(A) No Default or Violation. The execution, delivery and
performance by FCI of this Agreement does not and will not constitute a breach
or default under any other material agreement or contract to which FCI is a
party or by which FCI is bound or which affects the Property, and does not
violate or contravene any law, order, decree, rule or regulation to which FCI is
subject, and such execution, delivery and performance by FCI will not result in
the creation or imposition of (or the obligation to create or impose) any lien,
charge or encumbrance on, or security interest in, FCI's property pursuant to
the provisions of any of the foregoing.
(B) No Suits. Other than matters, if any, disclosed in Schedule 2
attached to the Lease, there are no judicial or administrative actions, suits,
proceedings or investigations pending or, to FCI's knowledge, threatened that
will adversely affect the Property or the validity, enforceability or priority
of this Agreement, and FCI is not in default with respect to any order, writ,
injunction, decree or demand of any court or other governmental or regulatory
authority that could materially and adversely affect the use, occupancy or
operation of the Property.
(C) Enforceability. The execution, delivery and performance by
FCI of this Agreement is duly authorized and does not require the consent or
approval of any governmental body or other regulatory authority that has not
heretofore been obtained and is not in contravention of or conflict with any
applicable laws or any term or provision of FCI's articles of incorporation or
bylaws. This Agreement is a valid, binding and legally enforceable obligation of
FCI, in accordance with its terms, except as such enforcement is affected by
bankruptcy, insolvency and similar laws affecting the rights of creditors,
generally, and equitable principles of general application.
(D) Organization. FCI is duly incorporated and legally existing
under the laws of the State of Delaware and is duly qualified to do business in
the State of California. FCI has all requisite power and has procured or will
procure on a timely basis all governmental certificates of authority, licenses,
permits, qualifications and other documentation required to fulfill its
obligations under this Agreement.
(E) Omissions. None of FCI's representations or warranties
contained in this Agreement or in any other document, certificate or written
statement furnished to BNPLC by or on behalf of FCI in connection with this
Agreement contains any untrue statement of a material fact or omits a material
fact necessary in order to make the statements contained herein or therein (when
taken in their entireties) not misleading.
7. CERTAIN REMEDIES CUMULATIVE. No right or remedy herein conferred upon
or reserved to BNPLC is intended to be exclusive of any other right or remedy
BNPLC has with respect to the Property, and each and every right and remedy
shall be cumulative and in addition to any other right or remedy given hereunder
or now or hereafter existing at law or in equity or by statute. In addition to
other remedies available under this Agreement, either party shall be entitled,
to the extent permitted by applicable law, to a decree compelling performance of
any of the other party's agreements hereunder.
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<PAGE> 13
8. ATTORNEYS' FEES AND LEGAL EXPENSES. If either party commences any
legal action or other proceeding to enforce any of the terms of this Agreement
or the documents and agreements referred to herein, or because of any breach by
the other party or dispute hereunder or thereunder, the successful or prevailing
party, shall be entitled to recover from the nonprevailing party all Attorneys'
Fees incurred in connection therewith, whether or not such controversy, claim or
dispute is prosecuted to a final judgment. Any such Attorneys' Fees incurred by
either party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from such judgment, and the obligation for such
Attorneys' Fees is intended to be severable from other provisions of this
Agreement and not to be merged into any such judgment.
9. ESTOPPEL CERTIFICATE. Either party to this Agreement will, upon not
less than twenty days' prior request by the other party hereto, execute,
acknowledge and deliver to the requesting party a written statement certifying
that this Agreement is unmodified and in full effect (or, if there have been
modifications, that this Agreement is in full effect as modified, and setting
forth such modification) and either stating that no default exists hereunder or
specifying each such default of which the responding party has knowledge. Any
such statement may be relied upon by any Participant or prospective purchaser or
permitted assignee of BNPLC or FCI with respect to the Property.
10. SUCCESSORS AND ASSIGNS. The terms, provisions, covenants and
conditions hereof shall be binding upon FCI and BNPLC and their respective
permitted successors and assigns and shall inure to the benefit of FCI and BNPLC
and all permitted transferees, mortgagees, successors and assignees of FCI and
BNPLC with respect to the Property; provided, that the rights of BNPLC hereunder
shall not pass to FCI or any Applicable Purchaser or any subsequent owner
claiming through FCI or an Applicable Purchaser. Prior to the Designated Sale
Date, BNPLC may transfer, assign and convey, in whole or in part, the Property
and any and all of its rights under this Agreement (subject to the terms of this
Agreement) by any conveyance that constitutes a Permitted Transfer, but not
otherwise. If BNPLC sells or otherwise transfers the Property and assigns its
rights under this Agreement and the other Operative Documents pursuant to a
Permitted Transfer, and if BNPLC's successor in interest assumes in writing for
the benefit of FCI liability for the obligations imposed upon BNPLC by this
Agreement and the other Operative Documents on and subject to the express terms
set out herein and therein, then BNPLC shall thereby be released from any
further obligations arising under this Agreement or other Operative Documents
after the date of such assumption, and FCI agrees to look solely to each
successor in interest of BNPLC for performance of such obligations.
11. MISCELLANEOUS.
(A) Notices. Each provision of this Agreement, or of any
Applicable Laws with reference to the sending, mailing or delivery of any notice
or demand hereunder, or with reference to the making of any payment required
hereunder, shall be deemed to be complied with when and if the following steps
are taken:
(1) All payments required to be paid by FCI or any Applicable
Purchaser to BNPLC hereunder shall be paid to BNPLC in immediately
available funds by wire transfer to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ Solectron (Force Computers Synthetic Lease)
10
<PAGE> 14
or at such other place and in such other manner as BNPLC may designate
in a notice to FCI. Time is of the essence as to all payments of FCI
under this Agreement.
(2) All payments required to be made by BNPLC to FCI pursuant to
the last sentence of subparagraph 1(A)(2) or pursuant to subparagraph
2(D) shall be paid to FCI in immediately available funds at the address
of FCI set forth below or as FCI may otherwise direct by notice sent in
accordance herewith.
(3) All notices, demands, approvals, consents and other
communications to be made hereunder to or by the parties hereto must, to
be effective for purpose of this Agreement, be in writing. Notices,
demands and other communications required or permitted hereunder are to
be sent to the addresses set forth below (or in the case of
communications to Participants, at the addresses set forth in Schedule 1
attached to the Participation Agreement) and shall be given by any of
the following means: (A) personal service, with proof of delivery or
attempted delivery retained; (B) electronic communication, whether by
telegram or telecopying (if confirmed in writing sent by United States
first class mail, return receipt requested); or (C) registered or
certified first class mail, return receipt requested. Such addresses may
be changed by notice to the other parties given in the same manner as
provided above. Any notice or other communication sent pursuant to
clause (A) or (C) hereof shall be deemed received (whether or not
actually received) upon first attempted delivery at the proper notice
address on any Business Day between 9:00 A.M. and 5:00 P.M., and any
notice or other communication sent pursuant to clause (B) hereof shall
be deemed received upon dispatch by electronic means.
Address of BNPLC:
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telecopy: (214) 788-9140
With a copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Rafael Lumanlan or Gavin Holles
Telecopy: (415) 296-8954
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
Address of FCI:
11
<PAGE> 15
Force Computers, Inc.
777 Gibraltar Drive, Building #5
Milpitas, CA 95035
Attn: Chief Financial Officer
Telecopy: (408) 956-6059
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill
Palo Alto, California 94304-1050
Attention: Real Estate Department/DSS
Telecopy: (415) 493-6811
(B) Severability. If any term or provision of this Agreement or
the application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of this Agreement,
or the application of such term or provision other than to the extent to which
it is invalid or unenforceable, shall not be affected thereby. Further, the
obligations of FCI hereunder, to the maximum extent possible, shall be deemed to
be separate, independent and in addition to, not in lieu of, the obligations of
FCI under the other Operative Documents. In the event of any inconsistency
between the terms of this Agreement and the terms and provisions of the other
Operative Documents, the terms and provisions of this Agreement shall control.
(C) No Implied Waiver. The failure of BNPLC or FCI to insist at
any time upon the strict performance of any covenant or agreement or to exercise
any option, right, power or remedy contained in this Agreement shall not be
construed as a waiver or a relinquishment thereof for the future. The waiver of
or redress for any breach of this Agreement shall not prevent a similar
subsequent act from constituting a violation. Any express waiver shall affect
only the term or condition specified in such waiver and only for the time and in
the manner specifically stated therein. A receipt by BNPLC of any payment
hereunder with knowledge of the breach of any covenant or agreement contained in
this Agreement shall not be deemed a waiver of such breach, and no waiver of any
provision of this Agreement shall be deemed to have been made unless expressed
in writing and signed by the waiving party.
(D) NO IMPLIED REPRESENTATIONS BY BNPLC. BNPLC AND BNPLC'S AGENTS
HAVE MADE NO REPRESENTATIONS OR PROMISES WITH RESPECT TO THE PROPERTY EXCEPT AS
EXPRESSLY SET FORTH HEREIN AND IN THE OTHER OPERATIVE DOCUMENTS SIGNED BY BNPLC,
AND NO RIGHTS, EASEMENTS OR LICENSES ARE ACQUIRED BY FCI BY IMPLICATION OR
OTHERWISE EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE OTHER
OPERATIVE DOCUMENTS.
(E) Entire Agreement. This Agreement, the other Operative
Documents and the other documents dated as of July 16, 1998, which are being
executed by FCI and executed or accepted by BNPLC contemporaneously with the
execution of this Agreement supersede any prior negotiations and agreements
between BNPLC and FCI concerning the Property, and no amendment or modification
of this Agreement shall be binding or valid unless expressed in a writing
executed by both parties hereto.
(F) Time is of the Essence. Time is of the essence as to all
obligations of FCI and BNPLC and all notices required of FCI and BNPLC under
this Agreement.
12
<PAGE> 16
(G) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without regard
to conflict or choice of laws.
(H) Paragraph Headings. The paragraph headings contained in this
Agreement are for convenience only and shall in no way enlarge or limit the
scope or meaning of the various and several paragraphs hereof.
(I) Other Terms and References. Words of any gender used in this
Agreement shall be held and construed to include any other gender, and words in
the singular number shall be held to include the plural and vice versa, unless
the context otherwise requires. References herein to Paragraphs, subparagraphs
or other subdivisions shall refer to the corresponding Paragraphs, subparagraphs
or subdivisions of this Agreement, unless specific reference is made to another
document or instrument. References herein to any Schedule or Exhibit shall refer
to the corresponding Schedule or Exhibit attached hereto, which shall be made a
part hereof by such reference. All capitalized terms used in this Agreement
which refer to other documents shall be deemed to refer to such other documents
as they may be renewed, extended, supplemented, amended or otherwise modified
from time to time, provided such documents are not renewed, extended or modified
in breach of any provision contained herein or therein or, in the case of any
other document to which BNPLC is a party or of which BNPLC is an intended
beneficiary, without the consent of BNPLC. All accounting terms used but not
specifically defined herein shall be construed in accordance with GAAP. The
words "this Agreement", "herein", "hereof", "hereby", "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular subdivision unless expressly so limited. The phrases
"this Paragraph" and "this subparagraph" and similar phrases used herein refer
only to the Paragraphs or subparagraphs in which the phrase occurs. As used
herein the word "or" is not exclusive. As used herein the words "include",
"including" and similar terms shall be construed as if followed by "without
limitation to".
(1) Not a Partnership, Etc. NOTHING IN THIS AGREEMENT IS INTENDED
TO BE OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE
BETWEEN BNPLC AND FCI. NEITHER THE EXECUTION OF THIS AGREEMENT NOR THE
ADMINISTRATION OF THIS AGREEMENT OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC,
NOR ANY OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO THIS
AGREEMENT OR SUCH DOCUMENTS IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY
OBLIGATIONS OF BNPLC TO FCI.
12. WAIVER OF JURY TRIAL. BNPLC AND FCI EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER DOCUMENT OR DEALINGS BETWEEN THEM
RELATING TO THIS AGREEMENT OR THE PROPERTY. The scope of this waiver is intended
to be all-encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction, including contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. FCI and BNPLC each acknowledge that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on the waiver in entering into this Agreement and the other documents referred
to herein, and that each will continue to rely on the waiver in their related
future dealings. FCI and BNPLC each further warrants and represents that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THIS
13
<PAGE> 17
AGREEMENT OR THE PROPERTY. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
13. ADDITIONAL RIGHTS OF BNPLC RELATING TO ESCROWED PROCEEDS. BNPLC
shall be entitled to deliver any Escrowed Proceeds it holds on the Designated
Sale Date directly to FCI or to any Applicable Purchaser purchasing BNPLC's
interest in the Property and the Escrowed Proceeds pursuant to this Agreement
notwithstanding any prior actual or attempted conveyance or assignment by FCI,
voluntary or otherwise, of any right to receive the same; BNPLC shall not be
responsible for the proper distribution or application by FCI or any Applicable
Purchaser of any such Escrowed Proceeds paid over to FCI or the Applicable
Purchaser; and any such payment of Escrowed Proceeds to FCI or an Applicable
Purchaser shall discharge any obligation of BNPLC to deliver the same to all
Persons claiming an interest therein.
14. SECURITY FOR BNPLC'S OBLIGATIONS. To secure FCI's right to purchase
the Property pursuant to this Agreement and to recover any damages caused by a
breach of Paragraph 3 by BNPLC, including any such breach caused by a rejection
or termination of this Agreement in any bankruptcy or insolvency proceeding
instituted by or against BNPLC, as debtor, BNPLC does hereby grant to FCI a lien
and security interest against all rights, title and interests of BNPLC from time
to time in and to the Land, Improvements and other Property. FCI may enforce
such lien and security interest judicially after any such breach by BNPLC, but
not otherwise. FCI waives any right it has to seek a deficiency judgement
against BNPLC in any action brought for a judicial foreclosure of such lien and
security interest, subject to the condition that BNPLC unequivocally and
effectively waive, following any such judicial foreclosure of the lien and
security interest granted in this Paragraph, BNPLC's right of redemption.
Contemporaneously with the execution of this Agreement, FCI and BNPLC will
execute a memorandum of this Agreement which is in recordable form and which
specifically references the lien granted in this Paragraph, and FCI shall be
entitled to record such memorandum at any time prior to the Designated Sale
Date.
15. INCOME TAX REPORTING. BNPLC and FCI intend this Agreement and the
Lease to have a form for income taxes which is different than the form of this
Agreement and the Lease for other purposes, and thus the parties acknowledge and
agree as follows:
(1) FOR PURPOSES OF DETERMINING THEIR RESPECTIVE FEDERAL, STATE
AND LOCAL INCOME TAX OBLIGATIONS, BNPLC and FCI believe and intend that
this Agreement and the Lease constitute a financing arrangement or
conditional sale. Both BNPLC and FCI agree to report this Agreement and
the Lease as a financing arrangement or conditional sale on their
respective income tax returns (the "REQUIRED REPORTING"), unless such
Required Reporting is challenged in writing by the Internal Revenue
Service or another governmental authority with jurisdiction (a "TAX
CHALLENGE"). Consistent with the foregoing, BNPLC and FCI expect that
FCI (and not BNPLC) shall be treated as the true owner of the Property
for income tax purposes, thereby entitling FCI (and not BNPLC) to take
depreciation deductions and other tax benefits available to the owner.
FCI shall also report all interest earned on Escrowed Proceeds as FCI's
income for federal, state and local income tax purposes. REFERENCES IN
THIS AGREEMENT OR IN THE LEASE TO A "LEASE" OR THE "LEASED PROPERTY" ARE
NOT INTENDED FOR INCOME TAX PURPOSES TO REFLECT THE INTENT OF BNPLC OR
FCI AS TO THE FORM OF THE TRANSACTIONS COVERED BY, OR THE PROPER
CHARACTERIZATION OF, THIS AGREEMENT AND THE LEASE.
(2) FOR ALL OTHER PURPOSES, INCLUDING THE DETERMINATION OF THE
APPROPRIATE FINANCIAL ACCOUNTING FOR THIS AGREEMENT AND THE
DETERMINATION OF THEIR RESPECTIVE RIGHTS AND REMEDIES UNDER STATE LAW,
BNPLC and FCI believe and intend that (i) the Lease constitutes a true
Lease, not a mere financing
14
<PAGE> 18
arrangement, enforceable in accordance with its express terms (and
neither this Paragraph 15 nor the provisions referencing this Paragraph
on the title page of this Agreement nor the corresponding provisions in
the Lease are intended to affect the enforcement of any other provisions
of this Agreement or the Lease) and (ii) this Agreement shall constitute
a separate and independent contract, enforceable in accordance with the
express terms and conditions set forth herein. In this regard, FCI
acknowledges that FCI asked BNPLC to participate in the transactions
evidenced by this Agreement and the Lease as a landlord and owner of the
Property, not as a lender. Although other transactions might have been
used to accomplish similar results, FCI expects to receive certain
material accounting and other advantages through the use of a lease
transaction. Accordingly, and notwithstanding the Required Reporting for
income tax purposes, FCI cannot equitably deny that this Agreement and
the Lease should be construed and enforced in accordance with their
respective terms, rather than as a mortgage or other security device, in
any action brought by BNPLC to enforce this Agreement or the Lease.
In the event of a Tax Challenge, BNPLC and FCI shall each provide to the other
copies of all notices from the Internal Revenue Service or any other
governmental authority presenting the Tax Challenge. Further, before changing
from the Required Reporting because of a Tax Challenge, BNPLC and FCI shall each
consider in good faith any reasonable suggestions received from the other party
to this Agreement about an appropriate response to the Tax Challenge; provided,
however, that the suggestions are set forth in a notice delivered no later than
thirty Business Days after the suggesting party is first notified of the Tax
Challenge; and, provided further, that when presented with a Tax Challenge,
BNPLC shall have the right to change from the Required Reporting rather than
participate in any litigation or other legal proceeding against the Internal
Revenue Service or another governmental authority. In any event, FCI shall
indemnify BNPLC and defend and hold BNPLC harmless from and against all Losses
imposed on or asserted against or incurred by BNPLC by reason of, in connection
with or arising out of any such challenge or any resulting recharacterization of
this Agreement or the Lease required by the Internal Revenue Service or another
governmental authority, including any additional taxes that may become due upon
any sale under this Agreement, to the extent (if any) that such Losses are not
offset by tax savings to BNPLC resulting from additional depreciation deductions
or other tax benefits of the recharacterization.
[The signature pages follow.]
15
<PAGE> 19
IN WITNESS WHEREOF, FCI and BNPLC have caused this Purchase Agreement to
be executed as of July 16, 1998.
"FCI"
FORCE COMPUTERS, INC.
By: /s/ Leonard J. Zanoni
-------------------------------------
Printed Name: Leonard J. Zanoni
Title: Vice President & Chief
Financial Officer
<PAGE> 20
[Continuation of signature pages to Purchase Agreement dated to be effective
July 16, 1998]
"BNPLC"
BNP LEASING CORPORATION
By: /s/ LLOYD G. COX
-------------------------------------
Name: Lloyd G. Cox
Title: Vice President
<PAGE> 21
EXHIBIT A
LEGAL DESCRIPTION
All of that certain real property situated in the City of San Jose, County of
Santa Clara, State of California, described as follows:
Parcel 1 as shown on that Parcel Map filed for record in the office of the
Recorder of the County of Santa Clara, State of California on July 1, 1998 in
Book 704 of Maps at Pages 11-12.
<PAGE> 22
EXHIBIT B
CORPORATE GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [FCI or the Applicable Purchaser]
ADDRESS: _________________________________
ATTN: _________________________________
CITY: _________________________________
STATE: _________________________________
Zip: _________________________________
BNP LEASING CORPORATION, a Delaware corporation (hereinafter called
"Grantor"), for and in consideration of the sum of Ten Dollars ($10.00) and
other valuable consideration paid to Grantor by [FCI or the Applicable
Purchaser] (hereinafter called "Grantee"), the receipt and sufficiency of which
are hereby acknowledged, does hereby GRANT to Grantee the real property
described in Annex A attached hereto and hereby made a part hereof, together
with any buildings and other improvements situated thereon, any fixtures and
other property affixed thereto and all right, title and interest of Grantor in
and to adjacent streets, alleys and rights-of-way (collectively, the
"Property"); provided, however, this conveyance is made by Grantor and accepted
by Grantee subject to all zoning and other ordinances affecting the Property,
all general or special assessments due and payable after the date hereof, all
encroachments, variations in area or in measurements, boundary line disputes,
roadways and other matters not of record which would be disclosed by a current
survey and inspection of the Property, and the encumbrances listed in Annex B
attached hereto and made a part hereof (collectively, the "Permitted
Encumbrances").
<PAGE> 23
IN WITNESS WHEREOF, this Deed is executed by Grantor on this ____ day of
______________, _______.
The address of Grantee is:
_______________________________
_______________________________
BNP LEASING CORPORATION
Date: As of ___________________ By: _____________________________________
Its:
Attest: _________________________________
Its:
Exhibit B - Page 2
<PAGE> 24
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, ____________________, personally
appeared _______________________________ and _______________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the persons whose names are subscribed to the within instrument and
acknowledged to me that they executed the same in their authorized capacities,
and that by their signatures on the instrument the person, or the entity upon
behalf of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature ___________________________
Exhibit B - Page 3
<PAGE> 25
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LEASE CHANGES FROM
TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH FCI REQUESTS BNPLC'S CONSENT OR
APPROVAL AS PROVIDED IN THE LEASE, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW
CHANGE. ANY SUCH CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND
THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION
IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
All of that certain real property situated in the City of San Jose, County of
Santa Clara, State of California, described as follows:
Parcel 1 as shown on that Parcel Map filed for record in the office of the
Recorder of the County of Santa Clara, State of California on July 1, 1998 in
Book 704 of Maps at Pages 11-12.
Exhibit B - Page 4
<PAGE> 26
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY
BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW, SUCH ADDITIONAL
ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND THIS "DRAFTING NOTE" WILL BE
DELETED BEFORE THIS DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS
"PERMITTED ENCUMBRANCES" UNDER THE LEASE FROM TIME TO TIME OR BECAUSE OF FCI'S
REQUEST FOR BNPLC'S CONSENT OR APPROVAL TO AN ADJUSTMENT AS PROVIDED IN THE
LEASE.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the List of Defined Terms attached to the
Lease Agreement referenced in item #1 of the list below), including the
following matters to the extent the same are still valid and in force:
1. Amended and Restated Lease Agreement dated as of July 16, 1998, by and
between BNP Leasing Corporation, as lessor, and Force Computers, Inc.,
as lessee.
2. Liens securing TAXES AND ASSESSMENTS, not yet due and payable.
3. Easement -
In Favor Of: County of Santa Clara
For: Ingress and egress
Recorded: June 28, 1968 in Book 8174, Page 148, Official Records
Affects: a portion of the Land as follows:
Beginning at the most Northerly corner of that certain 5.545 acre
parcel shown upon that certain Record of Survey recorded October
24, 1950 in Book 29 of Maps, at page 6, Santa Clara County
Records; thence along the Northeasterly line of said 5.545 acre
parcel, said Northeasterly line being also the Southwesterly line
of that certain 0.441 acre parcel described as Parcel Two of
Exhibit A in the deed recorded in Book 6500, at pages 101, 102,
103, Official Records of Santa Clara County S. 17(Degree) E.
26.44 feet to the true point of beginning and continuing along
said Northeasterly and Southwesterly line S. 17(Degree) E. 34.81
feet; thence leaving said Northeasterly and Southwesterly line N.
11(Degree) 31' 33" E. 48.16 feet to a point on the Northeasterly
line of said 0.441 acre parcel thence along last mentioned
Northeasterly line N. 17(Degree) W. 18.93 feet to the most
Northerly corner thereof, said Northerly corner also being the
most Northerly corner of that strip of land 23 feet wide, shown
parallel and adjacent to the aforementioned 5.545 acre parcel as
shown upon said Record of Survey; thence leaving last said
Northerly corner N. 73(Degree) 00' E. 10.29 feet; thence N.
11(Degree) 31' 33" E. 117.37 feet; thence along the arc of a
curve to the left the tangent of which bears S. 32(Degree) 47'
30" W. having a radius of 300.00 feet through an angel of
30(Degree) 24' 44" for an arc distance of 159.24 feet to the true
point of beginning.
4. Easement -
In Favor Of: City of San Jose, a municipal corporation
For: Public service facilities, slope purposes, sanitary sewer
purposes
Recorded: May 8, 1985 in Book J340, Page 1040, Official Records
Exhibit B - Page 5
<PAGE> 27
Affects: Those street areas of Fontanoso Avenue, Fontanoso Way,
Hellyer Avenue, Branham Lane and Silver Creek Valley Road.
Reference to the records is hereby made for further particulars,
as to the description of the exact location.
5. Easement -
In Favor Of: Pacific Bell
For: Underground communication facilities and necessary
fixtures and appurtenances
Recorded: December 20, 1985 in Book J555, Page 160, Official Records
Affects: those portions shown as 1E on Exhibit "B" to deed
from B B & K, a general partnership, to the City of
San Jose, recorded May 8, 1985 in Book J340, Pages 1045
through 1062.
Exhibit B - Page 6
<PAGE> 28
EXHIBIT C
See the form of Preliminary Change of Ownership Report attached to and made a
part of this Exhibit C.
<PAGE> 29
<TABLE>
<S> <C>
THIS SPACE FOR RECORDER'S USE
PRELIMINARY CHANGE OF OWNERSHIP REPORT
THIS REPORT IS NOT A PUBLIC DOCUMENT
(To be completed by transferee (buyer) prior to transfer of the subject property
in accordance with Section 480.3 of the Revenue and Taxation Code.)
____________________________________________________________________________________________________________________________________
SELLER/TRANSFEROR: ____________________________________________________________________ FOR ASSESSOR'S USE ONLY
SELLER RECORDING DATE: _________________ DOCUMENT NO. _________________________________ Cluster ____________
OC1 ________________ OC2 ________________
BUYER/TRANSFEREE: DT _________________ INT ________________
RC _________________ SP$ ________________
ASSESSOR'S IDENTIFICATION NUMBER(S) ___________________________________________________ DTT $_______________ # Pcl. _____________
LA ___ Page Parcel
PROPERTY ADDRESS OR LOCATION: _________________________________________________________
No Street __________________________________________
_________________________________________________________
City State Zip Code
A Preliminary Change in Ownership Report
must be filed with each conveyance in the
MAIL TAX INFORMATION TO: County Recorder's office for the county
where the property is located; this
NAME: _________________________________________________________________________________ particular form may be used in all
58 counties of California.
ADDRESS: ______________________________________________________________________________
Street No City State Zip Code
___________________________________________________________________________________________________________________________________
NOTICE: A lien for property taxes applies to your property on March 1 of each year for the taxes owing in the following fiscal
year, July 1 through June 30. One-half of those taxes is due November 1 and one-half is due February 1. The first installment
becomes delinquent on December 10 and the second installment becomes delinquent on April 10. One tax bill is mailed before November
1 to the owner of record. IF THIS TRANSFER OCCURS AFTER MARCH 1 AND ON OR BEFORE DECEMBER 31, YOU MAY BE RESPONSIBLE FOR THE SECOND
INSTALLMENT OF TAXES ON FEBRUARY 1.
The property which you acquired may be subject to a supplemental tax assessment in an amount to be determined by the Santa Clara
County Assessor. For further information on your supplemental roll obligation, please call the Santa Clara County Assessor at
( ) - .
____________________________________________________________________________________________________________________________________
PART I: TRANSFER INFORMATION Please answer all questions.
YES NO
[ ] [ ] A. Is this transfer solely between husband and wife (Addition of a spouse, death of a spouse,
divorce settlement, etc.)?
[ ] [ ] B. Is this transaction only a correction of the name(s) of the person(s) holding title to the property (For example,
a name change upon marriage)?
[ ] [ ] C. Is this document recorded to create, terminate, or reconvey a lender's interest in the property?
[ ] [ ] D. Is this transaction recorded only to create, terminate, or reconvey a security interest (e.g., cosigner)?
[ ] [ ] E. Is this document recorded to substitute a trustee under a deed of trust, mortgage, or other similar document?
[ ] [ ] F. Did this transfer result in the creation of a joint tenancy in which the seller (transferor) remains as one of the
joint tenants?
[ ] [ ] G. Does this transfer return property to the person who created the joint tenancy (original transferor)?
[ ] [ ] H. Is this transfer of property:
1. to a trust for the benefit of the grantor, or grantor's spouse?
2. to a trust revocable by the transferor?
3. to a trust from which the property reverts to the grantor within 12 years?
[ ] [ ] I. If this property is subject to a lease, is the remaining lease term 35 years or more including written options?
[ ] [ ] J. Is this a transfer from parents to children or from children to parents?
[ ] [ ] K. Is this transaction to replace a principal residence by a person 55 years of age or older?
[ ] [ ] L. Is this transaction to replace a principal residence by a person who is severely disabled as defined by Revenue
and Taxation Code Section 69.5?
If you checked yes to J, K or L, an applicable claim form must be filed with the County Assessor.
Please provide any other information that would help the Assessor to understand the nature of the transfer.
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
IF YOU HAVE ANSWERED "YES" TO ANY OF THE ABOVE QUESTIONS EXCEPT J, K, OR L, PLEASE SIGN AND DATE.
OTHERWISE COMPLETE BALANCE OF THE FORM.
____________________________________________________________________________________________________________________________________
PART II: OTHER TRANSFER INFORMATION
A. Date of transfer if other than recording date. ________________________________________________________________________________
B. Type of transfer. Please check appropriate box.
[ ] Purchase [ ] Foreclosure [ ] Gift [ ] Trade or Exchange [ ] Merger, Stock or Partnership Acquisition
[ ] Contract of Sale -- Date of Contract _________________________
[ ] Inheritance -- Date of Contract _______________________________ [ ] Other: Please explain: ___________________________
[ ] Creation of a lease: [ ] Assignment of a lease; [ ] Termination of a lease
Date lease began ______________________________________________
Original term in years (including written options) _________________________________
Remaining term in years (including written options) ________________________________
C. Was only a partial interest in the property transferred? [ ] Yes [ ] No
If yes, indicate the percentage transferred _________%
____________________________________________________________________________________________________________________________________
Please answer, to the best of your knowledge, all applicable questions, sign and date. If a question does not apply, indicate with
"N/A".
</TABLE>
<PAGE> 30
<TABLE>
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<S> <C> <C> <C>
PART III: PURCHASE PRICE & TERMS OF SALE
A. CASH DOWN PAYMENT OR Value of Trade or Exchange (excluding closing cost) AMOUNT $ ____________
B. FIRST DEED OF TRUST @ ______% interest for ______ years. Pymts./Mo. = $______ (Prin. & Int. only) AMOUNT $ ____________
[ ] FHA [ ] Fixed Rate [ ] New Loan
[ ] Conventional [ ] Variable Rate [ ] Assumed Existing Loan Balance
[ ] VA [ ] All inclusive D.T. ($______ Wrapped) [ ] Bank or Savings & Loan
[ ] Cal-Vet [ ] Loan Carried by Seller [ ] Finance Company
Balloon Payment [ ] Yes [ ] No Due Date _________ Amount $___________
C. SECOND DEED OF TRUST @ ______% interest for ______ years. Pymts./Mo. = $_____ (Prin. & Int. only) AMOUNT $ ____________
[ ] Bank or Savings & Loan [ ] Fixed Rate [ ] New Loan
[ ] Loan Carried by Seller [ ] Variable Rate [ ] Assumed Existing Loan Balance
Balloon Payment [ ] Yes [ ] No Due Date _________ Amount $___________
D. OTHER FINANCING: Is other financing involved not covered in (b) or (c) above? [ ] Yes [ ] No AMOUNT $ ____________
Type______________ @ ______% interest for ______ years. Pymts./Mo. = $_____ (Prin. & Int. only)
[ ] Bank or Savings & Loan [ ] Fixed Rate [ ] New Loan
[ ] Loan Carried by Seller [ ] Variable Rate [ ] Assumed Existing Loan Balance
Balloon Payment [ ] Yes [ ] No Due Date _________ Amount $___________
E. IMPROVEMENT BOND [ ] Yes [ ] No Outstanding Balance: AMOUNT $ ____________
F. TOTAL PURCHASE PRICE: (or acquisition price, if traded or exchanged, include
real estate commission if paid.)
Total items A through E $ __________________
G. PROPERTY PURCHASED: [ ] Through a broker; [ ] Direct form seller; [ ] Other (Explain) ____________
If purchased through a broker, provide broker's name and phone no.: _________________________________
Please explain any special terms or financing and many other information that would
help the Assessor understand the purchase price and terms of sale. __________________________________
- ----------------------------------------------------------------------------------------------------------------------------------
PART IV: PROPERTY INFORMATION
A. IS PERSONAL PROPERTY INCLUDED IN THE PURCHASE PRICE
(other than a mobilehome subject to local property tax)? [ ] Yes [ ] No
If yes, enter the value of the personal property included in the purchase price $______
(Attach itemized list of personal property)
B. IS THIS PROPERTY INTENDED AS YOUR PRINCIPAL RESIDENCE? [ ] Yes [ ] No
If yes, enter date of occupancy ________/________/, 19________ or intended occupancy ________/________/, 19________
Month Day Month Day
C. TYPE OF PROPERTY TRANSFERRED:
[ ] Single-Family residence [ ] Agricultural [ ] Timeshare
[ ] Multiple-Family residence (no. of units: ____) [ ] Coop/Own-your-own [ ] Mobilehome
[ ] Commercial/Industrial [ ] Condominium [ ] Unimproved lot
[ ] Other (Description: ____________________________________________________________________)
D. DOES THE PROPERTY PRODUCE INCOME? [ ] Yes [ ] No
E. IF THE ANSWER TO QUESTION D IS YES, IS THE INCOME FROM:
[ ] Lease/Rent [ ] Contract [ ] Mineral rights [ ] Other - explain ______________
F. WHAT WAS THE CONDITION OF THE PROPERTY AT THE TIME OF SALE?
[ ] Good [ ] Average [ ] Fair [ ] Poor
Enter here, or on an attached sheet, any other information that would assist the Assessor in determining
value of the property such as the physical condition of the property, restrictions, etc.
______________________________________________________________________________________________
______________________________________________________________________________________________
- ----------------------------------------------------------------------------------------------------------------------------------
I certify that the foregoing is true, correct and complete to the best of my knowledge and belief.
Signed _____________________________________________________ Date __________________________
(New Owner/Corporate Officer)
Please Print Name of New Owner/Corporate Officer ____________________________________________
Phone No. where you are available from 8:00 a.m. - 5:00 p.m. (______)________________________
(Note: The Assessor may contact you for further information)
- ----------------------------------------------------------------------------------------------------------------------------------
If a document evidencing a change of ownership is presented to the recorder for recordation without
the concurrent filing of a PRELIMINARY CHANGE OF OWNERSHIP REPORT, the recorder may charge an
additional recording fee of twenty dollars ($20).
</TABLE>
<PAGE> 31
EXHIBIT D
BILL OF SALE AND ASSIGNMENT OF
LEASE AND INTANGIBLE ASSETS
Reference is made to: (1) that certain Amended and Restated Purchase
Agreement between BNP Leasing Corporation ("ASSIGNOR") and Force Computers,
Inc., dated as of July 16, 1998 (the "PURCHASE AGREEMENT"); (2) that certain
Amended and Restated Lease Agreement between Assignor, as landlord, and Force
Computers, Inc., as tenant, dated as of July 16, 1998 (the "LEASE"); and (3)
that certain Amended and Restated Closing Certificate and Agreement by Force
Computers, Inc. in favor of Assignor, dated as of July 16, 1998 (the "CLOSING
CERTIFICATE"). (Capitalized terms used and not otherwise defined in this
document are intended to have the meanings assigned to them in the List of
Defined Terms attached to and made a part of the Lease.)
As contemplated by the Amended and Restated Purchase Agreement, Assignor
hereby sells, transfers and assigns unto [FCI OR THE APPLICABLE PURCHASER, AS
THE CASE MAY BE], a _____________ ("ASSIGNEE"), all of Assignor's right, title
and interest in and to the following property, if any, to the extent such
property is assignable:
(a) the Lease;
(b) any pending or future award made because of any condemnation affecting
the Property or because of any conveyance to be made in lieu thereof, and any
unpaid award for damage to the Property and any unpaid proceeds of insurance or
claim or cause of action for damage, loss or injury to the Property; and
(c) all other property included within the definition of "Property" as set
forth in the Purchase Agreement, including but not limited to any of the
following transferred to Assignor by the tenant pursuant to Paragraph 8 of the
Lease or otherwise acquired by Assignor, at the time of the execution and
delivery of the Lease and Purchase Agreement or thereafter, by reason of
Assignor's status as the owner of any interest in the Property: (1) any goods,
equipment, furnishings, furniture, chattels and tangible personal property of
whatever nature that are located on the Property and all renewals or
replacements of or substitutions for any of the foregoing; (ii) the rights of
Assignor, existing at the time of the execution of the Lease and Purchase
Agreement or thereafter arising, under Permitted Encumbrances or Development
Documents (both as defined in the Lease); and (iii) any other permits, licenses,
franchises, certificates, and other rights and privileges related to the
Property that Assignee would have acquired if Assignee had itself purchased the
land included in the Property.
Provided, however, excluded from this conveyance and reserved to Assignor are
any rights or privileges of Assignor under the following ("EXCLUDED RIGHTS"):
(1) the indemnities set forth in the Lease and the Closing Certificate, whether
such rights are presently known or unknown, including rights of the Assignor to
be indemnified against environmental claims of third parties as provided in the
Closing Certificate which may not presently be known, (2) provisions in the
Lease that establish the right of Assignor to recover any accrued unpaid rent
under the Lease which may be outstanding as of the date hereof, (3) agreements
between Assignor and "BNPLC's Parent" or any "Participant," both as defined in
the Lease, or any modification or extension thereof, or (4) any other instrument
being delivered to Assignor contemporaneously herewith pursuant to the Purchase
Agreement. To the extent that this conveyance does include any rights to receive
future payments under the Lease, such rights ("INCLUDED RIGHTS") shall be
subordinate to Assignor's Excluded Rights, and Assignee hereby waives any rights
to enforce Included Rights until such time as Assignor has received all payments
to which it remains entitled by reason of Excluded Rights. If any amount shall
be paid to Assignee on account of any Included Rights at any time before
Assignor has received all payments to which it is entitled
<PAGE> 32
because of Excluded Rights, such amount shall be held in trust by Assignee for
the benefit of Assignor, shall be segregated from the other funds of Assignee
and shall forthwith be paid over to Assignor to be held by Assignor as
collateral for, or then or at any time thereafter applied in whole or in part by
Assignor against, the payments due to Assignor because of Excluded Rights,
whether matured or unmatured, in such order as Assignor shall elect.
Assignor does for itself and its successors covenant and agree to warrant
and defend the title to the property assigned herein against the just and lawful
claims and demands of any person claiming under or through a Lien Removable by
BNPLC, but not otherwise.
Assignee hereby assumes and agrees to keep, perform and fulfill Assignor's
obligations, if any, relating to any permits or contracts, under which Assignor
has rights being assigned herein.
IN WITNESS WHEREOF, the parties have executed this instrument as of
_______________, _____.
ASSIGNOR:
BNP LEASING CORPORATION a Delaware corporation
By: _____________________________________________________
Its: ____________________________________________________
ASSIGNEE:
[FCI OR THE APPLICABLE PURCHASER], a ________ corporation
By: _____________________________________________________
Its: ____________________________________________________
Exhibit D - Page 2
<PAGE> 33
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, ________________________, personally
appeared ________________________ and ________________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
persons whose names are subscribed to the within instrument and acknowledged to
me that they executed the same in their authorized capacities, and that by their
signatures on the instrument the person, or the entity upon behalf of which the
persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature ________________________
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, ________________________, personally
appeared ________________________ and ________________________ , personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
persons whose names are subscribed to the within instrument and acknowledged to
me that they executed the same in their authorized capacities, and that by their
signatures on the instrument the person, or the entity upon behalf of which the
persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature ________________________
Exhibit D - Page 3
<PAGE> 34
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LEASE CHANGES FROM
TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH FCI REQUESTS BNPLC'S CONSENT OR
CHANGE. ANY SUCH CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND
THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THE DOCUMENT TO WHICH THIS
DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
All of that certain real property situated in the City of San Jose, County of
Santa Clara, State of California, described as follows:
Parcel 1 as shown on that Parcel Map filed for record in the office of the
Recorder of the County of Santa Clara, State of California on July 1, 1998 in
Book 704 of Maps at Pages 11-12.
Exhibit D - Page 4
<PAGE> 35
EXHIBIT E
ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES (this
"Certificate") is made as of ___________________, ____, by [FCI or the
Applicable Purchaser, as the case may be], a ___________________ ("GRANTEE").
Contemporaneously with the execution of this Certificate, BNP Leasing
Corporation, a Delaware corporation ("BNPLC"), is executing and delivering to
Grantee (1) a deed and (2) a Bill of Sale and Assignment of Lease and Intangible
Assets (the foregoing documents and any other documents to be executed in
connection therewith are herein called the "CONVEYANCING DOCUMENTS" and any of
the properties, rights or other matters assigned, transferred or conveyed
pursuant thereto are herein collectively called the "SUBJECT PROPERTY").
NOTWITHSTANDING ANY PROVISION CONTAINED IN THE CONVEYANCING DOCUMENTS TO
THE CONTRARY, GRANTEE ACKNOWLEDGES THAT BNPLC MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY NATURE OR KIND, WHETHER STATUTORY, EXPRESS OR IMPLIED, WITH
RESPECT TO ENVIRONMENTAL MATTERS OR THE PHYSICAL CONDITION OF THE SUBJECT
PROPERTY, AND GRANTEE, BY ACCEPTANCE OF THE CONVEYANCING DOCUMENTS, ACCEPTS THE
SUBJECT PROPERTY "AS IS," "WHERE IS," "WITH ALL FAULTS" AND WITHOUT ANY SUCH
REPRESENTATION OR WARRANTY BY GRANTOR AS TO ENVIRONMENTAL MATTERS, THE PHYSICAL
CONDITION OF THE SUBJECT PROPERTY, COMPLIANCE WITH SUBDIVISION OR PLATTING
REQUIREMENTS OR CONSTRUCTION OF ANY IMPROVEMENTS. Without limiting the
generality of the foregoing, Grantee hereby further acknowledges and agrees that
warranties of merchantability and fitness for a particular purpose are excluded
from the transaction contemplated by the Conveyancing Documents, as are any
warranties arising from a course of dealing or usage of trade. Grantee hereby
assumes all risk and liability (and agrees that BNPLC shall not be liable for
any special, direct, indirect, consequential, or other damages) resulting or
arising from or relating to the ownership, use, condition, location,
maintenance, repair, or operation of the Subject Property, except for damages
proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of BNPLC. As used in the
preceding sentence, "ESTABLISHED MISCONDUCT" is intended to have, and be limited
to, the meaning given to it in the List of Defined Terms attached to the Amended
and Restated Purchase Agreement between BNPLC and Force Computers, Inc. dated as
of July 16, 1998, pursuant to which BNPLC is delivering the Conveyancing
Documents.
The provisions of this Certificate shall be binding on Grantee, its
successors and assigns and any other party claiming through Grantee. Grantee
hereby acknowledges that BNPLC is entitled to rely and is relying on this
Certificate.
EXECUTED as of ________________, ____.
[FCI OR THE APPLICABLE PURCHASER]
By: _____________________________________
Name: _______________________________
Title: ______________________________
<PAGE> 36
EXHIBIT F
INTENTIONALLY DELETED
<PAGE> 37
EXHIBIT G
SECRETARY'S CERTIFICATE
The undersigned, [Secretary or Assistant Secretary] of BNP Leasing
Corporation, a Delaware corporation (the "Corporation"), hereby certifies as
follows:
1. That he is the duly, elected, qualified and acting Secretary [or
Assistant Secretary] of the Corporation and has custody of the corporate
records, minutes and corporate seal.
2. That the following named persons have been properly designated, elected
and assigned to the office in the Corporation as indicated below; that such
persons hold such office at this time and that the specimen signature appearing
beside the name of such officer is his or her true and correct signature.
[THE FOLLOWING BLANKS MUST BE COMPLETED WITH THE NAMES AND SIGNATURES OF THE
OFFICERS WHO WILL BE SIGNING THE DEED AND OTHER SALE CLOSING DOCUMENTS ON BEHALF
OF THE CORPORATION.]
Name Title Signature
_____________________ ____________________ ____________________
_____________________ ____________________ ____________________
3. That the resolutions attached hereto and made a part hereof were duly
adopted by the Board of Directors of the Corporation in accordance with the
Corporation's Articles of Incorporation and Bylaws. Such resolutions have not
been amended, modified or rescinded and remain in full force and effect.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Corporation on this __, day of ____________, ____.
________________________________________
[signature and title]
<PAGE> 38
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Amended and Restated Purchase
Agreement (herein called the "Purchase Agreement") dated as of July 16, 1998, by
and between BNP Leasing Corporation (the "Corporation") and Force Computers,
Inc. ("Purchaser"), the Corporation agreed to sell and Purchaser agreed to
purchase or cause the Applicable Purchaser (as defined in the Purchase
Agreement) to purchase the Corporation's interest in the property (the
"Property") located in __________, California more particularly described
therein.
NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Corporation, in its best business judgment, deems it in the best interest of the
Corporation and its shareholders that the Corporation convey the Property to
Purchaser or the Applicable Purchaser pursuant to and in accordance with the
terms of the Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed in the name and on behalf of the
Corporation to cause the Corporation to fulfill its obligations under the
Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed to take or cause to be taken any and
all actions and to prepare or cause to be prepared and to execute and deliver
any and all deeds and other documents, instruments and agreements that shall be
necessary, advisable or appropriate, in such officer's sole and absolute
discretion, to carry out the intent and to accomplish the purposes of the
foregoing resolutions.
Exhibit G - Page 2
<PAGE> 39
EXHIBIT H
BNP LEASING CORPORATION
12201 MERIT DRIVE
SUITE 860
DALLAS, TEXAS 75251
__________, ______
[Title Insurance Company]
_________________________
_________________________
_________________________
Re: Recording of (1) Deed and (2) Bill of Sale and Assignment of Lease
and Intangible Assets to [FCI OR THE APPLICABLE PURCHASER] ("Purchaser")
Ladies and Gentlemen:
BNP Leasing Corporation has executed and delivered to Purchaser (1) a
Deed and (2) Bill of Sale and Assignment of Lease and Intangible Assets, each in
the form attached to this letter. You are hereby authorized and directed to
record such documents at the request of Purchaser.
Sincerely,
<PAGE> 40
EXHIBIT I
FIRPTA STATEMENT
Section 1445 of the Internal Revenue Code of 1986, as amended, provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person.
To inform [FCI OR THE APPLICABLE PURCHASER] (the "Transferee") that
withholding of tax is not required upon the disposition of a real property
interest by transferor, BNP Leasing Corporation (the "Seller"), the undersigned
hereby certifies the following on behalf of the Seller:
1. The Seller is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. The United States employer identification number for the Seller is
75-2252918;
3. The office address of the Seller is ________________________________.
The Seller understands that this certification may be disclosed to the
Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
The Seller understands that the Transferee is relying on this affidavit
in determining whether withholding is required upon said transfer. The Seller
hereby agrees to indemnify and hold the Transferee harmless from and against any
and all obligations, liabilities, claims, losses, actions, causes of action,
demands, rights, damages, costs, and expenses (including but not limited to
court costs and attorneys' fees) incurred by the Transferee as a result of any
false misleading statement contained herein.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Seller.
Dated: ___________, ____.
BNP LEASING CORPORATION, a Delaware corporation
By: ___________________________________________
Name: _____________________________________
Title: ____________________________________
<PAGE> 41
EXHIBIT J
INDEMNITY FOR LIENS REMOVABLE BY BNPLC
THIS INDEMNITY AGREEMENT (this "AGREEMENT") is made as of
_________________, _____, by FORCE COMPUTERS, INC., a Delaware corporation
("PURCHASER") [OR THE APPLICABLE PURCHASER] and BNP LEASING CORPORATION, a
Delaware corporation ("SELLER") and ___________________________ ("TITLE
COMPANY").
R E C I T A L S
A. Purchaser is acquiring the land described in Annex A attached hereto
and any improvements located thereon (the "PROPERTY") pursuant to the terms and
conditions of that certain Amended and Restated Purchase Agreement dated as of
July 16, 1998 by between Seller and Purchaser [or FCI] (the "PURCHASE
AGREEMENT").
B. In connection with its acquisition of the Property, Seller has been
notified as contemplated by the Purchase Agreement that the matters described in
Annex B attached hereto (the "RELEVANT ENCUMBRANCES") have been identified as
encumbrances upon title to the Property and that such matters, to the extent
valid, constitute Liens Removable by BNPLC (as defined below).
C. Because of such notice to Seller, Seller is required by the Purchase
Agreement to tender this Indemnity Agreement to Purchaser.
NOW, THEREFORE, in consideration of the above recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
Seller must promptly remove any of the Relevant Encumbrances that
constitute "LIENS REMOVABLE BY BNPLC" (which for purposes of this Indemnity
Agreement shall have the meaning assigned to it in the List of Defined Terms
attached to the Purchase Agreement). Seller must also pay, indemnify and hold
harmless Purchaser, the Title Company, the Purchaser's successors and assigns as
to the Property and the Title Company's successors and assigns as to any title
insurance policy issued to Purchaser by the Title Company covering the Property
from and against any and all liabilities, damages, claims, actions, judgments,
costs and expenses (including, without limitation, reasonable attorneys' fees)
caused by Seller's failure to promptly remove any of the Relevant Encumbrances
that constitute Liens Removable by BNPLC.
Nothing herein shall be construed as an admission by Seller that any of
the Relevant Encumbrances do constitute Liens Removable by BNPLC or as imposing
a duty upon Seller to remove or defend against claims arising out of any
Relevant Encumbrances that do not constitute Liens Removable by BNPLC. Nothing
herein contained shall limit Purchaser's rights or remedies under the Purchase
Agreement because of any failure by BNPLC to remove all Liens Removable by BNPLC
before conveying the Property.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
SELLER, PURCHASER AND THE TITLE COMPANY EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER DOCUMENT, OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE
<PAGE> 42
RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended to
be all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including, without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Purchaser, Seller and the Title Company each
acknowledge that this waiver is a material inducement to enter into a business
relationship, that each has already relied on the waiver in entering into this
Agreement and the other documents referred to herein, and that each will
continue to rely on the waiver in their related future dealings. Purchaser,
Seller and the Title Company each further warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LEASE OR THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
Exhibit J - Page 2
<PAGE> 43
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"Seller"
BNP LEASING CORPORATION, a Delaware corporation
By: ___________________________________________
Name: _____________________________________
Title: ____________________________________
"Purchaser"
FORCE COMPUTERS, INC., a Delaware corporation
By: ___________________________________________
Name: _____________________________________
Title: ____________________________________
"Title Company"
____________________________________________, a
__________________________
By: ___________________________________________
Name: _____________________________________
Title: ____________________________________
Exhibit J - Page 3
<PAGE> 44
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LEASE CHANGES FROM
TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH FCI REQUESTS BNPLC'S CONSENT OR
APPROVAL AS PROVIDED IN THE LEASE, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW
CHANGE. ANY SUCH CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND
THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THE DOCUMENT TO WHICH THIS
DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
All of that certain real property situated in the City of San Jose, County of
Santa Clara, State of California, described as follows:
Parcel 1 as shown on that Parcel Map filed for record in the office of the
Recorder of the County of Santa Clara, State of California on July 1, 1998 in
Book 704 of Maps at Pages 11-12.
Exhibit J - Page 4
<PAGE> 45
ANNEX B
Relevant Encumbrances
[THIS ANNEX IS TO BE COMPLETED BY A LIST OF POSSIBLE LIENS REMOVABLE BY BNPLC
IDENTIFIED BY FCI AND AGAINST WHICH FCI HAS NOT BEEN ABLE TO OBTAIN TITLE
INSURANCE.]
Exhibit J - Page 5
<PAGE> 46
Exhibit K
NOTICE OF ELECTION TO TERMINATE THE PURCHASE OPTION AND
FCI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Amended and Restated Purchase Agreement dated as of July 16, 1998
(the "PURCHASE AGREEMENT"), between Force Computers, Inc. ("FCI") and BNP
Leasing Corporation ("BNPLC")
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Purchase Agreement referenced above. This letter shall
constitute a notice, given before the Base Rent Commencement Date pursuant to
subparagraph 4(B) of the Purchase Agreement, of FCI's election to terminate the
Purchase Option and FCI's Initial Remarketing Rights and Obligations. FCI
irrevocably elects to terminate the Purchase Option and FCI's Initial
Remarketing Rights and Obligations effective immediately, subject only to the
conditions described below.
FCI ACKNOWLEDGES THAT THE ELECTION MADE BY FCI DESCRIBED ABOVE
CONSTITUTES AN ISSUE 97-10 ELECTION UNDER AND AS DEFINED IN THE OPERATIVE
DOCUMENTS.
FCI also acknowledges that its right to terminate the Purchase Option
and FCI's Initial Remarketing Rights and Obligations is subject to the condition
precedent that FCI shall have delivered a Notice of FCI's Intent to Terminate,
as necessary to terminate the Construction Management Agreement pursuant to
Paragraph 5(D) thereof. Accordingly, if for any reason FCI has not already sent
a Notice of FCI's Intent to Terminate, the Purchase Option and FCI's Initial
Remarketing Rights and Obligations shall not terminate by reason of this notice.
FCI further acknowledges that no termination of the Purchase Option and
FCI's Initial Remarketing Rights and Obligations by FCI pursuant to this notice
shall be effective, unless contemporaneously with the giving of this notice FCI
shall deliver to BNPLC a full Issue 97-10 Prepayment. FCI hereby covenants to
pay, if FCI has not already done so, a full Issue 97-10 Prepayment to BNPLC.
Finally, FCI acknowledges that a termination of the Purchase Option and
FCI's Initial Remarketing Rights and Obligations pursuant to this notice shall
cause the Lease to terminate as of the Base Rent Commencement Date pursuant to
subparagraph 1(b) of the Lease.
<PAGE> 47
Executed this _____ day of ______________, 19___.
FORCE COMPUTERS, INC.
Name: ___________________________________
Title: __________________________________
[cc all Participants]
Exhibit K - Page 2
<PAGE> 1
EXHIBIT 10.6
================================================================================
AMENDED AND RESTATED
GUARANTY
FROM
SOLECTRON CORPORATION,
("GUARANTOR")
IN FAVOR OF
BNP LEASING CORPORATION,
("BNPLC")
EFFECTIVE AS OF JULY 16, 1998
================================================================================
<PAGE> 2
AMENDED AND RESTATED GUARANTY
THIS AMENDED AND RESTATED GUARANTY is made as of July 16, 1998, by
SOLECTRON CORPORATION, a Delaware corporation ("GUARANTOR"), in favor of BNP
LEASING CORPORATION, a Delaware corporation ("BNPLC").
RECITALS
1. Guarantor owns directly one hundred percent (100%) of the outstanding
shares of capital stock of Force Computers, Inc., a Delaware corporation
("FCI").
2. Contemporaneously herewith FCI and BNPLC are executing an Amended and
Restated Lease Agreement dated the date hereof (as from time to time
supplemented, amended or restated, the "LEASE"), pursuant to which BNPLC has
agreed to lease to FCI certain land and improvements thereon which are described
in the Lease. The Amended and Restated Lease Agreement incorporates changes to a
prior Lease Agreement dated as of July 16, 1998, and supersedes and replaces the
prior Lease Agreement in its entirety.
3. Contemporaneously herewith FCI and BNPLC are executing a Construction
Management Agreement dated the date hereof (as from time to time supplemented,
amended or restated, the "CONSTRUCTION MANAGEMENT AGREEMENT"), pursuant to which
BNPLC has authorized FCI to construct certain improvements on the land covered
by the Lease and agreed to provide a construction allowance for such
construction on and subject to the terms and conditions described therein.
4. Contemporaneously herewith FCI and BNPLC are executing an Amended and
Restated Purchase Agreement dated the date hereof (as from time to time
supplemented, amended or restated, the "PURCHASE AGREEMENT"), pursuant to which
FCI has agreed to purchase or arrange for the purchase of the Property as more
particularly provided therein. The Amended and Restated Purchase Agreement
incorporates changes to a prior Purchase Agreement dated as of July 16, 1998,
and supersedes and replaces the prior Purchase Agreement in its entirety.
5. Contemporaneously herewith FCI is executing an Amended and Restated
Closing Certificate and Agreement dated the date hereof (as from time to time
supplemented, amended or restated, the "CLOSING CERTIFICATE"), pursuant to which
FCI has made certain representations to BNPLC concerning the Property and has
agreed to indemnify BNPLC for certain matters relating to the Property. The
Amended and Restated Closing Certificate incorporates changes to a prior Closing
Certificate dated as of July 16, 1998, and supersedes and replaces the prior
Closing Certificate in its entirety.
6. As a condition precedent to BNPLC's execution of the Lease and
Purchase Agreement, as amended and restated, and the Construction Management
Agreement, BNPLC requires that Guarantor execute and deliver to BNPLC this
Amended and Restated Guaranty of FCI's obligations under the Lease, the
Construction Management Agreement, the Purchase Agreement and the Closing
Certificate. This Amended and Restated Guaranty incorporates changes to a prior
Guaranty dated as of July 16, 1998, and hereby supersedes and replaces the prior
Guaranty in its entirety.
<PAGE> 3
7. The board of directors of Guarantor has determined that Guarantor's
execution, delivery and performance of this Amended and Restated Guaranty may
reasonably be expected to benefit Guarantor, directly or indirectly, and are in
the best interests of Guarantor.
NOW, THEREFORE, in consideration of the premises, of the benefits which
will inure to Guarantor from the transactions contemplated by the Lease, the
Construction Management Agreement, the Purchase Agreement and the Closing
Certificate and of Ten Dollars and other good and valuable consideration, the
receipt and sufficiency of all of which are hereby acknowledged, and in order to
induce BNPLC to enter into the Lease and Purchase Agreement, Guarantor hereby
agrees with BNPLC as follows:
AGREEMENTS
Section 1. Definitions. Reference is hereby made to the Lease, the
Construction Management Agreement, Purchase Agreement and the Closing
Certificate for all purposes. All capitalized terms used in this Guaranty which
are defined in the Lease and the List of Defined Terms attached to the Lease and
not otherwise defined herein shall have the same meanings when used herein. All
references herein to any Obligation Document or other document or instrument
refer to the same as from time to time amended, supplemented or restated. As
used herein the following terms shall have the following meanings:
"Designated Covenants" means, collectively, all of the covenants and
agreements of FCI contained in the Lease, the Construction Management Agreement,
the Purchase Agreement and the Closing Certificate.
"Designated Representations" means, collectively, all of the
representations and warranties of FCI contained in the Lease, the Construction
Management Agreement, the Purchase Agreement and the Closing Certificate.
"Obligations" means collectively all of the indebtedness, obligations,
and undertakings which are guaranteed by Guarantor, as described in subsections
(a) and (b) of Section 2.
"Obligation Documents" means the Lease, the Management Agreement, the
Purchase Agreement, the Closing Certificate and all other documents and
instruments (other than this Guaranty) under, by reason of which, or pursuant to
which any or all of the Obligations are evidenced, governed, secured, or
otherwise dealt with, and all other documents, instruments and agreements
hereafter delivered in connection herewith or therewith.
"Obligors" means FCI and any other guarantors or obligors, primary or
secondary, of any or all of the Obligations, excluding Guarantor.
"Security" means any rights, properties, or interests of BNPLC, under
the Obligation Documents or otherwise, which provide recourse or other benefits
to BNPLC in connection with the Obligations or the non-payment or
non-performance thereof.
Section 2. Guaranty. Subject only to Section 3 below:
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(a) Guarantor hereby irrevocably, absolutely, and unconditionally
guarantees to BNPLC the prompt, complete, and full payment when due, and no
matter how the same shall become due, of all sums payable under the Lease, the
Construction Management Agreement, the Purchase Agreement and the Closing
Certificate. Without limiting the generality of the foregoing, Guarantor's
liability hereunder shall extend to and include all post-petition interest,
expenses, and other duties and liabilities of FCI described above in this
subsection (a), or below in the following subsections (b) and (c), which would
be owed by FCI but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization, or similar proceeding
involving FCI.
(b) The Guarantor hereby irrevocably, absolutely, and unconditionally
guarantees to BNPLC (i) that each Designated Representation is true and correct
and (ii) that each Designated Covenant will be performed promptly and completely
when due, no matter how the same shall become due.
(c) Without limiting the foregoing, BNPLC shall be entitled to recover
from Guarantor any expenses, losses and damages which BNPLC may incur or suffer
(including but not limited to any loss, reduction or delay in amounts paid to
BNPLC) as a result of the failure of any Designated Representation to be true
and correct or as a result of the failure of Guarantor to cause any Designated
Covenant to be performed (without regard to any event or circumstance which may
be asserted by Guarantor as having excused, prevented or limited such
performance by Guarantor). All rights, powers and remedies of BNPLC for such
failure to cause any such covenant or undertaking to be performed are
cumulative.
(d) If either FCI or the Guarantor fails to pay or perform any
Obligation as described in the immediately preceding subsections (a), (b) or
(c), the Guarantor will incur the additional obligation to pay to BNPLC, and the
Guarantor will forthwith upon demand by BNPLC, the amount of any and all
reasonable expenses, including fees and disbursements of BNPLC's counsel, and of
any experts or agents retained by BNPLC, which BNPLC may incur as a result of
such failure.
(e) As between Guarantor and BNPLC, this Guaranty shall be considered a
primary liability of Guarantor.
Section 3 Express Grace and Cure Periods. This Guaranty is not intended
to nullify any grace or cure period expressly provided for the benefit of FCI in
the Lease, the Construction Management Agreement, the Purchase Agreement or the
Closing Certificate. Accordingly, any payment required of FCI by the Lease, the
Construction Management Agreement, the Purchase Agreement or the Closing
Certificate, for which a grace or cure period is expressly provided therein,
will not be considered due for purposes of this Guaranty until such grace or
cure period expires. Similarly, any performance obligation imposed upon FCI by
the Lease, the Construction Management Agreement, the Purchase Agreement or the
Closing Certificate, for which a grace or cure period is expressly provided
therein, will not be considered to have been breached unless FCI's failure to
perform such obligation continues upon the expiration of such grace or cure
period.
Section 4 Unconditional Guaranty.
(a) No action which BNPLC may take or omit to take in connection with
any of the Obligation Documents, any of the Obligations (or any other
indebtedness owing by FCI to BNPLC), or any Security, and no course of dealing
of BNPLC with any Obligor or any other Person, shall release or diminish
Guarantor's obligations, liabilities, agreements or duties hereunder, affect
this Guaranty in
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<PAGE> 5
any way, or afford Guarantor any recourse against BNPLC, regardless of whether
any such action or inaction may increase any risks to or liabilities of BNPLC or
any Obligor or increase any risk to or diminish any safeguard of any Security.
Without limiting the foregoing, Guarantor hereby expressly agrees that BNPLC
may, from time to time, without notice to or the consent of Guarantor, do any or
all of the following:
(i) Amend, change or modify, in whole or in part, any one or more
of the Obligation Documents and give or refuse to give any waivers or
other indulgences with respect thereto.
(ii) Neglect, delay, fail, or refuse to take or prosecute any
action for the collection or enforcement of any of the Obligations, to
foreclose or take or prosecute any action in connection with any
Security or Obligation Document, to bring suit against any Obligor or
any other Person, or to take any other action concerning the Obligations
or the Obligation Documents.
(iii) Change, rearrange, extend, or renew the time, rate, terms,
or manner for payment or performance of any one or more of the
Obligations (whether for principal, interest, fees, expenses,
indemnifications, affirmative or negative covenants, or otherwise).
(iv) Compromise or settle any unpaid or unperformed Obligation or
any other obligation or amount due or owing, or claimed to be due or
owing, under any Obligation Document.
(v) Take, exchange, amend, eliminate, surrender, release, or
subordinate any or all Security for any or all of the Obligations,
accept additional or substituted Security therefor, and perfect or fail
to perfect BNPLC's rights in any or all Security.
(vi) Discharge, release, substitute or add Obligors.
(vii) Apply all monies received from Obligors or others, or from
any Security for any of the Obligations, as BNPLC may determine to be in
its best interest, without in any way being required to marshall
Security or assets or to apply all or any part of such monies upon any
particular Obligations.
(b) No action or inaction of any Obligor or any other Person, and no
change of law or circumstances, shall release or diminish Guarantor's
obligations, liabilities, agreements, or duties hereunder, affect this Guaranty
in any way, or afford Guarantor any recourse against BNPLC. Without limiting the
foregoing, the obligations, liabilities, agreements, and duties of Guarantor
under this Guaranty shall not be released, diminished, impaired, reduced, or
affected by the occurrence of any or all of the following from time to time,
even if occurring without notice to or without the consent of Guarantor:
(i) Any voluntary or involuntary liquidation, dissolution, sale
of all or substantially all assets, marshalling of assets or
liabilities, receivership, conservatorship, assignment for the benefit
of creditors, insolvency, bankruptcy, reorganization, arrangement, or
composition of any Obligor or any other proceedings involving any
Obligor or any of the assets of any Obligor under laws for the
protection of debtors, or any discharge, impairment, modification,
release, or limitation of the liability of, or stay of actions or lien
enforcement proceedings against, any
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<PAGE> 6
Obligor, any properties of any Obligor, or the estate in bankruptcy of
any Obligor in the course of or resulting from any such proceedings.
(ii) The failure by BNPLC to file or enforce a claim in any
proceeding described in the immediately preceding subsection (i) or to
take any other action in any proceeding to which any Obligor is a party.
(iii) The release by operation of law of any Obligor from any of
the Obligations or any other obligations to BNPLC.
(iv) The invalidity, deficiency, illegality, or unenforceability
of any of the Obligations or the Obligation Documents, in whole or in
part, any bar by any statute of limitations or other law of recovery on
any of the Obligations, or any defense or excuse for failure to perform
on account of force majeure, act of God, casualty, impossibility,
impracticability, or other defense or excuse whatsoever.
(v) The failure of any Obligor or any other Person to sign any
guaranty or other instrument or agreement within the contemplation of
any Obligor or BNPLC.
(vi) The fact that Guarantor may have incurred directly part of
the Obligations or is otherwise primarily liable therefor.
(vii) Without limiting any of the foregoing, any fact or event
(whether or not similar to any of the foregoing) which in the absence of
this provision would or might constitute or afford a legal or equitable
discharge or release of or defense to a guarantor or surety other than
the actual payment and performance by Guarantor under this Guaranty.
(c) BNPLC may invoke the benefits of this Guaranty before pursuing any
remedies against any Obligor or any other Person and before proceeding against
any Security now or hereafter existing for the payment or performance of any of
the Obligations. BNPLC may maintain an action against Guarantor on this Guaranty
without joining any Obligor therein and without bringing a separate action
against any Obligor.
(d) If any payment to BNPLC by any Obligor is held to constitute a
preference or a voidable transfer under applicable state or federal laws, or if
for any other reason BNPLC is required to refund such payment to the payor
thereof or to pay the amount thereof to any other Person, such payment to BNPLC
shall not constitute a release of Guarantor from any liability hereunder, and
Guarantor agrees to pay such amount to BNPLC on demand and agrees and
acknowledges that this Guaranty shall continue to be effective or shall be
reinstated, as the case may be, to the extent of any such payment or payments.
(e) This is a continuing guaranty and shall apply to and cover all
Obligations and renewals and extensions thereof and substitutions therefor from
time to time.
Section 5 Waiver. Guarantor waives all notices of the creation, renewal,
extension or accrual of any of the Obligations and notice or proof of reliance
by BNPLC on this Guaranty or acceptance of this Guaranty. The Obligations shall
conclusively be considered to have been created, contracted or incurred in
reliance on this Guaranty, and all dealings between BNPLC and FCI shall likewise
be conclusively presumed to have been had or consummated in reliance on this
Guaranty. Guarantor also
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<PAGE> 7
waives (to the extent permitted by applicable law) all requirements of notice,
presentment, protest or demand on it, FCI or any other Person, all other notices
and demands whatsoever relating to the Obligations and any requirement that
BNPLC file a claim with a court in any bankruptcy or similar proceedings of FCI
or first proceed against FCI or any other Person or first realize on any
collateral security held by it or otherwise exhaust any right, power or remedy
under any document or against BNPLC or any other Person before proceeding
against Guarantor under this Guaranty. BNPLC shall have no responsibility to
notify Guarantor of FCI's financial condition or FCI's incurrence or performance
of the Obligations. WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS GUARANTY, GUARANTOR HEREBY WAIVES, TO THE MAXIMUM
EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND ALL DEFENSES ARISING DIRECTLY OR
INDIRECTLY UNDER ANY ONE OR MORE OF (A) CALIFORNIA CIVIL CODE SECTIONS 2808,
2809, 2810, 2815, 2819, 2820, 2821, 2838, 2839, 2845, 2848, 2849, AND 2850, (B)
TO THE EXTENT APPLICABLE, CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a,
580b, 580c, 580d AND 726, AND (C) TO THE EXTENT APPLICABLE, CHAPTER 2 OF TITLE
14 OF THE CALIFORNIA CIVIL CODE. Guarantor warrants and agrees that each of the
waivers set for in this Guaranty is made with full knowledge of its significance
and consequences and that, under the circumstances, the waivers are reasonable
and not contrary to public policy or law. If any of such waivers are determined
to be contrary to any applicable law or public policy, such waivers shall be
effective only to the maximum extent permitted by law.
Section 6 Exercise of Remedies. BNPLC shall have the right to enforce,
from time to time, in any order and at BNPLC's sole discretion, any rights,
powers and remedies which BNPLC may have under the Obligation Documents, this
Guaranty or otherwise. No failure on the part of BNPLC to exercise, and no delay
in exercising, any right hereunder or under any Obligation Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right preclude any other or further exercise thereof or the exercise of any
other right. The rights, powers and remedies of BNPLC provided herein and in the
Obligation Documents are cumulative and are in addition to, and not exclusive
of, any other rights, powers or remedies provided by law or in equity. The
rights of BNPLC hereunder are not conditional or contingent on any attempt by
BNPLC to exercise any of its rights under any Obligation Document against any
Obligor or any other Person.
Section 7 Limited Subrogation. Until all of the Obligations have been
paid and performed in full Guarantor shall have no right, by reason of or in
connection with this Guaranty, to exercise any right of subrogation,
reimbursement, indemnity, exoneration, contribution or any other claim which it
may now or hereafter have against or to any Obligor or any Security, and
Guarantor hereby waives any rights to enforce any such remedy which Guarantor
may have against FCI and any right to participate in any Security until such
time. If any amount shall be paid to Guarantor on account of any such
subrogation or other rights, any such other remedy, or any Security at any time
when all of the Obligations and all other expenses guaranteed pursuant hereto
shall not have been paid in full, such amount shall be held in trust for the
benefit of BNPLC, shall be segregated from the other funds of Guarantor and
shall forthwith be paid over to BNPLC to be held by BNPLC as collateral for, or
then or at any time thereafter applied in whole or in part by BNPLC against, all
or any portion of the Obligations, whether matured or unmatured, in such order
as BNPLC shall elect.
Section 8 Successors and Assigns. Guarantor's rights or obligations
hereunder may not be assigned or delegated, but this Guaranty and such
obligations shall pass to and be fully binding upon the successors of Guarantor,
as well as Guarantor. This Guaranty shall apply to and inure to the benefit of
BNPLC and its successors or assigns. Without limiting the generality of the
immediately
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preceding sentence, BNPLC may assign, grant a participation in, or otherwise
transfer any Obligation held by it or any portion thereof, and BNPLC may assign
or otherwise transfer its rights or any portion thereof under any Obligation
Document, to any other Person, and such other Person shall thereupon become
vested with all of the benefits in respect thereof granted to BNPLC hereunder
unless otherwise expressly provided by BNPLC in connection with such assignment
or transfer.
Section 9 Representations, Warranties and Covenants of Guarantor.
Guarantor hereby represents, warrants and covenants to BNPLC as follows:
(a) The Recitals at the beginning of this Guaranty are true and correct
in all material respects.
(b) The direct or indirect value of the consideration received and to be
received by Guarantor in connection herewith is reasonably worth at least as
much as the liability and obligations of Guarantor hereunder, and the incurrence
of such liability and obligations in return for such consideration may
reasonably be expected to benefit Guarantor, directly or indirectly.
(c) The execution, delivery and performance by Guarantor of this
Guaranty do not and will not constitute a breach or default under any other
material agreement or contract to which Guarantor is a party or by which
Guarantor is bound or which affects the Property, and do not violate or
contravene any law, order, decree, rule or regulation to which Guarantor is
subject, and such execution, delivery and performance by Guarantor will not
result in the creation or imposition of (or the obligation to create or impose)
any lien, charge or encumbrance on, or security interest in, Guarantor's
property pursuant to the provisions of any of the foregoing.
(d) There are no judicial or administrative actions, suits, proceedings
or investigations pending or, to Guarantor's knowledge, threatened that will
adversely affect the Property or the validity, enforceability or priority of
this Guaranty, and Guarantor is not in default with respect to any order, writ,
injunction, decree or demand of any court or other governmental or regulatory
authority that could materially and adversely affect the use, occupancy or
operation of the Property. No condemnation or other like proceedings are pending
or, to Guarantor's knowledge, threatened against the Property.
(e) The execution, delivery and performance by Guarantor of this
Guaranty are duly authorized and does not require the consent or approval of any
governmental body or other regulatory authority that has not heretofore been
obtained and are not in contravention of or conflict with any applicable laws or
any term or provision of Guarantor's articles of incorporation or bylaws. This
Guaranty is a valid, binding and legally enforceable obligation of Guarantor, in
accordance with its terms, except as such enforcement is affected by bankruptcy,
insolvency and similar laws affecting the rights of creditors, generally, and
equitable principles of general application.
(f) Guarantor is not "insolvent" on the date hereof (that is, the sum of
Guarantor's absolute and contingent liabilities, including the Obligations, does
not exceed the fair market value of Guarantor's assets) and has no outstanding
liens, suits, garnishments or court actions which could render Guarantor
insolvent or bankrupt. Guarantor's capital is adequate for the businesses in
which Guarantor is engaged and intends to be engaged. Guarantor has not incurred
(whether hereby or otherwise), nor does Guarantor intend to incur or believe
that it will incur, debts which will be beyond its ability to pay as such debts
mature. There has not been filed by or, to Guarantor's knowledge, against
Guarantor a petition in bankruptcy or a petition or answer seeking an assignment
for the benefit
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of creditors, the appointment of a receiver, trustee, custodian or liquidator
with respect to Guarantor or any significant portion of Guarantor's property,
reorganization, arrangement, rearrangement, composition, extension, liquidation
or dissolution or similar relief under the federal Bankruptcy Code or any state
law. The financial statements and all financial data heretofore delivered to
BNPLC relating to Guarantor are true, correct and complete in all material
respects. No material adverse change has occurred in the financial position of
Guarantor and its Subsidiaries as reflected in Guarantor's financial statements
covering the fiscal period ended December 31, 1997.
(g) Guarantor is duly incorporated and legally existing under the laws
of the State of Delaware. Guarantor has all requisite power and has procured or
will procure on a timely basis all governmental certificates of authority,
licenses, permits, qualifications and other documentation required to fulfill
its obligations under this Guaranty. Guarantor has the corporate power and
adequate authority, rights and franchises to own Guarantor's property and to
carry on Guarantor's business as now conducted and is duly qualified and in good
standing in each state in which the character of Guarantor's business makes such
qualification necessary (including the State of California) or, if it is not so
qualified in a state other than California, such failure does not have a
material adverse effect on the properties, assets, operations or businesses of
Guarantor and its Subsidiaries, taken as a whole.
(h) Guarantor is not and will not become an "employee benefit plan" (as
defined in Section 3(3) of ERISA) which is subject to Title I of ERISA. The
assets of Guarantor do not and will not in the future constitute "plan assets"
of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101.
Guarantor is not and will not become a "governmental plan" within the meaning of
Section 3(32) of ERISA. Transactions by or with Guarantor are not subject to
state statutes regulating investments of and fiduciary obligations with respect
to governmental plans. No ERISA Termination Event has occurred with respect to
any Plan of Guarantor and Guarantor and all its Subsidiaries are in compliance
with ERISA. Neither Guarantor nor any of its Subsidiaries is required to
contribute to, or has any other absolute or contingent liability in respect of,
any "multi employer plan" as defined in Section 4001 of ERISA. As of the
Effective Date no "accumulated funding deficiency" (as defined in Section 412(a)
of the Code) exists with respect to any Plan of Guarantor, whether or not waived
by the Secretary of the Treasury or his delegate, and the current value of the
benefits of each Plan of Guarantor, if any, equals or is less than the current
value of such Plan's assets available for the payment of such benefits.
(i) None of the representations or warranties of Guarantor or FCI
contained in this Guaranty or the Obligation Documents or any other document,
certificate or written statement furnished to BNPLC by or on behalf of Guarantor
or FCI contains any untrue statement of a material fact or omits a material fact
necessary in order to make the statements contained herein or therein (when
taken in their entireties) not misleading.
(j) Guarantor shall, upon request of BNPLC, (i) promptly correct any
error or omission which may be discovered in the contents of this Guaranty or in
any other instrument executed in connection herewith or in the execution or
acknowledgment thereof; (ii) execute, acknowledge, deliver and record or file
such further instruments and do such further acts as may be necessary, desirable
or proper to carry out more effectively the purposes of this Guaranty and to
subject to this Guaranty any property intended by the terms hereof to be covered
hereby, including any renewals, additions, substitutions, replacements or
appurtenances to the Property; (iii) execute, acknowledge, deliver, procure and
record or file any document or instrument deemed advisable by BNPLC to protect
its rights in and to the Property against the rights or interests of third
persons; and (iv) provide such certificates, documents, reports, information,
affidavits and other instruments and do such further acts
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as may be necessary, desirable or proper in the reasonable determination of
BNPLC to enable BNPLC, BNPLC's Parent and any other Participants to comply with
the requirements or requests of any agency or authority having jurisdiction over
them.
Section 10 Covenants Incorporated by Reference to Schedule A. So long as
Guarantor shall continue to have any obligations under this Guaranty, Guarantor
shall comply with each and every requirement set forth in Schedule A attached
hereto and made a part hereof; provided, however, to the extent that any of the
Obligations or requirements set forth in other provisions of this Guaranty are
more stringent than the requirements set forth in Schedule A, the more stringent
Obligations or requirements set forth herein shall control.
Section 11 Ownership of FCI. So long as Guarantor shall continue to have
any obligations under this Guaranty, Guarantor shall continue to own directly
one hundred percent (100%) of the outstanding shares of capital stock of FCI.
Section 12 No Oral Change. No amendment of any provision of this
Guaranty shall be effective unless it is in writing and signed by Guarantor and
BNPLC, and no waiver of any provision of this Guaranty, and no consent to any
departure by Guarantor therefrom, shall be effective unless it is in writing and
signed by BNPLC, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 13 Invalidity of Particular Provisions. If any term or provision
of this Guaranty shall be determined to be illegal or unenforceable all other
terms and provisions hereof shall nevertheless remain effective and shall be
enforced to the fullest extent permitted by applicable law.
Section 14 Headings and References. The headings used herein are for
purposes of convenience only and shall not be used in construing the provisions
hereof. The words "this Guaranty," "this instrument," "herein," "hereof,"
"hereby" and words of similar import refer to this Guaranty as a whole and not
to any particular subdivision unless expressly so limited. The phrases "this
section" and "this subsection" and similar phrases refer only to the
subdivisions hereof in which such phrases occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation". Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
Section 15 Term. This Guaranty shall be irrevocable until all of the
Obligations have been completely and finally paid and performed, Guarantor shall
have paid all amounts that may be required hereunder, the Obligation Documents
have been terminated, and all obligations and undertakings of FCI under, by
reason of, or pursuant to the Obligation Documents have been completely
performed, and this Guaranty is thereafter subject to reinstatement as provided
in Section 3(d). All extensions of credit and financial accommodations
heretofore or hereafter made by BNPLC to FCI shall be conclusively presumed to
have been made in acceptance hereof and in reliance hereon.
Section 16 Notices. Any notice or communication required or permitted
hereunder shall be given as provided in the Lease and if to Guarantor at its
address set forth below:
TO GUARANTOR: Solectron Corporation
777 Gibraltar Drive, Building #5
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<PAGE> 11
Milpitas, California 95035
Attn: Chief Financial Officer
Telecopy: (408) 956-6059
or to such other address or to the attention of such other individual as
hereafter shall be designated in writing by Guarantor to BNPLC sent in
accordance herewith.
Section 17 Counterparts. This Guaranty may be executed in any number of
counterparts, each of which when so executed shall be deemed to constitute one
and the same Guaranty.
SECTION 18 GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 19 Waiver of a Jury Trial. GUARANTOR AND BNPLC EACH HEREBY
WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of this waiver is intended
to be all-encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction, including, without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Guarantor and BNPLC each acknowledge that this
waiver is a material inducement to enter into a business relationship, that
BNPLC has already relied on the waiver in entering into the Lease, the
Construction Management Agreement, the Purchase Agreement and the Closing
Certificate and the other documents referred to herein, and that each will
continue to rely on the waiver in their related future dealings. BNPLC and
Guarantor each further warrants and represents that it has reviewed this waiver
with its legal counsel, and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS GUARANTY OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THIS GUARANTY. In the event of litigation, this Guaranty may be
filed as a written consent to a trial by the court.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty
as of the date first written above.
SOLECTRON CORPORATION
By: /s/ SUSAN WANG
----------------------------
Name (print): SUSAN WANG
Title: SR. V.P. & CFO
10
<PAGE> 12
Schedule A
FINANCIAL AND OTHER COVENANTS OF GUARANTOR
PART 1
ADDITIONAL DEFINITIONS
1.01 Definitions Applicable in this Schedule. For purposes of this
Schedule A, the following capitalized terms will have the following respective
meanings:
"Adjusted Leverage Ratio" means with respect to Guarantor and its
Subsidiaries on a consolidated basis at the end of any fiscal quarter, the ratio
of (a) (without duplication) (i) Consolidated Funded Debt plus (ii) Guarantee
obligations plus (iii) Indebtedness with respect to synthetic leases and
securitized assets plus (iv) Indebtedness in respect to letters of credit minus
(v) Permitted Subordinated Indebtedness, to (b) (i) operating income plus (ii)
depreciation and amortization charges, in each case, for the period of the four
fiscal quarters ended on the applicable date of determination.
"Capital Lease Obligations" means the obligations of any Person to pay
rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
"Consolidated Funded Debt" means, as of the last day of any fiscal
quarter, the sum for Guarantor and its Subsidiaries as of such day, of, without
duplication, (a) the aggregate outstanding principal amount of Indebtedness for
borrowed money and (b) the aggregate outstanding capitalized amount of Capital
Lease Obligations, all as determined on a consolidated basis in accordance with
GAAP.
"Consolidated Tangible Assets" means, as of the last day of any fiscal
quarter of Guarantor, all tangible assets on the consolidated balance sheet of
Guarantor and its Subsidiaries, as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Tangible Net Worth" means as of the last day of any fiscal
quarter of Guarantor, (a) total shareholders' equity of Guarantor and its
Subsidiaries minus (b) the aggregate amount of all intangible assets on the
consolidated balance sheet of Guarantor and its Subsidiaries, all as determined
on a consolidated basis in accordance with GAAP.
"Current Liabilities" means, with respect to any Person, all liabilities
of such Person treated as current liabilities in accordance with GAAP, including
without limitation (a) all obligations payable on demand or within one year
after the date in which the determination is made and (b) installment and
sinking fund payments required to be made within one year after the date on
which determination is made, but excluding all such liabilities or obligations
which are renewable or extendable at the option of such Person to a date more
than one year from the date of determination.
"Existing Credit Agreement" means the Credit Agreement dated as of April
29, 1997, among Guarantor as Borrower, Bank of America National Trust and
Savings Association, as Agent and Issuing Bank, and other financial institutions
named therein.
<PAGE> 13
"Guarantee" of or by any Person (the "guarantor") means, for the
purposes of this Schedule only and not for the purposes of the Obligation
Documents, any obligation, contingent or otherwise of the guarantor guaranteeing
or having the economic effect of guaranteeing any Indebtedness or other
obligation of any other Person (the "primary obligor") in any matter, whether
directly or indirectly, and including any obligation of the guarantor, direct or
indirect (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment thereof, (b)
to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment
thereof, (c) to maintain working capital, equity capital or any other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or other obligation, or (d) as an
account party in respect of any letter of credit or letter of guaranty issued to
support such Indebtedness or obligation; provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid (excluding deferred
compensation obligations owed to current and former directors, officers and
employees), (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of property
or services (excluding current accounts payable, measured in accordance with
GAAP, incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty supporting Indebtedness, (j) all obligations, contingent
or otherwise, of such Person in respect of bankers' acceptances, and (k) all
obligations, contingent or otherwise, with respect to synthetic leases or
securitized assets. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
"Lien" means, for the purpose of this Schedule only and not for the
purposes of the Obligation Documents, with respect to any asset (a) a mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance or security interest in,
on or of such asset, and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement relating
to such asset.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
Guarantor and its Subsidiaries taken as a whole, (b) the ability of Guarantor to
perform its obligations under this Guaranty if called upon to do so, or (c) the
ability of FCI to perform its Obligations under the Obligation Documents; or (d)
the rights of or benefits available to BNPLC or the Participants under the
Obligation Documents.
"Modified Quick Ratio" means, as computed with respect to Guarantor and
its Subsidiaries on a consolidated basis, the ratio of (1) their Quick Assets to
(2) the sum (without duplication of any item)
Schedule A - Page 2
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of their Current Liabilities and any payments maturing within 12 months on any
Indebtedness of Guarantor or its Subsidiaries or on Indebtedness of any other
Person which is the subject of any Guarantee made by Guarantor or its
Subsidiaries.
"Permitted Contest" means a contest of the validity or amount of any
payment claimed to be due from Guarantor or a Subsidiary where (a) the contest
is undertaken by Guarantor or such Subsidiary in good faith by appropriate
proceedings, (b) Guarantor or such Subsidiary shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP, and (c) the
failure to make such payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
"Permitted Encumbrances" means, for the purposes of this Guaranty only
and not for the purposes of the Obligation Documents:
(a) Liens imposed by law by any governmental authority for taxes
that are not yet due or are the subject of a Permitted Contest.
(b) Carriers' warehousemen's, mechanics', material men's,
repairmen's and other like Liens imposed by law, and any other
involuntary, statutory or common law Lien arising in the ordinary course
of business and securing obligations that are not overdue by more than
30 days or are the subject of a Permitted Contest.
(c) Pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations.
(d) Deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the
ordinary course of business.
(e) Easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of Guarantor or any
Subsidiary.
(f) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under the Lease.
(g) Liens which constitute rights of set-off of a customary
nature or banker's Liens with respect to amounts on deposit arising by
operation of law in connection with arrangements entered into with banks
in the ordinary course of business.
(h) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with
the importation of goods.
(i) Leases or subleases and licenses and sublicenses granted to
others in the ordinary course of business not interfering in any
material respect with the business of Guarantor or its Subsidiaries
taken as a whole, and any interest or title of any lessor or licensor
Schedule A - Page 3
<PAGE> 15
under any lease or license.
The term "Permitted Encumbrances" shall not include any Lien securing
Indebtedness.
"Permitted Subordinated Indebtedness" means Indebtedness of Guarantor,
the payment of which is expressly subordinated (on terms satisfactory to BNPLC)
to the Obligations.
"Quick Assets" means the sum (without duplication of any item) of
unencumbered cash, plus unencumbered short term cash investments, plus other
unencumbered marketable securities which are classified as short term
investments according to GAAP, plus unencumbered current net accounts
receivable, plus the fair market value of certain long-term investments
hereinafter described. For purposes of determining Quick Assets, assets will be
deemed to be "unencumbered" if they are actually unencumbered or if they are
encumbered only by Liens, from which, at the time of the determination of Quick
Assets, the owner of the assets (be it Guarantor or one of its Subsidiaries) is
entitled to a release of such assets upon no more than ninety days' notice,
without any payment (other than the payment of ministerial fees and costs),
without subjecting other assets to any Lien and without otherwise satisfying any
condition that is beyond the owner's control. The following assets (and only the
following assets) will qualify as "long-term investments" to be included in
Quick Assets to the extent (and only to the extent) that, at the time of the
determination of Quick Assets, they shall not be classified as short term
investments in accordance with GAAP and shall have maturities of not longer than
two years:
(1) securities issued or fully guaranteed or fully insured
by the United States government or any agency thereof and backed
by the full faith and credit of the United States;
(2) certificates of deposit, time deposits, Eurodollar
time deposits, repurchase agreements, or banker's acceptances
that are (A) issued by either one of the 50 largest (in assets)
banks in the United States or by one of the 100 largest (in
assets) banks in the world and (B) rated not less than A- by
Standard & Poor's Corporation or less than A by Moody's Investors
Service, Inc.; and
(3) corporate or municipal bonds rated not less than A- by
Standard & Poor's Corporation or less than A by Moody's Investors
Service, Inc.
"Special Purpose Subsidiary" means any bankruptcy remote special purpose
subsidiary of Guarantor formed for the purpose of selling undivided interests in
accounts receivable and/or other assets transferred by Guarantor and/or any of
its Subsidiaries to such subsidiary for financing purposes, including Solectron
Funding Corporation, a corporation organized or to be organized under the laws
of the state of Delaware.
"Subsidiary" means, for purposes of this Schedule only and not for the
purposes of the Obligation Documents, with respect to Guarantor or any Special
Purpose Subsidiary (the "parent") at any date, any corporation, limited
liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent's
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date.
Schedule A - Page 4
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PART 2
DELIVERY OF INFORMATION
2.01. Financial Statements and Other Information. Guarantor will furnish
to BNPLC and to each Participant of which Guarantor has been notified:
(a) within 90 day's after the end of each fiscal year of
Guarantor, its audited consolidated balance sheet and related statements
of operations, changes in shareholders' equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by KPMG Peat
Marwick or other independent public accountants of recognized national
standing (without a "going concern" or like qualification or exception
and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present
fairly in all material respects the financial condition and results of
operations of Guarantor and consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year of Guarantor, its consolidated
balance sheet and related statements of operations and cash flows as of
the end of and for such fiscal quarter and the then elapsed portion of
the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its senior or executive financial officers as
presenting fairly in all material respects the financial condition and
results of operations of Guarantor and consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under
clauses (a) or (b) above, a completed compliance certificate of a senior
or executive financial officer of Guarantor in form and content
reasonably acceptable to BNPLC;
(d) concurrently with any delivery of consolidated financial
statements under clause (a) above, a certificate of the accounting firm
that reported on such financial statements stating whether they obtained
knowledge during the course of their audit of such consolidated
financial statements of any Event of Default or a Default under the
Obligation Documents insofar as it relates to accounting matters (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials
filed by Guarantor or any Subsidiary with the Securities and Exchange
Commission, or any governmental authority succeeding to any or all of
the functions of said commission, or with any national securities
exchange, or distributed by Guarantor to its shareholders generally, as
the case may be;
(f) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of Guarantor or any Subsidiary, or compliance with the terms
of the Obligation Documents, as the BNPLC or any Participant may
reasonably request; and
Schedule A - Page 5
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(g) promptly upon becoming aware thereof, notice of the
effectiveness of any rating of any Index Debt by S&P or Moody's and
notice of the effectiveness of any change in any rating of any Index
Debt by S&P or Moody's.
2.02. Notices of Material Events. Guarantor will furnish to BNPLC and
each Participant prompt written notice of the following:
(a) The filing or commencement of any action, suit or proceeding
by or before any arbitrator or governmental authority against or
affecting Guarantor or any Subsidiary thereof that could reasonably be
expected to result in a Material Adverse Effect.
(b) The occurrence of any ERISA Termination Event that, alone or
together with any other ERISA Termination Events that have occurred,
could reasonably be expected to result in liability of Guarantor and its
Subsidiaries in an aggregate amount exceeding $5,000,000.
(c) Any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Paragraph 2.02 shall be accompanied by a
statement of a senior or executive financial officer or other executive officer
of Guarantor setting forth the details of the event or development requiring
such notice and any action taken or proposed to be taken with respect thereto.
PART 3
NEGATIVE COVENANTS
3.01. Subsidiary Indebtedness. No Subsidiary will create, incur, assume
or permit to exist any Indebtedness, except:
(a) Indebtedness existing on the Effective Date and set forth in
schedule 6.01 attached to the Existing Credit Agreement (a copy of which
schedule is also attached hereto for convenience) and extensions,
renewals and replacements of any such Indebtedness that do not increase
the outstanding principal amount thereof.
(b) Indebtedness of any Subsidiary to Guarantor or any other
Subsidiary.
(c) Guarantees by any Subsidiary of Indebtedness of Guarantor or
of any other Subsidiary to the extent such Indebtedness is permitted
under the Obligation Documents and other material agreements governing
the Indebtedness of Guarantor.
(d) Indebtedness of any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a Lien
on any such assets prior to the acquisition thereof and extensions,
renewals and replacements of any such Indebtedness that do not increase
the outstanding principal amount thereof; provided that (i) such
Indebtedness is incurred prior to or within 120 days after such
acquisition or the completion of such construction or improvement, and
(ii) the aggregate principal amount of Indebtedness permitted by this
clause (d) when aggregated (without
Schedule A - Page 6
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duplication) with all Indebtedness incurred under clause (g) below, with
the aggregate amount of all claims and obligations secured by Liens
permitted pursuant to clauses (d) and (f) of Paragraph 3.02 and with the
aggregate book value or sale price of the assets sold in sale and
leaseback transactions permitted pursuant to Paragraph 3.03 does not
exceed 30% of Consolidated Tangible Assets as of the last day of the
most recent fiscal period in respect of which financial statements shall
have been delivered pursuant to Paragraph 2.01 of this Schedule.
(e) Indebtedness of any Person that becomes a Subsidiary after
April 30, 1997; provided that such Indebtedness exists at the time such
Person becomes a Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Subsidiary.
(f) Indebtedness of any Subsidiary as an account party in respect
of trade letters of credit.
(g) Other unsecured Indebtedness of the Subsidiaries in an
aggregate principal amount outstanding at any time that, when aggregated
(without duplication) with all Indebtedness incurred under clause (d)
above, with the aggregate amount of all claims and obligations secured
by Liens permitted pursuant to clauses (d) and (f) of Paragraph 3.02 and
with the aggregate book value or sale price of the assets sold in sale
and leaseback transactions permitted pursuant to Paragraph 3.03 does not
exceed 30% of Consolidated Tangible Assets as of the last day of the
most recent fiscal period in respect of which financial statements shall
have been delivered pursuant to Paragraph 2.01 of this Schedule.
(h) (i) Indebtedness of any Special Purpose Subsidiary; or (ii)
Indebtedness of any other Subsidiary incurred by such Subsidiary in
connection with the incurrence of Indebtedness by any Special Purpose
Subsidiary.
3.02. Liens. Guarantor will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Lien on any property or asset now
owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
(a) Permitted Encumbrances and Liens securing Capital Lease
Obligations permitted under subparagraph 3.01(d), and any renewal or
extension of any such Permitted Encumbrance or Lien so long as the
principal amount of the obligations secured thereby is not increased;
(b) any Lien on any property or asset of Guarantor or any
Subsidiary existing on April 30, 1997 and set forth in schedule 6.02
attached to the Existing Credit Agreement (a copy of which schedule is
also attached hereto for convenience); provided that (i) such Lien shall
not apply to any other property or asset of Guarantor or any Subsidiary
and (ii) such Lien shall secure only those obligations which it secures
on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by Guarantor or any Subsidiary or existing on any
property or asset (including attachments, accessions, replacements or
proceeds thereof) of any Person that becomes a Subsidiary after
Schedule A - Page 7
<PAGE> 19
April 30, 1997 prior to the time such Person becomes a Subsidiary;
provided that (i) such Lien is not created in contemplation of or in
connection with such acquisition of such Person becoming a Subsidiary,
as the case may be, (ii) such Lien shall not apply to any other property
or assets of Guarantor or any Subsidiary, and (iii) such Lien shall
secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case
may be, and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;
(d) Liens on fixed or capital assets acquired, constructed or
improved by Guarantor or any Subsidiary (including replacements or
proceeds of such assets and including any Capital Lease Obligations);
provided that (i) in the case of any Subsidiary, such security interest
secure Indebtedness permitted by clause (d) of Paragraph 3.01, (ii) such
security interests and the Indebtedness secured thereby are incurred
prior to or within 120 days after such acquisition or the completion of
such construction or improvement, (iii) the Indebtedness secured thereby
does not exceed 100% of the cost of acquiring, constructing or improving
such fixed or capital assets, (iv) such security interest shall not
apply to any other property or assets of Guarantor or any Subsidiary,
and (v) the aggregate amount of such Indebtedness when aggregated
(without duplication) with all Indebtedness incurred under clauses (d)
and (g) of Paragraph 3.01, with the aggregate amount of all claims
secured by Liens permitted pursuant to clause (f) below and with the
aggregate book value or sale price of the assets sold in sale and
leaseback transactions permitted pursuant to Paragraph 3.03 does not
exceed 30% of Consolidated Tangible Assets as of the last day of the
most recent fiscal period in respect of which financial statements shall
have been delivered pursuant to Paragraph 2.01;
(e) Liens securing claims of any Special Purpose Subsidiary
against any other Subsidiary and sales or assignments of accounts
receivable (or interests therein) by any Subsidiary to a Special Purpose
Subsidiary and by any Special Purpose Subsidiary; and
(f) other Liens securing claims in an aggregate amount at any
time outstanding that when aggregated (without duplication) with (i) all
obligations of any Special Purpose Subsidiary secured by liens, (ii) all
Indebtedness incurred under clauses (d) and (g) of Paragraph 3.01, (iii)
the aggregate amount of all obligations secured by Liens permitted
pursuant to clause (d) above and (iv) the aggregate book value or sale
price of the assets sold in sale and leaseback transactions permitted
pursuant to Paragraph 6.03, does not exceed 30% of Consolidated Tangible
Assets as of the last day of the most recent fiscal period of Guarantor
in respect of which financial statements shall have been delivered
pursuant to Paragraph 2.01, provided that the dollar amount of claims
and other obligations (other than claims or other obligations of any
Subsidiary in favor of any Special Purpose Subsidiary which is directly
or indirectly wholly owned by Guarantor and inchoate indemnity
obligations) secured by accounts receivable does not exceed the greater
of $130,000,000 or 35% of Guarantor's aggregate accounts receivable
(including such accounts receivable sold to any Special Purpose
Subsidiary) calculated on a consolidated basis.
3.03. Sale and Leaseback Transactions. Guarantor will not, and will not
permit any Subsidiary to, enter into any arrangement, directly or indirectly,
with any Person whereby it shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property which it intends to use for
substantially the same purpose or purposes as the property being sold or
transferred; provided, however, that
Schedule A - Page 8
<PAGE> 20
notwithstanding the above, Guarantor or any Subsidiary may engage in any sale
and leaseback transaction if, immediately after the consummation of such
transaction, the aggregate book value or sale price of the assets sold in sale
and leaseback transactions referred to in this Paragraph 3.03, when aggregated
(without duplication) with all Indebtedness incurred under clauses (d) and (g)
of Paragraph 3.01 and with the aggregate amount of all claims and obligations
secured by Liens permitted pursuant to clauses (d) and (f) of Paragraph 3.02,
does not exceed 30% of Consolidated Tangible Assets as of the last day of the
most recent fiscal period in respect of which financial statements shall have
been delivered pursuant to Paragraph 2.01.
3.04. Fundamental Changes.
(a) Guarantor will not, and will not permit any Subsidiary to,
merge into or consolidate with any other Person, or permit any other
Person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions)
all or any substantial portion of its assets, or all or substantially
all of the capital stock of any of the Subsidiaries (in each case,
whether now owned or hereafter acquired), or liquidate or dissolve,
except that, if at the time thereof and immediately after giving effect
thereto no Event of Default or default under the Obligation Documents
shall have occurred and be continuing (i) any Person may merge into or
consolidate with Guarantor in a transaction in which Guarantor is the
surviving corporation, (ii) any Person may merge into any Subsidiary in
a transaction in which the surviving entity is a Subsidiary, (iii) any
Subsidiary may sell, transfer, lease or otherwise dispose of its assets
to Guarantor or to another Subsidiary, (iv) any Subsidiary may liquidate
or dissolve if Guarantor determines in good faith that such liquidation
or dissolution is in the best interests of Guarantor and is not
materially disadvantageous to BNPLC or the Participants and any
distribution or other transfer of assets in connection with such
liquidation or dissolution is made to Guarantor or another Subsidiary in
an amount consistent with such person's ownership percentage of the
Subsidiary being dissolved or liquidated, (v) Guarantor and the
Subsidiaries may sell, lease or otherwise dispose of property in any
individual transaction not related to any other such transaction if the
aggregate fair market value of the assets sold, leased or otherwise
disposed of in such transaction is less than $2,000,000, (vi) Guarantor
and/or any of the Subsidiaries may sell or otherwise transfer their
accounts receivable and other assets to any Special Purpose Subsidiary
and/or any Special Purpose Subsidiary may sell or otherwise transfer
such accounts receivable or other property (or interests therein) if
otherwise permitted under Paragraph 3.02(f), and (vii) Guarantor and the
Subsidiaries may sell, lease or otherwise dispose of property in any
other transaction in the ordinary course of business, provided that,
with respect to transactions outside of the ordinary course of business,
the aggregate fair market value of all assets sold, leased or otherwise
disposed of in transactions under this clause (vii) shall not when taken
together at the time of each such sale, lease or other disposition
exceed 25% of Consolidated Tangible Assets as of the last day of the
most recent fiscal period in respect of which financial statements shall
have been delivered pursuant to Paragraph 2.01 at such time.
(b) Guarantor will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any line of business
material to Guarantor and the Subsidiaries, taken as a whole, other than
businesses currently conducted by Guarantor and the Subsidiaries and
businesses reasonably related thereto.
3.05 Intentionally Omitted.
Schedule A - Page 9
<PAGE> 21
3.06. Fiscal Year. Guarantor will not change its fiscal year end from
August 31.
3.07. Restrictive Agreements. Guarantor will not, and will not permit
any of its Subsidiaries to, directly or indirectly, enter into, incur or permit
to exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of Guarantor or any Subsidiary to create,
incur or permit to exist any Lien upon any of its property or assets, or (b) the
ability of any Subsidiary to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to
Guarantor or any other Subsidiary or to Guarantee Indebtedness of Guarantor or
any other Subsidiary if any such prohibition, restriction or condition is more
burdensome than any similar prohibition, restriction or condition contained in
this Schedule; provided that (i) the foregoing shall not apply to restrictions
and conditions imposed by law or by any the Existing Credit Agreement, (ii) the
foregoing shall not apply to restrictions and conditions existing prior to and
identified in the schedule 6.07 attached to the Existing Credit Agreement (a
copy of which schedule is also attached hereto for convenience), but shall apply
to any amendment or modification expanding the scope of any such restriction or
condition unless otherwise permitted under this Paragraph 3.07, (iii) the
foregoing shall not apply to customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is to be sold and
such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Schedule if such restrictions or conditions apply
only to the property or assets securing such Indebtedness, (v) clause (a) of the
foregoing shall not apply to customary provisions in leases and other contracts
restricting the assignment thereof, (vi) the foregoing shall not apply to such
restrictions and conditions applicable to any Subsidiary acquired after April
30, 1997 if such restrictions and conditions existed at the time such Subsidiary
was acquired and were not created in anticipation of such acquisition, (vii) the
foregoing shall not apply to one or more Subsidiaries having any such
restriction or condition so long as any such Subsidiary individually shall not
account for more than 5% of the gross revenues for the most recently ended
fiscal year of Guarantor and the Subsidiaries, taken as a whole, and each such
Subsidiary together with all other such Subsidiaries in the aggregate shall not
account for more than 10% of the gross revenues for the most recently ended
fiscal year of Guarantor and the Subsidiaries, taken as a whole, (viii) the
foregoing shall not apply to any working capital facility entered into by a
Subsidiary organized under the laws of any foreign country, and (ix) the
foregoing shall not apply to any Special Purpose Subsidiary or to any agreement
or other arrangement entered into by Guarantor or any of the Subsidiaries
incidental to a transaction involving a Special Purpose Subsidiary, which
transaction is otherwise permitted under the terms of this Schedule and the
Obligations Documents.
3.08. Distributions. Guarantor shall not declare or make, and shall not
suffer or permit any of its Subsidiaries to declare or make, any dividend
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any shares of any class of its capital stock, or
purchase, redeem or otherwise acquire for value any shares of its capital stock
or any warrants, rights or options to acquire such shares, now or hereafter
outstanding, if any Event of Default or default under the Existing Credit
Agreement then exists or would result therefrom.
3.09. Adjusted Leverage Ratio. Guarantor will not permit its Adjusted
Leverage Ratio, as calculated as of the last day of each fiscal quarter of
Guarantor, to be greater than (a) 1.50 to 1.00 from the Effective Date through
and including February 28, 1999, (b) 1.25 to 1.00 from May 31, 1999 through and
including February 28, 2000, and (c) 1.00 to 1.00 thereafter.
Schedule A - Page 10
<PAGE> 22
3.10. Consolidated Tangible Net Worth. Guarantor will not permit its
Consolidated Tangible Net Worth as of the last day of each fiscal quarter of
Guarantor following April 30, 1997 to be less than the sum of (without
duplication) 80% of Consolidated Tangible Net Worth measured as of the end of
the fiscal quarter ended February 28, 1997, plus 50% of consolidated net income
(without subtracting losses or acquisition related charges) for each fiscal
quarter ended after the fiscal quarter ended February 28, 1997, minus 100% of
all acquisition-related charges if such charges are recorded in the same fiscal
quarter in which the applicable acquisition is consummated.
3.11. Modified Quick Ratio. At the end of any fiscal quarter of
Guarantor when (1) the rating established by Moody's for the Index Debt of
Guarantor is below Ba2 or (2) the rating established by S&P for the Index Debt
of Guarantor is below BB, or (3) neither Moody's nor S&P maintains a rating for
the Index Debt of Guarantor, Guarantor shall not permit the Modified Quick Ratio
to be less than 1.0 to 1.0.
Schedule A - Page 11
<PAGE> 23
ATTACH SCHEDULES 6.01, 6.02 AND 6.07 FROM THE EXISTING CREDIT AGREEMENT
Schedule A - Page 12
<PAGE> 24
Schedule 3.13: Copyrights, Patents, Trademarks and Licenses Infringement Claims
None.
Schedule 6.01: Subsidiary Indebtedness
<TABLE>
<CAPTION>
Name of Subsidiary Agreement
------------------ ----------------------------------------------
<S> <C>
Solectron Scotland Limited $4.918 million Credit Facility with Royal Bank
of Scotland
Solectron Technology, Inc. $30.488 million Credit Agreement with Standard
SDN BHD Chartered Bank and DCB Bank
Solectron GmbH $5,000 Credit Agreement with Commerzebank
$7 million L-T note from Landersgirekasse
Oeffentliche Bank
$2 million Credit Agreement with Hewlett Packard
Company for purchase of inventory at acquisition
Solectron Japan, Inc. $22.425 million Credit Agreement with Bank of
Tokyo Mitsubishi Ltd.
Fine Pitch Technology, Inc. $89,000 Equipment Loan from San Jose National
Bank
Force Computers, Inc. $1.038 million Credit Facility with Dresdner
Bank Tokyo
$8.876 million Credit Facility with
Stadtoparkasse Munich
$5.917 million Credit Facility with
Hypobanck Munich
$5.917 million Credit Facility with
Reuschelbank
$655,000 Credit Facility with Barclays Bank
$500,000 Credit Facility with Bank Leumi
$7.5 million Credit Facility with Comerica Bank
</TABLE>
Schedule 6.02: Liens
1. Solectron Corporation
<TABLE>
<CAPTION>
Secretary of State - California
-------------------------------
Secured Party Description of Collateral Filing Date File Number
- ---------------------------------- ------------------------------- ----------- -----------
<S> <C> <C> <C>
Equitable Life Leasing Corporation Specific Equipment and Proceeds 1-26-93 88020525
Xerox Corporation Office Equipment and Proceeds 6-22-92 92137563
</TABLE>
-2-
<PAGE> 25
<TABLE>
<CAPTION>
Secured Party Description of Collateral Filing Date File Number
- ---------------------------------- -------------------------------- ----------- -----------
<S> <C> <C> <C>
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 4-15-94 94074579
Hewlett Packard Company Specific Equipment and Proceeds 5-11-94 94093984
Hewlett Packard Company Specific Equipment and Proceeds 3-2-95 9506661264
Hewlett Packard Company Specific Equipment and Proceeds 8-28-95 9524460015
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 12-19-95 9535560504
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 3-1-96 9606760948
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 7-24-96 9620860481
Associates Leasing, Inc. Computer Equipment and Proceeds 1-10-97 9701360025
Security Pacific Equipment Leasing, Inc. Specific Equipment and Proceeds 5-1-95 85169376
Security Pacific Equipment Leasing, Inc. Computer Equipment and Proceeds 8-21-95 85270060
MNLC/BALTC Leasing Partners Specific Equipment and Proceeds 4-2-92 87117094
Security Pacific Equipment Leasing, Inc. Computer Equipment and Proceeds 5-6-92 87217647
Equitable Life Leasing Corporation Computer Equipment and Proceeds 10-20-92 87314510
G.E. Capital Corporation Specific Equipment and Proceeds 2-18-93 88046793
NEMLC Leasing Associates No. 3 Specific Equipment and Proceeds 1-11-93 88063091
Security Pacific Equipment Leasing Specific Equipment and Proceeds 12-27-94 90067753
Deutsch Credit Corporation Specific Equipment and Proceeds 4-3-95 90101368
Security Pacific Equipment Leasing, Inc. Specific Equipment and Proceeds 5-1-95 90172604
Hewlett Packard Company Computer Equipment and Proceeds 5-4-92 92099518
Lease Plan USA, Inc. Specific Equipment and Proceeds 5-12-92 92107399
Hewlett Packard Company Specific Equipment and Proceeds 7-13-92 92153799
Hewlett Packard Company Specific Equipment and Proceeds 10-6-92 92216939
Hewlett Packard Company Specific Equipment and Proceeds 10-16-92 92223550
Hewlett Packard Company Specific Equipment and Proceeds 10-27-92 92231425
Hewlett Packard Company Specific Equipment and Proceeds 4-1-93 92241883
Equitable Life Leasing Corporation Specific Equipment and Proceeds 1-28-94 93018954
Hewlett Packard Company Specific Equipment and Proceeds 4-22-93 9308147
Hewlett Packard Company Specific Equipment and Proceeds 5-12-93 93096482
MetLife Capital, L.P. Computer Equipment and Proceeds 1-28-94 93113136
Hewlett Packard Company Specific Equipment and Proceeds 6-4-93 93114108
Hewlett Packard Company Specific Equipment and Proceeds 6-16-93 93122297
United States Leasing International, Inc. Computer Equipment and Proceeds 11-5-93 93223327
Capital Preferred Yield Fund - II, L.P. Specific Equipment and Proceeds 4-7-94 93234553
Avnet Computer Technologies, Inc. Specific Equipment and Proceeds 2-4-94 94021647
Hewlett Packard Company Specific Equipment and Proceeds 4-25-94 94081377
Hewlett Packard Company Specific Equipment and Proceeds 5-4-94 94088238
Hewlett Packard Company Specific Equipment and Proceeds 5-20-94 94101661
Hewlett Packard Company Specific Equipment and Proceeds 7-18-94 94145012
</TABLE>
-3-
<PAGE> 26
<TABLE>
<CAPTION>
Secured Party Description of Collateral Filing Date File Number
- -------------------------------- ------------------------------- ----------- -----------
<S> <C> <C> <C>
Hewlett Packard Company Specific Equipment and Proceeds 8-30-94 94178790
BNP Leasing Corporation Specific Equipment and Proceeds 9-8-94 94185412
Hewlett Packard Company Specific Equipment and Proceeds 9-21-94 9428560112
BNP Leasing Corporation Specific Equipment and Proceeds 9-27-94 9429360076
Hewlett Packard Company Specific Equipment and Proceeds 11-28-94 9434761275
Comdisco, Inc. Specific Equipment and Proceeds 12-8-94 9434960578
Hewlett Packard Company Specific Equipment and Proceeds 12-14-94 9500361142
Hewlett Packard Company Specific Equipment and Proceeds 1-26-95 9503360328
Hewlett Packard Company Specific Equipment and Proceeds 2-10-95 9504860699
Hewlett Packard Company Specific Equipment and Proceeds 2-10-95 9504860715
Hewlett Packard Company Specific Equipment and Proceeds 2-21-95 9505960514
Hewlett Packard Company Specific Equipment and Proceeds 3-6-95 9506860234
Hewlett Packard Company Specific Equipment and Proceeds 4-28-95 9512160498
Hewlett Packard Company Specific Equipment and Proceeds 4-28-95 9512160513
Hewlett Packard Company Specific Equipment and Proceeds 6-5-95 9515960516
Hewlett Packard Company Specific Equipment and Proceeds 6-5-95 9515960526
Hewlett Packard Company Specific Equipment and Proceeds 9-5-95 9525560208
Hewlett Packard Company Specific Equipment and Proceeds 9-5-95 9525560219
Hewlett Packard Company Specific Equipment and Proceeds 9-26-95 9527260307
Pitney Bowes Credit Corporation Specific Equipment and Proceeds 1-22-96 9602360211
Hewlett Packard Company Specific Equipment and Proceeds 1-29-96 9603060985
Copelco Capital, Inc. Specific Equipment and Proceeds 4-25-96 9608261042
Copelco Capital, Inc. Specific Equipment and Proceeds 6-19-96 9617660616
Copelco Capital, Inc. Specific Equipment and Proceeds 7-30-96 9621460705
Hewlett Packard Company Specific Equipment and Proceeds 8-9-96 9622661204
Copelco Capital, Inc. Specific Equipment and Proceeds 11-26-96 9633161377
Comdisco, Inc. Specific Equipment and Proceeds 2-10-97 9704260387
Comdisco, Inc. Specific Equipment and Proceeds 2-24-97 9705660119
Hewlett Packard Company Specific Equipment and Proceeds 7-7-93 93138136
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 8-21-95 9523560031
</TABLE>
Liens of the Company pursuant to that Lease Agreement, dated as of September 6,
1994 (as amended from time to time) between BNP Leasing Company and Solectron
Corporation.
2. Solectron Washington, Inc.
Department of Licensing-Washington
-4-
<PAGE> 27
<TABLE>
<CAPTION>
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
GTE Northwest Specific Equipment 9-20-93 93-263-0729
AT&T Capital Services, Inc. Specific Equipment 11-3-95 95-307-0414
3. Solectron Texas, Inc.
</TABLE>
<TABLE>
<CAPTION>
Secretary of State - Texas
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
General Electric Capital Corporation Electronic Equipment 8-26-96 96704367
4. Fine Pitch Technology
</TABLE>
<TABLE>
<CAPTION>
Secretary of State - California
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
San Jose National Bank Specific Equipment 2-29-95 9504660745
San Jose National Bank Specific Equipment 4-3-95 9509560531
San Jose National Bank Specific Equipment 12-13-95 9534860123
5. Force Computers, Inc.
</TABLE>
<TABLE>
<CAPTION>
Secretary of State - California
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
Taylor Made Office Systems, Inc. Specific Equipment 10-11-94 9430660823
Taylor Made Office Systems, Inc. Specific Equipment 8-21-95 9523460666
Taylor Made Office Systems, Inc. Specific Equipment 6-13-94 94119361
6. Solectron Technology, Inc. (Charlotte)
</TABLE>
<TABLE>
<CAPTION>
Secretary of State - North Carolina
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
Hewlett Packard Company Specific Equipment 2-22-93 0000970502
</TABLE>
Schedule 6.07; Restrictive Agreements
Indenture dated as of February 15, 1996 governing the terms of issuance of
7 3/8% Senior Notes due 2006. Contains a covenant restricting the Company's
ability to encumber certain items of its property.
-5-
<PAGE> 28
Lease Agreement dated as of September 6, 1994 (as amended from time to
time) between BNP Leasing Company and Solectron Corporation. Includes all
covenants by cross reference in Article VI of this Credit Agreement.
The Force Computers, Inc. credit facilities contains (1) restrictions on
its ability to pay dividends to Solectron and (2) its ability to encumber any
of its assets except for ordinary course involuntary liens and equipment finance
and purchase money security interests.
-6-
<PAGE> 1
EXHIBIT 10.7
================================================================================
$50,000,000
LEASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
SOLECTRON GEORGIA CORPORATION
("SGC")
OCTOBER 20, 1998
(GWINNETT COUNTY, GEORGIA)
================================================================================
PURSUANT TO AND AS MORE PARTICULARLY PROVIDED IN SUBPARAGRAPH 26 OF THIS LEASE,
THIS LEASE AND THE PURCHASE AGREEMENT REFERENCED HEREIN ARE TO CONSTITUTE, FOR
INCOME TAX PURPOSES ONLY, A FINANCING ARRANGEMENT OR CONDITIONAL SALE. AS
PROVIDED IN SUBPARAGRAPH 26 OF THIS LEASE, BNPLC AND SGC EXPECT THAT SGC (AND
NOT BNPLC) SHALL BE TREATED AS THE TRUE OWNER OF THE PROPERTY FOR INCOME TAX
PURPOSES, THEREBY ENTITLING SGC (AND NOT BNPLC) TO TAKE DEPRECIATION DEDUCTIONS
AND OTHER TAX BENEFITS AVAILABLE TO THE OWNER. 34083.1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. TERM...............................................................................2
(a) Scheduled Term................................................................2
(b) Automatic Termination as of the Base Rent Commencement Date Resulting
From an Election by SGC to Terminate the Purchase Option and SGC's Initial
Remarketing Rights and Obligations............................................3
(c) Election by BNPLC to Terminate After an Issue 97-10 Election..................3
(d) Election by SGC to Terminate After Accelerating the Designated Sale Date......3
(e) Extension of the Term.........................................................3
2. NO LEASE TERMINATION...............................................................4
(a) Status of Lease...............................................................4
(b) Waiver by SGC.................................................................4
3. USE AND CONDITION OF THE PROPERTY..................................................5
(a) Use...........................................................................5
(b) Condition of the Property.....................................................5
(c) Consideration for and Scope of Waiver.........................................5
4. RENT...............................................................................6
(a) Base Rent Generally...........................................................6
(b) Calculation of and Due Dates for Base Rent....................................6
(i) Amount Payable On the Base Rent Commencement Date.......................6
(ii) Determination of Subsequent Payment Due Dates...........................6
(iii) Base Rent Formula.......................................................6
(c) Additional Rent...............................................................7
(d) Commitment Fees...............................................................7
(e) Administrative Agency Fees....................................................7
(f) Issue 97-10 Prepayments.......................................................7
(g) No Demand or Setoff...........................................................8
(h) Default Interest and Order of Application.....................................8
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY......................8
(a) "Net" Lease Generally.........................................................8
(b) Impositions...................................................................8
(c) Increased Costs; Capital Adequacy Charges.....................................9
(d) SGC's Payment of Other Losses; General Indemnification........................9
(e) Exceptions and Qualifications to Indemnities.................................11
(f) Withholding Taxes............................................................12
6. CONSTRUCTION OF NEW IMPROVEMENTS AND ACQUISITION OF EXISTING IMPROVEMENTS.........13
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
(a) Advances; Outstanding Construction Allowance.................................13
(b) Calculation of Carrying Costs................................................13
(i) Carrying Costs Formula.................................................13
(ii) Limits on the Amount of Carrying Costs.................................14
(c) SGC's Right to Control the Construction Project..............................14
(d) Landlord's Election to Continue Construction.................................14
(i) Take Control of the Property...........................................14
(ii) Continuation of Construction...........................................14
(iii) Arrange for Turnkey Construction.......................................15
(iv) Suspension or Termination of Construction..............................15
(e) Powers Coupled With an Interest..............................................16
(f) Completion Notice............................................................16
7. OTHER OBLIGATIONS OF AND LIMITED REPRESENTATIONS BY BNPLC.........................16
(a) Cooperation of BNPLC to Facilitate Construction and Development..............16
(b) Actions Permitted by SGC Without BNPLC's Consent.............................17
(c) Waiver of Landlord's Liens...................................................18
(d) Limited Representations by BNPLC Concerning Accounting Matters...............18
(e) Other Limited Representations by BNPLC.......................................19
(i) No Default or Violation................................................19
(ii) No Suits...............................................................19
(iii) Enforceability.........................................................20
(iv) Organization...........................................................20
(v) Not a Foreign Person...................................................20
(f) Keeping Proprietary Information Confidential.................................20
8. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC..........................20
9. ENVIRONMENTAL.....................................................................21
(a) Environmental Covenants by SGC...............................................21
(b) Right of BNPLC to do Remedial Work Not Performed by SGC......................22
(c) Environmental Inspections and Reviews........................................22
(d) Communications Regarding Environmental Matters...............................23
10. INSURANCE REQUIRED AND CONDEMNATION...............................................23
(a) Liability Insurance..........................................................23
(b) Property Insurance...........................................................24
(c) Failure to Obtain Insurance..................................................24
(d) Condemnation.................................................................24
11. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS................................25
(a) Collection of Insurance and Condemnation Proceeds Generally..................25
(b) Administration of Remaining Proceeds; SGC's Obligation to Restore............25
(c) Special Provisions Concerning CMA Termination Events, Events of Default
and Qualified Payments.......................................................26
(d) Takings of All or Substantially All of the Property..........................26
(e) Waiver of Subrogation........................................................26
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C>
12. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF SGC
CONCERNING THE PROPERTY...........................................................27
(a) Compliance with Covenants and Laws...........................................27
(b) Operation of Property........................................................27
(c) Debts for Construction, Maintenance, Operation or Development................28
(d) Repair, Maintenance, Alterations and Additions...............................28
(e) Compliance With Permitted Encumbrances and Development Contracts.............28
(f) Modification of Permitted Encumbrances and Development Contracts.............29
(g) Books and Records Concerning the Property....................................29
13. ASSIGNMENT AND SUBLETTING BY SGC..................................................29
(a) BNPLC's Consent Required.....................................................29
(b) Standard for BNPLC's Consent to Assignments and Certain Other Matters........29
(c) Consent Not a Waiver.........................................................30
14. ASSIGNMENT BY BNPLC...............................................................30
(a) Restrictions on Transfers....................................................30
(b) Effect of Permitted Transfer or other Assignment by BNPLC....................30
15. BNPLC'S RIGHT OF ACCESS...........................................................30
16. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF SGC............................31
(a) Negative Covenants...........................................................31
(i) Multi employer ERISA Plans............................................31
(ii) Prohibited ERISA Transaction..........................................31
(b) Financial Statements; Required Notices; Certificates as to Default...........31
(c) No Default or Violation......................................................32
(d) No Suits.....................................................................32
(e) Enforceability...............................................................32
(f) Financial Matters............................................................33
(g) Organization.................................................................33
(h) ERISA........................................................................33
(i) Use of Proceeds..............................................................33
(j) Investment Company Act.......................................................34
(k) Omissions....................................................................34
(l) Not a Foreign Person.........................................................34
(m) Further Assurances...........................................................34
17. EVENTS OF DEFAULT.................................................................34
(a) Definition of Events of Default..............................................34
18. REMEDIES..........................................................................36
(a) Basic Remedies...............................................................36
(b) Notice Required So Long As SGC 's Purchase Option and Initial Remarketing
Rights and Obligations Continue Under the Purchase Agreement.................38
(c) Enforceability...............................................................38
(d) Remedies Cumulative..........................................................38
19. DEFAULT BY BNPLC..................................................................39
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C>
20. QUIET ENJOYMENT...................................................................39
21. SURRENDER UPON TERMINATION........................................................39
22. HOLDING OVER BY SGC...............................................................39
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS................40
24. WAIVER OF JURY TRIAL..............................................................40
25. MISCELLANEOUS.....................................................................40
(a) Notices......................................................................40
(b) Severability.................................................................42
(c) No Merger....................................................................42
(d) No Implied Waiver............................................................42
(e) NO IMPLIED REPRESENTATIONS BY BNPLC..........................................42
(f) Entire Agreement.............................................................42
(g) Binding Effect...............................................................43
(h) Time is of the Essence.......................................................43
(i) Governing Law................................................................43
(j) Paragraph Headings...........................................................43
(k) Other Terms and References...................................................43
(l) Not a Partnership, Etc.......................................................43
26. INCOME TAX REPORTING..............................................................43
27. PROPRIETARY INFORMATION AND CONFIDENTIALITY.......................................44
28. USURY SAVINGS CLAUSE..............................................................45
</TABLE>
EXHIBITS AND SCHEDULES
Exhibit A....... ..............................................Legal Description
Exhibit B.............................................Permitted Encumbrance List
Notice by SGC of Election Not to Make Construction-Period
Exhibit C......................................................Indemnity Payment
Exhibit D.........................Standard Notice of Request for Action by BNPLC
Exhibit E......................Notice of Request Requiring an Expedited Response
Exhibit F.................................................Insurance Requirements
Exhibit G.................................................Compliance Certificate
Exhibit H.............................................Libor Period Election Form
(iv)
<PAGE> 6
Schedule 1.........................................List of Development Documents
Schedule 2.............List of Claims Pending or Threatened Against the Property
List of Defined Terms.........................................Shared Definitions
(v)
<PAGE> 7
LEASE AGREEMENT
This LEASE AGREEMENT (this "LEASE"), by and between BNP LEASING
CORPORATION, a Delaware corporation ("BNPLC"), and SOLECTRON GEORGIA
CORPORATION, a Georgia corporation ("SGC"), is dated as of October 20, 1998, the
Effective Date. ("EFFECTIVE DATE" and other capitalized terms used and not
otherwise defined in this Lease are intended to have the meanings assigned to
them in the List of Defined Terms attached to and made a part of this Lease.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC is acquiring the Land and any appurtenances thereto from Seller
contemporaneously with the execution of this Lease.
In anticipation of BNPLC's acquisition of the Land, BNPLC and SGC have
reached agreement as to the terms and conditions upon which BNPLC is willing to
lease the Land to SGC and to lease to SGC the improvements to be acquired
pursuant to the Existing Contract or constructed on the Land as hereinafter
provided, and by this Lease BNPLC and SGC desire to evidence such agreement.
GRANTING CLAUSES
In consideration of the rent to be paid and the covenants and agreements to
be performed by SGC, as hereinafter set forth, BNPLC does hereby LEASE, DEMISE
and LET unto SGC for the term hereinafter set forth all right, title and
interest of BNPLC, now owned or hereafter acquired, in and to:
(1) the Land;
(2) any and all Improvements acquired from Seller pursuant to the
Existing Contract, contemporaneously with the execution of this Lease or in
the future as provided in the Existing Contract;
(3) all easements and other rights appurtenant to the Land or to the
Improvements, whether now owned or hereafter acquired by BNPLC; and
(4) (A) any land lying within the right-of-way of any street, open or
proposed, adjoining the Land, (B) any sidewalks and alleys adjacent to the
Land and (C) any strips and gores between the Land and abutting land.
BNPLC's interest in all property described in clauses (1) through (4) above
are hereinafter referred to collectively as the "REAL PROPERTY".
To the extent, but only to the extent, that assignable rights or interests
in, to or under the following have been or will be acquired by BNPLC under the
Existing Contract or acquired by BNPLC pursuant to Paragraph 8 below, BNPLC also
hereby grants and assigns to SGC for the term of this Lease the right to use and
enjoy (and, in the case of contract rights, to enforce) such rights or interests
of BNPLC:
(a) any goods, equipment, furnishings, furniture and other tangible
personal property of whatever nature that are located on the Real Property
and all renewals or replacements of or substitutions for any of the
foregoing;
<PAGE> 8
(b) the benefits, if any, conferred upon the owner of the Real
Property by the Permitted Encumbrances (including the Ground Lease) and
Development Documents; and
(c) any permits, licenses, franchises, certificates, and other rights
and privileges against third parties (including the lessee under the Ground
Lease) related to the Real Property.
Such rights and interests of BNPLC, whether now existing or hereafter arising,
are hereinafter collectively called the "PERSONAL PROPERTY". The Real Property
and the Personal Property are hereinafter sometimes collectively called the
"PROPERTY."
However, the leasehold estate conveyed hereby and SGC's rights hereunder
are expressly made subject and subordinate to the terms and conditions of this
Lease, to the matters listed in Exhibit B and all other Permitted Encumbrances
(including the Ground Lease), and to any other claims or encumbrances not
constituting Liens Removable by BNPLC. FURTHER, NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS LEASE OR IN ANY OTHER OPERATIVE DOCUMENT:
(1) SGC SHALL NOT INTERFERE WITH (AND NO RIGHT OR ESTATE IN THE
PROPERTY IS GRANTED TO SGC HEREBY OR BY ANY OTHER OPERATIVE DOCUMENT THAT
WOULD ENTITLE SGC TO INTERFERE WITH) THE RIGHTS OF THE LESSEE UNDER THE
GROUND LEASE TO THE POSSESSION AND QUIET ENJOYMENT OF THE PORTION OF THE
LAND COVERED BY THE GROUND LEASE.
(2) BNPLC AND SGC INTEND THAT THE RIGHTS OF THE LESSEE UNDER THE
GROUND LEASE SHALL CONTINUE ON AND SUBJECT TO THE TERMS AND CONDITIONS SET
FORTH THEREIN, UNAFFECTED BY THIS LEASE OR ANY OTHER OPERATIVE DOCUMENT OR
THE EXERCISE BY BNPLC OR SGC OF ANY RIGHTS OR REMEDIES PROVIDED HEREIN OR
IN THE OTHER OPERATIVE DOCUMENTS.
(3) IF, WHETHER BY SUBSEQUENT WRITTEN AGREEMENT OF BNPLC AND SGC OR
OTHERWISE, THIS LEASE OR ANY OTHER OPERATIVE DOCUMENT SHOULD TERMINATE
DURING THE TERM OF THE GROUND LEASE, THE GROUND LEASE SHALL SURVIVE SUCH
TERMINATION.
GENERAL TERMS AND CONDITIONS
The Property is leased by BNPLC to SGC and is accepted and is to be used
and possessed by SGC upon and subject to the following terms and conditions:
1. TERM.
(a) Scheduled Term. This Lease is intended to be an effective and
binding obligation upon BNPLC and SGC throughout the period (the "TERM")
commencing on and including the Effective Date and ending on the first Business
Day of October, 2003, unless extended or sooner terminated as expressly herein
provided; however, the rights of SGC as the tenant hereunder to the use,
occupancy and possession of the Land and the Improvements will not commence
until the Base Rent Commencement Date. Prior to the Base Rent Commencement Date,
SGC will have the right under and pursuant to the rights and authority granted
to it by the Construction Management Agreement to the use, occupancy and
possession of the Land and the Improvements in its capacity
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as construction manager. Such right of SGC as construction manager will be to
the exclusion of BNPLC, but subject to the terms and conditions set forth
therein, herein and in the other Operative Documents, so long as the
Construction Management Agreement remains in force.
(b) Automatic Termination as of the Base Rent Commencement Date
Resulting From an Election by SGC to Terminate the Purchase Option and SGC's
Initial Remarketing Rights and Obligations. If SGC terminates the Purchase
Option and SGC's Initial Remarketing Rights and Obligations prior to the Base
Rent Commencement Date pursuant to subparagraph 4(B) of the Purchase Agreement,
then this Lease shall terminate automatically on the Base Rent Commencement
Date. Just as any such termination of the Purchase Option and SGC's Initial
Remarketing Rights and Obligations shall be subject to the condition (set forth
in subparagraph 4(B) of the Purchase Agreement) that SGC pay an Issue 97-10
Prepayment to BNPLC, so too will the termination of this Lease pursuant to this
subparagraph be subject the condition that SGC make the Issue 97-10 Prepayment
to BNPLC.
(c) Election by BNPLC to Terminate After an Issue 97-10 Election.
BNPLC shall be entitled to terminate this Lease, as BNPLC deems appropriate in
its sole and absolute discretion, at any time after receiving a notice given by
SGC to make or attempt to make any Issue 97-10 Election. Upon any termination of
this Lease by BNPLC pursuant to this subparagraph, SGC must pay to BNPLC an
Issue 97-10 Prepayment.
(d) Election by SGC to Terminate After Accelerating the Designated
Sale Date. Provided SGC has not made any Issue 97-10 Election, SGC shall be
entitled to accelerate the Designated Sale Date (and thus accelerate the
purchase of BNPLC's interest in the Property by SGC or by an Applicable
Purchaser pursuant to the Purchase Agreement) by sending a notice to BNPLC as
provided in clause (2) of the definition of "Designated Sale Date" in the List
of Defined Terms. In the event, because of SGC's election to so accelerate the
Designated Sale Date or for any other reason, the Designated Sale Date occurs
before the end of the scheduled Term, SGC may terminate this Lease on or after
the Designated Sale Date; provided, however, as a condition to any such
termination by SGC, SGC must have done the following prior to the termination:
(i) purchased or caused an Applicable Purchaser to purchase the
Property pursuant to the Purchase Agreement and satisfied all of SGC's
other obligations under the Purchase Agreement;
(ii) paid to BNPLC all Base Rent, all Commitment Fees, all
Administrative Agency Fees and all other Rent due on or before or accrued
through the Designated Sale Date; and
(iii) paid any Breakage Costs caused by BNPLC's sale of the Property
pursuant to the Purchase Agreement.
(e) Extension of the Term. The Term may be extended at the option of
SGC for two successive periods of five (5) years each; provided, however, that
prior to any such extension the following conditions must have been satisfied:
(A) at least one hundred eighty (180) days prior to the commencement of any such
extension, BNPLC and SGC must have agreed in writing upon, and received the
written consent and approval of BNPLC's Parent and all other Participants to (1)
a corresponding extension not only to the date for the expiration of the Term
specified above in this Section, but also to the date specified in clause (1) of
the definition of Designated Sale Date in the List of Defined Terms attached
hereto, and (2) an adjustment to the Rent that SGC will be required to pay for
the extension, it being expected that the Rent for the extension may be
different than the Rent required for the original Term, and it being understood
that the Rent for any extension must in all events be satisfactory to both BNPLC
and SGC, each in its sole and absolute discretion; (B) there must be no Event of
Default continuing hereunder at the time of SGC's exercise of its option to
extend; (C) prior to any such extension, SGC must have
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completed the Construction Project in accordance with the Construction
Management Agreement and must not have made any Issue 97-10 Election; and (D)
immediately prior to any such extension, this Lease must remain in effect. With
respect to the condition that BNPLC and SGC must have agreed upon the Rent
required for any extension of the Term, neither SGC nor BNPLC is willing to
submit itself to a risk of liability or loss of rights hereunder for being
judged unreasonable. Accordingly, both SGC and BNPLC hereby disclaim any
obligation express or implied to be reasonable in negotiating the Rent for any
such extension. Subject to the changes to the Rent payable during any extension
of the Term as provided in this Paragraph, if SGC exercises its option to extend
the Term as provided in this Paragraph, this Lease shall continue in full force
and effect, and the leasehold estate hereby granted to SGC shall continue
without interruption and without any loss of priority over other interests in or
claims against the Property that may be created or arise after the date hereof
and before the extension.
2. NO LEASE TERMINATION.
(a) Status of Lease. Except as expressly provided herein, this Lease
shall not terminate, nor shall SGC have any right to terminate this Lease, nor
shall SGC be entitled to any abatement of the Rent, nor shall the obligations of
SGC under this Lease be excused, for any reason whatsoever, including any of the
following: (i) any damage to or the destruction of all or any part of the
Property from whatever cause, (ii) the taking of the Property or any portion
thereof by eminent domain or otherwise for any reason, (iii) the prohibition,
limitation or restriction of SGC's use of all or any portion of the Property or
any interference with such use by governmental action or otherwise, (iv) any
eviction of SGC or of anyone claiming through or under SGC (provided, that if
SGC is wrongfully evicted by BNPLC or by any third party lawfully exercising its
rights under a Lien Removable by BNPLC, then SGC will have the remedies
described in Paragraph 19 below), (v) any default on the part of BNPLC under
this Lease or under any other agreement to which BNPLC and SGC are parties, (vi)
the inadequacy in any way whatsoever of the design, construction, assembly or
installation of any improvements, fixtures or tangible personal property
included in the Property, it being understood that BNPLC has not made, does not
make and will not make any representation express or implied as to the adequacy
thereof, (vii) any latent or other defect in the Property or any change in the
condition thereof or the existence with respect to the Property of any
violations of Applicable Laws, (viii) any breach by Seller of the surviving
provisions of the Existing Contract, (ix) any breach of the Ground Lease by the
lessee thereunder, or (x) any other cause whether similar or dissimilar to the
foregoing. It is the intention of the parties hereto that the obligations of SGC
hereunder shall be separate and independent of the covenants and agreements of
BNPLC, that the Base Rent and all other sums payable by SGC hereunder shall
continue to be payable in all events and that the obligations of SGC hereunder
shall continue unaffected, unless the requirement to pay or perform the same
shall have been terminated or limited pursuant to an express provision of this
Lease.
(b) Waiver by SGC. Without limiting the foregoing, SGC waives to the
extent permitted by Applicable Laws, except as otherwise expressly provided
herein, all rights to which SGC may now or hereafter be entitled by law
(including any such rights arising because of any implied "warranty of
suitability" or other warranty under Applicable Laws) (i) to quit, terminate or
surrender this Lease or the Property or any part thereof or (ii) to any
abatement, suspension, deferment or reduction of the Rent.
However, nothing in this Paragraph 2 shall be construed as a waiver by SGC
of any right SGC may have at law or in equity to the following remedies, whether
because of BNPLC's failure to remove a Lien Removable by BNPLC or because of any
other default by BNPLC under this Lease that continues beyond the period for
cure provided in Paragraph 19: (i) the recovery of monetary damages, (ii)
injunctive relief in case of the violation, or attempted or threatened
violation, by BNPLC of any of the express covenants, agreements, conditions or
provisions of this Lease which are binding upon BNPLC (including the
confidentiality provisions set forth in
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subparagraph 7.(f) below), or (iii) a decree compelling performance by BNPLC of
any of the express covenants, agreements, conditions or provisions of this Lease
which are binding upon BNPLC.
3. USE AND CONDITION OF THE PROPERTY.
(a) Use. Subject to the Permitted Encumbrances, the Development
Documents and the terms hereof, SGC may use and occupy the Property during the
Term, but only for the following purposes and other lawful purposes incidental
thereto:
(i) manufacturing, engineering, assembly, warehousing and
laboratory-based research and development of circuit boards,
computer-related and other electronic products;
(ii) administrative and office space;
(iii) cafeteria, library, and other support function uses that SGC may
provide to its employees; and
(iv) other lawful uses approved in advance and in writing by BNPLC,
which approval will not be unreasonably withheld after completion of the
Construction Project (but SGC acknowledges that BNPLC's withholding of such
approval shall be reasonable if BNPLC determines in good faith that (i)
giving the approval may materially increase BNPLC's risk of liability for
any existing or future environmental problem, or (ii) giving the approval
is likely to substantially increase BNPLC's administrative burden of
complying with or monitoring SGC's compliance with the requirements of this
Lease or other Operative Documents).
Although the term "products" in this subparagraph may include products designed
to detect, monitor, neutralize, handle or process Hazardous Substances, the use
of the Property by SGC shall not include bringing Hazardous Substances onto the
Property for the purpose of testing or demonstrating any such products.
(b) Condition of the Property. SGC ACKNOWLEDGES THAT IT HAS CAREFULLY
AND FULLY INSPECTED THE PROPERTY AND ACCEPTS THE PROPERTY IN ITS PRESENT STATE,
AS IS, AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
CONDITION OF SUCH PROPERTY OR AS TO THE USE WHICH MAY BE MADE THEREOF. SGC ALSO
ACCEPTS THE PROPERTY WITHOUT ANY COVENANT, REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, BY BNPLC OR ITS AFFILIATES REGARDING THE TITLE THERETO OR THE RIGHTS
OF ANY PARTIES IN POSSESSION OF ANY PART THEREOF, EXCEPT AS EXPRESSLY SET FORTH
IN PARAGRAPH 20. BNPLC SHALL NOT BE RESPONSIBLE FOR ANY LATENT OR OTHER DEFECT
OR CHANGE OF CONDITION IN THE LAND, IMPROVEMENTS, FIXTURES AND PERSONAL PROPERTY
FORMING A PART OF THE PROPERTY OR FOR ANY VIOLATIONS WITH RESPECT THERETO OF
APPLICABLE LAWS. NOR SHALL BNPLC BE REQUIRED TO FURNISH TO SGC ANY FACILITIES OR
SERVICES OF ANY KIND, INCLUDING WATER, STEAM, HEAT, GAS, AIR CONDITIONING,
ELECTRICITY, LIGHT OR POWER.
(c) Consideration for and Scope of Waiver. The provisions of
subparagraph 3.(b) above have been negotiated by BNPLC and SGC after due
consideration for the Rent payable hereunder and are intended to be a complete
exclusion and negation of any representations or warranties of BNPLC or its
Affiliates, express or implied, with respect to the Property that may arise
pursuant to any law now or hereafter in effect or otherwise, except as expressly
set forth herein.
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However, such exclusion of representations and warranties by BNPLC and its
Affiliates is not intended to impair any representations or warranties made by
other parties, including any architects, engineers or contractors engaged to
work on the Construction Project, the benefit of which is to pass to SGC during
the Term because of the definition of Personal Property and Property above.
4. RENT.
(a) Base Rent Generally. On the Base Rent Commencement Date and on
each Base Rent Date through the end of the Term, SGC shall pay BNPLC rent ("BASE
RENT"). Each payment of Base Rent must be received by BNPLC no later than 10:00
a.m. (Central time) on the date it becomes due; if received after 10:00 a.m.
(Central time) it will be considered for purposes of this Lease as received on
the next following Business Day. BNPLC shall notify SGC of the amount of each
payment of Base Rent (calculated as provided in subparagraph 4.(b)) at least
three days before the date upon which it first becomes due. However, any failure
by BNPLC to so notify SGC shall not constitute a waiver of BNPLC's right to
payment, but absent such notice SGC shall not be in default for any underpayment
resulting therefrom if SGC, in good faith, reasonably estimates the payment
required, makes a timely payment of the amount so estimated and corrects any
underpayment within three Business Days after being notified by BNPLC of the
underpayment.
(b) Calculation of and Due Dates for Base Rent. Payments of Base Rent
shall be calculated and become due as follows:
(i) Amount Payable On the Base Rent Commencement Date. The Base Rent
payable on the Base Rent Commencement Date shall equal the difference (if
any) between (a) the total amount that would have been added to the
Outstanding Construction Allowance as Carrying Costs on such date if not
for the limit set forth in subparagraph 6.(b)(ii), and (b) the Carrying
Costs actually added on such date to the Outstanding Construction
Allowance.
(ii) Determination of Subsequent Payment Due Dates. For all Base Rent
Periods subject to a LIBOR Period Election of one month or three months,
Base Rent shall be due in one installment on the Base Rent Date upon which
the Base Rent Period ends. For Base Rent Periods subject to a LIBOR Period
Election of six months, Base Rent shall be payable in two installments,
with the first installment becoming due on the Base Rent Date that occurs
on the first Business Day of the third calendar month following the
commencement of such Base Rent Period, and with the second installment
becoming due on the Base Rent Date upon which the Base Rent Period ends.
Notwithstanding the foregoing, if SGC or any Applicable Purchaser purchases
BNPLC's interest in the Property pursuant to the Purchase Agreement, any
accrued unpaid Base Rent and all outstanding Additional Rent shall be due
on the date of purchase in addition to the purchase price and other sums
due BNPLC under the Purchase Agreement.
(iii) Base Rent Formula. Each installment of Base Rent payable for any
Base Rent Period shall equal:
o Stipulated Loss Value on the first day of such Base Rent Period,
times
o the sum of (a) the Effective Rate with respect to such Base Rent
Period, plus (b) the Spread for the period from and including the
preceding Base Rent Date to but not including the Base Rent Date
upon which the installment is due, times
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o the number of days in the period from and including the preceding
Base Rent Date to but not including the Base Rent Date upon which
the installment is due, divided by
o three hundred sixty.
Assume, only for the purpose of illustration: that prior to the first
day of a Base Rent Period subject to a LIBOR Period Election of one month
the Construction Allowance has been fully funded, but a total of
$35,000,000 of Qualified Payments have been received by BNPLC, leaving a
Stipulated Loss Value of $15,000,000; that the Effective Rate for such Base
Rent Period is 6%; that the Spread for such period is thirty-two and
one-half basis points (32.5/100 of 1%); and that such Base Rent Period
contains exactly thirty days. Under such assumptions, the Base Rent for the
hypothetical Base Rent Period will equal:
$15,000,000 x (6% + .325%) x 30/360 = $79,062.50
(c) Additional Rent. All amounts which SGC is required to pay to or
on behalf of BNPLC pursuant to this Lease, together with every charge, premium,
interest and cost set forth herein which may be added for nonpayment or late
payment thereof, shall constitute rent (all such amounts, other than Base Rent,
are herein called "ADDITIONAL RENT", and together Base Rent and Additional Rent
are herein sometimes called "RENT").
(d) Commitment Fees. For each Construction Period SGC shall pay BNPLC
a fee (a "COMMITMENT FEE") equal to:
o twelve and one-half basis points (12.5/100 of 1%), times an
amount equal to:
(i) the Maximum Construction Allowance, less
(ii) the Funded Construction Allowance on the first day of such
Construction Period; times
o the number of days in such Construction Period; divided by
o three hundred sixty.
SGC shall pay Commitment Fees in arrears on the first Business Day of February,
May, August and November of each calendar year, beginning with November 1, 1998
and continuing regularly throughout the Term so long as Commitment Fees have
accrued and remain unpaid. However, if any Commitment Fees shall have accrued
and remain unpaid on the date BNPLC's interest in the Property is sold pursuant
to the Purchase Agreement, such accrued unpaid Commitment Fees shall be due on
the date of the sale.
(e) Administrative Agency Fees. Upon execution and delivery of this
Lease by BNPLC, and again on each anniversary of the date hereof, SGC shall pay
to BNPLC an administrative fee (an "ADMINISTRATIVE AGENCY FEE") in the amount
set forth in the letter agreement dated as of July 22, 1998 between BNPLC, SGC
and Guarantor and other affiliates of SGC. Each Administrative Agency Fee shall
represent Additional Rent for the Construction Period or Base Rent Period during
which it is paid.
(f) Issue 97-10 Prepayments. Following any Issue 97-10 Election or
any CMA Termination Event under (and as defined in) the Construction Management
Agreement, SGC shall make an Issue 97-10 Prepayment to BNPLC within three
Business Days after receipt of any demand for such a payment. BNPLC may
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demand an Issue 97-10 Prepayment pursuant to this subparagraph at any time and
from time to time (as Project Costs increase) after any Issue 97-10 Election or
CMA Termination Event.
(g) No Demand or Setoff. Except as expressly provided herein, SGC
shall pay all Rent without notice or demand and without counterclaim, deduction,
setoff or defense.
(h) Default Interest and Order of Application. All Rent shall bear
interest, if not paid when first due, at the Default Rate in effect from time to
time from the date due until paid; provided, that nothing herein contained will
be construed as permitting the charging or collection of interest at a rate
exceeding the maximum rate permitted under Applicable Laws. Subject to any
requirements of Applicable Law, BNPLC shall be entitled to apply any amounts
paid by or on behalf of SGC against any Rent then past due in the order the same
became due or in such other order as BNPLC may elect.
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.
(a) "Net" Lease Generally. Subject only to the exceptions listed in
subparagraph 5.(e) below, it is the intention of BNPLC and SGC that the Base
Rent, Commitment Fees, Administrative Agency Fees and other payments herein
specified shall be absolutely net to BNPLC and that SGC shall pay all costs,
expenses and obligations of every kind relating to the Property or this Lease
which may arise or become due, including: (i) any taxes payable by virtue of
BNPLC's receipt of amounts paid to or on behalf of BNPLC in accordance with this
Paragraph 5; (ii) any amount for which BNPLC is or becomes liable with respect
to the Permitted Encumbrances or the Development Documents; and (iii) any costs
incurred by BNPLC (including Attorneys' Fees) because of BNPLC's acquisition or
ownership of any interest in the Property or because of this Lease or the
transactions contemplated herein.
(b) Impositions. Subject only to the exceptions listed in
subparagraph 5.(e) below, SGC shall pay or cause to be paid prior to delinquency
all ad valorem taxes assessed against the Property and other Impositions. If
requested by BNPLC from time to time, SGC shall furnish BNPLC with receipts
showing payment of all Impositions at least ten days prior to the applicable
default date therefor.
Notwithstanding the foregoing, SGC may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
Imposition, and pending such contest SGC shall not be deemed in default
hereunder because of the Imposition if (1) SGC diligently prosecutes such
contest to completion in a manner reasonably satisfactory to BNPLC, and (2) SGC
promptly causes to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all costs, penalties and interest thereon, promptly
after such judgment becomes final; provided, however, in any event each such
contest shall be concluded and the contested Impositions must be paid by SGC
prior to the earlier of (i) the date that any criminal action is overtly
threatened or instituted against BNPLC or its directors, officers or employees
because of the nonpayment thereof or (ii) the date any writ or order is issued
under which any property owned or leased by BNPLC (including the Property) may
be seized or sold or any other action is taken or overtly threatened against
BNPLC or against any property owned or leased by BNPLC because of the nonpayment
thereof, (iii) any Designated Sale Date upon which, for any reason, SGC or an
Affiliate of SGC or any Applicable Purchaser shall not purchase BNPLC's interest
in the Property pursuant to the Purchase Agreement for a net price to BNPLC
(when taken together with any additional payments made by SGC pursuant to
Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value, or (iv) any date upon
which the Construction Management Agreement or this Lease or SGC's Initial
Remarketing Rights and Obligations may be terminated because of or following any
Issue 97-10 Election.
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(c) Increased Costs; Capital Adequacy Charges. Subject only to the
exceptions listed in subparagraph 5.(e) below:
(i) If, after the Effective Date, there shall be any increase in the
cost to BNPLC's Parent or any other Participant agreeing to make or making,
funding or maintaining advances to BNPLC in connection with the Property
because of any Banking Rules Change, then SGC shall from time to time, pay
to BNPLC for the account of BNPLC's Parent or such other Participant, as
the case may be, additional amounts sufficient to compensate BNPLC's Parent
or the Participant for such increased cost. A certificate as to the amount
of such increased cost, submitted to BNPLC and SGC by BNPLC's Parent or the
other Participant, shall be conclusive and binding upon SGC, absent clear
and demonstrable error.
(ii) BNPLC's Parent or any other Participant may demand additional
payments ("CAPITAL ADEQUACY CHARGES") if BNPLC's Parent or the other
Participant determines that any Banking Rules Change affects the amount of
capital to be maintained by it and that the amount of such capital is
increased by or based upon the existence of advances made or to be made to
BNPLC to permit BNPLC to maintain BNPLC's investment in the Property or to
make Construction Advances. To the extent that BNPLC's Parent or another
Participant demands Capital Adequacy Charges as compensation for the
additional capital requirements reasonably allocable to such investment or
advances, SGC shall pay to BNPLC for the account of BNPLC's Parent or the
other Participant, as the case may be, the amount so demanded.
(iii) Any amount to be paid by SGC under this subparagraph 5.(c) shall
be due within ten days after a demand for such payment is made upon SGC.
(d) SGC's Payment of Other Losses; General Indemnification. Subject
only to the exceptions listed in subparagraph 5.(e) below:
(i) All Losses (including Environmental Losses) asserted against or
incurred or suffered by BNPLC or other Interested Parties at any time and
from time to time by reason of, in connection with or arising out of (A)
their ownership or alleged ownership of any interest in the Property or the
Rents, (B) the use and operation of the Property, (C) the negotiation or
administration of this Lease or other Operative Documents, (D) the making
of Funding Advances, (E) any Construction Project, (F) the breach by SGC of
this Lease or any other document executed by SGC in connection herewith,
(G) any failure of the Property or SGC itself to comply with Applicable
Laws, (H) Hazardous Substance Activities, including those occurring prior
to the Effective Date, (I) any bodily or personal injury or death or
property damage occurring in or upon or in the vicinity of the Property
through any cause whatsoever, or (J) the Permitted Encumbrances (including
the Ground Lease and the surviving provisions of the Existing Contract),
shall be paid by SGC, and SGC shall indemnify and defend BNPLC and other
Interested Parties from and against all such Losses. (However, the
indemnity in the preceding sentence shall not be construed to make SGC
liable to both BNPLC and any Participant or other party claiming through
BNPLC for the same costs, expenses or damages. Nor will such indemnity be
construed to make SGC liable for any allocation of general overhead or
internal administrative expenses of BNPLC, BNPLC's Parent or any other
Interested Party except to the extent allowed by subparagraph 5.(c)(i)
because of a Banking Rules Change after the date of this Lease. Nor will
such indemnity be construed to limit SGC's right to reimbursement for
Reimbursable Construction-Period Costs under the Construction Management
Agreement.)
(ii) THE INDEMNITIES AND RELEASES PROVIDED HEREIN FOR THE BENEFIT OF
BNPLC AND OTHER INTERESTED PARTIES, INCLUDING THE INDEMNITY SET FORTH
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THE PRECEDING SUBPARAGRAPH 5.(d)(i), SHALL APPLY EVEN IF AND WHEN THE
SUBJECT MATTERS OF THE INDEMNITIES AND RELEASES ARE CAUSED BY OR ARISE OUT
OF THE NEGLIGENCE OR STRICT LIABILITY OF BNPLC OR ANOTHER INTERESTED PARTY.
FURTHER, SUCH INDEMNITIES AND RELEASES WILL APPLY EVEN IF INSURANCE
OBTAINED BY SGC OR REQUIRED OF SGC BY THIS LEASE OR OTHER OPERATIVE
DOCUMENTS IS NOT ADEQUATE TO COVER LOSSES AGAINST OR FOR WHICH THE
INDEMNITIES AND RELEASES ARE PROVIDED. SGC'S LIABILITY, HOWEVER, FOR ANY
FAILURE TO OBTAIN INSURANCE REQUIRED BY THIS LEASE OR OTHER OPERATIVE
DOCUMENTS WILL NOT BE LIMITED TO LOSSES AGAINST WHICH INDEMNITIES ARE
PROVIDED HEREIN, IT BEING UNDERSTOOD THAT SUCH INSURANCE IS INTENDED TO DO
MORE THAN PROVIDE A SOURCE OF PAYMENT FOR LOSSES AGAINST WHICH BNPLC AND
OTHER INTERESTED PARTIES ARE ENTITLED TO INDEMNIFICATION BY THIS LEASE.
(iii) Costs and expenses for which SGC shall be responsible pursuant
to this subparagraph 5.(d) will include appraisal fees, filing and
recording fees, inspection fees, survey fees, taxes, brokerage fees and
commissions, abstract fees, title policy fees, Uniform Commercial Code
search fees, escrow fees and Attorneys' Fees incurred by BNPLC with respect
to the Property, whether such costs and expenses are incurred at the time
of execution of this Lease or at any time during the Term. Such costs and
expenses will also include Attorneys' Fees or other costs incurred to
evaluate lien releases and other information submitted by SGC with requests
for Construction Advances.
(iv) SGC's obligations under this subparagraph 5.(d) shall survive the
termination or expiration of this Lease. Any amount to be paid by SGC under
this subparagraph 5.(d) shall be due within ten days after a demand for
such payment is made upon SGC.
(v) If an Interested Party notifies SGC of any claim or proceeding
included in, or any investigation or allegation concerning, Losses for
which SGC is responsible pursuant to this subparagraph 5.(d), SGC shall
assume on behalf of the Interested Party and conduct with due diligence and
in good faith the investigation and defense thereof and the response
thereto with counsel selected by SGC, but reasonably satisfactory to the
Interested Party; provided, that the Interested Party shall have the right
to be represented by advisory counsel of its own selection and at its own
expense; and provided further, that if any such claim, proceeding,
investigation or allegation involves both SGC and the Interested Party and
the Interested Party shall have been advised in writing by counsel that
there may be legal defenses available to it which are inconsistent with
those available to SGC, then the Interested Party shall have the right to
select separate counsel to participate in the investigation and defense of
and response to such claim, proceeding, investigation or allegation on its
own behalf, and SGC shall pay or reimburse the Interested Party for all
Attorney's Fees incurred by the Interested Party because of the selection
of such separate counsel. If SGC fails to assume promptly (and in any event
within fifteen days after being notified of the applicable claim,
proceeding, investigation or allegation) the defense of the Interested
Party, then the Interested Party may contest (or settle, with the prior
written consent of SGC, which consent will not be unreasonably withheld)
the claim, proceeding, investigation or allegation at SGC's expense using
counsel selected by the Interested Party. Moreover, if any such failure by
SGC continues for thirty days or more after SGC is notified of any such
claim, proceeding, investigation or allegation, the Interested Party may
elect not to contest or continue contesting the same and instead settle (or
pay in full) all claims related thereto without SGC's consent and without
releasing SGC from any obligations to the Interested Party under this
subparagraph 5.(d) so long as, in the written opinion of reputable counsel
to the Interested Party, the settlement (or payment in full) is clearly
advisable.
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(e) Exceptions and Qualifications to Indemnities.
(i) BNPLC acknowledges and agrees that nothing in the preceding
subparagraphs of this Paragraph 5 shall be construed to require SGC to pay
or reimburse an Interested Party for: (1) Excluded Taxes; (2) Losses
incurred or suffered by such Interested Party that are proximately caused
by (and attributed by any applicable principles of comparative fault to)
the Established Misconduct of that Interested Party; (3) withholding of
taxes permitted by subparagraph 5.(f); (4) general overhead or internal
administrative expenses of BNPLC or any other Interested Party, except to
the extent allowed by subparagraph 5.(c)(i) because of changes described in
that subparagraph after the Effective Date; (5) Losses incurred or suffered
by Participants in connection with their negotiation or execution of the
Participation Agreement (or supplements making them parties thereto) or in
connection with any due diligence they may undertake before entering into
the Participation Agreement; (6) Losses incurred or suffered by any
Interested Party after, and not proximately caused by events or
circumstances that actually or allegedly occurred or existed on or before,
the later of the dates upon which (A) this Lease terminates or expires, or
(B) SGC surrenders possession of the Property. Further, without limiting
BNPLC's rights (as provided in other provisions of this Lease and other
Operative Documents) to include the following in the calculation of the
Outstanding Construction Allowance, Stipulated Loss Value, the Break Even
Price and the Maximum Permitted Prepayment (as applicable) or to collect
Base Rent, Issue 97-10 Prepayments, a Supplemental Payment and other
amounts, the calculation of which depends upon the Outstanding Construction
Allowance, Stipulated Loss Value, the Break Even Price and the Maximum
Permitted Prepayment, BNPLC acknowledges and agrees that nothing in
subparagraph 5.(a) or the preceding subparagraphs of this Paragraph 5 shall
be construed to require SGC to pay or reimburse an Interested Party for:
a) costs paid by BNPLC with the proceeds of the Initial Funding
Advance as part of the Transaction Expenses; or
b) Construction Advances, including costs and expenditures
incurred or paid by or on behalf of BNPLC after any Landlord's
Election to Continue Construction, to the extent that such costs and
expenditures are considered to be Construction Advances pursuant to
subparagraph 6.(d).
(ii) Notwithstanding anything to the contrary in the preceding
subparagraphs of this Paragraph 5, SGC's liability for payments required by
the preceding subparagraphs of this Paragraph 5, and not excused by the
preceding subparagraph 5.(e)(i), prior to substantial completion of the
Construction Project ("CONSTRUCTION-PERIOD INDEMNITY PAYMENTS") shall be
subject to the following provisions:
a) SGC may decline to pay any Construction-Period Indemnity
Payments other than the following (it being understood that SGC's
payment of the following Construction-Period Indemnity Payments shall
not be subject to any abatement or deferral by anything contained in
this subparagraph 5.(e)(ii)):
(1) Construction-Period Indemnity Payments eligible for
reimbursement to SGC under the terms and conditions of the
Construction Management Agreement; and
(2) Construction-Period Indemnity Payments that constitute
Absolute SGC Construction Obligations.
b) Any Construction-Period Indemnity Payment SGC is excused
from paying by this
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<PAGE> 18
subparagraph 5.(e)(ii), together with interest thereon at the Default
Rate, will be included in the calculation of the Break Even Price
under (and as defined in) the Purchase Agreement.
(iii) Further, if an Interested Party receives a written notice of
Losses that such Interested Party believes are covered by the indemnity in
subparagraph 5.(d)(i), then such Interested Party will be expected to
promptly furnish a copy of such notice to SGC. The failure to so provide a
copy of the notice to SGC shall not excuse SGC from its obligations under
subparagraph 5.(d)(i); provided, that if SGC is unaware of the matters
described in the notice and such failure renders unavailable defenses that
SGC might otherwise assert, or precludes actions that SGC might otherwise
take, to minimize its obligations, then SGC shall be excused from its
obligation to indemnify such Interested Party (and any Affiliate of such
Interested Party) against the Losses, if any, which would not have been
incurred or suffered but for such failure. For example, if BNPLC fails to
provide SGC with a copy of a notice of an obligation covered by the
indemnity set out in subparagraph 5.(d)(i) and SGC is not otherwise already
aware of such obligation, and if as a result of such failure BNPLC becomes
liable for penalties and interest covered by the indemnity in excess of the
penalties and interest that would have accrued if SGC had been promptly
provided with a copy of the notice, then SGC will be excused from any
obligation to BNPLC (or any Affiliate of BNPLC) to pay the excess.
(f) Withholding Taxes. Notwithstanding anything else to the contrary
in this Paragraph 5, but subject to the provisions of this subparagraph 5.(f),
to the extent required by law SGC may deduct United States and Georgia
withholding taxes imposed as a way of collecting or in lieu of Excluded Taxes on
payments of Base Rent, Commitment Fees, Administrative Agency Fees, any interest
payable pursuant to subparagraph 4.(h) or any additional compensation claimed by
BNPLC pursuant to subparagraph 5.(c)(ii) (collectively, "INCOME PAYMENTS") from
Income Payments, without obligation to gross up, indemnify or otherwise increase
payments in consequence thereof. Such withholding, without obligation to gross
up, indemnify or otherwise increase payments in consequence thereof, will be
permitted if, but only if:
(i) in the case of withholding for Excluded Taxes imposed by the
United States of America, the Person entitled to receive Income Payments
(whether BNPLC, as the original landlord named herein, or an assignee of
the original landlord's rights hereunder, a "PAYEE") is not exempt from
withholding by reason of having been organized under the laws of the
United States of America or any State thereof, and such Person shall not
have provided SGC with three counterparts of each of the forms
prescribed by the Internal Revenue Service (Form 1001 or 4224, or
successor forms, as the case may be) claiming for Payee an exemption
from federal withholding on all Income Payments;
(ii) in the case of withholding for Excluded Taxes imposed by the
State of Georgia, the Payee is not exempt from withholding by reason of
having been qualified to do business in Georgia or otherwise, and such
Person shall not have provided SGC with three (3) counterparts of the
forms (if any) prescribed by the Georgia taxing authorities claiming for
Payee an exemption from Georgia withholding on all Income Payments;
(iii) at least thirty days prior to any withholding from or
reduction of Income Payments, SGC shall have notified the Payee that SGC
believes the withholding is required and permitted by this subparagraph;
and
(iv) the withholding taxes on the Income Payments would have been
assessed even if the applicable taxing authorities had characterized the
transactions evidenced by this Lease and the Purchase Agreement as a
financing arrangement.
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<PAGE> 19
Any Payee exempt from withholding for Excluded Taxes imposed by the United
States of America by reason of having been organized under the laws of the
United States of America or any State thereof shall provide to SGC statements
conforming to the requirements of Treasury Regulation 1.1441-5(b) or any
successor thereto (which statements may be made on a Form W-9). If SGC shall
ever be required to pay Excluded Taxes that BNPLC has failed to pay when due
because of SGC's failure to withhold from payments made under this Lease, BNPLC
shall reimburse SGC for such Excluded Taxes and for any penalties or interest
thereon charged to SGC. Nothing in this subparagraph 5.(f) shall excuse SGC from
its obligation under subparagraph 5.(c)(i) to compensate BNPLC for increased
costs attributable to any change in law relating to withholding taxes after the
Effective Date.
6. CONSTRUCTION OF NEW IMPROVEMENTS AND ACQUISITION OF EXISTING
IMPROVEMENTS.
(a) Advances; Outstanding Construction Allowance. The Construction
Management Agreement entitles SGC to receive from BNPLC - subject to the terms
and conditions set forth in the Construction Management Agreement - Construction
Advances on Advance Dates from time to time to pay or reimburse SGC for the
costs of acquiring existing Improvements after the Effective Date pursuant to
the Existing Contract, for the costs of the Construction Project and for certain
other costs described in the Construction Management Agreement. In addition,
BNPLC may from time to time make expenditures or incur costs constituting
Construction Advances after a Landlord's Election to Continue Construction as
described in subparagraph 6.(d). As used herein, references to the "OUTSTANDING
CONSTRUCTION ALLOWANCE" mean the difference on the date in question (but not
less than zero) of (A) the total Construction Advances made by or on behalf of
BNPLC on or prior to the date in question, plus (B) all Carrying Costs added on
or prior to the date in question, less (C) any funds received and applied as
Qualified Prepayments on or prior to the date in question. Charges ("CARRYING
COSTS") shall accrue as described below for each Construction Period and will be
added to (and thereafter be included in) the Outstanding Construction Allowance
on the last day of such Construction Period (i.e., generally on the Advance Date
upon which such Construction Period ends). However, if for any reason Stipulated
Loss Value (and thus the Outstanding Construction Allowance included as a
component thereof) must be determined as of any date between Advance Dates, the
Outstanding Construction Allowance determined on such date shall include not
only Carrying Costs added on or before the immediately preceding Advance Date
computed as described below, but also Carrying Costs accruing on and after such
preceding Advance Date to but not including the date in question.
(b) Calculation of Carrying Costs. Carrying Costs shall be calculated
as follows:
(i) Carrying Costs Formula. Carrying Costs accruing for any
Construction Period shall equal:
o Stipulated Loss Value on the first day of such Construction
Period, times
o the sum of:
(A) the Spread, plus
(B) the Effective Rate with respect to such Construction
Period, times
o the number of days in the period from and including the
preceding Advance Date to but not including the Advance Date
upon which the period ends, divided by
o three hundred sixty.
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<PAGE> 20
(ii) Limits on the Amount of Carrying Costs. Notwithstanding the
foregoing, however, because the Construction Allowance available to SGC
under the Construction Management Agreement is limited in amount to the
Maximum Construction Allowance, and because Carrying Costs are to be
charged against the Construction Allowance, Carrying Costs added to the
Outstanding Construction Allowance on the Base Rent Commencement Date shall
not exceed the amount that can be added without causing the Funded
Construction Allowance to exceed the Maximum Construction Allowance. If,
because of an extension of the Base Rent Commencement Date by BNPLC (as
described in the definition thereof in the List of Defined Terms) or
because of any Landlord's Election to Continue Construction, the Funded
Construction Allowance already exceeds the Maximum Construction Allowance,
then no Carrying Costs will be added to the Outstanding Construction
Allowance on the Base Rent Commencement Date.
(c) SGC's Right to Control the Construction Project. Subject to
BNPLC's rights under subparagraph 6.(d) of this Lease, the Construction
Management Agreement grants to SGC the sole right and responsibility for
designing and constructing the Construction Project, it being understood that
although title to all Improvements will pass directly to BNPLC (as more
particularly provided in Paragraph 8), BNPLC's obligation with respect to the
Construction Project shall be limited to the making of advances under and
subject to the conditions set forth in the Construction Management Agreement. No
contractor or other third party shall be entitled to require BNPLC to make
advances as a third party beneficiary of this Lease or of the Construction
Management Agreement or otherwise.
(d) Landlord's Election to Continue Construction. Without limiting
BNPLC's other rights and remedies under this Lease, and without terminating this
Lease or SGC's obligations hereunder or under any of the other documents
referenced herein, in the event of any termination of the Construction
Management Agreement as provided in subparagraph 5(D) or subparagraph 5(E)
thereof, BNPLC shall be entitled (but not obligated) to take whatever action it
deems necessary or appropriate by the use of legal proceedings or otherwise to
continue or complete the Construction Project in a manner substantially
consistent (to the extent practicable under Applicable Laws) with the general
description of the Construction Project set forth in Exhibit B to the
Construction Management Agreement and with the permitted use of the Property set
forth in subparagraph 3.(a). (As used herein, "LANDLORD'S ELECTION TO CONTINUE
CONSTRUCTION" means any election by BNPLC to continue or complete the
Construction Project pursuant to the preceding sentence.) After any Landlord's
Election to Continue Construction, BNPLC may do any one or more of the following
pursuant to this subparagraph without further notice and regardless of whether
any Event of Default is then continuing:
(i) Take Control of the Property. BNPLC may cause SGC and any
contractors or other parties on the Property to vacate the Property until
the Construction Project is complete or BNPLC elects not to continue work
on the Construction Project.
(ii) Continuation of Construction. BNPLC may perform or cause to be
performed any work to complete or continue the construction of the
Construction Project. In this regard, so long as work ordered or undertaken
by BNPLC is substantially consistent (to the extent practicable under
Applicable Laws) with the general description of the Construction Project
set forth in Exhibit B to the Construction Management Agreement and the
permitted use of the Property set forth in subparagraph 3.(a), BNPLC shall
have complete discretion to:
a) proceed with construction according to such plans and
specifications as BNPLC may from time to time approve;
b) establish and extend construction deadlines as BNPLC from
time to time deems
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<PAGE> 21
appropriate, without obligation to adhere to the deadlines for
Construction Milestones set forth in the Construction Management
Agreement;
c) hire, fire and replace architects, engineers, contractors,
construction managers and other consultants as BNPLC from time to time
deems appropriate, without obligation to use, consider or compensate
architects, engineers, contractors, construction managers or other
consultants previously selected or engaged by SGC;
d) determine the compensation that any architect, engineer,
contractor, construction manager or other consultant engaged by BNPLC
will be paid, and the terms and conditions that will govern the
payment of such compensation (including whether payment will be due in
advance, over the course of construction or on some other basis and
including whether contracts will be let on a fixed price basis, a cost
plus a fee basis or some other basis), as BNPLC from time to time
deems appropriate;
e) pay, settle or compromise existing or future bills and
claims which are or may be liens against the Property or as BNPLC
considers necessary or desirable for the completion of the
Construction Project or the removal of any clouds on title to the
Property;
f) prosecute and defend all actions or proceedings in
connection with the construction of the Construction Project;
g) select and change interior and exterior finishes for the
Improvements and landscaping as BNPLC from time to time deems
appropriate; and
h) generally do anything that SGC itself might have done if SGC
had satisfied or obtained BNPLC's waiver of the conditions specified
therein.
(iii) Arrange for Turnkey Construction. Without limiting the
generality of the foregoing, BNPLC may engage any contractor or real estate
developer BNPLC believes to be reputable to take over and complete
construction of the Construction Project on a "turnkey" basis.
(iv) Suspension or Termination of Construction. Notwithstanding any
Landlord's Election to Continue Construction, BNPLC may subsequently elect
at any time to suspend or terminate further construction without obligation
to SGC.
For purposes of this Lease and other Operative Documents (including the
determination of the Outstanding Construction Allowance, Stipulated Loss Value,
the Break Even Price and the Maximum Permitted Prepayment), after any Landlord's
Election to Continue Construction, all costs and expenditures incurred or paid
by or on behalf of BNPLC to complete or continue construction as provided in
this subparagraph shall be considered Construction Advances and (to the extent
BNPLC capitalizes the same in accordance with GAAP) Project Costs, regardless of
whether they cause the Funded Construction Allowance to exceed the Maximum
Construction Allowance. Further, as used in the preceding sentence, "costs
incurred" by BNPLC will include costs that BNPLC has become obligated to pay to
any third party that is not an Affiliate of BNPLC (including any contractor),
even if the payments for which BNPLC has become so obligated will constitute
prepayments for work or services to be rendered after payment and
notwithstanding that BNPLC's obligations for the payments may be conditioned
upon matters beyond BNPLC's control. For example, even if a construction
contract between BNPLC and a contractor excused BNPLC from making further
progress payments to the contractor upon SGC's failure to make any required
Issue 97-10
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<PAGE> 22
Prepayment hereunder, the obligation to make a progress payment would
nonetheless be "incurred" by BNPLC, for purposes of determining whether BNPLC
has incurred costs considered to be Project Costs and Construction Advances,
when BNPLC's obligation to pay it became subject only to SGC's payment of the
Contingent Rental Prepayment or other conditions beyond BNPLC's control. If and
to the extent, however, BNPLC does incur costs considered as Construction
Advances under this subparagraph, but (1) BNPLC does not actually pay the costs
and after incurring them BNPLC is fully and finally excused from the obligation
to pay them for any reason other than a breach by SGC of this Lease or other
Operative Documents, or (2) BNPLC receives a refund of such costs, then the
costs BNPLC is excused from paying or refunded to BNPLC shall be considered
Qualified Prepayments.
(e) Powers Coupled With an Interest. BNPLC's rights under
subparagraph 6.(d) are intended to constitute powers coupled with an interest
which cannot be revoked.
(f) Completion Notice. After any Landlord's Election to Continue
Construction, BNPLC may provide a notice (a "COMPLETION NOTICE") to SGC,
advising SGC that construction of the Construction Project is substantially
complete or that BNPLC no longer intends to continue such construction at that
time.
7. OTHER OBLIGATIONS OF AND LIMITED REPRESENTATIONS BY BNPLC.
(a) Cooperation of BNPLC to Facilitate Construction and Development.
During the Term BNPLC shall take any action reasonably requested by SGC to
facilitate the acquisition of existing Improvements after the Effective Date
pursuant to the Existing Contract and the construction and use of the Property
permitted by this Lease; provided, however, that:
(i) This subparagraph 7.(a) shall not impose upon BNPLC the
obligation to take any action that can be taken by SGC, SGC's Affiliates or
anyone else other than BNPLC as the owner of the Land, the Improvements or
any other interests in the Property.
(ii) BNPLC shall not be required by this subparagraph 7.(a) to make
any payment to another Person unless BNPLC shall first have received funds
from SGC, in excess of any other amounts due from SGC hereunder, sufficient
to make the payment. (This clause (ii) will not be construed as limiting
the right of SGC to obtain additional Construction Advances, on and subject
to the terms and conditions set forth in the Construction Management
Agreement, for payments SGC itself may pay or incur an obligation to pay to
another Person.)
(iii) BNPLC shall have no obligations whatsoever under this
subparagraph at any time after an Issue 97-10 Election by SGC, after a
Landlord's Election to Continue Construction or when an Event of Default
shall have occurred and be continuing.
(iv) SGC must request any action to be taken by BNPLC pursuant to this
subparagraph, and such request must be specific and in writing, if required
by BNPLC at the time the request is made. A suggested form for such a
request is attached as Exhibit D.
(v) No action may be required of BNPLC pursuant to this subparagraph
7.(a) that could constitute a violation of any Applicable Laws or
compromise or constitute a waiver of BNPLC's rights under other provisions
of this Lease or the other Operative Documents or that for any other reason
is reasonably objectionable to BNPLC.
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<PAGE> 23
The actions BNPLC shall take pursuant to this subparagraph 7.(a) if
reasonably requested by SGC will include, subject to the conditions listed in
the proviso above, joining in or consenting to any (i) grant of easements,
licenses, rights of way, and other rights in the nature of easements encumbering
the Real Property, (ii) release or termination of easements, licenses, rights of
way or other rights in the nature of easements which are for the benefit of the
Real Property or any portion thereof, (iii) dedication or transfer of portions
of the Land not improved with a building, for road, highway or other public
purposes, (iv) agreements (other than with SGC or its Affiliates) for the use
and maintenance of common areas, for reciprocal rights of parking, for ingress
and egress and for amendments to any Permitted Encumbrances or Development
Documents (including amendments to the Development Documents that SGC may
reasonably request to facilitate construction or development on land owned by it
or its Affiliates other than the Land), (V) instruments necessary or desirable
for the exercise or enforcement of rights under the Permitted Encumbrances, the
Development Documents or any contract, permit, license, franchise or other right
included within the term "Property", (VI) permit applications or other documents
reasonably required to accommodate the construction or alteration of
Improvements otherwise permitted by this Lease, (VII) confirmations of SGC's
rights under any particular provisions of this Lease which SGC may wish to
provide to a third party, (IX) execution or filing of a tract or parcel map
subdividing the Real Property into lots or parcels or reconfiguring existing
parcels, (X) agreements providing development incentives or tax abatements with
respect to the Property. However, the determination of whether any such action
is reasonably requested or reasonably objectionable to BNPLC may depend in whole
or in part upon the extent to which the requested action shall result in a lien
to secure payment or performance obligations against BNPLC's interest in the
Property, shall cause a decrease in the value of the Property to less than sixty
percent (60%) of Stipulated Loss Value after any Qualified Payments that may
result from such action are taken into account, or shall impose upon BNPLC any
present or future obligations greater than the obligations BNPLC is willing to
accept in reliance on the indemnifications provided by SGC hereunder.
Upon request by SGC, BNPLC shall also provide a statement in writing
certifying that this Lease is unmodified and in full effect (or, if there have
been modifications, that this Lease is in full effect as modified, and setting
forth such modifications), certifying the dates to which the Base Rent and other
amounts payable by SGC hereunder have been paid, stating whether BNPLC is aware
of any default by SGC that may exist hereunder and confirming BNPLC's agreements
concerning landlord's liens and other matters set forth in subparagraph 7.(c);
it being intended that any such statement by BNPLC may be relied upon by anyone
with whom SGC may intend to enter into an agreement for construction of the
Improvements or other significant agreements concerning the Property.
Any Losses incurred by BNPLC because of any action taken pursuant to this
subparagraph 7.(a) shall be covered by the indemnification set forth in
subparagraph 5.(d). Further, for purposes of such indemnification, any action
taken by BNPLC will be deemed to have been made at the request of SGC if made
pursuant to any request of counsel to or any officer of SGC (or with their
knowledge, and without their objection) in connection with the execution or
administration of this Lease or the other Operative Documents.
To avoid construction delays or for other reasonable cause, SGC may ask
BNPLC for an expedited response to any request for action made by SGC pursuant
to this subparagraph 7.(a) by delivering such request with a notice
substantially in the form attached hereto as Exhibit E. BNPLC shall endeavor in
good faith to respond promptly to any such notice after the receipt of any such
notice by an officer of BNPLC.
(b) Actions Permitted by SGC Without BNPLC's Consent. No refusal by
BNPLC to execute or join in the execution of any agreement, application or other
document requested by SGC pursuant to the preceding subparagraph 7.(a) shall
preclude SGC from itself executing such agreement, application or other
document; provided, that in doing so SGC is not purporting to act for BNPLC and
does not thereby create or
17
<PAGE> 24
expand any obligations or restrictions that encumber the Property. Further,
subject to the other terms and conditions of this Lease, SGC shall be entitled
to do any of the following in SGC's own name and to the exclusion of BNPLC
during the Term without any notice to or consent of BNPLC so long as no
Landlord's Election to Continue Construction has occurred, so long as no Event
of Default has occurred and is continuing and so long as SGC is not purporting
to act for BNPLC and does not thereby create or expand any obligations or
restrictions that encumber the Property:
(i) perform obligations arising under and exercise and enforce the
rights of SGC or the owner of the Real Property under the Development
Documents and Permitted Encumbrances;
(ii) perform obligations arising under and exercise and enforce the
rights of SGC or the owner of the Real Property with respect to any other
contracts or documents (such as building permits) included within the
Personal Property; and
(iii) recover and retain any monetary damages or other benefit inuring
to SGC or the owner of the Real Property through the enforcement of any
rights, contracts or other documents included within the Personal Property
(including the Development Documents and Permitted Encumbrances); provided,
that to the extent any such monetary damages may become payable as
compensation for an adverse impact on value of the Property, the rights of
BNPLC and SGC hereunder with respect to the collection and application of
such monetary damages shall be the same as for condemnation proceeds
payable because of a taking of all or any part of the Property.
(c) Waiver of Landlord's Liens. BNPLC waives any security interest,
statutory landlord's lien or other interest BNPLC may have in or against
computer equipment and other tangible personal property placed on the Land from
time to time that SGC or its Affiliates own or lease from other lessors;
provided, however, that BNPLC does not waive its interest in or rights with
respect to equipment or other property included within the "Property" as
described in Paragraph 8. Although computer equipment or other tangible personal
property may be "bolted down" or otherwise firmly affixed to Improvements, it
shall not by reason thereof become part of the Improvements if it can be removed
without causing structural or other material damage to the Improvements and
without rendering HVAC or other major building systems inoperative and if it
does not otherwise constitute "Property" as provided in Paragraph 8.
(d) Limited Representations by BNPLC Concerning Accounting Matters.
BNPLC is not expected or required to represent or warrant that this Lease or the
Purchase Agreement will qualify for any particular accounting treatment under
GAAP. However, to permit SGC to determine for itself the appropriate accounting
for this Lease and the Purchase Agreement, BNPLC does represent to SGC as of the
Effective Date:
(i) Equity capital invested in BNPLC is greater than three percent
(3%) of the aggregate of all lease funding amounts (including
participations) of BNPLC. Such equity capital investments constitute equity
in legal form and are reflected as shareholders' equity in the financial
statements and accounting records of BNPLC.
(ii) BNPLC is one hundred percent (100%) owned by French American Bank
Corporation, which is one hundred percent (100%) owned by BNPLC's Parent.
(iii) BNPLC leases properties of substantial value to more than
fifteen tenants.
(iv) All parties to whom BNPLC has any material obligations known to
BNPLC are (and are
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<PAGE> 25
expected to be) Affiliates of BNPLC's Parent, Participants, or participants
with BNPLC in other leasing deals or loans made by BNPLC, or other tenants
or borrowers in such other leasing deals or loans.
(v) BNPLC has substantial assets in addition to the Property, assets
which BNPLC believes to have a value far in excess of the value of the
Property.
(vi) Other than any Funding Advances provided from time to time by
Participants under the Participation Agreement, BNPLC expects to obtain all
Funding Advances from Banque Nationale de Paris or other Affiliates of
BNPLC (including Funding Advances to cover Carrying Costs and other amounts
to be capitalized as part of the Outstanding Construction Allowance, and
assuming that SGC uses the Maximum Construction Allowance under this
Lease), and to the extent that Banque Nationale de Paris or such other
Affiliates themselves borrow or accept bank deposits to obtain the funds
needed to provide such Funding Advances, the obligation to repay such funds
shall not be limited, by agreement or corporate structure, to payments
collected from SGC or otherwise recovered from the Property.
(vii) BNPLC has not obtained residual value insurance or a residual
value guarantee from any third party to ensure the recovery of its
investment in the Property.
(viii) BNPLC does not intend to take any action during the term of
this Lease that would change, or anticipate any change in, any of the facts
listed above in this subparagraph.
SGC shall have the right to ask BNPLC questions from time to time concerning
BNPLC's financial condition, concerning matters relevant to the proper
accounting treatment of this Lease on SGC's financial statements and accounting
records (including the amount of BNPLC's equity capital as a percentage of the
aggregate of all lease funding amounts [including participations] by BNPLC) or
concerning BNPLC's ability to perform under this Lease or other Operative
Documents, to which questions BNPLC shall promptly respond. Such response,
however, may be limited to a statement that BNPLC will not provide requested
information; provided, however, BNPLC must notify SGC in writing if at any time
during the Term BNPLC ceases to be 100% owned, directly or indirectly, by Banque
Nationale de Paris, or if at any time during the Term BNPLC believes it could
not represent that the statements in clauses (i), (v) and (vii) above continue
to be accurate, whether because of a change in the capital structure of BNPLC, a
purchase of residual value insurance with respect to the Property or otherwise.
(e) Other Limited Representations by BNPLC. BNPLC represents that:
(i) No Default or Violation. The execution, delivery and performance
by BNPLC of this Lease and the other Operative Documents do not and will
not constitute a breach or default under any material contract or agreement
to which BNPLC is a party or by which BNPLC is bound and do not, to the
knowledge of BNPLC, violate or contravene any law, order, decree, rule or
regulation to which BNPLC is subject. (As used in this subparagraph 7.(e),
"BNPLC'S KNOWLEDGE" means the present actual knowledge of Lloyd Cox, the
current officer of BNPLC having primary responsibility for the negotiation
of this Lease.)
(ii) No Suits. There are no judicial or administrative actions, suits,
proceedings or investigations pending or, to BNPLC's knowledge, threatened
against BNPLC that are reasonably likely to affect BNPLC's interest in the
Property or the validity, enforceability or priority of this Lease or the
other Operative Documents, and BNPLC is not in default with respect to any
order, writ, injunction, decree or demand of any court or other
governmental or regulatory authority that could materially and adversely
affect the business or assets of BNPLC or its interest in the Property.
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<PAGE> 26
(iii) Enforceability. The execution, delivery and performance of this Lease
and the other Operative Documents by BNPLC are duly authorized, are not in
contravention of or conflict with any term or provision of BNPLC's articles
of incorporation or bylaws and do not, to BNPLC's knowledge, require the
consent or approval of any governmental body or other regulatory authority
that has not heretofore been obtained or conflict with any Applicable Laws.
This Lease and the other Operative Documents are valid, binding and legally
enforceable obligations of BNPLC except as such enforcement is affected by
bankruptcy, insolvency and similar laws affecting the rights of creditors,
generally, and equitable principles of general application; provided, BNPLC
makes no representation or warranty that conditions imposed by zoning
ordinances or other state or local Applicable Laws to the purchase,
ownership, lease or operation of the Property have been satisfied.
(iv) Organization. BNPLC is duly incorporated and legally existing
under the laws of Delaware and is (or will become, if necessary to lawfully
perform hereunder) duly qualified to do business in the State of Georgia.
BNPLC has or will obtain on a timely basis, at SGC's expense to the extent
so provided in the other provisions of this Lease, all requisite power and
all governmental certificates of authority, licenses, permits,
qualifications and other documentation necessary to own and lease the
Property and to perform its obligations under this Lease.
(v) Not a Foreign Person. BNPLC is not a "foreign person" within the
meaning of Sections 1445 and 7701 of the Code (i.e., BNPLC is not a
non-resident alien, foreign corporation, foreign partnership, foreign trust
or foreign estate as those terms are defined in the Code and regulations
promulgated thereunder).
(f) Keeping Proprietary Information Confidential. BNPLC agrees to use
reasonable precautions to keep confidential any "proprietary information" (as
defined in Paragraph 27) that BNPLC may receive from SGC or otherwise discover
with respect to SGC or SGC's business pursuant to this Lease or any
investigation by BNPLC hereunder, except for disclosures: (i) specifically and
previously authorized in writing by SGC; (ii) to any permitted assignee of BNPLC
as to any interest in the Property so long as the assignee has agreed in writing
to use its reasonable efforts to keep such information confidential in
accordance with the terms of this subparagraph; (iii) to legal counsel,
accountants, auditors, environmental consultants and other professional advisors
to BNPLC so long as BNPLC shall inform such persons in writing (if practicable)
of the confidential nature of such information and shall direct them to treat
such information confidentially; (iv) to regulatory officials having
jurisdiction over BNPLC or BNPLC's Parent (provided that the disclosing party
shall request confidential treatment of the disclosed information, if
practicable); (v) as required by legal process (provided that the disclosing
party shall request confidential treatment of the disclosed information, if
practicable); (vi) of information which has previously become publicly available
through the actions or inactions of a Person other than BNPLC not, to BNPLC's
knowledge, in breach of an obligation of confidentiality to SGC; and (vii) to
any Participant so long as the Participant has not repudiated the
confidentiality provision concerning SGC's proprietary information set forth in
the Participation Agreement.
8. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC. Subject in
each case to SGC's rights under the other provisions of this Lease, all
Improvements sold by Seller pursuant to the Existing Contract (including those
sold after the Effective Date as provided in the Existing Contract) and all
Improvements constructed during the term of this Lease shall be owned by BNPLC
and shall constitute "Property" covered by this Lease. Further, subject in each
case to SGC's rights under the other provisions of this Lease, all furnishings,
furniture, chattels, permits, licenses, franchises, certificates and other
personal property of whatever nature shall have been acquired on behalf of BNPLC
by SGC, shall be owned by BNPLC and shall constitute "Property" covered by this
Lease, to the extent heretofore or hereafter acquired, in whole or in part, with
any portion of the
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Initial Funding Advance provided to SGC or with any Construction Advances or
other funds for which SGC has received or hereafter receives reimbursement from
the Initial Funding Advance or Construction Advances, as shall all renewals or
replacements of or substitutions for any such Property. SGC shall not authorize
or permit the transfer of title to the Improvements or to any other such
Property to pass through SGC or SGC's Affiliates before it is transferred to
BNPLC from contractors, suppliers, vendors or other third Persons. Nothing
herein shall constitute authorization of SGC by BNPLC to bind BNPLC to any
construction contract or other agreement with a third Person, but any
construction contract or other agreement executed by SGC for the acquisition or
construction of Improvements or other components of the Property may provide for
the transfer of title as required by the preceding sentence. Upon request of
BNPLC made when any Event of Default has occurred and is continuing, SGC shall
deliver to BNPLC an inventory describing all significant items of Personal
Property (and, in the case of tangible personal property, showing the make,
model, serial number and location thereof) other than Improvements, with a
certification by SGC that such inventory is true and complete and that all items
specified in the inventory are covered by this Lease free and clear of any Lien
other than the Permitted Encumbrances or Liens Removable by BNPLC.
9. ENVIRONMENTAL.
(a) Environmental Covenants by SGC. SGC covenants that:
(i) SGC shall not conduct or permit others to conduct Hazardous
Substance Activities, except Permitted Hazardous Substance Use and Remedial
Work.
(ii) SGC shall not discharge or permit the discharge of anything on or
from the Property that would require any permit under applicable
Environmental Laws, other than (1) storm water runoff, (2) waste water
discharges through a publicly owned treatment works, (3) discharges that
are a necessary part of any Remedial Work, and (4) other similar discharges
consistent with the definition herein of Permitted Hazardous Substance Use,
in each case in strict compliance with Environmental Laws.
(iii) Following any discovery that Remedial Work is required by
Environmental Laws or otherwise reasonably required, and to the extent not
inconsistent with the other provisions of this Lease, SGC shall promptly
perform and diligently and continuously pursue such Remedial Work, in each
case in strict compliance with Environmental Laws; provided, however, SGC
shall not be required to perform the Remedial Work that Seller is obligated
to perform, and that Seller does perform as it is obligated to do, pursuant
to and within the deadlines imposed by the Existing Contract. BNPLC and SGC
intend that the right to enforce Seller's obligations to perform Remedial
Work (lead cleanup) under the Existing Contract be included in the
intangible Personal Property covered by this Lease. Accordingly, SGC will
have the right during the Term (and SGC hereby undertakes the
responsibility) to cause Seller to perform, and to verify Seller's
performance of, the Remedial Work contemplated by the Existing Contract in
accordance with the standards and deadlines specified therein. Further, SGC
shall not allow its own employees or other invitees to use the building on
the land covered by the Ground Lease until such Remedial Work is complete;
provided, however, that this provision shall not be construed to prohibit
the use of such building as reasonably required to monitor or complete such
Remedial Work; and provided, further, that until the building is actually
conveyed by the Seller to BNPLC as provided in the Existing Contract
(whereupon the Ground Lease is to terminate according to its terms), it is
understood that nothing in this Lease will be construed as purporting to
authorize or require BNPLC or SGC to interfere with the use and occupancy
of the building by the Seller or the lessee under the Ground Lease as
provided in the Existing Contract and the Ground Lease.
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(iv) If requested by BNPLC in connection with any significant Remedial
Work required by this subparagraph, SGC shall retain an independent
Environmental Consultant or Industrial Hygienist, as appropriate, to
evaluate any significant new information generated during SGC's
implementation of the Remedial Work and to discuss with SGC whether such
new information indicates the need for any additional measures that SGC
should take to protect the health and safety of persons (including, without
limitation, employees, contractors and subcontractors and their employees)
or to protect the environment. SGC shall implement any such additional
measures to the extent required with respect to the Property by
Environmental Laws or otherwise reasonably required and to the extent not
inconsistent with the other provisions of this Lease.
(b) Right of BNPLC to do Remedial Work Not Performed by SGC. If SGC's
failure to cure any breach of the covenants set forth in subparagraph 9.(a)
continues beyond the Environmental Cure Period (as defined below), BNPLC may, in
addition to any other remedies available to it, after notifying SGC of the
Remedial Work BNPLC believes is needed, conduct all or any part of the Remedial
Work. To the extent that Remedial Work done by BNPLC pursuant to the preceding
sentence (including any removal of Hazardous Substances) is reasonably required,
or is required or believed by BNPLC in good faith to be required by Applicable
Law or by any demand, regulation or guideline of any governmental authority
(whether or not having the force of law), the cost thereof shall be a demand
obligation owing by SGC to BNPLC. As used in this subparagraph, "ENVIRONMENTAL
CURE PERIOD" means the period ending on the earlier of: (1) one hundred twenty
days after SGC is notified of the breach which must be cured within such period,
(2) the date that any writ or order is issued for the levy or sale of any
property owned by BNPLC (including the Property) because of such breach, (3) the
date that any criminal action is overtly threatened or instituted against BNPLC
or any of its directors, officers or employees because of such breach, (4) a
Designated Sale Date upon which, for any reason, SGC or an Affiliate of SGC or
any Applicable Purchaser shall not purchase BNPLC's interest in the Property
pursuant to the Purchase Agreement for a net price to BNPLC (when taken together
with any additional payments made by SGC pursuant to Paragraph 1(A)(2) of the
Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal
to Stipulated Loss Value; or (5) any date upon which the Construction Management
Agreement or this Lease or SGC's Initial Remarketing Rights and Obligations may
be terminated because of or following any Issue 97-10 Election
(c) Environmental Inspections and Reviews. BNPLC reserves the right
to retain an Environmental Consultant or Industrial Hygienist to review any
report prepared by SGC or to conduct BNPLC's own investigation to confirm
whether SGC is complying with the requirements of this Paragraph 9. SGC grants
(subject to the Ground Lease) to BNPLC and to BNPLC's agents, employees,
consultants and contractors the right during reasonable business hours and after
reasonable notice to enter upon the Property to inspect the Property and to
perform such tests as BNPLC deems necessary or appropriate to review or
investigate Hazardous Substances in, on, under or about the Property or any
discharge or suspected discharge of Hazardous Substances into groundwater or
surface water from the Property. SGC shall promptly reimburse BNPLC for the
reasonable fees of its Environmental Consultants and Industrial Hygienists and
the costs of any such inspections and tests; provided, however, BNPLC's right to
reimbursement for the reasonable fees of any consultant engaged as provided in
this subparagraph or for the costs of any inspections or test undertaken as
provided in this subparagraph shall be limited to the following circumstances:
(1) an Event of Default or CMA Termination Event shall have occurred; (2) BNPLC
shall have retained the consultant to establish the condition of the Property
just prior to any conveyance thereof pursuant to the Purchase Agreement or just
prior to the expiration of this Lease; (3) BNPLC shall have retained the
consultant to satisfy any regulatory requirements applicable to BNPLC or its
Affiliates; or (4) BNPLC shall have retained the consultant because BNPLC has
been notified of a violation of Environmental Laws concerning the Property or
BNPLC otherwise reasonably believes that SGC has not complied with the
requirements of this Paragraph 9.
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(d) Communications Regarding Environmental Matters.
(i) SGC shall immediately advise BNPLC and Participants of (1) any
discovery of any event or circumstance which would render any of the
representations of SGC herein or in the Closing Certificate concerning
environmental matters materially inaccurate or misleading if made at the
time of such discovery and assuming that SGC was aware of all relevant
facts, (2) any Remedial Work (or change in Remedial Work) required or
undertaken by SGC or its Affiliates in response to any (A) discovery of any
Hazardous Substances on, under or about the Property other than Permitted
Hazardous Substances or (B) any claim for damages resulting from Hazardous
Substance Activities, (3) SGC's discovery of any occurrence or condition on
any real property adjoining or in the vicinity of the Property which would
or could reasonably be expected to cause the Property or any part thereof
to be subject to any ownership, occupancy, transferability or use
restrictions under Environmental Laws, or (4) any investigation or inquiry
of any failure or alleged failure by SGC to comply with Environmental Laws
affecting the Property by any governmental authority responsible for
enforcing Environmental Laws. In such event, SGC shall deliver to BNPLC
within thirty days after BNPLC's request (or such longer period as may be
reasonably required, but in any event within ninety days after BNPLC's
request), a preliminary written environmental plan setting forth a general
description of the action that SGC proposes to take with respect thereto,
if any, to bring the Property into compliance with Environmental Laws or to
correct any breach by SGC of this Paragraph 9, including any proposed
Remedial Work, the estimated cost and time of completion, the name of the
contractor and a copy of the construction contract, if any, and such
additional data, instruments, documents, agreements or other materials or
information as BNPLC may reasonably request.
(ii) SGC shall provide BNPLC and Participants with copies of all
material written communications with federal, state and local governments,
or agencies relating to the matters listed in the preceding clause (i). SGC
shall also provide BNPLC and Participants with copies of any correspondence
from third Persons which threaten litigation over any significant failure
or alleged significant failure of SGC to maintain or operate the Property
in accordance with Environmental Laws.
(iii) Prior to SGC's submission of a Material Environmental
Communication which relates to the matters listed in the preceding clause
(i) to any governmental or regulatory agency or third party, SGC shall, to
extent practicable, deliver to BNPLC and Participants a draft of the
proposed submission (together with the proposed date of submission), and in
good faith assess and consider any comments of BNPLC regarding the same.
Promptly after BNPLC's request, SGC shall meet with BNPLC to discuss the
submission, shall provide any additional information reasonably requested
by BNPLC and shall provide a written explanation to BNPLC addressing the
issues raised by comments (if any) of BNPLC regarding the submission,
including a reasoned analysis supporting any decision by SGC not to modify
the submission in accordance with comments of BNPLC.
10. INSURANCE REQUIRED AND CONDEMNATION.
(a) Liability Insurance. Throughout the Term SGC shall maintain
commercial general liability insurance against claims for bodily and personal
injury, death and property damage occurring in or upon or resulting from any
occurrence in or upon the Property under one or more insurance policies that
satisfy the requirements set forth in Exhibit F. SGC shall deliver and maintain
with BNPLC for each liability insurance policy required by this Lease written
confirmation of the policy and the scope of the coverage provided thereby issued
by the applicable insurer or its authorized agent, which confirmation must also
satisfy the requirements set forth in Exhibit F.
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(b) Property Insurance. Throughout the Term SGC will keep all
Improvements (including all alterations, additions and changes made to the
Improvements) insured against fire and other casualty under one or more property
insurance policies that satisfy the requirements set forth in Exhibit F. SGC
shall deliver and maintain with BNPLC for each property insurance policy
required by this Lease written confirmation of the policy and the scope of the
coverage provided thereby issued by the applicable insurer or its authorized
agent, which confirmation must also satisfy the requirements set forth in
Exhibit F. If any of the Property is destroyed or damaged by fire, explosion,
windstorm, hail or by any other casualty against which insurance shall have been
required hereunder, (i) BNPLC may, but shall not be obligated to, make proof of
loss if not made promptly by SGC after notice from BNPLC, (ii) each insurance
company concerned is hereby authorized and directed to make payment for such
loss directly to BNPLC for application as required by Paragraph 11, and (iii)
BNPLC may settle, adjust or compromise any and all claims for loss, damage or
destruction under any policy or policies of insurance (provided, that so long as
no SGC has made no Issue 97-10 Election, no Landlord's Election to Continue
Construction shall have occurred and no Event of Default shall have occurred and
be continuing, BNPLC must obtain SGC's consent to any such settlement). If any
casualty shall result in damage to or loss or destruction of the Property, SGC
shall give immediate notice thereof to BNPLC and Paragraph 11 shall apply.
Notwithstanding the foregoing, SGC shall have the right as SGC deems
appropriate to settle, adjust or compromise any insurance claim for damage to
the Property that cannot reasonably be asserted for more than $3,000,000 if (and
after) SGC completes the Construction Project pursuant to the Construction
Management Agreement and so long no Event of Default shall have occurred and be
continuing; and SGC may directly receive and hold the proceeds of such claim if
(and after) SGC completes the Construction Project pursuant to the Construction
Management Agreement and so long as no Landlord's Election to Continue
Construction shall have occurred and no Event of Default shall have occurred and
be continuing and so long as SGC applies such proceeds as required by
subparagraph 11.(b).
(c) Failure to Obtain Insurance. If SGC fails to obtain any insurance
or to provide confirmation of any such insurance as required by this Lease,
BNPLC shall be entitled (but not required) to obtain the insurance that SGC has
failed to obtain or for which SGC has not provided the required confirmation
and, without limiting BNPLC's other remedies under the circumstances, BNPLC may
require SGC to reimburse BNPLC for the cost of such insurance and to pay
interest thereon computed at the Default Rate from the date such cost was paid
by BNPLC until the date of reimbursement by SGC.
(d) Condemnation. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Property or any
portion thereof, or any other similar governmental or quasi-governmental
proceedings arising out of injury or damage to the Property or any portion
thereof, each party shall notify the other (provided, however, BNPLC shall have
no liability for its failure to provide such notice) of the pendency of such
proceedings. SGC shall, at its expense, diligently prosecute any such
proceedings and shall consult with BNPLC, its attorneys and experts and
cooperate with them as reasonably requested in the carrying on or defense of any
such proceedings. All proceeds of condemnation awards or proceeds of sale in
lieu of condemnation with respect to the Property and all judgments, decrees and
awards for injury or damage to the Property shall be paid to BNPLC as Escrowed
Proceeds for application as provided in Paragraph 11. BNPLC is hereby
authorized, in the name of SGC, at any time when an Event of Default shall have
occurred and be continuing, or otherwise with SGC's prior consent, to execute
and deliver valid acquittances for, and to appeal from, any such judgment,
decree or award concerning condemnation of any of the Property. BNPLC shall not
be in any event or circumstances liable or responsible for failure to collect,
or to exercise diligence in the collection of, any such proceeds, judgments,
decrees or awards.
Notwithstanding the foregoing provisions of this subparagraph, SGC shall
have the right as SGC deems
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appropriate to settle, adjust or compromise any claim for any taking of less
than all or substantially all of the Property if the claim cannot reasonably be
asserted for more than $3,000,000 and if (and after) SGC completes the
Construction Project pursuant to the Construction Management Agreement and if no
Event of Default shall have occurred and be continuing; and SGC may directly
receive and hold the proceeds of any such claim if (and after) SGC completes the
Construction Project pursuant to the Construction Management Agreement and so
long as no Event of Default shall have occurred and be continuing and so long as
SGC applies such proceeds as required by subparagraph 11.(b).
11. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.
(a) Collection of Insurance and Condemnation Proceeds Generally.
Subject to BNPLC's rights under this Paragraph 11, and so long as no CMA
Termination Event shall have occurred and no Event of Default shall have
occurred and be continuing, SGC shall be entitled to use all property insurance
and condemnation proceeds payable with respect to the Property during the Term
for the restoration and repair of the Property or any remaining portion thereof.
Except as provided in the last sentence of subparagraph 10.(b) and the last
sentence of subparagraph 10.(d), all insurance and condemnation proceeds
received with respect to the Property (including proceeds payable under any
insurance policy covering the Property which is maintained by SGC) shall be paid
to BNPLC and then applied as follows:
(i) First, such proceeds shall be used to reimburse BNPLC for any
costs and expenses, including Attorneys' Fees, incurred in connection with
the collection of such proceeds.
(ii) Second, the remainder of such proceeds (the "REMAINING Proceeds")
shall be held by BNPLC as Escrowed Proceeds and used to reimburse SGC for
the actual cost of the repair, restoration or replacement of the Property.
However, any Remaining Proceeds not needed for such purpose shall be
applied by BNPLC as Qualified Payments, as provided in subparagraph 11.(c),
after SGC notifies BNPLC that they are not needed for repairs, restoration
or replacement.
(b) Administration of Remaining Proceeds; SGC's Obligation to
Restore. Any Remaining Proceeds held by BNPLC as Escrowed Proceeds shall be
deposited by BNPLC in an interest bearing account as provided in the definition
of Escrowed Proceeds in the attached List of Defined Terms and shall be paid to
SGC or to third parties as SGC may direct as the applicable repair, restoration
or replacement progresses and upon compliance by SGC with such terms, conditions
and requirements as may be reasonably imposed by BNPLC, but in no event shall
BNPLC be required to pay Escrowed Proceeds to SGC in excess of the actual cost
to SGC of the applicable repair, restoration or replacement, as evidenced by
invoices or other documentation reasonably satisfactory to BNPLC, it being
understood that BNPLC may retain and apply any such excess as a Qualified
Payment. In any event, SGC will not be entitled to any abatement or reduction of
the Base Rent or any other amount due hereunder except to the extent that such
excess Remaining Proceeds result in Qualified Payments which reduce Stipulated
Loss Value (and thus payments computed on the basis of Stipulated Loss Value) as
provided in the definitions set out in the attached List of Defined Terms.
Further, notwithstanding the inadequacy of the Remaining Proceeds held by BNPLC
as Escrowed Proceeds, if any, or anything herein to the contrary, SGC must,
after any taking of less than all or substantially all of the Property by
condemnation and after any damage to the Property by fire or other casualty,
either:
(i) promptly restore or improve the Property or the remainder thereof
to a value no less than sixty percent (60%) of Stipulated Loss Value
(computed after the application of any Remaining Proceeds as a Qualified
Payment) and to a reasonably safe and sightly condition; or
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(ii) promptly restore the Property to a reasonably safe and sightly
condition and pay to BNPLC for application as a Qualified Payment the
amount (if any), as determined by BNPLC, needed to reduce Stipulated Loss
Value (computed after the application of such amount and any available
Remaining Proceeds as Qualified Payments) to no more than one hundred
sixty-seven percent (167%) of the then-current market value of the Property
or remainder thereof.
(c) Special Provisions Concerning CMA Termination Events, Events of
Default and Qualified Payments. If a CMA Termination Event shall have occurred,
or an Event of Default shall have occurred and be continuing, then
notwithstanding the foregoing, BNPLC shall be entitled to receive and collect
all insurance or condemnation proceeds payable with respect to the Property, and
BNPLC shall be entitled to either, at the discretion of BNPLC, (A) hold all
Remaining Proceeds as Escrowed Proceeds until paid to SGC as reimbursement for
the actual and reasonable cost of repairing, restoring or replacing the Property
when SGC has completed such repair, restoration or replacement, or (B) apply
such proceeds as Qualified Payments when and to the extent deemed appropriate by
BNPLC.
When no CMA Termination Event shall have occurred and no Event of Default
shall have occurred and be continuing, BNPLC shall apply any Remaining Proceeds
paid to it (or other amounts available for application as a Qualified Payment)
as a Qualified Payment on any date that BNPLC is directed to do so by a notice
from SGC; provided, that if such a notice from SGC specifies an effective date
for a Qualified Payment that is less than five Business Days after BNPLC's
actual receipt of the notice, BNPLC may postpone the date of the Qualified
Payment to any date not later than five Business Days after BNPLC's receipt of
the notice. In any event, except when BNPLC is required by the preceding
sentence to apply Remaining Proceeds or other amounts as a Qualified Payment on
an Advance Date or Base Rent Date, BNPLC may deduct Breakage Costs incurred in
connection with any Qualified Payment from the Remaining Proceeds or other
amounts available for application as the Qualified Payment, and SGC will
reimburse BNPLC upon request for any such Breakage Costs that BNPLC incurs but
does not deduct.
(d) Takings of All or Substantially All of the Property. In the event
of any taking of all or substantially all of the Property, BNPLC shall be
entitled to apply all Remaining Proceeds as a Qualified Payment, notwithstanding
the foregoing. In addition, if Stipulated Loss Value immediately prior to any
taking of all or substantially all of the Property by condemnation exceeds the
sum of the Remaining Proceeds resulting from such condemnation, then BNPLC shall
be entitled to recover the excess from SGC upon demand as an additional
Qualified Payment, whereupon this Lease shall terminate. Any taking of so much
of the Real Property as, in BNPLC's reasonable good faith judgment, makes it
impracticable to restore or improve the remainder thereof as required by part
(1) of subparagraph 11.(b) shall be considered a taking of substantially all the
Property for purposes of this Paragraph 11.
(e) Waiver of Subrogation. Without limiting SGC's obligations to make
repairs under other provisions of this Lease, BNPLC and SGC each waive any right
of recovery against the other, and the other's agents, officers or employees,
for any damage to the Property or to the personal property situated from time to
time in or on the Real Property resulting from fire or other casualty covered by
a valid and collectible insurance policy; provided, however, that the waiver set
forth in this subparagraph 11.(e) shall be effective insofar, but only insofar,
as compensation for such damage or loss is actually recovered by the waiving
party (net of costs of collection) under the policy notwithstanding the waivers
set out in this subparagraph. SGC shall cause the insurance policies required of
SGC by this Lease to be properly endorsed, if necessary, to prevent any loss of
coverage because of the waivers set forth in this subparagraph. If such
endorsements are not available at commercially reasonable rates, the waivers set
forth in this subparagraph shall be ineffective to the extent that such waivers
would cause required insurance with respect to the Property to be impaired.
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12. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF SGC
CONCERNING THE PROPERTY. SGC represents, warrants and covenants as follows:
(a) Compliance with Covenants and Laws. The use of the Property
permitted by this Lease complies, or will comply after SGC obtains available
permits as the tenant under this Lease, in all material respects with all
Applicable Laws. SGC has obtained or will promptly obtain all utility, building,
health and operating permits as may be required by any governmental authority or
municipality having jurisdiction over the Property for the construction
contemplated herein and the use of the Property permitted by this Lease.
(b) Operation of Property. SGC shall operate the Property in a good
and workmanlike manner and in a manner that causes it to comply in all material
respects with Applicable Laws. (For purposes of this Lease, "material"
noncompliance with Applicable Law will include any noncompliance, the correction
of which has been requested by a governmental authority, or because of which a
threat of action against the Property or BNPLC has been asserted by a
governmental authority.) SGC shall not use or occupy or allow the use or
occupancy of the Property in any manner which violates any Applicable Law in any
material respect or which constitutes a public or private nuisance or which
makes void, voidable or cancelable any insurance then in force with respect
thereto. To the extent that any of the following could, individually or in the
aggregate, reduce the value of the Property and leave the Property with a value
of less than sixty percent (60%) of Stipulated Loss Value, SGC shall not: (i)
initiate or permit any zoning reclassification of the Property; (ii) seek any
variance under existing zoning ordinances applicable to the Property; (iii) use
or permit the use of the Property in a manner that would result in such use
becoming a nonconforming use under applicable zoning ordinances or similar laws,
rules or regulations; (iv) execute or file any subdivision plat affecting the
Property; or (v) consent to the annexation of the Property to any municipality.
If a change in the zoning or other Applicable Laws affecting the permitted use
or development of the Property shall occur that BNPLC determines will reduce the
then-current market value of the Property, and if after such reduction the
then-current market value of the Property shall be less than sixty percent (60%)
of Stipulated Loss Value in the reasonable judgment of BNPLC, then SGC shall pay
BNPLC an amount equal to such excess for application as a Qualified Payment. SGC
shall not cause or consent to any drilling or exploration for, or extraction,
removal or production of, minerals from the surface or subsurface of the
Property. If SGC receives a notice or claim from any federal, state or other
governmental authority that the Property is not in compliance with any
Applicable Law in any material respect, or that any action may be taken against
BNPLC because the Property does not comply with any Applicable Law, SGC shall
promptly furnish a copy of such notice or claim to BNPLC.
Notwithstanding the foregoing, SGC may in good faith, by appropriate
proceedings, contest the validity and applicability of any Applicable Law with
respect to the Property, and pending such contest SGC shall not be deemed in
default hereunder because of the violation of such Applicable Law, if SGC
diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and if SGC promptly causes the Property to comply with
any such Applicable Law upon a final determination by a court of competent
jurisdiction that the same is valid and applicable to the Property; provided,
however, in any event such contest shall be concluded and the violation of such
Applicable Law must be corrected by SGC and any claims asserted against BNPLC or
the Property because of such violation must be paid by SGC, all prior to the
earlier of (i) the date that any criminal action is overtly threatened or
instituted against BNPLC or any of its directors, officers or employees because
of such violation, (ii) the date that any action is taken or overtly threatened
by any governmental authority against BNPLC or any property owned by BNPLC
(including the Property) because of such violation, (iii) a Designated Sale Date
upon which, for any reason, SGC or an Affiliate of SGC or any Applicable
Purchaser shall not purchase BNPLC's interest in the Property pursuant to the
Purchase Agreement for a net price to BNPLC (when taken together with any
additional payments made by SGC pursuant to Paragraph 1(A)(2) of the Purchase
Agreement, in the case of a purchase by an Applicable Purchaser) equal to
Stipulated Loss Value, or (iv) any date upon which the Construction Management
Agreement or this Lease or SGC's Initial Remarketing Rights and Obligations may
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be terminated because of or following any Issue 97-10 Election.
(c) Debts for Construction, Maintenance, Operation or Development.
SGC shall cause all debts and liabilities incurred in the construction,
maintenance, operation or development of the Property, including all debts and
liabilities for labor, material and equipment and all debts and charges for
utilities servicing the Property, to be promptly paid; provided, nothing in this
subparagraph will be construed to make SGC liable for Liens Removable by BNPLC
or Excluded Taxes.
Notwithstanding the foregoing, SGC may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
mechanic's or materialmen's lien and pending such contest SGC shall not be
deemed in default under this subparagraph because of the contested lien if (1)
within thirty days after being asked to do so by BNPLC, SGC bonds over to
BNPLC's reasonable satisfaction all such contested liens against the Property
alleged to secure an amount in excess of $5,000,000 (individually or in the
aggregate), (2) SGC diligently prosecutes such contest to completion in a manner
reasonably satisfactory to BNPLC, and (3) SGC promptly causes to be paid any
amount adjudged by a court of competent jurisdiction to be due, with all costs
and interest thereon, promptly after such judgment becomes final; provided,
however, that in any event each such contest shall be concluded and the lien,
interest and costs must be paid by SGC prior to the earlier of (i) the date that
any criminal action is overtly threatened or instituted against BNPLC or its
directors, officers or employees because of the nonpayment thereof, (ii) the
date that any writ or order is issued under which the Property or any other
property in which BNPLC has an interest may be seized or sold or any other
action is taken or overtly threatened against BNPLC or any property in which
BNPLC has an interest because of the nonpayment thereof, (iii) a Designated Sale
Date upon which, for any reason, SGC or an Affiliate of SGC or any Applicable
Purchaser shall not purchase BNPLC's interest in the Property pursuant to the
Purchase Agreement for a net price to BNPLC (when taken together with any
additional payments made by SGC pursuant to Paragraph 1(A)(2) of the Purchase
Agreement, in the case of a purchase by an Applicable Purchaser) equal to
Stipulated Loss Value, or (iv) any date upon which the Construction Management
Agreement or this Lease or SGC's Initial Remarketing Rights and Obligations may
be terminated because of or following any Issue 97-10 Election
(d) Repair, Maintenance, Alterations and Additions. SGC shall keep
the Property in good order, operating condition and appearance, causing all
necessary repairs, renewals and replacements to be promptly made, and will not
allow any of the Property to be materially misused, abused or wasted. To the
extent that any of the following could, individually or in the aggregate, reduce
the value of the Property and leave the Property with a value of less than sixty
percent (60%) of Stipulated Loss Value, SGC shall not: (i) fail to promptly
replace any worn-out fixtures or material items of tangible Personal Property
covered by this Lease with fixtures or other tangible Personal Property
comparable to the replaced fixtures or Personal Property when new, (ii) remove
from the Property any fixtures or tangible Personal Property of significant
value covered by this Lease except such as are replaced by SGC by articles of
equal suitability and value, free and clear of any Lien other than Permitted
Encumbrances or Liens Removable by BNPLC, or (iii) make any significant
alterations to any Improvements after they are completed. Without limiting the
foregoing, SGC will notify BNPLC before making any alterations to the
Improvements which could materially reduce the market value of the Property or
which change the general character of the Property or which impair in any
significant manner the useful life or utility of any Improvements.
Nothing in this subparagraph is intended to limit SGC's rights and
obligations under other provisions of this Lease with respect to the
construction of the initial or any subsequent Construction Project permitted by
other provisions of this Lease.
(e) Compliance With Permitted Encumbrances and Development Contracts.
SGC shall comply with and will cause to be performed all of the covenants,
agreements and obligations imposed upon the owner of
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any interest in the Property by the Permitted Encumbrances (including the Ground
Lease) or the Development Contracts. Without limiting the foregoing, SGC shall
cause all amounts to be paid when due, the payment of which is secured by any
Lien against the Property created by the Permitted Encumbrances. Also SGC shall
cause the testing for lead contamination contemplated in the Existing Contract
to be performed in an appropriate manner and shall keep BNPLC informed as to the
status of Seller's efforts to cleanup lead contamination as required by the
Existing Contract.
(f) Modification of Permitted Encumbrances and Development Contracts.
SGC shall not enter into, initiate, approve or consent to any modification of
any Permitted Encumbrance or Development Contract that would create or expand or
purport to create or expand obligations or restrictions which would encumber the
Property without the prior consent of BNPLC. Whether BNPLC must give any such
consent requested by SGC during the term of this Lease shall be governed by
subparagraph 7.(a).
(g) Books and Records Concerning the Property. SGC shall keep books
and records that are accurate and complete in all material respects for the
Property and will, subject to Paragraph 27, permit all such books and records
(including all contracts, statements, invoices, bills and claims for labor,
materials and services supplied for the construction and operation of any
Improvements) to be inspected and copied by BNPLC.
13. ASSIGNMENT AND SUBLETTING BY SGC.
(a) BNPLC's Consent Required. Without the prior consent of BNPLC, SGC
shall not assign, transfer, mortgage, pledge or hypothecate this Lease or any
interest of SGC hereunder and shall not sublet all or any part of the Property,
by operation of law or otherwise; provided, that, if (and after) SGC completes
the Construction Project pursuant to the Construction Management Agreement and
so long as no Event of Default has occurred and is continuing, SGC shall be
entitled without the consent of BNPLC to (1) assign SGC's rights under this
Lease and the other Operative Documents to an Affiliate of SGC (including any
Affiliate of SGC that is the surviving entity after a merger permitted by
subsection 3.04(a) of Schedule A attached to the Guaranty) pursuant to a written
assignment unconditionally providing that the Affiliate assumes SGC's
obligations hereunder and thereunder and (unless SGC has been merged into the
Affiliate pursuant to a merger permitted by subsection 3.04(a) of Schedule A
attached to the Guaranty) that SGC ratifies and confirms for the benefit of
BNPLC SGC's responsibility and liability to BNPLC under this Lease and the other
Operative Documents, and (2) sublet all or any portion of the Property if:
(i) any sublease by SGC is made expressly subject and subordinate to
the terms hereof;
(ii) no sublease purports to grant the subtenant thereunder rights to
use or occupy the Property after the expiration or termination of this
Lease, other than rights expressly conditioned upon a purchase by SGC of
the Property pursuant to the Purchase Agreement;
(iii) the uses permitted by such sublease are limited to uses
expressly permitted by subparagraph 3.(a) above; and
(iv) less than forty-nine percent (49%) of any completed Improvements
are at any time subleased by SGC to anyone other than its own Affiliates.
(b) Standard for BNPLC's Consent to Assignments and Certain Other
Matters. Consents and approvals of BNPLC which are required by this Paragraph 13
will not be unreasonably withheld, but SGC acknowledges that BNPLC's withholding
of such consent or approval shall be reasonable if BNPLC determines
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in good faith that (1) giving the approval may materially increase BNPLC's risk
of liability for any existing or future environmental problem, (2) giving the
approval is likely to substantially increase BNPLC's administrative burden of
complying with or monitoring SGC's compliance with the requirements of this
Lease, or (3) any transaction for which SGC has requested the consent or
approval would negate SGC's representations in this Lease regarding ERISA or
cause this Lease or the other documents referenced herein to constitute a
violation of any provision of ERISA.
(c) Consent Not a Waiver. No consent by BNPLC to a sale, assignment,
transfer, mortgage, pledge or hypothecation of this Lease or SGC's interest
hereunder, and no assignment or subletting of the Property or any part thereof
in accordance with this Lease or otherwise with BNPLC's consent, shall release
SGC from liability hereunder; and any such consent shall apply only to the
specific transaction thereby authorized and shall not relieve SGC from any
requirement of obtaining the prior consent of BNPLC to any further sale,
assignment, transfer, mortgage, pledge or hypothecation of this Lease or any
interest of SGC hereunder.
14. ASSIGNMENT BY BNPLC.
(a) Restrictions on Transfers. Except by a Permitted Transfer, BNPLC
shall not assign, transfer, mortgage, pledge, encumber or hypothecate this Lease
or the other Operative Documents or any interest of BNPLC in and to the Property
during the Term without the prior consent of SGC.
(b) Effect of Permitted Transfer or other Assignment by BNPLC. If,
without breaching subparagraph 14.(a), BNPLC sells or otherwise transfers the
Property and assigns all of its rights under this Lease and the other Operative
Documents, and if BNPLC's successor in interest to all such rights assumes in
writing for the benefit of SGC BNPLC's obligations under this Lease and the
other Operative Documents on and subject to the express terms and conditions set
out herein and therein, then BNPLC shall thereby be released from any
obligations arising after such assumption under this Lease or the other
Operative Documents (other than any liability for a breach of the landlord's
obligation to provide Construction Advances), and SGC shall look solely to each
successor in interest of BNPLC for performance of such obligations.
15. BNPLC'S RIGHT OF ACCESS
(a) BNPLC and BNPLC's representatives may (subject to the Ground
Lease) enter the Property, after three Business Days advance notice to SGC
(except in the event of an emergency, when no advance notice will be required),
for the purpose of performing any work BNPLC is authorized to undertake by the
next subparagraph or for the purpose confirming whether SGC has complied with
the requirements of this Lease at any time BNPLC may reasonably question such
compliance. So long as SGC remains in possession of the Property, BNPLC or
BNPLC's representative will, before making any such inspection or performing any
such work on the Property, if then requested to do so by SGC to maintain
security: (i) sign in at SGC's security or information desk if SGC has such a
desk on the premises, (ii) wear a visitor's badge or other reasonable
identification provided by SGC when BNPLC or BNPLC's representative first
arrives at the Property, (iii) permit an employee of SGC to observe such
inspection or work, and (iv) comply with other similar reasonable
nondiscriminatory security, health or safety requirements of SGC, as SGC may
establish from time to time in accordance with good industry practices, provided
that such other requirements do not, individually or in the aggregate,
substantially interfere with or delay inspections or work of BNPLC authorized by
this Lease.
(b) If SGC fails to perform any act or to take any action which
hereunder SGC is required to perform or take, or to pay any money which
hereunder SGC is required to pay, and if such failure or action constitutes an
Event of Default or causes BNPLC or any director, officer, employee or Affiliate
of BNPLC to be
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overtly threatened with criminal prosecution or renders BNPLC's interest in the
Property or any part thereof at risk of forfeiture by forced sale or otherwise,
then in addition to any other remedies specified herein or otherwise available,
BNPLC may, perform or cause to be performed such act or take such action or pay
such money. Any expenses so incurred by BNPLC, and any money so paid by BNPLC,
shall be a demand obligation owing by SGC to BNPLC. Further, BNPLC, upon making
such payment, shall be subrogated to all of the rights of the person,
corporation or body politic receiving such payment. But nothing herein shall
imply any duty upon the part of BNPLC to do any work which under any provision
of this Lease SGC may be required to perform, and the performance thereof by
BNPLC shall not constitute a waiver of SGC's default. BNPLC may during the
progress of any such work permitted by BNPLC hereunder on or in the Property
keep and store upon the Property all necessary materials, tools, and equipment.
BNPLC shall not in any event be liable for inconvenience, annoyance,
disturbance, loss of business, or other damage to SGC or the subtenants of SGC
by reason of making such repairs or the performance of any such work on or in
the Property, or on account of bringing materials, supplies and equipment into
or through the Property during the course of such work (except for liability in
connection with death or injury or damage to the property of third parties
caused by [and attributed by any applicable principles of comparative fault to]
the Established Misconduct of BNPLC), and the obligations of SGC under this
Lease shall not thereby be excused in any manner.
16. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF SGC. SGC
represents, warrants and covenants as follows:
(a) Negative Covenants. Without the prior written consent of BNPLC in
each case, neither SGC nor any of its Affiliates shall:
(i) Multi employer ERISA Plans. Incur or permit any Affiliate to
incur any obligation to contribute to any "Multi employer plan" as defined
in Section 4001 of ERISA.
(ii) Prohibited ERISA Transaction. Enter into any transaction which
would cause this Lease or the other Operative Documents or any other
document executed in connection herewith (or any exercise of BNPLC's rights
hereunder or thereunder) to constitute a non-exempt prohibited transaction
under ERISA.
(b) Financial Statements; Required Notices; Certificates as to
Default. To the extent not so delivered by Guarantor, SGC shall deliver to BNPLC
and to each Participant of which SGC has been notified:
(i) copies of all financial statements, certificates, notices and
other information that Guarantor is required to provide by Part 2 of
Schedule A attached to the Guaranty prior to the deadlines for delivery
established thereunder;
(ii) together with the annual and quarterly financial statements
furnished in accordance with subparagraph 16.(b)(i), a certificate of a
Responsible Financial Officer of Guarantor in the form attached hereto as
Exhibit G certifying (a) that no Event of Default or material Default by
SGC has occurred and is continuing (or, if an Event of Default or material
Default by SGC has occurred, stating the nature thereof and the action
which SGC proposes to take with respect thereto), (b) that the
representations and warranties by Guarantor and SGC contained in the
provisions referenced in Exhibit G from this Lease, the other Operative
Documents and the Guaranty are true and correct in all material respects on
and as of the date of such certificate as though made on and as of such
date, or, if not then true and correct, a brief statement as to why such
representations are no longer true and correct, and (c) the accuracy of
computations attached thereto demonstrating compliance by Guarantor with
the financial covenants established in
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Schedule A attached to the Guaranty;
(iii) as soon as possible and in any event within five days after the
occurrence of each Event of Default or material Default known to a
Responsible Financial Officer of Guarantor, a statement setting forth
details of such Event of Default or material Default and the action which
SGC has taken and proposes to take with respect thereto;
(iv) as soon as practicable and in any event within thirty days after
a Responsible Financial Officer of SGC knows or has reason to know that any
ERISA Termination Event with respect to any Plan has occurred, a statement
of a Responsible Financial Officer of SGC describing such ERISA Termination
Event and the action, if any, which SGC proposes to take with respect
thereto;
(v) upon request by BNPLC, a statement by SGC and Guarantor in
writing certifying that this Lease and the Guaranty are unmodified and in
full effect (or, if there have been modifications, that this Lease and the
Guaranty are in full effect as modified, and setting forth such
modifications) and the dates to which the Base Rent, Commitment Fees and
Administrative Agency Fees have been paid and either stating that no
default exists hereunder or specifying each such default; it being intended
that any such statement may be relied upon by any prospective purchaser or
mortgagee of the Property or any prospective Participant;
(vi) promptly after any change in the rating of the Index Debt of
Guarantor by S&P or Moody's, which will result in a change in the Spread
(as defined in the List of Defined Terms), a certificate of a Responsible
Financial Officer of Guarantor advising BNPLC of the ratings after the
change; and
(vii) such other information respecting the condition or operations,
financial or otherwise, of SGC, of its Affiliates or of the Property as
BNPLC or any Participant may from time to time reasonably request.
BNPLC is hereby authorized to deliver a copy of any information or certificate
delivered to it pursuant to this subparagraph 16.(b) to any Participant and to
any regulatory body having jurisdiction over BNPLC, BNPLC's Parent or any other
Participant that requires or requests it.
(c) No Default or Violation. The execution, delivery and performance
by SGC of this Lease do not and will not constitute a breach or default under
any other material agreement or contract to which SGC is a party or by which SGC
is bound or which affects the Property, and do not violate or contravene any
law, order, decree, rule or regulation to which SGC is subject, and such
execution, delivery and performance by SGC will not result in the creation or
imposition of (or the obligation to create or impose) any lien, charge or
encumbrance on, or security interest in, SGC's property pursuant to the
provisions of any of the foregoing.
(d) No Suits. Except as disclosed in Schedule 2, there are no
judicial or administrative actions, suits, proceedings or investigations pending
or, to SGC's knowledge, threatened that will adversely affect the Property or
the validity, enforceability or priority of this Lease, and SGC is not in
default with respect to any order, writ, injunction, decree or demand of any
court or other governmental or regulatory authority that could materially and
adversely affect the use, occupancy or operation of the Property. No
condemnation or other like proceedings are pending or, to SGC's knowledge,
threatened against the Property.
(e) Enforceability. The execution, delivery and performance by SGC of
this Lease and the other Operative Documents are duly authorized and do not
require the consent or approval of any governmental
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body or other regulatory authority that has not heretofore been obtained and are
not in contravention of or conflict with any applicable laws or any term or
provision of SGC's articles of incorporation or bylaws. This Lease and the Other
Operative Documents are valid, binding and legally enforceable obligations of
SGC in accordance with its terms, except as such enforcement is affected by
bankruptcy, insolvency and similar laws affecting the rights of creditors,
generally, and equitable principles of general application.
(f) Financial Matters. SGC is not "insolvent" on the date hereof
(that is, the sum of SGC's absolute and contingent liabilities, including the
obligations of SGC under this Lease, does not exceed the fair market value of
SGC's assets) and has no outstanding liens, suits, garnishments or court actions
which could render SGC insolvent or bankrupt. SGC's capital is adequate for the
businesses in which SGC is engaged and intends to be engaged. SGC has not
incurred (whether hereby or otherwise), nor does SGC intend to incur or believe
that it will incur, debts which will be beyond its ability to pay as such debts
mature. There has not been filed by or, to SGC's knowledge, against SGC a
petition in bankruptcy or a petition or answer seeking an assignment for the
benefit of creditors, the appointment of a receiver, trustee, custodian or
liquidator with respect to SGC or any significant portion of SGC's property,
reorganization, arrangement, rearrangement, composition, extension, liquidation
or dissolution or similar relief under the federal Bankruptcy Code or any state
law. The financial statements and all financial data heretofore delivered to
BNPLC relating to SGC are true, correct and complete in all material respects.
(g) Organization. SGC is duly incorporated and legally existing under
the laws of the State of Georgia. SGC has all requisite power and has procured
or will procure on a timely basis all governmental certificates of authority,
licenses, permits, qualifications and other documentation required to fulfill
its obligations under this Lease. SGC has the corporate power and adequate
authority, rights and franchises to own SGC's property and to carry on SGC's
business as now conducted and is duly qualified and in good standing in each
state in which the character of SGC's business makes such qualification
necessary or, if it is not so qualified in a state other than Georgia, such
failure does not have a material adverse effect on the properties, assets,
operations or businesses of SGC and its Subsidiaries, taken as a whole.
(h) ERISA. SGC is not and will not become an "employee benefit plan"
(as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA. The
assets of SGC do not and will not in the future constitute "plan assets" of one
or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. SGC is
not and will not become a "governmental plan" within the meaning of Section
3(32) of ERISA. Transactions by or with SGC are not subject to state statutes
regulating investments of and fiduciary obligations with respect to governmental
plans. No ERISA Termination Event has occurred with respect to any Plan of SGC
and SGC and all its Affiliates are in compliance with ERISA. Neither SGC nor any
of its Affiliates is required to contribute to, or has any other absolute or
contingent liability in respect of, any "Multi employer plan" as defined in
Section 4001 of ERISA. As of the Effective Date no "accumulated funding
deficiency" (as defined in Section 412(a) of the Code) exists with respect to
any Plan of SGC, whether or not waived by the Secretary of the Treasury or his
delegate, and the current value of the benefits of each Plan of SGC, if any,
equals or is less than the current value of such Plan's assets available for the
payment of such benefits.
(i) Use of Proceeds. In no event shall the funds from the Initial
Funding Advance or any Construction Advance be used (nor have they been used)
directly or indirectly for personal, family, household or agricultural purposes
or for the purpose, whether immediate, incidental or ultimate, of purchasing,
acquiring or carrying any "margin stock" or any "margin securities" (as such
terms are defined respectively in Regulation U and Regulation G promulgated by
the Board of Governors of the Federal Reserve System) or to extend credit to
others directly or indirectly for the purpose of purchasing or carrying any such
margin stock or margin securities. SGC represents and warrants that SGC is not
engaged principally, or as one of SGC's important activities, in the
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business of extending credit to others for the purpose of purchasing or carrying
such margin stock or margin securities.
(j) Investment Company Act. SGC is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(k) Omissions. None of SGC's representations or warranties contained
in this Lease or in any other document, certificate or written statement
furnished to BNPLC by or on behalf of SGC in connection with this Lease contains
any untrue statement of a material fact or omits a material fact necessary in
order to make the statements contained herein or therein (when taken in their
entireties) not misleading.
(l) Not a Foreign Person. SGC is not a "foreign person" within the
meaning of Sections 1445 and 7701 of the Code (i.e. SGC is not a non-resident
alien, foreign corporation, foreign partnership, foreign trust or foreign estate
as those terms are defined in the Code and regulations promulgated thereunder).
(m) Further Assurances. SGC shall, upon request of BNPLC, (i)
promptly correct any error or omission which may be discovered in the contents
of this Lease or in any other instrument executed in connection herewith or in
the execution or acknowledgment thereof; (ii) execute, acknowledge, deliver and
record or file such further instruments and do such further acts as may be
necessary, desirable or proper to carry out more effectively the purposes of
this Lease and to subject to this Lease any property intended by the terms
hereof to be covered hereby, including any renewals, additions, substitutions,
replacements or appurtenances to the Property; (iii) execute, acknowledge,
deliver, procure and record or file any document or instrument deemed advisable
by BNPLC to protect its rights in and to the Property against the rights or
interests of third persons; and (iv) provide such certificates, documents,
reports, information, affidavits and other instruments and do such further acts
as may be necessary, desirable or proper in the reasonable determination of
BNPLC to enable BNPLC, BNPLC's Parent and any other Participants to comply with
the requirements or requests of any agency or authority having jurisdiction over
them.
17. EVENTS OF DEFAULT.
(a) Definition of Events of Default. Each of the following events
shall be deemed to be an "EVENT OF DEFAULT" by SGC under this Lease:
(i) SGC shall fail to pay when first due any Base Rent, any
Commitment Fees or any Administrative Agency Fees and such failure shall
continue for three Business Days after SGC is notified thereof by BNPLC
pursuant to a notice that specifically references this Paragraph 17.(a).
(ii) SGC shall fail to pay when first due any Rent other than Base
Rent, Commitment Fees or Administrative Agency Fees, or SGC shall fail to
pay when first due any amount required by the Closing Certificate, and in
either case such failure shall continue for thirty days after SGC is
notified thereof by BNPLC pursuant to a notice that specifically references
this Paragraph 17.(a).
(iii) SGC shall fail to comply with any term, provision or covenant of
this Lease, the Construction Management Agreement or the Closing
Certificate, other than as described in the other clauses of this
subparagraph 17.(a), and shall not cure such failure prior to the earlier
of (A) thirty days after notice thereof is sent to SGC, or (B) the date any
writ or order is issued for the levy or sale of any property owned by BNPLC
(including the Property) because of such failure or any criminal action is
overtly threatened or instituted against BNPLC or any of its directors,
officers or employees because of
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such failure; provided, however, that so long as no such writ or order is
issued and no such criminal action is overtly threatened or instituted, the
period within which such failure may be cured by SGC shall be extended for
a further period (not to exceed an additional one hundred twenty days) as
shall be necessary for the curing thereof with diligence, if (but only if)
(x) such failure is susceptible of cure but cannot with reasonable
diligence be cured within such thirty day period, (y) SGC shall promptly
have commenced to cure such failure and shall thereafter continuously
prosecute the curing thereof with reasonable diligence and (z) the
extension of the period for cure will not, in the case of such a failure
that occurs or commences more than thirty-five days prior to the expiration
of this Lease, cause the period for cure to extend beyond five days prior
to the expiration of this Lease.
(iv) SGC shall fail to pay the full amount of any Supplemental Payment
on the Designated Sale Date as required by the Purchase Agreement.
(v) SGC shall abandon the Property.
(vi) Guarantor, SGC or any of Guarantor's other Subsidiaries shall:
(1) be in default with respect to any payment (whether of principal or
interest and regardless of amount) in respect of any "Material
Indebtedness" (which as used in this provision shall mean any Debt of
Guarantor or its applicable Subsidiary [as the case may be] that is owed to
BNPLC or BNPLC's Affiliates or that is outstanding in a principal amount of
at least $10,000,000 in the aggregate), and such default shall continue
beyond the applicable grace period, if any, specified in the agreements or
instruments relating to such Material Indebtedness; or (2) be in default
under any agreement or instrument relating to any Material Indebtedness and
as a result of such default, the Material Indebtedness shall be declared to
be due and payable prior to the stated maturity thereof.
(vii) Guarantor, SGC or any of Guarantor's other Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against Guarantor, SGC or any of Guarantor's other
Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization, or seeking the entry
of an order for the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property and, in
the case of any such proceeding instituted against it (but not instituted
by it), either such proceeding shall remain undismissed or unstayed for a
period of sixty consecutive days, or any of the actions sought in such
proceeding (including the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official
for, it or for any substantial part of its property) shall occur; or
Guarantor, SGC or any of Guarantor's other Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in this
clause 17.(a)(vii).
(viii) Any order, judgment or decree is entered in any proceedings
against Guarantor, SGC or any of Guarantor's other Subsidiaries decreeing
its dissolution and such order, judgment or decree remains unstayed and in
effect for more than sixty days.
(ix) Any order, judgment or decree is entered in any proceedings
against Guarantor decreeing a divestiture of any of its assets that
represent a substantial part, or the divestiture of the stock of SGC or any
of Guarantor's other Subsidiaries whose assets represent a substantial
part, of the total assets of Guarantor and its Subsidiaries (determined on
a consolidated basis in accordance with GAAP) or which requires the
divestiture of assets, or stock of any of Guarantor's Subsidiaries, which
shall have contributed
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a substantial part of the net income of Guarantor and its Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for any of the
three fiscal years then most recently ended, and such order, judgment or
decree remains unstayed and in effect for more than sixty days.
(x) A final judgment or order for the payment of money in an amount
(not covered by insurance) which exceeds $10,000,000 shall be rendered
against Guarantor, SGC or any of Guarantor's other Subsidiaries and either
(i) enforcement proceedings shall have been commenced by any creditor upon
such judgment, or (ii) within sixty days after the entry thereof, such
judgment or order is not discharged or execution thereof stayed pending
appeal, or within thirty days after the expiration of any such stay, such
judgment is not discharged.
(xi) Any ERISA Termination Event that BNPLC determines in good faith
would constitute grounds for a termination of any Plan of SGC or for the
appointment by the appropriate United States district court of a trustee to
administer any Plan of SGC shall have occurred and be continuing thirty
days after notice to such effect shall have been given to SGC by BNPLC, or
any Plan of SGC shall be terminated, or a trustee shall be appointed by an
appropriate United States district court to administer any Plan of SGC, or
the Pension Benefit Guaranty Corporation shall institute proceedings to
terminate any Plan of SGC or to appoint a trustee to administer any Plan of
SGC.
(xii) SGC or any of its Affiliates shall enter into any transaction
which would cause this Lease or any other Operative Document or any other
document executed in connection herewith (or any exercise of BNPLC's rights
hereunder or thereunder) to constitute a non-exempt prohibited transaction
under ERISA.
(xiii) Guarantor shall breach or repudiate its guarantee of the
obligations of SGC under this Lease, the Construction Management Agreement,
the Purchase Agreement or the Closing Certificate or Guarantor shall fail
to comply with any other covenants of Guarantor in the Guaranty including
the obligations of Guarantor set forth Section 10 of the Guaranty.
(xiv) Any breach by SGC of subparagraph 16.(b)(iii) resulting from
SGC's failure to notify BNPLC of a material Default known to a Responsible
Financial Officer.
(xv) Any representation of SGC contained herein or in the other
Operative Documents is false or misleading in any material respect, or any
certificate delivered to BNPLC by or on behalf of SGC as required by this
Lease is false or misleading in any material respect.
(xvi) Any representation of Guarantor contained in the Guaranty is
false or misleading in any material respect, or any certificate, if any,
delivered to BNPLC by or on behalf of Guarantor as may be required by the
Guaranty is false or misleading in any material respect.
18. REMEDIES.
(a) Basic Remedies. At any time after an Event of Default and after
BNPLC has given any notice required by subparagraph 18.(b), BNPLC shall be
entitled at BNPLC's option (and without limiting BNPLC in the exercise of any
other right or remedy BNPLC may have, and without any further demand or notice
except as expressly described in this subparagraph 18.(a)), to exercise any one
or more of the following remedies:
(i) By notice to SGC, BNPLC may terminate SGC's right to possession
of the Property.
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A notice demanding possession given in connection with possessory
proceedings specifying a time within which to cure a default shall
terminate SGC's right to possession if SGC fails to cure the default within
the time specified in the notice.
(ii) Upon termination of SGC's right to possession and without further
demand or notice, BNPLC may re-enter the Property in any manner not
prohibited by Applicable Law and take possession of all improvements,
additions, alterations, equipment and fixtures thereon and remove any
persons in possession thereof. Any property on the Land or in the
Improvements may be removed and stored in a warehouse or elsewhere at the
expense and risk of and for the account of SGC.
(iii) Upon termination of SGC's right to possession, this Lease shall
terminate and BNPLC may recover from SGC:
a) The worth at the time of award of the unpaid Rent which had
been earned at the time of termination;
b) The worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that SGC proves
could have been reasonably avoided;
c) The worth at the time of award of the amount by which the
unpaid Rent for the balance of the scheduled Term after the time of
award exceeds the amount of such rental loss that SGC proves could be
reasonably avoided; and
d) Any other amount necessary to compensate BNPLC for all the
detriment proximately caused by SGC's failure to perform SGC's
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, including, but not limited to,
the costs and expenses (including Attorneys' Fees, advertising costs
and brokers' commissions) of recovering possession of the Property,
removing persons or property therefrom, placing the Property in good
order, condition, and repair, preparing and altering the Property for
reletting, all other costs and expenses of reletting, and any loss
incurred by BNPLC as a result of SGC's failure to perform SGC's
obligations under the Other Operative Documents.
The "WORTH AT THE TIME OF AWARD" of the amounts referred to in
subparagraph 18.(a)(iii)a) and subparagraph 18.(a)(iii)b) shall be
computed by allowing interest at ten percent (10%) per annum or such
lesser rate as may be the maximum interest rate then permitted to be
charged under Georgia law at the time of computation. The "WORTH AT
THE TIME OF AWARD" of the amount referred to in subparagraph
18.(a)(iii)c) shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time
of award plus one percent (1%).
e) Such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable Georgia
law.
(iv) Even if SGC breaches this Lease and abandons the Property, this
Lease shall continue in effect for so long as BNPLC does not terminate
SGC's right to possession, and BNPLC may enforce all of BNPLC's rights and
remedies under this Lease, including the right to recover the Rent as it
becomes due under this Lease. SGC's right to possession shall not be deemed
to have been terminated
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by BNPLC except pursuant to subparagraph 18.(a)(i) hereof. The following
shall not constitute a termination of SGC's right to possession:
a) Acts of maintenance or preservation or efforts to relet the
Property;
b) The appointment of a receiver upon the initiative of BNPLC
to protect BNPLC's interest under this Lease; or
c) Reasonable withholding of consent to an assignment or
subletting, or terminating a subletting or assignment by SGC.
(b) Notice Required So Long As SGC's Purchase Option and Initial
Remarketing Rights and Obligations Continue Under the Purchase Agreement. So
long as SGC remains in possession of the Property and there has been no
termination of SGC's Purchase Option and SGC's Initial Remarketing Rights and
Obligations as provided Paragraph 4 of the Purchase Agreement, BNPLC's right to
exercise remedies provided in subparagraph 18.(a) will be subject to the
condition precedent that BNPLC shall have notified SGC of BNPLC's intent to
exercise remedies provided in subparagraph 18.(a) at least sixty days prior to
exercising the remedies. The condition precedent is intended to provide SGC with
an opportunity to exercise SGC's Purchase Option or SGC's Initial Remarketing
Rights and Obligations before losing possession of the Property pursuant to
subparagraph 18.(a). The condition precedent is not, however, intended to extend
any period for curing an Event of Default. Accordingly, if an Event of Default
has occurred, and regardless of whether any Event of Default is then continuing,
BNPLC may proceed immediately to exercise remedies provided in subparagraph
18.(a) at any time after the earlier of (i) sixty days after BNPLC has given
such a notice to SGC, (ii) any date upon which SGC relinquishes possession of
the Property, or (iii) any termination of SGC's Purchase Option and SGC's
Initial Remarketing Rights and Obligations.
(c) Enforceability. This Paragraph 18 shall be enforceable to the
maximum extent not prohibited by Applicable Law, and the unenforceability of any
provision in this Paragraph shall not render any other provision unenforceable.
(d) Remedies Cumulative. No right or remedy herein conferred upon or
reserved to BNPLC is intended to be exclusive of any other right or remedy, and
each and every right and remedy shall be cumulative and in addition to any other
right or remedy given hereunder or now or hereafter existing under Applicable
Law or in equity; however, before exercising any right or remedy available under
Applicable Law or in equity to evict SGC from the Property or to terminate SGC's
right of occupancy hereunder, BNPLC shall give SGC any sixty days notice
required in subparagraph 18.(b). In addition to other remedies provided in this
Lease, BNPLC shall be entitled, to the extent permitted by Applicable Law or in
equity, to injunctive relief in case of the violation, or attempted or
threatened violation, of any of the covenants, agreements, conditions or
provisions of this Lease, or to a decree compelling performance of any of the
other covenants, agreements, conditions or provisions of this Lease to be
performed by SGC, or to any other remedy allowed to BNPLC at law or in equity.
Nothing contained in this Lease shall limit or prejudice the right of BNPLC to
prove for and obtain in proceedings for bankruptcy or insolvency of SGC by
reason of the termination of this Lease, an amount equal to the maximum allowed
by any statute or rule of law in effect at the time when, and governing the
proceedings in which, the damages are to be proved, whether or not the amount be
greater, equal to, or less than the amount of the loss or damages referred to
above. Without limiting the generality of the foregoing, nothing contained
herein shall modify, limit or impair any of the rights and remedies of BNPLC
under the Purchase Agreement, and BNPLC shall not be required to give the sixty
day notice described in subparagraph 18.(a) as a condition to any acceleration
of the Designated Sale Date or to taking any action to enforce the Purchase
Agreement or the Closing Certificate.
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19. DEFAULT BY BNPLC. If BNPLC should default in the performance of any of
its obligations under this Lease, BNPLC shall have the time reasonably required,
but in no event less than thirty days, to cure such default after receipt of
notice from SGC specifying such default and specifying what action SGC believes
is necessary to cure the default. If SGC prevails in any litigation brought
against BNPLC because of BNPLC's failure to cure a default within the time
required by the preceding sentence, then SGC shall be entitled to an award
against BNPLC for the monetary damages proximately caused to SGC by such
default.
Notwithstanding the foregoing, BNPLC's right to cure as provided in this
Paragraph 19 will not in any event extend the time within which BNPLC must
remove Liens Removable by BNPLC as required to consummate a conveyance of
BNPLC's interest in the Property required by the Purchase Agreement.
20. QUIET ENJOYMENT. Provided SGC pays the Base Rent and all Additional
Rent payable hereunder as and when due and payable and keeps and fulfills all of
the terms, covenants, agreements and conditions to be performed by SGC
hereunder, BNPLC shall not during the Term disturb SGC's peaceable and quiet
enjoyment of the Property; however, such enjoyment shall be subject to the
terms, provisions, covenants, agreements and conditions of this Lease, to
Permitted Encumbrances, to Development Documents and to any other claims not
constituting Liens Removable by BNPLC. If any Lien Removable by BNPLC is claimed
against the Property, including any judgment lien securing a Deductible Judgment
against BNPLC, BNPLC will remove the Lien Removable by BNPLC promptly. However,
BNPLC shall not be responsible for any Lien that is expressly excluded from the
definition of Liens Removable by BNPLC in the attached List of Defined Terms.
Any breach by BNPLC of this Paragraph shall render BNPLC liable to SGC for any
monetary damages proximately caused thereby, but as more specifically provided
in Paragraph 2 above, no such breach shall entitle SGC to terminate this Lease
or excuse SGC from its obligation to pay Base Rent and other amounts hereunder.
21. SURRENDER UPON TERMINATION. Unless SGC or an Applicable Purchaser
purchases BNPLC's entire interest in the Property pursuant to the terms of the
Purchase Agreement, SGC shall, upon the termination of SGC's right to occupancy,
surrender to BNPLC the Property, including any buildings, alterations,
improvements, replacements or additions constructed by SGC, with all fixtures
and furnishings included in the Property, but not including movable furniture
and movable personal property not covered by this Lease, free of all Hazardous
Substances (including Permitted Hazardous Substances) and tenancies and, to the
extent required by BNPLC, with all Improvements in substantially the same
condition as of the date the same were initially completed, excepting only (i)
ordinary wear and tear that occurs between the maintenance, repairs and
replacements required by other provisions of this Lease, and (ii) alterations
and additions which are expressly permitted by the terms of this Lease and which
have been completed by SGC in a good and workmanlike manner in accordance with
all Applicable Laws. Any movable furniture or movable personal property
belonging to SGC or any party claiming under SGC, if not removed at the time of
such termination and if BNPLC shall so elect, shall be deemed abandoned and
become the property of BNPLC without any payment or offset therefor. If BNPLC
shall not so elect, BNPLC may remove such property from the Property and store
it at SGC's risk and expense. SGC shall bear the expense of repairing any damage
to the Property caused by such removal by BNPLC or SGC.
22. HOLDING OVER BY SGC. Should SGC not purchase BNPLC's right, title and
interest in the Property as provided in the Purchase Agreement, but nonetheless
continue to hold the Property after the termination of this Lease without
BNPLC's consent, whether such termination occurs by lapse of time or otherwise,
such holding over shall constitute and be construed as a tenancy from day to day
only, at a daily Base Rent equal to: (i) Stipulated Loss Value on the day in
question, times (ii) (A) the Prime Rate in effect for such day so long as the
holdover period does not extend beyond ninety days and (B) for each such day
beginning with the ninety-first day after the holdover commences, two percent
(2%) above the Prime Rate; divided by (iii) three hundred and sixty; subject,
however, to all of the terms, provisions, covenants and agreements on the part
of SGC hereunder. No
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payments of money by SGC to BNPLC after the termination of this Lease shall
reinstate, continue or extend the Term of this Lease and no extension of this
Lease after the termination thereof shall be valid unless and until the same
shall be reduced to writing and signed by both BNPLC and SGC.
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS.
SGC acknowledges and agrees that nothing contained in this Lease shall limit,
modify or otherwise affect any of SGC's obligations under the other Operative
Documents, which obligations are intended to be separate, independent and in
addition to, and not in lieu of, the obligations set forth herein. In the event
of any inconsistency between the terms and provisions of the Purchase Agreement
and the terms and provisions of this Lease, the terms and provisions of the
Purchase Agreement shall control. In the event of any inconsistency between the
terms and provisions of the Closing Certificate or Construction Management
Agreement and the terms and provisions of this Lease, the terms and provisions
of this Lease shall control; provided, nothing in this Lease shall be construed
to limit or impair the indemnities provided by SGC in the Closing Certificate,
including the indemnity therein provided against Environmental Losses, and
nothing herein shall limit the obligations of SGC under the Construction
Management Agreement.
24. WAIVER OF JURY TRIAL. BNPLC AND SGC EACH HEREBY WAIVES ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS LEASE OR ANY OTHER DOCUMENT OR DEALINGS BETWEEN THEM RELATING TO THIS
LEASE OR THE PROPERTY. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including contract claims,
tort claims, breach of duty claims, and all other common law and statutory
claims. SGC and BNPLC each acknowledge that this waiver is a material inducement
to enter into a business relationship, that each has already relied on the
waiver in entering into this Lease and the other documents referred to herein,
and that each will continue to rely on the waiver in their related future
dealings. SGC and BNPLC each further warrants and represents that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LEASE OR TO ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING TO THIS LEASE OR THE PROPERTY. In the event of
litigation, this Lease may be filed as a written consent to a trial by the
court.
25. MISCELLANEOUS.
(a) Notices. Each provision of this Lease, or of any Applicable Laws
with reference to the sending, mailing or delivery of any notice or demand
hereunder or with reference to the making of any payment required hereunder,
shall be deemed to be complied with when and if the following steps are taken:
(i) All Rent required to be paid by SGC to BNPLC hereunder shall be
paid to BNPLC in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ Solectron (Solectron Georgia Synthetic Lease)
or at such other place and in such other manner as BNPLC may designate in a
notice to SGC.
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(ii) All advances paid to SGC by BNPLC hereunder or in connection
herewith shall be paid to SGC in immediately available funds at such
place and in such manner as SGC may reasonably designate in a notice
signed by SGC's Treasurer or Chief Financial Officer to BNPLC.
(iii) All notices, demands, approvals, consents and other
communications to be made hereunder to or by the parties hereto must, to
be effective for purpose of this Lease, be in writing. Notices, demands
and other communications required or permitted hereunder are to be sent
to the addresses set forth below (or in the case of communications to
Participants, at the addresses set forth in Schedule 1 to the
Participation Agreement) and shall be given by any of the following
means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex,
telegram or telecopying (if confirmed in writing sent by United States
first class mail, return receipt requested); or (C) registered or
certified first class mail, return receipt requested. Such addresses may
be changed by notice to the other parties given in the same manner as
provided above. Any notice or other communication sent pursuant to
clause (A) or (C) hereof shall be deemed received (whether or not
actually received) upon first attempted delivery at the proper notice
address on any Business Day between 9:00 A.M. and 5:00 P.M., and any
notice or other communication sent pursuant to clause (B) hereof shall
be deemed received upon dispatch by electronic means.
Address of BNPLC:
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Telecopy: (214) 969-0060
With a copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Rafael Lumanlan or Gavin Holles
Telecopy: (415) 296-8954
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
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Address of SGC:
Solectron Georgia Corporation
777 Gibraltar Drive, Building #5
Milpitas, CA 95035
Attn: Chief Financial Officer
Telecopy: (408) 956-6059
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill
Palo Alto, California 94304-1050
Attention: Real Estate Department/DSS
Telecopy: (415) 493-6811
(b) Severability. If any term or provision of this Lease or the
application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of this Lease, or
the application of such term or provision other than to the extent to which it
is invalid or unenforceable, shall not be affected thereby.
(c) No Merger. There shall be no merger of this Lease or of the
leasehold estate created hereby created with any other interest in the Property
by reason of the fact that the same person may acquire or hold, directly or
indirectly, this Lease or the leasehold estate created hereby and any other
interest in the Property, unless all Persons with an interest in the Property
that would be adversely affected by any such merger specifically agree in
writing that such a merger shall occur.
(d) No Implied Waiver. The failure of BNPLC or SGC to insist at any
time upon the strict performance of any covenant or agreement or to exercise any
option, right, power or remedy contained in this Lease shall not be construed as
a waiver or a relinquishment thereof for the future. The waiver of or redress
for any breach of this Lease shall not prevent a similar subsequent act from
constituting a violation. Any express waiver shall affect only the term or
condition specified in such waiver and only for the time and in the manner
specifically stated therein. A receipt by BNPLC of any Base Rent or other
payment hereunder with knowledge of the breach of any covenant or agreement
contained in this Lease shall not be deemed a waiver of such breach, and no
waiver of any provision of this Lease shall be deemed to have been made unless
expressed in writing and signed by the waiving party.
(e) NO IMPLIED REPRESENTATIONS BY BNPLC. BNPLC AND BNPLC'S AGENTS
HAVE MADE NO REPRESENTATIONS OR PROMISES WITH RESPECT TO THE PROPERTY EXCEPT AS
EXPRESSLY SET FORTH HEREIN AND IN THE OTHER OPERATIVE DOCUMENTS, AND NO RIGHTS,
EASEMENTS OR LICENSES ARE ACQUIRED BY SGC BY IMPLICATION OR OTHERWISE EXCEPT AS
EXPRESSLY SET FORTH IN THIS LEASE AND THE OTHER OPERATIVE DOCUMENTS.
(f) Entire Agreement. This Lease and the other Operative Documents
and the other documents dated as of the Effective Date which are being executed
by SGC and executed or accepted by BNPLC contemporaneously with the execution of
this Lease supersede any prior negotiations and agreements between BNPLC and SGC
concerning the Property, and no amendment or modification of this Lease shall be
binding or
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valid unless expressed in a writing executed by both parties hereto.
(g) Binding Effect. All of the covenants, agreements, terms and
conditions to be observed and performed by the parties hereto shall be
applicable to and binding upon their respective successors and, to the extent
assignment is permitted hereunder, their respective assigns.
(h) Time is of the Essence. Time is of the essence as to all
obligations of SGC and BNPLC and all notices required of SGC and BNPLC under
this Lease.
(i) Governing Law. This Lease shall be governed by and construed in
accordance with the laws of the State of Georgia without regard to conflict or
choice of laws.
(j) Paragraph Headings. The paragraph headings contained in this
Lease are for convenience only and shall in no way enlarge or limit the scope or
meaning of the various and several paragraphs hereof.
(k) Other Terms and References. Words of any gender used in this
Lease shall be held and construed to include any other gender, and words in the
singular number shall be held to include the plural and vice versa, unless the
context otherwise requires. References herein to Paragraphs, subparagraphs or
other subdivisions shall refer to the corresponding Paragraphs, subparagraphs or
subdivisions of this Lease, unless specific reference is made to another
document or instrument. References herein to any Schedule or Exhibit shall refer
to the corresponding Schedule or Exhibit attached hereto, which shall be made a
part hereof by such reference. All capitalized terms used in this Lease which
refer to other documents shall be deemed to refer to such other documents as
they may be renewed, extended, supplemented, amended or otherwise modified from
time to time, provided such documents are not renewed, extended or modified in
breach of any provision contained herein or therein or, in the case of any other
document to which BNPLC is a party or of which BNPLC is an intended beneficiary,
without the consent of BNPLC. All accounting terms used but not specifically
defined herein shall be construed in accordance with GAAP. The words "this
Lease", "herein", "hereof", "hereby", "hereunder" and words of similar import
when used in this Lease refer to this Lease as a whole and not to any particular
subdivision unless expressly so limited. The phrases "this Paragraph" and "this
subparagraph" and similar phrases used herein refer only to the Paragraphs or
subparagraphs in which the phrase occurs. As used herein the word "or" is not
exclusive. As used herein the words "include", "including" and similar terms
shall be construed as if followed by "without limitation to".
(l) Not a Partnership, Etc. NOTHING IN THIS LEASE IS INTENDED TO BE
OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE BETWEEN
BNPLC AND SGC. NEITHER THE EXECUTION OF THIS LEASE NOR THE ADMINISTRATION OF
THIS LEASE OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY OTHER RIGHT,
DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO THIS LEASE OR SUCH DOCUMENTS IS
INTENDED TO BE OR TO CREATE ANY FIDUCIARY OBLIGATIONS OF BNPLC TO SGC.
26. INCOME TAX REPORTING. BNPLC and SGC intend this Lease and the Purchase
Agreement to have a form for income taxes which is different than the form of
this Lease and the Purchase Agreement for other purposes, and thus the parties
acknowledge and agree as follows:
a) FOR PURPOSES OF DETERMINING THEIR RESPECTIVE FEDERAL, STATE
AND LOCAL INCOME TAX OBLIGATIONS, BNPLC and SGC believe and intend
that this Lease and the Purchase Agreement constitute a financing
arrangement or conditional sale. Both BNPLC and SGC agree to report
this Lease and the Purchase Agreement as a financing arrangement or
conditional sale on their
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<PAGE> 50
respective income tax returns (the "REQUIRED REPORTING"), unless such
Required Reporting is challenged in writing by the Internal Revenue
Service or another governmental authority with jurisdiction (a "TAX
CHALLENGE"). Consistent with the foregoing, BNPLC and SGC expect that
SGC (and not BNPLC) shall be treated as the true owner of the Property
for income tax purposes, thereby entitling SGC (and not BNPLC) to take
depreciation deductions and other tax benefits available to the owner.
SGC shall also report all interest earned on Escrowed Proceeds as
SGC's income for federal, state and local income tax purposes.
REFERENCES IN THIS LEASE OR IN THE PURCHASE AGREEMENT TO A "LEASE" OR
TO "LEASED PROPERTY" ARE NOT INTENDED FOR INCOME TAX PURPOSES TO
REFLECT THE INTENT OF BNPLC OR SGC AS TO THE FORM OF THE TRANSACTIONS
COVERED BY, OR THE PROPER CHARACTERIZATION OF, THIS LEASE AND THE
PURCHASE AGREEMENT.
b) FOR ALL OTHER PURPOSES, INCLUDING THE DETERMINATION OF THE
APPROPRIATE FINANCIAL ACCOUNTING FOR THIS LEASE AND THE DETERMINATION
OF THEIR RESPECTIVE RIGHTS AND REMEDIES UNDER STATE LAW, BNPLC and SGC
believe and intend that (i) this Lease constitutes a true Lease, not a
mere financing arrangement, enforceable in accordance with its express
terms (and neither this subparagraph 26 nor the provisions referencing
this subparagraph on the title page of this Lease nor the
corresponding provisions in the Purchase Agreement are intended to
affect the enforcement of any other provisions of this Lease or the
Purchase Agreement) and (ii) the Purchase Agreement shall constitute a
separate and independent contract, enforceable in accordance with the
express terms and conditions set forth therein. In this regard, SGC
acknowledges that SGC asked BNPLC to participate in the transactions
evidenced by this Lease and the Purchase Agreement as a landlord and
owner of the Property, not as a lender. Although other transactions
might have been used to accomplish similar results, SGC expects to
receive certain material accounting and other advantages through the
use of a lease transaction. Accordingly, and notwithstanding the
Required Reporting for income tax purposes, SGC cannot equitably deny
that this Lease and the Purchase Agreement should be construed and
enforced in accordance with their respective terms, rather than as a
mortgage or other security device, in any action brought by BNPLC to
enforce this Lease or the Purchase Agreement.
In the event of a Tax Challenge, BNPLC and SGC shall each provide to the other
copies of all notices from the Internal Revenue Service or any other
governmental authority presenting the Tax Challenge. Further, before changing
from the Required Reporting because of a Tax Challenge, BNPLC and SGC shall each
consider in good faith any reasonable suggestions received from the other party
to this Lease about an appropriate response to the Tax Challenge; provided,
however, that the suggestions are set forth in a written notice delivered no
later than thirty Business Days after the suggesting party is first notified of
the Tax Challenge; and, provided further, that when presented with a Tax
Challenge, BNPLC and SGC shall each have the right to change from the Required
Reporting rather than participate in any litigation or other legal proceeding
against the Internal Revenue Service or another governmental authority. In any
event, SGC must indemnify and hold harmless BNPLC from and against all
liabilities, costs, additional taxes and other expenses that may arise or become
due because of any challenge to the Required Reporting or because of any
resulting recharacterization of this Lease or the Purchase Agreement required by
the Internal Revenue Service or another governmental authority, including any
additional taxes that may become due upon any sale under the Purchase Agreement,
to the extent (if any) that such liabilities, costs, additional taxes and other
expenses are not offset by tax savings resulting from additional depreciation
deductions or other tax benefits to BNPLC of the recharacterization.
27. PROPRIETARY INFORMATION AND CONFIDENTIALITY. SGC shall have no
obligation to provide
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<PAGE> 51
proprietary information (as defined in the next sentence) to BNPLC, except and
to the extent that (1) BNPLC reasonably determines that BNPLC cannot accomplish
the purposes of BNPLC's inspection of the Property pursuant to the various
provisions hereof without evaluating such information, and (2) before conducting
any inspections of the Property permitted hereunder BNPLC shall, if requested by
SGC, confirm and ratify the confidentiality agreements covering such proprietary
information set forth in subparagraph 7.(f). For purposes of this Lease
"PROPRIETARY INFORMATION" means SGC's intellectual property, trade secrets and
other confidential information of value to SGC about, among other things, SGC's
products, marketing and corporate strategies, but in no event will "proprietary
information" include any disclosure of substances and materials (and their
chemical composition) which are or previously have been present in, on or under
the Property at the time of any inspections by BNPLC, nor will "proprietary
information" include any additional disclosures reasonably required to permit
BNPLC to determine whether the presence of such substances and materials has
constituted a violation of Environmental Laws or this Lease. In addition, under
no circumstances shall SGC have any obligation to disclose to BNPLC or any other
party any proprietary information of SGC (including, without limitation, any
pending applications for patents or trademarks, any research and design and any
trade secrets) except if and to the limited extent reasonably necessary to
comply with the express provisions of this Lease.
28. USURY SAVINGS CLAUSE. Notwithstanding anything to the contrary
contained in this Lease or the other Operative Documents to the contrary, BNPLC
does not intend to contract for, charge or collect any amount of money that
constitutes interest in excess of the Maximum Rate. As used herein, "MAXIMUM
RATE" shall mean, at any time in question, the maximum rate of interest which,
under applicable law, may be charged. If, notwithstanding the intention of the
parties as explained in Paragraph 26, this Lease and the other Operative
Documents should be construed as a financing arrangement under state law, BNPLC
and SGC agree that it is their intent in the execution of this Lease and the
other Operative Documents to contract in strict compliance with applicable law
concerning usury. In furtherance thereof, BNPLC and SGC stipulate and agree that
none of the terms and provisions contained in this Lease or in the other
Operative Documents shall ever be construed to create a contract to pay for the
use, forbearance or detention of money at a rate in excess of the Maximum Rate.
Neither SGC nor any other parties now or hereafter becoming liable to BNPLC
under the terms of this Lease or the other Operative Documents shall ever be
required to pay interest at a rate in excess of the Maximum Rate, and the
provisions of this paragraph shall control over all other provisions of this
Lease and of the other Operative Documents which may be in apparent conflict
herewith. If the Designated Sale Date is accelerated and as a result thereof any
amounts payable by SGC to BNPLC under or in connection with this Lease or the
other Operative Documents are determined to constitute interest for the actual
period of existence of this Lease in excess of the interest that would have
accrued at the Maximum Rate for such period, BNPLC shall, at its option, either
refund to SGC the amount of such excess or credit such excess as a Qualified
Payment (and thus reduce Stipulated Loss Value, the Break Even Price and other
amounts, the determination of which depend upon Qualified Payments credited to
SGC) and thereby shall render inapplicable any and all penalties of any kind
provided by applicable laws as a result of such excess interest. If BNPLC shall
receive money (or anything else) which is determined to constitute interest and
which would increase the effective interest rate received by BNPLC under or in
connection with this Lease or the other Operative Documents to a rate in excess
of the Maximum Rate, the amount determined to constitute interest in excess of
the Maximum Rate shall, immediately following such determination, at the option
of BNPLC, be returned to SGC or credited as a Qualified Payment, in which event
any and all penalties of any kind under applicable law as a result of such
excess interest shall be inapplicable. If BNPLC shall not actually receive, but
shall contract for, request or demand, a payment of money (or anything else)
which is determined to constitute interest and which would increase the
effective interest rate contracted for or charged to a rate in excess of the
Maximum Rate, BNPLC shall be entitled, following such determination, to waive or
rescind the contractual claim, request or demand for the amount determined to
constitute interest in excess of the lawful rate, in which event any and all
penalties of any kind under applicable law as a result of such excess interest
shall be inapplicable. By execution of this Lease and the Purchase Documents,
SGC agrees that if, at any time, SGC should have reason to
45
<PAGE> 52
believe that the transactions evidenced by this Lease or the other Operative
Documents are in fact usurious, it will give BNPLC notice of such condition, and
SGC agrees that BNPLC shall have ninety days in which to make appropriate refund
or other adjustment in order to correct such condition if it in fact exists. The
term "applicable law" as used in this subparagraph shall mean the laws of the
State of Georgia or the laws of the United States, whichever laws allow the
greater rate of interest, as such laws now exist or may be changed or amended or
come into effect in the future.
[The signature pages follow.]
46
<PAGE> 53
IN WITNESS WHEREOF, SGC and BNPLC have caused this Lease Agreement to be
executed as of October 20, 1998.
"SGC"
SOLECTRON GEORGIA CORPORATION
By: /s/ G. R. HAWKINS, JR.
------------------------------------
G. R. Hawkins, Jr., President
<PAGE> 54
[Continuation of signature pages to Lease Agreement dated to be effective
October 20, 1998]
"BNPLC"
BNP LEASING CORPORATION
By: /s/ LLOYD G. COX
------------------------------------
Lloyd G. Cox, Vice President
<PAGE> 55
Exhibit A
LEGAL DESCRIPTION
ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lots 126, 153 and 154,
7th District of Gwinnett County, Georgia, which is described as follows:
TO LOCATE THE POINT OF BEGINNING commence at a point formed by the intersection
of the northeastern margin of the right-of-way of Northridge Drive (having an
80-foot right-of-way) and the northwestern margin of the right-of-way of Old
Peachtree Road (having an 80-foot right of way), if both of said rights-of-way
are extended to form a point; thence North 56 degrees 23 minutes 46 seconds West
a distance of 11.43 feet to a point marked by a 1/2-inch rebar pin which is the
POINT OF BEGINNING and which is located on the northeastern margin of the
right-of-way of Northridge Drive; thence northwesterly along the northeastern
margin of the right-of-way of Northridge Drive the following five (5) courses
and distances, or curves, as hereinafter described: thence North 56 degrees 23
minutes 46 seconds West a distance of 216.60 feet to a point; thence
northwesterly along an arc of a curve to the right a distance of 278.76 feet to
a point (said arc being subtended by a chord having a chord bearing of North 44
degrees 21 minutes 15 seconds West, a chord distance of 276.71 feet and a radius
of 663.15 feet); thence North 32 degrees 19 minutes 42 seconds West a distance
of 225.20 feet to a point; thence northwesterly along an arc of a curve to the
left a distance of 312.95 feet to a point (said arc being subtended by a chord
having a chord bearing of North 45 degrees 15 minutes 26 seconds West, a chord
distance of 310.30 feet and a radius of 692.57 feet); thence North 58 degrees 12
minutes 08 seconds West a distance of 308.00 feet to a point marked by a
1/2-inch rebar pin; thence leaving the northeastern margin of the right-of-way
of Northridge Drive and continuing northwesterly, northerly and northeasterly
along an arc of a curve to the right a distance of 18.85 feet to a point marked
by a 1/2-inch rebar pin (said arc being subtended by a chord having a chord
bearing of North 13 degrees 12 minutes 08 seconds West, a chord distance of
16.97 feet and a radius of 12.00 feet) located on the southeasterly margin of
the right-of-way of Northbrook Parkway (having a 100-foot right-of-way); thence
easterly along the southeasterly margin of the right-of-way of Northbrook
Parkway the following four (4) courses and distances, or curves, as hereinafter
described: North 31 degrees 47 minutes 52 seconds East a distance of 164.90 feet
to point; thence northeasterly along an arc of a curve to the right a distance
of 462.34 feet to a point (said arc being subtended by a chord having a chord
bearing of North 46 degrees 47 minutes 52 seconds East, a chord distance of
457.08 feet and a radius of 883.01 feet); thence North 61 degrees 47 minutes 52
seconds East a distance of 277.91 feet to a point; thence northeasterly along an
arc of a curve to the left distance of 518.27 feet to a point marked by a
1/2-inch rebar pin (said arc being subtended by a chord having a chord bearing
of North 45 degrees 13 minutes 11 seconds East, a chord distance of 511.07 feet
and a radius of 895.59 feet); leaving said southerly margin of the right-of-way
of Northbrook Parkway, thence South 61 degrees 21 minutes 31 seconds East a
distance of 1,185.63 feet to a point marked by a 5/8-inch rebar pin which is
located on the western margin of the right-of-way of Old Peachtree Road; thence
South 03 degrees 13 minutes 18 seconds East along the western margin of the
right-of-way of Old Peachtree Road a distance of 199.76 feet to a point; thence
southerly and southwesterly along the western and northwestern margin of the
right-of-way of Old Peachtree Road and being an arc of a curve to the right a
distance of 536.80 feet to a point (said arc being subtended by a chord having a
chord bearing of South 26 degrees 52 minutes 52 seconds West, a chord distance
of 512.44 feet and a radius of 510.85 feet); thence South 56 degrees 59 minutes
02 seconds West along the northwestern margin of the right-of-way of Old
Peachtree Road a distance of 729.16 feet to a point; thence southwesterly along
the northwestern margin of the right-of-way of Old Peachtree Road along an arc
of a curve to the left a distance of 330.46 feet to a point marked by a 1/2 inch
rebar pin (said arc being subtended by a chord having a chord bearing of south
46 degrees 52 minutes 01 seconds West, a chord distance of 328.74 feet and a
radius of 935.72 feet); thence southwesterly, westerly and northwesterly along
an arc of a curve to the right a distance of 18.19 feet tot he POINT OF
BEGINNING (said arc being subtended by a chord having a chord bearing of South
80 degrees 10 minutes 35 seconds West, a chord distance of 16.50 feet and a
radius of 12.00 feet), said parcel containing an aggregate of 49.552 acres,
depicted as Tract 1 (12.208 acres);
<PAGE> 56
Tract 2 (10.000 acres) and Tract 3 (27.334 acres), and being more particularly
shown and delineated on that certain survey entitled "As Built Survey for OKI
America, Inc.; Solectron Georgia Corporation; BNP Leasing Corporation and
Chicago Title Insurance Company:, prepared by Pinion & McGaughery Land
Surveyors, Inc, bearing the seal and certification of George H. Pinion, Georgia
Registered Land Surveyor Number 1606, dated July 1, 1998 last revised October 7,
1998, which survey is incorporated herein by reference thereto.
Exhibit A -- Page 2
<PAGE> 57
EXHIBIT B
PERMITTED ENCUMBRANCES
This conveyance is subject to the following matters, but only to the extent
the same are still valid and in full force and effect:
1. Declaration of Protective Covenants for Northbrook, Gwinnett County,
Georgia by Weeks NorthBrook MeadowBrook I Partnership, Ltd. and David Roan,
dated March 11, 1986, filed for record March 14, 1986 at 3:54 p.m.,
recorded in Deed Book 3426, Page 118, Records of Gwinnett County, Georgia;
as assigned by that certain Assignment of Declaration of Protective
Covenants for Northbrook from Weeks Northbrook Meadowbrook I Partnership,
Ltd., a Georgia limited partnership to Weeks Development Partnership, a
Georgia general partnership, dated August 24, 1994, filed for record
September 1, 1994 at 3:31 p.m., recorded in Deed Book 10643, Page 286,
aforesaid Record.
2. Those matters as disclosed by that certain survey entitled "As Built Survey
for OKI America, Inc.", prepared by Pinion & McGaughey Land Surveyors,
Inc., bearing the seal and certification of George H. Pinion, Georgia
Registered Land Surveyor Number 1606, dated July 1, 1998, as follows:
(i) 15-foot building line along northeasterly line of subject property;
(ii) 100-foot building line located along a portion of Old Peachtree Road
near easterly corner of subject property;
(iii)50-foot building lines along Northridge Drive, Northbrook Parkway and
a portion of Old Peachtree Road;
(iv) 75-foot natural buffer in east corner of subject property;
(v) 10-foot no access buffer in east corner of subject property;
(vi) 10-foot, 15-foot and 20-foot drainage easements with 18-inch, 30-inch,
36-inch, 48-inch and 60-inch corrugated metal pipes, swales, flared
end sections, manholes, junction boxes and outlet control structure in
southerly, westerly and easterly portions of subject property;
(vii)20-foot sanitary sewer easements with manholes in southerly, westerly
and central portions of subject property;
(viii)branches in southwesterly portion of subject property;
(ix) two (2) detention ponds with earthen berm, 60-foot corrugated metal
pipe and headwall with 10-foot drainage easement surrounding said
ponds in westerly portion of subject property;
(x) water vaults in easterly and northerly portions of subject property;
(xi) liquid oxygen tank located in northerly portion of subject property;
(xii)Jackson Electric Membership Corporation cubicle located in easterly
corner portion of subject property;
<PAGE> 58
(xiii) Southern Bell cabinet located in easterly portion of subject
property;
(xiv) guy wire crossing easterly line of subject property;
(xv) ditch in westerly portion of subject property;
(xvi) lights and bollard lights throughout subject property;
(xvii) electric box in central portion of subject property;
(xviii) fire hydrants throughout subject property;
(xix) concrete flumes on northwestern side of building;
(xx) two (2) concrete pads with electrical equipment in easterly portion
of subject property;
(xxi) water meter on southern side of building; and
(xxii) concrete vault (electric) in central portion of subject property.
<PAGE> 59
Exhibit D
NOTICE OF REQUEST FOR ACTION BY BNPLC
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Re: Lease Agreement dated as of October 20, 1998, between Solectron Georgia
Corporation, as tenant, and BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Lease referenced above. Pursuant to subparagraph 7.(a)
of the Lease, requests the following of BNPLC:
[INSERT HERE A SPECIFIC DESCRIPTION OF THE ACTION REQUESTED - E.G., "PLEASE
EXECUTE THE ENCLOSED APPLICATION FOR BUILDING PERMIT REQUIRED BY THE CITY
IN CONNECTION WITH CONSTRUCTION OF CERTAIN IMPROVEMENTS WHICH ARE PART OF
THE CONSTRUCTION PROJECT."]
PLEASE NOTE: SUBPARAGRAPH 7.(a) OF THE LEASE OBLIGATES BNPLC NOT TO UNREASONABLY
REFUSE TO COMPLY WITH THE FOREGOING REQUEST, SUBJECT TO TERMS AND CONDITIONS SET
FORTH IN THAT SUBPARAGRAPH. SGC HEREBY CERTIFIES TO BNPLC THAT AFTER CAREFUL
CONSIDERATION SGC BELIEVES THAT ALL SUCH TERMS AND CONDITIONS ARE SATISFIED IN
THE CASE OF THE FOREGOING REQUEST, AND SGC HEREBY RATIFIES AND CONFIRMS ITS
OBLIGATION TO INDEMNIFY BNPLC AGAINST ANY LOSSES BNPLC MAY INCUR OR SUFFER
BECAUSE OF ITS COMPLIANCE WITH SUCH REQUEST AS PROVIDED IN SUBPARAGRAPH 5.(d) OF
THE LEASE.
SGC respectfully requests that BNPLC respond to this notice as soon as
reasonably possible.
Executed this _____ day of ______________, 19___.
SOLECTRON GEORGIA CORPORATION
Name:___________________________________
Title:__________________________________
<PAGE> 60
Exhibit E
NOTICE OF REQUEST REQUIRING AN EXPEDITED RESPONSE
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Re: Lease Agreement dated as of October 20, 1998, between Solectron Georgia
Corporation, as tenant, and BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Lease referenced above. SGC asks for an EXPEDITED
RESPONSE to the following request, which is a request made by SGC pursuant to
subparagraph 7.(a) of the Lease:
[INSERT HERE A SPECIFIC DESCRIPTION OF THE ACTION REQUESTED - E.G., "PLEASE
EXECUTE THE ENCLOSED APPLICATION FOR BUILDING PERMIT REQUIRED BY THE CITY
IN CONNECTION WITH CONSTRUCTION OF CERTAIN IMPROVEMENTS WHICH ARE PART OF
THE CONSTRUCTION PROJECT."]
PLEASE NOTE: SUBPARAGRAPH 7.(a) OF THE LEASE OBLIGATES BNPLC NOT TO UNREASONABLY
REFUSE TO COMPLY WITH THE FOREGOING REQUEST, SUBJECT TO TERMS AND CONDITIONS SET
FORTH IN THAT SUBPARAGRAPH. SGC HEREBY CERTIFIES TO BNPLC THAT AFTER CAREFUL
CONSIDERATION SGC BELIEVES THAT ALL SUCH TERMS AND CONDITIONS ARE SATISFIED IN
THE CASE OF THE FOREGOING REQUEST, AND SGC HEREBY RATIFIES AND CONFIRMS ITS
OBLIGATION TO INDEMNIFY BNPLC AGAINST ANY LOSSES BNPLC MAY INCUR OR SUFFER
BECAUSE OF ITS COMPLIANCE WITH SUCH REQUEST AS PROVIDED IN SUBPARAGRAPH 5.(d) OF
THE LEASE.
As you consider the foregoing request, please understand that SGC must ask for
an expedited request for the following reasons:
[INSERT HERE A BRIEF DESCRIPTION OF THE NEED FOR AN EXPEDITED RESPONSE
-E.G., "TO AVOID CRITICAL PATH DELAYS IN THE CONSTRUCTION CONTEMPLATED BY
THE LEASE, SGC MUST SUBMIT THE ENCLOSED APPLICATION FOR BUILDING PERMIT TO
THE CITY OF WITHIN 15 DAYS, AND UNFORTUNATELY THE CITY HAS ONLY RECENTLY
INDICATED THAT SGC WILL NEED THE SIGNATURE OF BNPLC ON THE APPLICATION."]
For the reasons stated above, SGC respectfully requests that BNPLC respond to
this notice as soon as possible. Although SGC would appreciate a sooner
response, SGC believes that it would be unreasonable for BNPLC not to respond to
this notice on or before:
[INSERT HERE A REASONABLE DEADLINE FOR THE RESPONSE - BUT IN NO EVENT PRIOR
TO 10 BUSINESS DAYS AFTER THE DATE OF THIS NOTICE - TAKING INTO ACCOUNT THE
MATERIALS THAT BNPLC WILL HAVE TO REVIEW TO EVALUATE SGC'S
<PAGE> 61
REQUEST AND THE PARTICULAR REASONS FOR SGC'S NEED FOR AN EXPEDITED
RESPONSE]
Executed this _____ day of ______________, 19___.
SOLECTRON GEORGIA CORPORATION
Name:___________________________________
Title:__________________________________
Exhibit E -- Page 2
<PAGE> 62
Exhibit F
INSURANCE REQUIREMENTS
I. LIABILITY INSURANCE:
A. SGC must maintain commercial general liability ("CGL") insurance on an
occurrence basis, affording afford immediate protection to the limit of not less
than $20,000,000 combined single limit for bodily and personal injury, death and
property damage in respect of any one occurrence.
B. Any deductible or self-insured retention applicable to the CGL
insurance shall not exceed $1,000 at any time when SGC shall continue to have
the right to exercise any Issue 97-10 Election, or shall have previously
exercised an Issue 97-10 Election. After the expiration of SGC's right to
exercise any Issue 97-10 Election, and provided no Issue 97-10 Election has been
exercised by SGC, SGC may increase any deductible or self-insured retention
applicable to such insurance, but not to an amount in excess of $3,000,000.
C. The forms of insurance policies (including endorsements) used to
provide the CGL insurance required by this Lease, and the insurance company or
companies providing the CGL insurance, must be acceptable to BNPLC. BNPLC shall
have the right from time to time and at any time to review and approve such
policy forms (including endorsements) and the insurance company or companies
providing the insurance. Without limiting the generality of the foregoing, BNPLC
may reasonably require (and unless and until SGC is otherwise notified by BNPLC,
BNPLC does require) that such insurance be provided under forms and by companies
consistent with the following:
(1) Forms: CGL Insurance must be provided on Insurance Services
Office ("ISO") forms CG 0001 1093 or CG 0001 0695.
(2) Rating Requirements: Insurance must be provided through insurance
or reinsurance companies rated by the A.M. Best Company of
Oldwick, New Jersey as having a policyholder's rating of A- or
better and a reported financial information rating of VI or
better.
(3) Required Endorsements: CGL Insurance must be endorsed to provide
or include:
(a) blanket contractual liability coverage which insures
contractual liability under the indemnifications set forth in
this Lease (though such coverage or the amount thereof shall in
no way limit such indemnifications);
(c) in any policy containing a general aggregate limit, ISO form
amendment "Aggregate Limits of Insurance Per Location" CG 2504
1185;
(b) a waiver of subrogation, using ISO form CG 2404 1093 (and
under the commercial umbrella, if any), in favor of "BNP Leasing
Corporation and other Interested Parties (as defined in the Lease
Agreement between SOLECTRON GEORGIA CORPORATION and BNP Leasing
Corporation dated October 20, 1998)";
(d) ISO additional insured form CG 2026 1185, without
modification (and under the commercial umbrella, if any),
designating as additional insureds "BNPLC and other
<PAGE> 63
Interested Parties, as defined in the Lease Agreement between
SOLECTRON GEORGIA CORPORATION and BNP Leasing Corporation dated
October 20, 1998)"; and
(e) provisions entitling BNPLC to 30 days' notice from the
insurer prior to any cancellation, nonrenewal or material
modification to the CGL coverage.
(4) Other Insurance: Each policy to contain standard CGL "other
insurance" wording, unmodified in any way that would make it
excess over or contributory with the additional insured's own
commercial general liability coverage.
II. PROPERTY INSURANCE:
A. SGC must maintain property insurance in "special form" or against "all
risks," providing the broadest available coverage for all Improvements and
equipment included in the Property, with no exclusions for vandalism, malicious
mischief, or sprinkler leakage, and including coverage against earthquake and
all coverage perils normally included within the definitions of extended
coverage, vandalism, malicious mischief and, if the Property is in a flood zone,
flood. During any period of significant construction on any Improvements, the
property insurance must include builder's completed value risk insurance for
such Improvements.
B. The property insurance must provide coverage in the amount no less
than replacement value (exclusive of land, foundation, footings, excavations and
grading) with endorsements for contingent liability from operation of building
laws, increased cost of construction and demolition costs which may be necessary
to comply with building laws. Subject to the approval of BNPLC, SGC will be
responsible for determining the amount of property insurance to be maintained
from time to time, but SGC must maintain such coverage on an agreed value basis
to eliminate the effects of coinsurance.
C. Any deductible or self-insured retention applicable to the property
insurance shall not exceed $1,000 at any time when SGC shall continue to have
the right to exercise any Issue 97-10 Election, or shall have previously
exercised an Issue 97-10 Election. After the expiration of SGC's right to
exercise any Issue 97-10 Election, and provided no Issue 97-10 Election has been
exercised by SGC, SGC may increase any deductible or self-insured retention
applicable to such insurance, but not to an amount in excess of $3,000,000.
D. The property insurance shall cover not only the value of SGC's
interest in the Improvements, but also the interest of BNPLC, with BNPLC shown
as an insured as its interests may appear.
E. The forms of insurance policies (including endorsements) used to
provide the property insurance required by this Lease, and the insurance company
or companies providing the property insurance, must be acceptable to BNPLC.
BNPLC shall have the right from time to time and at any time to review and
approve such policy forms (including endorsements) and the insurance company or
companies providing such insurance. Without limiting the generality of the
foregoing, BNPLC may reasonably require (and unless and until SGC is otherwise
notified by BNPLC, BNPLC does require) that such insurance be provided under
forms and by companies consistent with the following:
(1) Rating Requirements: Insurance to be provided through insurance
or reinsurance companies rated by the A.M. Best Company of Oldwick,
New Jersey as having (a) a policyholder's rating of A- or better, (b)
a reported financial information rating of no less than VI,
Exhibit F -- Page 2
<PAGE> 64
and (c) in the case of each insurance or reinsurance company, a
reported financial information rating which indicates an adjusted
policyholders' surplus equal to or greater than the underwriting
exposure that such company has under the insurance or reinsurance it
is providing for the Property.
(2) Required Endorsements: SGC's property Insurance must be endorsed
to provide or include:
(a) a waiver of subrogation in favor of "BNPLC and other
Interested Parties, as defined in the Lease Agreement
between SOLECTRON GEORGIA CORPORATION and BNP Leasing
Corporation dated October 20, 1998)";
(b) that SGC's insurance is primary, with any policies of BNPLC
or other Interested Parties being excess, secondary and
noncontributing;
(c) that the protection afforded to BNPLC by such insurance
shall not be reduced or impaired by acts or omissions of SGC
or any other beneficiary or insured; and
(d) that BNPLC must be notified at least thirty days prior to
any cancellation, nonrenewal or reduction of insurance
coverage.
III. OTHER INSURANCE RELATED REQUIREMENTS:
A. BNPLC must be notified in writing immediately by SGC of claims against
SGC that might cause a reduction below seventy-five percent (75%) of any
aggregate limit of any policy.
B. SGC's Property insurance must be evidenced by ACORD form 27 "Evidence
of Property Insurance" completed and interlineated in a manner satisfactory to
BNPLC to show compliance with the requirements of this Exhibit.
B. SGC's CGL insurance must be evidenced by ACORD form 25 "Certificate of
Insurance" completed and interlineated in a manner satisfactory to BNPLC to show
compliance with the requirements of this Exhibit.
C. Such evidence of required insurance must be delivered upon execution
of this Lease and new certificate or evidence of insurance must be delivered no
later than 30 days prior to expiration of existing policy.
D. Copies of endorsements must be attached to ACORD forms 25 and 27
delivered to BNPLC.
Exhibit F -- Page 3
<PAGE> 65
Exhibit G
COMPLIANCE CERTIFICATE
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Gentlemen:
The undersigned, as _____________________________ of Solectron Corporation
("Guarantor"), does hereby certify on behalf of Guarantor and Solectron Georgia
Corporation ("SGC") that the following are true:
1. This Certificate is furnished pursuant to subparagraph 16.(b)(ii) of
that certain Lease Agreement dated as of October 20, 1998 (the "LEASE"; the
terms defined therein being used herein as therein defined) between SGC and you.
2. No Event of Default or material Default by SGC under the Lease has
occurred and is continuing.
3. The representations and warranties of SGC in the Operative Documents
are true and correct in all material respects as of the date hereof as though
made on and as of the date hereof.
4. The representations and warranties of Guarantor in Section 9 of the
Guaranty are true and correct in all material respects as of the date hereof as
though made on and as of the date hereof.
5. Annex 1 attached hereto sets forth financial data and computations
evidencing Guarantor's compliance with certain covenants established in Schedule
A attached to the Guaranty, all of which data and computations are complete,
true and correct.
Executed this _____ day of ______________, 19___.
Solectron Corporation
Name:_________________________
Title:________________________
<PAGE> 66
Annex 1 To Compliance Certificate
For the _________________ Ended ________________, 19___
NOTE: References to Sections below are intended to refer to the Sections in Part
3 of Schedule A to the Guaranty.
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C> <C> <C>
1. Section 3.09 - Adjusted Leverage Ratio As of the last day of each fiscal
quarter, the amount which is not greater
than (a) 1.75 to 1.00 from the Effective
Date through and including February 28,
1998, (b) 1.50 to 1.00 from May 31, 1998
through and including February 28, 1999,
(c) 1.25 to 1.00 from May 31, 1999
through and including February 28, 2000,
and (d) 1.00 to 1.00 thereafter.
Adjusted Leverage Ratio calculation
(A) Consolidated Funded Debt $_______
plus Guarantee obligations ________
plus Indebtedness with respect to ________
synthetic leases and securitized
assets
plus Indebtedness with respect to ________
letters of credit (including the
Letters of Credit)
minus Permitted Subordinated ________
Indebtedness
TOTAL $_______
</TABLE>
Exhibit G -- Page 2
<PAGE> 67
<TABLE>
<S> <C> <C> <C>
(B) operating income $_______
plus depreciation and ________
amortization charges
TOTAL $_______
RATIO OF (A) TO (B) ________
2. Section 3.10 - Minimum Consolidated
Tangible Net Worth As of the last day of each fiscal
quarter following April 30, 1997, the
amount that is not less than the sum of
(without duplication) 80% of
Consolidated Tangible Net Worth measured
as of the end of the fiscal quarter
ended February 28, 1997, plus 50% of
consolidated net income (without
subtracting losses or
acquisition-related charges) for each
fiscal quarter ended after the fiscal
quarter ended February 28, 1997, minus
100% of all acquisition-related charges
if such charges are recorded in the same
fiscal quarter in which the applicable
acquisition is consummated.
(A) Consolidated Tangible Net Worth
calculation:
total shareholders' equity $_______
minus intangible assets ________
</TABLE>
Exhibit G -- Page 3
<PAGE> 68
<TABLE>
<S> <C> <C> <C>
Consolidated Tangible Net Worth $_______
(B) Minimum Consolidated Tangible Net
Worth calculation:
Beginning minimum amount $_______
plus 50% of quarterly net income _______
for each fiscal quarter subsequent
to the quarter ended February 28,
1997, with no reduction for losses
or acquisition-related charges
minus 100% of all acquisition-
related charges if such charges are
recorded in the same fiscal quarter
in which the applicable acquisition
is consummated
Minimum Consolidated Tangible Net $_______
Worth
(A) MINUS (B) $_______
3. Section 3.11 - Modified Quick Ratio At the end of any fiscal quarter of
Guarantor when (1) the rating the rating
established by Moody's for the Index
Debt of Guarantor is below Ba2 or (2)
the rating established by S&P for the
Index Debt of Guarantor is below BB, or
(3) neither Moody's nor S&P maintains a
rating for the Index Debt of Guarantor,
the Modified Quick Ratio is to be not
less than 1.0 to 1.0.
(A) Quick Assets calculation:
unencumbered cash $_______
plus unencumbered short term cash ________
investments
</TABLE>
Exhibit G -- Page 4
<PAGE> 69
<TABLE>
<S> <C> <C> <C>
plus unencumbered marketable ________
securities which are classified
as short term investments
according to GAAP
plus unencumbered net accounts ________
receivable
plus fair market value of the
following to the extent not
otherwise already included in
Quick Assets and to the extent
having maturities of not longer
than two years:
securities issued or fully ________
guaranteed by the United States
government or any agency thereof
and backed by the full faith and
credit of the United States
certificates of deposit, ________
time deposits, Eurodollar time
deposits, repurchase agreements,
or banker's acceptances that are
(A) issued by either one of the
50 largest (in assets) banks in
the United States or by one of
the 100 largest (in assets)
banks in the world and (B) rated
not less than A- by Standard &
Poor's Corporation or less than
A by Moody's Investors Service,
Inc.
corporate or municipal ________
bonds rated not less than A- by
Standard & Poor's Corporation or
less than A by Moody's Investors
Service, Inc.
TOTAL $_______
</TABLE>
Exhibit G -- Page 5
<PAGE> 70
<TABLE>
<S> <C> <C> <C>
(B) Current Liabilities according to $_______
GAAP
(C) Payments not included in Current $_______
Liabilities maturing within 12 months
on Indebtedness or which are the
subject of any Guarantee
RATIO OF (A) TO [(B) +(C)] ________
</TABLE>
Exhibit G -- Page 6
<PAGE> 71
Exhibit H
NOTICE OF LIBOR PERIOD ELECTION
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Re: Lease Agreement dated as of October 20, 1998, between Solectron
Georgia Corporation, as tenant, and BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Lease referenced above. This letter constitutes notice
to you that the LIBOR Period Election under the Lease shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or after:
________________, ____.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE NUMBER OF MONTHS
SPECIFIED ABOVE IS NOT A PERMITTED NUMBER UNDER THE DEFINITION OF "LIBOR PERIOD
ELECTION" IN THE LIST OF DEFINED TERMS ATTACHED TO THE LEASE, OR IF THE DATE
SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF THE LIBOR PERIOD ELECTION IS LESS
THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF THIS NOTICE. HOWEVER, WE ASK THAT
YOU NOTIFY US IMMEDIATELY IF FOR ANY REASON YOU BELIEVE THIS NOTICE IS
DEFECTIVE.
Executed this _____ day of ______________, 19___.
SOLECTRON GEORGIA CORPORATION
Name:___________________________________
Title:__________________________________
[cc all Participants]
<PAGE> 72
Schedule 1
LIST OF DEVELOPMENT DOCUMENTS
-- NONE -
<PAGE> 73
Schedule 2
LIST OF CLAIMS PENDING OR THREATENED AGAINST THE PROPERTY
-- NONE -
<PAGE> 74
LIST OF DEFINED TERMS
FOR AGREEMENTS BETWEEN
BNP LEASING CORPORATION
AND
SOLECTRON GEORGIA CORPORATION
DATED AS OF OCTOBER 20, 1998
69
<PAGE> 75
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
DEFINED TERM NUMBER
- ------------------------------------------------------------------------
<S> <C>
ABSOLUTE SGC CONSTRUCTION OBLIGATIONS..................................1
ACTIVE NEGLIGENCE......................................................1
ADDITIONAL RENT........................................................1
ADMINISTRATIVE AGENCY FEES.............................................1
ADVANCE DATE...........................................................1
AFFILIATE..............................................................2
APPLICABLE LAWS........................................................2
APPLICABLE PURCHASER...................................................2
ATTORNEYS' FEES........................................................2
BALANCE OF UNPAID CONSTRUCTION-PERIOD INDEMNITY PAYMENTS...............2
BANKING RULES CHANGE...................................................2
BASE RENT..............................................................2
BASE RENT COMMENCEMENT DATE............................................2
BASE RENT DATE.........................................................3
BASE RENT PERIOD.......................................................3
BNPLC..................................................................4
BNPLC'S PARENT.........................................................4
BREAKAGE COSTS.........................................................4
BREAK EVEN PRICE.......................................................4
BUSINESS DAY...........................................................4
CAPITAL ADEQUACY CHARGES...............................................5
CARRYING COSTS.........................................................5
CLOSING CERTIFICATE....................................................5
CMA SUSPENSION EVENT...................................................5
CMA SUSPENSION NOTICE..................................................5
CMA SUSPENSION PERIOD..................................................5
CMA TERMINATION EVENT..................................................5
CODE...................................................................5
COMMITMENT FEE.........................................................5
COMPLETION NOTICE......................................................5
CONSTRUCTION ADVANCES..................................................5
CONSTRUCTION ADVANCE REQUEST...........................................5
CONSTRUCTION ALLOWANCE.................................................5
CONSTRUCTION MILESTONE.................................................6
CONSTRUCTION PERIOD....................................................6
CONSTRUCTION-PERIOD INDEMNITY PAYMENTS.................................6
CONSTRUCTION PROJECT...................................................6
DEBT...................................................................6
DEDUCTIBLE JUDGMENT....................................................6
DEFAULT................................................................6
DEFAULT RATE...........................................................6
DEFECTIVE WORK.........................................................7
DESIGNATED SALE DATE...................................................7
DEVELOPMENT DOCUMENTS..................................................7
EFFECTIVE DATE.........................................................8
EFFECTIVE RATE.........................................................8
ENVIRONMENTAL CONSULTANT...............................................8
</TABLE>
-i-
<PAGE> 76
<TABLE>
<CAPTION>
PAGE
DEFINED TERM NUMBER
- ------------------------------------------------------------------------
<S> <C>
ENVIRONMENTAL LAWS.....................................................8
ENVIRONMENTAL LOSSES...................................................8
ENVIRONMENTAL REPORT...................................................9
ERISA..................................................................9
ERISA AFFILIATE........................................................9
ERISA TERMINATION EVENT................................................9
ESCROWED PROCEEDS......................................................9
ESTABLISHED MISCONDUCT................................................10
EUROCURRENCY LIABILITIES..............................................10
EURODOLLAR RATE RESERVE PERCENTAGE....................................10
EVENT OF DEFAULT......................................................10
EXCESS FUNDING COMMITMENT.............................................10
EXCLUDED TAXES........................................................10
EXISTING CONTRACT.....................................................11
FAIR MARKET VALUE.....................................................11
FED FUNDS RATE........................................................11
FOCB NOTICE...........................................................12
FUNDED CONSTRUCTION ALLOWANCE.........................................12
FUNDING ADVANCES......................................................12
FUTURE WORK...........................................................12
GAAP..................................................................12
GUARANTOR.............................................................12
GROUND LEASE..........................................................12
GUARANTY..............................................................12
HAZARDOUS SUBSTANCE...................................................12
HAZARDOUS SUBSTANCE ACTIVITY..........................................13
IMPOSITIONS...........................................................13
IMPROVEMENTS..........................................................13
INDEX DEBT............................................................13
INDUSTRIAL HYGIENIST..................................................13
INITIAL FUNDING ADVANCE...............................................13
INTERESTED PARTY......................................................14
ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT........14
ISSUE 97-10 ELECTION..................................................14
ISSUE 97-10 PREPAYMENT................................................14
LAND..................................................................14
LANDLORD'S ELECTION TO CONTINUE CONSTRUCTION..........................15
LEASE.................................................................15
LIBOR.................................................................15
LIBOR PERIOD ELECTION.................................................15
LIEN..................................................................16
LIENS REMOVABLE BY BNPLC..............................................16
LIST OF DEFINED TERMS.................................................16
LOSS CUTOFF DATE......................................................16
LOSSES................................................................16
MATERIAL ENVIRONMENTAL COMMUNICATION..................................17
MAXIMUM CONSTRUCTION ALLOWANCE........................................17
</TABLE>
-ii-
<PAGE> 77
<TABLE>
<CAPTION>
PAGE
DEFINED TERM NUMBER
- ------------------------------------------------------------------------
<S> <C>
MAXIMUM PERMITTED PREPAYMENT..........................................17
MAXIMUM REMARKETING OBLIGATION........................................17
MINIMUM EXTENDED REMARKETING PRICE....................................17
MOODY'S...............................................................17
NORMAL TENANT IMPROVEMENTS............................................17
NOTICE OF SGC'S INTENT TO TERMINATE...................................17
OPERATIVE DOCUMENTS...................................................17
OUTSTANDING CONSTRUCTION ALLOWANCE....................................17
PARTICIPANT...........................................................18
PARTICIPATION AGREEMENT...............................................18
PERMITTED ENCUMBRANCES................................................18
PERMITTED HAZARDOUS SUBSTANCE USE.....................................18
PERMITTED HAZARDOUS SUBSTANCES........................................18
PERMITTED TRANSFER....................................................19
PERSON................................................................19
PERSONAL PROPERTY.....................................................19
PLAN..................................................................19
POTENTIAL LIEN CLAIMANTS..............................................19
PRIME RATE............................................................19
PRIOR WORK............................................................20
PROJECT COSTS.........................................................20
PROJECTED COST OVERRUNS...............................................20
PROPERTY..............................................................21
PURCHASE AGREEMENT....................................................21
PURCHASE OPTION.......................................................21
QUALIFIED PAYMENTS....................................................21
REAL PROPERTY.........................................................21
REIMBURSABLE CONSTRUCTION-PERIOD COSTS................................21
REMEDIAL WORK.........................................................21
RENT..................................................................22
RESIDUAL RISK PERCENTAGE..............................................22
RESPONSIBLE FINANCIAL OFFICER.........................................22
S&P...................................................................22
SCOPE CHANGE..........................................................22
SELLER................................................................22
SGC...................................................................22
SGC'S EXTENDED REMARKETING PERIOD.....................................22
SGC'S EXTENDED REMARKETING RIGHT......................................22
SGC'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS......................22
SPREAD................................................................22
STIPULATED LOSS VALUE.................................................23
SUBSIDIARY............................................................23
SUPPLEMENTAL PAYMENT..................................................23
TERM..................................................................23
THIRD PARTY CONTRACT..................................................23
THIRD PARTY SALE NOTICE...............................................23
THIRD PARTY SALE PROPOSAL.............................................23
</TABLE>
-iii-
<PAGE> 78
<TABLE>
<CAPTION>
PAGE
DEFINED TERM NUMBER
- ------------------------------------------------------------------------
<S> <C>
THIRD PARTY TARGET PRICE..............................................24
TRANSACTION EXPENSES..................................................24
UNFUNDED BENEFIT LIABILITIES..........................................24
VOLUNTARY SGC CONSTRUCTION CONTRIBUTIONS..............................24
VOLUNTARY RETENTION OF THE PROPERTY...................................24
WORK..................................................................24
</TABLE>
-iv-
<PAGE> 79
LIST OF DEFINED TERMS
As used in the Lease to which this List of Defined Terms is attached and in
the other Operative Documents (as defined below) into which this List of Defined
Terms is incorporated by reference:
"ABSOLUTE SGC CONSTRUCTION OBLIGATIONS" means the following:
(1) Construction-Period Indemnity Payments required because of or in
connection with or arising out of Environmental Losses incurred or suffered
by any Interested Party;
(2) Construction-Period Indemnity Payments required because of or in
connection with or arising out of Losses incurred or suffered by BNPLC,
when such Losses would not have been incurred or suffered but for any act
or any omission of SGC or of any SGC's contractors or subcontractors during
the period that the Construction Management Agreement remains in force or
during any other period that SGC remains in possession or control of the
Construction Project;
(3) Construction-Period Indemnity Payments required because of or in
connection with or arising out of Losses incurred or suffered by BNPLC that
would not have been incurred but for any fraud, misapplication of funds
(including Construction Advances), illegal acts, or willful misconduct on
the part of the SGC or its employees or agents or any other party for whom
SGC is responsible; and
(4) Construction-Period Indemnity Payments required because of or in
connection with or arising out of Losses incurred or suffered by BNPLC that
would not have been incurred but for any bankruptcy proceeding involving
SGC.
For purposes of this definition, "acts and omissions of SGC" shall include (i)
any decision by SGC to make any Scope Change, (ii) any failure of SGC to
maintain insurance required by the Lease or the Construction Management
Agreement, (iii) any decision not to continue or complete Work under the
Construction Management Agreement because of a change in SGC's facility needs or
in SGC's plans to meet its facility needs (such as, for example, a decision by
SGC to lease or acquire another less expensive facility as an alternative to the
Improvements), (iv) any failure of SGC to correct Defective Work performed prior
to a termination of the Construction Management Agreement as provided in
subparagraphs 5(D) or 5(E) thereof, and (v) any other breach by SGC of the
Construction Management Agreement.
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is limited
to, the negligent conduct on the Property (and not mere omissions) by such
Person or by others acting and authorized to act on such Person's behalf in a
manner that proximately causes actual bodily injury or property damage for which
SGC does not carry (and is not obligated by the Lease to carry) insurance.
"ACTIVE NEGLIGENCE" shall not include (1) any negligent failure of BNPLC to act
when the duty to act would not have been imposed but for BNPLC's status as owner
of the Property or as a party to the transactions described in the Lease, (2)
any negligent failure of any other Interested Party to act when the duty to act
would not have been imposed but for such party's contractual or other
relationship to BNPLC or participation or facilitation in any manner, directly
or indirectly, of the transactions described in the Lease, or (3) the exercise
in a lawful manner by BNPLC (or any party lawfully claiming through or under
BNPLC) of any right or remedy provided in or under the Lease or any other
Operative Document.
"ADDITIONAL RENT" shall have the meaning assigned to it in subparagraph
4.(c) of the Lease.
"ADMINISTRATIVE AGENCY FEES" shall have the meaning assigned to it in
subparagraph 4.(e) of the Lease.
"ADVANCE DATE" means, regardless of whether any Construction Advance shall
actually be made thereon,
<PAGE> 80
the first Business Day of every calendar month, beginning with October 20, 1998
and continuing regularly thereafter to and including the Base Rent Commencement
Date.
"AFFILIATE" of any Person means any other Person controlling, controlled by
or under common control with such Person. For purposes of this definition, the
term "control" when used with respect to any Person means the power to direct
the management of policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
Notwithstanding the foregoing, for purposes of the Lease and the Purchase
Agreement, SGC's "Affiliates" will not include any Person domiciled outside the
United States.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to SGC or the Property or the Lease or the other Operative Documents:
restrictive covenants; zoning ordinances and building codes; flood disaster
laws; health, safety and environmental laws and regulations; the Americans with
Disabilities Act and other laws pertaining to disabled persons; and other laws,
statutes, ordinances, rules, permits, regulations, orders, determinations and
court decisions.
"APPLICABLE PURCHASER" means any third party designated by SGC to purchase
BNPLC's interest in the Property and in any Escrowed Proceeds as provided in the
Purchase Agreement.
"ATTORNEYS' FEES" means the reasonable fees and expenses of counsel to the
parties incurring the same, excluding costs or expenses of in-house counsel
(whether or not accounted for as general overhead or administrative expenses),
but otherwise including printing, photostating, duplicating and other expenses,
air freight charges, and fees billed for law clerks, paralegals, librarians and
others not admitted to the bar but performing services under the supervision of
an attorney. Such terms shall also include all such reasonable fees and expenses
incurred with respect to appeals, arbitrations and bankruptcy proceedings, and
whether or not any manner of proceeding is brought with respect to the matter
for which such fees and expenses were incurred.
"BALANCE OF UNPAID CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" shall have the
meaning assigned to it in subparagraph 1(A)(1) of the Purchase Agreement.
"BANKING RULES CHANGE" means either: (1) the introduction of or any change
after the Effective Date (other than any change by way of imposition or increase
of reserve requirements included in the Eurodollar Rate Reserve Percentage) in
any law or regulation applicable to BNPLC, BNPLC's Parent or any other
Participant, or in the generally accepted interpretation by the institutional
lending community of any such law or regulation, or in the interpretation of any
such law or regulation asserted by any regulator, court or other governmental
authority or (2) the compliance by BNPLC, BNPLC's Parent or any other
Participant with any new guideline or new request after the Effective Date from
any central bank or other governmental authority (whether or not having the
force of law).
"BASE RENT" means the rent payable by SGC pursuant to subparagraph 4.(a) of
the Lease.
"BASE RENT COMMENCEMENT DATE" means the earlier of (1) the last day that
constitutes first business day of a calendar month and that is no more than 364
days after the Effective Date, (2) the first Business Day of the first calendar
month to follow by twenty days or more the date upon which any Completion Notice
is given as provided in the Construction Management Agreement or in the Lease,
(3) the first Business Day of the first calendar month to follow by twenty days
or more BNPLC's receipt of a notice from SGC, given before SGC has exercised any
Issue 97-10 Election and setting forth SGC's express, unconditional, unequivocal
and irrevocable
List of Defined Terms -- Page 2
<PAGE> 81
(A) waiver of any right to make any Issue 97-10 Election, and (B) election to
accelerate the Base Rent Commencement Date by delivery such notice,
notwithstanding that after the Base Rent Commencement Date, SGC shall have no
further right to Construction Advances under the Construction Management
Agreement or the Lease, or (4) the first Business Day of the first calendar
month upon which the Funded Construction Allowance shall equal or exceed the
Maximum Construction Allowance. Notwithstanding the forgoing, if for any reason
(including a termination of the Construction Management Agreement) SGC has not
completed the Construction Project thirty days in advance of the scheduled Base
Rent Commencement Date determined pursuant to the first sentence of this
definition, BNPLC shall be entitled (but not obligated) to extend the Base Rent
Commencement Date one or more times and at any time before the Construction
Project actually is complete and ready for occupancy. To so extend the Base Rent
Commencement Date, BNPLC shall notify SGC thereof and of the date to which the
Base Rent Commencement Date is extended, which may be the first Business Day of
any calendar month designated by BNPLC in the notice of extension, provided that
BNPLC will not so designate any date more than sixty days after the date upon
which the Construction Project is expected by BNPLC (at the time of the
designation) to be complete.
"BASE RENT DATE" means a date upon which Base Rent must be paid under the
Lease, all of which dates shall be the first Business Day of a calendar month.
The first Base Rent Date shall be determined as follows:
a) If a LIBOR Period Election of one month is in effect on the
Base Rent Commencement Date, then the first Business Day of the first
calendar month following the Base Rent Commencement Date shall be the
first Base Rent Date.
b) If the LIBOR Period Election in effect on the Base Rent
Commencement Date is three months or six months, then the first
Business Day of the third calendar month following the Base Rent
Commencement Date shall be the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date shall be the first
Business Day of the first or third calendar month following the calendar month
which includes the preceding Base Rent Date, determined as follows:
(1) If a LIBOR Period Election of one month is in effect on a
Base Rent Date, then the first Business Day of the first calendar
month following such Base Rent Date shall be the next following Base
Rent Date.
(2) If a LIBOR Period Election of three months or six months is
in effect on a Base Rent Date, then the first Business Day of the
third calendar month following such Base Rent Date shall be the next
following Base Rent Date.
Thus, for example, if the Base Rent Commencement Date falls on the first
Business Day of June, 1999 and a LIBOR Period Election of six months commences
on the Base Rent Commencement Date, then the first Base Rent Date shall be the
first Business Day of September, 1999, and the second Base Rent Date shall be
the first Business Day of December, 1999.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the Lease, each of which periods shall correspond to the LIBOR Period Election
for such period. The first Base Rent Period shall begin on and include the Base
Rent Commencement Date, and each successive Base Rent Period shall begin on and
include the Base Rent Date upon which the preceding Base Rent Period ends. Each
Base Rent Period, including the first Base Rent Period, shall end on but not
include the first or second Base Rent Date after the Base Rent Date upon which
such period began, determined as follows:
List of Defined Terms -- Page 3
<PAGE> 82
(1) If the LIBOR Period Election for a Base Rent Period is one
month or three months, then such Base Rent Period shall end on the
first Base Rent Date after the Base Rent Date upon which such period
began.
(2) If the LIBOR Period Election for a Base Rent Period is six
months, then such Base Rent Period shall end on the second Base Rent
Date after the Base Rent Date upon which such period began.
The determination of Base Rent Periods can be illustrated by two examples:
1) If SGC makes a LIBOR Period Election of three months for a
hypothetical Base Rent Period beginning on the first Business Day in
January, 2000, then such Base Rent Period will end on but not include
the first Base Rent Date after it begins; that is, such Base Rent
Period will end on the first Business Day in April, 2000, the third
calendar month after January, 2000.
2) If, however, SGC makes a LIBOR Period Election of six months
for the hypothetical Base Rent Period beginning the first Business Day
in January, 2000, then such Base Rent Period will end on but not
include the second Base Rent Date after it begins; that is, the first
Business Day in July, 2000.
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a bank
organized and existing under the laws of France and any successors of such bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent (as a Participant or otherwise) or any other
Participant, for which BNPLC's Parent or the Participant shall request
reimbursement from BNPLC, because of the resulting liquidation or redeployment
of deposits or other funds:
(1) used to make or maintain Funding Advances upon application of a
Qualified Payment or upon any sale of the Property pursuant to the Purchase
Agreement, if such application or sale occurs on any day other than the
last day of a Construction Period or Base Rent Period; or
(2) reserved to provide a Construction Advance that SGC requests, but
thereafter declines to take for any reason, or that SGC requests but is not
permitted to take because of its failure to satisfy any of the conditions
specified in the Construction Management Agreement.
Breakage Costs will include, for example, losses attributable to any decline in
LIBOR as of the effective date of any application described in the clause (1)
preceding, as compared to LIBOR used to determine the Effective Rate then in
effect. Each determination by BNPLC's Parent or the applicable Participant of
Breakage Costs shall, in the absence of clear and demonstrable error, be
conclusive and binding upon SGC.
"BREAK EVEN PRICE" shall have the meaning assigned to it in subparagraph
1(A)(1) of the Purchase Agreement.
"BUSINESS DAY" means any day that is (1) not a Saturday, Sunday or day on
which commercial banks are generally closed or required to be closed in New York
City, New York or San Francisco, California, and (2) a day
List of Defined Terms -- Page 4
<PAGE> 83
on which dealings in deposits of dollars are transacted in the London interbank
market; provided that if such dealings are suspended indefinitely for any
reason, "Business Day" shall mean any day described in clause (1).
"CAPITAL ADEQUACY CHARGES" means any additional amounts BNPLC's Parent or
any other Participant requests BNPLC to pay as compensation for an increase in
required capital as provided in subparagraph 5.(c)(ii) of the Lease.
"CARRYING COSTS" means the charges added to and made a part of the
Outstanding Construction Allowance (and thus also added to and made a part of
the Funded Construction Allowance) from time to time on and before the Base Rent
Commencement Date pursuant to and as more particularly described in subparagraph
6.(a) of the Lease.
"CLOSING CERTIFICATE" means the Closing Certificate and Agreement dated as
of October 20, 1998 executed by SGC in favor of BNPLC, as such Closing
Certificate may be extended, supplemented, amended, restated or otherwise
modified from time to time in accordance with its terms.
"CMA SUSPENSION EVENT" shall have the meaning assigned to it in
subparagraph 5(A) of the Construction Management Agreement.
"CMA SUSPENSION NOTICE" shall have the meaning assigned to it in
subparagraph 5(B)(1) of the Construction Management Agreement.
"CMA SUSPENSION PERIOD" shall have the meaning assigned to it in
subparagraph 5(C) of the Construction Management Agreement.
"CMA TERMINATION EVENT" shall have the meaning assigned to it in
subparagraph 5(B) of the Construction Management Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT FEE" shall have the meaning assigned to it in subparagraph
4.(d) of the Lease.
"COMPLETION NOTICE" means (1) a notice required by subparagraph 1(B) of the
Construction Management Agreement from SGC to BNPLC, advising BNPLC when
construction of the Construction Project is substantially complete, or (2) a
notice permitted by subparagraph 6.(f) of the Lease from BNPLC to SGC, advising
SGC after any Landlord's Election to Complete Construction when construction of
the Construction Project is substantially complete or that BNPLC no longer
intends to continue such construction.
"CONSTRUCTION ADVANCES" means (1) actual advances of funds made by or on
behalf of BNPLC to or on behalf of SGC pursuant to Paragraph 2 of the
Construction Management Agreement, and (2) amounts considered as Construction
Advances pursuant to subparagraph 6.(d) of the Lease.
"CONSTRUCTION ADVANCE REQUEST" shall have the meaning assigned to it in
subparagraph 2(C)(1) of the Construction Management Agreement.
"CONSTRUCTION ALLOWANCE" means the allowance, consisting of Construction
Advances and Carrying Costs, which is to be provided for the Construction
Project as more particularly described in the Construction Management
List of Defined Terms -- Page 5
<PAGE> 84
Agreement and Paragraph 6 of the Lease.
"CONSTRUCTION MILESTONE" shall have the meaning assigned to it in
subparagraph 5(B)(2) of the Construction Management Agreement.
"CONSTRUCTION PERIOD" means each successive period of approximately one
month, with the first Construction Period beginning on and including the
Effective Date and ending on but not including the first Advance Date. Each
successive Construction Period after the first Construction Period shall begin
on and include the day on which the preceding Construction Period ends and shall
end on but not include the next following Advance Date, until the last
Construction Period, which shall end on but not include the earlier of the Base
Rent Commencement Date or any Designated Sale Date upon which SGC or any
Applicable Purchaser shall purchase BNPLC's interest in the Property pursuant to
the Purchase Agreement.
"CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" shall have the meaning assigned to
it in subparagraph 5.(e)(ii) of the Lease.
"CONSTRUCTION PROJECT" means the new buildings or other substantial
Improvements to be constructed, or the alteration of existing Improvements, as
described generally in Exhibit B attached to the Construction Management
Agreement.
"DEBT" of any Person means: (i) indebtedness of such Person for borrowed
money; (ii) obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments; (iii) obligations of such Person to pay the deferred
purchase price of property or services; (iv) obligations of such Person as
lessee under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases; (v) obligations of such Person, contingent or
otherwise, under any lease of real property or related documents (including a
separate purchase agreement) which provide that such Person must purchase or
cause another to purchase any interest in the leased property and thereby
guarantee a minimum residual value of the leased property to the lessor; (vi)
obligations under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a another Person against loss in respect of, indebtedness or obligations
of others of the kinds referred to in the preceding clauses (i) through (v);
(vii) liabilities of another Person secured by a Lien on, or payable out of the
proceeds of production from, property of such Person even though such obligation
shall not be assumed by such Person (but in the case of such liabilities not
assumed by such Person, the liabilities shall constitute Debt of such Person
only to the extent of the value of such Person's property encumbered by the Lien
securing such liabilities); and (viii) Unfunded Benefit Liabilities.
"DEDUCTIBLE JUDGMENT" means a final, liquidated judgment against BNPLC, the
execution of which has not been and will not be stayed pending appeal by BNPLC,
secured by a judgment lien filed against the Property which constitutes a Lien
Removable by BNPLC.
"DEFAULT" means any event which, with the passage of time or the giving of
notice or both, would (if not cured within any applicable cure period)
constitute an Event of Default.
"DEFAULT RATE" means, for any period prior to the Designated Sale Date, a
floating per annum rate equal to two percent (2%) above the Prime Rate, and for
any period commencing on or after the Designated Sale Date, Default Rate shall
mean a floating per annum rate equal to five percent (5%) above the Prime Rate.
However, in no event will the "Default Rate" at any time exceed the maximum
interest rate permitted by law.
List of Defined Terms -- Page 6
<PAGE> 85
"DEFECTIVE WORK" shall have the meaning assigned to it in subparagraph
1(A)(2)(e) of the Construction Management Agreement.
"DESIGNATED SALE DATE" means the earlier of:
(1) the first Business Day of October, 2003; or
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by SGC to BNPLC before SGC has made an Issue
97-10 Election; provided, that if the Business Day so designated by SGC is
earlier than sixty days after the date of such notice, then the notice will
be of no effect for purposes of this definition; and provided, further, to
be effective for purposes of this definition, the notice must include an
express, unconditional, unequivocal and irrevocable (A) waiver by SGC of
any remaining right SGC may have under any of the Operative Documents to
make any Issue 97-10 Election, and (B) acknowledgment by SGC that because
of SGC's election to accelerate the Designated Sale Date, the Maximum
Remarketing Obligation will equal the Break Even Price under the Purchase
Agreement; or
(3) any Business Day designated as such in an irrevocable,
unconditional notice given by SGC to BNPLC after SGC has made an Issue
97-10 Election (a notice which SGC might give, for example, to force the
commencement of SGC's Extended Remarketing Period); provided, that if the
Business Day so designated by SGC is earlier than sixty days after the date
of such notice or is earlier than the Base Rent Commencement Date, then the
notice will be of no effect for purposes of this Definition; and provided,
further, to be effective for purposes of this definition, the notice must
include an express, unconditional, unequivocal and irrevocable
acknowledgment by SGC that (A) because SGC has previously made an Issue
97-10 Election, BNPLC has the right to collect Issue 97-10 Prepayments
under the Operative Documents and such right will continue unaffected by
the notice, and (B) because of SGC's election to accelerate the Designated
Sale Date, the Maximum Remarketing Obligation will equal the Break Even
Price under the Purchase Agreement; or
(4) any Business Day designated as such in a notice given by BNPLC to
SGC after the effective date of any termination of the Construction
Management Agreement as provided in subparagraphs 5(D) or 5(E) thereof;
provided, that if the Business Day so designated by BNPLC is earlier than
thirty days after the date of such notice, then the notice will be of no
effect for purposes of this definition; or
(5) any Business Day designated as such in a notice given by BNPLC to
SGC after BNPLC's receipt of a notice from SGC setting forth SGC's election
to terminate the Purchase Option and SGC's Initial Remarketing Rights and
Obligations as provided in subparagraph 4(B) thereof; provided, that if the
Business Day so designated by BNPLC is earlier than thirty days after the
date of such notice, then the notice will be of no effect for purposes of
this definition; or
(6) any Business Day designated as such in a notice given by BNPLC to
SGC when any Event of Default has occurred and is continuing; provided,
that if the Business Day so designated by BNPLC is earlier than thirty days
after the date of such notice, then the notice will be of no effect for
purposes of this definition.
"DEVELOPMENT DOCUMENTS" means the contracts, ordinances and other documents
described in Schedule 1 attached to the Lease, if any, as the same may be
modified from time to time in accordance with the Lease and the
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Closing Certificate (including modifications authorized pursuant to
subparagraphs 7.(a) and 7.(b) of the Lease), and any applications, permits or
certificates concerning or affecting the use or development of the Property that
may be submitted, issued or executed from time to time as contemplated in such
contracts, ordinances and other documents or that BNPLC may hereafter execute,
approve or consent to at the request of SGC.
"EFFECTIVE DATE" means October 20, 1998.
"EFFECTIVE RATE" means for each Construction Period and for each Base Rent
Period, the per annum rate determined by dividing (A) LIBOR for such
Construction Period or Base Rent Period, as the case may be, by (B) one hundred
percent (100%) minus the Eurodollar Rate Reserve Percentage for such
Construction Period or Base Rent Period. If LIBOR or the Eurodollar Rate Reserve
Percentage changes from Construction Period to Construction Period or from Base
Rent Period to Base Rent Period, then the Effective Rate shall be automatically
increased or decreased as of the date of such change, as the case may be,
without prior notice to SGC. If for any reason BNPLC determines that it is
impossible or unreasonably difficult to determine the Effective Rate with
respect to a given Construction Period or Base Rent Period in accordance with
the foregoing, then the "EFFECTIVE RATE" for that Construction Period or Base
Rent Period shall equal any published index or per annum interest rate
determined in good faith by BNPLC's Parent to be comparable to LIBOR at the
beginning of the first day of that period. A comparable interest rate might be,
for example, the then existing yield on short term United States Treasury
obligations (as compiled by and published in the then most recently published
United States Federal Reserve Statistical Release H.15(519) or its successor
publication), plus or minus a fixed adjustment based on BNPLC's Parent's
comparison of past eurodollar market rates to past yields on such Treasury
obligations. Any determination by BNPLC of the Effective Rate under this
definition shall, in the absence of clear and demonstrable error, be conclusive
and binding upon SGC.
"ENVIRONMENTAL CONSULTANT" means a qualified individual employed by a
qualified firm. Individuals shall be deemed qualified if they (i) possess at
least five years of experience in performing environmental, engineering and
consulting services; (ii) have performed or supervised at least five projects
involving remediation of soil contaminated with hazardous substances, including
at least one project similar to the Remedial Work; (iii) have all licenses
required under applicable law for the Remedial Work; and (iv) have at least a
bachelor's degree in the physical sciences or a related field from an accredited
college or university. A firm shall be deemed qualified if it is: (i) a
nationally recognized, reputable environmental and/or engineering firm in the
business of providing professional environmental engineering and consulting
services; (ii) has experience and expertise in projects involving the Remedial
Work; (iii) maintains policies of insurance which are approved by BNPLC in its
reasonable discretion.
"ENVIRONMENTAL LAWS" means any and all existing and future Applicable Laws
pertaining to safety, health or the environment, or to Hazardous Substances or
Hazardous Substance Activities, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, "CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, "RCRA").
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by any Interested
Party relating to or arising out of, based on or as a result of: (i) any
Hazardous Substance Activity that occurs or is alleged to have occurred on or
prior to the Loss Cutoff Date; (ii) any violation on or prior to the Loss Cutoff
Date of Environmental Laws relating to the Property or to the ownership, use,
occupancy or operation thereof; (iii) any investigation, inquiry, order,
hearing, action, or other proceeding by or before any governmental or
quasi-governmental agency or
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authority in connection with any Hazardous Substance Activity that occurs or is
alleged to have occurred in whole or in part on or prior to the Loss Cutoff
Date; or (iv) any claim, demand, cause of action or investigation, or any action
or other proceeding, whether meritorious or not, brought or asserted against any
Interested Party which relates to, arises from, is based on, or results from any
of the matters described in clauses (i), (ii) or (iii) of this definition, or
any allegation of any such matters. For purposes of determining whether Losses
constitute "Environmental Losses," any actual or alleged Hazardous Substance
Activity or violation of Environmental Laws relating to the Property will be
presumed to have occurred prior to the Loss Cutoff Date unless SGC establishes
by clear and convincing evidence to the contrary that the relevant Hazardous
Substance Activity or violation of Environmental Laws did not occur or commence
prior to the Loss Cutoff Date. Even if after the Loss Cutoff Date Losses are
incurred by or asserted against a particular Interested Party that would not
have been incurred or asserted, but for any matter described in clauses (i),
(ii) or (iii) of this definition, or an allegation of any such matter, then such
Losses will constitute Environmental Losses.
"ENVIRONMENTAL REPORT" means collectively the Phase II Sampling Report and
other written reports of SGC's independent environmental consultant (Parsons
Engineering Science, Inc.) that SGC provided to BNPLC or to BNPLC's
environmental consultant (Elizabeth Ward of Washington Advisors) prior to the
execution of the Lease, which reports may be more specifically identified and
listed in a separate letter executed by SGC and BNPLC and dated as of the
Effective Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA is
a member of SGC's controlled group, or under common control with SGC, within the
meaning of Section 414 of the Internal Revenue Code, and the regulations
promulgated and rulings issued thereunder.
"ERISA TERMINATION EVENT" means (i) the occurrence with respect to any Plan
of a reportable event described in Section 4043(c) of ERISA for which any
penalty or notice thereof has not been waived pursuant to regulations, rulings,
or notices issued by the Pension Benefit Guaranty Corporation pursuant to a
waiver by such corporation under Section 4043(a) of ERISA, or (ii) the filing of
a notice of intent to terminate any Plan or the treatment of any Plan amendment
as a termination under Section 4041 of ERISA (other than in connection with a
standard termination of a fully funded Plan pursuant to Section 4041 of ERISA),
or (iii) the institution of proceedings to terminate any Plan by the Pension
Benefit Guaranty Corporation under Section 4042 of ERISA, or (iv) any other
event or condition which would constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"ESCROWED PROCEEDS" means, subject to the exclusions specified in the next
sentence, any money that is received by BNPLC from time to time during the Term
(and any interest earned thereon) from any party (1) under any property
insurance policy as a result of damage to the Property, (2) as compensation for
any restriction imposed by any governmental authority upon the use or
development of the Property or for the condemnation of the Property or any
portion thereof, (3) because of any judgment, decree or award for injury or
damage to the Property or (4) under any title insurance policy or otherwise as a
result of any title defect or claimed title defect with respect to the Property;
provided, however, in determining the amount of "Escrowed Proceeds" there shall
be deducted all expenses and costs of every type, kind and nature (including
Attorneys' Fees) incurred by BNPLC to collect such proceeds. Notwithstanding the
foregoing, "Escrowed Proceeds" will not include (A) any payment to BNPLC by a
Participant or an Affiliate of BNPLC that is made to compensate BNPLC for the
Participant's or Affiliate's share of any Losses BNPLC may incur as a result of
any of the events described in the preceding clauses (1)
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through (4), (B) any money or proceeds that have been applied as a Qualified
Payment or to pay any Breakage Costs or other costs incurred in connection with
a Qualified Payment, (C) any money or proceeds that, after no less than ten days
notice to SGC, BNPLC returns or pays to a third party because of BNPLC's good
faith belief that such return or payment is required by law, (D) any money or
proceeds paid by BNPLC to SGC or offset against any amount owed by SGC, or (E)
any money or proceeds used by BNPLC in accordance with the Lease for repairs or
the restoration of the Property or to obtain development rights or the release
of restrictions that will inure to the benefit of future owners or occupants of
the Property. Until Escrowed Proceeds are paid to SGC pursuant to Paragraph 11
of the Lease, transferred to a purchaser under the Purchase Agreement as therein
provided or applied as a Qualified Payment or as otherwise described in the
preceding sentence, BNPLC shall keep the same deposited in an interest bearing
account, and all interest earned on such account shall be added to and made a
part of Escrowed Proceeds.
"ESTABLISHED MISCONDUCT" of a Person means, and is limited to: (1) if the
Person is bound by the Lease or the Purchase Agreement, a breach by such Person
of the express provisions of the Lease or the Purchase Agreement that continues
beyond any period for cure provided therein, and (2) conduct of such Person or
its Affiliates that has been determined to constitute wilful misconduct or
Active Negligence in or as a necessary element of a final judgment rendered
against such Person by a court with jurisdiction to make such determination.
Established Misconduct of one Interested Party shall not be attributed to a
second Interested Party unless the second Interested Party is an Affiliate of
the first. Negligence which does not constitute Active Negligence shall not in
any event constitute Established Misconduct. For purposes of this definition,
"conduct of a Person" will include (1) the conduct of an employee of that
Person, but only to the extent that the employee is acting within the scope of
his employment by that Person, as determined in or as a necessary element of a
final judgment rendered against such Person by a court with jurisdiction to make
such determination, and (2) the conduct of an agent of that Person (such as an
independent environmental consultant engaged by that Person), but only to the
extent that the agent is, as determined in or as a necessary element of a final
judgment rendered against such Person by a court with jurisdiction to make such
determination, (x) acting within the scope of the authority granted to him by
such Person, (y) not acting with the consent or approval of or under the
direction of SGC or SGC's Affiliates, employees or agents, and (z) not acting in
good faith to mitigate Losses that such Person may suffer because of a breach or
repudiation by SGC of the Closing Certificate or Lease or the Purchase
Agreement.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining the
Effective Rate for any Construction Period or Base Rent Period, the reserve
percentage applicable two Business Days before the first day of such period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for BNPLC's Parent with respect to liabilities or deposits
consisting of or including Eurocurrency Liabilities (or with respect to any
other category or liabilities by reference to which LIBOR is determined) having
a term comparable to such period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in subparagraph
17.(a) of the Lease.
"EXCESS FUNDING COMMITMENT" shall have the meaning assigned to it in
subparagraph 2(C)(2)(b) of the Construction Management Agreement.
"EXCLUDED TAXES" means (1) all federal, state and local income taxes upon
Base Rent, Commitment Fees,
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Administrative Agency Fees, any interest paid to BNPLC or any Participant
pursuant to subparagraph 4.(h) of the Lease and any additional compensation
claimed by BNPLC pursuant to subparagraph 5.(c)(ii) of the Lease; (2) all
federal, state and local income taxes upon any amounts paid as reimbursement for
or to satisfy Losses incurred by BNPLC or any Participant to the extent such
taxes are offset by a corresponding reduction of BNPLC's or the applicable
Participant's income taxes because of BNPLC's or such Participant's deduction of
the reimbursed Losses from its taxable income or because of any tax credits
attributable thereto; (3) taxes imposed by any governmental authority outside
the United States of America; and (4) any transfer or change of ownership taxes
assessed because of BNPLC's transfer or conveyance to any third party of BNPLC's
rights or interests in the Lease or the Purchase Agreement or the Property, but
excluding any such taxes assessed because of any transfer described in clauses
(4) or (6) of the definition of Permitted Transfer below. For purposes of this
definition, income taxes shall include any state or local taxes on the net
income of BNPLC or a Participant, as the case may be, whether or not designated
as an "income tax" or "franchise tax" and regardless of any future increase in
tax rates used to compute such taxes. If, however, a change in Applicable Laws
after the Effective Date results in an increase in such taxes for any reason
other than an increase in the applicable tax rates (e.g., a disallowance of
deductions that would otherwise be available against payments described in
clause (1) of this definition), then for purposes of computing the taxes that
constitute "Excluded Taxes," the change in law will not be considered.
"EXISTING CONTRACT" means the Amended Purchase and Sale Agreement dated as
of October 9, 1998, originally between OKI America, Inc. as Seller and SGC as
Purchaser, covering the Land described in Exhibit A of the Lease.
"FAIR MARKET VALUE" means the fair market value of the Property on or about
the Designated Sale Date (calculated under the assumptions, whether or not then
accurate, that SGC has fulfilled and can be expected to continue to fulfill its
obligations under the Lease and other Operative Documents; that SGC has
maintained the Property in compliance with all Applicable Laws [including
Environmental Laws]; that any construction commenced on the Land but not
completed prior to the Designated Sale Date shall not reduce the value of the
Property; that all Improvements are self-sufficient in the sense that any
easements or offsite facilities needed under the Development Documents or
otherwise for the use of the Improvements will be available at no additional
cost to the owner of the Improvements; that SGC has repaired and restored the
Property after any damage following fire or other casualty; that SGC has
restored the remainder of the Property after any partial taking by eminent
domain; that SGC has completed any contests of and paid any taxes due [other
than Excluded Taxes] or other amounts secured by or allegedly secured by a lien
against the Property, including any assessment liens, but not including Liens
Removable by BNPLC; that no conditions or circumstances on or about the Property
[such as the presence of an endangered species] is discovered that will impede
development of the Property; that development of the Property will not be
hindered or delayed because of the limited availability of utilities or water;
that any purchaser paying fair market value for the Property will receive copies
of all of SGC's books and records which are necessary or useful to a future
owner's or occupant's use of the Property in the manner permitted by the Lease,
including books and records evidencing the testing and validation of the
Property for the uses permitted by the Lease; that without undue cost or delay
any such purchaser can obtain any necessary permits or licenses needed to use
the Property for the purposes permitted by the Lease; and that SGC has cured any
title defects affecting the Property other than Liens Removable by BNPLC, all in
accordance with the standards and requirements of the Lease [as though the Lease
were continuing in force], and the Closing Certificate) as determined by an
independent MAI Certified General Real Estate Appraiser reasonably satisfactory
to BNPLC who has five years or more experience appraising similar properties in
and around Gwinnett County, Georgia.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted
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average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rates are not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by BNPLC's Parent from three Federal funds brokers
of recognized standing selected by BNPLC's Parent. All determinations of the Fed
Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon SGC.
"FOCB NOTICE" shall have the meaning assigned to it in subparagraph 5(E) of
the Construction Management Agreement.
"FUNDED CONSTRUCTION ALLOWANCE" means on any day the Outstanding
Construction Allowance on that day, including all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
that day, plus the amount of any Qualified Payments deducted on or prior to that
day in the calculation of such Outstanding Construction Allowance, less any
Voluntary SGC Construction Contributions added on or prior to that day in the
calculation of such Qualified Payments.
"FUNDING ADVANCES" means (1) the Initial Funding Advance and (2) all future
advances made by BNPLC's Parent or any other Participant to or on behalf of
BNPLC to allow BNPLC to provide the Construction Allowance under the Lease.
"FUTURE WORK" shall have the meaning assigned to it in subparagraph
2(C)(2)(b) of the Construction Management Agreement.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a basis consistent with
those used in the preparation of the financial statements referred to in
subparagraph 16.(b) of the Lease (except for changes concurred in by SGC's
independent public accountants).
"GUARANTOR" means Solectron Corporation, a Delaware corporation.
"GROUND LEASE" means the Ground Lease dated on or about the Effective Date
between BNPLC and Seller, whereby pursuant to the Existing Contract BNPLC leased
back a portion of the Land upon which Improvements existing at the time of
BNPLC's acquisition of the Land.
"GUARANTY" means the Guaranty dated as of October 20, 1998 given by
Guarantor to BNPLC, guaranteeing the obligations of SGC under the Lease,
Purchase Agreement and Closing Certificate, as such Guaranty may be extended,
supplemented, amended, restated or otherwise modified from time to time in
accordance with its terms.
"HAZARDOUS SUBSTANCE" means (i) any chemical, compound, material, mixture
or substance that is now or hereafter defined or listed in, regulated under, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance," "hazardous material," "hazardous waste," "extremely hazardous waste
or substance," "infectious waste," "toxic substance," "toxic pollutant," or any
other formulation intended to define, list or classify substances by reason of
deleterious properties, including ignitability, corrosiveness, reactivity,
carcinogenicity, toxicity or reproductive toxicity; (ii) petroleum, any fraction
of petroleum, natural gas, natural gas liquids, liquified natural gas, synthetic
gas usable for fuel (or mixtures of natural gas and such synthetic gas), and ash
produced by a resource recovery facility utilizing a municipal solid waste
stream, and drilling fluids, produced waters and other
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wastes associated with the exploration, development or production of crude oil,
natural gas or geothermal resources; (iii) asbestos and any asbestos containing
material; and (iv) any other material that, because of its quantity,
concentration or physical or chemical characteristics, poses a significant
present or potential hazard to human health or safety or to the environment if
released into the workplace or the environment.
"HAZARDOUS SUBSTANCE ACTIVITY" means any actual, proposed or threatened
use, storage, holding, release (including any spilling, leaking, leaching,
pumping, pouring, emitting, emptying, dumping, disposing into the environment,
and the continuing migration into or through soil, surface water, groundwater or
any body of water), discharge, deposit, placement, generation, processing,
construction, treatment, abatement, removal, disposal, disposition, handling or
transportation of any Hazardous Substance from, under, in, into or on the
Property, including the movement or migration of any Hazardous Substance from
surrounding property, surface water, groundwater or any body of water under, in,
into or onto the Property and any resulting residual Hazardous Substance
contamination in, on or under the Property. "HAZARDOUS SUBSTANCE ACTIVITY" also
means any existence of Hazardous Substances on the Property that would cause the
Property or the owner or operator thereof to be in violation of, or that would
subject the Property to any remedial obligations under, any Environmental Laws,
including CERCLA and RCRA, assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances pertaining to
the Property. "HAZARDOUS SUBSTANCE ACTIVITY" does not, however, include events
or circumstances that do not affect the Property on or about other properties
owned or operated by SGC.
"IMPOSITIONS" means all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes, levies, fees,
charges, surcharges, assessments or penalties which arise out of or are
attributable to the Lease or which are imposed upon BNPLC or the Property
because of the ownership, leasing, occupancy, sale or operation of the Property,
or any part thereof or interest therein, or relating to or required to be paid
by any of the Permitted Encumbrances or the Development Documents, excluding
only Excluded Taxes. "IMPOSITIONS" shall include real estate taxes imposed
because of a change of use or ownership of the Property on or prior to the date
of any sale by BNPLC pursuant to the Purchase Agreement.
"IMPROVEMENTS" means any and all (1) buildings and other real property
improvements now or hereafter erected on the Land, and (2) equipment (e.g., HVAC
systems, elevators and plumbing fixtures) attached to the buildings or other
real property improvements, the removal of which would cause structural or other
material damage to the buildings or other real property improvements or would
materially and adversely affect the value or use of the buildings or other real
property improvements.
"INDEX DEBT" means senior, unsecured, long-term indebtedness for borrowed
money of Guarantor that is not guaranteed by any other Person or subject to any
other credit enhancement.
"INDUSTRIAL HYGIENIST" means an industrial hygienist certified by the
American Board of Industrial Hygiene who is experienced with required and
appropriate health and safety standards and good industrial hygiene practice
related to operations at hazardous waste sites.
"INITIAL FUNDING ADVANCE" means, collectively, the advances of made by
BNPLC's Parent (directly or through one or more of its Affiliates) to or on
behalf of BNPLC on or prior to the effective date of the Lease to cover the cost
of BNPLC's acquisition of the Property and certain Transaction Expenses and
other amounts described in this definition. The amount of the Initial Funding
Advance may be confirmed by a separate closing certificate executed by SGC as of
the Effective Date. To the extent that BNPLC does not itself use the entire
Initial Funding Advance to pay Transaction Expenses incurred by BNPLC or for
other purposes described in the
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preceding sentence, the remainder thereof is being advanced to SGC, with the
understanding that SGC will use any such amount advanced for one or more of the
following purposes: (1) the payment or reimbursement of Transaction Expenses
incurred by SGC; (2) the payment or reimbursement of expenses incurred by SGC in
connection with the Construction Project, including the planning, design,
engineering, construction and permitting of thereof; (3) the maintenance of the
Property; or (4) the payment of Rents next due.
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) any other Participants and their permitted
successors and assigns under the Participation Agreement; provided, however,
none of the following shall constitute an Interested Party: (a) any Person to
whom BNPLC may transfer an interest in the Property by a conveyance that is not
a Permitted Transfer and others that cannot lawfully claim an interest in the
Property except through or under such a transfer by BNPLC, (b) SGC or any Person
that cannot lawfully claim an interest in the Property except through or under a
conveyance from SGC, or (c) any Applicable Purchaser under the Purchase
Agreement and any Person that cannot lawfully claim an interest in the Property
except through or under a conveyance from such Applicable Purchaser.
"ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT" means an
Event of Default that is unrelated to the Property or the use or maintenance
thereof and that results solely from (A) a breach by SGC or Guarantor of a
provision in any Operative Document or the Guaranty, the occurrence of which
breach cannot be objectively determined, or (B) any other event described in
clauses (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiv) or (xvi) of
subparagraph 17(a) of the Lease, the occurrence of which event cannot be
objectively determined. For example, an Event of Default under subparagraph
17.(a)(vii) of the Lease resulting solely from a failure of SGC to "generally"
pay its debts as such debts become due (in contrast to a failure of SGC to pay
Rent to BNPLC as it becomes due under the Lease) would constitute an Issue 97-1
Non-performance-related Subjective Event of Default. In no event, however, will
the term "Issue 97-1 Non-performance-related Subjective Event of Default"
include an Event of Default resulting from (1) a failure of SGC to make any
payment required to BNPLC under the Operative Documents, (2) a breach by
Guarantor of any of sections 3.09, 3.10 or 3.11 of PART 3 of Schedule A attached
to the Guaranty (which set forth financial ratio covenants), (3) any failure of
SGC to use, maintain and insure the Property in accordance with the requirements
of the Lease, or (4) any failure of SGC to pay the full amount of any
Supplemental Payment on the Designated Sale Date as required by the Purchase
Agreement. Except as provided in subparagraph 1(A)(2)(c)(i) of the Purchase
Agreement, the characterization of any Event of Default as an Issue 97-1
Non-performance-related Subjective Event of Default will not affect the rights
or remedies available to BNPLC because of the Event of Default.
"ISSUE 97-10 ELECTION" means any of the following elections by SGC: (1) an
election to terminate the Construction Management Agreement as provided in
subparagraph 5(D) thereof; and (2) an election to terminate SGC's Initial
Remarketing Rights and Obligations as provided in subparagraph 4(B) of the
Purchase Agreement.
"ISSUE 97-10 PREPAYMENT" means a payment to BNPLC, required by subparagraph
4.(f) of the Lease or by subparagraphs 4(B) or 4(C) of the Purchase Agreement,
equal in each case to (A) the Maximum Permitted Prepayment, computed as of the
date on which the payment becomes due, less (B) the accreted value of any prior
payments actually received by BNPLC from SGC constituting Issue 97-10
Prepayments or Voluntary SGC Construction Contributions. For purposes of the
preceding sentence, "accreted value" of a payment shall mean the amount of the
payment plus an amount equal to the interest that would have accrued on the
payment if it bore interest at the Effective Rate.
"LAND" means the land as described in Exhibit A attached to the Lease,
Closing Certificate and Purchase
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Agreement. However, upon any amendment to the Lease which modifies the land
covered thereby, the land covered by the Closing Certificate and Purchase
Agreement shall automatically be so modified.
"LANDLORD'S ELECTION TO CONTINUE CONSTRUCTION" shall have the meaning
assigned to it in subparagraph 6.(d) of the Lease.
"LEASE" means the Lease Agreement dated as of October 20, 1998 between
BNPLC, as landlord, and SGC, as tenant, pursuant to which SGC has agreed to
lease BNPLC's interest in the Property, as such Lease Agreement may be extended,
supplemented, amended, restated or otherwise modified from time to time in
accordance with its terms.
"LIBOR" means, for purposes of determining the Effective Rate for each
Construction Period or Base Rent Period, the rate determined by BNPLC's Parent
to be the average rate of interest per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) of the rates at which deposits of dollars are offered or
available to BNPLC's Parent in the London interbank market at approximately
11:00 a.m. (London time) on the second Business Day preceding the first day of
such period. BNPLC shall instruct BNPLC's Parent to consider deposits, for
purposes of making the determination described in the preceding sentence, that
are offered: (i) for delivery on the first day of such Construction Period or
Base Rent Period, as the case may be, (ii) in an amount equal or comparable to
the total (projected on the applicable date of determination by BNPLC's Parent)
Stipulated Loss Value on the first day of such period, and (iii) for a time
equal or comparable to the length of such period. If BNPLC's Parent so chooses,
it may determine LIBOR for any period by reference to the rate reported by the
British Banker's Association on Page 3750 of the Telerate Service at
approximately 11:00 a.m. (London time) on the second Business Day preceding the
first day of such period. If for any reason BNPLC's Parent determines that it is
impossible or unreasonably difficult to determine LIBOR with respect to a given
Construction Period or Base Rent Period in accordance with the foregoing, or if
BNPLC's Parent shall determine that it is unlawful (or any central bank or
governmental authority shall assert that it is unlawful) for BNPLC, BNPLC's
Parent or any Participant to provide or maintain Funding Advances during any
Construction Period or Base Rent Period for which Carrying Costs or Base Rent is
computed by reference to LIBOR, then "LIBOR" for that period shall equal the
rate which is fifty basis points (50/100 of 1%) above the Fed Funds Rate for
that period. All determinations of LIBOR by BNPLC's Parent shall, in the absence
of clear and demonstrable error, be binding and conclusive upon SGC.
"LIBOR PERIOD ELECTION" for the first Base Rent Period means one month and
for any subsequent Base Rent Period means a period of one month, three months or
six months as designated by SGC at least ten Business Days prior to the
commencement of such Base Rent Period by a notice given to BNPLC in the form of
Exhibit H attached to the Lease. (For purposes of the Lease a LIBOR Period
Election for any Base Rent Period shall also be considered the LIBOR Period
Election in effect on (1) the Base Rent Commencement Date or Base Rent Date upon
which such Base Rent Period begins and (2) subsequent Base Rent Dates, if any,
which occur before the date upon which such Base Rent Period ends.) Any LIBOR
Period Election so designated by SGC shall remain in effect for the entire Base
Rent Period specified in SGC's notice to BNPLC (provided such Base Rent Period
commences at least ten Business Days after BNPLC's receipt of the notice) and
for all subsequent Base Rent Periods until a new designation becomes effective
in accordance with the provisions set forth in this definition. Notwithstanding
the foregoing, however: (1) SGC shall not be entitled to designate a LIBOR
Period Election that would cause a Base Rent Period to extend beyond the end of
the scheduled Term; (2) changes in the LIBOR Period Election shall become
effective only upon the commencement of a new Base Rent Period; and (3) if SGC
fails to make a LIBOR Period Election consistent with the foregoing requirements
for any Base Rent Period, or if an Event of Default shall have occurred and be
continuing on the third Business Day preceding the commencement of any Base Rent
Period, the LIBOR Period Election for such Base Rent Period shall be deemed to
be one month.
List of Defined Terms -- Page 15
<PAGE> 94
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction). Customary bankers' rights of set-off arising by operation of
law or by contract (however styled, if the contract grants rights no greater
than those arising by operation of law) in connection with working capital
facilities, lines of credit, term loans and letter of credit facilities and
other contractual arrangements entered into with banks in the ordinary course of
business are not "Liens" for the purposes of the Lease.
"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering the
Property that are asserted (1) other than as contemplated by the Lease or the
Purchase Agreement, by BNPLC itself, (2) by third parties lawfully claiming
through or under BNPLC (which for purposes of the Lease shall include any
judgment liens established against the Property because of a judgment rendered
against BNPLC and shall also include any liens established against the Property
to secure past due Excluded Taxes), or (3) by third parties lawfully claiming
under a deed or other instrument duly executed by BNPLC; provided, however,
Liens Removable by BNPLC shall not include (A) any Permitted Encumbrances or
Development Documents (regardless of whether claimed through or under BNPLC),
(B) any of the Operative Documents or any other document executed by BNPLC with
the knowledge of (and without objection by) SGC's counsel contemporaneously with
the execution and delivery of the Operative Documents, (C) Liens which are
neither lawfully claimed through or under BNPLC (as described above) nor claimed
under a deed or other instrument duly executed by BNPLC, (D) Liens claimed by
SGC or claimed through or under a conveyance made by SGC, (E) Liens arising
because of BNPLC's compliance with Applicable Law, the Lease, Permitted
Encumbrances, the Development Documents or any written request made by SGC, (F)
Liens securing the payment of property taxes or other amounts assessed against
the Property by any governmental authority, other than to secure the payment of
past due Excluded Taxes or to secure damages caused by (and attributed by any
applicable principles of comparative fault to) BNPLC's own Established
Misconduct or the Established Misconduct of BNPLC's Parent or BNPLC's other
Affiliates, (G) Liens resulting from or arising in connection with any breach by
SGC of the Closing Certificate, the Lease or the Purchase Agreement; or (H)
Liens resulting from or arising in connection with any Permitted Transfer that
occurs after any Designated Sale Date upon which, for any reason, SGC or an
Affiliate of SGC or any Applicable Purchaser shall not purchase BNPLC's interest
in the Property pursuant to the Purchase Agreement for a net price to BNPLC
(when taken together with any additional payments made by SGC pursuant to
Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value.
"LIST OF DEFINED TERMS" means this List of Defined Terms, which is attached
to the Lease and incorporated by reference into the other Operative Documents.
"LOSS CUTOFF DATE" means the later of the dates upon which (i) the Lease
terminates, (ii) SGC surrenders possession of the Property or (iii) SGC ceases
to have any leasehold or other interest in the Property under the Lease or
otherwise.
"LOSSES" means the following, to the extent (but only to the extent)
resulting from, arising out of or in connection with events or circumstances
(including the condition of the Property) that actually or allegedly occurred or
existed or may hereafter occur or exist on or before the Loss Cutoff Date: any
and all losses, liabilities, damages (whether actual, consequential, punitive or
otherwise denominated), demands, claims, administrative or legal proceedings,
actions, judgments, causes of action, assessments, fines, penalties, costs and
expenses (including Attorneys' Fees and the fees of outside accountants and
environmental consultants), of any and every kind or character, foreseeable and
unforeseeable, liquidated and contingent, proximate and remote. For purposes of
List of Defined Terms -- Page 16
<PAGE> 95
determining whether any loss, liability, damage, demand, claim, administrative
or legal proceeding, action, judgment, cause of action, assessment, fine,
penalty, cost or expense constitutes a "Loss," the events or circumstances
relating thereto will be presumed to have occurred prior to the Loss Cutoff Date
unless SGC establishes by clear and convincing evidence to the contrary that the
relevant events or circumstances did not occur or exist prior to the Loss Cutoff
Date.
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between SGC or
its agents and a regulatory agency or third party, which causes, or potentially
could cause (whether by implementation of or response to said communication), a
material change in the scope, duration, or nature of any Remedial Work.
"MAXIMUM CONSTRUCTION ALLOWANCE" means an amount equal to $50,000,000, less
the Initial Funding Advance.
"MAXIMUM PERMITTED PREPAYMENT" as of any date means the amount equal to the
lesser of the following:
(1) the sum of:
(A) eighty-nine and nine-tenths of one percent (89.9%) of the
aggregate of (i) all Project Costs paid or incurred on or
prior to such date, plus (ii) ninety-seven percent (97%) of
Carrying Costs added to the Outstanding Construction
Allowance on or prior to such date; plus
(B) any amount by which the value of BNPLC's interest in the
Land and its appurtenances are less than the price paid by
BNPLC for the same as determined reasonably and in good
faith by BNPLC after consulting with an independent
appraiser; or
(2) eighty-nine and nine-tenths of one percent (89.9%) of
Stipulated Loss Value on such date.
"MAXIMUM REMARKETING OBLIGATION" shall have the meaning indicated in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"MINIMUM EXTENDED REMARKETING PRICE" shall have the meaning assigned to it
in subparagraph 2(B) of the Purchase Agreement.
"MOODY'S" means Moody's Investor Service, Inc.
"NORMAL TENANT IMPROVEMENTS" shall have the meaning assigned to it in
subparagraph 3(A) of the Construction Management Agreement.
"NOTICE OF SGC'S INTENT TO TERMINATE" shall have the meaning assigned to it
in subparagraph 5(D) of the Construction Management Agreement.
"OPERATIVE DOCUMENTS" means the Closing Certificate, the Lease, the
Construction Management Agreement and the Purchase Agreement.
"OUTSTANDING CONSTRUCTION ALLOWANCE" shall have the meaning assigned to it
in subparagraph 6.(a) of
List of Defined Terms -- Page 17
<PAGE> 96
the Lease.
"PARTICIPANT" means BNPLC's Parent and any other Person that, upon becoming
a party to the Participation Agreement by executing a supplement thereto as
contemplated therein, agrees from time to time to participate in all or some of
the risks and rewards to BNPLC of the Lease or other Operative Documents. As of
the Effective Date, the only Participant is BNPLC's Parent, but BNPLC may agree
after the Effective Date to share in risks and rewards of the Lease or other
Operative Documents with other Participants. However, no Person other than
BNPLC's Parent and its Affiliates shall qualify as a Participant for purposes of
the Lease or the other Operative Documents or other agreements concerning the
Property to which SGC is a party unless such Person, with SGC's prior written
approval (which approval will not be unreasonably withheld), became a party to
the Participation Agreement by executing a supplement to that agreement as
contemplated therein.
"PARTICIPATION AGREEMENT" means the Participation Agreement dated as of the
Effective Date, between BNPLC and BNPLC's Parent and any other Participants that
may become parties thereto as contemplated therein, pursuant to which BNPLC's
Parent has agreed to participate in the risks and rewards to BNPLC of the Lease
and the Purchase Agreement, as such Participation Agreement may be extended,
supplemented, amended, restated or otherwise modified from time to time in
accordance with its terms.
"PERMITTED ENCUMBRANCES" means (i) the encumbrances and other matters
affecting the Property that are set forth in Exhibit B attached to the Lease,
(ii) any easement agreement or other document affecting title to the Property
executed by BNPLC at the request of or with the consent of SGC, (iii) any liens
from time to time imposed to secure only ad valorem taxes on the Property which,
at the time in question, are not delinquent, and (iv) the Ground Lease and the
terms and conditions of the Existing Contract that survived the conveyance of
the Land from Seller to BNPLC.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage and
offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not:
(1) exceed that reasonably required for the construction of the
Construction Project in accordance with the Lease and the Construction
Management Agreement or for the operation of the Property for the purposes
expressly permitted under subparagraph 3.(a) of the Lease; or
(2) include any disposal, discharge or other release of Hazardous
Substances from the Property in any manner that might allow such substances
to reach surface water or groundwater, except (i) through a lawful and
properly authorized discharge (A) to a publicly owned treatment works or
(B) with rainwater or storm water runoff in accordance with Applicable Laws
and any permits obtained by SGC that govern such runoff; or (ii) any such
disposal, discharge or other release of Hazardous Substances for which no
permits are required and which are not otherwise regulated under applicable
Environmental Laws.
Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for the construction of the Construction Project or for the
use of the Property by SGC and its permitted subtenants and
List of Defined Terms -- Page 18
<PAGE> 97
assigns for the purposes expressly permitted by subparagraph 3.(a) of the Lease,
in either case in strict compliance with all Environmental Laws and with due
care given the nature of the Hazardous Substances involved. Without limiting the
generality of the foregoing, Permitted Hazardous Substances shall include usual
and customary office, laboratory and janitorial products.
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance of rights and interests in favor of the BNPLC's Parent or
other Participants pursuant to the terms and conditions of the Participation
Agreement, provided that in any case where rights or interests in the Property
are so created or conveyed, the rights or interests are made expressly subject
to the rights of SGC under the Lease and the Purchase Agreement; (2) any
assignment or conveyance by BNPLC to any present or future Participant of any
lien or security interest against the Property (in contrast to a conveyance of
BNPLC's fee estate) or of any interest in Rent, payments required by or under
the Purchase Agreement or payments to be generated from the Property after the
Term, provided that such assignment or conveyance is made expressly subject to
the rights of SGC under the Lease and the Purchase Agreement; (3) any agreement
to exercise or refrain from exercising rights or remedies under the Lease or the
Purchase Agreement made by BNPLC with any present or future Participant; (4) any
assignment or conveyance by BNPLC requested by SGC or required by any Permitted
Encumbrance, by Development Documents, by the Purchase Agreement or by
Applicable Laws; (5) conveyances or transfers by BNPLC or its Affiliates to
BNPLC or its Affiliates, provided that in the case of any such conveyance or
transfer that covers any interest in the Property, the conveyance or transfer is
made expressly subject to the rights of SGC under the Lease and the Purchase
Agreement; or (6) any other assignment or conveyance by BNPLC when an Event of
Default shall have occurred and be continuing or after a Landlord's Election to
Continue Construction or after the Designated Sale Date (provided, that if the
assignment or conveyance constitutes a sale of BNPLC's fee estate in the
Property, and if at the time of the sale SGC's Extended Remarketing Right under
Paragraph 2 of the Purchase Agreement has not expired or been terminated as
provided in the Purchase Agreement, then the sale will be subject to SGC's
Extended Remarketing Right.)
"PERSON" means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or agency or political subdivision
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
"PERSONAL PROPERTY" shall have the meaning assigned to it on page 2 of the
Lease.
"PLAN" means at any time an employee pension benefit plan which is covered
under Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and is either (i) maintained by SGC,
Guarantor or any Subsidiary of SGC or Guarantor for employees of SGC, Guarantor
or any Subsidiary of SGC or Guarantor or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which SGC, Guarantor or any Subsidiary
of SGC or Guarantor is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions.
"POTENTIAL LIEN CLAIMANTS" means (1) general contractors, or (2) other
parties who have filed any required statutory notices, or who have actually
notified BNPLC or SGC of claims, in order to preserve or establish their right
to a mechanic's or materialman's lien against the Property in connection with
any Construction Project.
"PRIME RATE" means the prime interest rate or equivalent charged by BNPLC's
Parent in the United States of America as announced or published by BNPLC's
Parent from time to time, which need not be the lowest interest rate charged by
BNPLC's Parent. If for any reason BNPLC's Parent does not announce or publish a
prime rate
List of Defined Terms -- Page 19
<PAGE> 98
or equivalent, the prime rate or equivalent announced or published by either
Citibank, N.A. or any New York branch or office of Credit Commercial de France
as selected by BNPLC shall be used to compute the rate describe in the preceding
sentence. The prime rate or equivalent announced or published by such bank need
not be the lowest rate charged by it. The Prime Rate may change from time to
time after the Effective Date without notice to SGC as of the effective time of
each change in rates described in this definition.
"PRIOR WORK" shall have the meaning assigned to it in subparagraph
2(C)(2)(b) of the Construction Management Agreement.
"PROJECT COSTS" means the following:
(1) costs incurred for the Work (as defined in the Construction
Management Agreement), including not only hard costs incurred for the new
Improvements described in Exhibit B attached to the Construction Management
Agreement, but also the following costs to the extent reasonably incurred
in connection with the Construction Project:
o soft costs, such as architectural fees, engineering fees and
fees and costs paid in connection with obtaining project
permits and approvals required by governmental authorities
or the Development Documents,
o site preparation costs, and
o costs of offsite and other public improvements required as
conditions of governmental approvals for the Construction
Project;
(2) costs incurred to maintain insurance required by (and consistent
with the requirements of) the Lease prior to the Base Rent Commencement
Date;
(3) a fraction of the cost of title insurance incurred to satisfy the
condition set forth in subparagraph 5(B)(3)(a) of the Construction
Management Agreement, the numerator of which fraction is the difference
computed by subtracting the price paid by BNPLC for the Land from the
maximum dollar amount of coverage provided by the title insurance, and the
denominator of which fraction is equal to such maximum dollar amount of
coverage;
(4) Impositions that have accrued or become due under the Lease prior
to the Base Rent Commencement Date; and
(5) cancellation or termination fees or other compensation payable by
SGC or BNPLC pursuant to any contract concerning the Construction Project
made by SGC or BNPLC with any general contractor, architect, engineer or
other third party because of any election by SGC or BNPLC to cancel or
terminate such contract.
Project Costs will include costs incurred by BNPLC to continue or complete the
Construction Project after any Landlord's Election to Continue Construction as
provided in subparagraph 6(d) of the Lease; provided, however, such costs will
constitute Project Costs only to the extent BNPLC capitalizes such costs in
accordance with GAAP.
"PROJECTED COST OVERRUNS" shall have the meaning assigned to it in
subparagraph 4(A) of the Construction
List of Defined Terms -- Page 20
<PAGE> 99
Management Agreement.
"PROPERTY" means the Personal Property and the Real Property, collectively.
"PURCHASE AGREEMENT" means the Purchase Agreement dated as of October 20,
1998 between BNPLC and SGC pursuant to which SGC has agreed to purchase or to
arrange for the purchase by a third party of BNPLC's interest in the Property,
as such Purchase Agreement may be extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with its terms.
"PURCHASE OPTION" shall have the meaning assigned to it in subparagraph
1(A)(1) of the Purchase Agreement.
"QUALIFIED PAYMENTS" means (A) any Issue 97-10 Prepayments received by
BNPLC, (B) any Voluntary SGC Construction Contributions received by BNPLC
pursuant to subparagraph 4(C) of the Construction Management Agreement, and (C)
any payments received by BNPLC from time to time during the Term (1) under any
property insurance policy as a result of damage to the Property, (2) as
compensation for any restriction placed upon the use or development of the
Property or for the condemnation of the Property or any portion thereof, (3)
because of any judgment, decree or award for injury or damage to the Property or
(4) under any title insurance policy or otherwise as a result of any title
defect or claimed title defect with respect to the Property; provided, however,
that (x) in determining the amount of "Qualified Payments", there shall be
deducted all expenses and costs of every kind, type and nature (including taxes,
Breakage Costs and Attorneys' Fees) incurred by BNPLC with respect to the
collection or application of such payments, (y) "Qualified Payments" shall not
include any payment to BNPLC by a Participant or an Affiliate of BNPLC that is
made to compensate BNPLC for the Participant's or Affiliate's share of any
Losses BNPLC may incur as a result of any of the events described in the
preceding clauses (1) through (4) and (z) "Qualified Payments" shall not include
any payments received by BNPLC that BNPLC has paid or is obligated to pay to SGC
for the restoration or repair of the Property or that BNPLC is holding as
Escrowed Proceeds pursuant to Paragraph 11 of the Lease or any other provision
of the Lease. For purposes of computing the total Qualified Payments (and other
amounts dependent upon Qualified Payments, such as Stipulated Loss Value and the
Outstanding Construction Allowance) paid to or received by BNPLC as of any date,
payments described in the preceding clauses (1) through (4) will be considered
as Escrowed Proceeds, not Qualified Payments, until they are actually applied as
Qualified Payments by BNPLC as provided in subparagraph 11.(c) of the Lease.
"REAL PROPERTY" shall have the meaning assigned to it on page 1 of the
Lease.
"REIMBURSABLE CONSTRUCTION-PERIOD COSTS" shall have the meaning assigned to
it in Paragraph 2 of the Construction Management Agreement.
"REMEDIAL WORK" means any investigation, monitoring, clean-up, containment,
remediation, removal, payment of response costs, or restoration work and the
preparation and implementation of any closure or other required remedial plans
that any governmental agency or political subdivision requires or approves (or
could reasonably be expected to require if it was aware of all relevant
circumstances concerning the Property), whether by judicial order or otherwise,
because of the presence of or suspected presence of Hazardous Substances in, on,
under or about the Property or because of any prior Hazardous Substance
Activity. Without limiting the generality of the foregoing, Remedial Work also
means any obligations imposed upon or undertaken by SGC pursuant to Development
Documents or any recommendations or proposals made therein.
List of Defined Terms -- Page 21
<PAGE> 100
"RENT" means the Base Rent and all Additional Rent.
"RESIDUAL RISK PERCENTAGE" means fifteen percent (15%) or such greater
percentage, but in no event greater than eighteen percent (18%), as is necessary
to cause the Lease to satisfy the FAS 13 "90% test" for an operating lease under
GAAP. At any time after the Base Rent Commencement Date, upon request of either
BNPLC or SGC, the parties will execute a written acknowledgment of the amount of
the Residual Risk Percentage (not less than 15% and not more than 18%)
calculated in accordance with this definition.
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of either SGC or Guarantor,
as the case may be.
"S&P" means Standard and Poor's Corporation.
"SCOPE CHANGE" shall have the meaning assigned to it in subparagraph
1(A)(1)(b) of the Construction Management Agreement.
"SELLER" means OKI America, Inc., a Delaware corporation.
"SGC" means Solectron Georgia Corporation, a Georgia corporation.
"SGC'S EXTENDED REMARKETING PERIOD" shall have the meaning assigned to it
in subparagraph 2(A) of the Purchase Agreement.
"SGC'S EXTENDED REMARKETING RIGHT" shall have the meaning assigned to it in
subparagraph 2(A) of the Purchase Agreement.
"SGC'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS" shall have the meaning
assigned to it in subparagraph 1(A)(2) of the Purchase Agreement.
"SPREAD" means, for each Construction Period or period beginning on and
including a Base Rent Date and ending on but not including the next Base Rent
Date, the amount established as described below in this definition on the date
that is two Business Days prior to such period by reference to the stated (or
published, implied) rating by S&P or by Moody's applicable to the Index Debt on
that date. The Spread shall be established at the Level in the pricing grid
below which corresponds to the rating of S&P and Moody's, respectively,
applicable to the Index Debt; provided that (a) if one, but not both, of Moody's
or S&P shall not have in effect a rating (stated or published, implied) for the
Index Debt, then the Spread shall be determined solely with reference to the
available rating by the rating agency that still rates the Index Debt; (b) if
the ratings established by Moody's and S&P for the Index Debt shall indicate two
different but consecutive Levels, the Spread shall be based on the more
favorable to Guarantor of the two Levels; (c) if the ratings established by
Moody's and S&P for the Index Debt shall indicate two different but
nonconsecutive Levels, the Spread shall be the average of the Spreads
corresponding to such Levels; (d) if the rating established by Moody's or S&P
for the Index Debt shall be changed (other than as a result of a change in the
rating system of Moody's or S&P), such change shall be effective on the date on
which it is first announced by the applicable rating agency; (e) notwithstanding
anything to the contrary in (a) through (d) above, but subject to (f) and (g)
below, if either the rating established by Moody's for the Index Debt of
Guarantor is below Ba2 or the rating established by S&P for the Index Debt of
Guarantor is below BB, the Spread shall be 80.0 basis points; (f)
notwithstanding anything to the contrary in (a) through (e) above, but subject
to (g) below, if Moody's does not establish a rating for the Index Debt of Ba2
or higher (including if Moody's has ceased to
List of Defined Terms -- Page 22
<PAGE> 101
establish any rating for the Index Debt) and S&P does not establish a rating for
the Index Debt of BB or higher (including if S&P has ceased to establish any
rating of the Index Debt), the Spread sall be the difference computed by
subtracting the Effective Rate from the rate that is 50.0 basis points above the
Prime Rate; and (g) notwithstanding anything to the contrary in (a) through (f)
above, on any date where an Event of Default has occurred and is continuing, the
Spread shall equal the Default Rate less the Effective Rate.
<TABLE>
<CAPTION>
===============================================================================================
LEVELS S & P RATING MOODY'S RATING MARGIN
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Level I BBB+ (or better) Baa1 (or better) 40 basis points
- -----------------------------------------------------------------------------------------------
Level II BBB Baa2 50 basis points
- -----------------------------------------------------------------------------------------------
Level III BBB- Baa3 60 basis points
- -----------------------------------------------------------------------------------------------
Level IV BB+ Ba1 75 basis points
- -----------------------------------------------------------------------------------------------
Level V BB Ba2 95 basis points
===============================================================================================
</TABLE>
All determinations of the Spread by BNPLC shall, in the absence of clear and
demonstrable error, be binding and conclusive for purposes of the Lease. Further
BNPLC may, but shall not be required, to rely on the determination of the Spread
set forth in any certificate delivered by Guarantor pursuant to subparagraph
16.(b)(ii) of the Lease, and no reduction in the Spread will be effective
because of an improvement in the S&P Rating or the Moody's Rating before the
date that Guarantor has notified BNPLC thereof by delivery of such a
certificate.
"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum of
the Initial Funding Advance, plus the sum of all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
such date, minus all funds received by BNPLC and applied as Qualified Payments
on or prior to such date. Under no circumstances will any payment of Base Rent,
Commitment Fees or Administrative Agency Fees reduce Stipulated Loss Value.
"SUBSIDIARY" means any corporation of which another corporation owns,
directly or indirectly, such number of outstanding shares as have more than
fifty percent (50%) of the ordinary voting power for the election of directors.
"SUPPLEMENTAL PAYMENT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"TERM" shall have the meaning assigned to it in Paragraph 1.(a) of the
Lease.
"THIRD PARTY CONTRACT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(b) of the Construction Management Agreement.
"THIRD PARTY SALE NOTICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY SALE PROPOSAL" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
List of Defined TErms -- Page 23
<PAGE> 102
"THIRD PARTY TARGET PRICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"TRANSACTION EXPENSES" means costs incurred in connection with the
preparation and negotiation of the Operative Documents and related documents and
the consummation of the transactions contemplated therein.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within the
meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the market value
of all Plan assets allocable to such benefit liabilities, as determined on the
most recent valuation date of the Plan and in accordance with the provisions of
ERISA for calculating the potential liability of SGC or Guarantor or any ERISA
Affiliate of SGC or Guarantor under Title IV of ERISA.
"VOLUNTARY SGC CONSTRUCTION CONTRIBUTIONS" shall have the meaning assigned
to it in subparagraph 4(C) of the Construction Management Agreement.
"VOLUNTARY RETENTION OF THE PROPERTY" means an affirmative election made by
BNPLC to keep the Property pursuant to, and under the circumstances described in
subparagraph 1(A)(2)(a) of the Purchase Agreement.
"WORK" shall have the meaning assigned to it in subparagraph 1(A)(2)(a) of
the Construction Management Agreement.
List of Defined terms -- Page 24
<PAGE> 1
EXHIBIT 10.8
================================================================================
$50,000,000
PURCHASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
SOLECTRON GEORGIA CORPORATION
("SGC")
OCTOBER 20, 1998
(GWINNETT COUNTY, GEORGIA)
================================================================================
PURSUANT TO AND AS MORE PARTICULARLY PROVIDED IN PARAGRAPH 15 OF THIS AGREEMENT,
THE LEASE REFERENCED HEREIN AND THIS PURCHASE AGREEMENT ARE TO CONSTITUTE, FOR
INCOME TAX PURPOSES ONLY, A FINANCING ARRANGEMENT OR CONDITIONAL SALE. AS
PROVIDED IN PARAGRAPH 15 OF THIS AGREEMENT, BNPLC AND SGC EXPECT THAT SGC (AND
NOT BNPLC) SHALL BE TREATED AS THE TRUE OWNER OF THE PROPERTY FOR INCOME TAX
PURPOSES, THEREBY ENTITLING SGC (AND NOT BNPLC) TO TAKE DEPRECIATION DEDUCTIONS
AND OTHER TAX BENEFITS AVAILABLE TO THE OWNER.
34084.1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1 SGC'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE............................1
(A) Right to Purchase; Right and Obligation to Remarket...........................1
(B) Determination of Fair Market Value............................................3
(C) Designation of the Purchaser..................................................3
2 SGC'S RIGHTS AND OPTIONS AFTER THE DESIGNATED SALE DATE..............................3
(A) SGC's Extended Right to Remarket..............................................3
(B) Definition of Minimum Extended Remarketing Price..............................4
(C) BNPLC's Right to Sell.........................................................5
(D) SGC's Right to Excess Sales Proceeds..........................................5
3 TERMS OF CONVEYANCE UPON PURCHASE....................................................6
4 SURVIVAL AND TERMINATION OF THE RIGHTS AND OBLIGATIONS OF SGC AND BNPLC..............6
(A) Status of this Agreement Generally............................................6
(B) Election by SGC to Terminate the Purchase Option and SGC's Initial Remarketing
Rights and Obligations Prior to the Base Rent Commencement Date...............7
(C) Election by BNPLC to Terminate the Purchase Option and SGC's Initial
Remarketing Rights and Obligations............................................7
(D) Automatic Termination of Certain Rights of SGC................................7
(E) Termination of SGC's Extended Remarketing Rights to Permit a Sale by BNPLC....8
(F) Payment Only to BNPLC.........................................................8
(G) Remedies Under the Other Operative Documents..................................8
5 EFFECT OF SALE UPON INTERVENING ENCUMBRANCES.........................................8
6. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF SGC...............................9
(A) No Default or Violation.......................................................9
(B) No Suits......................................................................9
(C) Enforceability................................................................9
(D) Organization..................................................................9
(E) Omissions.....................................................................9
7 CERTAIN REMEDIES CUMULATIVE..........................................................9
8. ATTORNEYS' FEES AND LEGAL EXPENSES..................................................10
9. ESTOPPEL CERTIFICATE................................................................10
10. SUCCESSORS AND ASSIGNS..............................................................10
11. MISCELLANEOUS.......................................................................10
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
(A) Notices......................................................................10
(B) Severability.................................................................12
(C) No Implied Waiver............................................................12
(D) NO IMPLIED REPRESENTATIONS BY BNPLC..........................................12
(E) Entire Agreement.............................................................12
(F) Time is of the Essence.......................................................13
(G) Governing Law................................................................13
(H) Paragraph Headings...........................................................13
(I) Other Terms and References...................................................13
(1) Not a Partnership, Etc.......................................................13
12. WAIVER OF JURY TRIAL................................................................13
13. ADDITIONAL RIGHTS OF BNPLC RELATING TO ESCROWED PROCEEDS............................14
14. SECURITY FOR BNPLC'S OBLIGATIONS....................................................14
15. INCOME TAX REPORTING................................................................14
Exhibits and Schedules
Exhibit A....................................................................Legal Description
Exhibit B................................................................Limited Warranty Deed
Exhibit C................................................................Intentionally Deleted
Exhibit D..........................................................Bill of Sale and Assignment
Exhibit E........................................................Acknowledgment and Disclaimer
Exhibit F................................................................Intentionally Deleted
Exhibit G..............................................................Secretary's Certificate
Exhibit H..................................................Instruction Letter to Title Insurer
Exhibit I...................................................................FIRPTA Certificate
Exhibit J...............................................Indemnity for Liens Removable by BNPLC
Exhibit K...............................................Notice by SGC of Election to Terminate
List of Defined Terms.......................................................Shared Definitions
</TABLE>
(ii)
<PAGE> 4
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "AGREEMENT"), by and between BNP LEASING
CORPORATION, a Delaware corporation ("BNPLC"), and SOLECTRON GEORGIA
CORPORATION, a Georgia corporation ("SGC"), is dated as of October 20, 1998, the
Effective Date. ("EFFECTIVE DATE" and other capitalized terms used and not
otherwise defined in this Agreement are intended to have the meanings assigned
to them in the List of Defined Terms attached to and made a part of the Lease
Agreement dated of even date herewith between BNPLC, as landlord, and SGC, as
tenant. By this reference, such List of Defined Terms is incorporated into and
made a part of this Agreement for all purposes.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC is acquiring the Land and any appurtenances thereto from Seller
contemporaneously with the execution of this Agreement. Pursuant to the Lease
and the Construction Management Agreement, BNPLC will lease the Land to SGC and
is agreeing to provide funding for the acquisition and construction of
Improvements to be owned by BNPLC. (BNPLC's interests in the Land, the
Improvements and in all other real and personal property from time to time
covered by the Lease and included within the "Property" as defined therein are
hereinafter collectively referred to as the "PROPERTY".)
SGC and BNPLC have reached agreement upon the terms and conditions upon
which SGC will purchase or arrange for the purchase of the Property, and by this
Agreement they desire to evidence such agreement
AGREEMENTS
1. SGC'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE.
(A) Right to Purchase; Right and Obligation to Remarket. Whether
or not an Event of Default shall have occurred and be continuing or the Lease
shall have been terminated, but subject to Paragraph 4 below:
(1) SGC shall have the right (the "PURCHASE OPTION") to
purchase or cause an Affiliate of SGC to purchase BNPLC's interest in
the Property and in Escrowed Proceeds, if any, on the Designated Sale
Date for a cash price equal to the Break Even Price. As used herein,
"BREAK EVEN PRICE" means an amount equal, on the Designated Sale Date,
to Stipulated Loss Value, plus all costs and expenses (including
appraisal costs, withholding taxes (if any) other than Excluded Taxes,
and Attorneys' Fees) incurred in connection with any sale of BNPLC's
interests in the Property under this Agreement or in connection with
collecting payments due hereunder, and plus an amount equal to the
Balance of Unpaid Construction-Period Indemnity Payments, but less the
amount of any Deductible Judgment that SGC may elect to pay on or before
the Designated Sale Date in order to remove the Deductible Judgment as a
Lien against the Property. As used herein, the "BALANCE OF UNPAID
CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" means an amount equal to the sum
of Construction-Period Indemnity Payments, if any, that SGC elected not
to pay pursuant to subparagraph 5(e)(ii) of the Lease, plus interest
accruing at the Default Rate, compounded annually, on each such payment
from the date such payment would have become but for SGC's election not
to pay it as permitted by subparagraph 5(e)(ii) of the Lease.
<PAGE> 5
15
(2) If for any reason whatsoever (including any termination of
SGC's Purchase Option as described in subparagraph 4(D) below), neither SGC nor
an Affiliate of SGC purchases BNPLC's interest in the Property and in any
Escrowed Proceeds on the Designated Sale Date as provided in the preceding
subparagraph 1(A)(1), then SGC shall have the following rights and obligations
(collectively, "SGC'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS"):
(a) First, SGC shall have the right (but not the obligation)
to cause an Applicable Purchaser who is not an Affiliate of SGC to
purchase BNPLC's interest in the Property and any Escrowed Proceeds on
the Designated Sale Date for a net cash purchase price not below the
lesser of (I) Fair Market Value, or (II) the Break Even Price. If,
however, a net cash price actually tendered or to be tendered to BNPLC
by an Applicable Purchaser identified by SGC in accordance with the
preceding sentence is below the amount equal to the Break Even Price
less any Supplemental Payment tendered by SGC as described below, then
BNPLC may affirmatively elect to decline such tender and to keep the
Property and any Escrowed Proceeds rather than sell to the Applicable
Purchaser (a "VOLUNTARY RETENTION OF THE PROPERTY").
(b) Second, if the cash price actually paid by an Applicable
Purchaser to BNPLC on the Designated Sale Date exceeds the Break Even
Price, SGC shall be entitled to such excess, subject, however, to
BNPLC's right to offset against such excess any and all sums that are
then due from SGC to BNPLC under the other Operative Documents.
(c) Third, if for any reason whatsoever (including any
failure of SGC to cause an Applicable Purchaser to tender a purchase
price to BNPLC or any Voluntary Retention of the Property) the amount of
the Break Even Price exceeds any cash sales proceeds actually received
by BNPLC on the Designated Sale Date in connection with a sale of
BNPLC's interest in the Property and any Escrowed Proceeds pursuant to
this Agreement (such excess being hereinafter called a "DEFICIENCY"),
then SGC shall have the obligation to pay to BNPLC on the Designated
Sale Date a supplemental payment (the "SUPPLEMENTAL PAYMENT") equal to
the lesser of the (1) the Deficiency or (2) Maximum Remarketing
Obligation. As used herein, "MAXIMUM REMARKETING OBLIGATION" means a
dollar amount determined in accordance with the following provisions:
1) "MAXIMUM REMARKETING OBLIGATION" will equal the
product of (i) Stipulated Loss Value on the Designated Sale Date,
times (ii) 100% minus the Residual Risk Percentage, provided that
both of the following conditions are satisfied:
(x) SGC shall not have elected to accelerate the
Designated Sale Date as provided in clause (2) of the
definition of Designated Sale Date in the List of Defined
Terms attached to the Lease; and
(y) No Event of Default, other than an Issue 97-1
Non-performance-related Subjective Event of Default, shall
occur on or be continuing on the Designated Sale Date.
2) If either of the conditions listed in subparagraph
1) preceding are not satisfied, "MAXIMUM REMARKETING OBLIGATION"
will equal the Break Even Price.
2
<PAGE> 6
Notwithstanding the foregoing, in the event of any Voluntary
Retention of the Property, the amount of the Supplemental Payment
calculated as provided in this subparagraph (c) will be reduced
(but not below zero) by the amount of any Escrowed Proceeds held
by and that will be retained by BNPLC after the Designated Sale
Date.
If any Supplemental Payment or other amount payable to BNPLC pursuant to this
subparagraph 1(A) is not actually paid to BNPLC on the Designated Sale Date, SGC
shall pay interest on the past due amount computed at the Default Rate from the
Designated Sale Date. However, SGC shall be entitled to a credit against the
interest required by the preceding sentence equal to the Base Rent, if any,
actually paid by SGC pursuant to the Lease for any period after the Designated
Sale Date.
(B) Determination of Fair Market Value. To give BNPLC the
opportunity before the Designated Sale Date to have Fair Market Value determined
by an appraiser (as provided in the definition of Fair Market Value), SGC must,
unless SGC concedes that Fair Market Value will be no less than the Break Even
Price on the Designated Sale Date, provide BNPLC with a Remarketing Notice. As
used in this Agreement, "REMARKETING NOTICE" means a notice given by SGC to
BNPLC (and to each of the Participants) no earlier than two hundred seventy days
before the Designated Sale Date and no later than one hundred and eighty days
before the Designated Sale Date, specifying that SGC does not concede that Fair
Market Value will be greater than the Break Even Price. No Remarketing Notice
will be required if SGC does concede that Fair Market Value will equal or exceed
the Break Even Price on the Designated Sale Date. But if for any reason
(including any acceleration of the Designated Sale Date as provided in the
definition thereof in the List of Defined Terms attached to the Lease) SGC fails
to provide a Remarketing Notice within the time periods specified in the
definition of Remarketing Notice above, Fair Market Value shall, for purposes of
determining any Supplemental Payment required by this Agreement, be deemed to be
no less than the Residual Risk Percentage of Stipulated Loss Value on the
Designated Sale Date.
(C) Designation of the Purchaser. To give BNPLC the opportunity
before the Designated Sale Date to prepare the deed and other documents that
BNPLC must tender pursuant to Paragraph 3 (collectively, the "SALE CLOSING
DOCUMENTS"), SGC must, by a notice to BNPLC given at least twenty days prior to
the Designated Sale Date, specify irrevocably, unequivocally and with
particularity any party who will purchase BNPLC's interest in the Property as
provided in subparagraph 1(A). If for any reason SGC fails to so specify a party
who will in accordance with the terms and conditions set forth herein purchase
BNPLC's interest in the Property (be it SGC itself, an Affiliate of SGC or
another Applicable Purchaser), BNPLC shall be entitled to postpone the tender of
the Sale Closing Documents until a date after the Designated Sale Date and not
more than twenty days after SGC finally does so specify a party, but such
postponement will not relieve or postpone the obligation of SGC to make a
Supplemental Payment on the Designated Sale Date as provided in Paragraph
1(A)(2)(c).
2. SGC'S RIGHTS AND OPTIONS AFTER THE DESIGNATED SALE DATE.
(A) SGC's Extended Right to Remarket. During the period
commencing on the Designated Sale Date and ending on the second anniversary of
the Designated Sale Date ("SGC'S EXTENDED REMARKETING PERIOD"), SGC shall have
the right ("SGC'S EXTENDED REMARKETING RIGHT") to cause an Applicable Purchaser
who is not an Affiliate of SGC to purchase BNPLC's interest in the Property for
a cash purchase price not below the lesser of (I) the Minimum Extended
Remarketing Price (as defined below), or (II) the Third Party Target Price (as
defined below) specified in any Third Party Sale Notice (as defined below) given
by BNPLC pursuant to subparagraph 2(C)(2) within the ninety days prior to the
date (the "FINAL SALE DATE") upon which
3
<PAGE> 7
BNPLC receives such purchase price from the Applicable Purchaser. SGC's Extended
Remarketing Right shall, however, be subject to all of the following conditions:
(1) No Event of Default, other than an Issue 97-1
Non-performance-related Subjective Event of Default, shall occur on or
be continuing on the Designated Sale Date.
(2) BNPLC's interest in the Property and in Escrowed
Proceeds, if any, shall not have been sold on the Designated Sale Date
as provided in Paragraph 1, and on the Designated Sale Date SGC shall
have paid the full amount of any Supplemental Payment to BNPLC required
by subparagraph 1(A)(2)(c). (If, however, as provided in subparagraph
4(B) SGC shall have properly exercised its right to terminate SGC's
Initial Remarketing Rights and Obligations and paid an Issue 97-10
Prepayment to BNPLC, then payment of the Supplemental Payment shall not
be a condition to SGC's Extended Remarketing Right.)
(3) No Voluntary Retention of the Property shall have
occurred as described in subparagraph 1(A)(2)(a).
(4) SGC's Extended Remarketing Right shall not have been
terminated by BNPLC pursuant to subparagraph 4(E) below.
(5) At least thirty days prior to the Final Sale Date, SGC
shall have notified BNPLC of (x) the date proposed by SGC as the Final
Sale Date (which must be a Business Day), (y) the full legal name of the
Applicable Purchaser and such other information as will be required to
prepare the Sale Closing Documents, and (z) the amount of the purchase
price that the Applicable Purchaser will pay (consistent with the
minimum required pursuant to this subparagraph 2(A)) for BNPLC's
interest in the Property.
(6) If any Balance of Unpaid Construction-Period Indemnity
Payments remains after SGC shall have properly exercised its right to
terminate SGC's Initial Remarketing Rights and Obligations and paid an
Issue 97-10 Prepayment to BNPLC as provided in subparagraph 4(B), then
BNPLC will not be required by this subparagraph 2(A) to sell to an
Applicable Purchaser at a price below the lesser of (A) the fair market
value of the Property, or (B) the minimum price which would allow BNPLC
to recover the Balance of Unpaid Construction-Period Indemnity Payments
upon the distribution of sales proceeds in accordance with subparagraph
2(D) below.
(B) Definition of Minimum Extended Remarketing Price. As used
herein, "MINIMUM EXTENDED REMARKETING PRICE" means an amount equal to the sum of
the following:
(1) the amount by which the Stipulated Loss Value computed
on the Designated Sale Date exceeds any Supplemental Payment actually
paid to BNPLC on the Designated Sale Date, together with interest on
such excess computed at the Default Rate from the period commencing on
the Designated Sale Date and ending on the Final Sale Date, plus
(2) all costs and expenses (including withholding taxes [if
any] other than Excluded Taxes and Attorneys' Fees) incurred in
connection with the sale of BNPLC's interest in the Property to the
Applicable Purchaser, and plus
4
<PAGE> 8
(3) the sum of all Impositions, insurance premiums and other
Losses of every kind suffered or incurred by BNPLC or any other Interest
Party with respect to the ownership, operation or maintenance of the
Property on or after the Designated Sale Date, together with interest on
such Impositions, insurance premiums and other Losses computed at the
Default Rate from the date the paid or incurred to the Final Sale Date.
(C) BNPLC's Right to Sell. After the Designated Sale Date, if the
interest of BNPLC in the Property has not already been sold pursuant to
Paragraph 1 of this Agreement, BNPLC shall have the right to sell the Property
or offer the Property for sale on any terms believed to be appropriate by BNPLC
in its sole good faith business judgment; provided, however, that so long as the
conditions to SGC's Extended Remarketing Rights specified in subparagraph 2(A)
continue to be satisfied:
(1) BNPLC shall not sell the Property to an Affiliate of
BNPLC on terms less favorable than those which BNPLC would require from
a prospective purchaser not an Affiliate of BNPLC;
(2) If BNPLC receives a written proposal (including any
"letter of intent" or other nonbinding expression of interest) outlining
the purchase price and general business terms upon which a prospective
purchaser is interested in a possible purchase of the Property, and if
on the basis of such proposal (the "THIRD PARTY SALE PROPOSAL") BNPLC
intends and desires to enter into further negotiations for a more
definitive purchase and sale agreement with the prospective purchaser,
then BNPLC shall, prior to entering into negotiations for a more
definitive purchase and sale agreement, submit the Third Party Sale
Proposal to SGC with a notice (the "THIRD PARTY SALE NOTICE") explaining
that (A) BNPLC is then prepared to accept a price not below an amount
specified in such Third Party Sale Notice (the "THIRD PARTY TARGET
PRICE") from the prospective purchaser if BNPLC and the prospective
purchaser reach agreement on other terms and conditions to be
incorporated into the more definitive purchase and sale agreement, and
(B) SGC's Extended Remarketing Right may be terminated pursuant to
subparagraph 4(E) of this Agreement unless SGC causes an Applicable
Purchaser to consummate a purchase of BNPLC's interest in the Property
pursuant to this Paragraph 2 within ninety days after the date of such
Third Party Sale Notice.
(D) SGC's Right to Excess Sales Proceeds. If the cash price
actually paid by any third party purchasing the Property from BNPLC prior to the
second anniversary of the Designated Sale Date, including any Applicable
Purchaser purchasing from BNPLC pursuant to this Paragraph 2, exceeds the
Minimum Extended Remarketing Price, then such excess will be paid and applied as
follows:
(1) first, to pay to BNPLC any and all sums that are then due
and unpaid from SGC to BNPLC under the other Operative
Documents;
(2) second, to repay to SGC the aggregate amount of any and
all Issue 97-10 Prepayments made to BNPLC;
(3) third, to compensate BNPLC for any Balance of Unpaid
Construction-Period Indemnity Payments; and
(4) fourth, any balance of the excess remaining after payments
as described in clauses (1) through (3) preceding shall be
paid over to SGC.
5
<PAGE> 9
3. TERMS OF CONVEYANCE UPON PURCHASE. Subject to any postponement
permitted by subparagraph 1(C), and provided BNPLC has not affirmatively elected
a Voluntary Retention of the Property as permitted by subparagraph 1(A)(2)(a),
promptly after the tender of the purchase price and any other payments to BNPLC
required by and pursuant to the Paragraph 1 or Paragraph 2, as applicable, BNPLC
must convey all of BNPLC's right, title and interest in the Land, Improvements
and other Property by BNPLC's execution, acknowledgment (where appropriate) and
delivery of the Sale Closing Documents to SGC or the Applicable Purchaser, as
the case may be, subject only to the Permitted Encumbrances and any other
encumbrances that do not constitute Liens Removable by BNPLC. However, such
conveyance shall not include the right to receive any payment under the
indemnities under the Operative Documents then due BNPLC or that may become due
thereafter because of any expense or liability incurred by BNPLC resulting in
whole or in part from events or circumstances occurring or alleged to have
occurred before such conveyance. All costs of such purchase and conveyance of
every kind whatsoever, both foreseen and unforeseen, shall be the responsibility
of the purchaser. The Sale Closing Documents used to accomplish such conveyance
shall consist of the following: (1) a Deed in the form attached as Exhibit B,
(2) a Bill of Sale and Assignment of Lease and Intangible Assets in the form
attached as Exhibit D, (3) an Acknowledgment of Disclaimer of Representations
and Warranties in the form attached as Exhibit E, which SGC or the Applicable
Purchaser must execute and return to BNPLC, (4) a Secretary's Certificate in the
form attached as Exhibit G, (5) a letter to the title insurance company insuring
title to the Property in the form attached as Exhibit H, (6) a FIRPTA
certificate in the form attached hereto as Exhibit I, and (7) if applicable, an
Indemnity for Liens Removable by BNPLC in the form attached hereto as Exhibit J.
The Indemnity for Liens Removable by BNPLC described in the preceding sentence
shall be required if, but only if, before the other Sale Closing Documents are
tendered by BNPLC in accordance with this Agreement, SGC shall have identified,
provided a written list to BNPLC of, and been unable to obtain a commitment for
title insurance against, any title encumbrances that SGC believes in good faith
may constitute Liens Removable by BNPLC and that, if valid, would constitute
Liens Removable by BNPLC. Any such Indemnity will be completed by attaching a
list of such identified encumbrances as Annex B thereto. If for any reason BNPLC
fails to tender the Sale Closing Documents as required by this Paragraph 3,
BNPLC may cure such refusal at any time before thirty days after receipt of a
demand for such cure from SGC.
4. SURVIVAL AND TERMINATION OF THE RIGHTS AND OBLIGATIONS OF SGC AND
BNPLC.
(A) Status of this Agreement Generally. Except as expressly
provided herein, this Agreement shall not terminate, nor shall SGC have any
right to terminate this Agreement, nor shall SGC be entitled to any reduction of
the Break Even Price, Deficiency, Maximum Remarketing Obligation or Supplemental
Payment hereunder, nor shall the obligations of SGC to BNPLC under Paragraph 1
be affected by reason of (i) any damage to or the destruction of all or any part
of the Property from whatever cause, (ii) the taking of or damage to the
Property or any portion thereof by eminent domain or otherwise for any reason,
(iii) the prohibition, limitation or restriction of SGC's use of all or any
portion of the Property or any interference with such use by governmental action
or otherwise, (iv) any eviction of SGC or any party claiming under SGC by
paramount title or otherwise, (v) SGC's prior acquisition or ownership of any
interest in the Property, (vi) any default on the part of BNPLC under this
Agreement, the Lease or any other agreement to which BNPLC is a party, or (vii)
any other cause, whether similar or dissimilar to the foregoing, any existing or
future law to the contrary notwithstanding. It is the intention of the parties
hereto that the obligations of SGC to make payment to and, if applicable, to
cause the Applicable Purchaser to make payment to BNPLC under Paragraph 1 shall
be separate and independent covenants and agreements from BNPLC's obligations
under this Agreement or any other agreement between BNPLC and SGC.
6
<PAGE> 10
(B) Election by SGC to Terminate the Purchase Option and SGC's
Initial Remarketing Rights and Obligations Prior to the Base Rent Commencement
Date. At any time prior to the Base Rent Commencement Date, SGC may elect to
terminate both the Purchase Option and SGC's Initial Remarketing Rights and
Obligations, subject to the following conditions:
(1) To be effective, any such election to terminate must be made
after SGC shall have given Notice of SGC's Election to Terminate
pursuant to Paragraph 5(D) of the Construction Management Agreement, or
after BNPLC shall have given any FOCB Notice as provided in Paragraph
5(E) of the Construction Management Agreement, and any such election to
terminate must be made prior to the Base Rent Commencement Date.
(2) To be effective, any such election to terminate must be made
by giving BNPLC and the Participants a notice thereof in the form
attached as Exhibit K prior to the Base Rent Commencement Date.
(3) No termination pursuant to this subparagraph 4(B) shall be
effective, notwithstanding any notice SGC may have given as described in
the preceding clause (2), unless contemporaneously with the giving of
the notice (and in any event prior to the Base Rent Commencement Date)
SGC shall deliver to BNPLC an Issue 97-10 Prepayment.
(4) If for any reason whatsoever, including any bona fide
dispute over the amount of any required Issue 97-10 Prepayment, BNPLC
does not receive both the notice described in the preceding clause (2)
and a full Issue 97-10 Prepayment as described in the preceding clause
(3) prior to the Base Rent Commencement Date, then without any notice or
other action by the parties to this Agreement SGC shall cease to have
any option to terminate pursuant to this subparagraph 4(B).
(C) Election by BNPLC to Terminate the Purchase Option and SGC's
Initial Remarketing Rights and Obligations. BNPLC shall be entitled to terminate
both the Purchase Option and SGC's Initial Remarketing Rights and Obligations,
as BNPLC deems appropriate in its sole and absolute discretion, at any time
after receiving a notice given by SGC to make or attempt to make any Issue 97-10
Election. Upon any such termination by BNPLC, SGC shall be required to pay BNPLC
an Issue 97-10 Prepayment.
(D) Automatic Termination of Certain Rights of SGC. Without
limiting BNPLC's right to enforce SGC's obligation to make a Supplemental
Payment and other amounts required by this Purchase Agreement, SGC's Purchase
Option and all rights included in SGC's Initial Remarketing Rights and
Obligations hereunder (to be distinguished from SGC's Extended Remarketing
Right) shall terminate automatically if:
(1) BNPLC shall have elected to keep the Property in
accordance with subparagraph 1(A)(2)(a); or
(2) SGC shall have failed on the Designated Sale Date to
make or cause to be made all payments to BNPLC required by this
Agreement or by the other Operative Documents (including the payment on
the Designated Sale Date of the purchase price required from an
Applicable Purchaser if an Applicable Purchaser is to purchase from
BNPLC as provided in subparagraph 1(A)(2)(a)).
Notwithstanding the foregoing, if BNPLC does not receive all payments due under
this Agreement or other Operative Documents on the Designated Sale Date, SGC may
nonetheless tender to BNPLC the full Break
7
<PAGE> 11
Even Price and all amounts then due under the Operative Documents, together with
interest on the total Break Even Price computed at the Default Rate from the
Designated Sale Date to the date of tender, and if presented with such a tender
within thirty days after the Designated Sale Date, BNPLC must accept it and
promptly thereafter deliver any Escrowed Proceeds and the Sale Closing Documents
listed in Paragraph 3 to SGC.
(E) Termination of SGC's Extended Remarketing Rights to Permit a
Sale by BNPLC. At any time more than ninety days after BNPLC has delivered a
Third Party Sale Notice to SGC as described in subparagraph 2(C)(2), BNPLC may
terminate SGC's Extended Remarketing Rights contemporaneously with the
consummation of a sale of the Property by BNPLC to any third party (be it the
prospective purchaser named in the Third Party Sale Notice or another third
party) at a price equal to or in excess of the Third Party Target Price
specified in the Third Party Sale Notice, so as to permit the sale of the
Property unencumbered by SGC's Extended Remarketing Rights.
(F) Payment Only to BNPLC. All amounts payable under this
Agreement by SGC and, if applicable, by an Applicable Purchaser must be paid
directly to BNPLC, and no payment to any other party shall be effective for the
purposes of this Agreement. In addition to the payments required under
subparagraph 1(A), on the Designated Sale Date SGC must pay all amounts then due
to BNPLC under the Lease. BNPLC will remit any excess amounts due SGC pursuant
to the last sentence of subparagraph 1(A)(2) or pursuant to subparagraph 2(D)
promptly after BNPLC's receipt of the same. To the extent, if any, that SGC
claims and is entitled to claim a reduction in the Break Even Price because of
any Deductible Judgment, as provided in the definition of Break Even Price
above, SGC must pay such Deductible Judgment for the account of BNPLC
contemporaneously with the payment of the other amounts required by subparagraph
1(A).
(G) Remedies Under the Other Operative Documents. No repossession
of or re-entering upon the Property or exercise of any other remedies available
to BNPLC under the Lease or other Operative Documents shall terminate SGC's
rights or obligations hereunder, all of which shall survive BNPLC's exercise of
remedies under the other Operative Documents. SGC acknowledges that the
consideration for this Agreement is separate and independent of the
consideration for the Lease, the Construction Management Agreement and the
Closing Certificate, and SGC's obligations hereunder shall not be affected or
impaired by any event or circumstance that would excuse SGC from performance of
its obligations under such other Operative Documents.
5. EFFECT OF SALE UPON INTERVENING ENCUMBRANCES. Any conveyance of
the Property to SGC or any Applicable Purchaser pursuant to this Agreement shall
cut off and terminate any interest in the Land, Improvements or other Property
claimed by, through or under BNPLC, including any interest claimed by the
Participants and including any Liens Removable by BNPLC (such as, but not
limited to, any judgment liens established against the Property because of a
judgment rendered against BNPLC and any leasehold or other interests conveyed by
BNPLC in the ordinary course of BNPLC's business), but not obligations of SGC to
BNPLC under the indemnities in the Lease or other Operative Documents then due
or that may become due thereafter because of any expense or liability incurred
by BNPLC resulting in whole or in part from events or circumstances occurring
before such conveyance. Anyone accepting or taking any interest in the Property
by or through BNPLC after the date of this Agreement shall acquire such interest
subject to the rights and options granted SGC hereby. Further, SGC and any
Applicable Purchaser shall be entitled to pay any payment required by this
Agreement for the purchase of the Property directly to BNPLC notwithstanding any
prior conveyance or assignment by BNPLC, voluntary or otherwise, of any right or
interest in this Agreement or the Property, and neither SGC nor any Applicable
Purchaser shall be responsible for the proper distribution or application of any
such payments by BNPLC; and any such payment to BNPLC shall discharge the
obligation of SGC to cause such payment to all Persons claiming an interest in
such payment. The parties shall record a
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<PAGE> 12
memorandum of this Agreement for purposes of effecting constructive notice to
all Persons of SGC's rights under this Agreement, including its rights under
this subparagraph.
6. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF SGC. SGC
represents, warrants and covenants as follows:
(A) No Default or Violation. The execution, delivery and
performance by SGC of this Agreement does not and will not constitute a breach
or default under any other material agreement or contract to which SGC is a
party or by which SGC is bound or which affects the Property, and does not
violate or contravene any law, order, decree, rule or regulation to which SGC is
subject, and such execution, delivery and performance by SGC will not result in
the creation or imposition of (or the obligation to create or impose) any lien,
charge or encumbrance on, or security interest in, SGC's property pursuant to
the provisions of any of the foregoing.
(B) No Suits. Other than matters, if any, disclosed in Schedule 2
attached to the Lease, there are no judicial or administrative actions, suits,
proceedings or investigations pending or, to SGC's knowledge, threatened that
will adversely affect the Property or the validity, enforceability or priority
of this Agreement, and SGC is not in default with respect to any order, writ,
injunction, decree or demand of any court or other governmental or regulatory
authority that could materially and adversely affect the use, occupancy or
operation of the Property.
(C) Enforceability. The execution, delivery and performance by
SGC of this Agreement is duly authorized and does not require the consent or
approval of any governmental body or other regulatory authority that has not
heretofore been obtained and is not in contravention of or conflict with any
applicable laws or any term or provision of SGC's articles of incorporation or
bylaws. This Agreement is a valid, binding and legally enforceable obligation of
SGC, in accordance with its terms, except as such enforcement is affected by
bankruptcy, insolvency and similar laws affecting the rights of creditors,
generally, and equitable principles of general application.
(D) Organization. SGC is duly incorporated and legally existing
under the laws of the State of Georgia. SGC has all requisite power and has
procured or will procure on a timely basis all governmental certificates of
authority, licenses, permits, qualifications and other documentation required to
fulfill its obligations under this Agreement.
(E) Omissions. None of SGC's representations or warranties
contained in this Agreement or in any other document, certificate or written
statement furnished to BNPLC by or on behalf of SGC in connection with this
Agreement contains any untrue statement of a material fact or omits a material
fact necessary in order to make the statements contained herein or therein (when
taken in their entireties) not misleading.
7. CERTAIN REMEDIES CUMULATIVE. No right or remedy herein conferred
upon or reserved to BNPLC is intended to be exclusive of any other right or
remedy BNPLC has with respect to the Property, and each and every right and
remedy shall be cumulative and in addition to any other right or remedy given
hereunder or now or hereafter existing at law or in equity or by statute. In
addition to other remedies available under this Agreement, either party shall be
entitled, to the extent permitted by applicable law, to a decree compelling
performance of any of the other party's agreements hereunder.
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<PAGE> 13
8. ATTORNEYS' FEES AND LEGAL EXPENSES. If either party commences any
legal action or other proceeding to enforce any of the terms of this Agreement
or the documents and agreements referred to herein, or because of any breach by
the other party or dispute hereunder or thereunder, the successful or prevailing
party, shall be entitled to recover from the nonprevailing party all Attorneys'
Fees incurred in connection therewith, whether or not such controversy, claim or
dispute is prosecuted to a final judgment. Any such Attorneys' Fees incurred by
either party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from such judgment, and the obligation for such
Attorneys' Fees is intended to be severable from other provisions of this
Agreement and not to be merged into any such judgment.
9. ESTOPPEL CERTIFICATE. Either party to this Agreement will, upon
not less than twenty days' prior request by the other party hereto, execute,
acknowledge and deliver to the requesting party a written statement certifying
that this Agreement is unmodified and in full effect (or, if there have been
modifications, that this Agreement is in full effect as modified, and setting
forth such modification) and either stating that no default exists hereunder or
specifying each such default of which the responding party has knowledge. Any
such statement may be relied upon by any Participant or prospective purchaser or
permitted assignee of BNPLC or SGC with respect to the Property.
10. SUCCESSORS AND ASSIGNS. The terms, provisions, covenants and
conditions hereof shall be binding upon SGC and BNPLC and their respective
permitted successors and assigns and shall inure to the benefit of SGC and BNPLC
and all permitted transferees, mortgagees, successors and assignees of SGC and
BNPLC with respect to the Property; provided, that the rights of BNPLC hereunder
shall not pass to SGC or any Applicable Purchaser or any subsequent owner
claiming through SGC or an Applicable Purchaser. Prior to the Designated Sale
Date, BNPLC may transfer, assign and convey, in whole or in part, the Property
and any and all of its rights under this Agreement (subject to the terms of this
Agreement) by any conveyance that constitutes a Permitted Transfer, but not
otherwise. If BNPLC sells or otherwise transfers the Property and assigns its
rights under this Agreement and the other Operative Documents pursuant to a
Permitted Transfer, and if BNPLC's successor in interest assumes in writing for
the benefit of SGC liability for the obligations imposed upon BNPLC by this
Agreement and the other Operative Documents on and subject to the express terms
set out herein and therein, then BNPLC shall thereby be released from any
further obligations arising under this Agreement or other Operative Documents
after the date of such assumption, and SGC agrees to look solely to each
successor in interest of BNPLC for performance of such obligations.
11. MISCELLANEOUS
(A) Notices. Each provision of this Agreement, or of any
Applicable Laws with reference to the sending, mailing or delivery of any notice
or demand hereunder, or with reference to the making of any payment required
hereunder, shall be deemed to be complied with when and if the following steps
are taken:
(1) All payments required to be paid by SGC or any Applicable
Purchaser to BNPLC hereunder shall be paid to BNPLC in immediately
available funds by wire transfer to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ Solectron (Georgia Synthetic Lease)
10
<PAGE> 14
or at such other place and in such other manner as BNPLC may designate in a
notice to SGC. Time is of the essence as to all payments of SGC under this
Agreement.
(2) All payments required to be made by BNPLC to SGC pursuant to the
last sentence of subparagraph 1(A)(2) or pursuant to subparagraph 2(D) shall be
paid to SGC in immediately available funds at the address of SGC set forth below
or as SGC may otherwise direct by notice sent in accordance herewith.
(3) All notices, demands, approvals, consents and other
communications to be made hereunder to or by the parties hereto must, to be
effective for purpose of this Agreement, be in writing. Notices, demands and
other communications required or permitted hereunder are to be sent to the
addresses set forth below (or in the case of communications to Participants, at
the addresses set forth in Schedule 1 attached to the Participation Agreement)
and shall be given by any of the following means: (A) personal service, with
proof of delivery or attempted delivery retained; (B) electronic communication,
whether by telegram or telecopying (if confirmed in writing sent by United
States first class mail, return receipt requested); or (C) registered or
certified first class mail, return receipt requested. Such addresses may be
changed by notice to the other parties given in the same manner as provided
above. Any notice or other communication sent pursuant to clause (A) or (C)
hereof shall be deemed received (whether or not actually received) upon first
attempted delivery at the proper notice address on any Business Day between 9:00
A.M. and 5:00 P.M., and any notice or other communication sent pursuant to
clause (B) hereof shall be deemed received upon dispatch by electronic means.
Address of BNPLC:
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Telecopy: (214) 969-0060
With a copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Rafael Lumanlan or Gavin Holles
Telecopy: (415) 296-8954
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
Address of SGC:
11
<PAGE> 15
Solectron Georgia Corporation
777 Gibraltar Drive, Building #5
Milpitas, CA 95035
Attn: Chief Financial Officer
Telecopy: (408) 956-6059
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill
Palo Alto, California 94304-1050
Attention: Real Estate Department/DSS
Telecopy: (415) 493-6811
(B) Severability. If any term or provision of this Agreement or
the application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of this Agreement,
or the application of such term or provision other than to the extent to which
it is invalid or unenforceable, shall not be affected thereby. Further, the
obligations of SGC hereunder, to the maximum extent possible, shall be deemed to
be separate, independent and in addition to, not in lieu of, the obligations of
SGC under the other Operative Documents. In the event of any inconsistency
between the terms of this Agreement and the terms and provisions of the other
Operative Documents, the terms and provisions of this Agreement shall control.
(C) No Implied Waiver. The failure of BNPLC or SGC to insist at
any time upon the strict performance of any covenant or agreement or to exercise
any option, right, power or remedy contained in this Agreement shall not be
construed as a waiver or a relinquishment thereof for the future. The waiver of
or redress for any breach of this Agreement shall not prevent a similar
subsequent act from constituting a violation. Any express waiver shall affect
only the term or condition specified in such waiver and only for the time and in
the manner specifically stated therein. A receipt by BNPLC of any payment
hereunder with knowledge of the breach of any covenant or agreement contained in
this Agreement shall not be deemed a waiver of such breach, and no waiver of any
provision of this Agreement shall be deemed to have been made unless expressed
in writing and signed by the waiving party.
(D) NO IMPLIED REPRESENTATIONS BY BNPLC. BNPLC AND BNPLC'S AGENTS
HAVE MADE NO REPRESENTATIONS OR PROMISES WITH RESPECT TO THE PROPERTY EXCEPT AS
EXPRESSLY SET FORTH HEREIN AND IN THE OTHER OPERATIVE DOCUMENTS SIGNED BY BNPLC,
AND NO RIGHTS, EASEMENTS OR LICENSES ARE ACQUIRED BY SGC BY IMPLICATION OR
OTHERWISE EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE OTHER
OPERATIVE DOCUMENTS.
(E) Entire Agreement. This Agreement, the other Operative
Documents and the other documents dated as of October 20, 1998, which are being
executed by SGC and executed or accepted by BNPLC contemporaneously with the
execution of this Agreement supersede any prior negotiations and agreements
between BNPLC and SGC concerning the Property, and no amendment or modification
of this Agreement shall be binding or valid unless expressed in a writing
executed by both parties hereto.
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<PAGE> 16
(F) Time is of the Essence. Time is of the essence as to all
obligations of SGC and BNPLC and all notices required of SGC and BNPLC under
this Agreement.
(G) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia without regard to
conflict or choice of laws.
(H) Paragraph Headings. The paragraph headings contained in this
Agreement are for convenience only and shall in no way enlarge or limit the
scope or meaning of the various and several paragraphs hereof.
(I) Other Terms and References. Words of any gender used in this
Agreement shall be held and construed to include any other gender, and words in
the singular number shall be held to include the plural and vice versa, unless
the context otherwise requires. References herein to Paragraphs, subparagraphs
or other subdivisions shall refer to the corresponding Paragraphs, subparagraphs
or subdivisions of this Agreement, unless specific reference is made to another
document or instrument. References herein to any Schedule or Exhibit shall refer
to the corresponding Schedule or Exhibit attached hereto, which shall be made a
part hereof by such reference. All capitalized terms used in this Agreement
which refer to other documents shall be deemed to refer to such other documents
as they may be renewed, extended, supplemented, amended or otherwise modified
from time to time, provided such documents are not renewed, extended or modified
in breach of any provision contained herein or therein or, in the case of any
other document to which BNPLC is a party or of which BNPLC is an intended
beneficiary, without the consent of BNPLC. All accounting terms used but not
specifically defined herein shall be construed in accordance with GAAP. The
words "this Agreement", "herein", "hereof", "hereby", "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular subdivision unless expressly so limited. The phrases
"this Paragraph" and "this subparagraph" and similar phrases used herein refer
only to the Paragraphs or subparagraphs in which the phrase occurs. As used
herein the word "or" is not exclusive. As used herein the words "include",
"including" and similar terms shall be construed as if followed by "without
limitation to".
(1) Not a Partnership, Etc. NOTHING IN THIS AGREEMENT IS INTENDED
TO BE OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE
BETWEEN BNPLC AND SGC. NEITHER THE EXECUTION OF THIS AGREEMENT NOR THE
ADMINISTRATION OF THIS AGREEMENT OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC,
NOR ANY OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO THIS
AGREEMENT OR SUCH DOCUMENTS IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY
OBLIGATIONS OF BNPLC TO SGC.
12. WAIVER OF JURY TRIAL. BNPLC AND SGC EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER DOCUMENT OR DEALINGS BETWEEN THEM
RELATING TO THIS AGREEMENT OR THE PROPERTY. The scope of this waiver is intended
to be all-encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction, including contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. SGC and BNPLC each acknowledge that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on the waiver in entering into this Agreement and the other documents referred
to herein, and that each will continue to rely on the waiver in their related
future dealings. SGC and BNPLC each further warrants and represents that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER
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<PAGE> 17
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
AGREEMENT OR THE PROPERTY. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
13. ADDITIONAL RIGHTS OF BNPLC RELATING TO ESCROWED PROCEEDS. BNPLC
shall be entitled to deliver any Escrowed Proceeds it holds on the Designated
Sale Date directly to SGC or to any Applicable Purchaser purchasing BNPLC's
interest in the Property and the Escrowed Proceeds pursuant to this Agreement
notwithstanding any prior actual or attempted conveyance or assignment by SGC,
voluntary or otherwise, of any right to receive the same; BNPLC shall not be
responsible for the proper distribution or application by SGC or any Applicable
Purchaser of any such Escrowed Proceeds paid over to SGC or the Applicable
Purchaser; and any such payment of Escrowed Proceeds to SGC or an Applicable
Purchaser shall discharge any obligation of BNPLC to deliver the same to all
Persons claiming an interest therein.
14. SECURITY FOR BNPLC'S OBLIGATIONS. To secure SGC's right to
purchase the Property pursuant to this Agreement and to recover any damages
caused by a breach of Paragraph 3 by BNPLC, including any such breach caused by
a rejection or termination of this Agreement in any bankruptcy or insolvency
proceeding instituted by or against BNPLC, as debtor, BNPLC does hereby grant to
SGC a lien and security interest against all rights, title and interests of
BNPLC from time to time in and to the Land, Improvements and other Property. SGC
may enforce such lien and security interest judicially after any such breach by
BNPLC, but not otherwise. SGC waives any right it has to seek a deficiency
judgement against BNPLC in any action brought for a judicial foreclosure of such
lien and security interest, subject to the condition that BNPLC unequivocally
and effectively waive, following any such judicial foreclosure of the lien and
security interest granted in this Paragraph, BNPLC's right of redemption.
Contemporaneously with the execution of this Agreement, SGC and BNPLC will
execute a memorandum of this Agreement which is in recordable form and which
specifically references the lien granted in this Paragraph, and SGC shall be
entitled to record such memorandum at any time prior to the Designated Sale
Date.
15. INCOME TAX REPORTING. BNPLC and SGC intend this Agreement and the
Lease to have a form for income taxes which is different than the form of this
Agreement and the Lease for other purposes, and thus the parties acknowledge and
agree as follows:
(1) FOR PURPOSES OF DETERMINING THEIR RESPECTIVE FEDERAL, STATE
AND LOCAL INCOME TAX OBLIGATIONS, BNPLC and SGC believe and intend that
this Agreement and the Lease constitute a financing arrangement or
conditional sale. Both BNPLC and SGC agree to report this Agreement and
the Lease as a financing arrangement or conditional sale on their
respective income tax returns (the "REQUIRED REPORTING"), unless such
Required Reporting is challenged in writing by the Internal Revenue
Service or another governmental authority with jurisdiction (a "TAX
CHALLENGE"). Consistent with the foregoing, BNPLC and SGC expect that
SGC (and not BNPLC) shall be treated as the true owner of the Property
for income tax purposes, thereby entitling SGC (and not BNPLC) to take
depreciation deductions and other tax benefits available to the owner.
SGC shall also report all interest earned on Escrowed Proceeds as SGC's
income for federal, state and local income tax purposes. REFERENCES IN
THIS AGREEMENT OR IN THE LEASE TO A "LEASE" OR THE "LEASED PROPERTY" ARE
NOT INTENDED FOR INCOME TAX PURPOSES TO REFLECT THE INTENT OF BNPLC OR
SGC AS TO THE FORM OF THE TRANSACTIONS COVERED BY, OR THE PROPER
CHARACTERIZATION OF, THIS AGREEMENT AND THE LEASE.
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<PAGE> 18
(2) FOR ALL OTHER PURPOSES, INCLUDING THE DETERMINATION OF THE
APPROPRIATE FINANCIAL ACCOUNTING FOR THIS AGREEMENT AND THE
DETERMINATION OF THEIR RESPECTIVE RIGHTS AND REMEDIES UNDER STATE LAW,
BNPLC and SGC believe and intend that (i) the Lease constitutes a true
Lease, not a mere financing arrangement, enforceable in accordance with
its express terms (and neither this Paragraph 15 nor the provisions
referencing this Paragraph on the title page of this Agreement nor the
corresponding provisions in the Lease are intended to affect the
enforcement of any other provisions of this Agreement or the Lease) and
(ii) this Agreement shall constitute a separate and independent
contract, enforceable in accordance with the express terms and
conditions set forth herein. In this regard, SGC acknowledges that SGC
asked BNPLC to participate in the transactions evidenced by this
Agreement and the Lease as a landlord and owner of the Property, not as
a lender. Although other transactions might have been used to accomplish
similar results, SGC expects to receive certain material accounting and
other advantages through the use of a lease transaction. Accordingly,
and notwithstanding the Required Reporting for income tax purposes, SGC
cannot equitably deny that this Agreement and the Lease should be
construed and enforced in accordance with their respective terms, rather
than as a mortgage or other security device, in any action brought by
BNPLC to enforce this Agreement or the Lease.
In the event of a Tax Challenge, BNPLC and SGC shall each provide to the other
copies of all notices from the Internal Revenue Service or any other
governmental authority presenting the Tax Challenge. Further, before changing
from the Required Reporting because of a Tax Challenge, BNPLC and SGC shall each
consider in good faith any reasonable suggestions received from the other party
to this Agreement about an appropriate response to the Tax Challenge; provided,
however, that the suggestions are set forth in a notice delivered no later than
thirty Business Days after the suggesting party is first notified of the Tax
Challenge; and, provided further, that when presented with a Tax Challenge,
BNPLC shall have the right to change from the Required Reporting rather than
participate in any litigation or other legal proceeding against the Internal
Revenue Service or another governmental authority. In any event, SGC shall
indemnify BNPLC and defend and hold BNPLC harmless from and against all Losses
imposed on or asserted against or incurred by BNPLC by reason of, in connection
with or arising out of any such challenge or any resulting recharacterization of
this Agreement or the Lease required by the Internal Revenue Service or another
governmental authority, including any additional taxes that may become due upon
any sale under this Agreement, to the extent (if any) that such Losses are not
offset by tax savings to BNPLC resulting from additional depreciation deductions
or other tax benefits of the recharacterization.
[The signature pages follow.]
15
<PAGE> 19
IN WITNESS WHEREOF, SGC and BNPLC have caused this Purchase Agreement to
be executed as of October 20, 1998.
"SGC"
SOLECTRON GEORGIA CORPORATION
By: /s/ G. R. HAWKINS, JR.
-----------------------------------
G. R. Hawkins, Jr., President
<PAGE> 20
[Continuation of signature pages to Purchase Agreement dated to be effective
October 20, 1998]
"BNPLC"
BNP LEASING CORPORATION
By: /s/ LLOYD G. COX
-----------------------------------
Lloyd G. Cox, Vice President
<PAGE> 21
EXHIBIT A
LEGAL DESCRIPTION
ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lots 126, 153 and 154,
7th District of Gwinnett County, Georgia, which is described as follows:
TO LOCATE THE POINT OF BEGINNING commence at a point formed by the intersection
of the northeastern margin of the right-of-way of Northridge Drive (having an
80-foot right-of-way) and the northwestern margin of the right-of-way of Old
Peachtree Road (having an 80-foot right of way), if both of said rights-of-way
are extended to form a point; thence North 56 degrees 23 minutes 46 seconds West
a distance of 11.43 feet to a point marked by a 1/2-inch rebar pin which is the
POINT OF BEGINNING and which is located on the northeastern margin of the
right-of-way of Northridge Drive; thence northwesterly along the northeastern
margin of the right-of-way of Northridge Drive the following five (5) courses
and distances, or curves, as hereinafter described: thence North 56 degrees 23
minutes 46 seconds West a distance of 216.60 feet to a point; thence
northwesterly along an arc of a curve to the right a distance of 278.76 feet to
a point (said arc being subtended by a chord having a chord bearing of North 44
degrees 21 minutes 15 seconds West, a chord distance of 276.71 feet and a radius
of 663.15 feet); thence North 32 degrees 19 minutes 42 seconds West a distance
of 225.20 feet to a point; thence northwesterly along an arc of a curve to the
left a distance of 312.95 feet to a point (said arc being subtended by a chord
having a chord bearing of North 45 degrees 15 minutes 26 seconds West, a chord
distance of 310.30 feet and a radius of 692.57 feet); thence North 58 degrees 12
minutes 08 seconds West a distance of 308.00 feet to a point marked by a
1/2-inch rebar pin; thence leaving the northeastern margin of the right-of-way
of Northridge Drive and continuing northwesterly, northerly and northeasterly
along an arc of a curve to the right a distance of 18.85 feet to a point marked
by a 1/2-inch rebar pin (said arc being subtended by a chord having a chord
bearing of North 13 degrees 12 minutes 08 seconds West, a chord distance of
16.97 feet and a radius of 12.00 feet) located on the southeasterly margin of
the right-of-way of Northbrook Parkway (having a 100-foot right-of-way); thence
easterly along the southeasterly margin of the right-of-way of Northbrook
Parkway the following four (4) courses and distances, or curves, as hereinafter
described: North 31 degrees 47 minutes 52 seconds East a distance of 164.90 feet
to point; thence northeasterly along an arc of a curve to the right a distance
of 462.34 feet to a point (said arc being subtended by a chord having a chord
bearing of North 46 degrees 47 minutes 52 seconds East, a chord distance of
457.08 feet and a radius of 883.01 feet); thence North 61 degrees 47 minutes 52
seconds East a distance of 277.91 feet to a point; thence northeasterly along an
arc of a curve to the left distance of 518.27 feet to a point marked by a
1/2-inch rebar pin (said arc being subtended by a chord having a chord bearing
of North 45 degrees 13 minutes 11 seconds East, a chord distance of 511.07 feet
and a radius of 895.59 feet); leaving said southerly margin of the right-of-way
of Northbrook Parkway, thence South 61 degrees 21 minutes 31 seconds East a
distance of 1,185.63 feet to a point marked by a 5/8-inch rebar pin which is
located on the western margin of the right-of-way of Old Peachtree Road; thence
South 03 degrees 13 minutes 18 seconds East along the western margin of the
right-of-way of Old Peachtree Road a distance of 199.76 feet to a point; thence
southerly and southwesterly along the western and northwestern margin of the
right-of-way of Old Peachtree Road and being an arc of a curve to the right a
distance of 536.80 feet to a point (said arc being subtended by a chord having a
chord bearing of South 26 degrees 52 minutes 52 seconds West, a chord distance
of 512.44 feet and a radius of 510.85 feet); thence South 56 degrees 59 minutes
02 seconds West along the northwestern margin of the right-of-way of Old
Peachtree Road a distance of 729.16 feet to a point; thence southwesterly along
the northwestern margin of the right-of-way of Old Peachtree Road along an arc
of a curve to the left a distance of 330.46 feet to a point marked by a 1/2 inch
rebar pin (said arc being subtended by a chord having a chord bearing of south
46 degrees 52 minutes 01 seconds West, a chord distance of 328.74 feet and a
radius of 935.72 feet); thence southwesterly, westerly and northwesterly along
an arc of a curve to the right a distance of 18.19 feet tot he POINT OF
BEGINNING (said arc being subtended by a chord having a chord bearing of South
80 degrees 10 minutes 35 seconds West, a chord distance of 16.50 feet and a
radius of 12.00 feet), said parcel containing an aggregate of 49.552 acres,
depicted as Tract 1 (12.208 acres);
<PAGE> 22
Tract 2 (10.000 acres) and Tract 3 (27.334 acres), and being more particularly
shown and delineated on that certain survey entitled "As Built Survey for OKI
America, Inc.; Solectron Georgia Corporation; BNP Leasing Corporation and
Chicago Title Insurance Company:, prepared by Pinion & McGaughery Land
Surveyors, Inc, bearing the seal and certification of George H. Pinion, Georgia
Registered Land Surveyor Number 1606, dated July 1, 1998 last revised October 7,
1998, which survey is incorporated herein by reference thereto.
Exhibit A - Page 2
<PAGE> 23
EXHIBIT B
LIMITED WARRANTY DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [SGC or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
BNP LEASING CORPORATION, a Delaware corporation (hereinafter called
"Grantor"), for and in consideration of the sum of Ten Dollars ($10.00) and
other valuable consideration paid to Grantor by [SGC or the Applicable
Purchaser] (hereinafter called "Grantee"), the receipt and sufficiency of which
are hereby acknowledged, does hereby GRANT, SELL, CONVEY, ASSIGN and DELIVER to
Grantee the real property described in Annex A attached hereto and hereby made a
part hereof, together with any buildings and other improvements situated
thereon, any fixtures and other property affixed thereto and all right, title
and interest of Grantor in and to adjacent streets, alleys and rights-of-way
(collectively, the "Property"); provided, however, this conveyance is made by
Grantor and accepted by Grantee subject to all zoning and other ordinances
affecting the Property, current year ad valorem taxes and any general or special
assessments due and payable after the date hereof, all encroachments, variations
in area or in measurements, boundary line disputes, roadways and other matters
not of record which would be disclosed by a current survey and inspection of the
Property, and the encumbrances listed in Annex B attached hereto and made a part
hereof (collectively, the "Permitted Encumbrances").
TO HAVE AND TO HOLD the Property, together with all and singular the
rights and appurtenances thereto in any wise belonging unto Grantee, its
successors and assigns, forever, and Grantor does hereby bind Grantor and
Grantor's successors to warrant and forever defend all and singular the said
premises unto Grantee, its successors and assigns against every person
whomsoever lawfully claiming, or to claim the same, or any part thereof by,
through or under Grantor, but not otherwise; subject, however, to the Permitted
Encumbrances. Except as expressly set forth in the preceding sentence, Grantor
makes no warranty of title, express or implied.
<PAGE> 24
IN WITNESS WHEREOF, this Deed is executed by Grantor on this ___ day
of ____________, _______.
The address of Grantee is:
________________
________________
BNP LEASING CORPORATION
Date: As of ____________ By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[SEAL]
Signed, sealed and delivered
this ____ day of _________, _____,
in the presence of:
- -------------------------
Unofficial Witness
- -------------------------
Notary Public
[Notary Seal]
Exhibit B - Page 2
<PAGE> 25
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LEASE CHANGES FROM
TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH SGC REQUESTS BNPLC'S CONSENT OR
APPROVAL AS PROVIDED IN THE LEASE, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW
CHANGE. ANY SUCH CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND
THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION
IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lots 126, 153 and 154,
7th District of Gwinnett County, Georgia, which is described as follows:
TO LOCATE THE POINT OF BEGINNING commence at a point formed by the intersection
of the northeastern margin of the right-of-way of Northridge Drive (having an
80-foot right-of-way) and the northwestern margin of the right-of-way of Old
Peachtree Road (having an 80-foot right of way), if both of said rights-of-way
are extended to form a point; thence North 56 degrees 23 minutes 46 seconds West
a distance of 11.43 feet to a point marked by a 1/2-inch rebar pin which is the
POINT OF BEGINNING and which is located on the northeastern margin of the
right-of-way of Northridge Drive; thence northwesterly along the northeastern
margin of the right-of-way of Northridge Drive the following five (5) courses
and distances, or curves, as hereinafter described: thence North 56 degrees 23
minutes 46 seconds West a distance of 216.60 feet to a point; thence
northwesterly along an arc of a curve to the right a distance of 278.76 feet to
a point (said arc being subtended by a chord having a chord bearing of North 44
degrees 21 minutes 15 seconds West, a chord distance of 276.71 feet and a radius
of 663.15 feet); thence North 32 degrees 19 minutes 42 seconds West a distance
of 225.20 feet to a point; thence northwesterly along an arc of a curve to the
left a distance of 312.95 feet to a point (said arc being subtended by a chord
having a chord bearing of North 45 degrees 15 minutes 26 seconds West, a chord
distance of 310.30 feet and a radius of 692.57 feet); thence North 58 degrees 12
minutes 08 seconds West a distance of 308.00 feet to a point marked by a
1/2-inch rebar pin; thence leaving the northeastern margin of the right-of-way
of Northridge Drive and continuing northwesterly, northerly and northeasterly
along an arc of a curve to the right a distance of 18.85 feet to a point marked
by a 1/2-inch rebar pin (said arc being subtended by a chord having a chord
bearing of North 13 degrees 12 minutes 08 seconds West, a chord distance of
16.97 feet and a radius of 12.00 feet) located on the southeasterly margin of
the right-of-way of Northbrook Parkway (having a 100-foot right-of-way); thence
easterly along the southeasterly margin of the right-of-way of Northbrook
Parkway the following four (4) courses and distances, or curves, as hereinafter
described: North 31 degrees 47 minutes 52 seconds East a distance of 164.90 feet
to point; thence northeasterly along an arc of a curve to the right a distance
of 462.34 feet to a point (said arc being subtended by a chord having a chord
bearing of North 46 degrees 47 minutes 52 seconds East, a chord distance of
457.08 feet and a radius of 883.01 feet); thence North 61 degrees 47 minutes 52
seconds East a distance of 277.91 feet to a point; thence northeasterly along an
arc of a curve to the left distance of 518.27 feet to a point marked by a
1/2-inch rebar pin (said arc being subtended by a chord having a chord bearing
of North 45 degrees 13 minutes 11 seconds East, a chord distance of 511.07 feet
and a radius of 895.59 feet); leaving said southerly margin of the right-of-way
of Northbrook Parkway, thence South 61 degrees 21 minutes 31 seconds East a
distance of 1,185.63 feet to a point marked by a 5/8-inch rebar pin which is
located on the western margin of the right-of-way of Old Peachtree Road; thence
South 03 degrees 13 minutes 18 seconds East along the western margin of the
right-of-way of Old Peachtree Road a distance of 199.76 feet to a point; thence
southerly and southwesterly along the western and northwestern margin of the
right-of-way of Old Peachtree Road and being an arc of a curve to the right a
distance of 536.80 feet to a point (said arc being subtended by a chord having a
chord bearing of South 26 degrees 52 minutes 52 seconds West, a chord distance
of 512.44 feet and a radius of 510.85 feet); thence South 56 degrees 59 minutes
02 seconds West along the northwestern margin of the right-of-way of Old
Peachtree Road
Exhibit B - Page 3
<PAGE> 26
a distance of 729.16 feet to a point; thence southwesterly along the
northwestern margin of the right-of-way of Old Peachtree Road along an arc of a
curve to the left a distance of 330.46 feet to a point marked by a 1/2 inch
rebar pin (said arc being subtended by a chord having a chord bearing of south
46 degrees 52 minutes 01 seconds West, a chord distance of 328.74 feet and a
radius of 935.72 feet); thence southwesterly, westerly and northwesterly along
an arc of a curve to the right a distance of 18.19 feet tot he POINT OF
BEGINNING (said arc being subtended by a chord having a chord bearing of South
80 degrees 10 minutes 35 seconds West, a chord distance of 16.50 feet and a
radius of 12.00 feet), said parcel containing an aggregate of 49.552 acres,
depicted as Tract 1 (12.208 acres); Tract 2 (10.000 acres) and Tract 3 (27.334
acres), and being more particularly shown and delineated on that certain survey
entitled "As Built Survey for OKI America, Inc.; Solectron Georgia Corporation;
BNP Leasing Corporation and Chicago Title Insurance Company:, prepared by Pinion
& McGaughery Land Surveyors, Inc, bearing the seal and certification of George
H. Pinion, Georgia Registered Land Surveyor Number 1606, dated July 1, 1998 last
revised October 7, 1998, which survey is incorporated herein by reference
thereto.
Exhibit B - Page 4
<PAGE> 27
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY
BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW, SUCH ADDITIONAL
ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND THIS "DRAFTING NOTE" WILL BE
DELETED BEFORE THIS DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS
"PERMITTED ENCUMBRANCES" UNDER THE LEASE FROM TIME TO TIME OR BECAUSE OF SGC'S
REQUEST FOR BNPLC'S CONSENT OR APPROVAL TO AN ADJUSTMENT AS PROVIDED IN THE
LEASE.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the List of Defined Terms attached to the
Lease Agreement referenced in item #1 of the list below), including the
following matters to the extent the same are still valid and in force:
1. Lease Agreement dated as of October 20, 1998, by and between BNP Leasing
Corporation, as lessor, and Solectron Georgia Corporation, as lessee.
2. Declaration of Protective Covenants for Northbrook, Gwinnett County, Georgia
by Weeks NorthBrook MeadowBrook I Partnership, Ltd. and David Roan, dated
March 11, 1986, filed for record March 14, 1986 at 3:54 p.m., recorded in
Deed Book 3426, Page 118, Records of Gwinnett County, Georgia; as assigned
by that certain Assignment of Declaration of Protective Covenants for
Northbrook from Weeks Northbrook Meadowbrook I Partnership, Ltd., a Georgia
limited partnership to Weeks Development Partnership, a Georgia general
partnership, dated August 24, 1994, filed for record September 1, 1994 at
3:31 p.m., recorded in Deed Book 10643, Page 286, aforesaid Record.
3. Those matters as disclosed by that certain survey entitled "As Built Survey
for OKI America, Inc.", prepared by Pinion & McGaughey Land Surveyors, Inc.,
bearing the seal and certification of George H. Pinion, Georgia Registered
Land Surveyor Number 1606, dated July 1, 1998, as follows:
(i) 15-foot building line along northeasterly line of subject property;
(ii) 100-foot building line located along a portion of Old Peachtree Road
near easterly corner of subject property;
(iii) 50-foot building lines along Northridge Drive, Northbrook Parkway and
a portion of Old Peachtree Road;
(iv) 75-foot natural buffer in east corner of subject property;
(v) 10-foot no access buffer in east corner of subject property;
(vi) 10-foot, 15-foot and 20-foot drainage easements with 18-inch,
30-inch, 36-inch, 48-inch and 60-inch corrugated metal pipes, swales,
flared end sections, manholes, junction boxes and outlet control
structure in southerly, westerly and easterly portions of subject
property;
Exhibit B - Page 5
<PAGE> 28
(vii) 20-foot sanitary sewer easements with manholes in southerly,
westerly and central portions of subject property;
(viii) branches in southwesterly portion of subject property;
(ix) two (2) detention ponds with earthen berm, 60-foot corrugated metal
pipe and headwall with 10-foot drainage easement surrounding said
ponds in westerly portion of subject property;
(x) water vaults in easterly and northerly portions of subject property;
(xi) liquid oxygen tank located in northerly portion of subject property;
(xii) Jackson Electric Membership Corporation cubicle located in easterly
corner portion of subject property;
(xiii) Southern Bell cabinet located in easterly portion of subject
property;
(xiv) guy wire crossing easterly line of subject property;
(xv) ditch in westerly portion of subject property;
(xvi) lights and bollard lights throughout subject property;
(xvii) electric box in central portion of subject property;
(xviii) fire hydrants throughout subject property;
(xix) concrete flumes on northwestern side of building;
(xx) two (2) concrete pads with electrical equipment in easterly portion
of subject property;
(xxi) water meter on southern side of building; and
(xxii) concrete vault (electric) in central portion of subject property.
Exhibit B - Page 6
<PAGE> 29
EXHIBIT C
INTENTIONALLY DELETED.
<PAGE> 30
EXHIBIT D
BILL OF SALE AND ASSIGNMENT OF
LEASE AND INTANGIBLE ASSETS
Reference is made to: (1) that certain Purchase Agreement between BNP
Leasing Corporation ("ASSIGNOR") and Solectron Georgia Corporation, dated as of
October 20, 1998 (the "PURCHASE AGREEMENT"); (2) that certain Lease Agreement
between Assignor, as landlord, and Solectron Georgia Corporation, as tenant,
dated as of October 20, 1998 (the "LEASE"); and (3) that certain Closing
Certificate and Agreement by Solectron Georgia Corporation in favor of Assignor,
dated as of October 20, 1998 (the "CLOSING CERTIFICATE"). (Capitalized terms
used and not otherwise defined in this document are intended to have the
meanings assigned to them in the List of Defined Terms attached to and made a
part of the Lease.)
As contemplated by the Purchase Agreement, Assignor hereby sells, transfers
and assigns unto [SGC OR THE APPLICABLE PURCHASER, AS THE CASE MAY BE], a
_____________ ("ASSIGNEE"), all of Assignor's right, title and interest in and
to the following property, if any, to the extent such property is assignable:
(a) the Lease;
(b) any pending or future award made because of any condemnation affecting
the Property or because of any conveyance to be made in lieu thereof, and any
unpaid award for damage to the Property and any unpaid proceeds of insurance or
claim or cause of action for damage, loss or injury to the Property; and
(c) all other property included within the definition of "Property" as set
forth in the Purchase Agreement, including but not limited to any of the
following transferred to Assignor by the tenant pursuant to Paragraph 8 of the
Lease or otherwise acquired by Assignor, at the time of the execution and
delivery of the Lease and Purchase Agreement or thereafter, by reason of
Assignor's status as the owner of any interest in the Property: (1) any goods,
equipment, furnishings, furniture, chattels and tangible personal property of
whatever nature that are located on the Property and all renewals or
replacements of or substitutions for any of the foregoing; (ii) the rights of
Assignor, existing at the time of the execution of the Lease and Purchase
Agreement or thereafter arising, under Permitted Encumbrances or Development
Documents (both as defined in the Lease); and (iii) any other permits, licenses,
franchises, certificates, and other rights and privileges related to the
Property that Assignee would have acquired if Assignee had itself purchased the
land included in the Property.
Provided, however, excluded from this conveyance and reserved to Assignor are
any rights or privileges of Assignor under the following ("EXCLUDED RIGHTS"):
(1) the indemnities set forth in the Lease and the Closing Certificate, whether
such rights are presently known or unknown, including rights of the Assignor to
be indemnified against environmental claims of third parties as provided in the
Closing Certificate which may not presently be known, (2) provisions in the
Lease that establish the right of Assignor to recover any accrued unpaid rent
under the Lease which may be outstanding as of the date hereof, (3) agreements
between Assignor and "BNPLC's Parent" or any "Participant," both as defined in
the Lease, or any modification or extension thereof, or (4) any other instrument
being delivered to Assignor contemporaneously herewith pursuant to the Purchase
Agreement. To the extent that this conveyance does include any rights to receive
future payments under the Lease, such rights ("INCLUDED RIGHTS") shall be
subordinate to Assignor's Excluded Rights, and Assignee hereby waives any rights
to enforce Included Rights until such time as Assignor has received all payments
to which it remains entitled by reason of Excluded Rights. If any amount shall
be paid to Assignee
<PAGE> 31
on account of any Included Rights at any time before Assignor has received all
payments to which it is entitled because of Excluded Rights, such amount shall
be held in trust by Assignee for the benefit of Assignor, shall be segregated
from the other funds of Assignee and shall forthwith be paid over to Assignor to
be held by Assignor as collateral for, or then or at any time thereafter applied
in whole or in part by Assignor against, the payments due to Assignor because of
Excluded Rights, whether matured or unmatured, in such order as Assignor shall
elect.
Assignor does for itself and its successors covenant and agree to warrant
and defend the title to the property assigned herein against the just and lawful
claims and demands of any person claiming under or through a Lien Removable by
BNPLC, but not otherwise.
Assignee hereby assumes and agrees to keep, perform and fulfill Assignor's
obligations, if any, relating to any permits or contracts, under which Assignor
has rights being assigned herein.
IN WITNESS WHEREOF, the parties have executed this instrument as of
_______________, _____.
ASSIGNOR:
BNP LEASING CORPORATION a Delaware corporation
By:______________________________________________
Its:_____________________________________________
ASSIGNEE:
[SGC OR THE APPLICABLE PURCHASER], a ____________
corporation
By: _____________________________________________
Its:_____________________________________________
Exhibit D - Page 2
<PAGE> 32
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, ______________________________________,
personally appeared _____________________________ and _________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the persons whose names are subscribed to the within instrument and
acknowledged to me that they executed the same in their authorized capacities,
and that by their signatures on the instrument the person, or the entity upon
behalf of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature _____________________
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, _______________________________________,
personally appeared ________________________and _________________________ ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the persons whose names are subscribed to the within instrument and
acknowledged to me that they executed the same in their authorized capacities,
and that by their signatures on the instrument the person, or the entity upon
behalf of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature_____________________________
Exhibit D - Page 3
<PAGE> 33
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LEASE CHANGES FROM
TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH SGC REQUESTS BNPLC'S CONSENT OR
APPROVAL AS PROVIDED IN THE LEASE, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW
CHANGE. ANY SUCH CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND
THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THE DOCUMENT TO WHICH THIS
DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lots 126, 153 and 154,
7th District of Gwinnett County, Georgia, which is described as follows:
TO LOCATE THE POINT OF BEGINNING commence at a point formed by the intersection
of the northeastern margin of the right-of-way of Northridge Drive (having an
80-foot right-of-way) and the northwestern margin of the right-of-way of Old
Peachtree Road (having an 80-foot right of way), if both of said rights-of-way
are extended to form a point; thence North 56 degrees 23 minutes 46 seconds West
a distance of 11.43 feet to a point marked by a 1/2-inch rebar pin which is the
POINT OF BEGINNING and which is located on the northeastern margin of the
right-of-way of Northridge Drive; thence northwesterly along the northeastern
margin of the right-of-way of Northridge Drive the following five (5) courses
and distances, or curves, as hereinafter described: thence North 56 degrees 23
minutes 46 seconds West a distance of 216.60 feet to a point; thence
northwesterly along an arc of a curve to the right a distance of 278.76 feet to
a point (said arc being subtended by a chord having a chord bearing of North 44
degrees 21 minutes 15 seconds West, a chord distance of 276.71 feet and a radius
of 663.15 feet); thence North 32 degrees 19 minutes 42 seconds West a distance
of 225.20 feet to a point; thence northwesterly along an arc of a curve to the
left a distance of 312.95 feet to a point (said arc being subtended by a chord
having a chord bearing of North 45 degrees 15 minutes 26 seconds West, a chord
distance of 310.30 feet and a radius of 692.57 feet); thence North 58 degrees 12
minutes 08 seconds West a distance of 308.00 feet to a point marked by a
1/2-inch rebar pin; thence leaving the northeastern margin of the right-of-way
of Northridge Drive and continuing northwesterly, northerly and northeasterly
along an arc of a curve to the right a distance of 18.85 feet to a point marked
by a 1/2-inch rebar pin (said arc being subtended by a chord having a chord
bearing of North 13 degrees 12 minutes 08 seconds West, a chord distance of
16.97 feet and a radius of 12.00 feet) located on the southeasterly margin of
the right-of-way of Northbrook Parkway (having a 100-foot right-of-way); thence
easterly along the southeasterly margin of the right-of-way of Northbrook
Parkway the following four (4) courses and distances, or curves, as hereinafter
described: North 31 degrees 47 minutes 52 seconds East a distance of 164.90 feet
to point; thence northeasterly along an arc of a curve to the right a distance
of 462.34 feet to a point (said arc being subtended by a chord having a chord
bearing of North 46 degrees 47 minutes 52 seconds East, a chord distance of
457.08 feet and a radius of 883.01 feet); thence North 61 degrees 47 minutes 52
seconds East a distance of 277.91 feet to a point; thence northeasterly along an
arc of a curve to the left distance of 518.27 feet to a point marked by a
1/2-inch rebar pin (said arc being subtended by a chord having a chord bearing
of North 45 degrees 13 minutes 11 seconds East, a chord distance of 511.07 feet
and a radius of 895.59 feet); leaving said southerly margin of the right-of-way
of Northbrook Parkway, thence South 61 degrees 21 minutes 31 seconds East a
distance of 1,185.63 feet to a point marked by a 5/8-inch rebar pin which is
located on the western margin of the right-of-way of Old Peachtree Road; thence
South 03 degrees 13 minutes 18 seconds East along the western margin of the
right-of-way of Old Peachtree Road a distance of 199.76 feet to a point; thence
southerly and southwesterly along the western and northwestern margin of the
right-of-way of Old Peachtree Road and being an arc of a curve to the right a
distance of 536.80 feet to a point (said arc being subtended by a chord having a
chord bearing of South 26 degrees 52 minutes 52 seconds West, a chord distance
of 512.44 feet and a radius of 510.85 feet); thence South 56 degrees 59 minutes
02 seconds West along the northwestern margin of the right-of-way of Old
Peachtree Road a distance of 729.16 feet to a point; thence southwesterly along
the northwestern
Exhibit D - Page 4
<PAGE> 34
margin of the right-of-way of Old Peachtree Road along an arc of a curve to the
left a distance of 330.46 feet to a point marked by a 1/2 inch rebar pin (said
arc being subtended by a chord having a chord bearing of south 46 degrees 52
minutes 01 seconds West, a chord distance of 328.74 feet and a radius of 935.72
feet); thence southwesterly, westerly and northwesterly along an arc of a curve
to the right a distance of 18.19 feet tot he POINT OF BEGINNING (said arc being
subtended by a chord having a chord bearing of South 80 degrees 10 minutes 35
seconds West, a chord distance of 16.50 feet and a radius of 12.00 feet), said
parcel containing an aggregate of 49.552 acres, depicted as Tract 1 (12.208
acres); Tract 2 (10.000 acres) and Tract 3 (27.334 acres), and being more
particularly shown and delineated on that certain survey entitled "As Built
Survey for OKI America, Inc.; Solectron Georgia Corporation; BNP Leasing
Corporation and Chicago Title Insurance Company:, prepared by Pinion &
McGaughery Land Surveyors, Inc, bearing the seal and certification of George H.
Pinion, Georgia Registered Land Surveyor Number 1606, dated July 1, 1998 last
revised October 7, 1998, which survey is incorporated herein by reference
thereto.
Exhibit D - Page 5
<PAGE> 35
EXHIBIT E
ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES (this
"CERTIFICATE") is made as of ___________________, ____, by [SGC or the
Applicable Purchaser, as the case may be], a ___________________ ("GRANTEE").
Contemporaneously with the execution of this Certificate, BNP Leasing
Corporation, a Delaware corporation ("BNPLC"), is executing and delivering to
Grantee (1) a deed and (2) a Bill of Sale and Assignment of Lease and Intangible
Assets (the foregoing documents and any other documents to be executed in
connection therewith are herein called the "CONVEYANCING DOCUMENTS" and any of
the properties, rights or other matters assigned, transferred or conveyed
pursuant thereto are herein collectively called the "SUBJECT PROPERTY").
NOTWITHSTANDING ANY PROVISION CONTAINED IN THE CONVEYANCING DOCUMENTS TO
THE CONTRARY, GRANTEE ACKNOWLEDGES THAT BNPLC MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY NATURE OR KIND, WHETHER STATUTORY, EXPRESS OR IMPLIED, WITH
RESPECT TO ENVIRONMENTAL MATTERS OR THE PHYSICAL CONDITION OF THE SUBJECT
PROPERTY, AND GRANTEE, BY ACCEPTANCE OF THE CONVEYANCING DOCUMENTS, ACCEPTS THE
SUBJECT PROPERTY "AS IS," "WHERE IS," "WITH ALL FAULTS" AND WITHOUT ANY SUCH
REPRESENTATION OR WARRANTY BY GRANTOR AS TO ENVIRONMENTAL MATTERS, THE PHYSICAL
CONDITION OF THE SUBJECT PROPERTY, COMPLIANCE WITH SUBDIVISION OR PLATTING
REQUIREMENTS OR CONSTRUCTION OF ANY IMPROVEMENTS. Without limiting the
generality of the foregoing, Grantee hereby further acknowledges and agrees that
warranties of merchantability and fitness for a particular purpose are excluded
from the transaction contemplated by the Conveyancing Documents, as are any
warranties arising from a course of dealing or usage of trade. Grantee hereby
assumes all risk and liability (and agrees that BNPLC shall not be liable for
any special, direct, indirect, consequential, or other damages) resulting or
arising from or relating to the ownership, use, condition, location,
maintenance, repair, or operation of the Subject Property, except for damages
proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of BNPLC. As used in the
preceding sentence, "ESTABLISHED MISCONDUCT" is intended to have, and be limited
to, the meaning given to it in the List of Defined Terms attached to the
Purchase Agreement between BNPLC and Solectron Georgia Corporation dated as of
October 20, 1998, pursuant to which BNPLC is delivering the Conveyancing
Documents.
The provisions of this Certificate shall be binding on Grantee, its
successors and assigns and any other party claiming through Grantee. Grantee
hereby acknowledges that BNPLC is entitled to rely and is relying on this
Certificate.
EXECUTED as of ________________, ____.
[SGC OR THE APPLICABLE PURCHASER]
By:__________________________________________
Name:_____________________________________
Title:____________________________________
<PAGE> 36
EXHIBIT F
INTENTIONALLY DELETED
<PAGE> 37
EXHIBIT G
SECRETARY'S CERTIFICATE
The undersigned, [Secretary or Assistant Secretary] of BNP Leasing
Corporation, a Delaware corporation (the "Corporation"), hereby certifies as
follows:
1. That he is the duly, elected, qualified and acting Secretary [or
Assistant Secretary] of the Corporation and has custody of the corporate
records, minutes and corporate seal.
2. That the following named persons have been properly designated,
elected and assigned to the office in the Corporation as indicated below; that
such persons hold such office at this time and that the specimen signature
appearing beside the name of such officer is his or her true and correct
signature.
[THE FOLLOWING BLANKS MUST BE COMPLETED WITH THE NAMES AND SIGNATURES OF THE
OFFICERS WHO WILL BE SIGNING THE DEED AND OTHER SALE CLOSING DOCUMENTS ON BEHALF
OF THE CORPORATION.]
<TABLE>
<CAPTION>
Name Title Signature
- ---- ----- ---------
<S> <C> <C>
- ----------- ----------------- ---------------------
- ----------- ----------------- ---------------------
</TABLE>
3. That the resolutions attached hereto and made a part hereof were
duly adopted by the Board of Directors of the Corporation in accordance with the
Corporation's Articles of Incorporation and Bylaws. Such resolutions have not
been amended, modified or rescinded and remain in full force and effect.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Corporation on this __, day of ______________, ____.
-----------------------------------------
[signature and title]
<PAGE> 38
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Purchase Agreement (herein called the
"Purchase Agreement") dated as of October 20, 1998, by and between BNP Leasing
Corporation (the "Corporation") and Solectron Georgia Corporation ("Purchaser"),
the Corporation agreed to sell and Purchaser agreed to purchase or cause the
Applicable Purchaser (as defined in the Purchase Agreement) to purchase the
Corporation's interest in the property (the "Property") located in __________,
Georgia more particularly described therein.
NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Corporation, in its best business judgment, deems it in the best interest of the
Corporation and its shareholders that the Corporation convey the Property to
Purchaser or the Applicable Purchaser pursuant to and in accordance with the
terms of the Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed in the name and on behalf of the
Corporation to cause the Corporation to fulfill its obligations under the
Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed to take or cause to be taken any and
all actions and to prepare or cause to be prepared and to execute and deliver
any and all deeds and other documents, instruments and agreements that shall be
necessary, advisable or appropriate, in such officer's sole and absolute
discretion, to carry out the intent and to accomplish the purposes of the
foregoing resolutions.
Exhibit G - Page 2
<PAGE> 39
EXHIBIT H
BNP LEASING CORPORATION
717 N. HARWOOD
SUITE 2630
DALLAS, TEXAS 75201
___________________ , ________
[Title Insurance Company]
- -----------------
- -----------------
- -----------------
Re: Recording of (1) Deed and (2) Bill of Sale and Assignment of Lease
and Intangible Assets to [SGC OR THE APPLICABLE PURCHASER] ("Purchaser")
Ladies and Gentlemen:
BNP Leasing Corporation has executed and delivered to Purchaser (1) a
Deed and (2) Bill of Sale and Assignment of Lease and Intangible Assets, each in
the form attached to this letter. You are hereby authorized and directed to
record such documents at the request of Purchaser.
Sincerely,
<PAGE> 40
EXHIBIT I
FIRPTA STATEMENT
Section 1445 of the Internal Revenue Code of 1986, as amended, provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person.
To inform [SGC OR THE APPLICABLE PURCHASER] (the "Transferee") that
withholding of tax is not required upon the disposition of a real property
interest by transferor, BNP Leasing Corporation (the "Seller"), the undersigned
hereby certifies the following on behalf of the Seller:
1. The Seller is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. The United States employer identification number for the Seller is
75-2252918;
3. The office address of the Seller is ______________
___________________________________ .
The Seller understands that this certification may be disclosed to the
Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
The Seller understands that the Transferee is relying on this affidavit
in determining whether withholding is required upon said transfer. The Seller
hereby agrees to indemnify and hold the Transferee harmless from and against any
and all obligations, liabilities, claims, losses, actions, causes of action,
demands, rights, damages, costs, and expenses (including but not limited to
court costs and attorneys' fees) incurred by the Transferee as a result of any
false misleading statement contained herein.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Seller.
Dated: ___________, ____.
BNP LEASING CORPORATION, a Delaware
corporation
By: ________________________________________
Name:____________________________________
Title:___________________________________
<PAGE> 41
EXHIBIT J
INDEMNITY FOR LIENS REMOVABLE BY BNPLC
THIS INDEMNITY AGREEMENT (this "AGREEMENT") is made as of
_________________, _____, by SOLECTRON GEORGIA CORPORATION, a Georgia
corporation ("PURCHASER") [OR THE APPLICABLE PURCHASER] and BNP LEASING
CORPORATION, a Delaware corporation ("SELLER") and ___________________________
("TITLE COMPANY").
R E C I T A L S
A. Purchaser is acquiring the land described in Annex A attached hereto
and any improvements located thereon (the "PROPERTY") pursuant to the terms and
conditions of that certain Purchase Agreement dated as of October 20, 1998 by
between Seller and Purchaser [or SGC] (the "PURCHASE AGREEMENT").
B. In connection with its acquisition of the Property, Seller has been
notified as contemplated by the Purchase Agreement that the matters described in
Annex B attached hereto (the "RELEVANT ENCUMBRANCES") have been identified as
encumbrances upon title to the Property and that such matters, to the extent
valid, constitute Liens Removable by BNPLC (as defined below).
C. Because of such notice to Seller, Seller is required by the Purchase
Agreement to tender this Indemnity Agreement to Purchaser.
NOW, THEREFORE, in consideration of the above recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
Seller must promptly remove any of the Relevant Encumbrances that
constitute "LIENS REMOVABLE BY BNPLC" (which for purposes of this Indemnity
Agreement shall have the meaning assigned to it in the List of Defined Terms
attached to the Purchase Agreement). Seller must also pay, indemnify and hold
harmless Purchaser, the Title Company, the Purchaser's successors and assigns as
to the Property and the Title Company's successors and assigns as to any title
insurance policy issued to Purchaser by the Title Company covering the Property
from and against any and all liabilities, damages, claims, actions, judgments,
costs and expenses (including, without limitation, reasonable attorneys' fees)
caused by Seller's failure to promptly remove any of the Relevant Encumbrances
that constitute Liens Removable by BNPLC.
Nothing herein shall be construed as an admission by Seller that any of
the Relevant Encumbrances do constitute Liens Removable by BNPLC or as imposing
a duty upon Seller to remove or defend against claims arising out of any
Relevant Encumbrances that do not constitute Liens Removable by BNPLC. Nothing
herein contained shall limit Purchaser's rights or remedies under the Purchase
Agreement because of any failure by BNPLC to remove all Liens Removable by BNPLC
before conveying the Property.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF GEORGIA WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
SELLER, PURCHASER AND THE TITLE COMPANY EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER DOCUMENT, OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE
<PAGE> 42
RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended to
be all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including, without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Purchaser, Seller and the Title Company each
acknowledge that this waiver is a material inducement to enter into a business
relationship, that each has already relied on the waiver in entering into this
Agreement and the other documents referred to herein, and that each will
continue to rely on the waiver in their related future dealings. Purchaser,
Seller and the Title Company each further warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LEASE OR THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
Exhibit J - Page 2
<PAGE> 43
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"Seller"
BNP LEASING CORPORATION, a Delaware
corporation
By: ________________________________________
Name: ________________________
Title: ________________________
"Purchaser"
SOLECTRON GEORGIA CORPORATION, a Georgia
corporation
By: _________________________________________
Name: ________________________
Title: ________________________
"Title Company"
_________________________________, a
__________________________
By: _________________________________________
Name: ________________________
Title: ________________________
Exhibit J - Page 3
<PAGE> 44
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LEASE CHANGES FROM
TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH SGC REQUESTS BNPLC'S CONSENT OR
APPROVAL AS PROVIDED IN THE LEASE, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW
CHANGE. ANY SUCH CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND
THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THE DOCUMENT TO WHICH THIS
DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lots 126, 153 and 154,
7th District of Gwinnett County, Georgia, which is described as follows:
TO LOCATE THE POINT OF BEGINNING commence at a point formed by the intersection
of the northeastern margin of the right-of-way of Northridge Drive (having an
80-foot right-of-way) and the northwestern margin of the right-of-way of Old
Peachtree Road (having an 80-foot right of way), if both of said rights-of-way
are extended to form a point; thence North 56 degrees 23 minutes 46 seconds West
a distance of 11.43 feet to a point marked by a 1/2-inch rebar pin which is the
POINT OF BEGINNING and which is located on the northeastern margin of the
right-of-way of Northridge Drive; thence northwesterly along the northeastern
margin of the right-of-way of Northridge Drive the following five (5) courses
and distances, or curves, as hereinafter described: thence North 56 degrees 23
minutes 46 seconds West a distance of 216.60 feet to a point; thence
northwesterly along an arc of a curve to the right a distance of 278.76 feet to
a point (said arc being subtended by a chord having a chord bearing of North 44
degrees 21 minutes 15 seconds West, a chord distance of 276.71 feet and a radius
of 663.15 feet); thence North 32 degrees 19 minutes 42 seconds West a distance
of 225.20 feet to a point; thence northwesterly along an arc of a curve to the
left a distance of 312.95 feet to a point (said arc being subtended by a chord
having a chord bearing of North 45 degrees 15 minutes 26 seconds West, a chord
distance of 310.30 feet and a radius of 692.57 feet); thence North 58 degrees 12
minutes 08 seconds West a distance of 308.00 feet to a point marked by a
1/2-inch rebar pin; thence leaving the northeastern margin of the right-of-way
of Northridge Drive and continuing northwesterly, northerly and northeasterly
along an arc of a curve to the right a distance of 18.85 feet to a point marked
by a 1/2-inch rebar pin (said arc being subtended by a chord having a chord
bearing of North 13 degrees 12 minutes 08 seconds West, a chord distance of
16.97 feet and a radius of 12.00 feet) located on the southeasterly margin of
the right-of-way of Northbrook Parkway (having a 100-foot right-of-way); thence
easterly along the southeasterly margin of the right-of-way of Northbrook
Parkway the following four (4) courses and distances, or curves, as hereinafter
described: North 31 degrees 47 minutes 52 seconds East a distance of 164.90 feet
to point; thence northeasterly along an arc of a curve to the right a distance
of 462.34 feet to a point (said arc being subtended by a chord having a chord
bearing of North 46 degrees 47 minutes 52 seconds East, a chord distance of
457.08 feet and a radius of 883.01 feet); thence North 61 degrees 47 minutes 52
seconds East a distance of 277.91 feet to a point; thence northeasterly along an
arc of a curve to the left distance of 518.27 feet to a point marked by a
1/2-inch rebar pin (said arc being subtended by a chord having a chord bearing
of North 45 degrees 13 minutes 11 seconds East, a chord distance of 511.07 feet
and a radius of 895.59 feet); leaving said southerly margin of the right-of-way
of Northbrook Parkway, thence South 61 degrees 21 minutes 31 seconds East a
distance of 1,185.63 feet to a point marked by a 5/8-inch rebar pin which is
located on the western margin of the right-of-way of Old Peachtree Road; thence
South 03 degrees 13 minutes 18 seconds East along the western margin of the
right-of-way of Old Peachtree Road a distance of 199.76 feet to a point; thence
southerly and southwesterly along the western and northwestern margin of the
right-of-way of Old Peachtree Road and being an arc of a curve to the right a
distance of 536.80 feet to a point (said arc being subtended by a chord having a
chord bearing of South 26 degrees 52 minutes 52 seconds West, a chord distance
of 512.44 feet and a radius of
Exhibit J - Page 5
<PAGE> 45
510.85 feet); thence South 56 degrees 59 minutes 02 seconds West along the
northwestern margin of the right-of-way of Old Peachtree Road a distance of
729.16 feet to a point; thence southwesterly along the northwestern margin of
the right-of-way of Old Peachtree Road along an arc of a curve to the left a
distance of 330.46 feet to a point marked by a 1/2 inch rebar pin (said arc
being subtended by a chord having a chord bearing of south 46 degrees 52 minutes
01 seconds West, a chord distance of 328.74 feet and a radius of 935.72 feet);
thence southwesterly, westerly and northwesterly along an arc of a curve to the
right a distance of 18.19 feet tot he POINT OF BEGINNING (said arc being
subtended by a chord having a chord bearing of South 80 degrees 10 minutes 35
seconds West, a chord distance of 16.50 feet and a radius of 12.00 feet), said
parcel containing an aggregate of 49.552 acres, depicted as Tract 1 (12.208
acres); Tract 2 (10.000 acres) and Tract 3 (27.334 acres), and being more
particularly shown and delineated on that certain survey entitled "As Built
Survey for OKI America, Inc.; Solectron Georgia Corporation; BNP Leasing
Corporation and Chicago Title Insurance Company:, prepared by Pinion &
McGaughery Land Surveyors, Inc, bearing the seal and certification of George H.
Pinion, Georgia Registered Land Surveyor Number 1606, dated July 1, 1998 last
revised October 7, 1998, which survey is incorporated herein by reference
thereto.
Exhibit J - Page 5
<PAGE> 46
ANNEX B
Relevant Encumbrances
[THIS ANNEX IS TO BE COMPLETED BY A LIST OF POSSIBLE LIENS REMOVABLE BY BNPLC
IDENTIFIED BY SGC AND AGAINST WHICH SGC HAS NOT BEEN ABLE TO OBTAIN TITLE
INSURANCE.]
Exhibit J - Page 6
<PAGE> 47
Exhibit K
NOTICE OF ELECTION TO TERMINATE THE PURCHASE OPTION AND
SGC'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Re: Purchase Agreement dated as of October 20, 1998 (the "PURCHASE
AGREEMENT"), between SOLECTRON GEORGIA CORPORATION ("SGC") and BNP Leasing
Corporation ("BNPLC")
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Purchase Agreement referenced above. This letter shall
constitute a notice, given before the Base Rent Commencement Date pursuant to
subparagraph 4(B) of the Purchase Agreement, of SGC's election to terminate the
Purchase Option and SGC's Initial Remarketing Rights and Obligations. SGC
irrevocably elects to terminate the Purchase Option and SGC's Initial
Remarketing Rights and Obligations effective immediately, subject only to the
conditions described below.
SGC ACKNOWLEDGES THAT THE ELECTION MADE BY SGC DESCRIBED ABOVE
CONSTITUTES AN ISSUE 97-10 ELECTION UNDER AND AS DEFINED IN THE OPERATIVE
DOCUMENTS.
SGC also acknowledges that its right to terminate the Purchase Option
and SGC's Initial Remarketing Rights and Obligations is subject to the condition
precedent that SGC shall have delivered a Notice of SGC's Intent to Terminate,
as necessary to terminate the Construction Management Agreement pursuant to
Paragraph 5(D) thereof, or BNPLC shall have delivered an FOCB Notice as provided
in Paragraph 5(E) of the Construction Management Agreement. Accordingly, if for
any reason SGC has not already sent a Notice of SGC's Intent to Terminate, and
BNPLC has not sent an FOCB Notice, the Purchase Option and SGC's Initial
Remarketing Rights and Obligations shall not terminate by reason of this notice.
SGC further acknowledges that no termination of the Purchase Option and
SGC's Initial Remarketing Rights and Obligations by SGC pursuant to this notice
shall be effective, unless contemporaneously with the giving of this notice SGC
shall deliver to BNPLC a full Issue 97-10 Prepayment. SGC hereby covenants to
pay, if SGC has not already done so, a full Issue 97-10 Prepayment to BNPLC.
Finally, SGC acknowledges that a termination of the Purchase Option and
SGC's Initial Remarketing Rights and Obligations pursuant to this notice shall
cause the Lease to terminate as of the Base Rent Commencement Date pursuant to
subparagraph 1(b) of the Lease.
<PAGE> 48
Executed this _____ day of ______________, 19___.
SOLECTRON GEORGIA CORPORATION
Name:__________________________________________________
Title:_________________________________________________
[cc all Participants]
Exhibit K - Page 2
<PAGE> 1
================================================================================
EXHIBIT 10.9
GUARANTY
FROM
SOLECTRON CORPORATION,
("GUARANTOR")
IN FAVOR OF
BNP LEASING CORPORATION,
("BNPLC")
EFFECTIVE AS OF OCTOBER 20, 1998
================================================================================
<PAGE> 2
GUARANTY
THIS GUARANTY is made as of October 20, 1998, by SOLECTRON CORPORATION,
a Delaware corporation ("GUARANTOR"), in favor of BNP LEASING CORPORATION, a
Delaware corporation ("BNPLC").
RECITALS
1 Guarantor owns directly one hundred percent (100%) of the outstanding
shares of capital stock of Solectron Georgia Corporation, a Georgia corporation
("SGC").
2 Contemporaneously herewith SGC and BNPLC are executing a Lease
Agreement dated the date hereof (as from time to time supplemented, amended or
restated, the "LEASE"), pursuant to which BNPLC has agreed to lease to SGC
certain land and improvements thereon which are described in the Lease.
3 Contemporaneously herewith SGC and BNPLC are executing a Construction
Management Agreement dated the date hereof (as from time to time supplemented,
amended or restated, the "CONSTRUCTION MANAGEMENT AGREEMENT"), pursuant to which
BNPLC has authorized SGC to construct certain improvements on the land covered
by the Lease and agreed to provide a construction allowance for such
construction on and subject to the terms and conditions described therein.
4 Contemporaneously herewith SGC and BNPLC are executing a Purchase
Agreement dated the date hereof (as from time to time supplemented, amended or
restated, the "PURCHASE AGREEMENT"), pursuant to which SGC has agreed to
purchase or arrange for the purchase of the Property as more particularly
provided therein.
5 Contemporaneously herewith SGC is executing a Closing Certificate and
Agreement dated the date hereof (as from time to time supplemented, amended or
restated, the "CLOSING CERTIFICATE"), pursuant to which SGC has made certain
representations to BNPLC concerning the Property and has agreed to indemnify
BNPLC for certain matters relating to the Property.
6 As a condition precedent to BNPLC's execution of the Lease, the
Construction Management Agreement and Purchase Agreement, BNPLC requires that
Guarantor execute and deliver to BNPLC this Guaranty of SGC's obligations under
the Lease, the Construction Management Agreement, the Purchase Agreement and the
Closing Certificate.
7 The board of directors of Guarantor has determined that Guarantor's
execution, delivery and performance of this Guaranty may reasonably be expected
to benefit Guarantor, directly or indirectly, and are in the best interests of
Guarantor.
NOW, THEREFORE, in consideration of the premises, of the benefits which
will inure to Guarantor from the transactions contemplated by the Lease, the
Construction Management Agreement, the Purchase Agreement and the Closing
Certificate and of Ten Dollars and other good and valuable consideration, the
receipt and sufficiency of all of which are hereby acknowledged, and in order to
induce BNPLC to enter into the Lease and Purchase Agreement, Guarantor hereby
agrees with BNPLC as follows:
AGREEMENTS
<PAGE> 3
Section 1 Definitions. Reference is hereby made to the Lease, the
Construction Management Agreement, Purchase Agreement and the Closing
Certificate for all purposes. All capitalized terms used in this Guaranty which
are defined in the Lease and the List of Defined Terms attached to the Lease and
not otherwise defined herein shall have the same meanings when used herein. All
references herein to any Obligation Document or other document or instrument
refer to the same as from time to time amended, supplemented or restated. As
used herein the following terms shall have the following meanings:
"Designated Covenants" means, collectively, all of the covenants and
agreements of SGC contained in the Lease, the Construction Management Agreement,
the Purchase Agreement and the Closing Certificate.
"Designated Representations" means, collectively, all of the
representations and warranties of SGC contained in the Lease, the Construction
Management Agreement, the Purchase Agreement and the Closing Certificate.
"Obligations" means collectively all of the indebtedness, obligations,
and undertakings which are guaranteed by Guarantor, as described in subsections
(a) and (b) of Section 2.
"Obligation Documents" means the Lease, the Management Agreement, the
Purchase Agreement, the Closing Certificate and all other documents and
instruments (other than this Guaranty) under, by reason of which, or pursuant to
which any or all of the Obligations are evidenced, governed, secured, or
otherwise dealt with, and all other documents, instruments and agreements
hereafter delivered in connection herewith or therewith.
"Obligors" means SGC and any other guarantors or obligors, primary or
secondary, of any or all of the Obligations, excluding Guarantor.
"Security" means any rights, properties, or interests of BNPLC, under
the Obligation Documents or otherwise, which provide recourse or other benefits
to BNPLC in connection with the Obligations or the non-payment or
non-performance thereof.
Section 2 Guaranty. Subject only to Section 3 below:
(a) Guarantor hereby irrevocably, absolutely, and unconditionally
guarantees to BNPLC the prompt, complete, and full payment when due, and no
matter how the same shall become due, of all sums payable under the Lease, the
Construction Management Agreement, the Purchase Agreement and the Closing
Certificate. Without limiting the generality of the foregoing, Guarantor's
liability hereunder shall extend to and include all post-petition interest,
expenses, and other duties and liabilities of SGC described above in this
subsection (a), or below in the following subsections (b) and (c), which would
be owed by SGC but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization, or similar proceeding
involving SGC.
(b) The Guarantor hereby irrevocably, absolutely, and
unconditionally guarantees to BNPLC (i) that each Designated Representation is
true and correct and (ii) that each Designated Covenant will be performed
promptly and completely when due, no matter how the same shall become due.
(c) Without limiting the foregoing, BNPLC shall be entitled to
recover from Guarantor any expenses, losses and damages which BNPLC may incur or
suffer (including but not limited to any loss, reduction or delay in amounts
paid to BNPLC) as a result of the failure of any Designated Representation to be
true and correct or as a result of the failure of Guarantor to cause any
Designated Covenant to be performed (without regard to any event or circumstance
which may be asserted by Guarantor as having
2
<PAGE> 4
excused, prevented or limited such performance by Guarantor). All rights, powers
and remedies of BNPLC for such failure to cause any such covenant or undertaking
to be performed are cumulative.
(d) If either SGC or the Guarantor fails to pay or perform any
Obligation as described in the immediately preceding subsections (a), (b) or
(c), the Guarantor will incur the additional obligation to pay to BNPLC, and the
Guarantor will forthwith upon demand by BNPLC, the amount of any and all
reasonable expenses, including fees and disbursements of BNPLC's counsel, and of
any experts or agents retained by BNPLC, which BNPLC may incur as a result of
such failure.
(e) As between Guarantor and BNPLC, this Guaranty shall be
considered a primary liability of Guarantor.
Section 3 Express Grace and Cure Periods. This Guaranty is not intended
to nullify any grace or cure period expressly provided for the benefit of SGC in
the Lease, the Construction Management Agreement, the Purchase Agreement or the
Closing Certificate. Accordingly, any payment required of SGC by the Lease, the
Construction Management Agreement, the Purchase Agreement or the Closing
Certificate, for which a grace or cure period is expressly provided therein,
will not be considered due for purposes of this Guaranty until such grace or
cure period expires. Similarly, any performance obligation imposed upon SGC by
the Lease, the Construction Management Agreement, the Purchase Agreement or the
Closing Certificate, for which a grace or cure period is expressly provided
therein, will not be considered to have been breached unless SGC's failure to
perform such obligation continues upon the expiration of such grace or cure
period.
Section 4 Unconditional Guaranty.
(a) No action which BNPLC may take or omit to take in connection
with any of the Obligation Documents, any of the Obligations (or any other
indebtedness owing by SGC to BNPLC), or any Security, and no course of dealing
of BNPLC with any Obligor or any other Person, shall release or diminish
Guarantor's obligations, liabilities, agreements or duties hereunder, affect
this Guaranty in any way, or afford Guarantor any recourse against BNPLC,
regardless of whether any such action or inaction may increase any risks to or
liabilities of BNPLC or any Obligor or increase any risk to or diminish any
safeguard of any Security. Without limiting the foregoing, Guarantor hereby
expressly agrees that BNPLC may, from time to time, without notice to or the
consent of Guarantor, do any or all of the following:
(i) Amend, change or modify, in whole or in part, any one or
more of the Obligation Documents and give or refuse to give any waivers
or other indulgences with respect thereto.
(ii) Neglect, delay, fail, or refuse to take or prosecute any
action for the collection or enforcement of any of the Obligations, to
foreclose or take or prosecute any action in connection with any
Security or Obligation Document, to bring suit against any Obligor or
any other Person, or to take any other action concerning the Obligations
or the Obligation Documents.
(iii) Change, rearrange, extend, or renew the time, rate,
terms, or manner for payment or performance of any one or more of the
Obligations (whether for principal, interest, fees, expenses,
indemnifications, affirmative or negative covenants, or otherwise).
(iv) Compromise or settle any unpaid or unperformed
Obligation or any other obligation or amount due or owing, or claimed to
be due or owing, under any Obligation Document.
3
<PAGE> 5
(v) Take, exchange, amend, eliminate, surrender, release, or
subordinate any or all Security for any or all of the Obligations,
accept additional or substituted Security therefor, and perfect or fail
to perfect BNPLC's rights in any or all Security.
(vi) Discharge, release, substitute or add Obligors.
(vii) Apply all monies received from Obligors or others, or
from any Security for any of the Obligations, as BNPLC may determine to
be in its best interest, without in any way being required to marshall
Security or assets or to apply all or any part of such monies upon any
particular Obligations.
(b) No action or inaction of any Obligor or any other Person, and no
change of law or circumstances, shall release or diminish Guarantor's
obligations, liabilities, agreements, or duties hereunder, affect this Guaranty
in any way, or afford Guarantor any recourse against BNPLC. Without limiting the
foregoing, the obligations, liabilities, agreements, and duties of Guarantor
under this Guaranty shall not be released, diminished, impaired, reduced, or
affected by the occurrence of any or all of the following from time to time,
even if occurring without notice to or without the consent of Guarantor:
(i) Any voluntary or involuntary liquidation, dissolution,
sale of all or substantially all assets, marshalling of assets or
liabilities, receivership, conservatorship, assignment for the benefit
of creditors, insolvency, bankruptcy, reorganization, arrangement, or
composition of any Obligor or any other proceedings involving any
Obligor or any of the assets of any Obligor under laws for the
protection of debtors, or any discharge, impairment, modification,
release, or limitation of the liability of, or stay of actions or lien
enforcement proceedings against, any Obligor, any properties of any
Obligor, or the estate in bankruptcy of any Obligor in the course of or
resulting from any such proceedings.
(ii) The failure by BNPLC to file or enforce a claim in any
proceeding described in the immediately preceding subsection (i) or to
take any other action in any proceeding to which any Obligor is a party.
(iii) The release by operation of law of any Obligor from any
of the Obligations or any other obligations to BNPLC.
(iv) The invalidity, deficiency, illegality, or
unenforceability of any of the Obligations or the Obligation Documents,
in whole or in part, any bar by any statute of limitations or other law
of recovery on any of the Obligations, or any defense or excuse for
failure to perform on account of force majeure, act of God, casualty,
impossibility, impracticability, or other defense or excuse whatsoever.
(v) The failure of any Obligor or any other Person to sign
any guaranty or other instrument or agreement within the contemplation
of any Obligor or BNPLC.
(vi) The fact that Guarantor may have incurred directly part
of the Obligations or is otherwise primarily liable therefor.
(vii) Without limiting any of the foregoing, any fact or event
(whether or not similar to any of the foregoing) which in the absence of
this provision would or might constitute or afford a legal or equitable
discharge or release of or defense to a guarantor or surety other than
the actual payment and performance by Guarantor under this Guaranty.
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(c) BNPLC may invoke the benefits of this Guaranty before pursuing
any remedies against any Obligor or any other Person and before proceeding
against any Security now or hereafter existing for the payment or performance of
any of the Obligations. BNPLC may maintain an action against Guarantor on this
Guaranty without joining any Obligor therein and without bringing a separate
action against any Obligor.
(d) If any payment to BNPLC by any Obligor is held to constitute a
preference or a voidable transfer under applicable state or federal laws, or if
for any other reason BNPLC is required to refund such payment to the payor
thereof or to pay the amount thereof to any other Person, such payment to BNPLC
shall not constitute a release of Guarantor from any liability hereunder, and
Guarantor agrees to pay such amount to BNPLC on demand and agrees and
acknowledges that this Guaranty shall continue to be effective or shall be
reinstated, as the case may be, to the extent of any such payment or payments.
(e) This is a continuing guaranty and shall apply to and cover all
Obligations and renewals and extensions thereof and substitutions therefor from
time to time.
Section 5 Waiver. Guarantor waives all notices of the creation, renewal,
extension or accrual of any of the Obligations and notice or proof of reliance
by BNPLC on this Guaranty or acceptance of this Guaranty. The Obligations shall
conclusively be considered to have been created, contracted or incurred in
reliance on this Guaranty, and all dealings between BNPLC and SGC shall likewise
be conclusively presumed to have been had or consummated in reliance on this
Guaranty. Guarantor also waives (to the extent permitted by applicable law) all
requirements of notice, presentment, protest or demand on it, SGC or any other
Person, all other notices and demands whatsoever relating to the Obligations and
any requirement that BNPLC file a claim with a court in any bankruptcy or
similar proceedings of SGC or first proceed against SGC or any other Person or
first realize on any collateral security held by it or otherwise exhaust any
right, power or remedy under any document or against BNPLC or any other Person
before proceeding against Guarantor under this Guaranty. BNPLC shall have no
responsibility to notify Guarantor of SGC's financial condition or SGC's
incurrence or performance of the Obligations. WITHOUT LIMITING THE GENERALITY OF
ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS GUARANTY, GUARANTOR HEREBY
WAIVES, TO THE MAXIMUM EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND ALL
DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF (A) CALIFORNIA
CIVIL CODE SECTIONS 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2838, 2839, 2845,
2848, 2849, AND 2850, (B) TO THE EXTENT APPLICABLE, CALIFORNIA CODE OF CIVIL
PROCEDURE SECTIONS 580a, 580b, 580c, 580d AND 726, AND (C) TO THE EXTENT
APPLICABLE, CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE. Guarantor
warrants and agrees that each of the waivers set for in this Guaranty is made
with full knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any of such waivers are determined to be contrary to any applicable law
or public policy, such waivers shall be effective only to the maximum extent
permitted by law.
Section 6 Exercise of Remedies. BNPLC shall have the right to enforce,
from time to time, in any order and at BNPLC's sole discretion, any rights,
powers and remedies which BNPLC may have under the Obligation Documents, this
Guaranty or otherwise. No failure on the part of BNPLC to exercise, and no delay
in exercising, any right hereunder or under any Obligation Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right preclude any other or further exercise thereof or the exercise of any
other right. The rights, powers and remedies of BNPLC provided herein and in the
Obligation Documents are cumulative and are in addition to, and not exclusive
of, any other rights, powers or remedies provided by law or in equity. The
rights of BNPLC hereunder are not conditional or contingent on any attempt by
BNPLC to exercise any of its rights under any Obligation Document against any
Obligor or any other Person.
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<PAGE> 7
Section 7 Limited Subrogation. Until all of the Obligations have been
paid and performed in full Guarantor shall have no right, by reason of or in
connection with this Guaranty, to exercise any right of subrogation,
reimbursement, indemnity, exoneration, contribution or any other claim which it
may now or hereafter have against or to any Obligor or any Security, and
Guarantor hereby waives any rights to enforce any such remedy which Guarantor
may have against SGC and any right to participate in any Security until such
time. If any amount shall be paid to Guarantor on account of any such
subrogation or other rights, any such other remedy, or any Security at any time
when all of the Obligations and all other expenses guaranteed pursuant hereto
shall not have been paid in full, such amount shall be held in trust for the
benefit of BNPLC, shall be segregated from the other funds of Guarantor and
shall forthwith be paid over to BNPLC to be held by BNPLC as collateral for, or
then or at any time thereafter applied in whole or in part by BNPLC against, all
or any portion of the Obligations, whether matured or unmatured, in such order
as BNPLC shall elect.
Section 8 Successors and Assigns. Guarantor's rights or obligations
hereunder may not be assigned or delegated, but this Guaranty and such
obligations shall pass to and be fully binding upon the successors of Guarantor,
as well as Guarantor. This Guaranty shall apply to and inure to the benefit of
BNPLC and its successors or assigns. Without limiting the generality of the
immediately preceding sentence, BNPLC may assign, grant a participation in, or
otherwise transfer any Obligation held by it or any portion thereof, and BNPLC
may assign or otherwise transfer its rights or any portion thereof under any
Obligation Document, to any other Person, and such other Person shall thereupon
become vested with all of the benefits in respect thereof granted to BNPLC
hereunder unless otherwise expressly provided by BNPLC in connection with such
assignment or transfer.
Section 9 Representations, Warranties and Covenants of Guarantor.
Guarantor hereby represents, warrants and covenants to BNPLC as follows:
(a) The Recitals at the beginning of this Guaranty are true and
correct in all material respects.
(b) The direct or indirect value of the consideration received and
to be received by Guarantor in connection herewith is reasonably worth at least
as much as the liability and obligations of Guarantor hereunder, and the
incurrence of such liability and obligations in return for such consideration
may reasonably be expected to benefit Guarantor, directly or indirectly.
(c) The execution, delivery and performance by Guarantor of this
Guaranty do not and will not constitute a breach or default under any other
material agreement or contract to which Guarantor is a party or by which
Guarantor is bound or which affects the Property, and do not violate or
contravene any law, order, decree, rule or regulation to which Guarantor is
subject, and such execution, delivery and performance by Guarantor will not
result in the creation or imposition of (or the obligation to create or impose)
any lien, charge or encumbrance on, or security interest in, Guarantor's
property pursuant to the provisions of any of the foregoing.
(d) There are no judicial or administrative actions, suits,
proceedings or investigations pending or, to Guarantor's knowledge, threatened
that will adversely affect the Property or the validity, enforceability or
priority of this Guaranty, and Guarantor is not in default with respect to any
order, writ, injunction, decree or demand of any court or other governmental or
regulatory authority that could materially and adversely affect the use,
occupancy or operation of the Property. No condemnation or other like
proceedings are pending or, to Guarantor's knowledge, threatened against the
Property.
(e) The execution, delivery and performance by Guarantor of this
Guaranty are duly authorized and does not require the consent or approval of any
governmental body or other regulatory
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<PAGE> 8
authority that has not heretofore been obtained and are not in contravention of
or conflict with any applicable laws or any term or provision of Guarantor's
articles of incorporation or bylaws. This Guaranty is a valid, binding and
legally enforceable obligation of Guarantor, in accordance with its terms,
except as such enforcement is affected by bankruptcy, insolvency and similar
laws affecting the rights of creditors, generally, and equitable principles of
general application.
(f) Guarantor is not "insolvent" on the date hereof (that is, the
sum of Guarantor's absolute and contingent liabilities, including the
Obligations, does not exceed the fair market value of Guarantor's assets) and
has no outstanding liens, suits, garnishments or court actions which could
render Guarantor insolvent or bankrupt. Guarantor's capital is adequate for the
businesses in which Guarantor is engaged and intends to be engaged. Guarantor
has not incurred (whether hereby or otherwise), nor does Guarantor intend to
incur or believe that it will incur, debts which will be beyond its ability to
pay as such debts mature. There has not been filed by or, to Guarantor's
knowledge, against Guarantor a petition in bankruptcy or a petition or answer
seeking an assignment for the benefit of creditors, the appointment of a
receiver, trustee, custodian or liquidator with respect to Guarantor or any
significant portion of Guarantor's property, reorganization, arrangement,
rearrangement, composition, extension, liquidation or dissolution or similar
relief under the federal Bankruptcy Code or any state law. The financial
statements and all financial data heretofore delivered to BNPLC relating to
Guarantor are true, correct and complete in all material respects. No material
adverse change has occurred in the financial position of Guarantor and its
Subsidiaries as reflected in Guarantor's financial statements covering the
fiscal period ended December 31, 1997.
(g) Guarantor is duly incorporated and legally existing under the
laws of the State of Delaware. Guarantor has all requisite power and has
procured or will procure on a timely basis all governmental certificates of
authority, licenses, permits, qualifications and other documentation required to
fulfill its obligations under this Guaranty. Guarantor has the corporate power
and adequate authority, rights and franchises to own Guarantor's property and to
carry on Guarantor's business as now conducted and is duly qualified and in good
standing in each state in which the character of Guarantor's business makes such
qualification necessary (including the State of California) or, if it is not so
qualified in a state other than California, such failure does not have a
material adverse effect on the properties, assets, operations or businesses of
Guarantor and its Subsidiaries, taken as a whole.
(h) Guarantor is not and will not become an "employee benefit plan"
(as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA. The
assets of Guarantor do not and will not in the future constitute "plan assets"
of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101.
Guarantor is not and will not become a "governmental plan" within the meaning of
Section 3(32) of ERISA. Transactions by or with Guarantor are not subject to
state statutes regulating investments of and fiduciary obligations with respect
to governmental plans. No ERISA Termination Event has occurred with respect to
any Plan of Guarantor and Guarantor and all its Subsidiaries are in compliance
with ERISA. Neither Guarantor nor any of its Subsidiaries is required to
contribute to, or has any other absolute or contingent liability in respect of,
any "multi employer plan" as defined in Section 4001 of ERISA. As of the
Effective Date no "accumulated funding deficiency" (as defined in Section 412(a)
of the Code) exists with respect to any Plan of Guarantor, whether or not waived
by the Secretary of the Treasury or his delegate, and the current value of the
benefits of each Plan of Guarantor, if any, equals or is less than the current
value of such Plan's assets available for the payment of such benefits.
(i) None of the representations or warranties of Guarantor or SGC
contained in this Guaranty or the Obligation Documents or any other document,
certificate or written statement furnished to BNPLC by or on behalf of Guarantor
or SGC contains any untrue statement of a material fact or omits a material fact
necessary in order to make the statements contained herein or therein (when
taken in their entireties) not misleading.
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<PAGE> 9
(j) Guarantor shall, upon request of BNPLC, (i) promptly correct any
error or omission which may be discovered in the contents of this Guaranty or in
any other instrument executed in connection herewith or in the execution or
acknowledgment thereof; (ii) execute, acknowledge, deliver and record or file
such further instruments and do such further acts as may be necessary, desirable
or proper to carry out more effectively the purposes of this Guaranty and to
subject to this Guaranty any property intended by the terms hereof to be covered
hereby, including any renewals, additions, substitutions, replacements or
appurtenances to the Property; (iii) execute, acknowledge, deliver, procure and
record or file any document or instrument deemed advisable by BNPLC to protect
its rights in and to the Property against the rights or interests of third
persons; and (iv) provide such certificates, documents, reports, information,
affidavits and other instruments and do such further acts as may be necessary,
desirable or proper in the reasonable determination of BNPLC to enable BNPLC,
BNPLC's Parent and any other Participants to comply with the requirements or
requests of any agency or authority having jurisdiction over them.
Section 10 Covenants Incorporated by Reference to Schedule A. So long as
Guarantor shall continue to have any obligations under this Guaranty, Guarantor
shall comply with each and every requirement set forth in Schedule A attached
hereto and made a part hereof; provided, however, to the extent that any of the
Obligations or requirements set forth in other provisions of this Guaranty are
more stringent than the requirements set forth in Schedule A, the more stringent
Obligations or requirements set forth herein shall control.
Section 11 Ownership of SGC. So long as Guarantor shall continue to have
any obligations under this Guaranty, Guarantor shall continue to own directly
one hundred percent (100%) of the outstanding shares of capital stock of SGC.
Section 12 No Oral Change. No amendment of any provision of this
Guaranty shall be effective unless it is in writing and signed by Guarantor and
BNPLC, and no waiver of any provision of this Guaranty, and no consent to any
departure by Guarantor therefrom, shall be effective unless it is in writing and
signed by BNPLC, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 13 Invalidity of Particular Provisions. If any term or provision
of this Guaranty shall be determined to be illegal or unenforceable all other
terms and provisions hereof shall nevertheless remain effective and shall be
enforced to the fullest extent permitted by applicable law.
Section 14 Headings and References. The headings used herein are for
purposes of convenience only and shall not be used in construing the provisions
hereof. The words "this Guaranty," "this instrument," "herein," "hereof,"
"hereby" and words of similar import refer to this Guaranty as a whole and not
to any particular subdivision unless expressly so limited. The phrases "this
section" and "this subsection" and similar phrases refer only to the
subdivisions hereof in which such phrases occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation". Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
Section 15 Term. This Guaranty shall be irrevocable until all of the
Obligations have been completely and finally paid and performed, Guarantor shall
have paid all amounts that may be required hereunder, the Obligation Documents
have been terminated, and all obligations and undertakings of SGC under, by
reason of, or pursuant to the Obligation Documents have been completely
performed, and this Guaranty is thereafter subject to reinstatement as provided
in Section 3(d). All extensions of credit and
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<PAGE> 10
financial accommodations heretofore or hereafter made by BNPLC to SGC shall be
conclusively presumed to have been made in acceptance hereof and in reliance
hereon.
Section 16 Notices. Any notice or communication required or permitted
hereunder shall be given as provided in the Lease and if to Guarantor at its
address set forth below:
TO GUARANTOR: Solectron Corporation
777 Gibraltar Drive, Building #5
Milpitas, California 95035
Attn: Chief Financial Officer
Telecopy: (408) 956-6059
or to such other address or to the attention of such other individual as
hereafter shall be designated in writing by Guarantor to BNPLC sent in
accordance herewith.
Section 17 Counterparts. This Guaranty may be executed in any number of
counterparts, each of which when so executed shall be deemed to constitute one
and the same Guaranty.
SECTION 18 GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 19 Waiver of a Jury Trial. GUARANTOR AND BNPLC EACH HEREBY
WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of this waiver is intended
to be all-encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction, including, without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Guarantor and BNPLC each acknowledge that this
waiver is a material inducement to enter into a business relationship, that
BNPLC has already relied on the waiver in entering into the Lease, the
Construction Management Agreement, the Purchase Agreement and the Closing
Certificate and the other documents referred to herein, and that each will
continue to rely on the waiver in their related future dealings. BNPLC and
Guarantor each further warrants and represents that it has reviewed this waiver
with its legal counsel, and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS GUARANTY OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THIS GUARANTY. In the event of litigation, this Guaranty may be
filed as a written consent to a trial by the court.
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IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty
as of the date first written above.
SOLECTRON CORPORATION
By: /s/ SUSAN WANG
---------------------------------
Name (print): Susan Wang
------------------------
Title: Sr. Vice President and CFO
-------------------------------
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Schedule A
FINANCIAL AND OTHER COVENANTS OF GUARANTOR
PART 1
ADDITIONAL DEFINITIONS
1.01 Definitions Applicable in this Schedule. For purposes of this
Schedule A, the following capitalized terms will have the following respective
meanings:
"Adjusted Leverage Ratio" means with respect to Guarantor and its
Subsidiaries on a consolidated basis at the end of any fiscal quarter, the ratio
of (a) (without duplication) (i) Consolidated Funded Debt plus (ii) Guarantee
obligations plus (iii) Indebtedness with respect to synthetic leases and
securitized assets plus (iv) Indebtedness in respect to letters of credit minus
(v) Permitted Subordinated Indebtedness, to (b) (i) operating income plus (ii)
depreciation and amortization charges, in each case, for the period of the four
fiscal quarters ended on the applicable date of determination.
"Capital Lease Obligations" means the obligations of any Person to pay
rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
"Consolidated Funded Debt" means, as of the last day of any fiscal
quarter, the sum for Guarantor and its Subsidiaries as of such day, of, without
duplication, (a) the aggregate outstanding principal amount of Indebtedness for
borrowed money and (b) the aggregate outstanding capitalized amount of Capital
Lease Obligations, all as determined on a consolidated basis in accordance with
GAAP.
"Consolidated Tangible Assets" means, as of the last day of any fiscal
quarter of Guarantor, all tangible assets on the consolidated balance sheet of
Guarantor and its Subsidiaries, as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Tangible Net Worth" means as of the last day of any fiscal
quarter of Guarantor, (a) total shareholders' equity of Guarantor and its
Subsidiaries minus (b) the aggregate amount of all intangible assets on the
consolidated balance sheet of Guarantor and its Subsidiaries, all as determined
on a consolidated basis in accordance with GAAP.
"Current Liabilities" means, with respect to any Person, all liabilities
of such Person treated as current liabilities in accordance with GAAP, including
without limitation (a) all obligations payable on demand or within one year
after the date in which the determination is made and (b) installment and
sinking fund payments required to be made within one year after the date on
which determination is made, but excluding all such liabilities or obligations
which are renewable or extendable at the option of such Person to a date more
than one year from the date of determination.
"Existing Credit Agreement" means the Credit Agreement dated as of April
29, 1997, among Guarantor as Borrower, Bank of America National Trust and
Savings Association, as Agent and Issuing Bank, and other financial institutions
named therein.
"Guarantee" of or by any Person (the "guarantor") means, for the
purposes of this Schedule only and not for the purposes of the Obligation
Documents, any obligation, contingent or otherwise of the
<PAGE> 13
guarantor guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person (the "primary obligor") in
any matter, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation
of the payment thereof, (c) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation, or (d)
as an account party in respect of any letter of credit or letter of guaranty
issued to support such Indebtedness or obligation; provided that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid (excluding deferred
compensation obligations owed to current and former directors, officers and
employees), (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of property
or services (excluding current accounts payable, measured in accordance with
GAAP, incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty supporting Indebtedness, (j) all obligations, contingent
or otherwise, of such Person in respect of bankers' acceptances, and (k) all
obligations, contingent or otherwise, with respect to synthetic leases or
securitized assets. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
"Lien" means, for the purpose of this Schedule only and not for the
purposes of the Obligation Documents, with respect to any asset (a) a mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance or security interest in,
on or of such asset, and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement relating
to such asset.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
Guarantor and its Subsidiaries taken as a whole, (b) the ability of Guarantor to
perform its obligations under this Guaranty if called upon to do so, or (c) the
ability of SGC to perform its Obligations under the Obligation Documents; or (d)
the rights of or benefits available to BNPLC or the Participants under the
Obligation Documents.
"Modified Quick Ratio" means, as computed with respect to Guarantor and
its Subsidiaries on a consolidated basis, the ratio of (1) their Quick Assets to
(2) the sum (without duplication of any item) of their Current Liabilities and
any payments maturing within 12 months on any Indebtedness of Guarantor or its
Subsidiaries or on Indebtedness of any other Person which is the subject of any
Guarantee made by Guarantor or its Subsidiaries.
Schedule A - Page 2
<PAGE> 14
"Permitted Contest" means a contest of the validity or amount of any
payment claimed to be due from Guarantor or a Subsidiary where (a) the contest
is undertaken by Guarantor or such Subsidiary in good faith by appropriate
proceedings, (b) Guarantor or such Subsidiary shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP, and (c) the
failure to make such payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
"Permitted Encumbrances" means, for the purposes of this Guaranty only
and not for the purposes of the Obligation Documents:
(a) Liens imposed by law by any governmental authority for
taxes that are not yet due or are the subject of a Permitted Contest.
(b) Carriers' warehousemen's, mechanics', material men's,
repairmen's and other like Liens imposed by law, and any other
involuntary, statutory or common law Lien arising in the ordinary course
of business and securing obligations that are not overdue by more than
30 days or are the subject of a Permitted Contest.
(c) Pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations.
(d) Deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business.
(e) Easements, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations
and do not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of Guarantor or any
Subsidiary.
(f) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under the Lease.
(g) Liens which constitute rights of set-off of a customary
nature or banker's Liens with respect to amounts on deposit arising by
operation of law in connection with arrangements entered into with banks
in the ordinary course of business.
(h) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods.
(i) Leases or subleases and licenses and sublicenses granted
to others in the ordinary course of business not interfering in any
material respect with the business of Guarantor or its Subsidiaries
taken as a whole, and any interest or title of any lessor or licensor
under any lease or license.
The term "Permitted Encumbrances" shall not include any Lien securing
Indebtedness.
"Permitted Subordinated Indebtedness" means Indebtedness of Guarantor,
the payment of which is expressly subordinated (on terms satisfactory to BNPLC)
to the Obligations.
"Quick Assets" means the sum (without duplication of any item) of
unencumbered cash, plus
Schedule A - Page 3
<PAGE> 15
unencumbered short term cash investments, plus other unencumbered marketable
securities which are classified as short term investments according to GAAP,
plus unencumbered current net accounts receivable, plus the fair market value of
certain long-term investments hereinafter described. For purposes of determining
Quick Assets, assets will be deemed to be "unencumbered" if they are actually
unencumbered or if they are encumbered only by Liens, from which, at the time of
the determination of Quick Assets, the owner of the assets (be it Guarantor or
one of its Subsidiaries) is entitled to a release of such assets upon no more
than ninety days' notice, without any payment (other than the payment of
ministerial fees and costs), without subjecting other assets to any Lien and
without otherwise satisfying any condition that is beyond the owner's control.
The following assets (and only the following assets) will qualify as "long-term
investments" to be included in Quick Assets to the extent (and only to the
extent) that, at the time of the determination of Quick Assets, they shall not
be classified as short term investments in accordance with GAAP and shall have
maturities of not longer than two years:
(1) securities issued or fully guaranteed or fully
insured by the United States government or any agency thereof
and backed by the full faith and credit of the United States;
(2) certificates of deposit, time deposits, Eurodollar
time deposits, repurchase agreements, or banker's acceptances
that are (A) issued by either one of the 50 largest (in assets)
banks in the United States or by one of the 100 largest (in
assets) banks in the world and (B) rated not less than A- by
Standard & Poor's Corporation or less than A by Moody's
Investors Service, Inc.; and
(3) corporate or municipal bonds rated not less than A-
by Standard & Poor's Corporation or less than A by Moody's
Investors Service, Inc.
"Special Purpose Subsidiary" means any bankruptcy remote special purpose
subsidiary of Guarantor formed for the purpose of selling undivided interests in
accounts receivable and/or other assets transferred by Guarantor and/or any of
its Subsidiaries to such subsidiary for financing purposes, including Solectron
Funding Corporation, a corporation organized or to be organized under the laws
of the state of Delaware.
"Subsidiary" means, for purposes of this Schedule only and not for the
purposes of the Obligation Documents, with respect to Guarantor or any Special
Purpose Subsidiary (the "parent") at any date, any corporation, limited
liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent's
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date.
Schedule A - Page 4
<PAGE> 16
PART 2
DELIVERY OF INFORMATION
2.01. Financial Statements and Other Information. Guarantor will furnish
to BNPLC and to each Participant of which Guarantor has been notified:
(a) within 90 day's after the end of each fiscal year of
Guarantor, its audited consolidated balance sheet and related statements
of operations, changes in shareholders' equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by KPMG Peat
Marwick or other independent public accountants of recognized national
standing (without a "going concern" or like qualification or exception
and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present
fairly in all material respects the financial condition and results of
operations of Guarantor and consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year of Guarantor, its consolidated
balance sheet and related statements of operations and cash flows as of
the end of and for such fiscal quarter and the then elapsed portion of
the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its senior or executive financial officers as
presenting fairly in all material respects the financial condition and
results of operations of Guarantor and consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements
under clauses (a) or (b) above, a completed compliance certificate of a
senior or executive financial officer of Guarantor in form and content
reasonably acceptable to BNPLC;
(d) concurrently with any delivery of consolidated financial
statements under clause (a) above, a certificate of the accounting firm
that reported on such financial statements stating whether they obtained
knowledge during the course of their audit of such consolidated
financial statements of any Event of Default or a Default under the
Obligation Documents insofar as it relates to accounting matters (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements and other
materials filed by Guarantor or any Subsidiary with the Securities and
Exchange Commission, or any governmental authority succeeding to any or
all of the functions of said commission, or with any national securities
exchange, or distributed by Guarantor to its shareholders generally, as
the case may be;
(f) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of Guarantor or any Subsidiary, or compliance with the terms
of the Obligation Documents, as the BNPLC or any Participant may
reasonably request; and
Schedule A - Page 5
<PAGE> 17
(g) promptly upon becoming aware thereof, notice of the
effectiveness of any rating of any Index Debt by S&P or Moody's and
notice of the effectiveness of any change in any rating of any Index
Debt by S&P or Moody's.
2.02. Notices of Material Events. Guarantor will furnish to BNPLC and
each Participant prompt written notice of the following:
(a) The filing or commencement of any action, suit or
proceeding by or before any arbitrator or governmental authority against
or affecting Guarantor or any Subsidiary thereof that could reasonably
be expected to result in a Material Adverse Effect.
(b) The occurrence of any ERISA Termination Event that,
alone or together with any other ERISA Termination Events that have
occurred, could reasonably be expected to result in liability of
Guarantor and its Subsidiaries in an aggregate amount exceeding
$5,000,000.
(c) Any other development that results in, or could
reasonably be expected to result in, a Material Adverse Effect.
Each notice delivered under this Paragraph 2.02 shall be accompanied by a
statement of a senior or executive financial officer or other executive officer
of Guarantor setting forth the details of the event or development requiring
such notice and any action taken or proposed to be taken with respect thereto.
PART 3
NEGATIVE COVENANTS
3.01. Subsidiary Indebtedness. No Subsidiary will create, incur,
assume or permit to exist any Indebtedness, except:
(a) Indebtedness existing on the Effective Date and set
forth in schedule 6.01 attached to the Existing Credit Agreement (a copy
of which schedule is also attached hereto for convenience) and
extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof.
(b) Indebtedness of any Subsidiary to Guarantor or any other
Subsidiary.
(c) Guarantees by any Subsidiary of Indebtedness of
Guarantor or of any other Subsidiary to the extent such Indebtedness is
permitted under the Obligation Documents and other material agreements
governing the Indebtedness of Guarantor.
(d) Indebtedness of any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a Lien
on any such assets prior to the acquisition thereof and extensions,
renewals and replacements of any such Indebtedness that do not increase
the outstanding principal amount thereof; provided that (i) such
Indebtedness is incurred prior to or within 120 days after such
acquisition or the completion of such construction or improvement, and
(ii) the aggregate principal amount of Indebtedness permitted by this
clause (d) when aggregated (without duplication) with all Indebtedness
incurred under clause (g) below, with the aggregate amount of all claims
and obligations secured by Liens permitted pursuant to clauses (d) and
(f) of Paragraph 3.02 and with the aggregate book value or sale price of
the assets sold in sale and leaseback transactions
Schedule A - Page 6
<PAGE> 18
permitted pursuant to Paragraph 3.03 does not exceed 30% of Consolidated
Tangible Assets as of the last day of the most recent fiscal period in
respect of which financial statements shall have been delivered pursuant
to Paragraph 2.01 of this Schedule.
(e) Indebtedness of any Person that becomes a Subsidiary
after April 30, 1997; provided that such Indebtedness exists at the time
such Person becomes a Subsidiary and is not created in contemplation of
or in connection with such Person becoming a Subsidiary.
(f) Indebtedness of any Subsidiary as an account party in
respect of trade letters of credit.
(g) Other unsecured Indebtedness of the Subsidiaries in an
aggregate principal amount outstanding at any time that, when aggregated
(without duplication) with all Indebtedness incurred under clause (d)
above, with the aggregate amount of all claims and obligations secured
by Liens permitted pursuant to clauses (d) and (f) of Paragraph 3.02 and
with the aggregate book value or sale price of the assets sold in sale
and leaseback transactions permitted pursuant to Paragraph 3.03 does not
exceed 30% of Consolidated Tangible Assets as of the last day of the
most recent fiscal period in respect of which financial statements shall
have been delivered pursuant to Paragraph 2.01 of this Schedule.
(h) (i) Indebtedness of any Special Purpose Subsidiary; or
(ii) Indebtedness of any other Subsidiary incurred by such Subsidiary in
connection with the incurrence of Indebtedness by any Special Purpose
Subsidiary.
3.02. Liens. Guarantor will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset
now owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
(a) Permitted Encumbrances and Liens securing Capital Lease
Obligations permitted under subparagraph 3.01(d), and any renewal or
extension of any such Permitted Encumbrance or Lien so long as the
principal amount of the obligations secured thereby is not increased;
(b) any Lien on any property or asset of Guarantor or any
Subsidiary existing on April 30, 1997 and set forth in schedule 6.02
attached to the Existing Credit Agreement (a copy of which schedule is
also attached hereto for convenience); provided that (i) such Lien shall
not apply to any other property or asset of Guarantor or any Subsidiary
and (ii) such Lien shall secure only those obligations which it secures
on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by Guarantor or any Subsidiary or existing on any
property or asset (including attachments, accessions, replacements or
proceeds thereof) of any Person that becomes a Subsidiary after April
30, 1997 prior to the time such Person becomes a Subsidiary; provided
that (i) such Lien is not created in contemplation of or in connection
with such acquisition of such Person becoming a Subsidiary, as the case
may be, (ii) such Lien shall not apply to any other property or assets
of Guarantor or any Subsidiary, and (iii) such Lien shall secure only
those obligations which it secures on the date of such acquisition or
the date such Person becomes a Subsidiary, as the case may be, and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
Schedule A - Page 7
<PAGE> 19
(d) Liens on fixed or capital assets acquired, constructed
or improved by Guarantor or any Subsidiary (including replacements or
proceeds of such assets and including any Capital Lease Obligations);
provided that (i) in the case of any Subsidiary, such security interest
secure Indebtedness permitted by clause (d) of Paragraph 3.01, (ii) such
security interests and the Indebtedness secured thereby are incurred
prior to or within 120 days after such acquisition or the completion of
such construction or improvement, (iii) the Indebtedness secured thereby
does not exceed 100% of the cost of acquiring, constructing or improving
such fixed or capital assets, (iv) such security interest shall not
apply to any other property or assets of Guarantor or any Subsidiary,
and (v) the aggregate amount of such Indebtedness when aggregated
(without duplication) with all Indebtedness incurred under clauses (d)
and (g) of Paragraph 3.01, with the aggregate amount of all claims
secured by Liens permitted pursuant to clause (f) below and with the
aggregate book value or sale price of the assets sold in sale and
leaseback transactions permitted pursuant to Paragraph 3.03 does not
exceed 30% of Consolidated Tangible Assets as of the last day of the
most recent fiscal period in respect of which financial statements shall
have been delivered pursuant to Paragraph 2.01;
(e) Liens securing claims of any Special Purpose Subsidiary
against any other Subsidiary and sales or assignments of accounts
receivable (or interests therein) by any Subsidiary to a Special Purpose
Subsidiary and by any Special Purpose Subsidiary; and
(f) other Liens securing claims in an aggregate amount at
any time outstanding that when aggregated (without duplication) with (i)
all obligations of any Special Purpose Subsidiary secured by liens, (ii)
all Indebtedness incurred under clauses (d) and (g) of Paragraph 3.01,
(iii) the aggregate amount of all obligations secured by Liens permitted
pursuant to clause (d) above and (iv) the aggregate book value or sale
price of the assets sold in sale and leaseback transactions permitted
pursuant to Paragraph 6.03, does not exceed 30% of Consolidated Tangible
Assets as of the last day of the most recent fiscal period of Guarantor
in respect of which financial statements shall have been delivered
pursuant to Paragraph 2.01, provided that the dollar amount of claims
and other obligations (other than claims or other obligations of any
Subsidiary in favor of any Special Purpose Subsidiary which is directly
or indirectly wholly owned by Guarantor and inchoate indemnity
obligations) secured by accounts receivable does not exceed the greater
of $130,000,000 or 35% of Guarantor's aggregate accounts receivable
(including such accounts receivable sold to any Special Purpose
Subsidiary) calculated on a consolidated basis.
3.03. Sale and Leaseback Transactions. Guarantor will not, and will
not permit any Subsidiary to, enter into any arrangement, directly or
indirectly, with any Person whereby it shall sell or transfer any property, real
or personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property which it intends to use for
substantially the same purpose or purposes as the property being sold or
transferred; provided, however, that notwithstanding the above, Guarantor or any
Subsidiary may engage in any sale and leaseback transaction if, immediately
after the consummation of such transaction, the aggregate book value or sale
price of the assets sold in sale and leaseback transactions referred to in this
Paragraph 3.03, when aggregated (without duplication) with all Indebtedness
incurred under clauses (d) and (g) of Paragraph 3.01 and with the aggregate
amount of all claims and obligations secured by Liens permitted pursuant to
clauses (d) and (f) of Paragraph 3.02, does not exceed 30% of Consolidated
Tangible Assets as of the last day of the most recent fiscal period in respect
of which financial statements shall have been delivered pursuant to Paragraph
2.01.
Schedule A - Page 8
<PAGE> 20
3.04. Fundamental Changes.
(a) Guarantor will not, and will not permit any Subsidiary
to, merge into or consolidate with any other Person, or permit any other
Person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions)
all or any substantial portion of its assets, or all or substantially
all of the capital stock of any of the Subsidiaries (in each case,
whether now owned or hereafter acquired), or liquidate or dissolve,
except that, if at the time thereof and immediately after giving effect
thereto no Event of Default or default under the Obligation Documents
shall have occurred and be continuing (i) any Person may merge into or
consolidate with Guarantor in a transaction in which Guarantor is the
surviving corporation, (ii) any Person may merge into any Subsidiary in
a transaction in which the surviving entity is a Subsidiary, (iii) any
Subsidiary may sell, transfer, lease or otherwise dispose of its assets
to Guarantor or to another Subsidiary, (iv) any Subsidiary may liquidate
or dissolve if Guarantor determines in good faith that such liquidation
or dissolution is in the best interests of Guarantor and is not
materially disadvantageous to BNPLC or the Participants and any
distribution or other transfer of assets in connection with such
liquidation or dissolution is made to Guarantor or another Subsidiary in
an amount consistent with such person's ownership percentage of the
Subsidiary being dissolved or liquidated, (v) Guarantor and the
Subsidiaries may sell, lease or otherwise dispose of property in any
individual transaction not related to any other such transaction if the
aggregate fair market value of the assets sold, leased or otherwise
disposed of in such transaction is less than $2,000,000, (vi) Guarantor
and/or any of the Subsidiaries may sell or otherwise transfer their
accounts receivable and other assets to any Special Purpose Subsidiary
and/or any Special Purpose Subsidiary may sell or otherwise transfer
such accounts receivable or other property (or interests therein) if
otherwise permitted under Paragraph 3.02(f), and (vii) Guarantor and the
Subsidiaries may sell, lease or otherwise dispose of property in any
other transaction in the ordinary course of business, provided that,
with respect to transactions outside of the ordinary course of business,
the aggregate fair market value of all assets sold, leased or otherwise
disposed of in transactions under this clause (vii) shall not when taken
together at the time of each such sale, lease or other disposition
exceed 25% of Consolidated Tangible Assets as of the last day of the
most recent fiscal period in respect of which financial statements shall
have been delivered pursuant to Paragraph 2.01 at such time.
(b) Guarantor will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any line of business
material to Guarantor and the Subsidiaries, taken as a whole, other than
businesses currently conducted by Guarantor and the Subsidiaries and
businesses reasonably related thereto.
3.05 Intentionally Omitted.
3.06. Fiscal Year. Guarantor will not change its fiscal year end from
August 31.
3.07. Restrictive Agreements. Guarantor will not, and will not permit
any of its Subsidiaries to, directly or indirectly, enter into, incur or permit
to exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of Guarantor or any Subsidiary to create,
incur or permit to exist any Lien upon any of its property or assets, or (b) the
ability of any Subsidiary to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to
Guarantor or any other Subsidiary or to Guarantee Indebtedness of Guarantor or
any other Subsidiary if any such prohibition, restriction or condition is more
burdensome than any similar prohibition, restriction or condition contained in
this Schedule; provided that (i) the foregoing shall not apply to restrictions
and conditions imposed by law or by any the Existing Credit Agreement, (ii) the
Schedule A - Page 9
<PAGE> 21
foregoing shall not apply to restrictions and conditions existing prior to and
identified in the schedule 6.07 attached to the Existing Credit Agreement (a
copy of which schedule is also attached hereto for convenience), but shall apply
to any amendment or modification expanding the scope of any such restriction or
condition unless otherwise permitted under this Paragraph 3.07, (iii) the
foregoing shall not apply to customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is to be sold and
such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Schedule if such restrictions or conditions apply
only to the property or assets securing such Indebtedness, (v) clause (a) of the
foregoing shall not apply to customary provisions in leases and other contracts
restricting the assignment thereof, (vi) the foregoing shall not apply to such
restrictions and conditions applicable to any Subsidiary acquired after April
30, 1997 if such restrictions and conditions existed at the time such Subsidiary
was acquired and were not created in anticipation of such acquisition, (vii) the
foregoing shall not apply to one or more Subsidiaries having any such
restriction or condition so long as any such Subsidiary individually shall not
account for more than 5% of the gross revenues for the most recently ended
fiscal year of Guarantor and the Subsidiaries, taken as a whole, and each such
Subsidiary together with all other such Subsidiaries in the aggregate shall not
account for more than 10% of the gross revenues for the most recently ended
fiscal year of Guarantor and the Subsidiaries, taken as a whole, (viii) the
foregoing shall not apply to any working capital facility entered into by a
Subsidiary organized under the laws of any foreign country, and (ix) the
foregoing shall not apply to any Special Purpose Subsidiary or to any agreement
or other arrangement entered into by Guarantor or any of the Subsidiaries
incidental to a transaction involving a Special Purpose Subsidiary, which
transaction is otherwise permitted under the terms of this Schedule and the
Obligations Documents.
3.08. Distributions. Guarantor shall not declare or make, and shall
not suffer or permit any of its Subsidiaries to declare or make, any dividend
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any shares of any class of its capital stock, or
purchase, redeem or otherwise acquire for value any shares of its capital stock
or any warrants, rights or options to acquire such shares, now or hereafter
outstanding, if any Event of Default or default under the Existing Credit
Agreement then exists or would result therefrom.
3.09. Adjusted Leverage Ratio. Guarantor will not permit its Adjusted
Leverage Ratio, as calculated as of the last day of each fiscal quarter of
Guarantor, to be greater than (a) 1.50 to 1.00 from the Effective Date through
and including February 28, 1999, (b) 1.25 to 1.00 from May 31, 1999 through and
including February 28, 2000, and (c) 1.00 to 1.00 thereafter.
3.10. Consolidated Tangible Net Worth. Guarantor will not permit its
Consolidated Tangible Net Worth as of the last day of each fiscal quarter of
Guarantor following April 30, 1997 to be less than the sum of (without
duplication) 80% of Consolidated Tangible Net Worth measured as of the end of
the fiscal quarter ended February 28, 1997, plus 50% of consolidated net income
(without subtracting losses or acquisition related charges) for each fiscal
quarter ended after the fiscal quarter ended February 28, 1997, minus 100% of
all acquisition-related charges if such charges are recorded in the same fiscal
quarter in which the applicable acquisition is consummated.
3.11. Modified Quick Ratio. At the end of any fiscal quarter of
Guarantor when (1) the rating established by Moody's for the Index Debt of
Guarantor is below Ba2 or (2) the rating established by S&P for the Index Debt
of Guarantor is below BB, or (3) neither Moody's nor S&P maintains a rating for
the Index Debt of Guarantor, Guarantor shall not permit the Modified Quick Ratio
to be less than 1.0 to 1.0.
Schedule A - Page 10
<PAGE> 22
Schedule 3.13: Copyrights, Patents, Trademarks and Licenses Infringement Claims
None.
Schedule 6.01: Subsidiary Indebtedness
<TABLE>
<CAPTION>
Name of Subsidiary Agreement
------------------ ----------------------------------------------
<S> <C>
Solectron Scotland Limited $4.918 million Credit Facility with Royal Bank
of Scotland
Solectron Technology, Inc. $30.488 million Credit Agreement with Standard
SDN BHD Chartered Bank and DCB Bank
Solectron GmbH $5,000 Credit Agreement with Commerzebank
$7 million L-T note from Landersgirekasse
Oeffentliche Bank
$2 million Credit Agreement with Hewlett Packard
Company for purchase of inventory at acquisition
Solectron Japan, Inc. $22.425 million Credit Agreement with Bank of
Tokyo Mitsubishi Ltd.
Fine Pitch Technology, Inc. $89,000 Equipment Loan from San Jose National
Bank
Force Computers, Inc. $1.038 million Credit Facility with Dresdner
Bank Tokyo
$8.876 million Credit Facility with
Stadtoparkasse Munich
$5.917 million Credit Facility with
Hypobanck Munich
$5.917 million Credit Facility with
Reuschelbank
$655,000 Credit Facility with Barclays Bank
$500,000 Credit Facility with Bank Leumi
$7.5 million Credit Facility with Comerica Bank
</TABLE>
Schedule 6.02: Liens
1. Solectron Corporation
<TABLE>
<CAPTION>
Secretary of State - California
-------------------------------
Secured Party Description of Collateral Filing Date File Number
- ---------------------------------- ------------------------------- ----------- -----------
<S> <C> <C> <C>
Equitable Life Leasing Corporation Specific Equipment and Proceeds 1-26-93 88020525
Xerox Corporation Office Equipment and Proceeds 6-22-92 92137563
</TABLE>
-2-
<PAGE> 23
<TABLE>
<CAPTION>
Secured Party Description of Collateral Filing Date File Number
- ---------------------------------- -------------------------------- ----------- -----------
<S> <C> <C> <C>
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 4-15-94 94074579
Hewlett Packard Company Specific Equipment and Proceeds 5-11-94 94093984
Hewlett Packard Company Specific Equipment and Proceeds 3-2-95 9506661264
Hewlett Packard Company Specific Equipment and Proceeds 8-28-95 9524460015
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 12-19-95 9535560504
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 3-1-96 9606760948
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 7-24-96 9620860481
Associates Leasing, Inc. Computer Equipment and Proceeds 1-10-97 9701360025
Security Pacific Equipment Leasing, Inc. Specific Equipment and Proceeds 5-1-95 85169376
Security Pacific Equipment Leasing, Inc. Computer Equipment and Proceeds 8-21-95 85270060
MNLC/BALTC Leasing Partners Specific Equipment and Proceeds 4-2-92 87117094
Security Pacific Equipment Leasing, Inc. Computer Equipment and Proceeds 5-6-92 87217647
Equitable Life Leasing Corporation Computer Equipment and Proceeds 10-20-92 87314510
G.E. Capital Corporation Specific Equipment and Proceeds 2-18-93 88046793
NEMLC Leasing Associates No. 3 Specific Equipment and Proceeds 1-11-93 88063091
Security Pacific Equipment Leasing Specific Equipment and Proceeds 12-27-94 90067753
Deutsch Credit Corporation Specific Equipment and Proceeds 4-3-95 90101368
Security Pacific Equipment Leasing, Inc. Specific Equipment and Proceeds 5-1-95 90172604
Hewlett Packard Company Computer Equipment and Proceeds 5-4-92 92099518
Lease Plan USA, Inc. Specific Equipment and Proceeds 5-12-92 92107399
Hewlett Packard Company Specific Equipment and Proceeds 7-13-92 92153799
Hewlett Packard Company Specific Equipment and Proceeds 10-6-92 92216939
Hewlett Packard Company Specific Equipment and Proceeds 10-16-92 92223550
Hewlett Packard Company Specific Equipment and Proceeds 10-27-92 92231425
Hewlett Packard Company Specific Equipment and Proceeds 4-1-93 92241883
Equitable Life Leasing Corporation Specific Equipment and Proceeds 1-28-94 93018954
Hewlett Packard Company Specific Equipment and Proceeds 4-22-93 9308147
Hewlett Packard Company Specific Equipment and Proceeds 5-12-93 93096482
MetLife Capital, L.P. Computer Equipment and Proceeds 1-28-94 93113136
Hewlett Packard Company Specific Equipment and Proceeds 6-4-93 93114108
Hewlett Packard Company Specific Equipment and Proceeds 6-16-93 93122297
United States Leasing International, Inc. Computer Equipment and Proceeds 11-5-93 93223327
Capital Preferred Yield Fund - II, L.P. Specific Equipment and Proceeds 4-7-94 93234553
Avnet Computer Technologies, Inc. Specific Equipment and Proceeds 2-4-94 94021647
Hewlett Packard Company Specific Equipment and Proceeds 4-25-94 94081377
Hewlett Packard Company Specific Equipment and Proceeds 5-4-94 94088238
Hewlett Packard Company Specific Equipment and Proceeds 5-20-94 94101661
Hewlett Packard Company Specific Equipment and Proceeds 7-18-94 94145012
</TABLE>
-3-
<PAGE> 24
<TABLE>
<CAPTION>
Secured Party Description of Collateral Filing Date File Number
- -------------------------------- ------------------------------- ----------- -----------
<S> <C> <C> <C>
Hewlett Packard Company Specific Equipment and Proceeds 8-30-94 94178790
BNP Leasing Corporation Specific Equipment and Proceeds 9-8-94 94185412
Hewlett Packard Company Specific Equipment and Proceeds 9-21-94 9428560112
BNP Leasing Corporation Specific Equipment and Proceeds 9-27-94 9429360076
Hewlett Packard Company Specific Equipment and Proceeds 11-28-94 9434761275
Comdisco, Inc. Specific Equipment and Proceeds 12-8-94 9434960578
Hewlett Packard Company Specific Equipment and Proceeds 12-14-94 9500361142
Hewlett Packard Company Specific Equipment and Proceeds 1-26-95 9503360328
Hewlett Packard Company Specific Equipment and Proceeds 2-10-95 9504860699
Hewlett Packard Company Specific Equipment and Proceeds 2-10-95 9504860715
Hewlett Packard Company Specific Equipment and Proceeds 2-21-95 9505960514
Hewlett Packard Company Specific Equipment and Proceeds 3-6-95 9506860234
Hewlett Packard Company Specific Equipment and Proceeds 4-28-95 9512160498
Hewlett Packard Company Specific Equipment and Proceeds 4-28-95 9512160513
Hewlett Packard Company Specific Equipment and Proceeds 6-5-95 9515960516
Hewlett Packard Company Specific Equipment and Proceeds 6-5-95 9515960526
Hewlett Packard Company Specific Equipment and Proceeds 9-5-95 9525560208
Hewlett Packard Company Specific Equipment and Proceeds 9-5-95 9525560219
Hewlett Packard Company Specific Equipment and Proceeds 9-26-95 9527260307
Pitney Bowes Credit Corporation Specific Equipment and Proceeds 1-22-96 9602360211
Hewlett Packard Company Specific Equipment and Proceeds 1-29-96 9603060985
Copelco Capital, Inc. Specific Equipment and Proceeds 4-25-96 9608261042
Copelco Capital, Inc. Specific Equipment and Proceeds 6-19-96 9617660616
Copelco Capital, Inc. Specific Equipment and Proceeds 7-30-96 9621460705
Hewlett Packard Company Specific Equipment and Proceeds 8-9-96 9622661204
Copelco Capital, Inc. Specific Equipment and Proceeds 11-26-96 9633161377
Comdisco, Inc. Specific Equipment and Proceeds 2-10-97 9704260387
Comdisco, Inc. Specific Equipment and Proceeds 2-24-97 9705660119
Hewlett Packard Company Specific Equipment and Proceeds 7-7-93 93138136
Taylor Made Office Systems, Inc. Specific Equipment and Proceeds 8-21-95 9523560031
</TABLE>
Liens of the Company pursuant to that Lease Agreement, dated as of September 6,
1994 (as amended from time to time) between BNP Leasing Company and Solectron
Corporation.
2. Solectron Washington, Inc.
Department of Licensing-Washington
-4-
<PAGE> 25
<TABLE>
<CAPTION>
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
GTE Northwest Specific Equipment 9-20-93 93-263-0729
AT&T Capital Services, Inc. Specific Equipment 11-3-95 95-307-0414
3. Solectron Texas, Inc.
</TABLE>
<TABLE>
<CAPTION>
Secretary of State - Texas
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
General Electric Capital Corporation Electronic Equipment 8-26-96 96704367
4. Fine Pitch Technology
</TABLE>
<TABLE>
<CAPTION>
Secretary of State - California
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
San Jose National Bank Specific Equipment 2-29-95 9504660745
San Jose National Bank Specific Equipment 4-3-95 9509560531
San Jose National Bank Specific Equipment 12-13-95 9534860123
5. Force Computers, Inc.
</TABLE>
<TABLE>
<CAPTION>
Secretary of State - California
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
Taylor Made Office Systems, Inc. Specific Equipment 10-11-94 9430660823
Taylor Made Office Systems, Inc. Specific Equipment 8-21-95 9523460666
Taylor Made Office Systems, Inc. Specific Equipment 6-13-94 94119361
6. Solectron Technology, Inc. (Charlotte)
</TABLE>
<TABLE>
<CAPTION>
Secretary of State - North Carolina
Secured Party Description of Collateral Filing Date File Number
- ------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
Hewlett Packard Company Specific Equipment 2-22-93 0000970502
</TABLE>
Schedule 6.07; Restrictive Agreements
Indenture dated as of February 15, 1996 governing the terms of issuance of
7 3/8% Senior Notes due 2006. Contains a covenant restricting the Company's
ability to encumber certain items of its property.
-5-
<PAGE> 26
Lease Agreement dated as of September 6, 1994 (as amended from time to
time) between BNP Leasing Company and Solectron Corporation. Includes all
covenants by cross reference in Article VI of this Credit Agreement.
The Force Computers, Inc. credit facilities contains (1) restrictions on
its ability to pay dividends to Solectron and (2) its ability to encumber any
of its assets except for ordinary course involuntary liens and equipment finance
and purchase money security interests.
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-27-1999
<PERIOD-END> FEB-26-1999
<CASH> 463,596
<SECURITIES> 272,974
<RECEIVABLES> 882,452
<ALLOWANCES> 4,508
<INVENTORY> 929,413
<CURRENT-ASSETS> 2,679,694
<PP&E> 1,028,662
<DEPRECIATION> 469,451
<TOTAL-ASSETS> 3,383,528
<CURRENT-LIABILITIES> 946,395
<BONDS> 1,140,017
0
0
<COMMON> 119
<OTHER-SE> 1,289,767
<TOTAL-LIABILITY-AND-EQUITY> 3,383,528
<SALES> 3,853,781
<TOTAL-REVENUES> 3,853,781
<CGS> 3,499,504
<TOTAL-COSTS> 3,499,504
<OTHER-EXPENSES> 157,683
<LOSS-PROVISION> 850
<INTEREST-EXPENSE> 14,939
<INCOME-PRETAX> 190,355
<INCOME-TAX> 60,913
<INCOME-CONTINUING> 129,442
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 129,442
<EPS-PRIMARY> 0.55<F1>
<EPS-DILUTED> 0.52<F1>
<FN>
<F1>REFLECTED FOR THE TWO-FOR-ONE STOCK SPLIT EFFECTIVE FEBRUARY 24, 1999.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-28-1998
<PERIOD-END> AUG-28-1998
<CASH> 225,228
<SECURITIES> 83,576
<RECEIVABLES> 674,193
<ALLOWANCES> 3,999
<INVENTORY> 788,519
<CURRENT-ASSETS> 1,887,558
<PP&E> 859,831
<DEPRECIATION> 411,792
<TOTAL-ASSETS> 2,410,568
<CURRENT-LIABILITIES> 840,834
<BONDS> 385,519
0
0
<COMMON> 117
<OTHER-SE> 1,181,209
<TOTAL-LIABILITY-AND-EQUITY> 2,410,568
<SALES> 5,288,294
<TOTAL-REVENUES> 5,288,294
<CGS> 4,749,988
<TOTAL-COSTS> 4,749,988
<OTHER-EXPENSES> 237,063
<LOSS-PROVISION> 2,254
<INTEREST-EXPENSE> 24,759
<INCOME-PRETAX> 298,983
<INCOME-TAX> 100,159
<INCOME-CONTINUING> 198,159
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 198,159
<EPS-PRIMARY> 1.72
<EPS-DILUTED> 1.65
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-29-1997
<PERIOD-END> AUG-29-1997
<CASH> 225,073
<SECURITIES> 257,829
<RECEIVABLES> 422,731
<ALLOWANCES> 4,049
<INVENTORY> 494,622
<CURRENT-ASSETS> 1,499,632
<PP&E> 648,777
<DEPRECIATION> 322,416
<TOTAL-ASSETS> 1,876,419
<CURRENT-LIABILITIES> 567,942
<BONDS> 385,850
0
0
<COMMON> 115
<OTHER-SE> 918,954
<TOTAL-LIABILITY-AND-EQUITY> 1,876,419
<SALES> 3,694,385
<TOTAL-REVENUES> 3,694,385
<CGS> 3,266,106
<TOTAL-COSTS> 3,266,106
<OTHER-EXPENSES> 189,538
<LOSS-PROVISION> 2,319
<INTEREST-EXPENSE> 26,551
<INCOME-PRETAX> 238,407
<INCOME-TAX> 80,348
<INCOME-CONTINUING> 158,059
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 158,059
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.37
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Amended Financial Data Schedule -- 8/30/96
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-30-1996
<PERIOD-END> AUG-30-1996
<CASH> 228,830
<SECURITIES> 181,520
<RECEIVABLES> 344,192
<ALLOWANCES> 2,992
<INVENTORY> 368,862
<CURRENT-ASSETS> 1,144,724
<PP&E> 466,797
<DEPRECIATION> 217,227
<TOTAL-ASSETS> 1,452,198
<CURRENT-LIABILITIES> 358,369
<BONDS> 386,927
0
0
<COMMON> 105
<OTHER-SE> 700,464
<TOTAL-LIABILITY-AND-EQUITY> 1,452,198
<SALES> 2,817,191
<TOTAL-REVENUES> 2,817,191
<CGS> 2,534,813
<TOTAL-COSTS> 2,534,813
<OTHER-EXPENSES> 105,302
<LOSS-PROVISION> 1,651
<INTEREST-EXPENSE> 15,650
<INCOME-PRETAX> 173,077
<INCOME-TAX> 58,845
<INCOME-CONTINUING> 114,232
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 114,232
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.08
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-28-1998
<PERIOD-START> AUG-30-1997
<PERIOD-END> FEB-27-1998
<CASH> 143,374
<SECURITIES> 282,747
<RECEIVABLES> 484,231
<ALLOWANCES> 3,913
<INVENTORY> 582,728
<CURRENT-ASSETS> 1,575,922
<PP&E> 756,165
<DEPRECIATION> 368,141
<TOTAL-ASSETS> 2,016,655
<CURRENT-LIABILITIES> 597,118
<BONDS> 386,343
0
0
<COMMON> 115
<OTHER-SE> 1,030,300
<TOTAL-LIABILITY-AND-EQUITY> 2,016,655
<SALES> 2,323,651
<TOTAL-REVENUES> 2,323,651
<CGS> 2,073,730
<TOTAL-COSTS> 2,073,730
<OTHER-EXPENSES> 109,200
<LOSS-PROVISION> 51
<INTEREST-EXPENSE> 12,839
<INCOME-PRETAX> 140,950
<INCOME-TAX> 47,219
<INCOME-CONTINUING> 93,731
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93,731
<EPS-PRIMARY> 0.81
<EPS-DILUTED> 0.78
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-29-1997
<PERIOD-START> AUG-31-1996
<PERIOD-END> FEB-28-1997
<CASH> 233,423
<SECURITIES> 277,918
<RECEIVABLES> 374,457
<ALLOWANCES> 3,973
<INVENTORY> 445,424
<CURRENT-ASSETS> 1,365,363
<PP&E> 528,219
<DEPRECIATION> 279,060
<TOTAL-ASSETS> 1,674,713
<CURRENT-LIABILITIES> 479,059
<BONDS> 389,015
0
0
<COMMON> 112
<OTHER-SE> 804,740
<TOTAL-LIABILITY-AND-EQUITY> 1,674,713
<SALES> 1,666,423
<TOTAL-REVENUES> 1,666,423
<CGS> 1,478,077
<TOTAL-COSTS> 1,478,077
<OTHER-EXPENSES> 84,142
<LOSS-PROVISION> 355
<INTEREST-EXPENSE> 12,994
<INCOME-PRETAX> 104,604
<INCOME-TAX> 35,564
<INCOME-CONTINUING> 69,040
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,040
<EPS-PRIMARY> 0.63
<EPS-DILUTED> 0.61
</TABLE>
