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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(MARK ONE)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
--- EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 28, 1997.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
--- EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ______.
COMMISSION FILE NUMBER 0-17781
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SYMANTEC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 77-0181864
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10201 TORRE AVENUE, CUPERTINO, CALIFORNIA 95014-2132
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (408) 253-9600
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Securities registered pursuant to Section 12(b) of the Act:
NONE NONE
(Title of each class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filer pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
Aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the closing sale price of the Symantec common stock on
June 1, 1997 as reported on the Nasdaq National Market and with respect to the
Delrina exchangeable stock on the Toronto Stock Exchange:
$1,046,855,373
Number of shares outstanding of each of the registrant's classes of common
stock, including 2,919,312 shares of Delrina exchangeable stock, as of June 1,
1997:
55,323,964
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement to be delivered to stockholders in
connection with the Annual Meeting of Stockholders to be held September 18,
1997 are incorporated by reference into Part III.
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SYMANTEC CORPORATION
FORM 10-K
FOR THE FISCAL YEAR ENDED MARCH 31, 1997
TABLE OF CONTENTS
PART I.
<TABLE>
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Page
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Item 1. Business.................................................. 1
Item 2. Properties................................................ 9
Item 3. Legal Proceedings......................................... 9
Item 4. Submission of Matters to a Vote of Security Holders....... 9
PART II.
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 10
Item 6. Selected Financial Data................................... 11
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 12
Item 8. Financial Statements and Supplementary Data............... 23
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure....................... 23
PART III.
Item 10 Directors and Executive Officers of the Registrant........ 24
Item 11 Executive Compensation.................................... 26
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 26
Item 13. Certain Relationships and Related Transactions............ 26
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.............................................. 27
Signatures........................................................ 55
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PART I
ITEM 1: BUSINESS.
FORWARD-LOOKING STATEMENTS.
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The following discussion contains forward-looking statements that are subject to
risks and uncertainties. There are several important factors that could cause
actual results to differ materially from those anticipated by the
forward-looking statements contained in the following discussion. Readers should
pay particular attention to the risk factors set forth in this section and in
the section of this report entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
GENERAL.
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Symantec Corporation ("Symantec" or the "Company") develops, markets and
supports a diversified line of application and system software products designed
to enhance individual and workgroup productivity. Approximately 80% of
Symantec's net revenues are derived from products that operate on Microsoft
Corporation's ("Microsoft") MS-DOS, Windows, Windows 95 and Windows NT operating
systems for personal computers. Symantec also offers products for use on the
Apple Macintosh, Power Macintosh and IBM OS/2 operating systems.
The Company's predecessor, C&E Software, Inc., a California corporation, and
that predecessor's operating subsidiary, Symantec Corporation, a California
corporation, were formed in September 1983 and March 1982, respectively. The
Company was incorporated in Delaware in April 1988 in connection with the
September 1988 reincorporation of the Company's predecessor and its operating
subsidiary into a single Delaware corporation.
Since Symantec's initial public offering on June 23, 1989, the Company has
completed acquisitions of the following companies:
<TABLE>
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Software or Activity
Companies Acquired Date Acquired Acquired
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<S> <C> <C>
Fast Track, Inc. ("Fast Track") May 28, 1996 Network Management Utilities
Delrina Corporation ("Delrina") November 22, 1995 Remote Productivity Solutions
Intec Systems Corporation ("Intec") August 31, 1994 Applications
Central Point Software, Inc. ("Central Point") June 1, 1994 Security and Assistance
SLR Systems, Inc. ("SLR") May 31, 1994 Internet Tools
Fifth Generation Systems, Inc. ("Fifth Generation") October 4, 1993 Security and Assistance
Contact Software International, Inc. ("Contact") June 2, 1993 Remote Productivity Solutions
Certus International Corporation ("Certus") November 30, 1992 Security and Assistance
MultiScope, Inc. ("MultiScope") September 2, 1992 Internet Tools
The Whitewater Group, Inc. ("Whitewater") September 2, 1992 Internet Tools
Symantec (UK) Ltd. ("Symantec UK") April 3, 1992 Marketing Entity
Zortech Ltd. ("Zortech") August 31, 1991 Internet Tools
Dynamic Microprocessor Associates, Inc. ("DMA") August 30, 1991 Remote Productivity Solutions
Leonard Development Group ("Leonard") August 30, 1991 Applications
Peter Norton Computing, Incorporated ("Norton") August 31, 1990 Security and Assistance
</TABLE>
All of these acquisitions were accounted for as poolings of interest.
Accordingly, all financial information has been restated to reflect the combined
operations of these companies and Symantec with the exception of Fast Track,
Intec, SLR, MultiScope and Whitewater, which had results of operations that were
not material to Symantec's consolidated financial statements.
Symantec's business strategy is to satisfy customer needs by developing and
marketing products across multiple operating platforms that make customers
productive and keep their computers safe and reliable - anywhere, anytime.
During fiscal 1997, in a move to focus the Company's product offerings on
customer needs, Symantec sold its FormFlow product line, acquired as part of the
Delrina acquisition, to JetForm Corporation and sold the assets
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comprising its networking business unit to the Hewlett-Packard Company. See
further discussion in Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Symantec has a 52/53-week fiscal accounting year. Accordingly, all references as
of and for the periods ended March 31, 1997, 1996 and 1995 reflect amounts as of
and for the periods ended March 28, 1997, March 29, 1996 and March 31, 1995,
respectively.
PRODUCTS AND SERVICES.
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Symantec's products, comprising both application software and system software,
are currently organized into the following three major product groups: Remote
Productivity Solutions, Security and Assistance and Emerging Businesses and
Other. The following table summarizes Symantec's principal
products by product group:
Principal Products
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REMOTE PRODUCTIVITY SOLUTIONS
ACT!(R)
Internet FastFind(TM)
WinFax(R) PRO
pcANYWHERE(R)
SECURITY AND ASSISTANCE
Norton AntiVirus(R)
Symantec AntiVirus for Macintosh (SAM(R))
Norton Your Eyes Only(TM)
Norton Utilities(R)
Norton Commander(R)
Healthy PC.com(TM)
PC Handyman(TM)
CrashGuard(TM)
EMERGING BUSINESSES AND OTHER
Symantec Cafe(TM)
Visual Cafe(TM)
Visual Cafe(TM) PRO
Visual Page(TM)
REMOTE PRODUCTIVITY SOLUTIONS
The Remote Productivity Solutions business is focused on helping remote
professionals remain productive - anytime, anywhere. This business unit focuses
on customer needs to access information, applications and data from any
location.
ACT! is an easy-to-use contact database with a graphical activity schedule, a
full-featured word processor that links Microsoft Word and Wordperfect and a
report generator. ACT! manages and integrates a user's contacts, calendar
and communication through the use of integrated e-mail messaging. In
addition, it has a drag-and-drop to link any file to any contact. ACT! runs
on the Windows, Windows 95, Windows NT, MS-DOS, Macintosh, Newton, Psion,
Lotus Notes and palmtop operating systems.
Internet FastFind allows the user to use all of the top search engines at once
as well as locate specific files on the Internet. Other features include
"Notify" which automatically tracks and alerts when changes occur to favorite
folders, FTP and Web sites and "PatchConnect" which identifies your system's
hardware and software and automatically connects you to the appropriate Internet
sites. Internet FastFind also uses Symantec's LiveUpdate to download and install
the latest free updates. Internet FastFind runs on the Windows 95 and Windows NT
operating systems.
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WinFax PRO allows users to send, receive and manage faxes. WinFax PRO provides
background faxing, which allows users to continue working on other applications
while sending a fax via the Internet or any fax machine in the world. WinFax PRO
also provides enhanced file compression, which increases the speed at which
faxes are transmitted. Other features include "Delrina Pager," which allows a
computer to page a user to alert him or her of incoming voice and fax messages
and "call identify," which allows a user to view the incoming fax or phone
number on the user's computer screen before answering the phone. In addition,
WinFax PRO for Networks offers comprehensive support for the most common e-mail
packages, enabling users to receive faxes directly to their e-mail address. It
also uses Symantec's LiveUpdate to download and install the latest free updates.
WinFax PRO runs on the Windows, Windows 95 and Windows NT operating systems.
pcANYWHERE offers reliable, fast and flexible PC-to-PC remote computing via
serial or modem connection. pcANYWHERE lets the user remotely control one PC
from the keyboard of another PC. The offsite remote PC, laptop or PC terminal
controls the operation of the distant host PC. The software allows the user to
run any MS-DOS, Windows, Windows 95, Windows NT or Windows CE application
remotely, transfer files and perform other data operations. In addition to
allowing a remote user to run a distant PC, pcANYWHERE optionally allows users
at the host (distant) machine to view the operations being conducted from the
remote site. This makes pcANYWHERE ideal for support of users as a remote
helpdesk function for both problem solving and application training.
SECURITY AND ASSISTANCE
The Security and Assistance business is dedicated to being indispensable to
customers' daily use of computers by increasing productivity and keeping
computers safe and reliable.
Norton AntiVirus/Symantec AntiVirus for Macintosh (SAM) are programs for the
protection, detection and elimination of computer viruses under the MS-DOS,
Windows, Windows 95, Windows NT, Macintosh, Power Macintosh and OS/2 operating
systems. They provide virus protection, detection and repair capability,
recognize virus-like behavior and prevent most known or unknown viruses from
infecting a system. They detect viruses and disinfect infected files and disks
during normal computer use. They also detect and disinfect floppy boot-track
viruses, stealth and encrypted viruses and remove active viruses from memory.
They are designed to prevent viruses with a unique, comprehensive, multi-layered
line of defense that combines scanning, virus sensing and inoculation. They also
use Symantec's LiveUpdate to download and install the latest free updates.
Norton Your Eyes Only offers comprehensive 32-bit security designed specifically
for the Windows 95 operating system, "on-the-fly" automatic encryption using RSA
Data Security, Inc.'s public key encryption technology, optional access control
during boot-up to prevent unauthorized access to data on the hard disk and
configurable automatic time-out blanking of the screen if the computer system is
idle for a specified period of time. The administrator version provides
configuration, distribution and management for an entire network from a central
location.
Norton Utilities are a set of "tools" designed to address the system-level
operations of the MS-DOS, Windows, Windows 95, Windows NT, Macintosh and Power
Macintosh operating systems. Norton Utilities provides disk and data recovery,
security, performance optimization, system and .ini-file monitoring and
preventive maintenance functions. The Norton Utilities can restore the structure
of a disk and files under certain conditions and can also provide for file
de-fragmentation, system operation information, file unerasing and other file
and system operation improvements. It also uses Symantec's LiveUpdate to
download and install the latest free updates.
Norton Commander is designed to provide a character-based graphical approach and
mouse capability for operations such as copy, move and delete. Norton Commander
includes a MCI mail facility, file compression, Commander Link and a PC-to-PC
file transfer function. Norton Commander includes a wide range of file viewers,
application launching functions, a customizable menuing facility and a variety
of network utilities and editor associates. Norton Commander runs on the MS-DOS,
Windows, Windows 95 and Windows NT operating systems.
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Healthy PC.com is an Internet site operated by Ziff-Davis' ZDNet division that
consists of two separate services which include a free advice and consultation
area maintained by ZDNet and the Healthy PC.com Health Club, a subscription
based membership service which provides access to Symantec's AntiVirus, disk
repair and LiveUpdate software. Healthy PC.com runs on the MS-DOS, Windows,
Windows 95 and Windows NT operating systems.
PC Handyman works continuously in the background to fix all kinds of PC
operation problems such as screen freezes and hard drive crashes, and to keep
important PC functions running smoothly. This product also provides the user
with a trouble-shooting screen to help pinpoint computer problems and identify
solutions. PC Handyman runs on the Windows 95 operating system.
CrashGuard allows users to unfreeze most applications using the familiar
Ctrl-Alt-Del keystroke combination, even when the system is hung or otherwise
not responding. This program notifies you when a crash has been intercepted and
provides a recommendation for fixing the crash. It also uses Symantec's
LiveUpdate to download and install the latest free updates. CrashGuard runs on
the Windows 95 and Windows NT operating systems.
EMERGING BUSINESSES AND OTHER
The Emerging Businesses and Other business includes products providing an easy
to use Java development environment, as well as revenue streams from the sale of
certain of the Company's software product lines and revenues from products
nearing the end of their life cycle.
Symantec Cafe features a native Java compiler that allows the building of Java
programs. It provides a Class Browser, an introduction to Java programming book
and over 35 sample applets that help developers get started quickly using Java
in their web pages. In addition, Symantec Cafe provides a fully integrated
graphical debugger for Java, allowing developers to do source level debugging of
their Java standalone applications or applets that are embedded inside an HTML
web page. This product runs on the Windows 95, Windows NT, Macintosh and Power
Macintosh operating systems.
Visual Cafe provides developers with a fast and productive visual programming
environment for creating Java applets and applications. It includes many
application components like buttons, text boxes and dialog boxes to create your
own templates to reuse on future projects. In addition, it provides
drag-and-drop visual programming for quick application development with minimal
coding as well as a powerful, integrated graphical debugger to quickly debug
applications at the source level. This product runs on the Windows 95, Windows
NT, Macintosh and Power Macintosh operating systems.
Visual Cafe PRO provides the complete Visual Cafe Java Rapid Application
environment as well as the tools to create database applets and applications to
allow the user to build Web pages with interactive database links in one
complete, fully-integrated environment. It represents data structures
graphically and uses wizards to instantly create dialogs and applications
(including master/detail joins) with live connections to database tables. This
product runs on the Windows 95, Windows NT, Macintosh and Power Macintosh
operating systems.
Visual Page allows business users to create documents on a web page for other
people to access. Visual Page provides the user with a "Standard" Word Processor
Toolbar with easy to use features to change type face sizes, align text and set
styles. It also contains a Site Window which allows easy link setup and shows
all pages, anchors and images in one convenient window. Other features include
support for Java Applets, Netscape plug-ins and embedded Quicktime movies as
well as an interface to support Apple Java Virtual Machine (VM) to make Java
applets "alive". This product runs on the Windows 95, Windows NT, Macintosh and
Power Macintosh operating systems.
SALES, INTERNATIONAL SALES AND CUSTOMER SUPPORT.
- ------------------------------------------------
Symantec markets its products worldwide utilizing a multi-channel strategy of
direct sales and indirect sales through independent software distributors, major
retail chains and resellers.
SALES AND MARKETING
Symantec utilizes both direct and indirect sales forces to encourage end users
to adopt Symantec's products as corporate standards. The direct sales force
focuses primarily on site license sales where a license for multiple
workstations is sold to a customer at a negotiated price. The sales cycle with
respect to site license sales may be lengthy and may be subject to integration
and acceptance by the customer. The Company also employs an indirect sales force
that works closely with its major distributor and reseller accounts to manage
the flow of orders,
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inventory levels and sell-through to retail chains as well as promotions and
other selling activities. At March 31, 1997, Symantec had approximately 120
people in its North American direct and indirect sales force.
Symantec maintains distribution relationships with major independent
distributors. These distributors stock Symantec's products in inventory for
redistribution to independent dealers, consultants and other resellers. Symantec
also maintains relationships with major retailers, including CompUSA and Best
Buy. Symantec markets to these retailers through independent distributors.
Additionally, Symantec sells product upgrades and certain of its products to end
users through direct mail campaigns and the Internet.
Approximately 34% of Symantec's net revenues in the year ended March 31, 1997
were derived from Symantec's two largest distributors. Ingram Micro, Inc.
represented 27%, 27% and 22% of Symantec's net revenues in fiscal 1997, 1996 and
1995, respectively, while Merisel Americas, Inc. represented 7%, 10% and 11% of
Symantec's net revenues in fiscal 1997, 1996 and 1995, respectively. Agreements
with distributors are generally nonexclusive and may be terminated by either
party without cause. Such distributors are not within the control of Symantec,
are not obligated to purchase products and also represent other vendors' product
lines. (See further discussion in Item 7: Management's Discussion and Analysis
of Financial Condition and Results of Operations Business Risks - Distribution
Channels.)
Symantec's return policy allows its distributors, subject to certain
limitations, to return purchased products in exchange for new products or for
credit towards future purchases. End users may return products through dealers
and distributors within a reasonable period from the date of purchase for a full
refund, and retailers may return older versions of products. Various
distributors and resellers may have different return policies that may
negatively impact the level of products which are returned to Symantec. Product
returns occur when the Company introduces upgrades and new versions of products
or when distributors order too much product. In addition, competitive factors
often require the Company to offer rights of return for products that
distributors or retail stores are unable to sell. (See further discussion in
Item 7: Management's Discussion and Analysis of Financial Condition and Results
of Operations - Business Risks - Product Returns.)
Symantec's marketing activities include advertising in trade, technical and
business publications, cooperative marketing with distributors, resellers and
dealers, periodic direct mailings to existing and prospective end users and
participation in trade and computer shows. Additionally, the Company typically
offers two types of rebate programs, volume incentive rebates and rebates to end
users. Volume incentive rebates are made available to Symantec's largest
distributors and resellers whereby the distributor or reseller earns a rebate
based upon their purchases or the volume of product they sell to end users.
Volume incentive rebates are accrued when revenue is recorded. The amount of
these rebates as a percentage of net revenues has been consistent for all
periods presented and has not had a material impact on the Company's liquidity.
From time to time, Symantec makes available rebates to end users of various
products who acquired the products through major retailers. End user rebates are
accrued when revenue is recorded.
INTERNATIONAL SALES
International revenues represented approximately 29%, 32% and 31% of Symantec's
net revenues in fiscal 1997, 1996 and 1995, respectively. At March 31, 1997,
Symantec had approximately 140 sales, marketing and related personnel in its
international sales organization.
The majority of Symantec's net revenues from certain European regions are
derived from sales by affiliates of Symantec's major United States distributors.
In other countries, Symantec sells its products through authorized distributors.
In some countries, these distributors are restricted to specified territories.
Symantec typically adapts products for local markets, including translating the
documentation and software where necessary, and prepares marketing programs for
each local market.
Symantec has established marketing offices in Australia, Brazil, Canada, France,
Germany, Holland, Hong Kong, Italy, Japan, Korea, Mexico, New Zealand, Russia,
Singapore, South Africa, Sweden, Switzerland, Taiwan and the United Kingdom.
These local offices facilitate Symantec's marketing and distribution in
international markets. The Company's international operations are subject to
certain risks common to international operations, such as government
regulations, import restrictions, currency fluctuations, repatriation
restrictions and, in certain jurisdictions, reduced protection for the Company's
copyrights and trademarks. (See further discussion in Item 7: Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Business Risks - Foreign
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Operations.) Information with respect to international operations and export
sales may be found in Note 12 of the Notes to Consolidated Financial Statements
in Part IV, Item 14 of this Form 10-K.
CUSTOMER SUPPORT
Symantec's product support program provides a wide variety of free and fee-based
technical support services to its customers. Symantec provides its customers
with free support via electronic and automated services as well as 90 days free
telephone support for selected products. Symantec accrues the cost of providing
this free support at the time of product sale. In August 1996, Symantec
introduced LiveUpdate, which provides free, instant access to on-line updates,
enhancements, support tips and other useful information for selected products.
In addition, Symantec offers both domestic individual users and domestic
corporate customers a variety of fee-based options designed to meet their
technical support requirements. These fee-based support programs are revised
from time to time as customer requirements change and as market trends dictate.
Fee-based technical support services did not generate material revenues in any
fiscal years presented and are not expected to generate material revenues in the
near future. (See further discussion in Item 7: Management's Discussion and
Analysis of Financial Condition and Results of Operations - Business Risks -
Rapid Technological Change and Development Risks and Fluctuations in Quarterly
Operating Results.)
PRODUCT DEVELOPMENT AND ACQUISITIONS.
Symantec uses a multiple products sourcing strategy that includes internal
development, acquisitions of product lines or companies and licensing from third
parties. Symantec typically develops new products and enhancements of existing
products in one of its two core product groups (Remote Productivity Solutions
and Security and Assistance) and in selected product areas targeted as emerging
business opportunities. Each group's responsibilities include design,
development, documentation and quality assurance. Independent contractors are
used for certain aspects of the product development process and elements of
certain Company products are licensed from third-party developers.
Symantec uses strategic acquisitions, as necessary, to provide certain
technology, people and products for its overall product strategy. The Company
has completed a number of acquisitions and dispositions of companies and
products and may acquire and dispose other companies and products in the future.
(See further discussion in Item 7: Management's Discussion and Analysis of
Financial Condition and Results of Operations - Business Risks Management of
Expanding Operations.)
The Company is devoting substantial efforts to the development of software
products that are designed to operate on various operating systems. Symantec's
total research and development expenses were approximately $89 million, $95
million and $71 million in fiscal 1997, 1996 and 1995, respectively. Research
and development expenditures are charged to operations as incurred. In fiscal
1997, Symantec capitalized approximately $8 million of capitalized software
development costs, primarily related to network administration technology, which
was sold to Hewlett-Packard in March 1997, resulting in the write off of
approximately $7 million of unamortized costs during fiscal 1997. No material
software development costs have been capitalized by the Company in fiscal 1996,
while prior to being acquired by Symantec, Delrina capitalized approximately $6
million in software development costs in fiscal year 1995. (See further
discussion in Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations - Business Risks - Operating System and
Uncertainty of Research and Development Efforts.)
COMPETITION.
The microcomputer software market is intensely competitive and is subject to
rapid changes in both technology and the strategic direction of major
microcomputer hardware manufacturers and operating system providers. The
Company's competitiveness depends on its ability to enhance its existing
products and to offer new products on a timely basis. The Company has limited
resources and must restrict its product development efforts to a relatively
small number of projects. (See further discussion in Item 7: Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Business Risks - Rapid Technological Change and Development Risks.)
Operating system vendors such as Microsoft have added features to new versions
of their products that provide some of the same functionality traditionally
offered in Symantec's products. Symantec believes this trend may continue.
Microsoft may incorporate advanced features in future versions of operating
systems that may decrease the demand for certain of the Company's products,
including those currently under development. A number of software developers
have integrated antivirus capabilities into their Internet products. While
Symantec plans to continue to improve its products with a view toward providing
enhanced functionality over what may be provided in
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operating systems, there is no assurance that these efforts will be successful
or that such improved products will be commercially accepted by software users.
Symantec will also attempt to work with operating system vendors in an effort to
make its products compatible with those operating systems, yet differentiate
those utility products from features included in the operating systems. However,
there is no assurance that these efforts will be successful. (See further
discussion in Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations Business Risks - Operating System.)
The Company competes with at least one product from many of the major
independent software vendors, including Borland International, Inc.
("Borland"), CyberMedia ("CyberMedia"), Dr Solomon's ("Dr Solomon's"), ELAN
Software Corporation ("ELAN"), International Business Machines Corporation
("IBM"), McAfee Associates, Inc. ("McAfee"), Microcom, Inc. ("Microcom"),
Microsoft, Norton-Lambert Corporation ("Norton-Lambert"), Phoenix
Technologies Ltd. ("Phoenix"), TouchStone Software Corporation
("TouchStone"), Traveling Software, Inc. ("Traveling Software"), Starfish
Software, Inc. ("Starfish") and SofNet, Inc. ("SofNet").
For example, Norton Utilities competes with operating systems, such as
Microsoft's Windows 95 and MSDOS and IBM's DOS, which offer file recovery,
anti-virus and backup features, First Aid from CyberMedia and other products
from various other utilities vendors. Norton AntiVirus competes with PC-cillin
95 from TouchStone, Dr Solomon's Anti-Virus Toolkit from Dr. Solomon's and
Viruscan from McAfee. Symantec's pcANYWHERE competes mainly with Laplink from
Traveling Software, Carbon Copy from Microcom, Close Up from Norton Lambert and
NetRemote from McAfee. ACT! competes with Lotus Organizer for Windows from IBM,
Outlook from Microsoft, GoldMine from ELAN, Sidekick from Starfish and many
other personal information managers produced by various software developers.
Delrina WinFax PRO competes with products offered by Phoenix, Traveling Software
and SofNet, as well as Microsoft's Windows 95 operating system. Cafe mainly
competes with products from Microsoft. In addition, these and other Company
products compete less directly with a number of other products that offer levels
of functionality different from those offered by Symantec's products or that
were designed for a somewhat different group of end users than those targeted by
Symantec.
Symantec also competes with microcomputer hardware manufacturers that develop
their own software products. Further, Symantec competes with other microcomputer
software companies for access to the channels of retail distribution and for the
attention of customers at the retail level and in corporate accounts. Finally,
Symantec competes with other software companies in its efforts to acquire
products or companies and to publish software developed by third parties.
Symantec believes that competition in the industry will continue to intensify as
most major software companies expand their product lines into additional product
categories. Some of the Company's competitors have substantial financial,
marketing and technological resources. (See further discussion in Item 7:
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Business Risks Rapid Technological Change and Development Risks,
Operating System and Distribution Channels.)
MANUFACTURING AND BACKLOG.
Symantec's product development organization produces a set of master diskettes
and documentation for each product. Most of Symantec's domestic manufacturing is
performed by outside contractors under the supervision of Symantec's
manufacturing organization. Purchasing of most raw materials and fulfillment of
most orders is done by Symantec personnel in Symantec's Sunnyvale, California
facility. The manufacturing steps that are subcontracted to outside
organizations include the duplication of diskettes and CD-ROM's, printing of
documentation materials and assembly of the final package. Symantec performs
diskette duplication and assembly of the final package in its Dublin, Ireland
manufacturing facility for most products distributed outside of the United
States, Canada and Latin America.
Symantec has often been able to acquire materials on a volume-discount basis and
has had multiple sources of supply for certain materials. To date, Symantec has
not experienced any material difficulties or delays in production of its
software and related documentation and packaging. However, shortages may occur
in the future. For example, shortages of certain materials may occur when
Microsoft introduces new operating systems. (See further discussion in Item 7:
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Business Risks - Supply Risk.)
Symantec normally ships products within one week after receiving an order. Thus,
Symantec does not consider backlog to be a significant indicator of future
performance.
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PRICE COMPETITION.
Price competition is intense in the microcomputer business software market and
is expected to continue to increase and become even more significant in the
future. See further discussion in Item 7: Management's Discussion and Analysis
of Financial Condition and Results of Operations.
SEASONALITY.
While Symantec's diverse product line has tended to lessen fluctuations in
quarterly net revenues, these fluctuations have occurred and may occur in the
future. These fluctuations may be caused by a number of factors, including the
timing of announcements and releases of new or enhanced versions of Symantec's
products and product upgrades, the introduction of competitive products by
existing or new competitors, reduced demand for any given product, seasonality
in the retail software market in foreign markets, customer end-of-period buying
patterns and the market's transition between operating systems. These factors
may cause significant fluctuations in net revenues and, accordingly, operating
results. (See further discussion in Item 7: Management's Discussion and Analysis
of Financial Condition and Results of Operations - Business Risks - Fluctuations
in Quarterly Operating Results.)
PRODUCT PROTECTION.
Symantec regards its software as proprietary and relies on a combination of
copyright, patent and trademark laws and license agreements in an attempt to
protect its rights. (See further discussion in Item 7: Management's Discussion
and Analysis of Financial Condition and Results of Operations Business Risks -
Intellectual Property Rights.)
EMPLOYEES.
As of March 31, 1997, Symantec employed approximately 2,000 people, including
1,000 in sales, marketing and related staff activities, 600 in product
development and 400 in management, manufacturing, administration and finance.
None of the employees is represented by a labor union, and Symantec has
experienced no work stoppages. Symantec believes that its employee relations are
good.
Competition in recruiting personnel in the software industry is intense.
Symantec believes that its future success will depend in part on its ability to
recruit and retain highly skilled management, marketing and technical personnel.
Symantec believes that it must provide personnel with a competitive compensation
package, which necessitates the continued availability of stock options and
requires ongoing shareholder approval of such option programs. (See further
discussion in Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations Business Risks - Employee Risk.)
8
<PAGE> 11
ITEM 2: PROPERTIES.
Symantec's principal locations, all of which are leased, are as follows:
<TABLE>
<CAPTION>
Approximate Expiration
Size of
Location Purpose (in square feet) Lease
- -------- ------- ---------------- ----------
<S> <C> <C> <C>
North America
Cupertino, California
Corporate Headquarters Administration, sales and marketing 87,000 2003
Emerging Business and Research and development 161,000 2003
Remote Productivity
Solutions
Symantec Technology Future expansion * 143,000 2003
Center
Sunnyvale, California Manufacturing 78,000 1998
Santa Monica, California Research and development and 71,000 2000
marketing
Eugene, Oregon Customer service and technical 136,000 2006
support
Beaverton, Oregon Research and development and 45,000 2001
marketing
Melville, New York Research and development and 24,000 2000
marketing
Toronto, Canada Research and development and 63,000 2005
technical support
International
Leiden, Holland Administration, sales and marketing 7,000 1997
and technical support
Dublin, Ireland Administration, manufacturing 74,000 2026
and translations
</TABLE>
Symantec's principal administrative and sales and marketing facility, as well as
certain research and development and support facilities, are located in
Cupertino, California. The Company leases a number of additional facilities for
marketing and research and development in the United States and for marketing in
Australia, Brazil, Canada, France, Germany, Holland, Hong Kong, Italy, Japan,
Korea, Mexico, New Zealand, Russia, Singapore, South Africa, Sweden,
Switzerland, Taiwan and the United Kingdom. Symantec believes its facilities are
adequate for its current needs and additional or substitute space will be
available as needed to accommodate any expansion of its operations.
* The Symantec Technology Center is currently under construction, with
anticipated completion in fiscal 1999.
ITEM 3: LEGAL PROCEEDINGS.
Information with respect to this Item may be found in Note 11 of Notes to
Consolidated Financial Statements in Part IV, Item 14 of this Form 10-K.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the security holders during the quarter
ended March 31, 1997.
9
<PAGE> 12
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Symantec's common stock is traded on the Nasdaq National Market under the Nasdaq
symbol "SYMC". The high and low closing sales prices set forth below are as
reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
Fiscal 1997 Fiscal 1996
--------------------------------------------- ---------------------------------------------
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
1997 1996 1996 1996 1996 1995 1995 1995
---------- -------- -------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High $ 18.38 $ 16.38 $ 12.75 $ 18.13 $ 22.63 $ 29.38 $ 33.00 $ 29.50
Low 12.63 9.88 8.75 11.00 10.31 21.50 23.75 20.63
</TABLE>
Delrina exchangeable stock has been traded on the Toronto Stock Exchange
under the symbol "DE" since the acquisition of Delrina by Symantec on November
22, 1995. The high and low closing sales prices set forth below are in Canadian
dollars as reported on the Toronto Stock Exchange. Delrina exchangeable stock is
exchangeable at the option of the stockholders on a one-for-one basis into
Symantec common stock.
<TABLE>
<CAPTION>
Fiscal 1997 Fiscal 1996
--------------------------------------------- ---------------------
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31,
1997 1996 1996 1996 1996 1995
(In Canadian dollars)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
High $ 24.35 $ 22.00 $ 17.70 $ 25.00 $ 31.00 $ 37.25
Low 17.55 13.00 12.00 15.50 16.50 29.38
</TABLE>
As of March 31, 1997, there were approximately 852 stockholders of record,
including approximately 45 holders of record of Delrina exchangeable shares. The
Company has never paid cash dividends on its stock with the exception of cash
distributions to stockholders of acquired companies. Symantec anticipates that
it will continue to retain its earnings to finance the growth of its business.
In addition, the Company's bank line of credit and outstanding convertible
subordinated debentures limit the payment of cash dividends on common stock (See
Notes 4 and 5 of Notes to Consolidated Financial Statements in Part IV, Item 14
of this Form 10-K).
10
<PAGE> 13
ITEM 6: SELECTED FINANCIAL DATA.
The following selected financial data is qualified in its entirety by and
should be read in conjunction with the more detailed consolidated financial
statements and related notes included elsewhere herein. During fiscal 1997,
Symantec acquired Fast Track, Inc. ("Fast Track") in a transaction accounted for
as a pooling of interests. As the results of operations of Fast Track were not
material to Symantec's consolidated financial statements, amounts prior to the
date of acquisition were not restated to reflect the combined operations of the
companies. Additional acquisitions accounted for as poolings of interest include
Delrina Corporation in fiscal 1996, Intec Systems Corporation, Central Point
Software, Inc. and SLR Systems, Inc. in fiscal 1995, Fifth Generation Systems,
Inc. and Contact Software International, Inc. during fiscal 1994, and Certus
International Corporation, MultiScope, Inc., The Whitewater Group, Inc. and
Symantec (UK) Ltd. during fiscal 1993. The Company has never paid cash dividends
on its stock with the exception of distributions to stockholders of acquired
companies.
FIVE YEAR SUMMARY
<TABLE>
<CAPTION>
Year Ended March 31,
(In thousands, except ---------------------------------------------------------------------
net income (loss) per share) 1997 1996 1995 1994 1993
- ---------------------------- -------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net revenues $472,183 $ 445,432 $431,268 $ 403,206 $ 382,911
Acquisition, restructuring and
other expenses 8,585 27,617 9,545 56,094 23,836
Operating income (loss) 26,289 (48,279) 40,286 (47,290) (59,792)
Net income (loss) 26,038 (39,783) 33,409 (44,421) (46,304)
Distributions to stockholders
of acquired companies -- -- -- -- 162
Net income (loss) per share - primary $ 0.47 $ (0.76) $ 0.65 $ (0.96) $ (1.09)
Net income (loss) per share - fully diluted $ 0.47 $ (0.76) $ 0.61 $ (0.96) $ (1.09)
Shares used to compute net
income (loss) per share - primary 55,407 52,664 52,181 46,270 42,624
Shares used to compute net
come (loss) per share - fully diluted 55,841 52,664 56,491 46,270 42,624
</TABLE>
<TABLE>
<CAPTION>
March 31,
---------------------------------------------------------------------
(In thousands) 1997 1996 1995 1994 1993
- -------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital $129,569 $134,643 $143,405 $101,644 $100,075
Total assets 341,673 285,027 306,126 262,335 257,584
Long-term obligations, less
current portion 15,066 15,393 25,413 25,967 28,152
Stockholders' equity 217,979 180,317 184,874 129,193 139,056
</TABLE>
11
<PAGE> 14
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY EFFECT FUTURE RESULTS The
following discussion contains forward-looking statements that are subject to
risks and uncertainties. There are several important factors that could cause
actual results to differ materially from those anticipated by the
forward-looking statements contained in the following discussion. Readers should
pay particular attention to the risk factors set forth within this section.
Nothing in this report shall impose upon Symantec or any person a duty to update
any forward looking statement.
OVERVIEW
Symantec develops, markets and supports a diversified line of application and
system software products designed to enhance individual and workgroup
productivity. Founded in 1982, the Company has offices in the United States,
Canada, Asia, Australia, Europe, Africa and Latin America.
During the last three fiscal years, Symantec has acquired the following
companies:
<TABLE>
<CAPTION>
Shares of Acquired
Symantec Company
Common Stock
Stock Options
Companies Acquired Date Acquired Issued Assumed
- ------------------ ------------- ---------- ---------
<S> <C> <C> <C>
Fast Track, Inc. ("Fast Track") May 28, 1996 600,000 --
Delrina Corporation ("Delrina") November 22, 1995 13,684,174* 1,271,677
Intec Systems Corporation ("Intec") August 31, 1994 133,332 --
Central Point Software, Inc.
("Central Point") June 1, 1994 4,029,429 707,452
SLR Systems, Inc. ("SLR") May 31, 1994 170,093 --
</TABLE>
* Includes Delrina exchangeable stock that is traded on the Toronto Stock
Exchange. Delrina stockholders received Delrina exchangeable stock in exchange
for Delrina common stock at a rate of 0.61 per share. Delrina exchangeable
stock may be converted into Symantec common stock on a one-for-one basis at
each stockholder's option.
All of these acquisitions were accounted for as poolings of interest.
Accordingly, all financial information has been restated to reflect the combined
operations of these companies and Symantec with the exception of Fast Track,
Intec and SLR, which had results of operations that were not material to
Symantec's consolidated financial statements.
12
<PAGE> 15
RESULTS OF OPERATIONS
The following table sets forth each item from the consolidated statements of
operations as a percentage of net revenues and the percentage change in the
total amount of each item for the periods indicated.
<TABLE>
<CAPTION>
Period-to-Period
Percentage
Increase (Decrease)
------------------
Year Ended March 31, 1997 1996
----------------------- Compared Compared
1997 1996 1995 to 1996 to 1995
----- ----- ----- -------- --------
<S> <C> <C> <C> <C> <C>
Net revenues 100% 100% 100% 6% 3%
Cost of revenues 20 25 21 (14) 20
----- ----- -----
Gross margin 80 75 79 13 (1)
Operating expenses:
Research and development 19 21 17 (6) 34
Sales and marketing 47 52 44 (4) 21
General and administrative 7 7 7 4 12
Acquisition, restructuring
and other non-
recurring expenses 2 6 2 (69) 189
----- ----- -----
Total operating expenses 75 86 70 (8) 28
----- ----- -----
Operating income (loss) 5 (11) 9 * *
Interest income 2 2 1 (4) 33
Interest expense -- -- -- (6) (38)
Other income (expense), net -- (1) -- (21) *
----- ----- -----
Income (loss) before income
taxes 7 (10) 10 * *
Provision (benefit) for
income taxes 1 (1) 2 * *
----- ----- -----
Net income (loss) 6% (9)% 8% * *
===== ===== =====
</TABLE>
- ---------------------
* percentage change is not meaningful.
NET REVENUES.
Net revenues increased 6% from $445 million in fiscal 1996 to $472 million in
fiscal 1997. Net revenues increased 3% from $431 million in fiscal 1995 to $445
million in fiscal 1996.
PRODUCT GROUPS. During fiscal 1997, the Company experienced increased net
revenues from each of its core product groups: Remote Productivity Solutions and
Security and Assistance. The Remote Productivity Solutions product group is
focused on helping remote professionals remain productive, by addressing
customer needs to access information, applications and data from any location.
The Security and Assistance product group is dedicated to being indispensable to
customers' daily use of computers by increasing productivity and keeping
computers safe and reliable.
The market's acceptance of the Windows95 and Windows NT operating systems, as
well as the further expansion of personal computer sales, enabled Symantec to
experience strong fiscal 1997 sales of its Windows 95 products first introduced
during the last half of fiscal 1996 and Windows NT products introduced in fiscal
1997. The most significant product line sales growth was related to the Norton
AntiVirus products from the Security and Assistance product group and pcANYWHERE
products from the Remote Productivity Solutions product group. During fiscal
1997, the financial impact of product price reductions for Symantec's core
products was more than offset by the increase in the volume of products sold,
resulting in increased net revenues.
Symantec's third business unit is the Emerging Business and Other product group,
which includes products providing an easy to use Java development environment,
as well as revenue streams from the sale of certain of
13
<PAGE> 16
the Company's software product lines and revenues from products nearing the end
of their life cycles. Fiscal 1997 net revenues for the Emerging Business product
group decreased from fiscal 1996, largely as the result of declining sales from
products which Symantec no longer actively develops or markets. Symantec
expanded its line of Java development tools in fiscal 1997 in response to wider
acceptance of the Java development environment, resulting in an increase in net
revenues for the Java product line during fiscal 1997. The Emerging Business and
Other product group also recorded approximately $6 million of consulting net
revenues in fiscal 1997, resulting from a non-recurring consulting contract
which was completed during the fiscal year.
As a result of the sale of its electronic forms software products and related
tangible assets to JetForm Corporation ("JetForm") for approximately $100
million in fiscal 1997, the Emerging Business and Other product group recognized
revenue of approximately $18 million during the 1997 fiscal year and is
contractually entitled to quarterly revenue payments through the June 2000
quarter. JetForm has the option to tender payment in either cash or in
registered JetForm common stock, within a contractually defined quantity
threshold. Due to the uncertainty regarding the ultimate collectibility of these
installments, Symantec is recognizing the related revenue as payments are due
and collectibility is assured from JetForm.
During the fourth quarter of fiscal 1997, Symantec also sold the software
products and related tangible assets of its Networking Business Unit to the
Hewlett-Packard Company ("Hewlett-Packard"), resulting in the receipt of
approximately $1 million of revenue and $2 million research and development
expense reimbursement by the Emerging Business and Other product group.
Additionally, over the next two years, Hewlett-Packard is contractually
obligated to pay to Symantec a royalty stream not to exceed the present value of
$27 million, which is contingent upon future sales of certain products by
Hewlett-Packard. Due to the uncertainty regarding the amounts upon which these
royalties will be determined, Symantec is recognizing these amounts as they are
estimable.
During fiscal 1996, the Company experienced increased net revenues from its
Security and Assistance product group, offset in part by decreased revenues from
its Remote Productivity Solutions product group and products which Symantec no
longer actively develops or markets. Symantec experienced an increase in net
revenue from the introduction of several Windows 95 products; however, this
increase was substantially offset by a decrease in net revenues related to
Windows 3.1 and DOS products.
Symantec markets its products through a number of distribution channels,
including retail, site licenses, OEM, direct marketing and upgrades and the
Internet. The retail channel is Symantec's single largest product channel and
comprises approximately 60% of total product revenues.
INTERNATIONAL. Net revenues from international sales were $138 million and $142
million and represented 29% and 32% of total net revenues in fiscal years 1997
and 1996, respectively. The decrease in international net revenue as a
percentage of total net revenue is the result of domestic revenue growth
outpacing international revenue growth during the fiscal year. Additionally,
international revenues for fiscal 1996 includes the one time recognition of
approximately $7 million, previously deferred Central Point revenue. Foreign
exchange rate fluctuations during fiscal 1997 did not materially contribute to
the fluctuation in results from fiscal 1996 to fiscal 1997. Net revenues from
international sales increased by $7 million in fiscal 1996, from $135 million in
fiscal 1995 to $142 million in fiscal 1996. This increase was largely the result
of the one-time recognition in fiscal 1996 of approximately $7 million of
previously deferred Central Point revenue.
PRODUCT RETURNS. The level of actual product returns and related product return
provision are largely a factor of the level of product sell-in (gross revenue)
from normal sales activity and the replacement of obsolete quantities with the
current version of the Company's products. Changes in the levels of product
returns and related product return provision are generally offset by changing
levels of gross revenue and, therefore, do not typically have a material impact
on reported net revenues.
The Company's product return provision typically fluctuate from period to period
based upon the level and timing of product upgrade releases and changes in
product sell-in. The product return provision for fiscal 1997 was higher than
the provision for fiscal 1996 due to increased returns exposure for Windows 95
products due to additional product sell-in during fiscal 1997. The product
return provision for fiscal 1996 was higher than the provision for fiscal 1995,
due to the introduction of Symantec's Windows 95 products during the last three
quarters of fiscal 1996, which had unusually high sell-in volumes.
14
<PAGE> 17
GROSS MARGIN.
Gross margin represents net revenues less cost of revenues. Cost of revenues
consists primarily of manufacturing expenses, costs for producing manuals,
packaging costs, royalties paid to third parties under publishing contracts and
amortization and write-off of capitalized software.
Prior to fiscal 1997, accounting rules requiring capitalization of certain
software development costs did not materially affect the Company, except for
amounts capitalized by Delrina prior to its acquisition by Symantec in fiscal
1996. Amounts capitalized during fiscal 1997 primarily related to the networking
business unit which was sold to Hewlett-Packard in March 1997, at which time the
amounts were written off.
Amortization of capitalized software, including amortization and the write-off
of both purchased product rights and capitalized software development expenses,
totaled $10 million, $19 million and $13 million for fiscal 1997, 1996 and 1995,
respectively. Included in the fiscal 1997 total is approximately $7 million of
unamortized capitalized software development expenses and $1 million of
unamortized purchased software product rights related to network administration
technology written off as part of the sale to Hewlett-Packard in March 1997. The
fiscal 1997 write-off of unamortized FormFlow technology sold to JetForm was
immaterial. Amortization expense in fiscal year 1997 was lower than in 1996 due
to capitalized software write-offs in fiscal 1996 related to de-emphasized
products and Delrina Windows 3.1 products. The fiscal 1996 amortization of
capitalized software expense included the aforementioned write-offs, resulting
in the significant increase in expense from fiscal 1995.
Gross margins increased to 80% of net revenues in fiscal 1997 from 75% in fiscal
1996 and from 79% in fiscal 1995. The increase in gross margin percentage in
fiscal 1997 compared to fiscal 1996 was due to the decrease in capitalized
software amortization and write-offs noted above. In addition, revenues, with no
related cost of revenues, from JetForm totaling $18 million and from
Hewlett-Packard totaling $1 million were included in net revenues during fiscal
1997. The decline in the gross margin percentage in fiscal 1996 compared to
fiscal 1995 was due to an increase in the amortization and write-off of
purchased product rights and capitalized software development expenses noted
above and increased inventory reserves related to Delrina products designed to
operate on Windows 3.1 and other products de-emphasized by Symantec during
fiscal 1996. Due to an anticipated reduction in software amortization and the
recognition of the potential future revenue streams from JetForm and
Hewlett-Packard, for which there will be no associated costs, Symantec believes
that the gross margin percentage may increase to approximately 81% to 84% in
fiscal 1998, unless there is a significant change in Symantec's net revenues.
RESEARCH AND DEVELOPMENT EXPENSES.
Research and development expenses decreased 6% to $89 million or 19% of net
revenues in fiscal 1997 from $95 million or 21% of net revenues in fiscal 1996
and were $71 million or 17% of net revenues in fiscal 1995. The decrease in
research and development expenses in fiscal 1997 as compared to fiscal 1996 is
due primarily to decreased product development efforts associated with the
Company's decision to cease developing certain software products, and an
increase in capitalized software development costs. In fiscal 1997, Symantec
capitalized approximately $8 million of software development costs, primarily
related to network administration technology, which was subsequently sold to
Hewlett-Packard in March 1997 and resulted in the write off of approximately $7
million in unamortized costs during the fourth quarter of fiscal 1997. In
addition, a $2 million research and development expense reimbursement was
received from Hewlett-Packard in fiscal 1997 under the aforementioned agreement,
which further reduced fiscal 1997 research and development expenses.
The increase in research and development expenses in fiscal 1996 as compared to
fiscal 1995 was primarily the result of increased product development efforts
associated with Symantec's and Delrina's development of new products designed to
operate on the Windows 95 operating system.
Research and development expenditures are charged to operations as incurred.
Prior to fiscal 1997, capitalization of certain software development costs in
accordance with Statement of Accounting Standards No. 86 did not materially
affect the Company, except for amounts capitalized by Delrina prior to its
acquisition by Symantec in fiscal 1996. Delrina did not capitalize any software
development costs in fiscal 1996 and capitalized approximately $6 million in
software development costs in fiscal year 1995.
15
<PAGE> 18
SALES AND MARKETING EXPENSES.
Sales and marketing expenses decreased 4% to $221 million or 47% of net revenues
in fiscal 1997 from $230 million or 52% of net revenues in fiscal 1996. The
decrease in sales and marketing expenses in fiscal 1997 as compared to fiscal
1996 is due primarily to the elimination of duplicative sales and marketing
expenses as a result of the acquisition of Delrina by Symantec and the
elimination of sales and marketing expenses related to the electronic forms
software products which were sold to JetForm in September 1996. Reductions in
expenditures for products no longer actively marketed by Symantec were offset by
increased spending for new products released during the fiscal year.
Sales and marketing expenses increased to $230 million or 52% of net revenues in
fiscal 1996 from $190 million or 44% of net revenues in fiscal 1995, due to an
increase in sales and marketing expenses associated with the release of
Symantec's Windows 95 products.
GENERAL AND ADMINISTRATIVE EXPENSES.
In fiscal 1997, general and administrative expenses increased by 4% to $34
million or 7% of net revenues from $33 million or 7% of net revenues in fiscal
1996 and from $29 million or 7% of net revenues in fiscal 1995. The increase in
general and administrative expenses in absolute dollars in fiscal 1997 as
compared to fiscal 1996 is primarily the result of management consulting
expenditures, offset by benefits from the elimination of duplicative general and
administrative expenses as a result of the acquisition of Delrina by Symantec in
fiscal 1996. The increase in general and administrative expenses in absolute
dollars in fiscal 1996 as compared to fiscal 1995 was principally due to
significant general and administrative expenses incurred by Delrina in the three
month period ended September 30, 1995 and certain legal fees incurred by
Delrina.
ACQUISITION, RESTRUCTURING AND OTHER EXPENSES.
Acquisition Expenses. In connection with the acquisitions completed in fiscal
1997, 1996 and 1995 (see Summary of Significant Accounting Policies and Note 10
of Notes to Consolidated Financial Statements), significant acquisition expenses
have been incurred. These acquisition expenses principally included fees for
legal, accounting and financial advisory services, the write-off of duplicative
capitalized technology, the modification of certain development contracts and
expenses related to the combination of the companies, including the elimination
of duplicative and excess facilities and personnel. These charges approximated
$1 million, $20 million and $10 million in fiscal 1997, 1996 and 1995,
respectively.
Symantec recorded total acquisition charges of approximately $1 million in
fiscal 1997 in connection with the acquisition of Fast Track.
In connection with the acquisition of Delrina in fiscal 1996, Symantec recorded
total acquisition charges of $22 million, which included $9 million for legal,
accounting and financial advisory services, $6 million for the elimination of
duplicative and excess facilities and equipment, $4 million for personnel
severance and outplacement expenses and $3 million for the consolidation and
discontinuance of certain operational activities and other acquisition-related
expenses. Offsetting these costs was a reduction in accrued acquisition,
restructuring and other expenses of $2 million, as actual costs incurred related
to the acquisitions of Central Point and SLR were less than costs previously
accrued by the Company.
In connection with the acquisitions of Central Point and SLR, Symantec recorded
total acquisition charges of $10 million in fiscal 1995. The charges included $4
million for legal, accounting and financial advisory services, $1 million for
the write-off of duplicative product-related expenses and modification of
certain development contracts, $1 million for the elimination of duplicative and
excess facilities, $3 million for personnel severance and outplacement expenses
and $1 million for the consolidation and discontinuance of certain operational
activities and other acquisition-related expenses.
Restructuring Expenses. In fiscal 1997, the Company recorded a charge of $3
million for costs related to the restructuring of certain domestic and
international sales and research and development operations, settlement of the
Carmel lawsuit (see Note 11 of Notes to Consolidated Financial Statements in
Part IV, Item 14 of this Form 10-K) and other expenses. The restructuring plans
have been completed.
In February 1995, Symantec announced a plan to consolidate certain research and
development activities. This plan was designed to gain greater synergy between
the Company's Third Generation Language and Fourth Generation
16
<PAGE> 19
Language development groups. During fiscal 1996, the Company completed the
consolidation and recorded $2 million for the relocation costs of moving
equipment and personnel.
Other Expenses. In fiscal 1997, Symantec recorded a $2 million charge in
connection with the write-off of an equity investment and a $3 million charge
for the write-off of certain in-process research and development acquired by the
Company.
In fiscal 1996, Symantec sold the assets of Time Line Solutions Corporation, a
wholly-owned subsidiary, to a group comprised of Time Line Solutions
Corporation's management and incurred a $3 million loss on the sale. In the
fourth quarter of fiscal 1996, the Company recorded $2 million for estimated
legal fees expected to be incurred in connection with a securities class action
complaint filed in March 1996 and other legal matters (See Note 11 of Notes to
Consolidated Financial Statements in Part IV, Item 14 of this Form 10-K).
As of March 31, 1997, total accrued cash related acquisition and restructuring
expenses were $4 million and included less than $1 million for estimated legal
fees and expenses, less than $1 million for the elimination of duplicative and
excess facilities and $3 million for other acquisition related expenses.
INTEREST INCOME, INTEREST EXPENSE AND OTHER INCOME (EXPENSE). Interest income
was $7 million, $8 million and $6 million in fiscal 1997, 1996 and 1995,
respectively. Higher average cash balances during fiscal 1997 compared to fiscal
1996 were offset by lower interest rates on invested cash during the year.
Interest income increased 33% in fiscal 1996 over fiscal 1995 due to higher
average invested cash balances. Interest expense was $1 million, $2 million and
$2 million in fiscal 1997, 1996 and 1995, respectively. The April 1995
conversion of convertible subordinated debentures totaling $10 million, which
were originally issued in April 1993, for 833,333 shares of Symantec common
stock, resulted in a reduction in interest expense in fiscal 1997 from 1996 and
in fiscal 1996 from 1995. Other income (expense) is primarily comprised of
foreign currency exchange gains and losses from fluctuations in currency
exchange rates.
INCOME TAXES.
The effective income tax provision for fiscal 1997 was 14%, which compares to an
effective income tax benefit of 10% in fiscal 1996 and an effective tax
provision of 25% in fiscal 1995. The 1997 income tax provision of 14% is lower
than the statutory rate primarily due to the utilization of previously
unbenefitted losses.
Realization of the $13 million of net deferred tax asset that is reflected in
the financial statements is dependent upon the Company's ability to generate
sufficient future U.S. taxable income. Management believes that it is more
likely than not that the asset will be realized based on forecasted U.S.
earnings. A valuation allowance of approximately $40 million was provided in the
financial statements. Approximately $22 million of the valuation allowance for
deferred tax assets is attributable to unbenefitted stock option deductions, the
benefit of which will be credited to equity when realized. Approximately $4
million of the valuation allowance represents net operating loss and tax credit
carryforwards of various acquired companies that are limited by separate return
limitations and under the "change of ownership" rules of Internal Revenue Code
Section 382, and the remaining $14 million of the valuation allowance relates to
unbenefitted temporary differences and net operating loss and tax credit
carryforwards.
Symantec projects the effective tax rate to be 23% in fiscal 1998. This rate is
lower than the expected U. S. federal and state combined statutory rate of 40%
is due to a lower tax rate from the Company's Irish operation and the
utilization of previously unbenefitted losses. However, this projection is
subject to change due to fluctuations in and the geographic allocation of
earnings. (See further discussion in Item 7: Management's Discussion and
Analysis of Financial Condition and Results of Operations - Business Risks
Fluctuations in Quarterly Operating Results.)
LIQUIDITY AND CAPITAL RESOURCES
Cash, short-term investments and restricted investments increased $79 million to
$208 million at March 31, 1997 from $129 million at March 31, 1996. This
increase was largely due to cash provided from operating activities, net
proceeds from the exercise of stock options and the sales of common stock under
the Employee Stock Purchase Plan, and improved cash collections of trade
accounts receivable. Cash provided by operating activities was partially offset
by the reclassification of $47 million to restricted investments, a non-current
asset. The restricted investment balance relates to collateral requirements
under lease agreements entered into by Symantec during the current fiscal year.
Symantec is obligated under lease agreements for two existing office buildings,
one parcel of land and one office building under construction in Cupertino,
California to maintain a restricted cash balance invested in U.S. treasury notes
with maturities not to exceed three years. In accordance with the lease terms,
these
17
<PAGE> 20
funds would not be available to meet operating cash requirements. Net cash
provided by operating activities was $94 million and was comprised of the
Company's net income of $26 million and non-cash related expenses of $37 million
and a net decrease in assets and liabilities of $31 million.
Trade accounts receivable decreased $11 million from $59 million at March 31,
1996 to $48 million at March 31, 1997 primarily due to improved cash collections
during the year.
On April 29, 1997, the Board of Directors of Symantec authorized the repurchase
of up to 1,000,000 shares of Symantec common stock by June 13, 1997. The shares
will be used for employee stock purchase programs and option grants. As of June
13, 1997, management completed the repurchase of 500,000 shares at prices
ranging from $16.57 to $17.00 per share.
The Company has a $10 million line of credit that expires in March 1998. The
Company was in compliance with the debt covenants at March 31, 1997. At March
31, 1997, there were no borrowings outstanding under this line and there were
less than $1 million of standby letters of credit outstanding under this
agreement. Future acquisitions by the Company may cause the Company to be in
violation of the line of credit covenants; however, the Company believes that if
the line of credit were canceled or amounts were not available under the line,
there would not be a material adverse impact on the financial results, liquidity
or capital resources of the Company.
Symantec is obligated under lease agreements for two existing office buildings,
one parcel of land and one office building under construction in Cupertino,
California to maintain a restricted cash balance invested in U.S. treasury notes
with maturities not to exceed three years. In accordance with the lease terms,
these funds would not be available to meet operating cash requirements.
If Symantec were to sustain significant losses, the Company could be required to
reduce operating expenses, which could result in product delays, reassessment of
acquisition opportunities, which could negatively impact the Company's growth
objectives, and/or pursue further financing options. The Company believes
existing cash and short-term investments will be sufficient to fund operations
for the next year. (See further discussion in Item 7: Management's Discussion
and Analysis of Financial Condition and Results of Operations - Business Risks -
Fluctuations in Quarterly Operating Results and Management of Expanding
Operations.)
BUSINESS RISKS
The preceding discussion contains forward-looking statements that are subject to
significant risks and uncertainties. There are several important factors that
could cause actual results to differ materially from historical results and
percentages and results anticipated by the forward-looking statements contained
in the following discussion.
RAPID TECHNOLOGICAL CHANGE AND DEVELOPMENT RISKS. The Company participates in a
highly dynamic industry. Future technology or market changes may cause certain
of Symantec's products to become obsolete more quickly than expected and the
trend towards server-based applications in networks and over the Internet could
have a material adverse effect on sales of the Company's products. The impact of
the market's acceptance and adoption rate of Symantec's products may result in
reduced revenues, gross margins and net income, as well as significant increases
in the volatility of Symantec's stock price.
STOCK PRICE VOLATILITY. The Company's earnings and stock price have been and may
continue to be subject to significant volatility, particularly on a quarterly
basis. Symantec has previously experienced shortfalls in revenue and earnings
from levels expected by securities analysts, which has had an immediate and
significant adverse effect on the trading price of the Company's common stock.
This may occur again in the future. Additionally, as a significant portion of
the Company's revenues often occur late in the quarter, the Company may not
learn of revenue shortfalls until late in the fiscal quarter, which could result
in an even more immediate and adverse effect on the trading price of the
Company's common stock.
PERSONAL COMPUTER AND HARDWARE GROWTH RATES. Fluctuations in customer spending
from software to hardware as the result of technological advancements in
hardware or price reductions of hardware have in the past and may in the future
result in reduced revenues which would have a material adverse effect on
operating results.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. While Symantec's diverse product
line has tended to lessen fluctuations in quarterly net revenues, these
fluctuations have occurred in the past and are likely to occur in the future.
These fluctuations may be caused by a number of factors, including the
introduction of competitive products by new competitors, reduced demand for any
given product, seasonality in the retail software market, the market's
18
<PAGE> 21
transition between operating systems, the impact of the Internet and general
economic conditions. These factors may cause significant fluctuations in net
revenues and, accordingly, operating results.
MANAGEMENT OF EXPANDING OPERATIONS. Symantec continually evaluates its product
and corporate strategy and has in the past and will in the future undertake
organizational changes and product and marketing strategy modifications which
are designed to maximize market penetration, maximize use of limited corporate
resources and develop new products and product channels. These organizational
changes increase the risk that objectives will not be met due to the allocation
of valuable resources to implement changes. Further, due to the uncertain nature
of any of these undertakings, there can be no assurance that these efforts will
be successful or that the Company will realize any benefit from these efforts.
Symantec has completed a number of acquisitions and may acquire other companies
in the future. Acquisitions involve a number of special risks, including the
diversion of management's attention to assimilation of the operations and
personnel of the acquired companies in an efficient and timely manner, the
retention of key employees, the difficulty of presenting a unified corporate
image, the coordination of research and development and sales efforts and the
integration of the acquired products.
The Company has lost certain key employees of acquired companies, and, in some
cases, the assimilation of the operations of acquired companies took longer than
initially had been anticipated by the Company. In addition, because the
employees of acquired companies have frequently remained in their existing,
geographically diverse facilities, the Company has not realized certain
economies of scale that might otherwise have been achieved.
Symantec typically incurs significant expenses in connection with acquisitions,
which have a significant adverse impact on the Company's profitability and
financial resources. These expenses may have a significant adverse impact on the
Company's future profitability and financial resources.
FOREIGN OPERATIONS. A significant portion of Symantec's revenues, manufacturing
costs and marketing is transacted in foreign currencies. As a result, the
Company may be materially and adversely affected by fluctuations in currency
exchange rates, as well as increases in duty rates, exchange or price controls
or other restrictions on foreign currencies. The Company's international
operations are subject to certain risks common to international operations, such
as government regulations, import restrictions, currency fluctuations,
repatriation restrictions and, in certain jurisdictions, reduced protection for
the Company's copyrights and trademarks.
PRICE COMPETITION. Price competition is intense in the microcomputer business
software market and is expected to continue to increase and become even more
significant in the future, resulting in reduced profit margins. Should
competitive pressures in the industry continue to increase, Symantec may be
required to reduce software prices and/or increase its spending on sales,
marketing and research and development as a percentage of net revenues,
resulting in lower profit margins. There can be no assurance these changes will
be successful.
DISTRIBUTION CHANNELS. Approximately 34% of the Company's net revenues in fiscal
1997 were from sales to two large retail distributors. These customers tend to
make the majority of their purchases at the end of the fiscal quarter, in part
because they are able, or believe that they are able, to negotiate lower prices
and more favorable terms. This end-of-period buying pattern means that forecasts
of quarterly and annual financial results are particularly vulnerable to the
risk that they will not be achieved, either because expected sales do not occur
or because they occur at lower prices or on less favorable terms to the Company.
The Company's retail distribution customers also carry the products of
Symantec's competitors. The distributors have limited capital to invest in
inventory, and their decisions to purchase the Company's products is partly a
function of pricing, terms and special promotions offered by Symantec as well as
by its competitors over which the Company has no control and which it cannot
predict.
Agreements with distributors are generally nonexclusive and may be terminated by
either party without cause. Such distributors are not within the control of
Symantec, are not obligated to purchase products and may also represent
competitors' product lines. There can be no assurance that these distributors
will continue their current relationships with Symantec on the same basis, or
that they will not give higher priority to the sale of other products, which
could include products of competitors. Additionally, certain distributors and
resellers have experienced financial difficulties in the past. There can be no
assurance that distributors that account for significant sales of the Company
will not experience financial difficulties in the future. Any such problems
could lead to reduced sales and could adversely affect
19
<PAGE> 22
operating results of the Company. There can be no assurance that Symantec will
be able to continue to obtain adequate distribution channels for all of its
products in the future.
Due to the rapid change in software distribution technology as demonstrated by
the increase in volume of software distributed through the Internet, there can
be no assurance that Symantec will be able to develop an effective method of
distributing its software products utilizing each of the available distribution
channels or that Symantec will develop distribution channels for those channels
which are ultimately accepted by the marketplace. The presence of new channels
could adversely impact existing channels and/or product pricing, which could
have a material adverse impact on the Company's net revenues and profitability.
The Company operates with relatively little backlog; therefore, if near-term
demand for the Company's products weakens in a given quarter, there could be an
immediate, material adverse effect on net revenues and on the Company's
operating results, which would likely result in a precipitous drop in stock
price.
CHANNEL FILL. The Company's pattern of revenues and earnings may be affected by
"channel fill." Channel fill occurs following the introduction of a new product
as distributors buy significant quantities of the new product in anticipation of
sales of such product. Software upgrades typically result in an increase in net
revenues during the first three to six months following their introduction due
to purchases by existing users, usually at discounted prices, and initial
inventory purchases by Symantec's distributors. Following such purchases, the
rate of distributors' purchases often declines in a material amount, depending
on the rates of purchases by end users or "sell-through." As the desktop
applications market has become more saturated, the sales mix is shifting from
standard retail products to lower priced product upgrades. This trend is likely
to continue.
Channel fill may also occur in anticipation of price increases or in response to
sales promotions or incentives, some of which may be designed to encourage
customers to accelerate purchases that might otherwise occur in later periods.
Channels may also become filled simply because the distributors do not sell
their inventories to retail distribution or end users as anticipated. If
sell-through does not occur at a sufficient rate, distributors will delay
purchases or cancel orders in later periods or return prior purchases in order
to reduce their inventories. Such order delays or cancellations can cause
material fluctuations in revenues from one quarter to the next. The impact is
somewhat mitigated by the Company's deferral of revenue associated with
inventories estimated to be in excess of appropriate levels in the distribution
channel; however, net revenues may still be materially affected favorably or
adversely by the effects of channel fill.
Between the date Symantec announces a new version or new product and the date of
release, distributors, dealers and end users often delay purchases, cancel
orders or return products in anticipation of the availability of the new version
or new product.
Channel fill did not have a material impact on the Company's revenues in fiscal
1997, 1996 or 1995 but may have a material impact in future periods,
particularly in periods where a large number of new products are simultaneously
introduced.
PRODUCT RETURNS. The Company estimates and maintains reserves for product
returns. Product returns can occur when the Company introduces upgrades and new
versions of products or when distributors have excess inventories. Symantec's
return policy allows its distributors, subject to certain limitations, to return
purchased products in exchange for new products or for credit towards future
purchases. End users may return products through dealers and distributors within
a reasonable period from the date of purchase for a full refund, and retailers
may return older versions of products. Symantec prepares detailed analyses of
historical return rates, as well as taking into consideration upcoming product
upgrades, current market conditions, customer inventory balances and any other
known factors when estimating anticipated returns and maintains reserves for
product returns. Symantec has experienced, and may experience in the future,
significant increases in product returns above historical levels from customers
of acquired companies after an acquisition is completed. The impact of actual
returns on net revenues, net of such provisions, has not had a material effect
on the Company's liquidity as the returns typically result in the issuance of
credit towards future purchases as opposed to cash payments to the distributors.
However, there can be no assurance that future returns will not exceed the
reserves established by the Company or that future returns will not have
material adverse effect on the operating results of the Company.
UNCERTAINTY OF RESEARCH AND DEVELOPMENT EFFORTS. Symantec believes research and
development expenditures will be necessary in order to remain competitive. While
the Company believes its research and development
20
<PAGE> 23
expenditures will result in successful product introductions, due to the
uncertainty of software development projects, these expenditures will not
necessarily result in successful product introductions. Uncertainties impacting
the success of software development project introductions include technical
difficulties, market conditions, competitive products and customer acceptance of
new products and operating systems.
The length of Symantec's product development cycle has generally been greater
than Symantec originally expected. Although such delays have undoubtedly had a
material adverse effect on Symantec's business, Symantec is not able to quantify
the magnitude of net revenues that were deferred or lost as a result of any
particular delay because Symantec is not able to predict the amount of net
revenues that would have been obtained had the original development expectations
been met. Delays in future product development are likely to occur and could
have a material adverse effect on the amount and timing of future revenues. Due
to the inherent uncertainties of software development projects, Symantec does
not generally disclose or announce the specific expected shipment date of the
Company's product introductions. While the Company performs extensive usability
and beta testing of new products, there can be no assurance that any products
currently being developed by Symantec will be technologically successful, that
any resulting products will achieve market acceptance or that the Company's
products will be effective in competing with products either currently in the
market or introduced in the future.
OPERATING SYSTEM. The release and subsequent customer acceptance of current or
enhanced operating systems are particularly important events that increase the
uncertainty and increase the volatility of Symantec's results.
Microsoft has incorporated advanced utilities including telecommunications,
facsimile and data recovery utilities in Windows 95 and may include additional
product features in future releases of Windows 95 and Window NT that may
decrease the demand for certain of the Company's products, including those
currently under development.
Should the Company be unable to successfully or timely develop products that
operate under existing or new operating systems, the Company's future net
revenues and operating results would be immediately and significantly adversely
affected. In addition, as the timing of delivery and adoption of many of
Symantec's products is dependent on the adoption rate of these operating
systems, which the Company and securities analysts are unable to predict, the
ability of Symantec and securities analysts to forecast the Company's net
revenues has been and will continue to be adversely impacted. As a result, there
is a heightened risk that net revenues and profits will not be in line with
analysts' expectations in the periods following the introduction of existing or
new operating systems.
INTELLECTUAL PROPERTY RIGHTS. Symantec regards its software as proprietary and
relies on a combination of copyright, patent and trademark laws and license
agreements in an attempt to protect its rights. Despite these precautions, it
may be possible for unauthorized third parties to copy aspects of Symantec's
products or to obtain and use information that Symantec regards as proprietary.
All of Symantec's products are protected by copyright, and Symantec has several
patents and patent applications pending. However, existing patent and copyright
laws afford limited practical protection. In addition, the laws of some foreign
countries do not protect Symantec's proprietary rights in its products to the
same extent as do the laws of the United States. Symantec's products are not
copy protected.
As the number of software products in the industry increases and the
functionality of these products further overlap, Symantec believes that software
developers will become increasingly subject to infringement claims. This risk is
potentially greater for companies, such as Symantec, that obtain certain of
their products through publishing agreements or acquisitions, since they have
less direct control over the development of those products.
In addition, an increasing number of patents are being issued that are
potentially applicable to software, and allegations of patent infringement are
becoming increasingly common in the software industry. It is impossible to
ascertain all possible patent infringement claims because new patents are being
issued continually, the subject of patent applications is confidential until a
patent is issued, and it may not be apparent even from a patent that has already
been issued whether it is potentially applicable to a particular software
product. This increases the risk that Symantec's products may be subject to
claims of patent infringement. Although such claims may ultimately prove to be
without merit, they are time consuming and expensive to defend. Symantec has
been involved in disputes claiming patent infringement in the past, is currently
involved in such disputes and litigation and may be involved in such disputes
and/or litigation in the future. If Symantec is alleged to infringe one or more
patents, it may choose to litigate the claim and/or seek an appropriate license.
If litigation were to commence and a license were not available
21
<PAGE> 24
on reasonable terms or if another party were found to have a valid patent claim
against Symantec, it could have a material adverse effect on Symantec (See Note
11 of Notes to Consolidated Financial Statements).
LITIGATION. Symantec is involved in a number of other judicial and
administrative proceedings incidental to its business (See Note 11 of Notes to
Consolidated Financial Statements). The Company intends to defend and/or pursue
all of these lawsuits vigorously and, although an unfavorable outcome could
occur in one or more of the cases, the final resolution of these lawsuits,
individually or in the aggregate, is not expected to have a material adverse
effect on the financial position of the Company. However, depending on the
amount and timing of an unfavorable resolution of these lawsuits, it is possible
that the Company's future results of operations or cash flows could be
materially adversely effected in a particular period.
SALES AND MARKETING AND SUPPORT INVESTMENTS. Symantec believes substantial sales
and marketing efforts are essential to achieve revenue growth and to maintain
and enhance Symantec's competitive position. There can be no assurance that
these increased sales and marketing efforts will be successful.
BUSINESS DISRUPTION. Much of the Company's administration, sales and marketing,
manufacturing and research and development facilities are located on the west
coast of the United States. Future earthquakes or other natural disasters could
cause a significant disruption to the Company's operations and may cause delays
in product development that could adversely impact future revenues of the
Company.
Order entry and product shipping are geographically separated both domestically
and internationally. A disruption in communications between these facilities,
particularly at the end of a fiscal quarter, would likely result in an
unexpected shortfall in net revenues and could result in an adverse impact on
operating results.
SUPPLY RISK. Symantec has often been able to acquire materials on a
volume-discount basis and has had multiple sources of supply for certain
materials. To date, Symantec has not experienced any material difficulties or
delays in production of its software and related documentation and packaging.
However, shortages may occur in the future. For example, shortages of certain
materials may occur when Microsoft introduces new operating systems.
EMPLOYEE RISK. Competition in recruiting personnel in the software industry is
intense. Symantec believes that its future success will depend in part on its
ability to recruit and retain highly skilled management, marketing and technical
personnel. Symantec believes that it must provide personnel with a competitive
compensation package, which necessitates the continued availability of stock
options and requires ongoing shareholder approval of such option programs.
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<PAGE> 25
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
ANNUAL FINANCIAL STATEMENTS. See Part IV, Item 14 of this Form 10-K.
SELECTED QUARTERLY DATA. During fiscal 1996, Symantec acquired Delrina in a
transaction accounted for as a pooling of interest. All financial information
has been restated to reflect the combined operations of Symantec and Delrina.
(In thousands, except net income (loss) per share; unaudited)
<TABLE>
<CAPTION>
Fiscal 1997 Fiscal 1996
---------------------------------------------- ----------------------------------------------------
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
1997 1996 1996 1996 1996 1995 1995 1995
-------- -------- -------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues $129,706 $124,081 $109,178 $109,218 $115,960 $111,097 $108,510 $109,865
Gross margin 100,352 102,105 88,448 87,734 95,363 80,027 73,420 87,647
Acquisition,
restructuring and
other expenses * -- -- 7,290 1,295 2,000 25,688 -- (71)
Net income (loss) ** 8,269 13,852 882 3,035 7,943 (36,806) (17,786) 6,866
Net income (loss)
per share -
primary $ 0.15 $ 0.25 $ 0.02 $ 0.06 $ 0.15 $ (0.69) $ (0.34) $ 0.13
fully diluted $ 0.15 $ 0.25 $ 0.02 $ 0.06 $ 0.15 $ (0.69) $ (0.34) $ 0.12
</TABLE>
* See Note 10 of Notes to Consolidated Financial Statements.
** Quarterly operating results for the period ended March 31, 1997, includes
revenue and charges related to the sale of Symantec's networking business
unit (see Note 9 of Notes to Consolidated Financial Statements).
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by this Item with respect to Directors may be found in the
section captioned "Election of Symantec Directors" appearing in the definitive
Proxy Statement to be delivered to stockholders in connection with the Annual
Meeting of Stockholders to be held on September 18, 1997 (the "Proxy
Statement"). Such information is incorporated herein by reference. Information
required by this Item with respect to compliance with Section 16(a) of the
Securities Exchange Act of 1934, as amended, may be found in the section
captioned "Section 16(a) Beneficial Ownership Reporting Compliance" appearing in
the Proxy Statement.
EXECUTIVE OFFICERS OF THE REGISTRANT:
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Gordon E. Eubanks, Jr. 50 President and Chief Executive Officer
Howard A. Bain III 51 Vice President, Worldwide Operations
and Chief Financial Officer
Mark W. Bailey 38 Senior Vice President, Business
Development/Emerging Businesses
Enrique T. Salem 31 Vice President, Security and Assistance
Business Unit and Chief Technical Officer
Dieter Giesbrecht 53 Vice President, EMEA
Dana E. Siebert 37 Vice President, Americas
Christopher Calisi 37 Vice President, Remote Professional Tools
Derek Witte 40 Vice President, General Counsel and Secretary
</TABLE>
Executive officers are chosen by and serve at the discretion of the Board of
Directors. There is no family relationship between any director or executive
officer of Symantec and any other director or executive officer of Symantec.
GORDON E. EUBANKS, JR. is the President and Chief Executive Officer of
Symantec. He has served as a director of Symantec since November 1983 and as
the President and Chief Executive Officer of Symantec since October 1986.
Mr. Eubanks also served as Symantec's Chairman of the Board from November
1983 to October 1986 and from November 1990 to January 1993. Previously, Mr.
Eubanks was Vice President of Digital Research, Inc.'s commercial systems
division where he was responsible for the development and marketing of all
system software products. He left Digital Research, Inc. in September 1983.
Mr. Eubanks founded Compiler Systems, Inc. and authored its products:
CBASIC, one of the first successful languages on personal computers, and
CB80, a compiled version of CBASIC. Compiler Systems, Inc. was acquired by
Digital Research, Inc. in August of 1981. Mr. Eubanks received his Bachelor
of Science degree in Electrical Engineering from Oklahoma State University.
He received his Masters degree in Computer Science from Naval Postgraduate
School in Monterey, California. Mr. Eubanks was a commissioned officer in
the United States Navy from 1970 to 1979 serving in the Nuclear Submarine
Force. Mr. Eubanks is also a director of NetFrame Systems, Inc. He is a
member of the IEEE and ACM.
HOWARD A. BAIN III is currently Vice President, World-Wide Operations and CFO,
at Symantec Corporation. Mr. Bain has over twenty-five years of experience in
all phases of corporate operations and challenges. Prior to joining Symantec in
October 1991 as Vice President, Finance, he was CFO for several private venture
financed technology companies (RTP semiconductor manufacturing equipment, BiCMOS
SRAM's, laser-based large screen projection systems for HDTV and computer
graphics applications, and high performance 5-1/4" disk drives for personal
computers) where he assisted those management teams in growing their businesses
through raising over $50 million in venture capital and controlling
hyper-growth. His previous experience includes senior financial and
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<PAGE> 27
accounting management positions with Fairchild Camera and Instrument Corporation
and as a consultant with Arthur Andersen & Company. Mr. Bain is a CPA and holds
a B.S.B.A. from California Polytechnic University.
MARK W. BAILEY is Senior Vice President, Business Development and Emerging
Businesses of Symantec. Mr. Bailey has led Symantec's mergers and
acquisitions and alliances effort since December 1989. Prior to that, Mr.
Bailey was an associate partner with one of the early investors in Symantec,
Kleiner Perkins Caufield & Byers. Before attending graduate school, Mr.
Bailey worked at Hewlett Packard. Mr. Bailey received a Bachelor of Science
degree cum laude in electrical engineering and computer science from
Princeton University and an MBA from Harvard University's Graduate School of
Business Administration.
ENRIQUE T. SALEM is Vice President, Security and Assistance Business Unit and
Chief Technical Officer. Mr. Salem joined Symantec in April 1990 and has
held numerous positions including Director of Development and General Manager
of Advanced Utilities Group. Previous to joining Symantec, he was Vice
President in Security Pacific National Bank, Merchant Bank Division, where he
was responsible for the development and deployment of a global trading
system. Mr. Salem holds a Bachelor of Arts degree in Computer Science from
Dartmouth College. He is a member of the Board of Directors of the Software
Council of Southern California and a member of the IEEE. Mr. Salem became an
executive officer of Symantec in October 1996.
DIETER GIESBRECHT is Vice President, EMEA (Europe, Middle East and Africa) of
Symantec. Mr. Giesbrecht joined Symantec in September 1996. From 1995 until
joining Symantec, he was Vice President of Attachmate Europe based in Paris,
France and was responsible for the EMEA region. From 1991 to 1995, he held
several executive functions within Lotus Development Europe including Managing
Director UK and Managing Director Central Europe. He has a degree in Electronics
Engineering from the Technical University of Furtwangen located in Germany. Mr.
Giesbrecht is a member of the Institute of Directors.
DANA E. SIEBERT is Vice President, Americas. Previously, Mr. Siebert served
as Vice President, Worldwide Sales of Symantec and prior to that, Vice
President, Worldwide Services of Symantec. Mr. Siebert joined Symantec in
September 1987. From 1985 to 1987, he was a Sales Manager at THINK
Technologies where he was responsible for U.S. corporate, OEM and
international sales. Previously, he held a number of sales management
positions in high technology companies including Wang Laboratories,
Computerland Corporation and Burroughs Corporation. Mr. Siebert holds a
Bachelor of Science degree in Business Administration from the University of
New Hampshire and is a member of the Software Publishers Association.
CHRISTOPHER CALISI is Vice President, Remote Professional Tools of Symantec.
From 1992 to 1996, Mr. Calisi held several positions within Symantec's Remote
Access Business Unit, including Development Manager, Director of Development,
General Manager and most recently, Vice President, Communication Products.
Mr. Calisi joined Symantec in 1992 from Unify Corporation, a relational
database and 4GL tools vendor where he served as the Manager of Sales
Engineers. Prior to Unify Corporation, Mr. Calisi held development positions
with several relational database vendors, including Britton Lee, Oracle and
Computer Associates. Mr. Calisi holds a Bachelor of Science degree from the
State University of New York at Empire State and has received executive
training at the Wharton School. Mr. Calisi holds several copyrights for
software innovations from 1981 through 1986 and is an associate of the IEEE
Committee. Mr. Calisi became an executive officer of Symantec in May 1996.
DEREK WITTE is Vice President, General Counsel and Secretary of Symantec.
Mr. Witte joined Symantec in October 1990. From October 1987 until joining
Symantec, Mr. Witte was Associate General Counsel and later Director of Legal
Services for Claris Corporation, a software subsidiary of Apple. Between
January and October 1987, Mr. Witte was Assistant General Counsel at Worlds
of Wonder, Inc. Previously, Mr. Witte practiced law with the San
Francisco-based law firms of Brobeck, Phleger & Harrison and Heller Ehrman
White and McAuliffe during the periods between 1981 and 1983 and 1983 and
1987, respectively. Mr. Witte holds a law degree and a Bachelor of Arts
degree in Economics from the University of California at Berkeley. Mr. Witte
has been a member of the California bar since 1981.
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<PAGE> 28
ITEM 11: EXECUTIVE COMPENSATION.
Information with respect to this Item may be found in the section captioned
"Executive Compensation" appearing in the definitive Proxy Statement to be
delivered to stockholders in connection with the Annual Meeting of Stockholders
to be held on September 18, 1997. Such information is incorporated herein by
reference.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information with respect to this Item may be found in the section captioned
"Security Ownership of Certain Beneficial Owners and Management" appearing in
the definitive Proxy Statement to be delivered to stockholders in connection
with the Annual Meeting of Stockholders to be held on September 18, 1997.
Such information is incorporated herein by reference.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information with respect to this Item may be found in the section captioned
"Executive Compensation - Certain Transactions" appearing in the definitive
Proxy Statement to be delivered to stockholders in connection with the Annual
Meeting of Stockholders to be held on September 18, 1997. Such information is
incorporated herein by reference.
26
<PAGE> 29
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
Upon written request, the Company will provide, without charge, a copy of the
Company's annual report on Form 10-K, including the consolidated financial
statements, financial statement schedules and any exhibits for the Company's
most recent fiscal year. All requests should be sent to:
Lori A. Barker
Investor Relations
Symantec Corporation
10201 Torre Avenue
Cupertino, California 95014-2132
408-446-8990
(a) The following documents are filed as part of this report:
<TABLE>
<CAPTION>
Page
Number
<S> <C>
1. Consolidated Financial Statements.
Report of Ernst & Young LLP, Independent Auditors.............. 33
Report of Price Waterhouse, Independent Auditors............... 34
Consolidated Balance Sheets as of March 31, 1997 and 1996...... 35
Consolidated Statements of Operations for the Years Ended
March 31, 1997, 1996 and 1995............................... 36
Consolidated Statements of Stockholders' Equity for the Years
Ended March 31, 1997, 1996 and 1995......................... 37
Consolidated Statements of Cash Flow for the Years Ended
March 31, 1997, 1996 and 1995............................... 38
Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements........................... 39
2. Financial Statement Schedules. The following financial
statement schedule of Symantec Corporation for the years ended
March 31, 1997, 1996 and 1995 is filed as part of this Form
10-K and should be read in conjunction with the Consolidated
Financial Statements of Symantec Corporation.
Schedule
II Valuation and Qualifying Accounts........................ 56
</TABLE>
Schedules other than that listed above have been omitted since they are
either not required, not applicable, or the information is otherwise
included.
3. Exhibits. The following exhibits are filed as part of, or incorporated by
reference into, this Form 10-K:
<TABLE>
<S> <C>
3.01 The Registrant's Restated Certificate of Incorporation.
(Incorporated by reference to Annex G filed with the Registrant's
Joint Management Information Circular and Proxy Statement (No.
000-17781) dated October 17, 1995.)
3.02 The Registrant's Bylaws, as currently in effect. (Incorporated by
reference to Exhibit 3.02 filed with the Registrant's Registration
Statement on Form S-1 (No. 33-28655) originally filed May 19,
1989, and amendment No. 1 thereto filed June 21, 1989, which
Registration Statement became effective June 22, 1989.)
4.01 Registration Rights Agreement. (Incorporated by reference to
Exhibit 4.02 filed with the Registrant's Registration Statement
on Form S-4 (No. 33-35385) initially filed June 13, 1990.)
4.02 Amendment No. One to Registration Rights Agreement (Incorporated
by reference to Exhibit 4.03 filed with the Registrant's Annual
Report on Form 10-K for the year ended April 2, 1993.)
4.03 Amendment No. Two to Registration Rights Agreement (Incorporated
by reference to Exhibit 4.04 filed with the Registrant's Annual
Report on Form 10-K for the year ended April 2, 1993.)
</TABLE>
27
<PAGE> 30
<TABLE>
<S> <C>
4.04 Plan of Arrangement and Exchangeable Share Provisions related to
the acquisition of Delrina. (Incorporated by reference to Annex D
filed with the Registrant's Joint Management Information Circular
and Proxy Statement dated October 17, 1995.)
4.05 Support Agreement dated July 5, 1995 between Symantec and Delrina.
(Incorporated by reference to Annex E filed with the Registrant's
Joint Management Information Circular and Proxy Statement dated
October 17, 1995.)
4.06 Form of Voting and Exchange Trust Agreement dated July 5, 1996
between Symantec and Delrina. (Incorporated by reference to Annex
F filed with the Registrant's Joint Management Information
Circular and Proxy Statement dated October 17, 1995.)
10.01 Amended Agreement Respecting Certain Rights of Publicity.
(Incorporated by reference to Exhibit 10.04 filed with the
Registrant's Registration Statement on Form S-4 (No. 33-35385)
initially filed June 13, 1990.)
10.02 Non-Competition and Non-Solicitation Agreement between Registrant
and Peter Norton and Ronald Posner. (Incorporated by reference
to Exhibit 10.06 filed with the Registrant's Registration
Statement on Form S-4 (No. 33-35385) initially filed June 13,
1990.)
10.03* 1988 Employees Stock Option Plan, as amended to date. (Incorporated
by reference to Exhibit 4.02 filed with the Registrant's
Registration Statement on Form S-8 (No. 33-88694) filed January 23,
1995.)
10.04* 1989 Employee Stock Purchase Plan, as amended to date. (Incorporated
by reference to Exhibit 4.01 filed with the Registrant's
Registration Statement on Form S-8 (No. 333-18353) filed December
20, 1996.)
10.05* Form of Stock Option Agreement and Form of Stock Option Exercise
Request, as currently in effect, under the Registrant's 1988
Employees Stock Option Plan. (Incorporated by reference to Exhibit
10.10 filed with the Registrant's Registration Statement on Form S-4
(No. 33-35385) initially filed June 13, 1990.)
10.06* 1988 Directors Stock Option Plan, as amended to date. (Incorporated
by reference to Exhibit 10.09 filed with the Registrant's Annual
Report on Form 10-K for the year ended April 2, 1993.)
10.07* 1993 Directors Stock Option Plan, as amended. (Incorporated by
reference to Exhibit 10.07 filed with the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1994)
10.08* Form of Stock Option Grant and Stock Option Exercise Notice and
Agreement under the Registrant's 1988 Directors Stock Option Plan.
(Incorporated by reference to Exhibit 10.12 filed with the
Registrant's Registration Statement on Form S-4 (No. 33-35385)
initially filed June 13, 1990.)
10.09* 1994 Patent Incentive Plan. (Incorporated by reference to
Exhibit 4.01 filed with the Registrant's Registration Statement
on Form S-8 (No. 33-60141) filed June 9, 1995.)
10.10* Symantec Corporation 1996 Equity Incentive Plan. (Incorporated
by reference to Exhibit 4.01 filed with the Registrant's
Registration Statement on Form S-8 (No. 333-18355) filed December
20, 1996.)
10.11* Symantec Corporation Deferred Compensation Plan dated as of November
7, 1996.
10.12 Participation Agreement dated as of October 18, 1996, by and among
Symantec Corporation, Sumitomo Bank Leasing and Financing, Inc., The
Sumitomo Bank, Limited, San Francisco Branch and the other Various
Financial Institutions Identified Herein and the Sumitomo Bank,
Limited, San Francisco Branch. (Incorporated by reference to Exhibit
10.01 filed with the Registrants Quarterly Report on Form 10-Q for
the quarter ended September 27, 1996.)
10.13 Appendix A to Participation Agreement, Master Lease, Lease
Supplements Loan Agreements, Pledge Agreement, Lessor Mortgages, and
Guaranty. (Incorporated by reference to Exhibit 10.02 filed with the
Registrants Quarterly Report on Form 10-Q for the quarter ended
September 27, 1996.)
10.14 Master Lease and Deed of Trust, as amended, dated as of October 18,
1996 between Symantec Corporation and Sumitomo Bank Leasing and
Finance, Inc.
10.15 Guaranty dated as of October 18, 1996, made by Symantec Corporation
in favor of Various Financial Institutions and The Sumitomo Bank,
Limited, San Francisco Branch. (Incorporated by reference to Exhibit
10.05 filed with the Registrants Quarterly Report on Form 10-Q for
the quarter ended
</TABLE>
- ----------------------
* Indicates a management contract or compensatory plan or arrangements.
28
<PAGE> 31
<TABLE>
<S> <C>
September 27, 1996.)
10.16 Pledge Agreement dated as of October 18, 1996, made by Symantec
Corporation, in favor of Sumitomo Bank, Limited, San Francisco
Branch for the benefit of the Lenders, and Donaldson, Lufkin,
Jenrette Securities Corporations, as collateral agent. (Incorporated
by reference to Exhibit 10.06 filed with the Registrants Quarterly
Report on Form 10-Q for the quarter ended September 27, 1996.)
10.17 Assignment of Lease and Rent, as amended, dated as of October 18,
1996, from Sumitomo Bank Leasing and Finance, Inc., to The Sumitomo
Bank, Limited, San Francisco Branch.
10.18 Agreement of Purchase and Sale of Cupertino City Center One between
Cigna Property and Casualty Insurance Company and Symantec
Corporation.
10.19 Agreement for Purchase and Sale and Escrow Instructions of 10201
Torre Avenue, Cupertino, CA.
10.20 Agreement for Purchase and Sale and Escrow Instructions, as amended,
dated as of May 31, 1996.
10.21 Loan Agreement dated as of October 18, 1996, among Sumitomo Bank
Leasing and Finance, Inc., Various Financial Institutions Identified
Herein and The Sumitomo Bank, Limited, San Francisco Branch.
10.22 Construction Agency Agreement dated as of March 3, 1997, between
Sumitomo Bank Leasing and Finance, Inc., and Symantec Corporation.
10.23 Symantec - CC5 Office Building and Parking Structure, as amended,
dated as of May 5, 1997, made by and between Symantec Corporation
and Webcor Builders.
10.24 Office building lease dated as of April 10, 1991, between the
Registrant and Maguire Thomas Partners Colorado Place regarding
property located in Santa Monica, California. (Incorporated by
reference to Exhibit 10.25 filed with the Registrant's Annual Report
on Form 10-K for the year ended March 31, 1991.)
10.25 Office building lease dated as of February 27, 1991, between the
Registrant and Kim Camp No. VII regarding property located in
Sunnyvale, California. (Incorporated by reference to Exhibit 10.26
filed with the Registrant's Annual Report on Form 10-K for the year
ended March 31, 1991.)
10.26 Office building lease dated as of April 19, 1995, between the
Registrant and CIGNA Property and Casualty Insurance Company
regarding property located in Cupertino, California. (Incorporated
by reference to Exhibit 10.16 filed with the Registrant's Annual
Report on Form 10-K for the year ended March
31, 1995.)
10.27 Office building lease, as amended, dated as of December 1, 1995
between Delrina (Canada) Corporation and Sherway Centre Limited
regarding property located in Toronto, Canada. (Incorporated by
reference to Exhibit 10.01 filed with the Registrants Quarterly
Report on Form 10-Q for the quarter ended December 29, 1995.)
10.28 Form of Indemnity Agreement with Officers and Directors.
(Incorporated by reference to Exhibit 10.17 filed with the
Registrant's Registration Statement on Form S-1 (No. 33-28655)
originally filed May 19, 1989, and amendment No. 1 thereto filed
June 21, 1989, which Registration Statement became effective June
22, 1989.)
10.29* Full Recourse Promissory Note and Pledge Agreement between the
Company and Gordon E. Eubanks, Jr. (Incorporated by reference
to Exhibit 10.19 filed with the Registrant's Annual Report on
Form 10-K for the year ended April 2, 1993.)
10.30* Form of Promissory Note and Pledge Agreement between the Company and
certain executives. (Incorporated by reference to Exhibit 10.20
filed with the Registrant's Annual Report on Form 10-K for the
year ended April 2, 1993.)
10.31* Form of Housing Assistance Agreement between the Company and certain
executives. (Incorporated by reference to Exhibit 10.26 filed
with the Registrant's Registration Statement on Form S-4 (No.
33-35385) initially filed June 13, 1990.)
10.32 Note Purchase Agreement, dated April 2, 1993, among Symantec
Corporation, Morgan Guaranty Trust Company of New York, as
Trustee, J. P. Morgan Investments Management, Inc., as
Investment Manager and The Northwestern Mutual Life Insurance
Company, including Form of Convertible Subordinated Notes.
(Incorporated by reference to Exhibit 10.30 filed with the
Registrant's
</TABLE>
- ----------
* Indicates a management contract or compensatory plan or arrangement.
29
<PAGE> 32
<TABLE>
<S> <C>
Annual Report on Form 10-K for the year ended April 2, 1993.)
10.33* The Registrant's Section 401(k) Plan, as amended. (Incorporated by
reference to Exhibit 10.25 filed with the Registrants Annual
Report on Form 10-K for the year ended March 31, 1995.)
10.34* Form of Executive Compensation Agreement between the Company and
certain executives. (Incorporated by reference to Exhibit 10.25
filed with the Registrants Annual Report on Form 10-K for the
year ended March 31, 1995.)
10.35 Assignment of Copyright and Other Intellectual Property Rights.
(Incorporated by reference to appendix to Prospectus/Proxy
Statement filed with the Registrant's Registration Statement on
Form S-4 (No. 33-35385) initially filed June 13, 1990.)
10.36* Employment and Consulting Agreement among Symantec Corporation,
Symantec Acquisition Corp. and Charles M. Boesenberg.
(Incorporated by reference to Exhibit 10.32 filed with the
Registrant's Annual Report of Form 10-K for the year ended
April 1, 1994.) (Confidential treatment has been granted with
respect to portions of this exhibit.)
10.37* Stock Option Grant between the Company and Charles Boesenberg.
(Incorporated by reference to Exhibit 10.29 filed with the
Registrants Annual Report on Form 10-K for the year ended March
31, 1995.)
10.38 Authorized Distributor Agreement between Symantec Corporation and
Ingram Micro, Inc. (Incorporated by reference to Exhibit 10.34
filed with the Registrant's Quarterly Report of Form 10-Q for
the quarter ended July 1, 1994.) (Confidential treatment has
been granted with respect to portions of this exhibit.)
10.39 Authorized Distributor Agreement between Symantec Corporation and
Merisel Americas, Inc. (Incorporated by reference to Exhibit
10.35 filed with the Registrant's Quarterly Report of Form 10-Q
for the quarter ended July 1, 1994.) (Confidential treatment
has been granted with respect to portions of this exhibit.)
10.40* Employment and Non-competition Agreement between Symantec
Corporation and Dennis Bennie. (Incorporated by reference to
Exhibit 10.02 filed with the Registrants Quarterly Report on
Form 10-Q for the quarter ended December 29, 1995.)
10.41 Combination Agreement between Symantec Corporation and Delrina
Corporation dated July 5, 1995. (Incorporated by reference to
Exhibit 10.01 filed with the Registrants Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995.)
10.42 Asset Purchase Agreement dated as of September 10, 1996 by and
between Delrina and JetForm. (Incorporated by reference to
Exhibit 2.01 filed with the Registrant's Current Report of Form
8-K filed September 26, 1996.)
10.43 Asset Purchase Agreement, as amended, dated as of March 27, 1997 by
and between Hewlett-Packard Company and Symantec Corporation.
10.44 Class action complaint filed by the law firm of Milberg Weiss
Bershad Hynes & Lerach in Superior Court of the State of
California, County of Santa Clara against the Company and
several of its current and former officers and directors.
(Incorporated by reference to Exhibit 10.35 filed with the
Registrant's Annual Report of Form 10-K for the year ended
March 31, 1996.)
11.01 Computation of Net Income (Loss) Per Share.
21.01 Subsidiaries of the Registrant.
23.01 Consent of Ernst & Young LLP, Independent Auditors.
23.02 Consent of Price Waterhouse, Independent Auditors.
27.01 Financial Data Schedule.
</TABLE>
30
<PAGE> 33
(b) Reports on Form 8-K
None
(c) Exhibits:
The Registrant hereby files as part of this Form 10-K the exhibits listed
in Item 14(a)3, as set forth above.
(d) Financial Statement Schedules:
The Registrant hereby files as part of this Form 10-K the schedule listed
in Item 14(a)2, as set forth on page 56.
31
<PAGE> 34
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors................. 33
Report of Price Waterhouse, Independent Auditors.................. 34
Consolidated Balance Sheets as of March 31, 1997 and 1996......... 35
Consolidated Statements of Operations for the years ended March
31, 1997, 1996 and 1995......................................... 36
Consolidated Statements of Stockholders' Equity for the years
ended March 31, 1997, 1996 and 1995............................. 37
Consolidated Statements of Cash Flow for the years ended March
31, 1997, 1996 and 1995......................................... 38
Summary of Significant Accounting Policies........................ 39
Notes to Consolidated Financial Statements........................ 42
</TABLE>
32
<PAGE> 35
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Symantec Corporation
We have audited the accompanying consolidated balance sheets of Symantec
Corporation as of March 31, 1997 and 1996, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended March 31, 1997. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audits. We did not audit the financial
statements or schedule of Delrina Corporation, which statements reflect net
income constituting 14% of the related 1995 consolidated financial statement
totals. Those statements were audited by other auditors whose report has been
furnished to us, and our opinion, insofar as it relates to data included for
Delrina Corporation, is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Symantec Corporation at March 31, 1997
and 1996, and the consolidated results of its operations and its cash flows for
each of the three years in the period ended March 31, 1997, in conformity with
generally accepted accounting principles. Also, in our opinion, based upon our
audits and the report of other auditors, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
ERNST & YOUNG LLP
San Jose, California
April 25, 1997, except for paragraph 6 of Note 11, as to which the date is May
13, 1997
33
<PAGE> 36
INDEPENDENT AUDITORS' REPORT
August 8, 1995
Auditors' Report
To the Shareholders of Delrina Corporation
We have audited the consolidated balance sheet of Delrina Corporation as at June
30, 1995 and the consolidated statements of operations, retained earnings
(deficit) and changes in financial position for the years ended June 30, 1995
and 1994, all expressed in Canadian dollars. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the consolidated financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of Delrina Corporation as at June 30,
1995 and the results of its operations and the changes in its financial position
for the years ended June 30, 1995 and 1994 in accordance with generally accepted
accounting principles in Canada.
PRICE WATERHOUSE
Chartered Accountants
34
<PAGE> 37
SYMANTEC CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
------------------------
(In thousands) 1997 1996
- --------------------------------------------------------- --------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 160,082 $ 129,199
Trade accounts receivable 47,650 59,340
Inventories 4,476 7,893
Deferred income taxes 12,823 12,875
Other 13,166 14,653
--------- ---------
Total current assets 238,197 223,960
Equipment and leasehold improvements 51,610 51,698
Restricted investments 47,448 --
Capitalized software 2,037 4,183
Other 2,381 5,186
--------- ---------
$ 341,673 $ 285,027
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,328 $ 23,368
Accrued compensation and benefits 16,241 14,888
Other accrued expenses 53,742 47,664
Income taxes payable 8,276 3,329
Current portion of long-term obligations 41 68
--------- ---------
Total current liabilities 108,628 89,317
Convertible subordinated debentures 15,000 15,000
Long-term obligations 66 393
Commitments and contingencies
Stockholders' equity:
Preferred stock (authorized: 1,000; issued and outstanding: none) -- --
Common stock (authorized: 100,000; issued and outstanding: 55,427
and 53,636 shares) 554 536
Capital in excess of par value 291,548 279,508
Notes receivable from stockholders (144) (144)
Cumulative translation adjustment (7,580) (7,591)
Accumulated deficit (66,399) (91,992)
--------- ---------
Total stockholders' equity 217,979 180,317
--------- ---------
$ 341,673 $ 285,027
========= =========
</TABLE>
The accompanying Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements are an integral part of these statements.
35
<PAGE> 38
SYMANTEC CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended March 31,
---------------------------------------
(In thousands, except net income (loss) per share) 1997 1996 1995
- -------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Net revenues $ 472,183 $ 445,432 $ 431,268
Cost of revenues 93,544 108,975 90,935
--------- --------- ---------
Gross margin 378,639 336,457 340,333
Operating expenses:
Research and development 88,924 94,672 70,706
Sales and marketing 220,811 229,703 190,439
General and administrative 34,030 32,744 29,357
Acquisition, restructuring and
other expenses 8,585 27,617 9,545
--------- --------- ---------
Total operating expenses 352,350 384,736 300,047
--------- --------- ---------
Operating income (loss) 26,289 (48,279) 40,286
Interest income 7,182 7,512 5,648
Interest expense (1,402) (1,495) (2,419)
Other income (expense), net (1,691) (2,130) 1,041
--------- --------- ---------
Income (loss) before income taxes 30,378 (44,392) 44,556
Provision (benefit) for income taxes 4,340 (4,609) 11,147
--------- --------- ---------
Net income (loss) $ 26,038 $ (39,783) $ 33,409
========= ========= =========
Net income (loss) per share - primary $ 0.47 $ (0.76) $ 0.65
========= ========= =========
Net income (loss) per share - fully diluted $ 0.47 $ (0.76) $ 0.61
========= ========= =========
Shares used to compute net income (loss) per share - primary 55,407 52,664 52,181
========= ========= =========
Shares used to compute net income (loss) per share - fully diluted 55,841 52,664 56,491
========= ========= =========
</TABLE>
The accompanying Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements are an integral part of these statements.
36
<PAGE> 39
SYMANTEC CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Notes
Capital in Receivable Cumulative Total
Common Excess of from Translation Accumulated Stockholders'
(In thousands) Stock Par Value Stockholders Adjustment Deficit Equity
- -------------- ------ ---------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balances, March 31, 1994 $484 $ 226,001 $(149) $(7,054) $(90,089) $ 129,193
Net income -- -- -- -- 33,409 33,409
Acquisition of Intec and SLR:
Issued 303 shares of common stock 3 38 -- -- -- 41
Accumulated deficit -- -- -- -- (363) (363)
Issued common stock:
2,147 shares under stock plans
and other 21 21,351 -- -- -- 21,372
Repayments on notes -- -- 5 -- -- 5
Issued 57 shares to acquire subsidiary -- 1,376 -- -- --
1,376
Translation adjustment -- -- -- (159) -- (159)
---- --------- ----- ------- -------- ---------
Balances, March 31, 1995 508 248,766 (144) (7,213) (57,043) 184,874
Net loss -- -- -- -- (39,783) (39,783)
Delrina net loss for the quarter
ended June 30, 1995 -- -- -- -- 4,834 4,834
Issued common stock:
2,021 shares under stock plans
and other 20 21,101 -- -- -- 21,121
833 shares from conversion of
convertible debentures 8 9,641 -- -- -- 9,649
Translation adjustment -- -- -- (378) -- (378)
---- --------- ----- ------- -------- ---------
Balances, March 31, 1996 536 279,508 (144) (7,591) (91,992) 180,317
Net income -- -- -- -- 26,038 26,038
Acquisition of Fast Track:
Issued 600 shares of common stock 6 (5) -- -- -- 1
Accumulated deficit -- -- -- -- (445) (445)
Issued common stock:
1,191 shares under stock plans
and other 12 12,045 -- -- -- 12,057
Translation adjustment -- -- -- 11 -- 11
---- --------- ----- ------- -------- ---------
Balances, March 31, 1997 $554 $ 291,548 $(144) $(7,580) $(66,399) $ 217,979
==== ========= ===== ======= ======== =========
</TABLE>
The accompanying Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements are an integral part of these statements.
37
<PAGE> 40
SYMANTEC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Year Ended March 31,
-----------------------------------------
(In thousands) 1997 1996 1995
- ---------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 26,038 $ (39,783) $ 33,409
Delrina net loss for the quarter ended June 30, 1995 -- 4,834 --
Acquired companies' net assets (445) -- (1,677)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization of equipment and
leasehold improvements 22,770 19,717 15,689
Amortization and write-off of capitalized software costs 10,477 19,141 13,360
Write-off of equipment and leasehold improvements 4,010 3,403 1,539
Deferred income taxes 21 (989) 7,267
Net change in assets and liabilities:
Trade accounts receivable 11,699 17,554 (15,266)
Inventories 3,432 1,450 1,308
Other current assets 1,304 (6,461) 4,008
Capitalized software costs (7,656) (3,286) (1,523)
Other assets 2,720 2,465 (6,175)
Accounts payable 7,373 (2,368) (11,224)
Accrued compensation and benefits 1,502 1,313 (1,042)
Accrued other expenses 6,104 (7,203) (1,546)
Income taxes payable 5,031 1,211 78
--------- --------- ---------
Net cash provided by operating activities 94,380 10,998 38,205
--------- --------- ---------
INVESTING ACTIVITIES:
Capital expenditures (27,195) (35,767) (24,749)
Purchased intangibles (698) (461) (4,293)
Purchases of short-term, available-for-sale investments (180,000) (154,500) (166,524)
Maturities of short-term, available-for-sale investments 203,098 168,681 122,736
Purchases of long-term, restricted investments (47,448) -- --
Sales of fixed assets and other -- -- (1,505)
--------- --------- ---------
Net cash used in investing activities (52,243) (22,047) (74,335)
--------- --------- ---------
FINANCING ACTIVITIES:
Principal payments on long-term obligations (354) (475) (889)
Net proceeds from sales of common stock and other 12,057 20,770 21,395
--------- --------- ---------
Net cash provided by financing activities 11,703 20,295 20,506
--------- --------- ---------
Effect of exchange rate fluctuations on cash and cash equivalents 141 2,339 (2,263)
Increase (decrease) in cash and cash equivalents 53,981 11,585 (17,887)
Beginning cash and cash equivalents 41,777 30,192 48,079
--------- --------- ---------
Ending cash and cash equivalents $ 95,758 $ 41,777 $ 30,192
========= ========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid (net of refunds) during the year $ 392 $ 906 $ (759)
Interest paid on convertible subordinated debentures and
long-term obligations $ 1,182 $ 1,299 $ 2,070
</TABLE>
The accompanying Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements are an integral part of these statements.
38
<PAGE> 41
SYMANTEC CORPORATION
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Symantec Corporation ("Symantec" or the "Company") develops, markets and
supports a diversified line of application and system software products designed
to enhance individual and workgroup productivity. Symantec's products,
comprising both application software and system software, are currently
organized into the following three major product groups: Remote Productivity
Solutions, Security and Assistance and Emerging Businesses and Other. Customers
consist primarily of corporations, higher education institutions, government
agencies and individual users, which are mainly located in North America, Europe
and Asia/Pacific.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Symantec Corporation and its wholly-owned subsidiaries ("Symantec" or the
"Company"). All significant intercompany accounts and transactions have been
eliminated.
Basis of Presentation
During fiscal 1997, 1996 and 1995, Symantec acquired various companies in
transactions accounted for as poolings of interest. Accordingly, all financial
information has been restated to reflect the combined operations of Symantec and
the acquired companies with the exception of Intec Systems Corporation
("Intec"), SLR Systems, Inc. ("SLR") and Fast Track, Inc. ("Fast Track"). The
results of operations of Intec, SLR and Fast Track were not material to
Symantec's consolidated financial statements, and therefore, amounts prior to
the year of acquisition were not combined with Symantec's financial statements.
Symantec has a 52/53-week fiscal accounting year. Accordingly, all references as
of and for the periods ended March 31, 1997, 1996 and 1995 reflect amounts as of
and for the periods ended March 28, 1997, March 29, 1996 and March 31, 1995,
respectively. The fiscal year ending on April 3, 1998 will be comprised of a 53
week period.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Foreign Currency Translation
The functional currency of the Company's foreign subsidiaries is the local
currency. Non-current assets and liabilities denominated in foreign currencies
are translated using the exchange rate on the balance sheet dates. The
cumulative translation adjustments resulting from this process are shown
separately as a component of stockholders' equity. Revenues and expenses are
translated using average exchange rates prevailing during the year. Foreign
currency transaction gains and losses are included in the determination of net
income (loss).
Revenue Recognition
Symantec recognizes revenue upon shipment when no significant vendor obligations
remain and collection of the receivable, net of provisions for estimated future
returns, is probable. Symantec offers the right of return of its products under
various policies. The Company estimates and maintains reserves for product
returns. Based on returns experienced, the Company's estimates have been
materially accurate.
During fiscal 1997, Symantec sold certain software products and related tangible
assets to JetForm Corporation ("JetForm") and to the Hewlett-Packard Company
("Hewlett-Packard") (see Note 9 of Notes to Consolidated Financial Statements).
Due to the uncertainty regarding the ultimate collectibility of certain
contractual installment payments from JetForm, Symantec is recognizing the
related revenue as payments are due and collectibility is assured. Due to the
uncertainty regarding the amounts upon which the related Hewlett-Packard
payments are determined, Symantec is recognizing these amounts as revenue as
they are determinable.
Revenues related to significant post-contract support agreements (generally
product maintenance agreements) are deferred and recognized over the period of
the agreements. The estimated cost of providing insignificant post-contract
support (generally telephone support) is accrued at the time of the sale and is
included in sales and marketing expense. Technical support costs included in
sales and marketing expense were $35.1 million, $34.5 million and $28.0 million
in fiscal 1997, 1996 and 1995, respectively.
39
<PAGE> 42
SYMANTEC CORPORATION
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Symantec recognized approximately $3.0 million of North American net revenues in
the March 1995 quarter and $7.2 million of international net revenues in the
June 1995 quarter that had been previously deferred by Central Point in
accordance with Statement of Financial Accounting Standards No.48.
Cash Equivalents, Short-Term Investments and Restricted Investments
Symantec considers investments in highly liquid instruments purchased with an
original maturity of 90 days or less to be cash equivalents. All of the
Company's cash equivalents, short-term investments and restricted investments,
consisting principally of commercial paper, corporate notes, U.S. treasury notes
and certificates of deposit, are classified as available-for-sale as of the
balance sheet date. These securities are reported at amortized cost, which
approximates fair value, and therefore, there are no unrealized gains and losses
included in stockholders' equity. Realized gains and losses and declines in
value judged to be other-than-temporary are included in interest income. The
cost of securities sold is based upon the specific identification method.
Inventories
Inventories are valued at the lower of cost or market. Cost is principally
determined using currently adjusted standards, which approximate actual cost on
a first-in, first-out basis.
Equipment and Leasehold Improvements
Equipment and leasehold improvements are stated at cost, net of accumulated
depreciation and amortization. Depreciation and amortization is provided on a
straight-line basis over the estimated useful lives of the respective assets,
generally the shorter of the lease term or three to seven years.
Capitalized Software
Purchased product rights are comprised of acquired software ("product rights")
and are stated at cost less accumulated amortization. Amortization is provided
on the greater of the straight-line basis over the estimated useful lives of the
respective assets, generally three to five years, or on the basis of the ratio
of current revenues to current revenues plus anticipated future revenues. In
fiscal 1997, Symantec wrote off approximately $0.6 million of unamortized
purchased product rights related to its network administration technology, as a
result of the sale of this business unit to Hewlett-Packard in March 1997.
In fiscal 1997, Symantec capitalized approximately $7.7 million of capitalized
software development costs, primarily related to network administration
technology, which was sold to Hewlett-Packard in March 1997, resulting in the
write off of approximately $7.0 million of unamortized costs during the fourth
quarter of fiscal 1997 (See Note 9 of Notes to Consolidated Financial
Statements). Amortization expense for capitalized software development costs
during the fourth quarter of fiscal 1997 totaled approximately $0.3 million.
Prior to fiscal 1997, capitalization of certain software development costs in
accordance with Statement of Financial Accounting Standards No. 86 did not
materially affect the Company, except for amounts capitalized by Delrina prior
to its acquisition by Symantec in fiscal 1996. Delrina did not capitalize any
software development costs in fiscal 1996 and capitalized approximately $6.3
million in software development costs in fiscal year 1995, which were
substantially written off in fiscal 1996 as the result of the de-emphasis of
Delrina Windows 3.1 and certain other products. The related amortization expense
was approximately $5.6 million and $4.0 million in fiscal 1996 and 1995,
respectively.
Income Taxes
Income taxes are computed in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."
Net Income (Loss) Per Share
Net income (loss) per share is calculated using the treasury stock or the
modified treasury stock method, as applicable, if dilutive. Common stock
equivalents are attributable to outstanding stock options. Fully diluted
earnings per share includes the assumed conversion of all of the outstanding
convertible subordinated debentures.
Concentrations of Credit Risk
The Company's product revenues are concentrated in the personal computer
software industry, which is highly competitive and rapidly changing. Significant
technological changes in the industry or customer requirements, or
40
<PAGE> 43
SYMANTEC CORPORATION
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
the emergence of competitive products with new capabilities or technologies,
could adversely affect operating results. In addition, a significant portion of
the Company's revenue and net income is derived from international sales and
independent agents and distributors. Fluctuations of the U.S. dollar against
foreign currencies, changes in local regulatory or economic conditions, piracy
or nonperformance by independent agents or distributors could adversely affect
operating results.
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of short-term investments, restricted
investments and trade accounts receivable. The Company's investment portfolio is
diversified and consists of investment grade A-1/P-1 securities. The Company is
exposed to credit risks in the event of default by these institutions to the
extent of the amount recorded on the balance sheet. The credit risk in the
Company's trade accounts receivable is substantially mitigated by the Company's
credit evaluation process, reasonably short collection terms and the
geographical dispersion of sales transactions. The Company generally does not
require collateral and maintains reserves for potential credit losses, and such
losses have been within management's expectations.
Advertising
Advertising expenditures are charged to operations as incurred except for
certain direct mail campaigns which are deferred and amortized over the expected
period of benefit or twelve months, whichever is shorter. Deferred advertising
costs have not been material in all periods presented. Advertising expense for
fiscal 1997, 1996 and 1995 was approximately $39.1 million, $43.0 million and
$41.0 million, respectively.
Impairment of Long-Lived Assets
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
applicable for the fiscal year beginning April 1, 1996, did not have a material
effect on the Company's consolidated financial condition or results of
operations.
Common Stock Repurchase
On April 29, 1997, the Board of Directors of Symantec authorized the repurchase
of up to 1,000,000 shares of Symantec common stock by June 13, 1997. The shares
will be used for employee stock purchase programs and option grants. As of June
13, 1997, management completed the repurchase of 500,000 shares at prices
ranging from $16.57 to $17.00 per share.
Recent Accounting Pronouncements
In February 1997, the Finance Accounting Standards Board issued Statement (SFAS)
No. 128, "Earnings per Share", which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods. The
application of the SFAS 128 new "basic earnings per share" calculation results
in basic earnings per share of $0.48 for the year ended March 31, 1997, basic
loss per share of $0.76 for the year ended March 31, 1996 and basic earnings per
share of $0.68 for the year ended March 31, 1995. The Company does not expect
the new diluted calculation to be materially different to fully diluted earnings
per share.
Reclassifications
Certain previously reported amounts have been reclassified to conform to the
current presentation format. During fiscal 1997, certain deferred revenue
amounts which were previously classified as accrued liabilities have been
reclassified to accounts receivable. The reclassification amounted to
approximately $19.0 million, $13.0 million, and $3.0 million in fiscal 1997,
1996, and 1995, respectively. All financial information has been restated to
conform to this presentation
41
<PAGE> 44
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
March 31,
-------------------------
(In thousands) 1997 1996
- ------------------------------ --------- ---------
<S> <C> <C>
Cash, cash equivalents and short-term investments:
Cash $ 33,755 $ 20,176
Cash equivalents 62,003 21,601
Short-term investments 64,324 87,422
--------- ---------
$ 160,082 $ 129,199
========= =========
Trade accounts receivable:
Receivables 51,950 $ 64,356
Less: allowance for doubtful accounts (4,300) (5,016)
--------- ---------
$ 47,650 $ 59,340
========= =========
Inventories:
Raw materials 1,736 $ 1,969
Finished goods 2,740 5,924
--------- ---------
$ 4,476 $ 7,893
========= =========
Equipment and leasehold improvements:
Computer equipment 91,533 $ 79,153
Office furniture and equipment 27,706 25,753
Leasehold improvements 17,697 12,603
--------- ---------
136,936 117,509
Less: accumulated depreciation and amortization (85,326) (65,811)
--------- ---------
$ 51,610 $ 51,698
========= =========
Capitalized software:
Purchased product rights 591 $ 8,680
Capitalized software costs 2,465 5,623
Less: accumulated amortization of purchased product rights (55) (8,162)
Less: accumulated amortization of capitalized software costs (964) (1,958)
--------- ---------
$ 2,037 $ 4,183
========= =========
Other accrued expenses:
Acquisition and restructuring expenses 3,833 $ 7,833
Deferred revenue 13,825 13,350
Marketing development funds 12,529 11,412
Other 23,555 15,069
--------- ---------
$ 53,742 $ 47,664
========= =========
</TABLE>
42
<PAGE> 45
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 2. BUSINESS COMBINATIONS AND PURCHASED PRODUCT RIGHTS
During the three fiscal years ended March 31, 1997, Symantec completed
acquisitions of the following companies:
<TABLE>
<CAPTION>
Shares of Acquired
Symantec Company
Common Stock
Stock Options
Companies Acquired Date Acquired Issued Assumed
- ------------------ ------------- ---------- ---------
<S> <C> <C> <C>
Fast Track, Inc. ("Fast Track") May 28, 1996 600,000 --
Delrina Corporation ("Delrina") November 22, 1995 13,684,174* 1,271,677
Intec Systems Corporation ("Intec") August 31, 1994 133,332 --
Central Point Software, Inc.
("Central Point") June 1, 1994 4,029,429 707,452
SLR Systems, Inc. ("SLR") May 31, 1994 170,093 --
</TABLE>
* Includes Delrina exchangeable stock that is traded on the Toronto Stock
Exchange. Delrina stockholders received Delrina exchangeable stock in exchange
for Delrina common shares at a rate of 0.61 per share. Delrina exchangeable
stock may be converted at any time into Symantec common stock on a one-for-one
basis at each stockholder's option.
All of these acquisitions were accounted for as poolings of interest. In
connection with the acquisitions of the companies listed above, Symantec
incurred significant acquisition expenses (See Note 10). Due to differing year
ends of Symantec and Delrina, financial information for dissimilar fiscal year
ends was combined. Delrina's fiscal year ended June 30, 1995 was combined with
Symantec's fiscal year ended March 31, 1995. Accordingly, Delrina's results of
operations for the quarter ended June 30, 1995 were duplicated in the combined
statements of operations for fiscal 1996 and 1995 and Delrina's net loss for the
quarter ended June 30, 1995 was credited to stockholder's equity. Delrina
reported net revenues of $19.8 million and net loss of $4.8 million in the
quarter ended June 30, 1995. The results of operations of Fast Track were not
material to Symantec's consolidated financial statements, and therefore, amounts
prior to the date of acquisition were not restated to reflect the combined
operations of the companies.
NOTE 3. CASH EQUIVALENTS, SHORT-TERM INVESTMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS
All cash equivalents, short-term investments and restricted investments have
been classified as available-for-sale securities. As of March 31, 1997 and 1996,
the estimated fair value of the cash equivalents and short-term investments
consisted of the following:
<TABLE>
<CAPTION>
Cash equivalents and short-term investments (In thousands) 1997 1996
- ----------------------------------------------------------- ------- -------
<S> <C> <C>
Taxable commercial paper $ 64,196 $ 77,392
Money market funds 2,598 21,601
Taxable corporate notes 5,130 5,022
Taxable certificates of deposit 5,030 5,008
Treasury bills 33,648 --
Taxable fixed deposit 15,725 --
-------- --------
$126,327 $109,023
======== ========
</TABLE>
43
<PAGE> 46
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
All of the Company's available-for-sale cash equivalent and short-term
investment securities as of March 31, 1997 and 1996 have a contractual maturity
of less than one year. As of March 31, 1997 and 1996, the estimated fair value
of the restricted investments consisted of the following:
<TABLE>
<CAPTION>
Restricted investments (In thousands) 1997 1996
- ------------------------------------------ ------- -------
<S> <C> <C>
Maturities of less than one year:
Money market funds $ 6 $ --
Treasury bills 19,815 --
------- -------
$19,821 $ --
======= =======
Maturities of one to three years:
Treasury notes $27,627 $ --
------- -------
$27,627 $ --
======= =======
</TABLE>
The Company's available-for-sale restricted investments relate to certain
collateral requirements for lease agreements associated with the Symantec's
corporate Cupertino, California facilities and have maturities of three years or
less (See Note 6 of Notes to Consolidated Financial Statements).
Fair values of cash, cash equivalents, short-term investments and restricted
investments approximate cost due to the nature of the investments and/or their
short period to maturity.
During the period covered by the financial statements, the Company has not used
any derivative instrument for trading purposes. Symantec utilizes some natural
hedging to mitigate the Company's transaction exposures and hedges some residual
transaction exposures through the use of one-month foreign exchange forward
contracts. The Company enters into foreign exchange forward contracts with
financial institutions primarily to protect against currency exchange risks
associated with certain firmly committed transactions. Fair value of foreign
exchange forward contracts are based on quoted market prices. At March 31, 1997,
there was a total notional amount of approximately $46.3 million of outstanding
foreign exchange forward contracts all of which mature in 35 days or less. The
net liability of forward contracts was a notional amount of approximately $45.8
million at March 31, 1997. The fair value of foreign currency exchange forward
contracts approximates cost due to the short maturity periods and the minimal
fluctuations in foreign currency exchange rates. The Company does not hedge its
translation risk.
NOTE 4. CONVERTIBLE SUBORDINATED DEBENTURES
On April 2, 1993, the Company issued convertible subordinated debentures
totaling $25.0 million. The debentures bear interest at 7.75% payable
semiannually and are convertible into Symantec common stock at $12 per share at
the option of the investor. The debentures are due in three equal annual
installments beginning in 1999 and are redeemable at the option of the investors
in the event of a change in control of Symantec or the sale of all or
substantially all of the assets of the Company. Symantec, at its option, may
redeem the notes at any time on 30 to 60 days notice; however, the Company could
incur a prepayment penalty for early redemption. The holders are entitled to
certain registration rights relating to the shares of common stock resulting
from the conversion of the debentures. The Company reserved 2,083,333 shares of
common stock to be issued upon conversion of these debentures. The debentures
limit the payment of cash dividends and the repurchase of capital stock to a
total of $10.0 million plus 25% of cumulative net income subsequent to April 2,
1993.
On April 26, 1995, convertible subordinated debentures totaling $10.0 million
were converted into 833,333 shares of Symantec common stock, leaving 1,250,000
shares of common stock reserved for future conversion as of March 31, 1997.
The estimated fair value of the $15.0 million convertible subordinated
debentures was approximately $17.9 million at March 31, 1997. The estimated fair
value was based on the total shares of common stock reserved for issuance upon
conversion of the debentures at the closing price of the Company's common stock
at March 31, 1997, which exceeded the conversion price of $12 per share, plus
accrued interest.
44
<PAGE> 47
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 5. LINE OF CREDIT
The Company has a $10.0 million bank line of credit that expires in March 1998.
The line of credit is available for general corporate purposes and bears
interest at the banks' reference (prime) interest rate (8.50% at March 31,
1997), the U.S. offshore rate plus 1.25%, a CD rate plus 1.25% or London
Interbank Offering Rate ("LIBOR") plus 1.25%, at the Company's discretion. The
line of credit requires bank approval for the payment of cash dividends.
Borrowings under this line are unsecured and are subject to the Company
maintaining certain financial ratios and profits. The Company was in compliance
with the line of credit covenants as of March 31, 1997. At March 31, 1997, there
was approximately $0.3 million of standby letters of credit outstanding under
this line of credit. There were no borrowings outstanding under this line at
March 31, 1997.
NOTE 6. COMMITMENTS
Symantec leases all of its facilities and certain equipment under operating
leases that expire at various dates through 2026. The Company currently
subleases some space under various operating leases which will expire at various
dates through 2000.
The future fiscal year minimum operating lease commitments were as follows at
March 31, 1997:
<TABLE>
<CAPTION>
(In thousands)
- ------------------------------------------------------
<S> <C>
1998 $15,800
1999 15,029
2000 13,831
2001 10,612
2002 7,639
Thereafter 24,352
-------
Operating lease commitments 87,263
Sublease income (5,343)
-------
Net operating lease commitments $81,920
=======
</TABLE>
Rent expense charged to operations totaled approximately $12.4 million, $11.3
million and $9.7 million for the years ended March 31, 1997, 1996 and 1995,
respectively.
45
<PAGE> 48
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
In fiscal 1997, Symantec entered into lease agreements for two existing office
buildings, land and one office building under construction in Cupertino,
California. The lease agreements are for seven years and the lease payments per
year total approximately $1.0 million in fiscal 1997, $4.1 million in fiscal
1998 and $4.8 million in fiscal years 1999 through 2004. Lease payments are
based on the three month LIBOR in effect at the beginning of each fiscal
quarter. Symantec has the right to acquire the related properties at any time
during the seven year lease period. If at the end of the lease term Symantec
does not renew the lease, purchase the property under lease or arrange a third
party purchase, then the Company will be obligated to the lessor for a
guaranteed residual amount equal to a specified percentage of the Company's
purchase price of the property. Symantec would also be obligated to the lessor
for all or some portion of this amount if the price paid by the third party is
below the guaranteed residual amount. The guaranteed residual payment on the
lease agreements for the two existing office buildings totals approximately
$38.4 million. The guaranteed residual payment on the lease agreements for the
land and office building under construction was approximately $7.0 million at
March 31, 1997 and will increase to approximately $31.7 million at the
completion of the construction during fiscal year 1999. As security against this
guaranteed residual payment, Symantec is required to maintain a corresponding
investment in U.S. Treasury securities with maturities not to exceed three
years. Symantec is restricted in its use of these investments per the terms of
the lease agreement. The investments total approximately $47.4 million and are
classified as non-current restricted investments within the financial
statements.
The Company currently occupies a portion of these office buildings and has
assumed the right to sub-lease income provided by the other tenants. The
sub-lease agreements have terms expiring in April 1997 through September 2000.
NOTE 7. INCOME TAXES
The components of the provision (benefit) for income taxes were as follows:
<TABLE>
<CAPTION>
Year Ended March 31,
-------------------------------
(In thousands) 1997 1996 1995
- ------------------------------------------ ------- ------- -------
<S> <C> <C> <C>
Current:
Federal $ 514 $(5,882) $ 998
State 302 130 349
International 3,472 2,149 2,825
------- ------- -------
4,288 (3,603) 4,172
Deferred:
Federal 565 (1,006) 6,431
State 126 -- 1,761
International (639) -- (1,217)
------- ------- -------
52 (1,006) 6,975
------- ------- -------
$ 4,340 $(4,609) $11,147
======= ======= =======
</TABLE>
The difference between the Company's effective income tax rate and the federal
statutory income tax rate as a percentage of income (loss) before income taxes
was as follows:
<TABLE>
<CAPTION>
Year Ended March 31,
-----------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Federal statutory rate 35.0% (35.0)% 35.0%
State taxes, net of federal benefit 2.9 0.3 3.3
Non-deductible acquisition expenses -- 6.8 2.6
Non-deductible acquired in-process R&D -- -- 1.1
Impact of international operations (9.2) -- (11.2)
Losses for which no benefit is
currently recognizable -- 16.9 --
Benefit of pre-acquisition losses
of acquired entities (16.5) -- (6.7)
Other, net 2.1 0.7 1.0
-------- -------- --------
14.3% (10.3)% 25.1%
======== ======== ========
</TABLE>
46
<PAGE> 49
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
The principal components of deferred tax assets were as follows:
<TABLE>
<CAPTION>
March 31,
-------------------
(In thousands) 1997 1996
- ------------------------------ ------- -------
<S> <C> <C>
Tax credit carryforwards $ 9,158 $ 8,213
Net operating loss carryforwards 7,969 19,813
Inventory valuation accounts 2,327 2,704
Other reserves and accruals not
currently tax deductible 8,570 9,403
Accrued compensation and benefits 2,392 1,916
Deferred revenue 10,187 5,465
Sales incentive programs 5,005 4,054
Allowance for doubtful accounts 984 1,104
Acquired software 2,613 2,979
Accrued acquisition, restructuring
and other expenses 1,077 2,364
Other 2,868 579
------- -------
53,150 58,594
Valuation allowance (40,327) (45,719)
------- -------
$12,823 $12,875
======= =======
</TABLE>
Realization of the $12.8 million of net deferred tax asset that is reflected in
the financial statements is dependent upon the Company's ability to generate
sufficient future U.S. taxable income. Management believes that it is more
likely than not that the asset will be realized based on forecasted U.S.
earnings.
Approximately $22.3 million of the valuation allowance for deferred tax assets
is attributable to unbenefitted stock option deductions, the benefit of which
will be credited to equity when realized. Approximately $4.3 million of the
valuation allowance represents net operating loss and tax credit carryforwards
of various acquired companies that are limited by separate return limitations
and under the "change of ownership" rules of Internal Revenue Code Section 382
and the remaining $13.7 million of the valuation allowance relates to
unbenefitted temporary differences and net operating loss and tax credit
carryforwards. The change in the valuation allowance for the years ended March
31, 1997, 1996 and 1995 were a net decrease of $5.4 million and net increases of
$14.8 million and $1.6 million, respectively.
Pretax income (loss) from international operations was approximately $24.9
million, $(4.1) million and $25.9 million for the years ended March 31, 1997,
1996 and 1995, respectively.
At March 31, 1997, the Company had tax credit carryforwards of approximately
$9.2 million that expire in fiscal 1998 through 2011 and net operating loss
carryforwards of approximately $19.3 million that expire in fiscal 1999 through
2012.
NOTE 8. EMPLOYEE BENEFITS
401(k) Plan
Symantec maintains a salary deferral 401(k) plan for all of its domestic
employees. The plan allows employees to contribute up to 15% of their pretax
salary up to the maximum dollar limitation prescribed by the Internal Revenue
Code. Symantec matches 100% of the first $500 of employees' contributions and
then 50% of the employee's contribution up to 6% of the employees' eligible
compensation. Company contributions under the plan were $2.0 million, $1.5
million and $1.2 million for the years ended March 31, 1997, 1996 and 1995,
respectively.
47
<PAGE> 50
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
Employee Stock Purchase Plan
In October 1989, the Company established the 1989 Employee Stock Purchase Plan
(the "ESPP"). Subject to certain limitations, Company employees may purchase,
through payroll deductions of 2 to 10% of compensation, shares of common stock
at a price per share that is the lesser of 85% of the fair market value as of
the beginning of the offering period or the end of the purchase period. On
September 25, 1996, stockholders approved an amendment to the ESPP which
included increasing by 1.4 million to 3.4 million the number of shares reserved
for issuance under the ESPP. As of March 31, 1997, approximately 1.9 million
shares had been issued and 1.5 million shares remain to be issued under the
ESPP.
Stock Option Plans
The Company maintains stock option plans pursuant to which an aggregate total of
approximately 17.4 million shares of Common stock have been reserved for
issuance as incentive and nonqualified stock options to employees, officers,
directors, consultants, independent contractors and advisors to the Company (or
of any parent, subsidiary or affiliate of the Company as the Board of Directors
or committee may determine). The purpose of these plans are to attract, retain
and motivate eligible persons whose present and potential contributions are
important to the success of the Company by offering them an opportunity to
participate in the Company's future performance through awards of stock options
and stock bonuses. Under the terms of these plans, the option exercise price may
not be less than 100% of the fair market value on the date of grant, the options
have a maximum term of ten years and generally vest over a four-year period.
On May 14, 1996, Symantec stockholders approved the 1996 Equity Incentive Plan
(the "96 Plan") which superseded the 1988 Option Plan (the "88 Plan") and made
available approximately 2.7 million shares. On September 25, 1996, stockholders
approved an amendment to the 96 Plan to make available for issuance up to
approximately 1.3 million additional shares representing the number of options
previously granted pursuant to the 88 Plan that had expired, were canceled or
were unexercisable for any reason without having been exercised in full.
Stock option and warrant activity was as follows:
<TABLE>
<CAPTION>
Weighted
Average
Number Exercise
(In thousands, except exercise price per share) of Shares Price
- ----------------------------------------------- --------- --------
<S> <C> <C>
Outstanding at March 31, 1994 8,685 $12.28
Granted 3,799 19.02
Exercised (1,813) 9.53
Canceled (1,682) 20.20
------
Outstanding at March 31, 1995 8,989 14.36
Granted 5,990 16.56
Exercised (1,601) 10.40
Canceled (3,660) 22.14
------
Outstanding at March 31, 1996 9,718 13.43
Granted 2,681 13.90
Exercised (684) 9.89
Canceled (2,673) 14.21
------
Outstanding at March 31, 1997 9,042 13.61
======
</TABLE>
<TABLE>
<CAPTION>
(In thousands) March 31,
- ------------------------------------- ------------------
Balances are as follows: 1997 1996
------ ------
<S> <C> <C>
Authorized but unissued 11,901 10,418
Available for future grants 2,859 700
Exercisable and vested 4,066 3,894
Exercised, subject to repurchase -- 1
</TABLE>
48
<PAGE> 51
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
The following tables summarize information about options outstanding at March
31, 1997:
<TABLE>
<CAPTION>
Outstanding options Exercisable options
---------------------------------------- -------------------------
Weighted
average Weighted Weighted
Number of contractual average Number of average
shares (in life exercise shares (in exercise
Range of Exercise Prices thousands) (in years) price thousands) price
- ------------------------ ----------- ----------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
$ 1.00 - $ 12.50 2,995 7.27 $ 10.18 1,368 $9.71
$12.56 - $ 14.25 3,104 7.98 13.19 1,415 13.15
$14.31 - $ 39.13 2,943 7.64 17.54 1,283 19.42
----- -----
9,042 7.63 13.61 4,066 13.97
===== =====
</TABLE>
These options will expire if not exercised at specific dates ranging from April
1997 to March 2007. Prices for options exercised during the three-year period
ended March 31, 1997 ranged from $0.05 to $24.00.
Stock Award Plan
During fiscal 1996, the Company registered 400,000 shares to be issued under the
terms of the 1994 Patent Incentive Plan (the "94 Patent Plan"). The purpose of
this plan is to increase awareness of the importance of patents to the Company's
business and to provide employees with incentives to pursue patent protection
for new technologies that may be valuable to the Company. The Company's
executive officers are not eligible for awards under the 1994 Patent Incentive
Plan. As of March 31, 1997, approximately 9,000 shares had been issued under
this plan.
Pro Forma Information
The Company has elected to follow APB Opinion No. 25, "Accounting for Stock
Issued to Employees," in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under SFAS
No. 123, "Accounting for Stock-Based Compensation," requires the use of option
valuation models that were not developed for use in valuing employee stock
options. Under APB No. 25, because the exercise price of the Company's employee
stock options generally equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized in the Company's financial
statements.
Pro forma information regarding net income and earnings per share is required by
SFAS No. 123. This information is required to be determined as if the Company
had accounted for its employee stock options (including shares issued under the
Employee Stock Purchase Plan, collectively called "options") granted subsequent
to March 31,
49
<PAGE> 52
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1995 under the fair value method of that statement. The fair value of options
granted in fiscal years 1996 and 1997 reported below has been estimated at the
date of grant using a Black-Scholes option pricing model assuming no expected
dividends and the following weighted average assumptions:
<TABLE>
<CAPTION>
Employee Employee Stock
Stock Options Purchase Plan
---------------- ----------------
Range of Exercise Prices 1997 1996 1997 1996
- ----------------------------------- ---- ----- ---- ----
<S> <C> <C> <C> <C>
Expected life (years) 4.34 4.34 0.50 0.50
Expected volatility 0.63 0.74 0.74 0.60
Risk free interest rate 6.7% 6.0% 5.4% 5.4%
</TABLE>
During March 1996, the Board of Directors authorized the Company to offer to
each employee with stock options having an exercise price greater than $13.10
(the "Old Options") the opportunity to cancel the affected grants and receive a
new grant for the same number of shares dated March 4, 1996 (the "New Options").
On the date of grant, the New Options have an exercise price equal to $13.10 and
a stock price of $12.63. Under the terms of this stock option cancellation and
regrant, all options began vesting as of the new grant date and no portion of
any regranted options were exercisable until March 4, 1997. Options representing
a total of approximately 2.3 million shares of common stock were canceled and
regranted. The weighted average fair value of these New Options was $14.79. The
President and Chief Executive Officer, the then Executive Vice President,
Worldwide Operations and Chief Financial Officer, the majority of the then
members of the Executive Staff, and all members of the Board of Directors
elected to exclude themselves from this stock option cancellation and regrant.
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in the opinion of management, the
existing models do not necessarily provide a reliable single measure of the fair
value of its options.
The weighted-average estimated fair value of employee stock options for fiscal
year 1997 and 1996 were $7.81 and $10.44 per share, respectively. The
weighted-average estimated fair value of employee stock purchase rights granted
under the Employee Stock Purchase Plan during fiscal year 1997 and 1996 were
$7.74 and $18.94, respectively.
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period (for employee stock
options) and the six-month purchase period (for stock purchases under the
Employee Stock Purchase Plan). The Company's pro forma information is as
follows:
<TABLE>
<CAPTION>
(In thousands, except per share data) Year ended March 31,
-------------------
1997 1996
------- --------
<S> <C> <C>
Net income (loss) - Pro forma $14,123 $(47,015)
Net income (loss) per share - Pro forma 0.27 (0.89)
</TABLE>
The effects on pro forma disclosures of applying SFAS No. 123 are not likely to
be representative of the effects on pro forma disclosures of future years.
Because SFAS 123 is applicable only to options granted subsequent to March 31,
1995, its pro forma effect will not be fully reflected until approximately
fiscal 2000.
NOTE 9. SALE OF PRODUCT RIGHTS
During September 1996, Symantec sold its electronic forms software products and
related tangible assets to JetForm for approximately $100.0 million, payable
over four years in quarterly installments through the June 2000 quarter. JetForm
has the option to tender payment in either cash or in registered JetForm common
stock, within a contractually defined quantity threshold. Due to the uncertainty
regarding the ultimate collectibility of these installments, Symantec is
recognizing the related revenue as payments are due and collectibility is
assured from JetForm. Symantec recognized revenue of approximately $18.3 million
from JetForm during fiscal 1997.
50
<PAGE> 53
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
In March 1997, Symantec also sold the software products and related tangible
assets of its Networking Business Unit to Hewlett-Packard, resulting in the
receipt of approximately $1.0 million of revenue and a $2.0 million research and
development reimbursement in the fourth quarter of fiscal 1997. Additionally, a
two year quarterly royalty payment stream not to exceed a present value of $27.0
million as of the date of the transaction date will commence beginning in fiscal
1998, which is solely contingent on future sales of certain Hewlett-Packard
products. Due to the uncertainty regarding the amounts upon which these
royalties will be determined, Symantec is recognizing these amounts as they are
estimable. In association with this sale to Hewlett-Packard, during the fourth
quarter of fiscal 1997, Symantec wrote off approximately $7.0 million of
unamortized software development costs and approximately $0.6 million of
unamortized purchased product rights, as well as incurring approximately $2.0
million of legal, accounting and other costs associated with the transaction.
NOTE 10. ACQUISITION, RESTRUCTURING AND OTHER EXPENSES
Acquisition, restructuring and other expense consists of the following:
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------------------
(In thousands) 1997 1996 1995
- --------------------------------------------------------- -------- ------- -------
<S> <C> <C> <C>
Centralization and restructuring expenses $ 3,185 $ -- $ --
Write off of acquired in-process research and
development costs 3,050 -- --
Write off of equity investment 1,750 -- --
Fast Track, Inc. acquisition expenses 600 -- --
Delrina acquisition -- 22,000 --
Loss on sale of Time Line Solutions Corporation assets -- 2,653 --
Relocation of certain research and development activities -- 2,229 --
SLR acquisition -- -- 545
Central Point acquisition -- (2,300) 9,000
Legal fees and expenses -- 2,000 --
Other -- 1,035 --
-------- ------- ------
Total acquisition, restructuring and other expenses $ 8,585 $27,617 $9,545
======== ======= ======
</TABLE>
During fiscal 1997, Symantec recorded a $1.8 million charge in connection with
the write-off of an equity investment in a privately held company and a $3.1
million charge for the write off of certain in-process research and development
costs acquired by the Company. Additionally, during fiscal 1997, the Company
recorded a charge of $3.2 million, which included $2.4 million for personnel
severence and outplacement charges, for costs related to the restructuring of
certain domestic and international sales and research and development
operations, settlement of the Carmel lawsuit (See Note 11 to Notes to
Consolidated Financial Statements) and other expenses. The restructuring plans
were substantially completed during fiscal 1997. Symantec recorded total
acquisition charges of $0.6 million in the quarter ended June 30, 1996 in
connection with the acquisition of Fast Track, Inc.
In connection with the acquisition of Delrina (See Note 2 to Notes to
Consolidated Financial Statements) in fiscal 1996, Symantec recorded total
acquisition charges of $22.0 million, which included $8.8 million for legal,
accounting and financial advisory services, $6.4 million for the elimination of
duplicative and excess facilities and equipment, $3.7 million for personnel
severance and outplacement expenses and $3.1 million for the consolidation and
discontinuance of certain operational activities and other acquisition-related
expenses.
In November 1995, Symantec sold the assets of Time Line Solutions Corporation, a
wholly-owned subsidiary, to a group comprised of Time Line Solution
Corporation's management and incurred a $2.7 million loss on the sale.
During fiscal 1996, Symantec also expensed $1.0 million, which included a loss
on the sale of certain assets and liabilities of a subsidiary and other
expenses.
In February 1995, Symantec announced a plan to consolidate certain research and
development activities. This plan was designed to gain greater synergy between
the Company's Third Generation Language and Fourth Generation Language
development groups. During fiscal 1996, the Company incurred $2.2 million for
the relocation costs of moving equipment and personnel.
51
<PAGE> 54
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
In the fourth quarter of fiscal 1996, the Company recorded $2.0 million for
estimated legal fees expected to be incurred in connection with a securities
class action complaint filed in March 1996 and other legal expenses (See Note 11
to Consolidated Financial Statements).
In connection with the acquisitions of Central Point and SLR (See Note 2 to
Consolidated Financial Statements), Symantec recorded total acquisition charges
of $9.5 million in fiscal 1995. The charges included $3.2 million for legal,
accounting and financial advisory services, $1.0 million for the write-off of
duplicative product-related expenses and modification of certain development
contracts, $0.9 million for the elimination of duplicative and excess
facilities, $3.1 million for personnel severance and outplacement expenses and
$1.3 million for the consolidation and discontinuance of certain operational
activities and other acquisition related expenses. During fiscal 1996, the
Company recognized a reduction in accrued acquisition, restructuring and other
expenses of $2.3 million as actual costs incurred were less than costs
previously accrued by the Company.
As of March 31, 1997, total accrued cash related acquisition and restructuring
expenses were $3.8 million and included $0.2 million for estimated legal fees
and expenses, $0.4 million for the elimination of duplicative and excess
facilities and $3.2 million for other acquisition related expenses.
NOTE 11. LITIGATION
On March 18, 1996, a class action complaint was filed by the law firm of
Milberg, Weiss, Bershad, Hynes & Lerach in Superior Court of the State of
California, County of Santa Clara, against the Company and several of its
current and former officers and directors. The complaint alleges that Symantec
insiders inflated the stock price and then sold stock based on inside
information that sales were not going to meet analysts' expectations. The
complaint seeks damages in an unspecified amount. The complaint has been refiled
twice in state court, most recently on January 10, 1997, to reflect changes
brought about by Symantec's demurrer to previous complaints. The same plaintiffs
have further filed, on January 7, 1997, a complaint in federal court based on
the same facts as the state court complaint, for violation of the Securities Act
of 1934. Symantec believes that neither the state court complaint nor the
federal court complaint has any merit and will vigorously defend itself against
both complaints. The Company has accrued certain estimated legal fees and
expenses related to this matter; however, actual amounts may differ materially
from those estimated amounts.
On September 3, 1992, Borland International, Inc. ("Borland") filed a lawsuit in
the Superior Court for Santa Cruz County, California against Symantec, Gordon E.
Eubanks, Jr. (Symantec's President and Chief Executive Officer) and Eugene Wang
(a former Executive Vice President of Symantec and former employee of Borland).
The complaint, as amended, alleged misappropriation of trade secrets, unfair
competition, including breach of contract, interference with prospective
economic advantage and unjust enrichment. Under a confidential joint settlement
agreement entered into as of February 25, 1997, this case was fully settled.
On June 11, 1992, Dynamic Microprocessor Associates, Inc. ("DMA"), a former
wholly-owned subsidiary of Symantec which has since been merged into Symantec,
commenced an action against EKD Computer Sales & Supplies Corporation ("EKD"), a
former licensee of DMA and Thomas Green, a principal of EKD, for copyright
infringement, violations of the Lanham Act, trademark infringement,
misappropriation, deceptive acts and practices, unfair competition and breach of
contract. On July 14, 1992, the Suffolk County, New York sheriff's department
conducted a search of EKD's premises and seized and impounded thousands of
infringing articles. On July 21, 1992, the Court issued a preliminary injunction
against EKD and Mr. Green, enjoining them from manufacturing, marketing,
distributing, copying or purporting to license DMA's pcANYWHERE III or using
DMA's marks. On March 18, 1997, the Magistrate assigned to the action issued a
non-binding Report and Recommendation recommending that summary judgment be
granted in Symantec's/DMA's favor on certain claims and counterclaims. Judge
Block has subsequently approved the recommendation, which has disposed of
certain claims against Symantec.
On April 10, 1997, Trio Systems LLC filed a lawsuit in the United States
District Court, Central District of California, against Symantec, for damages,
injunctive and declaratory relief and for the imposition of a constructive trust
claiming copyright infringement, fraud, misrepresentation and breach of
contract, based on Symantec's alleged inclusion, in its Norton Utilities, Norton
Your Eyes Only and pcANYWHERE products, of Trio's C-Index code.
52
<PAGE> 55
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
No discovery motions have as yet been filed. Symantec believes these claims have
no merit and intends to defend this action vigorously.
On April 23, 1997, Symantec filed a lawsuit against McAfee Associates in the
United States District Court, Northern District of California, for copyright
infringement and unfair competition. Symantec believes McAfee Associates copied
portions of Symantec's copyrighted software code and unlawfully incorporated
such code into certain of McAfee's products. Symantec plans to aggressively
pursue its remedies under this lawsuit, which include both injunctive relief and
monetary damages.
On May 13, 1997, Trend Micro Incorporated filed a lawsuit in the United States
District Court, Northern District of California, against Symantec Corporation
and McAfee Associates, alleging against Symantec patent infringement by the
Symantec product known as Norton AntiVirus for Internet E-mail Gateways. The
lawsuit requests damages, injunctive relief and costs and attorney fees.
Symantec believes this claim has no merit and intends to defend the action
vigorously.
Symantec is currently evaluating claims of patent infringement asserted by IBM
with respect to certain of the Company's products. While the Company believes
that it has valid defenses to these claims, there can be no assurance that the
outcome of any related litigation or negotiation would not have a material
adverse impact on the Company's future results of operations or cash flows.
Symantec is involved in a number of other judicial and administrative
proceedings incidental to its business. The Company intends to defend all of the
aforementioned pending lawsuits vigorously and although adverse decisions (or
settlements) may occur in one or more of the cases, the final resolution of
these lawsuits, individually or in the aggregate, is not expected to have a
material adverse effect on the financial position of the Company. However,
depending on the amount and timing of an unfavorable resolution of these
lawsuits, it is possible that the Company's future results of operations or cash
flows could be materially adversely affected in a particular period.
NOTE 12. SEGMENT INFORMATION
Symantec operates in the microcomputer software industry business segment. The
Company markets its products in North America and international countries
primarily through retail and distribution channels.
INFORMATION BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
Year Ended March 31,
-------------------------------
(In thousands) 1997 1996 1995
- ------------------------------ ------- ------- -------
<S> <C> <C> <C>
Net revenues:
U.S. operations:
North American customers $334,210 $303,280 $296,684
International customers 6,451 16,609 16,977
Intercompany 79 6,015 4,625
-------- -------- --------
340,740 325,904 318,286
Other international operations:
Customers 131,522 125,543 117,607
Intercompany 745 11,387 13,865
-------- -------- --------
132,267 136,930 131,472
Eliminations (824) (17,402) (18,490)
-------- -------- --------
$472,183 $445,432 $431,268
======== ======== ========
Operating income (loss):
U.S. operations $ 11,415 $(58,296) $ 17,907
International operations 12,931 8,201 23,449
Eliminations 1,943 1,816 (1,070)
-------- -------- --------
$ 26,289 $(48,279) $ 40,286
======== ======== ========
</TABLE>
53
<PAGE> 56
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
March 31,
-------------------------------
(In thousands) 1997 1996 1995
- ------------------------------ ------- ------- -------
<S> <C> <C> <C>
Identifiable assets:
U.S. operations $284,023 $236,508 $255,748
International operations 57,650 48,519 50,378
-------- -------- --------
$341,673 $285,027 $306,126
======== ======== ========
</TABLE>
Intercompany sales between geographic areas are accounted for at prices
representative of unaffiliated party transactions. "U.S. operations" include
sales to customers in the United States and exports of finished goods directly
to international customers, primarily in Canada. Exports and international OEM
transactions are primarily denominated in U.S. dollars. "Other international
operations" primarily include export sales from the Irish manufacturing
subsidiary to European and Asia/Pacific customers. International revenues, which
include net revenues from other international operations and exports made by
U.S. operations, were 29%, 32% and 31% of total revenue for fiscal 1997, 1996
and 1995, respectively.
SIGNIFICANT CUSTOMERS
The following customers accounted for more than 10% of net revenues during
fiscal 1997, 1996 and 1995:
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Ingram Micro, Inc. 27% 27% 22%
Merisel Americas, Inc. * 10 11
</TABLE>
* Amount is less than 10%.
54
<PAGE> 57
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
SYMANTEC CORPORATION
(Registrant)
By /s/ Gordon E. Eubanks, Jr.
--------------------------------------
(Gordon E. Eubanks, Jr.,
President and Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated below.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
CHIEF EXECUTIVE OFFICER:
/s/ Gordon E. Eubanks, Jr. President, Chief Executive June 23, 1997
- ------------------------------ Officer and Director
(Gordon E. Eubanks, Jr.)
CHIEF FINANCIAL OFFICER:
/s/ Howard A. Bain III Executive Vice President/ June 23, 1997
- ------------------------------ Worldwide Operations and
(Howard A. Bain III) Chief Financial Officer
CHIEF ACCOUNTING OFFICER:
/s/ Ronald W. Kisling Vice President Controller and June 23, 1997
- ------------------------------- Chief Accounting Officer
(Ronald W. Kisling)
DIRECTORS:
/s/ Charles M. Boesenberg Director June 23, 1997
- ------------------------------
(Charles M. Boesenberg)
/s/ Walter W. Bregman Director June 23, 1997
- ------------------------------
(Walter W. Bregman)
/s/ Carl D. Carman Chairman of the Board June 23, 1997
- ------------------------------
(Carl D. Carman)
/s/ Robert S. Miller Director June 23, 1997
- ------------------------------
(Robert S. Miller)
/s/ Robert R. B. Dykes Director June 23, 1997
- ------------------------------
(Robert R. B. Dykes)
</TABLE>
55
<PAGE> 58
SCHEDULE II
SYMANTEC CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Balance at Charged to Balance at
Beginning Costs and End
Classification of Period Expenses Deductions of Period
- -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended March 31, 1995 $ 4,814 $ 1,094 $(1,056) $ 4,852
Year ended March 31, 1996 4,852 903 (739) 5,016
Year ended March 31, 1997 5,016 1,599 (2,315) 4,300
</TABLE>
56
<PAGE> 1
EXHIBIT 10.11
SYMANTEC CORPORATION DEFERRED COMPENSATION PLAN
As Adopted November 7, 1996
1. Purpose. Symantec Corporation hereby establishes this Symantec
Corporation Deferred Compensation Plan (the "Plan") for the purpose of providing
its eligible employees with a program for deferring compensation that otherwise
would be earned during the period of current employment.
2. Eligibility. Employees who (i) are executive staff members or in
salary grades S-10, F, or 13 and above, and (ii) earn an annual base salary of
$125,000 or greater ("Eligible Employee") are eligible to participate in the
Plan. Nonresident aliens shall not be eligible to participate in the Plan unless
specifically permitted by the Deferred Compensation Committee (the "Committee").
3. Election to Defer Compensation.
(a) An Eligible Employee may elect (i) to defer a flat dollar amount
of such Eligible Employee's base salary for 1996, provided that such dollar
amount does not exceed (A) fifty percent (50%) of the Eligible Employee's base
salary for 1996, or (B) one hundred percent (100%) of any paycheck received by
such Eligible Employee in December 1996 and (ii) to be paid any such base salary
as "Deferred Compensation" by filing the Election Form attached hereto with the
Company on or before November 25, 1996. The minimum amount an Eligible Employee
may elect to defer during December 1996 is $1,000 per paycheck.
(b) For years after 1996, an Eligible Employee may elect (i) to
defer either a flat dollar amount or a percentage of the Eligible Employee's
semi-monthly base salary, quarterly commissions, and annual or quarterly
bonuses, provided that such amount does not exceed fifty percent (50%) of the
Eligible Employee's semi-monthly base salary, quarterly commissions, and
quarterly or annual bonuses in any calendar year, and (ii) to be paid any such
base salary, commissions, and bonus as "Deferred Compensation" by filing the
Election Form attached hereto with the Company as follows: at any time prior to
(A) December 15, or any other date as set by the Committee, of the year
preceding any calendar year for which the semi-monthly base salary,
1
<PAGE> 2
quarterly commission and annual bonus is earned, or (B) the 15th day of the
month, or any other date as set by the Committee, prior to the beginning of any
quarter in which any quarterly bonus, quarterly commission is earned. The
minimum amount an Eligible Employee may elect to defer is $5,000 during each
year of deferral beginning January 1, 1997.
(c) Notwithstanding the foregoing, any employee who meets the
eligibility requirements set forth in Section 2 above after the deadlines set
forth in this Section 3 for filing election forms for the calendar year may
elect to defer either a flat dollar amount or a percentage of semi-monthly base
salary, quarterly commissions, and annual or quarterly bonuses, which are earned
in such remaining year or quarter, provided that such amount does not exceed
fifty percent (50%) of the Eligible Employee's semi-monthly base salary,
quarterly commissions, and annual or quarterly bonuses in such remaining
calendar year, and to be paid any such base salary, commissions, and bonus as
"Deferred Compensation" by filing the Election Form attached hereto with the
Company prior to the 15th day of the month, or any other date as set by the
Committee, prior to the first day of the quarter coincident with or next
following the date on which such employee met the eligibility requirements.
(d) The Election Form shall specify the time and manner of payment
of such Deferred Compensation subject to paragraph 6 below. Once filed with the
Committee, an election to defer compensation cannot be changed.
4. Crediting of Deferred Compensation. For purposes of paragraph 6
below, the aggregate amount allocable to the Eligible Employee's account as
Deferred Compensation as of the date on which the Eligible Employee receives the
lump sum or first installment of Deferred Compensation (the "Total Deferred
Compensation") shall be the sum of:
(a) the amounts of base salary, commission and bonus that the
Employee shall have elected to receive as Deferred Compensation pursuant to
paragraph 3 above; and
2
<PAGE> 3
(b) the earnings or losses credited to the Eligible Employee
pursuant to paragraph 5 below.
The Total Deferred Compensation may be held and administered by a
custodian appointed by the Committee pursuant to the terms of a trust agreement
approved by the Committee (the "Trust Agreement"). The Company will bear the
cost of fees charged by the custodian for its performance under the Trust
Agreement. An Eligible Employee shall be entitled to receive quarterly
statements of account which describe the Total Deferred Compensation and
earnings and losses which have accrued thereon during that period.
5. Investment of Deferred Compensation. Amounts treated as Deferred
Compensation by the Eligible Employee pursuant to paragraph 3 above, shall be
treated as if actually invested by the Company on behalf of the Eligible
Employee among investments designated by the Eligible Employee, other than stock
of the Company, in such manner as the Committee (as defined in paragraph 2
above) shall determine; provided however, that the Committee may: (a) determine
not to take account of such Eligible Employee's designated investments; and (b)
determine to have such amounts invested in another manner in the Committee's
sole discretion. Eligible Employees may change investment elections periodically
in accordance with guidelines set by the Committee.
6. Payment of Total Deferred Compensation.
(a) Normal Distribution. Unless otherwise specified in paragraphs
6(b) - 6(d) or paragraph 7 below, the Total Deferred Compensation shall be paid
to the participant on the date and manner as designated on the Election Form,
but in no event earlier than five years from the January 1st of the year in
which the compensation was earned.
(a) Termination of Employment. The Total Deferred Compensation shall
be payable to the Eligible Employee in one lump sum within 90 days of such
Eligible Employee's termination of employment with the Company for any reason
other than death, disability or attaining age 65.
(b) Death, Disability and Retirement. The Total Deferred
Compensation shall be payable to the Eligible Employee (or such Eligible
Employee's beneficiary or legal representative) in one lump sum within 90 days
of the Eligible Employee's death, total and permanent disability (as
3
<PAGE> 4
defined in the Company's long term disability policy), or attainment of 65 years
of age, the Company's normal retirement age.
(c) Hardship Withdrawals. The Company may, in its sole discretion,
accelerate the payment of all or any portion of the Total Deferred Compensation
in the event of an unforeseen emergency caused by an event beyond the control of
the Eligible Employee that would result in severe financial hardship to the
Eligible Employee, but only to the extent of the amount necessary to meet such
unforeseen emergency. To qualify for such hardship withdrawal, the participant
must have exhausted all other financial resources such as liquidation of assets,
insurance reimbursements and loans. The approval of any such financial hardship
shall be determined by the Committee.
(d) Early withdrawals. The Eligible Employee may request that the
Company accelerate the payment of all or any portion of the Total Deferred
Compensation for any reason at any time, provided that such amount shall be
equal to at least $10,000 or the full amount of the Total Deferred Compensation,
if less. In the event of such acceleration of payment, the Eligible Employee
shall be subject to a penalty equal to 15% of the amount of the accelerated
payment. Such penalty shall be paid to or retained by the Company from the
Eligible Employee's Total Deferred Compensation.
7. Change of Control. Notwithstanding anything in this Plan to the
contrary, the Total Deferred Compensation shall become payable to the Eligible
Employee in one lump sum upon the occurrence of any of the following events:
(a) Any consolidation or merger of the Company with or into any
other corporation or corporations in which the shareholders of the Company
immediately prior to the consolidation or merger do not retain a majority of the
voting power of the surviving corporation;
(b) As a result of or in connection with any cash tender offer,
exchange offer, merger or other business combination, sale of assets or
contested election, or combination of the
4
<PAGE> 5
foregoing, if the persons who were directors of the Company immediately prior to
such event no longer constitute a majority of the Company's Board of Directors;
(c) Any sale of all or substantially all of the assets of the
Company; or
(d) Any liquidation or dissolution of the Company.
8. Payments to Beneficiary or Representative. If the Eligible Employee
should die before receiving any or all of the Total Deferred Compensation to
which he or she is entitled, any such unpaid Total Deferred Compensation shall
be paid to the beneficiary last designated by the Eligible Employee or, if no
such beneficiary shall survive the Eligible Employee, to the Eligible Employee's
estate. If the Company shall find that any person to whom any amount is or was
payable hereunder is unable to care for his or her affairs because of illness or
accident, or is a minor, or has died, then the Company, if it so elects, may
direct that any payment due him or her or his or her estate (unless a prior
claim therefore has been made by a duly appointed legal representative) or any
part thereof, be paid or applied for the benefit of such person (or such
person's spouse, children or other dependents), to an institution maintaining or
having custody of such person, or to any other person deemed by the Company to
be a proper recipient on behalf of such person otherwise entitled to payment, or
any of them, in such manner and proportion as the Company may deem proper. Any
such payment shall be in complete discharge of the Company's obligations under
this Plan.
9. Administration. The Plan shall be administered by the Committee,
except as to members of the Board of Directors, in which case the Plan shall be
administered by the entire Board of Directors, which shall have full power,
discretion and authority to interpret, construe and administer the Plan and any
part thereof, and the Committee's interpretation and construction thereof, and
actions thereunder, shall be binding and conclusive on all persons for all
purposes. The Committee may employ legal counsel, consultants, actuaries and
agents as it may deem desirable in the administration of the Plan and may rely
on the opinion of such counsel or the computations of such consultant or other
agent. The Committee shall provide for the keeping of detailed written minutes
of its actions hereunder which shall be reviewed by the legal counsel or the
consultant engaged by the Committee prior to their finalization.
5
<PAGE> 6
10. Unsecured Funds. All payments of Total Deferred Compensation shall
be paid in cash from the general funds of the Company and no special or separate
fund, other than any Rabbi Trust Agreement between a bank or trust company and
the Company, shall be established and no other segregation of assets shall be
made to assure the payment of any Total Deferred Compensation. The Eligible
Employee shall have no right, title or interest whatever in or to any investment
which the Company may make to aid it in meeting its obligations hereunder,
including, but not limited to, deemed investments. Nothing contained in this
Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary relationship between the
Company and the Eligible Employee or any other person. To the extent that any
person acquires a right to receive payments from the Company hereunder such
right shall be no greater than the right of an unsecured creditor of the
Company.
11. Other Rights. This Plan shall be in addition to any rights of the
Eligible Employee under any other agreement with the Company, if any.
12. Withholding. The Company may withhold from any benefits payable
under this Plan all federal, state, city or other taxes as shall be required
pursuant to any law or governmental regulation or ruling.
13. Employment and Benefits Rights. Any benefit payable under this Plan
shall not be deemed salary or other compensation for the purpose of computing
benefits under any employee benefit plan or other arrangement of the Company for
the benefit of its employees.
Neither this Plan nor any action taken hereunder shall be construed as
giving to any employee the right to be retained in the employ of the Company or
as affecting the right of the Company to dismiss any employee.
14. Binding Effect; Nonassignability. This Plan shall be binding upon
and inure to the benefit of the Company and its successors and assigns and the
Eligible Employee and the Eligible Employee's designees and estate. Neither the
Eligible Employee or the Eligible Employee's designees or estate shall commute,
encumber, sell or otherwise dispose of the right to receive the
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<PAGE> 7
payments provided for in this Plan, which payments and the rights thereto are
expressly declared to be nontransferable and nonassignable.
15. Amendment. This Plan may be amended, suspended or terminated, in
whole or in part, by the Board of Directors of the Company, but no such action
shall retroactively impair or otherwise adversely affect the rights of any
person to benefits under this Plan which have accrued prior to the date of such
action, as determined by the Committee.
16. Governing Law. This Plan shall be governed by the laws of the State
of California from time to time in effect.
17. Captions; Entire Agreement. The captions preceding the Sections
hereof have been inserted solely as a matter of convenience and in no way define
or limit the scope or intent of any provisions hereof.
7
<PAGE> 1
EXHIBIT 10.14
EXECUTION COPY
================================================================================
MASTER LEASE AND DEED OF TRUST
THIS DOCUMENT SECURES FUTURE ADVANCES
Dated as of October 18, 1996
between
SYMANTEC CORPORATION,
as the Lessee
and
SUMITOMO BANK LEASING AND FINANCE, INC.,
as the Lessor.
================================================================================
This Master Lease and Deed of Trust is subject to a lien in favor of the Lenders
under the Loan Agreement. This Master Lease and Deed of Trust has been executed
in several counterparts. To the extent, if any, that this Master Lease and Deed
of Trust constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no lien on this
Master Lease and Deed of Trust may be created through the transfer or possession
of any counterpart other than the original counterpart containing the receipt
therefor executed by THE SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH as the
Agent for the Lenders, on or following the signature page hereof.
This counterpart is not the original executed chattel paper counterpart.
<PAGE> 2
MASTER LEASE
MASTER LEASE AND DEED OF TRUST
THIS DOCUMENT SECURES FUTURE ADVANCES
THIS MASTER LEASE AND DEED OF TRUST (this "Master Lease"), dated as of
October 18, 1996, between SUMITOMO BANK LEASING AND FINANCE, INC., a Delaware
corporation, as the Lessor (in such capacity, the "Lessor"), and SYMANTEC
CORPORATION, a Delaware corporation, as Lessee (in such capacity, the "Lessee").
W I T N E S S E T H:
WHEREAS, pursuant to a Participation Agreement dated as of the date
hereof (as amended, modified, restated or supplemented from time to time, the
"Participation Agreement"), among the Lessee, the Lessor, the various financial
institutions (the "Lenders") as are or may from time to time become Lenders
under the Loan Agreement, and The Sumitomo Bank, Limited, San Francisco Branch,
as Administrative Agent (in such capacity, the "Agent") for the Lenders, the
Lenders and the Lessor have agreed to finance the Lessor's acquisition of each
Property;
WHEREAS, on each Acquisition Date, the Lessor will purchase from one or
more third parties designated by the Lessee certain parcels of Land, together
with the Improvements thereon, if any;
WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee
desires to lease from the Lessor, each Property; and
WHEREAS, each Property will be subject to the terms of this Master
Lease;
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
I.1. Definitions; Interpretation. Capitalized terms used but not
otherwise defined in this Master Lease have the respective meanings specified in
Appendix A to this Master Lease; and the rules of interpretation set forth in
Appendix A to this Master Lease shall apply to this Master Lease.
<PAGE> 3
MASTER LEASE
ARTICLE II
MASTER LEASE
II.1. Acceptance and Lease of Property. Subject to the conditions set
forth in the Participation Agreement, including without limitation the
satisfaction or waiver of the conditions set forth in Article II thereof, the
Lessor hereby agrees to accept pursuant to the terms of the Participation
Agreement delivery on the Closing the Land together with Improvements thereon,
if any, to be delivered by the seller thereof and simultaneously to demise and
lease to the Lessee hereunder and under the Lease Supplement for the Lease Term,
the Lessor's interest in such Land and in such Improvements together with any
Improvements which thereafter may be constructed on such Land pursuant this
Master Lease, and the Lessee hereby agrees, expressly for the direct benefit of
the Lessor, to lease from the Lessor for the Lease Term, the Lessor's interest
in such Land and in such Improvements together with any Improvements which
thereafter may be constructed on such Land pursuant and this Master Lease.
II.2. Acceptance Procedure. The Lessee hereby agrees that the execution
and delivery by the Lessee on each Acquisition Date of an appropriately
completed Lease Supplement in the form of Exhibit A hereto covering the Land and
all Improvements thereon, if any, to be acquired by the Lessor on such
Acquisition Date and all other Improvements which thereafter may be constructed
thereon this Master Lease, shall, without further act, constitute the
irrevocable acceptance by the Lessee of all of the Property which is the subject
of such Lease Supplement for all purposes of this Master Lease and the other
Operative Documents on the terms set forth therein and herein, and that such
Property, together with any Improvements constructed on such Property pursuant
to the this Master Lease, shall be deemed to be included in the leasehold estate
of this Master Lease and shall be subject to the terms and conditions of this
Master Lease as of the Acquisition Date.
II.3. Lease Term. The Base Lease Term (the "Base Lease Term") of this
Master Lease with respect to any Property shall (i) begin on the Acquisition
Date, and (ii) shall end on the seventh (7th) anniversary of the Documentation
Date, unless earlier terminated in accordance with the provisions of this Master
Lease and the other Operative Documents.
II.4. Title. Each Property is leased to the Lessee without any
representation or warranty, express or implied, by the Lessor and subject to the
rights of parties in possession, the existing
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<PAGE> 4
MASTER LEASE
state of title (including, without limitation, all Liens other than Lessor
Liens) and all applicable Requirements of Law and Property Legal Requirements.
The Lessee shall in no event have any recourse against the Lessor for any defect
in or exception to title to any Property other than resulting from Lessor Liens.
ARTICLE III
PAYMENT OF RENT
III.1. Rent.
(a) During the Lease Term, the Lessee shall pay Basic Rent on
each Basic Rent Payment Date, on the date required under Section 20.1(k)
in connection with the Lessee's exercise of the Remarketing Option and
on any date on which this Master Lease shall terminate with respect to
any or all Properties.
(b) The Lessee's inability or failure to take possession of all
or any portion of any Property when delivered by the Lessor, nor the
Lessor's inability or failure to deliver all or any portions of this
Property to the Lessee where attributable to any act or omission of the
Lessee or any act or omission of the Lessor, or for any other reason
whatsoever, shall delay or otherwise affect the Lessee's obligation to
pay Rent for such Property in accordance with the terms of this Master
Lease.
III.2. Payment of Rent. Rent shall be paid absolutely net to the Lessor,
so that this Master Lease shall yield to the Lessor the full amount thereof,
without setoff, deduction or reduction.
III.3. Supplemental Rent. The Lessee shall pay to the Lessor or the
Person entitled thereto any and all Supplemental Rent promptly as the same shall
become due and payable, and if the Lessee fails to pay any Supplemental Rent,
the Lessor shall have all rights, powers and remedies provided for herein or by
law or equity or otherwise in the case of nonpayment of Basic Rent. The Lessee
shall pay to the Lessor, as Supplemental Rent, among other things, on demand, to
the extent permitted by applicable Requirements of Law, interest at the
applicable Overdue Rate on any installment of Basic Rent not paid when due for
the period for which the same shall be overdue and on any payment of
Supplemental Rent not paid when due or demanded by the Lessor for the period
from the due date or the date of any such demand, as the case may be, until the
same shall be paid. The expiration or other termination of the Lessee's
obligations to pay Basic Rent hereunder shall not limit or modify the
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<PAGE> 5
MASTER LEASE
obligations of the Lessee with respect to Supplemental Rent. Unless expressly
provided otherwise in this Master Lease, in the event of any failure on the part
of the Lessee to pay and discharge any Supplemental Rent as and when due, the
Lessee shall also promptly pay and discharge any fine, penalty, interest or cost
which may be assessed or added under any agreement with a third party for
nonpayment or late payment of such Supplemental Rent, all of which shall also
constitute Supplemental Rent.
III.4. Method of Payment. Each payment of Rent shall be made by the
Lessee to the Agent prior to 11:00 a.m., San Francisco, California time to the
Agent's account specified on Schedule II to the Participation Agreement in funds
consisting of lawful currency of the United States of America which shall be
immediately available on the scheduled date when such payment shall be due,
unless such scheduled date shall not be a Business Day, in which case such
payment shall be made on the next succeeding Business Day. Payments received
after 12:00 p.m., San Francisco time on the date due shall for the purpose of
Section 16.1 hereof be deemed received on such day; provided, however, that for
the purposes of the second sentence of Section 3.3 hereof, such payments shall
be deemed received on the next succeeding Business Day and, unless the Agent is
otherwise able to invest or employ such funds on the date received, subject to
interest at the Overdue Rate as provided in such Section 3.3.
ARTICLE IV
QUIET ENJOYMENT; RIGHT TO INSPECT
IV.1. Quiet Enjoyment. Subject to Sections 2.4 and 4.2, and subject to
the rights of the Lessor contained in Article XV and the other terms of the
Operative Documents to which the Lessee is a party, the Lessee shall peaceably
and quietly have, hold and enjoy each Property for the Lease Term, free of any
claim or other action by the Lessor or anyone claiming by, through or under the
Lessor (other than the Lessee) with respect to any matters arising from and
after the applicable Acquisition Date. Such right of quiet enjoyment is
independent of, and shall not affect the Lessor's rights otherwise to initiate
legal action to enforce, the obligations of the Lessee under this Master Lease.
IV.2. Right to Inspect. During the Lease Term, the Lessee shall upon
reasonable notice from the Lessor (except that no notice shall be required if a
Lease Event of Default has occurred and is continuing), permit the Lessor and
its authorized representatives to inspect any Property subject to this Master
Lease during normal business hours, provided that such
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<PAGE> 6
MASTER LEASE
inspections shall not unreasonably interfere with the Lessee's business
operations at such Property.
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<PAGE> 7
MASTER LEASE
ARTICLE V
NET LEASE, ETC.
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<PAGE> 8
MASTER LEASE
V.1. Net Lease. This Master Lease shall constitute a net lease. Any
present or future law to the contrary notwithstanding, this Master Lease shall
not terminate, nor shall the Lessee be entitled to any abatement, suspension,
deferment, reduction, setoff, counterclaim, or defense with respect to the Rent,
nor shall the obligations of the Lessee hereunder be affected (except as
expressly herein permitted and by performance of the obligations in connection
therewith) by reason of: (i) any defect in the condition, merchantability,
design, construction, quality or fitness for use of any Property or any part
thereof, or the failure of any Property to comply with all Requirements of Law
and Property Legal Requirements, including any inability to occupy or use any
such Property by reason of such non-compliance; (ii) any damage to, removal,
abandonment, salvage, loss, contamination of or Release from, scrapping or
destruction of or any requisition or taking of any Property or any part thereof;
(iii) any restriction, prevention or curtailment of or interference with any use
of any Property or any part thereof including eviction; (iv) any defect in title
to or rights to any Property or any Lien on such title or rights or on any
Property (other than Lessor Liens); (v) any change, waiver, extension,
indulgence or other action or omission or breach in respect of any obligation or
liability of or by the Lessor or any Participant; (vi) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceedings relating to the Lessee, the Lessor, any Participant or
any other Person, or any action taken with respect to this Master Lease by any
trustee or receiver of the Lessee, the Lessor, any Participant or any other
Person, or by any court, in any such proceeding; (vii) any claim that the Lessee
has or might have against any Person, including without limitation the Lessor,
any Participant, or any vendor, manufacturer, contractor of or for any Property;
(viii) any failure on the part of the Lessor to perform or comply with any of
the terms of this Master Lease (other than performance by Lessor of its
obligations set forth in Section 2.1 hereof), of any other Operative Document or
of any other agreement; (ix) any invalidity or unenforceability or illegality or
disaffirmance of this Master Lease against or by the Lessee or any provision
hereof or any of the other Operative Documents or any provision of any thereof;
(x) the impossibility or illegality of performance by the Lessee, the Lessor or
both; (xi) any action by any court, administrative agency or other Governmental
Authority; (xii) any restriction, prevention or curtailment of or interference
with the construction on or any use of any Property or any part thereof; or
(xiii) any other cause or circumstances whether similar or dissimilar to the
foregoing and whether or not the Lessee shall have notice or knowledge of any of
the foregoing. The Lessee's agreement in the preceding sentence shall not affect
any claim, action or right
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<PAGE> 9
MASTER LEASE
the Lessee may have against the Lessor or any Participant. The parties intend
that the obligations of the Lessee hereunder shall be covenants and agreements
that are separate and independent from any obligations of the Lessor hereunder
or under any other Operative Documents and the obligations of the Lessee shall
continue unaffected unless such obligations shall have been modified or
terminated in accordance with an express provision of this Master Lease.
V.2. No Termination or Abatement. The Lessee shall remain obligated
under this Master Lease in accordance with its terms and shall not take any
action to terminate, rescind or avoid this Master Lease (except as provided
herein), notwithstanding any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution, or other proceeding affecting the Lessor or any
Participant, or any action with respect to this Master Lease which may be taken
by any trustee, receiver or liquidator of the Lessor or any Participant or by
any court with respect to the Lessor or any Participant. The Lessee hereby
waives all right (i) to terminate or surrender this Master Lease (except as
provided herein) or (ii) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
The Lessee shall remain obligated under this Master Lease in accordance with its
terms and the Lessee hereby waives any and all rights now or hereafter conferred
by statute or otherwise to modify or to avoid strict compliance with its
obligations under this Master Lease. Notwithstanding any such statute or
otherwise, the Lessee shall be bound by all of the terms and conditions
contained in this Master Lease.
ARTICLE VI
SUBLEASES
VI.1. Subletting. Subject to Section 2.1(r) of the Participation
Agreement, the Lessee may sublease any Property or any portion thereof to any
Person; provided, however, that no sublease or other relinquishment of
possession of any Property shall in any way discharge or diminish any of the
Lessee's obligations to the Lessor hereunder and the Lessee shall remain
directly and primarily liable under this Master Lease as to the Properties, or
portion thereof, so sublet. Each sublease of any Property shall expressly be
made subject to and subordinated to this Master Lease and to the rights of the
Lessor hereunder.
ARTICLE VII
LESSEE ACKNOWLEDGMENTS
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<PAGE> 10
MASTER LEASE
VII.1. Condition of the Properties. THE LESSEE ACKNOWLEDGES AND AGREES
THAT IT IS LEASING EACH PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR
COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR OR THE LENDERS AND IN EACH CASE
SUBJECT TO (A) THE EXISTING STATE OF TITLE (EXCLUDING LESSOR LIENS), (B) THE
RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF FACTS WHICH AN
ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW, AND (D) VIOLATIONS OF
REQUIREMENTS OF LAW AND PROPERTY LEGAL REQUIREMENTS WHICH MAY EXIST ON THE DATE
HEREOF OR ON THE ACQUISITION DATE FOR SUCH PROPERTY. NONE OF THE LESSOR OR THE
LENDERS HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR
COVENANT (EXPRESS OR IMPLIED) OR SHALL BE DEEMED TO HAVE ANY LIABILITY
WHATSOEVER AS TO THE TITLE (OTHER THAN FOR LESSOR LIENS), VALUE, HABITABILITY,
USE, CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF ANY PROPERTY (OR ANY
PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY PROPERTY (OR ANY PART THEREOF) AND NONE
OF THE LESSOR OR THE LENDERS SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT
DEFECT THEREIN (OTHER THAN FOR LESSOR LIENS) OR THE FAILURE OF ANY PROPERTY, OR
ANY PART THEREOF, TO COMPLY WITH ANY REQUIREMENT OF LAW OR PROPERTY LEGAL
REQUIREMENT.
VII.2. Risk of Loss. During the Lease Term the risk of loss of or
decrease in the enjoyment and beneficial use of the Properties as a result of
the damage or destruction thereof by fire, the elements, casualties, thefts,
riots, wars or otherwise is assumed by the Lessee, and the Lessor shall in no
event be answerable or accountable therefor.
ARTICLE VIII
POSSESSION AND USE OF THE PROPERTIES, ETC.
VIII.1. Utility Charges. The Lessee shall pay or cause to be paid all
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and utilities used in or on the Properties during
the Lease Term. The Lessee shall be entitled to receive any credit or refund
with respect to any utility charge paid by the Lessee and the amount of any
credit or refund received by the Lessor on account of any utility charges paid
by the Lessee, net of the costs and expenses reasonably incurred by the Lessor
in obtaining such credit or refund, shall be promptly paid over to the Lessee.
VIII.2. Possession and Use of the Property. Each Property may be used in
all lawful manners consistent with the business of the Lessee and otherwise as
set forth in the applicable
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<PAGE> 11
MASTER LEASE
Appraisal. The Lessee shall pay, or cause to be paid, all charges and costs
required in connection with the use of the Properties as contemplated by this
Master Lease. The Lessee shall not commit or permit any waste of the Properties
or any part thereof.
VIII.3. Compliance with Requirements of Law, Property Legal Requirements
and Insurance Requirements. Subject to the terms of Article XII relating to
permitted contests, the Lessee, at its sole cost and expense, shall (a) comply
in all material respects with all Requirements of Law (including all Hazardous
Materials Laws), Property Legal Requirements and Insurance Requirements relating
to the Properties, including the use, construction, operation, maintenance,
repair and restoration thereof and the remarketing thereof pursuant to Article
XX, whether or not compliance therewith shall require structural or
extraordinary changes in the Improvements or interfere with the use and
enjoyment of the Properties, and (b) procure, maintain and comply with all
licenses, permits, orders, approvals, consents and other authorizations required
for the construction, use, maintenance and operation of the Properties and for
the use, operation, maintenance, repair and restoration of the Improvements.
Notwithstanding the preceding sentence, the Lessee shall be deemed to be in
compliance with all Hazardous Materials Laws for purposes of this Master Lease
notwithstanding any Environmental Violation if the severity of such
Environmental Violation is less than Federal, state or local standards requiring
remediation or removal or, if such standards are exceeded, remediation or
removal is proceeding in accordance with all applicable Hazardous Materials
Laws.
VIII.4. Assignment by Lessee. The Lessee may not assign this Master
Lease or any of its rights or obligations hereunder in whole or in part to any
Person, except that the Lessee may sublease any Property or portion thereof as
permitted under Section 6.1.
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<PAGE> 12
MASTER LEASE
ARTICLE IX
MAINTENANCE AND REPAIR; RETURN
IX.1. Maintenance and Repair; Return.
(a) The Lessee, at its sole cost and expense, shall maintain each
Property in good condition (ordinary wear and tear excepted) and make
all necessary repairs thereto, of every kind and nature whatsoever,
whether interior or exterior, ordinary or extraordinary, structural or
nonstructural or foreseen or unforeseen, in each case as required by all
Requirements of Law, Property Legal Requirements and Insurance
Requirements and in no event less than the standards applied by the
Lessee in the operation and maintenance of other comparable properties
owned or leased by the Lessee or its Affiliates.
(b) The Lessor shall under no circumstances be required to build
any improvements on any Property, make any repairs, replacements,
alterations or renewals of any nature or description to any Property,
make any expenditure whatsoever in connection with this Master Lease
(other than for Advances made in accordance with and pursuant to the
terms of the Participation Agreement) or maintain any Property in any
way. The Lessee waives any right to (i) require the Lessor to maintain,
repair, or rebuild all or any part of any Property or (ii) make repairs
at the expense of the Lessor pursuant to any Requirement of Law,
Property Legal Requirement, Insurance Requirement, contract, agreement,
or covenant, condition or restriction in effect at any time during the
Lease Term.
(c) The Lessee shall, upon the expiration or earlier termination
of this Master Lease with respect to any Property (other than as a
result of the Lessee's purchase of such Property from the Lessor as
provided herein), vacate and surrender such Property to the Lessor in
its then-current, "AS IS" condition, subject to the Lessee's obligations
under Sections 8.3, 9.1(a), 10.1, 11.1, 14.1(e), 14.2 and 20.1.
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<PAGE> 13
MASTER LEASE
ARTICLE X
MODIFICATIONS, ETC.
X.1. Modifications, Substitutions and Replacements. During the Lease
Term, the Lessee, at its sole cost and expense, may at any time and from time to
time make alterations, renovations, improvements and additions to any Property
or any part thereof and substitutions and replacements therefor (collectively,
"Modifications"); provided, however, that:
(i) except for any Modification required to be made pursuant to a
Requirement of Law or Property Legal Requirement (a "Required
Modification"), no Modification shall adversely affect the value or
useful life of such Property or any part thereof from that which existed
immediately prior to such Modification;
(ii) the Modification shall be done in a good and workmanlike
manner;
(iii) the Lessee shall comply in all material respects with all
Requirements of Law (including all Hazardous Materials Laws), Property
Legal Requirements and Insurance Requirements applicable to the
Modification, including the obtaining of all permits and certificates of
occupancy;
(iv) subject to the terms of Article XII relating to permitted
contests, the Lessee shall pay all costs and expenses and shall
discharge (or cause to be insured or bonded over) within sixty (60) days
after the same shall be filed (or otherwise become effective) any Liens
arising with respect to the Modification;
(v) such Modifications shall comply with Sections 8.3 and
9.1(a); and
(vi) the Lessee shall be required to obtain the prior written
approval of the Lessor, which approval shall not be unreasonably
withheld, and which shall be deemed to have been given if no response
from the Lessor to the request for consent is received by the Lessee
within ten (10) days of the date of such request, with respect to any
alterations that shall Materially affect any structural element of any
Improvements.
All Modifications shall remain part of the realty and shall be subject to this
Master Lease and title thereto shall immediately vest in the Lessor; provided,
however, that Modifications that
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<PAGE> 14
MASTER LEASE
(x) are not Required Modifications, (y) were not financed by the Lessor and (z)
are readily removable without impairing the value, utility or remaining useful
life of the applicable Property, shall be the property of the Lessee and shall
not be subject to this Master Lease. So long as no Lease Event of Default has
occurred and is continuing, the Lessee may place upon the Properties any trade
fixtures, machinery, equipment, inventory or other property belonging to the
Lessee or third parties and may remove the same at any time during the Lease
Term, subject, however, to the terms of Section 9.1(a); provided, however, that
such trade fixtures, machinery, equipment, inventory or other property do not
impair the value or useful life of the applicable Property; provided, further,
however, that the Lessee shall keep and maintain at the Properties and shall not
remove from the Properties any Equipment financed or otherwise paid for
(directly or indirectly) by the Lessor or any Participant pursuant to the
Participation Agreement.
X.2. Notice to the Lessor. If the Lessee reasonably expects the cost of
any Modification to any Property to exceed $250,000.00, the Lessee shall deliver
to the Lessor a brief written narrative of the work to be performed in
connection with such Modification prior to making such Modification.
ARTICLE XI
WARRANT OF TITLE; EASEMENTS
XI.1. Warrant of Title.
(a) The Lessee agrees that except as otherwise provided herein
and subject to the terms of Article XII relating to permitted contests,
the Lessee shall not directly or indirectly create or allow to remain,
and shall promptly discharge at its sole cost and expense, any Lien
(other than any Lessor Lien), defect, attachment, levy, title retention
agreement or claim upon any Property or any Lien, attachment, levy or
claim with respect to the Rent or with respect to any amounts held by
the Lessor or the Participants pursuant to the Loan Agreement or the
other Operative Documents, other than Permitted Property Liens and Liens
on machinery, equipment, general intangibles and other personal property
not financed by the proceeds of the Loans or Lessor Amounts.
(b) Nothing contained in this Master Lease shall be construed as
constituting the consent or request of the Lessor, expressed or implied,
to or for the performance by any contractor, mechanic, laborer,
materialman, supplier or
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MASTER LEASE
vendor of any labor or services or for the furnishing of any materials
for any construction, alteration, addition, repair or demolition of or
to any Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NONE OF
THE LESSOR OR THE LENDERS IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES
OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE
HOLDING A PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND
THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR
MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR OR ANY
LENDER IN AND TO ANY PROPERTY.
XI.2. Grants and Releases of Easements; Lessor's Waivers. Provided that
no Lease Event of Default shall have occurred and be continuing and subject to
the provisions of Articles VII, IX and X and Section 8.3 the Lessor hereby
consents in each instance to the following actions by the Lessee, in the name
and stead of the Lessor, but at the Lessee's sole cost and expense: (a) the
granting of easements, licenses, rights-of-way and other rights and privileges
in the nature of easements reasonably necessary or desirable for the use,
repair, or maintenance of any Property as herein provided; (b) the release of
existing easements or other rights in the nature of easements which are for the
benefit of any Property; and (c) the execution of amendments to any covenants
and restrictions affecting any Property; provided, however, that in each case
(i) such grant, release, dedication, transfer or amendment does not materially
impair the value or remaining useful life of the applicable Property, (ii) such
grant, release, dedication, transfer or amendment that in the Lessee's judgment
is reasonably necessary in connection with the use, maintenance, alteration or
improvement of the applicable Property, (iii) such grant, release, dedication,
transfer or amendment will not cause the applicable Property or any portion
thereof to fail to comply with the provisions of this Master Lease or any other
Operative Documents and all Property Legal Requirements (including, without
limitation, all applicable zoning, planning, building and subdivision
ordinances, all applicable restrictive covenants and all applicable
architectural approval requirements); (iv) all governmental consents or
approvals required prior to such grant, release, dedication, transfer,
annexation or amendment have been obtained, and all filings required prior to
such action have been made; (v) the Lessee shall remain obligated under this
Master Lease and under any instrument executed by the Lessee consenting to the
assignment of the Lessor's interest in this Master Lease as security for
indebtedness, in each such case in accordance with their terms, as though such
grant, release, dedication, transfer or amendment had not been effected and (vi)
the Lessee shall pay and perform any obligations of the Lessor under such grant,
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release, dedication, transfer or amendment. The Lessor acknowledges the Lessee's
right to finance and to secure under the Uniform Commercial Code, inventory,
furnishings, furniture, equipment, machinery, leasehold improvements and other
personal property located at the Properties other than Equipment, and Lessor
agrees to execute Lessor waiver forms and release of Lessor's Liens in favor of
any purchase money seller, lessor or lender which has financed or may finance in
the future such items. Without limiting the effectiveness of the foregoing,
provided that no Lease Event of Default shall have occurred and be continuing,
the Lessor shall, upon the request of the Lessee, and at the Lessee's sole cost
and expense, execute and deliver any instruments necessary or appropriate to
confirm any such grant, release, dedication, transfer, annexation or amendment
to any Person permitted under this Section 11.2 including landlord waivers with
respect to any of the foregoing. So long as no Event of Default shall have
occurred and be continuing, Lessee is hereby granted an irrevocable power of
attorney (coupled with an interest) to execute the types of documents,
instruments and agreement referred to in this Section 11.2. In addition, Lessor
covenants to cooperate and to execute promptly any documents requested by Lessee
under this Section 11.2.
ARTICLE XII
PERMITTED CONTESTS
XII.1. Permitted Contests in Respect of Applicable Law. If, to the
extent and for so long as (a) a test, challenge, appeal or proceeding for review
of any Applicable Law relating to any Property shall be prosecuted diligently
and in good faith in appropriate proceedings by the Lessee or (b) compliance
with such Applicable Law shall have been excused or exempted by a valid
nonconforming use, variance permit, waiver, extension or forbearance, the Lessee
shall not be required to comply with such Applicable Law but only if and so long
as any such test, challenge, appeal, proceeding, waiver, extension, forbearance
or noncompliance shall not, in the reasonable opinion of the Lessor and the
Agent, involve (A) any risk of criminal liability being imposed on the Lessor or
any Lender or (B) any risk of (1) foreclosure, forfeiture or loss of such
Property, or sale of any Property or any material part thereof, or nonpayment of
Rent (2) civil liability being imposed on the Lessor, any Lender, or such
Property, or (3) enjoinment of, or interference with, the use, possession or
disposition of such Property in any material respect.
The Lessor will not be required to join in any proceedings pursuant to
this Section 12.1 unless a provision of any
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MASTER LEASE
Applicable Law requires that such proceedings be brought by or in the name of
the Lessor; and in that event the Lessor will join in the proceedings or permit
them or any part thereof to be brought in its name if and so long as (i) the
Lessee has not elected the Remarketing Option and (ii) the Lessee pays all
related expenses and indemnifies the Lessor and the Participants with respect to
such proceedings.
ARTICLE XIII
INSURANCE
XIII.1. Public Liability and Workers' Compensation Insurance.
(a) During the Lease Term, the Lessee shall procure and carry, at
the Lessee's sole cost and expense, commercial general liability
insurance for claims for injuries or death sustained by persons or
damage to property while on the Properties and such other public
liability coverages as are ordinarily procured by the Lessee or its
Affiliates who own or operate similar properties, but in any case shall
provide liability coverage of at least combined single limit for bodily
injury or property damage, $5,000,000 per occurrence and aggregate. Such
insurance shall be on terms and in amounts that are no less favorable
than insurance maintained by the Lessee or such Affiliates with respect
to similar properties that they own and that are in accordance with
normal industry practice. The policy shall be endorsed to name the
Lessor as additional insured. The policy shall also specifically provide
that the policy shall be considered primary insurance which shall apply
to any loss or claim before any contribution by any insurance which the
Lessor may have in force.
(b) The Lessee shall in the construction of any Modifications and
the operation of the Properties, comply with the applicable workers'
compensation laws.
XIII.2. Hazard and Other Insurance. During the Lease Term, the Lessee
shall keep, or cause to be kept, such Property insured against loss or damage by
fire, and other risks on terms and in amounts that are no less favorable than
insurance covering other similar properties owned by the Lessee or its
Affiliates and that are in accordance with normal industry practices, but at
least an amount sufficient to cover the replacement cost of the Improvements.
During the construction of any Improvements the Lessee shall also maintain or
cause to be maintained builders' risk insurance. All insurance proceeds in
respect of any loss or
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MASTER LEASE
occurrence for which the proceeds related thereto are (i) less than or equal to
$500,000.00, in the absence of the occurrence and continuance of an Event of
Default, shall be adjusted by and paid to the Lessee for application toward the
reconstruction, repair or refurbishment of the applicable Property and (ii)
greater than $500,000.00, shall be adjusted by and held by the Lessor for
application in accordance with Article XIV.
XIII.3. Insurance Coverage.
(a) The Lessee shall furnish the Lessor and the Agent with
certificates showing the insurance required under Sections 13.1 and 13.2
to be in effect and naming the Lessor as additional insured with respect
to liability coverage (excluding worker's compensation insurance),
naming the Lessor and the Lessee as their interests may appear with
respect to property coverage and naming the Lessor as loss payee with
respect to property coverage and showing the mortgagee endorsement
required by Section 13.3(c) with respect to such coverage. All such
insurance shall be at the cost and expense of the Lessee. Such
certificates shall include a provision for no less than thirty (30)
days' advance written notice by the insurer to the Lessor in the event
of cancellation or reduction of such insurance.
(b) The Lessee agrees that the insurance policy or policies
required by Sections 13.2 shall include an appropriate clause pursuant
to which such policy shall provide that it will not be invalidated
should the Lessee waive, in writing, prior to a loss, any or all rights
of recovery against any party for losses covered by such policy, and
that the insurance in favor of the Lessor and its rights under and
interests in said policies shall not be invalidated or reduced by any
act or omission (including breach of warranty) or negligence of the
Lessee or any other Person having any interest in any Property other
than the Lessor. The Lessee hereby waives any and all such rights
against the Lessor to the extent of payments made under such policies.
(c) All such insurance shall be written by reputable insurance
companies that are financially sound and solvent and otherwise
reasonably appropriate considering the amount and type of insurance
being provided by such companies. Any insurance company selected by the
Lessee which is rated in Best's Insurance Guide or any successor thereto
(or if there be none, an organization having a similar national
reputation) shall have a general policyholder rating of "A" and a
financial rating of at least "VIII" or be otherwise
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MASTER LEASE
acceptable to the Lessor. All insurance policies required by Section
13.2 shall include a standard form mortgagee endorsement in favor of the
Lessor.
(d) The Lessor shall not carry separate insurance concurrent in
kind or form or contributing in the event of loss with any insurance
required under this Article XIII except that the Lessor may, at the
Lessor's expense, carry separate liability insurance so long as (i) the
Lessee's insurance is designated as primary and in no event excess or
contributory to any insurance the Lessor may have in force which would
apply to a loss covered under the Lessee's policy and (ii) each such
insurance policy will not cause the Lessee's insurance required under
this Article XIII to be subject to a coinsurance exception of any kind.
(e) The Lessee shall pay as they become due all premiums for the
insurance required by Section 13.1 and Section 13.2, and shall renew or
replace each policy prior to the expiration date thereof. Throughout the
Lease Term, at the time each of the Lessee's insurance policies is
renewed (but in no event less frequently than once each year), the
Lessee shall deliver to the Lessor and the Agent certificates of
insurance evidencing that all insurance required by this Article XIII is
being maintained by the Lessee and is in effect.
ARTICLE XIV
CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS
XIV.1. Casualty and Condemnation.
(a) Subject to the provisions of this Article XIV, if all or a
portion of any Property is damaged or destroyed in whole or in part by a
Casualty or if the use, access, occupancy, easement rights or title to
any Property or any part thereof, is the subject of a Condemnation, then
(i) in the case of a Casualty, (x) any insurance proceeds
less than $500,000 payable with respect to such Casualty shall be
paid directly to the Lessee, or if received by the Lessor, shall
be paid over to such Lessee for the reconstruction, refurbishment
and repair of such Property, and (y) any insurance proceeds in
excess of $500,000 payable with respect to such Casualty shall be
paid to the Lessor to be applied by disbursement to the Lessee to
the restoration of such Property, and
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MASTER LEASE
(ii) in the case of a Condemnation (that is not a
Significant Condemnation) of any part of any Land (not including
the applicable Improvements), any award or compensation relating
thereto shall be paid to the Lessee and in the case of a
Significant Condemnation such award or compensation shall be paid
to the Lessor to be applied in the Lessee's reasonable discretion
to the restoration of such Property or toward the payment of the
applicable Lease Balance;
provided, however, that, in each case, if a Lease Event of Default shall
have occurred and be continuing, such award, compensation or insurance
proceeds shall be paid directly to the Lessor or, if received by the
Lessee, shall be held in trust for the Lessor and the Lenders, and shall
be paid over by the Lessee to the Lessor to be distributed in accordance
with the Article VII of the Participation Agreement. All amounts held by
the Lessor, or the Lenders when a Lease Event of Default exists
hereunder on account of any award, compensation or insurance proceeds
either paid directly to the Lessor or the Lenders or turned over to the
Lessor or the Lenders shall at the option of the Lessor either be (i)
paid to the Lessee for the repair of damage caused by such Casualty or
Condemnation in accordance with clause (d) of this Section 14.1, or (ii)
applied to the purchase price of the related Property on the Termination
Date with respect to such Property in accordance with Article XV, with
any Excess Casualty/Condemnation Proceeds being payable to the Lessee.
(b) The Lessee may appear in any proceeding or action to
negotiate, prosecute, adjust or appeal any claim for any award,
compensation or insurance payment on account of any such Casualty or
Condemnation and shall pay all expenses thereof. At the Lessee's
reasonable request, and at the Lessee's sole cost and expense, the
Lessor and the Lenders shall participate in any such proceeding, action,
negotiation, prosecution or adjustment. The Lessor and the Lessee agree
that this Master Lease shall control the rights of the Lessor and the
Lessee in and to any such award, compensation or insurance payment.
(c) If the Lessor or the Lessee shall receive notice of a
Casualty or of an actual, pending or threatened Condemnation of any
Property or any interest therein, the Lessor or the Lessee, as the case
may be, shall give notice thereof to the other and to the Lenders
promptly after the receipt of such notice.
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MASTER LEASE
(d) If pursuant to this Section 14.1 and Section 15.1 this Master
Lease shall continue in full force and effect following a Casualty or
Condemnation with respect to any Property, the Lessee shall, at its sole
cost and expense (and, without limitation, if any award, compensation or
insurance payment is not sufficient to restore such Property in
accordance with this clause (d), or is not covered by insurance as in
the case of Casualty caused by earthquake, the Lessee shall pay the
shortfall), promptly and diligently repair any damage to such Property
caused by such Casualty or Condemnation in conformity with the
requirements of Sections 9.1 and 10.1 (as modified to give effect to any
subsequent Modifications, any Condemnation affecting such Property and
all applicable Property Legal Requirements) so as to restore such
Property to at least the same condition, operation, function and value
as existed immediately prior to such Casualty or Condemnation with such
Modification as the Lessee may elect in accordance with Section 10.1. In
such event, title to such Property shall remain with the Lessor subject
to the terms of this Master Lease. Upon completion of such restoration,
the Lessee shall furnish the Lessor an architect's certificate of
substantial completion and a Responsible Employee's Certificate
confirming that such restoration has been completed pursuant to this
Master Lease.
(e) In no event shall a Casualty or Condemnation affect the
Lessee's obligations to pay Rent pursuant to Section 3.1 or to perform
its obligations and pay any amounts due on the Expiration Date or
pursuant to Articles XVIII and XXI.
(f) Any Excess Casualty/Condemnation Proceeds received by the
Lessor or the Lenders in respect of a Casualty or Condemnation shall be
turned over to the Lessee.
XIV.2. Environmental Matters. Promptly upon the Lessee's knowledge of
the existence of an Environmental Violation with respect to any Property, the
Lessee shall notify the Lessor in writing of such Environmental Violation. If
the Lessor elects not to terminate this Master Lease with respect to such
Property pursuant to Section 15.1, at the Lessee's sole cost and expense, the
Lessee shall promptly and diligently commence any response, clean up, remedial
or other action necessary to remove, clean up or remediate the Environmental
Violation in accordance with the terms of Section 8.3 (including the last
sentence thereof). The Lessee shall, upon completion of remedial action by the
Lessee, cause to be prepared by an environmental consultant reasonably
acceptable to the Lessor a report describing the Environmental
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MASTER LEASE
Violation and the actions taken by the Lessee (or its agents) in response to
such Environmental Violation, and a statement by the consultant that the
Environmental Violation has been remedied in compliance in all material respects
with applicable Hazardous Materials Laws. Each such Environmental Violation
shall be remedied prior to the Expiration Date unless each Property with respect
to which an Environmental Violation has occurred but has not been remedied has
been purchased by the Lessee in accordance with Section 18.1 or 18.2. Nothing in
this Article XIV shall reduce or limit the Lessee's obligations under Sections
13.1, 13.2 or 13.3 of the Participation Agreement.
XIV.3. Notice of Environmental Matters. Promptly, but in any event
within sixty (60) Business Days from the date the Lessee has actual knowledge
thereof, the Lessee shall provide to the Lessor written notice of any pending or
threatened claim, action or proceeding involving any Hazardous Materials Laws or
any Release on or in connection with any Property. All such notices shall
describe in reasonable detail the nature of the claim, action or proceeding and
the Lessee's proposed response thereto. In addition, the Lessee shall provide to
the Lessor, within sixty (60) Business Days of receipt, copies of all written
communications with any Governmental Authority relating to any Environmental
Violation in connection with any Property. The Lessee shall also promptly
provide such detailed reports of any such material environmental claims as may
reasonably be requested by the Lessor or the Lenders. In the event that the
Lessor receives written notice of any pending or threatened claim, action or
proceeding involving any Hazardous Materials Laws or any Release on or in
connection with any Property, the Lessor shall promptly give notice thereof to
the Lessee.
ARTICLE XV
TERMINATION OF LEASE
XV.1. Partial Termination upon Certain Events. If any of the following
occurs with respect to any Property:
(i) a Significant Condemnation occurs; or
(ii) an Environmental Violation occurs or is discovered the cost
of remediation of which would exceed $5,000,000;
and the Lessor shall have given written notice (a "Termination Notice") to the
Lessee that, as a consequence of such event, (x) the Lease Supplement relating
to such Property is to be terminated and (y) this Master Lease is to be
terminated with
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MASTER LEASE
respect to such Property, then the Lessee shall be obligated to purchase the
Lessor's interest in such affected Property on or prior to the next occurring
Basic Rent Payment Date by paying the Lessor an amount equal to the Property
Balance for such affected Property.
XV.2. Termination Procedures. On the date of the payment by the Lessee
of the Property Balance, or the Lease Balance, as the case may be, with respect
to any Property or all Properties, as the case may be, in accordance with
Section 15.1 (such date, the "Termination Date"), the Lease Supplement relating
to each such affected Property shall terminate and this Master Lease shall
terminate with respect to each such Property and, concurrent with the Lessor's
receipt of such payment,
(a) the Lessor shall execute and deliver to the Lessee (or to the
Lessee's designee) at the Lessee's cost and expense a special warranty
deed with respect to each such Property, a bill of sale with respect to
the Equipment located on each such Property and an assignment of the
Lessor's entire interest in each such Property (which shall include an
assignment of all of the Lessor's right, title and interest in and to
any Net Proceeds with respect to each such Property not previously
received by the Lessor), in each case in recordable form and otherwise
in conformity with local custom and free and clear of the Lien of the
Lessor Mortgage and any Lessor Liens attributable to the Lessor;
(b) each such Property shall be conveyed to the Lessee (or to the
Lessee's designee) "AS IS" and in its then present physical condition;
and
(c) in the case of a termination pursuant to clause (i) or (ii)
of Section 15.1(a), the Lessor shall convey to the Lessee any Net
Proceeds with respect to the Casualty or Condemnation giving rise to the
termination of this Master Lease with respect to such Property
theretofore received by the Lessor or at the request of the Lessee, such
amounts shall be applied against sums due hereunder.
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ARTICLE XVI
EVENTS OF DEFAULT
XVI.1. Lease Events of Default. The occurrence of any one or more of the
following events (whether such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) shall constitute a "Lease Event of
Default":
(a) the Lessee shall fail to make payment of (i) any Basic Rent
within five (5) days after the same has become due and payable, or (ii)
any Property Balance, Purchase Option Price, Loan Balance or Lease
Balance, including, without limitation, amounts due pursuant to Sections
15.1, 15.2, 18.1, 18.2, or 20.1;
(b) the Lessee shall fail to make payment of any Supplemental
Rent due and payable within five (5) days after receipt of notice
thereof;
(c) the Lessee shall fail to maintain insurance as required by
Article XIII of this Master Lease;
(d) the Lessee shall fail to deposit with the Collateral Agent,
within the time set forth in Section 6.1 of the Participation Agreement,
the Deficiency Collateral;
(e) the Lessee shall not be in compliance with Section
10.1(f)(i), (ii) or (iii) of the Participation Agreement;
(f) the Lessee shall fail to observe or perform any term,
covenant or condition of the Lessee under this Lease or the Operative
Documents to which it is party other than those described in Section
20.1(a), (b), (c), (d) or (e) hereof, and such failure shall have
continued for thirty (30) days after the earlier of (i) delivery to the
Lessee of written notice thereof from the Lessor or (ii) a Responsible
Employee of the Lessee shall have knowledge of such failure; provided
further, that failure by the Lessee to fully comply with the
requirements of Section 20.1 hereof shall not be subject to any cure
period; provided, however, that no Event of Default shall be deemed to
have occurred under this subsection until one hundred twenty (120) days
has elapsed so long as throughout such time, the Lessee is diligently
pursuing a cure for such breach (to the extent such breach may be
cured);
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MASTER LEASE
(g) any representation or warranty made by the Lessee in any of
the Operative Documents to which it is a party shall prove to have been
Materially inaccurate at the time made, and if such inaccuracy can be
cured, it shall not have been cured within thirty (30) days after the
earlier of (i) delivery to the Lessee of written notice thereof from the
Lessor or (ii) a Responsible Employee of the Lessee shall have knowledge
of such inaccuracy; provided, however, that no Event of Default shall be
deemed to have occurred under this subsection until one hundred twenty
(120) days has elapsed so long as throughout such time, the Lessee is
diligently pursuing a cure for such breach (to the extent such breach
may be cured);
(h) the Lessee shall (i) admit in writing its inability to pay
its debts generally as they become due, (ii) file a petition under the
United States bankruptcy laws or any other applicable insolvency law or
statute of the United States of America or any State or Commonwealth
thereof, (iii) make a general assignment for the benefit of its
creditors, (iv) consent to the appointment of a receiver of itself or
the whole or any substantial part of its property, (v) fail to cause the
discharge of any custodian, trustee or receiver appointed for the Lessee
or the whole or a substantial part of its property within sixty (60)
days after such appointment, or (vi) file a petition or answer seeking
or consenting to reorganization under the United States bankruptcy laws
or any other applicable insolvency law or statute of the United States
of America or any State or Commonwealth thereof;
(i) insolvency proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency law or statute of the
United States of America or any State or Commonwealth thereof shall be
filed against the Lessee and not dismissed within ninety (90) days from
the date of its filing, or a court of competent jurisdiction shall enter
an order or decree appointing, without the consent of the Lessee a
receiver of the Lessee or the whole or a substantial part of any of its
property and such order or decree shall not be vacated or set aside
within ninety (90) days from the date of the entry thereof;
(j) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $5,000,000 which it shall
have become liable to pay under Title IV of ERISA; or notice of intent
to terminate a Material Plan shall be filed under Title IV of ERISA by
any
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MASTER LEASE
member of the ERISA Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $5,000,000;
(k) any judgments or orders for the payment of money, in any case
not covered by insurance, individually or in the aggregate in excess of
$5,000,000 shall be rendered against the Lessee, and such judgment or
order shall continue unsatisfied and unstayed (pursuant to laws, rules
or court orders) for a period of thirty (30) days;
(l) an event of default, as defined in any agreement, mortgage,
indenture or instrument under which there may be issued, or by which
there may be secured or evidenced, any indebtedness of the Lessee with
respect to any Property, whether such indebtedness now exists or shall
hereafter be created, shall happen and such indebtedness individually or
in the aggregate shall exceed $5,000,000 and shall be due and payable
prior to its stated maturity;
(m) any Lien granted under any Operative Document shall, in whole
or in part, terminate, cease to be effective against, or cease to be the
legal, valid, binding and enforceable obligation of, the Lessee;
(n) the Lessee shall directly or indirectly contest the validity
of any Operative Document in any manner in any court of competent
jurisdiction or any lien granted by any Operative Document; or
(o) a Loan Agreement Event of Default, a Guaranty Event of
Default or a Construction Agency Agreement Event of Default shall have
occurred and be continuing.
XVI.2. Remedies. Upon the occurrence of any Lease Event of Default and
at any time thereafter, the Lessor may, so long as such Lease Event of Default
is continuing, do one or more of the following as the Lessor in its sole
discretion shall determine,
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MASTER LEASE
without limiting any other right or remedy the Lessor may have on account of
such Lease Event of Default (including, without limitation, the obligation of
the Lessee to purchase the Properties as set forth in Section 18.2:
(a) The Lessor may, by notice to the Lessee, rescind or terminate
this Master Lease as to any Property or all of the Properties as of the
date specified in such notice; however, (i) no reletting, reentry or
taking of possession of any Property (or any portion thereof) by the
Lessor will be construed as an election on the Lessor's part to
terminate this Master Lease unless a written notice of such intention is
given to the Lessee, (ii) notwithstanding any reletting, reentry or
taking of possession, the Lessor may at any time thereafter elect to
terminate this Master Lease for a continuing Lease Event of Default and
(iii) no act or thing done by the Lessor or any of its agents,
representatives or employees and no agreement accepting a surrender of
the Properties shall be valid unless the same be made in writing and
executed by the Lessor;
(b) The Lessor may (i) demand that the Lessee, and the Lessee
shall upon the written demand of the Lessor, return any Property
promptly to the Lessor in the manner and condition required by, and
otherwise in accordance with all of the provisions of, Articles VII and
IX and Section 8.3 hereof as if such Property were being returned at the
end of the Lease Term, and the Lessor shall not be liable for the
reimbursement of the Lessee for any costs and expenses incurred by the
Lessee in connection therewith and (ii) without prejudice to any other
remedy which the Lessor may have for possession of any Property, and to
the extent and in the manner permitted by Applicable Law, enter upon
such Property and take immediate possession of (to the exclusion of the
Lessee) such Property or any part thereof and expel or remove the Lessee
and any other Person who may be occupying such Property, by summary
proceedings or otherwise, all without liability to the Lessee for or by
reason of such entry or taking of possession, whether for the
restoration of damage to property caused by such taking or otherwise
and, in addition to the Lessor's other damages, the Lessee shall be
responsible for all costs and expenses incurred by the Lessor and/or the
Lenders in connection with any reletting, including, without limitation,
reasonable brokers' fees and all costs of any alterations or repairs
made by the Lessor;
(c) The Lessor may (i) sell all or any part of any Property at
public sale free and clear of any rights of the
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MASTER LEASE
Lessee and without any duty to account to the Lessee with respect to
such action or inaction or any proceeds (except that Excess Proceeds are
payable to and shall be paid to the Lessee) with respect thereto (except
to the extent required by clause (ii) below if the Lessor shall elect to
exercise its rights thereunder) in which event the Lessee's obligation
to pay Basic Rent hereunder for periods commencing after the date of
such sale shall be terminated or proportionately reduced, as the case
may be; and (ii) if the Lessor shall so elect, demand that the Lessee
pay to the Lessor, and the Lessee shall pay to the Lessor, on the date
of such sale, as liquidated damages for loss of a bargain and not as a
penalty (the parties agreeing that the Lessor's actual damages would be
difficult to predict, but the aforementioned liquidated damages
represent a reasonable approximation of such amount) or (in lieu of
Basic Rent due for periods commencing on or after the Payment Date
coinciding with such date of sale (or, if the sale date is not a Basic
Rent Payment Date, the Basic Rent Payment Date next preceding the date
of such sale)), an amount equal to (A) the excess, if any, of (1) the
Lease Balance calculated as of such Basic Rent Payment Date (including
all Rent due and unpaid to and including such Basic Rent Payment Date
and), over (2) the net proceeds of such sale (that is, after deducting
all costs and expenses incurred by the Lessor incident to such
conveyance, including, without limitation, repossession costs, brokerage
commissions, prorations, transfer taxes, fees and expenses for counsel,
title insurance fees, survey costs, recording fees, and any repair
costs); plus (B) interest at the Overdue Rate on the foregoing amount
from such Basic Rent Payment Date until the date of payment;
(d) The Lessor may, at its option, elect not to terminate this
Master Lease with respect to any Property or all of the Properties and
continue to collect all Basic Rent, Supplemental Rent, and all other
amounts due the Lessor (together with all costs of collection) and
enforce the Lessee's obligations under this Master Lease as and when the
same become due, or are to be performed, and at the option of the
Lessor, upon any abandonment of any Property by the Lessee or re-entry
of same by the Lessor, the Lessor may, in its sole and absolute
discretion, elect not to terminate this Master Lease and may make the
necessary repairs in order to relet such Property, and relet such
Property or any part thereof for such term or terms (which may be for a
long term extending beyond the Lease Term of this Master Lease) and at
such rental or rentals and upon such other terms and conditions as the
Lessor in its
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MASTER LEASE
reasonable discretion may deem advisable; and upon each such reletting
all rentals actually received by the Lessor from such reletting shall be
applied to the Lessee's obligations hereunder and the other Operative
Documents in such order, proportion and priority as the Lessor may elect
in the Lessor's sole and absolute discretion. If such rentals received
from such reletting during any period are less than the Rent with
respect to such Property to be paid during that period by the Lessee
hereunder, the Lessee shall pay any deficiency, as calculated by the
Lessor, to the Lessor on the next Basic Rent Payment Date;
(e) Unless all of the Properties have been sold in their
entirety, the Lessor may, whether or not the Lessor shall have exercised
or shall thereafter at any time exercise any of its rights under clause
(b), (c) or (d) of this Section 16.2 with respect to any Properties or
any portions thereof, demand, by written notice to the Lessee specifying
a date (a "Termination Date") not earlier than twenty (20) days after
the date of such notice, that the Lessee purchase, on such Termination
Date, all unsold Properties and all unsold portions of Properties in
accordance with the provisions of Article XXI and Section 18.2;
(f) The Lessor may exercise any other right or remedy that may be
available to it under Applicable Law, or proceed by appropriate court
action (legal or equitable) to enforce the terms hereof or to recover
damages for the breach hereof. Separate suits may be brought to collect
any such damages for any period(s), and such suits shall not in any
manner prejudice the Lessor's right to collect any such damages for any
subsequent period(s), or the Lessor may defer any such suit until after
the expiration of the Lease Term, in which event such suit shall be
deemed not to have accrued until the expiration of the Lease Term;
(g) The Lessor may retain and apply against the Lease Balance all
sums which the Lessor would, absent such Lease Event of Default, be
required to pay to, or turn over to, the Lessee pursuant to the terms of
this Master Lease;
(h) If a Lease Event of Default shall have occurred and be
continuing, the Lessor, to the extent permitted by Applicable Law, as a
matter of right and with notice to the Lessee, shall have the right to
apply to any court having jurisdiction to appoint a receiver or
receivers of any Property, and the Lessee hereby irrevocably consents to
any such appointment. Any such receiver(s) shall have all of
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MASTER LEASE
the usual powers and duties of receivers in like or similar cases and
all of the powers and duties of the Lessor in case of entry, and shall
continue as such and exercise such powers until the date of confirmation
of the sale of such Property unless such receivership is sooner
terminated;
(i) To the maximum extent permitted by law, the Lessee hereby
waives the benefit of any appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the event of any sale of any Property or any
interest therein;
(j) The Lessor shall be entitled to enforce payment of the
indebtedness and performance of the obligations secured hereby and to
exercise all rights and powers under this instrument or under any of the
other Operative Documents or other agreement or any laws now or
hereafter in force, notwithstanding some or all of the obligations
secured hereby may now or hereafter be otherwise secured, whether by
mortgage, security agreement, pledge, lien, assignment or otherwise.
Neither the acceptance of this instrument nor its enforcement, shall
prejudice or in any manner affect the Lessor's right to realize upon or
enforce any other security now or hereafter held by the Lessor, it being
agreed that the Lessor shall be entitled to enforce this instrument and
any other security now or hereafter held by the Lessor in such order and
manner as the Lessor may determine in its absolute discretion. No remedy
herein conferred upon or reserved to the Lessor is intended to be
exclusive of any other remedy herein or by law provided or permitted,
but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity
or by statute. Every power or remedy given by any of the Operative
Documents to the Lessor or to which it may otherwise be entitled, may be
exercised, concurrently or independently, from time to time and as often
as may be deemed expedient by the Lessor. In no event shall the Lessor,
in the exercise of the remedies provided in this instrument (including,
without limitation, in connection with the assignment of rents to
Lessor, or the appointment of a receiver and the entry of such receiver
onto all or any part of the Properties), be deemed a "mortgagee in
possession," and the Lessor shall not in any way be made liable for any
act, either of commission or omission, in connection with the exercise
of such remedies.
If, pursuant to the exercise by the Lessor of its remedies pursuant to this
Section 16.2, the Lease Balance and all other amounts due and owing from the
Lessee under this Master Lease and
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MASTER LEASE
the other Operative Documents have been paid in full, then the Lessor shall
remit to the Lessee any excess amounts received by the Lessor.
(k) Foreclosure; Power of Sale. Lessee hereby grants to First
American Title Guaranty Company, as trustee (together with all successor
trustees, the "Trustee"), IN TRUST, WITH POWER OF SALE, all of Lessee's
right, title and interest in and to the Properties and, upon the
occurrence of a Lease Event of Default, Lessor shall have the power and
authority, after proper notice and lapse of such time as may be required
by law, to cause Trustee to sell any Property or the Properties by
notifying Trustee of that election and depositing with Trustee this
instrument and receipts and evidence of expenditures made and secured
hereby as Trustee may reasonably require. Upon receipt of any such
notice from Lessor, Trustee shall cause to be recorded, published and
delivered to Lessee such Notice of Default and Election to Sell as is
then required by applicable statutory authority and by this instrument,
which notice shall set forth, among other things, the nature of the
breach(es) or default(s), the action(s) required to effect a cure
thereof and the time period within which that cure may be effected. If
no cure is effected within the statutory time limits following
recordation of the Notice of Default and Election to Sell and after
Notice of Sale has been given as required by the above-referenced
statutes, Trustee may without further notice or demand sell and convey
any Property or the Properties in accordance with the above-referenced
statutes. Each Property may be sold as a whole or in separate lots,
parcels or items and in such order as Lessor may direct, at public
auction to the highest bidder for cash in lawful money of the United
States payable at the time of sale. Trustee shall deliver to such
purchaser(s) a good and sufficient deed or deeds conveying the property
so sold, but without any covenant or warranty express or implied. The
recitals in such deed of any matter or fact shall be conclusive proof of
the truthfulness thereof. Any Person, including Lessee, Trustee or
Lessor, may purchase at any sale. After deducting all costs, fees and
expenses of Lessor and Trustee, including costs of evidence of title in
connection with any sale, Lessor shall apply the proceeds of sale, in
the following order of priority, to payment of the following
(collectively, the "Obligations"): (i) first, all amounts expended by or
for the account of Lessor under the terms hereof and not then repaid,
with accrued interest at the Overdue Rate; and (ii) second, all other
amounts then due and owing hereunder including, without limitation, all
Basic Rent, Supplemental Rent, the full amount of the Lease
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MASTER LEASE
Balance as of the date of sale as if this Lease had been terminated with
respect to all of the Properties then subject to this Lease under
Section 18.1, and all other amounts then payable by Lessee under this
Lease and the other Operative Documents, with Lessor having the right to
apply the proceeds of sale to the amounts described above in this clause
(ii) in such order, proportion and priority as Lessor may elect in its
sole and absolute discretion. To the extent permitted by applicable
statutes, Trustee may postpone the sale of all or any portion of any
Property or the Properties by public announcement at the time and place
of sale, and from time to time thereafter may again postpone that sale
by public announcement or subsequently noticed sale, and without further
notice may make such sale at the time fixed at the last postponement or
may, in its discretion, give a new notice of sale. A sale of less than
all of any Property or the Properties or any defective or irregular sale
made hereunder shall not exhaust the power of sale provided for herein,
and subsequent sales may be made hereunder until all of the Obligations
have been satisfied or all the Properties have been sold, without defect
or irregularity. No action of Lessor or Trustee based upon the
provisions contained herein or contained in the applicable statutes,
including, without limitation, the giving of the Notice of Default and
Election to Sell or the Notice of Sale, shall constitute an election of
remedies which would preclude Lessor from pursuing judicial foreclosure
before a completed sale pursuant to the power of sale contained herein.
Lessor shall have the right, with the irrevocable consent of Lessee
hereby given and evidenced by the execution of this instrument, to
obtain appointment of a receiver by any court of competent jurisdiction
without further notice to Lessee, which receiver shall be authorized and
empowered to enter upon and take possession of any Property or the
Properties, including all personal property used upon or in connection
with the real property herein conveyed, to let any Property or the
Properties, to receive all the rents, issues and profits, if any, which
may be due or become due in respect to the leasing of any Property or
the Properties to another party ("Property Rents"), and apply the
Property Rents after payment of all necessary charges and expenses to
reduction of the Obligations in such order, proportion and priority as
Lessor may elect. At the option of Lessor, the receiver shall accomplish
entry and taking possession of any Property or the Properties by actual
entry and possession or by notice to Lessee. The receiver so appointed
by a court of competent jurisdiction shall be empowered to issue
receiver's certificates for funds advanced by Lessor for the purpose of
protecting the
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MASTER LEASE
value of any Property or the Properties as security for the Obligations.
The amounts evidenced by receiver's certificates shall bear interest at
the Overdue Rate and may be added to the Obligations if the Lessee or a
junior lienholder purchases any Property or the Properties at the
trustee's sale. Trustee or any successor acting hereunder may resign and
thereupon be discharged of the trusts hereunder upon thirty (30) days'
prior written notice to Lessor. Regardless of whether Trustee resigns,
Lessor may, from time to time, substitute a successor or successors to
any Trustee named herein or acting hereunder in accordance with any
statutory procedure for such substitution; or if Lessor, in its sole and
absolute discretion, so elects, and if permitted by law, Lessor may
substitute such successors or successors by recording, in the office of
the recorder of the county or counties where such Property is located, a
document executed by Lessor and containing the name of the original
Lessee and Lessor hereunder, the book and page where this instrument (or
a memorandum hereof) is recorded (and/or instrument number, as
applicable) and the name of the new Trustee, which instrument shall be
conclusive proof of proper substitution of such successor Trustee or
Trustees, who shall, without conveyance from the predecessor Trustee,
succeed to the rights, powers and duties hereunder. It is acknowledged
that A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT; A POWER OF
SALE MAY ALLOW LESSOR TO TAKE THE PROPERTIES AND SELL THEM WITHOUT GOING
TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY LESSEE UNDER THIS
INSTRUMENT.
Notwithstanding any of the foregoing, the Lessor acknowledges that upon
the occurrence and continuance of a Lease Event of Default solely under clause
(e) of Section 16.1, the Lessor's remedies for such default shall be limited to
recovery of the Loan Balance by liquidation of the Additional Collateral or
through other appropriate means.
XVI.3. Waiver of Certain Rights. If this Master Lease shall be
terminated pursuant to Section 16.2, the Lessee waives, to the fullest extent
permitted by law, (a) any notice of re-entry or the institution of legal
proceedings to obtain re-entry or possession; (b) any right of redemption,
re-entry or repossession; (c) the benefit of any laws now or hereafter in force
exempting property from liability for rent or for debt or limiting the Lessor
with respect to the election of remedies; and (d) any other rights which might
otherwise limit or modify any of the Lessor's rights or remedies under this
Article XVI.
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MASTER LEASE
ARTICLE XVII
LESSOR'S RIGHT TO CURE
XVII.1. The Lessor's Right to Cure the Lessee's Lease Defaults. The
Lessor, without waiving or releasing any obligation or Lease Event of Default,
may (but shall be under no obligation to) remedy any Lease Event of Default for
the account and at the sole cost and expense of the Lessee, including the
failure by the Lessee to maintain the insurance required by Article XIII, and
may, to the fullest extent permitted by law, and notwithstanding any right of
quiet enjoyment in favor of the Lessee, enter upon any Property for such purpose
and take all such action thereon as may be necessary or appropriate therefor. No
such entry shall be deemed an eviction of the Lessee. All reasonable
out-of-pocket costs and expenses so incurred (including fees and expenses of
counsel), together with interest thereon at the Overdue Rate from the date on
which such sums or expenses are paid by the Lessor, shall be paid by the Lessee
to the Lessor as Supplemental Rent.
ARTICLE XVIII
PURCHASE PROVISIONS
XVIII.1. Purchase of All or Some of the Properties. Subject to the
conditions contained herein, and without limitation of the Lessee's purchase
obligation pursuant to Section 18.2, the Lessee shall have the irrevocable
option on any Business Day to purchase all or some of the Properties subject to
this Master Lease at a price equal to the Lease Balance for such Properties on
the date of such purchase relating to such Property. The Lessee's exercise of
its option pursuant to this Section 18.1 shall be subject to the following
conditions:
(i) the Lessee shall have delivered a Purchase Notice to the
Lessor not less than thirty (30) days prior to such purchase, specifying
the date of such purchase, which date shall be a Basic Rent Payment
Date;
(ii) the Lessee shall not have given notice of its intention to
exercise the Remarketing Option.
If the Lessee exercises its option pursuant to this Section 18.1 then, upon the
Lessor's receipt of all amounts due in connection therewith, including Break
Costs, if any, the Lessor shall transfer to the Lessee or its designee all of
the Lessor's right, title and interest in and to the applicable Properties in
accordance with the procedures set forth in Section 21.1(a), such transfer to be
effective as of the date specified in the Purchase
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MASTER LEASE
Notice. The Lessee may designate, in a notice given to the Lessor not less than
ten (10) Business Days prior to the closing of such purchase (time being of the
essence), the transferee or transferees to whom the conveyance shall be made (if
other than to the Lessee), in which case such conveyance shall (subject to the
terms and conditions set forth herein) be made to such designee; provided,
however, that such designation of a transferee or transferees shall not cause
the Lessee to be released, fully or partially, from any of its obligations under
this Master Lease, including, without limitation, the obligation to pay the
Lessor the Lease Balance on such Expiration Date.
XVIII.2. Expiration Date Purchase Obligation. Unless (a) the Lessee
shall have properly exercised its option pursuant to Section 18.1 and purchased
the Properties pursuant thereto, or (b) the Lessee shall have properly exercised
the Remarketing Option and shall have fulfilled all of the conditions of clauses
(a) through (l) of Section 20.1 hereof and the Lessor shall have sold its
interest in all of the Properties pursuant thereto, then, subject to the terms,
conditions and provisions set forth in this Article, and in accordance with the
terms of Section 21.1(a), the Lessee shall purchase from the Lessor, and the
Lessor shall convey to the Lessee, on the Expiration Date all of the Lessor's
interest in all of the Properties for an amount equal to the Lease Balance. The
Lessee may designate, in a notice given to the Lessor not less than ten (10)
Business Days prior to the closing of such purchase (time being of the essence),
the transferee or transferees to whom the conveyance shall be made (if other
than to the Lessee), in which case such conveyance shall (subject to the terms
and conditions set forth herein) be made to such designee; provided, however,
that such designation of a transferee or transferees shall not cause the Lessee
to be released, fully or partially, from any of its obligations under this
Master Lease, including, without limitation, the obligation to pay the Lessor
the Lease Balance on such Expiration Date.
ARTICLE XIX
RENEWAL TERMS
XIX.1. Renewal. Prior to the final Expiration Date, the parties hereto
may agree to renew this Master Lease for one or more additional terms upon terms
and conditions to be mutually agreed upon; provided, however, that nothing
herein shall be construed as a commitment by either party to renew this Master
Lease beyond the Expiration Date.
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MASTER LEASE
ARTICLE XX
REMARKETING OPTION
XX.1. Option to Remarket. Subject to the fulfillment of each of the
conditions set forth in this Section 20.1, the Lessee shall have the option (the
"Remarketing Option") to market and complete the sale of all of the Properties
for the Lessor.
The Lessee's effective exercise and consummation of the Remarketing
Option shall be subject to the due and timely fulfillment of each of the
following provisions as to each of the Properties as of the dates set forth
below.
(a) Not later than one hundred and eighty (180) days prior to the
Expiration Date, the Lessee shall give to the Lessor written notice of
the Lessee's exercise of the Remarketing Option, which exercise shall be
irrevocable. Failure by the Lessee to give timely notice shall be deemed
to be an election by the Lessee, without further act thereby, of its
Purchase Option for all of the Properties.
(b) Not later than one hundred and twenty (120) days prior to the
Expiration Date, the Lessee shall deliver to the Lessor an Environmental
Audit for each of the Properties. Such Environmental Audit shall be
prepared by an environmental consultant selected by the Lessor in the
Lessor's reasonable discretion and shall contain conclusions reasonably
satisfactory to the Lessor as to the environmental status of the
Properties. If any such Environmental Audit indicates any exceptions,
the Lessee shall have also delivered prior to the Expiration Date a
Phase Two environmental assessment by such environmental consultant and
a written statement by such environmental consultant indicating that all
such exceptions have been remedied in compliance with Applicable Law.
(c) The Lessee shall have completed all Modifications,
restoration and rebuilding of the affected Properties pursuant to
Sections 10.1 and 14.1 (as the case may be) and shall have fulfilled all
of the conditions and requirements in connection therewith pursuant to
said Sections, in each case prior to the date on which the Lessor
receives the Lessee's notice of the Lessee's intention to exercise the
Remarketing Option (time being of the essence), regardless of whether
the same shall be within the Lessee's control. The Lessee shall have
also paid the cost of all Modifications commenced prior to the
Expiration Date. The Lessee shall not have been excused pursuant to
Section 12.1 from complying with any Applicable Law that involved the
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MASTER LEASE
extension of the ultimate imposition of such Applicable Law beyond the
Expiration of the Term. Any Permitted Property Liens (other than Lessor
Liens) on any Property that were contested by the Lessee shall have been
removed.
(d) During the Marketing Period, the Lessee shall, as
nonexclusive agent for the Lessor, use its best efforts to sell the
Lessor's interest in the Properties and will attempt to obtain the
highest purchase price therefor and for not less than the Fair Market
Sales Value. The Lessee will be responsible for hiring brokers and
making the Properties available for inspection by prospective
purchasers. The Lessee shall promptly upon request permit inspection of
any Property and any maintenance records relating to any Property by the
Lessor, any Participant and any potential purchasers, and shall
otherwise do all things necessary to sell and deliver possession of the
Properties to any purchaser. All such marketing of the Properties shall
be at the Lessee's sole expense. The Lessee shall allow the Lessor and
any potential qualified purchaser reasonable access to the Properties
for the purpose of inspecting the same.
(e) The Lessee shall procure bids from one or more bona fide
prospective purchasers and shall deliver to the Lessor and the
Participants not less than ninety (90) days prior to the Expiration Date
a binding written unconditional (except as set forth below), irrevocable
offer by such purchaser or purchasers offering the highest bid to
purchase the Properties. No such purchaser shall be the Lessee or any
Subsidiary or Affiliate of the Lessee. The written offer must specify
the Expiration Date as the closing date unless the Lessor and the
Participants shall otherwise agree in their sole discretion.
(f) The Lessee shall submit all bids to the Lessor and the
Participants, and the Lessor will have the right to submit any one or
more bids. Any sale by the Lessee shall be for the highest cash bid
submitted to the Lessor. The determination of the highest bid shall be
made by the Lessor prior to the end of the Marketing Period, but in any
event, the Lessor shall have no obligation to approve any bid for any
Property unless each highest bid plus an amount that may be paid by the
Lessee in its sole and absolute discretion (in addition to its
obligations under Section 20.1(i)), together with such bid, equals or
exceeds the Property Balance. All bids shall be on an all-cash basis
unless the Lessor and the Participants shall otherwise agree in their
sole discretion.
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MASTER LEASE
(g) The Lessee shall have obtained, at its cost and expense, all
required governmental and regulatory consents and approvals and shall
have made all filings as required by Applicable Law in order to carry
out and complete the transfer of each of the Properties. As to the
Lessor, any such sale shall be made on an "as is, with all faults" basis
without representation or warranty by the Lessor other than the absence
of Lessor Liens. Any agreement as to such sale shall be made subject to
the Lessor's rights hereunder.
(h) As between the Lessor and the Lessee the Lessee shall pay
directly, and not from the sale proceeds, all prorations, credits, costs
and expenses of the sale of the Properties, whether incurred by the
Lessor or the Lessee, including without limitation, the cost of all
title insurance, surveys, environmental reports, appraisals, transfer
taxes, the Lessor's reasonable attorneys' fees, the Lessee's attorneys'
fees, commissions, escrow fees,recording fees, and all applicable
documentary and other transfer taxes.
(i) The Lessee shall pay to the Lessor on or prior to the
Expiration Date (or in the case of Supplemental Rent, to the Person
entitled thereto) an amount equal to the Loan Balance plus all accrued
and unpaid Rent (including Supplemental Rent, if any) and all other
amounts hereunder which have accrued or will accrue prior to or as of
the Expiration Date, in the type of funds specified in Section 3.4
hereof.
(j) The Lessee shall pay to the Lessor on or prior to the
Expiration Date the amounts, if any, required to be paid pursuant to
Section 13.2 of the Participation Agreement.
(k) The purchase of all of the Properties shall be consummated on
the Expiration Date and the gross proceeds (the "Gross Remarketing
Proceeds") of the sale of the Properties (less any marketing, closing or
other costs, prorations or commissions) shall be paid directly to the
Lessor; provided, however, that if the sum of (x) the Gross Remarketing
Proceeds from such sale plus (y) the Loan Balance received by the Lessor
exceeds the Lease Balance as of such date, then the excess shall be paid
to the Lessee on the Expiration Date.
If the Lessee effectively elects the Remarketing Option and no sale of
any Property is consummated prior to the end of the Marketing Period, Lessee may
exercise its purchase option
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<PAGE> 39
pursuant to Section 18.2 or Lessee shall, in addition to making the payment
required pursuant to Section 20.1(i) above, at its own cost and expense, do each
of the following:
(i) execute and deliver to Lessor and the Lessor's title
insurance company an affidavit as to the absence of any Liens (other
than Permitted Liens of the type described in clause (i), (viii) or
(x)), and shall execute and deliver to the Lessor a statement of
termination of this Master Lease to the extent relating to such
Property;
(ii) on the Expiration Date, transfer possession of such Property
to the Lessor or any Person designated by the Lessor, by surrendering
the same into the possession of the Lessor or such Person, as the case
may be, in the condition required by this Section 20.1 and in compliance
with Applicable Law; and
(iii) for a period of up to one year after the Expiration Date,
cooperate reasonably with the Lessor and/or any Person designated by the
Lessor to receive such Property, which cooperation shall include
reasonable efforts with respect to the following, all of which the
Lessee shall do on or before the Expiration Date for such Property or as
soon thereafter as is reasonably practicable: providing copies of all
books and records regarding the maintenance and ownership of such
Property and all know-how, data and technical information relating
thereto, providing a current copy of the applicable Plans and
Specifications, granting or assigning all assignable licenses necessary
for the operation and maintenance of such Property and cooperating
reasonably in seeking and obtaining all necessary Governmental Action.
The obligations of the Lessee under this paragraph shall survive the
expiration or termination of this Master Lease.
Except as expressly set forth herein, the Lessee shall have no right,
power or authority to bind the Lessor in connection with any proposed sale of
any Property.
If one or more of the foregoing provisions shall not be fulfilled as of
the date set forth above with respect to any Property, then the Lessor shall
declare by written notice to the Lessee the Remarketing Option to be null and
void (whether or not it has been theretofore exercised by the Lessee) as to all
of the Properties, in which event all of the Lessee's rights under this Section
20.1 shall immediately terminate and the Lessee shall be obligated to purchase
all of the Properties pursuant to Section 18.2 on the Expiration Date.
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MASTER LEASE
XX.2. Certain Obligations Continue. During the Marketing Period, the
obligation of the Lessee to pay Rent with respect to each Property (including
the installment of Rent due on the Expiration Date) shall continue undiminished
until payment in full of the Loan Balance and all other amounts due to the
Lessor with respect to the Properties under the Operative Documents to which the
Lessee is a party. The Lessor shall have the right, but shall be under no duty,
to solicit bids, to inquire into the efforts of the Lessee to obtain bids or
otherwise to take action in connection with any such sale, other than as
expressly provided in this Article XX.
ARTICLE XXI
PROCEDURES RELATING TO PURCHASE OR REMARKETING
XXI.1. Provisions Relating to the Exercise of Purchase Option or
Obligation and Conveyance Upon Remarketing and Conveyance Upon Certain Other
Events.
(a) In connection with any termination of this Master Lease with
respect to any Property pursuant to the terms of Article XV, in
connection with any purchase or in connection with the Lessee's purchase
of any Property in accordance with Section 18.1 or in connection with
the Lessee's Expiration Date Purchase Obligation or obligations under
Section 16.2(e), then, upon the date on which this Master Lease is to
terminate with respect to the applicable Property and upon the payment
of all amounts due under Section 5.1 of the Construction Agency
Agreement, as applicable, and upon tender by the Lessee of the amounts
set forth in Article XV, Sections 16.2(e), 18.1 or 18.2, as applicable:
(i) the Lessor shall execute and deliver to the Lessee (or
to the Lessee's designee) at the Lessee's cost and expense a
grant deed with respect to such Property or Properties containing
representations and warranties of grantor to the Lessee regarding
Lessor Liens, a bill of sale with respect to the Equipment
located on such Property or Properties and an assignment of the
Lessor's entire interest in such Property or Properties (which
shall include an assignment of all of the Lessor's right, title
and interest in and to any Net Proceeds with respect to such
Property or Properties not previously received by the Lessor and
an assignment of leases of the Properties), in each case in
recordable form and
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<PAGE> 41
otherwise in conformity with local custom and free and clear of
the Lien of the Lessor Deed of Trust and any Lessor Liens;
(ii) such Property or Properties shall be conveyed to the
Lessee "AS IS" and in its then present physical condition; and
(iii) the Lessor shall execute and deliver to Lessee and
the Lessee's title insurance company an affidavit as to the
Lessor's title and Lessor Liens and shall execute and deliver to
Lessee a statement of termination of this Master Lease.
(b) If the Lessee properly exercises the Remarketing Option, then
the Lessee shall, on the Expiration Date, and at its own cost, transfer
possession of all of the Properties to the independent purchaser(s)
thereof, in each case by surrendering the same into the possession of
the Lessor or such purchaser(s), as the case may be, free and clear of
all Liens other than Lessor Liens and the lien of the Lessor Mortgage,
in good condition (as modified by Modifications permitted by this Master
Lease), ordinary wear and tear excepted, and in compliance with
Applicable Law. The Lessee shall, on and within a reasonable time before
and up to one year after the Expiration Date, cooperate reasonably with
the Lessor and the independent purchaser(s) of the Properties in order
to facilitate the purchase by such purchaser(s) of the Properties, which
cooperation shall include the following, all of which the Lessee shall
do on or before the Expiration Date or as soon thereafter as is
reasonably practicable: providing copies of all books and records
regarding the maintenance and ownership of the Properties and all
know-how, data and technical information relating thereto, providing a
current copy of the Plans and Specifications for each Property, granting
or assigning all licenses necessary for the operation and maintenance of
each Property and cooperating reasonably in seeking and obtaining all
necessary Governmental Action. The obligations of the Lessee under this
paragraph shall survive the expiration or termination of this Master
Lease.
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<PAGE> 42
MASTER LEASE
ARTICLE XXII
ESTOPPEL CERTIFICATES
XXII.1. Estoppel Certificates. At any time and from time to time upon
not less than ten (10) Business Days' prior request by the Lessor or the Lessee
(the "Requesting Party"), the other party (whichever party shall have received
such request, the "Certifying Party") shall furnish to the Requesting Party a
certificate signed by an individual having the office of vice president or
higher in the Certifying Party certifying that this Master Lease is in full
force and effect (or that this Master Lease is in full force and effect as
modified and setting forth the modifications); the dates to which the Basic Rent
and Supplemental Rent have been paid; to the best knowledge of the signer of
such certificate, whether or not the Requesting Party is in default under any of
its obligations hereunder (and, if so, the nature of such alleged default); and
such other matters under this Master Lease as the Requesting Party may
reasonably request. Any such certificate furnished pursuant to this Article XXII
may be relied upon by the Requesting Party, and any existing or prospective
mortgagee, purchaser or lender, and any accountant or auditor, of, from or to
the Requesting Party (or any Affiliate thereof).
ARTICLE XXIII
ACCEPTANCE OF SURRENDER
XXIII.1. Acceptance of Surrender. No surrender to the Lessor of this
Master Lease or of all or any of the Properties or of any part of any thereof or
of any interest therein shall be valid or effective unless agreed to and
accepted in writing by the Lessor and, prior to the payment or performance of
all obligations under the Loan Agreement and termination of the Commitments, the
Lenders, and no act by the Lessor or the Lenders or any representative or agent
of the Lessor or the Lenders, other than a written acceptance, shall constitute
an acceptance of any such surrender.
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<PAGE> 43
MASTER LEASE
ARTICLE XXIV
NO MERGER OF TITLE
XXIV.1. No Merger of Title. There shall be no merger of this Master
Lease or of the leasehold estate created hereby by reason of the fact that the
same Person may acquire, own or hold, directly or indirectly, in whole or in
part, (a) this Master Lease or the leasehold estate created hereby or any
interest in this Master Lease or such leasehold estate, (b) the fee or
groundleasehold estate in any Property, except as may expressly be stated in a
written instrument duly executed and delivered by the appropriate Person or (c)
a beneficial interest in the Lessor.
ARTICLE XXV
INTENT OF THE PARTIES
XXV.1. Ownership of the Properties. (a) The parties hereto intend that
(i) for financial accounting purposes with respect to the Lessee, the Lessor
will be treated as the owner and the lessor of the Properties and the Lessee
will be treated as the lessee of the Properties and (ii) for all other purposes,
including federal and all state and local income tax purposes, state real estate
and commercial law and bankruptcy purposes, (A) this Lease will be treated as a
financing arrangement, (B) the Lessor and the Lenders will be deemed lenders
making loans to the Lessee in an amount equal to the sum of the Lessor Amount
and the outstanding principal amount of the Loans and (C) the Lessee will be
treated as the owner of the Properties and will be entitled to all tax benefits
ordinarily available to an owner of properties like the Properties for such tax
purposes. Nevertheless, the Lessee acknowledges and agrees that neither the
Lessor nor any of the Lenders has made any representations or warranties to the
Lessee concerning the tax, accounting or legal characteristics of the Operative
Documents and that the Lessee has obtained and relied upon such tax, accounting
and legal advice concerning the Operative Documents as it deems appropriate.
(b) It is the intent of the parties hereto that this Lease grants a
security interest and mortgage, as the case may be, on the Properties to the
Lessor to secure Lessee's performance under and payment of all amounts under
this Lease and the other Operative Documents.
-42-
<PAGE> 44
MASTER LEASE
ARTICLE XXVI
MISCELLANEOUS
XXVI.1. Survival; Severability; Etc. Anything contained in this Master
Lease to the contrary notwithstanding, all claims against and liabilities of the
Lessee or the Lessor arising from events commencing prior to the expiration or
earlier termination of this Master Lease shall survive such expiration or
earlier termination for a period of one year except as to indemnification which
shall continue to survive; provided that any such right shall be exercised
within 54 years from the date hereof. If any term or provision of this Master
Lease or any application thereof shall be declared invalid or unenforceable, the
remainder of this Master Lease and any other application of such term or
provision shall not be affected thereby. If any right or option of the Lessee
provided in this Master Lease, including any right or option described in
Article XIV, XV, XVIII or XX, would, in the absence of the limitation imposed by
this sentence, be invalid or unenforceable as being in violation of the rule
against perpetuities or any other rule of law relating to the vesting of an
interest in or the suspension of the power of alienation of property, then such
right or option shall be exercisable only during the period which shall end
twenty-one (21) years after the date of death of the last survivor of the
descendants of Franklin D. Roosevelt, the former President of the United States,
Henry Ford, the deceased automobile manufacturer, and John D. Rockefeller, the
founder of the Standard Oil Company, known to be alive on the date of the
execution, acknowledgement and delivery of this Master Lease.
XXVI.2. Amendments and Modifications. Subject to the requirements,
restrictions and conditions set forth in the Participation Agreement, neither
this Master Lease nor any provision hereof may be amended, waived, discharged or
terminated except by an instrument in writing in recordable form signed by the
Lessor and the Lessee.
XXVI.3. No Waiver. No failure by the Lessor or the Lessee to insist upon
the strict performance of any term hereof or to exercise any right, power or
remedy upon a default hereunder, and no acceptance of full or partial payment of
Rent during the continuance of any such default, shall constitute a waiver of
any such default or of any such term. To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Master Lease, and this Master
Lease shall continue in full force and effect with respect to any other then
existing or subsequent default.
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<PAGE> 45
MASTER LEASE
XXVI.4. Notices. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing and directed to the address
described in, and deemed received in accordance with the provisions of, Section
14.3 of the Participation Agreement.
XXVI.5. Successors and Assigns. All the terms and provisions of this
Master Lease shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
XXVI.6. Headings and Table of Contents. The headings and table of
contents in this Master Lease are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.
XXVI.7. Counterparts. This Master Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
XXVI.8. GOVERNING LAW. THIS MASTER LEASE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
XXVI.9. Limitations on Recourse. The parties hereto agree that except as
specifically set forth in this Lease or in any other Operative Document, Lessor
shall have no personal liability whatsoever to the Lessee or its respective
successors and assigns for any claim based on or in respect of this Master Lease
or any of the other Operative Documents or arising in any way from the
transactions contemplated hereby or thereby and the recourse shall be solely had
against the Lessor's interest in the Property; provided, however, that Lessor
shall be liable in its individual capacity (a) for its own willful misconduct or
gross negligence (or negligence in the handling of funds), (b) breach of any of
its representations, warranties or covenants under the Operative Documents, or
(c) for any Tax based on or measured by any fees, commission or compensation
received by it for acting as the Lessor as contemplated by the Operative
Documents. It is understood and agreed that, except as provided in the preceding
sentence: (i) Lessor shall have no personal liability under any of the Operative
Documents as a result of acting pursuant to and consistent with any of the
Operative Documents; (ii) all obligations of Lessor to the Lessee are solely
nonrecourse obligations except to the extent that it has received payment from
others; and (iii) all such personal liability of Lessor is expressly waived and
released as a condition of, and as
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<PAGE> 46
MASTER LEASE
consideration for, the execution and delivery of the Operative Documents by
Lessor.
XXVI.10. Original Lease. The single executed original of this Master
Lease marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the
signature page thereof and containing the receipt thereof of The Sumitomo Bank,
Limited, San Francisco Branch, as Agent for the Lenders therefor on or following
the signature page thereof shall be the Original Executed Counterpart of this
Master Lease (the "Original Executed Counterpart"). To the extent that this
Master Lease constitutes chattel paper, as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction, no security
interest in this Master Lease may be created through the transfer or possession
of any counterpart other than the Original Executed Counterpart.
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<PAGE> 47
MASTER LEASE
IN WITNESS WHEREOF, the parties have caused this Master Lease be duly
executed and delivered as of the date first above written.
SYMANTEC CORPORATION,
as Lessee
By _____________________________________
Name:
Title:
S-1
<PAGE> 48
MASTER LEASE
SUMITOMO BANK LEASING AND
FINANCE, INC., as Lessor
By _____________________________________
Name:
Title:
S-2
<PAGE> 49
MASTER LEASE
THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART.
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of the date hereof.
THE SUMITOMO BANK, LIMITED,
SAN FRANCISCO, as Agent
for the Lenders
By_________________________________
Name:
Title:
S-3
<PAGE> 50
MASTER LEASE
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE I
DEFINITIONS
1.1. Definitions; Interpretation...................................... 1
ARTICLE II
MASTER LEASE
2.1. Acceptance and Lease of Property................................. 2
2.2. Acceptance Procedure............................................. 2
2.3. Lease Term....................................................... 2
2.4. Title............................................................ 2
ARTICLE III
PAYMENT OF RENT
3.1. Rent............................................................. 3
3.2. Payment of Rent.................................................. 3
3.3. Supplemental Rent................................................ 3
3.4. Method of Payment................................................ 4
ARTICLE IV
QUIET ENJOYMENT; RIGHT TO INSPECT
4.1. Quiet Enjoyment.................................................. 4
4.2. Right to Inspect................................................. 4
ARTICLE V
NET LEASE, ETC.
5.1. Net Lease........................................................ 5
5.2. No Termination or Abatement...................................... 6
ARTICLE VI
SUBLEASES
6.1. Subletting....................................................... 6
ARTICLE VII
LESSEE ACKNOWLEDGMENTS
7.1. Condition of the Properties...................................... 7
7.2. Risk of Loss..................................................... 7
</TABLE>
i
<PAGE> 51
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE VIII
POSSESSION AND USE OF THE PROPERTIES, ETC.
8.1. Utility Charges.................................................. 7
8.2. Possession and Use of the Property............................... 8
8.3. Compliance with Requirements of Law, Property Legal
Requirements and Insurance Requirements....................... 8
8.4. Assignment by Lessee............................................. 8
ARTICLE IX
MAINTENANCE AND REPAIR; RETURN
9.1. Maintenance and Repair; Return................................... 8
ARTICLE X
MODIFICATIONS, ETC.
10.1. Modifications, Substitutions and Replacements.................... 9
10.2. Notice to the Lessor............................................. 11
ARTICLE XI
WARRANT OF TITLE; EASEMENTS
11.1. Warrant of Title................................................. 11
11.2. Grants and Releases of Easements; Lessor's Waivers............... 11
ARTICLE XII
PERMITTED CONTESTS
12.1. Permitted Contests in Respect of Applicable Law.................. 13
ARTICLE XIII
INSURANCE
13.1. Public Liability and Workers' Compensation Insurance............. 13
13.2. Hazard and Other Insurance....................................... 14
13.3. Insurance Coverage............................................... 14
ARTICLE XIV
CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS
14.1. Casualty and Condemnation........................................ 16
14.2. Environmental Matters............................................ 18
14.3. Notice of Environmental Matters.................................. 18
</TABLE>
ii
<PAGE> 52
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE XV
TERMINATION OF LEASE
15.1. Partial Termination upon Certain Events.......................... 19
15.2. Termination Procedures........................................... 19
ARTICLE XVI
EVENTS OF DEFAULT
16.1. Lease Events of Default.......................................... 20
16.2. Remedies......................................................... 23
16.3. Waiver of Certain Rights......................................... 30
17.1. The Lessor's Right to Cure the Lessee's Lease Defaults........... 30
ARTICLE XVIII
PURCHASE PROVISIONS
18.1. Purchase of All or Some of the Properties........................ 31
18.2. Expiration Date Purchase Obligation.............................. 31
ARTICLE XIX
RENEWAL TERMS
19.1. Renewal.......................................................... 32
ARTICLE XX
REMARKETING OPTION
20.1. Option to Remarket............................................... 32
20.2. Certain Obligations Continue..................................... 36
ARTICLE XXI
PROCEDURES RELATING TO PURCHASE OR REMARKETING
21.1. Provisions Relating to the Exercise of Purchase Option
or Obligation and Conveyance Upon Remarketing
and Conveyance Upon Certain Other Events...................... 37
ARTICLE XXII
ESTOPPEL CERTIFICATES
22.1. Estoppel Certificates.............................................. 38
ARTICLE XXIII
ACCEPTANCE OF SURRENDER
</TABLE>
iii
<PAGE> 53
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
23.1. Acceptance of Surrender........................................... 39
ARTICLE XXIV
NO MERGER OF TITLE
24.1. No Merger of Title................................................ 39
ARTICLE XXV
INTENT OF THE PARTIES
25.1. Ownership of the Properties....................................... 39
ARTICLE XXVI
MISCELLANEOUS
26.1. Survival; Severability; Etc....................................... 40
26.2. Amendments and Modifications...................................... 41
26.3. No Waiver......................................................... 41
26.4. Notices........................................................... 41
26.5. Successors and Assigns............................................ 41
26.6. Headings and Table of Contents.................................... 41
26.7. Counterparts...................................................... 41
26.8. GOVERNING LAW..................................................... 41
26.9. Limitations on Recourse........................................... 42
26.10. Original Lease.................................................... 42
</TABLE>
EXHIBIT A Form of Lease Supplement
iv
<PAGE> 54
EXECUTION COPY
This instrument prepared by,
recording requested by,
and when recorded return to:
MAYER, BROWN & PLATT
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
LEASE SUPPLEMENT NO. 1 AND
MEMORANDUM OF LEASE AND DEED OF TRUST
dated as of October 18, 1996
among
SYMANTEC CORPORATION,
as the Lessee,
SUMITOMO BANK LEASING AND FINANCE, INC.,
as the Lessor,
and
FIRST AMERICAN TITLE INSURANCE COMPANY,
as Trustee
Location of Premises:
County of Santa Clara
State of California
<PAGE> 55
THIS LEASE SUPPLEMENT NO. 1 AND MEMORANDUM OF LEASE AND DEED OF TRUST
(this "Memorandum") dated as of October 18, 1996, among SYMANTEC CORPORATION, a
Delaware corporation, having a principal office at 10101 Torre Avenue,
Cupertino, California 95014, as the Lessee and as Mortgagor (the "Lessee"),
SUMITOMO BANK LEASING AND FINANCE, INC., as the Lessor (the "Lessor"), having an
address at 277 Park Avenue, New York, New York 10172, and FIRST AMERICAN TITLE
INSURANCE COMPANY (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Lessor is the owner in fee simple of the land described on
Exhibit A-1 attached hereto and all Improvements thereon described in Exhibit
A-2 attached hereto (together, the "Property");
WHEREAS, the Lessor wishes to lease the Property to the Lessee and the
Lessee wishes to lease the Property from the Lessor;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to enter
into this Memorandum, as follows:
I. Certain Terms. Capitalized terms used but not otherwise defined in
this Memorandum have the meanings specified in Appendix A to the Master Lease
and Security Agreement dated as of October 18, 1996 (as amended, restated,
supplemented or otherwise modified from time to time, the "Lease"), between the
Lessee and the Lessor; and the rules of interpretation specified in Appendix A
to the Lease shall apply to this Memorandum.
2. Property. Attached hereto as Exhibit A is the description of the
Property. Effective upon the execution and delivery of this Memorandum by the
Lessor and the Lessee, the Property shall be subject to the terms and provisions
of the Lease. Subject to the terms and conditions of the Lease, the Lessor
hereby leases the Property to the Lessee for the Term (as defined below) of this
Memorandum, and the Lessee hereby agrees, expressly for the direct benefit of
the Lessor, to lease the Property from the Lessor for the Term. For the purposes
of this Lease Supplement No. 1, the lease of the Exhibit A-1 Land and Exhibit
A-2 Improvements shall be considered separate Leases but one Property for the
purposes of the Master Lease.
3. Lease Term. The term of this Memorandum (the "Term") shall begin on
the date hereof and shall end on October 18, 2003 unless the Term with respect
to the Property is renewed or earlier terminated in accordance with the
provisions of the Lease or the other Operative Documents. For and in
consideration of
<PAGE> 56
good and valuable consideration paid by the Lessee to the Lessor as
described in the Lease, the Lessor hereby grants to the Lessee the right to
purchase the Property or to market and sell the Property during the Term of this
Memorandum on the terms set forth in the Lease.
4. Ownership of the Property. (a) The parties hereto intend that (i)
for financial accounting purposes with respect to the Lessee, the Lessor will be
treated as the owner and the lessor of the Properties and the Lessee will be
treated as the lessee of the Properties and (ii) for all other purposes,
including federal and all state and local income tax purposes, state real estate
and commercial law and bankruptcy purposes, (A) the Lease will be treated as a
financing arrangement, (B) the Lessor and the Lenders will be deemed lenders
making loans to the Lessee in an amount equal to the sum of the Lessor Amount
and the outstanding principal amount of the Loans, which loans are secured by
the Properties and (C) the Lessee will be treated as the owner of the Properties
and will be entitled to all tax benefits ordinarily available to an owner of
properties like the Properties for such tax purposes. Nevertheless, the Lessee
acknowledges and agrees that neither the Lessor nor any of the Lenders has made
any representations or warranties to the Lessee concerning the tax, accounting
or legal characteristics of the Operative Documents and that the Lessee has
obtained and relied upon such tax, accounting and legal advice concerning the
Operative Documents as it deems appropriate.
(b) It is the intent of the parties hereto that the Lease grants a
security interest and deed of trust or lien, as the case may be, on the Property
for the benefit of the Lessor to secure the Lessee's performance under and
payment of all amounts advanced by the Lessor for the acquisition of the
Property (corresponding to the value of the Property as indicated on the
Appraisal) under the Lease and the other Operative Documents, together with
interest thereon, and all other amounts payable under the Operative Documents in
connection therewith.
(c) Specifically, without limiting the generality of subsection (b),
the Lessor and the Lessee intend and agree that with respect to the nature of
the transactions evidenced by the Lease in the context of the exercise of
remedies under the Operative Documents, including, without limitation, in the
case of any insolvency or receivership proceedings or a petition under the
United States bankruptcy laws or any other applicable insolvency laws or statute
of the United States of America or any State or Commonwealth thereof affecting
the Lessee and the Lessor, or any enforcement or collection actions, the
transactions evidenced by the Lease are loans made by the Lessor as unrelated
third party lender to the Lessee secured by the Property (it being understood
that the Lessee hereby mortgages,
-2-
<PAGE> 57
grants, bargains, sells, releases, confirms, conveys, assigns, transfers and
sets over to the Trustee for the benefit of the Lessor, and grants a security
interest in, the Property (consisting of a fee deed of trust with respect to all
right, title and interest of the Lessee in and to the fee title to, and
reversionary interest in, the Land and Improvements, if any, and a leasehold
deed of trust on the Lessee's leasehold estate under the Lease), all to secure
such loans, effective on the date hereof, to have and to hold such interests in
the Property unto the Trustee for the benefit of the Lessor and its successors
and assigns, forever, provided always that these presents are upon the express
condition that, if all amounts due under the Lease shall have been paid and
satisfied in full, then this instrument and the estate hereby granted shall
cease and become void.
As additional security for the Rent, the Lease Balance and all other
sums owed to the Lessor by the Lessee under the Lease, the Lessee does hereby
grant, bargain, sell, transfer and convey unto the Trustee, its successors in
trust and assigns, IN TRUST, WITH POWER OF SALE, for the benefit of the Lessor,
all of the Lessee's right, title and interest in and to the Property, including,
without limitation, all buildings, structures and other improvements, and all
fixtures and other property now or hereafter attached to or affixed to any such
buildings, structures or other improvements, and any additions and alterations
thereto or replacements thereof, now or hereafter built, constructed or located
upon the Property, all rents, additional rents, issues, income, revenues,
distributions, royalties and profits now or in the future payable in respect of
the Property, together with all of the right, power and authority of the Lessee
to alter, modify or change the terms, conditions and provisions of the Lease and
any other lease pertaining to the Property, to consent to any request made by a
tenant or landlord pursuant thereto, or to surrender, cancel or terminate the
same or to accept any surrender, cancellation or termination of the same,
together with all of the options, rights, powers and privileges of the Lessee
under any lease pertaining to the Property, whether heretofore or hereafter
existing, including, without limitation, the rights and options to purchase the
Property contained in Articles XVIII and XX of the Lease, and all present and
future right, title and interest of the Lessee in and to (i) all refunds, tax
abatement agreements, rebates, reserves, deferred payments, deposits, cost
savings, awards and payments of any kind due from or payable by (a) any
Governmental Authority, or (b) any insurance or utility company, in each case
under clause (a) or (b) above in respect of the Property, and (ii) all refunds,
rebates and payments of any kind due from or payable by any Governmental
Authority for any taxes, assessments, or governmental or quasi-governmental
charges or levies imposed upon the Lessee in respect of the Property, and all
plans and specifications, designs, drawings and other information,
-3-
<PAGE> 58
materials and matters heretofore or hereafter prepared relating to the Property
or any construction on the Property, all proceeds (including claims and demands
therefor) of the conversion, voluntary or involuntary, of any of the foregoing
into cash or liquidated claims, including without limitation the proceeds of
insurance and condemnation awards in respect of the Property or any portion
thereof, all additional estates, rights and interests hereafter acquired by the
Lessee in the Property, or any portion thereof, together with all proceeds of
the conversion, whether voluntary or involuntary, of any of the Property into
cash or other liquid claims, including without limitation, all awards, payments
or proceeds, including interest thereon, and the right to receive the same,
which may be made as a result of any casualty, any exercise of the right of
eminent domain or deed in lieu thereof, any injury to the Property and any
defect in title in the Property or other matter insured under any policy of
title insurance, together with attorney's fees, costs and disbursements incurred
by the Lessor in connection with the collection of such awards, payments and
proceeds, and the Lessee further grants to the Lessor, pursuant to the
California Uniform Commercial Code (the "UCC"), a security interest in all
present and future right, title and interest of the Lessee in and to any portion
of the foregoing property for which a security interest may be created under the
UCC.
To have and to hold the same whether now owned or held or hereafter
acquired unto the Trustee, its successors-in-trust forever, IN TRUST, WITH POWER
OF SALE, to secure to the Lessor the payment of the Rent, the Lease Balance and
all other sums owing to the Lessor under the Lease and the performance and
observance of the terms, covenants, warranties, conditions, agreements and
obligations under the Lease. If the Lessee shall pay all sums due under the
Lease when due according to the terms thereof and shall otherwise fully and
properly perform and comply with all of the obligations, agreements, terms and
conditions of the Lease, then this conveyance shall become null and void.
In the event of the occurrence of an Event of Default, then the entire
unpaid balance of all sums due under the Lease and the interest accrued thereon
shall, at the option of the owner thereof and without notice, immediately become
due and payable for all purposes, whether or not due according to the maturity
date or dates thereof; and all other indebtedness, the payment of which is
secured hereby, shall likewise become due and payable. The Trustee and the
Lessor and each of them are authorized prior or subsequent to the institution of
any foreclosure proceedings to enter upon the Property or any part thereof and
to take possession of the Property and exercise without interference from the
Lessee, any and all rights which the Lessee has with respect to the management,
possession, operation, protection or preservation of the Property.
-4-
<PAGE> 59
Upon the occurrence of an Event of Default, Lessor shall have the power
and authority, after proper notice and lapse of such time as may be required by
law, to cause Trustee to sell the Property by notifying Trustee of that election
and depositing with Trustee this instrument and receipts and evidence of
expenditures made and secured hereby as Trustee may reasonably require. Upon
receipt of any such notice from Lessor, Trustee shall cause to be recorded,
published and delivered to Lessee such Notice of Default and Election to Sell as
is then required by applicable statutory authority and by this instrument, which
notice shall set forth, among other things, the nature of the breach(es) or
default(s), the action(s) required to effect a cure thereof and the time period
within which that cure may be effected. If no cure is effected within the
statutory time limits following recordation of the Notice of Default and
Election to Sell and after Notice of Sale has been given as required by the
above-referenced statutes, Trustee may without further notice or demand sell and
convey the Property in accordance with the above-referenced statutes. The
Property may be sold as a whole or in separate lots, parcels or items and in
such order as Lessor may direct, at public auction to the highest bidder for
cash in lawful money of the United States payable at the time of sale. Trustee
shall deliver to such purchaser(s) a good and sufficient deed or deeds conveying
the property so sold, but without any covenant or warranty express or implied.
The recitals in such deed of any matter or fact shall be conclusive proof of the
truthfulness thereof. Any Person, including Lessee, Trustee or Lessor, may
purchase at any sale. After deducting all costs, fees and expenses of Lessor and
Trustee, including costs of evidence of title in connection with any sale,
Lessor shall apply the proceeds of sale, in the following order of priority, to
payment of the following (collectively, the "Obligations"): (i) first, all
amounts expended by or for the account of Lessor under the terms hereof and not
then repaid, with accrued interest at the Overdue Rate; and (ii) second, all
other amounts then due and owing hereunder including, without limitation, all
Basic Rent, Supplemental Rent, the full amount of the Lease Balance as of the
date of sale as if the Lease had been terminated with respect to all of the
Properties then subject to the Lease under Section 18.1, and all other amounts
then payable by Lessee under the Lease and the other Operative Documents, with
Lessor having the right to apply the proceeds of sale to the amounts described
above in this clause (ii) in such order, proportion and priority as Lessor may
elect in its sole and absolute discretion. To the extent permitted by applicable
statutes, Trustee may postpone the sale of all or any portion of the Property by
public announcement at the time and place of sale, and from time to time
thereafter may again postpone that sale by public announcement or subsequently
noticed sale, and without further notice may make such sale at the time fixed at
the last postponement or may, in
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<PAGE> 60
its discretion, give a new notice of sale. A sale of less than all of the
Property or any defective or irregular sale made hereunder shall not exhaust the
power of sale provided for herein, and subsequent sales may be made hereunder
until all of the Obligations have been satisfied or the entire Property has been
sold, without defect or irregularity. No action of Lessor or Trustee based upon
the provisions contained herein or contained in the applicable statutes,
including, without limitation, the giving of the Notice of Default and Election
to Sell or the Notice of Sale, shall constitute an election of remedies which
would preclude Lessor from pursuing judicial foreclosure before a completed sale
pursuant to the power of sale contained herein. Lessor shall have the right,
with the irrevocable consent of Lessee hereby given and evidenced by the
execution of this instrument, to obtain appointment of a receiver by any court
of competent jurisdiction without further notice to Lessee, which receiver shall
be authorized and empowered to enter upon and take possession of the Property,
including all personal property used upon or in connection with the real
property herein conveyed, to let the Property, to receive all the rents, issues
and profits, if any, which may be due or become due in respect to the leasing of
the Property to another party ("Property Rents"), and apply the Property Rents
after payment of all necessary charges and expenses to reduction of the
Obligations in such order, proportion and priority as Lessor may elect. At the
option of Lessor, the receiver shall accomplish entry and taking possession of
the Property by actual entry and possession or by notice to Lessee. The receiver
so appointed by a court of competent jurisdiction shall be empowered to issue
receiver's certificates for funds advanced by Lessor for the purpose of
protecting the value of the Property as security for the Obligations. The
amounts evidenced by receiver's certificates shall bear interest at the Overdue
Rate and may be added to the Obligations if the Lessee or a junior lienholder
purchases the Property at the trustee's sale. Trustee or any successor acting
hereunder may resign and thereupon be discharged of the trusts hereunder upon
thirty (30) days' prior written notice to Lessor. Regardless of whether Trustee
resigns, Lessor may, from time to time, substitute a successor or successors to
any Trustee named herein or acting hereunder in accordance with any statutory
procedure for such substitution; or if Lessor, in its sole and absolute
discretion, so elects, and if permitted by law, Lessor may substitute such
successors or successors by recording, in the office of the recorder of the
county or counties where the Property is located, a document executed by Lessor
and containing the name of the original Lessee and Lessor hereunder, the book
and page where this instrument (or a memorandum hereof) is recorded (and/or
instrument number, as applicable) and the name of the new Trustee, which
instrument shall be conclusive proof of proper substitution of such successor
Trustee or Trustees, who shall, without conveyance from the predecessor Trustee,
succeed
-6-
<PAGE> 61
to the rights, powers and duties hereunder. It is acknowledged that A
POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT; A POWER OF SALE MAY ALLOW
LESSOR TO TAKE THE PROPERTY AND SELL THEM WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON DEFAULT BY LESSEE UNDER THIS INSTRUMENT.
If (a) the Property shall consist of one or more parcels, whether or
not contiguous and whether or not located in the same county, or (b) in addition
to this Memorandum, the Lessor shall now or hereafter hold one or more
additional mortgages, liens, deeds of trust or other security (directly or
indirectly) for the Obligations upon other property in the State in which the
Property is located (whether or not such property is owned by Lessor or by
others) or (c) both the circumstances described in clauses (a) and (b) shall be
true, then to the fullest extent permitted by law, the Lessor may, in its sole
discretion, commence or consolidate in a single foreclosure action all
foreclosure proceedings against all such collateral securing the Obligations
(including the Property), which action may be brought or consolidated in the
courts of any county in which any of such collateral is located. The Lessee
acknowledges that the right to maintain a consolidated foreclosure action is a
specific inducement to the Lessor to extend the Advances, and the Lessor
expressly and irrevocably waives any objections to the commencement or
consolidation of the foreclosure proceedings in a single action and any
objections to the laying of venue or based on the grounds of forum non
conveniens which it may now or hereafter have. The Lessee further agrees that if
the Lessor shall be prosecuting one or more foreclosure or other proceedings
against a portion of the Property or against any collateral other than the
Property, which collateral directly or indirectly secures the Obligations, or if
the Lessor shall have obtained a judgment of foreclosure and sale or similar
judgment against such collateral, then, whether or not such proceedings are
being maintained or judgments were obtained in or outside the State in which the
Property is located, the Lessor may commence or continue foreclosure proceedings
and exercise its other remedies granted in this Memorandum against all or any
part of the Property and the Lessor waives any objections to the commencement or
continuation of a foreclosure of this Memorandum or exercise of any other
remedies hereunder based on such other proceedings or judgments, and waives any
right to seek to dismiss, stay, remove, transfer or consolidate either any
action under this Memorandum or such other proceedings on such basis. Neither
the commencement nor continuation of proceedings to foreclose this Memorandum
nor the exercise of any other rights hereunder nor the recovery of any judgment
by the Lessor in any such proceedings shall prejudice, limit or preclude the
Lessor's right to commence or continue one or more foreclosure or other
proceedings or obtain a judgment against any other collateral (either in or
outside the State in which the Property is located) which
-7-
<PAGE> 62
directly or indirectly secures the Obligations, and the Lessor expressly waives
any objections to the commencement of, continuation of, or entry of a judgment
in such other proceedings or exercise of any remedies in such proceedings based
upon any action or judgment connected to this Memorandum, and the Lessor also
waives any right to seek to dismiss, stay, remove, transfer or consolidate
either such other proceedings or any action under this Memorandum on such basis.
If the Lessor so elects, the Trustee may sell any personal property
covered by this instrument at one or more separate sales in any manner permitted
by the UCC. One or more exercises of the powers herein granted shall not
extinguish nor exhaust such powers until the entire Property is sold or until
the entire amounts evidenced and/or secured by the Lease and the Operative
Documents is paid in full.
(d) Specifically, but without limiting the generality of subsection
(b), the Lessor and the Lessee further intend and agree that, with respect to
that portion of the Property constituting personal property, for the purpose of
securing the Lessee's obligations for the repayment of the above-described
obligations from the Lessor to the Lessee, (i) the Lease shall also be deemed to
be a security agreement and financing statement within the meaning of Article 9
of the UCC; (ii) the conveyance provided for hereby shall be deemed to be a
grant by the Lessee to the Lessor of a lien and security interest in all of the
Lessee's present and future right, title and interest in and to such portion of
the Property, including but not limited to the Lessee's leasehold estate therein
and all proceeds of the conversion, voluntary or involuntary, of the foregoing
into cash, investments, securities or other property, whether in the form of
cash, investments, securities or other property to secure such obligations,
effective on the date hereof, to have and to hold such interests in the Property
unto the Lessor and its successors and assigns, forever, provided always that
these presents are upon the express condition that, if all amounts due under the
Lease shall have been paid and satisfied in full, then this instrument and the
estate hereby granted shall cease and become void; (iii) the possession by the
Lessor of notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to Section 9-305 of the UCC; and (iv) notifications to Persons holding such
property, and acknowledgements, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed
to have been given for the purpose of perfecting such security interest under
Applicable Law. The Lessor and the Lessee shall, to the extent consistent with
this Memorandum, take such actions and execute, deliver, file and record such
other
-8-
<PAGE> 63
documents, financing statements, mortgages and deeds of trust as may be
necessary to ensure that, if the Lease were deemed to create a security interest
in the Property in accordance with this Section, such security interest would be
deemed to be a perfected security interest with priority over all Liens other
than Permitted Liens, under Applicable Law and will be maintained as such
throughout the Term.
SECTION 5. Ratification. The terms and provisions of the Lease are
hereby ratified and confirmed and remain in full force and effect. In the event
of any conflict between the terms of the Lease and the terms of this Memorandum,
the terms of the Lease shall control.
SECTION 6. Supplemental Lease Term.
(a) The Lenders' Percentage for the Lease Supplement is
84.8469%.
(b) The Lessor Margin for this Lease Supplement is 0.695%
(c) The Loan Margin for the Lease Supplement is 0.20%.
SECTION 7. Counterpart Execution. This Memorandum may be executed in
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.
SECTION 8. Future Advances; Revolving Credit. In the event a court of
competent jurisdiction rules that this instrument constitutes a mortgage, deed
of trust or other secured financing as is the intent of the parties pursuant to
Section 4 hereof, then this instrument will be deemed given to secure not only
existing financing, but also future advances made pursuant to or as provided in
the Lease, whether such advances are obligatory or to be made at the option of
the Lessor, or otherwise, to the same extent as if such future advances were
made on the date of execution of this instrument, although there may be no
advance made at the time of execution hereof, and although there may be no
financing outstanding at the time any advance is made. To the fullest extent
permitted by law, the lien of this instrument shall be valid as to all such
amounts, including all future advances, from the time this instrument is
recorded. Notwithstanding anything in this instrument to the contrary, although
the amount of the financing secured by this instrument may increase or decrease
from time to time, the maximum principal amount of the financing secured by this
instrument at any one time shall not exceed Fifty Three Million Dollars
($53,000,000), which amount shall be payable as set forth in the Lease, and in
any event the final payment shall be payable no later than
-9-
<PAGE> 64
October 18, 2003, plus all costs of enforcement and collection of this
instrument, the Lease and the other Operative Documents, plus the total amount
of any advances made pursuant thereto to protect the collateral and the security
interest and lien created hereby, together with interest on all of the foregoing
as provided in the Operative Documents.
SECTION 9. GOVERNING LAW. THE LEASE AND THIS MEMORANDUM SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
-10-
<PAGE> 65
IN WITNESS WHEREOF, each of the parties hereto has caused this
Memorandum of Lease and Deed of Trust to be duly executed by an officer
thereunto duly authorized as of the date and year first above written.
SYMANTEC CORPORATION,
as the Lessee
By:__________________________
Name:
Title:
SUMITOMO BANK LEASING AND
FINANCE, INC., as the
Lessor
By:_______________________
Name:
Title:
<PAGE> 66
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane Doe,
Notary Public
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
-----------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S) ______________________________
______________________________
[ ] CORPORATE OFFICER(S) ______________________________
------------------------------
TITLE
------------------------------
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER _______________________
_______________________
_______________________
- --------------------------------------------------------------------------------
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT COULD
PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
MUST BE ATTACHED Number of Pages _____ Date of Document________________
TO THE DOCUMENT Signer(s) Other Than Named Above _____________________
<PAGE> 67
DESCRIBED AT RIGHT:
<PAGE> 68
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane
Doe, Notary Public
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
-----------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S) ______________________________
______________________________
[ ] CORPORATE OFFICER(S) ______________________________
------------------------------
TITLE
------------------------------
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER _______________________
_______________________
_______________________
- --------------------------------------------------------------------------------
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT COULD
PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
MUST BE ATTACHED Number of Pages _____ Date of Document________________
TO THE DOCUMENT Signer(s) Other Than Named Above _____________________
<PAGE> 69
DESCRIBED AT RIGHT:
<PAGE> 70
EXHIBIT A-1
TO MEMORANDUM OF LEASE
LEGAL DESCRIPTION OF LAND
<PAGE> 71
EXECUTION COPY
This instrument prepared by,
recording requested by,
and when recorded return to:
MAYER, BROWN & PLATT
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
AMENDMENT NO. 1
dated as of March 3, 1997,
AMENDING
LEASE SUPPLEMENT NO. 1 AND
MEMORANDUM OF LEASE AND DEED OF TRUST
dated as of October 18, 1996
among
SYMANTEC CORPORATION,
as the Lessee,
SUMITOMO BANK LEASING AND FINANCE, INC.,
as the Lessor,
and
FIRST AMERICAN TITLE INSURANCE COMPANY,
as Trustee.
Location of Premises:
County of Santa Clara
State of California
- --------------------------------------------------------------------------------
This Amendment No. 1 is an amendment to
that certain Lease Supplement No. 1
and Memorandum of Lease and Deed of Trust
recorded on October 21, 1996 in the Official Records
of Santa Clara County, California (the "Official Records")
as Instrument No. 13489802,
with respect to the land described on Exhibit A
to this Amendment No. 1,
which Lease Supplement No. 1 is a supplement to
that certain Lease (as hereinafter defined),
as supplemented by that certain Lease Supplement No. 2
and Memorandum of Lease and Deed of Trust
recorded on October 23, 1996 in the Official Records, as
Instrument No. 1349244, and
that certain Lease Supplement No. 3
and Memorandum of Lease and Deed of Trust
recorded on February 5, 1997 in the Official Records, as
Instrument No. 13602289.
<PAGE> 72
THIS AMENDMENT NO. 1 TO LEASE SUPPLEMENT NO. 1 AND MEMORANDUM OF LEASE
AND DEED OF TRUST, dated as of March 3, 1997 (this "Amendment"), amending that
certain Lease Supplement No. 1 and Memorandum of Lease and Deed of Trust (the
"Memorandum") dated as of October 18, 1996 and recorded on October 21, 1996 in
the Official Records of Santa Clara County, California as Instrument No.
13489802, is among SYMANTEC CORPORATION, a Delaware corporation, having a
principal office at 10101 Torre Avenue, Cupertino, California 95014, as the
Lessee and as Mortgagor (the "Lessee"), SUMITOMO BANK LEASING AND FINANCE, INC.,
as the Lessor (the "Lessor"), having an address at 277 Park Avenue, New York,
New York 10172, and FIRST AMERICAN TITLE INSURANCE COMPANY (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Lessee, the Lessor and the Trustee have heretofore entered
into the Memorandum; and
WHEREAS, the Lessee, the Lessor and the Trustee now desire to amend the
Memorandum in certain respects to reflect the fact that the principal amount of
the obligations secured by the Memorandum has increased from Fifty Three Million
Dollars ($53,000,000) to Eighty One Million Five Hundred Thousand Dollars
($81,500,000), as hereinafter provided;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION I. Certain Terms. Capitalized terms used but not otherwise
defined in this Amendment have the meanings specified in Appendix A to the
Master Lease and Security Agreement dated as of October 18, 1996 (as amended by
that certain Master Amendment Agreement dated as of the date hereof, and
amended, restated, supplemented or otherwise modified from time to time, the
"Lease"), between the Lessee and the Lessor; and the rules of interpretation
specified in Appendix A to the Lease shall apply to this Amendment.
SECTION 2. Amendment to Section 8 of Memorandum. Section 8 of the
Memorandum is hereby amended by deleting the words "Fifty Three Million Dollars
($53,000,000)" appearing in the twentieth line of such Section, and replacing
such words with the words "Eighty One Million Five Hundred Thousand Dollars
($81,500,000)".
SECTION 3. Ratification of and References to Memorandum. This Amendment
shall be deemed to be an amendment to the Memorandum, and the Memorandum, as
amended hereby, is hereby
<PAGE> 73
ratified, approved and confirmed in every respect. All references to the
Memorandum in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Memorandum as amended hereby.
SECTION 4. Ratification of Lease. The terms and provisions of the Lease
are hereby ratified and confirmed and remain in full force and effect. In the
event of any conflict between the terms of the Lease and the terms of this
Amendment, the terms of the Lease shall control.
SECTION 7. Counterpart Execution. This Amendment may be
executed in any number of counterparts and by each of the parties
hereto in separate counterparts, all such counterparts together
constituting but one and the same instrument.
SECTION 9. GOVERNING LAW. THIS AMENDMENT, THE LEASE AND THE MEMORANDUM
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES
THEREOF.
-2-
<PAGE> 74
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
SYMANTEC CORPORATION, as the
Lessee
By:__________________________
Name:
Title:
SUMITOMO BANK LEASING AND
FINANCE, INC., as the Lessor
By:_______________________
Name:
Title:
-3-
<PAGE> 75
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane Doe,
Notary Public
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
-----------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S) ______________________________
______________________________
[ ] CORPORATE OFFICER(S) ______________________________
------------------------------
TITLE
------------------------------
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER _______________________
______________________________
______________________________
- --------------------------------------------------------------------------------
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT COULD
PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
MUST BE ATTACHED Number of Pages _____ Date of Document________________
TO THE DOCUMENT Signer(s) Other Than Named Above _____________________
DESCRIBED AT RIGHT:
<PAGE> 76
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane Doe,
Notary Public
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
-----------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S) ______________________________
______________________________
[ ] CORPORATE OFFICER(S) ______________________________
------------------------------
TITLE
------------------------------
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER _______________________
______________________________
______________________________
- --------------------------------------------------------------------------------
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT COULD
PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
MUST BE ATTACHED Number of Pages _____ Date of Document________________
TO THE DOCUMENT Signer(s) Other Than Named Above _____________________
DESCRIBED AT RIGHT:
<PAGE> 77
EXHIBIT A TO
AMENDMENT NO. 1 TO LEASE SUPPLEMENT NO. 1
AND MEMORANDUM OF LEASE AND DEED OF TRUST
LEGAL DESCRIPTION OF LAND
<PAGE> 78
EXECUTION COPY
This instrument prepared by,
recording requested by,
and when recorded return to:
MAYER, BROWN & PLATT
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
LEASE SUPPLEMENT NO. 2 AND
MEMORANDUM OF LEASE AND DEED OF TRUST
dated as of October 22, 1996
among
SYMANTEC CORPORATION,
as the Lessee,
SUMITOMO BANK LEASING AND FINANCE, INC.,
as the Lessor,
and
FIRST AMERICAN TITLE INSURANCE COMPANY,
as Trustee
Location of Premises:
County of Santa Clara
State of California
This Lease Supplement is a supplement to
that certain Lease (as hereinafter defined)
recorded on October 21, 1996, in the Official Records
of Santa Clara County, California,
as Instrument No. ______________
<PAGE> 79
THIS LEASE SUPPLEMENT NO. 2 AND MEMORANDUM OF LEASE AND DEED OF TRUST
(this "Memorandum") dated as of October 22, 1996, among SYMANTEC CORPORATION, a
Delaware corporation, having a principal office at 10101 Torre Avenue,
Cupertino, California 95014, as the Lessee and as Mortgagor (the "Lessee"),
SUMITOMO BANK LEASING AND FINANCE, INC., as the Lessor (the "Lessor"), having an
address at 277 Park Avenue, New York, New York 10172, and FIRST AMERICAN TITLE
INSURANCE COMPANY (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Lessor is the owner in fee simple of the land described on
Exhibit A attached hereto and all Improvements thereon (together, the
"Property");
WHEREAS, the Lessor wishes to lease the Property to the Lessee and the
Lessee wishes to lease the Property from the Lessor;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to enter
into this Memorandum, as follows:
1. Certain Terms. Capitalized terms used but not otherwise defined in
this Memorandum have the meanings specified in Appendix A to the Master Lease
and Security Agreement dated as of October 18, 1996 (as amended, restated,
supplemented or otherwise modified from time to time, the "Lease"), between the
Lessee and the Lessor; and the rules of interpretation specified in Appendix A
to the Lease shall apply to this Memorandum.
2. Property. Attached hereto as Exhibit A is the description of the
Property. Effective upon the execution and delivery of this Memorandum by the
Lessor and the Lessee, the Property shall be subject to the terms and provisions
of the Lease. Subject to the terms and conditions of the Lease, the Lessor
hereby leases the Property to the Lessee for the Term (as defined below) of this
Memorandum, and the Lessee hereby agrees, expressly for the direct benefit of
the Lessor, to lease the Property from the Lessor for the Term.
3. Lease Term. The term of this Memorandum (the "Term") shall begin on
the date hereof and shall end on October 18, 2003 unless the Term with respect
to the Property is renewed or earlier terminated in accordance with the
provisions of the Lease or the other Operative Documents. For and in
consideration of good and valuable consideration paid by the Lessee to the
Lessor as described in the Lease, the Lessor hereby grants to the Lessee the
right to purchase the Property or to market and sell the Property during the
Term of this Memorandum on the terms set
<PAGE> 80
forth in the Lease.
4. Ownership of the Property. (a) The parties hereto intend that (i) for
financial accounting purposes with respect to the Lessee, the Lessor will be
treated as the owner and the lessor of the Properties and the Lessee will be
treated as the lessee of the Properties and (ii) for all other purposes,
including federal and all state and local income tax purposes, state real estate
and commercial law and bankruptcy purposes, (A) the Lease will be treated as a
financing arrangement, (B) the Lessor and the Lenders will be deemed lenders
making loans to the Lessee in an amount equal to the sum of the Lessor Amount
and the outstanding principal amount of the Loans, which loans are secured by
the Properties and (C) the Lessee will be treated as the owner of the Properties
and will be entitled to all tax benefits ordinarily available to an owner of
properties like the Properties for such tax purposes. Nevertheless, the Lessee
acknowledges and agrees that neither the Lessor nor any of the Lenders has made
any representations or warranties to the Lessee concerning the tax, accounting
or legal characteristics of the Operative Documents and that the Lessee has
obtained and relied upon such tax, accounting and legal advice concerning the
Operative Documents as it deems appropriate.
(b) It is the intent of the parties hereto that the Lease grants a
security interest and deed of trust or lien, as the case may be, on the Property
for the benefit of the Lessor to secure the Lessee's performance under and
payment of all amounts advanced by the Lessor for the acquisition of the
Property (corresponding to the value of the Property as indicated on the
Appraisal) under the Lease and the other Operative Documents, together with
interest thereon, and all other amounts payable under the Operative Documents in
connection therewith.
(c) Specifically, without limiting the generality of subsection (b), the
Lessor and the Lessee intend and agree that with respect to the nature of the
transactions evidenced by the Lease in the context of the exercise of remedies
under the Operative Documents, including, without limitation, in the case of any
insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America or any State or Commonwealth thereof affecting the Lessee and
the Lessor, or any enforcement or collection actions, the transactions evidenced
by the Lease are loans made by the Lessor as unrelated third party lender to the
Lessee secured by the Property (it being understood that the Lessee hereby
mortgages, grants, bargains, sells, releases, confirms, conveys, assigns,
transfers and sets over to the Trustee for the benefit of the Lessor, and grants
a security interest in, the Property (consisting of a fee deed of trust with
respect to all right,
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<PAGE> 81
title and interest of the Lessee in and to the fee title to, and reversionary
interest in, the Land and Improvements, if any, and a leasehold deed of trust on
the Lessee's leasehold estate under the Lease), all to secure such loans,
effective on the date hereof, to have and to hold such interests in the Property
unto the Trustee for the benefit of the Lessor and its successors and assigns,
forever, provided always that these presents are upon the express condition
that, if all amounts due under the Lease shall have been paid and satisfied in
full, then this instrument and the estate hereby granted shall cease and become
void.
As additional security for the Rent, the Lease Balance and all other
sums owed to the Lessor by the Lessee under the Lease, the Lessee does hereby
grant, bargain, sell, transfer and convey unto the Trustee, its successors in
trust and assigns, IN TRUST, WITH POWER OF SALE, for the benefit of the Lessor,
all of the Lessee's right, title and interest in and to the Property, including,
without limitation, all buildings, structures and other improvements, and all
fixtures and other property now or hereafter attached to or affixed to any such
buildings, structures or other improvements, and any additions and alterations
thereto or replacements thereof, now or hereafter built, constructed or located
upon the Property, all rents, additional rents, issues, income, revenues,
distributions, royalties and profits now or in the future payable in respect of
the Property, together with all of the right, power and authority of the Lessee
to alter, modify or change the terms, conditions and provisions of the Lease and
any other lease pertaining to the Property, to consent to any request made by a
tenant or landlord pursuant thereto, or to surrender, cancel or terminate the
same or to accept any surrender, cancellation or termination of the same,
together with all of the options, rights, powers and privileges of the Lessee
under any lease pertaining to the Property, whether heretofore or hereafter
existing, including, without limitation, the rights and options to purchase the
Property contained in Articles XVIII and XX of the Lease, and all present and
future right, title and interest of the Lessee in and to (i) all refunds, tax
abatement agreements, rebates, reserves, deferred payments, deposits, cost
savings, awards and payments of any kind due from or payable by (a) any
Governmental Authority, or (b) any insurance or utility company, in each case
under clause (a) or (b) above in respect of the Property, and (ii) all refunds,
rebates and payments of any kind due from or payable by any Governmental
Authority for any taxes, assessments, or governmental or quasi-governmental
charges or levies imposed upon the Lessee in respect of the Property, and all
plans and specifications, designs, drawings and other information, materials and
matters heretofore or hereafter prepared relating to the Property or any
construction on the Property, all proceeds (including claims and demands
therefor) of the conversion, voluntary or involuntary, of any of the foregoing
into cash or
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<PAGE> 82
liquidated claims, including without limitation the proceeds of insurance and
condemnation awards in respect of the Property or any portion thereof, all
additional estates, rights and interests hereafter acquired by the Lessee in the
Property, or any portion thereof, together with all proceeds of the conversion,
whether voluntary or involuntary, of any of the Property into cash or other
liquid claims, including without limitation, all awards, payments or proceeds,
including interest thereon, and the right to receive the same, which may be made
as a result of any casualty, any exercise of the right of eminent domain or deed
in lieu thereof, any injury to the Property and any defect in title in the
Property or other matter insured under any policy of title insurance, together
with attorney's fees, costs and disbursements incurred by the Lessor in
connection with the collection of such awards, payments and proceeds, and the
Lessee further grants to the Lessor, pursuant to the California Uniform
Commercial Code (the "UCC"), a security interest in all present and future
right, title and interest of the Lessee in and to any portion of the foregoing
property for which a security interest may be created under the UCC.
To have and to hold the same whether now owned or held or hereafter
acquired unto the Trustee, its successors-in-trust forever, IN TRUST, WITH POWER
OF SALE, to secure to the Lessor the payment of the Rent, the Lease Balance and
all other sums owing to the Lessor under the Lease and the performance and
observance of the terms, covenants, warranties, conditions, agreements and
obligations under the Lease. If the Lessee shall pay all sums due under the
Lease when due according to the terms thereof and shall otherwise fully and
properly perform and comply with all of the obligations, agreements, terms and
conditions of the Lease, then this conveyance shall become null and void.
In the event of the occurrence of an Event of Default, then the entire
unpaid balance of all sums due under the Lease and the interest accrued thereon
shall, at the option of the owner thereof and without notice, immediately become
due and payable for all purposes, whether or not due according to the maturity
date or dates thereof; and all other indebtedness, the payment of which is
secured hereby, shall likewise become due and payable. The Trustee and the
Lessor and each of them are authorized prior or subsequent to the institution of
any foreclosure proceedings to enter upon the Property or any part thereof and
to take possession of the Property and exercise without interference from the
Lessee, any and all rights which the Lessee has with respect to the management,
possession, operation, protection or preservation of the Property.
Upon the occurrence of an Event of Default, Lessor shall have the power
and authority, after proper notice and lapse of such time as may be required by
law, to cause Trustee to sell the Property
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<PAGE> 83
by notifying Trustee of that election and depositing with Trustee this
instrument and receipts and evidence of expenditures made and secured hereby as
Trustee may reasonably require. Upon receipt of any such notice from Lessor,
Trustee shall cause to be recorded, published and delivered to Lessee such
Notice of Default and Election to Sell as is then required by applicable
statutory authority and by this instrument, which notice shall set forth, among
other things, the nature of the breach(es) or default(s), the action(s) required
to effect a cure thereof and the time period within which that cure may be
effected. If no cure is effected within the statutory time limits following
recordation of the Notice of Default and Election to Sell and after Notice of
Sale has been given as required by the above-referenced statutes, Trustee may
without further notice or demand sell and convey the Property in accordance with
the above-referenced statutes. The Property may be sold as a whole or in
separate lots, parcels or items and in such order as Lessor may direct, at
public auction to the highest bidder for cash in lawful money of the United
States payable at the time of sale. Trustee shall deliver to such purchaser(s) a
good and sufficient deed or deeds conveying the property so sold, but without
any covenant or warranty express or implied. The recitals in such deed of any
matter or fact shall be conclusive proof of the truthfulness thereof. Any
Person, including Lessee, Trustee or Lessor, may purchase at any sale. After
deducting all costs, fees and expenses of Lessor and Trustee, including costs of
evidence of title in connection with any sale, Lessor shall apply the proceeds
of sale, in the following order of priority, to payment of the following
(collectively, the "Obligations"): (i) first, all amounts expended by or for the
account of Lessor under the terms hereof and not then repaid, with accrued
interest at the Overdue Rate; and (ii) second, all other amounts then due and
owing hereunder including, without limitation, all Basic Rent, Supplemental
Rent, the full amount of the Lease Balance as of the date of sale as if the
Lease had been terminated with respect to all of the Properties then subject to
the Lease under Section 18.1, and all other amounts then payable by Lessee under
the Lease and the other Operative Documents, with Lessor having the right to
apply the proceeds of sale to the amounts described above in this clause (ii) in
such order, proportion and priority as Lessor may elect in its sole and absolute
discretion. To the extent permitted by applicable statutes, Trustee may postpone
the sale of all or any portion of the Property by public announcement at the
time and place of sale, and from time to time thereafter may again postpone that
sale by public announcement or subsequently noticed sale, and without further
notice may make such sale at the time fixed at the last postponement or may, in
its discretion, give a new notice of sale. A sale of less than all of the
Property or any defective or irregular sale made hereunder shall not exhaust the
power of sale provided for herein, and subsequent sales may be made hereunder
until all of
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<PAGE> 84
the Obligations have been satisfied or the entire Property has been sold,
without defect or irregularity. No action of Lessor or Trustee based upon the
provisions contained herein or contained in the applicable statutes, including,
without limitation, the giving of the Notice of Default and Election to Sell or
the Notice of Sale, shall constitute an election of remedies which would
preclude Lessor from pursuing judicial foreclosure before a completed sale
pursuant to the power of sale contained herein. Lessor shall have the right,
with the irrevocable consent of Lessee hereby given and evidenced by the
execution of this instrument, to obtain appointment of a receiver by any court
of competent jurisdiction without further notice to Lessee, which receiver shall
be authorized and empowered to enter upon and take possession of the Property,
including all personal property used upon or in connection with the real
property herein conveyed, to let the Property, to receive all the rents, issues
and profits, if any, which may be due or become due in respect to the leasing of
the Property to another party ("Property Rents"), and apply the Property Rents
after payment of all necessary charges and expenses to reduction of the
Obligations in such order, proportion and priority as Lessor may elect. At the
option of Lessor, the receiver shall accomplish entry and taking possession of
the Property by actual entry and possession or by notice to Lessee. The receiver
so appointed by a court of competent jurisdiction shall be empowered to issue
receiver's certificates for funds advanced by Lessor for the purpose of
protecting the value of the Property as security for the Obligations. The
amounts evidenced by receiver's certificates shall bear interest at the Overdue
Rate and may be added to the Obligations if the Lessee or a junior lienholder
purchases the Property at the trustee's sale. Trustee or any successor acting
hereunder may resign and thereupon be discharged of the trusts hereunder upon
thirty (30) days' prior written notice to Lessor. Regardless of whether Trustee
resigns, Lessor may, from time to time, substitute a successor or successors to
any Trustee named herein or acting hereunder in accordance with any statutory
procedure for such substitution; or if Lessor, in its sole and absolute
discretion, so elects, and if permitted by law, Lessor may substitute such
successors or successors by recording, in the office of the recorder of the
county or counties where the Property is located, a document executed by Lessor
and containing the name of the original Lessee and Lessor hereunder, the book
and page where this instrument (or a memorandum hereof) is recorded (and/or
instrument number, as applicable) and the name of the new Trustee, which
instrument shall be conclusive proof of proper substitution of such successor
Trustee or Trustees, who shall, without conveyance from the predecessor Trustee,
succeed to the rights, powers and duties hereunder. It is acknowledged that A
POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT; A POWER OF SALE MAY ALLOW
LESSOR TO TAKE THE PROPERTY AND SELL THEM WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON DEFAULT BY
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<PAGE> 85
LESSEE UNDER THIS INSTRUMENT.
If (a) the Property shall consist of one or more parcels, whether or not
contiguous and whether or not located in the same county, or (b) in addition to
this Memorandum, the Lessor shall now or hereafter hold one or more additional
mortgages, liens, deeds of trust or other security (directly or indirectly) for
the Obligations upon other property in the State in which the Property is
located (whether or not such property is owned by Lessor or by others) or (c)
both the circumstances described in clauses (a) and (b) shall be true, then to
the fullest extent permitted by law, the Lessor may, in its sole discretion,
commence or consolidate in a single foreclosure action all foreclosure
proceedings against all such collateral securing the Obligations (including the
Property), which action may be brought or consolidated in the courts of any
county in which any of such collateral is located. The Lessee acknowledges that
the right to maintain a consolidated foreclosure action is a specific inducement
to the Lessor to extend the Advances, and the Lessor expressly and irrevocably
waives any objections to the commencement or consolidation of the foreclosure
proceedings in a single action and any objections to the laying of venue or
based on the grounds of forum non conveniens which it may now or hereafter have.
The Lessee further agrees that if the Lessor shall be prosecuting one or more
foreclosure or other proceedings against a portion of the Property or against
any collateral other than the Property, which collateral directly or indirectly
secures the Obligations, or if the Lessor shall have obtained a judgment of
foreclosure and sale or similar judgment against such collateral, then, whether
or not such proceedings are being maintained or judgments were obtained in or
outside the State in which the Property is located, the Lessor may commence or
continue foreclosure proceedings and exercise its other remedies granted in this
Memorandum against all or any part of the Property and the Lessor waives any
objections to the commencement or continuation of a foreclosure of this
Memorandum or exercise of any other remedies hereunder based on such other
proceedings or judgments, and waives any right to seek to dismiss, stay, remove,
transfer or consolidate either any action under this Memorandum or such other
proceedings on such basis. Neither the commencement nor continuation of
proceedings to foreclose this Memorandum nor the exercise of any other rights
hereunder nor the recovery of any judgment by the Lessor in any such proceedings
shall prejudice, limit or preclude the Lessor's right to commence or continue
one or more foreclosure or other proceedings or obtain a judgment against any
other collateral (either in or outside the State in which the Property is
located) which directly or indirectly secures the Obligations, and the Lessor
expressly waives any objections to the commencement of, continuation of, or
entry of a judgment in such other proceedings or exercise of any remedies in
such proceedings based upon any
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<PAGE> 86
action or judgment connected to this Memorandum, and the Lessor also waives any
right to seek to dismiss, stay, remove, transfer or consolidate either such
other proceedings or any action under this Memorandum on such basis.
If the Lessor so elects, the Trustee may sell any personal property
covered by this instrument at one or more separate sales in any manner permitted
by the UCC. One or more exercises of the powers herein granted shall not
extinguish nor exhaust such powers until the entire Property is sold or until
the entire amounts evidenced and/or secured by the Lease and the Operative
Documents is paid in full.
(d) Specifically, but without limiting the generality of subsection (b),
the Lessor and the Lessee further intend and agree that, with respect to that
portion of the Property constituting personal property, for the purpose of
securing the Lessee's obligations for the repayment of the above-described
obligations from the Lessor to the Lessee, (i) the Lease shall also be deemed to
be a security agreement and financing statement within the meaning of Article 9
of the UCC; (ii) the conveyance provided for hereby shall be deemed to be a
grant by the Lessee to the Lessor of a lien and security interest in all of the
Lessee's present and future right, title and interest in and to such portion of
the Property, including but not limited to the Lessee's leasehold estate therein
and all proceeds of the conversion, voluntary or involuntary, of the foregoing
into cash, investments, securities or other property, whether in the form of
cash, investments, securities or other property to secure such obligations,
effective on the date hereof, to have and to hold such interests in the Property
unto the Lessor and its successors and assigns, forever, provided always that
these presents are upon the express condition that, if all amounts due under the
Lease shall have been paid and satisfied in full, then this instrument and the
estate hereby granted shall cease and become void; (iii) the possession by the
Lessor of notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to Section 9-305 of the UCC; and (iv) notifications to Persons holding such
property, and acknowledgements, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed
to have been given for the purpose of perfecting such security interest under
Applicable Law. The Lessor and the Lessee shall, to the extent consistent with
this Memorandum, take such actions and execute, deliver, file and record such
other documents, financing statements, mortgages and deeds of trust as may be
necessary to ensure that, if the Lease were deemed to create a security interest
in the Property in accordance with this Section, such security interest would be
deemed to be a
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<PAGE> 87
perfected security interest with priority over all Liens other than Permitted
Liens, under Applicable Law and will be maintained as such throughout the Term.
SECTION 5. Ratification. The terms and provisions of the Lease are
hereby ratified and confirmed and remain in full force and effect. In the event
of any conflict between the terms of the Lease and the terms of this Memorandum,
the terms of the Lease shall control.
SECTION 6. Supplemental Lease Term.
(a) The Lenders' Percentage for the Lease Supplement is
84.8469%.
(b) The Lessor Margin for this Lease Supplement is 0.695%
(c) The Loan Margin for the Lease Supplement is 0.20%.
SECTION 7. Counterpart Execution. This Memorandum may be executed in any
number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.
SECTION 8. Future Advances; Revolving Credit. In the event a court of
competent jurisdiction rules that this instrument constitutes a mortgage, deed
of trust or other secured financing as is the intent of the parties pursuant to
Section 4 hereof, then this instrument will be deemed given to secure not only
existing financing, but also future advances made pursuant to or as provided in
the Lease, whether such advances are obligatory or to be made at the option of
the Lessor, or otherwise, to the same extent as if such future advances were
made on the date of execution of this instrument, although there may be no
advance made at the time of execution hereof, and although there may be no
financing outstanding at the time any advance is made. To the fullest extent
permitted by law, the lien of this instrument shall be valid as to all such
amounts, including all future advances, from the time this instrument is
recorded. Notwithstanding anything in this instrument to the contrary, although
the amount of the financing secured by this instrument may increase or decrease
from time to time, the maximum principal amount of the financing secured by this
instrument at any one time shall not exceed Fifty Three Million Dollars
($53,000,000), which amount shall be payable as set forth in the Lease, and in
any event the final payment shall be payable no later than October 18, 2003,
plus all costs of enforcement and collection of this instrument, the Lease and
the other Operative Documents, plus the total amount of any advances made
pursuant thereto to protect the collateral and the security interest and lien
created
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<PAGE> 88
hereby, together with interest on all of the foregoing as provided in the
Operative Documents.
SECTION 9. GOVERNING LAW. THE LEASE AND THIS MEMORANDUM SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
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<PAGE> 89
IN WITNESS WHEREOF, each of the parties hereto has caused this
Memorandum of Lease and Deed of Trust to be duly executed by an officer
thereunto duly authorized as of the date and year first above written.
SYMANTEC CORPORATION,
as the Lessee
By:________________________________________
Name:
Title:
SUMITOMO BANK LEASING AND FINANCE, INC.,
as the Lessor
By:________________________________________
Name:
Title:
<PAGE> 90
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane
Doe, Notary Public
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
________________________________
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S) ____________________________________
[ ] CORPORATE OFFICER(S) ____________________________________
______________________________ ____________________________________
TITLE
______________________________
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER _______________________
================================================================================
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT COULD
PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
MUST BE ATTACHED Number of Pages _____ Date of Document________________
TO THE DOCUMENT Signer(s) Other Than Named Above _____________________
DESCRIBED AT RIGHT:
<PAGE> 91
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane
Doe, Notary Public
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
________________________________
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S) ____________________________________
[ ] CORPORATE OFFICER(S) ____________________________________
______________________________ ____________________________________
TITLE
______________________________
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER _______________________
================================================================================
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT COULD
PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
MUST BE ATTACHED Number of Pages _____ Date of Document________________
TO THE DOCUMENT Signer(s) Other Than Named Above _____________________
DESCRIBED AT RIGHT:
<PAGE> 92
EXHIBIT A-1
TO MEMORANDUM OF LEASE
LEGAL DESCRIPTION OF LAND
<PAGE> 93
EXECUTION COPY
This instrument prepared by,
recording requested by,
and when recorded return to:
MAYER, BROWN & PLATT
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
LEASE SUPPLEMENT NO. 3 AND
MEMORANDUM OF LEASE AND DEED OF TRUST
dated as of February 5, 1997
among
SYMANTEC CORPORATION,
as the Lessee,
SUMITOMO BANK LEASING AND FINANCE, INC.,
as the Lessor,
and
FIRST AMERICAN TITLE INSURANCE COMPANY,
as Trustee
Location of Premises:
County of Santa Clara
State of California
This Lease Supplement is a supplement to
that certain Lease (as hereinafter defined),
as supplemented by
that certain Lease Supplement No. 1
and Memorandum of Lease and Deed of Trust
recorded on October 21, 1996 in the Official Records
of Santa Clara County, California (the "Official Records"),
as Instrument No. 13489802,
and that certain Lease Supplement No. 2
and Memorandum of Lease and Deed of Trust
recorded on October 23, 1996 in the Official Records, as
Instrument No. 13492444
<PAGE> 94
THIS LEASE SUPPLEMENT NO. 3 AND MEMORANDUM OF LEASE AND DEED OF TRUST
(this "Memorandum") dated as of February 5, 1997, among SYMANTEC CORPORATION, a
Delaware corporation, having a principal office at 10101 Torre Avenue,
Cupertino, California 95014, as the Lessee and as Mortgagor (the "Lessee"),
SUMITOMO BANK LEASING AND FINANCE, INC., as the Lessor (the "Lessor"), having an
address at 277 Park Avenue, New York, New York 10172, and FIRST AMERICAN TITLE
INSURANCE COMPANY (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Lessor is the owner in fee simple of the land described on
Exhibit A attached hereto and all Improvements thereon (together, the
"Property");
WHEREAS, the Lessor wishes to lease the Property to the Lessee and the
Lessee wishes to lease the Property from the Lessor;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to enter
into this Memorandum, as follows:
I. Certain Terms. Capitalized terms used but not otherwise
defined in this Memorandum have the meanings specified in Appendix A to the
Master Lease and Security Agreement dated as of October 18, 1996 (as amended,
restated, supplemented or otherwise modified from time to time, the "Lease"),
between the Lessee and the Lessor; and the rules of interpretation specified in
Appendix A to the Lease shall apply to this Memorandum.
2. Property. Attached hereto as Exhibit A is the description of the
Property. Effective upon the execution and delivery of this Memorandum by the
Lessor and the Lessee, the Property shall be subject to the terms and provisions
of the Lease. Subject to the terms and conditions of the Lease, the Lessor
hereby leases the Property to the Lessee for the Term (as defined below) of this
Memorandum, and the Lessee hereby agrees, expressly for the direct benefit of
the Lessor, to lease the Property from the Lessor for the Term.
3. Lease Term. The term of this Memorandum (the "Term") shall begin on
the date hereof and shall end on October 18, 2003 unless the Term with respect
to the Property is renewed or earlier terminated in accordance with the
provisions of the Lease or the other Operative Documents. For and in
consideration of good and valuable consideration paid by the Lessee to the
Lessor as described in the Lease, the Lessor hereby grants to the Lessee the
right to purchase the Property or to market and sell the
<PAGE> 95
Property during the Term of this Memorandum on the terms set forth in the Lease.
4. Ownership of the Property. (a) The parties hereto intend that (i)
for financial accounting purposes with respect to the Lessee, the Lessor will be
treated as the owner and the lessor of the Properties and the Lessee will be
treated as the lessee of the Properties and (ii) for all other purposes,
including federal and all state and local income tax purposes, state real estate
and commercial law and bankruptcy purposes, (A) the Lease will be treated as a
financing arrangement, (B) the Lessor and the Lenders will be deemed lenders
making loans to the Lessee in an amount equal to the sum of the Lessor Amount
and the outstanding principal amount of the Loans, which loans are secured by
the Properties and (C) the Lessee will be treated as the owner of the Properties
and will be entitled to all tax benefits ordinarily available to an owner of
properties like the Properties for such tax purposes. Nevertheless, the Lessee
acknowledges and agrees that neither the Lessor nor any of the Lenders has made
any representations or warranties to the Lessee concerning the tax, accounting
or legal characteristics of the Operative Documents and that the Lessee has
obtained and relied upon such tax, accounting and legal advice concerning the
Operative Documents as it deems appropriate.
(b) It is the intent of the parties hereto that the Lease grants a
security interest and deed of trust or lien, as the case may be, on the Property
for the benefit of the Lessor to secure the Lessee's performance under and
payment of all amounts advanced by the Lessor for the acquisition of the
Property (corresponding to the value of the Property as indicated on the
Appraisal) under the Lease and the other Operative Documents, together with
interest thereon, and all other amounts payable under the Operative Documents in
connection therewith.
(c) Specifically, without limiting the generality of subsection (b),
the Lessor and the Lessee intend and agree that with respect to the nature of
the transactions evidenced by the Lease in the context of the exercise of
remedies under the Operative Documents, including, without limitation, in the
case of any insolvency or receivership proceedings or a petition under the
United States bankruptcy laws or any other applicable insolvency laws or statute
of the United States of America or any State or Commonwealth thereof affecting
the Lessee and the Lessor, or any enforcement or collection actions, the
transactions evidenced by the Lease are loans made by the Lessor as unrelated
third party lender to the Lessee secured by the Property (it being understood
that the Lessee hereby mortgages, grants, bargains, sells, releases, confirms,
conveys, assigns, transfers and sets over to the Trustee for the benefit of the
Lessor, and grants a security interest in, the Property
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<PAGE> 96
(consisting of a fee deed of trust with respect to all right, title and interest
of the Lessee in and to the fee title to, and reversionary interest in, the Land
and Improvements, if any, and a leasehold deed of trust on the Lessee's
leasehold estate under the Lease), all to secure such loans, effective on the
date hereof, to have and to hold such interests in the Property unto the Trustee
for the benefit of the Lessor and its successors and assigns, forever, provided
always that these presents are upon the express condition that, if all amounts
due under the Lease shall have been paid and satisfied in full, then this
instrument and the estate hereby granted shall cease and become void.
As additional security for the Rent, the Lease Balance and all other
sums owed to the Lessor by the Lessee under the Lease, the Lessee does hereby
grant, bargain, sell, transfer and convey unto the Trustee, its successors in
trust and assigns, IN TRUST, WITH POWER OF SALE, for the benefit of the Lessor,
all of the Lessee's right, title and interest in and to the Property, including,
without limitation, all buildings, structures and other improvements, and all
fixtures and other property now or hereafter attached to or affixed to any such
buildings, structures or other improvements, and any additions and alterations
thereto or replacements thereof, now or hereafter built, constructed or located
upon the Property, all rents, additional rents, issues, income, revenues,
distributions, royalties and profits now or in the future payable in respect of
the Property, together with all of the right, power and authority of the Lessee
to alter, modify or change the terms, conditions and provisions of the Lease and
any other lease pertaining to the Property, to consent to any request made by a
tenant or landlord pursuant thereto, or to surrender, cancel or terminate the
same or to accept any surrender, cancellation or termination of the same,
together with all of the options, rights, powers and privileges of the Lessee
under any lease pertaining to the Property, whether heretofore or hereafter
existing, including, without limitation, the rights and options to purchase the
Property contained in Articles XVIII and XX of the Lease, and all present and
future right, title and interest of the Lessee in and to (i) all refunds, tax
abatement agreements, rebates, reserves, deferred payments, deposits, cost
savings, awards and payments of any kind due from or payable by (a) any
Governmental Authority, or (b) any insurance or utility company, in each case
under clause (a) or (b) above in respect of the Property, and (ii) all refunds,
rebates and payments of any kind due from or payable by any Governmental
Authority for any taxes, assessments, or governmental or quasi-governmental
charges or levies imposed upon the Lessee in respect of the Property, and all
plans and specifications, designs, drawings and other information, materials and
matters heretofore or hereafter prepared relating to the Property or any
construction on the Property, all proceeds (including claims and demands
therefor) of the conversion,
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<PAGE> 97
voluntary or involuntary, of any of the foregoing into cash or liquidated
claims, including without limitation the proceeds of insurance and condemnation
awards in respect of the Property or any portion thereof, all additional
estates, rights and interests hereafter acquired by the Lessee in the Property,
or any portion thereof, together with all proceeds of the conversion, whether
voluntary or involuntary, of any of the Property into cash or other liquid
claims, including without limitation, all awards, payments or proceeds,
including interest thereon, and the right to receive the same, which may be made
as a result of any casualty, any exercise of the right of eminent domain or deed
in lieu thereof, any injury to the Property and any defect in title in the
Property or other matter insured under any policy of title insurance, together
with attorney's fees, costs and disbursements incurred by the Lessor in
connection with the collection of such awards, payments and proceeds, and the
Lessee further grants to the Lessor, pursuant to the California Uniform
Commercial Code (the "UCC"), a security interest in all present and future
right, title and interest of the Lessee in and to any portion of the foregoing
property for which a security interest may be created under the UCC.
To have and to hold the same whether now owned or held or hereafter
acquired unto the Trustee, its successors-in-trust forever, IN TRUST, WITH POWER
OF SALE, to secure to the Lessor the payment of the Rent, the Lease Balance and
all other sums owing to the Lessor under the Lease and the performance and
observance of the terms, covenants, warranties, conditions, agreements and
obligations under the Lease. If the Lessee shall pay all sums due under the
Lease when due according to the terms thereof and shall otherwise fully and
properly perform and comply with all of the obligations, agreements, terms and
conditions of the Lease, then this conveyance shall become null and void.
In the event of the occurrence of an Event of Default, then the entire
unpaid balance of all sums due under the Lease and the interest accrued thereon
shall, at the option of the owner thereof and without notice, immediately become
due and payable for all purposes, whether or not due according to the maturity
date or dates thereof; and all other indebtedness, the payment of which is
secured hereby, shall likewise become due and payable. The Trustee and the
Lessor and each of them are authorized prior or subsequent to the institution of
any foreclosure proceedings to enter upon the Property or any part thereof and
to take possession of the Property and exercise without interference from the
Lessee, any and all rights which the Lessee has with respect to the management,
possession, operation, protection or preservation of the Property.
Upon the occurrence of an Event of Default, Lessor shall have the power
and authority, after proper notice and lapse of such time
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<PAGE> 98
as may be required by law, to cause Trustee to sell the Property by notifying
Trustee of that election and depositing with Trustee this instrument and
receipts and evidence of expenditures made and secured hereby as Trustee may
reasonably require. Upon receipt of any such notice from Lessor, Trustee shall
cause to be recorded, published and delivered to Lessee such Notice of Default
and Election to Sell as is then required by applicable statutory authority and
by this instrument, which notice shall set forth, among other things, the nature
of the breach(es) or default(s), the action(s) required to effect a cure thereof
and the time period within which that cure may be effected. If no cure is
effected within the statutory time limits following recordation of the Notice of
Default and Election to Sell and after Notice of Sale has been given as required
by the above-referenced statutes, Trustee may without further notice or demand
sell and convey the Property in accordance with the above-referenced statutes.
The Property may be sold as a whole or in separate lots, parcels or items and in
such order as Lessor may direct, at public auction to the highest bidder for
cash in lawful money of the United States payable at the time of sale. Trustee
shall deliver to such purchaser(s) a good and sufficient deed or deeds conveying
the property so sold, but without any covenant or warranty express or implied.
The recitals in such deed of any matter or fact shall be conclusive proof of the
truthfulness thereof. Any Person, including Lessee, Trustee or Lessor, may
purchase at any sale. After deducting all costs, fees and expenses of Lessor and
Trustee, including costs of evidence of title in connection with any sale,
Lessor shall apply the proceeds of sale, in the following order of priority, to
payment of the following (collectively, the "Obligations"): (i) first, all
amounts expended by or for the account of Lessor under the terms hereof and not
then repaid, with accrued interest at the Overdue Rate; and (ii) second, all
other amounts then due and owing hereunder including, without limitation, all
Basic Rent, Supplemental Rent, the full amount of the Lease Balance as of the
date of sale as if the Lease had been terminated with respect to all of the
Properties then subject to the Lease under Section 18.1, and all other amounts
then payable by Lessee under the Lease and the other Operative Documents, with
Lessor having the right to apply the proceeds of sale to the amounts described
above in this clause (ii) in such order, proportion and priority as Lessor may
elect in its sole and absolute discretion. To the extent permitted by applicable
statutes, Trustee may postpone the sale of all or any portion of the Property by
public announcement at the time and place of sale, and from time to time
thereafter may again postpone that sale by public announcement or subsequently
noticed sale, and without further notice may make such sale at the time fixed at
the last postponement or may, in its discretion, give a new notice of sale. A
sale of less than all of the Property or any defective or irregular sale made
hereunder shall not exhaust the power of sale provided for
-5-
<PAGE> 99
herein, and subsequent sales may be made hereunder until all of the Obligations
have been satisfied or the entire Property has been sold, without defect or
irregularity. No action of Lessor or Trustee based upon the provisions contained
herein or contained in the applicable statutes, including, without limitation,
the giving of the Notice of Default and Election to Sell or the Notice of Sale,
shall constitute an election of remedies which would preclude Lessor from
pursuing judicial foreclosure before a completed sale pursuant to the power of
sale contained herein. Lessor shall have the right, with the irrevocable consent
of Lessee hereby given and evidenced by the execution of this instrument, to
obtain appointment of a receiver by any court of competent jurisdiction without
further notice to Lessee, which receiver shall be authorized and empowered to
enter upon and take possession of the Property, including all personal property
used upon or in connection with the real property herein conveyed, to let the
Property, to receive all the rents, issues and profits, if any, which may be due
or become due in respect to the leasing of the Property to another party
("Property Rents"), and apply the Property Rents after payment of all necessary
charges and expenses to reduction of the Obligations in such order, proportion
and priority as Lessor may elect. At the option of Lessor, the receiver shall
accomplish entry and taking possession of the Property by actual entry and
possession or by notice to Lessee. The receiver so appointed by a court of
competent jurisdiction shall be empowered to issue receiver's certificates for
funds advanced by Lessor for the purpose of protecting the value of the Property
as security for the Obligations. The amounts evidenced by receiver's
certificates shall bear interest at the Overdue Rate and may be added to the
Obligations if the Lessee or a junior lienholder purchases the Property at the
trustee's sale. Trustee or any successor acting hereunder may resign and
thereupon be discharged of the trusts hereunder upon thirty (30) days' prior
written notice to Lessor. Regardless of whether Trustee resigns, Lessor may,
from time to time, substitute a successor or successors to any Trustee named
herein or acting hereunder in accordance with any statutory procedure for such
substitution; or if Lessor, in its sole and absolute discretion, so elects, and
if permitted by law, Lessor may substitute such successors or successors by
recording, in the office of the recorder of the county or counties where the
Property is located, a document executed by Lessor and containing the name of
the original Lessee and Lessor hereunder, the book and page where this
instrument (or a memorandum hereof) is recorded (and/or instrument number, as
applicable) and the name of the new Trustee, which instrument shall be
conclusive proof of proper substitution of such successor Trustee or Trustees,
who shall, without conveyance from the predecessor Trustee, succeed to the
rights, powers and duties hereunder. It is acknowledged that A POWER OF SALE HAS
BEEN GRANTED IN THIS INSTRUMENT; A POWER OF SALE MAY ALLOW LESSOR TO TAKE THE
PROPERTY AND SELL THEM
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<PAGE> 100
WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY LESSEE UNDER THIS
INSTRUMENT.
If (a) the Property shall consist of one or more parcels, whether or
not contiguous and whether or not located in the same county, or (b) in addition
to this Memorandum, the Lessor shall now or hereafter hold one or more
additional mortgages, liens, deeds of trust or other security (directly or
indirectly) for the Obligations upon other property in the State in which the
Property is located (whether or not such property is owned by Lessor or by
others) or (c) both the circumstances described in clauses (a) and (b) shall be
true, then to the fullest extent permitted by law, the Lessor may, in its sole
discretion, commence or consolidate in a single foreclosure action all
foreclosure proceedings against all such collateral securing the Obligations
(including the Property), which action may be brought or consolidated in the
courts of any county in which any of such collateral is located. The Lessee
acknowledges that the right to maintain a consolidated foreclosure action is a
specific inducement to the Lessor to extend the Advances, and the Lessor
expressly and irrevocably waives any objections to the commencement or
consolidation of the foreclosure proceedings in a single action and any
objections to the laying of venue or based on the grounds of forum non
conveniens which it may now or hereafter have. The Lessee further agrees that if
the Lessor shall be prosecuting one or more foreclosure or other proceedings
against a portion of the Property or against any collateral other than the
Property, which collateral directly or indirectly secures the Obligations, or if
the Lessor shall have obtained a judgment of foreclosure and sale or similar
judgment against such collateral, then, whether or not such proceedings are
being maintained or judgments were obtained in or outside the State in which the
Property is located, the Lessor may commence or continue foreclosure proceedings
and exercise its other remedies granted in this Memorandum against all or any
part of the Property and the Lessor waives any objections to the commencement or
continuation of a foreclosure of this Memorandum or exercise of any other
remedies hereunder based on such other proceedings or judgments, and waives any
right to seek to dismiss, stay, remove, transfer or consolidate either any
action under this Memorandum or such other proceedings on such basis. Neither
the commencement nor continuation of proceedings to foreclose this Memorandum
nor the exercise of any other rights hereunder nor the recovery of any judgment
by the Lessor in any such proceedings shall prejudice, limit or preclude the
Lessor's right to commence or continue one or more foreclosure or other
proceedings or obtain a judgment against any other collateral (either in or
outside the State in which the Property is located) which directly or indirectly
secures the Obligations, and the Lessor expressly waives any objections to the
commencement of, continuation of, or entry of a judgment in such other
proceedings
-7-
<PAGE> 101
or exercise of any remedies in such proceedings based upon any action or
judgment connected to this Memorandum, and the Lessor also waives any right to
seek to dismiss, stay, remove, transfer or consolidate either such other
proceedings or any action under this Memorandum on such basis.
If the Lessor so elects, the Trustee may sell any personal property
covered by this instrument at one or more separate sales in any manner permitted
by the UCC. One or more exercises of the powers herein granted shall not
extinguish nor exhaust such powers until the entire Property is sold or until
the entire amounts evidenced and/or secured by the Lease and the Operative
Documents is paid in full.
(d) Specifically, but without limiting the generality of subsection
(b), the Lessor and the Lessee further intend and agree that, with respect to
that portion of the Property constituting personal property, for the purpose of
securing the Lessee's obligations for the repayment of the above-described
obligations from the Lessor to the Lessee, (i) the Lease shall also be deemed to
be a security agreement and financing statement within the meaning of Article 9
of the UCC; (ii) the conveyance provided for hereby shall be deemed to be a
grant by the Lessee to the Lessor of a lien and security interest in all of the
Lessee's present and future right, title and interest in and to such portion of
the Property, including but not limited to the Lessee's leasehold estate therein
and all proceeds of the conversion, voluntary or involuntary, of the foregoing
into cash, investments, securities or other property, whether in the form of
cash, investments, securities or other property to secure such obligations,
effective on the date hereof, to have and to hold such interests in the Property
unto the Lessor and its successors and assigns, forever, provided always that
these presents are upon the express condition that, if all amounts due under the
Lease shall have been paid and satisfied in full, then this instrument and the
estate hereby granted shall cease and become void; (iii) the possession by the
Lessor of notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to Section 9-305 of the UCC; and (iv) notifications to Persons holding such
property, and acknowledgements, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed
to have been given for the purpose of perfecting such security interest under
Applicable Law. The Lessor and the Lessee shall, to the extent consistent with
this Memorandum, take such actions and execute, deliver, file and record such
other documents, financing statements, mortgages and deeds of trust as may be
necessary to ensure that, if the Lease were deemed to create a security interest
in the Property in accordance with
-8-
<PAGE> 102
this Section, such security interest would be deemed to be a perfected security
interest with priority over all Liens other than Permitted Liens, under
Applicable Law and will be maintained as such throughout the Term.
SECTION 5. Ratification. The terms and provisions of the Lease are
hereby ratified and confirmed and remain in full force and effect. In the event
of any conflict between the terms of the Lease and the terms of this Memorandum,
the terms of the Lease shall control.
SECTION 6. Supplemental Lease Term.
(a) The Lenders' Percentage for the Lease Supplement is
97.0%.
(b) The Lessor Margin for this Lease Supplement is 2.70%
(c) The Loan Margin for the Lease Supplement is 0.20%.
SECTION 7. Counterpart Execution. This Memorandum may be executed in
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.
SECTION 8. Future Advances; Revolving Credit. In the event a court of
competent jurisdiction rules that this instrument constitutes a mortgage, deed
of trust or other secured financing as is the intent of the parties pursuant to
Section 4 hereof, then this instrument will be deemed given to secure not only
existing financing, but also future advances made pursuant to or as provided in
the Lease, whether such advances are obligatory or to be made at the option of
the Lessor, or otherwise, to the same extent as if such future advances were
made on the date of execution of this instrument, although there may be no
advance made at the time of execution hereof, and although there may be no
financing outstanding at the time any advance is made. To the fullest extent
permitted by law, the lien of this instrument shall be valid as to all such
amounts, including all future advances, from the time this instrument is
recorded. Notwithstanding anything in this instrument to the contrary, although
the amount of the financing secured by this instrument may increase or decrease
from time to time, the maximum principal amount of the financing secured by this
instrument at any one time shall not exceed Fifty Three Million Dollars
($53,000,000), which amount shall be payable as set forth in the Lease, and in
any event the final payment shall be payable no later than October 18, 2003,
plus all costs of enforcement and collection of this instrument, the Lease and
the other Operative Documents, plus the total amount of any advances made
pursuant thereto to
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<PAGE> 103
protect the collateral and the security interest and lien created hereby,
together with interest on all of the foregoing as provided in the Operative
Documents.
SECTION 9. GOVERNING LAW. THE LEASE AND THIS MEMORANDUM SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
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<PAGE> 104
IN WITNESS WHEREOF, each of the parties hereto has caused this
Memorandum of Lease and Deed of Trust to be duly executed by an officer
thereunto duly authorized as of the date and year first above written.
SYMANTEC CORPORATION, as the Lessee
By:__________________________
Name:
Title:
SUMITOMO BANK LEASING AND
FINANCE, INC., as the Lessor
By:_______________________
Name:
Title:
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<PAGE> 105
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane Doe,
Notary Public
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
-----------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S) ______________________________
______________________________
[ ] CORPORATE OFFICER(S) ______________________________
------------------------------
TITLE
------------------------------
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER _______________________
_______________________
_______________________
- --------------------------------------------------------------------------------
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT COULD
PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
MUST BE ATTACHED Number of Pages _____ Date of Document________________
TO THE DOCUMENT Signer(s) Other Than Named Above _____________________
<PAGE> 106
DESCRIBED AT RIGHT:
<PAGE> 107
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane Doe,
Notary Public
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
-----------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S) ______________________________
______________________________
[ ] CORPORATE OFFICER(S) ______________________________
------------------------------
TITLE
------------------------------
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER _______________________
_______________________
_______________________
- --------------------------------------------------------------------------------
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT COULD
PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED DOCUMENT.
THIS CERTIFICATE Title or Type of Document_______________________________
MUST BE ATTACHED Number of Pages _____ Date of Document__________________
TO THE DOCUMENT Signer(s) Other Than Named Above _______________________
<PAGE> 108
DESCRIBED AT RIGHT:
<PAGE> 109
EXHIBIT A
TO MEMORANDUM OF LEASE
LEGAL DESCRIPTION OF LAND
Real Property in the City of Cupertino, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
Lot 5, as shown on that certain Map entitled Tract No. 7953 Cupertino City
Center Phase III, which Map was filed for record in the office of the Recorder
of the County of Santa Clara, State of California on February 27, 1987, in Book
571 of Maps, pages 36 and 37.
PARCEL TWO:
Easements as described in the Section entitled "Easements and Rights Reserved
for Owners" of the Article entitled "Easements and Rights of Entry" of the
Declaration of Covenants, Conditions, and Restrictions and Grant of Easement for
Cupertino City Center recorded October 9, 1985, in Book J482, page 1907, as
amended by that certain First Amendment to Declaration of Covenants, Conditions,
and Restrictions and Grant of Easements recorded September 2, 1987, in Book
K281, page 2071, each in the Official Records of Santa Clara County, California.
PARCEL THREE:
Easements for parking, landscaping, support, settlement and encroachment as
granted to Cupertino City Center Buildings, a California Limited Partnership, in
the Grant of Easement (Cupertino City Center 5) recorded February 5, 1997 under
Series No. 13602286.
<PAGE> 110
EXECUTION COPY
This instrument prepared by, recording requested by, and when recorded return
to:
MAYER, BROWN & PLATT
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
AMENDMENT NO. 1
dated as of March 3, 1997,
AMENDING
LEASE SUPPLEMENT NO. 3 AND
MEMORANDUM OF LEASE AND DEED OF TRUST
dated as of February 5, 1997
among
SYMANTEC CORPORATION,
as the Lessee,
SUMITOMO BANK LEASING AND FINANCE, INC.,
as the Lessor,
and
FIRST AMERICAN TITLE INSURANCE COMPANY,
as Trustee.
Location of Premises:
County of Santa Clara
State of California
___________________
This Amendment No. 1 is an amendment to
that certain Lease Supplement No. 3
and Memorandum of Lease and Deed of Trust
recorded on February 5, 1997 in the Official Records
of Santa Clara County, California (the "Official Records")
as Instrument No. 13602289,
with respect to the land described on Exhibit A
to this Amendment No. 1,
which Lease Supplement No. 3 is a supplement to
that certain Lease (as hereinafter defined),
as supplemented by that certain Lease Supplement No. 1
and Memorandum of Lease and Deed of Trust
recorded on October 21, 1996 in the Official Records, as
Instrument No. 13489802, and
that certain Lease Supplement No. 2
and Memorandum of Lease and Deed of Trust
recorded on October 23, 1996 in the Official Records, as
Instrument No. 13492444.
<PAGE> 111
THIS AMENDMENT NO. 1 TO LEASE SUPPLEMENT NO. 3 AND MEMORANDUM OF LEASE
AND DEED OF TRUST, dated as of March 3, 1997 (this "Amendment"), amending that
certain Lease Supplement No. 3 and Memorandum of Lease and Deed of Trust (the
"Memorandum") dated as of February 5, 1997 and recorded on February 5, 1997 in
the Official Records of Santa Clara County, California as Instrument No.
13602289, is among SYMANTEC CORPORATION, a Delaware corporation, having a
principal office at 10101 Torre Avenue, Cupertino, California 95014, as the
Lessee and as Mortgagor (the "Lessee"), SUMITOMO BANK LEASING AND FINANCE, INC.,
as the Lessor (the "Lessor"), having an address at 277 Park Avenue, New York,
New York 10172, and FIRST AMERICAN TITLE INSURANCE COMPANY (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Lessee, the Lessor and the Trustee have heretofore
entered into the Memorandum; and
WHEREAS, the Lessee, the Lessor and the Trustee now desire to amend the
Memorandum in certain respects to reflect the fact that the principal amount of
the obligations secured by the Memorandum has increased from Fifty Three Million
Dollars ($53,000,000) to Eighty One Million Five Hundred Thousand Dollars
($81,500,000), as hereinafter provided;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION I. Certain Terms. Capitalized terms used but not otherwise
defined in this Amendment have the meanings specified in Appendix A to the
Master Lease and Security Agreement dated as of October 18, 1996 (as amended by
that certain Master Amendment Agreement dated as of the date hereof, and as
further amended, restated, supplemented or otherwise modified from time to time,
the "Lease"), between the Lessee and the Lessor; and the rules of interpretation
specified in Appendix A to the Lease shall apply to this Amendment.
SECTION 2. Amendment to Section 8 of Memorandum. Section 8 of the
Memorandum is hereby amended by deleting the words "Fifty Three Million Dollars
($53,000,000)" appearing in the twentieth line of such Section, and replacing
such words with the words "Eighty One Million Five Hundred Thousand Dollars
($81,500,000)".
SECTION 3. Ratification of and References to Memorandum. This Amendment
shall be deemed to be an amendment to the Memorandum, and the Memorandum, as
amended hereby, is hereby
<PAGE> 112
ratified, approved and confirmed in every respect. All references to the
Memorandum in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Memorandum as amended hereby.
SECTION 4. Ratification of Lease. The terms and provisions of the Lease
are hereby ratified and confirmed and remain in full force and effect. In the
event of any conflict between the terms of the Lease and the terms of this
Amendment, the terms of the Lease shall control.
SECTION 7. Counterpart Execution. This Amendment may be executed in
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.
SECTION 9. GOVERNING LAW. THIS AMENDMENT, THE LEASE AND THE MEMORANDUM
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES
THEREOF.
-2-
<PAGE> 113
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
SYMANTEC CORPORATION, as the Lessee
By:__________________________
Name:
Title:
SUMITOMO BANK LEASING AND
FINANCE, INC., as the Lessor
By:_______________________
Name:
Title:
-3-
<PAGE> 114
Consent of Lessee to Assignment of Lease and Rent
CONSENT AND ACKNOWLEDGMENT BY SYMANTEC CORPORATION
--------------------------------------------------
The undersigned hereby acknowledges receipt of a counterpart original
of, and consents to, the foregoing Assignment of Lease and Rent.
The foregoing is furnished for good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged by the undersigned, and
the undersigned understands and intends that the Lenders will rely on the
foregoing and that the undersigned will be legally bound by the foregoing. This
Consent and Acknowledgment shall inure to the benefit of the Lenders and their
respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Consent and Acknowledgment as of October __, 1996, pursuant to proper authority
duly granted.
SYMANTEC CORPORATION
By:
--------------------------
Name:
Title:
<PAGE> 115
EXHIBIT A
TO ASSIGNMENT OF LEASE AND RENT
SUPPLEMENT NO. _____ TO
ASSIGNMENT OF LEASE AND RENT
THIS SUPPLEMENT NO. _____ (this "Supplement"), dated as of _________,
to the ASSIGNMENT OF LEASE AND RENT, dated as of October ___, 1996 (the
"Assignment"), made by SUMITOMO BANK LEASING AND FINANCE, INC., (the "Lessor"),
in favor of THE SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH, as Agent (in such
Capacity, the "Agent") for the Lenders. Capitalized terms used herein but not
otherwise defined have the meanings specified in the Assignment.
The parties hereto agree as follows:
1. The Property. In accordance with the Assignment, the Lessor
has executed this Supplement to subject the Master Lease, as supplemented by
the Lease Supplement attached as Schedule 1 hereto, to the Assignment. The
description of the Property is attached hereto as Schedule 2.
2. Integrated Assignment. Following the execution and delivery
of this Supplement, this Supplement, and all supplements previously delivered
under the Assignment, shall constitute a part of the Assignment.
3. Confirmation. Except as expressly supplemented hereby, the
provisions of the Assignment are and shall remain in full force and effect.
Further, the Lessor hereby reaffirms its obligations under the Assignment.
IN WITNESS WHEREOF, the Lessor has caused this supplement to be duly
executed as of the day and year first above written.
SUMITOMO BANK LEASING AND FINANCE,
INC., as Lessor
By:
-------------------------------
Name:
Title:
<PAGE> 116
Schedule 1
[Lease Supplement]
<PAGE> 117
Schedule 2
[Description of Property]
<PAGE> 118
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane Doe,
Notary Public
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
-----------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S) ______________________________
______________________________
[ ] CORPORATE OFFICER(S) ______________________________
------------------------------
TITLE
------------------------------
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER _______________________
_______________________
_______________________
- --------------------------------------------------------------------------------
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT COULD
PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
MUST BE ATTACHED Number of Pages _____ Date of Document________________
TO THE DOCUMENT Signer(s) Other Than Named Above _____________________
DESCRIBED AT RIGHT:
<PAGE> 119
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane Doe,
Notary Public
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
-----------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S) ______________________________
______________________________
[ ] CORPORATE OFFICER(S) ______________________________
------------------------------
TITLE
------------------------------
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER _______________________
_______________________
_______________________
- --------------------------------------------------------------------------------
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT COULD
PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
MUST BE ATTACHED Number of Pages _____ Date of Document________________
TO THE DOCUMENT Signer(s) Other Than Named Above _____________________
DESCRIBED AT RIGHT:
<PAGE> 120
EXHIBIT A TO
AMENDMENT NO. 1 TO LEASE SUPPLEMENT NO. 3
AND MEMORANDUM OF LEASE AND DEED OF TRUST
LEGAL DESCRIPTION OF LAND
Real Property in the City of Cupertino, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
Lot 5, as shown on that certain Map entitled Tract No. 7953 Cupertino City
Center Phase III, which Map was filed for record in the office of the Recorder
of the County of Santa Clara, State of California on February 27, 1987, in Book
571 of Maps, pages 36 and 37.
PARCEL TWO:
Easements as described in the Section entitled "Easements and Rights Reserved
for Owners" of the Article entitled "Easements and Rights of Entry" of the
Declaration of Covenants, Conditions, and Restrictions and Grant of Easement for
Cupertino City Center recorded October 9, 1985, in Book J482, page 1907, as
amended by that certain First Amendment to Declaration of Covenants, Conditions,
and Restrictions and Grant of Easements recorded September 2, 1987, in Book
K281, page 2071, each in the Official Records of Santa Clara County, California.
PARCEL THREE:
Easements for parking, landscaping, support, settlement and encroachment as
granted to Cupertino City Center Buildings, a California Limited Partnership, in
the Grant of Easement (Cupertino City Center 5) recorded February 5, 1997 under
Series No. 13602286.
<PAGE> 1
EXHIBIT 10.17
EXECUTION COPY
This instrument prepared by,
recording requested by,
and when recorded return to:
MAYER, BROWN & PLATT
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
================================================================================
ASSIGNMENT OF LEASE AND RENT
dated as of October 18, 1996
from
SUMITOMO BANK LEASING AND FINANCE, INC.,
as ASSIGNOR
to
THE SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH,
as Agent,
as ASSIGNEE
================================================================================
<PAGE> 2
ASSIGNMENT OF LEASE AND RENT
THIS ASSIGNMENT OF LEASE AND RENT, dated as of October 18, 1996 (this
"Assignment"), made by SUMITOMO BANK LEASING AND FINANCE, INC., a Delaware
corporation (the "Lessor"), to THE SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH,
as agent (the "Agent") for the Lenders under the Loan Agreement referred to
below (together with their respective successors and assigns, the "Lenders"),
W I T N E S S E T H:
WHEREAS, pursuant to the Loan Agreement dated as of the date hereof (as
amended, restated, supplemented or otherwise modified from time to time, the
"Loan Agreement"), among the Lessor, the Lenders and the Agent, the Lenders have
severally agreed to make Loans to the Lessor in an aggregate amount not to
exceed the aggregate Commitments of the Lenders, as set forth on Schedule I to
the Participation Agreement (as defined in Appendix A to the Loan Agreement),
upon the terms and subject to the conditions set forth in the Loan Agreement and
the Participation Agreement, to be evidenced by the notes (such notes, as the
same may hereafter be amended, modified, renewed, extended or otherwise changed
from time to time, together with any note or notes or other obligations executed
and delivered in renewal, extension or replacement thereof or in substitution or
exchange therefor, are hereinafter collectively referred to as the "Notes")
issued by the Lessor under the Loan Agreement;
WHEREAS, it is a condition, among others, to the obligation of the
Lenders to make their respective Loans to the Lessor under the Loan Agreement
that the Lessor shall have executed and delivered, and the Lessee shall have
consented to, this Assignment to the Agent for the benefit of the Lenders; and
WHEREAS, in order further to secure payment of all the amounts owing to
the Lenders under the Loan Agreement, the Notes and the other Operative
Documents, the Lessor has agreed to enter into, execute, and deliver this
Assignment;
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
1. Defined Terms. Capitalized terms used but not otherwise
defined in this Assignment shall have the respective meanings specified in
Appendix A to the Loan Agreement; and the rules of interpretation set forth in
such Appendix A shall apply to this Assignment.
<PAGE> 3
2. Assignment. To secure its obligations under the Loan Agreement, the
Lessor hereby assigns, transfers, sets over and conveys to the Agent for the
ratable benefit of the Lenders, all the following described property relating to
or arising in connection with the Properties (including, without limitation,
each Property described in a Supplement to this Assignment, as delivered from
time to time in the form attached hereto as Exhibit A), whether now owned or
held or hereafter acquired:
(a) Except as hereinafter provided, all of the estate, right,
title, interest, benefits, powers and privileges of the Lessor, as
lessor, under the Master Lease (including all Lease Supplements)
(hereinafter referred to collectively as the "Assigned Leases")
including (i) the immediate and continuing right, on a non-exclusive
basis, to make claim for, receive, collect and receipt for all rents,
income, revenues, issues, profits, insurance proceeds, condemnation
awards, sales proceeds and other sums payable to or receivable by the
Lessor under the Assigned Leases, or pursuant to any provisions
thereof, whether as rent or as the purchase price or termination
payment for any interest in any Property or otherwise (including,
without limitation, the Loan Balance, the Purchase Option Price and any
sales proceeds payable to the Lessor pursuant to the Assigned Leases)
(collectively, the "Lease Rents"), including all cash, securities or
letters of credit delivered or deposited pursuant thereto to secure
performance by the Lessee of its obligations thereunder, (ii) the right
and power (which right and power are coupled with an interest) upon the
purchase by the Lessee of the interest of the Lessor in any Property in
accordance with any Assigned Lease to execute and deliver as
irrevocable agent and attorney-in-fact of the Lessor an appropriate
instrument necessary to convey the interest of the Lessor therein, or
to pay over or assign to the Lessee those sums to which it is entitled
if the Lessee becomes obligated to purchase the interest of the Lessor
in any Property and to perform all other necessary or appropriate acts
as said agent and attorney-in-fact with respect to any such purchase
and conveyance, (iii) the right, on a non-exclusive basis, to perform
all other necessary or appropriate acts as said agent and
attorney-in-fact with respect to any purchase or conveyance referred to
in clause (ii) above, (iv) the right (subject to the consent of
Required Participants), on a non-exclusive basis, to declare the Master
Lease or any Lease Supplement to be in default, (v) subject to the
terms of the Operative Documents (and subject to the consent of
Required Participants), the
-2-
<PAGE> 4
Assignment of Lease and Rent
right to exercise remedies under or with respect to the Assigned
Leases, (vi) the right (subject to the consent of Required Lenders) to
make all waivers and agreements on behalf of the Lessor under the
Assigned Leases provided for or permitted under the Assigned Leases;
provided, however, that none of the foregoing will be made or given
with respect to Article VII, IX, X, XIII, XIV, XVIII, XX or XXI of the
Master Lease without the written consent of the Required Participants,
(vii) the right to give all notices, consents, releases and other
instruments provided under the Assigned Leases; provided, however, that
none of the foregoing will be made or given with respect to Article
VII, IX, X, XIII, XIV, XVIII, XX or XXI of the Master Lease without the
written consent of the Required Participants, (viii) the right (subject
to the consent of Required Participants), on a non-exclusive basis, to
give all notices of default and to take all action upon the happening
of a Default or an Event of Default under any Assigned Lease, including
the commencement, conduct and consummation of proceedings as shall be
permitted under any provision of any Assigned Lease, or by law or in
equity, (ix) the right, on a non-exclusive basis, to receive all
notices sent to the Lessor under any Assigned Lease, (x) the Lessor's
interest under any Assigned Lease in the Lessee's tangible and
intangible property used or arising in connection with any Property,
including, but not limited to, permits, licenses, contract rights and
prepaid expenses, and (xi) the right (subject to the consent of
Required Participants), on a non-exclusive basis, to do any and all
other things whatsoever which the Lessor is or any lessor is, or may be
entitled to do under any Assigned Lease. The Lessor hereby agrees that
any action taken by the Lenders (or their designee) pursuant to this
Assignment shall be exclusive, and no party relying on such action of
the Lenders (or such designee) pursuant hereto shall be required to
obtain the concurrence or consent of the Lessor to such action or to a
request for such action.
(b) All of the estate, right, title, interest, benefits,
powers and privileges of the Lessor, to and under all agreements or
contracts for the sale or other disposition of all or any part of any
Property, now or hereafter entered into by the Lessor (collectively,
the "Contracts"), together with all estate, right, title, interest,
benefits, powers and privileges of the Lessor under the Contracts
including, without limitation, the immediate and continuing right, on a
non-exclusive basis, to make claim for, receive, collect and receipt
for all
-3-
<PAGE> 5
Assignment of Lease and Rent
charges, fees, income, issues, profits, receipts, rents, revenues or
royalties payable under any of the Contracts (collectively, the
"Contract Rents" and, together with the Lease Rents, the "Rents") and
all right, title and interest of the Lessor thereunder, including all
cash, securities or letters of credit deposited thereunder to secure
performance by the obligors of their obligations thereunder.
(c) On a non-exclusive basis, all of the right, title and
interest of the Lessor in and to all claims and rights to the payment
of money at any time arising in connection with any repudiation,
rejection or breach of any Assigned Lease by the Lessee or a trustee or
receiver of the Lessee under any insolvency statute, law or regulation,
including, without limitation, all rights to recover damages arising
out of such breach or rejection, all rights to charges payable by the
Lessee or such trustee or receiver in respect of any Property or any
portions thereof following rejection, repudiation or disaffirmance of
the Lease or following the entry of an order for relief under any
insolvency statute, law or regulation in respect of the Lessee and all
rentals and other charges outstanding under the Lease as of the date of
entry of such order for relief.
Notwithstanding the foregoing provisions of this Section 2, the
assignment contained herein shall in no event include any amounts received by
Agent or Lessor or otherwise paid or payable to Lessor with respect to Yield,
Lessor Amount, indemnity payments to or for the benefit of the Lessor, insurance
proceeds under policies maintained by the Lessor and fees or Transaction
Expenses paid or payable to or for the benefit of the Lessor.
3. Receipt of Rents. The Lenders hereby acknowledge and agree that the
Agent will hold the Rents for the benefit of each of the Lenders and the Lessor,
and the Agent will distribute the Rents to the Lenders and the Lessor in
accordance with Article VII of the Participation Agreement.
4. Irrevocability; Supplemental Instruments. The Lessor agrees that
this Assignment and the designation and direction to the Lessee set forth in
Sections 2 and 3 of this Assignment are irrevocable and that it will not take
any action as lessor under the Leases or otherwise which is inconsistent with
this Assignment and that any action, assignment, designation or direction
inconsistent herewith shall be void. The Lessor will from time to time execute
and deliver all instruments of further assurance and do such further acts as may
be necessary or proper to carry out more effectively the purpose of this
Assignment.
-4-
<PAGE> 6
Assignment of Lease and Rent
5. Validity. The Lessor represents and warrants (on a continuing basis)
and covenants to the Lenders that (a) the Lessor has not assigned or executed
any assignment of, and will not assign or execute any assignment of, the
Lessor's interest in any of the Assigned Leases, in any Contract, in any Rents
or in any other subject matter of this Assignment to anyone other than the
Lenders and any assignment, designation or direction by the Lessor inconsistent
herewith shall be void, and (b) the Lessor has not done any act or executed any
document that impairs the rights of the Lenders to the Leases or the Rents under
this Assignment.
6. The Lessor Remains Liable. While the assignment made hereby is
present, direct and continuing, it has been made for the purpose of providing
the Lenders with security for the performance of the Lessor's obligations under
the Loan Agreement and the Notes and the execution and delivery hereof shall not
impair or diminish in any way the obligations of the Lessor under the Assigned
Leases, or impose any of such obligations on the Lenders. This Assignment shall
not operate to cause the Lenders (or their designee) to be regarded as a
mortgagee in possession. Neither the Lenders nor their designee shall be
responsible or liable for performing any of the obligations of the Lessor under
any of the Assigned Leases or any Contract, for any waste by the Lessee or
others, for any dangerous or defective conditions of any Property, for
negligence in the management, upkeep, repair or control of any Property or any
other act or omission by any other Person. Nothing contained herein shall
operate or be construed to (a) obligate the Lenders (or their designee) to
assume the obligations of the Lessor under any of the Assigned Leases or any
Contract, to perform any of the terms and conditions contained in any of the
Assigned Leases or any Contract or otherwise to impose any obligation upon the
Lenders with respect to any of the Assigned Leases or any Contract or (b) place
upon the Lenders (or their designee) any responsibility for the operation,
control, care, management or repair of any Property or any part thereof. Subject
at all times to the terms and conditions of this Assignment, the Lessor will at
all times promptly and faithfully perform in all respects, or cause to be
performed in all respects, all of its covenants, conditions and agreements
contained in the Assigned Leases or any Contract now or hereafter existing on
the part of the Lessor to be kept and performed.
7. Amendments; Lessee's Consent. The Lessor will not enter into any
agreement subordinating, amending, extending or terminating any of the Assigned
Leases except as provided in Section 14.5 of the Participation Agreement, and
any such
-5-
<PAGE> 7
Assignment of Lease and Rent
attempted subordination, amendment, modification, extension or termination
without compliance with such Section 14.5 shall be void. If any of the Assigned
Leases or any Contract shall be amended, it shall continue to be subject to the
provisions hereof without the necessity of any further act by any of the parties
hereto. The Lessor and the Lenders hereby consent to the provisions of Lessee's
Consent attached to this Assignment and agree to be bound thereby.
8. Termination of this Assignment. This Assignment shall continue in
full force and effect until all obligations, liabilities and indebtedness of any
kind now or hereafter due to the Lenders from the Lessor or the Lessee under or
with respect to the Loan Agreement or any of the other Operative Documents, or
which are otherwise secured hereby, whether now existing or hereafter arising or
incurred, have been fully paid, performed and satisfied, at which time this
Assignment will terminate.
9. Ongoing Right to Collect Rents; Receivers. If notwithstanding the
terms of this Assignment, a petition or order for sequestration of rents, or the
appointment of a receiver or some similar judicial action or order is deemed
required under applicable state law to allow the Lenders to continue to collect
the moneys described in paragraphs 2(a), (b) and (c) of this Assignment, then it
is agreed by the Lessor that any proof of claim or similar document filed by the
Lenders in connection with the breach or rejection of any Lease by the lessee
thereunder or the trustee of any lessee under any federal or state insolvency
statute shall for the purpose of perfecting the Lenders' rights conferred in
said paragraphs be deemed to constitute action required under such state law.
Upon the occurrence and during the continuance of a Loan Agreement Event of
Default (not existing solely by virtue of a Lease Event of Default), the Lessor
hereby consents to the appointment of a receiver for any or all of the
Properties as a matter of right and without any requirement for notice to the
Lessor and without regard to the solvency of the Lessor or to the collateral
that may be available for the satisfaction of the Notes and all other
obligations under the Loan Agreement and the other Operative Documents.
10. Amendment. This Assignment may not be amended or otherwise modified
except by a writing signed by the Lessor, the Agent and, if required by Section
14.5 of the Participation Agreement, the Lessee, in accordance with the terms of
the Participation Agreement.
11. Notices. All notices, demands, requests, consents, approvals and
other instruments under this Assignment shall be
-6-
<PAGE> 8
Assignment of Lease and Rent
made in accordance with the notice provisions of the Participation Agreement.
12. Successors and Assigns. All covenants, agreements, representations
and warranties in this Assignment by the Lessor and the Lenders shall bind, and
shall inure to the benefit of and be enforceable by, their respective successors
and assigns, whether or not so expressed.
13. Severability. If any provision or provisions, or if any portion of
any provision or provisions, in this Assignment is found by a court of law of
competent jurisdiction to be in violation of any local, state or Federal
ordinance, statute, law, administrative or judicial decision, or public policy,
and if such court should declare such portion, provision or provisions to be
illegal, invalid, unlawful, void or unenforceable as written, then it is the
intent of the parties hereto that such portion, provision or provisions shall be
given force to the fullest possible extent that they are legal, valid and
enforceable, that the remainder of this Assignment shall be construed as if such
illegal, invalid, unlawful, void or unenforceable portion, provision or
provisions were not contained therein, and that the rights, obligations and
interests of the Lessor, the Lenders and the Lessee under the remainder of this
Assignment shall continue in full force and effect.
14. Governing Law. THIS ASSIGNMENT AND THE RIGHTS AND OBLIGATIONS OF
THE LESSOR UNDER THIS ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
15. Counterparts. This Assignment may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
16. Conflicts. In the event of any conflicts between the terms and
provisions hereof and the terms and provisions of the other Operative Documents,
the terms and provisions of the other Operative Documents shall be controlling.
17. Non-Disturbance. So long as no Lease Event of Default has occurred
and is continuing, the Lenders will take no action to disturb the Lessee's
rights to quiet enjoyment of each Property as set forth in Section 4.1 of the
Master Lease.
-7-
<PAGE> 9
Assignment of Lease and Rent
IN WITNESS WHEREOF, the Lessor has caused this Assignment to be duly
executed as of the day and year first above written.
SUMITOMO BANK LEASING AND FINANCE,
INC., as Lessor
By_______________________________
Name:
Title:
-8-
<PAGE> 10
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane Doe,
Notary Public
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
-----------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S) ______________________________
______________________________
[ ] CORPORATE OFFICER(S) ______________________________
------------------------------
TITLE
------------------------------
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER _______________________
______________________________
______________________________
- --------------------------------------------------------------------------------
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT COULD
PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
-9-
<PAGE> 11
MUST BE ATTACHED Number of Pages _____ Date of Document________________
TO THE DOCUMENT Signer(s) Other Than Named Above _____________________
DESCRIBED AT RIGHT:
-10-
<PAGE> 12
Consent of Lessee to Assignment of Lease and Rent
CONSENT AND ACKNOWLEDGMENT BY SYMANTEC CORPORATION
The undersigned hereby acknowledges receipt of a counterpart original
of, and consents to, the foregoing Assignment of Lease and Rent.
The foregoing is furnished for good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged by the undersigned, and
the undersigned understands and intends that the Lenders will rely on the
foregoing and that the undersigned will be legally bound by the foregoing. This
Consent and Acknowledgment shall inure to the benefit of the Lenders and their
respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Consent and Acknowledgment as of October __, 1996, pursuant to proper authority
duly granted.
SYMANTEC CORPORATION
By_____________________________________
Name:
Title:
<PAGE> 13
EXHIBIT A
TO ASSIGNMENT OF LEASE AND RENT
SUPPLEMENT NO. __ TO
ASSIGNMENT OF LEASE AND RENT
THIS SUPPLEMENT NO. __ (this "Supplement"), dated as of ____________,
to the ASSIGNMENT OF LEASE AND RENT, dated as of October ___, 1996 (the
"Assignment"), made by SUMITOMO BANK LEASING AND FINANCE, INC., (the "Lessor"),
in favor of THE SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH, as Agent (in such
capacity, the "Agent") for the Lenders. Capitalized terms used herein but not
otherwise defined have the meanings specified in the Assignment.
The parties hereto agree as follows:
1. The Property. In accordance with the Assignment, the
Lessor has executed this Supplement to subject the Master Lease,
as supplemented by the Lease Supplement attached as Schedule 1
hereto, to the Assignment. The description of the Property is
attached hereto as Schedule 2.
2. Integrated Assignment. Following the execution and
delivery of this Supplement, this Supplement, and all supplements
previously delivered under the Assignment, shall constitute a
part of the Assignment.
3. Confirmation. Except as expressly supplemented hereby,
the provisions of the Assignment are and shall remain in full
force and effect. Further, the Lessor hereby reaffirms its
obligations under the Assignment.
IN WITNESS WHEREOF, the Lessor has caused this Supplement to be duly
executed as of the day and year first above written.
SUMITOMO BANK LEASING AND FINANCE,
INC., as Lessor
By_______________________________
Name:
Title:
<PAGE> 14
Schedule 1
[Lease Supplement]
<PAGE> 15
Schedule 2
[Description of Property]
<PAGE> 16
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane Doe,
Notary Public
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
-----------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S) ______________________________
______________________________
[ ] CORPORATE OFFICER(S) ______________________________
------------------------------
TITLE
------------------------------
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER _______________________
______________________________
______________________________
- --------------------------------------------------------------------------------
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT COULD
PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
<PAGE> 17
MUST BE ATTACHED Number of Pages _____ Date of Document________________
TO THE DOCUMENT Signer(s) Other Than Named Above _____________________
DESCRIBED AT RIGHT:
<PAGE> 18
Consent of Lessee to Supplement to Assignment of Lease and Rent
CONSENT AND ACKNOWLEDGMENT BY SYMANTEC CORPORATION
The undersigned hereby acknowledges receipt of a counterpart original
of, and consents to, the foregoing Supplement No. __ to the Assignment of Lease
and Rent.
The foregoing is furnished for good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged by the undersigned, and
the undersigned understands and intends that the Agent and the Lenders will rely
on the foregoing and that the undersigned will be legally bound by the
foregoing. This Consent and Acknowledgment shall inure to the benefit of the
Agent, the Lenders and their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Consent and Acknowledgment as of October ___, 1996, pursuant to proper authority
duly granted.
SYMANTEC CORPORATION
By______________________________________
Name:
Title:
<PAGE> 19
EXECUTION COPY
SUPPLEMENT NO. 1 TO
ASSIGNMENT OF LEASE AND RENT
THIS SUPPLEMENT NO. 1 (this "Supplement"), dated as of October 18, to the
ASSIGNMENT OF LEASE AND RENT, dated as of October 18, 1996 (the "Assignment"),
made by SUMITOMO BANK LEASING AND FINANCE, INC., (the "Lessor"), in favor of THE
SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH, as Agent (in such capacity, the
"Agent") for the Lenders. Capitalized terms used herein but not otherwise
defined have the meanings specified in the Assignment.
The parties hereto agree as follows:
1. The Property. In accordance with the Assignment, the Lessor has
executed this Supplement to subject the Master Lease, as supplemented by the
Lease Supplement attached as Schedule 1 hereto, to the Assignment. The
description of the Property is attached hereto as Schedule 2.
2. Integrated Assignment. Following the execution and delivery of
this Supplement, this Supplement, and all supplements previously delivered
under the Assignment, shall constitute a part of the Assignment.
3. Confirmation. Except as expressly supplemented hereby, the
provisions of the Assignment are and shall remain in full force and effect.
Further, the Lessor hereby reaffirms its obligations under the Assignment.
IN WITNESS WHEREOF, the Lessor has caused this Supplement to be duly
executed as of the day and year first above written.
SUMITOMO BANK LEASING AND FINANCE, INC.,
as Lessor
By_______________________________
Name:
Title:
<PAGE> 20
Schedule 1
[Lease Supplement]
<PAGE> 21
Schedule 2
[Description of Property]
<PAGE> 22
Consent of Lessee to Supplement to Assignment of Lease and Rent
CONSENT AND ACKNOWLEDGMENT BY SYMANTEC CORPORATION
The undersigned hereby acknowledges receipt of a counterpart original of,
and consents to, the foregoing Supplement No. 1 to the Assignment of Lease and
Rent.
The foregoing is furnished for good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged by the undersigned, and the
undersigned understands and intends that the Agent and the Lenders will rely on
the foregoing and that the undersigned will be legally bound by the foregoing.
This Consent and Acknowledgment shall inure to the benefit of the Agent, the
Lenders and their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Consent and Acknowledgment as of October ___, 1996, pursuant to proper authority
duly granted.
SYMANTEC CORPORATION
By_______________________________
Name:
Title:
<PAGE> 23
EXECUTION COPY
This instrument prepared by,
recording requested by,
and when recorded return to:
MAYER, BROWN & PLATT
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
SUPPLEMENT NO. 3 TO
ASSIGNMENT OF LEASE AND RENT
dated as of _______________ ___, 1997
made by
SUMITOMO BANK LEASING AND FINANCE, INC.,
as the Lessor,
in favor of
SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH,
as the Agent
Location of Premises:
County of Santa Clara
State of California
This Supplement is a supplement to
that certain Assignment (as hereinafter defined),
recorded on October 21, 1996, in the Official Records
of Santa Clara County, California (the "Official Records"),
as Instrument No. 13489803, as supplemented by
that certain Supplement No. 1 to Assignment of Lease and Rent,
recorded on October 21, 1996, in the Official Records
as Instrument No. 13489804, and
that certain Supplement No. 2 to Assignment of Lease and Rent,
recorded on October 23, 1996, in the Official Records, as
Instrument No. 13492445
<PAGE> 24
SUPPLEMENT NO. 3 TO
ASSIGNMENT OF LEASE AND RENT
THIS SUPPLEMENT NO. 3 (this "Supplement"), dated as of _______________
___, 1997, to the ASSIGNMENT OF LEASE AND RENT, dated as of October 18, 1996
(the "Assignment"), made by SUMITOMO BANK LEASING AND FINANCE, INC., (the
"Lessor"), in favor of THE SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH, as
Agent (in such capacity, the "Agent") for the Lenders. Capitalized terms used
herein but not otherwise defined have the meanings specified in the Assignment.
The parties hereto agree as follows:
1. The Property. In accordance with the Assignment, the Lessor has
executed this Supplement to subject the Master Lease, as supplemented by the
Lease Supplement attached as Schedule 1 hereto, to the Assignment. The
description of the Property is attached hereto as Schedule 2.
2. Integrated Assignment. Following the execution and delivery of
this Supplement, this Supplement, and all supplements previously delivered
under the Assignment, shall constitute a part of the Assignment.
3. Confirmation. Except as expressly supplemented hereby, the
provisions of the Assignment are and shall remain in full force and effect.
Further, the Lessor hereby reaffirms its obligations under the Assignment.
IN WITNESS WHEREOF, the Lessor has caused this Supplement to be duly
executed as of the day and year first above written.
SUMITOMO BANK LEASING AND FINANCE, INC.,
as Lessor
By__________________________________________
Name:
Title:
<PAGE> 25
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane Doe,
Notary Public"
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
Witness my hand and official seal.
-----------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S)
------------------------------
------------------------------
------------------------------
[ ] CORPORATE OFFICER(S)
----------------------------
TITLE
----------------------------
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER
----------------------
----------------------------
----------------------------
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT
COULD PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED
DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
<PAGE> 26
MUST BE Number of Pages _____ Date of Document________________
ATTACHED Signer(s) Other Than Named Above _____________________
TO THE DOCUMENT
DESCRIBED AT RIGHT:
<PAGE> 27
Consent of Lessee to Supplement to Assignment of Lease and Rent
CONSENT AND ACKNOWLEDGMENT BY SYMANTEC CORPORATION
The undersigned hereby acknowledges receipt of a counterpart original of,
and consents to, the foregoing Supplement No. 3 to the Assignment of Lease and
Rent.
The foregoing is furnished for good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged by the undersigned, and the
undersigned understands and intends that the Agent and the Lenders will rely on
the foregoing and that the undersigned will be legally bound by the foregoing.
This Consent and Acknowledgment shall inure to the benefit of the Agent, the
Lenders and their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Consent and Acknowledgment as of _______________ ___, 1997, pursuant to proper
authority duly granted.
SYMANTEC CORPORATION
By__________________________________________
Name:
Title:
<PAGE> 28
ALL-PURPOSE ACKNOWLEDGEMENT
State of ___________________ )
)
County of __________________ )
On _______________________ before me, _______________________________________,
Date Name, Title of Officer, e.g., "Jane Doe,
Notary Public"
personally appeared _________________________________________________________,
[ ] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
Witness my hand and official seal.
-----------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[ ] INDIVIDUAL(S)
---------------------------------
---------------------------------
---------------------------------
[ ] CORPORATE OFFICER(S)
------------------------------
TITLE
------------------------------
TITLE
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER
----------------------
------------------------------
------------------------------
ATTENTION NOTARY: ALTHOUGH THE INFORMATION REQUESTED BELOW IS OPTIONAL, IT
COULD PREVENT FRAUDULENT ATTACHMENT OF THIS CERTIFICATE TO UNAUTHORIZED
DOCUMENT.
THIS CERTIFICATE Title or Type of Document_____________________________
<PAGE> 29
MUST BE Number of Pages _____ Date of Document________________
ATTACHED Signer(s) Other Than Named Above _____________________
TO THE DOCUMENT
DESCRIBED AT RIGHT:
<PAGE> 30
Schedule 1
[Copy of Lease Supplement No. 3]
<PAGE> 31
Schedule 2
Real Property in the City of Cupertino, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
Lot 5, as shown on that certain Map entitled Tract No. 7953 Cupertino City
Center Phase III, which Map was filed for record in the office of the Recorder
of the County of Santa Clara, State of California on February 27, 1987, in Book
571 of Maps, pages 36 and 37.
PARCEL TWO:
Easements as described in the Section entitled "Easements and Rights Reserved
for Owners" of the Article entitled "Easements and Rights of Entry" of the
Declaration of Covenants, Conditions, and Restrictions and Grant of Easement for
Cupertino City Center recorded October 9, 1985, in Book J482, page 1907, as
amended by that certain First Amendment to Declaration of Covenants, Conditions,
and Restrictions and Grant of Easements recorded September 2, 1987, in Book
K281, page 2071, each in the Official Records of Santa Clara County, California.
PARCEL THREE:
Easements for parking, landscaping, support, settlement and encroachment as
granted to Cupertino City Center Buildings, a California Limited Partnership, in
the Grant of Easement (Cupertino City Center 5) recorded _______________ ___,
1997 under Series No. ______________.
<PAGE> 32
[EXECUTION COPY]
This instrument prepared by,
recording requested by,
and when recorded return to:
MAYER, BROWN & PLATT
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
================================================================================
MASTER AMENDMENT NO. 1
dated as of March 3, 1997
among
SYMANTEC CORPORATION,
as Lessee, Pledgor, Guarantor and Construction Agent,
SUMITOMO BANK LEASING AND FINANCE, INC.,
as Lessor,
THE SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH,
and the other
VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED HEREIN,
as Lenders,
and
THE SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH,
as Agent.
-----------------------
Lease Financing of Three Properties
Located in Cupertino, California
and Construction of Certain Improvements
for Symantec Corporation
================================================================================
This Master Amendment No. 1 is an amendment to, among other things,
that certain Assignment of Lease and Rent
recorded on October 21, 1996 in the Official Records
of Santa Clara County, California (the "Official Records")
as Instrument No. 13489803, as supplemented by
that certain Supplement No. 1 to Assignment of Lease and Rent,
with respect to the land described on Annex 1 hereto,
recorded on October 21, 1996, in the Official Records,
as Instrument No. 13489804,
that certain Supplement No. 2 to Assignment of Lease and Rent,
with respect to the land described on Annex 2 hereto,
recorded on October 23, 1996, in the Official Records,
as Instrument No. 13492445,
and that certain Supplement No. 3 to Assignment of Lease and Rent,
with respect to the land described on Annex 3 hereto,
recorded on February 5, 1997, in the Official Records,
as Instrument No. 13602290.
<PAGE> 33
MASTER AMENDMENT NO. 1
THIS MASTER AGREEMENT NO. 1 (this "Amendment"), dated as of March 3, 1997,
to (a) that certain Participation Agreement dated as of October 18, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Participation Agreement") by and among SYMANTEC CORPORATION, a
Delaware corporation, as the Lessee, Pledgor and Guarantor; SUMITOMO BANK
LEASING AND FINANCE, INC., a Delaware corporation, as Lessor; THE SUMITOMO BANK,
LIMITED, SAN FRANCISCO BRANCH, a Japanese banking organization acting through
its San Francisco Branch, and the other Lenders; and THE SUMITOMO BANK, LIMITED,
SAN FRANCISCO BRANCH, as Agent; (b) that certain Master Lease and Deed of Trust
dated as of October 18, 1996 (as amended, supplemented, amended and restated or
otherwise modified from time to time, the "Master Lease"), between the Lessee
and the Lessor; (c) that certain Loan Agreement dated as of October 18, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Loan Agreement"), among the Lessor, the Lenders and the Agent; and
(d) that certain Assignment of Lease and Rent dated as of October 18, 1996 and
recorded on October 21, 1996 in the Official Records of Santa Clara County,
California (the "Official Records"), as Instrument No. 13489803 (as supplemented
by Supplement No. 1 to Assignment of Lease and Rent dated as of October 18, 1996
and recorded on October 21, 1996 in the Official Records as Instrument No.
13489804, Supplement No. 2 to Assignment of Lease and Rent dated as of October
22, 1996 and recorded on October 23, 1996 in the Official Records as Instrument
No. 13492445, and Supplement No. 3 to Assignment of Lease and Rent dated as of
February 5, 1997 and recorded on February 5, 1997 in the Official Records as
Instrument No. 13602290, and as amended, supplemented, amended and restated or
otherwise modified from time to time, the "Assignment of Lease and Rent"), made
by Sumitomo Bank Leasing and Finance, Inc., to The Sumitomo Bank, Limited, San
Francisco Branch, as Agent.
W I T N E S S E T H:
WHEREAS, the Lessee, the Lessor, the Lenders and the Agent have
heretofore entered into the Participation Agreement;
WHEREAS, the Lessee and the Lessor have heretofore entered into the Master
Lease and certain Lease Supplements;
WHEREAS, the Lenders and the Lessor wish to finance the construction of
certain Improvements located on the Land subject to Lease Supplement No. 3;
<PAGE> 34
WHEREAS, the Lessee, as Construction Agent, will construct the
Improvements on the Land subject to Lease Supplement No. 3 and such
Improvements, as constructed, will be the property of the Lessor;
WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee desires
to lease from the Lessor, such Improvements;
WHEREAS, the Improvements on the Land subject to Lease Supplement No. 3
will be made subject to the Master Lease pursuant to a Lease Supplement to be
dated as of the date hereof, and will become part of the Property subject to the
terms of the Master Lease;
WHEREAS, the Lessee, the Lessor, the Lenders and the Agent now desire to
amend (a) the Participation Agreement (including Schedule I thereto), (b)
Appendix A to the Participation Agreement, (c) the Master Lease, (d) each Lease
Supplement, (e) the Loan Agreement and (f) the Assignment of Lease and Rent, as
hereinafter provided;
NOW, THEREFORE, in consideration of the mutual agreements contained in
this Amendment and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and not
defined herein (including the recitals hereto) shall have the meanings assigned
thereto in Appendix A to the Participation Agreement (as amended hereby,
"Appendix A") for all purposes hereof; and the rules of interpretation set forth
in Appendix A shall apply to this Amendment.
ARTICLE II
CERTAIN AMENDMENTS
SECTION II.1. Amendments to the Participation Agreement. Solely with
respect to the Subject Property and not with respect to Property No. 1 and
the Improvements constructed thereon, the Master Lease is hereby amended as
follows:
(a) Amendment to Article II. Article II of the Participation
Agreement is hereby amended as follows:
-2-
<PAGE> 35
(i) the caption is amended by adding a semicolon at the end
thereof and inserting the following immediately after such semicolon:
"CONDITIONS PRECEDENT TO EACH CONSTRUCTION ADVANCE; CONDITIONS TO
SUBSTANTIAL COMPLETION".
(ii) the following provisions shall be inserted at the end of
such Article:
SECTION 2.3. Conditions Precedent to each Construction
Advance. The obligations of the Lessor to make a Construction
Advance on a Construction Payment Date is subject to satisfaction or
waiver of the following conditions precedent:
(a) Funding Request. Each of the Lenders, the Lessor and
the Agent shall have received a fully executed counterpart of
the applicable Funding Request in accordance with Section 3.4
(except that the Funding Request shall be substantially in the
form of Exhibit E to Master Amendment No. 1) executed by the
Lessee, as Construction Agent. Each of the delivery of a
Funding Request and the acceptance of the proceeds of the
applicable Construction Advance shall constitute a
representation and warranty by the Lessee that on such
Construction Payment Date (both immediately before and after
giving effect to the making of such Construction Advance and
the application of the proceeds thereof), the statements made
in Section 8.1 are true and correct.
(b) Fees. The Agent and the Lessor shall have
received all fees then due and payable pursuant to Section
4.3.
(c) Accuracy of Representations and Warranties. On the
applicable Construction Payment Date the representations and
warranties of the Lessee contained herein and in each of the
other Operative Documents shall be true and correct in all
Material respects as though made on and as of such date,
except to the extent such representations or warranties relate
solely to an earlier date, in which case such representations
and warranties shall have been true and correct in all
Material respects on and as of such earlier date.
-3-
<PAGE> 36
(d) Litigation. On the applicable Construction Payment
Date there shall not be any actions, suits or proceedings
pending or, to the knowledge of the Lessee, threatened by or
against the Lessee (i) that are reasonably likely to have a
Material adverse effect on City Center V or (ii) that question
the validity of the Operative Documents or the rights or
remedies of the Lessor with respect to the Lessee or City
Center V under the Operative Documents.
(e) No Default. There shall not have occurred and be
continuing any Default or Event of Default under the Master
Lease, and no Default or Event of Default under the Master
Lease will have occurred after giving effect to the making of
the Construction Advance requested by such Funding Request.
(f) Commitment Amount. After giving effect to the
applicable Construction Advance, (x) the condition set forth
in Section 3.1(c) shall not be violated and (y) the Property
Improvement Costs for City Center V shall not exceed the
Construction Commitment.
(g) Cost of Completion. After giving effect to the
applicable Construction Advance, the estimated as yet unpaid
cost to the Construction Agent of completing the Construction
pursuant to the Construction Documents shall not exceed the
Available Construction Commitment.
(h) Building Permits. All building permits required by
any Governmental Authority in connection with the Construction
for which the applicable Construction Advance is being made
shall have been obtained.
(i) Prime Construction Contract. With respect to
all Construction Advances, the Prime Construction Contract
shall have been duly executed and delivered by the parties
thereto and shall be in form and substance satisfactory to
the Lessor.
(j) Title Policy Endorsement. The Lessor shall have
received on the date of such Construction Advance an
endorsement to the title policy delivered pursuant to the
Lease (i) indicating that since the date of the preceding
Construction Advance there has been no change in the state of
title, and (ii) updating the title policy to the date of such
Construction Advance.
-4-
<PAGE> 37
SECTION 2.4. Conditions to Substantial Completion of the
Property. Substantial Completion shall be deemed to have occurred
for purposes of the Operative Documents at such time as the
Construction shall have been substantially completed in accordance
with the Plans and Specifications and all Applicable Law, as
evidenced by certificates of the Architect, the Prime Contractor and
the Construction Agent, all in form and substance reasonably
satisfactory to the Lessor.
(b) Amendment to Section 3.1. Section 3.1 of the Participation
Agreement is hereby amended and restated to read in its entirety as
follows:
SECTION 3.1. Advances.
(a) Subject to the conditions and terms hereof, the Lessor and
the Agent shall take the following actions at the written request of
the Lessee on the Acquisition Date for each Property:
(i) the Lessor and the Agent shall make an Advance (out
of the funds provided by the Lessor and the Lenders) to the
Lessee, for the purpose of financing the acquisition of Land
and Improvements existing thereon, if any, and the Fees and
the Transaction Expenses incurred in connection therewith, and
the proceeds of such Advances shall be made directly to the
Lessee or to such payees designated in writing by the Lessee;
(ii) the Lessor shall acquire the Land and
Improvements, if any (using the funds provided by the
Lessor and the Lenders); and
(iii) the Lessor shall lease the Land and Improvements
to the Lessee under the Master Lease and the respective Lease
Supplements.
(b) Subject to the conditions and terms hereof, (including,
without limitation, receipt of a Funding Request in accordance with
Section 3.4), the Lessor and the Agent shall make a Construction
Advance on a Construction Payment Date (out of funds provided by the
Lessor and the Lenders) to the Lessee, for the purpose of financing
the Construction of Improvements for City Center V, and the proceeds
of such Construction Advances shall be paid directly to the
Construction Agent or its designee(s) for the purpose of paying or
reimbursing itself for Property Improvement Costs, and
-5-
<PAGE> 38
paying Capitalized Interest, the Arrangement Fee, the Commitment
Fees, Transaction Expenses paid or payable by the Lessee in
connection therewith, and all fees paid or payable by the Lessee to
the Lessor in connection with the Operative Documents.
(c) Notwithstanding any other provision hereof, the
Participants shall not be obligated to make any Advance if, after
giving effect thereto, the aggregate outstanding amounts of each of
the Loans and the Lessor Amounts would exceed the Maximum Commitment
Amount.
(c) Amendment to Section 3.2. Section 3.2 of the Participation
Agreement is hereby amended as follows: (x) by deleting the words "the
Acquisition Date for each Property" appearing in the third line thereof
and replacing them with the words "each Funding Date", and (y) by deleting
the word "Acquisition" appearing in the sixth line thereof and replacing
it with the word "Funding".
(d) Amendment to Section 3.3. Section 3.3 of the Participation
Agreement is hereby amended as follows: (x) by deleting the words "the
Acquisition Date for each Property" appearing in the third and fourth
lines thereof and replacing them with the words "each Funding Date" and
(y) by deleting the word "Acquisition" appearing in the seventh line
thereof and replacing it with the word "Funding".
(e) Amendments to Section 3.4.
(i) Clause (a) of Section 3.4 of the Participation Agreement is
hereby amended as follows: (x) by deleting the word "Acquisition"
appearing in the sixth line thereof immediately after the words "prior to
the proposed" and replacing it with the word "Funding", (y) by deleting
the word "Acquisition" appearing in subclause (i) of such clause (a) and
replacing it with the word "Funding" and (z) by deleting the word "and"
appearing between subclauses (ii) and (iii) of such clause (a), and
inserting the words "and (iv) in the case of a Construction Advance,
requesting that the proceeds of such Construction Advance be wire
transferred to the accounts and Persons specified therein" immediately
before the period at the end of such sentence.
(ii) Clause (b) of Section 3.4 of the Participation Agreement is
hereby amended by inserting the words "and Property Improvement Costs"
immediately before the period at the end of such sentence.
(f) Amendment to Section 4.3. Section 4.3 of the Participation
Agreement is hereby amended and restated in
-6-
<PAGE> 39
its entirety to read as follows:
SECTION 4.3. Fees. The Lessee hereby agrees to pay the
fees set forth in this Section 4.3. All such fees shall be
non-refundable.
(a) Fee Letter. The Lessee shall pay the Fees to the
Lessor and the Agent.
(b) Commitment Fee. The Lessee shall pay to the Lessor,
for the period (including any portion thereof when the
Lessor's obligations pursuant to Section 3.2 are suspended by
reason of the Lessee's inability to satisfy any condition of
Article II) commencing on (and including) the Improvements
Closing Date for City Center V and continuing through (but
excluding) the last day of the Construction Commitment Period,
a Commitment Fee (the "Commitment Fee") at a rate of 0.275%
per annum on the average daily unused portion of the
Construction Commitment Amount. The Commitment Fee shall be
payable by the Lessee in arrears on each Construction Payment
Date and on the last day of the Construction Commitment
Period.
(b) Arrangement Fee. The Lessee shall pay to the Lessor
an Arrangement Fee (the "Arrangement Fee") in the amount of
$85,500.00, which amount shall be payable on the Improvements
Closing Date for City Center V and will be capitalized and
included in the Property Improvement Costs of City Center V.
(g) Amendment to Section 8.2. Section 8.2 of the Participation
Agreement is hereby amended by deleting the word "Acquisition" appearing
in the fifth line thereof and replacing it with the words "Funding".
(h) Amendment to Section 9.1. Clause (a) of Section 9.1 of the
Participation Agreement is hereby amended by deleting the word
"Acquisition" appearing in the fourth line of such clause and replacing it
with the word "Funding".
(i) Amendment to Section 13.2. Clause (a) of Section 13.2 of the
Participation Agreement is hereby amended by inserting the following words
immediately prior to the period at the end of such clause: "(or, in the
case of the Improvements constructed on City Center V pursuant to the
Construction Agency Agreement, the Appraisal delivered on the Improvements
Closing Date)".
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<PAGE> 40
(j) Amendment to Schedule I. Schedule I to the Participation
Agreement is hereby amended and restated in its entirety to read as set
forth in Schedule I attached hereto.
SECTION II.2. Amendments to Appendix A. Appendix A to the Participation
Agreement is hereby amended as follows:
(a) The following definitions shall be added to Appendix A in their
appropriate alphabetical order:
"Architect" means Hellmuth, Obata + Kassabaum, or such other
Person who shall, with the prior consent of the Lessor, have been
designated by the Construction Agent to act as the architect for
purposes of the Construction.
"Available Construction Commitment" means at any time, an
amount equal to the excess, if any, of (a) the amount of the
Construction Commitment Amount over (b) the aggregate original
principal amount of all Construction Advances (including all
Construction Advances made for the purpose of financing Capitalized
Interest, Commitment Fees and the Arrangement Fee).
"Capitalized Interest" means, for each Construction Payment
Date during the Construction Commitment Period, an amount equal to
(a) the aggregate outstanding Property Improvement Costs on such
date multiplied by (b) the LIBO Rate (Reserve Adjusted) plus a
margin of 0.275% multiplied by (c) the number of days elapsed since
the immediately preceding Construction Payment Date (or, in the case
of the first Construction Payment Date, the number of days elapsed
since the first Construction Advance), divided by (d) 360.
"City Center V" means the Property consisting of (a) the Land
and Improvements covered by Lease Supplement No. 3 dated as of
February 5, 1997, together with (b) all Improvements thereon
constructed pursuant to the Construction Agency Agreement.
"Construction" means the construction and installation of
all Improvements contemplated by the Plans and Specifications.
"Construction Advance" means each Advance made by the Lessor
and the Agent to the Construction Agent for the purpose of paying
Property Improvement Costs with respect to City Center V.
-8-
<PAGE> 41
"Construction Agency Agreement" means the Construction Agency
Agreement dated as of March 3, 1997 between the Lessor and the
Construction Agent, with respect to City Center V.
"Construction Agency Agreement Event of Default" means a
"Construction Agency Agreement Event of Default" as defined in
Section 5.1 of the Construction Agency Agreement.
"Construction Agent" means Symantec Corporation, as
construction agent under the Construction Agency Agreement.
"Construction Commitment Amount" means $28,500,000.
"Construction Commitment Period" means the period commencing
on (and including) the Improvements Closing Date for City Center V
and ending on (but excluding) the date occurring on the earliest of
(x) the first Business Day of the second full month following
Substantial Completion, (y) the first Business Day following the
calendar month in which the Construction Commitment Amount has been
fully funded and (z) the first Business Day of the twenty-fifth
(25th) month following the Improvements Closing Date.
"Construction Documents" is defined in Section 2.4 of the
Construction Agency Agreement.
"Construction Payment Date" means (a) the last Business Day of
each calendar month, commencing with the last Business Day of March,
1997, and (b) the last day of the Interim Lease Term (provided, that
if such day is not a Business Day, such Construction Payment Date
shall be extended to the next succeeding Business Day).
"Force Majeure Event" means any event (the existence of which
was not known and could not have been discovered through the
exercise of due diligence by the Lessee or the Construction Agent
prior to the Improvements Closing Date) beyond the control of the
Lessee and the Construction Agent, including, but not limited to,
strikes, lockouts, adverse soil conditions, acts of God, adverse
weather conditions, inability to obtain labor or materials,
government activities, civil commotion and enemy action; but
excluding any event, cause or condition that results from the
Construction Agent's financial condition or failure to pay or any
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<PAGE> 42
event, cause or condition which could have been avoided or which
could be remedied through the exercise of commercially reasonable
efforts or the commercially reasonable expenditure of funds.
"Funding Date" means (a) each Acquisition Date and (b) each
date on which a Construction Advance is made.
"Improvements Closing Date" is defined in Section 3.1 of
Master Amendment No. 1.
"Interim Lease Term" is defined in Section 2.3 of the
Master Lease.
"Master Amendment No. 1" means the Master Amendment No. 1
dated as of March 3, 1997, among the Lessee, the Lessor, the
Lenders and the Agent, amending the Participation Agreement,
Appendix A to the Participation Agreement, the Master Lease, the
Loan Agreement and the Assignment of Lease and Rent.
"Outside Completion Date" means the date occurring twenty-four
(24) months after the Improvements Closing Date.
"Plans and Specifications" means the plans and specifications
for the construction and installation of Improvements for City
Center V, as more particularly described in Schedule 2 to the
Construction Agency Agreement.
"Prime Construction Contract" means the contract between the
Construction Agent and the Prime Contractor, as amended from time to
time in accordance with the Construction Agency Agreement.
"Prime Contractor" means the contractor designated as such in
the Prime Construction Contract or such other Person who shall, with
the prior consent of the Lessor, have been designated by the
Construction Agent to act as the general contractor for purposes of
the Construction.
"Property Improvement Costs" means out-of-pocket costs of the
Construction Agent incurred and properly payable under the
Construction Documents in accordance with the Operative Documents.
"Substantial Completion" means such time as the conditions set
forth in Section 2.4 of the Participation Agreement shall have been
satisfied with
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<PAGE> 43
respect to City Center V.
(b) The definition of "Appraisal" is hereby amended by inserting the
words "(or, in the case of the Appraisal delivered with respect to the
Improvements on City Center V, as of the Improvements Closing Date)"
immediately after the words "Fair Market Sales Value of such Property as
of the Acquisition Date" appearing therein.
(c) The definition of "Lease Supplement" is hereby amended by
inserting the words "or Improvements Closing Date, as applicable,"
immediately after the words "dated as of the Acquisition Date" appearing
therein.
(d) The definition of "Maximum Commitment Amount" in Appendix A is
hereby amended by deleting the amount "$53,000,000.00" and replacing it
with the amount "$81,500,000.00".
(e) the definition of "Operative Documents" in Appendix A is hereby
amended by deleting the word "and" at the end of clause (k) thereof, by
deleting the period at the end of clause (l) thereof and replacing it with
a semicolon, and by inserting the following immediately after such
semicolon:
(m) the Construction Agency Agreement; and
(n) Master Amendment No. 1.
SECTION II.3. Amendments to Master Lease. The Master Lease is hereby
amended as follows:
(a) Amendment to Section 2.3. Section 2.3 of the Master Lease is
hereby amended by inserting the words "(other than the Improvements
comprising part of City Center V)" immediately after the words "with
respect to any Property", and inserting the following at the end of such
Section: "The Lease Term of this Master Lease with respect to the
Improvements comprising part of City Center V and constructed pursuant to
the Construction Agency Agreement shall consist of an Interim Lease Term
(the "Interim Lease Term") and a Base Lease Term. The Interim Lease Term
for such Improvements shall begin on (and include) the Improvements
Closing Date and end on (but exclude) the first day of the Base Lease Term
for such Improvements. The Base Lease Term for the Improvements comprising
part of City Center V and constructed pursuant to the Construction Agency
Agreement shall (i) begin on (and include) the earliest of (x) the first
Business Day of the second full month following Substantial Completion,
(y) the first Business Day following the calendar month in which the
Construction
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<PAGE> 44
Commitment Amount has been fully funded and (z) the first Business Day of
the twenty-fifth (25th) month following the Improvements Closing Date
(provided, that no Construction Agency Agreement Event of Default shall
have occurred and be continuing on such date) and (ii) end on (but
exclude) the seventh (7th) anniversary of the Documentation Date, unless
earlier terminated in accordance with the provisions of this Master Lease
and the other Operative Documents.
(b) Amendment to Section 3.1. Clause (a) of Section 3.1 of the
Master Lease is hereby amended by deleting the phrase "During the Lease
Term" at the beginning of such clause and replacing it with the phrase
"During the Base Lease Term for each Property".
SECTION II.4. Amendments to Loan Agreement. The Master Lease is
hereby amended as follows:
(a) Amendment to Second Recital. The Second Recital of the Loan
Agreement is hereby amended by deleting the amount "$45,800,000.00"
appearing therein and replacing it with the amount "$70,450,000.00".
(b) Amendment to Section 2.1. Section 2.1 of the Loan Agreement is
hereby amended by inserting the words "and Property Improvement Costs"
immediately after the words "and to pay Property Acquisition Costs"
appearing in the fifth line thereof.
(c) Amendment to Section 8.11. Section 8.11 of the Loan Agreement is
hereby amended as follows: (i) by inserting a comma after the word
"Lessee" appearing in the fourth line thereof, inserting the words "Agent,
any Lender" immediately after such comma, and deleting the word "its"
appearing before the words "respective successors" and replacing it with
the word "their", (ii) by inserting the words "for any liability or
obligation hereunder or under any other Operative Document (including
without limitation, the payment of the principal of, or interest on, the
Loans) or" immediately after the words "respective successors and assigns"
appearing in the fourth and fifth lines of such Section, (iii) by deleting
the words "Master Lease" immediately following the words "in respect of
this" appearing in the fifth line of such Section and replacing them with
the words "Loan Agreement" and (iv) by inserting the words "or the
Lenders" immediately after the words "obligations of Lessor to the Lessee"
appearing in clause (ii) of such Section.
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<PAGE> 45
SECTION II.5. Amendment to Assignment of Lease and Rent. The
Assignment of Lease and Rent is hereby amended as follows:
(a) Schedule 1 to each of (i) Supplement No. 1 to Assignment of Lease and
Rent, dated as of October 18, 1996 and recorded on October 21, 1996 in the
Official Records as Instrument No. 13489804, (ii) Supplement No. 2 to Assignment
of Lease and Rent, dated as of October 22, 1996 and recorded on October 23, 1996
in the Official Records as Instrument No. 13492445 and (iii) Supplement No. 3 to
Assignment of Lease and Rent, dated as of February 5, 1997 and recorded on
February 5, 1997 in the Official Records as Instrument No. 13602290, is hereby
amended in each case to reflect the amendment made as of the date hereof to the
Lease Supplement referred to in such Schedule;
(b) the first recital of the Assignment of Lease and Rent is hereby
amended by inserting the words "as amended by Master Amendment No. 1 dated as of
March 3, 1997, and" immediately after the open parenthesis on the second line
thereof and immediately before the words "as amended, restated, supplemented or
otherwise modified form time to time, the "Loan Agreement")"; and
(c) Section 2 of the Assignment of Lease and Rent is hereby amended by
inserting the words "the Notes and the other Operative Documents," immediately
after the words "obligations under the Loan Agreement," appearing in the first
and second line of such Section.
SECTION II.6. Effect of Amendments. Except as otherwise specifically
amended hereby, each of the Master Lease, the Participation Agreement and
Appendix A to the Participation Agreement shall remain in full force and effect
and all references therein to each such document, and all references in each of
other Operative Documents and the other documents, instruments or agreements
executed and delivered in connection herewith and therewith shall refer to the
Master Lease, the Participation Agreement and Appendix A to the Participation
Agreement as amended hereby.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1. Improvements Closing Date. This Amendment shall be effective
on the date (the "Improvements Closing Date") on which all the following
conditions precedent thereto shall have been satisfied or waived by the
applicable parties as set forth herein:
(a) Master Amendment No. 1. This Amendment shall have
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<PAGE> 46
been duly authorized, executed and delivered by the parties hereto.
(b) Construction Agency Agreement. A Construction Agency
Agreement in the form of Exhibit A hereto shall have been duly
authorized, executed and delivered by the Lessee and the Lessor.
(c) New Notes. The Agent shall have received, for the account of
each Lender, a note substantially in the form of Exhibit A to the Loan
Agreement (each, a "New Note"), duly executed and delivered by the Lessor,
payable to the order of such Lender and in a principal amount equal to the
initial Commitment of such Lender after giving effect to the increase in
Commitments provided by this Amendment (it being understood that each
Lender shall, promptly after receipt of its New Note, surrender its old
Note for cancellation to the Lessee).
(d) Amendments to Lease Supplements. Amendment No. 1 to Lease
Supplement No. 1, Amendment No. 1 to Lease Supplement No. 2, and
Amendment No. 1 to Lease Supplement No. 3, in the forms of Exhibits B,
C and D, respectively, shall have been duly authorized, executed and
delivered by the Lessee and the Lessor, and the original counterpart of
each Amendment to a Lease Supplement shall have been delivered to the
Agent and the Lenders.
(e) Lessor Financing Statements. The Lessee shall have delivered to
the Lessor all Lessor Financing Statements relating to the Improvements to
be constructed on City Center V as the Lessor or any other Participant may
reasonably request in order to protect the Lessor's interest under the
Master Lease and the Lease Supplement relating to such Property to the
extent the Master Lease and such Lease Supplement constitute security
agreements.
(f) Recordation. Each of the Participants shall have received
evidence reasonably satisfactory to it that each of (i) the amendments
described in clause (d) above, (ii) the Lessor Financing Statements
described in clause (e) above and (iii) this Amendment, has been, or are
being, recorded in a manner sufficient to properly secure each of their
interest therein.
(g) Appraisal. The Lessor and the Lenders shall have received an
Appraisal with respect to City Center V, in form and substance
satisfactory to the Agent and the Lessor, which Appraisal shall show that,
as of the Improvements Closing Date, the Fair Market Sales Value of the
Land and the Improvements to be constructed thereon in accordance
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<PAGE> 47
with the Plans and Specifications shall not be less than the sum of (i)
the Property Acquisition Cost for City Center V and (ii) ninety percent
(90%) of the Construction Commitment Amount.
(h) Title Insurance. With respect to each Property, First American
Title Insurance Company shall have reissued, in favor of the Lessor, the
ALTA extended coverage owners title insurance policies previously
committed to be issued pursuant to Section 2.2(i) of the Participation
Agreement in connection with the acquisition of such Property, each dated
as of the Improvements Closing Date, with the same endorsements, and
otherwise in the same form as agreed to by First American Title Insurance
Company in connection with the acquisition of such Property, and with no
other title exceptions other than (a) current taxes (not yet delinquent)
and (b) the Master Lease, as supplemented and modified by the applicable
Lease Supplement, this Amendment and the applicable Amendment No. 1 to
Lease Supplement. Each such reissued title insurance policy shall include
a tie-in endorsement confirming the aggregate liability amount for the
title policies to be $81,500,000.
(i) Lessee's Resolutions. The Lessee shall have delivered to the
Agent, the Lessor and each Lender a certificate of its Secretary or an
Assistant Secretary attaching and certifying as to the resolutions of the
Board of Directors duly authorizing the execution, delivery and
performance by it of this Amendment, the Construction Agency Agreement and
each other Operative Document to be executed by it in connection herewith
or therewith.
(j) Legal Opinion. The Agent and the Lessor shall have received,
with a copy for each Lender, an opinion of counsel for the Lessee, dated
the Improvements Closing Date and addressed to the Agent, the Lessor and
the Lenders, in form and substance reasonably satisfactory to the Agent,
the Lessor and the Lenders.
(k) Satisfactory Legal Form. All documents executed or submitted
pursuant hereto by or on behalf of Lessee shall be satisfactory in form
and substance to Lessor and its counsel; and Lessor and its counsel shall
have received all information, approvals, opinions, documents or
instruments as Lessor or its counsel may have reasonably requested.
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<PAGE> 48
ARTICLE IV
REPRESENTATIONS OF LESSEE
SECTION IV.1. Representations of Lessee. The Lessee represents and
warrants to each of the other parties as follows:
(a) Representations in Operative Documents. The representations and
warranties of the Lessee set forth in the Operative Documents (including,
without limitation, the representations and warranties set forth in
Section 8.2 of the Participation Agreement) are true and correct in all
material respects on and as of the Improvements Closing Date except to the
extent such representations or warranties relate solely to an earlier
date, in which case such representations and warranties shall have been
true and correct on and as of such earlier date. No Event of Default has
occurred and is continuing and no Default of which the Lessee has
knowledge and that has not been previously disclosed to the Agent and the
Participants has occurred and is continuing under the Master Lease, the
Construction Agency Agreement or, to the knowledge of the Lessee, any
other Operative Document. No Default or Event of Default under the Master
Lease, the Construction Agency Agreement or, to the knowledge of the
Lessee, any other Operative Document, will occur as a result of, or after
giving effect to, the transactions contemplated hereby.
(b) Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Lessee of this Amendment and each other
Operative Document executed or to be executed by it in connection with
this Amendment are within the Lessee's corporate powers, have been duly
authorized by all necessary corporate action, and do not
(i) contravene the Lessee's Organic Documents;
(ii) contravene any material contractual restriction the
contravention of which is reasonably likely to have a material
adverse effect on the financial condition of the Lessee (including
any covenant relating to the incurrence of indebtedness, which
restrictions the Lessee hereby acknowledges are material), law or
governmental regulation or court decree or order binding on or
affecting the Lessee; or
(iii) result in, or require the creation or imposition of, any
Lien on any of the Lessee's properties (including the Properties)
other than as are contemplated by the Operative Documents.
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<PAGE> 49
(c) Governmental Approval, Regulation, etc. No authorization or
approval or other action by, and not notice to or filing with, any
governmental authority or regulatory body or other Person is required for
the due execution, delivery or performance by the Lessee of this Amendment
or any other Operative Document to be executed by it in connection with
this Amendment.
(d) Validity, etc. This Amendment constitutes, and each other
Operative Document executed by the Lessee in connection with this
Amendment will, on the due execution and delivery thereof, constitute, the
legal, valid and binding obligations of the Lessee enforceable in
accordance with their respective terms, subject, in each case, as to
enforceability, to bankruptcy, insolvency, reorganization and other
similar laws affecting enforcement of creditor rights generally (insofar
as any such law relates to the bankruptcy, insolvency, reorganization or
similar event of the Lessee) and, as to the availability of specific
performance or other injunctive relief, subject to the discretionary power
of a court to deny such relief and to general equitable principles.
ARTICLE V
MISCELLANEOUS
SECTION V.1. Ratification of and References to the Operative Documents.
Upon the Improvements Closing Date, this Amendment shall be known (and may be
referred to) as Amendment No. 1, dated as of March 3, 1997, to each of the
Operative Documents amended hereby. This Amendment is an Operative Document
executed pursuant to the Participation Agreement, including for purposes of
construction as provided in Appendix A thereto. All references to the
Participation Agreement, the Master Lease, any Lease Supplement, the Loan
Agreement or the Assignment of Lease and Rent shall hereafter be deemed to refer
to such Operative Document as amended hereby.
SECTION V.2. Counterparts. This Amendment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
SECTION V.3. Headings, etc. The Table of Contents and headings of the
various Articles and Sections of this Amendment are for convenience of reference
only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
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<PAGE> 50
SECTION V.4. GOVERNING LAW. THIS AMENDMENT SHALL IN ALL RESPECTS BE
GOVERNED BY THE LAW OF THE STATE OF CALIFORNIA (EXCLUDING ANY CONFLICT-OF-LAW OR
CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF THE INTERNAL LAWS OF
ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.
SECTION V.5. Severability. Any provision of this Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION V.6. Liability Limited. The parties hereto agree that except as
specifically set forth herein or in any other Operative Document, Lessor shall
have no personal liability whatsoever to the Lessee or any Participant or their
respective successors and assigns for any claim based on or in respect hereof or
any of the other Operative Documents or arising in any way from the transactions
contemplated hereby or thereby and the recourse shall be solely had against the
Lessor's interest in any Property; provided, however, that Lessor shall be
liable in its individual capacity (a) for its own willful misconduct or gross
negligence (or negligence in the handling of funds), (b) breach of any of its
representations, warranties or covenants under the Operative Documents, or (c)
for any Tax based on or measured by any fees, commission or compensation
received by it for acting as the Lessor as contemplated by the Operative
Documents. It is understood and agreed that, except as provided in the preceding
sentence: (i) Lessor shall have no personal liability under any of the Operative
Documents as a result of acting pursuant to and consistent with any of the
Operative Documents; (ii) all obligations of Lessor to the Lessee are solely
nonrecourse obligations except to the extent that it has received payment from
others; and (iii) all such personal liability of Lessor is expressly waived and
released as a condition of, and as consideration for, the execution and delivery
of the Operative Documents by Lessor.
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<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
SYMANTEC CORPORATION,
as Lessee, Pledgor, Guarantor and
Construction Agent
By____________________________________
Name:
Title:
S-1 Master Amendment No. 1
<PAGE> 52
SUMITOMO BANK LEASING AND FINANCE,
INC., as Lessor
By____________________________________
Name:
Title:
S-2 Master Amendment No. 1
<PAGE> 53
THE SUMITOMO BANK, LIMITED,
SAN FRANCISCO BRANCH, as Lender
and as Agent
By____________________________________
Name:
Title:
S-3 Master Amendment No. 1
<PAGE> 54
SCHEDULE I
AMENDED AND RESTATED SCHEDULE I
TO PARTICIPATION AGREEMENT
COMMITMENTS
<TABLE>
<CAPTION>
PARTICIPANT COMMITMENT
<S> <C>
Lender
------
The Sumitomo Bank, Limited, San $70,450,000.00
Francisco Branch
Lessor
------
Sumitomo Bank Leasing and Finance, $11,050,000.00
Inc.
==============
TOTAL: $81,500,000.00
</TABLE>
<PAGE> 55
EXHIBIT B
[Form of Amendment No. 1 to Lease Supplement No. 1]
<PAGE> 56
EXHIBIT C
[Form of Amendment No. 1 to Lease Supplement No. 2]
<PAGE> 57
EXHIBIT D
[Form of Amendment No. 1 to Lease Supplement No. 3]
<PAGE> 58
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS; INTERPRETATION
ARTICLE II
CERTAIN AMENDMENTS
SECTION 2.1. Amendments to the Participation Agreement.................. 2
(a) Amendment to Article II............................. 2
(b) Amendment to Section 3.1............................ 5
(c) Amendment to Section 3.2............................ 6
(d) Amendment to Section 3.3............................ 6
(e) Amendments to Section 3.4........................... 6
(f) Amendment to Section 4.3............................ 6
(g) Amendment to Section 8.2............................ 7
(h) Amendment to Section 9.1............................ 7
(i) Amendment to Section 13.2........................... 7
(j) Amendment to Schedule I............................. 7
SECTION 2.2. Amendments to Appendix A................................... 8
SECTION 2.3. Amendments to Master Lease................................. 11
(a) Amendment to Section 2.3............................ 11
(b) Amendment to Section 3.1............................ 12
SECTION 2.4. Amendments to Loan Agreement............................... 12
(a) Amendment to Second Recital......................... 12
(b) Amendment to Section 2.1............................ 12
(c) Amendment to Section 8.11........................... 12
SECTION 2.5. Amendment to Assignment of Lease and Rent.................. 13
SECTION 2.6. Effect of Amendments....................................... 13
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1. Improvements Closing Date. ................................ 13
(a) Master Amendment No. 1.............................. 14
(b) Construction Agency Agreement....................... 14
(c) New Notes........................................... 14
(d) Amendments to Lease Supplements..................... 14
(e) Lessor Financing Statements......................... 14
(f) Recordation......................................... 14
(g) Appraisal........................................... 14
(h) Title Insurance..................................... 15
(i) Lessee's Resolutions................................ 15
(j) Legal Opinion....................................... 15
(k) Satisfactory Legal Form............................. 15
</TABLE>
<PAGE> 59
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
ARTICLE IV
REPRESENTATIONS OF LESSEE
SECTION 4.1. Representations of Lessee.................................. 16
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Ratification of and References to the Operative Documents.. 17
SECTION 5.2. Counterparts............................................... 17
SECTION 5.3. Headings, etc.............................................. 17
SECTION 5.4. GOVERNING LAW.............................................. 18
SECTION 5.5. Severability............................................... 18
SECTION 5.6. Liability Limited.......................................... 18
Schedule
- --------
Schedule I Amended and Restated Schedule I to Participation Agreement
Exhibits
- --------
Exhibit A Form of Construction Agency Agreement
Exhibit B Form of Amendment No. 1 to Lease Supplement No. 1
Exhibit C Form of Amendment No. 1 to Lease Supplement No. 2
Exhibit D Form of Amendment No. 1 to Lease Supplement No. 3
Exhibit E Form of Funding Request for Construction Advances
Annexes
- -------
Annex 1 Legal Description of Land Covered by
Supplement No. 1 to Assignment of Lease and Rent
Annex 2 Legal Description of Land Covered by
Supplement No. 2 to Assignment of Lease and Rent
Annex 3 Legal Description of Land Covered by
Supplement No. 3 to Assignment of Lease and Rent
</TABLE>
-ii-
<PAGE> 60
ANNEX 1 TO MASTER AMENDMENT NO. 1
LEGAL DESCRIPTION OF LAND COVERED BY
SUPPLEMENT NO. 1 TO ASSIGNMENT OF LEASE AND RENT
<PAGE> 61
ANNEX 2 TO MASTER AMENDMENT NO. 1
LEGAL DESCRIPTION OF LAND COVERED BY
SUPPLEMENT NO. 2 TO ASSIGNMENT OF LEASE AND RENT
<PAGE> 62
ANNEX 3 TO MASTER AMENDMENT NO. 1
LEGAL DESCRIPTION OF LAND COVERED BY
SUPPLEMENT NO. 3 TO ASSIGNMENT OF LEASE AND RENT
Real Property in the City of Cupertino, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
Lot 5, as shown on that certain Map entitled Tract No. 7953 Cupertino City
Center Phase III, which Map was filed for record in the office of the Recorder
of the County of Santa Clara, State of California on February 27, 1987, in Book
571 of Maps, pages 36 and 37.
PARCEL TWO:
Easements as described in the Section entitled "Easements and Rights Reserved
for Owners" of the Article entitled "Easements and Rights of Entry" of the
Declaration of Covenants, Conditions, and Restrictions and Grant of Easement for
Cupertino City Center recorded October 9, 1985, in Book J482, page 1907, as
amended by that certain First Amendment to Declaration of Covenants, Conditions,
and Restrictions and Grant of Easements recorded September 2, 1987, in Book
K281, page 2071, each in the Official Records of Santa Clara County, California.
PARCEL THREE:
Easements for parking, landscaping, support, settlement and encroachment as
granted to Cupertino City Center Buildings, a California Limited Partnership, in
the Grant of Easement (Cupertino City Center 5) recorded February 5, 1997 under
Series No. 13602286.
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EXHIBIT 10.18
AGREEMENT OF PURCHASE AND SALE
BETWEEN
CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY, SELLER
AND
SYMANTEC CORPORATION, PURCHASER
CUPERTINO CITY CENTER ONE
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TABLE OF CONTENTS
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Article 1 Property 1
Article 2 Purchase Price and Deposits 1
Article 3 Failure to Close 3
3.1 Purchaser's Default 3
3.2 Seller's Default 3
Article 4 Closing and Transfer of Title 4
4.1 Closing 4
4.2 Closing Procedure 4
4.3 Purchaser's Performance 6
4.4 Evidence of Authority; Miscellaneous 6
Article 5 Prorations of Rents, Taxes, Etc. 6
Article 6 Purchaser Inspections and Contingencies 8
6.1 Document Inspection 8
6.2 Physical Inspection 9
6.3 Feasibility Period 10
6.4 Survey 10
6.5 Title Contingency 10
Article 7 Loss due to Casualty or Condemnation 11
7.1 Loss due to Condemnation 11
7.2 Loss due to Casualty 12
Article 8 Maintenance of the Property 13
Article 9 Broker 14
Article 10 Representations and Warranties 15
10.1 Limitations on Representations and Warranties 15
10.2 Representations and Warranties 16
10.3 Seller's Knowledge 17
10.4 Survival 18
Article 11 Liability of Parties 18
Article 12 Assignment 19
Article 13 Notices 19
Article 14 Expenses 20
</TABLE>
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TABLE OF CONTENTS (Continued)
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Article 15 Miscellaneous 21
15.1 Successors and Assigns 21
15.2 Gender 21
15.3 Captions 21
15.4 Construction 21
15.5 Entire Agreement 21
15.6 Recording 22
15.7 No Continuance 22
15.8 Time of Essence 22
15.9 Original Document 22
15.10 Governing Law 22
15.11 Acceptance of Offer 22
15.12 Confidentiality 22
15.13 Surviving Covenants 22
15.14 Attorneys' Fees 23
15.15 Exclusivity Period 23
Exhibit A - Description of Land
Exhibit B - Rent Roll
Exhibit C - Special Warranty Deed
Exhibit D - Bill of Sale
Exhibit E - Assignment of Leases
Exhibit F - Form of Seller's Affidavit of
Non-Foreign Status
Exhibit G - Pending Litigation
</TABLE>
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AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE is made by and between CIGNA
Property and Casualty Insurance Company, a Connecticut corporation ("Seller"),
and Symantec Corporation, a Delaware corporation ("Purchaser"), as of the
"Effective Date" (as defined below).
Article I.
Property
Seller hereby agrees to sell, and Purchaser hereby agrees to buy, all of
the following property: (a) a parcel of real property (the "Land"), located in
the County of Santa Clara, State of California, more particularly described on
Exhibit A attached to this Agreement, together with easements, easement rights,
rights of way, rights in and to common areas and any other rights appurtenant to
the Land; (b) the buildings and other improvements located on the Land, being a
four story office building located at 20300 Stevens Creek Boulevard, Cupertino,
California, generally known as Cupertino City Center One (the "Improvements");
(c) all tenant leases relating to the Improvements, being the leases referred to
on the Rent Roll attached hereto as Exhibit B (the Land, Improvements, and
tenant leases are referred to herein, collectively, as the "Real Property"); and
(d) all fixtures, equipment, and other personal property (both tangible and
intangible, including, without limitation, any service and maintenance
agreements applicable thereto, other than the property management agreement,
which shall be terminated) owned by Seller and contained in or related to the
Improvements (the "Personal Property") (collectively, the Real Property and the
Personal Property are sometimes referred to herein as the "Property").
<PAGE> 5
Article II.
Purchase Price and Deposits
The purchase price which the Purchaser agrees to pay and the Seller
agrees to accept for the Property shall be the sum of Thirty-One Million, Five
Hundred Thousand and No/100 Dollars ($31,500,000) (hereinafter referred to as
the "Purchase Price"), subject to adjustment as provided in Article V hereof,
payable as follows:
(a) An earnest money deposit ("Earnest Deposit") of Three
Hundred Thousand and No/100 Dollars ($300,000), in cash, to be deposited
with First American Title Insurance Company (the "Title Company") within
three (3) business days after execution hereof by both parties, such
amount to be held in escrow and deposited in an interest-bearing
account;
(b) An additional earnest money deposit (the "Additional
Deposit") of Three Hundred Thousand and No/100 Dollars ($300,000), in
cash, to be deposited by Purchaser with the Title Company, within three
(3) business days after expiration of the Feasibility Period
(hereinafter defined), such amount to be held in escrow and deposited in
an interest-bearing account (the Earnest Deposit and the Additional
Deposit, with interest thereon, will be referred to hereinafter,
collectively, as the "Deposit"); and
(c) The balance of the Purchase Price shall be paid at time
of Closing by Federal wire transfer, with the transfer of funds to
Seller to be completed on the day of the Closing.
The Deposit shall be paid to Seller at the Closing as a credit against
the Purchase Price. Purchaser shall provide the Title Company with its tax
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identification number, and all interest shall be for Purchaser's account for
tax purposes.
In addition to the Deposit, Purchaser shall deposit five fully executed
copies of this Agreement with the Title Company immediately after both parties
have executed it. The date of such deposit shall be acknowledged by the Title
Company on all copies, and such date shall be the "Effective Date" of this
Agreement. The Title Company shall retain one copy of this Agreement and
deliver two copies hereof to each of Purchaser and Seller.
Article III.
Failure to Close
3.1 Purchaser's Default.
IF SELLER HAS COMPLIED WITH ALL OF THE COVENANTS AND CONDITIONS CONTAINED
HEREIN AND IS READY, WILLING AND ABLE TO CONVEY THE PROPERTY IN ACCORDANCE WITH
THIS AGREEMENT AND PURCHASER FAILS TO CONSUMMATE THIS AGREEMENT AND TAKE TITLE,
THEN THE PARTIES HERETO RECOGNIZE AND AGREE THAT THE DAMAGES THAT SELLER WILL
SUSTAIN AS A RESULT THEREOF WILL BE SUBSTANTIAL, BUT DIFFICULT IF NOT
IMPOSSIBLE TO ASCERTAIN. THEREFORE, THE PARTIES AGREE THAT, IN THE EVENT OF
PURCHASER'S DEFAULT, SELLER SHALL, AS ITS SOLE REMEDY, BE ENTITLED TO RETAIN
THE DEPOSIT AS LIQUIDATED DAMAGES, AND NEITHER PARTY SHALL HAVE ANY FURTHER
RIGHTS OR OBLIGATIONS WITH RESPECT TO THE OTHER UNDER THIS AGREEMENT, EXCEPT
FOR THE SURVIVING COVENANTS (HEREINAFTER DEFINED).
SELLER'S INITIALS: PURCHASER'S INITIALS:
------- -------
3.2 Seller's Default. In the event that Purchaser has complied with
all of the covenants and conditions contained herein and is ready, willing and
able to take title to the Property in accordance with this Agreement, and
Seller fails to consummate this Agreement and convey title as set forth
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herein, then Purchaser shall have, as its sole and exclusive remedy the right
to either (i) terminate this contract and recover the Deposit and all of
Purchaser's reasonable out-of-pocket expenses incurred by it in connection with
its due diligence investigation of the Property pursuant to this Agreement
(including, but not limited to, costs of obtaining environmental reports,
appraisals and engineering reports), or (ii) pursue the remedy of specific
performance of Seller's obligations under this Agreement, provided however that
(a) Purchaser must furnish ten (10) days prior written notice to Seller of its
intent and election to seek specific enforcement of this Agreement, and (b)
Purchaser must not be in default under this Agreement. In the event that either
of the conditions set forth in (a) or (b) above is not satisfied, the remedy of
specific performance shall be deemed waived by Purchaser.
Notwithstanding any of the foregoing to the contrary contained herein,
if Purchaser seeks specific performance under this Agreement, Purchaser agrees
to accept the Property in its "WHERE IS, AS IS" condition. Purchaser further
hereby agrees that prior to its exercise of any right or remedies as a result
of any defaults by Seller, Purchaser will first deliver written notice of said
default to Seller and give Seller ten (10) days thereafter in which to cure
said default, if Seller so elects. Except as specifically provided herein,
Purchaser shall have no right to seek money damages of any kind as a result of
any default by Seller under any of the terms of this Agreement. Purchaser's
claim and any recovery of damages shall be limited to direct damages from
Seller's breach of this Agreement, and in no event shall Seller be liable to
Purchaser for any punitive, speculative, incidental, consequential or any
other type of damages. If for any reason the remedy of specific performance is
denied Purchaser following all available court proceedings, or Purchaser
discontinues the action for specific performance, then the Deposit, if
applicable, shall be returned to Purchaser and Seller shall then be released
from any further liability to Purchaser in reference to this Agreement.
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Article IV.
Closing and Transfer of Title
4.1 Closing. The parties hereto agree to conduct a closing of this
sale (the "Closing") on or before 10:00 a.m. E.S.T. on October 22, 1996
("Closing Date") in the principal office of Morrison & Foerster, or at such
other place as may be agreed upon by the parties hereto. This Agreement shall
terminate if transfer of title is not completed by the Closing Date (unless
such failure to close is due to Seller's default, the date for Closing is
extended pursuant to any provision hereof, including, without limitation, the
matters described in Sections 6.3, 6.5 and Article VII hereof, or the date for
Closing is extended by agreement of the parties, which agreement shall be
confirmed in writing).
4.2 Closing Procedure. Seller shall execute and deliver or cause to
be delivered (a) a Grant Deed, in the form attached hereto as Exhibit C, proper
for recording, conveying Seller's interest in the Real Property to Purchaser,
subject, however, to (i) exceptions as reported in the Title Report (defined in
Section 6.5) and either approved by Purchaser or as to which objection has been
waived by Purchaser, or as shown on the Survey (as defined in Section 6.4),
(ii) taxes not yet delinquent, (iii) the rights of lessees and licensees of
space in the Improvements at the time of Closing (to the extent such lessees
and licensees are listed on the Rent Roll), and (iv) any encumbrances created
or permitted by the terms of this Agreement; (b) a Bill of Sale in the form
attached hereto as Exhibit D, dated as of the date of Closing conveying to
Purchaser any and all Personal Property; (c) an Assignment of Leases in the
form attached hereto as Exhibit E, dated the date of Closing, assigning all of
the landlord's right, title and interest in and to any tenant and other leases
covering all or any portion of the Real Property; (d) an Owner's Title
Insurance Policy (the "Owner's Title Policy") dated no earlier than the date of
the recording of the Deed, in the full amount of the Purchase Price, insuring
that good and indefeasible fee simple
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title to the Property is vested in Purchaser, containing no exceptions to such
title other than the standard printed exceptions (provided, however, that (i)
the printed survey exception must be deleted, except for matters shown on the
Survey, (ii) the exception as to ad valorem taxes shall be limited to taxes for
the current and subsequent years, and (iii) the exception for tenants and
parties in possession shall be limited to those tenants, licensees, and
occupants shown on the Rent Roll delivered at Closing), those items listed on
Schedule "B" of the Title Report that either were approved by Purchaser or as
to which objection has been waived by Purchaser or cured by Seller (but only as
to the portion of such encumbrance remaining after such cure), and encumbrances
created or permitted by the terms of this Agreement; (e) Tenant Notification
Agreements (the "Tenant Notices"), dated the date of the Closing, executed by
Seller, and complying with applicable statutes in order to relieve Seller of
liability for tenant security deposits (provided the security deposits are paid
to Purchaser), notifying the tenants of the Real Property that the Property has
been sold to Purchaser and directing the tenants to pay rentals to Purchaser
(or Purchaser's designated agent); (f) the originals of all leases and, to the
extent in Seller's possession or under Seller's control, as-built plans and
specifications and maintenance and service contracts that are to be assumed;
(g) a tenant estoppel certificate executed by Canon, in form and substance
satisfactory to Purchaser, which certificate shall identify the lease documents
and state the date of commencement and termination of the lease term, the rent
currently being paid, the amount of any rental payments made in advance, if any,
the amount of any security deposit, if any, that no party is in default under
the lease, and the date to which rent has been paid and shall list any renewal
options that exist, (except that Seller agrees to use reasonable efforts to
obtain such estoppel certificates from all other tenants of space in the
Improvements other than Purchaser, and Seller shall represent and warrant to
the best of Seller's knowledge as to the same matters for all leases shown on
the Rent Roll (except the lease to Purchaser) for which no tenant estoppel
certificate was obtained); (h) an updated Rent Roll, in the form of the Rent
Roll attached
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hereto as Exhibit B, dated within 15 days of the date of the Closing; (i) an
affidavit that Seller is not a "foreign person" in the form attached as Exhibit
G and the corresponding California Form 590 RE Form; (j) a master key or
duplicate key for all locks in the Improvements; and (k) to the extent in the
possession of Seller or Seller's property management company, all maintenance
records.
Purchaser acknowledges and agrees that Seller is under no obligation to
clear from the title any easements, rights of way, encumbrances, liens,
covenants, restrictions, or any other matters of record, or to cure any survey
objections of Purchaser, or to create any encumbrances on, or for the benefit
of, the Property, except any monetary liens or encumbrances against the
Property created by Seller on or after the Effective Date and any existing
mortgages or deeds of trust encumbering the Property (which shall be satisfied
in full by Seller on or before the Closing Date). Except as set forth above, if
Seller does not deliver title at Closing in form consistent with the Title
Report as approved or deemed approved in accordance with the terms hereof, such
failure shall not constitute a default or breach by Seller hereunder, and
notwithstanding any other provision of this Agreement, Purchaser's sole and
exclusive remedy shall be to terminate this Agreement and receive a return of
the Deposit or to accept conveyance of title as delivered by Seller without
reduction of the Purchase Price.
4.3 Purchaser's Performance. At the Closing, Purchaser will cause the
Purchase Price to be delivered to the Title Company, will execute and deliver
the Tenant Notices, the Assignment of Leases, and the Bill of Sale.
4.4 Evidence of Authority; Miscellaneous. Both parties will deliver
to the Title Company and each other such evidence or documents as may
reasonably be required by the Title Company or either party hereto evidencing
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the power and authority of Seller and Purchaser and the due authority of, and
execution and delivery by, any person or persons who are executing any of the
documents required hereunder in connection with the sale of the Property. Both
parties will execute and deliver such other documents as are reasonably
required to effect the intent of this Agreement.
Article V.
Prorations of Rents, Taxes, Etc.
Real estate taxes for the year of closing shall be prorated as of the
date of Closing either using actual tax figures or, if actual figures are not
available, then using as a basis for said proration the most recent assessed
value of the Real Estate multiplied by the current tax rate, with a subsequent
cash adjustment to be made between Purchaser and Seller when actual tax figures
are available. Personal property taxes, annual permit or inspection fees, sewer
charges and other expenses normal to the operation and maintenance of the
Property shall also be prorated as of the date of Closing. Rents that have been
collected for the month of the Closing will be prorated at the Closing, effect
as of the date of the Closing. With regard to rents that are delinquent as of
the date of the Closing, (i) no proration will be made at the Closing, (ii)
Purchaser will make a good faith effort after the Closing to collect the rents
in the usual course of Purchaser's operation of the Property, and (iii)
Purchaser will apply all rents collected first to the current rents and the
excess amount, if any, shall be applied to the delinquent rent owed to Seller.
It is agreed, however, that Purchaser will not be obligated to institute any
lawsuit or other collection procedures to collect delinquent rents. Rents
collected by Purchaser after the Closing Date, to which Seller is entitled,
shall be promptly paid to Seller.
As of the Closing Date, Purchaser shall be entitled to a credit for any
tenant deposits under the leases.
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Final readings on all gas, water and electric meters shall be made as
of the date of closing, if possible. If final readings are not possible, gas,
water and electricity charges will be prorated based on the most recent period
for which costs are available. Any deposits made by Seller with utility
companies shall be returned to Seller. Purchaser shall be responsible for
making all arrangements for the continuation of utility services. After the
Closing, Purchaser will assume full responsibility for all security deposits
and advance rental deposits of current tenants of the Real Property currently
held by Seller, which items will be itemized by Seller and transferred and paid
over to Purchaser at the Closing.
All items (including taxes) that are not subject to an exact
determination shall be estimated by the parties. When any item so estimated is,
after the Closing capable of exact determination, the party in possession of
the facts necessary to make the determination shall send the other party a
detailed report on the exact determination so made and the parties shall adjust
the prior estimate within thirty (30) days after both parties have received
said reports.
ARTICLE VI.
Purchaser Inspections and Contingencies
6.1 Document Inspection. Seller has made or will make available
within ten (10) days from the Effective Date of this Agreement the following
items relating to the Real Property for review by Purchaser, to the extent in
Seller's or its property manager's possession:
1. Copies of all leases and other occupancy agreements applicable
to the Property;
2. Copies of all licenses and permits regarding the Property;
3. Seller's existing survey of the Property;
4. Copies of any warranties or guarantees currently in effect (if
any);
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5. As-built plans and specifications for the improvements on the
Property and any soil reports, environmental reports,
engineering and architectural studies, grading plans,
topographical maps, and similar data relating to the Property;
6. A copy of Seller's policy of lender's title insurance;
7. Copies of all service and maintenance agreements;
8. A Rent Roll prepared as of the first day of the month in which
this Agreement is executed; and
9. Books and records of the Property.
Purchaser acknowledges that Seller took title to the Property through
deed in lieu of foreclosure on March 1, 1995, and that Seller has limited
records and knowledge pertaining to prior periods of time.
Seller shall also provide to Purchaser on or before two (2) business
days before the expiration of the Feasibility Period an updated Rent Roll for
the Property for review by Purchaser.
Purchaser agrees that if for any reason the Closing is not consummated,
Purchaser will immediately return to Seller all materials furnished to
Purchaser pursuant to this Section 6.1.
6.2 Physical Inspection. In addition to the items set forth in
Section 6.1, Seller will make the Property available for inspection by
Purchaser and Purchaser shall, at Purchaser's option and risk, conduct an
engineering and/or market and economic feasibility study of the Property and
undertake such physical inspection of the Property as Purchaser deems
appropriate as soon as possible after the Effective Date of this Agreement.
Such inspection shall be conducted at reasonable times upon reasonable oral or
written notice to Seller's property manager. Seller shall have the right to
designate a representative to accompany Purchaser's employees, agents, and
independent contractors on any such inspections.
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Purchaser hereby agrees to pay, protect, defend, indemnify and save
Seller harmless against all liabilities, obligations, claims (including
mechanic's lien claims), damages, penalties, causes of action, judgments, costs
and expenses (including, without limitation, attorneys' fees and expenses)
imposed upon, incurred by or asserted against Seller in connection with or
arising out of the entry upon the Real Property by Purchaser's employees,
agents or independent contractors and the actions of such persons on the Real
Property. In the event any part of the Property is damaged or excavated by
Purchaser, its employees, agents or independent contractors, Purchaser agrees
in the event its purchase hereunder is not consummated, to make such additional
payments to Seller as may be reasonably required to return the Property to its
condition immediately prior to such damage or excavation or, at Seller's
option, to cause such work to be done. Notwithstanding any provision to the
contrary herein, Purchaser's obligations under this subparagraph shall survive
the expiration or termination of this Agreement, and shall survive Closing.
6.3 Feasibility Period. Purchaser shall have a period ending 5:00
p.m. E.D.T. September 19, 1996 to conduct its inspection of the documents
delivered in accordance with Section 6.1 and to conduct a physical inspection
of the Property as set forth in Section 6.2 (the "Feasibility Period"). On or
before the last day of the Feasibility Period, Purchaser may, in its sole
discretion without obligation to specify which aspect of its inspection was
unsatisfactory, terminate this Agreement by providing a written notice to
Seller so providing. Upon receipt of such notice, this Agreement shall
terminate and Seller shall instruct the Title Company to return the Deposit to
Purchaser, and neither party shall have any obligation to the other, except for
the Surviving Covenants. If Purchaser fails to provide such notice of
termination on or before the last day of the Feasibility Period, Purchaser
shall be deemed to have approved such inspections and this contract shall
remain in full force and effect.
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6.4 Survey. Purchaser shall obtain, within ten (10) business days of
the Effective Date of this Agreement, a survey of the Real Property by a
registered surveyor (the "Survey"). The Survey shall show the location of all
improvements, structures, driveways, parking areas, easements, rights of way,
and any encroachments and shall specify whether the Property is within the 100
year flood plain or flood way. The Survey shall further set forth a legal
description of the boundaries of the Real Property in accordance with local
practices. Purchaser's obligations hereunder do not constitute a contingency
for closing under this Agreement.
6.5 Title Contingency. Purchaser's obligation to purchase the
Property is subject to its receipt of a preliminary title report (the "Title
Report"), issued by the Title Company, together with legible copies of all
items and documents referred to in the Title Report. Purchaser acknowledges
that the Title Report and accompanying documents have been delivered to
Purchaser by Seller. Purchaser shall have until the last day of the
Feasibility Period to state any objections in writing. This contingency shall
be deemed satisfied or waived if such written notice of objection is not
received by Seller before such date. Such written notice of objection shall
state all of Purchaser's objections with specificity. Upon receipt of such
notice, Seller may, but shall not be obligated to, cure such objection, except
for monetary encumbrances in an amount in the aggregate below $100,000. If
Seller cures such objections within 15 days, or, if such objections are such
that they cannot be cured within 15 days and Seller has commenced curing such
objections and thereafter diligently proceeds to perfect such cure, then this
Agreement shall continue in full force and effect and the Closing Date shall be
adjusted accordingly. If Seller is unable or chooses not to cure such
objections within the time permitted, then this Agreement shall terminate, and
Seller shall instruct the Title Company to return the Deposit to Purchaser, and
neither party shall have any further obligations hereunder except for the
Surviving Covenants. Notwithstanding the foregoing, however, Purchaser may
waive such objections that Seller is unable or chooses not to cure within 10
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days after receipt of a notice that Seller is unable or chooses not to cure
such objections, and upon receipt by Seller of such waiver in full from
Purchaser, this Agreement shall remain in full force and effect with no
reduction in the Purchase Price.
If required by Seller, Purchaser will confirm in writing whether this
title contingency has been satisfied and, if so, the date on which it was
satisfied.
Article VII.
Loss due to Casualty or Condemnation
7.1 Loss due to Condemnation. In the event of a condemnation of all
or a Substantial Portion of the Real Property which condemnation shall or would
render a Substantial Portion of the Real Property untenantable, or if any
portion of the building or parking area is taken, either party may, upon
written notice to the other party given within 10 days of receipt of notice of
such event, cancel this Agreement, in which event Seller shall instruct the
Title Company to return the Deposit to Purchaser, this Agreement shall
terminate and neither party shall have any rights or obligations hereunder
except for the Surviving Covenants. In the event that neither party elects to
terminate, or if the condemnation affects less than a Substantial Portion or
does not affect the building or parking area, then this Agreement shall remain
in full force and effect, and Seller shall be entitled to all monies received
or collected by reason of such condemnation prior to closing. In such event,
the transaction hereby contemplated shall close in accordance with the terms
and conditions of this Agreement except that there will be an abatement of the
Purchase Price equal to the amount of the net proceeds, less costs and
attorney's fees, which are received by Seller by reason of such condemnation
prior to closing. If the condemnation proceeding shall not have been concluded
prior to the closing, then there shall be no abatement of the Purchase Price
and Seller shall assign any interest it has in the pending
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award to Purchaser. For purposes of this Section 7.1, a Substantial Portion
shall mean a condemnation of in excess of $5,000,000 in value of the Real
Property.
7.2 Loss due to Casualty. In the event of Substantial Loss or Damage
to the Real Property by fire or other casualty, either party may, upon written
notice to the other party given within 10 days of receipt of notice of such
event, cancel this Agreement in which event Seller shall instruct the Title
Company to return the Deposit to Purchaser and this Agreement shall terminate
and neither party shall have any rights or obligations hereunder except for the
Surviving Covenants. In the event that neither party elects to terminate, then
this Agreement shall remain in full force and effect, the transaction hereby
contemplated shall close in accordance with the terms and conditions of this
Agreement except that Seller shall assign to Purchaser its rights to all
insurance proceeds by reason of such damage or loss, and there will be an
abatement of the Purchase Price equal to the amount of any loss not covered by
insurance, including without limitation the amount of any deductible, provided
that such abatement will be reduced by the amount expended by Seller in
accordance with Article VIII hereof for restoration or preservation of the
Property following the casualty. In the event that the casualty results in less
than Substantial Loss or Damage and the repair or replacement will take no more
than sixty (60) days to complete, Seller shall repair or replace the damaged
Property, and there shall be no abatement of the Purchase Price in such case. In
the event that the casualty results in less than Substantial Loss or Damage and
the repair or replacement will take more than sixty (60) days to complete, the
transaction hereby contemplated shall close in accordance with the terms and
conditions of this Agreement except that Seller shall assign to Purchaser its
rights to all insurance proceeds by reason of such damage or loss, and there
will be an abatement of the Purchase Price equal to the amount of any loss not
covered by insurance, including without limitation the amount of any deductible,
provided that such abatement will be reduced by the amount expended by Seller in
accordance with Article VIII hereof for restoration or preservation of the
Property following the casualty. In no event shall the date of Closing be
extended beyond sixty (60) days pursuant to this Section 7.2. For purposes of
this Section 7.2, "Substantial Loss or Damage" shall mean loss or damage, the
cost for repair of which exceeds $500,000.
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Article VIII.
Maintenance of the Property
Between the time of execution of this Agreement and the Closing, Seller
shall maintain the Property in good repair, reasonable wear and tear excepted,
shall perform all work required to be done under the terms of any lease or
agreement relating to the Property, and shall timely make all repairs,
maintenance and replacements of equipment or improvements, the same as though
Seller were retaining the Property; except that in the event of a fire or other
casualty, damage or loss, Seller shall have no duty to repair said damage.
However, Seller may repair any such damage with Purchaser's prior, written
approval and may, without Purchaser's approval, repair damage where such repair
is necessary in Seller's reasonable opinion to preserve and protect the health
and safety of tenants of the Property or to preserve the Property from imminent
risk of further damage or if required to do so by Seller's insurance carrier.
Any such emergency repairs shall be reported to Purchaser within 48 hours of
their completion. During the period prior to the Closing and after the latest
to occur of (i) the last day of the Feasibility Period, or (ii) the date on
which the title contingency in Section 6.5 is satisfied, Seller shall not lease
any portion of the Real Property unless such lease has been approved in writing
by Purchaser. Any such proposed lease shall be on Seller's standard form of
lease and shall be reviewed and approved or rejected within five (5) business
days after receipt thereof by Purchaser. Failure to approve or reject such
proposed lease within such period shall be deemed approval. If the proposed
lease is rejected, then Seller shall not enter into such lease. With respect to
any leases entered into between the Effective Date hereof and the Closing Date,
Purchaser shall pay the unamortized cost (based on the number of months in the
entire term of the lease for which rent is paid and the number of such months
that shall have occurred as of the date of the Closing) of all tenant
improvements and leasing commissions with respect thereto.
Page 15
<PAGE> 19
Article IX.
Broker
Purchaser and Seller represent to each other that they have dealt with
no agent or broker who in any way has participated as a procuring cause of the
sale of the Property, except Cornish & Carey Commercial ("Cornish"),
Cooper/Brady ("Cooper/Brady"), and McCandless Management Company
("McCandless"). At Closing, Seller shall be responsible for any real estate
brokerage commissions due to Cornish and McCandless in connection with this
transaction, each pursuant to a separate written agreement. In addition, Seller
shall be responsible for a real estate brokerage commission of three-quarters
of one percent (.75%) to Cooper/Brady at the Closing. Purchaser and Seller each
agree to defend, indemnify and hold harmless the other for any and all
judgments, costs of suit, attorneys' fees, and other reasonable expenses which
the other may incur by reason of any action or claim against the other by any
broker, agent, or finder with whom the indemnifying party has dealt arising out
of this Agreement or any subsequent sale of the Property to Purchaser, except
for the above-described commissions, which shall be paid by Seller. The
provisions of this Article IX shall survive the Closing and any termination of
this Agreement.
Article X.
Representations and Warranties
10.1 Limitations on Representations and Warranties. Purchaser hereby
agrees and acknowledges that, except as set forth in Section 10.2 below,
neither Seller nor any agent, attorney, employee or representative of Seller
has made any representation whatsoever regarding the subject matter of this
sale, or any part thereof, including (without limiting the generality of the
foregoing) representations as to the physical nature or condition of the
Property or the capabilities thereof, and that Purchaser, in executing,
delivering and/or performing this Agreement, does not rely upon any statement
Page 16
<PAGE> 20
and/or information to whomever made or given, directly or indirectly, orally or
in writing, by any individual, firm or corporation. Purchaser agrees to take
the Real Property and the Personal Property "as is," as of the date hereof,
reasonable wear and tear, and minor damage caused by the removal of any
personal property or fixtures not included in this sale, excepted. SELLER MAKES
NO REPRESENTATIONS OR WARRANTIES AS TO THE PHYSICAL CONDITION OF THE PROPERTY
OR THE SUITABILITY THEREOF FOR ANY PURPOSE FOR WHICH PURCHASER MAY DESIRE TO
USE IT. SELLER HEREBY EXPRESSLY DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY
AND/OR FITNESS FOR A PARTICULAR PURPOSE AND ANY OTHER WARRANTIES OR
REPRESENTATIONS AS TO THE PHYSICAL CONDITION OF THE PROPERTY. PURCHASER, BY
ACCEPTANCE OF THE DEED, AGREES THAT IT HAS INSPECTED THE PROPERTY AND ACCEPTS
SAME "AS IS" AND "WITH ALL FAULTS".
Purchaser understands that any financial statement and data, including,
without limitation, gross rental income, operating expenses and cash flow
statements, to be made available by Seller to Purchaser, will be unaudited
financial statements and data not prepared or reviewed by independent public
accountants, and that Seller makes no representation as to the accuracy or
completeness thereof.
10.2 Representations and Warranties. Seller makes the following
representations and warranties and agrees that Purchaser's obligations under
this Agreement are conditioned upon the truth and accuracy of such
representations and warranties, both as of this date and as of the date of the
Closing:
(a) Seller has the corporate power and authority to enter into this
Agreement and convey the Property to Purchaser.
(b) To the best of Seller's knowledge, Seller has received no
notice of any existing, pending or threatened litigation, administrative
proceeding
Page 17
<PAGE> 21
or condemnation or sale in lieu thereof, with respect to any portion of the
Real Property, except as noted on Exhibit H attached hereto.
(c) Except for those tenants and licensees in possession of the
Real Property under written leases or license Agreements for space in the Real
Property, as shown in the Rent Roll, to the best of Seller's knowledge there
are no parties in possession of, or claiming any possession to, any portion of
the Real Property as leases, tenants at sufferance, licensees, trespassers or
otherwise.
(d) The updated Rent Roll for the Real Property, which shall be
delivered at the Closing, will be true, correct and complete as of the date set
forth thereon; no tenant will be entitled to any rebates, rent concessions, or
free rent (other than as reflected in said Rent Roll) and no rents due under
any of the tenant or other leases will have been assigned, hypothecated, or
encumbered, to any party except pursuant to documents to be released at Closing.
(e) There are no attachments or executions affecting the Property,
general assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, pending or, to the best of Seller's knowledge,
threatened against Seller.
(f) During the period of Seller's ownership of the Property (i.e.
from March 1, 1995 to the Date of Closing) Seller has not itself, and to the
best of Seller's knowledge no prior owner or current or prior tenant or other
occupant of all or any part of the Property at any time has, used Hazardous
Materials (hereinafter defined) on, from, or affecting the Property in any
manner that violates federal, state, or local laws, ordinances, rules, or
regulations governing the use, storage, treatment, transportation, generation,
or disposal of Hazardous Materials (collectively, the "Environmental Laws"),
and to the best of Seller's knowledge no Hazardous Materials are present
Page 18
<PAGE> 22
underground beneath the Property or have been disposed of on the Property.
"Hazardous Materials" shall mean any flammable substances, explosives,
radioactive materials, hazardous wastes, toxic substances, pollutants,
pollution, or related materials regulated under any of the Environmental Laws.
10.3 Seller's Knowledge. Whenever the term "to the best of Seller's
knowledge" is used in this Agreement or in any representations and warranties
given to Purchaser at Closing, such knowledge shall be the actual knowledge of
Thomas W. Johnson and Leon Pouncy (the "Key Personnel"), the asset manager
assigned to the Real Property by CIGNA Investments, Inc., authorized agent for
Seller, after review of the files of CIGNA Investments, Inc. and inquiry of
Seller's property manager. Seller shall have no duty to conduct any further
inquiry in making any such representations and warranties, and no knowledge of
any other person shall be imputed to the Key Personnel. Purchaser acknowledges
that Seller took title to the Property through deed in lieu of foreclosure on
March 1, 1995, and that Seller has limited records and knowledge pertaining to
prior periods of time.
10.4 Survival. All representations and warranties contained in
Section 10.2 will survive the Closing of this transaction (but only as to the
status of facts as they exist as of the Closing, it being understood that
Seller makes no representations or warranties which would apply to changes or
other matters occurring after the Closing), but shall expire on the date one
year from the date of Closing, and no action on such representations and
warranties may be commenced after such expiration.
ARTICLE XI.
LIABILITY OF PARTIES
Except as specifically set forth herein, (i) Seller on behalf of itself
and its successors and assigns does hereby agree to indemnify and hold
Purchaser, its successors and assigns, harmless from and against all costs,
Page 19
<PAGE> 23
charges and expenses related to the ownership, management and operation of the
Property prior to the date of Closing but not thereafter; and (ii) Purchaser on
behalf of itself, its successors and assigns does hereby agree to indemnify and
hold Seller, it successors and assigns, harmless from an against all costs,
charges and expenses relating to the ownership, management and operation of the
Property from and after the date of Closing.
The foregoing indemnities shall not imply any warranties or
indemnities with respect to compliance with environmental and land use laws or
disposal of hazardous materials.
ARTICLE XII.
ASSIGNMENT
Except as provided herein, this Agreement may not be assigned or
transferred by Purchaser without the prior written consent of Seller. Purchaser
shall have the right to assign its interests under this Agreement to (i)
Sumitomo Bank Leasing and Finance, Inc., a Delaware corporation; or (ii) an
assignee (the "Assignee") with the prior written approval of Assignee by Seller
on or before the date five (5) days before Closing, which approval shall not be
unreasonably withheld. No assignment shall relieve Purchaser of any of its
obligations under this Agreement.
ARTICLE XIII.
NOTICES
All notices hereunder or required by law shall be sent via telecopy,
United States Mail, postage prepaid, certified mail, return receipt requested,
or via any nationally recognized commercial overnight carrier with provisions
for receipt, addressed to the parties hereto at their respective addresses set
forth below or as they have theretofore specified by written notice delivered
in accordance herewith:
Page 20
<PAGE> 24
PURCHASER: Symantec Corporation
10201 Torre Avenue
Cupertino, CA 95014
Attn: Dakin Ferris
Telecopier: (406) 252-5101
with a copy to: John Wells
Gibson Dunn & Crutcher
4 Park Plaza
Irvine, CA 92714
Telecopier (714) 451-4220
SELLER: CIGNA Property and Casualty Insurance
Company
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, CT 06152-2311
Attn: Real Estate Investment Department
Asset Management, S-311
Telecopier: (860) 726-7381
with a copy to: CIGNA Corporation
Investment Law Department
Mortgage and Real Estate Group, S-215A
900 Cottage Grove Road
Hartford, CT 06152-2215
Telecopier: (860) 726-8446
Delivery will be deemed complete upon actual receipt or refusal to accept
delivery. All telecopied notices shall be followed up by notice via another
mode of delivery approved hereunder.
Page 21
<PAGE> 25
Article XIV.
Expenses
Seller shall pay (i) its own attorney's fees, (ii) the real estate
transfer stamp, documentary or conveyance taxes, (iii) the cost of an Owner's
title insurance policy without extended coverage or special endorsements issued
in connection with this transaction, and (iv) one-half of the Title Company's
escrow fee. Notwithstanding any local practice to the contrary, Purchaser shall
pay for all other costs and expenses related to the transaction or this
Agreement including but not limited to (a) all of Purchaser's attorneys' fees
and expenses, (b) costs of Purchaser's inspecting architect and engineer, if
any, (c) recording charges, (d) one-half of the Title Company's escrow fee, (e)
the cost of any title insurance in excess of the cost of an Owner's policy
without extended coverage or special endorsements, including any additional
premium charges for endorsements and/or deletions of exception items and any
cancellation charges imposed by any title company in the event a title
insurance policy is not issued, unless caused by willful default of Seller
hereunder, and (f) the cost of the Survey.
Article XV.
Miscellaneous
15.1 Successors and Assigns. All the terms and conditions of this
Agreement are hereby made binding upon the executors, heirs, administrators,
successors and permitted assigns of both parties hereto.
15.2 Gender. 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
requires otherwise.
Page 22
<PAGE> 26
15.3 Captions. The captions in this Agreement are inserted only for
the purpose of convenient reference and in no way define, limit or prescribe
the scope or intent of this Agreement or any part hereof.
15.4 Construction. No provision of this Agreement shall be construed
by any Court or other judicial authority against any party hereto by reason of
such party's being deemed to have drafted or structured such provisions.
15.5 Entire Agreement. This Agreement constitutes the entire contract
between the parties hereto and there are no other oral or written promises,
conditions, representations, understandings or terms of any kind as conditions
or inducements to the execution hereof and none have been relied upon by either
party.
15.6 Recording. The parties agree that this Agreement shall not be
recorded. If Purchaser causes this Agreement or any notice or memorandum
thereof to be recorded, this Agreement shall be null and void at the option of
the Seller.
15.7 No Continuance. Purchaser acknowledges that there shall be no
assignment, transfer or continuance of any of Seller's insurance coverage or of
the property management contract.
15.8 Time of Essence. Time is of the essence in this transaction.
15.9 Original Document. This Agreement may be executed by both
parties in counterparts in which event each shall be deemed an original.
15.10 Governing Law. This Agreement shall be construed, and the
rights and obligations of Seller and Purchaser hereunder, shall be determined
in accordance with the laws of the State of California.
Page 23
<PAGE> 27
15.11 Acceptance of Offer. This Agreement constitutes Seller's offer
to sell to Purchaser on the terms set forth herein and must be accepted by
Purchaser by signing five copies hereof and depositing such with the Title
Company in accordance with Article II hereof no later than September 4, 1996.
If Purchaser has not accepted this Agreement by such date, then this Agreement
and the offer represented hereby shall automatically be revoked and shall be of
no further force or effect.
15.12 Confidentiality. Purchaser and Seller agree that all documents
and information concerning the Property delivered to Purchaser, the subject
matter of this Agreement, and all negotiations will remain confidential.
Purchaser and Seller will disclose such information only to those parties
required to know it, including, without limitation, employees of either of the
parties, consultants and attorneys engaged by either of the parties, and
prospective or existing investors and lenders.
15.13 Surviving Covenants. Notwithstanding any provisions hereof to
the contrary, the provisions of the second paragraph of Section 6.2 hereof and
the provisions of Article IX hereof (collectively, the "Surviving Covenants")
shall survive the closing and any termination of this Agreement.
15.14 Attorneys' Fees. If either party hereto fails to perform any of
its obligations under this Agreement or if any dispute arises between the
parties hereto concerning the meaning or interpretation of any provision of
this Agreement, then the defaulting party or the party not prevailing in such
dispute, as the case may be, shall pay any and all costs and expenses incurred
by the other party on account of such default and/or in enforcing or
establishing its rights hereunder, including, without limitation, court costs
and reasonable attorney's fees and disbursements. Any such attorneys' fees and
other expenses incurred by either party in enforcing a judgment in its favor
under this Agreement shall be recoverable separately from and in addition to
any other amount included in such judgment, and such attorneys'
Page 24
<PAGE> 28
fees obligation is intended to be severable from the other provisions of this
Agreement and to survive and not be merged into any such judgment.
15.14 Exclusivity Period. In consideration of Purchaser's commitment
to expend significant time, effort and expense to evaluate the possible
acquisition of the Property, Seller agrees that during the Feasibility Period
(unless sooner notified by Purchaser of its intent not to purchase the
Property) Seller shall not offer the Property (or any interest therein) for
sale or lease, except for leases of office space in the ordinary course of
business, to any other party, or negotiate, solicit or entertain any offers to
purchase or lease the Property (or any interest therein), except for leases of
office space in the ordinary course of business.
EXECUTED BY PURCHASER this ____ day of _____________, 1996.
PURCHASER:
SYMANTEC CORPORATION
By: /s/ [SIG]
------------------------------------
Name:
Title:
EXECUTED BY SELLER this ____ day of _____________, 1996.
SELLER:
CIGNA PROPERTY AND CASUALTY INSURANCE
COMPANY
By: CIGNA Investments, Inc.
By: /s/ Thomas W. Johnson
------------------------------------
Name: Thomas W. Johnson
Title: Vice President
Receipt of original copies of this Agreement executed by Seller and Purchaser
is acknowledged this ____ day of _____________, 1996.
Page 25
<PAGE> 29
TITLE COMPANY:
FIRST AMERICAN TITLE INSURANCE COMPANY
By:
------------------------------------
Name:
Title:
Page 26
<PAGE> 30
EXHIBIT A
TO
AGREEMENT OF PURCHASE AND SALE
Description of Land
<PAGE> 31
Order No. 511608
Page No. 12
LEGAL DESCRIPTION
REAL PROPERTY in the City of Cupertino, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
Lot 1 as shown on that certain Map of Tract No. 7734 filed October 9, 1985 in
Book 550 of Maps, pages 24, ?? and 26, Records of Santa Clara County.
Excepting therefrom the underground water rights conveyed to California Water
Service Company, a California Corporation by Deeds recorded July 11, 1984 in
Book 1708, page 320 of Official Records and September 7, 1984 in Book 1859,
page 185 of Official Records.
PARCEL TWO:
All easements, rights, benefits and privileges described in that certain
Declaration of Covenants, Conditions and Restrictions and Grants of Easements
for Cupertino City Center, recorded October 9, 1985 in Book J482, page 1807,
Official Records, as amended by First Amendment to Declaration of Covenants,
Conditions and Restrictions and Grant of Easements for Cupertino City Center,
recorded September 2, 1987, in Book K281, page 2071, Official Records,
appurtenant to Parcel One above.
PARCEL THREE:
A non-exclusive easement for parking 580 automobiles and for vehicular and
pedestrian ingress to and egress from such parking area upon Parcel A of Tract
No. 7870 recorded April 29, 1987 in Book 573 of Maps, pages ?? and 22 of the
Official Records of Santa Clara County, as granted in that certain Agreement
and Grant of Easement recorded June 26, 1987 in Book K202, page 1782 of
Official Records, appurtenant to Parcel One above.
?N: 368-01-019
<PAGE> 32
EXHIBIT B
TO
AGREEMENT OF PURCHASE AND SALE
Rent Roll
(The Rent Roll follows this page.)
<PAGE> 33
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
ONE-FOUR STORY BLDG,. SPRINKLERED
OFFICE/FULL SERVICE
CONSTRUCTION COMPLETED - 1965
<TABLE>
<CAPTION>
Total Basic (1)
Monthly Monthly Monthly
Tenant Suite Rent Rent Prorata
<S> <C> <C> <C> <C> <C> <C> <C>
SUN LIFE ASSURANCE (2) 300.320 14,253.18 2.99 7,787.50 1.50 4.475.68 0.59
CITY NET (3) 398 0.00 0.00 0.00 0.00 0.00 0.00
SILICON MAGIC (4) 400 17,710.22 8.94 11,428.75 1.25 6.281.47 0.00
SYMANTEC (5) 200.332 109,941.00 8.83 108,841.00 0.00 Date 1995
CANON (6) 100 90,258.02 8.88 20,258.02 0.00 Date 1995
ALPINE(7) 495 6,382.10 8.85 6,382.10 0.00 Date 1995
COMPUWARE 350,445 30,558.30 8.85 30,558.30 0.00 Date 1995
DSP 465 17,964.45 1.88 17,964.45 0.00 Date 1995
EDV 385 8,586,45 2.69 6,392.95 2.00 2,103.53 0.00
MORN VENTURES (W.R.GRACE) 330 6,303.96 2.04 4,176.00 1.35 2,127.08 0.00
MANAGEMENT OFFICE 125 0.00 0.00 0.00 0.00 0.00 0.00
MXXXXXXXXXXX 398 2,074.00 2.04 1,919.70 1.35 874.90 0.00
TOKYO ELECTRON AMERICA 380 12,311.15 1.84 7,046.25 1.25 4,304.00 0.00
XXX
TOTAL 317,084.78 1.88 796,800.72 1.85 870.417.34 0.13
</TABLE>
<TABLE>
<CAPTION>
Orig Rev Base
Soft XXXXX Comm Comm Exp. Rental
Leased Pro Date Date Date Adjust. XXX
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUN LIFE ASSURANCE (2) 6,525 0.00 4.04 09/01/93 08/31/99 - NONE
CITY NET (3) 611 0.00 9.38 10/01/95 08/30/97 - NONE
SILICON MAGIC (4) 9,143 0.00 5.87 12/01/94 11/30/97 - NONE
SYMANTEC (5) 58,810 0.00 36.20 04/24/95 06/31/01 5/22/97 YES
CANON (6) 43,237 0.00 25.79 03/16/95 08/30/00 03/18/99 YES
ALPINE(7) 3,270 0.00 2.03 09/18/95 00/18/00 03/18/97 NO
COMPUWARE 18,518 0.00 10.25 XXXXXXXX 09/31/98 - NONE
DSP 9,505 0.00 5.89 03/5/91 02/28/90 - NONE
EDV 3,182 0.00 1.XX 03/5/91 XXXXXXXX - NONE
MORN VENTURES (W.R.GRACE) 3,094 0.00 1.82 11/01/94 04/30/97 - NONE
MANAGEMENT OFFICE 1,038 0.00 0.04 XXXXXXXX - NONE
MXXXXXXXXXXX 1,422 0.00 0.00 02/01/94 01/31/87 - NONE
TOKYO ELECTRON AMERICA 8,357 0.00 3.94 08/01/94 08/08/94 06/31/98 - NONE
160,728
TOTAL
</TABLE>
<TABLE>
<CAPTION>
Option
Renewal to SEC DEP
Tenant Option Term or LLC
<S> <C> <C> <C>
SUN LIFE ASSURANCE (2) 3yr THBY 2/28/99 No S/D - WAIVED
CITY NET (3) NONE No S/D - WAIVED
SILICON MAGIC (4) 1yr THBY 7/31/97 No S/D - $11.428.75
SYMANTEC (5) 3yr THBY 8/31/00 No S/D - WAIVED
CANON (6) 5yr THBY 12/31/99 Yes S/D - WAIVED
ALPINE(7) 5yr THBY 12/19/99 No S/D - WAIVED
COMPUWARE NONE No S/D - $30,550.00
DSP 3yr THBY 8/28/97 No S/D - $17,984.45
EDV NONE No S/D - $3,700.00
MORN VENTURES (W.R.GRACE) 5yr THBY 4/30/99 No S/D - WAIVED
MANAGEMENT OFFICE NONE N/A
MXXXXXXXXXXX NONE No S/D - $1,918,70
TOKYO ELECTRON AMERICA 3yr THBY 11/00/07 No S/D - XX,232,30
TOTAL 160,728
</TABLE>
1) Expenses XXXXX were currently projected based on 1990 numbers.
2) Sun XXXX brother Communication ($13,332.25) to be paid XXX since
they didn't XXXX XXXX option.
Sun Life has free XXXX XXXX - 9/1/95 - 10/15/08
3) City XXX has rest and expense abatement through XXXX.
4) SXXXXX has right to XXXXX if they are unable to expand. (refl XXXXX
2.(b)). Must give five (5) months XXXX notice and information could
be that 13th month. Penalty of (2) XXXX bears a unamortized cover
5) SdXXXXX trust be $R109,841.80 on 5/22/98. Effective 6/1/2000 -
Restriction of space to 14.873
6) RPR any spacr over 5,000 XXXXXXXX effective 9/15/00XXXXXXX
7) Option to intend XXXXXXXXXXXXXXXXXXXXXXXXx
<PAGE> 34
EXHIBIT C
TO
AGREEMENT OF PURCHASE AND SALE
Grant Deed
(Seller's Local Counsel to draft form of Grant Deed.)
<PAGE> 35
EXHIBIT D
TO
AGREEMENT OF PURCHASE AND SALE
Bill of Sale
(The form of Bill of Sale follows this page.)
<PAGE> 36
BILL OF SALE AND GENERAL ASSIGNMENT
Concurrently with the execution and delivery hereof, ____________,
a __________________________________ ("Assignor"), is conveying to
_____________________________, a ___________________________ ("Assignee"), by
Grant Deed, that certain tract of land together with the improvements thereon
(the "Property") lying and being situated in _______________________________,
California and being more particularly described in Exhibit A, attached hereto
and made a part hereof.
It is the desire of Assignor to hereby assign, transfer, set over and
deliver to Assignee all furnishings, fixtures, fittings, appliances, apparatus,
equipment, machinery and other items of personal property, if any, affixed or
attached to, or placed or situated upon, the Property, except those not owned
by Assignor and any and all other incidental rights and appurtenances relating
thereto, all as more fully described below (such properties being collectively
called the "Assigned Properties").
NOW, THEREFORE, in consideration of the receipt of Ten Dollars ($10.00)
and other good and valuable consideration in hand paid by Assignee to Assignor,
the receipt and sufficiency of which are hereby acknowledged and confessed by
Assignor, Assignor does hereby ASSIGN, TRANSFER, SET OVER and DELIVER to
Assignee, its successors and assigns, all of the Assigned Properties, without
warranty (whether statutory, express or implied), including, without
limitation the following:
1. All furnishings, fittings, equipment, appliances, apparatus,
machinery fixtures and all other personal property of every kind and character
(both tangible and intangible), if any, owned by Assignor and located in or on
the Property;
2. All of Assignor's interest in and to all use, occupancy,
building and operating permits, licenses and approvals, if any, issued from
time to time with respect to the Property of the Assigned Properties;
3. All of Assignor's interest in and to all maintenance, service
and supply contracts, if any, relating to the Property or the Assigned
Properties (to the full extent same are assignable);
4. All of Assignor's interest in and to all existing and
assignable guaranties and warranties (express or implied), if any, issued in
connection with the making by Seller of a loan on the Property, to the extent
assignable, or in connection with the construction, alteration and repair of
the Property and/or the purchase, installation and the repair of the Assigned
Properties;
5. All rights which Assignor may have to use any names commonly
used in connection with the Property, if any; and
6. All rights, which Assignor may have, if any, in and to any
tenant data, telephone numbers and listings, all master keys and keys to common
areas, all good will, if any, and any and all other rights, privileges and
appurtenances owned by Assignor and related to or used in connection with the
existing business operation of the Property.
ASSIGNOR MAKES NO REPRESENTATIONS OR WARRANTIES AS TO THE PHYSICAL
CONDITION OF THE PROPERTY OR THE ASSIGNED PROPERTIES OR THE SUITABILITY THEREOF
FOR ANY PURPOSE THAT ASSIGNEE MAY DESIRE TO USE IT. ASSIGNOR HEREBY EXPRESSLY
DISCLAIMS ANY WARRANTIES AS TO MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR
PURPOSE AND ANY OTHER WARRANTIES OR REPRESENTATIONS AS TO THE
<PAGE> 37
BILL OF SALE AND GENERAL ASSIGNMENT
(Continued)
PHYSICAL CONDITION OF THE ASSIGNED PROPERTIES. ASSIGNEE ACKNOWLEDGES AND AGREES
THAT IT HAS INSPECTED THE ASSIGNED PROPERTIES AND ACCEPTS SAME IN THEIR PRESENT
CONDITION, "AS IS" AND "WITH ALL FAULTS."
Assignor on behalf of itself and its successors and assigns does hereby
agree to indemnify and hold Assignee, its successors and assigns, harmless from
all obligations accruing under the maintenance, service and supply contract
assigned hereby and any liabilities arising thereunder, prior to the date hereof
but not thereafter.
Assignee on behalf of itself, its successors and assigns, hereby agrees
to assume and perform all obligations accruing under the maintenance, service
and supply contracts from and after the date hereof, and Assignee on behalf of
itself, its successors and assigns does hereby agree to indemnify and hold
Assignor, its successors and assigns, harmless from all such obligations and
any liabilities arising thereunder from and after the date hereof.
If either party hereto fails to perform any of its obligations under
this Agreement or if any dispute arises between the parties hereto concerning
the meaning or interpretation of any provision of this Agreement, then the
defaulting party or the party not prevailing in such dispute, as the case may
be, shall pay any and all costs and expenses incurred by the other party on
account of such default and/or in enforcing or establishing its rights
hereunder, including, without limitation, court costs and reasonable attorneys'
fees and disbursements. Any such attorneys' fees and other expenses incurred by
either party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount included in
such judgment, and such attorneys' fees obligation is intended to be severable
from the other provisions of this Agreement and to survive and not be merged
into any such judgment.
This document may be executed in any number of counterparts, each of
which may be executed by any one or more of the parties hereto, but all of
which shall constitute one instrument, and shall be binding and effective when
all parties hereto have executed at least one counterpart.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment
to be executed as of the ______ day of ____________, 19__.
ASSIGNOR:
ASSIGNEE:
<PAGE> 38
EXHIBIT E
TO
AGREEMENT OF PURCHASE AND SALE
ASSIGNMENT OF LEASES
[The form of Assignment of Leases follows this page.]
<PAGE> 39
ASSIGNMENT AND ASSUMPTION OF
LEASES AND SECURITY DEPOSITS
This agreement is executed as of the _____ day of _____________, 19__,
by ______________________________, a _________________________________________
("Seller"), and _________________________, a _____________________("Purchaser").
Purchaser is this day purchasing from Seller and Seller is conveying to
Purchaser the real property described on Exhibit A attached hereto and made a
part hereof together with all improvements thereon and appurtenances thereto
(herein called the "Property"). The Property is occupied by various tenants
(herein called the "Tenants") claiming under written space leases listed and
described on Exhibit B attached hereto and made a part hereof (the "Leases").
Seller has required certain of the Tenants to pay and has collected from such
Tenants a security or other deposit, a list of which deposits and the Tenants
form from whom the deposits were collected being set forth on Exhibit B attached
hereto and made a part hereof (herein the total of all such deposits are
referred to as the "Security Deposits"). Seller desires to transfer and assign
all of Seller's right, title and interest in and to (i) the Leases and (ii) the
Security Deposits not heretofore forfeited, credited or returned to the Tenants.
NOW, THEREFORE in consideration of Ten Dollars ($10.00) and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller hereby transfers and assigns to Purchaser all right, title
and interest of Seller in and to (i) the Leases and (ii) the Security Deposits
paid to and held by Seller which have not been heretofore forfeited, credited
or returned to the Tenants, which Security Deposits hereby assigned are in the
amounts as set forth on Exhibit B attached hereto.
Seller on behalf of itself, its successors and assigns does hereby agree
to indemnify and hold Purchaser, its successors and assigns, harmless from and
against all liabilities arising under the Leases prior to the date hereof but
not thereafter, provided, however, that the foregoing indemnity shall not imply
any warranty or indemnity with respect to compliance with environmental and land
use laws or the use, generation or disposal of hazardous materials.
Purchaser on behalf of itself, its successors and assigns does hereby
agree to indemnify and hold Seller, its successors and assigns harmless from
all liabilities arising under the Lease from and after the date hereof;
provided, however, Purchaser shall not be liable under this indemnity for or
with respect to any inaccuracies set forth in Exhibit B.
Purchaser hereby assumes all obligations (i) of the landlord under the
Leases arising from and after the date hereof and (ii) under the Leases to pay
or account for the Security Deposits hereby transferred to Purchaser.
It is specifically agreed that Seller does not hereby transfer or
assign to Purchaser and Purchaser does not hereby assume liability for, any
deposits other than as set forth on Exhibit B.
If either party hereto fails to perform any of its obligations under
this Agreement or if any dispute arises between the parties hereto concerning
the meaning or interpretation of any provision of this Agreement, then the
defaulting party or the party not prevailing in such dispute, as the case may
be, shall pay any and all costs and expenses incurred by the other party on
account of such default and/or in enforcing or establishing its rights
hereunder, including, without limitation, court costs and reasonable attorneys'
fees and disbursements. Any such attorneys' fees and other expenses incurred by
either party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any
<PAGE> 40
ASSIGNMENT AND ASSUMPTION OF
LEASES AND SECURITY DEPOSITS
(Continued)
other amount included in such judgment, and such attorneys' fees obligation is
intended to be severable from the other provisions of this Agreement and to
survive and not be merged into any such judgment.
This document may be executed in any number of counterparts, each of
which may be executed by any one or more of the parties hereto, but all of
which shall constitute one instrument, and shall be binding and effective when
all parties hereto have executed at least one counterpart.
The terms and provisions of this agreement shall be binding upon and
inure to the benefit of the respective parties hereto and their respective
successors and assigns.
EXECUTED as of the day and year first written above.
SELLER:
PURCHASER:
<PAGE> 41
EXHIBIT F
TO
AGREEMENT OF PURCHASE AND SALE
Form of Seller's Affidavit of Non-Foreign Status
STATE OF ___________________)
) (insert date)
COUNTY OF __________________)
I, (proper name of Seller's officer), as (office held) of (Seller),
being duly authorized to make this affidavit on behalf of (Seller) and being
duly sworn, do depose and say, that:
1. (Seller's) taxpayer identification number is _________________.
2. (Seller) is not a "foreign person" within the meaning of
Section 1445(f)(3), of the Internal Revenue Code of 1954 (the "Code"), as
amended; and (Buyer) is not required, pursuant to Section 1445 of the Code, to
withhold ten percent (10%) of the amount realized by Seller on the disposition
of the Property to (Buyer).
3. I understand that I am making this Affidavit under penalty or
perjury pursuant to the requirements of Section 1445 of the Code.
(Seller)
By: ____________________________________
SWORN TO and subscribed before me this _____ day of _____________, 199_.
----------------------------------------
Notary Public
My Commission Expires:
<PAGE> 42
EXHIBIT G
TO
AGREEMENT OF PURCHASE AND SALE
Pending Litigation
1. NONE
<PAGE> 1
EXHIBIT 10.19
AGREEMENT FOR PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
ARTICLE 1.
AGREEMENT TERMS
1.1. DEFINITIONS. For purposes of this Agreement, terms set forth in quotes in
Section 1.2. below and Schedule "1" attached, shall have the meanings indicated
therein.
1.2. SPECIFIC TERMS.
1.2.1. "AGREEMENT DATE". July ___, 1996
1.2.2. "BROKER-BUYER". The real estate broker representing Buyer which
is Cooper/Brady Corporate Real Estate Services.
1.2.3. "BROKER-SELLER". The real estate broker representing Seller which
is Lincoln Property Management Services, Inc.
1.2.4. "BUYER". The party from time to time having the rights to purchase
the Property pursuant to this Agreement and the obligations of Buyer set
forth in this Agreement. Buyer shall initially be Symantec Corporation, a
Delaware corporation (or its Nominee); provided, however, the rights and
obligations of Buyer may be assigned or otherwise transferred in
connection with Buyer's financing of the acquisition of the Property to
any other party at any time without the consent of Seller so long as such
assignee assumes the obligations of Buyer hereunder.
1.2.5. "BUYER'S DESIGNATED REPRESENTATIVES". Shall refer the following
persons: Gordon Ciochon Vice President, Worldwide Operations.
1.2.6. "CITY". City of Cupertino, California.
1.2.7. "COUNTY". Santa Clara County, California.
1.2.8. "DEPOSIT". The Deposit shall consist of the following:
1.2.8.1. "INITIAL DEPOSIT". An initial amount of Fifty Thousand
Dollars ($50,000.00) to be paid to Escrow Holder within three (3)
business days after the full execution of this Agreement;
1.2.8.2. "FEASIBILITY PERIOD EXTENSION DEPOSIT". If Buyer extends
the Feasibility Period pursuant to Section 1.2.10. , the Deposit
shall be increased by an additional Fifty Thousand Dollars
($50,000.00);
<PAGE> 2
1.2.8.3. "ELECTION TO PROCEED DEPOSIT". Upon Buyer's election to
proceed pursuant to Section 3.3.1. , the Deposit shall be
increased to Two Hundred Thousand Dollars ($200,000.00);
1.2.8.4. "CLOSING EXTENSION DEPOSIT". If Buyer elects to extend
the Closing pursuant to Section 1.2.14., the Deposit shall be
increased by an additional Fifty Thousand Dollars ($50,000.00).
1.2.9. "ESCROW HOLDER". First American Title Guaranty Company, 1737 N.
First Street, San Jose, CA 95112.
1.2.10. "FEASIBILITY PERIOD". The period beginning on the Agreement Date
and terminating at 5:00 p.m. Pacific Time thirty (30) days after the
Agreement Date; provided, however, if Buyer determines in good faith that
Buyer needs additional time to evaluate facts concerning the conditions
for the benefit of Buyer set forth in Section 3.2., the Feasibility Period
shall be extended for up to an additional thirty (30) days upon the
payment of the Feasibility Period Extension Deposit.
1.2.11. "PROPERTY". Shall collectively refer to: (i) an approximate 86,630
square foot three story building identified as 10201 Torre Avenue,
Cupertino, California, currently occupied under lease by Buyer, and the
parcel of land on which such building is located, as described in Exhibit
A and to be more particularly described through Escrow, (ii) easements,
rights, rights of way, rights in and to common areas, and other rights
appurtenant to item (i), (iii) all fixtures, improvements, and personal
property currently located on the Property, and (iv) subject to the rights
of others and the terms thereof, all of Seller's right, title and interest
in any and all of the following pertaining to item (i): discretionary
permits, if any, from the City and County; subdivision maps completed, in
tentative or final form, or in process; grading, improvement and landscape
plans submitted to the City or County or in the process of preparation for
item (i), if any; and any and all of Seller's non-exclusive rights to
architectural and engineering drawings, including site utilities, sanitary
sewer and drainage facilities relating to the Property.
1.2.12. "PROPERTY DOCUMENTS". All architectural drawings and plans,
documents, records, reports (including, without limitation,
environmental), surveys, governmental approvals, Owners Association CC&Rs,
Articles, Bylaws and other Association documents, and other documentary
information in Seller's possession or control which relates to the use,
occupancy or condition of the Property.
1.2.13. "PURCHASE PRICE". Twelve Million Eight Hundred Thousand Dollars
($12,800,000.00).
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<PAGE> 3
1.2.14. "SCHEDULED CLOSING DATE". Shall occur thirty (30) days after the
date of Buyer's election to proceed pursuant to Section 3.3.1; provided,
however, the Scheduled Closing Date shall be extended for up to thirty
(30) days, if such time is needed to complete the financing of the
purchase upon the payment of the Closing Extension Deposit.
1.2.15. "SELLER". Lincoln Cupertino Associates Limited, a California
limited partnership.
1.2.16. "SELLER'S DESIGNATED REPRESENTATIVES". Shall refer to the
following persons: Barry DiRaimondo.
1.2.17. "TITLE INSURER". First American Title Guaranty Company.
1.2.18. "TITLE INSURANCE AMOUNT". The Title Policy shall be issued in
the amount of the Purchase Price.
1.3. NOTICES. All notices requests, demands and other communication given or
required to be given hereunder shall be in writing, duly addressed to the
parties and pursuant to Section 4.03 as follows:
1.3.1. BUYER. If to Buyer at:
Symantec Corporation
452 Kifer Road
Sunnyvale, CA 94086
Attention: Gordon Ciochon
Telephone: ________________________
Facsimile: ________________________
1.3.2. COPY TO: With a copy to:
Dakin Ferris
Symantec Corporation
10201 Torre Avenue
Cupertino, CA 95014
Telephone: (408) 725-2738
Facsimile: (408) 252-5101
3
<PAGE> 4
1.3.3. SELLER. If to Seller at:
Lincoln Cupertino Associates Limited
c/o the Lincoln Property Company
101 Lincoln Center Drive
Foster City, CA 94404
Attention: Edgar M. Thrift, Jr.
Telephone: (415) 571-2272
Facsimile: 415-573-8624
1.4. ADDITIONAL TERMS.
1.4.1. PURCHASE AND SALE. See Article II
1.4.2. CONTINGENCIES. See Article III
1.4.3. REPRESENTATIONS AND WARRANTIES. See Article IV
1.4.4. COVENANTS. See Article V
1.4.5. ESCROW. See Article VI
1.4.6. MISCELLANEOUS PROVISIONS. See Article VII
1.5. SCHEDULES.
1.5.1. SCHEDULE 1. Definitions
1.5.2. SCHEDULE 2. Representations and Warranties
1.5.3. SCHEDULE 3. Specific Escrow Instructions
1.5.4. SCHEDULE 4. Miscellaneous Provisions
1.6. EXHIBITS.
1.6.1. EXHIBIT "A." Legal Description of Property
1.6.2. EXHIBIT "B." Grant Deed
1.6.3. EXHIBIT "C." Buyer's Election to Continue Escrow
1.6.4. EXHIBIT "D." Non-Foreign Status Affidavit
4
<PAGE> 5
ARTICLE 2.
PURCHASE AND SALE
2.1. PURCHASE AND SALE. Subject to the terms and conditions contained in this
Agreement, Seller agrees to sell the Property to Buyer and Buyer agrees to
purchase the Property from Seller.
2.2. PAYMENT BY BUYER. The Purchase Price shall be paid as follows:
2.2.1. DEPOSIT. Buyer shall pay to Escrow Holder in cash or other
immediately available funds the amount of the Initial Deposit. The Deposit
shall be placed by Escrow Holder in an interest bearing account as
instructed by Buyer. The Deposit shall be increased by the amount of the
Feasibility Period Extension Deposit, if applicable. Upon Buyer's election
to proceed pursuant to Section 3.3.1., Buyer will increase the Deposit to
Two Hundred Thousand Dollars ($200,000.00). The Deposit shall be further
increased by the amount of the Closing Extension Deposit, if applicable.
The total Deposit and interest earned thereon shall apply against the
Purchase Price at Closing, if such occurs.
2.2.2. CASH REMAINDER. The remainder of the Purchase Price shall be paid
in cash or through other immediately available funds through escrow at
Closing.
2.3. CONDITION OF TITLE. Seller shall convey to Buyer title in fee simple to the
Property free and clear of all mortgages, liens or rights to liens, charges,
encumbrances, encroachments, easements conditions and rights of reentry or
forfeiture and other defects of title, except for the Permitted Exceptions.
ARTICLE 3.
CONTINGENCIES
3.1. EFFECT OF CONDITIONS GENERALLY. The close of escrow, Buyer's obligation to
purchase the Property and Seller's obligation to sell the Property shall be
contingent upon the satisfaction (or deemed satisfaction as specifically set
forth in each Section herein) or waiver by Buyer or Seller of all of the
conditions that are expressly stated to be in favor of each as set forth in this
Article and the Conditions to Close of Escrow as set forth in Schedule "3"
hereof, within the time
5
<PAGE> 6
limits specified in each Section of this Article and such Schedule. In the event
that any such condition is neither satisfied within the time limits specified in
each such Section nor waived in writing by the party specifically stated to be
benefited by such Section, such condition shall be deemed to have failed and the
party specifically stated to be benefited by such failed condition, may elect to
terminate this Agreement. In the event of any termination pursuant to this
Article, Buyer and Seller shall be released from their respective obligations to
purchase or sell under this Agreement and shall have no further rights or
remedies regarding purchase or sale against the other as a result of such
termination, except for the return of Buyer's Deposit and the payment of escrow
cancellation fees. In such event, Buyer and Seller shall comply with any
requirements reasonably imposed by Escrow Holder to evidence such termination.
3.2. CONDITIONS FOR THE BENEFIT OF BUYER. In addition to any other conditions to
Buyer's obligations contained in this Agreement, the following shall constitute
conditions to Buyer's obligation to purchase the Property from Seller and are
for the benefit of Buyer, the failure of any of which shall allow Buyer to
terminate this Agreement:
3.2.1. FEASIBILITY STUDIES. This Agreement is contingent on Buyer's
approval of any and all investigations, studies or analyses for the
Property deemed appropriate by Buyer to aid Buyer in determining whether
to consummate the transaction ("Feasibility Studies"). Buyer may elect in
Buyer's sole discretion, at any time prior to the end of the Feasibility
Period to terminate this Agreement. Upon such election to terminate, the
Deposit together with interest earned thereon shall be returned to Buyer.
Without limiting the generality of the foregoing, Buyer shall have the
right to approve the following during the Feasibility Period:
3.2.1.1. SITE APPRAISAL. An appraisal of the Property at Buyer's
expense;
3.2.1.2. SURVEY. An ALTA survey performed at Seller's expense;
3.2.1.3. SITE IMPROVEMENTS. An inspection of existing site
improvements (including, without limitation, location and
availability of utilities), roof. Foundation, structural integrity
of the building and all operating systems including, without
limitation, HVAC, plumbing and electrical; and
3.2.1.4. SOIL AND GROUND WATER CONDITIONS. Soil and groundwater
conditions concerning, without limitation, (i) the stability and
load bearing capacity of the soil, and (ii) the presence of
Hazardous Material on or under the Property or the potential for
migration of Hazardous Material onto or under the Property from
other property; provided, however, Buyer agrees not to perform any
drilling without giving Seller notice at least two (2) business
days in advance.
3.2.1.5. FINANCING. Buyer shall have obtained a binding commitment
of an institutional lender to provide financing for Buyer's
acquisition of the
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<PAGE> 7
Property on terms satisfactory to Buyer. In connection therewith,
Seller agrees to cooperate, at no expense to Seller, in the
assignment of this Agreement to a third party selected by Buyer.
3.2.1.6. BOARD APPROVAL. Buyer's obligations under this Agreement
are conditioned upon the approval of this Agreement and the
purchase contemplated hereby by Buyer's Board of Directors prior
to the end of the Feasibility Period.
3.2.2. APPROVAL OF CONDITION OF TITLE. Seller shall obtain and deliver to
Buyer within five (5) days of the Agreement Date a Title Report together
with full and complete copies of all documents referenced as exceptions
therein and a plotting of all easements referred to as exceptions therein.
This Agreement is contingent on Buyer's approval of the condition of title
of the Property as shown in such Title Report. If Seller and Escrow holder
are not notified in writing of Buyer's disapproval thereof by the later of
(i) the end of the Feasibility Period or (ii) ten (10) days after Buyer
receives such Title Report, Buyer shall be deemed to have approved the
condition of title as reflected in such Title Report. In case of Buyer's
timely objection, Seller shall have ten (10) days from receipt of Buyer's
notice of objection to inform Buyer and Escrow Holder in writing whether
Seller shall use its best efforts to remove such disapproved exceptions
prior to the Closing. In the event Seller agrees that Seller shall use its
best efforts to remove such disapproved exceptions, such removal shall be
a condition to the Closing and the condition of title as shown on the
Title Report shall otherwise be deemed approved. In the event that Seller
is unwilling or unable to remove such disapproved exceptions or fails to
notify Buyer and Escrow Holder whether it shall use its best efforts to
remove such exceptions, Buyer shall have ten (10) days from the first to
occur of (a) the date of receipt of Seller's notice, or (b) the expiration
of Seller's ten (10) day notice period, to inform Seller and Escrow Holder
whether Buyer is waiving its disapproval of such exceptions. In the event
Buyer fails to waive such disapproval, the condition of title shall be
deemed disapproved and this condition shall be deemed to have failed. All
matters shown on the Title Report, which are not disapproved by Buyer or
for which Buyer waives its disapproval, shall be deemed to be Permitted
Exceptions.
3.2.3. ASSIGNMENT OF PLANS. At Closing, Seller shall assign, at no cost to
Buyer, in form acceptable to Buyer, all of Seller's assignable rights in
the Property Documents.
3.2.4. REMOVAL OF ENCUMBRANCES. On or before the Scheduled Closing Date,
Seller shall have, at Seller's sole cost and expense and to Buyer's
satisfaction, removed the effect on title to the Property, or any portion
thereof, of any
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<PAGE> 8
assessments for public improvements, deeds of trust, mechanics liens, and
any other monetary or similar encumbrances.
3.2.5. EXISTING LEASE. Symantec Corporation is currently the sole occupant
and tenant of the Property pursuant to a lease with Seller as Landlord
(the "Existing Lease"). The following conditions shall be satisfied by
Seller or waived by Buyer as of the Closing Date:
3.2.5.1. LEASE TERMINATION. The Existing Lease shall be deemed
terminated without the necessity of any further documentation
between Seller and Symantec Corporation; provided, however, if
requested by Symantec Corporation, Seller agrees to execute
documentation confirming the termination of the Existing Lease.
3.2.5.2. PRORATIONS. As of the Closing Date, the following shall
be prorated between Buyer and Seller:
3.2.5.2.1. RENT. All rent and other charges to tenant
treated as rent or additional rent under the Existing
Lease.
3.2.5.2.2. OTHER TENANT CHARGES.
All charges due from tenant under the Existing Lease
that are not treated as rent or additional rent;
3.2.5.2.3. LANDLORD ALLOWANCES. All allowances, if any,
provided under the Existing Lease to the tenant for
improvements, repairs, maintenance or other purposes
which have accrued, but not been utilized by or paid to
the tenant.
3.2.5.3. SECURITY DEPOSIT. At the closing, any security deposit
held by Seller pursuant to the Existing Lease shall be paid to
Escrow for distribution to Buyer or credited against the Purchase
Price at the Closing.
3.2.5.4. LANDLORD PERFORMANCES. To the extent that the Existing
Lease requires that Seller as Landlord have commenced or completed
any non-monetary obligations with respect to the Property and such
non-monetary obligations have not been commenced or completed,
Buyer shall be entitled to a credit against the Purchase Price for
the reasonable value of such non-monetary obligations.
3.3. CONDITIONS FOR THE BENEFIT OF SELLER. In addition to any other conditions
to Seller's obligations contained in this Agreement, the following shall
constitute conditions to
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<PAGE> 9
Seller's obligation to sell the Property to Buyer and are for the benefit of
Seller, the failure of any of which shall allow Seller to terminate this
Agreement:
3.3.1. BUYER'S ELECTION TO PROCEED. This Agreement is contingent
upon Buyer's delivery to Seller, by the end of the Feasibility
Period, of Buyer's written election to proceed with the purchase
of the Property. If Buyer elects to proceed in Buyer's sole
discretion with the purchase after the Feasibility Period, Buyer
shall deliver to Seller and Escrow Holder a notice of Buyer's
election to proceed substantially in the form of Exhibit C.
3.4. CONDITIONS OF DEPOSIT REFUND TO BUYER. The Deposit is being made by Buyer
in consideration for Seller agreeing to refrain from actively marketing the
Property during the Feasibility Period. Therefore, the Deposit shall not be
refundable to Buyer unless this Agreement is terminated by Buyer on account of
the failure of conditions intended to benefit Buyer as set forth in this Article
3. or Schedule "3" attached hereto or terminated by Seller on account of the
failure of conditions set forth for the benefit of Seller in this Article 3 or
Schedule 3. Buyer agrees to proceed diligently with the Feasibility Studies. If
Buyer elects to proceed in its sole discretion with the purchase after the
Feasibility Period, the total Deposit will become non-refundable except in the
event of a default by Seller or a failure of a condition which is for the
benefit of the Buyer.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
4.1. BUYER AND SELLER REPRESENTATIONS AND WARRANTIES. Buyer and Seller hereby
make those representations and warranties as set forth in Schedule "2" attached
hereto.
4.2. BUYER'S ADDITIONAL REPRESENTATIONS AND WARRANTIES. In addition to those
representations and warranties set forth in Schedule "2" attached hereto, Buyer
hereby represents as follows:
4.2.1. BROKER. Buyer represents and warrants to Seller that it has
employed no broker, agent and/or finder with respect to this transaction
other than Broker-Buyer (Cooper/Brady Corporate Real Estate Services)
whose commission is to be paid by Seller.
4.3. SELLERS ADDITIONAL REPRESENTATIONS AND WARRANTIES. In addition to those
representations and warranties set forth in Schedule "2" attached hereto, Seller
hereby represents as follows:
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<PAGE> 10
4.3.1. BROKER. Seller represents and warrants to Buyer that it has
employed no broker, agent and/or finder with respect to this transaction
other than Broker-Seller (Lincoln Property Management Services, Inc.)
whose commission is to be paid by Seller.
4.4. SURVIVABILITY. Buyer's and Seller's representations and warranties shall
survive the Closing and the delivery of the Grant Deed for a period of one (l)
year.
ARTICLE 5.
COVENANTS
5.1. SELLER'S COVENANTS.
5.1.1. PROPERTY INSPECTION AND DOCUMENTS. Seller hereby covenants and
agrees to reasonably cooperate with Buyer in the inspection of the
Property. Within five (5) days after the Agreement Date, Seller shall make
available to Buyer all Property Documents in Seller's possession and
control. Seller makes no representation or warranty that such information
is truthful, accurate or complete.
5.1.2. OFF-BALANCE SHEET FINANCING STRUCTURE. Seller hereby covenants and
agrees to use reasonable and good faith efforts, at no expense to Seller,
to accommodate Buyer's use of an off-balance sheet financing structure.
5.1.3. CONDITION OF PROPERTY AND TITLE. Seller hereby covenants and agrees
that until the Closing, Seller shall (subject to the terms and conditions
of the Existing Lease) maintain all portions of the Property, including,
without limitation, all building systems, substantially in its present
condition, ordinary wear and tear excepted, and shall not permit acts of
waste or acts that would tend to diminish the value of the Property for
any reason. Seller further covenants and agrees that until the Closing,
Seller shall not permit any liens, encumbrances, or easements to be placed
on the Property, other than the Permitted Exceptions, nor shall Seller
enter into any agreement regarding the sale, rental, management, repair,
improvement or any other matter affecting the Property that would be
binding on Buyer or the Property after the Closing without the prior
written consent of Buyer.
5.1.4. REMOVAL OF ENCUMBRANCES. In addition to any obligations undertaken
by Seller pursuant to Section 3.2, on or before the Scheduled Closing
Date, Seller shall have, at Seller's sole cost and expense and to Buyer's
satisfaction, removed the effect on title to the Property, or any portion
thereof, of any assessments for
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<PAGE> 11
public improvements, deeds of trust, mechanics liens, and any other
monetary or similar encumbrances.
5.1.5. CONFIDENTIALITY. Seller shall maintain the confidentiality of
Buyer's name and shall not disclose Buyer's name or the terms of this
Agreement or of such sale and purchase to any third parties whatsoever
other than the Escrow Holder, the Title Insurer and such other persons
whose assistance is required in carrying out the terms of this Agreement.
5.2. BUYER'S INSPECTION RIGHTS. Buyer and its agents and contractors shall have
the right to enter on the Property to inspect it and conduct tests and will
indemnify Seller from any loss resulting from such entry or inspection;
provided, however, Buyer agrees not to perform any drilling without giving
Seller notice as provided in Section 3.2.1.4. Buyer shall also have the right to
contact any federal, state or local governmental authority or agency to
investigate any matters relating to the Property.
5.3. AS-IS PURCHASE.
The sale of the Property as provided for herein is made on an "AS-IS"
basis, and except as otherwise expressly specified in this Agreement, buyer
expressly acknowledges that in consideration of the agreements of Seller herein,
except as set forth in this Agreement 5.3 or in the Existing Lease, Seller
hereby specifically disclaims any warranty, guaranty or representation, oral or
written, past, present or future, express or implied, or arising by operation of
law, including, but not limited to (i) any warranty of condition; (ii)
habitability; (iii) merchantability; (iv) size; (v) useable area; (vi)
occupation or management of the Property; (vii) the available uses of the
Property; (viii) the boundary lines of or any encroachments or easements
affecting the Property; (ix) the nature and condition of the Property,
including, but not limited to, the water, soil, geology, environmental
conditions (including the presence or absence of any environmental
contamination, or toxic pollution as a result of the presence, use, discharge or
release of hazardous substances or materials on, bout or in the Property), and
the suitability thereof for any and all activities and uses which buyer may
elect to conduct thereon; (x) the presence or availability of water or sewage
disposal on or to the Property; (xi) the amount or nature of any taxes, special
assessments, governmental bonds or similar charges or liabilities affecting the
Property, (xii) the Property's compliance with applicable statues (including,
without limitation, the Americans With Disabilities Act of 1990), (xiii) laws,
codes, ordinances, regulations or requirements relating to leasing, zoning,
subdivision, planning, building, fire, safety, health, hazardous material or
environmental matters; (xiv) the nature an extent of any right-of-way, lease,
possessory interest, lien, encumbrance, license, reservation, condition or
otherwise or (xv) the Property's compliance with covenants, conditions or
restrictions (whether or not of record) or other local municipal, regional,
state or federal requirements or other statues, laws, codes, ordinances,
regulations or requirements.
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5.3.1. BUYER INVESTIGATION. Except for the specific promises and
representations set forth in this Agreement or the Existing Lease, Buyer
further acknowledges that it has entered into this Agreement in reliance
solely upon Buyer's ability to conduct it's own investigation of the
physical, environmental, economic and legal conditions of the Property,
and it s independent review and examination of the Feasibility Studies and
that Buyer is not relying upon any representation or warranty of Seller,
or any of its respective officers, trustees, managers, directors,
employees, brokers, agents, attorneys or other representatives
("Interested Parties"), concerning the Property. Buyer further
acknowledges that Buyer has not received from Seller or any of its
Interested Parties, any accounting, tax, legal, property management or
other advice with respect to the Property or the transaction contemplated
by this Agreement and that Buyer is relying solely upon the advice of its
own advisors, if any, in entering into this Agreement. Accordingly,
buyer's failure to terminate this Agreement in accordance with its rights
under this Agreement shall constitute an acknowledgment that buyer has
considered, inspected and reviewed to Buyer's satisfaction, all physical,
environmental, economic and legal aspects and conditions of the Property
and that Buyer is acquiring the Property on the basis of its evaluation,
without the benefit of any representation or warranty from Seller or its
Interested Parties except for the specific promises and representations
set forth in this Agreement or in the Existing Lease.
5.3.2. LIMITED REPRESENTATIONS. Buyer acknowledges that notwithstanding
any prior or contemporaneous oral or written representations, statements,
documents or understandings, this Agreement constitutes the entire
understanding of the parties with respect to the subject matter hereof and
supersedes the entire understanding of the parties with respect to the
subject matter hereof and supersedes all such prior or contemporaneous
oral or written representations, statements, documents or understandings
and will remain unaffected by any representation, statement or
understanding subsequent to the date hereof not constituting a duly
executed amendment to this Agreement. Buyer further acknowledges that
except for the specific promises and representations set forth in this
Agreement or in the Existing Lease, Seller nor any Interested Party has
previously or does so under this Agreement make any representation or
warranty of any kind whatsoever, either express or implied, with respect
to the Property or any related matter (and hereby disclaims any of the
same that may exist) and that the Property shall be sold to Buyer
hereunder in an "AS IS" condition.
5.3.3. BUYER'S WAIVER. Except for the specific promises and
representations set forth in this Agreement or in the Existing Lease, in
light of the "AS IS" nature of the transaction contemplated under this
Agreement and in consideration of the resultant benefits to Buyer in
connection with other terms of this Agreement, including without
limitation, the Purchase Price, Buyer hereby waives to the fullest
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<PAGE> 13
extent permitted by law the benefit of, and releases and absolves to the
fullest extent permitted by law, Seller and each Interested Party from any
liability under, all laws, rules, cases and other doctrines requiring
disclosure by Seller or any Interested Party of any matter concerning or
related to the Property, including without limitation, any applicable
statutes relating to the disclosure of known or suspected releases of
hazardous substances and all theories of recover based on concealment,
whether intention, passive, negligent or unintentional.
5.3.4. BUYER'S RELEASE OF SELLER. With the exception of a default or
breach of any representation or warranty of Seller specifically set forth
in this Agreement, Buyer, or itself and its agents, affiliates, successors
and assigns, hereby releases and forever discharges Seller, its agents,
affiliates, successors and assigns from, and waives any right to proceed
against Seller for, any and all cost, expense, claim, liabilities and
demands (including reasonable attorneys' fees) at law or in equity,
whether known or unknown, arising out of the physical, environmental,
economic, legal or other condition of the Property, including, without
limitation, any claims for contribution pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, or any other similar environmental statute, rule or decision
(collectively referred to hereinafter as "Claims") which Buyer has or may
have in the future.
Buyer hereby specifically acknowledges that buyer has carefully
reviewed this subsection, and discussed its import with legal counsel, is
fully aware of its consequences, and that the provisions of this
subsection are a material part of this Agreement
ARTICLE 6.
ESCROW
6.1. AGREEMENT TO CONSTITUTE ESCROW INSTRUCTIONS. This Agreement shall
constitute escrow instructions and a copy hereof shall be deposited with Escrow
Holder for this purpose. The Deposit shall be immediately placed by the Escrow
Holder into an insured interest bearing account or an insured certificate of
deposit, as designated by the Buyer. Interest accruing thereon shall be held in
accordance with this Agreement.
6.2. OPENING OF ESCROW. Escrow shall open on the date Escrow Holder receives a
fully executed original or originally executed counterparts of this Agreement
and the Deposit. Escrow Holder shall notify both Buyer and Seller of the date
escrow is opened.
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6.3. CLOSE OF ESCROW. Provided that all of the contingencies contained in
Article III herein and all of the conditions to the close of escrow contained in
Schedule "3" attached hereto have been satisfied (or deemed satisfied as the
case may be) or waived, the close of escrow shall occur on or before 5:00 p.m.,
Pacific Time, on the Scheduled Closing Date.
6.4. SPECIFIC ESCROW INSTRUCTIONS. Specific escrow instructions are attached
hereto as Schedule "3."
6.4.1. ASSIGNMENT OF PLANS. As an additional obligation of Seller at the
Closing, unless as to any item, Buyer elects not to accept the assignment
thereof, Seller shall assign (to the extent assignable), at no cost to
Buyer, all of Seller's right, title and interest in and to all
architectural and engineering drawings and plans as well as any and all
warranties, contracts, reports, or other rights relating to the Property.
6.5. LIQUIDATED DAMAGES. IF BUYER FAILS TO COMPLETE THE PURCHASE PROVIDED FOR IN
THIS AGREEMENT BY REASON OF ANY DEFAULT OF BUYER, SELLER SHALL BE RELEASED FROM
SELLER'S OBLIGATION TO SELL THE PROPERTY TO BUYER. BUYER AND SELLER AGREE IT
WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX ACTUAL DAMAGES IN THE CASE OF
BUYER'S DEFAULT AND THAT THE AMOUNT OF THE TOTAL "DEPOSIT" INCLUDING ALL
INTEREST ACCRUED THEREON AT THE TIME OF DEFAULT, IS A REASONABLE ESTIMATE OF
SELLER'S DAMAGES IN SUCH EVENT, AND THAT IN THE EVENT OF ANY DEFAULT BY BUYER
HEREUNDER AS AFORESAID, SELLER MAY RETAIN THE DEPOSIT. THE DEPOSIT SHALL
CONSTITUTE LIQUIDATED DAMAGES AND SELLER'S SOLE REMEDY ON ACCOUNT OF BUYER'S
DEFAULT FOR FAILURE TO CLOSE.
---------------- -----------------
Buyer's initials Seller's initials
6.6. SPECIFIC PERFORMANCE. If Seller breaches this Agreement in any respect,
Buyer shall be entitled to specific performance of Seller's obligations.
ARTICLE 7.
MISCELLANEOUS PROVISIONS
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7.1. MISCELLANEOUS PROVISIONS. Buyer and Seller hereby agree to those
miscellaneous provisions as set forth in Schedule "4" attached hereto.
7.2. ASSIGNMENT. Buyer may assign this Agreement or designate a party other than
Buyer to take title to the Property at the Closing without the consent of Seller
as provided in Section 1.2.4 and upon any such assignment, the party which is
then assignor under such assignment shall be relieved of any obligation under
this Agreement.
7.3. INCORPORATION OF EXHIBITS. All schedules and exhibits attached hereto and
referred to herein are incorporated in this Agreement as though fully set forth
herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date above first written.
SELLER:
Lincoln Cupertino Associates Limited,
a California limited partnership,
By: Lincoln Property Company No. 309, Ltd.,
a California limited partnership
Its General Partner
By: _____________________________________
Edgar M. Thrift, Jr.,
Its Managing General Partner
BUYER:
Symantec Corporation, a Delaware
corporation
By: _____________________________________
Robert Dykes,
Its Executive Vice President
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CONSENT OF ESCROW HOLDER
The undersigned Escrow Holder hereby agrees to (i) accept the foregoing
Agreement, (ii) be escrow agent under said Agreement, and (iii) be bound by said
Agreement in the performance of its duties as escrow agent.
First American Title Guaranty Company
By:_________________________________
Its: Authorized Agent
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LIST OF SCHEDULES
Schedule "1 "Definitions
Schedule "2 "Representations and Warranties
Schedule "3 "Specific Escrow Instructions
Schedule "4 "Miscellaneous Provisions
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<PAGE> 18
SCHEDULE "1"
DEFINITIONS
1.01 Definitions. For the purposes of this Agreement, the terms set forth
below in quotes shall have the meanings indicated in this Schedule "1."
1.02 "Agreement" means this Agreement for Purchase and Sale and Escrow
Instructions.
1.03 "Closing" means the delivery and recordation of the Grant Deed and the
payment by Buyer to Seller of the Purchase Price for the Property pursuant to
the terms of the Agreement.
1.04 "Closing Date" means the date on which the Closing occurs.
1.05 "Contract Period" means the period commencing upon the Agreement Date
and ending upon the first to occur of the Closing or the termination of this
Agreement.
1.06 "Grant Deed" means a deed in favor of Buyer in a form substantially
similar to that attached hereto as Exhibit "B."
1.07 "Hazardous Material" means any substance, the presence of which requires
investigation or remediation under any federal, state or local statute,
regulation or law; or which is as of the date of this Agreement defined as a
"hazardous waste" pollutant or contaminant under any federal, state or local
statute, regulation or law.
1.08 "Permitted Exceptions" means those certain matters constituting
exceptions to and/or encumbrances against the Property not disapproved by
Buyer, and all other exceptions to title voluntarily imposed or consented to
by Buyer prior to Closing.
1.09 "Title Report" means a preliminary title report issued by the Title
Insurer providing for the issuance at the Closing to Buyer of a Title Policy.
1.10 "Title Policy" shall mean an ALTA Policy of Title Insurance from Title
Insurer in form satisfactory to Buyer ("ALTA Policy") insuring Buyer (or
Buyer's approved assignee) as fee owner of the Property, with liability in
the amount of the Title Insurance Amount, subject only to the Permitted
Exceptions. Buyer shall pay the premium difference between the ALTA and CLTA
policy.
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SCHEDULE "2"
REPRESENTATIONS AND WARRANTIES
2.01 Seller's Representations and Warranties. Seller hereby makes the
following representations and warranties to Buyer.
(a) Actions. To the actual knowledge of the Seller's Representatives, there
are no actions, suits, material claims, legal proceedings or any other
proceedings pending or threatened before any court or governmental
agency which may involve or affect the Property or any portion thereof.
(b) Compliance with Laws. To the actual knowledge of the Seller's
Representatives, Seller has not received written notice that any
operation, use or ownership of the Property is a material violation of
any fire, building, zoning, health or other ordinance, code, law,
regulation or order of any governmental or any agency or body or
subdivision thereof, or that any investigation has been commenced or is
contemplated regarding such possible violation.
(c) Other Agreements. Except as previously disclosed in writing by Seller to
Buyer, there is no agreement affecting the Property to which Seller is a
party. Neither this Agreement, nor anything provided to be done
hereunder, violates or shall violate any contract, agreement or
instrument to which Seller is a party, or which affects the Property or
any portion thereof.
(d) Default. To the actual knowledge of the Seller's Representatives, Seller
is not in default with respect to any of its obligations or liabilities
pertaining to the Property.
(e) Hazardous Materials. To the actual knowledge of the Seller's
Representatives, the Property is not contaminated by any Hazardous
Material, including, but not limited to, any substance or material: (i)
which could impair the value or beneficial use of the Property or
constitute or cause a health, safety or environmental hazard on or off
the Property or to any person who may enter on the Property or (ii)
which may require remediation at the behest of any governmental agency;
and, to the actual knowledge of Seller's Representatives, the Property
is not in violation of and previously has not been in violation of, and
there are no actions or proceedings pending or contemplated pursuant to
any federal, state or local law, ordinance, regulation or order relating
to the environmental condition of the Property.
(f) Bankruptcy. Seller has not (i) made a general assignment for the
benefit of creditors; (ii) filed any voluntary petition in bankruptcy or
suffered the filing of
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an involuntary petition by the Seller's creditors; (iii) suffered the
appointment of a receiver to take possession of all or substantially all
of the Seller's assets; (iv) suffered the attachment or other judicial
seizure of all, or substantially all, of the Seller's assets; or (v)
admitted in writing its inability to pay its debts as they come due.
(g) Authority. Seller is duly organized and existing and in good standing
under the laws of the State of California. Seller has the full right and
authority to enter into this Agreement and to consummate the transaction
contemplated herein. All requisite action, has been taken by Seller in
connection with entering into this Agreement. Each of the persons
signing this Agreement on behalf of Seller is authorized to do so.
(h) Execution. The execution and delivery of the Agreement will not
constitute a breach of or a default under any agreement or other
instrument to which the Seller is a party.
(i) No Other Representations or Warranties. Seller makes no representations
and warranties other than those contained in this Schedule "2."
2.02 Buyer's Representations and Warranties. Buyer hereby makes the
following representations and warranties to Seller:
(a) Authority. Buyer is duly organized and in good standing under the laws
of the State of its formation. Buyer has the full right and authority to
enter into and fully perform its obligations under this Agreement and to
consummate the transactions contemplated herein. All requisite action
has been taken by Buyer in connection with entering this Agreement. Each
of the persons signing this Agreement on behalf of Buyer is authorized
to do so.
(b) Execution. The execution and delivery of the Agreement will not
constitute a breach of or a default under any agreement or other
instrument to which the Buyer is a party.
(c) Actions. To the actual knowledge of the Buyer's Representatives, there
are no actions, suits, material claims, legal proceedings or any other
proceedings pending or threatened before any court or governmental
agency which may involve or affect the Property or any portion thereof.
(d) Compliance with Laws. To the actual knowledge of the Buyer's
Representatives, Buyer has not received written notice that any
operation, use or ownership of the Property is a material violation of
any fire, building, zoning, health or other ordinance, code, law,
regulation or order of any governmental or
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any agency or body or subdivision thereof, or that any investigation has
been commenced or is contemplated regarding such possible violation.
(e) Hazardous Materials. To the actual knowledge of the Buyer's
Representatives, the Property is not contaminated by any Hazardous
Material, including, but not limited to, any substance or material: (i)
which could impair the value or beneficial use of the Property or
constitute or cause a health, safety or environmental hazard on or off
the Property or to any person who may enter on the Property or (ii)
which may require remediation at the behest of any governmental agency;
and, to the actual knowledge of Buyer's Representatives, the Property
is not in violation of and previously has not been in violation of, and
there are no actions or proceedings pending or contemplated pursuant to
any federal, state or local law, ordinance, regulation or order relating
to the environmental condition of the Property.
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"SCHEDULE "3"
SPECIFIC ESCROW INSTRUCTIONS
3.01 Conditions to Close of Escrow.
(a) Conditions for the Benefit of Buyer. In addition to any other obligations
contained in this Agreement, the following shall constitute conditions to
Buyer's obligation to purchase the Property from Seller and are for the
benefit of Buyer, the failure of any of which shall allow Buyer to terminate
this Agreement.
(i) Grant Deed. Seller shall have delivered to Escrow Holder prior to the
time set for Closing a duly executed and acknowledged Grant Deed in the
form attached hereto as Exhibit "B."
(ii) Non-Foreign Status Affidavit. Seller shall have delivered to Escrow
Holder prior to the time set for Closing a Non-Foreign Status Affidavit
executed by Seller in the form attached hereto as Exhibit "E" as well as
any similar Affidavit required by the State where the Property is
located.
(iii)Other Documents and Sums. Seller shall deliver to Escrow Holder all
other documents and sums reasonably required of Seller to carry out the
Closing, including, without limitation, the Existing Lease Security
Deposit and the Lease Termination Documentation pursuant to Section
3.2.5.
(iv) Seller's Representations and Warranties are True and Correct. Seller
shall have delivered to Escrow Holder on or before the time set for
Closing a certificate of Seller that all representations and warranties
made by Seller in this Agreement are true and correct as of the Closing
and that Seller has complied with all covenants of Seller contained
therein.
(v) Title Policy. The Title Company shall be committed to issue an ALTA
Policy from Title Insurer subject only to the Permitted Exceptions.
(vi) Bill of Sale. Seller shall have delivered to Escrow Holder prior to the
time set for Closing a duly executed "Bill of Sale" in a form reasonably
acceptable to Buyer transferring to Buyer all of Seller's right, title
and interest in and to all fixtures, improvements, and personal property
located on the Property.
(b) Conditions for the Benefit of Seller. In addition to any other
obligations contained in this Agreement, the following shall constitute
conditions to Seller's obligation to sell the Property to Buyer and shall be
for the benefit of Seller, the failure of any of which shall allow Seller to
terminate this Agreement:
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(i) Delivery of Purchase Price. Buyer shall deliver the balance of the
Purchase Price to Escrow Holder prior to the time set for Closing.
(ii) Other Documents and Sums. Buyer shall deliver to Escrow Holder all
other documents and sums reasonably required of Buyer to carry out the
Closing.
(iii)Buyer's Representations and Warranties are True and Correct. Buyer
shall have delivered to Escrow Holder on or before the time set for
Closing a certificate of Buyer that all representations and warranties
are true and correct as of the Closing Date and that Buyer has complied
with all covenants of Buyer contained therein.
3.02 Recordation of Grant Deed and Delivery of Funds. Upon receipt of the
funds and instruments described in this Schedule "3," and upon the
satisfaction (or deemed satisfaction as the case may be) or waiver of the
conditions specified in this Schedule "3," Escrow Holder shall cause the
Grant Deed to be recorded in the official records of the County Recorder of
Santa Clara County, California, (with documentary transfer tax information to
be affixed by separate affidavit) and shall deliver the proceeds of this
escrow to Seller. All sums to be disbursed to Seller by Escrow Holder shall
be in cash, by wire transfer, or in other immediately available funds.
3.03 Prorations. All prorations are to be apportioned as of 11:59 p.m. on
the day preceding the Closing Date.
(a) Real property taxes and assessments shall be prorated between Buyer and
Seller based on the latest available tax information. In the event any
supplemental tax bill is issued following the Closing, Seller shall pay
to Buyer all additional amounts for which Sellers would otherwise be
responsible applicable to the time prior to the Closing upon written
request of Buyer.
(b) Rent and other amounts relating to the Existing lease pursuant to
Section 3.2.1.2.
(c) Said prorations shall be based on a 30-day month and a 360-day year.
3.04 Costs of Escrow.
(a) Seller shall pay;
(i) All costs not specifically referenced herein customarily allocated to
Seller Santa Clara County, California;
(ii) A real estate brokerage commission in an amount equal to two percent
(2%) of the Purchase Price to Broker-Buyer and in an amount equal to one
percent (1%) of the Purchase Price to Broker-Seller;
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<PAGE> 24
(iii) The premium for the Title Policy up to the cost for a CLTA policy;
(iv) The cost of any of Seller's other obligations hereunder.
(b) Buyer shall pay:
(i) All costs not specifically referenced herein customarily allocated to
Buyer in Santa Clara County, California.
(ii) The premium for the Title Policy for such portion of the Title
Insurance Amount that is in excess of the cost for a CLTA policy and
for the following numbered CLTA endorsements to the Title Policy:
100 (broad coverage CC&R's, easements and encroachments), 116
(improvements designated and described), 116.1 (improvements
described in survey), 103.1 (blanket easements), 103.1 (locatable
easements), and 123.2 (zoning).
(iv) The cost of any of Buyer's other obligations hereunder.
3.05 Escrow Cancellation Charges. In the event that any Closing shall fail to
occur by reason of the default of either party, the defaulting party shall be
liable for all escrow cancellation charges. In the event that any Closing
shall fail to occur for any other reason, Buyer and Seller shall each be
liable for one-half of any escrow cancellation charges.
3.06 Default. TIME IS OF THE ESSENCE in this Agreement and if Buyer or Seller
(the "Defaulting Party") fails to deposit any of the amounts due pursuant to
this Agreement, or to perform any other act when due, then the other party
(the "Non-Defaulting Party") may terminate this Agreement by notice in
writing to the Defaulting Party and Escrow Holder at which time Escrow Holder
shall cancel this escrow and the Non-Defaulting Party shall thereupon be
released from its obligations under this Agreement. In the event that escrow
shall fail to close by reason of the default of Seller, in addition to any
other remedies to which Buyer is entitled under this Agreement, including,
without limitation, the right to specific performance, if Buyer elects to
terminate this Agreement, Buyer shall be entitled to the return of the
Deposit and all accrued interest.
3.07 Additional Escrow Instructions. If required by Escrow Holder, Buyer and
Seller shall execute Escrow Holder's usual form of supplemental escrow
instructions for transactions of this type, provided, however, that (a) in
the event that any portion of such additional escrow instructions shall be
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall prevail to the extent of any such
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inconsistency; and (b) no provision thereof shall have the effect of
modifying this Agreement unless it is expressly so stated and such express
statement is initialed by Buyer and Seller.
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SCHEDULE "4"
MISCELLANEOUS PROVISIONS
4.01 Brokers. The parties hereto hereby acknowledges that any brokerage,
broker's, agent's and/or finder's fee that shall have been earned or claimed
in connection with this Agreement is and shall be the sole and exclusive
responsibility of the party employing or allegedly employing a broker, agent
and/or finder, and the other party shall have no liability or responsibility
therefor. Each party shall indemnify the other against and hold the other
party free and harmless from any and all loss, damage, liability or expense
(including costs and reasonable attorneys' fees) that such other party may
incur or sustain by reason of, or in connection with, any claim or liability
on account of a broker, agent and/or finder employed by or allegedly employed
by the other party..
4.02 Attorneys' Fees. In any legal proceeding between Buyer and Seller
seeking enforcement of or attempting to construe any of the terms and
provisions of this Agreement, or in connection with the Property, including,
without limitation, insolvency, bankruptcy, arbitration, declaratory relief
or other litigation, the prevailing party in such action shall be awarded, in
addition to damages, injunctive or other relief, its reasonable costs and
expenses, not limited to service of process, filing fees, court and court
reporter costs, investigation costs, expert witness fees and the cost of any
bonds, and reasonable attorneys' fee (hereinafter "Legal Fees"). In addition,
any Legal Fees incurred in enforcing any judgment, injunctive or other
relief, shall be paid by the party against whom the judgment is being
enforced.
4.03 Notices. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed delivered and effective upon the earlier of (i) if
personally delivered, the date of the receipt of delivery by an individual at
the address of the party to receive such notice; (ii) if delivered by
overnight commercial carrier, on the date of delivery to the address of the
party to receive such notice, as shown on the delivery receipt from such
carrier; (iii) if mailed, on the date of delivery as shown by the sender's
registry or certification receipt; or (iv) if given by facsimile, upon
telephonic confirmation of receipt of such facsimile transmission and
provided further that the facsimile shall be later confirmed by any of the
above-noted three methods. Any communication sent by facsimile must be
confirmed immediately by telephone and also by the end of the next succeeding
business day by written evidence mailed or delivered in accordance with this
Section. Notice sent by any other manner shall be effective only upon actual
receipt thereof. Any party may change its address for purposes of this
Section by giving notice to the other party hereto and to Escrow Holder as
herein provided.
4.04 Assignment. This Agreement shall be binding upon the parties hereto and
their respective heirs, successors or representatives.
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4.05 Relationship of Parties. Except for the provisions of the Existing Lease
which shall remain in full force and effect until earlier terminated in
accordance with the provisions thereof or upon the Closing pursuant to this
Agreement (whichever first occurs), the relationship of the parties to this
Agreement shall be solely that of Buyer and Seller, and nothing herein
contained shall be construed otherwise.
4.06 Governing Law. This Agreement shall be construed in accordance with the
laws of the State of California.
4.07 Pronouns. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the
identity of the parties may require.
4.08 Headings. All headings of this Agreement are for purposes of reference
only and shall not limit or define the meaning of the provisions of this
Agreement.
4.09 Severability. If any paragraph, section, sentence, clause or phrase
contained in this Agreement shall become illegal, null or void against public
policy, or otherwise unenforceable, for any reason, or shall be held by any
court of competent jurisdiction to be illegal, null or void, against public
policy, or otherwise unenforceable, the remaining paragraphs, sections,
sentences, clauses or phrases contained in this Agreement shall not be
affected thereby.
4.10 Waiver. The waiver of any breach of any provision hereunder by Buyer or
Seller shall not be deemed to be a waiver of any preceding or subsequent
breach hereunder. No failure or delay of any party in the exercise of any
right given hereunder shall constitute a waiver thereof nor shall any partial
exercise of any right preclude further exercise thereof.
4.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which shall
constitute one and the same instrument.
4.12 Time of Essence. TIME IS OF THE ESSENCE in this Agreement as to all
dates and time periods set forth herein.
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LIST OF EXHIBITS
Exhibit "A" Legal Description of Property
Exhibit "B" Grant Deed
Exhibit "C" Buyer's Election to Continue Escrow
Exhibit "D" Non-Foreign Status Affidavit
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EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
PARCEL ONE:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map being a
Subdivision of Lot 9 of Tract 3743 (186-MAPS-36 & 37)" which Map was filed
for record in the Office of the Recorder of the County of Santa Clara, State
of California on December 12, 1978 in Book 432, of Maps, at page 3.
PARCEL TWO and PARCEL THREE:
Appurtenant easements
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EXHIBIT "B"
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
__________________________
__________________________
__________________________
Attention: _______________
MAIL TAX STATEMENTS TO:
__________________________
__________________________
__________________________
Attention ________________:
_____________________________________________________________________________
(SPACE ABOVE THIS LINE FOR RECORDER'S USE)
GRANT DEED
----------
Documentary Transfer tax is $
( ) Computed on full value of property conveyed, or
( ) Computed on full value less value of liens and encumbrances
remaining at time of sale.
( ) Unincorporated area: ( ) City of _________________,
FOR A VALUABLE CONSIDERATION, receipt of this is hereby acknowledged,
Lincoln Cupertino Associates Limited, a California limited partnership hereby
grants to ______________, a ________________, the following described real
property in the County of Santa Clara, State of California:
See Exhibit "A" which is attached hereto and incorporated by this
reference
Subject to: 1. Current taxes and assessments.
2. [Permitted Exceptions]
IN WITNESS WHEREOF, the parties hereto have executed this Grant Deed as
of this day of , 19 .
Lincoln Cupertino Associates Limited,
a California limited partnership,
By:_________________________________________
Its: _______________________________________
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EXHIBIT "A" to
Grant Deed
PROPERTY DESCRIPTION
--------------------
PARCEL ONE:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map being a
Subdivision of Lot 9 of Tract 3743 (186-MAPS-36 & 37)" which Map was filed
for record in the Office of the Recorder of the County of Santa Clara, State
of California on December 12, 1978 in Book 432, of Maps, at page 3.
PARCEL TWO and PARCEL THREE:
Appurtenant easements
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EXHIBIT "C"
BUYER'S ELECTION TO CONTINUE ESCROW
To: _______________ [Escrow Holder]
Re: Buyer's Election to Continue Escrow for Escrow No.
Ladies and Gentlemen:
Under that certain Agreement for Purchase and Sale and Escrow Instructions
(the "Agreement") dated July __, 1996 between Lincoln Cupertino Associates
Limited, a California limited partnership ("Seller") and the Buyer therein,
initially Symantec Corporation, a Delaware corporation ("Buyer"), hereby
elects to proceed with the purchase and tenders herewith the additional sum
of Thousand Dollars ($________) as an increase in the Deposit making the
total Deposit Two Hundred Thousand Dollars ($200,000).
Very truly yours,
BUYER
____________________ a ___________________
By: ______________________________________
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EXHIBIT "D"
NON-FOREIGN STATUS AFFIDAVIT
To inform __________________________________, a ___________________________
(the "Transferee") that withholding of tax under Section 1445 of the Internal
Revenue Code of 1986, as amended ("Code") and under Section 18805(a)(2) of
the California Revenue and Taxation Code will not be required upon the
transfer of certain real property to the Transferee by Lincoln Cupertino
Associates Limited, a California limited partnership (the "Transferor"), the
undersigned hereby certifies the following on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Code
and the Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer identification number is ______________;
and
3. The Transferor's office address is ____________________________________
The Transferor understands that this Certification may be disclosed to the
Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both. Under
penalty of perjury I declare that I have examined this Certification and to
the best of my knowledge and belief it is true, correct and complete, and I
further declare that I have authority to sign this document on behalf of the
Transferor.
Date ________________, 1996.
Lincoln Cupertino Associates, Limited,
a California limited partnership,
By: Lincoln Property Company No. 309,
Ltd., a California limited partnership
Its General Partner
By: _____________________________________
Edgar M. Thrift, Jr.,
Its Managing General Partner
BUYER:
Symantec Corporation ,
a Delaware corporation
By: _____________________________________
Robert Dykes,
Its Executive Vice President
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EXHIBIT 10.20
AGREEMENT FOR PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
ARTICLE 1.
AGREEMENT TERMS
1.1. DEFINITIONS. For purposes of this Agreement, terms set forth in quotes in
Section 1.2. below and Schedule "1" attached, shall have the meanings indicated
therein.
1.2. SPECIFIC TERMS.
1.2.1. "AGREEMENT DATE". May ___, 1996
1.2.2. "BUYER". The party from time to time having the rights to purchase
the Property pursuant to this Agreement and the obligations of Buyer set
forth in this Agreement. Buyer shall initially be Symantec Corporation, a
Delaware corporation (or its Nominee); provided, however, the rights and
obligations of Buyer may be assigned or otherwise transferred to any other
party at any time without the consent of Seller.
1.2.3. "BUYER'S DESIGNATED REPRESENTATIVES". Shall refer to the
following persons: Gordon Ciochon.
1.2.4. "CITY". City of Cupertino, California.
1.2.5. "COUNTY". Santa Clara County, California.
1.2.6. "DEPOSIT". The Deposit shall consist of an initial amount of Fifty
Thousand Dollars ($50,000.00) (the "Initial Deposit") to be paid to Escrow
Holder within two (2) business days after the full execution of this
Agreement, and upon Buyer's election to proceed pursuant to Section
3.3.1., the deposit shall be increased to Two Hundred Thousand Dollars
($200,000.00)(the "Second Deposit").
1.2.7. "ESCROW HOLDER". First American Title Guaranty Company, 1850 Mt.
Diablo Boulevard, Suite 300, Walnut Creek, CA 94596.
1.2.8. "FEASIBILITY PERIOD". The period beginning on the Agreement Date
and terminating at 5:00 p.m. Pacific Time sixty (60) days after the
Agreement Date.
1.2.9. "LIENHOLDER." Teachers Insurance and Annuity Association of
America.
1.2.10. "PARKING AGREEMENT". That agreement to be negotiated and executed
during the Feasibility Period as contemplated by Section 5.1.
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1.2.11. "PARKING APPROVALS". The approvals to be obtained by Seller as
required pursuant to Section 5.3.1.1. .
1.2.12. "PROJECT". Shall refer to the construction of a four story
building of approximately 140,000 square feet and underground parking for
approximately 630 parking stalls.
1.2.13. "PROPERTY". Shall collectively refer to: (i) approximately 1.291
net acres of land identified as Lot 5 of Tract 7953, "Cupertino City
Center," Cupertino, California, more particularly described in Exhibit "A"
attached hereto (the "Land"), (ii) easements, rights, rights of way,
rights in and to common areas, and other rights appurtenant to the Land
and (iii) subject to the rights of others and the terms thereof, all of
Seller's right, title and interest in any and all of the following
pertaining to the Land: discretionary permits, if any, from the City and
County; subdivision maps completed, in tentative or final form, or in
process; grading, improvement and landscape plans submitted to the City or
County or in the process of preparation for the Land, if any; and any and
all of Seller's non-exclusive rights to architectural and engineering
drawings, including site utilities, sanitary sewer and drainage facilities
relating to the Property.
1.2.14. "PROPERTY DOCUMENTS". Any architectural drawings and plans,
documents, records, reports (including, without limitation,
environmental), surveys, governmental approvals, Owners Association CC&Rs,
Articles, Bylaws and other Association documents, and other documentary
information in Seller's possession and control which relates to the use,
occupancy or condition of the Property.
1.2.15. "PURCHASE PRICE". Six Million Five Hundred Thousand Dollars
($6,500,000.00), subject to reduction pursuant to Section 2.3. .
1.2.16. "SCHEDULED CLOSING DATE". Shall occur seven (7) days after Buyer's
receipt of a Use Permit from the City for the Project, but in no event
later than December 30, 1996.
1.2.17. "SELLER". Cupertino City Center Buildings, a California limited
partnership.
1.2.18. "SELLER'S DESIGNATED REPRESENTATIVES". Shall refer to the
following persons: Mark Kroll and Sanford N. Diller.
1.2.19. "TITLE INSURER". First American Title Guaranty Company.
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1.2.20. "TITLE INSURANCE AMOUNT". The liability amount of title insurance
for which the Title Policy shall be issued.
1.2.21. "USE PERMIT". Shall refer to any use permit (other than a building
permit) required by the City to allow Buyer to construct the Project.
1.3. NOTICES. All notices requests, demands and other communication given or
required to be given hereunder shall be in writing, duly addressed to the
parties as follows:
1.3.1. BUYER. If to Buyer at:
Symantec Corporation1452 Kifer Road
Sunnyvale, CA 94086
Attention: Gordon Ciochon
1.3.2. COPY TO: With a copy to:
Dakin Ferris
Symantec Corporation
10201 Torre Avenue
Cupertino, CA 95014
1.3.3. SELLER. If to Seller at:
Sanford N. Diller
Maxim Property Management
350 Bridge Parkway
Redwood City, CA 94065
1.3.4. COPY TO:
With a copy to:
Mark Kroll
SARES_REGIS Group of Northern California
393 Vintage Park Dr.
Suite 100
Foster City, CA 94404-1134
1.4. ADDITIONAL TERMS.
1.4.1. PURCHASE AND SALE. See Article II
1.4.2. CONTINGENCIES. See Article III
1.4.3. REPRESENTATIONS AND WARRANTIES. See Article IV
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1.4.4. COVENANTS. See Article V
1.4.5. ESCROW. See Article VI
1.4.6. MISCELLANEOUS PROVISIONS. See Article VII
1.5. SCHEDULES.
1.5.1. SCHEDULE 1. Definitions
1.5.2. SCHEDULE 2. Representations and Warranties
1.5.3. SCHEDULE 3. Specific Escrow Instructions
1.5.4. SCHEDULE 4. Miscellaneous Provisions
1.6. EXHIBITS.
1.6.1. EXHIBIT "A." Legal Description of Property
1.6.2. EXHIBIT "B." Grant Deed
1.6.3. EXHIBIT "C." Buyer's Election to Continue Escrow
1.6.4. EXHIBIT "D." Non-Foreign Status Affidavit
ARTICLE 2.
PURCHASE AND SALE
2.1. PURCHASE AND SALE. Subject to the terms and conditions contained in this
Agreement, Seller agrees to sell the Property to Buyer and Buyer agrees to
purchase the Property from Seller.
2.2. PAYMENT BY BUYER. The Purchase Price shall be paid as follows:
2.2.1. DEPOSIT. Buyer shall pay to Escrow Holder in cash or other
immediately available funds the amount of the Initial Deposit within two
(2) business days of execution of this Agreement. The Deposit shall be
placed by Escrow Holder in an interest bearing Federally insured account
as instructed by Buyer. Upon Buyer's election to proceed pursuant to
Section 3.3.1. , Buyer will increase the Deposit to
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Two Hundred Thousand Dollars ($200,000.00). The Total Deposit and interest
earned thereon shall apply against the Purchase Price at Closing, if such
occurs.
2.2.2. CASH REMAINDER. The remainder of the Purchase Price shall be paid
in cash or through other immediately available funds through escrow at
Closing.
2.3. REDUCTION IN PURCHASE PRICE. The Purchase Price shall be subject to
reduction in the following events:
2.3.1. USE PERMIT. In the event that Buyer's Use Permit for the Project is
approved for less than 140,000 square feet of building area, the Purchase
Price shall be reduced by $46.42 per square foot times the number of
square feet of building area less than 140,000 square feet, provided,
however, in no event shall the Purchase Price be less than Five Million
Five Hundred Seventy Thousand Four Hundred Dollars ($5,570,400.00). Buyer
will apply for 140,000 square feet of building area.
2.4. CONVEYANCE. Seller shall convey to Buyer title in fee simple to the
Property by Grant Deed, subject to the Permitted Exceptions.
ARTICLE 3.
CONTINGENCIES
3.1. EFFECT OF CONDITIONS GENERALLY. The close of escrow, Buyer's obligation to
purchase the Property and Seller's obligation to sell the Property shall be
contingent upon the satisfaction (or deemed satisfaction as specifically set
forth in each Section herein) or waiver by Buyer or Seller of all of the
conditions that are expressly stated to be in favor of each as set forth in this
Article and the Conditions to Close of Escrow as set forth in Schedule "3"
hereof, within the time limits specified in each Section of this Article and
such Schedule. In the event that any such condition is neither satisfied within
the time limits specified in each such Section nor waived in writing by the
party specifically stated to be benefited by such Section, such condition shall
be deemed to have failed and this Agreement shall terminate. In the event of any
termination pursuant to this Article, Buyer and Seller shall be released from
their respective obligations to purchase or sell under this Agreement and shall
have no further rights or remedies regarding purchase or sale against the other
as a result of such termination, except for the return of Buyer's Deposit and
the payment of escrow cancellation fees and the survival of the indemnity made
by Buyer
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pursuant to Section 5.4.. In such event, Buyer and Seller shall comply with any
requirements reasonably imposed by Escrow Holder to evidence such termination.
3.2. CONDITIONS FOR THE BENEFIT OF BUYER. In addition to any other conditions to
Buyer's obligations contained in Schedule 3, the following shall constitute
conditions to Buyer's obligation to purchase the Property from Seller and are
for the benefit of Buyer, the failure of any of which shall allow Buyer to
terminate this Agreement:
3.2.1. FEASIBILITY STUDIES. This Agreement is contingent on Buyer's
approval of any and all investigations, studies or analyses, including,
but not limited to engineering reports, soils reports, surveys, and
environmental studies for the Property deemed appropriate by Buyer to aid
Buyer in determining whether to consummate the transaction ("Feasibility
Studies").
Buyer may elect in Buyer's sole discretion, at any time prior to the
end of the Feasibility Period to terminate this Agreement. Upon such
election to terminate, the Deposit together with interest earned thereon
shall be returned to Buyer, and Buyer shall furnish to Seller a copy of
all Feasibility Studies produced by or for Buyer which Buyer has the right
to so furnish. Any such Feasibility Studies so furnished to Seller shall
be accepted by Seller "as is" and Buyer shall not warrant or represent in
any way the accuracy or completeness of any such Feasibility Studies.
3.2.2. APPROVAL OF CONDITION OF TITLE. Buyer shall obtain a Title Report
together with full and complete copies of all documents referenced as
exceptions therein and a plotting of all easements referred to as
exceptions therein. This Agreement is contingent on Buyer's approval of
the condition of title of the Property as shown in such Title Report. If
Seller and Escrow holder are not notified in writing of Buyer's
disapproval thereof by within thirty-five (35) days after the Agreement
Date, Buyer shall be deemed to have approved the condition of title as
reflected in such Title Report. In case of Buyer's timely objection,
Seller shall have ten (10) days from receipt of Buyer's notice of
objection to inform Buyer and Escrow Holder in writing whether Seller
shall use its diligent efforts to remove such disapproved exceptions prior
to the Closing. In the event Seller agrees that Seller shall use its
diligent efforts to remove such disapproved exceptions, such removal shall
be a condition to the Closing and the condition of title as shown on the
Title Report shall otherwise be deemed approved. In the event that Seller
is unwilling or unable to remove such disapproved exceptions or fails to
notify Buyer and Escrow Holder whether it shall use its best efforts to
remove such exceptions, Buyer shall have ten (10) days from the first to
occur of (a) the date of receipt of Seller's notice, or (b) the expiration
of Seller's ten (10) day notice period, to inform Seller and Escrow Holder
whether Buyer is waiving
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its disapproval of such exceptions. In the event Buyer fails to waive such
disapproval, the condition of title shall be deemed disapproved. All
matters shown on the Title Report, which are not disapproved by Buyer
and/or as to which Buyer waives its disapproval, shall be deemed to be
Permitted Exceptions. Unless Seller has actual knowledge that a matter of
record which is material is not disclosed in the Title Report, any matter
of record not disclosed in the Title Report shall be the responsibility of
the Title Insurer and not Seller and shall be deemed a Permitted
Exception.
3.2.3. APPROVAL TO ENTER AGREEMENT. Buyer's obligations under this
Agreement shall be subject to Seller obtaining within thirty (30) days of
the Agreement Date the written approval of Lienholder and any other
necessary parties for Seller to enter into this Agreement.
3.2.4. ASSIGNMENT OF PLANS. At Closing, Seller shall assign, at no cost to
Buyer, in form acceptable to Buyer, all of Seller's assignable rights in
the Property Documents.
3.2.5. PARKING AGREEMENT. Prior to the expiration of the Feasibility
Period, Buyer and Seller shall have agreed to the terms, provisions, and
form of the Parking Agreement, shall have executed the Parking Agreement
to become effective at the Closing described in Section 5.1.1. and the
Parking Approvals defined in Section 5.3.1.1. shall have been obtained.
3.2.6. ACCESS.
Seller shall have arranged prior to the end of the Feasibility
Period for the grant from the Cupertino City Center Owners Association
("Association") to Buyer for the benefit of the Property, a non-exclusive
easement over Lot 7 of Tract 7953 to the East of the Property, to the West
of the Property, and, if required by the City, to the South of Lot 4 of
Tract 7953 for vehicular and pedestrian ingress and egress to the parking
garage and service area, which grant shall be by deed recordable at the
closing and in a form reasonably acceptable to Buyer.
3.2.7. CONSTRUCTION STAGING AREA. Seller shall have arranged prior to the
end of the Feasibility Period for a temporary easement ("Construction
Staging Easement") in favor of Buyer effective as of the Closing to permit
Buyer to use Parcels 1 and 6 of Tract 7953 in the City for construction
staging purposes in connection with Buyer's contemplated construction of
the Project. The Construction Staging easement shall be coordinated with
and subject to any temporary parking requirements that need to be provided
on such parcels pursuant to Section 5.3.1.2. and shall be of a duration
limited to Buyer's contemplated construction period.
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3.3. CONDITIONS FOR THE BENEFIT OF SELLER.
In addition to any other conditions to Seller's obligations contained in
Schedule 3, the following shall constitute conditions to Seller's obligation to
sell the Property to Buyer and are for the benefit of Seller, the failure of any
of which shall allow Seller to terminate this Agreement:
3.3.1. BUYER'S ELECTION TO PROCEED. This Agreement is contingent upon
Buyer's delivery to Seller, by the end of the Feasibility Period, of
Buyer's written election to proceed with the purchase of the Property. If
Buyer elects to proceed, in Buyer's sole discretion, with the purchase,
Buyer shall deliver to Seller and Escrow Holder a notice of Buyer's
election to proceed substantially in the form of Exhibit C.
3.3.2. APPROVAL TO ENTER AGREEMENT. Seller's obligations under this
Agreement shall be subject to Seller obtaining within thirty (30) days of
the Agreement Date the written approval of Lienholder for Seller to enter
into this Agreement.
3.3.3. PARKING AGREEMENT. Prior to the expiration of the Feasibility
Period, Buyer and Seller shall have agreed to the terms, provisions and
form of the Parking Agreement and shall have executed the Parking
Agreement to become effective at the Closing described in Section 5.1.1.
and the Parking Approvals defined in Section 5.3.1.1. shall have been
obtained.
3.3.4. ACCESS.
Seller shall have arranged prior to the end of the Feasibility
Period for the grant from the Cupertino City Center Owners Association
("Association") to Buyer for the benefit of the Property, a non-exclusive
easement over Lot 7 of Tract 7953 to the East of the Property, to the West
of the Property, and, if required by the City, to the South of Lot 4 of
Tract 7953 for vehicular and pedestrian ingress and egress to the parking
garage and service area, which grant shall be by deed recordable at the
closing and in a form reasonably acceptable to Buyer.
3.4. CONDITIONS OF DEPOSIT REFUND TO BUYER.
The Deposit is being made by Buyer in consideration for Seller keeping the
Property off the market during the Feasibility Period. Therefore, the Deposit
shall not be refundable to Buyer unless this Agreement is terminated by Buyer
pursuant to conditions intended to benefit Buyer as set forth in this Article 3.
or Schedule "3" attached hereto or terminated by Seller pursuant to the
conditions set forth for the benefit of Seller in this Article 3. or Schedule 3.
If Buyer elects to proceed in its sole discretion with the purchase
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after the Feasibility Period, the total Deposit will become non-refundable
except in the event of a material breach by Seller.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
4.1. BUYER AND SELLER REPRESENTATIONS AND WARRANTIES. Buyer and Seller hereby
make those representations and warranties as set forth in Schedule "2" attached
hereto.
4.2. BUYER'S ADDITIONAL REPRESENTATIONS AND WARRANTIES. In addition to those
representations and warranties set forth in Schedule "2" attached hereto, Buyer
hereby represents as follows:
4.2.1. BROKER. Buyer represents and warrants to Seller that it has
employed no broker, agent and/or finder with respect to this transaction
other than Cooper/Brady.
4.3. LIMITATION OF ACTIONS[SURVIVABILITY]. Any claims resulting or arising out
of or related to this Agreement and/or the Property, including, but not limited
to, the representations and warranties set forth in Schedule 2, shall be
asserted and legal action commenced, if at all, within twelve (12) months from
the Closing and the delivery of the Grant Deed, except for claims based on the
fraudulent misrepresentations and/or fraudulent non-disclosures of either party,
which shall survive for the period of the applicable statute of
limitations.[Buyer's and Seller's representations and warranties shall survive
for twelve (12) months from the Closing and the delivery of the Grant Deed,
except for claims based on the fraudulent misrepresentations and/or fraudulent
non-disclosures of Seller which shall survive for the period of the applicable
statute of limitations.]
ARTICLE 5.
COVENANTS
5.1. PARKING.
5.1.1. PARKING AGREEMENT. The Property is currently used to provide
surface parking for the benefit of other lots (the "Benefitted Lots"). It
is the intention of
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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Buyer and Seller that during Buyer's construction of the Project, the
parking facilities currently existing on the Property will be removed and,
if required, inter alia, by the City, temporary parking facilities will be
provided by Buyer, at Buyer's cost and expense. Upon the completion of the
Project, Buyer will provide replacement parking on the Property for the
Benefitted Lots to the extent required by those entitled thereto. To
facilitate the accommodation of parking, Buyer and Seller agree to
cooperate during the Feasibility Period to understand the requirements for
such temporary and permanent parking, if any, and to reach agreement with
any necessary third parties about the exact time, place and manner of
accommodating such parking. The parties contemplate that the terms,
conditions and requirements with respect to such parking shall be
contained in an agreement to be negotiated during the Feasibility Period
and executed during the Feasibility Period to become effective as of the
Closing by Buyer and Seller and any other parties that Buyer and Seller
deem necessary (the "Parking Agreement"). Buyer and Seller agree to
cooperate in negotiating the Parking Agreement.
5.1.2. MINIMIZE TEMPORARY PARKING. Buyer and Seller agree to work together
in order to persuade the City and other necessary parties that the parking
needs currently filled by the surface parking on the Property can be
filled temporarily without the need for Buyer to construct new temporary
parking facilities while the Project is being completed.
5.2. BUYER'S COVENANTS.
5.2.1. BUYER'S PARKING OBLIGATIONS. Buyer hereby covenants and agrees as
follows with respect to parking, which covenants shall survive the
Closing, and shall bind the Property and the assigns and successors of
Buyer:
5.2.1.1. REPLACEMENT PARKING
To provide, at Buyer's sole cost and expense, in a portion of
the parking structure contemplated as part of the Project,
sufficient parking to accommodate the parking requirements of the
Benefitted Lots, including handicap parking to the extent required.
5.2.1.2. TEMPORARY PARKING. If required, to provide, at Buyer's sole
cost and expense, for the construction of temporary surface parking
facilities including vehicular and pedestrian access on property
made available by Seller. Once constructed, Buyer shall have no
liability for such temporary parking facilities or the use or
removal thereof. Buyer agrees to cooperate with Seller in an effort
to persuade the City and any other necessary parties that such
temporary parking facilities should not be required. If such
temporary parking is required, Seller shall be responsible for
obtaining, on
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or before the expiration of the Feasibility Period required
consents, including, without limitation, consents from Lienholder
and Apple Computer. The consent of the City will be part of Buyer's
Use Permit process.
5.2.2. FUTURE DEVELOPMENT IN CITY CENTER PLANNING AREA. Buyer hereby
covenants and agrees for itself, its successors and assigns, that it shall
not object either publicly or privately to future development within the
City Center Master Project unless such future development will have a
substantial and material adverse effect on the Project.
5.3. SELLER'S COVENANTS.
5.3.1. SELLER'S PARKING OBLIGATIONS. Seller hereby covenants and agrees as
follows with respect to parking:
5.3.1.1. PARKING APPROVALS. To exert diligent efforts to obtain, at
Seller's sole cost and expense (i) on or before the end of the
Feasibility Period, any and approvals (other than from the City)
that may be required in connection with the abandonment of the
existing parking facilities on the Property, the provision for
temporary parking facilities, and the provision for replacement
parking within the Project when completed, including, without
limitation, the approvals and consent of the Lienholder and Apple
Computer, Inc. (the "Parking Approvals").
5.3.1.2. TEMPORARY PARKING. To the extent temporary parking
facilities are required, to make available at Buyer's request land
on Parcel 3 and 6 of Tract 7953 in the City to be used for temporary
parking facilities during the construction of the Project, to
arrange for the administration and maintenance of such temporary
parking facilities. When such temporary parking facilities are no
longer required, Seller in its discretion (unless such removal is
required by the City in which event Seller shall) and at Seller's
sole cost and expense, may remove such temporary parking facilities
and restore such land to its condition prior to the construction of
such temporary parking facilities.. Seller agrees to cooperate with
Buyer in an effort to persuade the City and any other necessary
parties that such temporary parking facilities should not be
required.
5.3.2. GOVERNMENTAL APPROVALS FOR THE PROJECT. Seller hereby covenants and
agrees to cooperate with Buyer and to use reasonable and good faith
efforts to aid and assist Buyer in obtaining a Use Permit and other
approvals necessary for construction, development of the Project.
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5.3.3. PROPERTY INSPECTION AND DOCUMENTS. Seller hereby covenants and
agrees to cooperate with Buyer in the inspection of the Property. Within
five (5) days after the Agreement Date, Seller shall make available to
Buyer all Property Documents in Seller's possession and control. Seller
makes no representation or warranty that such information is accurate or
complete.
5.3.4. OFF-BALANCE SHEET FINANCING STRUCTURE. Seller hereby covenants and
agrees to use reasonable and good faith efforts to accommodate Buyer's use
of an off-balance sheet financing structure.
5.3.5. CONDITION OF PROPERTY AND TITLE. Seller hereby covenants and agrees
that until the Closing, Seller shall maintain all portions of the Property
substantially in its present condition, ordinary wear and tear and acts or
occurrences beyond the reasonable control of Seller excepted, and shall
not permit acts of waste. Seller further covenants and agrees that until
the Closing, Seller shall not permit any liens, encumbrances, or easements
that will survive the closing to be placed on the Property, other than the
Permitted Exceptions, nor shall Seller enter into any agreement regarding
the sale, rental, management, repair, improvement or any other matter
affecting the Property that would be binding on Buyer or the Property
after the Closing without the prior written consent of Buyer, which
consent Buyer will not unreasonably withhold.
5.3.6. APPROVAL TO ENTER AGREEMENT. Seller covenants and agrees that on or
before thirty (30) days from the Agreement Date, it shall exert diligent
efforts to obtain the approval of Lienholder and any other necessary
parties for Seller to enter into this Agreement.
5.3.7. CONFIDENTIALITY. Seller shall maintain the confidentiality of
Buyer's name and shall not disclose Buyer's name or the terms of this
Agreement or of such sale and purchase to any third parties whatsoever
other than the Escrow Holder, the Title Insurer and such other persons
whose assistance is required in carrying out the terms of this Agreement.
5.3.8. NO FURTHER MARKETING. Seller agrees that unless and until this
Agreement is terminated, Seller will not offer the Property for sale or
lease, negotiate with anyone for the sale or lease of the Property, or
otherwise market the Property in any respect.
5.4. BUYER'S INSPECTION RIGHTS. Buyer and its agents and contractors shall have
the right to enter on the Property to inspect it and conduct tests. Buyer will
indemnify, defend (with counsel reasonably approved by Seller) and hold Seller,
its partners and Designated Representatives harmless from any loss, cost,
liability, claim or damage (including reasonable attorneys' fees and the cost of
expert witnesses) resulting or arising from any
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such entry, inspection or test and will, if Buyer fails to close, take
reasonable steps to restore the Property to its condition prior to such
inspection, entry, or test. Buyer shall also have the right to contact any
federal, state or local governmental authority or agency to investigate any
matters relating to the Property.
ARTICLE 6.
ESCROW
6.1. AGREEMENT TO CONSTITUTE ESCROW INSTRUCTIONS. This Agreement shall
constitute escrow instructions and a copy hereof shall be deposited with Escrow
Holder for this purpose. The Deposit shall be immediately placed by the Escrow
Holder into a federally insured interest bearing account or a federally insured
certificate of deposit, as designated by the Buyer. Interest accruing thereon
shall be held for the benefit of the Buyer.
6.2. OPENING OF ESCROW. Escrow shall open on the date Escrow Holder receives a
fully executed original or originally executed counterparts of this Agreement
and the Deposit. Escrow Holder shall notify both Buyer and Seller of the date
escrow is opened.
6.3. CLOSE OF ESCROW. Provided that all of the contingencies contained in
Article III herein and all of the conditions to the close of escrow contained in
Schedule "3" attached hereto have been satisfied (or deemed satisfied as the
case may be) or waived, the close of escrow shall occur on or before 5:00 p.m.,
Pacific Time, on the Scheduled Closing Date.
6.4. SPECIFIC ESCROW INSTRUCTIONS. Specific escrow instructions are attached
hereto as Schedule "3."
6.5. LIQUIDATED DAMAGES.
IF BUYER FAILS TO COMPLETE THE PURCHASE PROVIDED FOR IN THIS AGREEMENT BY
REASON OF ANY DEFAULT OF BUYER, SELLER SHALL BE RELEASED FROM SELLER'S
OBLIGATION TO SELL THE PROPERTY TO BUYER. BUYER AND SELLER AGREE IT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX ACTUAL DAMAGES IN THE CASE OF BUYER'S
DEFAULT AND THAT THE DEPOSIT OF FIFTY THOUSAND DOLLARS ($50,000.00) PRIOR TO THE
END OF THE FEASIBILITY PERIOD, OR TWO HUNDRED THOUSAND DOLLARS ($200,000.00)
AFTER THE EXPIRATION OF THE FEASIBILITY PERIOD, IS A REASONABLE ESTIMATE OF
SELLER'S DAMAGES IN SUCH EVENT, AND THAT IN THE EVENT OF ANY DEFAULT BY BUYER
HEREUNDER AS
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<PAGE> 14
AFORESAID, SELLER MAY RETAIN THE DEPOSIT. THE DEPOSIT SHALL CONSTITUTE
LIQUIDATED DAMAGES AND SELLER'S SOLE REMEDY ON ACCOUNT OF BUYER'S DEFAULT FOR
FAILURE TO CLOSE, BUT SHALL NOT LIMIT BUYER'S LIABILITY UNDER SECTION 5.4 ABOVE.
---------------- -----------------
Buyer's initials Seller's initials
Nothing in this Section shall prevent any recovery of attorneys' fees or
other costs pursuant to the Section hereof entitled "Attorneys' Fees."
ARTICLE 7.
MISCELLANEOUS PROVISIONS
7.1. MISCELLANEOUS PROVISIONS. Buyer and Seller hereby agree to those
miscellaneous provisions as set forth in Schedule "4" attached hereto.
7.2. ASSIGNMENT. Buyer may assign this Agreement or designate a party other than
Buyer to take title to the Property at the Closing without the consent of Seller
and upon any such assignment, the party which is then assignor under such
assignment shall, subject to the conditions hereinafter described, be released
from any obligation under this Agreement. As a condition precedent to the
release of Buyer from liability under Section 5.4. of this Agreement, Buyer or
Buyer's assignee shall obtain and maintain for a period commencing with the
effective date of the assignment and ending two (2) years after the earlier of
the Closing or the termination of this Agreement, a policy of commercial general
liability insurance naming Seller as an additional insured in an amount of not
less than $1,000,000 per occurrence and $2,000,000 aggregate insuring against
bodily injury and property damage[protecting Seller] on account of any
activities undertaken by or on behalf of Buyer under Section 5.4. of this
Agreement, which insurance policy shall name Seller as insured and shall be in
form and substance reasonably approved by Seller.
7.3. INCORPORATION OF EXHIBITS. All schedules and exhibits attached hereto and
referred to herein are incorporated in this Agreement as though fully set forth
herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date above first written.
SELLER:
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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<PAGE> 15
Cupertino City Center Buildings
Partnership,
a California limited partnership,
By: _____________________________________
Its _________________________________
BUYER:
Symantec Corporation,
a Delaware corporation
By:_____________________________________
Robert Dykes,
Its Executive Vice President
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<PAGE> 16
CONSENT OF ESCROW HOLDER
The undersigned Escrow Holder hereby agrees to (i) accept the foregoing
Agreement, (ii) be escrow agent under said Agreement, and (iii) be bound by said
Agreement in the performance of its duties as escrow agent.
First American Title Guaranty Company
By:_________________________________
Its: Authorized Agent
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<PAGE> 17
LIST OF SCHEDULES
Schedule "1" Definitions
Schedule "2" Representations and Warranties
Schedule "3" Specific Escrow Instructions
Schedule "4" Miscellaneous Provisions
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<PAGE> 18
SCHEDULE "1"
DEFINITIONS
1.01 Definitions. For the purposes of this Agreement, the terms set forth below
in quotes shall have the meanings indicated in this Schedule "1."
1.02 "Agreement" means this Agreement for Purchase and Sale and Escrow
Instructions.
1.03 "Closing" means the delivery and recordation of the Grant Deed and the
payment by Buyer to Seller of the Purchase Price for the Property pursuant to
the terms of the Agreement.
1.04 "Closing Date" means the date on which the Closing occurs.
1.05 "Contract Period" means the period commencing upon the Agreement Date and
ending upon the first to occur of the Closing or the termination of this
Agreement.
1.06 "Grant Deed" means a deed in favor of Buyer in a form substantially similar
to that attached hereto as Exhibit "B."
1.07 "Hazardous Material" means any substance, the presence of which requires
investigation or remediation under any federal, state or local statute,
regulation or law; or which is or becomes defined as a "hazardous waste"
pollutant or contaminant under any federal, state or local statute, regulation
or law.
1.08 "Permitted Exceptions" means those certain matters constituting exceptions
to and/or encumbrances against the Property approved or deemed approved by Buyer
pursuant to Section 3.2.2., all matters which would be disclosed by an ALTA
survey of the Property, or an inspection of the Property unless such ALTA survey
is completed within thirty-five (35) days of the Agreement Date and items shown
on such survey are not so approved or deemed approved by Buyer and all other
exceptions to title voluntarily imposed or consented to by Buyer prior to
Closing.
1.09 "Title Report" means a preliminary title report issued by the Title Insurer
providing for the issuance at the Closing to Buyer of a Title Policy.
1.10 "Title Policy" shall mean an Owners CLTA Policy of Title Insurance from
Title Insurer in form satisfactory to Buyer . insuring Buyer (or Buyer's
assignee) as fee owner of the Property, with liability in the amount of the
Title Insurance Amount, subject only to the Permitted Exceptions. Buyer shall be
responsible for any costs or delays
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<PAGE> 19
occasioned by Buyer's desire to obtain an ALTA Policy of Title Insurance or the
need to obtain an ALTA Survey.
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<PAGE> 20
SCHEDULE "2"
REPRESENTATIONS AND WARRANTIES
2.01 Seller's Representations and Warranties. Seller hereby makes the following
representations and warranties to Buyer.
(a) Actions. To the best of Seller's knowledge, there are no actions, suits,
material claims, legal proceedings or any other proceedings pending or
threatened before any court or governmental agency which may involve or
affect the Property or any portion thereof.
(b) Compliance with Laws. To the best of Seller's knowledge, Seller is not
aware that any governmental authority considers the operation, use or
ownership of the Property to violate or have violated any fire, building,
zoning, health or other ordinance, code, law, regulation or order of any
governmental or any agency or body or subdivision thereof, or that any
investigation has been commenced or is contemplated regarding such possible
violation, or that there is any material, adverse fact or condition
relating to the Property or any portion thereof affecting the legality of
developing the Property.
(c) Other Agreements. To the best knowledge of Seller, neither this Agreement,
nor anything provided to be done hereunder, violates or shall violate any
contract, agreement or instrument to which Seller is a party, or which
affects the Property or any portion thereof.
(d) Default. To the best of Seller's knowledge, Seller is not in default with
respect to any of its obligations or liabilities pertaining to the
Property.
(e) Hazardous Materials. To the best of Seller's actual knowledge, there has
been no release of Hazardous Materials on, from or under the Property.
(f) Bankruptcy. Seller has not (i) made a general assignment for the benefit of
creditors; (ii) filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition by the Seller's creditors; (iii) suffered
the appointment of a receiver to take possession of all or substantially
all of the Seller's assets; or (iv) suffered the attachment or other
judicial seizure of all, or substantially all, of the Seller's assets.
(g) Authority. Seller is duly organized and existing and in good standing under
the laws of the State of California. Seller has the full right and
authority to enter into this Agreement and subject to the approvals
described in this Agreement to consummate the transaction contemplated
herein. All requisite action, has been
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<PAGE> 21
taken by Seller in connection with entering into this Agreement. Any person
signing this Agreement on behalf of Seller is authorized to do so.
(h) Execution. The execution and delivery of the Agreement will not constitute
a breach of or a default under any agreement or other instrument to which
the Seller is a party.
(i) No Other Representations or Warranties. Seller makes no representations and
warranties other than those contained in this Schedule "2."
(j) Limited to Actual Knowledge. Any and all representations and warranties by
Seller to its best knowledge are hereby expressly limited to matters within
the actual knowledge of Seller's Designated Representatives without
investigation or inquiry.
2.02 Buyer's Independent Investigation.
(a) Buyer acknowledges and agrees that it has been given or will be given
before the end of the Feasibility Period, a full opportunity to inspect and
investigate each and every aspect of the Property, either independently or
through agents of Buyer's choosing, including, without limitation:
(l) All matters relating to title, together with all governmental and
other legal requirements such as taxes, assessments, zoning, use
permit requirements and building codes.
(2) The physical condition and aspects of the Property, including, without
limitation, the utilities, and all other physical and functional
aspects of the Property. Such examination of the physical condition of
the Property shall include an examination for the presence or absence
of Hazardous Materials, which shall be performed or arranged by Buyer
at Buyer's sole expense.
(3) Any easements and/or access rights affecting the Property.
(4) The service contracts and any other documents or agreements of
significance affecting the Property.
(5) All other matters of material significance affecting the Property.
(b) BUYER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT SELLER IS SELLING AND BUYER
IS PURCHASING
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<PAGE> 22
THE PROPERTY ON AN "AS IS WITH ALL FAULTS" BASIS AND THAT BUYER IS NOT
RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER,
EXPRESS OR IMPLIED, FROM SELLER, ITS AGENTS, OR BROKERS AS TO ANY MATTERS
CONCERNING THE PROPERTY EXCEPT AS EXPRESSLY SET FORTH IN SCHEDULE 2,
INCLUDING, WITHOUT LIMITATION: (i) the quality, nature, adequacy and
physical condition and aspects of the Property, including, but not limited
to appurtenances, access, landscaping, and parking facilities, (ii) the
quality, nature, adequacy, and physical condition of soils, geology and any
groundwater, (iii) the existence, quality, nature, adequacy and physical
condition of utilities serving the Property, (iv) the development potential
of the Property, and the Property's use, habitability, merchantability, or
fitness, suitability, value or adequacy of the Property for any particular
purpose, (v) the zoning or other legal status of the Property or any other
public or private restrictions on use of the Property, (vi) the compliance
of the Property or its operation with any applicable codes, laws,
regulations, statutes, ordinances, covenants, conditions and restrictions
of any governmental or quasi-governmental entity or of any other person or
entity, (vii) the presence of Hazardous Materials on, under or about the
Property or the adjoining or neighboring property, (viii) the quality of
any labor and materials used in any improvements on the Real Property, (ix)
the condition of title to the Property, (x) the leases, service contracts,
or other agreements affecting the Property and (xi) the economics of the
operations of the Property.
(c) Without limiting the above, and subject to the representations and
warranties of Seller contained in Schedule 2, Buyer on behalf of
itself and its successors and assigns waives its right to recover
from, and forever releases and discharges, Seller, Seller's
affiliates, Seller's investment manager, the partners, trustees,
shareholders, directors, officers, employees and agents of each of
them and their respective heirs, successors, personal representatives
and assigns (collectively, the "Seller Related Parties"), from any and
all demands, claims, legal or administrative proceedings, losses,
liabilities, damages, penalties, fines, liens, judgments, costs or
expenses whatsoever, including,
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<PAGE> 23
without limitation, attorneys' fees and costs), whether direct or
indirect, known or unknown, foreseen or unforeseen, that may arise on
account of or in any way be connected with the physical condition of
the Property or any law or regulation applicable thereto, including,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section
6901), et seq.), the Resources Conservation and Recovery Act of 1975
(42 U.S.C. Section 6901, et seq.), the Clean Water Act (33 U.S.C.
Section 1251, et seq.), the Safe Drinking Water Act (14 U.S.C. Section
1401, et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
Section 1801, et. seq.), and the Toxic Substance Control Act (15
U.S.C. Section 2601, et seq.).
(d) As to all matters being released by Buyer pursuant to the ptovisions
hereof, Buyer hereby waives any and all rights which it may have under
the provisions of California Civil Code Section 1542 or any comparable
federal or state statute or rule of law. California Civil Code Section
1542 provides:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known by him must have materially affected his
settlement with the debtor."
2.03 Buyer's Representations and Warranties. Buyer hereby makes the following
representations and warranties to Seller:
(a) Authority. Buyer is duly organized and in good standing under the laws
of the State of its formation. Following the approval of Buyer's Board
of Directors, Buyer will have the full right and authority to enter
into and fully perform its obligations under this Agreement and to
consummate the transactions contemplated herein. All requisite action
has been taken by Buyer in connection with entering this Agreement.
Each of the persons signing this Agreement on behalf of Buyer is
authorized to do so.
(b) Execution. The execution and delivery of the Agreement will not
constitute a breach of or a default under any agreement or other
instrument to which the Buyer is a party.
(c) No Other Representations or Warranties. Buyer acknowledges that Seller
has made no other representations or warranties other than those
contained in this Schedule 2.
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<PAGE> 24
"SCHEDULE "3"
SPECIFIC ESCROW INSTRUCTIONS
3.01 Conditions to Close of Escrow.
(a) Conditions for the Benefit of Buyer. In addition to any other obligations
contained in this Agreement, the following shall constitute conditions to
Buyer's obligation to purchase the Property from Seller and are for the
benefit of Buyer, the failure of any of which shall allow Buyer to
terminate this Agreement.
(i) Grant Deed. Seller shall have delivered to Escrow Holder prior to the
time set for Closing a duly executed and acknowledged Grant Deed in
the form attached hereto as Exhibit "B."
(ii) Non-Foreign Status Affidavit. Seller shall have delivered to Escrow
Holder prior to the time set for Closing a Non-Foreign Status
Affidavit executed by Seller in the form attached hereto as Exhibit
"E" as well as any similar Affidavit required by the State where the
Property is located.
(iii) Other Documents and Sums. Seller shall deliver to Escrow Holder all
other documents and sums reasonably required of Seller to carry out
the Closing.
(iv) Seller's Representations and Warranties are True and Correct. Seller
shall not have delivered to Escrow Holder on or before the time set
for Closing a certificate of Seller that any of the representations
and warranties made by Seller in this Agreement are no longer true and
correct as of the Closing and/or that Seller has not complied with any
of the covenants of Seller contained therein.
(iv) Title Policy. The Title Company shall be prepared to issue the Title
Policy from Title Insurer subject only to the Permitted Exceptions.
(b) Conditions for the Benefit of Seller. In addition to any other obligations
contained in this Agreement, the following shall constitute conditions to
Seller's obligation to sell the Property to Buyer and shall be for the
benefit of Seller, the failure of any of which shall allow Seller to
terminate this Agreement:
(i) Delivery of Purchase Price. Buyer shall deliver the Purchase
Price to Escrow Holder prior to the time set for Closing.
(ii) Other Documents and Sums. Seller shall deliver to Escrow Holder
all other documents and sums reasonably required of Seller to
carry out the Closing.
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<PAGE> 25
(iii) Buyer's Representations and Warranties are True and Correct.
Buyer shall not have delivered to Escrow Holder on or before the
time set for Closing a certificate of Buyer that any of the
representations and warranties are not true and correct as of
the Closing Date and/or that Buyer has not complied with any
covenants of Buyer contained therein.
3.02 Recordation of Grant Deed and Delivery of Funds. Upon receipt of the funds
and instruments described in this Schedule "3," and upon the satisfaction (or
deemed satisfaction as the case may be) or waiver of the conditions specified in
this Schedule "3," Escrow Holder shall cause the Grant Deed to be recorded in
the official records of the County Recorder of Santa Clara County, California,
(with documentary transfer tax information to be affixed by separate affidavit)
and shall deliver the proceeds of this escrow to Seller. All sums to be
disbursed to Seller by Escrow Holder shall be in cash, by wire transfer, or in
other immediately available funds.
3.03 Prorations. All prorations are to be apportioned as of 11:59 p.m. on the
day preceding the Closing Date.
(a) Real property taxes and assessments shall be prorated between Buyer
and Seller based on the latest available tax information. In the event
any supplemental tax bill is issued following the Closing, Seller
shall pay to Buyer all additional amounts applicable to the time prior
to the Closing upon written request of Buyer.
(b) Said prorations shall be based on a 30-day month and a 360-day year.
3.04 Costs of Escrow.
(a) Seller shall pay;
(i) All costs not specifically referenced herein customarily
allocated to Seller Santa Clara County, California;
(ii) Pursuant to separate written agreement, a real estate brokerage
commission in an amount equal to five percent (5%) of the
Purchase Price to Cooper/Brady:
(iii) The premium for a CLTA version without special endorsement of
the Title Policy up to the amount of the Purchase Price;
(iv) The cost of any of Seller's other obligations hereunder.
(b) Buyer shall pay:
(i) All costs not specifically referenced herein customarily
allocated to Buyer in Santa Clara County, California.
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(ii) The extra premium for an Owner's ALTA version of the Title
Policy for such portion of the Title Insurance Amount that is in
excess of the Purchase Price and the cost of any endorsements
required by Buyer (unless offered by Seller in order to correct
an exception to title disapproved by Buyer) and for any coverage
for any amount in excess of the Purchase Price.
(iii) The cost of any of Buyer's other obligations hereunder.
3.05 Escrow Cancellation Charges. In the event that any Closing shall fail to
occur by reason of the default of either party, the defaulting party shall be
liable for all escrow cancellation charges. In the event that any Closing shall
fail to occur for any other reason, Buyer and Seller shall each be liable for
one-half of any escrow cancellation charges.
3.06 Default. TIME IS OF THE ESSENCE in this Agreement and if Buyer or Seller
(the "Defaulting Party") fails to deposit any of the amounts due pursuant to
this Agreement, or to perform any other act when due, then the other party (the
"Non-Defaulting Party") may terminate this Agreement by notice in writing to the
Defaulting Party and Escrow Holder at which time Escrow Holder shall cancel this
escrow and the Non-Defaulting Party shall thereupon be released from its
obligations under this Agreement except for Buyer's liability under Section 5.4
of the Agreement. In the event that escrow shall fail to close by reason of the
default of Seller, Buyer shall be entitled to the return of the Deposit and all
accrued interest.
3.07 Additional Escrow Instructions. If required by Escrow Holder, Buyer and
Seller shall execute Escrow Holder's usual form of supplemental escrow
instructions for transactions of this type, provided, however, that (a) in the
event that any portion of such additional escrow instructions shall be
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall prevail to the extent of any such inconsistency; and (b) no
provision thereof shall have the effect of modifying this Agreement unless it is
expressly so stated and such express statement is initialed by Buyer and Seller.
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SCHEDULE "4"
MISCELLANEOUS PROVISIONS
4.01 No Brokers. Except for Buyer's broker, Cooper/Brady, each party represents
to the other that it has not had any contact or dealings regarding the Property,
or any communication in connection with the subject matter of this transaction,
through any real estate broker or other person who can claim a right to a
commission or finder's fee. If any broker or finder makes a claim for a
commission or finder's fee based upon a contact, dealings, or communications,
the party through whom the broker or finder makes this claim shall indemnify,
defend with counsel of the indemnified party's choice, and hold the indemnified
party harmless from all expense, loss, damage, liability and claims, including
the indemnified party's attorneys' fees, if necessary, arising out of the
broker's or finder's claim. Seller has agreed by separate written agreement to
pay at, and conditioned on, the Closing a commission to Cooper/Brady.
4.02 Attorneys' Fees. In any legal proceeding between Buyer and Seller seeking
enforcement of or attempting to construe any of the terms and provisions of this
Agreement, or in connection with the Property, including, without limitation,
insolvency, bankruptcy, arbitration, declaratory relief or other litigation, the
prevailing party in such action shall be awarded, in addition to damages,
injunctive or other relief, its reasonable costs and expenses, not limited to
service of process, filing fees, court and court reporter costs, investigation
costs, expert witness fees and the cost of any bonds, and reasonable attorneys'
fee (hereinafter "Legal Fees"). In addition, any Legal Fees incurred in
enforcing any judgment, injunctive or other relief, shall be paid by the party
against whom the judgment is being enforced.
4.03 Notices. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed delivered and effective upon the earlier of (i) if
personally delivered, the date of the receipt of delivery by an individual at
the address of the party to receive such notice; (ii) if delivered by overnight
commercial carrier, on the date of delivery to the address of the party to
receive such notice, as shown on the delivery receipt from such carrier; (iii)
if mailed, on the date of delivery as shown by the sender's registry or
certification receipt; or (iv) if given by telecopy, upon telephonic
confirmation of receipt of such telecopy transmission and provided further that
the telecopy shall be later confirmed by any of the above-noted three methods.
Any communication sent by telecopy must be confirmed immediately by telephone
and also within forty-eight (48) hours by letter mailed or delivered in
accordance with this Section. Notice sent by any other manner shall be effective
only upon actual receipt thereof. Any party may change its address for purposes
of this Section by giving notice to the other party hereto and to Escrow Holder
as herein provided.
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4.04 Assignment. This Agreement shall be binding upon the parties hereto and
their respective heirs, successors or representatives.
4.05 Relationship of Parties. The relationship of the parties to this Agreement
shall be solely that of Buyer and Seller, and nothing herein contained shall be
construed otherwise.
4.06 Governing Law. This Agreement shall be construed in accordance with the
laws of the State of California.
4.07 Pronouns. All pronouns and any variations thereof shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
parties may require.
4.08 Headings. All headings of this Agreement are for purposes of reference only
and shall not limit or define the meaning of the provisions of this Agreement.
4.09 Severability. If any paragraph, section, sentence, clause or phrase
contained in this Agreement shall become illegal, null or void against public
policy, or otherwise unenforceable, for any reason, or shall be held by any
court of competent jurisdiction to be illegal, null or void, against public
policy, or otherwise unenforceable, the remaining paragraphs, sections,
sentences, clauses or phrases contained in this Agreement shall not be affected
thereby.
4.10 Waiver. The waiver of any breach of any provision hereunder by Buyer or
Seller shall not be deemed to be a waiver of any preceding or subsequent breach
hereunder. No failure or delay of any party in the exercise of any right given
hereunder shall constitute a waiver thereof nor shall any partial exercise of
any right preclude further exercise thereof.
4.11 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which shall constitute one and the
same instrument.
4.12 Time of Essence. TIME IS OF THE ESSENCE in this Agreement as to all dates
and time periods set forth herein.
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LIST OF EXHIBITS
Exhibit "A" Legal Description of Property
Exhibit "B" Grant Deed
Exhibit "C" Buyer's Election to Continue Escrow
Exhibit "D" Non-Foreign Status Affidavit
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EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
(TO BE PROVIDED BY SELLER)
30
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EXHIBIT "B"
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
- ------------------
10201 Torre Avenue
Cupertino, CA 95014
Attention: Dakin Ferris
MAIL TAX STATEMENTS TO:
- ------------------
10201 Torre Avenue
Cupertino, CA 95014
Attention: Finance Department
- --------------------------------------------------------------------------------
(SPACE ABOVE THIS LINE FOR RECORDER'S USE)
GRANT DEED
----------
Documentary Transfer tax is $ ________________
( ) Computed on full value of property conveyed, or
( ) Computed on full value less value of liens and encumbrances remaining at
time of sale.
( ) Unincorporated area: ( ) City of ________________,
FOR A VALUABLE CONSIDERATION, receipt of this is hereby acknowledged,
Cupertino City Center Buildings Partnership, a California limited partnership
hereby grants to ______________, a ___________, the following described real
property in the County of Santa Clara, State of California:
See Exhibit "A" which is attached hereto and incorporated by this
reference.
IN WITNESS WHEREOF, the parties hereto have executed this Grant Deed as
of this day of ______________, 19___.
Cupertino City Center Buildings
Partnership, a California limited
partnership,
By:_________________________________
_______________ Its _____________
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EXHIBIT "A" to
Grant Deed
PROPERTY DESCRIPTION
--------------------
[TO BE PROVIDED BY SELLER]
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EXHIBIT "C"
BUYER'S ELECTION TO CONTINUE ESCROW
To: _______________ [Escrow Holder]
Re: Buyer's Election to Continue Escrow for Escrow No.
Ladies and Gentlemen:
Under that certain Agreement for Purchase and Sale and Escrow Instructions (the
"Agreement") dated May __, 1996 between Cupertino City Center Buildings
Partnership, a California limited partnership ("Seller") and the Buyer therein,
initially Symantec Corporation, a Delaware corporation ("Buyer"), the
undersigned having succeeded to the interest of Buyer by assignment hereby
elects to proceed with the purchase and tenders herewith the additional sum of
One Hundred Fifty Thousand Dollars ($150,000) as an increase in the Deposit
making the total Deposit Two Hundred Thousand Dollars ($200,000).
Very truly yours,
BUYER
____________________ a ___________________
By: ______________________________________
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EXHIBIT "D"
NON-FOREIGN STATUS AFFIDAVIT
To inform __________________________________, a _____________________(the
"Transferee") that withholding of tax under Section 1445 of the Internal Revenue
Code of 1986, as amended ("Code") and under Section 18805(a)(2) of the
California Revenue and Taxation Code will not be required upon the transfer of
certain real property to the Transferee by Cupertino City Center Buildings
Partnership, a California limited partnership (the "Transferor"), the
undersigned hereby certifies the following on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Code and the Income
Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer identification number is ________________; and
3. The Transferor's office address is _________________________________________.
The Transferor understands that this Certification may be disclosed to the
Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury I declare that I have examined this Certification and
to the best of my knowledge and belief it is true, correct and complete, and I
further declare that I have authority to sign this document on behalf of the
Transferor.
Date _____________________________, 1996.
Cupertino City Center Buildings Partnership, a California limited partnership
By: ______________________________
________________________, Its _____________________
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FIRST AMENDMENT TO AGREEMENT FOR PURCHASE
AND SALE AND ESCROW INSTRUCTIONS
This First Amendment ("Amendment") made effective July 30, 1996, amends
that certain Agreement for Purchase and Sale and Escrow Instructions dated May
31, 1996 made by and between Symantec Corporation, a Delaware Corporation,
therein and herein called "Buyer," and Cupertino City Center Buildings, a
California Limited Partnership, therein and herein called "Seller." The terms
of the Purchase Agreement are incorporated and made a part hereof by this
reference.
1. Section 1.2.8 ("Feasibility Period") is restated in its
entirety as follows: The period beginning on the Agreement Date and terminating
at 5:00 p.m. Pacific Time on September 5, 1996.
2. The fourth sentence of Section 3.2.2 of the Purchase Agreement
is restated in its entirety as follows: Buyer has made timely objections;
Seller shall have until August 20, 1996 to inform Buyer and Escrow Holder in
writing whether Seller shall use its diligent efforts to remove such
disapproved exceptions prior to the Closing.
3. In all other respects, the Purchase Agreement remains unamended
and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the dates set forth opposite their respective signatures.
Dated: 7/25/96 SELLER:
--------------
CUPERTINO CITY CENTER BUILDINGS,
a California Limited Partnership
By: SUNSET RIDGE DEVELOPMENT CO.
INC., a California Corporation
Its: General Partner
[ILLEGIBLE]
----------------------------------
By: SANFORD M. DILLER
Its: President
Dated: 7/26/96 BUYER:
--------------
SYMANTEC CORPORATION
a Delaware Corporation
[SIGNATURE]
----------------------------------
By: DEREK WITTE
Its: VP
-1-
<PAGE> 36
DRAFT
SECOND AMENDMENT TO AGREEMENT
FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS
This SECOND AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE AND ESCROW
INSTRUCTIONS ("Second Amendment") made effective as of September 5, 1996, amends
that certain Agreement for Purchase and Sale and Escrow Instructions dated May
31, 1996 ("Purchase Agreement") by and between Symantec Corporation, a Delaware
corporation, therein and herein called "Buyer," and Cupertino City Center
Buildings, a California Limited Partnership, therein and herein called "Seller."
The Purchase Agreement was previously amended by the First Amendment to
Agreement for Purchase and Sale and Escrow Instructions made effective July 30,
1996 (the "First Amendment"). Those terms defined in the Purchase Agreement
shall have the same definitions when used herein unless specifically modified
hereby.
Buyer and Seller now wish to further modify the Purchase Agreement, as
amended by the First Amendment, as hereinafter set forth.
1. Section 1.2.6 (entitled "Deposit") is hereby amended to increase to
Five Hundred Thousand Dollars ($500,000) the amount of the Second Deposit.
2. Section 1.2.8 (entitled "Feasibility Period") is hereby restated in
its entirety as follows:
"1.2.8 "Feasibility Period." The period beginning on the Agreement
Date and terminating two (2) business days following the occurrence of and
written notice from Seller to Buyer (the "Feasibility Completion Notice")
that all of the following feasibility conditions ("Feasibility
Conditions") have occurred:
(A) As a Feasibility Condition, that certain "Parking Easement and
Relocation Agreement" in the form attached hereto as Appendix A (the
"Parking Agreement") shall have been executed by all the parties thereto
and the Acknowledgementss in the forms attached hereto as Appendices B-1,
B-2 and B-3 shall have been executed by CCCLand, Cupertino City Center
Apartments II, and Cupertino City Center Owners Association, respectively.
In connection therewith, as a covenant to survive the Closing and not a
Feasibility Condition, Seller agrees to permit Buyer to exercise the right
of election of CCCB set forth in the second sentence of paragraph 2(a) of
such Parking Easement and Relocation Agreement (and to hereafter execute
such documents as may be reasonably required by Buyer to evidence the
same).The foregoing right of election in Buyer is qualified as follows
(except for the term "Buyer" which is defined in this Agreement, the
capitalized terms that follow refer to those same terms as capitalized and
defined in such Parking Agreement). Buyer must elect to relocate the
Existing Parking Rights to the Parcel A Commercial Garage to the extent
rights to the Parcel A Commercial Garage are available for such purpose at
the time of such election. However, if Buyer elects to relocate the
Existing Parking Rights to the Parcel A Commercial Garage and, within
three (3) months following such election, Buyer determines that such
rights are not reasonably
1
<PAGE> 37
available in the Parcel A Commercial Garage, then Buyer may elect to
relocate the Existing Parking Rights to the Alternate Property. In any
event, Buyer may elect to relocate the Existing Parking Rights to the
Alternate Property only until the earlier of (x) 36 months following the
date of the Owner Relocation Notice or (y) thirty (30) days after Seller
or Seller's successors or assigns have obtained a use permit for the
construction of permanent improvements on the Alternate Property at which
time such Existing Parking Rights must be relocated off the Alternate
Property.
(B) To the extent the following is within the power or control of
Seller (or any entity controlled by Seller or controlled by or under
common control with Sanford Diller, collectively a "Controlled Party"),
Seller or such Controlled Party, at no cost to Seller or such Controlled
Party nor payment to Apple, shall take such action as is reasonably
necessary to revoke the consent for, and require Apple Computer to move
the "Apple Computer" monument from a portion of Lot 7 of Tract 7953 which
is adjacent to the Property, to a location selected by Apple Computer that
is not located in any portion of said Lot 7 adjacent to the Property, and
Seller hereby represents to Buyer that, after diligent search, Seller has
been unable to locate any evidence that any specific permission has been
granted to Apple Computer to allow such monument to be so placed and
maintained. To the extent that the foregoing is not within the power or
control of Seller, this Feasibility Condition shall be satisfied upon
written notice from Seller to Buyer representing to Buyer that neither
Seller nor any Controlled Party has the requisite power and control to
satisfy such condition, in which event, Seller covenants to utilize its
reasonable efforts following the Closing to cause such monument to be so
moved.
(C) As a Feasibility Condition, a declaration in the form attached
hereto as Appendix C (the "Special Declaration") shall have been executed
by Seller, the Cupertino City Center Owners Association, and those parties
referred to therein as "Declarant" and an easement in form attached hereto
as Appendix D (the "Grant of Easement") shall have been executed by the
Cupertino City Center Owners Association (the "Association").
(D) Intentionally Omitted.
(E) Intentionally Omitted.
(F) As a Feasibility Condition, the "Consent to Declaration" in the
form attached hereto as Appendix F shall have been executed by Seller and
all the parties thereto except for the signatures of CIGNA and Travelers
Insurance Company ("Travelers") to the Consent to Declaration which shall
be the sole responsibility of Buyer and not a Feasibility Condition. Based
upon Seller's representation to Buyer that Seller has no reason to believe
that Travelers will refuse or grant such consent if requested by Buyer,
Buyer agrees to not seek the consent of Travelers prior to the Closing;
(G) As a Feasibility Condition, the Association's Design Review
Board shall have approved preliminary plans for Buyer's proposed Project
to be built on the Property;
(H) Intentionally Omitted;
2
<PAGE> 38
(I) As a Feasibility Condition, the "Entry Permit for a Construction
Staging Area" in the form attached hereto as Appendix G (the "Construction
Staging Easement) shall have been executed by Cupertino City Center Land
and delivered to Escrowholder with instructions that the Construction
Staging Easement shall be delivered to Buyer at the Closing. As a covenant
to survive Closing, but not as a Feasibility Condition, the Construction
Staging easement shall be coordinated with and subject to any temporary
parking requirements that need to be provided on such parcels pursuant to
Section 5.3.1.2 of the Agreement and shall be of a duration limited to
Buyer's contemplated construction period;
(J) As a Feasibility condition, Seller shall have delivered to Buyer
the commitment of the Title Insurer that as of the Closing the title
exceptions listed in paragraph 8 below shall be removed.
3. Section 1.2.15 (entitled "Purchase Price") is hereby restated in
its entirety as follows:
"1.2.15 "Purchase Price". Six Million Five Hundred Thousand
Dollars ($6,500,000), plus interest at the rate of ten percent (10%)
per annum from September 30, 1996 through Closing."
4. Section 1.2.16 (entitled "Scheduled Closing Date") is hereby
restated in its entirety as follows:
"1.2.16 "Scheduled Closing Date". Shall occur on or before the later
of (i) January 7, 1997, plus such additional time as Buyer may require if,
despite using good faith efforts to complete the Closing, Buyer is unable
to fulfill its requirements by such date or (ii) seven (7) days after the
end of the Feasibility Period; provided, however, that in no event shall
the Scheduled Closing Date be extended beyond January 31, 1997 without the
written agreement of both Buyer and Seller.
5. In Section 2.2.1 (entitled "Deposit") the amount of Two Hundred
Thousand Dollars ($200,000) shall be increased to Five Hundred Thousand Dollars
($500,000) and the following sentence shall be added:
"When Seller has given the Feasibility Completion Notice [all
conditions to the end of the Feasibility Period, have occurred] and Buyer
has given the [e]Election to [p]Proceed under Section 3.3.1, the Deposit
shall be increased to $500,000. Concurrently with Buyer's increase of the
Deposit, Two Hundred Fifty Thousand Dollars ($250,000) will be released to
Seller and shall be nonrefundable except in the event of a Seller material
default under this Agreement. If Buyer fails to close, except in the event
of a Seller material default under this Agreement, Seller shall be
entitled to retain the $250,000 released to Seller as consideration to
Seller for the making and entering into of this Second Amendment and,
among other things, for Seller's holding the Property off the market
during the Feasibility Period as extended by this Amendment and for the
costs and expenses incurred by Seller in pursuing this Agreement and the
transactions contemplated hereunder (including expenses of third party
consultants and attorneys), and in addition,
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
3
<PAGE> 39
Seller shall be entitled to the balance of the Deposit (then $250,000) as
liquidated damages pursuant to Section 6.5.
6. The second sentence of Section 3.1 (entitled "Effect of Conditions
Generally") shall be restated in its entirety as follows:
"Subject to the provisions of Section 2.2.1, in the event that any
such condition is neither satisfied within the time limits specified in
each such Section nor waived in writing by the party specifically stated
to be benefited by such Section, such condition shall be deemed to have
failed and the party specifically stated to be benefited by such failed
condition may elect to terminate this Agreement."
The following clause is inserted at the beginning of the third
sentence of Section 3.1: "Subject to the provisions of Section 2.2.1, "
7. The introductory sentence of Section 3.2 (entitled "Conditions for
the Benefit of Buyer") is restated in its entirety as follows:
"In addition to any other conditions to Buyer's obligations
contained in Schedule 3, the following shall constitute conditions
to Buyer's obligations to purchase the Property from Seller and are
for the benefit of Buyer, the failure of any of which shall allow
Buyer to terminate this Agreement subject to the provisions of
Section 2.2.1."
8. Section 3.2.2 (entitled "Approval of Condition of Title") shall be
restated in its entirety as follows:
"Buyer has reviewed the preliminary title report prepared by the
Title Insurer for the Property dated as of June 5. 1996 under its Order
No. 511373-A (the "title Report"). All of the exceptions shown on the
Title Report plus the Second Amendment to Declaration in the form attached
hereto as Appendix H (the "Second Amendment to Declaration"), the Special
Declaration, the Grant of Easement, the Parking Easement and Relocation
Agreement, and the "Grant of Lot 4 Easement Rights" in the form attached
hereto as Appendix I and the Amendment to Declaration in the form attached
hereto as Appendix K. are approved by Buyer as Permitted Exceptions except
for the following numbered exceptions, the removal of which shall be a
condition to Buyer's obligation to Close and which Seller agrees to use
its reasonable efforts to cause to be removed prior to Closing both as to
the Property and to the portion of Lot 7 of Tract 7953 that is the subject
of the easement described in 1.2.8.c":
<TABLE>
<CAPTION>
EXCEPTION NO. GENERAL TOPIC
<S> <C>
20 Travelers Deed of Trust
25 Apple Lease
</TABLE>
4
<PAGE> 40
<TABLE>
<S> <C>
26 Apple right of First Refusal
27 Apple lease/easements
28 Apple Right of First Refusal
33 TIAA Deed of Trust
34 Assignment of Leases-TIAA/Apple
35 Financing Statement-TIAA
38 Unrecorded leases and rights of first refusal
</TABLE>
With respect to exception No. 18 (regarding City Resolution No.
7007) shown on the Title Report, Buyer has approved exception No. 18 and
Seller hereby agrees (i) to indemnify Buyer against any and all loss,
cost, damage or liability that may arise out of the failure of Seller to
fulfill the requirements under City Resolution 7007 and (ii) to take
prompt and reasonable steps to fulfill such requirements as may be imposed
as a result of City Resolution 7007 and cause the effect thereof to be
removed as an exception to Buyer's title to the Property. Such indemnity
shall survive the Closing and the delivery of the Grant Deed.
9. The following subsections of Section 3.2 (entitled "Conditions for the
Benefit of Buyer") shall be deleted in their entirety:
(A) Section 3.2.3 (entitled "Approval to Enter Agreement");
(AA) Section 3.2.5 (entitled "Parking Agreement")
(B) Section 3.2.6 (entitled "Access"), the substance of which is set
forth in subsection 2 of this Second Amendment as revised Section
1.2.8(c); and
(C) Section 3.2.7 (entitled "Construction Staging Area"), the
substance of which is set forth in subsection 2 of this Second Amendment
as revised Section 1.2.8(i).
10. The following subsections of Section 3.3 (entitled "Conditions for
the Benefit of Seller") shall be deleted in their entirety
(A) Section 3.3.2 (entitled "Approval to Enter Agreement"); and
(AA) Section 3.3.3 (entitled "Parking Agreement").
(B) Section 3.3.4 (entitled "Access"), the substance of which is set
forth in subsection 2 of this Second Amendment as revised Section
1.2.8(c).
5
<PAGE> 41
11. Section 3.4 (entitled "Conditions of Deposit Refund to Buyer") is
deleted in its entirety.
12. The following is added to Section 4.3 (entitled "Limitation of
Actions"):
"In addition, the twelve (12) month limitation for the
commencement of legal action shall not apply to claims arising under
the Parking Agreement, the Construction Staging Easement, Buyer's
Parking Indemnity, or any other obligation the performance of which
is by its express terms deferred to a period later than the Closing,
and such claims shall be subject to the applicable statute of
limitations."
13. The following Section 5.2.3 (entitled "Buyer's Parking Indemnity"
is added to the Purchase Agreement:
"5.2.3. Buyer's Parking Indemnity. Unless defined in this Agreement,
the capitalized terms used in this Section shall have the meanings ascribed
to such capitalized terms in the Parking Agreement.
5.2.3.1 Buyer's Limited Indemnity. Buyer agrees to indemnify, defend
and hold Seller and the Controlled Parties, and their respective officers,
directors, shareholders, partners and employees (the "Indemnified Parking
Agreement Parties"), free and harmless from any and all expense, loss, damage,
liability and claims of any kind or nature arising out of any actions against
the Indemnified Parking Agreement Parties made by the Permittees alleging in
effect that Buyer has not provided the Symantec Parking Facilities pursuant to
the Parking Agreement ("Buyer's Parking Indemnity").
5.2.3.2 Indemnity Procedures. Promptly, and in no event later than
ten (10) days, after receipt by an Indemnified Parking Agreement Party of notice
of the commencement of any action, such Indemnified Parking Agreement Party
shall, if a claim in respect of such action is to be made against Buyer pursuant
to Buyer's Parking Indemnity, notify Buyer in writing of the commencement
thereof. In case any such action shall be brought against any Indemnfied Parking
Agreement Party and such Indemnified Parking Agreement Party shall notify Buyer
of the commencement thereof, Buyer shall be entitled to participate in such
action and, to the extent that Buyer shall wish, to assume the defense thereof,
with counsel satisfactory to such Indemnified Parking Agreement Party (which
counsel shall not, except with the consent of the Indemnified Parking Agreement
Party, be counsel to Buyer on other matters), and, after notice from Buyer to
such Indemnified Parking Agreement Party of Buyer's election so to assume the
defense thereof, Buyer shall not be liable to such Indemnified Parking Agreement
Party for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such Indemnified Parking Agreement Party, in
connection with the defense of such action, other than reasonable costs of
investigation and legal expenses of other counsel in the event the counsel
selected by Buyer has a conflict of interest in representing Buyer as well as
any Indemnified Parking Agreement Party.
6
<PAGE> 42
5.2.3.3. Other Indemnity Provisions. Notwithstanding anything in
this Amendment or in the Agreement to the contrary, Buyer's Parking Indemnity
shall survive the Closing, and the limitation for the commencement of legal
action under Section 4.3 of the Agreement, as amended by this Amendment shall
not apply to claims arising under Buyer's Parking Indemnity[. In all events,
Buyer's obligation to indemnify shall apply only to actual compensatory damages
to an Indemnified Parking Agreement Party and shall NOT extend to consequential
damages of any kind.]
14. Sections 5.2.1.2 (entitled "Temporary Parking") and 5.3.1.1 (entitled
"Parking Approvals") are modified by deleting therefrom the references to Apple
Computer, Inc." The foregoing deletion is agreed by Buyer based upon Seller's
representation that, other than the Apple Lease described in exception 25 of the
Title Report, there are no agreements granting Apple Computer parking rights
with respect to the Property.
15. Section 6.5 (entitled "Liquidated Damages"), is hereby restated in
its entirety as follows:
"IF BUYER FAILS TO COMPLETE THE PURCHASE PROVIDED FOR IN THIS
AGREEMENT BY REASON OF ANY DEFAULT OF BUYER, SELLER SHALL BE RELEASED FROM
SELLER'S OBLIGATION TO SELL THE PROPERTY TO BUYER. BUYER AND SELLER AGREE
IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX ACTUAL DAMAGES IN
THE CASE OF BUYER'S DEFAULT AND THAT THE DEPOSIT OF FIFTY THOUSAND DOLLARS
($50,000) PRIOR TO THE END OF THE FEASIBILITY PERIOD, OR TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000) AFTER THE EXPIRATION OF THE FEASIBILITY PERIOD
WHICH SUM OF $250,000 OF LIQUIDATED DAMAGES IS DISTINCT AND INDEPENDENT
FROM THE CONSIDERATION OF $250,000 WHICH MAY BE RETAINED BY SELLER UNDER
SECTION 2.2.1. EACH SUCH SUM IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES
IN SUCH EVENT, AND THAT IN THE EVENT OF ANY DEFAULT BY BUYER HEREUNDER AS
AFORESAID, SELLER MAY RETAIN THE SUM. SUCH SUM SHALL CONSTITUTE LIQUIDATED
DAMAGES AND SELLER'S SOLE REMEDY ON ACCOUNT OF BUYER'S DEFAULT FOR FAILURE
TO CLOSE, BUT SHALL NOT LIMIT BUYER'S LIABILITY UNDER SECTION 5.4 ABOVE.
--------------- -----------------
Buyers Initials Seller's Initials
16. Buyer hereby agrees that at the Closing, Seller shall be entitled to
grant to Cupertino City Center Apartments II, a California limited partnership
("CCCApartments II") one of the Controlled Parties and the owner of Lot 4, Tract
7953, a non-exclusive easement, in the form of the Grant of Lot 4 Easement
Rights, within the parking area established and designated by Buyer on the
Property for 12 parking spaces originally planned to be located within the
portion of Lot 7 adjacent to Lot 4 and displaced by Buyer's use of said portion
of Lot 7 pursuant to the Grant of Easement , provided, however, that the
entitlement therefore for nine (9) of such spaces shall only include weekends,
holidays and that time between 5 pm and 8 am on days other than weekends
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "] in the electronic format.
7
<PAGE> 43
and holidays, and provided further, that such parking spaces and the holders of
the rights thereto, shall be subject to reasonable, non-discriminatory rules and
regulations (including, without limitation, instituting such security and
administrative procedures as Buyer deems necessary for the safe, efficient
operation of the parking facilities located thereon). The parties acknowledge
that notwithstanding the Grant of the Lot 4 Easement rights, such parking rights
will be unavailable to CCCApartments II during the period that Buyer is
constructing the Project on Lot 5. Accordingly, during such period of
construction, Buyer covenants, as a covenant surviving the Closing, that
CCCApartments II shall have and enjoy said parking rights, including the right
of access thereto, on Buyer's property commonly known as its World Headquarters
having an address of 10201 Torre Avenue, Cupertino, California. If required in
order to satisfy the City's parking requirements for Lot 4, the foregoing
temporary parking rights will be expressed in a written instrument and recorded
in the official Records of Santa Clara County.
17. Prior to, but not as a condition to Closing, and to the extent not
completed at, Closing, Seller covenants and agrees to cooperate with Buyer and
to use Seller's and any Controlled Party's reasonable good faith efforts (i) to
enable Buyer to obtain permission (pursuant to written agreement which will
include, inter alia, provisions by which Buyer will agree to minimize any
disturbance to tenants and/or other users of the affected property, agree to
repair and maintain any damage to the affected property, agree that the affected
property will not be the subject of any lien by virtue of the activity of Buyer,
agree to obtain and maintain comprehensive general liability insurance in the
sum of Two Million Dollars ($2,000,000) protecting the affected property owners,
and agree to give written notice to the affected property owners prior to the
commencement of any work and/or the delivery of any materials so that the
affected property owners may post notices of non-responsibility) from the
Cupertino City Center Owners Association, the City, and other property owners
and their lenders to construct, install and maintain a fiber-optic or similar
"hard-wired" communications link between the Property, the property adjacent to
the southern boundary of the Property which is occupied by and owned or to be
acquired by Buyer and any other property owned or occupied by Buyer or Buyer's
affiliates within the Cupertino City Center and (ii) to cause the Association
and the Declarant members thereof to execute the Third Amendment providing for
the cessation of the Class B Membership in the Cupertino City Center Owners
Association not later than thirty-six (36) months from the date of the Closing.
To the extent that the cooperation of Seller and the Controlled Parties requires
Seller or the Controlled Parties to hire non-affiliated third parties, the
reasonable out of pocket cost of hiring such third parties shall be reimbursed
by Buyer. If not fulfilled as of the Closing, the covenants and agreements set
forth in this paragraph shall survive the Closing. [Resolution No. 9751
("Resolution 9751") of the City Council of the City of Cupertino adopted by the
City Council on December 11, 1996 contemplates an agreement between Seller,
Buyer and the City of Cupertino for the completion of certain improvements along
Stevens Creek Boulevard and within the southeast corner of Stevens Creek and De
Anza Boulevard. With respect to Resolution 9751 and the agreements contemplated
thereby, Buyer agrees to be responsible for those items specified in Exhibit A
to Resolution 9751 pursuant to which Buyer alone is mentioned and required to
perform. With respect to those items specified in Exhibit A to Resolution 9751
in which Buyer and Seller are both mentioned and required to perform, Seller
agrees that Seller shall be soley responsible for such performance, and, without
limiting the generality of the foregoing.] Seller shall, on or before September
1, 1997, subject to extensions due to matters beyond the
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
8
<PAGE> 44
reasonable control of Seller and/or the Controlled Parties, caused to be
completed (i) the park roadway on Lots 1 and 8 of Tract 7953 in accordance with
the plans therefore approved by the City of Cupertino, [and] (ii) the hardscape
and landscape improvements on Lot 9 and adjacent to the northerly boundary of
Lot 1 in accordance with the plans therefore approved by the City of Cupertino.
18. Notwithstanding the Closing, Seller agrees that Seller and the
Controlled Parties will reasonably cooperate with Buyer in order to effectuate
the intent of (i) the Agreement as amended and (ii) the other agreements to be
consummated and delivered pursuant to the Agreement as amended. Without limiting
the generality of the foregoing, to the extent that as of the Closing, any
covenants of Seller or Buyer remain unfulfilled or Buyer or Seller has waived an
unfulfilled condition to Closing, Seller or Buyer agrees that such unfulfilled
covenants or conditions shall remain covenants that survive the Closing
requiring Seller and the Controlled Parties to use reasonable efforts to
fulfill, working in cooperation with the other. To the extent that the
cooperation of Seller and the Controlled Parties, on the one hand and Buyer, on
the other hand, requires Seller or the Controlled Parties to hire non-affiliated
third parties, the reasonable out of pocket cost of hiring such third parties
shall be reimbursed by Buyer[; provided, however, prior to hiring any such third
parties the cost for which Seller shall expect to be reimbursed by Buyer, Seller
agrees to give Seller not less than ten (10) days notice specifying the third
parties that Seller desires to hire and the specific tasks that such third
parties will be hired to undertake].
19. The parties acknowledge that construction is under way and will
continue with respect to the improvement of Lot 4 of Tract 7953, which
construction includes some utilization of the "Burdened Property" shown on the
Grant of Easement. Buyer and Seller, for itself and the Controlled Parties,
covenant and agree that they will reasonably and in good faith cooperate and
coordinate their development on and utilization of the Burdened Property so that
neither will be unreasonably impeded.
20. Exhibit "C" (Election to Proceed) is revised and restated as set forth
in the Appendix J attached hereto. Said Election to Proceed must be given, if at
all, within three (3) business days of Seller having given the Feasibility
Completion Notice.
21. Whenever in the Purchase Agreement and/or this First Amendment, a
party has the right to "terminate" the agreement, the exercise of such right of
termination shall mean only the extinction of the obligation of Buyer to
purchase the Property and the obligation of Seller to sell the Property as well
as the extinction of any obligations under any documents ancillary to the
purchase of the Property.
22. To the extent this Second Amendment conflicts with the First
Amendment, this Second Amendment shall control.
22. Except as herein and heretofore amended, the Purchase Agreement
remains unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
on the dates set forth opposite their respective signatures below.
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
9
<PAGE> 45
SELLER: BUYER:
CUPERTINO CITY CENTER BUILDINGS, a SYMANTEC CORPORATION, a Delaware
California Limited Partnership corporation
By: SUNSET RIDGE DEVELOPMENT CO. By: _________________________________
INC., a California corporation _________________________________
Its______________________________
Its: General Partner
By: _________________________________
_________________________________
Its _____________________________
10
<PAGE> 46
LIST OF APPENDICES
<TABLE>
<CAPTION>
APPENDIX TITLE
<S> <C>
A Parking Easement and Relocation
Agreement
B-1 Acknowledgement by CCCLand
B-2 Acknowledgement by CCCApartments II
B-3 Acknowledgement by CCC Owners
Association
C Special Declaration (Encroachment
Easements)
D Grant of Easement
E List of Vacation of Easement Parties
F Consent to Declaration
G Contraction Staging Easement
H Second Amendment to Declaration
I Grant of Lot 4 Easement Rights
J Revised Exhibit C (Election to Proceed)
K Third Amendment to Declaration
</TABLE>
1
<PAGE> 47
APPENDIX A
[PARKING EASEMENT AND RELOCATION AGREEMENT]
1
<PAGE> 48
APPENDIX B
ACKNOWLEDGEMENT AND AGREEMENT BY CUPERTINO CITY CENTER LAND, a
California limited partnership ("CCCLand")
CCCLand hereby represents that it is the fee owner of Lots 1 and 6,
Tract 7953, Cupertino City Center Phase III, as shown on Map recorded
February 27, 1987 in Book 571 of Maps, pages 36 and 37, Official Records
of Santa Clara County, California ("Lots 1 and 6").
CCCLand hereby acknowledges that this ACKNOWLEDGEMENT AND AGREEMENT
is being executed concurrently with the execution of that certain Second
Amendment to Agreement for Purchase and Sale and Escrow Instructions by
and between Symantec Corporation, a Delaware corporation ("Buyer") and
Cupertino City Center Buildings, a California limited partnership
("Seller"). Said Agreement for Purchase and Sale and Escrow Instructions
as amended by said Second Amendment and any further amendments thereto are
herein referred to collectively as the "Agreement of Purchase and Sale".
CCCLand understands that Seller is controlled by or under common
control with Sanford Diller and CCCLand further represents that it is also
an entity controlled by or under common control with Sanford Diller and
CCCLand acknowledges that it is a "Controlled Party" as the term
"Controlled Party" is used in the Agreement of Purchase and Sale.
CCCLand hereby agrees that to the extent that the Agreement of
Purchase and Sale requires Seller and the Controlled Parties to cooperate
with Buyer before or after the Closing contemplated by such Agreement of
Purchase and Sale, CCCLand will use its reasonable efforts to so
cooperate. By a separate Parking Easement and Relocation Agreement (the
"Parking Agreement"), Seller and CCCLand, among other parties, are
agreeing that certain parking requirements for the benefit of the
Benefited Property described below may, at the election of Buyer, be
provided temporarily on Lots 1 and 6. The Benefited Property consists of
the following: Lots 2 and 3, of said Tract 7953 and Lot 4, Tract 7734,
Cupertino City Center Phase II, as shown on Map recorded October 9, 1985
in Book 550 of Maps, pages 24, 25 and 26, Official Records of Santa Clara
County.
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<PAGE> 49
CCCLand hereby confirms the above representation and agrees to
provide such temporary parking on Lots 1 and 6 when and if requested by
Buyer in accordance with the terms and conditions of the Parking
Agreement.
CUPERTINO CITY CENTER LAND, a
California Limited Partnership
By: SUNSET RIDGE DEVELOPMENT CO.
INC., a California corporation
Its: General Partner
By: _________________________________
_________________________________
Its ____________________________
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<PAGE> 50
APPENDIX B-2
ACKNOWLEDGEMENT AND AGREEMENT BY CUPERTINO CITY CENTER
APARTMENTS II, a California limited partnership ("CCCApartments II")
CCCApartments II hereby represents that it is the fee owner of Lot
4, Tract 7953, Cupertino City Center Phase III, as shown on Map recorded
February 27, 1987 in Book 571 of Maps, pages 36 and 37, Official Records
of Santa Clara County, California ("Lots 1 and 6").
CCCApartments II hereby acknowledges that this ACKNOWLEDGEMENT AND
AGREEMENT is being executed concurrently with the execution of that
certain Second Amendment to Agreement for Purchase and Sale and Escrow
Instructions by and between Symantec Corporation, a Delaware corporation
("Buyer") and Cupertino City Center Buildings, a California limited
partnership ("Seller"). Said Agreement for Purchase and Sale and Escrow
Instructions as amended by said Second Amendment and any further
amendments thereto are herein referred to collectively as the "Agreement
of Purchase and Sale".
CCCApartments II understands that Seller is controlled by or under
common control with Sanford Diller and CCCApartments II further represents
that it is also an entity controlled by or under common control with
Sanford Diller and CCCApartments II acknowledges that it is a "Controlled
Party" as the term "Controlled Party" is used in the Agreement of Purchase
and Sale.
CCCApartments II hereby agrees that to the extent that the Agreement
of Purchase and Sale requires Seller and the Controlled Parties to
cooperate with Buyer before or after the Closing contemplated by such
Agreement of Purchase and Sale, CCCApartments II will use its reasonable
efforts to so cooperate.
CUPERTINO CITY CENTER APARTMENTS II, a
California Limited Partnership
By: SUNSET RIDGE DEVELOPMENT CO.
INC., a California corporation
Its: General Partner
By:
-----------------------------
Name:
Title:
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<PAGE> 51
APPENDIX B-3
ACKNOWLEDGEMENT AND AGREEMENT BY CUPERTINO CITY CENTER OWNERS
ASSOCIATION, a California nonprofit corporation ("Association")
Association hereby represents that it is the fee owner of Lot 7,
Tract 7953, Cupertino City Center Phase III, as shown on Map recorded
February 27, 1987 in Book 571 of Maps, pages 36 and 37, Official Records
of Santa Clara County, California ("Lots 1 and 6").
Association hereby acknowledges that this ACKNOWLEDGEMENT AND
AGREEMENT is being executed concurrently with the execution of that
certain Second Amendment to Agreement for Purchase and Sale and Escrow
Instructions by and between Symantec Corporation, a Delaware corporation
("Buyer") and Cupertino City Center Buildings, a California limited
partnership ("Seller"). Said Agreement for Purchase and Sale and Escrow
Instructions as amended by said Second Amendment and any further
amendments thereto are herein referred to collectively as the "Agreement
of Purchase and Sale".
Association hereby agrees that to the extent that the Agreement of
Purchase and Sale requires Seller and the Controlled Parties to cooperate
with Buyer before or after the Closing contemplated by such Agreement of
Purchase and Sale, Association will use its reasonable efforts to so
cooperate. Without limiting the generality of the foregoing, Association
specifically agrees to the provisions of paragraph 17 of said Second
Amendment as such paragraph makes reference to Association.
CUPERTINO CITY CENTER OWNERS
ASSOCIATION, a California nonprofit
corporation
By:_______________________________
Its:________________________________
By:_________________________________
_________________________________
Its _____________________________
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<PAGE> 52
APPENDIX C
[SPECIAL DECLARATION-ENCROACHMENT EASEMENTS]
1
<PAGE> 53
APPENDIX D
[GRANT OF EASEMENTS]
1
<PAGE> 54
APPENDIX E
LIST OF VACATION OF EASEMENT PARTIES
Central Fire District
Cupertino Sanitary district
PG&E
Pacific Bell
San Jose Water Co.
TCI
1
<PAGE> 55
APPENDIX F
[CONSENT TO DECLARATION]
1
<PAGE> 56
APPENDIX G
[CONSTRUCTION STAGING EASEMENT
1
<PAGE> 57
APPENDIX H
[SECOND AMENDMENT TO DECLARATION]
<PAGE> 58
APPENDIX I
GRANT OF LOT 4 EASEMENT RIGHTS
<PAGE> 59
APPENDIX J
EXHIBIT "C"
BUYER'S ELECTION TO CONTINUE ESCROW
To: _______________ [Escrow Holder]
Re: Buyer's Election to Continue Escrow for Escrow No.
Ladies and Gentlemen:
Under that certain Agreement for Purchase and Sale and Escrow Instructions
(the "Agreement") dated May 30, 1996, as amended, between Cupertino City
Center Buildings Partnership, a California limited partnership ("Seller") and
the Buyer therein, initially Symantec Corporation, a Delaware corporation
("Buyer"), the undersigned having succeeded to the interest of Buyer by
assignment hereby acknowledges that all conditions have been fulfilled or are
waived by Buyer and Buyer elects to proceed with the purchase, subject to the
fulfillment of those conditions for the benefit of Buyer in Schedule 3 to the
Agreement and tenders herewith the additional sum of Four Hundred Fifty
Thousand Dollars ($450,000) as an increase in the Deposit making the total
Deposit Five Hundred Thousand Dollars ($500,000), Two Hundred Fifty Thousand
Dollars ($250,000) out of which Deposit shall be immediately released to
Seller..
Very truly yours,
BUYER
____________________a_____________
By: ________________
1
<PAGE> 60
APPENDIX K
[THIRD AMENDMENT TO DECLARATION]
1
<PAGE> 61
THIRD AMENDMENT TO AGREEMENT
FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS
This THIRD AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE AND ESCROW
INSTRUCTIONS ("Second Amendment") made effective as of January __, 1997, amends
that certain Agreement for Purchase and Sale and Escrow Instructions dated May
31, 1996 ("Purchase Agreement") by and between Symantec Corporation, a Delaware
corporation, therein and herein called "Buyer," and Cupertino City Center
Buildings, a California Limited Partnership, therein and herein called "Seller."
The Purchase Agreement was previously amended by the First Amendment to
Agreement for Purchase and Sale and Escrow Instructions made effective July 30,
1996 (the "First Amendment") and by the Second Amendment to Agreement for
Purchase and Sale and Escrow Instructions made effective September 5, 1996 (the
"Second Amendment"). Those terms defined in the Purchase Agreement as
supplemented and modified by the Second Amendment shall have the same
definitions when used herein unless specifically modified hereby.
Buyer and Seller now wish to further modify the Purchase Agreement, as
amended by the First Amendment and the Second Amendment, as hereinafter set
forth.
1. The following is added as subsection (k) to Section 1.2.8, as
amended by the Second Amendment:
(k) CCCApartments II, one of the Controlled parties, is currently
constructing an apartment project on Lot 4 of Tract 7953 (the "Lot 4 Project").
As a condition to the entitlements from the City of Cupertino for the Lot 4
Project, 12 parking spaces were to be provided adjacent to the western boundary
of said Lot 4. Pursuant to the Grant of Easement and otherwise as described in
paragraph 16 of the Second Amendment, CCCApartments II agreed to relinquish any
rights to such 12 parking spaces and instead agreed to the temporary and
permanent parking rights described in paragraph 16 of the Second Amendment. As a
Feasibility Condition, the City of Cupertino shall have confirmed (the "City
Entitlement Confirmation") that the temporary and permanent parking rights to be
granted to CCCApartments II as described in paragraph 16 of the Second Amendment
will satisfy the entitlement condition that would previously have been satisfied
by having such 12 parking spaces located adjacent to the western boundary of
said Lot 4. Seller agrees to use Seller's and to cause the Controlled Parties to
use their reasonable efforts to obtain the "City Entitlement Confirmation" as
soon as possible. Without limiting the generality of the foregoing, Seller
agrees that if the City Council of the City of Cupertino acts to give the City
Entitlement Confirmation, that this Feasibility Condition shall be deemed
satisfied.
2. Section 1.2.16 (entitled "Scheduled Closing Date") is hereby
restated in its entirety as follows:
1.2.16 "Scheduled Closing Date". Shall occur on or before the later
of (i) January 28, 1997, plus such additional time as Buyer may require
if, despite using good faith efforts to complete the Closing, Buyer is
unable to fulfill its requirements by such date but
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<PAGE> 62
not later than February 15, 1997 or (ii) seven (7) days after the end of
the Feasibility Period. Notwithstanding the foregoing, if, despite the
exercise of reasonable efforts by Seller and the Controlled Parties, the
Feasibility Condition described in Section 1.2.8(k) is not fulfilled
because the City Entitlement Confirmation cannot be obtained, Buyer and
Seller agree to cooperate in good faith to accommodate the requirement for
the 12 parking spaces described in Section 1.2.8(k) and at the same time
preserve the Project designed by Buyer for the Property, provided however,
that if Buyer and Seller are unable to agree on a mutually agreeable plan
(using such good faith efforts) by April 21, 1997, then either party may
elect to terminate this Agreement, at which time it shall have no further
force and effect.
3. To the extent this Third Amendment conflicts with the First Amendment
or the Second Amendment, this Third Amendment shall control.
4. Except as herein and heretofore amended, the Purchase Agreement
remains unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment
on the dates set forth opposite their respective signatures below.
SELLER: BUYER:
CUPERTINO CITY CENTER BUILDINGS, a SYMANTEC CORPORATION, a Delaware
California Limited Partnership corporation
By: SUNSET RIDGE DEVELOPMENT CO. By: _________________________________
INC., a California corporation _________________________________
Its______________________________
Its: General Partner
By:_________________________________
_________________________________
Its______________________________
<PAGE> 1
EXHIBIT 10.21
EXECUTION COPY
================================================================================
LOAN AGREEMENT
dated as of October 18, 1996
among
SUMITOMO BANK LEASING AND FINANCE, INC.
as Lessor,
VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED HEREIN,
as Lenders,
and
THE SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH
as Agent for the Lenders
================================================================================
<PAGE> 2
LOAN AGREEMENT
THIS LOAN AGREEMENT dated as of October 18, 1996 (this "Loan Agreement"),
among SUMITOMO BANK LEASING AND FINANCE, INC., a Delaware corporation (the
"Lessor"), the various financial institutions as are or may from time to time
become parties hereto as lenders hereunder (collectively, the "Lenders") and THE
SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH, as Agent (the "Agent") for
the Lenders,
W I T N E S S E T H:
WHEREAS, pursuant to the Participation Agreement dated as of the date
hereof (the "Participation Agreement"), among Symantec Corporation, a Delaware
(the "Lessee"), the Lessor, the Lenders and the Agent, the Lessor and the
Lenders have agreed, subject to the terms thereof, to make Lessor Amounts and
Loans available to the Lessor on each Acquisition Date, and the Lessor has
agreed, subject to the terms thereof, to make Advances for the benefit of the
Lessee on each Acquisition Date;
WHEREAS, the Lessor desires to obtain Commitments from the Lenders pursuant
to which Loans, in a maximum aggregate principal amount at any one time
outstanding not to exceed $45,800,000.00 will be made to the Lessor in
accordance with this Loan Agreement and the Participation Agreement;
WHEREAS, each Lender is willing, on the terms and subject to the conditions
hereinafter set forth (including Article III), to make Loans to the Lessor in an
aggregate amount not to ecxeed its Commitment as set forth on Schedule II to the
Participation Agreement, as such Schedule may be amended from time to time; and
WHEREAS, the Lessor will use the proceeds of such Loans to fund Advances to
the Lessee pursuant to the Participation Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Capitalized terms used but not otherwise defined in this Loan Agreement
have the respective meanings specified in Appendix A to this Loan Agreement; and
the rules of interpretation set forth in Appendix A to this Loan Agreement shall
apply to this Loan Agreement.
<PAGE> 3
Loan Agreement
ARTICLE 11
AMOUNT AND TERMS OF LENDERS' COMMITMENTS
SECTION II.1. Loan Commitments. Subject to the terms and conditions hereof
and of the Participation agreement, each lender severally agrees to make loans
(the "Loans") to the Lessor on each Acquisition Date for the purpose of enabling
the Lessor to acquire the Properties and to pay Property Acquisition Costs, in
an aggregate principal amount at any one time outstanding not to exceed the
amount of such Lender's Commitment. No amounts paid or prepaid with respect to
any Loans may be reborrowed.
SECTION II.2. Notes. The Loans made by each Lender shall be evidenced by a
promissory note of the Lessor, substantially in the form of Exhibit A (each, a
"Note"), with appropriate insertions as to payee, date and principal amount,
payable to the order of such Lender and in a principal amount equal to the
initial Commitment of such Lender. Each Lender is hereby authorized to record
the date and amount of each Loan made by such Lender, each continuation thereof,
the date and amount of each payment or prepayment of principal thereof and the
length of each Interest Period with respect thereto, on the schedule annexed to
and constituting a part of its Note, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so recorded, provided
that the failure to make any such recordation or any error in such recordation
shall not affect the Lessor's obligations hereunder or under such Note. Each
Note shall (i) be dated the date of the initial Acquisition Date, (ii) be stated
to mature on the Maturity Date and (iii) provide for the payment of interest in
accordance with this Loan Agreement.
SECTION II.3. Prepayments.
(a) Voluntary. The Lessor may in connection with a Casualty,
Condemnation or purchase by the Lessee of a Property at any time and from
time to time prepay the Loans, in whole or in part, without premium or
penalty (subject to Section 13.10 of the Participation Agreement), upon at
least three (3) Business Days' written notice to the Agent, specifying the
date and amount of prepayment and the Land Acquisition Costs and/or
Property Improvement Costs to which such Loans are allocable. Upon receipt
of any such notice the Agent shall promptly notify each Lender thereof. If
any such notice is given, the amount specified in such notice shall be due
and payable on the date specified therein,
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Loan Agreement
together with any amounts payable pursuant to Article XIII (including
without limitation Section 13.6) of the Participation Agreement.
(b) Mandatory. Notwithstanding the foregoing, all amounts payable by
the Lessee pursuant to Article XV, XVIII or XX of the Master Lease shall
be used to prepay the Loans and shall be applied to the Loans and the
Lessor Amounts in the manner set forth in Article VII of the
Participation.
SECTION II.4. Interest Rates and Payment Dates.
(a) Each Loan shall bear interest for each day during each Interest
Period with respect thereto at a rate per annum equal to the LIBO Rate
(Reserve Adjusted) determined for such day plus the Loan Margin or, at the
option of the Lessee, the Alternate Base Rate plus the Loan Margin.
(b) If all or a portion of (i) the principal amount of any Loan,
(ii) any interest payable thereon or (iii) any other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a
rate per annum which is equal to the Overdue Rate. Interest accruing
pursuant to this clause (b) shall be payable from time to time on demand.
(c) During the Base Lease Term, interest shall accrue on outstanding
Loans and shall be paid on the Scheduled Payment Date.
(d) Each prepayment of the Loans shall be accompanied by accrued
interest to the date of such prepayment on the amount prepaid.
SECTION II.5. Repayment of Loans.
(a) During the Base Lease Term the Lessor shall repay the Loans with
respect to each Property on the dates and in the amount set forth in the
Master Rent Schedule under the Lease.
(b) The Loans shall be repaid in full on the Maturity Date.
SECTION II.6. Computation of Interest.
(a) If interest on the Loans shall be based on the LIBO Rate
(Reserve Adjusted), then it shall be calculated on
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Loan Agreement
the basis of a 360-day year and, if based on the Alternate Base Rate, then
on a 360-day year basis if the Alternate Base Rate is calculated at the
Federal Funds Rate, and a 365- or, if applicable, 366-, day year basis if
the Alternate Base Rate is calculated at the Prime Rate, in each case for
the actual days elapsed. The Agent shall as soon as practicable notify the
Lessor and the Lenders of each determination of a LIBOR Rate. Any change
in the interest rate on a Loan resulting from a change in the Alternate
Base Rate or the LIBOR Reserve Percentage shall become effective as of the
opening of business on the day on which such change becomes effective. The
Agent shall as soon as practicable notify the Lessor and the Lenders of
the effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Loan Agreement shall be correct and binding on the
Lessor and each Lender in the absence of demonstrable error. The Agent
shall, at the request of the Lessor, deliver to the Lessor a statement
prepared in good faith and in reasonable detail showing the quotations
used by the Agent in determining any interest rate pursuant to Section
2.5(a).
SECTION II.7. Pro Rata Treatment and Payments. Each borrowing by the
Lessor from the Lenders hereunder shall be made pro rata among the Lenders
according to the respective Commitment Percentage of each such Lender. Except as
otherwise provided in Article VII of the Participation Agreement, each payment
(including each prepayment) by the Lessor on account of principal of and
interest on the Loans shall be made pro rata. among the Lenders according to the
respective outstanding principal amounts of the Loans then held by each such
Lender. Subject to Article V, all payments (including prepayments) to be made by
the Lessor hereunder and under the Notes, whether on account of principal,
interest or otherwise, shall be made without setoff or counterclaim and shall be
made by the Lessor to the applicable Lender prior to 12:00 p.m., San Francisco,
California time, to such Lender's Funding Office specified in Schedule II to the
Participation Agreement (or to such other office as may be designated by such
Lender from time to time in a written notice to the Owner Lessor) in funds
consisting of lawful currency of the United States of America which shall be
immediately available on the scheduled date when such payment is due. Payments
received after 1:00 p.m., San Francisco, California time, on the date due shall
for the purpose of Section 5.1 be deemed received on such day; provided,
however, that for the purposes of Section 2.5(b), such payments shall be deemed
received on the next
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<PAGE> 6
Loan Agreement
succeeding Business Day and, unless the Lenders are otherwise able to invest or
employ such funds on the date received, subject to interest at the Overdue Rate
as provided in Section 2.5(b).
ARTICLE III
CONDITIONS PRECEDENT
SECTION III.1. Conditions to Effectiveness. This Loan Agreement shall
be effective on the Documentation Date upon satisfaction of the conditions
precedent set forth in Section 2.1 of the Participation Agreement.
ARTICLE IV
PAYMENTS AND DISTRIBUTIONS
SECTION IV.1. Payments and Distributions. All payments to be made by the
Lessor hereunder, and all payments due and payable to the Lenders pursuant to
any other Operative Document, shall be distributed by the Lessor to the
Participants in accordance with Article VII of the Participation Agreement.
ARTICLE V
LOAN AGREEMENT EVENTS OF DEFAULT
SECTION V.1. Loan Agreement Events of Default. The occurrence of any one
or more of the following events (whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative the Loan Commitments shall immediately
terminate and (y) with the consent of Lenders holding a majority of the
outstanding Loans, the Agent may, or upon the request of Lenders holding a
majority of the outstanding Loans, the Agent shall, by notice to the Lessor,
declare all Loans hereunder (with accrued interest thereon) and all other
amounts owing with respect to the Loans under this Loan Agreement and the Notes
to be due and payable forthwith, whereupon all Loans shall immediately become
due and payable (any of the foregoing occurrences or actions referred to in
clause (i) or (ii) above, an "Acceleration"). Except as expressly provided above
in this Article V, presentment, demand, protest and all other notices of any
kind are hereby expressly waived.
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<PAGE> 7
Loan Agreement
(a) Upon the occurrence of any Loan Agreement Event of Default and
at any time thereafter so long as any Loan Agreement Event of Default
shall be continuing, the Agent shall, upon the written instructions of
Lenders holding a majority in principal amount of the outstanding Loans,
exercise any or all of the rights and powers and pursue any and all of the
remedies available to it hereunder and (subject to the terms thereof)
under the Lease and the other Loan Documents and shall have any and all
rights and remedies available under the Uniform Commercial Code or any
provision of law.
(b) Upon the occurrence of any Loan Agreement Event of Default and
at any time thereafter so long as any Loan Agreement Event of Default
shall be continuing, the Agent shall, upon the written instructions of
Lenders holding a majority in principal amount of the outstanding Loans,
proceed to protect and enforce this Loan Agreement, the Notes, the Lease
and the other Operative Documents by suit or suits or proceedings in
equity, at law or in bankruptcy, and whether for the specific performance
of any covenant or agreement herein contained or in execution or aid of
any power herein granted, or for foreclosure hereunder, or for the
appointment of a receiver or receivers for the Properties or any Property
or for the recovery of judgment for the indebtedness secured thereby or
for the enforcement of any other proper, legal or equitable remedy
available under Applicable Law.
(c) Subject to Section 8.11, the Lessor shall be liable for any and
all accrued and unpaid amounts due hereunder before, after or during the
exercise of any of the foregoing remedies, including all reasonable legal
fees and other reasonable costs and expenses incurred by the Agent or any
Lender by reason of the occurrence of any Loan Agreement Event of Default
or the exercise of remedies with respect thereto.
(d) With respect to the occurrence and continuance of any Lease
Default under Section 16.1(a), (b) or (c) of the Master Lease, the Lessor
agrees that the Agent or any Participant may give notice of such Lease
Default on behalf of the Lessor to the Lessee. With respect to any other
Lease Default, the Lessor agrees that the Agent may give notice of such
Lease Default on behalf of the Lessor to the Lessee. When a Lease Event of
Default has occurred and is continuing, the Agent, at the direction of
Lenders holding a majority of the outstanding Loans, may exercise any or
all of the remedies of the Lessor under Article XVI of the
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<PAGE> 8
Loan Agreement
Master Lease, and the Lessor shall exercise such remedies at the direction
of the Agent. The Lessor shall demand the purchase of properties by the
Lessee pursuant to Section 16.2(e) of the Master Lease at the direction of
Lenders holding a majority of the outstanding Loans. In addition, the
Lenders may request that the Agent, and upon direction of the Required
Lenders the Agent shall, exercise its rights against the Additional
Collateral under the Pledge Agreement.
ARTICLE VI
CERTAIN REMEDIAL MATTERS; RELEASE
SECTION VI.1. Certain Remedial Matters. Notwithstanding any other provision
of this Loan Agreement or any other Loan Document the Lessor shall at all times
retain the right, but not to the exclusion of the Agent, (A) to receive from the
Lessee all notices, certificates and other documents and all information that
the Lessee is permitted or required to give or furnish to the "Lessor" or the
"Lessor" pursuant to the Lease, the Participation Agreement or any other
Operative Document, (B) to provide such insurance as the Lessee shall have
failed to maintain and (C) subject to the other applicable provisions of this
Loan Agreement, to perform for the Lessee under Article XVII of the Master
Lease.
SECTION VI.2. Release of Properties, etc.
(a) If the Lessee shall at any time purchase any Property pursuant
to Article XV of the Master Lease, or exercise its Purchase Option with
respect to any Property under Article XVIII of the Master Lease, or if all
of the Properties shall be sold in accordance with and the Lessee
otherwise satisfies each of the obligations and conditions set forth at
Article XX of the Master Lease, then, upon application of such amounts to
prepay the Loans pursuant to Article IV and the Agent's and the Lenders'
receipt of all accrued interest and any other payments due and owing from
Lessee and/or the Lessor to the Agent and the Lenders on such date,
including without limitation pursuant to Article XIII of the Participation
Agreement, such Property shall be released from the Lien in favor of the
Lenders created by the Assignment of Lease and Rent, to the extent
relating to such Property, all without delivery of any instrument or
performance of any act by any party.
(b) Upon the termination of the Lenders' Commitments
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<PAGE> 9
Loan Agreement
and the payment in full of the Loans and all other amounts owing by the
Lessor hereunder or under any other Loan Document, the Properties shall be
released from the Lien in favor of the Lenders created by the Assignment
of Lease and Rent, to the extent relating to such Property, without
delivery of any instrument or performance of any act by any party.
(c) Upon request of the Lessor following a release of any Property
described in clause (a) or (b) above, the Agent shall, at the sole cost
and expenses of the Lessor, execute and deliver to the Lessor or the
Lessee such documents as the Lessor shall reasonably request to evidence
such release, including, if requested, a release of Assignment of Lease
and Rent to the extent relating to such Property.
ARTICLE VII
THE AGENT
SECTION VII.l. Appointment. Each Lender hereby irrevocably designates and
appoints the Agent as the agent of such Lender under this Loan Agreement and the
other Operative Documents, and each such Lender irrevocably authorizes the
Agent, in such capacity, to take such action on its behalf under the provisions
of this Loan Agreement and the other Operative Documents and to exercise such
powers and perform such duties as are expressly delegated to the Agent by the
terms of this Loan Agreement and the other Operative Documents, together with
such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Loan Agreement, the Agent shall not
have any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any Lender or any other party to the Operative
Documents, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Loan Agreement or any other
Operative Document or otherwise exist against the Agent.
SECTION VII.2. Delegation of Duties. The Agent may execute any of its
duties under this Loan Agreement and the other Operative Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
SECTION VII.3. Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-
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Loan Agreement
in-fact or Affiliates shall be (a) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this Loan
Agreement or any other Operative Document (except for its or such Person's own
gross negligence or willful misconduct or breach of any of its representations,
warranties or covenants under the Operative Documents) or (b) responsible in any
manner to any of the Lenders or any other party to the Operative Documents for
any recitals, statements, representations or warranties made by the Lessor or
the Lessee or any officer thereof contained in this Loan Agreement or any other
Operative Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Loan Agreement or any other Operative Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this Loan
Agreement or any other Operative Document or for any failure of the Lessor or
the Lessee to perform its obligations hereunder or thereunder. The Agent shall
not be under any obligation to any Lender or any other party to the Operative
Documents to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, this Loan Agreement or any
other Operative Document, or to inspect the properties, books or records of the
Lessor or the Lessee.
SECTION VII.4. Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, facsimile, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Lessor or the Lessee), independent accountants and
other experts selected by the Agent. The Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Loan Agreement or any other Operative Document unless it shall
first receive the advice or concurrence of Lenders holding a majority of the
outstanding Loans or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Loan Agreement and the other Operative Documents in accordance with a request of
Lenders holding a majority of the outstanding Loans, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
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<PAGE> 11
Loan Agreement Lenders and all future holders of the Notes.
SECTION VII.5. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Loan Agreement Default or Loan
Agreement Event of Default hereunder unless the Agent has received notice from a
Lender or the Lessor referring to this Loan Agreement, describing such Loan
Agreement Default or Loan Agreement Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall promptly give notice thereof to the Lenders and the
Lessee. The Agent shall take such action with respect to such Loan Agreement
Default or Loan Agreement Event of Default as shall be directed by Lenders
holding a majority of the outstanding Loans; provided, however, that unless and
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Loan Agreement Default or Loan Agreement Event of Default as it
shall deem advisable in the best interests of the Lenders.
SECTION VII.6. Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Lessor or the Lessee, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Lessor and the Lessee and made its own
decision to make its Loans hereunder and enter into this Loan Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Loan
Agreement and the other Operative Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Lessor and the Lessee.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Lessor or the
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<PAGE> 12
Loan Agreement
Lessee which may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
SECTION VII.7. Indemnification. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Lessee and without
limiting the obligation of the Lessee to do so), ratably according to the
percentage each Lender's Commitment bears to the total Commitments of all of the
Lenders on the date on which indemnification is sought under this Section 7.7
(or, if indemnification is sought after the date upon which the Lenders'
Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with the percentage that each Lender's Commitment bears to
the Commitments of all of the Lenders immediately prior to such date), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever (including without limitation all reasonable fees and disbursements
of any law firm or other external counsel of the Agent, the allocated cost of
internal legal services and all disbursements of internal counsel of the Agent)
which may at any time (including, without limitation, at any time following the
payment of the Notes) be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of, the Commitments, this Loan Agreement,
any of the other Operative Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Agent under or in connection with any of
the foregoing; provided, however, that no Lender shall be liable for the payment
of any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Agent's gross negligence or willful misconduct. The agreements in this
Section 7.7 shall survive the payment of the Notes and all other amounts payable
hereunder.
SECTION VII.8. Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Lessor, the Lessee and their Affiliates as though The Sumitomo Bank, Limited,
San Francisco Branch, were not the Agent hereunder and under the other Operative
Documents and without notice to or consent of the Banks. Each Lender
acknowledges that, pursuant to such activities, The Sumitomo Bank, Limited, San
Francisco Branch, or its Affiliates may receive information regarding the
Lessee, the Lessor or their Affiliates (including information that may be
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<PAGE> 13
Loan Agreement
subject to confidentiality obligations in favor of the Lessee, the Lessor or
their Affiliates) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to any Loans made or renewed by
it and any Note issued to it, The Sumitomo Bank, Limited, San Francisco Branch,
shall have the same rights and powers under this Loan Agreement and the other
Operative Documents as any Lender and may exercise the same as though it were
not the Agent, and, in the event The Sumitomo Bank, Limited, San Francisco
Branch, becomes a Lender, the terms "Lender" and "Lenders" shall include The
Sumitomo Bank, Limited, San Francisco Branch, in its individual capacity.
SECTION VII.9. Successor Agent. The Agent may resign as Agent upon 20
days' notice to the Lenders. If the Agent shall resign as Agent under this Loan
Agreement and the other Operative Documents, then Lenders holding a majority of
the outstanding Loans shall appoint a successor agent for Lenders, which
successor agent shall be a commercial bank organized under the laws of the
United States of America or any State thereof or under the laws of another
country which is doing business in the United States of America and having a
combined capital, surplus and undivided profits of at least $100,000,000 (and if
no Lease Default or Lease Event of Default exists, shall be approved by the
Lessee (which consent shall not be unreasonably withheld)), whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent, and
the term "Agent" shall mean such successor agent effective upon such appointment
and approval, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Loan Agreement or any holders of the Notes.
If no successor Agent has accepted appointment as Agent by the date which is 20
days following a resigning Agent's notice of resignation, the resigning Agent's
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of the Agent hereunder until such time, if any, as
Lenders holding a majority of the outstanding Loans appoint a successor Agent as
provided above. After any retiring Agent's resignation as Agent, all of the
provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Loan Agreement
and the other Operative Documents.
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<PAGE> 14
Loan Agreement
ARTICLE VIII
MISCELLANEOUS
SECTION VIII.1. Amendments and Waivers. Neither this Loan Agreement, any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of Section
14.5 of the Participation Agreement.
SECTION VIII.2. Notices. All notices, requests and demands to or upon
the respective parties hereto shall be given in accordance with Section 14.3
of the Participation Agreement.
SECTION VIII.3. No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
SECTION VIII.4. Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Loan
Agreement and the Notes and the making of the Loans hereunder.
SECTION VIII.5. Successors and Assigns; Assignment by Lessor. This Loan
Agreement shall be binding upon and inure to the benefit of the Lessor, each
Lender, the Agent, each future holder of a Note and their respective successors
and assigns.
SECTION VIII.6. Adjustments. If any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by setoff, pursuant to events or proceedings of the nature
referred to in Section 5.1(e), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
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<PAGE> 15
Loan Agreement
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
SECTION VIII.7. Counterparts. This Loan Agreement may be executed by one
or more of the parties to this Loan Agreement on any number of separate
counterparts (including by telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of the
copies of this Loan Agreement signed by all the parties shall be lodged with the
Lessor and the Agent.
SECTION VIII.8. Severability. Any provision of this Loan Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION VIII.9. Intention. This Loan Agreement and the other Operative
Documents represent the agreement of the Lessor, the Agent and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other
Operative Documents.
SECTION VIII.10. GOVERNING LAW. THIS LOAN AGREEMENT AND THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS LOAN AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA.
SECTION VIII.11. Limitation of Liability. The parties hereto agree that
except as specifically set forth in the Lease or in any other Operative
Document, Lessor shall have no personal liability whatsoever to the Lessee or
its respective successors and assigns for any claim based on or in respect of
this Master Lease or any of the other Operative Documents or arising in any way
from the transactions contemplated hereby or thereby and the recourse shall be
solely had against the Lessor's interest in the Property; provided, however,
that Lessor shall be liable in its
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<PAGE> 16
Loan Agreement
individual capacity (a) for its own willful misconduct or gross negligence (or
negligence in the handling of funds), (b) breach of any of its representations,
warranties or covenants under the Operative Documents, or (c) for any Tax based
on or measured by any fees, commission or compensation received by it for acting
as the Lessor as contemplated by the Operative Documents. It is understood and
agreed that, except as provided in the preceding sentence: (i) Lessor shall have
no personal liability under any of the Operative Documents as a result of acting
pursuant to and consistent with any of the Operative Documents; (ii) all
obligations of Lessor to the Lessee are solely nonrecourse obligations except to
the extent that it has received payment from others; and (iii) all such personal
liability of Lessor is expressly waived and released as a condition of, and as
consideration for, the execution and delivery of the Operative Documents by
Lessor.
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<PAGE> 17
Loan Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
SUMITOMO BANK LEASING AND FINANCE
COMPANY, INC. as Lessor
By__________________________________________
Name:
Title:
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<PAGE> 18
Loan Agreement
THE SUMITOMO BANK, LIMITED, SAN FRANCISCO
BRANCH as Lender and Agent
By__________________________________________
Name:
Title:
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<PAGE> 19
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS; INTERPRETATION
ARTICLE II
AMOUNT AND TERMS OF LENDERS' COMMITMENTS
SECTION 2.1. Loan Commitments .......................................... 2
SECTION 2.2. Notes ..................................................... 2
SECTION 2.3. Prepayments ............................................... 2
SECTION 2.4. Interest Rates and Payment Dates .......................... 3
SECTION 2.5. Repayment of Loans ........................................ 3
SECTION 2.6. Computation of Interest ................................... 3
SECTION 2.7. Pro Rata Treatment and Payments ........................... 4
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1. Conditions to Effectiveness ............................... 5
ARTICLE IV
PAYMENTS AND DISTRIBUTIONS
SECTION 4.1. Payments and Distributions ................................ 5
ARTICLE V
LOAN AGREEMENT EVENTS OF DEFAULT
SECTION 5.1. Loan Agreement Events of Default .......................... 5
SECTION 5.2. Remedies .................................................. 7
ARTICLE VI
CERTAIN REMEDIAL MATTERS; RELEASE
SECTION 6.1. Certain Remedial Matters .................................. 9
SECTION 6.2. Release of Properties, etc ................................ 9
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VII
THE AGENT
SECTION 7.1. Appointment .............................................. 10
SECTION 7.2. Delegation of Duties ..................................... 10
SECTION 7.3. Exculpatory Provisions ................................... 10
SECTION 7.4. Reliance by Agent ........................................ 11
SECTION 7.5. Notice of Default ........................................ 11
SECTION 7.6. Non-Reliance on Agent and Other Lenders .................. 12
SECTION 7.7. Indemnification .......................................... 12
SECTION 7.8. Agent in Its Individual Capacity ......................... 13
SECTION 7.9. Successor Agent .......................................... 14
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Amendments and Waivers ................................... 14
SECTION 8.2. Notices .................................................. 14
SECTION 8.3. No Waiver; Cumulative Remedies ........................... 14
SECTION 8.4. Survival of Representations and Warranties ............... 15
SECTION 8.5. Successors and Assigns; Assignment by Lessor ............. 15
SECTION 8.6. Adjustments .............................................. 15
SECTION 8.7. Counterparts ............................................. 15
SECTION 8.8. Severability ............................................. 16
SECTION 8.9. Intention ................................................ 16
SECTION 8.10. GOVERNING LAW ........................................... 16
SECTION 8.11. Limitation of Liability ................................. 16
</TABLE>
EXHIBIT
Exhibit A Form of Note
-ii-
<PAGE> 21
EXHIBIT A
TO LOAN AGREEMENT
NOTE
$___________ [Acquisition Date]
FOR VALUE RECEIVED, the undersigned, SUMITOMO BANK LEASING AND FINANCE,
INC., a Delaware corporation (the "Lessor"), promises to pay to the order of
__________ (the "Lender") on the Maturity Date the principal sum of
________________ DOLLARS ($__________) or, if less, the aggregate unpaid
principal amount of all Loans made by the Lender pursuant to that certain Loan
Agreement, dated as of October 18, 1996 (together with all amendments and other
modifications, if any, from time to time thereafter made thereto, the "Loan
Agreement"), among the Lessor and the various financial institutions (including
the Lender) as are, or may from time to time become, parties thereto.
The Lessor also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Loan Agreement.
Payments of both principal and interest are to be made without setoff or
counterclaim in lawful money of the United States of America in same day or
immediately available funds to the account of the Lender specified in Schedule
II to the Participation Agreement (or to such other account as the Lender may
from time to time designate in a written notice to the Lessor).
This Note is one of the Notes referred to in, and evidences indebtedness
incurred under, the Loan Agreement, to which reference is made for a description
of the security for this Note, the limitations on recourse for this Note and for
a statement of the terms and conditions on which the Lessor is permitted and
required to make prepayments and repayments of principal of the indebtedness
evidenced by this Note and on which such indebtedness may be declared to be or
automatically become immediately due and payable.
The Lender is authorized to endorse the schedule attached hereto (and any
continuation thereof) in accordance with the provisions of the Loan Agreement.
Capitalized terms used but not otherwise defined herein have the
respective meanings specified in Appendix A to the Loan
<PAGE> 22
Agreement.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN CALIFORNIA, AND SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE, OF
CALIFORNIA.
SUMITOMO BANK LEASING AND FINANCE,
INC., as Lessor
By_____________________________________
Name:
Title:
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<PAGE> 23
LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
AMOUNT OF
AMOUNT OF PRINCIPAL UNPAID NOTATION
DATE LOANS MADE REPAID PRINCIPAL MADE BY
---- ---------- ------ --------- -------
<S> <C> <C> <C> <C>
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</TABLE>
<PAGE> 1
EXHIBIT 10.22
EXHIBIT A
- --------------------------------------------------------------------------------
CONSTRUCTION AGENCY AGREEMENT
dated as of March 3, 1997
between
SUMITOMO BANK LEASING AND FINANCE, INC.,
as Lessor
and
SYMANTEC CORPORATION,
as Construction Agent.
--------------------------
Lease Financing of Three Properties
Located in Cupertino, California
and Construction of Certain Improvements
for Symantec Corporation
- --------------------------------------------------------------------------------
<PAGE> 2
CONSTRUCTION AGENCY AGREEMENT
THIS CONSTRUCTION AGENCY AGREEMENT, dated as of March 3, 1997 (this
"Agreement"), between SUMITOMO BANK LEASING AND FINANCE, INC., a Delaware
corporation, as Lessor (the "Lessor"), and SYMANTEC CORPORATION, a Delaware
corporation, as Construction Agent (in its capacity as Construction Agent, the
"Construction Agent").
W I T N E S S E T H:
WHEREAS, the Lessor and the Construction Agent are parties to that certain
Master Lease and Deed of Trust dated as of October 18, 1996 (as amended by
Master Amendment No. 1 (as defined below) and as amended, supplemented or
otherwise modified from time to time, the "Master Lease"), pursuant to which the
Lessee has agreed to lease from Lessor, and the Lessor has agreed to lease to
Lessee, Lessor's interest in certain Properties; and
WHEREAS, pursuant to Master Amendment No. 1 dated as of the date hereof
(the "Master Amendment"), the Lessor, Symantec Corporation (in its capacity as
Lessee, Pledgor, Guarantor and Construction Agent), the Lenders and the Agent
have agreed to amend certain provisions of the Operative Documents for the
purpose of providing financing for the construction of certain Improvements (the
"Subject Improvements") located on the Land subject to Lease Supplement No. 3
(which Land is described on Schedule 1 attached hereto);
WHEREAS, subject to the terms and conditions hereof, (i) the Lessor
desires to appoint the Construction Agent as its sole and exclusive agent for
the construction of the Subject Improvements in accordance with the Plans and
Specifications described on Schedule 2 attached hereto (the "Plans and
Specifications") and pursuant to the Master Lease and this Agreement, and (ii)
the Construction Agent desires, for the benefit of the Lessor, to cause the
Subject Improvements to be constructed in accordance with the Plans and
Specifications and pursuant to the Master Lease and this Agreement, in each case
in accordance with the terms set forth herein and in the Master Lease;
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:
<PAGE> 3
ARTICLE I
DEFINITIONS; INTERPRETATION
I.1. Definitions; Interpretation. Unless the context shall otherwise
require, capitalized terms used and not defined in this Agreement (including the
recitals hereto) shall have the meanings assigned thereto in Appendix A to the
Participation Agreement (as amended by Master Amendment No. 1 and as amended,
supplemented, amended and restated or otherwise modified from time to time,
"Appendix A") for all purposes hereof; and the rules of interpretation set forth
in Appendix A shall apply to this Agreement.
ARTICLE II
APPOINTMENT OF CONSTRUCTION AGENT
II.1. Appointment. Pursuant to and subject to the terms and conditions set
forth herein and in the Lease and the other Operative Documents, the Lessor
hereby irrevocably designates and appoints the Construction Agent as its
exclusive agent for the construction of the Subject Improvements in accordance
with the Plans and Specifications, and the Construction Agent hereby
unconditionally accepts the designation and appointment as Construction Agent.
II.2. Term. This Agreement shall commence on the date hereof and
shall terminate upon the first to occur of:
(a) payment by the Lessee of the Lease Balance and termination
of the Lease in accordance with the terms and conditions of the Lease;
(b) termination of this Agreement pursuant to Article V hereof;
and
(c) the completion of the Construction, including completion of
punch list items referred to in Section 2.5(e) and the full performance of
all other obligations of the Construction Agent hereunder.
II.3. Construction Documents.
(a) Subject to Section 3.1, the Construction Agent shall enter into the
Prime Construction Contract and such other agreements with architects and
contractors as the Construction Agent deems necessary or desirable for the
completion of the Construction pursuant hereto (collectively, the "Construction
Documents"); provided, however, that the Prime Construction
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<PAGE> 4
Contract shall include a retainage provision in an amount equal to at least ten
percent (10%) of the construction costs payable pursuant thereto (or, after
payment to the Prime Contractor of more than fifty percent (50%) of the
construction costs payable to the Prime Contractor thereunder (assuming for
purposes hereof that no retainage had been withheld), an amount equal to at
least five percent (5%) of the construction costs payable pursuant thereto);
provided, further, that no such delegation shall limit or reduce in any way the
Construction Agent's duties and obligations under this Agreement; provided,
further, that contemporaneously with the execution and delivery of this
Agreement, the Construction Agent will execute and deliver to the Lessor the
Construction Documents Assignment in the form of Annex I attached hereto,
pursuant to which the Construction Agent assigns to the Lessor, among other
things, all of the construction Agent's rights under and interest in such
Construction Documents.
II.4. Scope of Authority. (a) Subject to the terms, conditions,
restrictions and limitations set forth in the Operative Documents, the Lessor
hereby expressly authorizes the Construction Agent, or any agent or contractor
of the Construction Agent, and the Construction Agent unconditionally agrees,
for the benefit of the Lessor, to take all action necessary or desirable for the
performance and satisfaction of all of the Construction Agent's obligations
hereunder, including, without limitation:
(i) performing all design and supervisory functions and all
engineering work related to the Construction;
(ii) negotiating and entering into all contracts or arrangements to
procure the equipment necessary to construct the Subject Improvements on
such terms and conditions as are customary and reasonable in light of
local standards and practices;
(iii) obtaining all necessary Material permits, licenses, consents,
approvals and other authorizations, including those required under
Applicable Law (including Environmental Laws), from all Governmental
Authorities in connection with the Construction and granting on behalf of
the Lessor such easements as are necessary or appropriate to effect the
Construction or that otherwise would not have an adverse effect on the
value of the Subject Improvements or the Land on which the Subject
Improvements are located;
(iv) maintaining all books and records with respect to the
Construction; and
(v) performing any other acts necessary in connection
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<PAGE> 5
with the construction and development of the Subject Improvements in
accordance with the Plans and Specifications.
(b) Subject to the terms hereof, the Construction Agent may execute any of
its duties under this Agreement by or through agents, contractors, employees or
attorneys-in-fact.
(c) Subject to the terms and conditions of this Agreement and the other
Operative Documents, the Construction Agent shall have sole management and
control over the construction means, methods, sequences and procedures with
respect to the Construction.
(d) Neither the Construction Agent nor any of its Affiliates or agents
shall enter into any contract which would, directly or indirectly, impose any
material liability or obligation on the Lessor for which the Lessor is not
indemnified by the Construction Agent or the Lessee under this Agreement or any
of the other Operative Documents.
II.5. Covenants of the Construction Agent. The Construction Agent
hereby covenants and agrees that it will:
(a) promptly commence the Construction following the Improvements
Closing Date and prosecute the Construction diligently and without
interruption (subject only to delays caused by Force Majeure Events) in
accordance in all Material respects with the Plans and Specifications, all
Requirements of Law and all Insurance Requirements;
(b) notify the Lessor in writing as soon as practical after the
occurrence of each Force Majeure Event;
(c) take all reasonable and practical steps to minimize the
disruption of the construction process arising from Force Majeure
Events;
(d) cause the Substantial Completion of the Construction to occur on
or prior to the Outside Completion Date, and cause all Liens (including,
without limitation, Liens or claims for materials supplied or labor or
services performed in connection with the construction of the Subject
Improvements), other than Permitted Liens, to be discharged; and
(e) following the Substantial Completion of the Construction, cause
all outstanding punch list items with respect to the Construction to be
promptly and expeditiously completed following Substantial Completion.
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<PAGE> 6
ARTICLE III
THE SUBJECT IMPROVEMENTS
III.1. Construction of the Subject Improvements. The Construction Agent
shall (a) cause the Subject Improvements to be constructed in accordance with
the Plans and Specifications (as such Plans and Specifications may be modified
from time to time in accordance with Section 3.3) and (b) cause the Subject
Improvements to be constructed, equipped, maintained and used in compliance in
all Material respects with all Requirements of Law and Insurance Requirements,
and otherwise in compliance with the requirements of this Agreement, the Lease
and the other Operative Documents.
III.2. Estimated Improvement Costs. The Construction Agent hereby
certifies that the aggregate amount which the Construction Agent in good faith
expects to be expended in order to achieve Substantial Completion of the Subject
Improvements, including all costs of Construction and all Transaction Expenses
related thereto, does not exceed the Construction Commitment Amount.
III.3. Amendments and Modifications to Plans and Specifications and
Construction Documents. The Construction Agent may, subject to the conditions,
restrictions and limitations set forth herein and in the other Operative
Documents, at any time during the term hereof revise, amend or modify the Plans
and Specifications and/or the Construction Documents without the consent of the
Lessor; provided, however, that: (a) the Lessor's prior written consent will be
required (except to the extent that such revision, amendment or modification
constitutes a Required Modification) if (i) such revision, amendment or
modification would result in the Substantial Completion of the Construction
occurring after the Outside Completion Date, or (ii) the aggregate effect of
such revision, amendment or modification, when taken together with any previous
or contemporaneous revisions, amendments or modifications to the Plans and
Specifications and Construction Documents, would be to reduce the Fair Market
Sales Value of the Subject Improvements upon completion of the Construction, or
(iii) such revision, amendment or modification would materially change the
nature of the contemplated Subject Improvements or the utility of such Subject
Improvements for the purposes contemplated by the parties hereto as of the date
hereof; (b) the Construction Agent shall not terminate any Construction Document
or modify any provision of any Construction Document relating to requiring
retainage without the prior written consent of the Lessor; and (c) the
Construction Agent shall regularly furnish copies of all such revisions,
amendments and modifications to the Lessor.
-5-
<PAGE> 7
ARTICLE IV
PAYMENT OF FUNDS
IV.1. Funding of Property Improvements Costs. (a) In connection with and
during the course of the construction of the Subject Improvements, the
Construction Agent may request that the Lessor advance funds for the payment of
Property Improvements Costs, and the Lessor will comply with such request to the
extent provided for under, and subject to the conditions, restrictions and
limitations contained in, the Lease. The Construction Agent and the Lessor
acknowledge and agree that the Lessee's right to request funds and the Lessor's
obligation to advance funds for the payment of Property Improvements Costs is
subject in all respects to the terms and conditions of the Lease and each of the
other Operative Documents.
(b) The proceeds of any funds made available to the Lessor to pay Property
Improvements Costs shall be made available to the Construction Agent or its
designee(s) in accordance with the Funding Request relating thereto and the
terms of the Lease. The Construction Agent will use such proceeds only to pay
the Property Improvements Costs set forth in the Funding Request relating to
such funds.
(c) If, for any reason, the Construction Agent shall at any time incur
costs to complete the Construction that shall be in excess of the amounts then
payable under this Article IV, then all such excess costs shall be borne by the
Construction Agent from its own funds.
(d) The Construction Agent shall at all times cause to be and remain
vested in the Lessor's control any and all construction materials and equipment
not yet incorporated into the Properties for which funds shall have been
requested pursuant to this Article IV, and cause such title to be and remain
free of all Liens other than Permitted Liens.
ARTICLE V
CONSTRUCTION AGENCY EVENTS OF DEFAULT
V.1. Construction Agency Events of Default. If any one or more of the
following events (each a "Construction Agency Event of Default") shall occur:
(a) the Construction Agent fails to apply any funds paid by the
Lessor to the Construction Agent or its designee(s) to the payment of the
appropriate Property
-6-
<PAGE> 8
Improvements Costs; or
(b) the Construction Agent shall fail to observe or perform any
term, covenant or condition of this Agreement (except those specified in
clause (a) above), and such failure shall remain uncured for a period of
thirty (30) days; provided, however, that no Construction Agency Event of
Default shall be deemed to occur if such failure or breach cannot
reasonably be cured within such period, so long as the Construction Agent
shall have promptly commenced the cure thereof and continues to act with
diligence to cure such failure or breach and in fact cures such failure or
breach within one hundred eighty (180) days,
then, in any such event, the Lessor may, in addition to the other rights and
remedies provided for in this Article V and under the Lease, immediately
terminate this Agreement by giving the Construction Agent written notice of such
termination, and upon the giving of such notice, all rights of the Construction
Agent and all obligations of the Lessor under this Agreement shall cease. Upon
any such termination, the Construction Agent shall immediately pay to the
Lessor, as and for liquidated damages, an amount equal to the Lease Balance as
of the date of such payment (whereupon the Lessor shall convey title to the
Properties to the Lessee or its designee in accordance with Article XXII of the
Lease). Alternatively, the Lessor, with or without terminating this Agreement
and without waiving or releasing the Construction Agent from any obligation or
Construction Agency Event of Default, may (but shall be under no obligation to)
remedy any Construction Agency Event of Default for the account of and at the
sole cost and expense of the Construction Agent. The Construction Agent shall
pay upon demand all costs, expenses, losses, expenditures and damages
(including, without limitation, attorneys' fees) incurred by or on behalf of
Lessor in connection with any Construction Agency Event of Default, together
with interest thereon at the Overdue Rate from the date on which such amounts
are paid by the Lessor.
V.2. Survival. The termination of this Agreement pursuant to Section 5.1
shall in no event relieve the Construction Agent of its liability and
obligations hereunder which accrued prior to such termination, all of which
shall survive any such termination.
V.3. Remedies Cumulative; Waivers. (a) If a Construction Agency Event of
Default shall have occurred and be continuing, the Lessor shall have, in
addition to the rights and remedies provided for in Section 5.1, all rights and
remedies available under the Operative Documents or available at law, equity or
otherwise.
-7-
<PAGE> 9
(b) No failure to exercise and no delay in exercising, on the part of the
Lessor, any right, remedy, power or privilege under this Agreement or under the
other Operative Documents shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges provided in this Agreement, including with particularity Section 5.1,
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
ARTICLE VI
NO CONSTRUCTION AGENCY FEE
VI.1. Lease as Fulfillment of Lessor's Obligations. All obligations,
duties and requirements imposed upon or allocated to the Construction Agent
shall be performed by the Construction Agent at the Construction's Agent's sole
cost and expense, and the Construction Agent will not be entitled to, and the
Lessor shall have no obligation to pay, any agency fee or other fee or
compensation, and the Construction Agent shall not be entitled to, and the
Lessor shall have no obligation to make or pay, any reimbursement therefor, it
being understood that this Agreement is being entered into as consideration for
and as an inducement to the Lessor and the Construction Agent entering into the
Lease and the other Operative Documents.
ARTICLE VII
MISCELLANEOUS
VII.1. Notices. All notices, consents, directions, approvals,
instructions, requests, demands and other communications required or permitted
by the terms hereof to be given to any Person shall be given in writing in the
manner provided in, shall be sent to the respective addresses set forth in, and
the effectiveness thereof shall be governed by the provisions of, Section 14.3
of the Participation Agreement.
VII.2. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Lessor, the Construction Agent and their
respective successors and assigns.
VII.3. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY
THE LAW OF THE STATE OF CALIFORNIA (EXCLUDING ANY CONFLICT-OF-LAW OR
CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF THE INTERNAL LAWS OF
ANY OTHER JURISDICTION) AS TO
-8-
<PAGE> 10
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
VII.4. Amendments, etc. The Lessor and the Construction Agent may from
time to time, enter into written amendments, supplements or modifications
hereto.
VII.5. Counterparts. This Agreement may be executed in any number of
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
VII.6. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
VII.7. Headings and Table of Contents. The headings and table of contents
contained in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
-9-
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
SYMANTEC CORPORATION
as Construction Agent
By:_______________________________
Name:
Title:
-1-
<PAGE> 12
SUMITOMO BANK LEASING AND
FINANCE, INC.,
as Lessor
By:
--------------------------------
Name:
Title:
CONSTRUCTION AGENCY AGREEMENT
S-2
<PAGE> 13
Schedule 1
Description of Land
Real Property in the City of Cupertino, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
Lot 5, as shown on that certain Map entitled Tract No. 7953 Cupertino City
Center Phase III, which Map was filed for record in the office of the Recorder
of the County of Santa Clara, State of California on February 27, 1987, in Book
571 of Maps, pages 36 and 37.
PARCEL TWO:
Easements as described in the Section entitled "Easements and Rights Reserved
for Owners" of the Article entitled "Easements and Rights of Entry" of the
Declaration of Covenants, Conditions, and Restrictions and Grant of Easement for
Cupertino City Center recorded October 9, 1985, in Book J482, page 1907, as
amended by that certain First Amendment to Declaration of Covenants, Conditions,
and Restrictions and Grant of Easements recorded September 2, 1987, in Book
K281, page 2071, each in the Official Records of Santa Clara County, California.
PARCEL THREE:
Easements for parking, landscaping, support, settlement and encroachment as
granted to Cupertino City Center Buildings, a California Limited Partnership, in
the Grant of Easement (Cupertino City Center 5) recorded February 5, 1997 under
Series No. 13602286.
<PAGE> 14
Schedule 2
Plans and Specifications
<PAGE> 15
ANNEX I
TO CONSTRUCTION AGENCY AGREEMENT
CONSTRUCTION DOCUMENTS ASSIGNMENT
FOR VALUE RECEIVED, and to secure the performance by SYMANTEC CORPORATION,
a Delaware corporation (hereinafter referred to as either the "Lessee" or
"Assignor"), of all of its obligations under that certain Construction Agency
Agreement dated as of March 3, 1997 (as the same may be amended, modified or
restated from time to time, and together with all supplements thereto, the
"Construction Agency Agreement"), between the Lessee and Sumitomo Bank Leasing
and Finance, Inc. (the "Lessor" or "Secured Party"), the Lessee does hereby
quitclaim, sell, assign, transfer and set over unto the Secured Party and its
successors and assigns, all of the Lessee's right, title and interest in and to
the following (referred to collectively herein as the "Collateral"):
I all construction contracts relating to the Construction of the
Subject Improvements (including, without limitation, the Prime
Construction Contract), as each such agreement may hereafter be
supplemented, modified or amended from time to time (collectively, the
"Construction Contracts");
(ii) all architectural services agreements pertaining to the
Construction, as each such agreement may hereafter be supplemented,
modified or amended from time to time (collectively, the "Architect's
Agreements");
(iii) all plans, specifications and drawings of any and every kind
heretofore or hereafter prepared for use in connection with the
Construction of the Properties (including, without limitation, the Plans
and Specifications), and any supplements, amendments or modifications
thereto (collectively, the "Plans"); and
(iv) all building and other permits, licenses and governmental
approvals which are necessary or useful to the commencement and completion
of the Construction, or otherwise relate to the Construction, heretofore
or hereafter obtained or applied for by or on behalf of the Assignor or
any architects, engineers or contractors working on any aspect of the
Construction, and any deposits made in connection therewith (collectively,
the "Permits");
provided, however, that the Secured Party shall have no obligation or liability
of any kind under or with respect to the Construction Contracts, the Architect's
Agreements, the Permits
<PAGE> 16
or the Plans, either before or after the Secured Party's
exercise of any rights hereby granted to it, and the Assignor agrees to save and
hold the Secured Party harmless of and from, and to indemnify the Secured Party
against, any and all such obligations and liabilities, contingent or otherwise,
including without limitation attorneys' fees and expenses incurred in connection
therewith.
This Construction Documents Assignment shall inure to the benefit of the
Secured Party and its successors and assigns, and shall be binding upon the
Assignor and its successors and assigns, and shall continue in full force and
effect until all obligations, liabilities and indebtedness of any kind now or
hereafter due the Secured Party from the Assignor under or with respect to the
Lease or any of the other Operative Documents, or which are otherwise secured
hereby, whether now existing or hereafter arising or incurred (collectively, the
"Liabilities"), have been fully paid, performed and satisfied, and all
Commitments have terminated, at which time this Construction Documents
Assignment will terminate. The Secured Party will not exercise any of its rights
hereunder until there shall have occurred and be continuing a Lease Event of
Default.
For purposes of completing the Construction after any Lease Event of
Default shall have occurred and be continuing, the Secured Party may, at its
option, further assign its right, title and interest in the Collateral without
the consent of the Assignor, or any contractor or architect.
This Construction Documents Assignment is a present, perfected and
absolute assignment; provided, however, that the Secured Party shall not have
the right to undertake completion of the Construction or directly to enforce the
provisions of any Construction Contract or any Architect's Agreement until a
Lease Event of Default shall have occurred and be continuing. During the
continuance of any such Event of Default, the Secured Party may, without
affecting any other right or remedy available to it, exercise its rights under
this Construction Documents Assignment as provided herein in any manner
permitted by law. If any notice to the Assignor is required by law, such notice
shall be deemed commercially reasonable if given at least ten (10) days prior to
the date of intended action.
This Construction Documents Assignment may be effectively waived,
modified, amended or terminated only by a written instrument executed by the
Secured Party and the Lessee. Any waiver by the Secured Party shall be effective
only with respect to the specific instance described therein. Delay or course of
conduct shall not constitute a waiver of any right or remedy of the Secured
Party.
Unless the context shall otherwise require, capitalized
<PAGE> 17
terms used and not defined in this Construction Documents Assignment shall have
the meanings assigned thereto in Appendix A (as defined in the Construction
Agency Agreement) for all purposes hereof; and the rules of interpretation set
forth in Appendix A shall apply to this Construction Documents Assignment.
THIS CONSTRUCTION DOCUMENTS ASSIGNMENT SHALL IN ALL RESPECTS BE GOVERNED
BY THE LAW OF THE STATE OF CALIFORNIA (EXCLUDING ANY CONFLICT-OF-LAW OR
CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF THE INTERNAL LAWS OF
ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.
<PAGE> 18
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Construction Documents Assignment as of this third day of March, 1997 pursuant
to proper authority duly granted.
SYMANTEC CORPORATION,
as Construction Agent
By:
--------------------------------
Name:
Title:
<PAGE> 19
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION Page
<S> <C>
ARTICLE I
DEFINITIONS; INTERPRETATION
1.1. Definitions; Interpretation....................................... 2
ARTICLE II
APPOINTMENT OF CONSTRUCTION AGENT
2.1. Appointment....................................................... 2
2.2. Term.............................................................. 2
2.3. Construction Documents............................................ 2
2.4. Scope of Authority................................................ 3
2.5. Covenants of the Construction Agent............................... 4
ARTICLE III
THE SUBJECT IMPROVEMENTS
3.1. Construction of the Subject Improvements........................... 5
3.2. Estimated Improvement Costs........................................ 5
3.3. Amendments and Modifications to Plans and Specifications and
Construction Documents......................................... 5
ARTICLE IV
PAYMENT OF FUNDS
4.1. Funding of Property Improvements Costs............................ 6
ARTICLE V
CONSTRUCTION AGENCY EVENTS OF DEFAULT
5.1. Construction Agency Events of Default............................. 6
5.2. Survival.......................................................... 7
5.3. Remedies Cumulative; Waivers...................................... 7
ARTICLE VI
NO CONSTRUCTION AGENCY FEE
6.1. Lease as Fulfillment of Lessor's Obligations...................... 8
</TABLE>
<PAGE> 20
ARTICLE VII
MISCELLANEOUS
<TABLE>
<S> <C>
7.1. Notices........................................................... 8
7.2. Successors and Assigns............................................ 8
7.3. GOVERNING LAW..................................................... 8
7.4. Amendments, etc................................................... 9
7.5. Counterparts...................................................... 9
7.6. Severability...................................................... 9
7.7. Headings and Table of Contents.................................... 9
</TABLE>
Schedules and Annex
Schedule 1 Description of Land
Schedule 2 Plans and Specifications for Subject Improvements
Annex I Form of Construction Documents Assignment
<PAGE> 21
[EXECUTION COPY]
CONSTRUCTION DOCUMENTS ASSIGNMENT
FOR VALUE RECEIVED, and to secure the performance by SYMANTEC CORPORATION,
a Delaware corporation (hereinafter referred to as either the "Lessee" or
"Assignor"), of all of its obligations under that certain Construction Agency
Agreement dated as of February __, 1997 (as the same may be amended, modified or
restated from time to time, and together with all supplements thereto, the
"Construction Agency Agreement"), between the Lessee and Sumitomo Bank Leasing
and Finance, Inc. (the "Lessor" or "Secured Party"), the Lessee does hereby
quitclaim, sell, assign, transfer and set over unto the Secured Party and its
successors and assigns, all of the Lessee's right, title and interest in and to
the following (referred to collectively herein as the "Collateral"):
I. all construction contracts relating to the Construction of
the Subject Improvements (including, without limitation, the Prime
Construction Contract), as each such agreement may hereafter be
supplemented, modified or amended from time to time (collectively, the
"Construction Contracts");
(ii) all architectural services agreements pertaining to the
Construction, as each such agreement may hereafter be supplemented,
modified or amended from time to time (collectively, the "Architect's
Agreements");
(iii) all plans, specifications and drawings of any and every kind
heretofore or hereafter prepared for use in connection with the
Construction of the Properties (including, without limitation, the Plans
and Specifications), and any supplements, amendments or modifications
thereto (collectively, the "Plans"); and
(iv) all building and other permits, licenses and governmental
approvals which are necessary or useful to the commencement and completion
of the Construction, or otherwise relate to the Construction, heretofore
or hereafter obtained or applied for by or on behalf of the Assignor or
any architects, engineers or contractors working on any aspect of the
Construction, and any deposits made in connection therewith (collectively,
the "Permits");
provided, however, that the Secured Party shall have no obligation or liability
of any kind under or with respect to the Construction Contracts, the Architect's
Agreements, the Permits or the Plans, either before or after the Secured Party's
exercise of any rights hereby granted to it, and the Assignor agrees to
<PAGE> 22
save and hold the Secured Party harmless of and from, and to indemnify the
Secured Party against, any and all such obligations and liabilities, contingent
or otherwise, including without limitation attorneys' fees and expenses incurred
in connection therewith.
This Construction Documents Assignment shall inure to the benefit of the
Secured Party and its successors and assigns, and shall be binding upon the
Assignor and its successors and assigns, and shall continue in full force and
effect until all obligations, liabilities and indebtedness of any kind now or
hereafter due the Secured Party from the Assignor under or with respect to the
Lease or any of the other Operative Documents, or which are otherwise secured
hereby, whether now existing or hereafter arising or incurred (collectively, the
"Liabilities"), have been fully paid, performed and satisfied, and all
Commitments have terminated, at which time this Construction Documents
Assignment will terminate. The Secured Party will not exercise any of its rights
hereunder until there shall have occurred and be continuing a Lease Event of
Default.
For purposes of completing the Construction after any Lease Event of
Default shall have occurred and be continuing, the Secured Party may, at its
option, further assign its right, title and interest in the Collateral without
the consent of the Assignor, or any contractor or architect.
This Construction Documents Assignment is a present, perfected and
absolute assignment; provided, however, that the Secured Party shall not have
the right to undertake completion of the Construction or directly to enforce the
provisions of any Construction Contract or any Architect's Agreement until a
Lease Event of Default shall have occurred and be continuing. During the
continuance of any such Event of Default, the Secured Party may, without
affecting any other right or remedy available to it, exercise its rights under
this Construction Documents Assignment as provided herein in any manner
permitted by law. If any notice to the Assignor is required by law, such notice
shall be deemed commercially reasonable if given at least ten (10) days prior to
the date of intended action.
This Construction Documents Assignment may be effectively waived,
modified, amended or terminated only by a written instrument executed by the
Secured Party and the Lessee. Any waiver by the Secured Party shall be effective
only with respect to the specific instance described therein. Delay or course of
conduct shall not constitute a waiver of any right or remedy of the Secured
Party.
Unless the context shall otherwise require, capitalized terms used and not
defined in this Construction Documents Assignment shall have the meanings
assigned thereto in Appendix A
-2-
<PAGE> 23
(as defined in the Construction Agency Agreement) for all purposes hereof; and
the rules of interpretation set forth in Appendix A shall apply to this
Construction Documents Assignment.
THIS CONSTRUCTION DOCUMENTS ASSIGNMENT SHALL IN ALL RESPECTS BE GOVERNED
BY THE LAW OF THE STATE OF CALIFORNIA (EXCLUDING ANY CONFLICT-OF-LAW OR
CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF THE INTERNAL LAWS OF
ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.
-3-
<PAGE> 24
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Construction Documents Assignment as of this _____ day of _________________,
1997 pursuant to proper authority duly granted.
SYMANTEC CORPORATION,
as Construction Agent
By:
--------------------------------
Name:
Title:
-4-
<PAGE> 1
EXHIBIT 10.23
AGREEMENT
made as of the _________Fifth_________________ day of____May____ in the year of
Nineteen Hundred and Ninety-Seven
BETWEEN the Owner: SYMANTEC CORPORATION
(Name and address) 10201 Torre Avenue
Cupertino, CA 95014
and the Contractor: WEBCOR BUILDERS
(Name and address) 2755 Campus Drive
San Mateo, CA 94403-2514
the Project is: SYMANTEC - CC5 OFFICE BUILDING/PARKING STRUCTURE
(Name and address) 10200 S. DeAnza Boulevard
Cupertino, CA 95014
the Architect is: HELLMUTH, OBATA & KASSABAUM, INC.
(Name and address) 71 Stevenson Street, Suite 2200
San Francisco, CA 94105
The Owner and Contractor agree as set forth below.
ARTICLE 1
THE CONTRACT DOCUMENTS
1.1 The Contract Documents consist of this Agreement, Conditions of the Contract
(General, Supplementary and other Conditions), Drawings, Specifications, Addenda
issued prior to execution of this Agreement, other documents listed in this
Agreement and Modifications issued after execution of this Agreement; these form
the Contract, and are as fully a part of the Contract as if attached to this
Agreement or repeated herein. The Contract represents the entire and integrated
agreement between the parties hereto and supersedes prior negotiations,
representations or agreements, either written or oral. An enumeration of the
Contract Documents, other than Modifications, appears in Article 16. If anything
in the other Contract Documents is inconsistent with this Agreement, this
Agreement shall govern except that the General Conditions shall govern if they
are inconsistent with this Agreement.
<PAGE> 2
ARTICLE 2
THE WORK OF THIS CONTRACT
2.1 The Contractor shall execute the entire Work described in the Contract
Documents, except to the extent specifically indicated in the Contract Documents
to be the responsibility of others, or as follows:
Construction of a four story, 143,000 square foot office building ("Office
Building") with a four level, 291,000 square foot, 777 stall subterranean
parking structure ("Parking Structure") and related site work ("Site Work"). The
scope of the Work shall include all shell work for the Office Building and
related Site Work ("Shell Improvements"), the construction of the Parking
Structure and related Site Work ("Parking Improvements") and, at the option of
and in the sole discretion of Owner, some or all of the tenant improvements for
the Office Building ("Tenant Improvements"). If Owner elects to have the
Contractor construct the Tenant Improvements, such election shall be confirmed
in a Change Order signed by the Owner and Contractor containing the terms upon
which such improvements will be constructed by Contractor (including an increase
in the Guaranteed Maximum Price).
ARTICLE 3
RELATIONSHIP OF THE PARTIES
3.1 The Contractor accepts the relationship of trust and confidence established
by this Agreement and covenants with the Owner to cooperate with the Owner,
Architect and Development Manager and utilize the Contractor's best skill,
efforts and judgment in furthering the interests of the Owner; to furnish
efficient business administration and supervision; to make best efforts to
furnish at all times an adequate supply of workers and materials; and to perform
the Work in the best way and most expeditious and economical manner consistent
with the interests of the Owner. The Owner agrees to exercise best efforts to
enable the Contractor to perform the Work in the best way and most expeditious
manner by furnishing and approving in a timely way information required by the
Contractor and making payments to the Contractor in accordance with requirements
of the Contract Documents.
3.2 Nothing contained in the Contract Documents shall create a contractual
relationship between Owner and any third party. It is understood and agreed,
however, that Owner shall be an intended third party beneficiary of all
contracts between Contractor and third parties for labor or materials related to
the Project. The Contractor shall include a provision in each subcontract, and
shall require each subcontractor to include a similar provision in any
sub-subcontracts, providing that Owner is a third party beneficiary of such
subcontract or sub-subcontract.
ARTICLE 4
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1 The date of commencement is the date from which the Contract Time of
Subparagraph 4.2 is measured; it shall be the date of this Agreement, as first
written above, unless a different date is stated below or provision is made for
the date to be fixed in a notice to proceed issued by the Owner.
2
<PAGE> 3
(Insert the date of commencement, if it differs from the date of this Agreement
or, if applicable, state that the date will be fixed in a notice to proceed.)
The date of commencement shall be March 17, 1997 ("Commencement Date").
Unless the date of commencement is established by a notice to proceed issued by
the Owner, the Contractor shall notify the Owner in writing not less than five
days before commencing the Work to permit the timely filing of mortgages,
mechanic's liens and other security interests.
4.2 The Contractor shall achieve Substantial Completion (i) of the entire Work
excluding Tenant Improvements not later than July 10, 1998, and (ii) of the
entire Work, including Tenant Improvements, if applicable, not later than August
14, 1998; provided, however, that Substantial Completion with respect to item
(ii) shall be extended to the extent the programming, design and permitting for
the tenant improvements is not concluded, through no fault of Contractor, in
time to commence construction of the of the tenant improvements on or before
March 26, 1998.
(Insert the calendar date or number of calendar days after the date of commence.
Also insert any requirements for earlier Substantial Completion of certain
portions of the Work, if not stated elsewhere in the Contract Documents.)
, subject to adjustments of this Contract Time as provided in the Contract
Documents.
(Insert provisions, if any, for liquidated damages relating to failure to
complete on time.)
ARTICLE 5
CONTRACT SUM
5.1 The Owner shall pay the Contractor in current funds for the Contractor's
performance of the Contract the Contract Sum consisting of the Cost of the Work
as defined in Article 7 and the Contractor's Fee determined as follows:
(State a lump sum of Cost of the Work or other provision for determining the
Contractor's Fee, and explain how the Contractor's Fee is to be adjusted for
changes in the Work.)
The Contractor's Fee for the Shell Improvements, Parking Improvements and
Site Work shall be two and one-half percent (2.5%) of the Cost of the Work for
such improvements. The Contractor's Fee for the Tenant Improvements, if
applicable, shall be three percent (3%) of the Cost of the Work for such
improvements.
5.2 GUARANTEED MAXIMUM PRICE (IF APPLICABLE)
5.2.1 The sum of the Cost of the Work and the Contractor's Fee is guaranteed by
the Contractor not to exceed the amount to be established pursuant to this
Paragraph 5.2.1 [Dollars($_________)] subject to additions and deductions by
Change Order as provided in the Contract Documents. Such maximum sum is referred
to in the Contract Documents as the Guaranteed Maximum Price.
Language indicted as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
3
<PAGE> 4
Costs which would cause the Guaranteed Maximum Price to be exceeded shall be
paid by the Contractor without reimbursement by the Owner.
(Insert specific provisions if the Contractor is to participate in any savings.)
Within fifteen (10) days after Contractor receives completed Construction
Drawings and Specifications, Contractor shall submit to Owner a proposed
Guaranteed Maximum Price (excluding Tenant Improvements) based on the
subcontractor bids selected in accordance with Article 10 of this Agreement and
Article 5 of the General Conditions and in such detail as Owner shall reasonably
request but in any event is such detail as the schedule of values contemplated
in Paragraph 12.5.1. The actual Guaranteed Maximum Price shall be determined and
agreed upon by Owner and Contractor within ten (10) days of Owner's receipt of
such proposal, but in no event later than June 30, 1997. In the event Owner and
Contractor cannot agree on the actual Guaranteed Maximum Price by such date,
then either party may terminate this Agreement and such termination shall be
deemed a Termination for Convenience pursuant to Paragraph 14.2 of the General
Conditions. The estimate of the Guaranteed Maximum Price (exclusive of the
Contractor's Fee) based on preliminary construction drawings and specifications
("Preliminary Guaranteed Maximum Price") is as follows:
Office Building $ 9,822,855
-----------------------------------
Parking Structure $ 9,652,125
-----------------------------------
Site Work $ 1,048,331
-----------------------------------
CC5/WHQ Interconnect $ 121,763
-----------------------------------
$20,645,074
-----------------------------------
5.2.2 The Guaranteed Maximum Price is based upon the following alternates, if
any, which are described in the Contract Documents and are hereby accepted by
the Owner:
(State the numbers or other identification of accepted alternates, not only if a
Guaranteed Maximum Price is inserted in Subparagraph 5.2.1. If decisions on
other alternates are to be made by the Owner subsequent to the execution of this
Agreement, attach a schedule of such other alternates showing the amount for
each and the date until which that amount is valid.)
5.2.3 The amounts agreed to for unit prices, if any, are as follows:
(State unit prices only if a Guaranteed maximum Price is inserted in
Subparagraph 5.2.1)
ARTICLE 6
CHANGES IN THE WORK
6.1 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
6.1.1 Adjustments to the Guaranteed Maximum Price on account of changes in the
Work may be determined by any of the methods listed in subparagraph 7.3.3 of the
General Conditions.
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6.1.2 In calculating adjustments to subcontracts (except those awarded with the
Owner's prior consent on the basis of cost plus a fee), the terms "cost" and
"fee" as used in Clause 7.3.3.3 of the General Conditions and the terms "costs"
and "a reasonable allowance for overhead and profit" as used in Subparagraph
7.3.6 of the General Conditions shall have the meanings assigned to them in the
General Conditions and shall not be modified by Articles 5, 7 and 8 of this
Agreement. Adjustments to subcontracts awarded with the Owner's prior consent on
the basis of cost plus a fee shall be calculated in accordance with the terms of
[those subcontracts] this Agreement, unless the Owner has furnished the
Contractor with prior written approval of the form and substance of a
subcontract, in which case such adjustments shall be calculated in accordance
with the terms and conditions of that subcontract.
6.1.3 In calculating adjustments to this Contract, the terms "cost" and "costs"
as used in the above-referenced provisions of the General Conditions shall mean
the Cost of the Work as defined in Article 7 of this Agreement and the terms
"fee" and "a reasonable allowance for overhead and profit" shall mean the
Contractor's Fee as defined in Paragraph 5.1 of this Agreement.
6.1.4 Contractor understands and agrees that neither the Contract Sum nor the
Contract Time may be increased or extended except as provided in the Contract
Documents. Contractor agrees that the Contract Sum and Contract Time cannot be
changed by implication, oral agreement, course of conduct, course of dealing, or
other method not specifically set forth in the Contract Documents. The Owner's
decision in any instance to increase the Contract Sum or extend the Contract
Time when such increase or extension is not required by the Contract Documents
(e.g., pursuant to an oral agreement) shall not serve to waive Owner's right to
require a written Change Order or Change Directive in every other instance and
shall not estop Owner from denying any other increase or extension that is not
required under the express provisions of the Contract Documents.
[6.2 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE]
[6.2.1 Increased costs for the items set forth in Article 7 which result from
changes in the Work shall become part of the Cost of the Work, and the
Contractor's Fee shall be adjusted as provided in Paragraph 5.1.]
[6.3 ALL CONTRACTS]
[6.3.1 If no specific provision is made in Paragraph 5.1 for adjustment of the
Contractor's Fee in the case of changes in the Work, or if the extent of such
changes is such, in the aggregate, that application of the adjustment provisions
of Paragraph 5.1 will cause substantial inequity to the Owner or Contractor, the
Contractor's Fee shall be equitably adjusted on the basis of the Fee established
for the original Work.]
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enclosed in brackets "[" and "]" in the electronic format.
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ARTICLE 7
COSTS TO BE REIMBURSED
7.1 The term Cost of the Work shall mean costs necessarily incurred by the
Contractor in the proper performance of the Work. Such costs shall be at rates
not higher than the standard paid at the place of the Project except with prior
consent of the Owner. The Cost of the Work shall include only the items set
forth in this Article 7 and Paragraph 7.5.2 of the General Conditions.
Notwithstanding anything to the contrary contained in this Article 7, the Cost
of the Work shall not include items set forth in Paragraph 7.5.1 of the General
Conditions.
7.1.1 LABOR COSTS
7.1.1.1 Wages of construction workers directly employed by the Contractor to
perform the construction of the Work at the site or, with the Owner's agreement,
at off-site workshops.
7.1.1.2 Wages or salaries of the Contractor's supervisory and administrative
personnel when stationed at the site with the Owner's agreement.
(If it is intended that the wages or salaries of certain personnel stationed at
the Contractor's principal or other offices shall be included in the Cost of the
Work, identify in Article 14 the personnel to the included and whether for all
or only part of their time.)
7.1.1.3 Wages and salaries of the Contractor's supervisory or administrative
personnel engaged, at factories, workshops or on the road, in expediting the
production or transportation of materials or equipment required for the Work,
but only for that portion of their time required for the Work.
7.1.1.4 Costs paid or incurred by the Contractor for taxes, insurance,
contributions, assessments and benefits required by law or collective bargaining
agreements and, for personnel not covered by such agreements, customary benefits
such as sick leave, medical and health benefits, holidays, vacations and
pensions (but not merit bonuses), provided such costs are based on wages and
salaries included in the Cost of the Work under Clauses 7.1.1.1 through 7.1.1.3.
7.1.2 SUBCONTRACT COSTS
Payments made by the Contractor to Subcontractors in accordance with the
requirements of the subcontracts properly entered into under the terms of the
Contract Documents.
7.1.3 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
7.1.3.1 Costs, including transportation, of materials and equipment incorporated
or to be incorporated in the completed construction.
7.1.3.2 Costs of materials described in the preceding Clause 7.1.3.1 in excess
of those actually installed but required to provide reasonable allowance for
waste and for spoilage. Unused excess materials, if any, shall be [handed]
properly stored at the Project site, or in accordance with the Owner's
instructions, turned over to the Owner at the completion of the Work or, at the
Owner's
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option, shall be sold by the Contractor; amounts realized, if any, from
such sales shall be credited to the Owner as a deduction from the Cost of the
Work.
7.1.4 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND
RELATED ITEMS
7.1.4.1 Costs, including transportation, [installation,] and maintenance,
[dismantling and removal] of materials, supplies, temporary facilities,
[machinery,] equipment, and hand tools not customarily owned by the construction
workers, [which are provided by the Contractor at the site and fully consumed in
the performance of the Work; and cost less salvage value on such items if not
fully consumed, whether sold to others or retained by the Contractor. Cost for
items previously used by the Contractor shall mean fair market value.] and
consumed in the performance of the Work. Any such items used but not consumed,
which are paid for by the Owner, shall become the property of the Owner and
shall be delivered to the Owner upon completion of the Work in accordance with
instructions furnished by the Owner. If the Owner elects, however, the
Contractor shall purchase any such items from the Owner at a purchase price
equal to the original cost charged to the Owner, less the reduction in fair
market value resulting directly from use of any such item in connection with the
Work or such other price which is mutually acceptable to the Owner and the
Contractor. Upon demand by the Owner, the Contractor shall furnish the Owner
with any information and documentation necessary to verify the period of time
for which such items were used in connection with the Work.
7.1.4.2 [Rental charges for temporary facilities, machinery, equipment, and hand
tools not customarily owned by the construction workers, which are provided by
the Contractor at the site, whether rented from the Contractor or others, and
costs of transportation, installation, minor repairs and replacements,
dismantling and removal thereof. Rates and quantities of equipment rented shall
be subject to the Owner's prior approval.] Rental charges of all necessary
machinery and equipment, exclusive of hand tools, used at the site of the Work,
whether rented from the Contractor, including installation, minor repairs and
replacements, dismantling, removal, transportation and delivery costs thereof.
Such rental charges shall be consistent with those generally prevailing in the
location of the Project. The Contractor shall obtain bids for all machinery and
equipment to be rented from no less than two (2) responsible suppliers other
than the Contractor itself or an affiliate. The Owner shall, with the advice of
the Contractor and the Development Manager, determine which bid is to be
accepted and, if the Contractor is offering to rent its equipment or machinery,
determine whether to accept one of the bids or whether to accept Contractor's
offer to rent such equipment or machinery. In no event shall the Contractor be
entitled to reimbursement for any cumulative total of rental charges in
connection with any single piece of machinery or equipment in excess of the
difference between (x) the fair market value of the piece of machinery or
equipment on the date it is first rented in connection with the Work, and (y)
the fair market value of the piece of machinery or equipment on the last day it
is rented in connection with the Work. The Contractor shall pay any excess
rental charges.
7.1.4.3 Costs of removal of debris from the site.
7.1.4.4 Costs of telegrams and long-distance telephone calls, postage and parcel
delivery charges, telephone service at the site and reasonable petty cash
expenses of the site office.
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enclosed in brackets "[" and "]" in the electronic format.
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7.1.4.5 That portion of the reasonable travel and subsistence expenses of the
Contractor's personnel incurred while traveling in discharge of duties connected
with the Work. Expenses shall be substantiated by documentation in form and
substance satisfactory to Owner.
7.1.5 MISCELLANEOUS COSTS
7.1.5.1 That portion directly attributable to this Contract of premiums for
insurance and bonds required by the Contract; provided, however, that such bond
costs (other than those paid to Subcontractors or Sub-subcontractors) shall not
be included in the Cost of the Work for purposes of calculating the Contractor's
Fee.
7.1.5.2 Sales, use or similar taxes imposed by a governmental authority which
are related to the Work and for which the Contractor is liable.
7.1.5.3 Fees and assessments for the building permit and for other permits,
licenses and inspections for which the Contractor is required by the Contract
Documents to pay.
7.1.5.4 Fees of testing laboratories for tests required by the Contract
Documents, except those related to defective or nonconforming Work for which
reimbursement is excluded by Subparagraph 13.5.3 of the General Conditions or
other provisions of the Contract Documents and which do not fall within the
scope of Subparagraphs 7.2.2 through 7.2.4 below.
7.1.5.5 Royalties and license fees paid for the use of a particular design,
process or product required by the Contract Documents; the cost of defending
suits or claims for infringement of patent rights arising from such requirement
by the Contract Documents; payments made in accordance with legal judgments
against the Contractor resulting from such suits or claims and payments of
settlements made with the Owner's consent; provided, however, that such costs of
legal defenses, judgment and settlements shall not be
included in the calculation of the Contractor's Fee or of a Guaranteed Maximum
Price, if any, and provided that such royalties, fees and costs are not excluded
by the last sentence of subparagraph 3.17.1 of the General Conditions or other
provisions of the Contract Documents.
7.1.5.6 Deposits lost for causes other than the Contractor's fault or
negligence.
7.1.5.7 Costs incurred by Contractor prior to the date of commencement in good
faith with written approval of Owner.
7.1.6 OTHER COSTS
7.1.6.1 Other costs incurred in the performance of the Work if and to the extent
approved in advance in writing by the Owner.
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7.2 EMERGENCIES: REPAIRS TO DAMAGED, DEFECTIVE OR NONCONFORMING WORK
The Cost of the Work shall also include costs described in Paragraph 7.1 which
are incurred by the Contractor:
7.2.1 In taking action to prevent threatened damage, injury or loss in case of
an emergency affecting the safety of persons and property, as provided in
Paragraph 10.3 of the General Conditions to the extent not (i) caused by the
Contractor, a Subcontractor or anyone for whom either is responsible, or (ii)
capable of being prevented through timely notice of an unsafe condition to the
Owner.
7.2.2 In repairing or correcting Work damaged or improperly executed by
construction workers in the employ of the Contractor, provided such damage or
improper execution did not result from the fault or negligence of the Contractor
or the Contractor's foremen, engineers or superintendents, or other supervisory,
administrative or managerial personnel of the Contractor.
7.2.3 In repairing damaged Work [other than that described in Subparagraph
7.2.2, provided such damage [did not result from the fault or negligence of] was
not caused by the Contractor, [or the Contractor's personnel] a Subcontractor, a
Sub-subcontractor or anyone for whom either is responsible, and only to the
extent that the cost of such repairs is not recoverable by the Contractor from
others and the Contractor is not compensated therefor by insurance or otherwise
provided that any absence of collectible insurance is not due to the
Contractor's breach of the Contract or a contract for insurance.
7.2.4 In correcting defective or nonconforming Work performed or supplied by a
Subcontractor or material supplier and not corrected by them, provided such
defective or nonconforming Work did not result from the fault or neglect of the
Contractor or the Contractor's personnel adequately to supervise and direct the
Work of the Subcontractor or material supplier, and only to the extent that the
cost of correcting the defective or nonconforming Work is not recoverable by the
Contractor from the Subcontractor or material supplier.
7.3 GENERAL CONDITIONS
7.3.1 Costs as defined herein shall be actual costs paid by the Contractor, less
all discounts, rebates and salvages which shall be taken by the Contractor,
subject to Article 9 of the Agreement. All payments made by the Owner pursuant
to this Article 7, whether those payments are actually made before or after the
execution of the Contract, are to be included within the Guaranteed Maximum
Price to be established pursuant to Paragraph 5.2 above; provided, however, that
in no event shall the Owner be required to reimburse the Contractor for any
portion of the Cost of the Work incurred prior to the Commencement Date unless
the Contractor has received the Owner's written consent prior to incurring such
cost.
7.3.2 Notwithstanding the breakdown or categorization of any costs to be
reimbursed in this Article 7 or elsewhere in the Contract Documents, there shall
be no duplication of payment in the
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enclosed in brackets "[" and "]" in the electronic format.
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event of any particular items for which payment is requested can be
characterized as falling into more than one of the types of compensable or
reimbursable categories.
7.3.3 Any costs which comprise the Cost of the Work as described in Article 7 or
in Paragraph 7.5.2, which are also set forth in the Schedule of General
Conditions Costs attached hereto as Exhibit G, are subject to an aggregate limit
of ____________ Dollars ($_________).
ARTICLE 8
COSTS NOT TO BE REIMBURSED
8.1 The Cost of the Work shall not include (i) those items set forth in
Paragraph 7.5.1 of the General Conditions, and (ii) the following:
8.1.1 Salaries and other compensation of the Contractor's personnel stationed at
the Contractor's principal office or offices other than the site office, except
as specifically provided in Clauses 7.1.1.2 and 7.1.1.3 or as may be provided in
Article 14.
8.1.2 Expenses of the Contractor's principal office and offices other than the
site office.
8.1.3 Overhead and general expenses, except as may be expressly included in
Article 7.
8.1.4 The contractor's capital expenses, including interest on the Contractor's
capital employed for the Work.
8.1.5 Rental costs of machinery and equipment, except as specifically provided
in Clause 7.1.4.2.
8.1.6 Except as provided in Subparagraphs 7.2.2 through 7.2.4 and Paragraph 13.5
of this Agreement, costs due to the fault or negligence of, or failure to comply
with the requirements of the Contract Documents by, the Contractor,
Subcontractors, anyone directly or indirectly employed by any of them, or for
whose acts any of them may be liable, including but not limited to costs for the
correction of damaged, defective or nonconforming Work, disposal and replacement
of materials and equipment incorrectly ordered or supplied, and making good
damage to property not forming part of the Work.
8.1.7 Any cost not specifically and expressly described in Article 7 of this
Agreement or in Paragraph 7.5.2 of the General Conditions.
8.1.8 Costs which would cause the Guaranteed Maximum Price, if any, to be
exceeded.
ARTICLE 9
DISCOUNTS, REBATES AND REFUNDS
9.1 Cash discounts obtained on payments made by the contractor shall accrue to
the Owner if (1) before making the payment, the Contractor included them in an
Application for Payment and received payment therefor from the Owner, or (2) the
Owner has deposited funds with the contractor with which to make payments;
otherwise, cash discounts shall accrue to the
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Contractor. Trade discounts, rebates, refunds and amounts received from sales of
surplus materials and equipment shall accrue to the Owner, and the contractor
shall make provisions so that they can be secured. The Contractor shall not
obtain for its own benefit any cash discounts in connection with the Work prior
to providing the Owner with seven (7) days prior written notice of the potential
discount and an opportunity to furnish funds necessary to obtain such discount
on behalf of the Owner.
9.2 Amounts which accrue to the Owner in accordance with the provisions of
Paragraph 9.1 shall be credited to the Owner as a deduction from the Cost of the
Work and a reduction in the Guaranteed Maximum Price.
ARTICLE 10
SUBCONTRACTS AND OTHER AGREEMENTS
10.1 Those portions of the Work that the Contractor does not customarily perform
with the Contractor's own personnel shall be performed under subcontracts or by
other appropriate agreements with the Contractor. The Contractor shall obtain
bids from Subcontractors and from suppliers of materials or equipment fabricated
especially for the Work and shall deliver such bids to the [Architect]
Development Manager. The Owner will then determine, with the advice of the
Contractor and subject to the reasonable objection of the Development Manager or
Architect, which bids will be accepted. The Owner may designate specific persons
or entities from whom the Contractor shall obtain bids; however, if a Guaranteed
Maximum Price has been established, the Owner may not prohibit the Contractor
from obtaining bids from others. The Contractor shall not be required to
contract with anyone to whom the Contractor has reasonable objection.
10.2 If a Guaranteed Maximum Price has been established and a specific bidder
among those whose bids are delivered by the Contractor to the Development
Manager [Architect] (1) is recommended to the Owner by the Contractor; (2) is
qualified to perform that portion of the Work; [and] (3) has submitted a bid
which conforms to the requirements of the Contract Documents without
reservations or exceptions, but the Owner requires that another bid be accepted,
and (4) Owner's objection to the specific bidder recommended to Owner by
Contractor is not reasonable; then the Contractor may require that a Change
Order be issued to adjust the Guaranteed Maximum Price by the lesser of (i) the
difference between the bid of the person or entity recommended to the Owner by
the Contractor and the amount of the subcontract or other agreement actually
signed with the person or entity designated by the Owner, and (ii) the
difference between the bid of the person or entity recommended by the Owner to
the Contractor and the amount attributable to such subcontract or other
agreement in the original schedule of values with respect to the Guaranteed
Maximum Price submitted by the Contractor and accepted by the Owner.
10.3 Subcontracts or other agreements shall conform to the payment provisions of
Paragraphs 12.7 and 12.8, and shall not be awarded on the basis of cost plus a
fee without the prior consent of the Owner.
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ARTICLE 11
ACCOUNTING RECORDS
11.1 The Contractor shall keep full and detailed accounts and exercise such
controls as may be necessary for proper financial management under this
Contract; the accounting and control systems shall be satisfactory to the Owner.
The Owner and the Owner's accountants shall be afforded access to the
Contractor's records, books, correspondence, instructions, drawings, receipts,
subcontracts, purchase orders, vouchers, memoranda and other data relating to
this Contract, and the Contractor shall preserve these for a period of three
years alter final payment, or for such longer period as may be required by law.
11.2 If any inspection by Owner of Contractor's records, books, correspondence,
instructions, drawings, receipts, vouchers, memoranda or any other data relating
to the Contract Documents reveals an overcharge, Contractor shall pay Owner upon
demand an amount equal to the overcharge, plus simple interest from the date of
such overcharge at the annual rate of 10% as reimbursement for said overcharge
and the administrative expenses incurred in determining the overcharge. The
requirements of this Paragraph 11.2 shall not apply to any portion of an
overcharge which is the subject of a good faith dispute between the Owner and
the Contractor.
ARTICLE 12
PROGRESS PAYMENTS
12.1 Based upon Applications for Payment and all supporting documentation
submitted to the [Architect] Development Manager by the Contractor and
Certificates for Payment issued [by the Architect] pursuant to Article 9 of the
General Conditions, the Owner shall make progress payments on account of the
Contract Sum to the Contractor as provided below and elsewhere in the Contract
Documents.
12.2 The period covered by each Application for Payment shall be [one calendar
month ending on the last day of the month, or as follows] as established in
Article 9 of the General Conditions.[:]
12.3 [Provided an Application for Payment is received by the Architect not later
than the ______________ day of a month, the Owner shall make payment to the
Contractor not later than the ______________________ day of the ______________
month. If an Application for Payment is received by the Architect after the
application date fixed above, payment shall be made by the Owner not later than
______________ days after the Architect receives the Application for Payment.]
Applications for Payment shall be submitted and paid in accordance with the
provisions set forth in the General Conditions.
12.4 With each Application for Payment the Contractor shall submit payrolls,
petty cash accounts, receipted invoices or invoices with check vouchers
attached, and any other evidence required by the Owner or [Architect]
Development Manager to demonstrate that cash disbursements already made by the
Contractor on account of the Cost of the Work equal or exceed (1) progress
payments already received by the Contractor; less (2) that portion of those
payments attributable to the Contractor's Fee; plus (3) payrolls for the period
covered by the present Application for Payment; plus (4) retainage provided in
Subparagraph 12.5.4, if any,
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applicable to prior progress payments. In addition to any other items required
in this Paragraph 12.4 or in Paragraph 9.3.1.3 of the General Conditions, each
Application for Payment shall be accompanied by the following, all in form and
substance reasonably satisfactory to the Owner and in compliance with applicable
California statutes:
(1) Duly executed waivers of mechanics' and materialmen's liens from the
Contractor and all such Subcontractors, establishing payment or
satisfaction of the payment requested by the Contractor in the
Application for Payment; and
(2) Such other information, documentation and materials as the Owner or
the Development Manager may require, including without limitation
invoices from Subcontractors or Sub-subcontractors evidencing
amounts requested in such Application for Payment.
12.5 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
12.5.1 Each Application for Payment shall be based upon the most recent schedule
of values submitted by the Contractor in accordance with the Contract Documents.
The schedule of values shall allocate the entire Guaranteed Maximum Price among
the various portions of the Work, except that the Contractor's Fee shall be
shown as a single separate item. The schedule of values shall be prepared in
such form and supported by such data to substantiate its accuracy as the
[Architect] Development Manager may require. This schedule, unless objected to
by the [Architect] Development Manager or the Owner, shall be used as a basis
for reviewing the Contractor's Applications for Payment.
12.5.2 Applications for Payment shall show the percentage completion of each
portion of the Work as of the end of the period covered by the Application for
Payment. The percentage completion shall be the lesser of (1) the percentage of
that portion of the Work which has actually been completed or (2) the percentage
obtained by dividing (a) the expense which has actually been incurred by the
Contractor on account of that portion of the Work for which the Contractor has
made or intends to make actual payment prior to the next Application for Payment
by (b) the share of the Guaranteed Maximum Price allocated to that portion of
the Work in the schedule of values.
12.5.3 Subject to other provisions of the Contract Documents, the amount of each
progress payment shall be computed as follows:
12.5.3.1 Take that portion of the Guaranteed Maximum Price properly allocable to
completed Work as determined by multiplying the percentage completion of each
portion of the Work by the share of the Guaranteed Maximum Price allocated to
that portion of the Work in the schedule of values. Pending final determination
of cost to the Owner of changes in the Work, amounts not in dispute may be
included as provided in subparagraph 7.3.7 of the General Conditions, even
though the Guaranteed Maximum Price has not yet been adjusted by Change order.
12.5.3.2 If approved in advance in writing by the Owner, [Add] add that portion
of the Guaranteed Maximum Price properly allocable to materials and equipment
delivered and suitably
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stored at the site for subsequent incorporation in the Work or, if approved in
advance by the Owner, suitably stored off the site at a location agreed upon in
writing.
12.5.3.3 Add the Contractor's Fee, less retainage of ten percent (10%). The
Contractor's Fee shall be computed upon the Cost of the Work described in the
two preceding Clauses at the rate stated in Paragraph 5.1 or, if the
Contractor's Fee is stated as a fixed sum in that Paragraph, shall be an amount
which bears the same ratio to that fixed-sum Fee as the Cost of the Work in the
two preceding Clauses bears to a reasonable estimate of the probable Cost of the
Work upon its completion.
12.5.3.4 Subtract the aggregate of previous payments made by the Owner.
12.5.3.5 Subtract the shortfall, if any, indicated by the Contractor in the
documentation required by Paragraph 12.4 to substantiate prior Applications for
Payment, or resulting from errors subsequently discovered by the Owner's
accountants in such documentation.
12.5.3.6 Subtract amounts, if any, for which the Architect and Development
Manager has withheld or nullified a Certificate for Payment as provided in
Paragraph 9.5 of the General Conditions and other amounts, not including
retainage described in Paragraph 12.5.3.3, properly held by the Owner under the
Contract Documents at the time of each progress payment.
12.5.4 Additional retainage, if any, shall be as follows: The Owner shall
withhold as retainage ten percent (10%) of all Cost of the Work items and of the
Contractor's Fee included in each Application for Payment; provided, however, at
no time shall retainage in the aggregate exceed five percent (5%) of the Cost of
the Work. Retainage for Cost of the Work attributable to rebar, concrete,
shoring, mass excavation and certain other trades may be subject to a further
limitation on retainage as approved in writing by Owner, Lender and Contractor.
Any retainage under this Paragraph 12.5.4 shall not duplicate any amounts
retained pursuant to Subparagraphs 12.5.3.3, 12.7.1, or 12.7.2. The Owner shall
have the option, but not the obligation, to reduce the retainage requirement of
this Agreement or release any portion of retainage prior to the date specified
in the Contract Documents. Any exercise of this option, however, shall be in
writing and shall not be a waiver of (1) any of the Owner's rights to retainage
in connection with other payments to the Contractor, or (2) any other right or
remedy that the Owner has under the Contract Documents, at law or in equity.
(If it is intended to retain additional amounts from progress payments to the
Contractor beyond (1) the retainage from the Contractor's Fee provided in Clause
12.5.3.3, (2) the retainage from Subcontractors provided in Paragraph 12.7
below, and (3) the retainage, if any, provided by other provisions of the
contract, insert provision for such additional retainage here. Such provision,
if made, should also describe any arrangement for limiting or reducing the
amount retained after the Work reaches a certain state of completion.)
[12.6 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
12.6.1 Applications for Payment shall show the Cost of the Work actually
incurred by the Contractor through the end of the period covered by the
Application for Payment and for which the Contractor has made or intends to make
actual payment prior to the next Application for Payment.]
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[12.6.2 Subject to other provisions of the Contract Documents, the amount of
each progress payment shall be computed as follows:
12.6.2.1 Take the Cost of the Work as described in subparagraph 12.6.1.
12.8.2.2 Add the Contractor's Fee, less retainage of ________________ percent
(________%). The Contractor's Fee shall be computed upon the Cost of the Work
described in the preceding Clause 12.6.2.1 at the rate stated in Paragraph 5.1
or, if the Contractor's Fee is stated as a fixed sum in that Paragraph, an
amount which bears the same ratio to that fixed-sum Fee as the Cost of the Work
in the preceding Clause bears to a reasonable estimate of the probable Cost of
the Work upon its completion.
12.6.2.3 Subtract the aggregate of previous payments made by the Owner.
12.6.2.4 Subtract the shortfall, if any, indicated by the Contractor in the
documentation required by Paragraph 12.4 or to substantiate prior Applications
for Payment or resulting from errors subsequently discovered by the Owner's
accountants in such documentation.
12.6.2.5 Subtract amounts, if any, for which the Architect has withheld or
withdrawn a Certificate for Payment as provided in the Contract Documents.
12.6.3 Additional retainage, if any, shall be as follows:]
12.7 Except with the Owner's prior approval, payments to Subcontractors included
in the Contractor's Applications for Payment shall not exceed an amount for each
Subcontractor calculated as follows:
12.7.1 Take that portion of the Subcontract Sum properly allocable to completed
Work as determined by multiplying the percentage completion of each portion of
the Subcontractor's Work by the share of the total Subcontract Sum allocated to
that portion in the Subcontractor's schedule of values, less retainage of ten
percent (10%). Pending final determination of amounts to be paid to the
Subcontractor for changes in the Work, amounts not in dispute may be included as
provided in Subparagraph 7.3.7 of the General Conditions even though the
Subcontract Sum has not yet been adjusted by Change order.
12.7.2 If approved in writing in advance in writing by Owner, Add add that
portion of the Subcontract Sum properly allocable to materials and equipment
delivered and suitably stored at the site for subsequent incorporation in the
Work or, if approved in advance by the Owner, suitably stored off the site at a
location agreed upon in writing, less retainage of ten percent (10%).
12.7.3 Subtract the aggregate of previous payments made by the Contractor to
the Subcontractor.
12.7.4 Subtract amounts, if any, for which the Architect has withheld or
nullified a Certificate for Payment by the Owner to the Contractor for reasons
which are the fault of the Subcontractor
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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and other amounts, not including retainage described in Paragraph 12.7.1 and
12.7.2, properly held by the Owner under the Contract Documents at the time of
each progress payment.
12.7.5 Add, upon Substantial Completion of the entire Work of the Contractor, a
sum sufficient to increase the total payments to the Subcontractor to one
hundred percent (100%) of the Subcontract Sum, less amounts, if any, for
incomplete Work and unsettled claims; and, if final completion of the entire
Work is thereafter materially delayed through no fault of the Subcontractor, add
any additional amounts payable on account of Work of the Subcontractor in
accordance with Subparagraph 9.10.3 of the General Conditions.
(If it is intended, prior to Substantial Completion of the entire Work of the
Contractor, to reduce or limit the retainage from Subcontractors resulting from
the percentages inserted in Subparagraphs 12.7.1 and 12.7.2 above, and this is
not explained elsewhere in the Contract Documents, insert here provisions for
such reduction or limitation.)
The Subcontract Sum is the total amount stipulated in the subcontract to be paid
by the Contractor to the Subcontractor for the Subcontractor's performance of
the subcontract.
12.8 Except with the Owner's prior approval, the Contractor shall not make
advance payments to suppliers for materials or equipment which have not been
delivered and stored at the site.
12.9 In taking action on the Contractor's Applications for Payment, the
Architect and Development Manager shall be entitled to rely on the accuracy and
completeness of the information furnished by the Contractor and shall not be
deemed to represent that the Architect or Development Manager has made a
detailed examination, audit or arithmetic verification of the documentation
submitted in accordance with Paragraph 12.4 or other supporting data; that the
Architect or Development Manager has made exhaustive or continuous on-site
inspections or that the Architect or Development Manager has made examinations
to ascertain how or for what purposes the Contractor has used amounts previously
paid on account of the Contract. Such examinations, audits and verifications, if
required by the Owner, will be performed by the Owner's accountants acting in
the sole interest of the Owner.
ARTICLE 13
FINAL PAYMENT
13.1 Final payment shall be made by the Owner to the Contractor when (1) the
Contract has been fully performed by the Contractor except for the Contractor's
responsibility to correct defective or nonconforming Work, as provided in
Subparagraph 12.2.2 of the General Conditions, and to satisfy other
requirements, if any, which necessarily survive final payment; (2) a final
Application for Payment and a final accounting for the Cost of the Work and all
required supporting documentation have been submitted by the Contractor and
reviewed by the Owner's accountants; and (3) a final Certificate for Payment has
then been issued by the Development Manager and Architect; such final payment
shall be made by the Owner not more than 30 days after the issuance of the
Architect's final Certificate for Payment., [or as follows:]
13.2 The amount of the final payment shall be calculated as follows:
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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13.2.1 Take the sum of the Cost of the Work substantiated by the Contractor's
final accounting and the Contractor's Fee; but not more than the Guaranteed
Maximum Price, [if any.]
13.2.2 Subtract amounts, if any, for which the Development Manager and Architect
withholds, in whole or in part, a final Certificate for Payment as provided in
Subparagraph 9.5.1 of the General Conditions or other provisions of the Contract
Documents.
13.2.3 Subtract the aggregate of previous payments made by the Owner.
If the aggregate of previous payments made by the Owner exceeds the amount due
the Contractor, the Contractor shall reimburse the difference to the Owner.
13.3 The Owner's accountants will review and report in writing on the
Contractor's final accounting within 30 days after delivery of the final
accounting to the Architect by the Contractor. Based upon such Cost of the Work
as the Owner's accountants report to be substantiated by the Contractor's final
accounting, and provided the other conditions of Paragraph 13.1 have been met,
the Architect will, within seven days after receipt of the written report of the
Owner's accountants, either issue to the Owner a final Certificate for Payment
with a copy to the Contractor, or notify the Contractor and Owner in writing of
the Architect's reasons for withholding a certificate as provided in
subparagraph 9.5.1 of the General Conditions. The time periods stated in this
Paragraph 13.3 supersede those stated in subparagraph 9.4.1 of the General
Conditions.
13.4 If the Owner's accountants report the Cost of the Work as substantiated by
the Contractor's final accounting to be less than claimed by the Contractor, the
Contractor shall be entitled to demand arbitration of the disputed amount
without a further decision of the Architect. Such demand for arbitration shall
be made by the Contractor within 30 days after the Contractor's receipt of a
copy of the Architect's final Certificate for Payment; failure to demand
arbitration within this 30-day period shall result in the substantiated amount
reported by the Owner's accountants becoming binding on the Contractor. Pending
a final resolution by arbitration, the Owner shall pay the Contractor the amount
certified in the Architect's final Certificate for Payment.
13.5 If, subsequent to final payment and at the Owner's request, the Contractor
incurs costs described in Article 7 and not excluded by Article 8 to correct
defective or nonconforming Work, the Owner shall reimburse the Contractor such
costs and the Contractor's Fee applicable thereto on the same basis as if such
costs had been incurred prior to final payment, but not in excess of the
Guaranteed Maximum Price, if any. [If the Contractor has participated in savings
as provided in Paragraph 5.2, the amount of such savings shall be recalculated
and appropriate credit given to the Owner in determining the net amount to be
paid by the Owner to the Contractor.]
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Where reference is made in this Agreement to a provision of the General
Conditions or another Contract Document, the reference refers to that provision
as amended or supplemented by other provisions of the Contract Documents.
14.2 Payments due and unpaid under the Contract shall bear interest from the
date payment is due at the rate stated below, or in the absence thereof, at the
legal rate prevailing from time to time at the place where the Project is
located.
(Insert rate of interest agreed upon, if any.)
(Usury laws and requirements under the Federal Truth in lending Act, similar
state and local consumer credit laws and other regulations at the Owner's and
Contractor's principal places of business, the location of the Project and
elsewhere may affect the validity of this provision. Legal advice should be
obtained with respect to deletions or modifications, and also regarding
requirements such as written disclosures or waivers.)
14.3 Other provisions:
A. (i) Contractor has included zero (0) days of weather related delays in
the schedule. In the event the work is delayed by weather, the completion
date shall be extended by the actual number of days lost.
(ii) The construction schedule is based on all design information, permits
and approvals being available when needed to allow for a proper and continuous
flow of the construction. Subject to the limitations on delay contained in the
General Conditions, including without limitation Paragraphs 7.5 and 8.3 thereof,
any deviation from this will delay the completion date shown in Section 4.2.
B. Contingency Fund - Included in the Guaranteed Maximum Price is a contingency
fund in the amount of $_________ (to be determined). This contingency fund shall
be administered jointly by Owner and Contractor, neither of which shall
unreasonably withhold approval. This fund is not to be used for changes in the
scope or for upgrades in the quality of the Work as reflected in the Contract
Documents. The fund is intended to be used for additional costs necessary to
complete the Project which relate to necessary work about which Contractor had
no knowledge and would not reasonably be expected to have knowledge at the time
Contractor and Owner agreed upon the Guaranteed Maximum Price. In general, the
fund is to be used for coordination of items necessary for a completed building
and inadvertently missed. Examples included items not shown on the Plans and
Specifications that cause a "gap" between any subcontractors' scope of work or a
"gap" between Contractor's and a subcontractor's work, and items that are
improperly coordinated or are impractical in the Plans and Specifications and
must be modified at a cost.
C. Savings - All savings which are generated after the Guaranteed Maximum
Price is established will be returned to the Owner.
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D. Subcontractors - All trades will be bid to a minimum of three qualified
subcontractors approved by the Owner, except the concrete work which shall be
performed by the Contractor. Concrete work is to be performed on a cost plus 10%
markup basis with a savings split of 70% to the Owner and 30% to the Contractor.
Owner or Owner's Representative will have the right to full audit of all
concrete estimates and cost reports upon completion of the work. The HVAC and
electrical work shall be negotiated with Critchfield Mechanical and Schwartz &
Lindheim, providing these subcontractors do not exceed their schematic budgets.
After competitive bidding, all bids will be analyzed by the Contractor and a
recommendation for selection will be presented to the Owner for approval.
E. Design-build - Electrical, HVAC, Plumbing and Fire Protection will be done on
a design-build basis. The engineering for each of these trades will be included
in the subcontractor scopes of work. Owner will engage consulting engineers who
will provide the following services:
i. Performance outline specifications and definition of finish/quality
levels during the schematic design phase.
ii. Reviews of design-build bids for compliance with performance
criteria, including evaluation of proposed designs and alternates.
iii. Review and approval of design drawings provided by design-build
subcontractors prior to permit submittal.
iv. Review of shop drawings and submittals during construction.
ARTICLE 15
TERMINATION OR SUSPENSION
15.1 The Contract may be terminated by the Contractor as provided in Article 14
of the General Conditions; however, the amount to be paid to the Contractor
under Subparagraph 14.1.2 or 14.2.5 (excluding the fee described in Paragraph
14.2.5(c) of the General Conditions, if applicable) of the General Conditions
shall not exceed the amount the Contractor would be entitled to receive under
Paragraph 15.3 below, except that the Contractor's Fee shall be calculated as if
the Work had been fully completed by the Contractor, including a reasonable
estimate of the Cost of the Work for Work not actually completed.
15.2 If a Guaranteed Maximum Price is established in Article 5, the Contract may
be terminated by the Owner for cause as provided in Article 14 of the General
Conditions; however, the amount, if any, to be paid to the Contractor under
Subparagraph 14.2.4 of the General Conditions shall not cause the Guaranteed
Maximum Price to be exceeded, nor shall it exceed the amount the Contractor
would be entitled to receive under Paragraph 15.3 below.
15.3 If no Guaranteed Maximum Price is established in Article 5, the Contract
may be terminated by the Owner for cause as provided in Article 14 of the
General Conditions; however, the Owner shall then pay the Contractor an amount
calculated as follows:
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15.3.1 Take the Cost of the Work incurred by the Contractor to the date of
termination.
15.3.2 Add the Contractor's Fee computed upon the Cost of the Work to the date
of termination at the rate stated in Paragraph 5.1 or, if the Contractor's Fee
is stated as a fixed sum in that Paragraph, an amount which bears the same ratio
to that fixed-sum Fee as the Cost of the Work at the time of termination bears
to a reasonable estimate of the probable Cost of the Work upon its completion.
15.3.3 Subtract the aggregate of previous payments made by the Owner.
The Owner shall also pay the Contractor fair compensation, either by purchase or
rental at the election of the Owner, for any equipment owned by the Contractor
which the Owner elects to retain and which is not otherwise included in the Cost
of the Work under Subparagraph 15.3.1. To the extent that the Owner elects to
take legal assignment of subcontracts and purchase orders (including rental
agreements), the Contractor shall, as a condition of receiving the payments
referred to in this Article 15, execute and deliver all such papers and take all
such steps, including the legal assignment of such subcontracts and other
contractual rights of the Contractor, as the Owner may require for the purpose
of fully vesting in the Owner the rights and benefits of the Contractor under
such subcontracts or purchase orders.
15.4 The Work may be suspended by the Owner as provided in Article 14 of the
General Conditions; in such case, the Guaranteed Maximum Price, if any, shall be
increased as provided in Subparagraph 14.3.2 of the General Conditions except
that the term "cost of performance of the Contract" in that Subparagraph shall
be understood to mean the Cost of the Work and the term "profit" shall be
understood to mean the Contractor's Fee as described in Paragraphs 5.1 [and
6.3] of this Agreement.
ARTICLE 16
ENUMERATION OF CONTRACT DOCUMENTS
16.1 The Contract Documents, except for Modifications issued after execution of
this Agreement, are enumerated as follows:
16.1.1 The Agreement is this executed [Standard Form of Agreement Between Owner
and Contractor, AIA Document A111, 1987 Edition (as modified)] Agreement.
16.1.2 The General Conditions are the General Conditions of the Contract for
Construction[, AIA Document A201, 1987 Edition (as modified)] attached hereto as
Exhibit A.
16.1.3 The Supplementary and other Conditions of the Contract are listed on
Exhibit B attached hereto. [those contained in the Project Manual dated ,and
are as follows:
DOCUMENT TITLE PAGES]
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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16.1.4 The specifications are those contained in the Project Manual dated as in
Paragraph 16.1.3, and are [as follows:] listed on Exhibit C attached hereto.
(Either list the Specifications here or refer to an exhibit attached to this
Agreement.)
[SECTION TIDE PAGES]
16.1.5 The Drawings are listed on the attached Exhibit D. [as follows, and are
dated unless a different date is shown below:] (Either list the Drawings here or
refer to an exhibit attached to this Agreement.)
[NUMBER TIDE DATE]
16.1.6 The addenda, if any, are [as follows:] listed on Exhibit E attached
hereto.
[NUMBER DATE PAGES]
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also enumerated in [this
Article 16] Exhibit E.
16.1.7 Other Documents, if any, forming part of the Contract Documents are
[as follows:] listed on Exhibit F.
(List here any additional documents which are intended to form part of the
Contract Documents. The General Conditions provide that bidding requirements
such as advertisement or invitation to bid, Instructions to Bidders, sample
forms and the Contractor's bid are not part of the Contract Documents unless
enumerated in this Agreement. They should he listed here only if intended to he
part of the Contract Documents.)
This Agreement is entered into as of the day and year first written above and is
executed in at least three original copies of which one is to be delivered to
the Contractor, one to the [Architect] Development Manager for use in the
administration of the Contract, and the remainder to the Owner.
16.1.8 This Agreement, and the General Conditions, are based on AIA Documents
A111 and A201, respectively, but each excludes certain provisions contained
therein and includes certain provisions that have been negotiated by the parties
which are not contained in the AIA documents. Text that is plain or underlined
in this document is a part of this Agreement; text that is overstriked is not a
part of this Agreement. No comparison or other reference to AIA Documents A111
or A201 shall affect the interpretation of this Agreement, the General
Conditions, or any of the other Contract Documents.
OWNER CONTRACTOR
- ------------------------------------ -----------------------------------
(Signature) (Signature)
- ------------------------------------ -----------------------------------
(Printed name and title) (Printed name and title)
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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ARTICLE 1
GENERAL PROVISIONS
1.1 BASIC DEFINITIONS
1.1.1 THE CONTRACT DOCUMENTS
The Contract Documents consist of the Agreement between Owner and Contractor
(hereinafter the Agreement), Conditions of the Contract (General, Supplementary
and other Conditions), Drawings, Specifications, addenda issued prior to
execution of the Contract, other documents listed in the Agreement and
Modifications issued after execution of the Contract. A Modification is (l) a
written amendment to the Contract signed by both parties, (2) a Change Order,
(3) a Construction Change Directive or (4) a written order for a minor change in
the Work issued by the [Architect] Development Manager pursuant to Paragraph 7.4
or by the Owner. Unless specifically enumerated in the Agreement, the Contract
Documents do not include other documents such as bidding requirements
(advertisement or invitation to bid, instructions to Bidders, sample forms, the
Contractor's bid or portions of addenda relating to bidding requirements).
1.1.2 THE CONTRACT
The Contract Documents form the Contract for Construction. The Contract
represents the entire and integrated agreement between the parties hereto and
supersedes prior negotiations, representations or agreements, either written or
oral. The Contract may be amended or modified only by a Modification. [The
Contract Documents shall not be construed to create a contractual relationship
of any kind (l) between the Architect and Contractor, (2) between the Owner and
a Subcontractor or Sub-subcontractor or (3) between any persons or entities
other than the Owner and Contractor. The Architect shall, however, be entitled
to performance and enforcement of obligations under the Contract intended to
facilitate performance of the Architect's duties.] The Contract Documents shall
not be construed to create a contractual relationship of any kind (1) between
the Architect and Contractor, (2) between the Development Manager and
Contractor, (3) between the Architect and Development Manager, (4) between the
Owner and a Subcontractor or Sub-subcontractor (except as provided in Paragraph
5.4 hereof) or (5) between any persons or entities other than the Owner and
Contractor. The Development Manager and Architect shall, however, be entitled to
performance by the Contractor and to enforce the obligations of the Contractor
under the Contract as the same are intended to facilitate performance of their
duties.
1.1.3 THE WORK
The term "Work" means the construction and services required by the Contract
Documents, whether completed or partially completed, and includes all other
labor, materials, equipment and services provided or to be provided by the
Contractor to fulfill the Contractor's obligations. The Work may constitute the
whole or a part of the Project.
1.1.4 THE PROJECT
The Project is the total construction of which the Work performed under the
Contract Documents may be the whole or a part and which may include construction
by the Owner or by separate contractors.
1.1.5 THE DRAWINGS
The Drawings are the graphic and pictorial portions of the Contract Documents,
wherever located and whenever issued, showing the design, location and
dimensions of the Work, generally including plans, elevations, sections,
details, schedules and diagrams.
1.1.6 THE SPECIFICATIONS
The Specifications are that portion of the Contract Documents consisting of the
written requirements for materials, equipment, construction systems, standards
and workmanship for the Work, and performance of related services.
1.1.7 THE PROJECT MANUAL
The Project Manual is the volume usually assembled for the Work which may
include the bidding requirements, sample forms, conditions of the Contract and
Specifications.
1.1.8 ADDENDUM
A change to the Contract Documents issued by Architect or Development Manager's
approval prior to the execution of the Agreement and specifically listed in the
Agreement.
1.1.9 FINAL COMPLETION
The date the Contract has been fully performed, all the Work has been completed
and a Final Certificate for payment approved by the owner has been issued by the
Architect.
1.1.10 INDICATED AND SHOWN
Shall each mean as detailed, scheduled, or called for in the Contract Documents.
1.1.11 LAW
All federal, state, and local statues, rules, and regulations and ordinances
applicable to performance of the Work or construction or operation of the
Project, including, without limitation, building codes, environmental laws
(including toxic waste and dust control), social security and unemployment
compensation laws, workers' compensation laws, safety laws, and archaeological
and paleontological preservation laws.
1.1.12 CONCEALED CONDITIONS
Conditions at site which are (i) subsurface or otherwise concealed physical
conditions which differ materially from those indicated in the Contract
Documents, or (ii) unknown physical conditions of an unusual nature which differ
materially from those ordinarily found to exist and generally recognized as
inherent in construction activities of the character provided for in the
Contract Documents (including, without limitation, existence of asbestos,
phychlorinated biphenyls, or other hazardous materials) which adversely affect
the quality or cost of the Work.
1.2 EXECUTION, CORRELATION AND INTENT
1.2.1 The Contract Documents shall be signed by the Owner and Contractor as
provided in the Agreement. If either the Owner or Contractor or both do not sign
all the Contract Documents, the Architect shall identify such unsigned Documents
upon request.
1.2.2 [Execution of the Contract by the Contractor is a representation that the
Contractor has visited the site, become familiar with local conditions under
which the Work is to be performed and correlated personal observations with
requirements of the Contract Documents.] Execution of the Contract by the
Contractor is a representation that said Contract Documents [are full and
complete,] are sufficient to have enabled the Contractor to determine the cost
of the Work therein to enter into the Contract, and that the Contract Documents
are sufficient to enable it to contract the Work outlined therein, and otherwise
to fulfill all its obligations hereunder, including, but not limited to,
contractor's obligation to construct the Work for an amount not in excess of the
Contract Sum on or before the date(s) of Substantial Completion established in
the Agreement. The Contractor further acknowledges and declares that it has
visited and examined the site, examined all physical, legal, and other
conditions affecting the Work and is fully familiar with all of the conditions
thereon and thereunder affecting the same. In connection therewith, Contractor
specifically represents and warrants to Owner that it has, by careful
examination, satisfied itself as to: (1) The nature, location, and character of
the Project and the site, including, without limitation, the surface [and
subsurface] conditions of the site and all structures and obstructions thereon
[and thereunder], both natural and man-made, and all surface [and subsurface]
water conditions of the site and the surrounding area; (2) the nature, location,
and character of the general area in which the Project is located,
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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including without limitation, its climatic conditions, available labor supply
and labor costs, and available equipment supply and equipment costs; and (3) the
quality and quantity of all materials, supplies, tools, equipment, labor, and
professional services necessary to complete the Work in the manner and within
the cost and time frame required by the Contract Documents. In connection with
the foregoing, and having carefully examined all Contract Documents, as
aforesaid, and having visited the site, the Contractor acknowledges and declares
that it has no knowledge of any discrepancies, omissions, ambiguities, or
conflicts in said Contract Documents, and that if it becomes aware of any such
discrepancies, or conflicts, it will promptly notify Development Manager and
Architect of such fact.
1.2.3 [The intent of the Contract Documents is to include all items necessary
for the proper execution and completion of the Work by the Contractor. The
Contract Documents are complementary, and what is required by one shall be as
binding as if required by all; performance by the Contractor shall be required
only to the extent consistent with the Contract Documents and reasonably
inferable from them as being necessary to produce the intended results.] The
intent of the Contract Documents is to include all items necessary for the
proper execution and completion of the Work by the Contractor. The Work shall
consist of all items specifically [included] shown in the Contract Documents as
well as all additional items of Work which are reasonably inferable from that
which is specified in order to complete the Work in accordance with the Contract
Documents. The Contract Documents are complementary, and what is required by any
one Contract Document shall be as binding as if required by all. Any differences
between the requirements of the Drawings and the Specifications or any
differences noted within the Drawing themselves or within the Specifications
themselves will be referred to the Owner, Development Manager and Architect by
Contractor.
1.2.4 Organization of the Specifications into divisions, sections and articles,
and arrangement of Drawings shall not control the Contractor in dividing the
Work among Subcontractors or in establishing the extent of Work to be performed
by any trade.
1.2.5 Unless otherwise stated in the Contract Documents, words and abbreviations
which have well-known technical or construction industry meanings are used in
the Contract Documents in accordance with such recognized meanings.
1.3 OWNERSHIP AND USE OF ARCHITECT'S DRAWINGS, SPECIFICATIONS AND OTHER
DOCUMENTS
1.3.1 [The Drawings, Specifications and other documents prepared by the
Architect are instruments of the Architect's service through which the Work to
be executed by the Contractor is described. The Contractor may retain one
contract record set.] The Drawings, Specifications, and other similar or related
documents and copies thereof are furnished to the Contractor for the purpose of
performing the Work are, and shall remain, the property of the Owner. Neither
the Contractor nor any Subcontractor, Sub-subcontractor or material or equipment
supplier shall own or claim a copyright in the Drawings, Specifications [and
other documents prepared by the Architect, and unless otherwise indicated the
Architect shall be deemed the author of them and will retain all common law,
statutory and other reserved rights, in addition to the copyright. All copies of
them, except the Contractor's record set, shall be returned or suitably
accounted for to the Architect, on request, upon completion of the Work.] and
other similar or related documents, and Owner will retain all common law,
statutory, and other reserved rights, in addition to the copyright (including,
without limitation, the right to create derivative works therefrom). [All copies
of such document shall be returned to the Owner upon completion of the Work.]
The Drawings, Specifications and other similar or related documents [prepared by
the Architect], and copies thereof furnished to the Contractor, are for use
solely with respect to this Project. They are not to be used by the Contractor
or any Subcontractor, Sub-subcontractor or material or equipment supplier on
other projects or for additions to this Project outside the scope of the Work
without the specific written consent of the Owner [and Architect]. The
Contractor, Subcontractors, Sub-subcontractors and material or equipment
suppliers are granted a limited license to use and reproduce applicable portions
of the Drawings, Specifications and other documents [prepared by the Architect]
appropriate to and solely for use in the execution of their Work under the
Contract Documents. All copies made under this license shall bear the statutory
copyright notice, if any, shown on the Drawings, Specifications and other
documents prepared by the Architect. Submittal or distribution to meet official
regulatory requirements or for other purposes in connection with this Project is
not to be construed as publication in derogation of [the Architect's] any
copyright or other reserved rights.
1.4 CAPITALIZATION
1.4.1 Terms capitalized in these General Conditions include those which are (l)
specifically defined, (2) the titles of numbered articles and identified
references to Paragraphs, Subparagraphs and Clauses in the document (3) the
titles of other documents published by the American Institute of Architects.
1.5 INTERPRETATION
1.5.1 In the interest of brevity the Contract Documents frequently omit
modifying words such as "all" and "any" and articles such as "the" and "an," but
the fact that a modifier or an article is absent from one statement and appears
in another is not intended to affect the interpretation of either statement.
ARTICLE 2
OWNER
2.1 DEFINITION
2.1.1 The Owner is the person or entity identified as such in the Agreement and
is referred to throughout the Contract Documents as if singular in number. The
term "Owner" means the Owner or the Owner's authorized representative.
2.1.2 The Owner upon reasonable written request shall furnish to the contractor
in writing information which is necessary and relevant for the Contractor to
evaluate, give notice of or enforce mechanic's lien rights. Such information
shall include a correct statement of the record legal title to the property on
which the Project is located, usually referred to as the site, and the Owner's
interest therein at the time of execution of the Agreement, and, within five
days after any change, information of such change in title, recorded or
unrecorded.
2.2 INFORMATION AND SERVICES REQUIRED OF THE OWNER
2.2.1 The Owner shall, at the request of the Contractor, prior to execution of
the Agreement and promptly from time to time thereafter furnish to the
Contractor reasonable evidence that financial arrangements have been made to
fulfill the Owner's obligations under the Contract. [note: Unless such
reasonable evidence were furnished on request prior to the execution of the
Agreement, the prospective contractor would not be required to execute the
Agreement or to commence the Work.] The Owner may select the Architect, the
Development Manager, or any other designee or designees, including any employee
or agent of the Owner, to be the Owner's Representative, and such person or
persons shall have all powers of the Owner enumerated herein. The Owner may
specify an Owner's Representative as to all issues hereunder or may specify an
Owner's Representative as to any specific issue or issues. The Owner shall
specify an Owner's Representative in writing to both the Architect (if the
Owner's Representative is other than the Architect) and the
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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Contractor. The Architect, the Development Manager and the Contractor shall have
no right or authority to rely on the authority of any alleged Owner's
Representative unless the architect and the Contractor are in possession of a
document signed by the Owner specifying said person as the Owner's
Representative as to the particular issue or issues in question.
2.2.2 The Owner shall furnish any surveys in its possession describing physical
characteristics, legal limitations and utility locations for the site of the
Project, and a legal description of the site.
2.2.3 Except for permits and fees which are the responsibility of the Contractor
under the Contract Documents, the Owner shall secure and pay for necessary
approvals, easements, assessments and charges required for construction, use or
occupancy of permanent structures or for permanent changes in existing
facilities. Such approvals and the like shall be provided by Owner within a time
and in a manner so as to avoid any unreasonable delays in the Work or schedule
of Contractor and shall include only such approvals for permanent facilities
which are necessary to perform the Work as set forth in the Contract Documents.
2.2.4 Information or services [under the Owner's control] required to be
furnished by Owner shall be furnished by the Owner with reasonable promptness to
avoid delay in orderly progress of the Work.
2.2.5 Unless otherwise provided in the Contract Documents, the Contractor will
be furnished, free of charge, such copies of Drawings and Project Manuals as are
reasonably necessary for execution of the Work.[ ten (10) copies of the Drawings
and Specifications prepared by Owner's Architect; all other drawings and
documents necessary for the execution and completion of the Work shall be
furnished at Contractor's expense.]
2.2.6 The foregoing are in addition to other duties and responsibilities of the
Owner enumerated herein and especially those in respect to Article 6
(Construction by Owner or by Separate Contractors), Article 9 (Payments and
Completion) and Article II (Insurance and Bonds).
2.3 OWNER'S RIGHT TO STOP THE WORK
2.3.1 [If the Contractor fails to correct Work which is not in accordance with
the requirements of the Contract Documents as required by Paragraph 12.2 or
persistently fails to carry out Work in accordance with the Contract Documents,
the Owner, by written order signed personally or by an agent specifically so
empowered by the Owner in writing, may order the Contractor to stop the Work, or
any portion thereof, until the cause for such order has been eliminated;
however, the right of the Owner to stop the Work shall not give rise to a duty
on the part of the Owner to exercise this right for the benefit of the
Contractor or any other person or entity, except to the extent required by
Subparagraph 6.1.3.] If the Contractor fails to correct defective Work as
required by Paragraph 12.2, or fails to complete the Work within the Contract
Time or fails or refuses to provide a sufficient amount of properly supervised
and coordinated labor, materials, or equipment so as to be able to complete the
Work within the Contract Time, or fails to remove or discharge (within ten days)
any lien resulting from the Work for which the Contractor has been paid in
accordance with the Agreement filed upon Owner's property by anyone claiming by,
through, or under Contractor, or disregards the instructions of Architect,
Development Manager or Owner when based upon the requirements of the Contract
Documents, or is in default of any of its obligations hereunder, the Owner, by a
written order signed by any agent specifically so empowered by the Owner in
writing, may order the Contractor to stop the Work, or any portion thereof,
until cause of such order has been eliminated; however, this right of the Owner
to stop the Work shall not give rise to any duty on the part of the Owner to
exercise this right for the benefit of the Contractor or any other person or
entity. This right shall be in addition to, and not in restriction of, the
Owner's rights under Paragraph 12.2.
2.4 OWNER'S RIGHT TO CARRY OUT THE WORK
2.4.1 If the Contractor defaults or neglects to carry out the Work in accordance
with the Contract Documents and fails within a seven-day period after receipt of
written notice from the Owner to commence and continue correction of such
default or neglect with diligence and promptness, [the Owner may after such
seven-day period give the Contractor a second written notice to correct such
deficiencies within a second seven-day period. If the Contractor within such
second seven-day period after receipt of such second notice fails to commence
and continue to correct any deficiencies,] or fails within such seven-day period
to eliminate (or diligently commence to eliminate) the cause of any stop work
order issued under Subparagraph 2.3.1 hereof, the Owner may, without prejudice
to other remedies the Owner may have, correct such deficiencies. In such case an
appropriate Change Order shall be issued deducting from payments then or
thereafter due the Contractor the cost of correcting such deficiencies,
including compensation for the Development Manager's and Architect's and their
consultants' additional services and expenses made necessary by such default,
neglect or failure. [Such action by the Owner and amounts charged to the
Contractor are both subject to prior approval of the Architect.] If payments
then or thereafter due the Contractor are not sufficient to cover such amounts,
the Contractor shall pay the difference to the Owner.
ARTICLE 3
CONTRACTOR
3.1 DEFINITION
3.1.1 The Contractor is the person or entity identified as such in the Agreement
and is referred to throughout the Contract Documents as if singular in number.
The term "Contractor" means the Contractor or the Contractor's authorized
representative. The plural term "Contractors" refers to persons or entities who
perform construction or operations related to the Project under these or similar
Conditions of the Contract.
3.2 REVIEW OF CONTRACT DOCUMENTS AND FIELD CONDITIONS BY CONTRACTOR
3.2.1 [The] In addition to and not in derogation of Contractor's duties under
Subparagraphs 1.2.2 and 1.2.3 hereof, Contractor shall carefully study and
compare the Contract Documents with each other and with information furnished by
the Owner pursuant to Subparagraph 2.2.2 and shall at once report to the
Development Manager and Architect errors, inconsistencies or omissions
discovered. The Contractor shall not be liable to the Owner, Development Manager
or Architect for damage resulting from errors, inconsistencies or omissions in
the Contract Documents that would not have been discovered by a prudent and
experienced contractor in advance and that are not of the nature of items
described in and intended to be covered in Subparagraphs 1.2.2 and 1.2.3 hereof
unless the Contractor recognized or reasonably should have recognized such
error, inconsistency or omission and [knowingly] failed to report it to the
Development Manager and Architect. If the Contractor performs any construction
activity [knowing it involves a recognized] involving an error, inconsistency or
omission in the Contract Documents [without such notice to the Architect] that
Contractor recognized or reasonably should have recognized without such notice
to the Development Manager and Architect, the Contractor shall assume
appropriate [complete] responsibility for such performance and shall bear an
appropriate [the full] amount of the attributable costs for correction.
3.2.1.1 If any errors, inconsistencies, or omissions in Contract Documents are
recognized or reasonably should have been recognized by the Contractor, any
member of its organization, or any of its Subcontractors, the Contractor shall
be responsible for notifying the Development Manager
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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and Architect in writing of such error, inconsistency, or omission before
proceeding with the Work. The Architect will take such notice under advisement
and within a reasonable time commensurate with job progress render a decision.
The Architect's decision shall be subject to Owner's approval. The Contractor
shall be liable for damage, loss or expense to Owner, Development Manager and
Architect resulting from Contractor's (i) failure to report any such discovery
or (ii) performance of any construction activity if Contractor knows or should
have known of such error, inconsistency, omission or violation.
3.2.2 The In addition to and not in derogation of Contractor's duties under
Subparagraph 1.2.2 and 1.2.3 hereof, Contractor shall take field measurements
and verify field conditions and shall carefully compare such field measurements
and conditions and other information known (or which reasonably should have been
known) to the Contractor with the Contract Documents before commencing
activities. Errors, inconsistencies or omissions discovered (or which reasonably
should have been discovered) shall be reported to the Architect and Development
Manager at once.
3.2.3 The Contractor shall perform the Work in accordance with the Contract
Documents and submittals approved pursuant to Paragraph 3.12.
3.2.4 Should the Specifications and Drawings fail to particularly describe the
material or kind of goods to be used where shown or reasonably inferable, then
it shall be the duty of the Contractor to make inquiry of the Owner and
Architect as to what is best-suited. The material that is consistent with the
level of quality of adjacent materials shall be considered a part of the
Contract.
3.2.5 Before undertaking each part of the Work, the Contractor shall coordinate
the Architect to check and verify all pertinent data in the Drawings and
Specifications, against field measurements actually made at the site and report
at once in writing to the Owner any discrepancies which the Contractor may
discover. The Contractor shall establish and implement procedures to be followed
by the Contractor and Subcontractors for expediting the processing and approval
of shop drawings, catalogs and samples, and the scheduling of requirements for
materials and equipment. The Contractor shall maintain and cause the
Subcontractors and Sub-subcontractors to maintain at the site current marked
sets of working drawing prints and specifications reflecting "as built"
conditions for each portion of the Work. Upon Final Completion, the Contractor
shall deliver the marked sets to the Architect for correction of the original
drawings.
3.2.6 Contractor shall be held to the standard of care exercised by major
professional reputable general contractors in Santa Clara County, California
area. References herein to "the knowledge of Contractor" or the like shall mean
either that which the Contractor should have know had it exercised such standard
of care.
3.3 SUPERVISION AND CONSTRUCTION PROCEDURES
3.3.1 The Contractor shall supervise and direct the Work, using the Contractor's
best skill and attention. The Contractor shall be solely responsible for and
have control over construction means, methods, techniques, sequences and
procedures and for coordinating all portions of the Work under the Contract,
unless Contract Documents give other specific instructions concerning these
matters.
3.3.2 The Contractor shall be responsible to the Owner for acts and omissions of
the Contractor's employees, Subcontractors and their agents and employees, and
other persons performing portions of the Work under a contract or other
arrangement with the Contractor. It is understood and agreed that the
relationship of Contractor to Owner shall be that of an independent Contractor.
Nothing contained herein or inferable herefrom shall be deemed or construed to
(1) make Contractor the agent, servant or employee of the Owner, or (2) create
any partnership, joint venture, or other association between Owner and
Contractor. Any direction or instruction by Owner in respect of the Work shall
relate to the results the Owner desires to obtain from the Work, and shall in no
way affect Contractor's independent contractor status as described herein.
3.3.3 The Contractor shall not be relieved of obligations to perform the Work in
accordance with the Contract Documents either by activities or duties of the
Architect, Development Manager or Owner in their [Architect's] administration of
the Contract, or by tests, inspections or approvals required or performed by
persons other than the Contractor.
3.3.4 The Contractor shall be responsible for inspection of portions of Work
already performed under this Contract to determine that such portions are in
proper condition to receive subsequent Work.
3.3.5 The Contractor has the responsibility to ensure that all material
suppliers and Subcontractors, their agents, and employees adhere to the Contract
Documents, and that they order materials on time, taking into account the
current market and delivery conditions and that they provide materials on time.
The Contractor shall coordinate its Work with that of all others on the Project
including deliveries, storage, installations, and construction utilities. The
Contractor shall be responsible for the space requirements, locations, and
routing of its equipment. In areas and locations where the proper and most
effective space requirements, locations, and routing cannot be made as
indicated, the Contractor shall meet with all others involved, before
installation, to plan the most effective and efficient method of overall
installation.
3.3.6 The services to be performed under this Agreement shall be performed by
the Contractor's own staff, unless otherwise authorized by the Owner. The
employment of, contract with, or use of the services of any other person or firm
by the Contractor (except with respect to Subcontractors discussed elsewhere in
the Contract) as consultant or otherwise, shall be subject to the prior written
approval of the Owner. Such approval shall not be construed as constituting an
agreement between the Owner and any such person or firm.
3.4 LABOR AND MATERIALS
3.4.1. Unless otherwise provided in the Contract Documents, the Contractor shall
provide and pay for labor, materials, equipment, tools, construction equipment
and machinery, water, heat, utilities, transportation, and other facilities and
services necessary for proper execution and completion of the Work, whether
temporary or permanent and whether or not incorporated or to be incorporated in
the Work.
3.4.2 The Contractor shall enforce strict discipline and good order among the
Contractor's employees and other persons carrying out the Contract. The
Contractor shall not permit employment of unfit persons or persons not skilled
in tasks assigned to them. Contractor shall also be responsible for labor peace
on the Project and shall at all times use its best efforts and judgment as an
experienced contractor to adopt and implement policies and practices designed to
avoid work stoppages, slowdowns, disputes, or strikes where reasonably possible
and practical under the circumstances and shall at all times maintain
Project-wide labor harmony. Except as specifically provided in Subparagraph
8.3.1 hereof, Contractor shall be liable to Owner for all damages suffered by
Owner occurring as a result of work stoppages, slowdowns, disputes, or strikes
which are caused by the Contractor.
3.4.3 Materials shall conform to manufacturer's standards in effect at the date
of execution of the Agreement and shall be installed in strict accordance with
manufacturer's directions. The Contractor shall, if required by the Owner,
Development Manager or Architect, furnish satisfactory evidence as to the kind
and quality of any materials. All packaged materials shall be shipped to the
site in the original containers clearly labeled, and delivery slips shall be
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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submitted with bulk materials identifying thereon the source, and warranting
quality and compliance with Contract Documents. After the Contract has been
executed, the Owner and the Architect will consider a formal request for the
substitution of products in place of those specified only under the conditions
specified in the General Requirements.
3.5 WARRANTY
3.5.1 [The Contractor warrants to the Owner and Architect that materials and
equipment furnished under the Contract will be of good quality and new unless
otherwise required or permitted by the Contract Documents, that the Work will be
free from defects not inherent in the quality required or permitted, and that
the Work will conform with the requirements of the Contract Documents.] The
contractor warrants to the Owner that the Work, whether performed by Contractor
or by Subcontractors, including all materials and equipment, will be of good
quality, free of defects, in material and workmanship, will strictly conform to
the Contract Documents, and that, if applicable, the Project will perform to the
specifications set forth in the Contract Documents . In the event of breach of
this Warranty, the Owner may elect (i) to require the Contractor at its sole
cost and expense to repair or remedy such breach within ten (10) days of notice
thereof (or if such breach cannot reasonably be cured within such ten (10) day
period, then the Contractor shall commence to cure such breach within ten (10)
days and thereafter diligently prosecute such cure to completion); (ii) to
repair or remedy such breach and be entitled to full reimbursement from
Contractor, if Contractor has failed to so repair as provided in subsection (i);
or (iii) any other remedy at law or in equity. In the event Contractor cures any
breach hereunder or reimburses Owner for the expenses of such breach Contractor
shall be subrogated to the rights of Owner against any Subcontractor. Work not
conforming to these requirements, including substitutions not properly approved
and authorized, may be considered defective. The Contractor's warranty excludes
remedy for damage or defect caused by abuse not committed by Contractor,
modifications not executed by the Contractor, improper or insufficient
maintenance the performance of which Contractor was not responsible for,
improper operation not performed by Contractor, or normal wear and tear under
normal usage. If required by the Architect, Development Manager or Owner, the
Contractor shall furnish satisfactory evidence as to the kind and quality of
materials and equipment.
3.5.2 The Contractor shall issue in writing to the Owner as a condition
precedent to final payment a "General Warranty" reflecting the terms and
conditions of this Paragraph 3.5 for all Work under the Contract.
3.5.3 Except when a longer warranty time is specifically called for in the
Specifications Sections or is otherwise provided by law, the General Warranty
shall be eighteen (18) months and shall be in form and content otherwise
satisfactory to the Owner; provided, however, that the General Warranty for
equipment shall be twelve (12) months.
3.5.5 Warranties shall become effective on a date established by the Owner and
Architect in accordance with the Contract Documents. This date shall be the Date
of Substantial Completion of the entire Work or beneficial occupancy and use of
any portion of the Work by the Owner, unless otherwise provided in any
Certificate of Partial Substantial Completion approved by the parties. If the
date is determined on the basis of partial occupancy or use by the Owner, then
only the warranties for Work so occupied or used shall become effective on such
date.
3.5.6 The Contractor shall warrant for a period of eighteen (18) months that the
building(s) shall be watertight and leakproof at every point and in every area,
except where leaks can be attributed to damage to the building(s) by external
forces beyond Contractor's control. The Contractor shall, immediately upon
notification by the Owner of water penetration, determine the source of water
penetration and, at its own expense, do any work necessary to make the
building(s) watertight. Contractor shall also, at its own expense, repair or
replace any other damaged material, finishes, and furnishings, damaged as a
result of this water penetration, to return the building(s) to its (their)
original condition.
3.5.7 In addition to the foregoing stipulations, the Contractor shall comply
with all other warranties referred to in any portions of the Contract Documents
or otherwise provided by law or in equity, and where warranties overlap, the
more stringent requirement shall govern.
3.6 TAXES
3.6.1 The Contractor shall pay sales, consumer, use and similar taxes for the
Work or portions thereof provided by the Contractor which are legally enacted,
[when bids are received or negotiations concluded, whether or not yet effective
or merely scheduled to go into effect] and in a timely manner, complete and
submit to the appropriate governmental authorities all required tax reports.
3.7 PERMITS, FEES AND NOTICES
3.7.1 [Unless otherwise provided in the Contract Documents, the Contractor shall
secure and pay for the building permit and other permits and governmental fees,
licenses and inspections and other consents for general constructions,
including, without limitation, street opening, sidewalk, and other obstructions,
access over public ways and storage necessary for proper execution and
completion of the Work which are customarily secured after execution of the
Contract and which are legally required when bids arc received or negotiations
concluded.] The Contractor shall procure all certificates of inspection, use,
occupancy, permits and licenses and give all notices necessary and incidental to
the due and lawful prosecution of the Work. Certificates of inspection, use, and
occupancy shall be delivered to the Owner upon completion of the Work in
sufficient time for occupation of the Project in accordance with the approval
schedule for the Work. Owner shall be responsible for the cost of such
certificates, permits and licenses.
3.7.2 [The Contractor shall comply with and give notices required by laws,
ordinances, rules, regulations and lawful orders of public authorities bearing
on performance of the Work.] The Contractor shall comply with all Law in the
preparation for and performance of the Work (and give all notices required by
Law with a copy to Development Manager and Architect) and agrees to and does
hereby indemnify, defend and hold Owner harmless from any and all fines and
penalties which may arise out of the Contractor's failure to do so.
3.7.3 It is not the Contractor's responsibility to ascertain that the Contract
Documents are in accordance with applicable laws, statutes, ordinances, building
codes, and rules and regulations. However, if the Contractor observes that
portions of the Contract Documents are at variance therewith, the Contractor
shall promptly notify the Architect and Owner in writing, and necessary changes
shall be accomplished by appropriate Modification.
3.7.4 If the Contractor performs Work [knowing it to be] (including, without
limitation, the installation of any materials or equipment) that it knows or
reasonably should have known would be contrary to laws, statutes, ordinances,
building codes, and rules and regulations without such notice to express written
approval of the Owner, the Contractor shall assume full responsibility for such
Work and shall bear [the attributable costs] all costs attributable to the
correction thereof or related thereto (including all fines and penalties).
3.8 ALLOWANCES
3.8.1 The Contractor shall include in the Contract Sum all allowances stated in
the Contract Documents. Items covered by allowances shall be supplied for such
amounts and by such persons or entities as the Owner may direct, but the
Contractor shall not be required to employ persons or entities against which the
Contractor makes reasonable objections.
3.8.2 Unless otherwise provided in the Contract Documents:
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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.1 materials and equipment under the allowance shall be selected
promptly by the Owner to avoid any delay in the Work;
.2 allowances shall cover the cost to the Contractor of materials and
equipment delivered at the site and all required taxes, less
applicable trade discounts;
[.3 Contractor's costs for unloading and handling at the site, labor,
installation costs, overhead, profit and other expenses
contemplated for stated allowance amounts shall be included in the
Contract Sum and not in the allowances;]
.4 whenever costs are more than or less than allowances, the Contract
Sum shall be adjusted accordingly by Change Order. The amount of
the Change Order to the extent provided in Paragraph 7.5 shall
reflect (1) the difference between actual costs and the allowances
under Clause 3.8.2.2 and (2) changes in Contractor's costs under
Clause 3.8.2.3.
3.9 SUPERINTENDENT
3.9.1 The Contractor shall employ a competent superintendent and necessary
assistants who shall be in attendance at the Project site during performance of
the Work. The superintendent shall represent the Contractor, and communications
given to the superintendent shall be as binding as if given to the Contractor.
Important communications shall be confirmed in writing. Other communications
shall be similarly confirmed on written request in each case.
3.10 CONTRACTOR'S CONSTRUCTION SCHEDULES
3.10.1 The Contractor, promptly after being awarded the Contract, shall prepare
and submit for the [Owner's and] Architect's information and the Development
Manager's and Owner's review and approval a Contractor's construction schedule
for the Work. The schedule shall not exceed time limits current under the
Contract Documents, shall be revised as required herein and at appropriate
intervals as required by the conditions of the Work and Project, shall be
related to the entire Project to the extent required by the Contract Documents,
and shall provide for expeditious and practicable execution of the Work. The
Schedule shall indicate the proposed starting and completion dates for the
various subdivisions of the Work as well as the totality of the Work. The
schedule shall be updated every thirty (30) days and submitted to Development
Manager with Contractor's Applications for Payment. Each schedule shall contain
a comparison of actual progress with the estimated progress for such point in
time stated in the original schedule. If any schedule submitted sets forth a
date for Substantial Completion for the Work or any phase of the Work beyond the
Date(s) of Substantial Completion established in the Contract (as the same may
be extended as provided in the Contract Documents), then Contractor shall submit
to Development Manager and Owner for their review and approval a narrative
description of the means and methods which Contractor intends to employ to
expedite the progress of the Work to ensure timely completion of the various
phases of the Work as well as the totality of the Work. To ensure such timely
completion, Contractor shall take all necessary action, including, without
limitation, increasing the number of personnel and labor on the Project and
implementing overtime and double shifts. In that event, Contractor shall not be
entitled to an adjustment in the Contract Sum or the schedule.
3.10.2 The Contractor shall prepare and keep current, for the Development
Manager's and Architect's approval, a schedule of submittals which is
coordinated with the Contractor's construction schedule and allows the
Development Manager and Architect reasonable time to review submittals.
3.10.3 The Contractor shall conform to the most recent schedules.
3.10.4 Prior to execution of this Contract, the Contractor shall have prepared a
preliminary project schedule, estimating completion dates for a design, review,
approval, bidding, award and construction of the various phases of the Project.
After approval by the Owner, the preliminary project schedule will be
automatically incorporated as an exhibit and shall be updated and amended as
approved by Owner and Contractor to reflect changes in the estimated completion
dates for the various activities noted above.
The Contractor shall conduct pre-construction conferences with Subcontractors.
The Contractor shall schedule and conduct meetings to be attended by the
Subcontractors and representatives of the Owner, the Development Manager and the
Architect to discuss such matters as procedures, progress, problems, scheduling,
and compliance with Laws. The Contractor shall take, transcribe, and distribute
minutes of such meetings and deliver such to all parties in attendance or
otherwise involved in the Project unless done so by another party.
The Contractor shall also prepare a report not later than thirty (30) calendar
days after the contract is awarded which shall include a complete list of
suppliers, items to be purchased from the suppliers or fabricators, time
required for fabrication and the schedule delivery dates for each item. As soon
as available, copies of purchase orders shall be furnished to the Development
Manager and Owner.
The Contractor shall hold weekly progress meetings at the site, or at such other
time and frequency as are acceptable to the Owner. Progress of the Work shall be
reported in detail with reference to construction schedules. Each interested
Subcontractor shall have present a competent representative to report the
condition of its work and to receive information.
3.10.5 The Contractor shall cooperate with the Development Manager in scheduling
and performing the Contractor's Work to avoid conflict, delay in or interference
with the Work of other Contractors or the construction or operations of the
Owner's own forces.
3.11 DOCUMENTS AND SAMPLES AT THE SITE
3.11.1 The Contractor shall maintain at the site for the Owner one record copy
of the Drawings, Specifications, addenda, Change Orders and other Modifications,
in good order and marked currently to record changes and selections made during
construction, and in addition approved Shop Drawings, Product Data, Samples and
similar required submittals. These shall be available to the Development Manager
and Architect and shall be delivered to the Architect Development Manager for
submittal to the Owner upon completion of the Work.
3.11.2 At the Date of Substantial Completion and as a condition precedent to
final payment, the Contractor shall furnish the following documents to the
Development Manager for submittal to the Owner: Record Drawings showing the
field changes and selections (all changes and selections to be approved by the
Owner and the Architect in advance ) affecting the general construction,
mechanical, electrical, plumbing, and all other work, and indicating the Work as
actually installed. These shall consist of carefully drawn markings on a set of
reproducible prints of the Architect's most recent and complete Drawings,
including all changes issued with bulletins and requests for information,
obtained and paid for by Owner. The Contractor shall maintain at the job site
one (1) set of Architect's Drawings and indicate thereon each field change as it
occurs.
3.12 SHOP DRAWINGS, PRODUCT DATA AND SAMPLES
3.12.1 Shop Drawings are drawings, diagrams, schedules and other data specially
prepared for the Work by the
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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Contractor or a Subcontractor, Sub-subcontractor, manufacturer, supplier or
distributor to illustrate some portion of the Work.
3.12.2 Product Data are illustrations, standard schedules, performance charts,
instructions, brochures, diagrams and other information furnished by the
Contractor to illustrate materials or equipment for some portion of the Work.
3.12.3 Samples are physical examples which illustrate materials equipment or
workmanship and establish standards by which the work will be judged.
3.12.4 Shop Drawings, Product Data, Samples and similar submittals are not
Contract Documents. The purpose of their submittal is to demonstrate for those
portions of the Work for which submittals are required the way the Contractor
proposes to conform to the information given and the design concept expressed in
the Contract Documents. Review by the Architect is subject to the limitations of
Subparagraph 4.2.7.
3.12.5 The Contractor shall review, approve and submit to the Architect, with a
copy to Development Manager and Owner, Shop Drawings, Product Data, Samples and
similar submittals required by the Contract Documents with reasonable promptness
and in such sequence as to cause no delay in the Work or in the activities of
the Owner or of separate contractors. The Contractor shall cooperate with the
Development Manager in the coordination of the Contractor's Shop Drawings,
Product Data, Samples and similar submittals with related documents submitted by
other Contractors. Submittals made by the Contractor which are not required by
the Contract Documents may be returned without action.
3.12.6 The Contractor shall perform no portion of the Work requiring submittal
and review of Shop Drawings, Product Data, Samples or similar submittals until
the respective submittal has been approved by the Development Manager and
Architect. Such Work shall be in accordance with approved submittals.
3.12.7 By [approving] reviewing and submitting Shop Drawings, Product Data,
Samples and similar submittals, the Contractor represents that the Contractor
has determined and verified materials, field measurements and field construction
criteria related thereto, or will do so, and has checked and coordinated the
information contained within such submittals with the requirements of the Work
and of the Contract Documents.
3.12.8 The Contractor shall not be relieved of responsibility for deviations
from requirements of the Contract Documents by the Development Manager's or
Architect's approval of Shop Drawings, Product Data, Samples of similar
submittals unless the Contractor has specifically informed the Development
Manager and Architect in writing of such deviation at the time of submittal and
the Development Manager and Architect [has] have given written approval to the
specific deviation. The Contractor shall not be relieved of responsibility for
errors or omissions in Shop Drawings, Product Data, Samples or similar
submittals by the Architect's approval thereof.
3.12.9 The Contractor shall direct specific attention, in writing or on
resubmitted Shop Drawings, Product Data, Samples or similar submittals, to
revisions other than those requested by the Development Manager and Architect on
previous submittals.
3.12.9.1 Shop drawings for Architectural, Structural, Mechanical and Electrical
work shall be submitted for approval to the Development Manager and the
Architect.
3.12.9.2 The Contractor shall assemble for the Development Manager's and
Architect's approval and transmittal to the Owner three (3) complete copies of
loose leaf binders of all operating and maintenance data from all manufacturers
whose equipment is installed in the Work.
3.12.10 Informational submittals upon which the Development Manager and
Architect is are not expected to take responsive action may be so identified in
the Contract Documents.
3.12.11 When professional certification of performance criteria of materials,
systems or equipment is required by the Contract Documents, the Development
Manager and Architect shall be entitled to rely upon the accuracy and
completeness of such calculations and certifications.
3.13 USE OF SITE
3.13.1 The Contractor shall confine operations at the site to areas permitted by
law, ordinances, permits and the Contract Documents and shall not unreasonably
encumber the site with materials or equipment.
3.14 CUTTING AND PATCHING
3.14.1 The Contractor shall be responsible for cutting, fitting or patching
required to complete the Work or to make its parts fit together properly and
shall restore all portions of the Work which are cut, fitted or patched to a
completely finished condition acceptable to the Development Manager and
Architect.
3.14.2 The Contractor shall not damage or endanger a portion of the Work or
fully or partially completed construction of the [Owner or separate contractors]
Owner's own forces or of other Contractors by cutting, patching or otherwise
altering such construction, or by excavation. The Contractor shall not cut or
otherwise alter such construction by the Owner or a separate contractor except
with written consent of the Owner and [of such separate contractor] such other
Contractors; such consent shall not be unreasonably withheld. The Contractor
shall not unreasonably withhold from the Owner or [a separate contractor] the
other Contractors the Contractor's consent to cutting or otherwise altering the
Work.
3.15 CLEANING UP
3.15.1 The Contractor shall keep the premises and surrounding area free from
accumulation of waste materials or rubbish caused by operations under the
Contract. At completion of the Work the Contractor shall remove from and about
the Project waste materials, rubbish, the Contractor's tools, construction
equipment, machinery and surplus materials.
3.15.2 If the Contractor fails to clean up as provided in the Contract
Documents, the Owner may do so and the cost thereof shall be charged to the
Contractor.
3.15.3 The Contractor shall be responsible for broken glass, and at completion
of the Work shall replace such damaged or broken glass. In addition to general
broom cleaning, the Contractor shall perform the following final cleaning for
all trades at completion of the Work:
.1 Remove temporary protections.
.2 Remove marks, stains, fingerprints and other soil or dirt from painted,
decorated, and natural-finished woodwork and other work.
.3 Remove spots, mortar, plaster, soil and point from ceramic tile, marble,
and other finish materials and wash or wipe clean.
.4 Clean fixtures, cabinetwork and equipment, removing stains, paint, dirt,
and dust and leave it in an undamaged, new condition.
.5 Clean aluminum in accordance with recommendations of the manufacturer.
.6 Clean resilient floors thoroughly with a well rinsed mop containing only
enough moisture to clean off any surface dirt or dust and buff dry by
machine or bring the surfaces to sheen.
.7 Remove all labels and wash both sides of all glass.
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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3.16 ACCESS TO WORK
3.16.1 The Contractor shall provide the Owner, Development Manager and Architect
access to the Work in preparation and progress wherever located.
3.16.2 The Contractor shall forward all communications to the Owner directly,
with a copy to the Development Manager and Architect.
3.17 ROYALTIES AND PATENTS
3.17.1 The Contractor shall pay all royalties and license fees. The Contractor
shall defend suits or claims for infringement of patent rights and shall
indemnify, defend and hold the Owner, Development Manager and Architect harmless
from loss on account thereof, but shall not be responsible for such defense or
loss when a particular design, process or product of a particular manufacturer
or manufacturers is required by the Contract Documents. However, if the
Contractor has reason (or should have had reason) to believe that the required
design, process or product is an infringement of a patent, the Contractor shall
be responsible for such loss unless such information is promptly furnished to
the Architect.
3.18 INDEMNIFICATION
3.18.1 [To the fullest extent permitted by law, the Contractor shall indemnify
and hold harmless the Owner, Architect, Architect's consultants, and agents and
employees of any of them from and against claims, damages, losses and expenses,
including but not limited to attorneys' fees, arising out of or resulting from
performance of the Work, provided that such claim, damage, loss or expense is
attributable to bodily injury, sickness, disease or death, or to injury to or
destruction of tangible property (other than the Work itself) including loss of
use resulting therefrom, but only to the extent caused in whole or in part by
negligent acts or omissions of the Contractor, a Subcontractor, anyone directly
or indirectly employed by them or anyone for whose acts they may be liable,
regardless of whether or not such claim, damage, loss or expense is caused in
part by a party indemnified hereunder. Such obligation shall not be construed to
negate, abridge, or reduce other rights or obligations of indemnity which would
otherwise exist as to a party or person described in this Paragraph 3.18.] To
the greatest extent permitted by law, the Contractor shall indemnify, defend and
hold harmless the Owner, Development Manager, Architect and their agents,
shareholders, directors, employees, affiliates, consultants, successors and
assigns ("Indemnitees") from and against any and all of the following
("Claims"): (i) claims, damages, losses, liability and expenses, including but
not limited to attorneys' fees, arising out of or resulting from the act,
omission, negligence or willful misconduct of the Contractor, Subcontractors,
Sub-subcontractors or their employees or agents or in connection with the
performance of the Work; and (ii) any claim for payment or damages by a
Subcontractor or Sub-subcontractor, except for claims resulting from Owner's
failure to pay Contractor in accordance with the Agreement for Work performed by
such Subcontractor or Sub-subcontractor. Such Claims may include, but are not
limited to, mechanics' liens, unperfected claims of mechanics, materialmen or
laborers, bodily injury, sickness, disease or death, injury to or destruction of
tangible property, or a patent infringement. Such indemnity obligation shall not
be construed to negate, abridge, or otherwise reduce any other right or
obligation of indemnity which would otherwise exist in favor or any person or
party described in this Paragraph 3.18 under the Contract Documents or at law or
in equity. Nothing herein shall be deemed to abridge the right of Owner to seek
contribution where appropriate.
3.18.2 In claims against any person or entity indemnified under this paragraph
3.18 by an employee of the Contractor, a Subcontractor, anyone directly or
indirectly employed by them or anyone for whose acts they may be liable, the
indemnification obligation under this Paragraph 3.18 shall not be limited by a
limitation on amount or type of damages, compensation or benefits payable by or
for the Contractor or a Subcontractor under workers' or workmen's compensation
acts, disability benefit acts or other employee benefit acts.
3.18.3 The obligations of the Contractor under this paragraph 3.18 shall not
extend to the liability of the Development Manager, Architect, [the Architect's]
their consultants, and agents and employees of any of them arising out of (1)
the preparation or approval of maps, drawings, opinions, reports, surveys,
Change Orders, designs or specifications, or (2) the giving of the failure to
give directions or instructions by the Architect, the Architect's consultants,
and agents and employees of any of them provided such giving or failure to give
is the primary cause of the injury or damage.
3.18.4 The Contractor shall defend Indemnitees, through counsel reasonably
approved by Owner, in any action, proceeding or arbitration brought against the
Indemnitees, or any of them, by reason of any such claim described above in this
paragraph 3.18. The Contractor's obligation to defend Indemnitees shall extend
to any action, proceeding or arbitration alleging any claim described in this
paragraph 3.18, except if such action, proceeding or arbitration asserts or
alleges only that the injury to the claimant results solely from the negligence
or misconduct of Indemnitees, or any of them, and from no other cause, or if a
final judgment is obtained establishing that such injury to the claimant
resulted solely from the negligence or misconduct of Indemnitees, or any of
them, in which event Contractor's obligation to defend Indemnitees shall cease
upon the date such judgment becomes final and each Indemnitee shall thereupon
reimburse Contractor for its reasonable attorneys' fees, consultant's fees and
court costs incurred in so defending that Indemnitee.
3.18.5 If any claim or lien or stop-notice or any other demand for payment or
security therefor, including claims or demands upon the performance and payment
bond sureties, is made or filed with or against the Owner or the Project by
Contractor or by any Person claiming that the Contractor or any Subcontractor,
Sub-Subcontractor, Supplier or other person under it has failed to perform its
contractual obligations or to make payment for any labor, services, materials,
equipment, taxes, trust fund contribution or other items or obligations
furnished or incurred for, or in connection with, the Work, or if the Contractor
or any Subcontractor, Sub-Subcontractor, Supplier or other person under it
causes damage to the Work or fails to comply with the terms or provisions of the
Contract Documents (and Owner has not received insurance proceeds fully
compensating it for such damage or failure), then the Owner shall have the right
to retain from any payment then due or thereafter to become due an amount
sufficient to (1) satisfy, discharge and defend against any such claim of lien
or stop notice or other demand, or any action or proceeding thereon which may be
brought to judgment or award; (2) make good any such nonpayment, nonperformance,
damage, failure or default; and (3) compensate the Owner and other Indemnitees
for, and indemnify them against, any and all losses, reasonable accountants',
reasonable consultants' and reasonable experts' fees and costs which may be
sustained or incurred, by the Owner and other Indemnitees through counsel
reasonably approved by Owner in connection therewith. The Owner shall have the
right to apply and charge against any amount due to be paid to the Contractor,
or any amounts retained from such payments, as may be required for the foregoing
purposes. If the amount to be paid, or the amount retained, is insufficient
therefor, the Contractor shall be liable for the difference and upon written
demand shall immediately pay the same to the Owner. The provisions of this
paragraph are in addition to such other rights and entitlements as the
Indemnitees may enjoy against Contractor under this Agreement, the Contract
Documents, and at law and in equity, provided, however, the provisions of this
paragraph shall not apply to any claim of lien, stop-notice or other demand for
payment or security which arise out of Owner's breach of this Agreement,
including Owner's failure or the failure of the lender(s) for the Project to pay
for the Work which is the subject of the lien, stop notice or other demand.
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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3.18.6 Should any Subcontractor, Sub-Subcontractor, Supplier or other person
under them make, record or file, or maintain any action on or respecting, a
claim of mechanic's lien, a stop-notice or equitable lien, a claim of the
payment or performance bond, or a lis pendens, the Contractor shall immediately
and at its own expense procure, furnish and record appropriate statutory release
bonds, or take other action reasonably approved by Owner, which would under
applicable law extinguish or expense said claim, stop-notice or lis pendens. Any
failure of the Contractor to procure, furnish and record such release bond may
be treated by the Owner as an event of default under the Contract Documents.
Notwithstanding the foregoing, Contractor shall have no obligations to take the
action required under this paragraph if any such claim, lien or lis pendens
results from Owner's failure to make progress payments required hereunder.
3.19.1 If the Owner furnishes to the Contractor a construction loan agreement or
similar agreement between Owner and any lender, Contractor agrees to fully
cooperate with Owner in reasonably complying with the provisions thereof and
agrees to furnish any and all information, reports and certificates which are
required thereunder. Contractor specifically agrees to make such changes to the
Contract Documents as the lender may reasonably request, including without
limitation, changes to the monthly payment schedule, retentions, data to be
delivered with invoices, lender inspections, delivery of notices to the lender
regarding various matters and assignment of the Contract Documents to the
lender.
3.19.2 The Contractor shall provide all documents, reports and other information
requested by any escrow agent or title insurer, and shall cooperate with such
persons to the fullest extent possible.
3.19.3 In the event any lender of the Owner shall designate an inspecting
architect or other representative, the Owner may require the concurrence of such
architect or representative in each instance in which approval of Owner,
Development Manager or Architect is required by any Provision of these General
Conditions or other Contract Documents. The Contractor agrees to cooperate with
such inspecting architect or representative.
3.20 Contractor shall, in addition to any other Contractor duties and
obligations set forth in this Contract and subject to the terms and provisions
of this Contract, perform the following:
3.20.1 The Contractor, and any Subcontractor if expressly requested by Owner or
Development Manager, shall provide Owner and Development Manager with a copy of
the current contractor's license and certificate of insurance for the Contractor
prior to payment of the first Application for Payment. The Contractor shall
remain at all times during the term of this Contract fully qualified and capable
of performing every phase of the Work to complete the Project, either itself or
through the Subcontractors.
3.20.2 The Contractor shall maintain at the site on a current basis records of
all Subcontracts, orders for materials and equipment, shop drawings, samples,
and any other related documents and revisions thereto which arise out of the
Contract Documents or the Work.
3.20.3 After Substantial Completion, the Contractor shall perform or assist
Owner or Development Manager in the start-up of all Equipment and other
mechanical operations and systems included as a part of the Work.
ARTICLE 4
ADMINISTRATION OF THE CONTRACT
4.1 ARCHITECT AND DEVELOPMENT MANAGER
4.1.1 The Architect is the person lawfully licensed to practice architecture or
an entity lawfully practicing architecture identified as such in the Agreement
and is referred to throughout the Contract Documents as if singular in number.
The term "Architect" means the Architect or the Architect's authorized
representative.
4.1.2 The Development Manager is Sares-Regis Group of Northern California, LP,
with offices at 393 Vintage Park Drive, Suite 100, Foster City, CA 94404-1134 or
such successor as the Owner may appoint from time to time by written notice to
the Contractor.
4.1.[2]3 [Duties, responsibilities and limitations of authority of the
Architect as set forth in the Contract Documents shall not be restricted,
modified or extended without written consent of the Owner, Contractor and
Architect. Consent shall not be unreasonably withheld.] The duties,
responsibilities and limitations of authority of the Architect and Development
Manager as set forth in the Contract Documents shall not be modified or extended
without written consent of the Owner and the Architect or Development Manager
and written notice to the Contractor, except that the Owner may unilaterally
limit the Architect's or Development Manager's authority from time to time by
written notice to the Contractor; however, the limiting of the Development
Manager's or Architect's authority cannot be retroactive. Except to the extent
provided in Paragraph 7.5, Owner shall have no liability for the negligence,
willful misconduct or defaults of Development Manager or Architect. If
Contractor incurs any expense or liability as a result thereof, Contractor shall
be subrogated to the rights, if any, of Owner against Development Manager or
Architect.
It is the intent of the parties that if there are any errors or inconsistencies
in the Specifications and Drawings or if the Specifications or Drawings are in
violation of Law, then (i) Contractor and the Architect preparing such
Specifications and Drawings shall allocate such liability and responsibility,
should they so elect, in a separate document of which Owner shall not be a
party, (ii) as between Owner and Contractor, Owner shall have no liability or
responsibility whatsoever (except to the limited extent provided in Paragraph
7.5).
4.1.4 In case of termination of employment of the Architect or Development
Manager, [the Owner shall appoint an architect against whom the Contractor makes
no reasonable objection and whose status under the Contract Documents shall be
that of the former architect.] Owner may at any time employ or retain any
licensed Architect or person or entity qualified to act as Architect or
Development Manager to perform all or any part of their duties hereunder or to
exercise any of their rights hereunder. Owner shall notify all parties in
writing (setting forth the scope of said replacement Architect's or Development
Manager's duties and responsibilities).
4.1.4 Disputes arising under Subparagraphs 4.1.2 and 4.1.3 shall be subject to
arbitration.
4.2 [ARCHITECT'S] ADMINISTRATION OF THE CONTRACT
4.2.1 [The Architect will provide administration of the Contract 2s described in
the Contract Documents, and will be the Owner's representative (I) during
construction, (2) until final payment is due and (3) with the Owner's
concurrence, from time to time during the correction period described in
Paragraph 12.2. The Architect will advise and consult with the Owner. The
Architect will have authority to act on behalf of the Owner only to the extent
provided in the Contract Documents, unless otherwise modified by written
instrument in accordance with other provisions of the Contract.] The Owner shall
provide administration of the Contract as hereinafter described and may delegate
any part of such obligation to the Development Manager or Architect, but such
delegation shall not limit the Owner's right to require its concurrence or
approval of the Development Manager's or Architect's actions, if the Owner so
elects. The Owner may participate in all major meetings as required, and may
serve as the person through whom the Contractor special communications and needs
are passed, including requests for information and special consultation with
architects, engineers, outside consultants and lending institutions.
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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The Development Manager, with the concurrence of the Owner and Architect, shall
have general supervision and direction of the Work. The Architect, with the
approval of the Owner in each case shall supervise and instruct the Contractor
with regard to matters set forth in the Drawings and Specifications. In addition
to any specific responsibilities assigned elsewhere in the Contract Documents,
the Owner shall decide any and all questions which may arise as to the rate of
progress of the Work. The Development Manager and Architect will have authority
to act on behalf of the Owner only to the extent provided in the Contract
Documents, unless otherwise modified by written instrument executed by Owner.
4.2.2 The Architect will visit the site at intervals appropriate to the stage of
construction to become generally familiar with the progress and quality of the
completed Work and to determine in general if the Work is being performed in a
manner indicating that the Work, when completed, will be in accordance with the
Contract Documents. However, the Architect will not be required to make
exhaustive or continuous on-site inspections to check quality or quantity of the
Work. On the basis of on-site observations as an architect, the Architect will
keep the Owner informed of progress of the Work, and will endeavor to guard the
Owner against defects and deficiencies in the Work.
4.2.3 The Development Manager and The the Architect will not have control over
or charge of and will not be responsible for construction means, methods,
techniques, sequences or procedures, or for safety precautions and programs in
connection with the Work, since these are solely the Contractor's responsibility
as provided in Paragraph 3.3. The Architect will not be responsible for the
Contractor's failure to carry out the Work in accordance with the Contract
Documents. The Architect will not have control over or charge of and will not be
responsible for acts or omissions of the Con-tractor, Subcontractors, or their
agents or employees, or of any other persons performing portions of the Work.
4.2.4 COMMUNICATIONS FACILITATING CONTRACT ADMINISTRATION. Except as otherwise
provided in the Contract Documents or when direct communications have been
specially authorized by Owner, the Owner and Contractor shall [endeavor to]
communicate through the [Architect] Development Manager; provided, however, that
Owner may instruct, correspond or negotiate with Contractor directly.
Communications by and with the Architect's consultants shall be through the
Architect. Communications by and with Subcontractors and material suppliers
shall be through the Contractor. Communications by and with [separate
contractors] other Contractors shall be through the [Owner] Development Manager.
4.2.5 [Based on the Architect's observations and evaluations of the Contractor's
Applications for Payment, the Architect will review and certify the amounts due
the Contractor and will issue Certificates for Payment in such amounts.]
4.2.6 The Owner, Development Manager and Architect will have authority to reject
Work which does not conform to the Contract Documents. Whenever the Architect
considers it necessary or advisable for implementation of the intent of the
Contract Documents, and after consulting with Development Manager, the Architect
will have authority to require additional inspection or testing of the Work in
accordance with Subparagraphs 13.5.2 and 13.5.3, whether or not such Work is
fabricated, installed or completed. However, neither this authority of the
Owner, Development Manager and Architect nor a decision made in good faith
either to exercise or not to exercise such authority shall give rise to a duty
or responsibility of the Owner, Development Manager or Architect to the
Contractor, Subcontractors, material and equipment suppliers, their agents or
employees, or other persons performing portions of the Work.
4.2.7 The Architect will review and approve or take other appropriate action
upon the Contractor's submittals such as Shop Drawings, Product Data and
Samples, but only for the limited purpose of checking for conformance with
information given and the design concept expressed in the Contract Documents.
The Architect's action will be taken with such reasonable promptness as to cause
no delay in the Work or in the activities of the Owner, Contractor or separate
contractors, while allowing sufficient time in the Architect's professional
judgment to permit adequate review. Review of such submittals is not conducted
for the purpose of determining the accuracy and completeness of other details
such as dimensions and quantities, or for substantiating instructions for
installation or performance of equipment or systems, all of which remain the
responsibility of the Contractor as required by the Contract Documents. The
Architect's review of the Contractor's submittals shall not relieve the
Contractor of the obligations under Paragraphs 3.3, 3.5 and 3.12. The
Architect's review shall not constitute approval of safety precautions or,
unless otherwise specifically stated by the Architect, of any construction
means, methods, techniques, sequences or procedures. The Architect's approval of
a specific item shall not indicate approval of an assembly of which the item is
a component.
4.2.8 The Architect Development Manager will [prepare] direct the Architect to
issue Change Orders and Construction Change Directives, and may authorize minor
changes in the Work as provided in Paragraph 7.4. All Change Orders and
Construction Change Directives shall require the approval of Owner in writing to
be binding on Owner.
4.2.9 The Architect will conduct inspections to determine the date or dates of
Substantial Completion and the date of Final Completion, will receive and
forward to the Owner for the Owner's review and records written warranties and
related documents required by the Contract and assembled by the Contractor, and
will issue a final Certificate for Payment upon compliance with the requirements
of the Contract Documents approve, subject to Owner's review and approval, the
final Application for Payment in such amounts.
4.2.10 If the Owner and Architect agree, the Architect will provide one or more
project representatives to assist in carrying out the Architect's
responsibilities at the site. The duties, responsibilities and limitations of
authority of such project representatives shall be as set forth in an exhibit to
be incorporated in the Contract Documents.
4.2.11 Subject to Paragraph 4.3 hereinbelow in respect of claims, the [The]
Architect will, in the first instance, interpret and decide matters concerning
performance under and requirements of the Contract Documents on written request
of either the Owner, Development Manager or Contractor. The Architect's response
to such requests will be made with reasonable promptness and within any time
limits agreed upon. If no agreement is made concerning the time within which
interpretations required of the Architect shall be furnished in compliance with
this Paragraph 4.2, then delay shall not be recognized on account of failure by
the Architect to furnish such interpretations until 15 days after written
request is made for them. Should a conflict be discovered within the Contract
Documents, the CONTRACTOR SHALL BE DEEMED TO HAVE AGREED TO PERFORM THE WORK IN
ACCORDANCE WITH THE LEVEL OF QUALITY ESTABLISHED IN THE PLANS AND SPECIFICATION
AND ACCEPTED INDUSTRY STANDARDS FOR SIMILAR PROJECTS unless it shall have asked
for and obtained a decision, in writing, approved by Owner, from the Architect
before entering into the Contract.
4.2.12 Interpretations and decisions of the Architect will be consistent with
the intent of and reasonably inferable from the Contract Documents and will be
in writing or in the form of drawings. When making such interpretations and
decisions, the Architect will endeavor to secure faithful performance by both
Owner and Contractor, will not show partiality to either and will not be liable
for results of interpretations or decisions so rendered in good faith.
4.2.13 The Architect's decisions on matters relating to aesthetic effect will be
final if consistent with the intent expressed in the Contract Documents.
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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4.3 CLAIMS AND DISPUTES
4.3.1 DEFINITION. A Claim is a demand or assertion by one of the parties
seeking, as a matter of right, adjustment [or interpretation] of Contract terms,
payment of money, extension of time or other relief with respect to the terms of
the Contract. The term "Claim" also includes other disputes [and matters in
question] between the Owner and Contractor arising out of or relating to the
Contract. Claims must be made by written notice. The responsibility to
substantiate Claims shall rest with the party making the Claim.
4.3.2 DECISION OF ARCHITECT. Claims, including those alleging an error or
omission by the Development Manager or Architect, shall be referred initially to
the Architect for action as provided in Paragraph 4.4. A decision by the
Architect, as provided in Subparagraph 4.4.4, shall be required as a condition
precedent to arbitration or litigation of a Claim between the Contractor and
Owner as to all such matters arising prior to the date final payment is due,
regardless of (1) whether such matters relate to execution and progress of the
Work or (2) the extent to which the Work has been completed. The decision by the
Architect in response to a Claim shall not be a condition precedent to
arbitration or litigation in the event (l) the position of Architect is vacant,
(2) the Architect has not received evidence or has failed to render a decision
within agreed time limits, (3) the Architect has failed to take action required
under Subparagraph 4.4.4 within 30 days after the Claim is made, (4) 45 days
have passed after the Claim has been referred to the Architect or (5) the Claim
relates to a mechanic's lien.
4.3.3 TIME LIMITS ON CLAIMS. Claims by either party must be made within 21 days
after occurrence of the event giving rise to such Claim or within 21 days after
the claimant first recognizes the condition giving rise to the Claim, whichever
is later. Claims must be made by written notice. An additional Claim made after
the initial Claim has been implemented by Change Order will not be considered
unless submitted in a timely manner.
4.3.4 CONTINUING CONTRACT PERFORMANCE. Pending final resolution of a Claim
including arbitration, unless otherwise agreed in writing the Contractor shall
proceed diligently with performance of the Contract and the Owner shall continue
to make payments in accordance with the Contract Documents.
4.3.5 WAIVER OF CLAIMS: FINAL PAYMENT. The making of final payment shall
constitute a waiver of Claims by the Owner except those arising from:
.1 liens, Claims, security interests or encumbrances arising out of
the Contract and unsettled;
.2 failure of the Work to comply with the requirements of the
Contract Documents; or
.3 terms of special warranties required by the Contract Documents.
4.3.6 CLAIMS FOR CONCEALED OR UNKNOWN CONDITIONS. If a Concealed Condition is
discovered at the site [which are (1) subsurface or otherwise concealed physical
conditions which differ materially from those indicated in the Contract
Documents, or (2) unknown physical conditions of an unusual nature which differ
materially from those ordinarily found to exist and generally recognized as
inherent in construction activities of the character provided for in the
Contract Documents], then notice by the observing party shall be given to the
other party promptly before conditions are disturbed and in no event later than
21 days after first observance of the conditions. The Architect will promptly
investigate such conditions and, if they differ materially and cause an increase
or decrease in the Contractor's cost of, or time required for, performance of
any part of the Work, and if Contractor neither knew nor should have known of
such Concealed Condition prior to entering into this Agreement or prior to
establishing the Guaranteed Maximum Price, will recommend an equitable
adjustment in the Contract Sum or Contract Time, or both. If the Architect
determines that the conditions at the site are not materially different from
those indicated in the Contract Documents or that Contractor either knew or
should have known of such Concealed Condition prior to the time established
above, and that no change in the terms of the Contract is justified, the
Architect shall so notify the Owner and Contractor in writing, stating the
reasons. Claims by either party in opposition to such determination must be made
within 21 days after the Architect has given notice of the decision. If the
Owner and Contractor cannot agree on an adjustment in the Contract Sum or
Contract Time, the adjustment shall be referred to the Architect for initial
determination, subject to further proceedings pursuant to Paragraph 4.4.
4.3.7 CLAIMS FOR ADDITIONAL COST. If the Contractor wishes to make Claim for an
increase in the Contract Sum, written notice as provided herein shall be given
before proceeding to execute the Work. Prior notice is not required for Claims
relating to an emergency endangering life or property arising under Paragraph
10.3. [If the Contractor believes additional cost is involved for reasons
including but not limited to (1) a written interpretation from the Architect,
(2) an order by the Owner to stop the Work where the Contractor was not at
fault, (3) a written order for a minor change in the Work issued by the
Architect, (4) failure of payment by the Owner, (5) termination of the Contract
by the Owner, (6) Owner's suspension or (7) other reasonable grounds, Claim
shall be filed in accordance with the procedure established herein.] Contractor
shall only be allowed to make and recover on a Claim for an increase in the
Contract Sum resulting from events specifically listed in Paragraph 7.5; no
other increase in the Cost of the Work shall result in an increase in the
Contract Sum.
4.3.8 CLAIMS FOR ADDITIONAL TIME
4.3.8.1 If the Contractor wishes to make Claim for an increase in the Contract
Time, written notice as provided herein shall be given. The Contractor's Claim
shall include an estimate of cost and of probable effect of delay on progress of
the Work. In the case of a continuing delay only one Claim is necessary.
4.3.8.2 If adverse weather conditions are the basis for a Claim for additional
time, such Claim shall be documented by data substantiating that weather
conditions [were abnormal for the period of time and could not have been
reasonably anticipated, and that weather conditions] had an adverse effect on
the scheduled construction.
4.3.9 INJURY OR DAMAGE TO PERSON OR PROPERTY. If either party to the Contract
suffers injury or damage to person or property because of an act or omission of
the other party, of any of the other party's employees or agents, or of others
for whose acts such party is legally liable, written notice of such injury or
damage, whether or not insured, shall be given to the other party within a
reasonable time not exceeding 2 I days after first observance. The notice shall
provide sufficient detail to enable the other party to investigate the matter.
If a Claim for additional cost or time related to this Claim is to be asserted,
it shall be filed as provided in Subparagraphs 4.3.7 or 4.3.8.
4.4 RESOLUTION OF CLAIMS AND DISPUTES
4.4.1 The Architect will review Claims and take one or more of the following
preliminary actions within ten days of receipt of a Claim: (1) request
additional supporting data from the claimant, (2) submit a schedule to the
parties indicating when the Architect expects to take action, (3) reject the
Claim in whole or in part, stating reasons for rejection, (4) recommend approval
of the Claim by the other party or (5) suggest a compromise. The Architect may
also, but is not obligated to, notify the surety, if any, of the nature and
amount of the Claim.
4.4.2 If a Claim has been resolved, the Architect, or at Owner's sole option,
Owner will prepare or obtain appropriate documentation.
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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4.4.3 If a Claim has not been resolved, the party making the Claim shall, within
ten days after the Architect's preliminary response, take one or more of the
following actions: (1) submit additional supporting data requested by the
Architect, (2) modify the initial Claim or (3) notify the Architect that the
initial Claim stands.
4.4.4 If a Claim has not been resolved after consideration of the foregoing and
of further evidence presented by the parties or requested by the Architect, the
Architect will notify the parties in writing that the Architect's decision will
be made within seven days, which decision shall be [final and] considered
advisory only and not binding on the parties [but subject to arbitration]. Upon
expiration of such time period, the Architect will render to the parties the
Architect's written decision relative to the Claim, including any change in the
Contract Sum or Contract Time or both. If there is a surety and there appears to
be a possibility of a Contractor's default, the Architect may, but is not
obligated to, notify the surety and request the surety's assistance in resolving
the controversy.
4.5 ARBITRATION
4.5.1 CONTROVERSIES AND CLAIMS SUBJECT TO ARBITRATION. Any controversy or Claim
arising out of or related to the Contract, or the breach thereof, shall be
settled by arbitration in accordance with the Construction Industry Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrator or arbitrators may be entered in any court having
jurisdiction thereof, except controversies or Claims relating to aesthetic
effect and except those waived as provided for in Subparagraph 4.3.5. Such
controversies or Claims upon which the Architect has given notice and rendered a
decision as provided in Subparagraph 4.4.4 shall be subject to arbitration upon
written demand of either party. Arbitration may be commenced when 45 days have
passed after a Claim has been referred to the Architect as provided in Paragraph
4.3 and no decision has been rendered.
4.5.2 RULES AND NOTICES FOR ARBITRATION. Claims between the Owner and Contractor
not resolved under Paragraph 4,4 shall, if subject to arbitration under
Subparagraph 4.5.1, be decided by arbitration in accordance with the
Construction Industry Arbitration Rules of the American Arbitration Association
currently in effect, unless the parties mutually agree otherwise. Notice of
demand for arbitration shall be filed in writing with the other party to the
Agreement between the Owner and Contractor and with the American Arbitration
Association, and a copy shall be filed with the Architect.
4.5.3 CONTRACT PERFORMANCE DURING ARBITRATION. During arbitration proceedings,
the Owner and Contractor shall comply with Subparagraph 4.3.4.
4.5.4 WHEN ARBITRATION MAY BE DEMANDED. Demand for arbitration of any Claim may
not be made until the earlier of (1) the date on which the Architect has
rendered a final written decision on the Claim, (2) the tenth day after the
parties have presented evidence to the Architect or have been given reasonable
opportunity to do so, if the Architect has not rendered a final written decision
by that date, or (3) any of the five events described in Subparagraph 4.3.2.
4.5.4.1 When a written decision of the Architect states that (1) the decision is
final but subject to arbitration and (2) a demand for arbitration of a Claim
covered by such decision must be made within 30 days after the date on which the
party making the demand receives the final written decision, then failure to
demand arbitration within said 30 days' period shall result in the Architect's
decision becoming final and binding upon the Owner and Contractor. If the
Architect renders a decision after arbitration proceedings have been initiated,
such decision may be entered as evidence, but shall not supersede arbitration
proceedings unless the decision is acceptable to all parties concerned.
4.5.4.2 A demand for arbitration shall be made within the time limits specified
in Subparagraphs 4.5.1 and 4.5.4 and Clause 4.5.4.1 as applicable, and in other
cases within a reasonable time after the Claim has arisen, and in no event shall
it be made after the date when institution of legal or equitable proceedings
based on such Claim would be barred by the applicable statute of limitations as
determined pursuant to Paragraph 13.7.
4.5.5 Limitation on Consolidation or Joinder. No arbitration arising out of or
relating to the Contract Documents shall include, by consolidation or joinder or
in any other manner, the Architect, the Architect's employees or consultants,
except by written consent containing specific reference to the Agreement and
signed by the Architect, Owner, Contractor and any other person or entity sought
to be joined. No arbitration shall include, by consolidation or joinder or in
any other manner, parties other than the Owner, Contractor, a separate
contractor as described in Article 6 and other persons substantially involved in
a common question of fact or law whose presence is required if complete relief
is to be accorded in arbitration. No person or entity other than the Owner,
Contractor or a separate contractor as described in Article 6 shall be included
as an original third party or additional third party to an arbitration whose
interest or responsibility is insubstantial. Consent to arbitration involving an
additional person or entity shall not constitute consent to arbitration of a
dispute not described therein or with a person or entity not named or described
therein. The foregoing agreement to arbitrate and other agreements to arbitrate
with an additional person or entity duly consented to by parties to the
Agreement shall be specifically enforceable under applicable law in any court
having jurisdiction thereof.
4.5.6 CLAIMS AND TIMELY ASSERTION OF CLAIMS. A party who files a notice of
demand for arbitration must assert in the demand all Claims then known to that
party on which arbitration is permitted to be demanded. When a party fails to
include a Claim through oversight, inadvertence or excusable neglect, or when a
Claim has matured or been acquired subsequently, the arbitrator or arbitrators
may permit amendment.
4.5.7 JUDGMENT ON FINAL AWARD. The award rendered by the arbitrator or
arbitrators shall be final, and judgment may be entered upon it in accordance
with applicable law in any court having jurisdiction thereof.
ARTICLE 5
SUBCONTRACTORS
5.1 DEFINITIONS
5.1.1 A Subcontractor is a person or entity who has a direct contract with the
Contractor to perform a portion of the Work at the site. The term
"Subcontractor" is referred to throughout the Contract Documents as if singular
in number and means a Subcontractor or an authorized representative of the
Subcontractor. The term "Subcontractor does not include [a separate contractor]
other Contractors or subcontractors of [a separate contractor] other
Contractors.
5.1.2 A Sub-subcontractor is a person or entity who has a direct or indirect
contract with a Subcontractor to perform a portion of the Work at the site. The
term "Sub-subcontractor" is referred to throughout the Contract Documents as if
singular in number and means a Sub-subcontractor or an authorized representative
of the Sub-subcontractor.
5.1.3 The terms Subcontractor and Sub-subcontractor also include persons
supplying materials and equipment incorporated into, used in connection with, or
consumed by the Work.
5.2 AWARD OF SUBCONTRACTS AND OTHER CONTRACTS FOR PORTIONS OF THE WORK
5.2.1 Unless otherwise stated in the Contract Documents or the bidding
requirements, the Contractor, as soon as practicable after award of the
Contract, shall furnish in writing to the [Owner through the Architect]
Development Manager for review by the Owner, Development Manager and Architect
the names of persons or entities (including
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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those who are to furnish materials or equipment fabricated to a special design)
proposed for each portion of the Work.[ The Architect will promptly reply to the
Contractor in writing stating whether or not the Owner or the Architect, after
due investigation, has reasonable objection to any such proposed person or
entity. Failure of the Owner or Architect to reply promptly shall constitute
notice of no reasonable objection.] Copies of all bids or other proposals from
Subcontractors shall, upon request of the Owner, be submitted to the Owner. All
Subcontractors shall be subject to the approval of Owner which approval shall
not be unreasonably withheld.
5.2.2 The Contractor shall not contract with a proposed person or entity to whom
the Owner, Development Manager or Architect has made reasonable and timely
objection. The Contractor shall not be required to contract with anyone to whom
the Contractor has made reasonable objection.
5.2.3 If the Owner, Development Manager or Architect has reasonable objection to
a person or entity proposed by the Contractor, the Contractor shall propose
another to whom the Owner, Development Manager or and Architect has have no
reasonable objection. The Contract Sum shall be increased or decreased by the
difference in cost occasioned by such change and an appropriate Change Order
shall be issued. However, no increase in the Contract Sum shall be allowed for
such change unless the Contractor has acted promptly and responsively in
submitting names as required.
5.2.4 The Contractor shall not change a Subcontractor, person or entity
previously selected if the Owner, Development Manager or Architect makes
reasonable objection to such change. The Owner may require the Contractor to
change any Subcontractor previously approved and, if at such time the Contractor
is not in default hereunder, the Contract Sum shall be increased or decreased by
the difference in cost occasioned by such change.
5.2.5 Prior to solicitation of bids from Subcontractors and material suppliers,
Contractor shall submit to the Owner, Development Manager and Architect a
proposed list of bidders. The Owner reserves the right to approve and add to
such bidders list. Such approval shall be in writing.
5.2.6 It is understood that in the event of a conflict between Owner, on the one
hand, and the Development Manager or Architect, on the other hand, regarding the
selection of subcontractors, the Owner's decision in selection of subcontractors
shall govern.
5.3 SUBCONTRACTUAL RELATIONS
5.3.1 By appropriate written agreement, [written where legally required for
validity,] the Contractor shall require each Subcontractor, to the extent of the
Work to be performed by the Subcontractor, to be bound to the Contractor by
terms of the Contract Documents, and to assume toward the Contractor all the
obligations and responsibilities which the Contractor, by these Documents,
assumes toward the Owner, Development Manager and Architect. Each subcontract
agreement shall preserve and protect the rights of the Owner, Development
Manager and Architect under the Contract Documents with respect to the Work to
be performed by the Subcontractor so that subcontracting thereof will not
prejudice such rights, and shall allow to the Subcontractor, unless specifically
provided otherwise in the subcontract agreement, the benefit of all rights,
remedies and redress against the Contractor that the Contractor, by the Contract
Documents, has against the Owner. Where appropriate, the Contractor shall
require each Subcontractor to enter into similar agreements with
Sub-subcontractors. The Contractor shall make available to each proposed
Subcontractor, prior to the execution of the subcontract agreement, copies of
the Contract Documents to which the Subcontractor will be bound, and, upon
written request of the Subcontractor, identify to the Subcontractor terms and
conditions of the proposed subcontract agreement which may be at variance with
the Contract Documents. Subcontractors shall similarly make copies of applicable
portions of such documents available to their respective proposed
Sub-subcontractors.
5.3.2 Any part of the work performed for the Contractor by a Subcontractor shall
be pursuant to a written Subcontract between the Contractor and such
Subcontractor, which shall be prepared on the form of Subcontract which the
Owner has approved. Each Subcontract shall:
.1 require that such work be performed in accordance with the
requirements of the Contract Documents;
.2 waive all rights the contracting parties may have against one
another or that the Subcontractor may have against the Owner for
damages caused by fire or other perils covered by the property
insurance described in the Contract Documents;
.3 require the Subcontractor to carry and maintain liability
insurance in accordance with the Contract Documents; and
.4 require the Subcontractor to furnish such certificates and waivers
of liens as Owner, any lender or title insurer may reasonably
request including waivers of mechanics' lien rights to the extent
permitted by law.
5.4 CONTINGENT ASSIGNMENT OF SUBCONTRACTS
5.4.1 [Each subcontract agreement for a portion of the Work is assigned by the
Contractor to the Owner provided that:
.1 assignment is effective only after termination of the Contract by
the Owner for cause pursuant to Paragraph 14.2 and only for those
subcontract agreements which the Owner accepts by notifying the
Subcontractor in writing; and
.2 assignment is subject to the prior rights of the surety, if any,
obligated under bond relating to the Contract.]
All subcontract agreements shall conform to the requirements of the Contract
Documents and Contractor hereby assigns to Owner (and Owner's permitted assigns)
all its interest in any subcontract agreements and purchase orders now existing
or hereinafter entered into by Contractor for performance of any part of the
Work, which assignment will be effective upon acceptance by Owner in writing and
only as to those subcontract agreements and purchase orders that Owner
designates in said writing. It is agreed and understood that Owner may only
accept said assignment upon (i) Termination for Cause pursuant to Paragraph
14.2.1, or (ii) upon Termination for Convenience pursuant to Paragraph 14.2.5
and payment of the fee as provided under Paragraph 14.2.6.2. Upon such
acceptance by Owner, (1) Contractor shall promptly furnish to Owner true and
correct copies of the designated subcontract agreements, and purchase orders,
and (2) Owner shall only be required to compensate the designated
Subcontractor(s) or supplier(s) for compensation accruing to such party(ies) for
Work done or materials delivered from and after the date on which Owner
determines to accept the subcontract agreement(s) or purchase order(s). All sums
due and owing by Contractor to the designated Subcontractor(s) or supplier(s)
for work performed or material supplied prior to Owner's determination to accept
the subcontract agreement(s) or purchase order(s) shall constitute a debt
between such parties and Contractor. It is further agreed that all subcontract
agreements and purchase orders shall provide that they are freely assignable by
Contractor to Owner and assigns under the terms and conditions stated
hereinabove. It is further agreed and understood that such assignment is part of
the consideration to Owner for entering into the Contract with Contractor any
may not be withdrawn prior to Final Completion. Contractor shall deliver or
cause to be delivered to Owner a written acknowledgment in form and substance
satisfactory to Owner from each of its Subcontractors and suppliers of the
contingent assignment described herein no later than ten (10) days after the
date of
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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execution of each subcontract agreement and purchase order with such parties.
5.4.2 If the Work has been suspended for more than 30 days, he Subcontractor's
compensation shall be equitably adjusted.
5.5 CONTRACTOR'S RESPONSIBILITY FOR ACTS OF SUBCONTRACTORS
5.5.1 The Contractor shall be totally responsible and liable for all acts and
omissions of the Subcontractors and each of their employees, agents and
independent contractors and all other parties for whose acts any of such
Subcontractors may be liable, to the same extent as the Contractor is
responsible and liable for the acts and omissions of parties directly employed
by the Contractor. The Contractor shall also be solely responsible for the
payment of the Subcontractor and all other persons directly or indirectly
employed by the Contractor or the Subcontractors, whether or not such persons
are entitled to assert mechanics' lien, stop notice, equitable lien or labor and
material lien rights against the Project or the site.
ARTICLE 6
CONSTRUCTION BY OWNER OR BY [SEPARATE] OTHER CONTRACTORS
6.1.1 OWNER'S RIGHT TO PERFORM CONSTRUCTION WITH OWN FORCES AND TO AWARD
[SEPARATE] OTHER CONTRACTS
6.1.1 The Owner reserves the right to perform construction or operations related
to the Project with the Owner's own forces, which include persons or entities
under separate contracts not administered by the Development Manager. The Owner
further reserves the right to award other contracts in connection with other
portions of the Project or other construction or operations on the site [and to
award separate contracts in connection with other portions of the Project or
other construction or operations on the item] under Conditions of the Contract
identical or substantially similar to these including those portions related to
insurance and waiver of subrogation. If the Contractor claims that delay or
additional cost is involved because of such action by the owner, the Contractor
shall make such Claim as provided elsewhere in the Contract Documents.
6.1.2 [When separate contracts are awarded for different portions of the Project
or other construction or operations on the site, the term "Contractor" in the
Contract Documents in each case shall mean the Contractor who executed each
separate Owner-Contractor Agreement.] When the Owner performs construction or
operations with the Owner's own forces, including persons or entities under
separate contracts not administered by the Development Manager, the Owner shall
provide for coordination of such forces with the Work of the Contractor in order
to prevent any disruption or delay to the Work of the Contractor, who shall
cooperate with them.
6.1.3 [The Owner shall provide for coordination of the activities of the Owner's
own forces and of each separate contractor with the Work of the Contractor, who
shall cooperate with them. The Contractor shall participate with other separate
contractors and the Owner in reviewing their construction schedules when
directed to do so. The Contractor shall make any revisions to the construction
schedule and Contract Sum deemed necessary after a joint review and mutual
agreement. The construction schedules shall then constitute the schedules to be
used by the Contractor, separate contractors and the Owner until subsequently
revised.
6.1.4 Unless otherwise provided in the Contract Documents, when the Owner
performs construction or operations related to the Project with the Owner's own
forces, the Owner shall be deemed to be subject to the same obligations and to
have the same rights which apply to the Contractor under the Conditions of the
Contract, including, without excluding others, those stated in Article 3, this
Article 6 and Articles 10, 11 and 12.]
6.2 MUTUAL RESPONSIBILITY
6.2.1 The Contractor shall afford [the Owner and separate contractors] the
Owner's own forces, Development Manager and other Contractors reasonable
opportunity for introduction and storage of their materials and equipment and
performance of their activities and shall connect and coordinate the
Contractor's construction and operations with theirs as required by the Contract
Documents.
6.2.2 If part of the Contractor's Work depends for proper execution or results
upon construction or operations by the [Owner or a separate contractor] Owner's
own forces or other Contractors, the Contractor shall, prior to proceeding with
that portion of the Work, promptly report to the Owner, Development Manager and
Architect [apparent] discrepancies or defects in such other construction that
would render it unsuitable for such proper execution and results or would render
it incompatible with Contractor's Work. Failure of the Contractor so to report
shall constitute an acknowledgment that the Owner's [or separate contractors']
or other Contractors' completed or partially completed construction is fit and
proper to receive the Contractor's Work[, except as to defects not then
reasonably discoverable] and is fully compatible therewith.
6.2.3 [Costs] Subject to Paragraph 8.3 hereof, costs caused by delays or by
improperly timed activities or defective construction shall be borne by the
party responsible therefor.
6.2.4 The Contractor shall promptly remedy damage wrongfully caused by the
Contractor to completed or partially completed construction or to property of
the Owner or [separate contractors] other Contractors as provided in
Subparagraph 10.2.5 or to other completed or partially completed construction or
property on the site or to property of any adjoining owner or other party.
6.2.5 Claims and other disputes and matters in question between the Contractor
and a separate contractor shall be subject to the provisions of Paragraph 4.3
provided the separate contractor has reciprocal obligations.
6.2.6 The Owner and each separate contractor shall have the same
responsibilities for cutting and patching as are described for the Contractor in
Paragraph 3.14.
6.3 OWNER'S RIGHT TO CLEAN UP
6.3.1 If a dispute arises among the Contractor[, separate contractors and the
Owner] and other Contractors as to their responsibility [under their respective
contracts for maintaining the premises and surrounding area free from waste
materials and rubbish as described in Paragraph 3.15, the Owner may clean up and
allocate the cost among those responsible as the Architect determines to be
just.] for cleaning up as required by Paragraph 3.15, assignment of this
clean-up will be determined by the Development Manager.
ARTICLE 7
CHANGES IN THE WORK
7.1 CHANGES
7.1.1 Changes in the Work may be accomplished after execution of the Contract,
and without invalidating the Contract, only by Change Order, Construction Change
Directive or order for a minor change in the Work as provided in Paragraph 7.4,
subject to the limitations stated in this Article 7 and elsewhere in the
Contract Documents. When submitting a proposal for a Change Order or
Construction Change Directive, the Contractor shall include and set forth in
clear and precise detail breakdowns of labor and materials for all trades
involved and the estimated impact on the construction schedule. The Contractor
shall furnish spread sheets from which the breakdowns were prepared, plus spread
sheets, if requested, of any Subcontractors.
7.1.2 A Change Order shall be based upon agreement among the Owner, and
Contractor; a Construction Change
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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Directive requires agreement by the Owner, Development Manager and Architect and
may or may not be agreed to by the Contractor; an order for a minor change in
the Work may be issued by the Architect Development Manager alone.
7.1.3 Changes in the Work shall be performed under applicable provisions of the
Contract Documents, and the Contractor shall proceed promptly, unless otherwise
provided in the Change Order, Construction Change Directive or order for a minor
change in the Work.
7.1.4 If unit prices are stated in the Contract Documents or subsequently agreed
upon, and if quantities originally contemplated are so changed in a proposed
Change Order or Construction Change Directive that application of such unit
prices to quantities of Work proposed will cause substantial inequity to the
Owner or Contractor, the applicable unit prices shall be equitably adjusted.
7.2 CHANGE ORDERS
7.2.1 A Change Order is a written instrument prepared by the [Architect]
Development Manager and signed by the Owner, Contractor, Development Manager and
Architect, stating their agreement upon all of the following for the item
covered in each Change Order as well as the cumulative effect and impact of all
previous Change Orders:
.1 a change in the Work;
.2 the amount of the adjustment in the Contract Sum, if any; and
.3 the extent of the adjustment in the Contract Time, if any[.]; and
.4 the portion of the cost thereof to be applied against the Contractor's
Contingency or the Owner's Contingency.
7.2.2 Methods used in determining adjustments to the Contract Sum may include
those listed in Subparagraph 7.3.3.
7.3 CONSTRUCTION CHANGE DIRECTIVES
7.3.1 A Construction Change Directive is a written order [prepared by the
Architect] directed to the Contractor and signed by the Owner [and architect],
directing a change in the Work and stating a proposed basis for adjustment, if
any, in the Contract Sum or Contract Time, or both. The Owner may by
Construction Change Directive, without invalidating the Contract, order changes
in the Work within the general scope of the Contract consisting of additions,
deletions or other revisions, the Contract Sum and Contract Time being adjusted
accordingly.
7.3.2 A Construction Change Directive shall be used in the absence of total
agreement on the terms of a Change Order.
7.3.3 If the Construction Change Directive provides for an adjustment to the
Contract Sum, the adjustment shall be based on one of the following methods:
.1 mutual acceptance of a lump sum properly itemized and supported by
sufficient substantiating data to permit evaluation;
.2 unit prices stated in the Contract Documents or subsequently agreed upon
.3 cost to be determined in a manner agreed upon by the parties and a
mutually acceptable fixed or percentage fee; or
.4 as provided in Subparagraph 7.3.6.
7.3.4 Upon receipt of a Construction Change Directive, the Contractor shall
promptly proceed with the change in the Work involved and within five days of
receipt of same advise the [Architect] Development Manager and Owner of the
Contractor's agreement or disagreement with the method, if any, provided in the
Construction Change Directive for determining the proposed adjustment in the
Contract Sum or Contract Time.
7.3.5 A Construction Change Directive signed by the Contractor indicates the
agreement of the Contractor therewith, including adjustment in Contract Sum and
Contract Time or the method for determining them for the item covered in each
Change Directive as well as the cumulative effect and impact of all previous
Change Directives. Such agreement shall be effective immediately and shall be
recorded as a Change Order.
7.3.6 If the Contractor does not respond [promptly] within the five-day period
prescribed above, or disagrees with the method for adjustment in the Contract
Sum, the method and the adjustment shall be determined by the [Architect]
Development Manager on the basis of reasonable expenditures and savings of those
performing the Work attributable to the change, including, in case of an
increase in the Contract Sum, a reasonable allowance for overhead and profit as
provided in Paragraph 7.3.3. In such case, and also under Clause 7.3.3.3, the
Contractor shall keep and present, in such form as the [Architect] Development
Manager may prescribe, an itemized accounting together with appropriate
supporting data. Unless otherwise provided in the Contract Documents, costs for
the purposes of this Subparagraph 7.3.6 shall be limited to the following:
.1 costs of labor, including social security, old age and unemployment
insurance, fringe benefits required by agreement or custom, and
workers' or workmen's compensation insurance;
.2 costs of materials, supplies and equipment, including cost of
transportation, whether incorporated or consumed;
.3 reasonable rental costs of machinery and equipment, exclusive of hand
tools, obtained and used specifically for such Work, whether rented
from the Contractor or others;
.4 costs of premiums for all bonds (if any) and insurance, permit fees,
and sales, use or similar taxes directly attributable to such Work
[related to the Work]; and
.5 additional costs of supervision and field office personnel directly
attributable to the change.
7.3.7 Pending final determination of actual cost to the Owner, amounts not in
dispute may be included in Applications for Payment. The amount of credit to be
allowed by the Contractor to the Owner for a deletion or change which results in
a net decrease in the Contract Sum shall be actual net cost as confirmed by the
[Architect] Development Manager and Owner. When both additions and credits
covering related Work or substitutions are involved in a change, the allowance
for overhead and profit shall be figured on the basis of net increase, if any,
with respect to that change.
7.3.8 If the Owner and Contractor do not agree with the adjustment in Contract
Time or the method for determining it, the adjustment or the method shall be
[referred to the Architect for determination] determined in accordance with
Paragraph 8.3 hereof.
7.3.9 When the [Owner and Contractor agree with the determination made by the
Architect concerning the] adjustments in the Contract Sum and Contract Time[, or
otherwise reach agreement upon the adjustments] are determined as provided
herein, such [agreement] determination shall be effective immediately and shall
be recorded by preparation and execution of an appropriate Change Order.
7.4 MINOR CHANGES IN THE WORK
7.4.1 The [Architect] Owner and Development Manager will each have authority to
order minor changes in the Work not involving adjustment in the Contract Sum or
extension of the Contract Time and not inconsistent with the intent of the
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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Contract Documents. Such changes shall be effected by written order and shall be
binding on the Owner and Contractor. The Contractor shall carry out such written
orders promptly.
7.5 ALLOCATION OF ADDITIONAL COSTS
7.5.1 Additional Costs caused by the following events shall not constitute a
Cost of the Work or entitle the Contractor to an increase in the Contract Sum or
extension of the Contract Time:
.1 Any act or omission constituting a default or negligence by
Contractor, Subcontractors, Sub-subcontractors or their employees
or agents.
.2 The cost of repair of improper Work or Work damaged by Contractor,
Subcontractor, Sub-subcontractor or their employees or agents.
.3 Intentionally omitted.
.4 Additional testing, inspections or approvals pursuant to Paragraph
13.5.3.
.5 Deposits lost because of Contractor's fault or negligence.
7.5.2 Additional costs caused by the following events shall constitute a Cost of
the Work and shall entitle Contractor to an increase in the Contract Sum and/or
an extension of the Contract Time without application against the Contingency:
.1 Willful misconduct or breach of this Agreement by Owner.
.2 Voluntary changes in the Work requested by Owner constituting changes in
the Project not required by Law or reasonably necessary to cause the
Project to operate as generally contemplated by the Plans and
Specifications.
.3 Changes in Subcontractors required by Owner without cause pursuant to
Paragraph 5.2.4.
.4 Suspensions, delays or interruptions pursuant to Paragraph 14.3 without
cause or resulting from the negligence or willful misconduct or defaults
of Architect or Development Manager.
.5 Damage to the project caused by Owner due to move in.
.6 Increases in the Contractor's cost of performance of any part of the
Work to the extent such increase is the result of the negligence or
willful misconduct or defaults of Architect or Development Manager.
7. Except as otherwise provided in this Agreement (including without
limitation Paragraphs 1.2 or 3.2), errors, discrepancies, omissions or
interfacing omissions in the Drawings and Specifications.
7.5.3 After execution of a Change Order, the change in the Contract Sum and
Contract Time, if any, shall be final and binding on both parties. Thereafter,
Contractor shall not be entitled to request any additional increase to the
Contract Sum as a result of such Change Order for direct, indirect, delay,
acceleration or other costs or extension of the Contract Time, whether caused as
a result of facts known prior to such determination or thereafter. In
determining any claim for an increase, the Contract Sum or extensions of the
contract Time as a result of delays, any and all "float time" (i.e., delay in
portions of the Work not directly causing a delay in Substantial Completion;
i.e., critical path) shall be owned by Owner. The Contractor shall use its best
efforts to rearrange the Work so as to minimize delays and minimize any valid
Cost of the Work increase or any valid Contract Time extensions. In any event,
no claim by Contractor for an increase in the Contract Sum whether by a claim
based on additional direct costs, delay costs, acceleration costs, unjust
enrichment, quantum merit or otherwise, or for an extension of the Contract
Time, shall be valid.
7.5.4 Failure of both parties to agree to any change to the Contract Sum,
Contract Time or other Contract term pursuant to a Change Directive shall be
treated as provided in Paragraph 4.4. However, nothing shall excuse the
Contractor from proceeding with performance of the Contract as changed by Change
Directive from Owner, provided Owner continues to pay Contractor in accordance
with the Contract Documents and Contractor shall use its best efforts to
rearrange the Work so as to avoid or minimize delays and additional costs
resulting from delays in final agreement on such disputed matters.
7.5.5 References in the Contract Documents to "the expense of Contractor",
"charged to Contractor", "Contractor shall bear the cost of" or the like shall
mean that the Contractor shall absorb the cost thereof which shall not
constitute a Cost of the Work, whether or not any Contractor's Contingency then
exists.
ARTICLE 8
TIME
8.1 DEFINITIONS
8.1.1 Unless otherwise provided, Contract Time is the period of time, including
authorized adjustments, allotted in the Contract Documents for Substantial
Completion of the Work.
8.1.2 The date of commencement of the Work is the date established in the
Agreement. The date shall not be postponed by the failure to act of the
Contractor or of persons or entities for whom the Contractor is responsible.
8.1.3 The date of Substantial Completion is the date certified by the Architect
and approved by the Owner in accordance with Paragraph 9.8.
8.1.4 The term "day" as used in the Contract Documents shall mean calendar day
unless otherwise specifically defined.
8.2 PROGRESS AND COMPLETION
8.2.1 Time limits stated in the Contract Documents are of the essence of the
Contract. By executing the Agreement the Contractor confirms that the Contract
Time is a reasonable period for performing the Work.
8.2.2 The Contractor shall not [knowingly], except by agreement or instruction
of the Owner in writing, prematurely commence operations on the site or
elsewhere prior to the effective date of insurance required by Article II to be
furnished by the Contractor. The date of commencement of the Work shall not be
changed by the effective date of such insurance. Unless the date of commencement
is established by a notice to proceed given by the Owner, the Contractor shall
notify the Owner in writing not less than five days or other agreed period
before commencing the Work to permit the timely filing of mortgages, mechanic's
liens and other security interests.
8.2.3 The Contractor shall proceed expeditiously with adequate forces and shall
achieve Substantial Completion within the Contract Time.
8.3 DELAYS AND EXTENSIONS OF TIME
8.3.1 Subject to the provisions of Paragraph 7.5, if [If] the Contractor is
delayed at any time in progress of the Work by an act or neglect of the Owner or
Architect, or of an employee of either, or of a separate contractor employed by
the Owner, or by changes ordered in the Work, or by [labor disputes, fire,
unusual delay in deliveries, unavoidable casualties or other causes beyond the
Contractor's control, or by delay authorized by the Owner pending arbitration,
or by other causes which the Architect determines may justify delay, then the
Contract Time shall be extended by Change Order for such reasonable time as the
Architect may determine] occurrences beyond the control and without the fault or
negligence of the Contractor
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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and which by the exercise of reasonable diligence the Contractor is unable to
prevent or provide against, including labor disputes (other than disputes
limited to the work force of, or provided by, the Contractor or its
Subcontractors), fire, unusual delay in deliveries not reasonably anticipatable,
unavoidable casualties, or by other occurrences which the Development Manager,
subject to the Owner's approval, determines may justify delay, then, provided
that the Contractor is in compliance with Subparagraph 4.3.3 hereof, the
Contract Time Shall be extended and the Contract Sum shall be increased by
Change Order or Construction Change Directive for the length of time actually
and directly caused by such occurrence as determined by the Development Manager
and approved by the Contractor and Owner (such approval not to be unreasonably
withheld, delayed, or conditioned); provided, however, that such extension of
Contract Time shall be net of any delays caused by or due to the fault or
negligence of the Contractor or which are otherwise the responsibility of the
Contractor and shall also be net of any contingency of "float" time allowance
included in the Contractor's construction schedule. The Contractor shall, in the
event of any occurrence likely to cause a delay, cooperate in good faith with
the Development Manager and Owner to minimize and mitigate the impact of any
such occurrence and do all things reasonable under the circumstances to achieve
this goal.
8.3.2 Claims relating to time shall be made in accordance with applicable
provisions of Paragraphs 4.3 and Article 7. A copy of any claim for extension
shall be delivered to the Owner, and the Contractor shall immediately take all
steps reasonably possible to lessen the adverse impact of such delay.
8.3.3 This Paragraph 8.3 does not preclude recovery of damages for delay by
either party under other provisions of the Contract Documents; provided,
however, that Contractor's sole and exclusive remedy for delays of the type
described in Paragraph 8.3.1 shall be an extension of the Contract Time or an
increase in the Contract Sum as provided in this Article 8.
8.3.4 The Owner may seek recovery for actual damages suffered due to delays of
the Contractor; such actual damages will be considered to commence five (5) days
after each or all of the following: (1) scheduled Substantial Completion date
for any portion of the Work, (2) scheduled occupancy date for any portion of the
Work, (3) scheduled Substantial Completion date for the entire Work; and (4)
scheduled occupancy date for the entire Work. The dates referenced herein shall
be subject to adjustment as provided in the Contract Documents.
8.3.5 No change in the Work, whether by way of alteration or addition to the
Work, shall be the basis of an extension in the Contract Time unless and until
such alteration or addition has been authorized by a Change Order or Change
Directive executed and issued in accordance with and in strict compliance with
the requirements of the Contract Documents.
Any claim for increased cost for delay shall be asserted in accordance with the
provisions of Paragraph 4.3.3 unless the time is extended in writing by the
Owner. This requirement is of the essence of the Contract Documents.
Accordingly, no course of conduct or dealings between the parties, no express or
implied acceptance of alterations or additions to the Work, and no claim that
the Owner has been unjustly enriched by any alteration or addition to the Work,
whether or not there is in fact any such unjust enrichment, shall be the basis
for any claim to an increase in the Contract sum or an extension in the Contract
Time.
ARTICLE 9
PAYMENTS AND COMPLETION
9.1 CONTRACT SUM
9.1.1 The Contract Sum is stated in the Agreement and, including authorized
adjustments, is the total amount payable by the Owner to the Contractor for
performance of the Work under the Contract Documents.
9.2 SCHEDULE OF VALUES
9.2.1 Before the first Application for Payment, the Contractor shall submit to
the Architect a schedule of values allocated to various portions of the Work,
prepared in such form and supported by such data to substantiate its accuracy as
the Architect may require. This schedule, unless objected to by the Architect,
shall be used as a basis for reviewing the Contractor's Applications for
Payment.
9.3 APPLICATIONS FOR PAYMENT
9.3.1 At least ten days before the date established by the lender(s) for the
Project for each progress payment, the Contractor shall submit to the Architect
Development Manager an itemized Application for Payment for operations completed
in accordance with the schedule of values. Such application shall be notarized,
if required, and supported by such data substantiating the Contractor's right to
payment as the Owner or Architect Development Manager may require, such as
copies of requisitions from Subcontractors and material suppliers, and
reflecting retainage if provided for elsewhere in the Contract Documents.
9.3.1.1 Such applications may include requests for payment on account of changes
in the Work which have been properly authorized by Construction Change
Directives but not yet included in Change Orders.
9.3.1.2 Such applications may not include requests for payment of amounts the
Contractor does not intend to pay to a Subcontractor or material supplier
because of a dispute or other reason.
9.3.1.3 Such Application for Payment shall be accompanied by waivers of lien and
other documentation from subcontractors as may be reasonably required by the
Owner, any lender and title insurer to establish the absence of any claims for
mechanics or other statutory liens.
9.3.1.4 Copies of all Applications for Payment shall be submitted to the Owner
and, upon the Owner's request, directly to the lender(s) for the Project.
9.3.2 Unless otherwise provided in the Contract Documents, payments shall be
made on account of materials and equipment delivered and suitably stored at the
site for subsequent incorporation in the Work. If approved in advance by the
Owner, payment may similarly be made for materials and equipment suitably stored
off the site at a location agreed upon in writing. Payment for materials and
equipment stored on or off the site shall be conditioned upon compliance by the
Contractor with procedures satisfactory to the Owner to establish the Owner's
title to such materials and equipment or otherwise protect the Owner's interest,
and shall include applicable insurance, storage and transportation to the site
fur such materials and equipment stored off the site.
9.3.3 The Contractor warrants that title to all Work covered by an Application
for Payment will pass to the Owner no later than the time of payment. The
Contractor further warrants that upon submittal of an Application for Payment
all Work for which Certificates for Payment have been previously issued and
payments received from the Owner shall, to the best of the Contractor's
knowledge, information and belief, be free and clear of liens, claims, security
interests or encumbrances in favor of the Contractor, Subcontractors, material
suppliers, or other persons or entities making a claim by reason of having
provided labor, materials and equipment relating to the Work.
9.4 CERTIFICATES FOR PAYMENT
9.4.1 [The Architect will, within seven days after receipt of the Contractor's
Application for Payment, either issue to the Owner a Certificate for Payment,
with a copy to the Contractor, for such amount as the Architect determines is
properly due, or notify the Contractor and Owner in writing of the Architect's
reasons for withholding certification in whole or in part as provided in
Subparagraph 9.5.1.] The Development Manager will assemble a Project Application
for Payment by combining the Contractor's applications with
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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similar applications for progress payments from other Contractors and, after
certifying the amounts due on such applications, forward them to the Architect
within seven days.
9.4.1.1 Within seven days after the Architect's receipt of the Project
Application for Payment, the Development Manager and Architect will either issue
to the Owner a Project Certificate for Payment, with a copy to the Contractor,
for such amount as the Development Manager and Architect determine is properly
due, or notify the Contractor and Owner in writing of the Development Manager's
and Architect's reasons for withholding certification in whole or in part as
provided in Subparagraph 9.5.1. Such notification will be forwarded to the
Contractor by the Development Manager.
9.4.2 The issuance of a separate Certificate for Payment or a Project
Certificate for Payment will constitute a representations made separately by the
Development Manager and Architect to the Owner, based on their Architect's
individual observations at the site and the data comprising the Application for
Payment submitted by the Contractor, that the Work has progressed to the point
indicated and that, to the best of the Development Manager's and Architect's
knowledge, information and belief, quality of the Work is in accordance with the
Contract Documents. The foregoing representations are subject to an evaluation
of the Work for conformance with the Contract Documents upon Substantial
Completion, to results of subsequent tests and inspections, to minor deviations
from the Contract Documents correctable prior to completion and to specific
qualifications expressed by the Development Manager or Architect. The issuance
of a separate Certificate for Payment or a Project Certificate for Payment will
further constitute a representation that the Contractor is entitled to payment
in the amount certified. However, the issuance of a separate Certificate for
Payment or a Project Certificate for Payment will not be a representation that
the Development Manager or Architect has (1) made exhaustive or continuous
on-site inspections to check the quality or quantity of the Work, (2) reviewed
construction means, methods, techniques, sequences or procedures, (3) reviewed
copies of requisitions received from Subcontractors and material suppliers and
other data requested by the Owner to substantiate the Contractor's right to
payment or (4) made examination to ascertain how or for what purpose the
Contractor has used money previously paid on account of the Contract Sum.
9.5 DECISIONS TO WITHHOLD CERTIFICATION
9.5.1 The Development Manager and Architect may decide not to certify payment
and may withhold a Certificate for Payment in whole or in part, to the extent
reasonably necessary to protect the Owner, if in the Development Manager's or
Architect's opinion the representations to the Owner required by Subparagraph
9.4.2 cannot be made. If the Architect is unable to certify payment in the
amount of the Application, the Architect will notify the Contractor and Owner as
provided in Subparagraph 9.4.1. If the Development Manager or Architect is
unable to certify payment in the amount of the Application, the Development
Manager or Architect will notify the Contractor and Owner as provided in
Subparagraph 9.4.1.1. If the Contractor, Development Manager and Architect
cannot agree on a revised amount, the Development Manager and Architect will
promptly issue a Certificate for Payment for the amount for which the
Development Manager and Architect is are able to make such representations to
the Owner. The Development Manager or Architect may also decide not to certify
payment or, because of subsequently discovered evidence or subsequent
observations, may nullify the whole or a part of a Certificate for Payment
previously issued, to such extent as may be necessary in the Development
Manager's or Architect's opinion to protect the Owner from loss because of:
.1 defective Work not remedied;
.2 third party claims filed or reasonable evidence indicating
probable filing of such claims:
.3 failure of the Contractor to make payments properly to
Subcontractors or for labor, materials equipment.
.4 reasonable evidence that the Work cannot be completed for the
unpaid balance of the Contract Sum,
.5 damage to the Owner or another contractor,
.6 reasonable evidence that the Work will not be completed within the
Contract Time, and that the unpaid balance would not be adequate
to cover actual or liquidated damages for the anticipated delay:
or
.7 persistent failure to carry, out the Work in accordance with the
Contract Documents.
9.5.2 When the above reasons for withholding certification are removed,
certification will be made for amounts previously withheld.
9.5.3 If Contractor disputes any determination by the Development Manager or
Architect with regard to any Certificate of Payment, Contractor shall
nevertheless expeditiously continue to prosecute the Work.
9.5.4 The Owner may independently dispute payment in whole or part, whether or
not a Certificate for Payment has been issued regarding the same, and in such
event shall promptly notify the Development Manager, Architect and Contractor in
writing of the dispute and the reason or reasons therefor. The Owner shall not
be deemed to be in breach of this Contract by reason of the withholding of any
payment pursuant to any provision of the Contract Documents, provided the
Development Manager or Architect has approved the Owner's action, or the Work in
question shall have been rejected by any governmental authority, the Owner or
any lender of the Owner.
9.6 PROGRESS PAYMENTS
9.6.1 After the Development Manager and Architect has have issued a Project
Certificate for Payment or a separate Certificate for Payment, the Owner shall
make payment in the manner and within the time provided in the Contract
Documents, [and shall so notify the Architect] subject to Subparagraph 9.6.4.
9.6.1.1 The Owner shall have the option, but not the obligation, to issue joint
checks to the Contractor and various Subcontractors at the Owner's discretion
with respect to all or any part of the payments discussed in this Article. Any
payment in joint check form or the lack thereof shall not constitute a waiver of
the same as to later payments.
9.6.2 The Contractor shall promptly pay each Subcontractor, upon receipt of
payment from the Owner, out of the amount paid to the Contractor on account of
such Subcontractor's portion of the Work, the amount to which said Subcontractor
is entitled, reflecting percentages actually retained from payments to the
Contractor on account of such Subcontractor's portion of the Work. The
Contractor shall, by appropriate agreement with each Subcontractor, require each
Subcontractor to make payments to Sub-subcontractors in similar manner.
9.6.3 The Architect Development Manager will, on request, furnish to a
Subcontractor, if practicable, information regarding percentages of completion
or amounts applied for by the Contractor and action taken thereon by the
Development Manager, Architect and Owner on account of portions of the Work done
by such Subcontractor.
9.6.4 Neither the Owner, Development Manager nor Architect shall have an
obligation to pay or to see to the payment of money to a Subcontractor except as
may otherwise be required by law.
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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9.6.5 Payment to material suppliers shall be treated in a manner similar to that
provided in Subparagraphs 9.6.2, 9.6.3 and 9.6.4.
9.6.6 A Certificate for Payment, a progress payment, or partial or entire use or
occupancy of the Project by the Owner shall not constitute acceptance of Work
not in accordance with the Contract Documents.
9.7 FAILURE OF PAYMENT
9.7.1 If, through no fault of the Contractor, (1) the Architect does not issue a
Project Certificate for Payment, [through no fault of the Contractor,] within
seven days after receipt of the Development Manager's receipt of the
Contractor's Application for Payment, or (2) if the Owner does not pay the
Contractor within seven days after the date established in the Contract
Documents the amount certified by the Development Manager and Architect or
awarded by arbitration or reference, then the Contractor may, upon seven
additional days' written notice to the Owner, Development Manager and Architect,
stop the Work until payment of the amount owing has been received. The Contract
Time shall be extended appropriately and the Contract Sum shall be increased by
the amount of the Contractor's reasonable costs of shut-down, delay and
start-up, which shall be accomplished as provided in Article 7. Notwithstanding
the foregoing, the Contractor may not stop the Work during the pendency of a
bona fide dispute between Owner and Contractor provided any sums in dispute
claimed by the Contractor are placed in escrow.
9.8 SUBSTANTIAL COMPLETION
9.8.1 Substantial Completion is the stage in the progress of the Work when the
Work or designated portion thereof is sufficiently complete in accordance with
the Contract Documents so the Owner can occupy or utilize the Work for its
intended use.
9.8.2 When the Contractor considers that the Work, or a portion thereof which
the Owner agrees to accept separately, is substantially complete, the Contractor
and Development Manager shall jointly prepare and submit to the Architect and
Owner a comprehensive list of items to be completed or corrected. The Contractor
shall proceed promptly, to complete and correct items on the list. Failure to
include an item on such list does not alter the responsibility of the Contractor
to complete all Work in accordance with the Contract Documents. Upon receipt of
the Contractor's list, the Architect and Owner, assisted by the Development
Manager, will make an inspection to determine whether the Work or designated
portion thereof is substantially complete. If the Architect's inspection
discloses any item, whether or not included on the Contractor's list, which is
not in accordance with the requirements of the Contract Documents, the
Contractor shall, before issuance of the Certificate of Substantial Completion,
complete or correct such item upon notification by the Architect. The Contractor
shall then submit a request for another inspection by the Architect and Owner,
assisted by the Development Manager, to determine Substantial Completion. When
the Work or designated portion thereof is substantially complete, the Architect
will prepare a Certificate of Substantial Completion which shall establish
assist in the determination of the date of Substantial Completion, shall
establish responsibilities of the Owner and Contractor for security,
maintenance, heat, utilities, damage to the Work and insurance, and shall fix
the time within which the Contractor shall finish all items on the list
accompanying the Certificate. Warranties required by the Contract Documents
shall commence on the date of Substantial Completion of the Work or designated
portion thereof unless otherwise provided in the Certificate of Substantial
Completion. The Certificate of Substantial Completion shall be submitted to the
Owner and Contractor for their written acceptance of responsibilities assigned
to them in such Certificate.
9.8.2.1 Upon receipt of the Contractor's list of items to be completed or
corrected, the Development Manager and Architect will promptly make a thorough
review and prepare a "punch list," setting forth in accurate detail any items on
the Contractor's list and additional items that are not acceptable.
9.8.2.2 When the "punch list" has been prepared, the Development Manager and
Architect, if requested, will meet with the Contractor and any Subcontractor to
identify and explain all "punch list" items and answer questions on the work
which must be done before final acceptance.
9.8.2.3 If the Contractor gives notice that a major subcontractor has completed
his "punch list" items, the Development Manager and Architect will review that
portion of the work and, if the items are found to be satisfactorily completed,
advise the Contractor accordingly.
9.8.3 Upon Substantial Completion of the Work or designated portion thereof and
upon application by the Contractor, and certification by the Development Manager
and Architect, and acceptance by the Owner, all lenders for the Project and
applicable governmental authorities, the Owner shall make payment, reflecting
adjustment in retainage, if any, for such Work or portion thereof as provided in
the Contract Documents.
9.9 PARTIAL OCCUPANCY OR USE
9.9.1 The Owner may occupy or use any completed or partially completed portion
of the Work at any stage when such portion is designated by separate agreement
with the Contractor, provided such occupancy or use is consented to by the
insurer as required under Subparagraph 11.3.11 and authorized by public
authorities having jurisdiction over the Work. Such partial occupancy or use may
commence whether or not the portion is substantially complete, provided the
Owner and Contractor have accepted in writing the responsibilities assigned to
each of them fur payments, retainage if any, security. maintenance, heat,
utilities, damage to the Work and insurance, and have agreed in writing
concerning the period for correction of the Work and commencement of warranties
required by the Contract Documents. When the Contractor considers a portion
substantially complete, the Contractor and Development Manager shall jointly
prepare and submit a list to the Architect as provided under Subparagraph 9.8.2.
Consent of the Contractor to partial occupancy or use shall out be unreasonably
withheld. The stage of the progress of the Work shall be determined by written
agreement between the Owner and Contractor or, if an agreement is reached, by
decision of the Architect after consultation with the Development Manager.
9.9.2 Immediately prior to such partial occupancy or use, the Owner, Development
Manager, Contractor and Architect shall jointly inspect the area be occupied or
portion of the Work to be used in order determine and record the condition of
the Work.
9.9.3 Unless otherwise agreed upon, partial occupancy or use of a portion or
portions of the work shall not constitute acceptance of Work not complying with
the requirements of the Contract Documents.
9.10 FINAL COMPLETION AND FINAL PAYMENT
9.10.1 Upon completion of the Work, the Contractor shall forward to the
Development Manager and Owner a written notice that the Work is ready for final
inspection and acceptance and a final Contractor's Application for Payment. Upon
[receipt of written notice that the Work is ready for final inspection and
acceptance and upon receipt of a final Application for Payment,] the Development
Manager will forward the notice and Application for Payment to the Architect,
who will promptly make such inspection. [and, when]When the Architect, based on
the recommendation of the Development Manager, finds the Work acceptable under
the Contract Documents and the Contract fully performed, the Architect will
promptly issue a final Certificate for Payment stating that to the best of the
Architect's knowledge, information and belief, and on the basis of the
Architect's observations and inspections, the Work has been completed in
accordance with terms and conditions of the Contract
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
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Documents and that the entire balance found to be due the Contractor and noted
in said final Certificate is due and payable. The Architect's final Certificate
for Payment will constitute a further representation that conditions listed in
Subparagraph 9.10.2 as precedent to the Contractor's being entitled to final
payment have been fulfilled. The Owner shall approve or disapprove the final
Certificate for Payment, stating whether the same is correct and accurate and,
if the Owner disapproves the final Certificate for Payment, stating the reasons
therefor.
9.10.2 Neither final payment nor any remaining retained percentage shall become
due until the Contractor submits to the Architect through the Development
Manager (1) an affidavit that payrolls, bills for materials and equipment, and
other indebtedness connected with the Work for which the Owner or the Owner's
property might be responsible or encumbered (less amounts withheld by Owner)
have been paid or otherwise satisfied, (2) a certificate evidencing that
insurance required by the Contract Documents to remain in force after final
payment is currently in effect and will not be canceled or allowed to expire
until at least 30 days' prior written notice has been given to the Owner, (3) a
written statement that the Contractor knows of no substantial reason that the
insurance will not be renewable to cover the period required by the Contract
Documents, (4) consent of surety, if any, to final payment and (5), if required
by the Owner, other data establishing payment or satisfaction of obligations,
such as receipts, releases and waivers of liens, claims, security interests or
encumbrances arising out of the Contract, to the extent and in such form as may
be designated by the Owner. If a Subcontractor refuses to furnish a release or
waiver required by the Owner, the Contractor may furnish a bond satisfactory to
the Owner to indemnify the Owner against such lien. If such lien remains
unsatisfied after payments are made, the Contractor shall refund to the Owner
all money that the Owner may be compelled to pay in discharging such lien,
including all costs and reasonable attorneys' fees.
9.10.2.1 A reasonable sum may be withheld until the Contractor delivers to the
Owner record drawings and other items required pursuant to Subparagraph 3.11.2,
and the warranties, instructions and maintenance manuals required to be
furnished pursuant to Subparagraphs 3.5 and 3.12.9.2, and a final statement of
the cost of the Work allocated in accordance with the budget and in a form which
has been approved by the lender(s) for the Project has been furnished. All
submittals required to be made to Architect or Development Manager hereunder
shall concurrently be made to Owner.
9.10.3 If, after Substantial Completion of the Work, Final Completion thereof is
materially delayed through no fault of the Contractor or by issuance of Change
Orders affecting Final Completion, and the Development Manager and Architect so
confirms, the Owner shall, upon application by the Contractor and certification
by the Development Manager and Architect, and without terminating the Contract,
make payment of the balance due for that portion of the Work fully completed and
accepted. If the remaining balance for Work Out fully completed or corrected is
less than retainage stipulated in the Contract Documents, and if bonds have been
furnished, the written consent of surety to payment of the balance due for that
portion of the Work fully completed and accepted shall be submitted by the
Contractor to the Architect through the Development Manager prior to
certification of such payment. Such payment shall be made under terms and
conditions concerning final payment, except that it shall not constitute a
waiver of claims. The making of final payment shall constitute a waiver of
claims by the Owner as provided in Subparagraph 4.3.5.
9.10.4 Acceptance of final payment by the Contractor, a Subcontractor or
material supplier shall constitute a waiver claims by that payee except those
previously made in writing and identified by that payee as unsettled at the time
of final Application for Payment. Such waivers shall be in addition to the
waiver described in Subparagraph 4.3.5.
ARTICLE 10
PROTECTION OF PERSONS AND PROPERTY
10.1 SAFETY PRECAUTIONS AND PROGRAMS
10.1.1 The Contractor shall be responsible for initiating, maintaining and
supervising all safety precautions and programs in connection with the
performance of the Contract. The Contractor shall submit the Contractor's safety
program to the Development Manager for review and coordination with the safety
programs of other Contractors.
10.1.2 In the event the Contractor encounters on the site material reasonably
believed to be asbestos or polychlorinated biphenyl (PCB) which has not been
rendered harmless, the Contractor shall immediately stop Work in the area
affected and report the condition to the Owner, Development Manager and
Architect in writing. The Work in the affected area shall not thereafter be
resumed except by written agreement of the Owner and Contractor if in fact the
material is asbestos or polychlorinated biphenyl (PCB) and has not been rendered
harmless. The Work in the affected area shall be resumed in the absence of
asbestos or polychlorinated biphenyl (PCB), or when it has been rendered
harmless, by written agreement of the Owner and Contractor, or in accordance
with final determination by the Architect on which arbitration has not been
demanded, or by arbitration under Article 4.
10.1.3 The Contractor shall not be required pursuant to Article 7 to perform
without consent any Work relating to asbestos or polychlorinated biphenyl (PCB).
10.1.4 To the fullest extent permitted by law, the Owner shall indemnify and
hold harmless the Contractor, Development Manager, Architect, Architect's their
consultants and agents and employees of any of them from and against claims
damages, losses and expenses, including but not limited to attorneys' fees,
arising out of or resulting from performance of the Work in the affected area if
in fact the material is asbestos or polychlorinated biphenyl (PCB) and has not
been rendered harmless, provided that such claim, damage, loss or expense is
attributable to bodily injury, sickness, disease or death, or to injury to or
destruction of tangible property (other than the Work itself) including loss of
use resulting therefrom, but only to the extent caused in whole or in part by
negligent acts or omissions of the Owner, anyone directly or indirectly employed
by the Owner or anyone for whose acts the Owner may be liable, regardless of
whether or not such claim, damage, loss or expense is caused in part by a party
indemnified hereunder. Such obligation shall not be construed to negate,
abridge, or reduce other rights or obligations of indemnity which would
otherwise exist as to a party or person described in this Subparagraph 10.1.4.
10.2 SAFETY OF PERSONS AND PROPERTY
10.2.1 The Contractor shall take reasonable precautions for safety of, and shall
provide reasonable protection to prevent damage, injury or loss to:
.1 employees on the Work and other persons who may be affected
thereby;
.2 the Work and materials and equipment to be incorporated therein,
whether in storage on or off the site, under care, custody or
control of the Contractor or the Contractor's Subcontractor or
Sub-subcontractors; and
.3 other property at the site or adjacent thereto, such as trees,
shrubs, lawns, walks, pavements, roadways, structures and
utilities not designated for removal, relocation or replacement in
the course of construction.
10.2.2 The Contractor shall give notices and comply with applicable laws,
ordinances, rules, regulations and lawful orders of public authorities bearing
on safety of persons or
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property or their protection from damage, injury or loss. Without limiting the
foregoing, Contractor shall provide all facilities and shall follow all
procedures required by the Occupational Safety and Health Act.
10.2.3 The Contractor shall erect and maintain, as required by existing
conditions and performance of the Contract, reasonable safeguards for safety and
protection including posting danger signs and other warnings against hazards,
promulgating safety regulations and notifying owners and users of adjacent sites
and utilities.
10.2.4 When use or storage of explosives or other hazardous materials or
equipment or unusual methods are necessary for execution of the Work, the
Contractor shall exercise utmost care and carry out such activities under
supervision of properly qualified personnel.
10.2.5 The Contractor shall promptly remedy at its sole cost damage and loss
(other than damage or loss resulting from earthquake and flood or insured under
property insurance required by the Contract Documents) to property referred to
in Clauses 10.2.1.2 and 10.2.1.3 caused in whole or in part by the Contractor, a
Subcontractor, a Sub-subcontractor, or anyone directly or indirectly employed by
any of them, or by anyone for whose acts they may be liable and for which the
Contractor is responsible under Clauses 10.2.1.2 and 10.2.1.3, except damage or
loss attributable to acts or omissions of the Owner, Development Manager or
Architect or anyone directly or indirectly employed by either of them, or by
anyone for whose acts either of them may be liable, and not attributable to the
fault or negligence of the Contractor. The foregoing obligations of the
Contractor are in addition to the Contractor's obligations under Paragraph 3.18.
10.2.6 The Contractor shall designate a responsible member of the Contractor's
organization at the site whose duty shall be the prevention of accidents. This
person shall be the Contractor's superintendent unless otherwise designated by
the Contractor in writing to the Owner, Development Manager and Architect.
10.2.7 The Contractor shall designate a responsible member of the Contractor's
organization at the site whose duty shall be the prevention of accidents. This
person shall be the Contractor's superintendent unless otherwise designated by
the Contractor in writing to the Owner and Architect.
10.3 EMERGENCIES
10.3.1 In an emergency, affecting safety of persons or property, the Contractor
shall act, at the Contractor's discretion, to prevent threatened damage, injury
or loss. Additional compensation or extension of time claimed by the Contractor
on account of an emergency shall be determined as provided in Paragraph 4.3 and
Article 7.
ARTICLE 11
INSURANCE AND BONDS
11.1 CONTRACTOR'S LIABILITY INSURANCE
11.1.1 [The Contractor shall purchase from and maintain in a company or
companies lawfully authorized to do business in the jurisdiction in which the
Project is located such insurance as will protect the Contractor from claims set
forth below which may arise out of or result from the Contractor's operations
under the Contract and for which the Contractor may be legally liable, whether
such operations be by the Contractor or by a Subcontractor ore by anyone
directly or indirectly employed by any of them, or by anyone for whose acts any
of them may be liable:
.1 claims under workers' or workmen's compensation, disability
benefit and other similar employee benefit acts which arc
applicable to the Work to be performed.
.2 claims for damages because of bodily injury, occupational sickness
or disease, or death of the Contractor's employees;
.3 claims for damages because of bodily injury, sickness or disease,
or death of any person other than the Contractor's employees;
.4 claims for damages insured by usual personal injury liability
coverage which are sustained (1) by a person as a result of an
offense directly or indirectly related to employment of such
person by the Contractor, or (2) by another person;
.5 claims for damages, other than to the Work itself, because of
injury to or destruction of tangible property, including loss of
use resulting therefrom;
.6 claims for damages because of bodily injury, death of a person or
property damage arising out of ownership, maintenance or use of a
motor vehicle; AND
.7 claims involving contractual liability insurance applicable to the
Contractor's obligations under Paragraph 3 18.]
Contractor shall procure and maintain, at its own expense' with companies
satisfactory to Owner, the following insurance coverage:
.1 Workers' compensation and Employers' Liability Insurance as required
by California law affording 30 days notice of cancellation to the
Owner. The employers' liability coverage minimum limits are as
follows:
Bodily Injury by Accident -- $100,000 each accident;
Bodily Injury by Disease $100,000 each employee And $500,000
policy limit.
.2 General Liability Insurance in the amount of $1,000,000 each
occurrence for bodily injury and/or property damage liability
combined written on an "occurrence" basis including:
(a) Premises and Operations coverage with X, C, and U exclusion
deleted, if applicable.
(b) Owners and Contractors Protective coverage.
(c) Products and Completed Operations coverage.
(d) "Broad Form Property Damage" coverage including Completed
Operations.
(e) Blanket contractual obligations coverage including both
written and oral contracts and tort liability as prescribed by
law.
(f) Personal Injury Coverage.
(g) An endorsement naming Owner, and such other entities or
persons as Owner may designate, as additional insured.
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(h) An endorsement affording 30 days' notice of cancellation to
Owner in the event of cancellation, nonrenewal or material
reduction in coverage to the extent available.
(i) An endorsement providing that such insurance as is afforded
under Contractor's policy is primary insurance as respect
Owner and that any other insurance maintained by Owner is
excess and noncontributing with the insurance required
hereunder.
.3 Business Auto Liability in the amount of $1,000,000 each occurrence
for bodily injury and/or property damage liability combined
including:
(a) Owned autos,
(b) Hired or borrowed autos,
(c) Non-owned autos, and
(d) An endorsement, affording 30 days' notice of cancellation to
Owner in event of cancellation, or material reduction in
coverage to the extent available.
.4 Excess or Umbrella Liability Insurance with limits not less that
$3,000,000 per occurrence, for bodily injury and/or property damage
combined written on an "occurrence basis" listing the General
Liability, Employers' Liability and Business Liability policies
required as underlying policies and including:
(a) An endorsement naming Owner and such other entities or persons
as Owner may designate as additional insureds.
(b) An endorsement affording 30 days' notice to Owner of
cancellation or material reduction in coverage to the extent
available.
(c) An endorsement providing that any insurance maintained by
Owner is excess and noncontributing with the insurance
required hereunder.
11.1.1.1 Owner and Contractor acknowledge that the insurance requirements set
forth in the Contract Documents may be required to be varied by the lender for
the Project or by Owner's insurance carrier and Contractor agrees to enter into
suitable modifications of the provisions hereof upon the request of the Owner,
provided Owner bears any additional cost occasioned thereby.
11.1.2 The insurance required by Subparagraph 11.1.1 shall be written for not
less than limits of liability specified in the Contract Documents or required by
law, whichever coverage is greater, and shall name Owner as an additional
insured. Coverages, whether written or an occurrence or claims-made basis, shall
be maintained without interruption from date of commencement of the Work until
date of final payment and termination of any coverage required to be maintained
after final payment.
11.1.3 Certificates of Insurance acceptable to the Owner shall be filed with the
Owner prior to commencement of the Work. These Certificates and the insurance
policies required by this Paragraph 11. It shall contain a provision that
coverages afforded under the policies will not be canceled or allowed to expire
until at least 30 days' prior written notice has been given to the Owner. If any
of the foregoing insurance coverages are required to remain in force after final
payment and are reason ably available, an additional certificate evidencing
continuation of such coverage shall be submitted with the final Application
other than the Owner has an insurable interest in the property required by this
Paragraph 11.3 to be covered, whichever is earlier. This insurance shall include
interests of the Owner, and the Contractor, [Subcontractors and
Sub-subcontractors] in the Work.
11.1.4 Copies of policies or a certificate and endorsements, providing coverage
required under this Paragraph 11.1 must be delivered to Owner prior to
commencement of performance under this Contract. The requirements for the
foregoing insurance shall not derogate from Contractor's obligations to
indemnify Owner under the Contract Documents.
11.1.5 Contractor shall maintain all of the foregoing insurance coverage in
force until Final Completion of the Work other than the Products and Completed
Operations Coverage required under subparagraph 11.1.2(c) above which shall be
maintained in force until expiration of the applicable statute of limitations
for claims related to latent defects in construction of improvements to real
property.
11.1.6 If Contractor fails to secure and maintain the required insurance, Owner
shall have the right (without any obligation to do so, however) to secure same
in the name and for the account of Contractor, in which event Contractor shall
pay the cost thereof and shall furnish upon demand all information that may be
required in connection therewith.
11.1.7 Contractor shall require its Subcontractors to provide insurance with
maximum limits of not less than $1,000,000 except as may otherwise be approved
in writing by Owner where Contractor would be required to carry insurance under
the Contract Documents endorsed to name as additional insureds those individuals
and entities set forth in subparagraphs 11.1.1.2(g) and 11.1.1.5(a), above.
11.1.8 Contractor shall not begin any of the Work until all necessary evidence
of insurance has been furnished to Owner.
11.2 OWNER'S LIABILITY INSURANCE
11.2.1 The Owner shall be responsible for purchasing and maintaining the Owner's
usual liability insurance. Optionally the Owner may purchase and maintain other
insurance for self protection against claims which may arise from operations
under the Contract. The Contractor shall not be responsible for purchasing and
maintaining this optional Owner's liability insurance unless specifically
required by the Contract Documents.
11.3 PROPERTY INSURANCE
11.3.1 Unless otherwise provided, the Owner shall purchase and maintain, in a
company or companies lawfully authorized to do business in the jurisdiction in
which the Project is located, property insurance in the amount of the initial
Contract Sum as well as subsequent modifications thereto for the entire Work at
the site on a replacement cost basis. Such property insurance shall be
maintained, unless otherwise provided in the Contract Documents or otherwise
agreed in writing by all persons and entities who are beneficiaries of such
insurance, until final payment has been made as provided in Paragraph 9.10 or
until no person or entity other than the Owner has an insurable interest in the
property required by this Paragraph 11.3 to be covered, whichever is earlier.
This insurance shall include interests of the Owner, the Contractor,
Subcontractors and Sub-subcontractors in the Work.
11.3.1.1 Property insurance shall be on an all-risk policy form and shall insure
against the perils of fire and extended coverage and physical loss or damage
including, without duplication of coverage, theft, vandalism, malicious
mischief, collapse, falsework, temporary buildings and debris removal
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including demolition, and shall cover reasonable compensation for Architect's
services and expenses required as a result of such insured loss. Coverage for
other perils shall not be required unless otherwise provided in the Contract
Documents.
11.3.1.2 If the Owner does not intend to purchase such property insurance
required by the Contract and with all of the coverages in the amount described
above, the Owner shall so inform the Contractor in writing prior to commencement
of the Work. The Contractor may then effect insurance which will protect the
interests of the Contractor, Subcontractors and Sub-subcontractors in the Work,
and by appropriate Change Order the cost thereof shall be charged to the Owner.
If the Contractor is damaged by the failure or neglect of the Owner to purchase
or maintain insurance as described above, without so notifying the Contractor,
then the Owner shall bear all reasonable costs properly attributable thereto.
11.3.1.3 If the property insurance requires minimum deductibles and such
deductibles are identified in the Contract Documents, the Contractor shall pay
costs not covered because of such deductibles. If the Owner or insurer increases
the required minimum deductibles above the amounts so identified or if the Owner
elects to purchase this insurance with voluntary deductible amounts, the Owner
shall be responsible for payment of the additional costs not covered because of
such increased or voluntary deductibles. If deductibles are not identified in
the Contract Documents, the Owner shall pay costs not covered because of
deductibles.
11.3.1.4 Unless otherwise provided in the Contract Documents, this property
insurance shall cover portions of the Work stored off the site after written
approval of the Owner at the value established in the approval, and also
portions of the Work in transit.
11.3.2 BOILER AND MACHINERY INSURANCE. The Owner shall purchase and maintain
boiler and machinery insurance required by the Contract Documents or by law,
which shall specifically cover such insured objects during installation and
until final acceptance the Owner, this insurance shall include interests of the
Owner, Contractor, Subcontractors and Sub-subcontractors in the Work, and the
Owner and Contractor shall be named insureds.
11.3.3 LOSS OF USE INSURANCE. The Owner, at the Owner's option, may purchase and
maintain such insurance as will insure the Owner against loss of use of the
Owner's property due to fire or other hazards, however caused. [The Owner waives
all rights of action against the Contractor for loss of use of the Owner's
property including consequential losses due to fire or other hazards however
caused.] To the extent that the Owner actually receives insurance proceeds to
cover such losses, and only to the extent permitted by the Owner's insurer,
Owner shall waive any rights of action it may have against Contractor for loss
of use of the Owner's property, including consequential losses due to fire or
other hazard however caused. In addition, Owner acknowledges that it shall not
have a right of action against Contractor for loss of use of the Owner's
property unless such loss was caused by Contractor, its Subcontractors,
Sub-subcontractors, or other persons for whom Contractor is responsible.
11.3.4 If the Contractor requests in writing that insurance for risks other than
those described herein or for other special hazards be included in the property
insurance policy, the Owner shall, if possible, include such insurance and the
cost thereof shall be charged to the Contractor by appropriate Change Order.
11.3.5 If during the Project construction period the Owner insures properties,
real or personal or both, adjoining or adjacent to the site by property
insurance under policies separate from those insuring the Project, or if after
final payment property insurance is to be provided on the completed Project
through a policy or policies other than those insuring the Project during the
construction period, the Owner shall waive all rights in accordance with the
terms of Subparagraph 11.3.7 for damages caused by fire or other perils covered
by this separate property insurance. All separate policies shall provide this
waiver of subrogation by endorsement or otherwise.
11.3.6 Before an exposure to loss may occur, the Owner shall file with the
Contractor a copy of each policy that includes insurance coverages required by
this Paragraph 11.3. Each policy shall contain all generally applicable
conditions, definitions, exclusions and endorsements related to this Project.
Each policy shall contain a provision that the policy will not be canceled or
allowed to expire until at least 30 days' prior written notice has been given to
the Contractor.
11.3.7 WAIVERS OF SUBROGATION. The Owner and Contractor waive all rights against
[(1) each other and any of their subcontractors, sub-subcontractors, agents and
employees, each of the other, and (2) the Architect, Architect's consultants,
separate contractors] each other and against the Development Manager, Architect,
Owner's other Contractors and own forces described in Article 6, if any, and any
of their subcontractors, sub-subcontractors, agents and employees, for damages
caused by fire or other perils to the extent covered by property insurance
obtained pursuant to this Paragraph 11.3 or other property insurance applicable
to the Work, except such rights as they have to proceeds of such insurance held
by the Owner as fiduciary. [The Owner or Contractor, as appropriate, shall
require of the Architect, Architect's consultants, separate contractors
described in Article 6, if any, and the subcontractors, sub-subcontractors,
agents and employees of any of them, by appropriate agreements, written where
legally required for validity, similar waivers each in favor of other parties
enumerated herein.] The policies shall provide such waivers of subrogation by
endorsement or otherwise to the extent such waiver is permitted by Owner's and
Contractor's insurers and does not prejudice the insurance required to be
carried by the Owner and Contractor under this Agreement. A waiver of
subrogation shall be effective as to a person or entity even though that person
or entity would otherwise have a duty of indemnification, contractual or
otherwise, did not pay the insurance premium directly or indirectly, and whether
or not the person or entity had an insurable interest in the property damaged.
11.3.8 A loss insured under Owner's property insurance shall be adjusted by the
Owner as fiduciary and made payable to the Owner as fiduciary for the insureds,
as their interests may appear, subject to requirements of any applicable
mortgagee clause and of Subparagraph 11.3.10. The Contractor shall pay
Subcontractors their just shares of insurance proceeds received by the
Contractor, and by appropriate agreements, written where legally required for
validity, shall require Subcontractors to make payments to their
Sub-subcontractors in similar manner.
11.3.9 If required in writing by a party in interest, the Owner as fiduciary
shall, upon occurrence of an insured loss, give bond for proper performance of
the Owner's duties. The cost of required bonds shall be charged against proceeds
received as fiduciary. The Owner shall deposit in a separate account proceeds so
received, which the Owner shall distribute in accordance with such agreement as
the parties in interest may teach, or in accordance with an arbitration award in
which case the procedure shall be as provided in Paragraph 4.5. If after such
loss no other special agreement is made, replacement of damaged property shall
be coveted by appropriate Change Order.
11.3.10 The Owner as fiduciary shall have power to adjust and settle a loss with
insurers unless one of the parties in interest shall object in writing within
five days after occurrence of loss to the Owner's exercise of this power; if
such objection be made, arbitrators shall be chosen as provided in Paragraph
4.5. The Owner as fiduciary shall, in that case, make settlement with insurers
in accordance with directions of such arbitrators. If distribution of insurance
proceeds by arbitration is required, the arbitrators will direct such
distribution.
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11.3.11 Partial occupancy or use in accordance with Paragraph 9.9 shall not
commence until the insurance company or companies providing property insurance
have consented to such partial occupancy or use by endorsement or otherwise. The
Owner and the Contractor shall take reasonable steps to obtain consent of the
insurance company or companies and shall, without mutual written consent, take
no action with respect to partial occupancy or use that would cause
cancellation, lapse or reduction of insurance.
11.3.12 Contractor hereby releases, and shall cause its subcontractors and
suppliers to release, Owner, Owner's partners, parent companies, affiliates,
shareholders, directors, officers, employees, agents, Development Manager,
Architect and any of the above-mentioned parties (the "Released Parties") from
any and all claims or causes of action whatsoever which Contractor and/or such
parties might otherwise possess in or from or in any way connected with any loss
covered or which should have been covered by insurance, including the deductible
portion thereof, maintained and/or required to be maintained by the Contractor
and/or its subcontractor pursuant to the Contract.
11.4 PERFORMANCE BOND AND PAYMENT BOND
11.4.1 The Owner shall have the right to require the Contractor to furnish bonds
covering faithful performance of the Contract and payment of obligations arising
thereunder as stipulated in bidding requirements or specifically required in the
Contract Documents on the date of execution of the Contract.
11.4.2 Upon the request of any person or entity appearing to be a potential
beneficiary of bonds covering payment of obligations arising under the Contract,
the Contractor shall promptly furnish a copy of the bonds or shall permit a copy
to be made.
ARTICLE 12
UNCOVERING AND CORRECTION OF WORK
12.1 UNCOVERING OF WORK
12.1.1 If a portion of the Work is covered contrary to the Owner's, Development
Manager's or Architect's request or to requirements specifically expressed in
the Contract Documents, it must, if required in writing by either [the
Architect], be uncovered for [the Architect's] their observation and be replaced
at the Contractor's expense without change in the Contract Time or Contract Sum.
12.1.2 If a portion of the Work has been covered which the Owner, Development
Manager or Architect has not specifically requested to observe prior to its
being covered, the Owner, Development Manager or Architect may request to see
such Work and it shall be uncovered by the Contractor. If such Work is in
accordance with the Contract Documents, costs of uncovering and replacement
shall, by appropriate Change Order, be charged to the Owner. If such Work is not
in accordance with the Contract Documents, the Contractor shall pay such costs
unless the condition was caused by the Owner [or a separate contractor] one of
the other Contractors in which event the Owner shall be responsible for payment
of such costs.
12.2 CORRECTION OF WORK
12.2.1 The Contractor shall promptly correct Work rejected by the Owner,
Development Manager or Architect or failing to conform to the requirements of
the Contract Documents, whether observed before or after Substantial Completion
and whether or not fabricated, installed or completed. The Contractor shall beat
costs of correcting such rejected Work, including additional testing and
inspections and compensation for the Architect's services and expenses made
necessary thereby.
12.2.1.1 The Owner shall have authority at all times, until Final Completion and
acceptance of the Work, to inspect and reject work and materials which in the
Owner's judgment are not in conformity with the Contract Documents.
12.2.2 If, within one year after the date of Substantial Completion of the Work
of designated portion thereof, or after the date for commencement of warranties
established under Subparagraph 9.9.1, or by terms of an applicable special
warranty required by the Contract Documents, any of the Work is found to be not
in accordance with the requirements of the Contract Documents, the Contractor
shall correct it promptly after receipt of written notice from the Owner to do
so unless the Owner has previously given the Contractor a written acceptance of
such condition. This period of one year shall be extended with respect to
portions of Work first performed after Substantial Completion by the period of
time between Substantial Completion and the actual performance of the Work. This
obligation under this Subparagraph 12.2.2 shall survive acceptance of the Work
under the Contract and termination of the Contract. The Owner shall give such
notice promptly after discovery of the condition.
12.2.3 The Contractor shall remove from the site portions of the Work which are
not in accordance with the requirements of the Contract Documents and ate
neither corrected by the Contractor nor accepted by the Owner.
12.2.4 If the Contractor fails to correct nonconforming Work within a reasonable
time, the Owner may correct it in accordance with Paragraph 2.4. If the
Contractor does not proceed with correction of such nonconforming Work within a
reasonable time fixed by written notice from the Owner [Architect], the Owner
may remove it and store the salvable materials or equipment at the Contractor's
expense. If the Contractor does not pay costs of such removal and storage within
ten days after written notice, the Owner may upon ten additional days' written
notice sell such materials and equipment at auction or at private sale and shall
account for the proceeds thereof, after deducting costs and damages that should
have been borne by the Contractor, including compensation for the Development
Manager's and Architect's services and expenses made necessary thereby. If such
proceeds of sale do not cover costs which the Contractor should have borne, the
Contract Sum shall be reduced by the deficiency. If payments then or thereafter
due the Contractor are not sufficient to cover such amount, the Contractor shall
pay the difference to the Owner.
12.2.5 The Contractor shall beat the cost of correcting destroyed or damaged
construction, whether completed or partially completed, of the Owner or
[separate contractors] or other Contractors caused by the Contractor's
correction or removal of Work which is not in accordance with the requirements
of the Contract Documents.
12.2.6 Nothing contained in this Paragraph 12.2 shall be construed to establish
a period of limitation with respect to other obligations which the Contractor
might have under the Contract Documents. Establishment of the time period of one
year as described in Subparagraph 12.2.2 relates only to the specific obligation
of the Contractor to correct the Work, and has no relationship to the time
within which the obligation to comply with the Contract Documents may be sought
to be enforced, nor to the time within which proceedings may be commenced to
establish the Contractor's liability with respect to the Contractor's
obligations other than specifically to correct the Work.
12.3 ACCEPTANCE OF NONCONFORMING WORK
12.3.1 If the Owner prefers to accept Work which is not in accordance with the
requirements of the Contract Documents, the Owner may do so instead of requiring
its removal and correction, in which case the Contract Sum will be reduced as
appropriate and equitable. Such adjustment shall be effected whether or not
final payment has been made.
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ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 GOVERNING LAW
13.1.1 The Contract shall be governed by the laws of the [place where the
Project is located] State of California.
13.2 SUCCESSORS AND ASSIGNS
13.2.1 The Owner and Contractor respectively bind themselves, their partners,
successors, assigns and legal representatives the other party hereto and to
partners, successors, assigns and legal representatives of such other party in
respect to covenants, agreements and obligations contained in the Contract
Documents. [Neither party to the Contract shall assign the Contract as a whole
without written consent of the other. If either party attempts to make such an
assignment without such consent, that party shall nevertheless remain legally
responsible for all obligations under the Contract.] Contractor may not assign
its rights under this Contract. Owner may, without Contractor's consent, assign
its interest in the Contract as security to a lender and in the event the
lender(s) for the Project succeeds to the interest of Owner by foreclosure, deed
in lieu of foreclosure or otherwise, Contractor agrees to perform all of its
obligations under this Agreement for such lender(s) on the terms and conditions
provided in this Agreement. Any entity which shall succeed to the rights of
Owner shall be entitled to enforce the rights of Owner hereunder.
13.3 WRITTEN NOTICE
13.3.1 Written notice shall be deemed to have been duly served if delivered in
person to the individual or a member of the firm or entity or to an officer of
the corporation for which it was intended, or if delivered at or sent by
registered or certified mail to the last business address known to the party
giving notice. At Owner's request a copy of all written notices shall be
delivered to any lender for the project.
13.4 RIGHTS AND REMEDIES
13.4.1 Duties and obligations imposed by the Contract Documents and rights and
remedies available thereunder shall be in addition to and not a limitation of
duties, obligations, rights and remedies otherwise imposed or available by law.
13.4.2 No action or failure to act by the Owner, Development Manager, Architect
or Contractor shall constitute a waiver of a right or duty afforded them under
the Contract, not shall such action or failure to act constitute approval of or
acquiescence in a breach thereunder, except as may be specifically agreed in
writing.
13.4.2 The invalidity of any part or provision of the Contract Documents shall
not impair or affect in any manner whatsoever the validity, enforceability or
effect of the remainder of the Contract Documents.
13.5 TESTS AND INSPECTIONS
13.5.1 Tests, inspections and approvals of portions of the Work required by the
Contract Documents or by laws, ordinances, rules, regulations or orders of
public authorities having jurisdiction shall be made at an appropriate time.
Unless otherwise provided, the Contractor shall make arrangements for such
tests, inspections and approvals with an independent testing laboratory or
entity acceptable to the Owner, or with the appropriate public authority, and
shall beat all related costs of tests, inspections and approvals. The Contractor
shall give the Development Manager and Architect timely notice of when and where
tests and inspections are to be made so the [Architect] they may observe such
procedures. The Owner shall bear costs of tests, inspections or approvals which
do not become requirements until after bids ate received or negotiations
concluded.
13.5.2 If the Development Manager, Architect, Owner or public authorities having
jurisdiction determine that portions of the Work require additional testing,
inspection or approval not included under Subparagraph 13.5.1, the Development
Manager and Architect will, upon written authorization from the Owner, instruct
the Contractor to make arrangements for such additional testing, inspection or
approval by an entity acceptable to the Owner, and the Contractor shall give
timely notice to the Development Manager and Architect of when and where tests
and inspections are to be made so they [Architect] may observe such procedures.
The Owner shall bear such costs except as provided in Subparagraph 13.5.3.
13.5.3 If such procedures for testing, inspection or approval under
Subparagraphs 13.5.1 and 13.5.2 reveal failure of the portions of the Work to
comply with requirements established by the Contract Documents, the Contractor
shall hear all costs made necessary by such failure including those of repeated
procedures and compensation for the Development Manager's and Architect's
services and expenses.
13.5.4 Required certificates of testing, inspection or approval shall, unless
otherwise required by the Contract Documents, be secured by the Contractor and
promptly delivered to the Development Manager for transmittal to the Architect.
13.5.5 If the Development Manager or Architect is to observe tests, inspections
or approvals required by the Contract Documents, the Development Manager or
Architect will do so promptly and, where practicable, at the normal place of
testing.
13.5.6 Tests or inspections conducted pursuant to the Contract Documents shall
be made promptly to avoid unreasonable delay in the Work.
13.6 INTEREST
13.6.1 Payments due and unpaid under the Contract Documents shall bear interest
from the date that final determination is made that such payment is due at such
rate as the parties may agree upon in writing or, in the absence thereof, at the
legal rate prevailing from time to time at the place where the Project is
located.
13.7 COMMENCEMENT OF STATUTORY LIMITATION PERIOD
13.7.1 As between the Owner and Contractor:
.1 BEFORE SUBSTANTIAL COMPLETION. As to acts or failures to act
occurring prior to the relevant date of Substantial Completion,
any applicable statute of limitations except with respect to
limitations based on discovery shall commence to run and any
alleged cause of action shall be deemed to have accrued in any and
all events not later than such date of Substantial Completion;
.2 BETWEEN SUBSTANTIAL COMPLETION AND FINAL CERTIFICATE FOR PAYMENT.
As to acts or failures to act occur- ring subsequent to the
relevant date of Substantial Completion and prior to issuance of
the final Certificate for Payment, any applicable statute of
limitations except with respect to limitations based on discovery
shall commence to run and any alleged cause of action shall be
deemed to have accrued in any and all events not later than the
date of issuance of the final Certificate for Payment; and
.3 AFTER FINAL CERTIFICATE FOR PAYMENT. As to acts or failures to act
occurring after the relevant date of issuance of the Final
Certificate for Payment, any applicable statute of limitations
except with respect to limitations based on discovery shall
commence to run and any alleged cause of action shall be deemed to
have accrued in any and all events not later than the
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<PAGE> 48
date any act or failure to act by the Contractor pursuant any
warranty provided under Paragraph 3.5, the date any correction if
the Work of failure to correct the Work by the Contractor under
Paragraph 12.2, or the date of actual commission of any other act
or failure perform any duty or obligation by the Contractor Owner,
whichever occurs last.
ARTICLE 14
TERMINATION OR SUSPENSION OF THE CONTRACT
4.1 TERMINATION BY THE CONTRACTOR
14.1.1 The Contractor may terminate the Contract if the Work is stopped for a
period of 30 days through no act or fault of the Contractor or a Subcontractor,
Sub-subcontractor or their agents or employees or any other persons performing
portions of the Work under contract with the Contractor, for any of the
following reasons:
.1 issuance of an order of a court or other public authority having
jurisdiction;
.2 an act of government, such as a declaration of national emergency,
making material unavailable;
.3 because the Development Manager or Architect has not issued a
Certificate for Payment and has not notified the Contractor of the
reason for withholding certification as provided in Subparagraph
9.4.1, or because the Owner has not made payment on a Certificate for
Payment within the time stated in the Contract Documents;
.4 if repeated suspensions, delays or interruptions by the Owner as
described in Paragraph 14.3 constitute in the aggregate more than 100
percent of the total number of days scheduled for completion, or 120
days in any 365-day period, whichever is less; or
.5 the Owner has failed to furnish to the Contractor promptly, upon the
Contractor's request, reasonable evidence as required by Subparagraph
2.2.1.
14.1.2 If one of the above reasons exists, the Contractor may, upon seven
additional days' written notice to the Owner, Development Manager and Architect,
terminate the Contract and recover from the Owner payment for Work executed and
for proven loss with respect to materials, equipment, tools, and construction
equipment and machinery, including reasonable overhead, profit and damages.
14.1.3 If the Work is stopped for a period of 60 days through no act or fault of
the Contractor or a Subcontractor or their agents or employees or any other
persons performing portions the Work under contract with the Contractor because
the Owner has persistently failed to fulfill the Owner's obligations under the
Contract Documents with respect to matters important to the progress of the
Work, the Contractor may, upon seven additional days' written notice to the
Owner, Development Manager and the Architect, terminate the Contract and recover
from the Owner as provided in Subparagraph 14.1.2.
14.2 TERMINATION BY THE OWNER [FOR CAUSE]
14.2.1 The Owner may terminate the Contract if the Contractor:
.1 [persistently or repeatedly] refuses or fails to supply enough
properly skilled workers or proper materials;
.2 fails to make payment to Subcontractors for materials or labor in
accordance with the respective agreements between the Contractor and
the Subcontractors;
.3 [persistently] disregards laws, ordinances, or rules, regulations or
orders of a public authority having jurisdiction; or
.4 otherwise is guilty of substantial breach of a provision the Contract
Documents.
Termination for any of the above reasons shall be referred to in this Agreement
as "Termination for Cause."
14.2.2 When any of the above reasons exist, the Owner, [upon certification by
the Architect that sufficient cause exists to justify such action,] may without
prejudice to any other rights or remedies of the Owner and after giving the
Contractor and the Contractor's surety, if any, seven days' written notice,
terminate employment of the Contractor and may, subject to any prior rights of
the surety:
.1 take possession of the site and of all materials, equipment, tools,
and construction equipment and machinery thereon owned by the
Contractor;
.2 accept assignment of subcontracts pursuant to Paragraph 5.4; and
.3 finish the Work by whatever reasonable method the Owner may deem
expedient.
14.2.3 [When the Owner terminates the Contract for one of the reasons stated in
Subparagraph 14.2.1] Upon a Termination for Cause, the Contractor shall not be
entitled to receive further payment until the Work is finished.
14.2.4 Once the Work is finished, [If] if the unpaid balance of the Contract Sum
[exceeds] exceeded the costs of finishing the Work, including compensation for
the Development Manager's and Architects services and expenses made necessary
thereby, such excess shall be paid to the Contractor. If such costs exceed the
unpaid balance, the Contractor shall pay the difference to the Owner. The amount
to he paid to the Contractor or Owner, as the case may be, shall, upon
application, be certified by the Architect after consultation with the
Development Manager[, upon application], and this obligation for payment shall
survive termination of the Contract.
14.2.5 The Owner may, at its option, terminate this Contract in whole or in part
from time to time at any time by seven days' written notice thereof to the
Contractor and Contractor's surety, if any ("Termination for Convenience"). Upon
a Termination for Convenience, Contractor agrees to waive any claims for
damages, including loss of anticipated profits, on account thereof, and as the
sole right and remedy of Contractor, Owner shall pay Contractor in accordance
with Subparagraph 14.2.3(c) below. The provisions of the Contract, which by
their nature survive final acceptance of the Work, shall remain in full force
and effect after such Termination for Convenience to the extent provided in such
provisions.
(a) Upon receipt of a notice instituting a Termination for Cause or a
Termination for Convenience, Contractor shall, unless the notice
directs otherwise, immediately discontinue the Work on that date and
to the extent specified in the notice, place no further orders or
subcontracts for materials, equipment, services or facilities,
except as may be necessary for completion of such portion of the
Work as is not discontinued, promptly make every reasonable effort
to procure cancellation upon terms satisfactory to Owner of all
orders and subcontracts to the extent they relate to the performance
of the discontinued portion of the Work, and thereafter do only such
Work as may be necessary to preserve and protect work already in
progress and to protect materials, plants and equipment on the Site
or in transit thereto.
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
26
<PAGE> 49
(b) Upon a Termination for Convenience or a Termination for Cause, the
obligations of the Contract shall continue as to portions of the
Work already performed and as to bona fide obligations assumed by
Contractor prior to the date of termination.
(c) Upon a Termination for Convenience, Contractor shall be entitled to
be paid the full cost of all Work properly done by Contractor to the
date of termination not previously paid for, less sums already
received by Contractor on account of the portion of the Work
performed. If at the date of such termination Contractor has
properly prepared or fabricated off the Site any goods for
subsequent incorporation in the Work, and if Contractor delivers
such goods to the Site or to such other place as the Owner shall
reasonably direct, then Contractor shall be paid for such goods or
materials.
14.2.6 Upon a Termination for Convenience, the Owner may without prejudice to
any other rights or remedies of the Owner and subject to any prior rights of the
surety:
.1 take possession of the site and of all materials, equipment,
tools, and construction equipment and machinery thereon owned by
the Owner or rented on its behalf by Contractor;
.2 accept assignment of subcontracts pursuant to Paragraph 5.4 if but
only if Owner pays Contractor, in addition to any other sums owing
hereunder, a fee equal to twenty percent (20%) of the difference
between (x) the Contractor's Fee calculated as if the Cost of the
Work were equal to the Guaranteed Maximum Price at the time of
termination (or, if the Guaranteed Maximum Price has not yet been
established, the Preliminary Guaranteed Maximum Price established
in the Agreement), and (y) the Contractor's Fee paid or owing to
Contractor as a result of the actual Cost of the Work completed
prior to termination; provided, however, that upon Final
Completion, the value for (x) will be recalculated based on the
actual Cost of the Work rather than the Guaranteed Maximum Price
or estimate thereof, and Contractor will refund to Owner the
difference between the fee paid by Owner based on the initial
calculation and the amount owed based on such recalculation.
.3 finish the Work by whatever reasonable method the Owner may
deem expedient.
14.3 SUSPENSION BY THE OWNER FOR CONVENIENCE
14.3.1 The Owner may, without cause, order the Contractor in writing to suspend,
delay or interrupt the Work in whole or in part for such period of time as the
Owner may determine.
14.3.2 An ad99justment shall be made for increases in the cost of performance of
the Contract, including profit on the increased cost of performance, caused by
suspension, delay or interruption. No adjustment shall be made to the extent:
.1 that performance is, was or would have been so suspended, delayed
or interrupted by another cause for which the Contractor is
responsible; or
.2 that an equitable adjustment is made or denied under another
provision of this Contract.
14.3.3 Adjustments made in the cost of performance may have a mutually agreed
fixed or percentage fee.
<PAGE> 50
EXHIBIT C
PROJECT MANUAL SPECIFICATIONS
HOK & Associates Design Development Specifications dated January 31, 1997.
NOTE: Final specifications will be issued with completed Construction Drawings
and Specifications and incorporated into the contract with the GMP.
<PAGE> 51
EXHIBIT D
SYMANTEC CC5 OFFICE BUILDING
EXHIBIT "D"
CONTRACT DOCUMENTS
MAY 5,1997
WEBCOR BUELDERS JOB #295
1. Design Development Submittal - Architectural Specifications by HOK dated
1/31/97.
2. Geotechnical Investigation - Soils Report by Treadwell & Rollo dated
2/10/97.
3. Drawings as listed below:
<TABLE>
<CAPTION>
Sheet# Description Date
- -----------------------------------------------------------------------------------
<S> <C> <C>
Architectural Drawings by HOK:
-------- Title Page 1/31/97
1.1A-1 Drawing Index 1/31/97
1.1A-2 Gen. Notes, Symbols & Abbreviations 1/31/97
Civil Drawings by Kier & Wright:
C.0-1 Topographic Survey 1/8/97
C.0-2 Basement Excavation 1/26/97
C.0-3 Basement Excavation - Notes & Sections 1/26/97
Landscape Drawings by Guzzardo & Associates, Inc.:
2.2A-01 Site Layout Plan 1/31/97
2.2C-01 Site Details 1/31/97
2.5A-01 Site Planting Plan 1/31/97
Structural Drawings by Nishkian & Associates:
3.1-1 General Notes 1/31/97
3.2-1 Foundation/Level B4 Plan 1/31/97
3.2-2 Level B3 Framing Plan 1/31/97
3.2-3 Level B2 Framing Plan 1/31/97
3.2-4 Level B1 Framing Plan 1/31/97
3.2-5 Ground Level Framing Plan 1/31/97
3.2-6 Second Level Framing Plan 1/31/97
3.2-7 Third Level Framing Plan 1/31/97
3.2-8 Fourth Level Framing Plan 1/31/97
3.2-10 Penthouse Roof Framing Plan 1/31/97
3.2-9 Roof Framing Plan 1/31/97
</TABLE>
<PAGE> 52
Symantec CC5 Office Building
EXHIBIT "D" - Contract Documents
May 5, 1997
Webcor Builders Job #295
Page 2
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C>
3.3-1 Non-Frame Column Schedule 1/31/97
3.3-2 Braced Frame Elevations 1/31/97
3.3-3 Braced Frame Elevations and Details 1/31/97
3.4-1 Concrete Column Details 1/31/97
3.4-2 Typical Concrete Beam Details 1/31/97
3.4-4 Concrete Beam Schedule 1/31/97
3.6-1 Typical Steel Details 1/31/97
3.6-2 Typical Steel Details 1/31/97
3.6-3 Typical Steel Details 1/31/97
Architectural Drawings by HOK:
4.2-01 Level B4 Plan 1/31/97
4.2-02 Level B3 Plan 1/31/97
4.2-03 Level B2 Plan 1/31/97
4.2-04 Level B1 Plan 1/31/97
4.2-05 Ground Level Plan 1/31/97
4.2-06 Level 2 Floor Plan 1/31/97
4.2-07 Level 3 Floor Plan 1/31/97
4.2-08 Level 4 Floor Plan 1/31/97
4.2-09 Penthouse/Roof Plan 1/31/97
4.3A-01 Stair Plans 1/31/97
4.3A-02 Stair Plans 1/31/97
4.3A-03 Stair Plans 1/31/97
4.3A-04 Core Plans 1/31/97
4.3A-05 Core Plans 1/31/97
4.3A-06 Ground Level Toilet Room Plan 1/31/97
4.3B-1 Enlarged Plan Main Lobby 1/31/97
4.4-1 Reflected Ceiling Plans -
Lobby Levels 1 & 2 1/31/97
4.4-2 Reflected Ceiling Plan -
Lobby Level 2 1/31/97
4.5-01 Exterior Elevations 1/31/97
4.5-02 Exterior Elevations 1/31/97
4.5A-01 Enlarged Elevations 1/31/97
4.5A-02 Enlarged Elevations 1/31/97
4.5A-03 Enlarged Elevation 1/31/97
4.5A-04 Enlarged Elevation 1/31/97
4.5A-05 Enlarged Elevation 1/31/97
4.5A-06 Enlarged Elevation 1/31/97
4.5A-07 Enlarged Elevation 1/31/97
4.5A-08 Enlarged Elevation 1/31/97
4.5A-09 Enlarged Elevation 1/31/97
4.6-01 Toilet Room Interior Elevations 1/31/97
</TABLE>
<PAGE> 53
Symantec CC5 Office Building
EXHIBIT "D" - Contract Documents
May 5, 1997
Webcor Builders Job #295
Page 3
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C>
4.6-2 Enlarged Lobby Elevation 1/31/97
4.6-3 Enlarged Lobby Elevations 1/31/97
4.7-01 Sections 1/31/97
4.8-1 Stair Sections 1/31/97
4.8-3 Elevator Hoistway Sections 1/31/97
4.20A-01 Waterproofing Details 1/31/97
4.20D-01 Built-up Roofing Details 1/31/97
4.20E-01 Cement Plaster Exterior Soffits 1/31/97
4.30A-01 Hollow Metal Frames-Hold Open Details 1/31/97
4.30A-02 Door Threshold Details 1/31/97
4.40A-01 General Notes/Partition Types 1/31/97
4.40A-02 Partition Types 1/31/97
4.40B-01 Partition Termination Details 1/31/97
4.40B-02 Partition Details 1/31/97
4.40B-03 CMU Partition Details 1/31/97
4.40C-01 Acoustical Panel on T-Bar System 1/31/97
4.40C-02 Gypsum Board Ceiling and Soffits 1/31/97
4.40C-03 Ceiling Section Details 1/31/97
4.40D-01 ADA - Restroom Fixture & Accessory
Details 1/31/97
4.40D-02 ADA - Restroom Lavatory Details 1/31/97
4.40D-03 Toilet Room Shower Details 1/31/97
4.50A-01 Stair Railing Details 1/31/97
4.50A-02 Concrete Filled Metal Pan Stair
Details 1/31/97
4.50B-01 Passenger Elevator Cab Interior
Elev. & Details 1/31/97
4.50B-02 Freight Elevator Cab Interior
Elev. & Details 1/31/97
4.50B-03 Elevator Details 1/31/97
HVAC Drawings by C.M.I.:
6.1-1 Drawing List, Notes, Legend & Schedule 1/31/97
6.1-2 Schedules 1/31/97
6.2-1 Level B4 Plan 1/31/97
6.2-2 Level B2-B3 Plan 1/31/97
6.2-3 Level B1 Plan 1/31/97
6.2-4 Ground Level Plan 1/31/97
6.2-5 Level 2 Floor Plan 1/31/97
6.2-6 Level 3 Floor Plan 1/31/97
6.2-7 Level 4 Floor Plan 1/31/97
6.3-1 Penthouse/Roof Plan 1/31/97
6.5-1 Piping Schematic Chilled &
Condenser Water 1/31/97
6.5-2 Piping Schematic Hot Water 1/31/97
</TABLE>
<PAGE> 54
Symantec CC5 OFFICE Building
EXHIBIT "D" - Contract Documents
May 5, 1997
Webcor Builders Job #295
Page 4
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C>
Electrical Drawings by Schwartz & Lindheim, Inc.:
7.1-00 Legend, Ltg. Fixture Schedule &
Drawing List 1/31/97
7.1-01 Fixtures Schedule 1/31/97
7.1-02 Site Electrical Plan 1/31/97
7.2-00 Level B4 Electrical Plan 1/31/97
7.2-01 Level B3 Lighting Plan 1/31/97
7.2-02 Level B2 Lighting Plan 1/31/97
7.2-03 Level B1 Lighting Plan 12/12/96
7.2-04 Ground Level Electrical Plan 1/31/97
7.2-04P Ground Level Power Plan 1/31/97
7.2-05 Level 2 Electrical Plan 1/31/97
7.2-06 Level 3 Electrical Plan 1/31/97
7.2-07 Level 4 Electrical Plan 1/31/97
7.2-08 Penthouse/Roof Electrical Plan 1/31/97
7.5-00 Single Line Diagram 1/31/97
7.5-01 Riser Diagrams 1/31/97
7.7-00 Details - Electrical Rooms 1/31/97
</TABLE>
<PAGE> 55
WEBCOR BUILDERS
EXHIBIT "F"
May 5, 1997
WEBCOR BUILDERS JOB #295
PROJECT SYSTEMS SUMMARY
PROJECT: CC5 OFFICE BUILDING
LOCATION: CUPERTINO, CA
CM: SARES REGIS
OWNER: SYMANTEC
ARCHITECT: HOK
ESTIMATE DATE: 25-Feb-97
ESTIMATOR: SRN & Rich Lamb
ESTIMATE #: DD January 31, 1997 Drawings
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
OFFICE BUILDING PARKING STRUCTURE
LINE WBI CODE DESCRIPTION 144,378 SF 290,862 SF
PRICE $/SF PRICE $/SF
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 01000 GENERAL CONDITIONS $ 356,772 $ 2.47 $ 356,772 $ 1.23
2 02000 SITEWORK $ - $ - $1,823,993 $ 6.27
3 03000 LANDSCAPE AND IRRIGATION $ - $ - $ - $ -
4 04000 FOUNDATIONS $ 471,319 $ 3.26 $ 307,255 $ 1.06
5 05000 BUILDING STRUCTURE $2,678,350 $18.55 $5,461,932 $18.78
6 06000 EXTERIOR ENVELOPE (VERTICAL) $2,187,332 $15.15 $ 18,750 $ 0.06
7 07000 WATERPROOFING, INSULATION & ROOFING $ 564,796 $ 3.91 $ 180,679 $ 0.62
8 08000 INTERIOR CONSTRUCTION $ 801,003 $ 5.55 $ 91,330 $ 0.31
9 09000 SPECIALTIES $ 38,200 $ 0.26 $ 4,200 $ 0.01
10 10000 BUILDING EQUIPMENT $ 38,000 $ 0.26 $ - $ -
11 11000 SPECIAL CONSTRUCTION $ - $ - $ - $ -
12 15300 BUILDING FURNISHINGS $ - $ - $ - $ -
13 15400 ELEVATORS $ 225,000 $ 1.56 $ 128,000 $ 0.44
14 15500 FIRE SPRINKLERS $ 175,000 $ 1.21 $ 231,323 $ 0.80
15 16000 PLUMBING $ 320,000 $ 2.22 $ 56,000 $ 0.19
16 18000 H.V.A.C. $ 842,032 $ 5.83 $ 216,866 $ 0.75
17 19000 ELECTRICAL $ 646,071 $ 4.47 $ 296,094 $ 1.02
18 24000 MISCELLANEOUS EXPENSES $ 115,505 $ 0.80 $ 119,854 $ 0.41
19 19000 CONTINGENCY $ 100,000 $ 0.69 $ 100,000 $ 0.34
20 24000 CONTRACTOR JOB EQUIPMENT $ 23,660 $ 0.16 $ 23,660 $ 0.06
---------- ------ ---------- ------
SUBTOTAL $9,583,274 $66.38 $9,416,707 $32.38
CONTRACTORS FEE @ 2.6% $ 239,582 $ 1.66 $ 235,418 $ 0.81
---------- ------ ---------- ------
TOTAL COST $9,822,855 $68.04 $9,652,125 $33.18
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
SITEWORK
LINE WBI CODE DESCRIPTION 95,417 SF TOTAL
PRICE $/SF
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 01000 GENERAL CONDITIONS $ - $ - $ 713,545
2 02000 SITEWORK $ 462,594 $ 4.85 $ 2,286,587
3 03000 LANDSCAPE AND IRRIGATION $ 272,300 $ 2.85 $ 272,300
4 04000 FOUNDATIONS $ - $ - $ 778,575
5 05000 BUILDING STRUCTURE $ 7,500 $ 0.08 $ 8,147,782
6 06000 EXTERIOR ENVELOPE (VERTICAL) $ - $ - $ 2,206,082
7 07000 WATERPROOFING, INSULATION & ROOFING $ 150,800 $ 1.58 $ 896,275
8 08000 INTERIOR CONSTRUCTION $ - $ - $ 892,333
9 09000 SPECIALTIES $ - $ - $ 42,400
10 10000 BUILDING EQUIPMENT $ - $ - $ 38,000
11 11000 SPECIAL CONSTRUCTION $ - $ - $ -
12 15300 BUILDING FURNISHINGS $ - $ - $ -
13 15400 ELEVATORS $ - $ - $ 353,000
14 15500 FIRE SPRINKLERS $ - $ - $ 406,556
15 16000 PLUMBING $ - $ - $ 376,000
16 18000 H.V.A.C. $ 80,500 $ 0.84 $ 1,139,398
17 19000 ELECTRICAL $ 18,000 $ 0.19 $ 960,164
18 24000 MISCELLANEOUS EXPENSES $ 9,068 $ 0.10 $ 244,426
19 19000 CONTINGENCY $ 22,000 $ 0.23 $ 222,000
20 24000 CONTRACTOR JOB EQUIPMENT $ - $ - $ 47,320
---------- ------ -----------
SUBTOTAL $1,022,762 $10.72 $20,022,743
CONTRACTORS FEE @ 2.6% $ 25,569 $ 0.27 $ 500,569
---------- ------ -----------
TOTAL COST $1,048,331 $10.99 $20,523,311
---------- -----------
</TABLE>
PAGE 1
<PAGE> 56
Webcor Builders
EXHIBIT "F"
May 5, 1997
WEBCOR BUILDERS JOB #295
SYSTEMS ESTIMATE
<TABLE>
<S> <C> <C>
Project: CCS-OFFICE BUILDING
Location: CUPERTINO
CM: SARES REGIS
Owner: SYMANTEC
Architect: HOK
Estimate Date: 25-Feb-97
Estimator: SRN & Rich Lamb Building Size: 144,378 Square Feet
Estimate #: DD Budget January 31, 1997 Schedule: 15 months
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION PRICE $/SF COMMENTS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 GENERAL CONDITIONS 356,772 $ 2.47
2 BUILDING PAD EARTHWORK 0 $ -
3 LANDSCAPE AND IRRIGATION 0 $ -
4 FOUNDATIONS 471,319 $ 3.26
5 BUILDING STRUCTURE 2,678,350 $ 18.55
6 EXTERIOR ENVELOPE (VERTICAL) 2,187,332 $ 15.15
7 WATERPROOFING, INSULATION, & ROOFING 564,796 $ 3.91
8 INTERIOR CONSTRUCTION 801,003 $ 5.55
9 SPECIALTIES 38,200 $ 0.26
10 BUILDING EQUIPMENT 38,000 $ 0.26
11 SPECIAL CONSTRUCTION 0 $ -
12 BUILDING FURNISHINGS 0 $ -
13 ELEVATORS 225,000 $ 1.56
14 FIRE SPRINKLERS 175,232 $ 1.21
15 PLUMBING 320,000 $ 2.22
16 HVAC 842,032 $ 5.83
17 ELECTRICAL 646,071 $ 4.47
18 MISCELLANEOUS EXPENSES 115,505 $ 0.80
19 CONTINGENCY 100,000 $ 0.69
20 CONTRACTOR JOB EQUIPMENT 23,660 $ 0.16
---------- -------
SUBTOTAL 9,583,274 $ 66.38
CONTRACTORS FEE @ 2.5% 239,582 $ 1.66
---------- -------
TOTAL BUILDING COSTS $9,822,855
----------
Cost per sf $68.04
</TABLE>
ALTERNATES
ADD COOLING DUCT LOOPS $200,000 Add
ADD FOR 800KW GENERATOR $388,400 Add
Page 1
<PAGE> 57
WEBCOR BUILDERS
<TABLE>
<CAPTION>
GENERAL CONDITIONS
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
01 - 010 1 GENERAL CONDITIONS 1 LS 356,772 356,772 2.47 Pro rata with Parking
TOTAL GENERAL CONDITIONS 356,772
------------------------ -------
BUILDING PAD EARTHWORK
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
2 Clear & Grub Site 0 SF 0.00 0 0.00 See Sitework Estimate
2 Asphalt Patch 0 LS 0.00 0 0.00 See Sitework Estimate
2 Storm/Sewer/Water 0 LS 0.00 0 0.00 See Sitework Estimate
TOTAL BUILDING PAD EARTHWORK 0
---------------------------- -------
LANDSCAPE & IRRIGATION
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
3 Landscape/Hardscape Area 0 SF 0.00 0 0.00 See Sitework Estimate
TOTAL LANDSCAPE & IRRIGATION 0
---------------------------- -------
FOUNDATIONS
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
4 Substructure Rebar 208,365 LBS 0.45 93,764 0.65
4 Substructure Concrete 1 LS 377,555 377,555 2.62
TOTAL FOUNDATIONS 471,319
----------------- -------
BUILDING STRUCTURE
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
5 Rebar @ Decks, Pits, Misc. 113,906 LBS 0.45 51,257 0.36
5 Mesh @ Metal Decking 151,874 SF 0.45 68,343 0.47
5 Superstructure Concrete 1 ls 381,927 381,927 2.65
5 Block Walls @ Loading Dock 3,209 SF 11.00 35,299 0.24
5 Steel Framing @ Building
Shell 973 TNS 1,600.00 1,556,800 10.78 12#/sf + 1# for Panel Attach
5 Steel Framing @ Penthouse 43 TNS 1,600.00 68,800 0.48 Based on 10#/sf
5 Metal Decking 151,874 SF 2.20 334,123 2.31
5 Metal Stairs & Landings 7 FLTS 7,800.00 54,600 0.38
5 Misc Metals 1 LS 40,000.00 40,000 0.28
5 Awning Frames 1,744 SF 50.00 87,200 0.60
5 2nd Floor Lobby Rail 0 LF 0.00 0 0.00
TOTAL BUILDING STRUCTURE 2,678,350
------------------------ ---------
</TABLE>
Page 2
<PAGE> 58
Webcor Builders
<TABLE>
<CAPTION>
EXTERIOR ENVELOPE (VERTICAL)
- ------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6 Precast Panel System 1 LS 1,333,000 1,333,000 9.23
6 Punched Windows 12,214 SF 28.76 351,275 2.43
6 Ribbon Windows - 4th Floor 3,189 SF 28.11 89,643 0.62
6 Main Lobby 2,372 SF 50.00 118,600 0.82
6 East Lobby 728 SF 50.00 36,400 0.25
6 Awning Glazing 1744 SF 30.00 52,320 0.36
6 Entry Doors 5 PR 7,627.00 38,135 0.26
6 Single Entry Door 1 EA 2,500.00 2,500 0.02
6 5" x 5" extruded aluminum trim
(10ft +\- pcs) 10 EA 1,174.00 11,740 0.08 Penthouse Trim
6 Sheet Metal Wall Panels EIFS
@ Penthouse 5,280 SF 6.00 31,680 0.22
6 Penthouse EIFS 6420 SF 16.00 102,720 0.71
6 Backside of Parapet 2415 SF 8.00 19,320 0.13
TOTAL EXTERIOR ENVELOPE (VERTICAL) 2,187,332
---------------------------------- ---------
</TABLE>
<TABLE>
<CAPTION>
WATERPROOFING, INSULATION, & ROOFING
- ----------------------------------------------------------------------------------------------------------------------
UNIT
WBI CODE SYS DESCRIPTION QUANTITY UNIT PRICE PRICE $/SF COMMENTS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7 Thermal Wall Insulation 50,000 SF 0.40 20,000 0.14
7 Thermal insulation under
ground floor 37,858 SF 1.41 53,380 0.37
7 Safing insulation @ Perimeter 3,640 LF 2.85 10,374 0.07
7 Insulation @ Spandrel Glass 140 SF 3.00 420 0.00
7 Thermal Roof Insulation 40,045 SF 0.75 30,034 0.21
7 Fireproofing @ Steel 151,874 SF 1.85 280,967 1.95
7 Built up Roofing System 40,045 SF 2.25 90,101 0.62
7 Tapred insulation 23,688 SF 1.60 37,901 0.26
7 Water Proofing @ Showers 540 SF 3.00 1,620 0.01
7 Flashing & Sheet Metal 1 LS 35,000.00 35,000 0.24
7 Misc. Joint Sealers 1 LS 5,000.00 5,000 0.03
TOTAL WATERPROOFING, INSULATION, & ROOFING 564,796
------------------------------------------ -------
</TABLE>
<TABLE>
<CAPTION>
INTERIOR CONSTRUCTION
- --------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8 Restroom Countertops 8 EA 1,250.00 10,000 0.07
8 Thresholds 10 EA 200.00 2,000 0.01
8 Misc. Rough Carpentry 1 LS 20,000.00 20,000 0.14
8 Doors & Frames - Singles 56 EA 900.00 50,400 0.35
8 Doors & Frames - Pairs 9 PR 2,000.00 18,000 0.12
8 Total Doors @ Elevators 6 PR 2,500.00 15,000 0.10
8 PG&E Service Door 12 FT wide 1 EA 6,500.00 6,500 0.05
8 Loading Dock Service Door
24 Ft Wide 1 EA 15,000.00 15,000 0.10
8 Core & Shaft Walls 4 FLR 70,000.00 280,000 1.94 Per Floor Allowance
8 Cement Board @ Showers 1 LS 1,000.00 1,000 0.01
8 3RD Floor Soffit 1,200 SF 20.00 24,000 0.17 Includes Scaffolding
8 Core Restrooms Ceramic Tile 4,930 SF 8.00 39,440 0.27
8 Ceramic Tile @ Showers 1,063 SF 11.00 11,693 0.08
8 Balcony Pavers 0 SF 0.00 0 0.00 Non Accessible Balconies
8 Misc @ Cores 4 FLR 600.00 2,400 0.02
8 Misc. Painting 4 FLR 5,500.00 22,000 0.15
8 Vinyl Wallcovering
in Restrooms 2,856 SF 1.25 3,570 0.02
8 Lobby Wall/Floor/Ceiling
Finish Allowance 1 LS 240,000.00 240,000 1.66 Allowance
8 Lighting 0 LS 0.00 0 0.00 Included in Ceiling Allowance
8 New Bathrooms off Lobby 2 EA 20,000.00 40,000 0.28 Allowance
8 Furnishings 0 LS 0.00 0 0.00 NIC
TOTAL INTERIOR CONSTRUCTION 801,003
--------------------------- -------
SPECIALTIES
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Page 3
<PAGE> 59
WEBCOR BUILDERS
<TABLE>
- ----------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
9 Louvers near Dock Door 140 SF 50.00 7,000 0.05
9 Lockers @ Shower Rooms 8 EA 300.00 2,400 0.02
9 Fire Extinguishers & Cabinets 6 EA 200.00 1,600 0.01
9 Toilet Accessories & Partitions 4 FLR 6,000.00 24,000 0.17
9 Shower Accessories 4 EA 700.00 2,800 0.02
9 Benches @ Shower Rooms 2 EA 200.00 400 0.00
------------------------------------- ------------
TOTAL SPECIALTIES 38,200
------------------------------------- ------------
- ----------------------------------------------------
BUILDING EQUIPMENT
- ------------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
10 Window Washing Tiebacks 1 LS 30,000.00 30,000 0.21 Tiebacks Only
10 Dock Leveler 1 EA 8,000.00 8,000 0.06
------------------------------------- ------------
TOTAL BUILDING EQUIPMENT 38,000
------------------------------------- ------------
- ----------------------------------------------------
SPECIAL CONSTRUCTION
- ------------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
11 Special Construction 0 EA 0.00 0 0.00
------------------------------------- ------------
TOTAL SPECIAL CONSTRUCTION 0
------------------------------------- ------------
- ----------------------------------------------------
BUILDING FURNISHINGS
- ------------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
12 Window Coverings 0 EA 0.00 0 0.00 NIC, By Owner
------------------------------------- ------------
TOTAL BUILDING FURNISHINGS 0
------------------------------------- ------------
- ----------------------------------------------------
ELEVATORS
- ------------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
13 4 Stop Hydraulic Passenger Elevator 2 EA 60,000.00 120,000 0.83
13 4 Stop Hydraulic Freight Elevator 1 EA 75,000.00 75,000 0.52
13 Cab Allowance 2 EA 15,000.00 30,000 0.21 Allowance
------------------------------------- ------------
TOTAL ELEVATORS 225,000
------------------------------------- ------------
- ----------------------------------------------------
FIRE SPRINKLERS
- ------------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
14 14 Fire Sprinkler System 152,376 SF 1.15 175,232 1.21
------------------------------------- ------------
TOTAL FIRE SPRINKLERS 175,232
------------------------------------- ------------
</TABLE>
Exhibit F Steve Bldg DD.xls Page 4
<PAGE> 60
WEBCOR BUILDERS
<TABLE>
<CAPTION>
PLUMBING
- -----------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wall Hung Water Closets 24 EA 220,000 1.52
Urinals 8 EA with above 0.00
Lavatories 16 EA with above 0.00
Dual Drinking Fountains 4 EA with above 0.00
Janitor sinks 2 EA with above 0.00
Floor drains 8 EA with above 0.00
Roof/Balcony Drains 30 EA with above 0.00
Fuel Oil Tank & Piping 1 LS 30,000.00 30,000 0.21
Revised Bath Layout 1 LS 37,000.00 37,000 0.26
Showers (4) each 1 LS 16,000.00 16,000 0.11
New Drinking Fountains (4) each 1 LS 6,000.00 6,000 0.04
Upgrade to Automatic Flush
Valves 1 LS 8,000.00 8,000 0.06
New Janitor sinks (2) each 1 LS 3,000.00 3,000 0.02
TOTAL PLUMBING 320,000
-------------- -------
H.V.A.C.
- -----------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
16 Built-up Chilled Water Fans sized for 4 watts
System Without Duct Loops 142,275 SF 6.06 865,032 5.99 Chillers aired for 6 watts
16 Generator Exhaust 1 LS 5,000.00 5,000 0.03
16 Preheat Coils in Fan Rooms 1 LS 12,000.00 12,000 0.08
16 PG & E Rebates 1 LS -40,000.00 (40,000) -0.28
TOTAL H.V.A.C. 842,032
-------------- -------
ELECTRICAL
- -----------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
17 Electrical System 142,275 SF 4.54 646,071 4.47 5 watts/sf + 125 low generator
TOTAL ELECTRICAL 646,071
---------------- -------
</TABLE>
Page 5
<PAGE> 61
WEBCOR BUILDERS
<TABLE>
<CAPTION>
MISCELLANEOUS EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
18 SAFETY INSPECTIONS 19 DY 375 7,125 0.05
18 LIABILITY INSURANCE 0.58% LS 9,823,000 56,973 0.39
18 PRIME CONTRACTOR BOND 0.00% LS 0 0 0.00 NOT INCLUDED
18 SUBCONTRACTOR BONDS 1.50% LS 1,983,335 29,750 0.21 MEPS Only
18 ARCHITECTURAL/ENGR. SERVICES 0 LS 0 0 0.00 BY OWNER
18 TESTING AND INSPECTION 0 LS 0 0 0.00 BY OWNER
18 FINAL CLEAN UP 144,378 SF 0.15 21,657 0.15
18 FEES AND PERMITS 0 LS 0 0 0.00 BY OWNER
TOTAL CONTRACTOR SERVICES 115,505
------------------------- -------
CONTINGENCY
- -----------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
19 PROJECT CONTENTENCY @ 1% 1.00% EA 100,000 100,000 0.69
TOTAL CONTINGENCY 100,000
----------------- -------
CONTRACTOR JOB EQUIPMENT
- -----------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
20 JOBSITE CRANES 1 LS 0.00 0 0.00 By subcontractors
20 TEMPORARY EQUIPMENT 1 LS 0.00 0 0.00
20 MANLIFT 1 LS 0.00 0 0.00
20 EQUIPMENT, TOOLS, VEHICLES 1 LS 18,760.00 18,760 0.13
20 EXPENDABLE MATERIALS 1 LS 4,900.00 4,900 0.03
TOTAL CONTRACTOR JOB EQUIPMENT 23,660
------------------------------ -------
</TABLE>
Page 6
<PAGE> 62
WEBCOR BUILDERS
EXHIBIT "F"
May 5, 1997
WEBCOR BUILDERS JOB #295
SYSTEMS ESTIMATE
Project: CC5 PARKING STRUCTURE
Location: CUPERTINO
CM: SARES REGIS
Owner: SYMANTEC
Arch: HOK Parking Stalls: 777
Estimate Date: 05-May-97 Parking Structure Size: 290,862
Estimator: SRN & Rich Lamb Square Feet
Estimat #: DD Budget January 31, 1997 Schedule: 15 months
<TABLE>
<CAPTION>
WBI CODE SYS DESCRIPTION PRICE $/SF % COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 GENERAL CONDITIONS 356,772 $ 1.23
2 SITEWORK 1,823,993 $ 6.27
3 LANDSCAPE AND IRRIGATION 0 $ -
4 FOUNDATIONS 307,255 $ 1.06
5 BUILDING STRUCTURE 5,461,932 $18.78
6 EXTERIOR ENVELOPE (VERTICAL) 18,750 $ 0.06
7 WATERPROOFING, INSULATION, & ROOFING 180,679 $ 0.62
8 INTERIOR CONSTRUCTION 91,330 $ 0.31
9 SPECIALTIES 4,200 $ 0.01
10 BUILDING EQUIPMENT 0 $ -
11 SPECIAL CONSTRUCTION 0 $ -
12 BUILDING FURNISHINGS 0 $ -
13 ELEVATORS 128,000 $ 0.44
14 FIRE SPRINKLERS 231,323 $ 0.80
15 PLUMBING 56,000 $ 0.19
16 HVAC 216,866 $ 0.75
17 ELECTRICAL 296,094 $ 1.02
18 MISCELLANEOUS EXPENSES 119,854 $ 0.41
19 CONTINGENCY 100,000 $ 0.34
20 CONTRACTOR JOB EQUIPMENT 23,660 $ 0.08
--------- ------
SUBTOTAL 9,416,707 $32.38
CONTRACTORS FEE 2.5% 235,418 $ 0.81
--------- ------
PARKING STRUCTURE COST $9,652,125
---------
Cost per sf $33.18
Cost per Stall $12,422
Efficiency (SF/Stall) 374
</TABLE>
Page 1
<PAGE> 63
Webcor Builders
<TABLE>
<CAPTION>
- --------------------------------------
GENERAL CONDITIONS
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
01-010 1 GENERAL CONDITIONS 1 LS 356,772.25 356,772 1.23 Pro rata with Building
-------
TOTAL GENERAL CONDITIONS 356,772
-------
- --------------------------------------
SITEWORK
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
2 Clear & Grub Site 0 SF 0.00 0 0.00 See Sitework
2 Mass Excavation 1 LS 725,000.00 725,000 2.49
2 Site Grading 1 LS 50,000.00 50,000 0.17 Allowance
2 Shoring & Underpinning 1 LS 940,100.00 940,100 3.23 Malcolm Bid
2 Foundation Drain 3,062 LF 25.00 76,550 0.26
2 Foundation Drain Rock 4,593 CY 5.35 24,573 0.08
2 Asphalt Patch 0 LS 0.00 0 0.00 See Sitework
2 Stall & Directional Striping 777 STL 10.00 7.770 0.03 Striping only
2 Storm/Sewer/Water 0 LS 0.00 0 0.00 See Sitework
---------
TOTAL SITEWORK 1,823,993
---------
- --------------------------------------
LANDSCAPE & IRRIGATION
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
3 0 0.00
--
TOTAL LANDSCAPE & IRRIGATION 0
--
- --------------------------------------
FOUNDATIONS
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
4 Substructure Rebar 179,514 LBS 0.45 80,781 0.28
4 Substructure 1 LS 226,474 226,474 0.78
-------
TOTAL FOUNDATIONS 307,255
-------
- --------------------------------------
BUILDING STRUCTURE
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
5 Superstructure Rebar 2,431,924 LBS 0.45 1,094,366 3.76
5 Superstructure Concrete 1 LBS 4,053,566 4,053,566 13.94
5 Block Walls - 4 ft high 3,324 SF 11.00 36,564 0.13
5 Block Walls - 8'2" high 3,955 SF 11.00 43,505 0.15
5 Block Walls - 12'-2" high 4,162 SF 11.00 45,782 0.16
5 Metal Stairs & Landings 13 FLTS 7,800.00 101,400 0.35
5 Temporary Stair Tower 1 LS 15,000.00 15,000 0.05
5 Misc Metals 1 LS 30,000.00 30,000 0.10
5 Railing @ Ramps & SE Stair 334 LF 125.00 41,750 0.14
---------
TOTAL BUILDING STRUCTURE 5,461,932
---------
</TABLE>
Page 2
<PAGE> 64
Webcor Builders
<TABLE>
<CAPTION>
EXTERIOR ENVELOPE (VERTICAL)
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
6 HM Doors & Frames - 3' x 7' 17 EA 750.00 12.750 0.04
6 HM Doors & Frames - 6' x 7' 3 EA 2,000.00 6,000 0.02
6 Overhead Rolling Grill 0 EA 0.00 0 0.00 Not Required
------
TOTAL EXTERIOR ENVELOPE (VERTICAL) 18,750
------
WATERPROOFING, INSULATION & ROOFING
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
7 Miradrain @ Perimeter Walls 46,893 SF 3.00 140,679 0.48 With Volclay backing
7 Flashing & Sheet Metal 1 LS 5,000.00 5,000 0.02
7 Exhaust Grates/Hoods 4 EA 7,500.00 30,000 0.10 ALLOWANCE
7 Misc. Joint Sealers 1 LS 5,000.00 5,000 0.02
-------
TOTAL WATERPROOFING, INSULATION, & ROOFING 180,679
-------
INTERIOR CONSTRUCTION
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
8 Misc. Rough Carpentry 1 LS 15,000.00 15,000 0.05
8 Core & Shaft Walls 3.5 FLR 10,000.00 35,000 0.12 Per Floor Allowance
8 Elevator Floors + Base 844 SF 7.50 6,330 0.02
8 Misc. Painting 3.5 FLR 10,000.00 35,000 0.12
------
TOTAL INTERIOR CONSTRUCTION 91,330
------
SPECIALTIES
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
9 Signage 0 LS 0.00 0 0.00
9 Fire Extinguisher & Cabinets 28 EA 150.00 4,200 0.01
9 Toilet and Bath Accessories 0 EA 0.00 0 0.00
-----
TOTAL SPECIALTIES 4,200
-----
BUILDING EQUIPMENT
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
10 Parking Control Equipment 0 0.00 0 0.00 Not Provided
--
TOTAL BUILDING EQUIPMENT 0
--
SPECIAL CONSTRUCTION
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
11 Special Construction 0 EA 0.00 0 0.00
--
TOTAL SPECIAL CONSTRUCTION 0
--
Page 3
</TABLE>
<PAGE> 65
WEBCOR BUILDERS
<TABLE>
<CAPTION>
BUILDING FURNISHINGS
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12 WINDOW COVERINGS 0 EA 0.00 0 0.00
TOTAL BUILDING FURNISHINGS 0
-------------------------- -------
ELEVATORS
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
13 Four Stop Hydro, 150 fpm 2 EA 62,500.00 125,000 0.43 Standard Cabs
13 Cab Floors 2 EA 1,500.00 3,000 0.01 Floors Only
TOTAL ELEVATORS 128,000
--------------- -------
FIRE SPRINKLERS
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
14 Fire Sprinkler System 289,154 SF 0.80 231,323 0.80
TOTAL FIRE SPRINKLERS 231,323
--------------------- -------
PLUMBING
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
15 Parking Drainage 1 LS 56,000.00 56,000 0.19 Floor/trench Drains
TOTAL PLUMBING 56,000
-------------- -------
H.V.A.C.
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
16 Ventilation & Exhaust 289,154 SF 0.75 216,866 0.75
TOTAL H.V.A.C. 216,866
-------------- -------
ELECTRICAL
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
17 Electrical System 289,154 SF 1.02 296,094 1.02
17 Plaza Lighting, Allowance 0 LS 0.00 0 0.00 See Sitework
TOTAL ELECTRICAL 296,094
---------------- -------
</TABLE>
Page 4
<PAGE> 66
WEBCOR BUILDERS
<TABLE>
<CAPTION>
MISCELLANEOUS EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
18 SAFETY INSPECTIONS 22 DY 375 8,250 0.03
18 LIABILITY INSURANCE 0.58% LS 9,650,000 55,970 0.19
18 PRIME CONTRACTOR BOND 0.00% LS 0 0 0.00 NOT INCLUDED
18 SUBCONTRACTOR BONDS 1.50% LS 800,282 12.004 0.04 MEPS Only
18 ARCHITECTURAL/ENGR. SERVICES 0 LS 0 0 0.00 BY OWNER
18 TESTING AND INSPECTION 0 LS 0 0 0.00 BY OWNER
18 FINAL CLEAN UP 290,862 SF 0.15 43,629 0.15
18 FEES AND PERMITS 0 LS 0 0 0.00 BY OWNER
TOTAL MISCELLANEOUS SERVICES 119,854
---------------------------- -------
CONTINGENCY
- -----------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
19 PROJECT CONTENTENCY @ 1% 1.00% EA 10,100,000 100,000 0.34
TOTAL CONTINGENCY 100,000
----------------- -------
CONTRACTOR JOB EQUIPMENT
- -----------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
20 JOBSITE CRANES 1 LS 0.00 0 0.00 By subcontractors
20 CRANE MOBILIZATION 1 LS 0.00 0 0.00
20 TEMPORARY EQUIPMENT 1 LS 0.00 0 0.00
20 MANLIFT 1 LS 0.00 0 0.00
20 EQUIPMENT, TOOLS, VEHICLES 1 LS 18,760.00 18,760 0.06
20 EXPENDABLE MATERIALS 1 LS 4,900.00 4,900 0.02
TOTAL CONTRACTOR JOB EQUIPMENT 23,660
------------------------------ -------
</TABLE>
Page 5
<PAGE> 67
WEBCOR BUILDERS
EXHIBIT "F"
May 5, 1997
WEBCOR BUILDERS JOB #295
SYSTEMS ESTIMATE
<TABLE>
<S> <C> <C>
Project: CCS-OFFICE BUILDING
Location: CUPERTINO
CM: SARES REGIS
Owner: SYMANTEC
Architect: HOK/GUZZARDO
Estimate Date: 25-Feb-97
Estimator: SRN & Rich Lamb Site Area O/S Building: 57,000 Square Feet
Estimate #: DD-January 31, 1997 Schedule: 12 months
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION PRICE COMMENTS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 GENERAL CONDITIONS 0
2 SITEWORK 462,594
3 LANDSCAPE AND IRRIGATION 272,300
4 FOUNDATIONS 0
5 BUILDING STRUCTURE 7,500
6 EXTERIOR ENVELOPE (VERTICAL) 0
7 WATERPROOFING, INSULATION, & ROOFING 150,800
8 INTERIOR CONSTRUCTION 0
9 SPECIALTIES 0
10 BUILDING EQUIPMENT 0
11 SPECIAL CONSTRUCTION 0
12 BUILDING FURNISHINGS 0
13 ELEVATORS 0
14 FIRE SPRINKLERS 0
15 PLUMBING 80,500
16 HVAC 0
17 ELECTRICAL 16,000
18 MISCELLANEOUS EXPENSES 9,068
19 CONTINGENCY 22,000
20 CONTRACTOR JOB EQUIPMENT 0
----------
SUBTOTAL 1,022,762
----------
CONTRACTORS FEE 2.5% 25,569
----------
TOTAL SITEWORK COSTS $1,048,331
----------
</TABLE>
Page 1
<PAGE> 68
WEBCOR BUILDERS
<TABLE>
<CAPTION>
GENERAL CONDITIONS
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01 - 010 1 GENERAL CONDITIONS 1 LS 0 0.00
-------
TOTAL GENERAL CONDITIONS 0
-------
SITEWORK
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
2 Clear & Grub Site 0 SF 0.75 0 0.00
2 City Street A/C repair 1 LS 20,000.00 20,000 0.35 Allowance
2 Grading @ S/E P.L. for ramp & Turf Road 1 LS 7,500.00 7,500 0.13
2 Heavy base for East P.L. sidewalk 1,800 SF 3.00 5,400 0.09 Vehicular Concrete
Paving NIC
2 Concrete Plaza Paving 8,380 SF 6.00 50,280 0.88 Front & Rear Plaza
2 Slate Paving 2,680 SF 19.50 52,260 0.92 Front & Rear Plaza
2 Foam Fill @ Slate & Int. Type Paving 480 CY 71.67 34,402 0.60 Front & Rear Plaza
2 Turf Paver Fire Lane 5,371 SF 6.00 32,226 0.57 At East Property
line
2 Asphalt Fire Lane 1,500 SF 4.25 6,375 0.11 At East Property
line
2 West City Sidewalk 1,900 SF 4.50 8,550 0.15 Includes Base
Prep.
2 North Sidewalk 714 SF 4.50 3,213 0.06 Includes Base
Prep.
2 On site Sidewalks 1,517 SF 5.50 8,344 0.15 Includes Base
Prep.
2 New curbs at No. & East P.L.'s 600 LF 11.00 6,600 0.12
2 Storm/Sewer/Water 1 LS 40,000.00 40,000 0.70 Allowance
2 Fountain & Pool 0 LS 0.00 0 0.00 Eliminated From
Scope
2 Concrete Sealing Walls 4ft wide 130 LF 370.00 48,100 0.84
2 Concrete Planter seat wall 18" wide 792 LF 145.00 114,840 2.01
2 Concrete Mow Bands 101 LF 5.00 505 0.01
2 Entry Steps 160 LF 25.00 4,000 0.07
2 Project Sign Wall 1 LS 20,000.00 20,000 0.35 PIP Concrete Sign
Allowance
---------
TOTAL SITEWORK 462,594
---------
LANDSCAPE & IRRIGATION
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
3 Planting 1 LS 61,600.00 61,600 1.08 Jensen Quote
3 Redwood Headerboard 1 LS 10,000.00 10,000 0.18 Jensen Quote
3 Irrigation 1 LS 53,100.00 53,100 0.93 Jensen Quote
3 Normal Weight Soil on Structure 1 LS 65,300.00 65,300 1.15 Jensen Quote
3 Soil Preparation, fertilizer, bark mulch 1 LS 9,800.00 9,800 0.17 Jensen Quote
3 Volleyball Pit 1 LS 10,000.00 10,000 0.18 No Equipment
3 Clean up and 60 day maintenance 1 LS 2,600.00 2,600 0.05 Jensen Quote
3 Redwood Headerboard 998 LF 50.00 49,900 0.88 Assume 2 ft Tall
3 Redwood Headerboard 1 LS 10,000.00 10,000 0.18 @ S/E P.L.
--------
TOTAL LANDSCAPE & IRRIGATION 272,300
--------
FOUNDATIONS
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
4 Foundation Rebar 0 LBS 0.00 0 0.00
4 Foundation Rebar 0 CY 0.00 0 0.00
-------
TOTAL FOUNDATIONS 0
-------
</TABLE>
Page 2
<PAGE> 69
WEBCOR BUILDERS
<TABLE>
<CAPTION>
- --------------------------------------
BUILDING STRUCTURE
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 Shotcrete Wall Rebar 0 LBS 0.45 0 0.00
5 Metal Deck Topping Mesh 0 SF 0.45 0 0.00
5 Misc 0 LBS 0.45 0 0.00
5 Misc - Elevator Pits, Curbs, Etc 0 LS 0.00 0 0.00
5 Topping over Waterproofed Deck
@ grade 0 SF 2.00 0 0.00
5 Shotcrete Walls 0 CY 0.00 0 0.00
5 Interior Ramp Wall 0 SF 0.00 0 0.00
5 Column Bases 0 EA 0.00 0 0.00
5 Topping @ Metal Deck 0 SF 0.00 0 0.00
5 Block Walls - 4 ft high 0 SF 11.00 0 0.00
5 Steel Framing @ Parking Garage 0 TNS 0.00 0 0.00
5 Metal Decking 0 SF 0.00 0 0.00
5 Metal Stairs & Landings 0 FLTS 7,800.00 0 0.00
5 Hand Rails 50 LF 150.00 7,500 0.13
-----
TOTAL BUILDING STRUCTURE 7,500
-----
- --------------------------------------
EXTERIOR ENVELOPE (VERTICAL)
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
6 Hollow Metal Doors & Frames 0 EA 750.00 0 0.00
6 Overhead Rolling Grill 0 EA 10,000.00 0 0.00
--
TOTAL EXTERIOR ENVELOPE (VERTICAL) 0
--
- --------------------------------------
WATERPROOFING, INSULATION, & ROOFING
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
7 Fireproofing @ Steel 0 SF 1.65 0 0.00
7 Waterproof Deck o/s Bldg Line
@ Concrete 15,000 SF 3.00 45,000 0.79
7 Waterproof Deck o/s Bldg Line
@ Landscape 42,000 SF 2.40 100,800 1.77
7 Shotcrete Wall Waterproofing 0 SF 3.00 0 0.00
7 Flashing & Sheet Metal 0 SF 5,000.00 0 0.00
7 Louvers @ Elevator Shafts/
Garage 0 LS 10,000.00 0 0.00
7 Misc. Joint Sealers 1 LS 5,000.00 5,000 0.09
-------
TOTAL WATERPROOFING, INSULATION, & ROOFING 150,800
-------
- --------------------------------------
INTERIOR CONSTRUCTION
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
8 Misc. Rough Carpentry 0 LS 15,000.00 0 0.00
8 Core & Shaft Walls 0 FLR 15,000.00 0 0.00 Per Floor Allowance
8 Misc. Painting 0 FLR 2,500.00 0 0.00
--
TOTAL INTERIOR CONSTRUCTION 0
--
</TABLE>
Page 3
<PAGE> 70
WEBCOR BUILDERS
<TABLE>
<CAPTION>
- --------------------------------------
SPECIALTIES
- --------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10-520 9 FIRE EXTINGUISHERS & CABINETS 0 EA 150.00 0 0.00
10-800 9 TOILET AND BATH ACCESSORIES 0 EA 155.00 0 0.00
-------
TOTAL SPECIALTIES 0
-------
- --------------------------------------
BUILDING EQUIPMENT
- --------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
11-400 10 FOOD SERVICE EQUIPMENT 0
-------
TOTAL BUILDING EQUIPMENT 0
-------
- --------------------------------------
SPECIAL CONSTRUCTION
- --------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
13-000 11 SPECIAL CONSTRUCTION 0 EA 0.00 0 0.00
-------
TOTAL SPECIAL CONSTRUCTION 0
-------
- --------------------------------------
BUILDING FURNISHINGS
- --------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
12-500 12 WINDOW COVERINGS 0 EA 0.00 0 0.00
-------
TOTAL BUILDING FURNISHINGS 0
-------
- --------------------------------------
ELEVATORS
- --------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
13 Four Stop Hydro, 150 fpm 0 EA 50,000.00 0 0.00 Standard Cabs
14-205 13 CAB FLOORS 0 EA 1,500.00 0 0.00
-------
TOTAL ELEVATORS 0
-------
- --------------------------------------
FIRE SPRINKLERS
- --------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
14 Fire Sprinkler System 0 SF 0.80 0 0.00
-------
TOTAL FIRE SPRINKLERS 0
-------
- --------------------------------------
PLUMBING
- --------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
15 Parking Drainage 0 LS 53,000.00 0 0.00
15 Drainage for Area o/s
Building Line 1 LS 71,500.00 71,500 1.25
15 Water Supply For Irrigation 1 LS 9,000.00 9,000 0.16
-------
TOTAL PLUMBING 80,500
-------
- --------------------------------------
H.V.A.C.
- --------------------------------------
</TABLE>
Page 4
<PAGE> 71
Webcor Builders
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
16 Ventilation & Exhaust 0 SF 0.75 0 0.00
--
TOTAL H.V.A.C. 0
--
ELECTRICAL
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
17 Electrical System 0 SF 1.10 0 0.00
17 Plaza Lighting, Allowance 1 LS 18,000.00 18,000 0.32
------
TOTAL ELECTRICAL 18,000
------
MISCELLANEOUS EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
18 - 200 18 SAFETY INSPECTIONS 4 DY 375 1,500 0.03 BY OWNER
18 - 250 18 LIABILITY INSURANCE 0.58% LS 1,050,000 6,090 0.11
18 - 300 18 PRIME CONTRACTOR BOND 0.00% LS 0 0 0.00 NOT INCLUDED
18 - 400 18 SUBCONTRCTOR BONDS 1.50% LS 98,500 1,478 0.03 MEPS ONLY
18 - 500 18 GROSS RECEIPTS TAX (S.F. ONLY) 0.00% LS 1,050,000 0 0.00
18 - 675 18 ARCHITECTURAL/ENGR. SERVICES 0 LS 0 0 0.00 BY OWNER
18 - 750 18 TESTING AND INSPECTION 0 LS 0 0 0.00 BY OWNER
18 - 900 18 FINAL CLEAN UP 0 SF 0.15 0 0.00
18 - 950 18 FEES AND PERMITS 0 LS 0 0 0.00 BY OWNER
-----
TOTAL MISCELLANEOUS EXPENSES 9,068
-----
CONTINGENCY
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
19 - 100 19 PROJECT CONTINGENCY @2% 2% EA 1,100,000 22,000 0.39
------
TOTAL CONTINGENCY 22,000
------
CONTRACTOR JOB EQUIPMENT
- ------------------------------------------------------------------------------------------------------------------------------
WBI CODE SYS DESCRIPTION QUANTITY UNIT UNIT PRICE PRICE $/SF COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
17 - 061 20 JOBSITE CRANES 0 LS 7,500.00 0 0.00
17 - 062 20 CRANE MOBILIZATION 0 LS 0.00 0 0.00
17 - 063 20 TEMPORARY EQUIPMENT 0 LS 3,300.00 0 0.00
17 - 064 20 MANLIFT 0 LS 0.00 0 0.00
17 - 065 20 EQUIPMENT, TOOLS, VEHICLES 0 LS 14,175.00 0 0.00
17 - 066 20 EXPENDABLE MATERIALS 0 LS 4,200.00 0 0.00
--
TOTAL CONTRACTOR JOB EQUIPMENT 0
--
Page 5
</TABLE>
<PAGE> 72
SYMANTEC
CC5 OFFICE BUILDING/PARKING STRUCTURE
EXHIBIT "F"
MAY 5, 1997
WEBCOR BUILDERS JOB #295
ASSUMPTIONS/QUALIFICATIONS
1. OFFICE BUILDING:
a. Structural steel frame weight is 12 lb/sf.
b. Precast is a white matrix for the bulk of the facade with a
darker color as accented on the drawings.
c. Walls in loading dock/vault area are 8" CMU block.
d. Stairs are pre-fab, pre-poured Sharon Stairs (or equal). No
floor covering is provided in the shell estimate.
e. Roofing, including terraces, is a 4-ply built-up roof.
f. Doors at core rooms are 3' x 8'0" oak or equal with non-mortised
latch sets.
g. Doors off elevator lobbies are manufactured assemblies by "Total
Door".
h. The punched and strip windows are standard extrusions (2" x
4-1/2") with Kynar finish. The curtain wall at the entries is a
2-1/2" x 10" internally reinforced extrusion. The steps in the
glazing are accomplished by applying surface stops to the
mullions at the rear of the mullion. The entry doors are 1/2"
tempered glass with Von Duprin panic hardware.
i. The drywall scope includes all core walls, shaft walls, and
penthouse but does not include perimeter or column furring.
j. The rest rooms will have ceramic tile on the floor in the toilet
areas, full height on the three wet walls in the toilet area and
tile base only in the lavatory area. The remaining walls will
have vinyl wall covering and the lavatory area floor will be
carpeted with the tenant improvements.
k. Painting is limited to exterior metals, all door and frames,
rest room ceilings, and stairwells.
<PAGE> 73
SYMANTEC - CC5 OFFICE BUILDING/PARKING STRUCTURE
ASSUMPTIONS/QUALIFICATIONS
Page 2
- --------------------------------------------------------------------------------
l. The lobby allowance is based on the sketches by HOK dated
February 14, 1997. No allowance is included for the upper
floors.
m. Window washing sockets and tiebacks are included. Davit arms and
scaffold are excluded.
n. Insulation between the B1 level and the first floor is a sprayed
on material with R-11 rating.
o. Canopies are assumed to be painted steel with 9/16" laminated
glass.
p. The passenger elevators are standard hydraulic 3000#, 150 fpm
with center opening doors. The "freight" elevator is a standard
4000# premanufactured hydraulic car as made by Otis, Schindler,
etc. This is not an industrial type freight elevator.
q. Janitor sinks are included on all floors.
r. Faucets are manual and flush valves are automatic with battery
operators.
s. The HVAC system is a built-up chilled water system with fan
capacity for 4 watts/sf and chiller capacity for 6 watts/sf. The
HVAC price takes into account the PG&E rebates which are
available. The duct loops and fan coils are not included in the
shell estimate.
t. The electrical system provides a 3000 amp 480/277 service and a
125 kw backup generator to handle egress lighting, telephone
switch, security, fire alarm, and one elevator. This system will
provide 5 watts/sf for plug loads.
2. PARKING STRUCTURE
a. The basement will be shored and then have shotcrete walls
installed against a miradrain with volclay backing. The
shotcrete finish will be a rubber float.
b. A perimeter foundation drain is installed around the base of the
perimeter footings which ties into a central sump/ejector.
c. Structural design is a combination of the January 31, 1997
design development drawings and Nishkian input provided on
December 31, 1996.
d. Interior walls at stairs are 4 ft. CMU with drywall above to the
underside of the deck. Elevator shafts are full height CMU.
e. Doors and frames are 3' x 7' hollow metal with non mortised
latch sets.
<PAGE> 74
SYMANTEC - CC5 OFFICE BUILDING/PARKING STRUCTURE
ASSUMPTIONS/QUALIFICATIONS
Page 3
- -------------------------------------------------------------------------------
f. No gates or grilles are provided at the two ramps to restrict access
and no parking control equipment is included.
g. Painting is limited to the elevator and stair cores. The columns,
walls, and ceiling are not painted.
h. The elevators are 3000 lb, 150 fpm, standard hydraulic elevators. The
cabs are to be standard with an allowance included for the floors only.
i. The parking structure will be ventilated as required by code and will
have CO sensors regulating the fans.
j. The basement slab on grade will be installed over the insitu subgrade
material without rock or sand.
k. Lighting will be provided by high pressure sodium lamps.
l. All signage and graphics in the basement shall be provided by the Owner.
3. SITEWORK:
a. An allowance is included to upgrade the sub-base for the sidewalk at
the apartments on the east side.
b. Plaza paving is slate tile bands set in between colored concrete fields.
c. The fountain and pool have been deleted per the design development
drawings.
d. All plaza lighting is included as an $18,000 allowance.
e. The curb and gutter and sidewalk along De Anza are to remain as is and
are therefore not included as new in the estimate.
f. Volleyball equipment is to be provided by the Owner.
g. All site walls are standard gray concrete.
h. The soil on top of the deck will be a standard weight material as
Nishkian has designed the structure to accommodate this.
<PAGE> 1
EXHIBIT 10.43
HP AND SYMANTEC CONFIDENTIAL EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into and is
effective this 27th day of March, 1997, by and between Hewlett-Packard
Company, a California corporation ("HP") and Symantec Corporation, a Delaware
corporation ("Symantec").
RECITALS:
A. Symantec has been operating a business to design, develop,
enhance, test, manufacture, distribute and support the products, technologies
and intellectual property known to Symantec and its customers as all versions
of Norton Administrator for Networks ("NAN"), Norton Desktop Administrator
("NDA"), Expose ("Expose") and work-in-progress and developments intended for
the upcoming "Big Bang" release (collectively, the "Business").
B. Symantec's business of (i) designing, developing, enhancing
and testing the Products and Work-in-Progress, (ii) manufacturing and
distributing specifically for the Products and Work-in-Progress, and (iii)
supporting primarily the Products and Work-in-Progress, constitutes the
"Products Business."
C. Pursuant to this Agreement, Symantec is selling and HP is
buying the Assets.
D. Pursuant to the License Agreement, HP is licensing from
Symantec certain intellectual property relating to the Business, and Symantec
is licensing from HP certain intellectual property relating to the Business.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants, representations, warranties, conditions and agreements herein
contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. In this Agreement, the following terms
have the meanings specified or referred to in this Section 1.1 and shall be
equally applicable to both the singular and plural forms. Any agreement
referred to below shall mean such agreement as amended, supplemented and
modified from time to time to the extent permitted by the applicable provisions
thereof and by this Agreement.
"Affiliate" means any entity which controls, is controlled by, or is
under common control with, Symantec or HP, as the case may be. An entity shall
be deemed to be in control of another entity only if, and for so long as, it
owns or controls more than fifty percent (50%) of the shares of the subject
entity entitled to vote in the election of directors (or, in the case of an
entity that is not a corporation, for the election of the corresponding
managing authority).
"Assets" has the meaning specified in Section 2.1 hereto.
"Assumed Liabilities" has the meaning specified in Section 2.4 below.
1
<PAGE> 2
"Books and Records" means all copies of all books, records, files and
papers related to the Products Business or the Assets including drawings,
engineering information, computer programs (including source code), software
programs, manuals and data, sales and advertising materials, sales and
purchases correspondence, trade association files, research and development
records, softcopy of lists and databases of present and former customers,
suppliers, end user registrations and order history, research and development
personnel, sales and marketing personnel, employment and other records
(including, without limitation, the personnel files for the New HP Regular
Personnel), and all copies and recordings of the foregoing. To the extent that
Books and Records relate primarily to operations other than the Products
Business, Symantec will only deliver to Purchaser a copy of such Books and
Records and shall retain the original.
"Business" has the meaning specified in paragraph A of the Recitals to
this Agreement.
"HP" has the meaning specified in the first paragraph of this
Agreement.
"HP Ancillary Agreements" means all agreements, instruments and
documents being or to be executed and delivered by HP under this Agreement or
in connection herewith pursuant to Section 3.3 below.
"HP Group Member" means HP and its Affiliates and their respective
successors and assigns.
"CDA" means the Confidential Disclosure Agreement between Symantec and
HP effective November 15, 1996.
"Claim Notice" has the meaning specified in Section 10.4 below.
"Closing" has the meaning specified in Section 3.1 below.
"Closing Date" has the meaning specified in Section 3.1 below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Components" means component parts, raw materials supplies and other
materials which are of a type generally quantified in the bills of materials
and which are required for the production and test of the Products and the
Work-in-Process.
"Court Order" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal, or any Governmental
Body and any award in any arbitration proceeding.
"Disclosure Letter" has the meaning specified in Article 4 below.
"Encumbrance" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention
agreement, defect in title, covenant or other restrictions of any kind.
"Environmental Laws" shall mean all Requirements of Laws which relate
to any Hazardous Material or the use, handling, transportation, production,
spill, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
release, threatened release, migration, emission, sale, or storage of, or the
exposure of any Person to, a Hazardous Material.
2
<PAGE> 3
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" has the meaning specified in Section 2.3 below.
"Expenses" means any and all expenses incurred in connection with
investigating, mitigating, re-engineering to avoid, mitigate or terminate,
defending or asserting any claim, action, suit or proceeding incident to any
matter indemnified against hereunder (including, without limitation, court
filing fees, court costs, arbitration fees or costs, witness fees, any
engineering costs, and reasonable fees and disbursement of legal counsel,
investigators, expert witnesses, consultants, accountants and other
professionals).
"Expose" has the meaning described in Recital A above.
"Government Contract" means any Government prime contract, or any
subcontract at whatever tier under a Government prime contract, or any basic
ordering agreement, letter contract, purchase order or delivery order of any
kind, including without limitation, as to all of the foregoing, all amendments,
modifications and options thereunder relating thereto.
"Governmental Body" means any federal, state, county, local, district,
public authority, public agency, court, or any other political subdivision,
public corporation, or governmental or regulatory authority whether foreign or
domestic.
"Governmental Permits" has the meaning specified in Section 4.5 below.
"HSR Filing" has the meaning specified in Section 7.14
"Hazardous Material" shall mean any material or substance that is now
or hereafter prohibited or regulated by any Requirement of Law or that is now
or hereafter designated by any Governmental Body to be radioactive, toxic,
hazardous or otherwise a danger to health, reproduction or the environment.
"Instrument of Assignment and Assumption" means the Instrument of
Assignment and Assumption in the form of Exhibit C hereto executed as of the
Closing Date.
"Intellectual Property" means worldwide patents, patent applications,
patent rights, trademarks, trademark registrations, trademark applications,
licenses, service marks, products marks, trade names, all other names embodying
products or product goodwill (or both) copyright registrations, mask works,
copyrights (including those in computer programs, software, including all
source code and object code, programming tools, drawings, specifications and
data), designs, trade secrets, technology, inventions, discoveries and
improvements, know-how; proprietary rights, formulae, processes, technical
information, confidential and proprietary information, whether tangible or
intangible, and all other intellectual property rights, whether or not subject
to statutory registration or protection.
"IRS" means the Internal Revenue Service.
"Leased Premises" means approximately 31,276 square feet of office
space located at 2501 Colorado Avenue, Santa Monica, California and
approximately 7,230 square feet of lab space located at 2500 Broadway, Santa,
Monica, California which is leased or occupied by Symantec under the Premises
Lease at a current monthly rental rate on a gross basis of approximately $3 per
square foot.
3
<PAGE> 4
"Letter of Intent" means the Outline of Principal Terms dated February
19, 1997 by and between Symantec and HP.
"License Agreement" means the License Agreement in the form of Exhibit
D hereto, executed as of the date of this Agreement and effective as of the
Closing Date.
"Losses" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"Marketing Information" means the following information relating to
the Products Business and support of the Products and Work-in-Progress, in any
form whatsoever, in Symantec's possession or control: all customer and
marketing information and materials relating to the Products Business and
support of the Products and Work-in-Progress, including without limitation (a)
advertisements, advertising schedules, press releases, brochures and other
promotional materials; (b) strategic data, including marketing and development
plans, forecasts and forecast assumptions and volumes, and future plans and
potential strategies of Symantec which have been or are being discussed; (c)
financial data, including price and cost objectives, price lists, pricing and
quoting policies and procedures; and (d) customer data, including customer
lists, names of customers and their representatives, data provided by or about
prospective, existing or past customers, customer service materials, and the
type, quantity and specifications of products and services purchased, leased or
licensed by customers of Symantec.
"NAN" has the meaning described in Recital A above.
"NDA" has the meaning described in Recital A above.
"NSMD" has the meaning specified in Section 2.6 below.
"New HP Regular Personnel" means Regular Personnel who will become
HP's regular personnel on the first business day after the Closing Date.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C. Section
Section 651 et seq., any amendment thereto, any successor statute, and any
regulations promulgated thereunder.
"pcANYWHERE OEM" means the Second Amendment to Software License
Agreement between Symantec and HP in the form of Exhibit B hereto executed as
of the date of this Agreement and effective as of the Closing Date.
"Permitted Encumbrances" means (a) liens for taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable and (c) other liens or imperfections on property
which are not material in amount or do not materially detract from the value of
or materially impair the existing use of the property affected by such lien or
imperfection.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or Governmental Body.
4
<PAGE> 5
"Premises Lease" means the leases or subleases relating to the Leased
Premises.
"Products" means all past and current versions of NAN, NDA and Expose.
"Purchase Price" has the meaning specified in Section 2.6 below.
"Regular Personnel" means all employees of the Symantec engaged in the
Products Business on a full-time basis with the exception of (i) employees who
are currently on leave of absence without a job guarantee, (ii) employees who
are no longer physically able to perform the full range of essential
requirements of their position, (iii) employees who are on probation, and (iv)
employees who have indicated their intention not to become New HP Regular
Personnel. Part-time employees and independent contractors engaged in the
Business are not Regular Personnel for the purposes of this Agreement.
"Requirement of Laws" means any foreign, federal, state and local
laws, statutes, regulations, rules, guidelines, codes, ordinances, judgments,
injunctions, decrees, orders, permits, approvals, treaties or protocols now or
hereafter enacted, adopted, issued or promulgated by any Governmental Body
(including, without limitation, those pertaining to electrical, building,
zoning, environmental and occupational safety and health requirements) or
common law.
"Sublease" means the Sublease Agreement among Symantec, HP and the
landlord of the Leased Premises attached hereto as Exhibit F, executed as of
the date of this Agreement and effective as of the Closing Date.
"Sublease Letter Agreement" means the letter agreement between HP and
Symantec relating to certain post-closing matters relating to the Sublease.
"Symantec" has the meaning specified in the first paragraph of this
Agreement.
"Symantec Ancillary Agreements" means all agreements, instruments and
documents being or to be executed and delivered by Symantec under this
Agreement or in connection herewith pursuant to Section 3.4 below.
"Symantec Group Member" means Symantec and its Affiliates and their
respective successors and assigns.
"Symantec Property" means any real or personal property, plant,
building, facility, structure, underground storage tank, equipment or unit, or
other asset owned, leased or operated by Symantec and used in the Business.
"Tax" means any federal, state, local or foreign net income,
alternative or add-on minimum, gross income, gross receipts, property, sales,
use, transfer, gains, license, excise, employment, payroll, withholding or
minimum tax, or any other tax custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any Governmental Body.
"Tax Return" means any return, report or similar statement required to
be filed with respect to any Taxes (including any attached schedules),
including, without limitation, any information return, claim for
5
<PAGE> 6
refund, amended return and declaration of estimated Tax.
"Technical Support People" has the meaning specified in Section 7.8
below.
"Transfer Taxes" has the meaning specified in Section 2.6 below.
"Transferred Agreements" has the meaning specified in Section 4.10
below.
"Transition Agreement" means the Transition Agreement between Symantec
and HP attached hereto as Exhibit G, executed as of the date of this Agreement
and effective as of the Closing Date.
"Transition OEM" means the Software License Agreement between Symantec
and HP attached hereto as Exhibit E, executed as of the date of this Agreement
and effective as of the Closing Date.
"Transition Period" has the meaning specified in Section 7.8 below.
"Work-in-Progress" means work-in-progress for the "Big Bang" release.
ARTICLE 2
PURCHASE AND CONSIDERATION
Section 2.1 Purchase and Sale. Subject to the terms and
conditions of this Agreement, Symantec agrees to transfer, convey, assign and
deliver to HP on the Closing Date (as hereinafter defined), and HP agrees to
buy from Symantec, free and clear of all Encumbrances, all the assets and
properties, tangible and intangible, real, personal or mixed, owned, leased or
used by Symantec described in this Section 2.1 (the "Assets"):
(a) All Intellectual Property for the products,
components, build system projects and Marketing Information in
Exhibit A-1 hereto;
(b) The Transferred Agreements listed on Exhibit A-2
hereto;
(c) All Intellectual Property owned by Symantec and
necessary for, used in or associated with the Products Business,
except the Intellectual Property licensed under Section 2.2;
(d) The Books and Records;
(e) Capital Equipment and Hard Assets. All capital
equipment and other hard assets listed on Schedule 2.1(e) hereto;
(f) All planning and management models and tools used in
the Products Business; and
(g) Pursuant to the Sublease, the Leased Premises.
Section 2.2 Licenses. As described in the License Agreement, (a)
Symantec will license to HP certain products, technologies and intellectual
property, and (b) HP will license to Symantec certain
6
<PAGE> 7
products, technologies and intellectual property.
Section 2.3 Assets and Business Not to be Transferred. Symantec
shall retain and HP shall not acquire the following assets, properties and
business of Symantec, which together shall constitute the Excluded Assets:
(a) All cash, bank deposits and cash equivalents;
(b) All promissory notes and accounts receivable;
(c) All owned real property and options to acquire real
property;
(d) Symantec's interest in and to all telephone, telex
and telephone facsimile numbers and other directory listings currently
used or owned by Symantec;
(e) All contracts of insurance;
(f) All rights, title and interest in the names "Norton"
and "Symantec" and the trademarks "Norton" and "Symantec;"
(g) All contracts of distribution including, without
limitation, any exclusive distribution agreement; and
(h) All other assets of Symantec other than the Assets.
Section 2.4 Assumption of Liabilities and Obligations. Subject to
the terms and conditions contained herein, on the Closing Date HP shall assume
and agree thereafter to pay, perform and discharge only the obligations and
liabilities of Symantec under the Transferred Agreements, but HP shall not
assume or pay, perform or discharge any such obligations or liabilities arising
out of any breach or default by Symantec under the Transferred Agreements prior
to the Closing Date. The foregoing are hereinafter referred to collectively as
the "Assumed Liabilities." HP's assumption of the Assumed Liabilities is
intended to inure solely to the benefit of Symantec, and, not withstanding
anything herein to the contrary, such assumption is not intended and shall not
be construed to give any third parties any greater or additional benefits than
they would have but for HP's assumption.
Section 2.5 Liabilities and Obligations Not Assumed. Notwithstanding
anything in this Agreement to the contrary, except as set forth in Section 2.4
above or as set forth below in this Section 2.5, HP shall not assume or have
any responsibility for any liability, obligation or commitment of any nature of
Symantec, whether now or hereafter existing, and Symantec covenants that it
shall retain all such liabilities, obligations or commitments, including
without limitation:
(a) Any liabilities, obligations, commitments made by
Symantec to any customer, including without limitation for service,
support or maintenance of any kind;
(b) Any liabilities for any Taxes, including without
limitation Transfer Taxes, of any kind relating to or attributable to
any previous period (or any portion of any period) ending on or prior
to the Closing Date levied or imposed upon the Assets, or in
connection with this Agreement
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or the transactions contemplated hereby; and
(c) Except as set forth in Section 7.5 below or in the
offer letters from HP referred to therein any liabilities, obligations
or commitments of Symantec to New HP Regular Personnel incurred or
made in connection with the Business.
Section 2.6 Consideration. The consideration for the transfer of
the Assets shall be a stream of cash payments not to exceed an aggregate of
$30,000,000 net present value as follows (collectively, the "Purchase Price"):
(a) $2,000,000 payable at closing as reimbursement of
Symantec's development expenses on "Big Bang" between February 19,
1997 and the Closing Date;
(b) Nonrefundable royalties paid as follows: (i)
$1,000,000 paid at Closing, and (ii) as set forth on Schedule 2.6(b)
to this Agreement, a royalty payable within 45 days after the end of
each of HP's fiscal quarters commencing with the quarter ending April
30, 1997 and ending with the quarter ending October 31, 1998, in an
amount equal to a percentage of HP's Network and System Management
Division's ("NSMD") net revenue, as defined and tracked by NSMD's
controller for each such quarter, provided that such amounts will not
aggregate more than $27,000,000 net present value. Symantec agrees
that neither it nor its auditors will have audit rights or the right
to see any financial statements of NSMD or any other HP organization,
other than those publicly available.
Section 2.7 Allocation of Purchase Price.
(a) The royalties paid to Symantec, as set forth in
Section 2.6(b) above, will be allocated as follows: (i) $2,071,000
will be allocated to tangible property including fixed assets,
diskettes and manuals, and (ii) the remainder will be allocated to
intangible property.
(b) Symantec and HP will treat, account and report this
transaction in accordance with the above allocation for internal
accounting purposes and with respect to any returns filed with
federal, state or local tax authorities.
Section 2.8 Transfer Taxes. Symantec shall pay and promptly
discharge when due the entire amount of any and all excise, sales, value-added,
use, registration, stamp, transfer and other like Taxes (the "Transfer Taxes")
imposed or levied by reason of, in connection with or attributable to this
Agreement and the transactions contemplated hereby. The parties shall
cooperate with each other to the extent reasonably requested and legally
permitted to minimize any Transfer Taxes.
ARTICLE 3
CLOSING
Section 3.1 The Closing. The transactions contemplated by this
Agreement shall be consummated (the "Closing") at the offices of HP, 3000
Hanover Street, Palo Alto, CA 94304, at 10 a.m. local time, on, Wednesday,
April 16, 1997, or such other place, time and date as the parties shall agree
in writing. The time and date on which the Closing is actually held is
sometimes referred to herein as the
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"Closing Date."
Section 3.2 Payment. Subject to fulfillment or waiver of the
conditions set forth in Article 8 below, at Closing HP shall pay Symantec the
first $3,000,000 of the Purchase Price (net of any amounts payable to HP at the
Closing under any HP Ancillary Agreements or this Agreement) by delivery of a
wire transfer in the amount thereof to Bank of America, 1850 Gateway Boulevard,
Concord, CA 94520, FedWire (ABA) 121-000-358, account number 12338-10287, in
the name of Symantec Corporation.
Section 3.3 HP's Additional Deliveries. Subject to fulfillment
or waiver of the conditions set forth in Article 8, at Closing HP shall deliver
to Symantec all of the following:
(a) The Instrument of Assignment and Assumption duly
executed by HP;
(b) The certificate contemplated by Sections 7.17, 8.1,
8.2 and 8.3 below, duly executed by an authorized representative of
HP;
(c) The License Agreement duly executed by HP;
(d) The pcANYWHERE OEM Agreement duly executed by HP;
(e) The Transition OEM Agreement duly executed by HP;
(f) The Transition Agreement duly executed by HP; and
(g) The Sublease and the Sublease Letter Agreement duly
executed by HP.
Section 3.4 Symantec's Deliveries. Subject to fulfillment or
waiver of the conditions set forth in Article 9, at Closing Symantec shall
deliver to HP all of the following:
(a) Copies of the Articles of Incorporation of Symantec
certified as of a recent date by the Secretary of State of the State
of Delaware;
(b) Certificate of Good Standing of Symantec issued as of
a recent date by the Secretary of State of the State of Delaware;
(c) Certificate of the secretary or an assistant
secretary of Symantec, dated the Closing Date, in form and substance
reasonably satisfactory to HP, as to (i) no amendments to the
Certificate of Incorporation of Symantec since a specified date; (ii)
the by-laws of Symantec; (iii) the resolutions of the Board of
Directors of Symantec authorizing the execution and performance of
this Agreement, the Symantec Ancillary Agreements and the contemplated
transactions;
(d) The Instrument of Assignment and Assumption duly
executed by Symantec;
(e) All consents, waivers or approvals required to be
obtained by Symantec with respect to the Assets or the consummation of
the transactions contemplated by this Agreement;
(f) The certificates contemplated by Sections 8.1 through
8.3 below, duly executed by an authorized officer of Symantec;
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(g) (i) A copyright registration and assignment for each
Product and each Work-in-Progress; (ii) a worldwide trademark
assignment for each mark; and (iii) a patent assignment for each
patent included in the Assets;
(h) The License Agreement duly executed by Symantec;
(i) The pcANYWHERE OEM Agreement duly executed by
Symantec;
(j) The Transition OEM Agreement duly executed by
Symantec;
(k) The Transition Agreement duly executed by Symantec;
and
(l) The Sublease duly executed by Symantec and the
landlord of the Leased Premises; and the Sublease Letter Agreement
duly executed by Symantec.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SYMANTEC
As an inducement to HP to enter into this Agreement and to consummate
the transactions contemplated hereby, except as set forth in Schedule 4 (the
"Disclosure Letter") (which Disclosure Letter shall specifically reference the
Sections of this Agreement to which the disclosure therein applies and shall be
executed by an authorized officer of Symantec), Symantec represents and
warrants to HP as follows:
Section 4.1 Organization of Symantec. Symantec is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Symantec is duly qualified to transact business as a
foreign corporation and is in good standing in each of the 50 states of the
United States in which the ownership or leasing of the Assets or the conduct of
the Products Business requires such qualification. Symantec has full power and
authority to own or lease and to operate and use the Assets and to carry on the
Products Business as now conducted and as now proposed to be conducted pursuant
to this Agreement. Symantec has no subsidiaries or affiliated companies, and
does not otherwise own or control, directly or indirectly, any equity interest
in any corporation, association or business entity, that has any interest in
the Assets or the Products Business. Symantec has delivered to HP complete and
correct copies of the Certificate of Incorporation and Bylaws of Symantec, in
each case as amended to the date hereof, and has delivered or made available
minutes of all of directors', directors' committees' and shareholders' meetings
that directly discuss the Products Business or the Assets.
Section 4.2 Authorization.
(a) Symantec has full power and authority to execute,
deliver and perform this Agreement and all of the Symantec Ancillary
Agreements and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement
and the Symantec Ancillary Agreements by Symantec have been duly and
validly authorized and approved by all required corporate proceedings
on the part of Symantec. This Agreement has been duly authorized,
executed and delivered by Symantec and is the legal, valid and binding
obligation of Symantec enforceable in accordance with its terms,
except (a) as such enforcement may be
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subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights,
and (b) as the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may
be brought, and each of the Symantec Ancillary Agreements has been
duly authorized by Symantec and upon execution and delivery by
Symantec will be a legal, valid and binding obligation of Symantec
enforceable in accordance with its terms.
(b) Except as set forth in Section 4.2 of the Disclosure
Letter, neither the execution and delivery of this Agreement or any of
the Symantec Ancillary Agreements or the consummation of any of the
transactions contemplated hereby or thereby nor compliance with or
fulfillment of the terms, conditions and provisions hereof or thereof
will: (i) violate, conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under, or result in the creation or
imposition of any Encumbrance upon any of the Assets under, (1) the
Certificate of Incorporation or Bylaws of Symantec, (2) any
Transferred Agreement (as defined in Section 4.10), (3) any other
note, instrument, agreement, mortgage, lease, license, franchise,
permit or other authorization, right, restriction or obligation to
which Symantec is a party or any of its properties is subject or by
which Symantec is bound, (4) any Court Order to which Symantec is a
party or any of its properties is subject or by which Symantec or any
of its properties is bound, or (5) any Requirements of Laws affecting
Symantec or its property; or (ii) require the approval, consent,
authorization or act of, or the making by Symantec of any declaration,
filing or registration with any Person.
(c) Except for the HSR Filing, no consent, approval,
order or authorization of, or registration, declaration or filing
with, any Governmental Body is required by or with respect to Symantec
in connection with the execution and delivery of this Agreement and
the Symantec Ancillary Agreements by Symantec or the consummation by
Symantec of the transactions contemplated hereby or thereby.
Section 4.3 Taxes. Symantec has filed all Tax Returns which it
is required to file and has paid all Taxes which it is required to pay or which
have become payable pursuant to any assessment. There are (and as of
immediately following the Closing there will be) no Encumbrances on the Assets
relating to or attributable to Taxes other than Permitted Encumbrances.
Symantec has no knowledge of any basis for the assertion of any such claims
which, if adversely determined, would result in an Encumbrance on the Assets,
other than Permitted Encumbrances, or otherwise adversely affect HP or HP's use
of the Assets. None of the Assets are treated as "tax-exempt use property"
within the meaning of Section 168(h) of the Code.
Section 4.4 Availability of Assets and Legality of Use. Symantec
does not own any real property for the operations of the Products Business.
Except (i) as set forth in Section 4.4 of the Disclosure Letter, (ii) for the
Excluded Assets, and (iii) the rights granted under the License Agreement, the
Assets, in conjunction with the rights granted under the License Agreement,
constitute all the rights and intangible assets primarily used for and
necessary to operate the Products Business and constitute all the tangible
assets primarily used for the Products Business (including, but not limited
to, all books, records, computers and computer programs and data processing
systems) and are in good condition (subject to normal wear and tear) and
serviceable condition and are suitable for the uses for which they are
intended.
Section 4.5 Governmental Permits.
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(a) Symantec owns, holds or possesses all licenses,
franchises, permits, privileges, immunities, approvals and other
authorizations from a Governmental Body which are necessary to entitle
it to own or lease, operate and use the Assets and to carry on and
conduct the Products Business substantially as currently conducted
(herein collectively called "Governmental Permits"). Section 4.5 of
the Disclosure Letter sets forth a list and brief description of each
Governmental Permit, except for such incidental licenses, permits and
other authorizations which would be readily obtainable by any
qualified applicant without undue burden in the event of any lapse,
termination, cancellation or forfeiture thereof. The Governmental
Permits to be transferred to HP in connection with the transactions
contemplated hereby as indicated in Section 4.5 of the Disclosure
Letter are collectively referred to herein as the "Transferred
Permits." Complete and correct copies of all of the Transferred
Permits have heretofore been delivered to HP by Symantec.
(b) (i) Symantec has fulfilled and performed its
obligations under each of the Governmental Permits, and no event has
occurred or condition or state of facts exists which constitutes or,
after notice or lapse of time or both, would constitute a breach or
default under any such Governmental Permit or which permits or, after
notice or lapse of time or both, would permit revocation or
termination of any such Governmental Permit, or which might adversely
affect in any material respect the rights of Symantec under any such
Governmental Permit; (ii) no notice of cancellation, of default or of
any material dispute concerning any Governmental Permit, or of any
event, condition or state of facts described in the preceding clause,
has been received by, or is known to, Symantec; and (iii) each of the
Governmental Permits is valid, subsisting and in full force and effect
and may be assigned and transferred to HP in accordance with this
Agreement and will continue in full force and effect thereafter, in
each case without (x) the occurrence of any breach, default or
forfeiture of rights thereunder, or (y) the consent, approval, or act
of, or the making of any filing with, any Governmental Body.
Section 4.6 Personal Property. Schedule 2.1(e) contains a
detailed list of all capital equipment and hard assets used in the Products
Business. Schedule 2.1(e) contains a brief description of each lease or other
agreement or right, whether written or oral (including in each case the annual
rental amount, the expiration date thereof and a brief description of the
property covered) under which Symantec is lessee of, or holds or operates, any
machinery, equipment, vehicle or other tangible personal property owned by a
third Person transferred under this Agreement.
Section 4.7 Title to Property. Symantec has good and marketable
title to all of the Assets, free and clear of all Encumbrances, except for
Permitted Encumbrances. Except as disclosed in Section 4.7 of the Disclosure
Letter, the Assets constitute all of the intangible assets which are primarily
used for and necessary for the continued conduct of the Products Business as
now conducted and all of the tangible assets which are primarily used for the
continued conduct of the Products Business as now conducted. Upon delivery to
HP on the Closing Date of the instruments of transfer contemplated by Section
3.4 above, Symantec will thereby transfer to HP good and marketable title to
the Assets, subject to no Encumbrances, except for Permitted Encumbrances.
Section 4.8 Intellectual Property.
(a) Symantec owns, or is licensed or otherwise entitled
to exercise, without restriction, all rights to the Intellectual
Property of the Assets.
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(b) The Disclosure Letter lists (i) all patents,
registered copyrights, trade dress, trade names, trademarks, service
marks and other company, product or service identifiers and mask work
rights, and any applications or registrations therefor, included in
the Intellectual Property of the Assets, and specifies the
jurisdictions in which each such right has been issued or registered
or in which an application for such issuance or registration has been
filed, including the respective registration or application numbers,
together with a list of all of Symantec's currently marketed products
within the Products Business and an indication as to which, if any, of
such products have been registered for copyright protection with the
United States Copyright Office and any foreign offices; (ii) all
licenses, sublicenses and other agreements as to which Symantec is a
party and pursuant to which Symantec or any other person is authorized
to use any Intellectual Property of the Assets, other than (A)
standard object code end user license agreements, (B) standard upgrade
insurance agreements, (C) standard support agreements and (D) any
other end user upgrade or support agreement that only materially
deviates from the standard form agreement by providing that the
governing law is other than California law, the product is warranted
to comply with the "Year 2000," or Symantec has provided patent
indemnification to the other party to the agreement. The Disclosure
Letter shall include the full name of such agreements, the full names
of all parties thereto, and the effective date thereof. The
Disclosure Letter shall also list all parties to whom Symantec has
delivered copies of Symantec source code, whether pursuant to an
escrow arrangement or otherwise, or parties who have the right to
receive such source code. Symantec's standard form(s) of (A) object
code end use license agreements, (B) standard upgrade insurance
agreements, and (C) standard support agreements are labeled and
appended to the Disclosure Letter. Copies of all non-standard
licenses, sublicenses, and other agreements identified pursuant to
clause (ii) above have been delivered by Symantec to HP.
(c) Symantec is not, nor as a result of the execution and
delivery of this Agreement or the performance of Symantec's
obligations hereunder will be, in violation of, or lose any rights
pursuant to any license, sublicense or agreement described in the
Disclosure Letter.
(d) Symantec is the owner or licensee of, with all
necessary right, title and interest in and to (free and clear of any
liens, encumbrances or security interests), the Intellectual Property
of the Assets and has rights (and except as set forth in the
Disclosure Letter is not contractually obligated to pay any
compensation to any third party in respect thereof) to the use thereof
or the material covered thereby in connection with the services or
products in respect of which such rights are being used.
(e) No claims with respect to the Intellectual Property
of the Assets have been asserted or, are threatened by any person and
Symantec does not know of any claims (i) to the effect that the
manufacture, sale or use of any product as now used or offered or
proposed for use or sale by Symantec infringes any copyright, patent,
trade secret, or other Intellectual Property right of any third party,
(ii) against the use by Symantec of any Intellectual Property of the
Assets, or (iii) challenging the ownership, validity or effectiveness
of any such rights.
(f) All patents and registered trademarks, service marks,
and other company, product or service identifiers and registered
copyrights for the Intellectual Property of the Assets held by
Symantec are valid and in effect.
(g) There has not been and there is not now any material
unauthorized use,
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infringement or, misappropriation of any of the Intellectual Property
of the Assets by any third party, including without limitation any
employee or former employee of Symantec. Symantec has not been sued
or charged in writing as a defendant in any claim, suit, action or
proceeding which involves a claim of infringement of any patents,
trademarks, service marks, copyrights or other Intellectual Property
of the Assets and which has not been finally terminated prior to the
date hereof. There are no such charges or claims outstanding.
(h) (i) Symantec does not have any liability with
respect to the Intellectual Property of the Assets arising from the
infringement or misappropriation of any patent, known to Symantec and
issued or published prior to closing, any trademark, any service mark,
any copyright or other Intellectual Property right of another. (ii)
Symantec does not have any liability with respect to the Intellectual
Property of the Assets arising from the infringement or
misappropriation of any patent not known to Symantec and issued or
published prior to closing.
(i) No Intellectual Property of the Assets is subject to
any outstanding order, judgment, decree, stipulation or agreement
restricting in any manner the licensing thereof by Symantec. Symantec
has not entered into any agreement to indemnify any other person
against any charge of infringement of any Intellectual Property of the
Assets. Symantec has not entered into any agreement granting any
third party the right to bring infringement actions with respect to,
or otherwise to enforce rights with respect to, any Intellectual
Property of the Assets. Symantec has the exclusive right to file,
prosecute and maintain all applications and registrations with respect
to the Intellectual Property of the Assets.
Section 4.9 Employees.
(a) HP will not have, as a consequence of the
transactions contemplated hereby, any liability or obligation with
respect to or under any "employee benefit plan" (as such term is
defined in Section 3(3) of ERISA) or any other plan, program or
arrangement, whether written or oral, providing for compensation or
benefits in connection with the performance of services to Symantec
maintained by Symantec with respect to employees of the Business or
any other Symantec employees. Symantec has complied with the health
care continuation requirements of Section 601 et seq. of ERISA with
respect to employees of the Business and their spouses, former spouses
and dependents.
(b) Schedule 7.5 contains: (i) a list as of March 24,
1997 of all Regular Personnel and all other employees or contractors
of Symantec providing support to the Products and the
Work-in-Progress; and (ii) the then current annual compensation
provided by Symantec to any such employees. None of such employees
has indicated a present intention to resign or retire.
(c) No New HP Regular Personnel are currently affected by
a formal Symantec salary reduction program.
(d) Insofar as it pertains to the Products Business,
Symantec is not a party to or bound by any union contract and has not
experienced any strike, grievance or any arbitration proceeding, claim
of unfair labor practices filed or threatened to be filed or any other
material labor difficulty. No organizational effort is being or has
been made or threatened by or on behalf of any labor union with
respect to any employees of the Symantec.
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Section 4.10 Transferred Agreements. Complete and correct copies
of each of the leases, contracts and other agreements to be transferred to HP
in connection with the transactions contemplated hereby as indicated in Exhibit
A-2 (collectively referred to herein as the "Transferred Agreements") have been
delivered to HP by Symantec.
Section 4.11 Status of Transferred Agreements.
(a) Each of the Transferred Agreements constitutes a
valid and binding obligation of the parties thereto and is in full
force and effect. All of such Transferred Agreements may be
transferred to HP pursuant to this Agreement and will continue in full
force and effect thereafter, in each case without breaching the terms
thereof or resulting in the forfeiture or impairment of any rights
thereunder and without the consent, approval or act of, or the making
of any filing with, any other party.
(b) Symantec has fulfilled and performed in all material
respects its obligations under each of the Transferred Agreements, and
Symantec is not in, or alleged to be in, breach or default under, nor
is there or is there alleged to be any basis for termination of, any
of the Transferred Agreements and no other party to any of the
Transferred Agreements has materially breached or defaulted
thereunder, and no event has occurred and no condition or state of
facts exists which, with the passage of time or the giving of notice
or both, would constitute such a default or breach by Symantec or by
any such other party. Symantec is not currently renegotiating any of
the Transferred Agreements or paying liquidated damages in lieu of
performance thereunder.
Section 4.12 No Violation, Litigation or Regulatory Action.
Except as set forth in Section 4.12 of the Disclosure Letter, (i) the Assets
and their uses comply in all material respects with all applicable
Requirements of Laws and Court Orders; (ii) Symantec has complied in all
material respects with all Requirements of Laws and Court Orders which are
applicable to the Assets or the Products Business; (iii) there are no lawsuits,
claims, suits, proceedings or investigations pending or threatened against or
affecting Symantec in respect of the Assets or the Products Business nor is
there any known basis for any of the same, and there are no lawsuits, suits or
proceedings pending in which Symantec is the plaintiff or claimant and which
relate to the Assets or the Products Business; and (iv) there is no action,
suit or proceeding pending or threatened which questions the legality of the
transactions contemplated by this Agreement.
Section 4.13 Environmental Matters:
(a) Condition Of The Company's Property: (i) To
Symantec's knowledge, no Hazardous Materials are or are will be
present in the soil or groundwater of the Symantec Property and (ii)
no Hazardous Material is present in building materials, indoor air or
outdoor air of the Symantec Property in violation of applicable Law.
(b) Compliance With Environmental Laws: To Symantec's
knowledge, prior to the Closing, all Hazardous Materials Activities
conducted on or about the Symantec Property by Symantec or its agent,
employees, contractors or subsidiaries have been conducted in
accordance with all applicable Environmental Laws and Environmental
Permits and all Hazardous Material waste generated at the Symantec
Property or as a consequence of the Products Business has been
transferred to Disposal Facilities where it has been recycled,
destroyed or disposed of in accordance with applicable Law. No claim
has been or is pending or threatened against Symantec or any such
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Disposal Site in connection with such transferred Hazardous Material
waste.
(c) Permits: There are no Environmental Permits which are
a Requirement of Laws for the conduct of the Products Business as
presently conducted.
(d) Environmental Claims: Symantec has not received any
notice from governmental authority or other Person (i) ordering an
investigation or remediation of any Hazardous Material presently on or
about the Symantec Property, (ii) imposing any new covenant,
requirement, or condition pursuant to any Environmental Law or
Environmental Permit with respect to the Products, (iii) making any
claim for Loss or Expense based on an exposure of any person to a
Hazardous Material as a consequence of a Hazardous Material Activity
on or about the Symantec Property or a Hazardous Material Activity
conducted in the course of the Products Business, (iv) except to the
extent remedied to the satisfaction of applicable Governmental Bodies,
asserting that any Hazardous Material Activity of the Products
Business has violated or failed to fulfill the requirements of any
Environmental Law or Environmental Permit or has damaged the
environment, or (v) asserting that Symantec is liable with respect to
any Disposal Site to which Hazardous Materials generated by the
Products Business or from the Symantec Property have been transported.
(e) Environmental Liabilities: Symantec has provided HP
with copies of all material records of the Hazardous Materials
Activities of the Products Business required by HP for the conduct of
the Products Business after the Closing and all environmental
assessments of the Symantec Property. To Symantec's knowledge, there
is no fact or circumstance affecting the Symantec Property or the
Products Business which is likely to involve HP or the Products
Business in any environmental litigation or impose any material
environmental liability upon HP with respect to the Products Business
after the Closing.
Section 4.14 Financial Statements and Records.
(a) True and correct copies of the following have been
delivered by Symantec to HP, with respect to the Products Business:
(i) the budgets for capital expenditure, payroll and other
expenditures of Symantec with respect to the Products Business for the
fiscal years ending March 1997 and 1998 (if available), (ii) books and
records of the Products Business, including but not limited to
management and operational reports used in accounting and reporting
for the Products Business and the Assets, and (iii) any cost
information specifically related to the Products Business.
(b) With respect to Section 4.14(a)(ii) above, carrying
values for Assets have been stated in accordance with Generally
Accepted Accounting Principles, including without limitation any
necessary reserves for depreciation, amortization and write downs for
impairment, damage or obsolescence.
Section 4.15 No Undisclosed Liabilities. There are no obligations
or liabilities (whether absolute, accrued, contingent or otherwise), other than
the Assumed Liabilities, of Symantec relating to any of the Assets or the
Products Business, except obligations, liabilities or contingencies which are
set forth in the Disclosure Letter.
Section 4.16 Employee Agreements. To Seller's knowledge, no
employee of Symantec engaged in the Products Business is in violation of any
term of any employment contract (whether written or verbal),
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patent disclosure agreement, invention assignment agreement, confidentiality
agreement or any other contract or agreement relating to the relationship of
any such employee with Symantec or any other party (including prior employers)
because of the nature of the Products Business now conducted or now proposed to
be conducted by Symantec. Each current and former employee, consultant or
other contracting party who contributed or is contributing to the Intellectual
Property of the Assets has executed an Invention Assignment, Trade Secrets and
Non- Disclosure Agreement with Symantec in the form then being used by
Symantec, all of which forms have been previously delivered to HP by Symantec.
Section 4.17 Interests of Employees. None of Symantec's officers,
directors or employees has any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Products Business,
including any interest in the Intellectual Property of the Assets.
Section 4.18 No Finder. Neither Symantec nor any Person acting on
its behalf has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
Section 4.19 Government Contracts. None of the Transferred
Agreements is a Government Contract.
Section 4.20 Assets.
(a) Exhibit A-1 contains a complete and accurate
description of all products, components, build system projects,
Marketing Information for the Products and the Work-in-Progress.
(b) The currently shipping versions of the Assets have
undergone and passed Symantec's standard checking procedures for known
software viruses and the currently shipping versions of the Assets do
not contain any known viruses, or any viruses created by Symantec
employees, which would disrupt, damage, or interfere with the use of
such versions.
(c) Symantec has not disclosed the source code for any of
the Assets or other confidential or proprietary information
constituting embodied in or pertaining to the Assets to any Person and
has used diligent efforts to prevent such disclosure, other than
disclosure of such source code to employees or independent contractors
of Symantec, or third parties solely for evaluation purposes, in each
case pursuant to valid and binding nondisclosure agreements with such
Persons which are in full force and effect.
(d) The Assets and the rights granted under the License
Agreement are all the rights and intangible assets primarily used for
and necessary to operate the Products Business and are all the
tangible assets primarily used for the Products Business.
Section 4.21 Disclosure. None of the representations or
warranties of Symantec contained herein and none of the information contained
in the Schedules hereto or the Disclosure Letter is false or misleading in any
material respect or omits to state a fact herein or therein necessary to make
the statements herein or therein not misleading in any material respect in
light of the circumstances in which they were made.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF HP
As an inducement to Symantec to enter into this Agreement and to
consummate the transactions contemplated hereby, HP hereby represents and
warrants to Symantec and agrees as follows:
Section 5.1 Organization of HP. HP is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, is duly qualified to transact business in each of the jurisdictions
in which the ownership or leasing of the Assets or the conduct of the Products
Business pursuant to this Agreement requires such qualification, and has full
corporate power and authority to own or lease and to operate and use its
properties and assets and to carry on its business as now conducted and as now
proposed to be conducted pursuant to this Agreement. HP has delivered to
Symantec complete and correct copies of the Articles of Incorporation and
Bylaws of HP, in each case as amended to the date of this Agreement.
Section 5.2 Authority of HP.
(a) HP has full power and authority to execute, deliver
and perform this Agreement and all of the HP Ancillary Agreements and
to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and the HP
Ancillary Agreements by HP have been duly and validly authorized and
approved by the Executive Committee of the Board of Directors of HP,
and do not require any further authorization or consent of HP or its
shareholders. This Agreement has been duly authorized, executed and
delivered by HP and is the legal, valid and binding agreement of HP
enforceable in accordance with its terms, except (a) as such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights, and (b) as the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and each of the HP Ancillary
Agreements has been duly authorized by HP and upon execution and
delivery by HP will be a legal, valid and binding obligation of HP
enforceable in accordance with its terms.
(b) Neither the execution and delivery of this Agreement
or any of the HP Ancillary Agreements or the consummation of any of
the transactions contemplated hereby or thereby nor compliance with or
fulfillment of the terms, conditions and provisions hereof or thereof
will: (i) violate, conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under (A) the Articles of
Incorporation or Bylaws of HP, (B) any material note, instrument,
agreement, mortgage, lease, license, franchise, permit or other
authorization, right, restriction or obligation to which HP is a party
or any of its properties is subject or by which HP is bound, (C) any
Court Order to which HP is a party or by which it is bound or (D) any
Requirements of Laws affecting HP; or (ii) except for the HSR Filing,
require the approval, consent, authorization or act of, or the making
by HP of any declaration, filing or registration with, any Person,
including without limitation, obtaining any Governmental Permit other
than those Governmental Permits listed in Section 4.5 of the
Disclosure Letter.
Section 5.3 No Finder. Neither HP nor any Person acting on its
behalf has paid or become
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obligated to pay any fee or commission to any broker, finder or intermediary
for or on account of the transactions contemplated by this Agreement.
Section 5.4 Intention of HP to Market and Distribute. It is the
intention of HP to market and distribute the Products within the United States
as well as outside of the United States.
ARTICLE 6
[INTENTIONALLY OMITTED]
ARTICLE 7
ADDITIONAL AGREEMENTS
Section 7.1 Covenants of Symantec Relating to Conduct Prior to
the Closing. During the period from the date of this Agreement and continuing
until the Closing, Symantec agrees (except as expressly provided in this
Agreement or to the extent that HP shall otherwise consent in writing) that
Symantec shall:
(a) not sell, lease, otherwise dispose of or create any
Encumbrance on, or permit to be sold, leased, otherwise disposed of or
created any Encumbrance (except Permitted Encumbrances) on, all or any
part of the Assets;
(b) conduct the Products Business in the ordinary course
consistent with past practice;
(c) use the Assets in the usual, regular and ordinary
course and in substantially the same manner as heretofore used;
(d) not sell or license NAN, NDA or Expose unless the
terms of such sale or license are in all material respects the same as
sales or licenses heretofore granted by Symantec to its customers or
are in the ordinary course of the Products Business consistent with
past practice;
(e) make payments incurred or owed in connection with the
Products Business when due in the ordinary course, and perform its
obligations under the leases, contracts, commitments and other
agreements of the Products Business, including under the Transferred
Agreements;
(f) maintain insurance against loss or damage to the
Assets and such other insurance with respect to the Assets as has
heretofore been maintained;
(g) not enter into any employment or consulting contract
with any employee of the Products Business, increase any such
employee's compensation inconsistent with past practice, or create or
modify any benefit plan to which any such employee is a beneficiary;
(h) use commercially reasonable efforts to keep available
the services of the present employees of the Products Business;
(i) not enter into any agreement material to the Assets;
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(j) not waive any material claims or rights of the
Products Business; and
(k) not grant any options to purchase or sell any options
to purchase or sell any capital stock of Symantec to any New HP
Regular Personnel.
Section 7.2 Access; Due Diligence Completion. Between the date
of this Agreement and the Closing Date, Symantec, subject to the CDA, shall (a)
give HP and its authorized representatives reasonable access during normal
working hours and, if reasonably requested, on weekends to the Assets and to
such of Symantec's facilities and properties and its books and records as
relate to the Business, (b) permit HP to make inspections thereof, and (c)
cause its officers, employees and advisors to furnish HP with such financial
and operating data and other information with respect to the Business and to
discuss the Business with HP and its authorized representatives, all as HP may
from time to time reasonably request.
Section 7.3 Satisfaction of Legal Conditions to Closing. Each of
Symantec and HP will take all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed on it with respect to the
Closing and will promptly cooperate with and furnish information to each other
in connection with any such legal requirements. Each of Symantec and HP will
take all reasonable actions necessary to obtain (and will cooperate with each
other in obtaining) any consent, authorization, permit, order or approval of,
or any exemption by, any Person, required to be obtained in connection with any
of the transactions contemplated by this Agreement.
Section 7.4 [INTENTIONALLY LEFT BLANK]
Section 7.5 Employment Matters.
(a) Prior to Closing, HP will offer employment to all
individuals who are Regular Personnel and who are identified on
Schedule 7.5hereto with such employment to become effective (the "New
Employment Start Time") on the first business day after the Closing
Date, and to be contingent upon the consummation of the transactions
contemplated by this Agreement. Symantec and HP agree to select a
mutually agreeable payroll and benefit coverage transition date.
(b) Symantec shall terminate each Regular Personnel,
other than the seven employees listed in Section 7.5(f) below, who has
accepted (which acceptance has not been withdrawn) an offer of
employment extended pursuant to Section 7.5(a) above on and as of the
Closing Date, such termination to be deemed effective as of 11:59 p.m.
Pacific Daylight Time on the Closing Date. Symantec agrees that all
such Regular Personnel will complete their workdays at the close of
business on the Closing Date. HP will hire effective as of the New
Employment Start Time, on an "at will" basis and subject to HP's
terms, conditions and policies of employment, including without
limitation those set forth in the offer letters from HP to each of the
Regular Personnel, each of the Regular Personnel who are terminated by
Symantec on the Closing Date pursuant to the foregoing sentence. HP
reserves the right to redefine job content or position description of
any employee. Nothing contained in this Section 7.5 is intended or
shall be deemed to (i) require HP to employ such persons for any fixed
or predetermined time after the Closing, or (ii) confer upon any
employee of Symantec, past, present, or future, any rights of
employment of any nature, it being understood and agreed that the
provisions of this Section 7.5 are intended to set forth an agreement
between HP and Symantec, and are not intended to benefit any persons
not party to this Agreement, including
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such employees. Regardless of the date of the Closing, Symantec will
pay (i) any bonuses due to each of the New HP Regular Personnel and
the Technical Support People for Symantec's fiscal 1997 fourth quarter
and fiscal 1998 first quarter (any bonus pertaining to the fiscal 1998
first quarter shall be prorated for the employee's actual period of
employment with Symantec during such quarter) on the same date that
Symantec pays its other employees not engaged in the Business their
bonuses for such quarters, and (ii) on the Closing Date, all vacation
pay accrued and other earned benefits as of the Closing Date due to
each of the New HP Regular Personnel.
(c) With respect to those employees of the Business to
whom HP chooses not to extend offers of employment, as more fully
described in the Transition Agreement, either (i) if Symantec chooses
to keep those employees on its payroll, Symantec shall provide the
services of those employees as set forth in the Transition Agreement,
or (ii) if Symantec terminates those employees at the Closing, HP may
attempt to engage the services, on a contract basis, of those
individuals, in either case for a period of two to six months after
the Closing Date until HP's release of "Big Bang" products.
(d) Symantec will not solicit any of the (i) New HP
Regular Personnel for a period of two years after the Closing Date,
and (ii) HP contractors that were Symantec employees or contractors
prior to the Closing, if any, for their respective periods of service
after the Closing, but in any event no more than two years; provided,
that this restriction shall not apply if HP were to terminate any of
the New HP Regular Personnel or contractors after the Closing.
(e) HP acknowledges that under the CDA, HP may use
Symantec confidential information disclosed under the CDA only for the
purpose of evaluating a potential acquisition of certain assets of the
Business during the confidentiality period of the CDA. HP
acknowledges that, under the CDA, disclosed Symantec confidential
information includes confidential information about Symantec employees
that remain Symantec employees after the Transition Period, even if
known by the Symantec employees that become HP employees during the
Transition Period. HP further acknowledges that, under the CDA, use
of such confidential information by HP for the purpose of direct
solicitation of any of the remaining Symantec employees would be
outside the scope of the rights granted under the CDA.
(f) The following Symantec employees are affected by visa
issues that may delay the commencement of their employment with HP
should new visas reflecting their proposed new employment status not
issue by the Closing Date: Huey Ly, Rosely Ng, Swee Ying Yap, Nikhil
Dhami, Nivedita Ghosh, Raymond Siu and Sanjay Mehta. These seven
individuals shall remain employees of Symantec for a period of time
after the Closing Date, anticipated to be approximately 30- 60 days,
necessary for issuance of new visas reflecting their proposed new
employment status. Upon resolution of such matters, their employment
with HP shall commence as promptly as practicable for HP. HP shall be
responsible by direct payment for the reasonable fees and costs
associated with the issuance of new visas. HP will reimburse Symantec
for the (i) base pay, and (ii) pro rata benefits cost calculated at
the rate of 34% of base pay, for such employees for the period, if
any, beginning the day after the Closing Date, through and including
the day prior to the date of their commencement of employment at HP,
in an aggregate daily amount not to exceed $2,000 per individual. On
the same date in August 1997 that Symantec pays any bonuses for its
first quarter of fiscal 1998 to its standard, full-time employees,
Symantec shall pay directly to each of these seven individuals the
appropriate pro rata portion of any bonuses due to them for such
fiscal quarter. On
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their respective termination dates, Symantec will also pay all
vacation pay accrued and other earned benefits as of their respective
termination dates to each of these seven individuals.
Section 7.6 Taxes. Symantec shall be responsible for and pay
when due (i) all Taxes attributable, levied or imposed upon or incurred in
connection with the Assets or the Business (pertaining to the period (or that
portion of any period) ending on or prior to the Closing Date). Symantec
agrees to continue to timely file within the time period for filing, or any
extension granted with respect thereto, all Tax Returns it is required to file
in connection with the Assets or the Business, and such Tax Returns shall be
true and correct and completed in accordance with applicable laws.
Section 7.7 Discharge of Symantec's Liabilities. Symantec
covenants and agrees that it will pay and discharge, and hold HP harmless from,
each and every liability and obligation of Symantec in respect of the Business
or the Assets arising from events occurring on or prior to the Closing Date, it
being understood and agreed that HP is assuming no liabilities or obligations
of Symantec other than the "Assumed Liabilities."
Section 7.8 Support. HP shall provide support to the Products'
Business support contract customers and will, as more fully described in the
Transition Agreement, provide such support by contracting with Symantec for the
services of the appropriate Symantec technical support people in Eugene,
Oregon, Leiden, Holland and Melbourne, Australia (collectively, the "Technical
Support People") during a Transition Period (as defined in the Transition
Agreement). HP may directly solicit the Technical Support People in North
America during the Transition Period for possible employment to commence at
the end of the Transition Period. At the end of the Transition Period, HP
shall provide to Symantec an amount equal to the retention benefit agreed upon
by HP and Symantec for some of the Technical Support People, as stated in
letters from Symantec to those people. After the Transition Period, HP will
provide comparable support for any remaining term of the Products Business'
outstanding support contracts between Symantec and its customers.
Section 7.9 Upgrade Insurance. For Symantec's customers with
upgrade insurance agreements in effect as of the Closing Date, HP will provide,
at no charge, any major release of "Big Bang" from the Closing Date through the
coverage lapse date (not to exceed one year from the Closing Date) of the
relevant upgrade insurance agreement. Thereafter, HP shall provide any
upgrades and updates to all of the Products Business' customers pursuant to
HP's terms and conditions.
Section 7.10 Sublease. HP agrees to enter into a written sublease
agreement with Symantec and the landlord of the Leased Premises in the form of
Exhibit F hereto to become effective at the Closing Date.
Section 7.11 License Agreement. Symantec and HP agree to enter
into the License Agreement in the form of Exhibit D hereto to become effective
at the Closing Date.
Section 7.12 pcANYWHERE OEM Agreement. Symantec and HP agree to
enter into the PcANYWHERE OEM Agreement in the form of Exhibit B hereto to
become effective at the Closing Date, relating to the product known as
"pcANYWHERE."
Section 7.13 Transition OEM Agreement. Symantec and HP agree to
enter into the Transition OEM Agreement in the form of Exhibit E hereto to
become effective at the Closing Date.
Section 7.14 HSR Filings. Each of Symantec and HP agree to use
commercially reasonable
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efforts to cooperate with each other in preparing and filing a Premerger
Notification and Report Form with the Premerger Notification Office of the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice (the "HSR Filing") and in obtaining all required
regulatory approvals, clearances and expirations of waiting periods.
Section 7.15 Consent to Use of Certain Marks. Symantec will not
object to or attack HP's adoption, use or registration of the following marks
or combination of marks: "Administrator for Networks," "Desktop Administrator,"
"Expose," "NAN" or "NDA." Symantec agrees to furnish HP with a letter of
consent for any mark permitted above, if so requested by HP, in any country in
which Symantec is the senior party. HP agrees it receives no right under this
Agreement to register as marks the names "Norton" or "Symantec."
Section 7.16 Termination of Certain Agreements. The Software
License Agreement dated August 23, 1996 and the OEM Agreement effective June 1,
1994, as amended by the First Amendment to OEM Agreement effective February 1,
1996, each by and among Symantec, Symantec Limited and HP, shall be terminated
automatically on the Closing Date.
Section 7.17 Certificate. Symantec shall deliver to HP a
certificate or certificates, dated the Closing Date and signed on behalf of
Symantec by an authorized officer of Symantec, stating that each of the
representations and warranties of Symantec contained or referred to herein and
in the Symantec Ancillary Agreements shall be true and correct in all material
respects on the Closing Date as though made on the Closing Date, except for
changes therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by HP or any transaction
contemplated by this Agreement.
Section 7.18 I-9s. On or prior to the Closing Date, Symantec
shall deliver to HP a correct and complete original U.S. Department of Justice
Form I-9, Employment Eligibility Verification, for each HP New Regular
Personnel for whom such a form is required by U.S. law.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF HP
The obligations of HP under this Agreement shall, at the option of HP,
be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions.
Section 8.1 No Misrepresentation or Breach of Covenants and
Warranties. None of the representations and warranties of Symantec contained
or referred to herein and in the Symantec Ancillary Agreements shall be untrue
or incorrect in any material respect on the Closing Date so that, either
individually or in the aggregate, any such breach or inaccuracy results in a
material adverse effect on the Products Business or the Assets, except for
changes therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by HP or any transaction
contemplated by this agreement; and there shall have been delivered to HP a
certificate or certificates to such effect, dated the Closing Date, signed on
behalf of Symantec by an authorized officer of Symantec.
Section 8.2 No Restraint or Litigation. No action, suit,
investigation or proceeding shall have been instituted or threatened to
restrain or prohibit or otherwise challenge the legality or validity of the
transactions contemplated hereby and there shall have been delivered to HP a
certificate or certificates to
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such effect, dated the Closing Date, signed on behalf of Symantec by an
authorized officer of Symantec.
Section 8.3 Necessary Governmental Approvals. The parties shall
have received all approvals and actions of or by all Governmental Bodies which
are necessary to consummate the transactions contemplated hereby, which are
either specified in Section 4.2 of the Disclosure Letter or otherwise required
to be obtained prior to the Closing by applicable Requirements of Law; and
there shall have been delivered to HP a certificate or certificates to such
effect, dated the Closing Date, signed on behalf of Symantec by an authorized
officer of Symantec.
Section 8.4 Necessary Consents. Symantec shall have received
consents, in form and substance reasonably satisfactory to HP, to the
transactions contemplated hereby from the other parties to all contracts,
leases, agreements and permits to which Symantec is a party or by which
Symantec or any of the Assets is affected and which are specified in Section
4.2 of the Disclosure Letter, and there shall have been delivered to HP a
certificate or certificates to such effect, dated the Closing Date, signed on
behalf of Symantec by an authorized officer of Symantec.
Section 8.5 Employees. At least 80% of Category A employees and
60% of Category B employees listed in Schedule 7.5 shall have accepted (which
acceptances shall not have been withdrawn) offers of employment by HP extended
as contemplated by Section 7.5 above.
Section 8.6 No Material Adverse Change. There shall have been no
material adverse change in the Products Business or the Assets from the date
hereof through the Closing Date.
Section 8.7 Execution of Symantec Ancillary Agreements. Symantec
shall have executed and delivered to HP all of the Symantec Ancillary
Agreements.
Section 8.8 Opinion of Symantec's Counsel. HP shall have
received an opinion of Symantec's counsel, dated the Closing Date, in
substantially the form of Exhibit H hereto.
Section 8.9 Trio. Symantec shall have received a full and
complete release and an assignable license from Trio Systems LLC ("Trio"), each
in form and substance satisfactory to HP.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF SYMANTEC
The obligations of Symantec under this Agreement shall at the option
of Symantec, be subject to the satisfaction, on or prior to the Closing Date,
of the following conditions:
Section 9.1 No Misrepresentation or Breach of Covenants and
Warranties. Each of the representations and warranties of HP contained or
referred to in this Agreement and the HP Ancillary Agreements shall be true and
correct in all material respects on the Closing Date as though made on the
Closing Date, except for changes therein specifically permitted by this
Agreement or resulting from any transaction expressly consented to in writing
by Symantec or any transaction contemplated by this Agreement; and there shall
have been delivered to Symantec a certificate or certificates to such effect,
dated the Closing Date and signed on behalf of HP by an authorized
representative of HP.
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Section 9.2 No Restraint or Litigation. No action, suit or
proceeding by any Governmental Body shall have been instituted or threatened to
restrain, prohibit or otherwise challenge the legality or validity of the
transactions contemplated hereby; and there shall have been delivered to
Symantec a certificate or certificates to such effect, dated the Closing Date
and signed on behalf of HP by an authorized representative of HP.
Section 9.3 Necessary Governmental Approvals. The parties shall
have received all approvals and actions of or by all Governmental Bodies
necessary to consummate the transactions contemplated hereby, which are
required to be obtained prior to the Closing by applicable Requirements of
Laws; and there shall have been delivered to Symantec a certificate or
certificates to such effect, dated the Closing Date and signed on behalf of HP
by an authorized representative of HP.
Section 9.4 Execution of HP Ancillary Agreements. HP shall have
executed and delivered to Symantec the HP Ancillary Agreements to which
Symantec and HP are parties.
ARTICLE 10
INDEMNIFICATION
Section 10.1 Indemnification by Symantec. Symantec agrees to
indemnify and hold harmless each HP Group Member from and against any and all
Losses and Expenses incurred by such HP Group Member in connection with or
arising from:
(a) any breach by Symantec of any of its covenants in
this Agreement, any Symantec Ancillary Agreement, Exhibit or Schedule;
(b) any breach of any warranty or the inaccuracy of any
representation of Symantec contained or referred to in this Agreement,
any Symantec Ancillary Agreement (other than the pcANYWHERE OEM
Agreement), Exhibit or Schedule or any document or certificate
delivered by or on behalf of Symantec pursuant hereto, other than the
representations set forth in Section 4.8(h)(ii) of this Agreement,
Section 7.3 of the License Agreement and as the substance thereof may
appear elsewhere in this Agreement or any Symantec Ancillary Agreement
(other than the pcANYWHERE OEM Agreement), Exhibit or Schedule or any
document or certificate delivered by or on behalf of Symantec pursuant
hereto;
(c) any failure of Symantec to obtain prior to the
Closing any consent required under Section 4.2;
(d) any liabilities, obligations or commitments of or any
claims against Symantec, including without limitation arising from
Symantec's operation of the Business;
(e) any breach of any warranty or the inaccuracy of any
representation of Symantec contained or referred to in Section
4.8(h)(ii) of this Agreement, Section 7.3 of the License Agreement and
as the substance thereof may appear elsewhere in this Agreement or any
Symantec Ancillary Agreement (other than the pcANYWHERE OEM
Agreement), Exhibit or Schedule or any document or certificate
delivered by or on behalf of Symantec pursuant hereto; or
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(f) the Trio, Simba and Doug Neal matters disclosed in
the Disclosure Letter.
Section 10.2 Indemnification by HP. HP shall indemnify and hold
harmless Symantec from and against any and all Losses and Expenses incurred by
it in connection with, arising from, relating to or resulting from:
(a) any breach by HP of any of its covenants in this
Agreement, any HP Ancillary Agreement, Exhibit or Schedule; or
(b) any breach of any warranty or the inaccuracy of any
representation of HP contained or referred to in this Agreement, any
HP Ancillary Agreement, Exhibit, Schedule or any document or
certificate delivered by or on behalf of HP pursuant hereto.
Section 10.3 Limitation of Indemnification.
(a) Except for any Losses related to Trio, the
liabilities and obligations of Symantec arising under this Article 10
shall commence only following the incidence of Losses aggregating
$150,000, following which all claims starting from the first dollar
shall be recoverable as provided in this Agreement. The aggregate
amount of the liabilities and obligations of Symantec with respect to
any indemnification claim made pursuant to Section 10.1(a), (b), (c),
(d) or (f) above shall not exceed the Purchase Price, except that with
respect to Section 10.1(e) above, the aggregate amount shall not
exceed $5,000,000. Any claim must be made against Symantec pursuant
to this Article 10 on or prior to the date which is three years after
the date of the last payment constituting part of the Purchase Price,
except that (i) with respect to the breach of any warranty contained
in Section 4.3, the period of time during which such a claim may be
made shall terminate at the end of the relevant statutory time period,
and (ii) with respect to claims made with respect to the breach of any
warranty contained in Section 4.8 or 4.20, there shall be no time
limit.
(b) The liabilities and obligations of HP and any HP
Group Member arising under this Article 10 shall commence only
following the incidence of Losses (incurred by any and all Indemnified
Parties) aggregating $150,000, following which all claims starting
from the first dollar shall be recoverable as provided in this
Agreement. The aggregate amount of the obligations of HP and any HP
Group Member with respect to any indemnification claim made pursuant
to Section 10.2 shall not exceed $3 million. A claim must be made
against HP or any HP Group Member pursuant to this Article 10 on or
prior to the date which is one year after the date of the last payment
constituting part of the Purchase Price.
Section 10.4 Notice of Claims. Symantec or any HP Group Member
(the "Indemnified Party") seeking indemnification hereunder shall give to HP or
Symantec, as appropriate (or its successors and assigns) (the "Indemnitor"), a
notice (a "Claim Notice") describing in reasonable detail the facts giving rise
to any claim for indemnification hereunder and shall include in such Claim
Notice the amount of such claim, and a reference to the provision of this
Agreement or any other agreement, document or instrument executed hereunder or
in connection herewith upon which such claim is based; provided, that a Claim
Notice in respect of any action at law or suit in equity by or against a third
Person as to which indemnification will be sought shall be given promptly after
the action or suit is commenced; provided further that failure to give such
notice shall not relieve the Indemnitor of its obligations hereunder except to
the extent it shall have been materially prejudiced by such failure.
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Section 10.5 Third Person Claims.
(a) If any third Person claim, action or suit is made
against an Indemnified Party, the Indemnified Party will be entitled
to control the defense thereof. The Indemnitors will (i) reasonably
cooperate in connection with the defense of a third Person claim, and
(ii) not admit any liability with respect to, or settle, compromise or
discharge any third Person claim without the Indemnified Party's prior
written consent. The Indemnitors shall be entitled to participate in,
but not control, such defense with their own counsel at their own
expense.
(b) Reimbursement of Losses or Expenses in connection
with a settlement shall be in accordance with Sections 10.5(c) and
10.6 below.
(c) The Indemnified Party will not settle, compromise or
discharge any third Person claim without the consent of the
Indemnitors, which consent shall not be unreasonably withheld. In the
event the Indemnitors and the Indemnified Party cannot agree on a
settlement, compromise or discharge of any third Person claim, the
Indemnified Party may settle, compromise or discharge the third Person
claim without such consent; provided, however, that, if the
Indemnitors dispute the Indemnified Party's claim for indemnification
of the settled claim, such dispute shall be resolved in accordance
with Section 10.6 below.
Section 10.6 Dispute Resolution. In the event the Indemnitors
dispute the Indemnified Party's claim for indemnification of a third Person
claim that the Indemnified Party settles without the consent of the
Indemnitors, prior to filing any claims in a court of law or to submitting the
dispute to binding arbitration, the parties shall in good faith first negotiate
a written resolution of such dispute or claim for a period not to exceed
fifteen days from the date of receipt of a party's request for such
negotiation. Such negotiation shall be conducted between Symantec and managers
of HP who have authorization to resolve any such dispute or claim. In the
event the parties cannot negotiate a written resolution to such dispute or
claim during this fifteen-day negotiation period, and prior to filing any claim
in a court of law or submitting the dispute to binding arbitration, the parties
shall then submit such dispute or claim to nonbinding mediation with Judicial
Arbitration & Mediation Services ("JAMS"). The mediation may be initiated by
the written request of either party to the other party, shall commence within
fifteen (15) days of receipt of such notice and shall be conducted in
accordance with the standard mediation procedures established by JAMS, unless
otherwise agreed by the parties. The mediation shall not exceed a period of
thirty (30) days. In the event the parties do not resolve such dispute or
claim as a result of such mediation or in the event such dispute or claim is
not resolved within three months, either party may seek to resolve the dispute
or claim in a court of competent jurisdiction or seek other legal or equitable
resolution. The judgment or decree of a court shall be deemed final when the
time for appeal, if any, shall have expired and no appeal shall have been taken
or when all appeals taken shall have been finally determined. The costs of
resolving the dispute, including reasonable attorneys' fees and expenses, shall
be borne by the losing parties.
Section 10.7 Setoff. HP shall be entitled to set-off the amount
of any claim reasonably submitted in good faith under Section 10.1 as damages
or by way of indemnification against any other amounts payable by HP to
Symantec whether under this Agreement or otherwise as HP's sole monetary
remedy. Where the claim by HP relates to amounts paid or payable currently by
HP, HP may set off such amounts against the amounts next due and payable in
respect of the Purchase Price.
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ARTICLE 11
TERMINATION
Section 11.1 Termination. Anything contained in this Agreement to
the contrary notwithstanding, this Agreement may be terminated at any time
prior to the Closing Date:
(a) by the mutual consent of HP and Symantec;
(b) by HP or Symantec if the Closing shall not have
occurred on or before May 31, 1997 (or such later date as may be
mutually agreed to by HP and Symantec);
(c) by HP in the event of (i) any material breach by
Symantec of any of the representations, warranties, covenants or
agreements of Symantec contained herein, (ii) the failure of Symantec
to cure such breach within fourteen (14) days after receipt of notice
from HP requesting such breach to be cured, and (iii) the breach
resulting in a material adverse effect on the Products Business or the
Assets; or
(d) by Symantec in the event of any material breach by HP
of any of HP's representations, warranties, covenants or agreements
contained herein and the failure of HP to cure such breach within
fourteen (14) days after receipt of notice from Symantec requesting
such breach to be cured.
Section 11.2 Notice of Termination. Any party desiring to
terminate this Agreement pursuant to Section 11.1 above shall give notice of
such termination to the other parties to this Agreement.
Section 11.3 Effect of Termination. In the event that this
Agreement shall be terminated pursuant to this Article 11, all further
obligations of the parties under this Agreement (other than Sections 12.2, 12.3
and 12.10) shall be terminated without further liability of any party to the
other, provided that nothing herein shall relieve any party from liability for
its willful breach of this Agreement.
ARTICLE 12
GENERAL PROVISIONS
Section 12.1 Survival of Obligations. All representations,
warranties, covenants and obligations contained in this Agreement shall survive
the consummation of the transactions contemplated by this Agreement for the
relevant indemnification periods set forth in Article 10 above. The respective
representations and warranties of each party hereto contained herein shall not
be deemed waived or otherwise affected by any investigation made by the other
party hereto and shall survive the Closing.
Section 12.2 Confidential Information. Symantec agrees that it
will protect HP confidential information acquired from Symantec under this
Asset Purchase Agreement for a period of five years from the Closing Date by
using the same degree of care, but no less than a reasonable degree of care, to
prevent the unauthorized use, dissemination, or publication of the HP
confidential information as Symantec uses to protect its own confidential
information of a like nature.
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Section 12.3 No Public Announcements. Except as heretofore made
and subject to the CDA, neither HP nor Symantec shall, without the approval of
the other, make any press release or other public announcement concerning the
transactions contemplated by this Agreement, except as and to the extent that
any such party shall be so obligated by law, in which case the other party
shall be advised and the parties shall use their reasonable efforts to cause a
mutually agreeable release or announcement to be issued; provided that the
foregoing shall not preclude communications or disclosures necessary to
implement the provisions of this Agreement or to comply with accounting and
Securities and Exchange Commission disclosure obligations.
Section 12.4 Notices. Any notice given hereunder shall be in
writing and shall be deemed to have been received: (i) in the case of personal
delivery, on the date of such delivery; (ii) in the case of facsimile
transmission, on the date on which the sender receives confirmation by
facsimile transmission that such notice was received by the addressee, provided
that a copy of such transmission is additionally sent by mail as set forth
below; (iii) in the case of overnight air courier, on the second business day
following the day sent, with receipt confirmed by the courier; and (iv) in the
case of mailing by first class certified or registered mail, postage prepaid,
return receipt requested, on the fifth business day following such mailing and
should be addressed as follows:
If to HP, to:
Hewlett-Packard Company
3000 Hanover St.
M/S 20BT
Palo Alto, CA 94304-0890
Attention: Director, Corporate Development
Facsimile: 415-852-8342
with a copy to:
Hewlett-Packard Company
3000 Hanover Street, MS: 20BQ
Palo Alto, California 94304
Attention: General Counsel
Facsimile: 415-857-4392
If to Symantec, to
Symantec
Symantec Corporation
10201 Torre Avenue
Cupertino, CA 94014
Attention: Senior Vice President, Corporate Development
Facsimile: 408-446-8849
with a copy to:
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<PAGE> 30
Symantec Corporation
10201 Torre Avenue
Cupertino, CA 94014
Attention: Vice President and General Counsel
Facsimile: 408-252-5101
or to such other address as such party may indicate by a notice delivered to
the other parties hereto.
Section 12.5 Successors and Assigns.
(a) The rights of either party under this Agreement shall
not be assignable by such party hereto prior to the Closing without
the written consent of the other, except that the rights of HP
hereunder may be assigned prior to the Closing, without the consent of
Symantec, to any corporation all of the outstanding capital stock of
which is owned or controlled by HP, provided, that the assignee shall
assume in writing all of HP's obligations to Symantec hereunder;
provided, further, that HP shall be obligated to pay the balance of
any portion of the Purchase Price that Symantec is entitled to receive
pursuant to the terms of this Agreement and which the assignee fails
to pay. Following the Closing, either party may assign any of its
rights hereunder, but no such assignment shall relieve it of its
obligations hereunder.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted
assigns. The successors and permitted assigns hereunder shall include
without limitation, in the case of HP, any permitted assignee as well
as the successors in interest to such permitted assignee (whether by
merger, liquidation (including successive mergers or liquidations) or
otherwise. Nothing in this Agreement, expressed or implied, is
intended or shall be construed to confer upon any Person other than
the parties and successors and assigns permitted by this Section 12.5
any right, remedy or claim under or by reason of this Agreement.
Section 12.6 Access to Records After Closing.
(a) For a period of three (3) years after the Closing
Date, HP and its representatives shall have reasonable access to all
of the books and records relating to the Business which Symantec or
any of its Affiliates may retain after the Closing Date. Such access
shall be afforded by Symantec and its Affiliates upon receipt of
reasonable advance notice and during normal business hours. HP shall
be solely responsible for any costs and expenses incurred by it
pursuant to this Section 12.6. If Symantec or any of its Affiliates
shall desire to dispose of any of such books and records prior to the
expiration of such three (3) year period, Symantec shall prior to such
disposition, give HP a reasonable opportunity, at HP's expense, to
segregate and remove such books and records as HP may select.
(b) For a period of one (1) year after the Closing Date,
in the event that Symantec has a reasonable need for a copy of any of
the Books and Records delivered by Symantec to HP under this
Agreement, Symantec will notify HP of its request. HP may make such
copy available to Symantec, at Symantec's sole expense, in HP's
reasonable discretion.
Section 12.7 Entire Agreements, Amendments. With the exception of
the CDA, this Agreement and the Exhibits and Schedules referred to herein and
the documents delivered pursuant hereto contain the
30
<PAGE> 31
entire understanding of the parties hereto with regard to the subject matter
contained herein or therein, and supersede all prior agreements, understandings
or letters of intent between or among any of the parties hereto, including
without limitation the Letter of Intent. This Agreement shall not be amended,
modified or supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.
Section 12.8 Interpretation. Article titles and headings to
sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 12.9 Waivers. Any term or provision of this Agreement may
be waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to constitute a waiver of any other
or subsequent breach.
Section 12.10 Expenses. Each party hereto will pay all costs and
expenses incident to its negotiation and preparation of this Agreement and to
its performance and compliance with all agreements and conditions contained
herein on its part to be performed or complied with, including the fees,
expenses and disbursements of its counsel, accountants and other advisors.
Section 12.11 Partial Invalidity. Wherever possible, each
provision hereof shall be interpreted in such manner as to be effective and
valid under applicable law, but in case any one or more of the provisions
contained herein shall be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
Section 12.12 Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original instrument, but all of which shall be considered one and the same
agreement, and shall become binding when one or more counterparts have been
signed by each of the parties hereto and delivered to each of Symantec and HP.
Section 12.13 Further Assurances. On the Closing Date, Symantec
shall (i) deliver to HP such other bills of sale, deeds, endorsements,
assignments and other good and sufficient instruments of conveyance and
transfer, in form reasonably satisfactory to HP and its counsel, as HP may
reasonably request or as may be otherwise reasonably necessary to vest in HP
all the right, title and interest of Symantec in, to or under any or all of the
Assets, and (ii) take all steps as may be reasonably necessary to put HP in
actual possession and control of all the Assets. From time to time following
the Closing, Symantec shall execute and deliver, or cause to be executed and
delivered, to HP such other instruments of conveyance and transfer as HP may
reasonably request or as otherwise may be reasonably necessary to more
effectively convey and transfer to, and vest in, HP and put HP in possession
of, any part of the Assets, and, in the case of licenses, certificates,
approvals, authorizations, agreements, contracts, leases, easements and other
commitments included in the Assets (a) which cannot be transferred or assigned
effectively without the
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<PAGE> 32
consent of third parties which consent has not been obtained prior to the
Closing, to cooperate with HP at its request in endeavoring to obtain such
consent promptly, and if any such consent is unobtainable, to use its
reasonable efforts to secure to HP the benefits thereof in some other manner,
or (b) reasonable efforts jointly with HP to secure to HP the benefits thereof
in some other manner (including the exercise of the rights of Symantec
thereunder). Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any license, certificate,
approval, authorization, agreement, contract, lease, easement or other
commitment included in the Assets if an attempted assignment thereof without
the consent of a third party thereto would constitute a breach thereof.
Section 12.14 Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws (as opposed to the conflicts
of law provisions) of the State of California.
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<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the date first above written.
"HP"
HEWLETT-PACKARD COMPANY,
a California corporation
By:
-----------------------------
Name:
Title:
"Symantec"
SYMANTEC CORPORATION,
a Delaware corporation
By:
-----------------------------
Name:
Title:
33
<PAGE> 34
ASSET PURCHASE AGREEMENT
INDEX TO SCHEDULES
SCHEDULE DESCRIPTION
2.1(e) Capital Equipment and Other Hard Assets
2.6(b) Payment of Purchase Price
4 Disclosure Letter
7.5 Employees
i
<PAGE> 35
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
A-1 Transferred Products & Technology
A-2 Transferred Agreements
B pcANYWHERE OEM Agreement
C Instrument of Assignment and Assumption
D License Agreement
E Transition OEM Agreement
F Sublease and Sublease Letter Agreement
G Transition Agreement
H Opinion of Symantec's Counsel
ii
<PAGE> 36
ASSET PURCHASE AGREEMENT
Schedule 2.6(b)
Payment of Purchase Price
<TABLE>
<CAPTION>
(Dollars in millions, USD) Maximum Percent of HP's
Amount of NSMD Revenue
Royalty
<S> <C> <C>
HP Quarter Ending:
- -----------------
April 30, 1997 $ 5.3 30%
July 31, 1997 $ 5.0 30%
October 31, 1997 $ 5.5 30%
January 31, 1998 $ 5.5 30%
April 30, 1998 $ 4.0 30%
July 31, 1998 $ 1.5 30%
October 31, 1998 $ 1.3 30%
$ 28.1
</TABLE>
Payment stream has been modeled to yield no more than $27,000,000 NPV (at a
discount rate of 6%) over eight quarters beginning with HP's quarter ending
April 30, 1997.
iii
<PAGE> 37
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
LICENSE AGREEMENT
This license agreement (the "License Agreement") is entered into and is
effective as of the Closing Date specified in the Asset Purchase Agreement by
and between Hewlett-Packard Company, a California corporation ("HP") and
Symantec Corporation, a Delaware corporation ("Symantec").
1. RECITALS:
1.1 Symantec has been operating a business to design, develop,
enhance, test, manufacture, distribute and support the
products, technologies and intellectual property known to
Symantec and its customers as all versions of Norton
Administrator for Networks ("NAN"), Norton Desktop
Administrator ("NDA"), Expose ("Expose") and work-in-progress
and developments intended for the upcoming "Big Bang" release
(collectively, the "Business").
1.2 Symantec's business of (i) designing, developing, enhancing
and testing the Products and Work-in-Progress, (ii)
manufacturing and distributing specifically for the Products,
and (iii) and supporting primarily the Products and
Work-in-Progress constitutes the "Products Business."
1.3 Pursuant to the Asset Purchase Agreement between HP and
Symantec dated March 27, 1997 ("Asset Purchase Agreement"),
Symantec is selling and HP is buying the Assets;
1.4 In conjunction with execution of the Asset Purchase Agreement,
HP wishes to license from Symantec certain intellectual
property (described in Schedules 1, 2, 3, 4, 5 and 6 to this
Agreement) primarily related to other Symantec businesses but
also related to the Products. Symantec wishes to license
back from HP certain intellectual property (described in
Schedules 7, 8 and 9 to this Agreement) contained in the
Assets but also related to other Symantec business.
The parties agree as follows:
2. DEFINITIONS
2.1 Definitions. In this Agreement, the following terms have the
meanings specified or referred to in this Section 2 and shall
be equally applicable to both the singular and plural forms.
Any agreement referred to below shall mean such agreement as
amended, supplemented and modified from time to time to the
extent permitted by the applicable provisions thereof and by
this Agreement.
<PAGE> 38
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
2.1.1 "Affiliate" means any entity which controls, is
controlled by, or is under common control with,
Symantec or HP, as the case may be. An entity shall
be deemed to be in control of another entity only if,
and for so long as, it owns or controls more than
fifty percent (50%) of the shares of the subject
entity entitled to vote in the election of directors
(or, in the case of an entity that is not a
corporation, for the election of the corresponding
managing authority).
2.1.2 "HP" has the meaning specified in the first paragraph
of this Agreement.
2.1.3 "Expose" has the meaning described in Recital 1.1
above.
2.1.4 "Intellectual Property" means worldwide patents,
patent applications, patent rights, trademarks,
trademark registrations, trademark applications,
licenses, service marks, products marks, trade names,
all other names embodying products or product
goodwill (or both) copyright registrations, mask
works, copyrights (including those in computer
programs, software, including all source code and
object code, programming tools, drawings,
specifications and data), designs, trade secrets,
technology, inventions, discoveries and improvements,
know-how; proprietary rights, formulae, processes,
technical information, confidential and proprietary
information, whether tangible or intangible, and all
other intellectual property rights, whether or not
subject to statutory registration or protection.
2.1.5 "License Agreement" means this Agreement.
2.1.6 "NAN" has the meaning described in Recital 1.1 above.
2.1.7 "NDA" has the meaning described in Recital 1.1 above.
2.1.8 "Products" means all past and current versions of
NAN, NDA and Expose.
2.1.9 "Assets" has the meaning specified in the Asset
Purchase Agreement.
2.1.10 "Symantec" has the meaning specified in the first
paragraph of this Agreement.
2.1.11 "Work-in-Progress" means work-in-progress for the
"Big Bang" release.
3. DELIVERY
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HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
3.1 Symantec will create and own a source code copy of a TAOSKRNL
library for the Quake component and a TAOSKRNL library for the
Core component upon signing this License Agreement that
conform to the following requirements:
3.1.1 Symantec will use only minimal engineering resources
currently dedicated to the Big Bang release;
3.1.2 the TAOSKRNL libraries will contain a subset of the
functions provided by the corresponding SYMKRNL
libraries including all string handling functions,
all file/directory functions and all utility
functions;
3.1.3 the TAOSKRNL libraries will contain at least the disk
access functions required by the Big Bang release and
all supported versions of NAN and NDA; and
3.1.4 the TAOSKRNL libraries will meet all quality, testing
and localization standards currently defined by the
Symantec product release requirements.
3.2 Symantec will provide HP a copy of the software listed in
Schedules 1, 2, 3, 4, 5 and 6 upon signing this License
Agreement in accordance with the licenses granted in Section
4. HP will provide Symantec a copy of the software listed in
Schedule 9 upon release.
4. LICENSE GRANT
4.1 Symantec grants to HP and its Affiliates a non-exclusive,
perpetual, transferrable, worldwide, paid-up, irrevocable
license under all Symantec Intellectual Property rights,
whether currently owned or later acquired, to make, have made,
copy, use, sell, offer for sale, distribute, import, disclose
and create derivative works for the Schedule 1 Licensed
Software for source code, object code and associated
documentation, together with the right to sublicense others to
do the same.
4.2 Symantec grants to HP and its Affiliates a non-exclusive,
perpetual, transferrable, worldwide, paid-up, irrevocable
license under all Symantec Intellectual Property rights,
whether currently owned or later acquired, to make, have made,
copy, use, sell, offer for sale, distribute, import, disclose
and create derivative works for the Schedule 2 Licensed
Software for source code, object code and associated
documentation, together with the right to sublicense others to
do the same, except that:
4.2.1 this Section 4.2 license is limited only to the
development, development, distribution and support of
NAN metering products and derivative
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HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
metering products during a period ending 18 months
after closing;
4.2.2 HP will not provide the Schedule 2 Licensed Software
in source code format to any third party except to
escrow agents for escrow relationships during a
period ending 18 months after closing;
4.2.3 HP will not sell or distribute any disk utility
products or anti-virus products containing Schedule 2
Licensed Software during a period ending 36 months
after closing; and
4.2.4 HP will not provide either directly or indirectly any
source code license or any license with distribution
rights for the Schedule 2 Licensed Software to
McAfee, Cyber Media, Trend Micro Inc. or their
successors in interest during a period ending 36
months after closing.
4.3 Symantec grants to HP and its Affiliates a non-exclusive,
perpetual, transferrable, worldwide, paid-up, irrevocable
license under all Symantec Intellectual Property rights,
whether currently owned or later acquired, to make, have made,
copy, use, sell, offer for sale, distribute, import, disclose
and create derivative works for the Schedule 3 Licensed
Software for source code, object code and associated
documentation, together with the right to sublicense others to
do the same, except that:
4.3.1 HP will not provide either directly or indirectly any
source code license or any license with distribution
rights for the Schedule 3 Licensed Software to
McAfee, Cyber Media, Trend Micro Inc. or their
successors during a period ending 6 months after
closing.
4.4 Symantec grants to HP and its Affiliates a non-exclusive,
perpetual, transferrable, worldwide, paid-up, irrevocable
license under all Symantec Intellectual Property rights,
whether currently owned or later acquired, to make, have made,
copy, use, sell, offer for sale, distribute, import, disclose
and create derivative works for the Schedule 4 Licensed
Software for source code, object code and associated
documentation, together with the right to sublicense others to
do the same, except that:
4.4.1 HP will not provide either directly or indirectly any
source code license or any license with distribution
rights for the Schedule 3 Licensed Software to
McAfee, Cyber Media, Trend Micro Inc. or their
successors during a period ending 18 months after
closing.
4.5 Symantec grants to HP and its Affiliates a non-exclusive,
perpetual, transferrable,
4
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HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
worldwide, paid-up, irrevocable license under all Symantec
Intellectual Property rights, whether currently owned or later
acquired, to make, have made, copy, use, import, disclose and
create derivative works for the Schedule 5 Licensed Software
for source code, object code and associated documentation,
together with the right to sublicense others to do the same
except that HP will not sublicense the Schedule 5 Licensed
Software as a stand-alone product with no additional
functionality and will only sublicense the Schedule 5 Licensed
Software for use in conjunction with a source code license to
NAN, NDA, Expose or any derivative product.
4.6 Symantec grants to HP and its Affiliates a non-exclusive,
perpetual, transferrable, worldwide, paid-up, irrevocable
license under all Symantec Intellectual Property rights,
whether currently owned or later acquired, to make, have made,
copy, use and import up to a total of 50 copies for each of
the three programs contained in the Schedule 6 Licensed
Software for object code and associated documentation,
together with the right to sublicense others to do the same.
4.7 HP grants to Symantec and its Affiliates a non-exclusive,
perpetual, irrevocable, non-transferrable, worldwide, paid-up
license under all HP Intellectual Property rights acquired
from Symantec in the Asset Purchase Agreement or under this
License Agreement, whether currently held or later acquired,
to make, have made, copy, use, import and create derivative
works for the Schedule 7 Licensed Software only for use in the
Schedule 7 Licensed Products and only for the Schedule 7
Associated Limited Purpose. HP grants to Symantec and its
Affiliates a non-exclusive, non-transferrable, worldwide,
perpetual, irrevocable, paid-up license under all HP
Intellectual Property rights acquired from Symantec in the
Asset Purchase Agreement or under this License Agreement,
whether currently held or later acquired, to sell, offer for
sale, distribute the object code and associated documentation
for the Schedule 7 Licensed Software only for use in the
Schedule 7 Licensed Products and only for the Schedule 7
Associated Limited Purpose. Schedule 7 Licensed Products
means the Schedule 7 Associated Products and any later
versions or derivative products primarily based on the
Schedule 7 Associated Products. Schedule 7 Licensed Software
means the source code, object code and associated
documentation for the Schedule 7 Listed Software and any
modified Schedule 7 Listed Software.
4.8 HP grants to Symantec and its Affiliates a non-exclusive,
perpetual, irrevocable, non-transferrable, worldwide, paid-up
license under all HP Intellectual Property rights acquired
from Symantec in the Asset Purchase Agreement or under this
License Agreement, whether currently held or later acquired,
to use, sell, offer for sale, distribute, import the Schedule
8 Licensed Software only for use in the Schedule 8 Associated
Products and only for the Schedule 8 Associated Limited
Purpose. Schedule 8 Licensed Software means the object code
and associated
5
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HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
documentation for the Schedule 8 Listed Software.
4.9 HP grants to Symantec a non-exclusive, perpetual,
non-transferrable, worldwide, paid-up license under all HP
Intellectual Property rights, whether currently held or later
acquired, to make, have made, copy, use internally, use
externally only to embed for distribution to external test
sites for Symantec and import the object code and associated
documentation for the Schedule 9 Licensed Software. HP may
revoke this license upon material breach by Symantec of this
Section 4.9 License if the breach is not cured within 30 days
of notice.
5. OWNERSHIP
5.1 HP receives no right, title or interest to any Symantec
technology or Intellectual Property therein under this License
Agreement except for the specific licenses granted in Section
4. HP retains ownership of any modifications or additions
made by HP to any software licensed under and in accordance
with this License Agreement.
5.2 Symantec receives no right, title or interest to any HP
technology under this License Agreement except for the
specific licenses granted in Section 4. Symantec retains
ownership of any modifications or additions made by Symantec
to any software licensed under and in accordance with this
License Agreement.
6. PAYMENT
6.1 All licenses granted under this License Agreement are
non-royalty-bearing, fully paid-up licenses. Consideration
for the licenses granted under this License Agreement is found
within the Asset Purchase Agreement.
7. WARRANTY
7.1 Symantec represents and warrants that it either has title or
sufficient rights in the copyrights, trade secrets and patents
of any software and documentation licensed under this License
Agreement to grant the licenses granted by Symantec under this
License Agreement.
7.2 Symantec represents and warrants that Symantec does not have
any liability with respect to the software and documentation
licensed under this License Agreement arising from the
infringement or misappropriation of any patent, known to
Symantec and issued or published prior to closing, any
trademark, any service mark, any copyright or other
Intellectual Property right of another.
6
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HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
7.3 Symantec represents and warrants that Symantec does not have
any liability with respect to the software and documentation
licensed under this License Agreement arising from the
infringement or misappropriation of any patent not known to
Symantec and issued or published prior to closing.
7.4 THE WARRANTIES SPECIFICALLY SET FORTH IN THIS AGREEMENT ARE
EXCLUSIVE AND NO OTHER WARRANTY, WHETHER WRITTEN OR ORAL, IS
EXPRESSED OR IMPLIED. BOTH PARTIES SPECIFICALLY DISCLAIM THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
8. INDEMNIFICATION
8.1 Symantec will indemnify HP for a breach of the foregoing
warranties in accordance with Article 10 of the Asset Purchase
Agreement.
9. DISPUTE RESOLUTION
9.1 The parties will negotiate in good faith to resolve any
dispute between them regarding this Agreement. If such
negotiations do not resolve the dispute to the satisfaction of
both parties then the Agreement Coordinators from each party
will meet and will attempt to reach a mutually agreeable
resolution of the dispute.
9.2 If such negotiations and meetings do not resolve the dispute
to the satisfaction of both parties then each party will
nominate one senior officer of the rank of Vice President for
Symantec and Division General Manager for HP or higher as its
representative. These representatives will meet in person and
alone (except for one interpreter, if necessary, and one other
assistant allowed for each party) and will attempt in good
faith to resolve the dispute. This meeting will be a required
prerequisite before either party may seek judicial or
governmental resolution of the dispute, except for claims
seeking injunctive or other equitable relief. The parties may
agree to pursue any other additional mutually acceptable
dispute resolution method but such pursuit will not modify the
above-stated prerequisite.
10. TERMINATION
10.1 Termination. This Agreement may be terminated by the mutual
consent of HP and Symantec;
10.2 Notice of Termination. Any party desiring to terminate this
Agreement pursuant to this Section 10 above shall give notice
of such desire to the other party to this Agreement.
7
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HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
10.3 Effect of Termination. All representations, warranties,
covenants, licenses granted and obligations contained in this
Agreement shall survive the termination of this Agreement.
11. GENERAL PROVISIONS
11.1 Exhibits In This Agreement. The following exhibits form a
part of this Agreement and are incorporated by reference into
this Agreement:
Schedule 1 - Product technology unlimited source license to HP
Schedule 2 - SYMEVNT limited source license to HP
Schedule 3 - TAOSKRNL limited source license to HP
Schedule 4 - SYMKRNL limited source license to HP
Schedule 5 - Symantec tools limited source license to HP
Schedule 6 - Symantec tools limited object license to HP
Schedule 7 - Distribution technology limited source license to
Symantec
Schedule 8 - Product technology limited object license to
Symantec
Schedule 9 - Product technology limited end user license to
Symantec
11.2 Copyright Notices. Unless stated otherwise in this Agreement,
each party will ensure that all copyright notices that are
marked on or included in any portion of software or
documentation, in any form, that is furnished to that party
under this Agreement will be marked on or included at least
once in each copy made by or for that party.
11.3 Notices. Any notice given hereunder shall be in writing and
shall be deemed to have been received: (i) in the case of
personal delivery, on the date of such delivery; (ii) in the
case of facsimile transmission, on the date on which the
sender receives confirmation by facsimile transmission that
such notice was received by the addressee, provided that a
copy of such transmission is additionally sent by mail as set
forth in (iv) below; (iii) in the case of overnight air
courier, on the second business day following the day sent,
with receipt confirmed by the courier; and (iv) in the case of
mailing by first class certified or registered mail, postage
prepaid, return receipt requested, on the fifth business day
following such mailing and should be addressed as follows:
If to HP, to:
Hewlett-Packard Company
3000 Hanover St.
P.O. Box 10302, M/S 20BQ
8
<PAGE> 45
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
Palo Alto, CA 94303-0890
Attention: Director, Corporate Development
Facsimile: 415-852-8342
with a copy to:
Hewlett-Packard Company
3000 Hanover Street, MS: 20BQ
Palo Alto, California 94305
Attention: General Counsel
Facsimile: 415-857-4392
If to Symantec, to
Symantec Corporation
10201 Torre Avenue
Cupertino, California 95014
Attention: Senior Vice President, Corporate Development
Facsimile: 408-446-8849
with a copy to:
Symantec Corporation
10201 Torre Avenue
Cupertino, California 95014
Attention: Vice President and General Counsel
Facsimile: 408-446-8849
or to such other address as such party may indicate by a
notice delivered to the other parties hereto.
11.4 Export Control. HP and Symantec agree to comply with all
applicable United States laws and regulations that may govern
the export of products subject to this Agreement, including
the Export Administration Act of 1979, as amended, any
successor legislation, and the Export Administration
Regulations issued by the Department of Commerce.
11.5 No Waiver. The waiver of any term, condition, or provision of
this Agreement must be in writing and signed by an authorized
representative of the waiving party. No such waiver shall be
construed as a waiver of any other term, condition, or
provision except as provided in writing, nor as a waiver of
any subsequent breach of the same term, condition, or
provision.
9
<PAGE> 46
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
11.6 Severability. If any provision in this Agreement is held
invalid or unenforceable by a body of competent jurisdiction,
such provision shall be construed, limited or, if necessary,
severed to the extent necessary to eliminate such invalidity
or unenforceability. The parties agree to negotiate in good
faith a valid, enforceable substitute provision that most
nearly effects the parties' original intent in entering into
this Agreement or to provide an equitable adjustment in the
event no such provision can be added. The other provisions of
this Agreement shall remain in full force and effect.
11.7 Entire Agreement. This Agreement comprises the entire
understanding between the parties with respect to its subject
matters and supersedes any previous communications,
representations, or agreements, whether oral or written. For
purposes of construction, this Agreement shall be deemed to
have been drafted by both parties. No modification of this
Agreement shall be binding on either party unless in writing
and signed by an authorized representative of each party.
11.8 Governing Law. This Agreement will be governed by the laws of
the State of California without reference to any choice of
laws provisions.
The parties have read and agreed to this License Agreement.
HEWLETT-PACKARD COMPANY SYMANTEC CORPORATION
By: By:
------------------------ -------------------------------
Name: Name:
---------------------- ----------------------------
Title: Title:
-------------------- ----------------------------
10
<PAGE> 47
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
Schedule 1
Product technology unlimited source license to HP
Schedule 1 Licensed Software:
Components and Related Projects
1. System Detection Library (SDL)
2. Symantec Basic Extensions, Symantec Installer, Symantec Basic Recorder
and Enhanced Menuing System (EMS-the menuing system used in the NEF
console)
2.1 Components from Symantec shared technology that are used by
NAN 2.55 and NDA 1.02
<TABLE>
<CAPTION>
PROJECT DESCRIPTION TARGETS
<S> <C> <C>
EBEXT Network, mail, and other extensions SYMWNET7.SBL, SYMWEXT7.SBL, SYMCNST7.SBL,
to Summit Basic. SYMWNET7.LIB, SYMWEXT7.LIB, SYMPUB7.LIB,
SYMCNST7.LIB, SYMWNET7.SBH, SYMWEXT7.SBH,
SYMCNST7.SBH
Symantec Files that are in the Symantec INSTALL.EXE, INSTBIN.EXE, SIW3ZIP.DLL, SIWDLL.DLL,
Installer Installer. SIWDLL32.DLL, SIWUNZIP.DLL, SIWVWR.EXE,
SIWZIP.DLL, TKSIW16.DLL, TKSIW32.DLL
</TABLE>
11
<PAGE> 48
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
2.2 Components from Symantec shared technology that are used by NAS EE 1.0
<TABLE>
<CAPTION>
PROJECT DESCRIPTION TARGETS
<S> <C> <C>
EBEXT Network, mail, and other extensions to SYMWNET7.SBL, SYMWEXT7.SBL, SYMCNST7.SBL,
Summit Basic. SYMWNET7.LIB, SYMWEXT7.LIB, SYMPUB7.LIB,
SYMCNST7.LIB, SYMWNET7.SBH, SYMWEXT7.SBH,
SYMCNST7.SBH
Symantec Files that are in the Symantec INSTALL.EXE, INSTALL.EXE, INSTBIN.EXE,
Installer Installer set. INSTBIN.EXE, MAILBUSI.CTL, N16UTILS.LIB,
PIPELINE.DLL, PIPELINE.INI, SETUP.EXE,
SIW3ZIP.DLL, SIW3ZIP.DLL, SIWDLL.DLL,
SIWDLL.DLL, SIWDLL.LIB, SIWDLL32.DLL,
SIWDLL32.DLL, SIWFMOD.EXE, SIWGT16.DLL,
SIWGT32.DLL, SIWPIPL.EXE, SIWUNZIP.DLL,
SIWUNZIP.DLL, SIWVWR.EXE, SIWVWR.EXE,
SIWWIZ16.LIB, SIWZIP.DLL, SIWZIP.DLL,
SUNZIP16.DLL, SYMNAV7.LIB, TKSIW16.DLL,
TKSIW16.DLL, TKSIW32.DLL, TKSIW32.DLL,
_SYMINST.EXE, _SYMINST.PIF, _SYMSHEL.EXE
</TABLE>
12
<PAGE> 49
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
2.3 Components from Symantec shared technology that are used by
NAS PE 3.0
<TABLE>
<CAPTION>
PROJECT DESCRIPTION TARGETS
<S> <C> <C>
EBEXT Network, mail, and other extensions to SYMWNET7.SBL, SYMWEXT7.SBL, SYMCNST7.SBL,
Summit Basic. SYMWNET7.LIB, SYMWEXT7.LIB, SYMPUB7.LIB,
SYMCNST7.LIB, SYMWNET7.SBH, SYMWEXT7.SBH,
SYMCNST7.SBH
Symantec Files that are in the Symantec INSTALL.EXE, INSTALL.EXE, INSTBIN.EXE,
Installer Installer set. INSTBIN.EXE, MAILBUSI.CTL, N16UTILS.LIB,
SETUP.EXE, SIW3ZIP.DLL, SIW3ZIP.DLL,
SIWDLL.DLL, SIWDLL.DLL, SIWDLL.LIB,
SIWDLL32.DLL, SIWDLL32.DLL, SIWFMOD.EXE,
SIWGT16.DLL, SIWGT32.DLL, SIWPIPL.EXE,
SIWUNZIP.DLL, SIWUNZIP.DLL, SIWVWR.EXE,
SIWVWR.EXE, SIWWIZ16.LIB, SIWZIP.DLL,
SIWZIP.DLL, SUNZIP16.DLL, SYMNAV7.LIB,
TKSIW16.DLL, TKSIW16.DLL, TKSIW32.DLL,
TKSIW32.DLL, _SYMINST.EXE, _SYMINST.PIF,
_SYMSHEL.EXE
</TABLE>
13
<PAGE> 50
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
2.4 Components from Symantec shared technology that are used by
Big Bang
<TABLE>
<CAPTION>
PROJECT DESCRIPTION TARGETS
<S> <C> <C>
EBEXT Network, mail, and other extensions to SYMWNET7.SBL, SYMWEXT7.SBL, SYMCNST7.SBL,
Summit Basic. SYMWNET7.LIB, SYMWEXT7.LIB, SYMPUB7.LIB,
SYMCNST7.LIB, SYMWNET7.SBH, SYMWEXT7.SBH,
SYMCNST7.SBH
EMS Enhanced Menuing System SYMEMS40.DLL, SYMEMS4D.DLL
Symantec Basic The macro recorder used with Symantec SBRECORD.EXE
Recorder Basic.
Symantec Files that are in the Symantec SETUP.EXE, SFTTR32.DLL, SIWDLL32.DLL,
Installer Installer set. SIWFMOD.EXE, SIWGT16.DLL, SIWGT32.DLL,
SIWPIPL.EXE, SIWPIPL.EXE, SUNZIP32.DLL, ,
TKKNF160.DLL, TKKNF320.DLL, _SYMSHEL.EXE
</TABLE>
14
<PAGE> 51
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
3. Selected projects from Quake library, selected projects from Core
library
3.1 Quake projects that are used by NAN 2.55 and NDA 1.02
<TABLE>
<CAPTION>
PROJECT DESCRIPTION TARGETS
<S> <C> <C>
[ROOT] Files necessary to do development builds. None
DESKEDIT Symantec basic editor SBEDIT.EXE
DOCS System documentation. None
DOSCRT0 DOS C-runtime interface. DOSCRT0.LIB
DOSDLG DOS dialog library. DOSDLG.LIB
DOSDRVWN DOS drive window library. DOSDRVWN.LIB
DOSIO DOS I/O routines. DOSIO.LIB
DOSNET DOS network library. DOSNET.LIB
DOSTOOL DOS utility library. DOSTOOL.LIB
DOSUI DOS UI library. DOSUI.LIB
DOSVMM DOS memory management library. DOSVMM.LIB
DRAGDROP Drag and drop interface DLL. DRAGDRP7.DLL
GEOLGIST Documentation for Quake None
INC Project wide include files. None
INCLUDE Project wide include files. None
LOADER Memory swapping DOS loader. LOADER.LIB
NOBUILDS Various files that are included in the
project that don't get built.
NPT Print library. NPT7.DLL
OS2VMM OS/2 memory manager library. OS2VMM.LIB
PARSWAP DOS Memory swapping loader. SWAPPER.EXE
STRINGS Localizable resources. STRINGS.LIB
SYMCHART Wrapped up Quinn-Curtis charting code. SYMCHRT7.DLL
SYMCRC CRC routines. SYMCRC7.LIB
SYMDB Database without Trio C-Index. SYMDB7.DLL
SYMGUI GUI routines. SYMGUI7.DLL
SYMMAIL Mail system interface routines. SYMMAIL7.DLL
SYMNET Network routines. SYMNET7.DLL, NDS.DLL, SYMBV47.DLL,
SYMLM27.DLL, SYMNDS7.DLL, SYMNSM7.DLL,
</TABLE>
15
<PAGE> 52
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
<TABLE>
<S> <C> <C>
SYMUTIL Utility routines. SYMNW37.DLL SYMNW47.DLL, SYMNW37O.DLL,
SYMLM27O.DLL, SYMNSM7.DLL
SYMUTIL7.DLL
SYMVWR Viewer (database and other). NVIEWER.EXE
SYMVWR7.DLL, SYMSCAL7.PRS, SYMPROG7.PRS,
SYMNDB7.PRS, SYMHEX7.PRS, SYMDOC7.PRS,
SYMBMP7.PRS, SYMBM7.DSP, SYMHXD7.DSP,
SYMSS7.DSP, SYMTXT7.DSP
TREASURE Utility routines used by other parts of TREASURE.LIB
Quake.
</TABLE>
16
<PAGE> 53
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
3.2 Core projects that are used by Big Bang
<TABLE>
<CAPTION>
PROJECT DESCRIPTION TARGETS
<S> <C> <C>
[ROOT] Files necessary to do development builds None
DEVNODE Device node library DEVNODE.LIB
DOCS Core system documents None
DOSCRT0 DOS C-runtime interface. DOSCRT0.LIB
DOSIO DOS I/O routines. DOSIO.LIB
DOSTOOL DOS utility library. DOSTOOL.LIB
DOSUI DOS UI library. DOSUI.LIB
DOSVMM DOS memory management library. DOSVMM.LIB
DRAGDROP Drag and drop interface DLL. S32DGDPJ.DLL
EDITAPI Registry editing routines. S32EDAPJ.DLL
EDITPAGE Registry editing routines. S32EDPGJ.DLL
GEOLGIST Core system documents None
INC Project include files. None
INC.DEV Project include files. None
INCLUDE Project include files. None
INFODESK.DLL Help system. INFODESK.DLL
INFODESK.HLP Help files for help system. HLP files.
NOBUILDS Various files that are included in the
project that don't get built.
NPT Printing library. S32NPTJ.DLL
OS2VMM OS/2 memory manager. OS2VMM.LIB
PARSWAP DOS memory swapping loader. PARSWAP.EXE
SDL System detection library. SLD32.DLL, SDLTHK32.DLL, SDL16.DLL,
SDLTK16.DLL
SDLBENCH System detection library benchmark code. SDLBM32.DLL, SDLBMMB.VXD,
SDLBM16.DLL,
SDLDUMP System detection library test framework. SDLDMP16.EXE, SDLDMP32.EXE
SDLVXD System detection library. SDLVXD.VXD
STRINGS Localizable resources. STRINGS.LIB
SYMCRC CRC routines. SYMCRCJ.LIB
SYMDB Database without Trio C-Index. S32DBJ.LIB
</TABLE>
17
<PAGE> 54
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
<TABLE>
<S> <C> <C>
SYMEVNT.QA Event notification test routines. None
SYMGUI GUI routines. S32GUIJ.DLL
SYMKRLIB SYMKRNL as a static library. S32KRLIB.LIB
SYMLEAN Subset of MFC classes (i.e. Cstring). IRALEAN.LIB
SYMNET Networking libraries. LOCALGRP.EXE, NETTST32.EXE,
S32NETJ.DLL, S32NSMJ.DLL S32XPCJ.DLL,
NETTST16.EXE, SYMXPCJ.EXE
SYMBV4J.DLL, SYMLM2J.DLL,
SYMNETJ.DLL, SYMNSMJ.DLL SYMNW3J.DLL,
SYMNW4J.DLL
SYMNETQA.W16 Networking library test application. SYMNETQA.EXE
SYMNETQA.W32 Networking library test application. SYMNETQA.EXE
SYMNSO Network object display routines. S32NSOJ.DLL
SYMUTIL Utility library. S32UTILJ.DLL
SYMVWR Viewers (database and other). NVIEW32.EXE, S32VWRJ.DLL, S32BMJ.DSP,
S32NXDJ.DSP, S32SSJ.DSP, S32TXTJ.DSP,
S32BMPJ.PRS, S32DOCJ.PRS,
S32GIFJ.PRS, S32HEXJ.PRS,
S32PROGJ.PRS
</TABLE>
18
<PAGE> 55
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
Schedule2
SYMEVNT limited source license to HP
Schedule 2 Licensed Software
4. Limited use Core projects used by Big Bang
<TABLE>
<CAPTION>
PROJECTS DESCRIPTION TARGETS
<S> <C> <C>
SYMEVNT for the NT Event notification for the NT platform. N32EVENT.DLL, NANEVENT.DLL,
platform NANEVENT.SYS
NANEVNT NANEVNT is the SYMEVNT project for the Windows N32EVENT.DLL, N32EVENT.VXD,
95 platform customized to remove only the file NANEVENT.DLL
system and device management events.
</TABLE>
19
<PAGE> 56
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
Schedule 3
TAOSKRNL limited source license to HP
Schedule 3 Licensed Software
1. Limited use Quake projects used by NAN 2.55 and NDA 1.02
<TABLE>
<CAPTION>
PROJECT DESCRIPTION TARGETS
<S> <C> <C>
TAOSKRNL Substitute kernel routines for SYMKRNL. SYMKRNL7.DLL
</TABLE>
2. Limited use Core projects used by Big Bang
<TABLE>
<CAPTION>
PROJECTS DESCRIPTION TARGETS
<S> <C> <C>
TAOSKRNL Substitute kernel routines for SYMKRNL. S32KRNLI.DLL, SYMKRNL.DLL
</TABLE>
20
<PAGE> 57
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
Schedule 4
SYMKRNL limited source license to HP
Schedule 4 Licensed Software
1. Limited use Quake projects used by NAN 2.55 and NDA 1.02
<TABLE>
<CAPTION>
PROJECT DESCRIPTION TARGETS
<S> <C> <C>
SYMKRNL Kernel routines. SYMKRNL7.DLL
</TABLE>
2. Limited use Core projects used by Big Bang
<TABLE>
<CAPTION>
PROJECTS DESCRIPTION TARGETS
<S> <C> <C>
SYMKRNL Kernel routines. S32KRNLJ.DLL
</TABLE>
21
<PAGE> 58
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
Schedule 5
Symantec tools limited source license to HP
Schedule 5 Licensed Software
1. STS (Software Tracking System)
2. SBS (The Build system)
3. Enterprise Lab Test Tools
4. Build system projects as follows:
<TABLE>
<CAPTION>
PROJECT DESCRIPTION TARGET
<S> <C> <C>
NETNAME.DOS Lab utilities None
NETNAME.W16 Lab utilities None
</TABLE>
22
<PAGE> 59
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
Schedule 6
Symantec tools limited object license to HP
Schedule 6 Licensed Software
1. Symantec Cafe
2. Symantec C++
3. Think Pascal
23
<PAGE> 60
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
Schedule 7
Distribution technology limited source license to Symantec
For current products
<TABLE>
<CAPTION>
LISTED SOFTWARE ASSOCIATED PRODUCTS ASSOCIATED LIMITED PURPOSE
<S> <C> <C>
# NAN 2.5 Console and NEF Your Eyes Only Administrator # distributing and administering YEOA
2.5 framework. (YEOA) (PC version) and PCA clients
PC Anywhere (PCA) (PC
version)
LISTED SOFTWARE ASSOCIATED PRODUCTS ASSOCIATED LIMITED PURPOSE
# NAN 2.5 software Your Eyes Only Administrator # distributing and administering YEOA
distribution, limited to (YEOA) (PC version) and PCA clients
prevent end-user direct PC Anywhere (PCA) (PC
creation of new version)
distribution jobs and
end-user direct
modification of existing
distribution jobs other
than that allowed by the
current version (known as
"NAN-Lite").
</TABLE>
<TABLE>
<CAPTION>
LISTED SOFTWARE ASSOCIATED PRODUCTS ASSOCIATED LIMITED PURPOSE
<S> <C> <C>
# SNIM (Symantec Network Your Eyes Only Administrator # distribution of YEOA (Macintosh) and
Installer for Macintosh). (YEOA) (Macintosh version) SAM (Macintosh) clients.
Symantec Anti-Virus (SAM)
(Macintosh version)
</TABLE>
For future products
<TABLE>
<CAPTION>
LISTED SOFTWARE ASSOCIATED PRODUCTS ASSOCIATED LIMITED PURPOSE
<S> <C> <C>
build system project Any security, anti-virus or Any.
NALERT32 cost-of-ownership product.
</TABLE>
24
<PAGE> 61
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
<TABLE>
<S> <C> <C>
source files
APAGER.C
AIOCOMM.C
NPAGER.C
Associated include files.
</TABLE>
25
<PAGE> 62
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
Schedule 8
Product technology limited object license to Symantec
<TABLE>
<CAPTION>
LISTED SOFTWARE ASSOCIATED PRODUCTS ASSOCIATED LIMITED PURPOSE
<S> <C> <C>
# NAN 1.0 Console #Norton Utilities # allowing Symantec resellers to sell remaining
and NEF 1.0 Administrator copies of NUA (current inventory only).
framework.
</TABLE>
26
<PAGE> 63
HP AND SYMANTEC CONFIDENTIAL ASSET PURCHASE AGREEMENT - EXHIBIT D
MARCH 26, 1997
Schedule 9
Product technology limited end user license to Symantec
Schedule 9 Licensed Software
1. Expose (version 3.52)
2. Expose (version 4.0)
3. NAN (version 2.55)
4. NAN (Big Bang release version)
5. NDA (version 1.02)
6. NDA (Big Bang release version)
27
<PAGE> 64
ASSET PURCHASE AGREEMENT
AMENDMENT NO. 1
This Amendment No. 1 (the "Amendment") to the Asset Purchase Agreement
dated March 27, 1997 (the "Agreement") is entered into and made effective this
24th day of April, 1997 by and between Hewlett-Packard Company, a California
corporation ("HP"), and Symantec Corporation, a Delaware corporation
("Symantec"). Terms not defined herein shall have the meanings ascribed to
them in the Agreement.
RECITAL
WHEREAS, HP and Symantec executed and delivered the Agreement and now
desire to amend the Agreement to clarify certain of its terms and to add certain
additional matters not previously provided for in the Agreement.
NOW THEREFORE, intending to be bound, in consideration for good and
valuable consideration, the receipt and sufficiency of which is hereby mutually
acknowledged, HP and Symantec agree as follows:
1. AMENDMENT TO SECTION 7.4. Section 7.4 Is hereby amended and restated in
its entirety as follows:
*Section 7.4 Special License Grant.
(a) From time to time and at HP's sole discretion, HP shall sell at a price of
$0.01 per build a portion of the NAN and NDA Products (the "Source") to Symantec
for the purpose of incorporating in the Source an appropriate database with the
same or superior functionality to C-Index/II. As soon as reasonably practicable,
Symantec shall, using its computers and related equipment, complete the
incorporation of such database into the Source (the "Completed Builds") and
shall sell at a price of $0.01 per build such Completed Builds to HP.
Thereafter, HP may dispose of such Completed Builds at its sole discretion. HP
acknowledges that Symantec may need certain software tools and compilers which
are currently owned or licensed by HP in order to produce the Completed Builds.
HP will pay Symantec $1,000 as a fully-paid up license for the final Completed
Build. In that regard, upon reasonable requests by Symantec and pursuant to any
rights that HP may have, HP agrees to license such tools to Symantec. In
addition, HP agrees to license to Symantec all necessary equipment for Symantec
to produce the Completed Builds at a fee to be negotiated in good faith
following the Closing.
(b) HP and Symantec will mutually agree on the appointment of one or more
persons, who shall not be employees of HP, to perform consulting services to
produce the Completed Builds.
(c) HP will develop and release software containing all or any part of the
Products in which C-Index/II has been replaced with another database (the "New
Database Software") as quickly as is
<PAGE> 65
commercially reasonable. HP acknowledges that it would have replaced this
database in any event, but would not have engaged in such development prior to
the release of the next release of NAS (the "Next Release"), but for the
commitment hereunder.
(d) HP may set-off that portion of its expenses (which are directly attributed
to the parallel development of the New Database Software prior to the initial
release of the Next Release) for the development of the New Database Software
(the "Development Expenses"), that HP would not have otherwise incurred, but
for its obligations to accelerate development under subsection 7.4(c) above,
against the Purchase Price pursuant to Section 10.7 hereof. Notwithstanding the
foregoing, HP's right to set-off the Development Expenses will terminate at such
time as (i) Symantec has developed and delivered to HP a version of the Next
Release that does not contain C-Index/II or (ii) Symantec has provided to HP a
license to use C-Index/II in substantially the form attached hereto as Exhibit A
(the "New C-Index License"). Such development expenses may include charges on or
after May 5, 1997 of up to $100,000 for the cost of a new database.
(e) Symantec, hereby grants to HP any and all rights that Symantec may obtain at
a future date under the New C-Index License with respect to the Products.
Each of HP and Symantec agree to use its reasonable best efforts to
incorporate and expand upon the provisions set forth above in a mutually
satisfactory agreement to be executed within four weeks following the Closing
Date; provided, that, in the event that, for whatever reason, the parties are
unable to timely or otherwise execute such a definitive agreement, paragraphs
(a) through (e) above shall be enforced in accordance with their terms.
Notwithstanding anything herein to the contrary, HP may, at any time and in its
sole discretion, terminate the provisions set forth in Sections 7.4(a) and (b).
2. AMENDMENT TO SECTION 10.3.
(a) The first sentence of Section 10.3(a) is hereby amended and
replaced in its entirety as follows:
"Except for Losses and Expenses related to Trio, the liabilities and obligations
of Symantec arising under this Article 10 shall commence only following the
incidence of Losses and Expenses aggregating $150,000, following which all
claims starting from the first dollar shall be recoverable as provided in this
Agreement."
(b) The first sentence of Section 10.3(b) is hereby amended and
replaced in its entirety as follows:
"The liabilities and obligations of HP and any HP Group Member arising under
this Article 10 shall commence only following the incidence of Losses and
Expenses (incurred by any and all Indemnified Parties) aggregating $150,000,
following which all claims starting from the first dollar shall be recoverable
as provided in this Agreement."
<PAGE> 66
3. AMENDMENT TO SECTION 10.7. The first sentence of Section 10.7 of the
Agreement is hereby amended and replaced in its entirety with the following:
"HP shall be entitled to set-off the amount of any claim reasonably submitted in
good faith under Section 10.1 as a Loss and/or Expense or by way of
indemnification against any other amounts payable by HP to Symantec whether
under this Agreement or otherwise as HP's sole monetary remedy."
4. AMENDMENT TO EXHIBIT A-2. Any and all agreements among Trio Systems,
LLC and Symantec are hereby removed from the list of "Transferred Agreements"
under Exhibit A-2 of the Agreement.
5. GENERAL. The General Provisions of Article 12 of the Agreement are
hereby incorporated into and deemed applicable to this Amendment. Subject to the
foregoing amendments and restatements, the Agreement remains in full force and
effect. Each of HP and Symantec hereby agree that the terms and conditions of
this Amendment shall remain confidential and shall not be disclosed to any third
party, whether a governmental entity, pursuant to a legal proceeding or
otherwise, without the written consent of the other party, unless such
disclosure is required by law.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on the date first written above.
"HP"
HEWLETT-PACKARD COMPANY,
a California corporation
By: /s/ JOHN EATON
---------------------------------
Name: JOHN EATON
--------------------------------
Title: BUSINESS DEV. MGR.
--------------------------------
"Symantec"
SYMANTEC CORPORATION,
a Delaware corporation
By: /s/ DEREK WITTE
---------------------------------
Name: DEREK WITTE
---------------------------------
Title:
---------------------------------
<PAGE> 1
EXHIBIT 11.01
SYMANTEC CORPORATION
COMPUTATION OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------------
(In thousands, except per share data) 1997 1996 1995
- ----------------------------------------------- ------- -------- --------
<S> <C> <C> <C>
PRIMARY NET INCOME (LOSS) PER SHARE
Net income (loss) $26,038 $(39,783) $ 33,409
Interest on assumed repayment of short-term
and long-term borrowings and investment
in U.S. government securities, net of
income tax effect -- -- 468
------- -------- --------
Net income (loss), as adjusted $26,038 $(39,783) $ 33,877
======= ======== ========
Weighted average number of common
shares outstanding during the period 54,705 52,664 49,338
Shares issuable from assumed exercise
of options 702 -- 9,606
Shares assumed repurchased with proceeds,
limited to 20% of total shares outstanding -- -- (6,763)
------- -------- --------
Common and common stock equivalent
shares outstanding for purpose of
calculating primary net income (loss)
per share 55,407 52,664 52,181
======= ======== ========
Primary net income (loss) per share $ 0.47 $ (0.76) $ 0.65
======= ======== ========
FULLY DILUTED NET INCOME (LOSS) PER SHARE
Net income (loss) $26,038 $(39,783) $ 33,409
Interest on assumed conversion of convertible
subordinated debentures, and assumed
repayment of short-term and long-term
borrowings and investment in U.S.
government securities, net of income
tax effect -- -- 1,246
------- -------- --------
Net income (loss), as adjusted $26,038 $(39,783) $ 34,655
======= ======== ========
Weighted average number of common
shares outstanding during the period 54,705 52,664 49,338
Shares issuable from assumed exercise
of options 1,136 -- 10,031
Shares issuable from assumed conversion
of convertible subordinated debentures -- -- 2,083
Shares assumed repurchased with proceeds,
limited to 20% of total shares outstanding -- -- (4,961)
------- -------- --------
Total shares for purpose of calculating
fully diluted net income (loss) per share 55,841 52,664 56,491
======= ======== ========
Fully diluted net income (loss) per share $ 0.47 $ (0.76) $ 0.61
======= ======== ========
</TABLE>
<PAGE> 1
EXHIBIT 21.01
SYMANTEC CORPORATION
SUBSIDIARIES OF SYMANTEC
<TABLE>
<CAPTION>
Name of Subsidiary State or Country of Incorporation
- ------------------ ---------------------------------
<S> <C>
AntiVirus Update (AVU) GmbH Germany
Central Point Software, Inc.
("Central Point") Delaware, USA
Delrina Corporation (Canada) Canada
Delrina (Boston) Corporation Massachusetts, USA
Delrina (Canada) Corporation Canada
Delrina (Delaware) Corporation Delaware, USA
Delrina (Germany) GmbH Germany
Delrina (Seattle) Corporation Washington, USA
Delrina (UK) Corporation Limited United Kingdom
Delrina (US) Corporation Delaware, USA
Delrina (Washington) Corporation Washington, USA
Delrina (Wyoming) Limited Liability Company Wyoming, USA
Delrina International Corporation (Barbados) Barbados
Fifth Generation Systems GmbH Germany
Fifth Generation Systems PTE Ltd. (Singapore) Singapore
1087013 Ontario Limited Canada
Sym (UK) Holding, Ltd. United Kingdom
Symantec (Deutschland) GmbH Germany
Symantec (Japan) KK (formerly Fifth
Generation Systems KK) Japan
Symantec (UK) Ltd. ("Symantec UK") United Kingdom
Symantec Australia Pty. Ltd. Australia
Symantec EURL (France) France
Symantec Financing B.V. (Netherlands) Netherlands
Symantec Foreign Sales Corporation (Barbados) Barbados
Symantec Hong Kong Ltd. (formerly FGS
Hong Kong Ltd.) Hong Kong
Symantec Korea Ltd. Korea
Symantec Limited (Ireland) Ireland
Symantec SRL (Italy) Italy
Zortech (UK) Ltd. United Kingdom
Zortech Limited ("Zortech") United Kingdom
</TABLE>
<PAGE> 1
EXHIBIT 23.01
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-31444, 33-32065, 33-33654, 33-37066, 33-42440, 33-44203,
33-46927, 33-51612, 33-54396, 33-55300, 33-64290, 33-70558, 33-80360, 33-88694,
33-60141, 33-64507, 333-07223, 333-18353, 333-18355 and Form S-3 Nos. 33-82012
and 33-63513) of our report dated April 25, 1997 (except for paragraph 6 of Note
11, as to which the date is May 13, 1997), with respect to the consolidated
financial statements and schedule of Symantec Corporation included in this
Annual Report (Form 10-K) for the year ended March 31, 1997.
ERNST & YOUNG LLP
San Jose, California
June 20, 1997
<PAGE> 1
EXHIBIT 23.02
CONSENT OF PRICE WATERHOUSE, INDEPENDENT AUDITORS
June 20, 1996
The Board of Directors
Symantec Corporation:
We consent to incorporation by reference in the registration statements (No.
33-31444, No. 33-32065, No. 33-33654, No. 33-37066, No. 33-42440, No.
33-44203, No. 33-46927, No. 33-51612, No. 33-54396, No. 33-55300, No.
33-64290, No. 33-70558, No. 33-80360, No. 33-88694, No. 33-60141, No.
33-64507, No. 333-07223, No. 333-18353 and No. 333-18355) on Form S-8 and the
registration statements on Form S-3 (No. 33-82012 and No. 33-63513) filed by
Symantec Corporation of our report dated August 8, 1995, relating to the
balance sheet of Delrina Corporation as of June 30, 1995, and the related
consolidated statements of operations, retained earnings (deficit) and
changes in financial position for the years ended June 30, 1995 and 1994
which appears in the Fiscal 1997 Form 10-K of Symantec Corporation and the
Form S-8 of Symantec Corporation filed on or about June 26, 1997.
PRICE WATERHOUSE
Chartered Accountants
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-28-1997
<PERIOD-START> MAR-30-1996
<PERIOD-END> MAR-28-1997
<EXCHANGE-RATE> 1
<CASH> 95,758
<SECURITIES> 64,324
<RECEIVABLES> 51,950
<ALLOWANCES> (4,300)
<INVENTORY> 4,476
<CURRENT-ASSETS> 238,197
<PP&E> 136,936
<DEPRECIATION> (85,326)
<TOTAL-ASSETS> 341,673
<CURRENT-LIABILITIES> 108,628
<BONDS> 15,066
0
0
<COMMON> 554
<OTHER-SE> 217,425
<TOTAL-LIABILITY-AND-EQUITY> 341,673
<SALES> 472,183
<TOTAL-REVENUES> 472,183
<CGS> 93,544
<TOTAL-COSTS> 93,544
<OTHER-EXPENSES> 352,350
<LOSS-PROVISION> 1,599
<INTEREST-EXPENSE> 1,402
<INCOME-PRETAX> 30,378
<INCOME-TAX> 4,340
<INCOME-CONTINUING> 26,038
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,038
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.47
</TABLE>
