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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended July 30,1995
/ / 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 0-18225
CISCO SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
California 77-0059951
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
170 West Tasman Drive
San Jose, California 95134
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 526-4000
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
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None Nasdaq National Market
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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(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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
/ /
As of October 2, 1995, the approximate aggregate market value of voting stock
held by non-affiliates of the registrant was $16,746,720,000 (based upon the
closing price for shares of the Registrant's Common Stock as reported by the
National Market System of the National Association of Securities Dealers
Automated Quotation System on that date). Shares of Common Stock held by each
officer, director, and holder of 5% or more of the outstanding Common Stock have
been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
As of October 2, 1995, 273,931,124 shares of registrant's common stock were
outstanding.
Designated portions of the Cisco Systems, Inc. Proxy Statement for the 1995
Annual Meeting of Shareholders to be held on November 14, 1995, are incorporated
by reference into Part III of this Annual Report on Form 10-K where indicated.
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PART I
ITEM 1. BUSINESS
GENERAL
Cisco Systems, Inc. develops, manufactures, markets and supports
high-performance, multiprotocol internetworking systems that link geographically
dispersed local-area and wide-area networks (LANs and WANs) to form a single,
seamless information infrastructure. Cisco products include a wide range of
routers, LAN and Asynchronous Transfer Mode (ATM) switches, dial-up access
servers, and network management software solutions. The common thread running
through these products is the Cisco Internetwork Operating System (Cisco
IOS(TM)) software, which today provides the native intelligence for more than
450,000 installed Cisco units and is an integral part of the products of more
than two dozen global partners.
When Cisco shipped its first commercial multiprotocol router in 1986, it created
a new part of the information technology industry - internetworking. Since then
the market has changed greatly, and Cisco has kept pace with that change. In
addition to enhancing its core business of routers, the Company has developed or
acquired technology and products in all major categories of internetworking,
including LAN switching, ATM, and network access for remote offices and mobile
workers, incorporating the Cisco IOS software across all product lines. These
changes have allowed Cisco to continue to grow at or above the rate of the
overall market and to maintain leading market share in all the segments in which
it participates.
The Cisco IOS software is a sophisticated suite of networking capabilities that
provides network connectivity, security and interoperability for all of today's
standard data protocols, media access methods and products from leading
Information Service vendors. This software resides at the heart of Cisco's
internetworking products and within the hardware of more than two dozen vendor
partners including Alcatel, Cabletron Systems, Compaq Computers, LanOptics, NEC,
Northern Telecom and Sun Microsystems. Cisco's modular hardware and software
architecture allows products to be configured in a wide variety of ways to suit
customers' specific needs.
The Company expanded the Cisco IOS feature set by moving aggressively into new
markets and technologies. These include a range of remote access products, as
well as switching products. In 1994 the Company introduced the CiscoFusion(TM)
architecture, which blends the capabilities of today's routed internetworks with
the emerging technologies of ATM, LAN workgroup switches and virtual LANs.
Cisco sells its products in approximately 75 countries through a combination of
direct sales, distributors, and direct and indirect resellers. Cisco's worldwide
Original Equipment Manufacturer (OEM) customers and resellers include Alcatel,
AT&T, British Telecom, Cabletron Systems, Digital Equipment Corporation,
Ericsson, Hewlett-Packard, MCI, NEC Corporation, Olivetti, Siemens, Sprint,
Unisys and US West. Cisco has established technology partnerships with a number
of companies to address specialized segments of the internetworking marketplace,
and has partnered with leading WAN technology and service providers to offer
flexible options to customers. The Company offers customer service and support
through Technical Assistance Centers in California, North Carolina, Australia
and Belgium, and provides onsite hardware maintenance on a worldwide basis
through IBM, AT&T, and Hewlett-Packard.
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Beginning in fiscal year 1994, Cisco began entering new markets and broadening
its product offerings through a series of acquisitions. The following
acquisitions have been, or soon will be, integrated into the ATM, Access, or
Workgroup business units, which are more fully described later in the "Products"
section of this report.
In September 1993, the Company acquired Crescendo Communications, Inc.
("Crescendo"), a privately held networking company that provides
high-performance workgroup solutions. The Company issued approximately 3,400,000
shares of common stock for all the outstanding stock of Crescendo in a
transaction accounted for as a pooling of interests. The Company also assumed
options and warrants to purchase Crescendo stock of which the options remain
outstanding to purchase approximately 280,000 shares of the Company's common
stock.
In August 1994, the Company purchased Newport Systems Solutions(TM), Inc.
("Newport"), a privately held networking company providing software-based
routers for remote network sites. The Company issued approximately 3,300,000
shares of common stock for all the outstanding stock of Newport in a transaction
also accounted for as a pooling of interests. In addition, the Company assumed
options to purchase Newport stock that remain outstanding as options to purchase
approximately 190,000 shares of the Company's common stock.
In December 1994, the Company acquired Kalpana(R), Inc. ("Kalpana"), a privately
held manufacturer of Ethernet switches. Under the terms of the agreement, the
Company issued approximately 6,800,000 shares of common stock for all the
outstanding stock of Kalpana in a transaction also accounted for as a pooling of
interests. In connection with this transaction, the Company assumed options to
purchase Kalpana stock that remain outstanding as options to purchase
approximately 500,000 shares of the Company's common stock.
In January 1995, the Company acquired substantially all of the assets and
assumed the liabilities of LightStream(R) Corporation ("LightStream") for
$120,000,000 in cash and related acquisition costs of approximately $500,000.
LightStream was a developer of enterprise-class ATM switching technology. This
acquisition was accounted for as a purchase.
In September 1995, the Company acquired Combinet Inc. ("Combinet"), a privately
held manufacturer of remote access networking products. The Company issued
approximately 1,750,000 shares of common stock for all the outstanding stock of
Combinet in a transaction also accounted for as a pooling of interests. In
addition, the Company assumed options and warrants to purchase Combinet stock
that remain outstanding as options to purchase approximately 250,000 shares of
the Company's common stock.
Additionally, in September 1995, the Company acquired Internet Junction, Inc., a
developer of Internet gateway software that connects desktop users with the
Internet. The Company issued 81,000 shares of stock for the net assets of
Internet Junction in a transaction accounted for as a purchase.
On September 27, 1995, the Company entered into an agreement to acquire Grand
Junction Networks, Inc., a privately held manufacturer and the inventor of Fast
Ethernet (100BaseT) and Ethernet desktop switching products. The agreement calls
for the Company to issue approximately 5,000,000 shares to acquire all the
equity of Grand Junction, including outstanding options and warrants. The
transaction is subject to several closing conditions and, if consummated, will
be accounted for as a pooling of interests.
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The Company expects to make future acquisitions where it believes that it can
acquire new products and channels of distribution or otherwise rapidly enter new
or emerging markets. Mergers and acquisitions of high-technology companies are
inherently risky, and no assurance can be given that the foregoing or any future
acquisitions will be successful and will not adversely affect the Company's
financial condition or results of operations.
Cisco was incorporated in California in December 1984. The Company's executive
offices are located at 170 West Tasman Drive, San Jose, California 95134, and
its telephone number at that location is (408)526-4000. As used in this Form
10-K, the terms "Cisco" and "the Company" refer to Cisco Systems, Inc., and its
subsidiaries.
PRODUCTS
Cisco's breadth of product offerings and modular system design enable the
Company to configure media interfaces, protocol software and port capacity to
match customer needs for networks of varying sizes and complexity. Many of the
Company's products, particularly its core products, are expandable, offering
customers the option to upgrade their internetworks with existing equipment as
their needs grow.
In May 1995, Cisco created five internal business units that reflect the
Company's major product groups. Each of the five business units - Core, ATM
Enterprise, Access, Workgroup and InterWorks - has its own marketing and
engineering staffs. The Cisco IOS software and network management products
support all five business units, serving as the foundation upon which Cisco's
internetworking solutions are built.
CORE
Cisco's core routing strength is provided by the Cisco 7000 family, which
includes the high-end Cisco 7500 series, the Cisco 7000 and the compact Cisco
7010. The Cisco 7000 family offers users connectivity to ATM networks,
channelized T1/E1 connections, mainframe attachment, and a unique
packet-switching architecture that easily handles the demands of large
internetworks running many diverse protocols and applications. With the March
1995 introduction of a new Fast Ethernet Interface Processor (FEIP), the Cisco
7000 became the industry's only router family to support all three of the key
high-bandwidth networking technologies on the market. The Cisco 7000 series has
supported 100-Mbps Fiber Distributed Data Interface (FDDI) since early 1993 and
155-Mbps ATM since June 1994.
ATM
ATM has gained wide acceptance by customers as the strategic technology of
choice for long-term networking decisions. Cisco Systems is the first
internetworking vendor to offer a complete, end-to-end ATM solution, including
enterprise ATM switches, workgroup/campus ATM switches, ATM interface cards for
internetwork routers and LAN switches, and ATM adapters for desktop systems and
servers. The LightStream 2020 enterprise ATM multiservice switch provides LAN
and WAN internetworking for campus environments or global networks. The
LightStream 100 workgroup/campus ATM switch supports up to 16 155-Mbps ATM
interfaces.
ACCESS
Cisco's access routers are designed to improve productivity by extending the
enterprise network beyond the boundaries of corporate headquarters to regional
sales groups, small satellite offices and individual telecommuters.
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The Cisco 4000 series delivers a high-performance, modular solution that can
expand to meet the needs of large offices and regional sites. The Cisco 2500
series is available in 13 models customized for the needs of small branch
offices. The Cisco 1000 series provides low-cost remote LAN attachment to
corporate networks or Internet services for small offices and home offices. The
AS5100 dial-up access server enables the large-scale deployment of telecommuting
over standard telephone lines, integrating routing and modem-based technologies.
All Cisco access products can be centrally configured and managed from
headquarters, reducing the need for internetworking expertise in the field.
WORKGROUP
Cisco's LAN switching products include the Catalyst(TM) and Kalpana families.
Cisco's Catalyst family of LAN switches link network resources with maximum
modularity, performance and flexibility in LAN switching, and include embedded
Cisco IOS functionality to meet future needs as switched internetworks evolve.
The newest member of the Catalyst family, the Catalyst 5000, delivers dedicated
bandwidth to users through multiple-media switching options such as 10-Mbps
Ethernet, 100-Mbps Ethernet, and ATM with future capability for switched FDDI
and switched Token Ring. The Kalpana EtherSwitch family is a high-performance
stackable switching platform. The Kalpana ProStack, also announced this year,
consists of the EtherSwitch Pro16 and ProStack Matrix, and allows users to
expand network capacity as bandwidth demands dictate. High-speed connectivity to
routers or other switches is achieved with Fast Ethernet and ATM modules. Switch
management is achieved through the CiscoWorks(TM) software, a comprehensive
suite of network management applications.
INTERWORKS
A major area of market opportunity is the integration of legacy networks built
around large-scale IBM computers and their networking framework called Systems
Network Architecture (SNA). To address this market, Cisco has a separate
business unit, InterWorks, which focuses on integrating the large number of
SNA-based computing environments with newer multiprotocol networks. Cisco has a
comprehensive suite of capabilities for this market, including TCP/IP
encapsulation of SNA data; integrated Synchronous Data Link Control (SDLC)
support; mixed-media bridging, translation and conversion; enhanced data link
switching; Frame Relay connectivity; Token Ring router interfaces and switching;
Advanced Peer-to-Peer Networking (APPN); and direct channel attachment of Cisco
7000 routers to IBM mainframes.
The CiscoWorks Blue network management support enables operators visibility into
and control over Cisco routers from either IBM NetView operator consoles or
Simple Network Management Protocol (SNMP) network management stations.
NETWORK MANAGEMENT
The CiscoWorks software is a suite of standards-based applications that allow
users to manage their Cisco devices from a single integrated console. CiscoWorks
software provides applications for internetworking products in three major
areas: monitoring and diagnostics; troubleshooting and administration tasks; and
a management series for implementation and change to administration tasks and
planning and optimization for offline analysis of network traffic patterns and
trends. CiscoWorks supports the HP OpenView, NetView AIX, SunNet Manager and
Microsoft Windows platforms.
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CUSTOMERS AND MARKETS
Cisco's customers include corporations of all sizes, utilities, educational and
research institutions, and government agencies. Internetworking needs are
influenced most strongly by the size and complexity of a customer's information
systems, and therefore Cisco's business is not concentrated in any particular
industry.
An important trend influencing demand for the Company's products is the
worldwide phenomenon of the Internet. The Internet is a network of networks,
consisting of thousands of subnetworks and computer resources linked together.
Cisco's high-performance routers are widely used in the "backbone"
infrastructure of the Internet, and the Company believes that 80 percent or more
of all routers on the Internet are its products. In addition, the demand by
companies, institutions and individuals for access to the Internet is spurring
demand for remote access, switching and routing products of all kinds. The
Company also benefits from the Internet phenomenon through its alliance
relationships with numerous Internet service providers.
Another significant factor affecting internetworking is the global trend toward
deregulated telecommunications and the resulting increase in use of
higher-performance telecommunications services. Cisco has alliance relationships
with a majority of the world's telecommunications carriers.
Cisco is the first U.S.-based manufacturer to receive self-certification
approval from the British Approvals Board for Telecommunications, which allows
Cisco to more quickly bring products to the European Union.
The Company markets its internetworking products in the United States primarily
through its direct sales force and resellers, and internationally, through
distributors, Value-Added Resellers ("VARs"), OEMs, resellers, and its direct
sales force in subsidiary companies. In addition, the Company sells to system
integrators, both domestic and international, who resell the Company's
internetworking products along with other computer and communications equipment.
This multiple-channel approach allows customers to select the one that addresses
their specific needs and provides the Company with broad coverage of worldwide
markets.
At September 25, 1994, the Company's worldwide direct sales organization
consisted of 1375 individuals, including managers, sales representatives, and
technical support personnel. The Company has approximately 69 field sales
offices providing coverage in the following metropolitan areas: Atlanta, Boston,
Chicago, Cincinnati, Cleveland, Dallas, Denver, Durham, Honolulu, Houston,
Indianapolis, Los Angeles, Miami, New Orleans, New York, Orlando, Phoenix,
Pittsburgh, Portland (Oregon), Princeton, Salt Lake City, San Antonio, San
Diego, San Francisco, San Jose, Seattle, St. Louis, and Washington, D.C., among
others.
The Company's international sales are currently being made through multiple
channels including approximately 75 international distributors and resellers in
Africa, Asia, Australia, Canada, Europe, Latin America, Mexico and South
America. The international distributors provide system installation, technical
support, and follow-on service to local customers. Generally, the Company's
international distributors have nonexclusive, country-wide agreements.
International sales through the various channels, including the Company's
subsidiaries, accounted for approximately 39.0% of total sales in fiscal 1993,
41.9% in fiscal 1994, and 42.4% in fiscal 1995. Sales to international customers
and distributors generally have been made in United States dollars.
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The Company has sales support subsidiaries worldwide. New subsidiaries formed in
fiscal 1995 include Brazil, Korea, South Africa, Sweden, Switzerland, and
Venezuela. No individual subsidiary has had direct sales that have been material
to date.
Patterns of both revenue growth and types of products sold are affected by
various conditions in geographic regions. As a general rule, adoption of
internetworking technology in Europe tends to be 1 to 2 years behind the United
States, while Japan follows another 1 to 2 years later. Less-developed economies
tend to lag even farther in technology adoption, although the Company has noted
a recent tendency in some newly opened Eastern European economies to leapfrog
intermediate technologies and purchase products with the most advanced
technology. In November 1994, Cisco announced a joint venture with 13 leading
Japanese technology companies to expand the internetworking market in Japan.
BACKLOG
The Company's backlog on September 24, 1995, was approximately $278,800,000
compared with an approximate backlog of $88,200,000 at September 25, 1994. The
Company includes in its backlog only orders confirmed with a purchase order for
products to be shipped within six months to customers with approved credit
status. Because of the generally short cycle between order and shipment, and
occasional customer changes in delivery schedules or cancellation of orders
(which are made without significant penalty), the Company does not believe that
its backlog as of any particular date is necessarily indicative of actual net
sales for any future period.
COMPETITION
The networking market is characterized by rapid growth, technological change,
and a convergence of technologies. These market factors represent both an
opportunity and at the same time a competitive threat to Cisco.
The Company faces competition from customers it licenses technology to and
suppliers that it transfers technology from. The inherent nature of networking
is such that Cisco must compete, and at the same time, co-operate with these
companies. At a minimum these relationships exist to achieve interoperability.
Optimally, these relationships are synergistic and mutually beneficial,
resulting in growth for the industry.
3Com, Alantec, Ascend, Bay Networks, Cabletron, Fore, IBM, and Shiva exemplify
companies that compete with Cisco. Some companies compete across all of Cisco's
product lines, while others do not offer as wide a breadth of networking
solutions.
Cisco estimates that it competes with over 70 vendors in Access, over 40 vendors
in Core, over 50 vendors in Workgroup, over 30 vendors in ATM, and over 40
vendors in InterWorks. Cisco expects that the overall number of vendors will
grow in these markets because of its attractive growth opportunities. The
Company also expects that overall increases to the number of competitors will be
partially offset by mergers and acquisitions, as companies seek synergies and
market presence.
Over the past year, the networking industry has experienced some consolidation.
This has primarily been achieved through mergers and acquisitions, and to a
lesser extent, through joint technology agreements. Remaining competitors are
broadening their product offerings and attempting to strengthen their positions
in emerging and high-growth markets including remote access, high-speed
switching, and ATM technologies.
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The principal competitive factors in the market for internetworking products are
performance, price, value-added features, reliability, conformance to industry
standards, service, and market presence. The Company promotes its CiscoFusion
architecture and Cisco IOS software as providing the premier internetworking
solutions in the industry. These solutions offer many competitive advantages in
the areas described above. Cisco believes that it will continue to provide
solutions that offer competitive advantages and exceed end-users' buying
criteria in the computer networking market.
RESEARCH AND DEVELOPMENT
The market for the Company's products is characterized by rapidly changing
technology, evolving industry standards, and frequent new product introductions.
Management believes that the Company's future success depends in large part upon
its ability to continue to enhance its existing products and to develop new
products that maintain technological competitiveness. The Company closely
monitors, through electronic mail and onsite visits by engineering personnel,
customers' needs for additional products, and works actively with innovators of
internetworking products, including universities, laboratories, and
corporations. The Company intends to remain dedicated to industry standards and
to continue to support important protocol standards as they emerge.
The Company is focusing development efforts around its five internal business
units in the following areas: high-speed switching and ATM technologies, remote
access and ISDN connectivity, improving overall system performance, expanding
its network management capabilities, and IBM and WAN services connectivity.
Cisco's development efforts continue to be guided by its CiscoFusion
architecture announced in 1994, with the Cisco IOS software serving as the
underlying common thread. There can be no assurance, however, that the Company's
product development efforts will result in commercially successful products, or
that the Company's products will not be rendered obsolete by changing technology
or new product announcements by others. The Company has announced several new
products, including a wide range of remote access products and a new line of
high-end routers. Although the Company has announced its expected shipment dates
for some of these products, schedules for high-technology products are
inherently difficult to predict, and there can be no assurance that the Company
will achieve its expected initial shipments dates of these or any other new or
enhanced products developed by the Company. Because timely availability of new
and enhanced products and their acceptance by customers are critical to the
success of the Company, delays in availability of these products or lack of
market acceptance of such products could have a material adverse effect on the
Company.
In fiscal 1995, 1994, and 1993, the Company's research and development
expenditures were $164,819,000, $88,753,000, and $44,254,000, respectively. All
of the Company's expenditures for research and development costs, including
purchased research and development of $95,760,000 in fiscal 1995, have been
expensed as incurred.
MANUFACTURING
The Company's manufacturing operations consist primarily of quality assurance of
materials, components and subassemblies, final assembly, and test. The Company
presently uses a variety of independent third-party contract assembly companies
to perform printed circuit board assembly, in circuit test, and product repair.
The Company installs its proprietary software on electronically programmable
memory chips installed in its systems in order to configure products to customer
needs and to maintain quality control and security. The manufacturing process
enables the
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Company to configure the hardware and software in unique combinations to meet a
wide variety of individual customer requirements. The Company uses automated
testing equipment and "burn-in" procedures, as well as comprehensive inspection,
testing, and statistical process control to assure the quality and reliability
of its products. The Company's manufacturing processes and procedures are ISO
9001 certified. To date, the Company has not experienced significant customer
returns of its products.
PATENTS, INTELLECTUAL PROPERTY AND LICENSING
The Company generally relies upon patents, copyright, trademark, and trade
secret laws to establish and maintain its proprietary rights in its technology
and products. However, it may be technologically possible for competitors to
reverse-engineer the Company's products. Because the internetworking industry is
characterized by rapid technological change, the Company believes that its
success is more dependent upon its expertise in internetworking than its
proprietary rights.
The Company has, from time to time, established strategic distribution and
technology transfer relationships with other companies involved in the computer
and communications industries. The Company intends to continue to explore
strategic relationships and expects to enter into other such relationships in
the future.
The Company has a program to file applications for and obtain patents in the
United States and in selected foreign countries where a potential market for the
Company's products exists. The Company has been issued several patents; other
patent applications are currently pending.
There can be no assurance that any of these patents would be upheld as valid if
litigated or that any patent applications will result in issued patents. While
the Company believes that its patents and applications have value, it also
believes that its competitive position depends primarily on the innovative
skills, technological expertise and management abilities of its employees.
Many of the Company's products are designed to include software or other
intellectual property licensed from third parties. From time to time, the
Company receives notices from third parties regarding patent claims. While it
may be necessary in the future to seek or renew licenses relating to various
aspects of its products, the Company believes that based upon past experience
and standard industry practice, such licenses generally could be obtained on
commercially reasonable terms.
Because of the existence of a large number of patents in the networking field
and the rapid rate of issuance of new patents, it is not economically practical
to determine in advance whether a product or any of its components infringe
patent rights of others. In the event of any infringement, the Company believes
that based upon industry practice, any necessary license or rights under such
patents may be obtained on terms that would not have a material adverse effect
on the Company's financial condition or its results of operations. However,
there can be no assurance in this regard.
OTHER RISK FACTORS
The Company's business and stock is subject to a number of risks. Some of those
risks are described below. Other risks are presented elsewhere in this report.
See, in particular, the last four paragraphs of "Item 7, Management's Discussion
and Analysis of Financial Condition and Results of Operations - Comparison of
1994 and 1995."
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Potential Fluctuations in Quarterly Results
The Company's operating results may be subject to quarterly fluctuations as a
result of a number of factors. These factors include the integration of people,
operations, and products from acquired businesses and technologies; increased
competition, which the company expects; the introductions and market acceptance
of new products, including high-speed switching and ATM technologies; variations
in sales channels, product costs, or mix of products sold; the timing of orders
and manufacturing lead times; and changes in general economic conditions, any of
which could have an adverse impact on operations and financial results. For
example, in the second quarter of fiscal 1995, the Company acquired
substantially all of the assets of LightStream and incurred an expense of
approximately $95 million associated with purchased research and development,
which resulted in net income being significantly lower than in the prior
quarter. Additionally, the dollar amount of large orders for the Company's
products have been increasing, and therefore the operating results for a quarter
could be materially adversely affected if a number of large orders are either
not received or are delayed, due for example, to cancellations, delays or
deferrals by customers. Further, the Company's expense levels are required, in
part, to generate future revenues. If revenue levels are below expectations,
operating results are likely to be adversely affected. Net income may be
disproportionately affected by a reduction in revenues because a proportionately
smaller amount of the Company's expenses varies with its revenues.
Dependence on New Product Development; Rapid Technological and Market Change
The markets for the Company's products are characterized by rapidly changing
technology, evolving industry standards, frequent new product introductions and
evolving methods of building and operating networks. The Company's operating
results will depend to a significant extent on its ability to continue to
successfully introduce new products on a timely basis and to reduce costs of
existing products. In particular, in August 1992, the Company broadened its
product line by introducing its first network access product. Since that time,
sales of these products, which are generally lower priced and carry lower
margins than the Company's core products, have increased more rapidly than sales
of the core products. In addition, in 1994, Cisco announced its CiscoFusion
architecture, that provides a method of merging router-based networks with
emerging technologies such as Asynchronous Transfer Mode and LAN switches. While
some elements of the CiscoFusion architecture have been introduced, others are
still in development. The success of these and other new products is dependent
on several factors, including proper new product definition, product cost,
timely completion and introduction of new products, differentiation of new
products from those of the Company's competitors and market acceptance of these
products. The Company has addressed the need to develop new products through its
internal development efforts and through joint developments with other companies
and through acquisitions. Acquisitions involve numerous risks, including
difficulties in the assimilation of the operations, technologies and products of
the acquired companies, the diversion of management's attention from other
business concerns, risks of entering markets in which the Company has no or
limited direct prior experience and where competitors in such markets have
stronger market positions, and the potential loss of key employees of the
acquired company. There can be no assurance that the Company will successfully
identify new product opportunities and develop and bring new products to market
in a timely manner, or that products or technologies developed by others will
not render the Company's products or technologies obsolete or noncompetitive.
The failure of the Company's new product development efforts could have a
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material adverse effect on the Company's business and results of operations.
Manufacturing Risks
Although the Company generally uses standard parts and components for its
products, certain components are presently available only from a single source
or limited sources. The Company has generally been able to obtain adequate
supplies of all components in a timely manner from existing sources, or where
necessary, from alternative sources of supply. A reduction or interruption in
supply or a significant increase in the price of one or more components would
adversely affect the Company's operating results and could damage customer
relationships. For example, recent shortages in the supply of semiconductors has
resulted in price increases and has limited the Company's ability to obtain
price reductions with respect to such components. These developments could
result in lower gross margins. The Company expects that it will continue to be
dependent on single or limited source supplier relationships in the future.
Volatility of Stock Price
The Company's Common Stock has experienced substantial price volatility,
particularly as a result of variations between the Company's actual or
anticipated financial results and the published expectations of analysts and as
a result of announcements by the Company and its competitors. In addition, the
stock market has experienced extreme price and volume fluctuations that have
affected the market price of many technology companies in particular and that
have often been unrelated to the operating performance of these companies. These
broad market fluctuations, as well as general economic and political conditions,
may adversely affect the market price of the Company's Common Stock.
EMPLOYEES
As of September 24, 1995, the Company employed 4086 persons, including 427 in
manufacturing, 1092 in domestic sales and marketing, 525 in customer service,
1016 in engineering, 405 in finance and administration, and 621 employees in
international locations. The Company also employs a number of temporary and
contract employees, and during fiscal 1995 the Company employed between 473 and
742 such people at any one time.
None of the employees is represented by a labor union, and the Company considers
its relations with its employees to be positive. The Company has experienced no
work stoppages.
Competition for technical personnel in the Company's industry is intense. To
date, the Company believes that it has been successful in recruiting qualified
employees, but there is no assurance that it will continue to be as successful
in the future. The Company believes that its future success depends in part on
its continued ability to hire, assimilate, and retain qualified personnel.
ITEM 2. PROPERTIES
The Company's principal corporate offices are located at sites in Santa Clara
and San Jose, California. The Santa Clara facilities are leased through December
1996 and have approximately 120,000 square feet of office space. The Company's
main headquarters are situated on 46 acres of leased land in San Jose,
California. Eight buildings are located at this site, one of which is the
Company's manufacturing facility. The San Jose headquarters consist of
approximately 825,000 square feet of leased office space at the
11
<PAGE> 12
present time. To meet its anticipated needs at its main headquarters, the
Company has leased an additional 36 acres of land at two nearby sites where it
will eventually lease facilities to be constructed on each site. Construction
has started at one of the sites on a series of office buildings which, when
completed, will have approximately 575,000 square feet. Occupancy is expected
to begin prior to the end of calendar 1996.
In addition to the California facilities, the Company leases approximately 45
acres of land in Research Triangle Park, North Carolina, where the InterWorks
Business Unit, as well as a Technical Assistance Center, telesales, and various
other support functions, are located. One building of approximately 80,000
square feet has been constructed and is currently occupied under a lease that
expires in July 1999. A 120,000-square-foot building at this location is
currently under construction and should be occupied before the end of the 1996
fiscal year. This site can accommodate one additional building.
The Company's ATM Business Unit occupies approximately 50,000 square feet of
leased office space in Billerica, Massachusetts.
The Company also leases various small offices throughout the U.S. and on a
worldwide basis. See Note 6 to the Consolidated Financial Statements for
additional information regarding the Company's obligations under leases.
Management believes that suitable additional space will be available to
accommodate expansion of the Company's operations on commercially reasonable
terms.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
EXECUTIVE OFFICERS AND DIRECTORS OF THE REGISTRANT
<TABLE>
<CAPTION>
POSITION
NAME AGE POSITION HELD SINCE
- ----------------------- --- ------------------------------------------------------- ----------
<S> <C> <C> <C>
Larry R. Carter 52 Vice President, Finance and Administration, Chief 1995
Financial Officer, and Secretary
Mr. Carter joined the Company in January 1995 in his
present position. From July 1992 to January 1995, he was
Vice President and Corporate Controller for Advanced
Micro Devices. Prior to that, he was with V.L.S.I.
Technology, Inc. for four years where he held the
position of Vice President, Finance and Chief Financial
Officer.
John T. Chambers 46 President, Chief Executive Officer and Director 1995
(1)(4)(5) Mr. Chambers has been a member of the Board of Directors
since November 1993. He joined the Company as Senior
Vice President in January 1991 and became Executive Vice
President in June 1994. Mr. Chambers became President
and Chief Executive Officer of the Company as of January
31, 1995. Prior to that, he was with Wang Laboratories
for eight years, most recently as Senior Vice President
of U.S. Operations.
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
POSITION
NAME AGE POSITION HELD SINCE
- ----------------------- --- ------------------------------------------------------- ----------
<S> <C> <C> <C>
Dr. Michael S. Frankel 49 Director 1992
(2)(3)(5) Dr. Frankel has been a member of the Board of Directors
since May 1992. He has been Vice President and Division
Director of SRI International since January 1989 and became
Center Director of SRI International in 1986.
Dr. James F. Gibbons 64 Director 1992
(2)(4)(5) Dr. Gibbons has been a member of the Board of Directors
since May 1992. He has been Dean of the Stanford
University School of Engineering since September 1984.
Dr. Gibbons also currently serves on the Board of
Directors of Lockheed Martin Corporation, Raychem
Corporation, Centigram Corporation, and El Paso Natural
Gas.
Edward R. Kozel 40 Vice President, Business Development, and Chief 1995
Technical Officer
Mr. Kozel joined the Company in March 1989 as Market
Development Manager. From 1992-1993 he was Director
of Field Operations/Business Development. In February
1993 he became Vice President of Business Development
and in May 1995 also became Chief Technical Officer.
Donald A. LeBeau 48 Senior Vice President, Worldwide Sales 1994
Mr. LeBeau joined the Company as Vice President of
North American Sales in July 1992 and became Senior
Vice President of Worldwide Sales in August 1994. From
May 1989 to July 1992, he was Vice President of Western
Operations at Wang Laboratories. From August 1985 to
May 1989 he was with United Research Company, most
recently as Senior Vice President.
Frank J. Marshall 48 Vice President and General Manager, Core Business Unit 1995
Mr. Marshall joined the Company as Vice President of
Engineering in April 1992 and became Vice President and
General Manager of the Core Business Unit in May 1995.
Prior to that, he was at Convex Computer Corporation
for 10 years, most recently as Senior Vice President of
Engineering.
John P. Morgridge 62 Chairman of the Board of Directors 1995
(1)(5) Mr. Morgridge joined the Company as President and Chief
Executive Officer and was elected to the Board of
Directors in October 1988. Mr. Morgridge became Chairman
of the Board on January 31, 1995. From 1986 to 1988 he
was President and Chief Operating Officer at GRiD
Systems, a manufacturer of laptop computer systems.
Robert L. Puette 53 Director 1991
(2)(3)(4) Mr. Puette has been a member of the Board of Directors
since January 1991. He has been President, Chief
Executive Officer and on the Board of Directors of
NetFRAME Systems, Inc. since January 1995. He was a
consultant from November 1993 to December 1994. Prior
to that, he was Senior Vice President of Apple
Computer, Inc. and President of Apple USA Division from
June 1990 to October 1993. Mr. Puette also currently
serves on the Board of Directors of Quality
Semiconductor.
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
POSITION
NAME AGE POSITION HELD SINCE
- ----------------------- --- ------------------------------------------------------- ----------
<S> <C> <C> <C>
Carl Redfield 48 Vice President, Manufacturing 1993
Mr. Redfield joined the Company in August 1993 as
Director, Supply/Demand of Manufacturing and became
Vice President of Manufacturing in September 1993.
Prior to joining Cisco, he spent eighteen years at
Digital Equipment Company, most recently as Group
Manufacturing and Logistics Manager of the PC Group.
Masayoshi Son 38 Director 1995
Mr. Son has been a member of the Board of Directors
since July 1995. He has been the President and Chief
Executive Officer of SOFTBANK Corporation for more than
fifteen years.
Donald T. Valentine 63 Vice Chairman of the Board of Directors 1995
(1)(5) Mr. Valentine has been a member of the Board of
Directors of the Company since December 1987, and was
elected Chairman of the Board of Directors in December
1988. He became Vice Chairman of the Board on January 31,
1995. He has been a general partner of Sequoia Capital, a
venture capital firm that was an investor in the Company,
since 1974. Mr. Valentine currently serves as Chairman
of the Board of Directors of C-Cube Microsystems, Inc., a
semiconductor video compression company, and
serves on the Board of Directors of Sierra
Semiconductor, Inc., a communications semiconductor
company.
</TABLE>
- -------
(1) Member of the Executive Committee
(2) Member of the Compensation/Stock Option Committee
(3) Member of the Audit Committee
(4) Member of the Nomination Committee
(5) Member of the Acquisition Committee
TRANSFER AGENT AND REGISTRAR INDEPENDENT ACCOUNTANTS
Bank of Boston Coopers & Lybrand L.L.P.
50 Royal Street Ten Almaden Boulevard
Canton, MA 92021 San Jose, CA 95113
LEGAL COUNSEL
Brobeck, Phleger & Harrison
2200 Geng Road
Palo Alto, CA 94303
14
<PAGE> 15
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
STOCK MARKET INFORMATION
Price range of the Company's common stock that reflects the two-for-one splits
effective March 1993 and March 1994:
<TABLE>
<CAPTION>
1995 1994 1993
High Low High Low High Low
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
First Quarter $ 30.00 $ 20.87 $ 29.37 $ 20.87 $ 14.78 $ 11.25
Second Quarter 36.62 30.12 35.37 24.75 23.12 14.62
Third Quarter 40.75 32.56 40.37 29.00 23.94 20.22
Fourth Quarter 58.62 39.37 32.50 19.06 28.12 20.19
</TABLE>
Cisco Systems' common stock (Nasdaq symbol CSCO) is traded on the Nasdaq
National Market. The table above reflects the range of high and low closing
prices for each period indicated. The Company has never paid cash dividends on
the common stock and has no present plans to do so. There were approximately
4917 shareholders of record on October 2, 1995.
ITEM 6. SELECTED FINANCIAL DATA
FIVE YEARS ENDED JULY 30, 1995
(In thousands, except per-share amounts)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales $1,978,916 $ 1,242,975 $ 649,035 $ 339,623 $183,184
========== =========== =========== =========== ========
Net income $ 421,008 $ 314,867 $ 171,955 $ 84,386 $ 43,189
========== =========== =========== =========== ========
Net income per common share $ 1.52 $ 1.19 $ .67 $ .33 $ .17
========== =========== =========== =========== ========
Shares used in per-share
calculation 277,298 265,051 258,133 254,072 250,320
========== =========== =========== =========== ========
Total assets $1,757,279 $ 1,053,694 $ 595,213 $ 323,933 $154,145
========== =========== =========== =========== ========
</TABLE>
15
<PAGE> 16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Comparison of 1994 and 1995:
Net sales grew from $1,243.0 million in 1994 to $1,978.9 million in 1995. The
59.2% increase in net sales during the year was primarily a result of increasing
unit sales of the Cisco 7010, the Cisco 7000, and the Cisco 2500 product family,
sales of new products including the Cisco 4500, as well as the initial market
acceptance of the Company's high-speed switching products. These increases were
partially offset by decreasing unit sales of the Company's older product lines,
comprising the AGS+ as well as the Cisco 2000 and Cisco 3000 product families.
Sales to international customers were 42.4% of net sales in 1995 compared with
41.9% in 1994. This moderate increase reflects the Company's continued expansion
into new geographic markets.
Gross margins increased from 66.8% of net sales in 1994 to 67.4% in 1995. Gross
margins have improved as a result of several factors, including lower material
costs achieved through volume and prompt payment discounts, certain
manufacturing overhead efficiencies, and a decrease in warranty expenses from
2.0% of net sales in 1994 to 1.5% in 1995. This was partially offset by the
continued shift in revenue mix to the Company's lower-margin remote access
products. In the future, the Company expects its gross margins to decrease,
because it believes that the market for lower-margin remote access and
high-speed switching products will continue to increase at a faster rate than
the market for the Company's higher- margin router products. The Company is
attempting to improve manufacturing efficiencies, but there can be no assurance
that it will be able to do so, or that any efficiencies attained will be
sufficient to maintain gross margins.
Research and development expenses increased $76.1 million from 1994 to 1995, an
increase from 7.1% of net sales in 1994 to 8.3% in 1995. The increase reflects
the Company's ongoing research and development efforts, including the further
development of its CiscoFusion architecture, as well as the acquisition of
technologies to bring a broad range of products to market in a timely fashion. A
significant portion of the increase was due to the addition of new personnel,
primarily from hiring and to a lesser extent through acquisitions, as well as
higher material costs for prototypes and depreciation on new equipment. All of
the Company's research and development costs are expensed as incurred. The
Company is primarily developing new technologies internally, and because of
this, research and development as a percentage of sales is expected to increase.
When appropriate, the Company may acquire other businesses or license technology
from other businesses as an alternative to internal research and development.
Sales and marketing expenses increased $148.9 million in 1995, an increase from
16.6% to 17.9% of net sales. The increase in these expenses resulted from an
increase in the size of the Company's direct sales force and its commissions,
additional marketing programs to support the launch of new products, the entry
into new markets both domestic and international, and expansion of distribution
channels.
General and administrative expenses rose $29.0 million from 1994 to 1995 which
represents an increase from 3.8% of net sales in 1994 to 3.9% in 1995. The
increase in these expenses reflects increased personnel costs, implementation of
the Company's new information system, and the amortization of goodwill since the
date of the acquisition of the assets and assumption of the liabilities of
LightStream (see note 2).
16
<PAGE> 17
The amount expensed to purchased research and development arose from the
acquisition of the assets and assumption of the liabilities of LightStream (see
note 2).
Interest and other income, net, was $21.4 million in 1994 and $36.1 million in
1995. Interest income rose as a result of additional investment income on the
Company's increasing investment balances.
During March 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," which requires the Company to review for impairment
long-lived assets, certain identifiable intangibles, and goodwill related to
those assets whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In certain situations, an
impairment loss would be recognized. Statement No. 121 will be effective for the
Company's fiscal year 1997. The Company has studied the implications of the
statement, and based on its initial evaluation, does not expect it to have a
material impact on the Company's financial condition or results of operations.
Future Growth Subject to Risks
The Company's growth is dependent upon market growth and its ability to enhance
its existing products and introduce new products on a timely basis. The Company
must also maintain its ability to manage any such growth effectively. In this
regard, in May 1995 the Company completed an internal reorganization, which it
believes will better enable it to address its markets. No assurance can be given
that this reorganization will achieve its objectives. Failure to manage growth
effectively could materially and adversely affect the Company's business and
operating results. The Company's growth and ability to meet customer demand also
depend, in part, on its ability to have stable supplies of parts from its
suppliers. Many of these parts, particularly semiconductor parts, may be in
short supply. An inability to obtain these parts could have a material and
adverse affect on the Company's growth.
The Company expects that in the future, its net sales will grow at a slower rate
than was experienced in previous periods and that on a quarter-to-quarter basis,
the Company's growth in net sales may be significantly lower than its historical
quarterly growth rate. The Company has been experiencing longer sales cycles for
its core products resulting from larger order sizes and believes that some
customers may be deferring purchases in order to complete detailed reviews of
their overall network plans. In addition, in response to customer demand, the
Company has, from time to time, reduced its product manufacturing lead times and
its backlog of orders. To the extent that backlog is reduced during any
particular period, it would result in more variability and less predictability
in the Company's quarter-to-quarter net sales and operating results.
The Company also expects that gross margins may be adversely affected by
increases in material or labor costs, heightened price competition, and by
changes in channels of distribution or in the mix of products sold. In
particular, the Company broadened its product line by introducing its first
network access product in August 1992. Since that time, sales of these products,
which are generally lower-priced and carry lower gross margins than the
Company's core products, have increased more rapidly than the sales of the core
products.
The Company also expects that its operating margins may decrease as it continues
to hire additional personnel and to increase other operating
17
<PAGE> 18
expenses to support its business. The results of operations for 1995 are not
necessarily indicative of results to be expected in future periods, and the
Company's operating results may be subject to quarterly fluctuations as a result
of a number of factors. These factors include the integration of people,
operations, and products from acquired businesses and technologies; increased
competition, which the Company expects; the introduction and market acceptance
of new products, including high-speed switching and ATM technologies; variations
in sales channels, product costs, or mix of products sold; the timing of orders
and manufacturing lead times; and changes in general economic conditions, any of
which could have an adverse impact on operations and financial results.
Comparison of 1993 and 1994:
Net sales grew from $649.0 million in 1993 to $1,243.0 million in 1994. The
91.5% increase in net sales during the year was primarily a result of increasing
unit sales of the Cisco 3000, the Cisco 4000, and the Cisco 7000, sales of new
products including the Cisco 2500 and the Cisco 7010, and growth in sales of
add-on boards, which provide increased functionality. Sales to international
customers were 41.9% of net sales in 1994, compared with 39.0% in 1993. This
increase reflects the Company's continued expansion into new geographic markets.
Gross margins decreased from 67.6% of net sales in 1993 to 66.8% in 1994. Gross
margins decreased as a result of the increasing unit sales of lower-margin
products, principally the Cisco 3000 and the Cisco 4000, and from the sales of
new products, primarily the Cisco 2500. Warranty expenses increased slightly
from 1.7% of net sales in 1993 to 2.0% in 1994, reflecting the new product
introductions. In the future, the Company expects its gross margins to decrease,
because the Company believes that the market for lower-margin remote access and
high-speed switching products will increase at a faster rate than the market for
the Company's higher-margin router products. Decreases could be partially
offset by various measures employed to lower the cost of raw materials
purchased.
Research and development expenses increased $44.5 million from 1993 to 1994,
primarily as a result of additions to engineering personnel, including Crescendo
Communications personnel, depreciation on new engineering equipment, material
costs for prototypes, and increased facilities expenses. These expenses
increased from 6.8% of net sales in 1993 to 7.1% in 1994. All of the Company's
research and development costs are expensed as incurred. The Company is
primarily developing new technologies internally, and because of this, research
and development as a percentage of sales is expected to increase. When
appropriate, the Company may acquire other businesses or license technology from
other businesses as an alternative to internal research and development.
Sales and marketing expenses increased $96.1 million in 1994 as a result of
increased marketing and sales personnel and support costs, including
commissions, in both the U.S. and the Company's international subsidiaries.
Sales and marketing expenses decreased slightly as a percentage of net sales,
from 16.9% in 1993 to 16.6% in 1994. However, management expects sales
expenditures to increase as a percentage of net sales as the Company penetrates
new markets.
General and administrative expenses rose $26.5 million from 1993 to 1994, which
represents an increase from 3.2% of net sales in 1993 to 3.8% in 1994. The
increase in these expenses was due primarily to increased personnel costs, legal
and tax fees as the Company expands internationally, costs associated with the
Crescendo acquisition, and charitable contributions.
18
<PAGE> 19
Interest and other income, net, was $11.6 million in 1993 and $21.4 million in
1994. Interest income rose as a result of additional investment income on the
Company's increasing investment balances.
International operating income as a percentage of net international sales
decreased from 4.8% in 1993 to 1.5% in 1994. International operating income
consists of net operating income of the Company's international subsidiaries,
which have various distribution arrangements with the Company. The decrease from
1993 to 1994, in percentage terms, can be attributed to a shifting mix of
intercompany arrangements and higher organizational expenditures associated with
expanding international operations through new and existing entities.
LIQUIDITY AND CAPITAL RESOURCES
Cash, short-term investments, and investments increased by $289.1 million from
1994 to 1995, primarily as a result of cash generated by operations, cash
received in connection with the exercise of employee stock options, and proceeds
received from minority shareholders in the Company's Japanese subsidiary (see
note 7). The increase was partially offset by the cash paid to acquire the
assets and assume the liabilities of LightStream (see note 2) and repurchases of
the Company's common stock.
Accounts receivable rose 61.7% from 1994 to 1995, while sales grew by 59.2%.
Days sales outstanding in receivables were 56 days at the end of the year,
versus 59 days at July 31, 1994. Inventories increased 155.1% from 1994 to 1995
because of production planning associated with higher sales levels. In addition,
inventory levels were unusually low at July 31, 1994 because of the planned
delay in raw material receipts to accommodate the manufacturing operations move
to the Company's new headquarters. As a result, inventory turnover decreased
from 16.1 turns at July 31, 1994 to 13.0 turns at July 30, 1995.
Accounts payable increased 42.6% from 1994 to 1995 because of increases in
capital expenditures, operating expenses, and material purchases to support the
growth in net sales. The 82.8% increase in accrued payroll and related expenses
is primarily a result of personnel additions made during the year. Other accrued
liabilities increased by 61.2% from 1994 to 1995, primarily because of increases
in the warranty accrual and deferred service contracts.
At July 30, 1995, the Company had a line of credit totaling $100.0 million,
which expires April 1998. There have been no borrowings under this agreement.
The Company has entered into certain lease arrangements in San Jose, California,
and Research Triangle Park, North Carolina, where it has established its
headquarters operations and certain research and development and customer
support activities. In connection with these transactions, the Company pledged
$173.1 million of its investments as collateral for certain obligations of the
leases. The restricted investments balance will continue to increase as the
Company phases in operations at these lease sites.
Under the Company's ongoing stock repurchase program, shares have been purchased
periodically and retired. During the year ended July 30, 1995, the Company
purchased and retired approximately 2.1 million shares for an aggregate price of
$69.9 million. As of July 30, 1995, the Company was authorized to repurchase up
to an additional 4.9 million shares of its common stock in the open market or
through privately negotiated transactions.
19
<PAGE> 20
The Company's management believes that its current cash and equivalents,
short-term investments, line of credit, and cash generated from operations will
satisfy its expected working capital and capital expenditure requirements
through 1996.
20
<PAGE> 21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CISCO SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
July 30, July 31,
1995 1994
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 204,846 $ 53,567
Short-term investments 234,681 129,219
Accounts receivable, net of allowance for doubtful
accounts of $13,305 in 1995 and $8,077 in 1994 384,242 237,570
Inventories 71,160 27,896
Deferred income taxes 75,297 46,739
Prepaid expenses and other current assets 25,743 12,686
---------- ----------
Total current assets 995,969 507,677
Investments 403,855 371,494
Restricted investments 173,073 85,900
Property and equipment, net 136,635 77,449
Other assets 47,747 11,174
---------- ----------
Total assets $1,757,279 $1,053,694
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 45,205 $ 31,708
Income taxes payable 71,583 42,958
Accrued payroll and related expenses 84,695 46,334
Other accrued liabilities 136,273 84,512
---------- ----------
Total current liabilities 337,756 205,512
Commitments (Note 6)
Minority interest 40,792
Shareholders' equity:
Preferred stock, no par value, 5,000 shares authorized:
none issued or outstanding in 1995 and 1994
Common stock, no par value, 320,000 shares authorized:
272,246 shares issued and outstanding in 1995 and
257,697 shares in 1994 362,292 227,835
Retained earnings 959,657 620,135
Unrealized gain on marketable securities 50,933
Cumulative translation adjustments 5,849 212
---------- ----------
Total shareholders' equity 1,378,731 848,182
---------- ----------
Total liabilities and shareholders' equity $1,757,279 $1,053,694
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE> 22
CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per-share amounts)
<TABLE>
<CAPTION>
Years Ended
---------------------------------------
July 30, July 31, July 25,
1995 1994 1993
---------- ---------- --------
<S> <C> <C> <C>
Net sales $1,978,916 $1,242,975 $649,035
Cost of sales 644,152 412,824 210,528
---------- ---------- --------
Gross margin 1,334,764 830,151 438,507
Expenses:
Research and development 164,819 88,753 44,254
Sales and marketing 354,722 205,797 109,717
General and administrative 76,524 47,485 20,965
Purchased research and development 95,760
---------- ---------- --------
Total operating expenses 691,825 342,035 174,936
---------- ---------- --------
Operating income 642,939 488,116 263,571
Interest and other income, net 36,107 21,377 11,557
---------- ---------- --------
Income before provision for income taxes 679,046 509,493 275,128
Provision for income taxes 258,038 194,626 103,173
---------- ---------- --------
Net income $ 421,008 $ 314,867 $171,955
========== ========== ========
Net income per common share $ 1.52 $ 1.19 $ .67
========== ========== ========
Shares used in per-share calculation 277,298 265,051 258,133
========== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE> 23
CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
Common Stock
----------------------
Unrealized Total
Number gain on Cumulative Share-
of Retained marketable translation holders'
Shares Amount Earnings securities adjustments Equity
------- -------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balances, July 26, 1992 240,444 $ 98,940 $146,168 $ 502 $ 245,610
Issuance of common stock
under stock option and
purchase plans 6,972 18,621 18,621
Tax benefits related to
disqualifying
dispositions of stock
options 39,622 39,622
Amortization of deferred
compensation resulting
from stock options
issued 296 296
Net income 171,955 171,955
Translation adjustments (923) (923)
------- -------- -------- -------- ------ ----------
Balances, July 25, 1993 247,416 157,479 318,123 (421) 475,181
Issuance of common stock
under stock option and
purchase plans 6,885 23,407 23,407
Tax benefits related to
disqualifying
dispositions of stock
options 35,654 35,654
Pooling-of-interests with
Crescendo
Communications, Inc. 3,396 11,295 (12,855) (1,560)
Net income 314,867 314,867
Translation adjustments 633 633
------- -------- -------- -------- ------ ----------
Balances, July 31, 1994 257,697 227,835 620,135 212 848,182
Issuance of common stock
under stock option
and purchase plans 6,560 47,401 47,401
Tax benefits related to
disqualifying
dispositions of
stock options 55,756 55,756
Common stock repurchases (2,094) (2,073) (67,808) (69,881)
Pooling-of-interests with
Newport Systems
Solutions, Inc. 3,262 6,805 1,603 8,408
Pooling-of-interests with
Kalpana, Inc. 6,821 26,568 (15,281) 11,287
Unrealized gain on
marketable securities $ 50,933 50,933
Net income 421,008 421,008
Translation adjustments 5,637 5,637
------- -------- -------- -------- ------ ----------
Balances, July 30, 1995 272,246 $362,292 $959,657 $ 50,933 $5,849 $1,378,731
======= ======== ======== ======== ====== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE> 24
CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Years Ended
---------------------------------------
July 30, July 31, July 25,
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 421,008 $ 314,867 $ 171,955
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 58,510 30,812 13,583
Provision for doubtful accounts 10,429 4,562 6,421
Provision for inventory allowances 42,482 14,608 3,900
Deferred income taxes (65,665) (30,715) (6,645)
Change in operating assets and liabilities:
Accounts receivable (154,324) (113,023) (74,272)
Inventories (85,662) (19,004) (18,258)
Prepaid expenses and other current
assets (13,040) (5,705) (2,005)
Accounts payable 12,186 6,964 8,482
Income taxes payable 84,381 60,816 42,310
Accrued payroll and related expenses 38,361 19,878 9,227
Other accrued liabilities 47,089 33,476 21,312
--------- --------- ---------
Total adjustments (25,253) 2,669 4,055
--------- --------- ---------
Net cash provided by operating
activities 395,755 317,536 176,010
Cash flows from investing activities:
Purchases of short-term investments (276,463) (135,186) (139,606)
Proceeds from sales of short-term investments 153,032 71,787 148,448
Maturities of short-term investments 89,147 46,753 71,753
Purchases of investments (277,239) (560,090) (280,563)
Proceeds from sales of investments 228,680 348,123 66,213
Purchases of restricted investments (160,396) (74,343) (70,800)
Proceeds from sales of restricted investments 55,619 52,341 31,900
Maturities of restricted investments 44,853
Acquisition of property and equipment (111,922) (59,589) (33,942)
Acquisition of business, net of cash acquired
and purchased research and development (17,920)
Other 4,428 (5,052) 181
--------- --------- ---------
Net cash used by investing activities (268,181) (315,256) (206,416)
--------- --------- ---------
Cash flows from financing activities:
Issuance of common stock 47,401 23,407 18,621
Common stock repurchases (69,881)
Proceeds from sale of subsidiary stock 40,548
Other 5,637 633 (923)
--------- --------- ---------
Net cash provided by financing
activities 23,705 24,040 17,698
--------- --------- ---------
Net increase (decrease) in cash and
equivalents 151,279 26,320 (12,708)
Cash and equivalents, beginning of period 53,567 27,247 39,955
--------- --------- ---------
Cash and equivalents, end of period $ 204,846 $ 53,567 $ 27,247
========= ========= =========
Non-cash investing and financing activities in fiscal year 1995:
Transfers of securities to restricted investments $27,249
Unrealized gain on marketable securities 82,689
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE> 25
CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except exercise prices and percentages)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year. The Company's fiscal year is the 52 or 53 weeks ending on the
last Sunday in July. The fiscal years ended July 30, 1995, July 31, 1994, and
July 25, 1993 comprised 52, 53, and 52 weeks, respectively.
Principles of Consolidation. The consolidated financial statements include
the accounts of Cisco Systems, Inc. and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Cash and Equivalents. The Company considers all highly liquid investments
purchased with a maturity of less than three months to be cash equivalents.
Substantially all of its cash and equivalents are maintained with two major
financial institutions.
Short-Term Investments. The Company's short-term investments comprise
U.S., state, and municipal government obligations, and foreign and corporate
obligations. These investments are carried at market value and have maximum
maturities of one year. Prior to adoption of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", in fiscal year 1995, the Company's short-term investments were
carried at cost, which approximated market value at July 31, 1994. Nearly all
short-term investments are held in the Company's name and maintained with one
large financial institution.
Inventories. Inventories are stated at the lower of cost or market. Cost
is computed using standard cost, which approximates actual cost on a first-in,
first-out basis.
Investments. Investments consist of U.S., state, and municipal government
obligations, foreign and corporate obligations, and corporate securities with
maturities of more than one year. These investments are carried at market value.
Prior to adoption of Statement No. 115 in fiscal year 1995, the Company's
investments were carried at cost, which approximated market value at July 31,
1994. Investments are held in the Company's name and maintained with one large
financial institution.
Restricted Investments. Restricted investments consist of U.S.
governmental obligations with maturities of more than one year. These
investments are carried at market value at July 30, 1995 and are restricted as
to withdrawal (see Note 6). Prior to adoption of Statement No. 115 in fiscal
year 1995, the Company's restricted investments were carried at cost, which
approximated market value at July 31, 1994. Restricted investments are held in
the Company's name and maintained with one large financial institution.
Revenue Recognition. The Company recognizes product revenue upon shipment
of product. Revenue from service obligations is deferred and recognized over the
lives of the contracts.
Depreciation and Amortization. Property and equipment are stated at cost
and depreciated on a straight-line basis over the estimated useful lives of the
assets. Such lives vary from two and one-half to five years.
25
<PAGE> 26
CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except exercise prices and percentages)
Income Taxes. The Company accounts for income taxes using the liability
method to calculate deferred income taxes. The realization of deferred tax
assets is based on historical tax positions and expectations about future
taxable income.
Computation of Net Income Per Common Share. Net income per common share is
computed using the weighted average number of common and dilutive common
equivalent shares outstanding during the period. Dilutive common equivalent
shares consist of stock options.
Foreign Currency Translation. The Company's international subsidiaries use
their local currencies as their functional currencies. Assets and liabilities
are translated at exchange rates in effect at the balance sheet date and income
and expense accounts at average exchange rates during the year. Resulting
translation adjustments are recorded directly to a separate component of
shareholders' equity.
Forward Exchange Contracts. The Company enters into forward exchange
contracts to minimize the short-term impact of foreign currency fluctuations on
the asset and liability positions of its international subsidiaries. Gains and
losses on these contracts are recognized in net income in the period in which
exchange rate changes occur.
Recent Accounting Pronouncements. During March 1995, the Financial
Accounting Standards Board issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
which requires the Company to review for impairment long-lived assets, certain
identifiable intangibles, and goodwill related to those assets whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. In certain situations, an impairment loss would be
recognized. Statement No. 121 will be effective for the Company's fiscal year
1997. The Company has studied the implications of the statement, and, based on
its initial evaluation, does not expect it to have a material impact on the
Company's financial condition or results of operations.
26
<PAGE> 27
CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except exercise prices and percentages)
2. BUSINESS COMBINATIONS
In September 1993, the Company acquired Crescendo Communications, Inc., a
networking company that provides high-performance workgroup solutions. The
Company issued approximately 3400 shares of common stock for all the outstanding
stock of Crescendo in a transaction that was accounted for as a pooling of
interests. The Company also assumed options and warrants to purchase Crescendo
stock of which the options remain outstanding to purchase approximately 280
shares of the Company's common stock.
On August 8, 1994, the Company acquired Newport Systems Solutions, Inc., a
privately held networking company providing software-based routers for remote
network sites. The Company issued approximately 3300 shares of common stock for
all the outstanding stock of Newport in a transaction also accounted for as a
pooling of interests. The Company also assumed options to purchase Newport stock
that remain outstanding as options to purchase approximately 190 shares of the
Company's common stock.
On December 6, 1994, the Company acquired Kalpana, Inc., a privately held
manufacturer of Ethernet switches. Under the terms of the agreement, the Company
issued approximately 6800 shares of common stock for all the outstanding stock
of Kalpana in a transaction also accounted for as a pooling of interests. In
connection with this transaction, the Company assumed options to purchase
Kalpana stock that remain outstanding as options to purchase approximately 500
shares of the Company's common stock.
The aggregated historical operations of Crescendo, Newport and Kalpana are not
material to the Company's consolidated operations and financial position.
Therefore, prior period statements have not been restated.
Effective January 11, 1995, the Company acquired substantially all of the assets
and assumed the liabilities of LightStream Corporation for $120,000 in cash and
related acquisition costs of approximately $500. LightStream was a developer of
enterprise-class Asynchronous Transfer Mode (ATM) switching technology.
The acquisition was accounted for as a purchase. Accordingly, the results of
operations of the acquired business and the fair market values of the acquired
assets and assumed liabilities were included in the Company's financial
statements as of the effective date.
The purchase price was allocated to the acquired assets and assumed liabilities
based on fair market values as follows:
<TABLE>
<S> <C>
Cash $ 6,320
Accounts receivable 2,777
Other current assets 101
Property and equipment 1,815
Purchased research and development 95,760
Goodwill 19,710
Current liabilities (5,983)
----------
$ 120,500
==========
</TABLE>
27
<PAGE> 28
CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except exercise prices and percentages)
The amount allocated to purchased research and development was determined
through known valuation techniques in the high-technology communications
industry. Amounts allocated to goodwill will be amortized on a straight-line
basis over periods ranging from two to five years.
The following summary, prepared on a pro forma basis, combines the results of
operations as if LightStream had been acquired as of the beginning of the
periods presented. The summary includes the impact of certain adjustments such
as goodwill amortization and estimated changes in interest income due to cash
outlays associated with the transaction and the related income tax effects (in
thousands, except per-share amounts):
<TABLE>
<CAPTION>
Twelve months ended
-----------------------------
July 30, July 31,
1995 1994
---------- ----------
(Unaudited)
<S> <C> <C>
Sales $1,987,310 $1,244,863
Net income $ 410,456 $ 299,676
Net income per share $ 1.48 $ 1.13
</TABLE>
The pro forma results are not necessarily indicative of what actually would have
occurred if the acquisition had been in effect for the entire periods presented.
In addition, they are not intended to be a projection of future results and do
not reflect any synergies that might be achieved from the combined operations.
28
<PAGE> 29
CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except exercise prices and percentages)
3. BALANCE SHEET DETAIL
Inventories:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Raw materials $ 33,555 $ 13,724
Work in process 16,913 8,649
Finished goods 9,373 2,090
Demonstration systems 11,319 3,433
--------- ---------
Total $ 71,160 $ 27,896
========= =========
Property and equipment, net:
Leasehold improvements $ 16,170 $ 11,154
Computer equipment and related software 126,331 71,281
Production and engineering equipment 49,695 25,067
Office equipment, furniture,
fixtures, and other 50,682 24,297
--------- ---------
242,878 131,799
Less accumulated depreciation and
amortization (106,243) (54,350)
--------- ---------
Total $ 136,635 $ 77,449
========= =========
Accrued payroll and related expenses:
Accrued wages, paid time off, and related
expenses $ 56,623 $ 32,020
Accrued bonuses 28,072 14,314
--------- ---------
Total $ 84,695 $ 46,334
========= =========
Other accrued liabilities:
Deferred revenue $ 55,984 $ 30,981
Accrued warranties 38,731 22,962
Other liabilities 41,558 30,569
--------- ---------
Total $ 136,273 $ 84,512
========= =========
</TABLE>
29
<PAGE> 30
CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except exercise prices and percentages)
4. INVESTMENTS
Effective August 1, 1994, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." This statement requires the Company to classify debt and equity
securities into one of three categories: held-to-maturity, trading, or
available-for-sale. At July 30, 1995, substantially all of the Company's
investments were classified as available-for-sale, and the difference between
the cost and fair market value of those securities, net of the tax effect, is
shown as a separate component of shareholders' equity.
The following table summarizes the Company's securities at July 30, 1995:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Market
Issue Cost Gains (Losses) Value
- ------------------------------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
U.S. government notes and bonds $200,902 $ 665 $ (2,963) $198,604
State, municipal, and county
government notes and bonds 425,225 1,599 (4,995) 421,829
Foreign government notes and
bonds 38,841 433 39,274
Corporate notes and bonds 61,052 77 (242) 60,887
Corporate equity securities 2,900 88,115 91,015
-------- -------- --------- --------
$728,920 $ 90,889 $ (8,200) $811,609
======== ======== ========= ========
</TABLE>
Gross realized gains and losses on the sale of securities are calculated using
the specific identification method and were not material to the Company's
consolidated results of operations.
5. LINE OF CREDIT
On May 22, 1995, the Company entered into a syndicated credit agreement under
the terms of which a syndication of banks has committed a maximum of $100,000 on
an unsecured basis for cash borrowings and letters of credit. The commitments
made under this agreement expire on April 30, 1998. During the commitment
period, the Company is obligated to pay annual fees of approximately $150.
Outstanding borrowings under these arrangements bear interest at the London
Interbank Offered Rate plus .31%, or other alternative rates. The agreement
specifies various financial covenants, including a variable floor on tangible
net worth, all of which the Company has met. There have been no borrowings under
this agreement.
6. COMMITMENTS
LEASES
The Company leases office space for its U.S. and international sales offices.
The Company also leases buildings at its headquarters in Santa Clara and San
Jose, California. The Santa Clara lease expires December 1996.
30
<PAGE> 31
CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except exercise prices and percentages)
In February 1993, the Company entered into an agreement to lease 46 acres of
land located in San Jose, California, where it has established its headquarters
operations. In July 1994, the Company entered into an agreement to lease 45
acres of land located in Research Triangle Park, North Carolina, where it
expanded certain research and development and customer support activities. In
February and April 1995, the Company entered into agreements to lease an
additional 36 acres of land in San Jose, California, where it will further
expand its headquarters operations. All of the leases have initial terms of five
years and options to renew for an additional five years, subject to certain
conditions.
At any time during the terms of these land leases, the Company may purchase the
land. If the Company elects not to purchase the land at the ends of the leases,
the Company has guaranteed a residual value of approximately $55.9 million.
In May 1993, August 1994, and May 1995, the Company entered into agreements to
lease certain buildings to be constructed on the land described above. The
lessors of the buildings have committed to fund up to a maximum of $114.0
million (subject to reductions based on certain conditions in the lease) for the
construction of the buildings, with the portion of the committed amount actually
utilized to be determined by the Company. Rent obligations for the buildings
will commence on varying dates and will expire at the same time as the land
leases. The Company has an option to renew the building leases for an additional
five years, subject to certain conditions.
The Company may, at its option, purchase the buildings during the terms of the
leases at approximately the amount expended by the lessors to construct the
buildings. If the Company does not exercise the purchase options at the ends of
the leases, the Company will guarantee a residual value of the buildings as
determined at the lease inception date of each agreement (approximately $69.3
million at July 30, 1995).
As part of the above lease transactions, the Company restricted $173.1 million
of its securities as collateral for specified obligations of the lessor under
the leases. These securities will be restricted as to withdrawal and will be
managed by the Company subject to certain limitations, under its investment
policy. In addition, the Company must maintain a minimum consolidated tangible
net worth of $750.0 million.
Future annual minimum lease payments under all noncancelable operating leases as
of July 30, 1995, are as follows:
<TABLE>
<S> <C>
1996 $18,887
1997 14,365
1998 8,901
1999 4,522
2000 2,028
Thereafter 1,468
-------
Total minimum lease payments $50,171
=======
</TABLE>
31
<PAGE> 32
CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except exercise prices and percentages)
Rent expense totaled $19,157, $12,399, and $7,243 for 1995, 1994, and 1993,
respectively.
FORWARD EXCHANGE CONTRACTS
The Company enters into forward exchange contracts to reduce its exposure to
potentially adverse changes in foreign currency exchange rates. The contracts
hedge certain balance sheet exposures and intercompany balances against future
movements in foreign exchange rates. The Company does not hold these financial
instruments for trading purposes. Foreign exchange contracts outstanding,
primarily in European, Canadian, and Australian currencies, amounted to $44.5
million and $21.8 million at July 30, 1995 and July 31, 1994, respectively.
Gains and losses on the contracts are included in other income, which offset
foreign exchange gains or losses from revaluation of intercompany balances. The
maturity dates of the contracts outstanding at July 30, 1995 extended to
approximately one month.
The Company's forward exchange contracts contain an element of risk that the
other parties may be unable to meet the terms of the agreements. However, the
Company minimizes such risk exposure by limiting the other parties to major
financial institutions. In addition, the amount of agreements entered into with
any one party is also monitored. Management does not expect any significant
losses as a result of default by the other parties.
7. MINORITY INTEREST
In October 1994, the Company's Japanese subsidiary, Nihon Cisco Systems, K.K.,
completed the sale of preferred stock to a group of outside investors in a
private placement. Aggregate proceeds to Nihon Cisco Systems, K.K. were
approximately $40.5 million. The investors received 26.8% of the voting rights.
The Company retains ownership of all issued and outstanding common stock of its
subsidiary, amounting to 73.2% of the voting rights. Each share of preferred
stock is convertible into one share of common stock at any time, at the option
of the holder.
8. SHAREHOLDERS' EQUITY
The Company's common stock was split two-for-one on March 5, 1993 and March 4,
1994. All applicable share and per-share data in these financial statements have
been restated to give effect to these stock splits.
Under the terms of the Company's Articles of Incorporation, the Board of
Directors may determine the rights, preferences, and terms of the Company's
authorized preferred stock.
32
<PAGE> 33
CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except exercise prices and percentages)
9. EMPLOYEE STOCK PURCHASE PLAN
The Company has an Employee Stock Purchase Plan (the Purchase Plan) under which
4800 shares of common stock have been reserved for issuance. Eligible employees
may designate not more than 10% of their cash compensation to be deducted each
pay period for the purchase of common stock under the Purchase Plan, and
participants may purchase not more than $25 worth of common stock in any one
calendar year. On the last business day of each calendar quarter, shares of
common stock are purchased with the employees' payroll deductions over six
months, at a price per share of 85% of the lesser of the market price of the
common stock on the purchase date or the market price on the first day of the
period. The Purchase Plan will terminate no later than January 3, 2000. In 1995,
1994, and 1993, 579, 387, and 344 shares were issued under the Purchase Plan,
respectively. At July 30, 1995, 2142 shares were available for issuance under
the Purchase Plan.
10. STOCK OPTION PLANS
The Company established a Stock Option Plan in 1987 under which it has reserved
a total of 91,640 shares of common stock for issuance to employees, officers,
directors, consultants, and independent contractors. Both incentive and
nonqualified stock options have been granted at prices not less than fair market
value at the date of grant as determined by the Board of Directors. Although the
Board has the authority to set other terms, the options are generally 25%
exercisable one year from the date of grant and then ratably over the following
36 months.
A summary of option activity follows:
<TABLE>
<CAPTION>
Options Outstanding
--------------------------------------------------------------------
Options
Available Exercise
for Grant Options Prices Amount
---------------- ----------------- ------------------------------- ----------------
<S> <C> <C> <C> <C> <C>
Balances, July 26, 1992 3,388 25,196 $ .01 $12.12 87,522
Options granted (3,234) 3,234 12.87 - 26.87 67,869
Options exercised (6,628) .01 - 12.12 (14,375)
Options canceled 376 (376) .01 - 26.87 (2,218)
Additional shares reserved 4,000
---------------- ----------------- -------------- -------------- -----------------
Balances, July 25, 1993 4,530 21,426 .01 - 26.87 138,798
Options granted (4,779) 4,779 20.12 - 37.00 113,641
Options exercised (6,498) .01 - 22.69 (14,836)
Options canceled 684 (684) .16 - 37.00 (9,762)
Additional shares reserved 4,000
---------------- ----------------- -------------- -------------- -----------------
Balances, July 31, 1994 4,435 19,023 .01 - 37.00 227,841
Options granted and assumed (15,265) 15,265 8.15 - 57.75 557,523
Options exercised (5,981) .01 - 37.00 (33,567)
Options canceled 1,067 (1,067) .16 - 43.00 (25,651)
Additional shares reserved 6,237
---------------- ----------------- -------------- -------------- -----------------
Balances, July 30, 1995 (3,526) 27,240 $ .01 - $57.75 $726,146
================ ================= ============== ============== =================
</TABLE>
At July 30, 1995, approximately 9287 outstanding options were exercisable.
Options granted for approximately 4000 shares reflected in the 1995 fiscal year
are subject to shareholder approval of a 19,000 increase to the number of shares
made available for issuance under the plan.
33
<PAGE> 34
CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except exercise prices and percentages)
The Company has, in connection with the acquisition of Crescendo, Newport, and
Kalpana, assumed the stock option plans of each acquired company. A total of
2,237 shares of the Company's common stock has been reserved for issuance under
those assumed plans.
11. EMPLOYEE BENEFIT PLAN
The Company has adopted a plan to provide retirement and incidental benefits for
its employees, known as the Cisco Systems, Inc. 401(k) Plan (the Plan). As
allowed under Section 401(k) of the Internal Revenue Code, the Plan provides tax
deferred salary deductions for eligible employees.
Employees may contribute from 1% to 15% of their annual compensation to the
Plan, limited to a maximum amount as set by the Internal Revenue Service. The
Company matches employee contributions dollar for dollar, up to a maximum of
$1.5 per year. In addition, the Plan provides for discretionary contributions as
determined by the Board of Directors. Such contributions to the Plan are
allocated among eligible participants in the proportion of their salaries to the
total salaries of all participants. Company matching contributions to the Plan
totaled $3,456 in 1995, $1,796 in 1994, and $1,015 in 1993. No discretionary
contributions were made in 1995, 1994, or 1993.
12. INCOME TAXES
The provision for income taxes consists of:
<TABLE>
<CAPTION>
1995 1994 1993
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Federal:
Currently payable $ 260,874 $ 176,314 $ 85,125
Deferred (54,955) (24,084) (5,387)
-------------------- -------------------- --------------------
205,919 152,230 79,738
State:
Currently payable 56,108 44,718 22,444
Deferred (9,132) (4,909) (1,258)
-------------------- -------------------- --------------------
46,976 39,809 21,186
Foreign:
Currently payable 6,721 4,309 2,249
Deferred (1,578) (1,722)
-------------------- -------------------- --------------------
5,143 2,587 2,249
-------------------- -------------------- --------------------
$ 258,038 $ 194,626 $ 103,173
==================== ==================== ====================
</TABLE>
The Company paid income taxes of $240.7 million, $164.3 million, and $63.3
million, in 1995, 1994, and 1993, respectively.
34
<PAGE> 35
CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except exercise prices and percentages)
The items accounting for the difference between income taxes computed at the
federal statutory rate and the provision for income taxes follow:
<TABLE>
<CAPTION>
1995 1994 1993
------------------ ------------------ ------------------
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 34.0%
Effect of:
State rates, net of federal benefits 4.4 4.7 4.9
Foreign Sales Corporation benefit (2.6) (2.5) (2.0)
Tax-exempt interest (0.8) (1.1) (1.0)
Tax credits (0.8) (0.6)
Other 2.8 2.7 1.6
------------------ ------------------ ------------------
38.0% 38.2% 37.5%
================== ================== ==================
</TABLE>
The components of the deferred income tax provision are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------------ ------------------ ------------------
<S> <C> <C> <C>
Purchased research and development $(36,310)
Inventory allowances and capitalization (12,145) $ (5,640) $ (2,677)
Warranty accruals 1,446 (3,764) (883)
Accrued state franchise tax (3,816) (3,395)
Allowance for doubtful accounts and returns 101 (2,783) (874)
Depreciation (1,486) (3,034) (88)
Deferred revenue (2,141) (857) (339)
Royalty accruals (499) (746) (689)
Other nondeductible accruals (10,815) (10,496) (1,095)
------------------ ------------------ ------------------
$(65,665) $(30,715) $ (6,645)
================== ================== ==================
</TABLE>
The components of the deferred income tax assets follow:
<TABLE>
<CAPTION>
1995 1994
----------------- ------------------
<S> <C> <C>
Purchased research and development $ 36,310
Unrealized gain on marketable securities (31,756)
Inventory allowances and capitalization 25,114 $ 13,273
Warranty accruals 7,429 9,651
Accrued state franchise tax 7,211 3,395
Allowance for doubtful accounts and returns 7,020 5,913
Depreciation 4,882 4,392
Deferred revenue 3,800 1,800
Royalty accruals 2,414 1,690
Other nondeductible accruals 24,278 12,679
----------------- ------------------
$ 86,702 $ 52,793
================= ==================
</TABLE>
The noncurrent portion of the deferred income tax assets, which totaled
$11,405 at July 30, 1995, and $6,054 at July 31, 1994, is included in other
assets.
The Company's income taxes currently payable for both federal and state purposes
have been reduced by the tax benefit derived from the disqualifying dispositions
of incentive and nonqualified stock options. This benefit, which totaled $55,756
in 1995 and $35,654 in 1994, was credited directly to common stock.
35
<PAGE> 36
CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except exercise prices and percentages)
13. GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS
The Company operates in a single industry segment encompassing the design,
development, manufacture, marketing, and technical support of internetworking
products and services.
In 1995, 1994, and 1993, no customers accounted for 10% or more of the Company's
net sales.
International sales, primarily in Europe, the Pacific region, and Canada, were
$838.3 million in 1995, $520.5 million in 1994, and $252.9 million in 1993.
Export sales, primarily to these regions, were $661.6 million in 1995, $376.2
million in 1994, and $166.3 million in 1993.
Summarized financial information by geographic region for 1995, 1994, and 1993
is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------------------ -------------------- -------------------
<S> <C> <C> <C>
Net sales:
United States $1,948,098 $1,240,585 $ 629,747
International 176,715 144,277 86,600
Eliminations (145,897) (141,887) (67,312)
------------------------ -------------------- -------------------
Total $1,978,916 $1,242,975 $ 649,035
======================== ==================== ===================
Operating income:
United States $ 638,167 $ 489,659 $ 260,131
International 2,515 2,231 4,122
Eliminations 2,257 (3,774) (682)
------------------------ -------------------- -------------------
Total $ 642,939 $ 488,116 $ 263,571
======================== ==================== ===================
Identifiable assets:
United States $1,638,984 $1,009,243
International 141,280 61,027
Eliminations (22,985) (16,576)
------------------------ --------------------
Total $1,757,279 $1,053,694
======================== ====================
</TABLE>
14. SUBSEQUENT EVENT
On August 10, 1995, the Company entered into an agreement to acquire Combinet
Inc., a privately held manufacturer of remote access networking products. The
agreement calls for the Company to issue approximately 2000 shares to acquire
all the equity of Combinet, including outstanding options and warrants. The
transaction is subject to several closing conditions and, if consummated, will
be accounted for as a pooling of interests.
36
<PAGE> 37
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders
Cisco Systems, Inc.
San Jose, California
We have audited the accompanying consolidated balance sheets of Cisco Systems,
Inc. and its subsidiaries as of July 30, 1995 and July 31, 1994 and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended July 30, 1995. 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Cisco Systems,
Inc. and its subsidiaries as of July 30, 1995 and July 31, 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended July 30, 1995 in conformity with generally
accepted accounting principles.
/s/Coopers & Lybrand L.L.P.
San Jose, California
August 15, 1995
37
<PAGE> 38
SUPPLEMENTARY FINANCIAL DATA
1995 AND 1994 BY QUARTER
(Unaudited) (in thousands, except per-share amounts)
(In thousands, except per-share amounts)
<TABLE>
<CAPTION>
July 30, Apr. 30, Jan. 29, Oct. 30, July 31, May 1, Jan. 30, Oct. 24,
1995 1995 1995 1994 1994 1994 1994 1993
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $621,184 $509,910 $454,897 $392,925 $361,159 $331,193 $302,166 $248,457
Gross margin 418,727 344,388 306,693 264,956 242,755 222,052 200,644 164,700
Operating income 222,076 190,876 78,316 151,671 138,718 131,587 119,924 97,887
Income before provision for
income taxes 231,812 201,661 86,266 159,307 144,929 136,479 125,359 102,726
Net income $143,723 $125,030 $ 53,485 $ 98,770 $ 89,566 $ 84,344 $ 77,472 $ 63,485
Net income
per common share $ .51 $ .45 $ .19 $ .37 $ .34 $ .32 $ .29 $ .24
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding Directors appearing under the caption "Election of
Directors" in the Company's proxy statement to be mailed to Shareholders on or
before October 2, 1995, is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information appearing at the end of Part I and under the caption "Executive
Compensation" in the Company's proxy statement to be mailed to Shareholders on
or before October 2, 1995, is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information appearing under the captions "Election of Directors" and
"Ownership of Securities" in the Company's proxy statement to be mailed to
Shareholders on or before October 2, 1995, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing under the caption "Ownership of Securities" and
"Certain Relationships and Related Transactions" in the Company's proxy
statement to be mailed to Shareholders on or before October 2, 1995, is
incorporated herein by reference.
38
<PAGE> 39
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The financial statements listed in Item 14(a) are filed as part of
this annual report.
2. Financial Statement Schedules
The financial statement schedules listed in Item 14(a) are filed as
part of this annual report.
3. Exhibits
The exhibits listed in the accompanying Index to Exhibits are filed or
incorporated by reference as part of this annual report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of fiscal
1995.
39
<PAGE> 40
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Report on Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Jose, State of
California on this 17th day of October, 1995.
Cisco Systems, Inc.
/s/ John T. Chambers
-------------------------------------
(John T. Chambers, President and
Chief Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this Report on Form
10-K has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
President and Chief
Executive Officer
/s/ John T. Chambers (Principal Executive October 17, 1995
- ------------------------------------------- Officer and Director)
John T. Chambers
Vice President, Finance and
Administration, Chief
Financial Officer and
/s/ Larry R. Carter Secretary October 17, 1995
- ------------------------------------------- (Principal Financial and
Larry R. Carter Accounting Officer)
/s/ John Morgridge Chairman of the October 17, 1995
- ------------------------------------------- Board and Director
John P. Morgridge
Vice Chairman of the
- ------------------------------------------- Board and Director
Donald T. Valentine
/s/ Michael S. Frankel Director October 17, 1995
- -------------------------------------------
Dr. Michael S. Frankel
/s/ James F. Gibbons Director October 17, 1995
- -------------------------------------------
Dr. James F. Gibbons
/s/ Robert L. Puette Director October 17, 1995
- -------------------------------------------
Robert L. Puette
/s/ Masayoshi Son Director October 17, 1995
- -------------------------------------------
Masayoshi Son
</TABLE>
40
<PAGE> 41
CISCO SYSTEMS, INC.
-------------
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
ITEM 14(A)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Consolidated balance sheets at July 30, 1995 and July 31, 1994 ................. 21
Consolidated statements of operations for each of the three years in the period
ended July 30, 1995........................................................... 22
Consolidated statements of shareholders' equity for each of the three years in
the period ended July 30, 1995................................................ 23
Consolidated statements of cash flows for each of the three years in the period
ended July 30, 1995........................................................... 24
Notes to consolidated financial statements...................................... 25
Report of Independent Accountants............................................... 37
Supplementary financial data:
Fiscal years 1995 and 1994 by quarter (unaudited)............................. 38
Report of Independent Accountants............................................... 42
Schedule:
II Valuation and qualifying accounts 43
</TABLE>
All other schedules have been omitted since the required information is not
present in amounts sufficient to require submission of the schedules, or because
the information required is included in the consolidated financial statements or
notes thereto.
41
<PAGE> 42
REPORT OF INDEPENDENT ACCOUNTANTS
Our report on the consolidated financial statements of Cisco Systems, Inc. and
its subsidiaries is included on page 37 of this Form 10-K. In connection with
our audits of such financial statements, we have also audited the related
financial statement schedule listed in the index on page 41 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
/s/ Coopers & Lybrand L.L.P.
San Jose, California
August 15, 1995
42
<PAGE> 43
CISCO SYSTEMS, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<TABLE>
<CAPTION>
Balance at Balance at
Beginning Charged to End of
of Period Expenses Deductions Period
-------------------- -------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Year ended July 25, 1993:
Allowance for doubtful accounts $ 2,905 $ 6,421 $ 4,412 $ 4,914
Allowance for excess and obsolete
inventory 3,590 3,900 2,965(1) 4,525
Year ended July 31, 1994:
Allowance for doubtful accounts 4,914 4,562 1,399 8,077
Allowance for excess and obsolete
inventory 4,525 14,608 2,027(1) 17,106
Year ended July 30, 1995:
Allowance for doubtful accounts 8,077 10,429 5,201 13,305
Allowance for excess and obsolete 17,106 42,482 21,779(1) 37,809
inventory
</TABLE>
(1) Deductions principally relate to charges for standards changes.
43
<PAGE> 44
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed herewith.
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Table
- ------- -------------
<S> <C>
2.01** Agreement and Plan of Reorganization dated as of September 20, 1993
among the Company, Crescendo Communications Inc., and Co
Acquisition Corporation
2.02** Agreement of Merger among the Company, Crescendo Communications Inc.,
and Co Acquisition Corporation
2.03# Agreement and Plan of Reorganization dated as of July 11, 1994 among
the Company, Newport Systems Solutions, Inc. and New Acquisition
Corporation
2.04+ Agreement and Plan of Reorganization dated as of October 21, 1994
among the Company, Kalpana, Inc. and Pan Acquisition Corporation
2.05++ Asset Purchase Agreement dated as of December 8, 1994 among the
Company and LightStream Corporation
3.01* The Company's Restated Articles of Incorporation, as currently in
effect
3.02* The Company's Bylaws, as currently in effect
4.01## The Company's 1987 Stock Option Plan, as currently in effect
4.02* Form of Incentive Stock Option Agreement for granting incentive stock
options under the Company's 1987 Stock Option Plan
4.03* Series A Preferred Stock Purchase Agreement between the Company and
certain investors dated December 22, 1987, as amended
10.05* Form of Restricted Stock Purchase Agreement for sales of Common Stock
to employees, officers, directors and consultants
10.10* License Agreement between the Company and Network Equipment
Technologies Inc dated February 14, 1989
10.12* License Agreement between the Company and The Board of Trustees of
Leland Stanford Junior University dated April 15, 1987, as amended
10.13* 1989 Employee Stock Purchase Plan
10.14 Fiscal Year 1995 Management Incentive Plan
10.16* Agreement between the Company and American Telephone and Telegraph
Company dated February 1, 1990
10.19* Letter of Employment between the Company and John T. Chambers dated
January 9, 1991
10.20* Letter of Employment between the Company and John P. Morgridge dated
October 17, 1988
10.21* Letter of Employment between the Company and Donald A. LeBeau dated
July 15, 1992
10.22* Letter of Employment between the Company and Frank J. Marshall dated
March 31, 1992
10.23* Lease Agreement between the Company and SGA Development Partnership,
Ltd., dated February 19, 1993, for the Company's site in San Jose,
California
10.24* Lease Agreement between the Company and Sumitomo Bank Leasing and
Finance, Inc., dated May 13, 1993 for the Company's facilities in
San Jose, California
10.25* Lease Agreement between the Company and SGA Development Partnership,
Ltd., dated February 19, 1993, for the Company's site in San Jose,
California
10.26* Lease Agreement between the Company and the State of California
Public Employees' Retirement System dated March 11, 1993, for the
Company's facilities at 3100 Smoketree Court
10.27* Lease Agreement between the Company and Sumitomo Bank Leasing and
Finance, Inc., dated July 11, 1994 for the Company's site in Wake
County, North Carolina
10.28* Lease Agreement between the Company and Sumitomo Bank Leasing and
Finance, Inc., dated August 12, 1994 for the Company's facilities
in Wake County, North Carolina
</TABLE>
44
<PAGE> 45
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Table
- ------- -------------
<S> <C>
10.29 Lease (Buildings "I" and "J") by and between Sumitomo Bank of New
York Trust Company ("SBNYTC"), as trustee under that certain Trust
Agreement dated May 22, 1995 between Sumitomo Bank Leasing and
Finance, Inc. and SBNYTC ("SB Trust"), as Landlord, and the
Company, as tenant, dated May 22, 1995
10.30 First Amendment to Lease (Buildings "I" and "J") between SB Trust and
the Company, dated July 18, 1995
10.31 Lease (Buildings "K" and "L") by and between SB Trust and the
Company, dated May 22, 1995
10.32 First Amendment to Lease (Buildings "K" and "L") between SB Trust and
the Company, dated July 18, 1995
10.33 Lease (Improvements Phase "C") by and between SB Trust and the
Company, dated May 22, 1995
10.34 First Amendment to Lease (Improvements Phase "C") between SB Trust
and the Company, dated July 18, 1995
10.35 Ground Lease (Parcel 2 and Lot 54) by and between Irish Leasing
Corporation ("Irish"), as Landlord, and the Company, as Tenant,
dated February 28, 1995 for the Company's site in San Jose,
California
10.36 First Amendment to Lease (Parcel 2 and Lot 54) by and between Irish
and the Company dated as of May 1, 1995
10.37 Second Amendment to Lease (Parcel 2 and Lot 54) by and between Irish
and the Company dated as of May 22, 1995
10.38 Ground Lease (Lots 58 and 59) by and between Irish and the Company
dated February 28, 1995 for the Company's site in San Jose,
California
10.39 First Amendment to Lease (Lots 58 and 59) by and between Irish and
the Company dated as of May 1, 1995
10.40 Second Amendment to Lease (Lots 58 and 59) by and between Irish and
the Company dated as of May 22, 1995
10.41 Ground Lease (Tasman Phase C) by and between Irish and the Company
dated April 12, 1995 for the Company's site in San Jose, California
10.42 First Amendment to Lease (Tasman Phase C) by and between Irish and
the Company dated as of May 1, 1995
10.43 Second Amendment to Lease (Tasman Phase C) by and between Irish and
the Company dated as of May 22, 1995
10.44 Credit Agreement between the Company, the Banks Listed Herein,
Bank of America National Trust and Savings Association, as
Administrative Agent, Morgan Guaranty Trust Company of New York, as
Documentation Agent and Bank of America National Trust and Savings
Association, as Issuing Bank dated as of May 22, 1995
11.01 Statement Regarding Computation of Net Income Per Share
21.01 Subsidiaries of the Company
23.02 Consent of Independent Accountants
27 Financial Data Schedule
</TABLE>
(b) The following financial statement schedules are filed herewith
<TABLE>
<CAPTION>
Schedule
- --------
<S> <C>
II Valuation and qualifying accounts
</TABLE>
- --------------
* Previously filed with registrant's registration statements (File
#33-32778)
** Previously filed with registrant's Form 8-K dated October 8, 1993
+ Previously filed with registrant's Form 8-K dated December 9, 1994
++ Previously filed with registrant's Form 8-K dated January 25, 1995
# Previously filed with registrant's Form 8-K dated August 19, 1994
## Previously filed with registrant's Proxy statement dated October 2,
1995
45
<PAGE> 1
CISCO SYSTEMS, INC.
MANAGEMENT BONUS PLAN---LEVELS A - D
FY 1995
I. INTRODUCTION
A. THE OBJECTIVE OF THE MANAGEMENT BONUS PLAN is to financially reward
Senior Managers for their contributions to the success of Cisco
Systems, Inc.
B. PARTICIPANTS: This plan applies to Cisco Systems, Inc. senior
management staff in the following positions with the respective
levels:
LEVEL POSITION
----- --------
A President
B Vice Presidents
C All Directors
D Managers, Grade 12 and above
Any exceptions to the above will need to be approved by the
President. Participation requires that the manager be employed on or
before the first day of the last fiscal quarter. Participants in the
Plan with less than one year of service will be eligible for a
prorated bonus amount. Participants in this Plan are not eligible for
Company Performance Awards.
C. EFFECTIVE DATE: The Plan is effective for the Fiscal Year 1995,
beginning August 1, 1994 through July 30, 1995.
D. CHANGES IN PLAN: The Company presently has no plan to change the
Management Bonus Plan during the fiscal year. The Company reserves
the right to modify the Management Bonus Plan in total or in part, at
any time. Any such change must be in writing and signed by the
President.
E. ENTIRE AGREEMENT: This Plan and attachments are the entire agreement
between Cisco Systems, Inc. and the employee regarding the subject
matter of this Plan and supersede all prior compensation or incentive
plans or any written or verbal representations regarding the subject
matter of this Plan.
II. BONUS PLAN ELEMENTS
A. BASE SALARY is determined by the participant's manager. The annual
Base Salary in effect at the end of the fiscal year represents the
basis for the bonus calculation.
B. BONUS BASIS PERCENTAGE is a percentage level of Base Salary
determined by the position.
<TABLE>
<CAPTION>
LEVEL POSITION BONUS %
----- -------- -------
<S> <C> <C>
A President 45%
B Vice President 40%
C All Directors 35%
D Managers, Grade 12 and above 30%
CISCO CONFIDENTIAL
</TABLE>
<PAGE> 2
Management Bonus Plan Page 2 of 4
C. COMPANY PERFORMANCE FACTOR consists of two elements: 50% based upon
achieving an established Revenue target and 50% based upon achieving
a Profit Before Interest and Tax (PBIT) target per the current plan.
80% of each objective must be achieved for any bonus to be paid.
COMPANY PERFORMANCE FACTOR
<TABLE>
<CAPTION>
REVENUE PBIT
------- ----
<S> <C> <C>
Less than 80% 0 Less than 80%
80 - 100% 80 - 100% 80 - 100%
Greater than 100% 2% for each 1% Greater than 100
above 100%
</TABLE>
COMPANY PERFORMANCE FACTOR = (REVENUE + PBIT ) / 2
Example:
Actual Revenue Performance is 110% of goal
Actual PBIT Performance is 120% of goal
REVENUE PBIT
------- ----
100% 100%
+20% +40%
120% 140%
COMPANY PERFORMANCE FACTOR: (120 + 140) / 2 = 130%
D. INDIVIDUAL PERFORMANCE FACTOR is based upon individual goal
achievement for the fiscal year and is determined by the
participant's manager. This factor may range from 1.00-1.20 with the
following guidelines used:
<TABLE>
<CAPTION>
FISCAL YEAR '95 INDIVIDUAL
PERFORMANCE EVALUATION PERFORMANCE FACTOR
<S> <C>
5 1.16 - 1.20
4 1.11 - 1.15
3 1.00 - 1.10
</TABLE>
Employees who are on a Written Warning and/or are performing at a
level of 1 or 2 at the end of the fiscal year are not eligible to
receive a bonus. Any exceptions to this must be in writing and
approved by the President.
E. CUSTOMER SATISFACTION FACTOR is based upon a comparison of the
current fiscal year customer satisfaction survey rating to last
fiscal year's rating. This factor may range from 1.00 -1.10.
<TABLE>
<CAPTION>
COMPARISON FACTOR
---------- ------
<S> <C> <C>
Current rating as compared Decrease 1.00
to last year's rating No Change 1.05
Increase 1.10
</TABLE>
CISCO CONFIDENTIAL
<PAGE> 3
Management Bonus Plan Page 3 of 4
F. PRORATION FACTOR accounts for the number of calendar days during the
fiscal year that the employee was in the bonus-eligible position. For
example, the Proration Factor for an employee who has been on the
Plan the entire year will be "1.00". For an employee who has been on
the plan for 6 months, this factor will be ".50". Employees in the
following situations will have a Proration Factor of less than
"1.00":
- Participants in the Plan who transferred to a new position not
governed by any incentive plan.
- Employees who transferred from one bonus-eligible position to
another bonus-eligible position. Employees in this situation
will have their bonus prorated based on length of time in each
position.
- Employees who have been on the Plan less than 12 months (such as
a new hire).
- Employees who have been on a leave of absence greater than 14
calendar days.
- Employees who have been on the Plan, terminated their
employment, and returned to a bonus-eligible position all in the
same fiscal year.
G. BONUS FORMULA AND CALCULATION EXAMPLE: Assume a level C participant
with a Base Salary of $105,000 at the 35% level, a Company
Performance Factor of 1.30, an Individual Performance Factor of 1.15,
a Customer Satisfaction Factor of 1.10 and a Proration Factor of
1.00.
SAMPLE CALCULATION:
<TABLE>
<CAPTION>
BONUS COMPANY INDIVIDUAL CUSTOMER
BASE BASIS PERFORMANCE PERFORMANCE SATISFACTION PRORATION TOTAL
SALARY PERCENTAGE FACTOR FACTOR FACTOR FACTOR BONUS
------ ---------- ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
$105,000 x .35 x 1.30 x 1.15 x 1.10 x 1.00 = $60,435.38
</TABLE>
In this example, the Total Bonus equals approximately 58% of Base
Salary.
III. PROCEDURES AND PRACTICES
A. PROCEDURE:
1. A list of eligible employees will be sent by Human Resources to
the Executive Staff for review at the beginning of the fiscal
year. Additions, deletions or other changes to the list will be
made and the approved list will be returned to Human Resources.
2. Once the list is confirmed, a copy of the Plan will be sent to
each participant.
3. Each eligible new hire and employees promoted into eligible
positions will receive a copy of the plan during the fiscal
year.
4. A month before fiscal year end, a list of eligible employees
with all changes made during the year will again be sent to the
Executive Staff for final review and approval.
CISCO CONFIDENTIAL
<PAGE> 4
Management Bonus Plan Page 4 of 4
5. Following year-end, Human Resources will distribute bonus
worksheets to management and the Executive Staff will review and
approve the final bonus amounts.
6. Human Resources will review bonus recommendations and transfer
relevant information to Payroll to process the bonus checks. The
checks will be sent to the appropriate Vice President for
distribution, generally within 30 days following the end of the
fiscal year.
B. BUSINESS CONDUCT: It is the established policy of Cisco Systems, Inc.
to conduct business with the highest standards of business ethics.
Cisco employees may not offer, give, solicit or receive any payment
that could appear to be a bribe, kickback or other irregular type of
payment from anyone involved in any way with an actual or potential
business transaction. Gifts, favors and entertainment are allowed
such that they are consistent with our business practice, do not
violate any applicable laws, are of limited value ($50.00 or less)
and would not embarrass Cisco if publicly disclosed.
C. TRANSFERS AND TERMINATIONS: Employees who are participants in the
Management Bonus Plan and who transfer to a new position not governed
by this Plan will be eligible on a pro-rata basis for the applicable
period and paid as defined by the Plan. Any exceptions to the Plan
must be designated in writing and approved by the President.
A participant must be employed as of the last day of the fiscal year
to be eligible for the bonus. If an employee terminates during the
fiscal year, the employee is not eligible for the bonus.
D. EMPLOYMENT AT WILL: The employment of all Plan participants at Cisco
Systems, Inc. is for an indefinite period of time and is terminable
at any time, with or without cause being shown or advance notice by
either party. This Plan shall not be construed to create a contract
of employment for a specified period of time between Cisco Systems,
Inc. and any Plan participant.
<PAGE> 1
LEASE
(BUILDINGS "I" AND "J")
By and Between
SUMITOMO BANK OF NEW YORK TRUST COMPANY ("SBNYTC"),
AS TRUSTEE
UNDER THAT CERTAIN TRUST AGREEMENT
DATED MAY 22, 1995
BETWEEN
SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC
as Landlord
and
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
as Tenant
for
Premises located in
San Jose, California
THIS LEASE IS NOT INTENDED TO CONSTITUTE A TRUE LEASE
FOR INCOME TAX PURPOSES. SEE SECTION 21.2
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 BASIC LEASE PROVISIONS............................................................................. 1
1.1 Date of Lease...................................................................................... 1
1.2 Landlord........................................................................................... 1
1.3 Tenant............................................................................................. 1
1.4 Land............................................................................................... 1
1.5 Premises........................................................................................... 1
1.6 Term............................................................................................... 2
1.7 Rent Commencement Date............................................................................. 2
1.8 Base Rent.......................................................................................... 3
1.9 Addresses for Notices.............................................................................. 3
1.10 Address for Rent Payments.......................................................................... 3
ARTICLE 2 DEFINITIONS........................................................................................ 4
2.1 Additional Rent.................................................................................... 4
2.2 Advance............................................................................................ 5
2.3 Approval Plans..................................................................................... 5
2.4 Authorized Loan.................................................................................... 5
2.5 Authorized Plans................................................................................... 5
2.6 Base Rent.......................................................................................... 5
2.7 Building........................................................................................... 5
2.8 Building Leases.................................................................................... 5
2.9 Capitalized Interest............................................................................... 5
2.10 Collateral......................................................................................... 5
2.11 Construction Period................................................................................ 5
2.12 Contractor......................................................................................... 5
2.13 Coverage Test...................................................................................... 6
2.14 Default............................................................................................ 6
2.15 Default Rate....................................................................................... 6
2.16 Entity............................................................................................. 6
2.17 Equity Contribution................................................................................ 6
2.18 Equity Funded Amount............................................................................... 6
2.19 Equity Rent Component.............................................................................. 6
2.20 Event of Major Default............................................................................. 7
2.21 Extension Fee...................................................................................... 7
2.22 Extension Term..................................................................................... 7
2.23 Fee Mortgage....................................................................................... 7
2.24 Funded Amount...................................................................................... 7
2.25 Guaranteed Residual Value.......................................................................... 7
2.26 HSBC............................................................................................... 8
2.27 Improvements....................................................................................... 8
2.28 Improvements Loan.................................................................................. 8
2.29 Initial Term....................................................................................... 8
2.30 ILC................................................................................................ 8
2.31 Land............................................................................................... 8
2.32 Land Lease......................................................................................... 8
2.33 Land Lease Deed of Trust........................................................................... 8
2.34 Land Loan.......................................................................................... 9
2.35 Landlord Affiliate................................................................................. 9
2.36 Landlord Deed of Trust............................................................................. 9
2.37 Lease Inception Date............................................................................... 9
</TABLE>
i.
<PAGE> 3
<TABLE>
<S> <C> <C>
2.38 Legal Requirements................................................................................. 9
2.39 Lenders............................................................................................ 9
2.40 Lenders Deed of Trust.............................................................................. 9
2.41 LIBOR Business Day................................................................................. 9
2.42 LIBOR Rate. ...................................................................................... 10
2.43 Monthly Calculation................................................................................ 10
2.44 Mortgage........................................................................................... 10
2.45 Mortgagee.......................................................................................... 10
2.46 New Loan........................................................................................... 10
2.47 Nominal Rate....................................................................................... 10
2.48 Notes.............................................................................................. 10
2.49 Notice............................................................................................. 10
2.50 Official Records................................................................................... 10
2.51 Permitted Exceptions............................................................................... 10
2.52 Premises........................................................................................... 11
2.53 Real Estate Taxes.................................................................................. 11
2.54 Rent............................................................................................... 11
2.55 Rent Commencement Date............................................................................. 11
2.56 Rent Payment Date.................................................................................. 11
2.57 Rent Period........................................................................................ 11
2.58 Required Permits................................................................................... 11
2.59 SBNYTC............................................................................................. 11
2.60 Security Deposit................................................................................... 11
2.61 Senior Funded Amount............................................................................... 11
2.62 Senior Rent Component.............................................................................. 11
2.63 Site Plan.......................................................................................... 12
2.64 Sumitomo........................................................................................... 12
2.65 Taking............................................................................................. 12
2.66 Tenant Deed of Trust............................................................................... 12
2.67 Term............................................................................................... 12
ARTICLE 3 DEMISE............................................................................................. 12
3.1 Premises........................................................................................... 12
ARTICLE 4 TERM............................................................................................... 12
4.1 Initial Term....................................................................................... 12
4.2 Extension Term..................................................................................... 12
4.3 Holding Over....................................................................................... 13
ARTICLE 5 RENT............................................................................................... 13
5.1 Base Rent.......................................................................................... 13
5.2 Proration.......................................................................................... 16
5.3 No Abatement of Rent............................................................................... 16
5.4 Delinquent Rent.................................................................................... 16
5.5 Equity Funding..................................................................................... 16
5.6 Exhibits Reflecting Initial Advance and Rent
Commencement Date.................................................................................. 17
5.7 Security Deposit................................................................................... 18
5.8 Additional Rent.................................................................................... 19
ARTICLE 6 TAXES.............................................................................................. 19
6.1 Real Estate Taxes.................................................................................. 19
6.2 Personal Property Taxes............................................................................ 20
6.3 Right to Contest................................................................................... 20
</TABLE>
ii.
<PAGE> 4
<TABLE>
<S> <C> <C>
6.4 Withholding Taxes.................................................................................. 21
6.5 Additional Provisions Relating to Taxes............................................................ 21
ARTICLE 7 INSURANCE.......................................................................................... 22
7.1 Liability Insurance................................................................................ 22
7.2 Builders' Risk Insurance........................................................................... 23
7.3 All-Risk Insurance................................................................................. 23
7.4 General Requirements............................................................................... 23
7.5 Waiver of Subrogation.............................................................................. 24
7.6 Indemnity.......................................................................................... 24
ARTICLE 8 USE................................................................................................ 25
8.1 Use................................................................................................ 25
8.2 Contest of Legal Requirements...................................................................... 28
8.3 Indemnification.................................................................................... 28
ARTICLE 9 UTILITIES AND SERVICES............................................................................. 29
9.1 Services to the Premises........................................................................... 29
ARTICLE 10 MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES................................................. 29
10.1 Tenant Obligations................................................................................. 29
10.2 Surrender of the Premises.......................................................................... 29
ARTICLE 11 CONSTRUCTION OF IMPROVEMENTS....................................................................... 30
11.1 Tenant's Rights to Construct Improvements.......................................................... 30
11.2 Request for Construction Funding; Landlord
Obligation to Fund................................................................................. 30
11.3 Conditions Precedent to Landlord's Obligation to
Fund Initial Advances.............................................................................. 30
11.4 Conditions Precedent to Landlord's Obligation to
Fund Subsequent Advances........................................................................... 33
11.5 Conditions Precedent to Landlord's Obligation to
Fund Final Advance................................................................................. 34
11.6 Additional Provisions Regarding Advances........................................................... 34
11.7 Required Permits, Easements, etc................................................................... 35
11.8 Alterations........................................................................................ 35
11.9 Title to and Nature of Improvements................................................................ 35
11.10 Tenant as Landlord's Construction Agent............................................................ 36
11.11 Tenant's Release of Funding Commitment............................................................. 36
ARTICLE 12 LIENS.............................................................................................. 36
ARTICLE 13 ASSIGNMENT BY LANDLORD............................................................................. 36
13.1 Further Mortgages or Encumbrances by Landlord;
Authorized Loans................................................................................... 36
13.2 Landlord's Right to Sell........................................................................... 39
13.3 Transfer of Funds and Property..................................................................... 39
ARTICLE 14 ASSIGNMENT AND SUBLEASING.......................................................................... 40
14.1 Right to Assign.................................................................................... 40
14.2 Right to Sublet.................................................................................... 40
14.3 Tenant's Right to Mortgage......................................................................... 41
</TABLE>
iii.
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLF 15 EMINENT DOMAIN..................................................................................... 41
15.1 Total or Substantial Taking........................................................................ 41
15.2 Partial Taking..................................................................................... 41
15.3 Temporary Taking................................................................................... 41
15.4 Damages............................................................................................ 42
15.5 Notice and Execution............................................................................... 42
ARTICLE 16 DAMAGE OR DESTRUCTION.............................................................................. 42
16.1 Casualty........................................................................................... 42
16.2 Termination of Lease............................................................................... 42
16.3 Insurance Proceeds................................................................................. 43
ARTICLE 17 DEFAULT............................................................................................ 45
17.1 Default............................................................................................ 45
17.2 Event of Major Default............................................................................. 45
17.3 Contest by Tenant.................................................................................. 47
17.4 Remedies........................................................................................... 47
17.5 No Waiver.......................................................................................... 48
17.6 Effect of Assignment............................................................................... 48
17.7 Landlord Cure Right................................................................................ 49
17.8 Landlord's Default................................................................................. 49
ARTICLE 18 QUIET ENJOYMENT.................................................................................... 50
ARTICLE 19 TENANT'S OPTION TO PURCHASE........................................................................ 51
19.1 Option To Purchase Premises........................................................................ 51
19.2 Mandatory Purchase/Sale of Premises................................................................ 53
19.3 Survival........................................................................................... 55
ARTICLE 20 ADDITIONAL COVENANTS OF LANDLORD................................................................... 55
20.1 Title and Subdivision.............................................................................. 55
20.2 Land Use........................................................................................... 55
20.3 Transfer of Property Interests..................................................................... 56
20.4 Trust Equity; No Other Asset....................................................................... 56
20.5 Default Under Authorized Loan...................................................................... 56
ARTICLE 21 MISCELLANEOUS...................................................................................... 57
21.1 Relationship....................................................................................... 57
21.2 Form of Transaction; Certain Tax Matters........................................................... 57
21.3 Notices............................................................................................ 58
21.4 Severability of Provisions......................................................................... 58
21.5 Entire Agreement; Amendment........................................................................ 58
21.6 Approvals and Consents............................................................................. 58
21.7 Terminology........................................................................................ 59
21.8 Memorandum of Lease................................................................................ 59
21.9 Successors and Assigns............................................................................. 59
21.10 Commissions........................................................................................ 59
21.11 Attorneys' Fees.................................................................................... 60
21.12 Governing Law...................................................................................... 60
21.13 Counterparts....................................................................................... 60
21.14 Time Is of the Essence............................................................................. 60
21.15 No Third Party Beneficiaries....................................................................... 60
21.16 Limitations on Recourse............................................................................ 60
21.17 Estoppel Certificates.............................................................................. 60
</TABLE>
iv.
<PAGE> 6
<TABLE>
<S> <C> <C>
21.18 Collateral......................................................................................... 61
21.19 Landlord's Continuing Obligation to Sell........................................................... 61
21.20 As-Is Lease........................................................................................ 62
21.21 Net Lease.......................................................................................... 62
21.22 Representations and Warranties..................................................................... 62
21.23 Appraisal Procedure................................................................................ 62
21.24 Financial Reporting................................................................................ 64
21.25 Appraisal.......................................................................................... 64
</TABLE>
List of Exhibits
Exhibit A Description of Land
Exhibit B Permitted Exceptions
Exhibit C Site Plan
Exhibit D Pre-Approved Approval Plans
Exhibit E Memorandum of Lease
Exhibit F Form of Contractor's Certificate
Exhibit G Initial Advance Memorandum
Exhibit H Rent Commencement Date Memorandum
Exhibit I Draw Request Form
Exhibit J Closing Costs and Fees to be Included in Funded
Amount
Exhibit K Notice of Interest Rate Period Selection
Exhibit L Description of Additional Property Owned by Landlord
v.
<PAGE> 7
LEASE
THIS LEASE ("Lease") by and between SUMITOMO BANK OF NEW YORK
TRUST COMPANY ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED
MAY 22, 1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC., AND SBNYTC
("Landlord"), and CISCO SYSTEMS, INC., a California corporation ("Tenant"), is
entered into as of the date set forth in Article 1 and shall be effective and
binding upon the parties hereto as of such date. Capitalized terms used in this
Lease shall have the definitions set forth in Article 2 or in the text of this
Lease.
In consideration of the Base Rent reserved herein, and the
terms, covenants and conditions set forth below, Landlord and Tenant hereby
agree as follows:
ARTICLE 1
BASIC LEASE PROVISIONS
1.1 DATE OF LEASE: May 22, 1995.
1.2 LANDLORD: Sumitomo Bank of New York Trust
Company, ("SBNYTC"), as trustee
under that certain trust agreement
dated May 22, 1995 between Sumitomo
Bank Leasing and Finance, Inc. and
SBNYTC.
1.3 TENANT: Cisco Systems, Inc., a California
corporation.
1.4 LAND: That certain tract of land located
in the City of San Jose, Santa Clara
County, California, consisting of
two (2) parcels and more
particularly described on Exhibit A
attached hereto, together with all
easements, rights of way,
appurtenances and other rights and
benefits belonging or pertaining to
such land. The Land does not include
the Improvements. Landlord makes no
representations as to the accuracy
of the description of the Land.
1.5 PREMISES:
The Improvements which Tenant may
elect to construct, as agent for
Landlord, on the Land pursuant to
the terms of this Lease. The
Premises does not include any
portion of the Land itself.
1.
<PAGE> 8
1.6 TERM: The initial term ("Initial Term") of
this Lease shall commence on the
Date of Lease set forth in Section
1.1 above and shall expire on May
21, 2000. Subject to the Extension
Conditions contained in Section 4.2,
upon at least ninety (90) days'
prior written notice to Landlord,
Tenant may extend the Initial Term
for one (1) additional period of
five (5) years ("Extension Term").
The Initial Term and (if exercised
by Tenant) the Extension Term shall
be referred to collectively herein
as the "Term." The Term shall cease
upon, and shall not refer to any
period of time after, termination of
this Lease (whether pursuant to the
terms of the Lease, by operation of
law, or otherwise).
1.7 RENT COMMENCEMENT
DATE: Tenant's obligation to pay Base Rent
shall commence on a
Building-by-Building basis. With
respect to any particular Building,
the rent commencement date ("Rent
Commencement Date") shall be the
first LIBOR Business Day of the next
calendar month which commences
immediately following the earlier to
occur of: (a) the date Tenant
receives from the applicable
governmental authority a final
Certificate of Occupancy for the
Building in question; or (b)
eighteen (18) months following the
first Advance by Landlord for the
foundation for the Building in
question. If Tenant shall elect to
construct certain Improvements in a
phase of Buildings, then on or
before the Lease Inception Date for
such phase of Buildings, Landlord
and Tenant shall execute a
memorandum of understanding that
construction is taking place on a
phased basis, and in that event, the
Rent Commencement Date for such
phase of Buildings shall be the
first LIBOR Business Day of the next
calendar month which commences
immediately following the earlier to
occur of: (i) the date Tenant
receives a final Certificate of
Occupancy for the phase in question
from the applicable governmental
authority; or
2.
<PAGE> 9
(ii) eighteen (18) months after the
first Advance by Landlord for the
foundation for the phase in
question.
1.8 BASE RENT: As described in Section 2.6.
1.9 ADDRESSES FOR
NOTICES:
LANDLORD: TENANT:
Sumitomo Bank of New York Cisco Systems, Inc.
Trust Company Treasury Department
277 Park Avenue 3535 Garrett Drive
New York, NY 10172 Santa Clara, CA 95054
Attn: Corporate Trust Attention: Eugene Hill
Department
With a copy to: With a copy to:
Landels, Ripley & Diamond Cisco Systems, Inc.
Hills Plaza 3535 Garrett Drive
350 Steuart Street Santa Clara, CA 95054
San Francisco, CA 94105 Attention: Nancy Bareilles
Attn: Bruce W. Hyman, Esq.
and
Todd J. Anson, Esq.
Brobeck, Phleger & Harrison
550 West C Street
Suite 1300
San Diego, CA 92101
1.10 ADDRESS FOR RENT
PAYMENTS:
Equity Rent Component: Sumitomo Bank of New York Trust
Company
277 Park Avenue
New York, NY 10172
Attn: Corporate Trust Department
3.
<PAGE> 10
Senior Rent
Component: One half (1/2) of the Senior Rent Component
(as defined in Section 2.62) shall be
payable at the following address:
The Hongkong and Shanghai
Banking Corporation Limited
160 Sansome Street
San Francisco, CA 94104
Attn: Loan Administration
Department
and one half (1/2) of the Senior Rent Component
(as defined in Section 2.62) shall be payable at
the following address:
The Sumitomo Bank, Limited
555 California Street
Suite 3350
San Francisco, CA 94104
Attn: Mr. Dave Kubiak
This Article 1 is intended to supplement and/or summarize the
provisions set forth in the balance of this Lease. If there is any conflict
between any provisions contained in this Article 1 and the balance of this
Lease, the balance of this Lease shall control.
ARTICLE 2
DEFINITIONS
For purposes of this Lease, the following defined terms shall
have the meanings set forth in this Article 2.
2.1 ADDITIONAL RENT. "Additional Rent" shall mean any amounts
other than Base Rent payable by Tenant to Landlord or to other Entities on
Landlord's behalf as required under this Lease, including, without limitation,
interest accrued on past due Base Rent and on other past due Additional Rent
amounts owing to Landlord hereunder (including interest on the past due amounts
payable by Landlord to Lenders under the Improvements Loan, as described in
Section 21.21, excluding interest on interest) at the Default Rate (to be
compounded annually), costs and expenses to be paid or reimbursed by Tenant
hereunder (including any amounts which Tenant owes to Landlord pursuant to the
terms of Section 17.7 or Section 21.21), any charges, fees or other amounts due
under the Improvements Loan and any other Authorized Loan, amounts due pursuant
to Tenant's indemnity obligations hereunder, Real Estate Taxes, Tenant's
obligation to pay condemnation proceeds to Landlord pursuant to Section 15.4,
Tenant's obligation to pay insurance proceeds to Landlord pursuant to Section
16.3, Tenant's obligation to pay the Purchase Price under Section 19.2, and
Tenant's obligation, if any, to pay the "Margin Increase" (as defined in that
certain side letter regarding "Management of Collateral
4.
<PAGE> 11
Account" between Tenant and HSBC, of even date herewith). Except as provided in
this Section, Additional Rent shall not include interest charged on interest.
2.2 ADVANCE. "Advance" shall mean any payment by Landlord for
Improvements which has been requested by Tenant and paid pursuant to the terms
of Article 11.
2.3 APPROVAL PLANS. "Approval Plans" shall have the meaning set
forth in Section 11.3(c).
2.4 AUTHORIZED LOAN. "Authorized Loan" shall have the meaning
set forth in Section 13.1(b).
2.5 AUTHORIZED PLANS. "Authorized Plans" shall have the meaning
set forth in Section 11.3(c).
2.6 BASE RENT. "Base Rent" shall mean, as of a Rent Payment
Date, the sum of the following for any Building for which the Rent Commencement
Date has occurred: (1) the Senior Rent Component; and (2) the Equity Rent
Component.
2.7 BUILDING. "Building" shall mean any individual building
which constitutes an Improvement.
2.8 BUILDING LEASES. "Building Leases" shall mean this Lease
and those two (2) certain lease agreements by and between Landlord and Tenant
for premises located in San Jose, California, dated the date hereof,
collectively.
2.9 CAPITALIZED INTEREST. "Capitalized Interest" shall mean:
(1) the Senior Rent Component incurred by Landlord to Lenders under the Notes on
Advances during the construction of any Building or phase prior to the Rent
Commencement Date for such Building or phase; and (2) the Equity Rent Component
as a result of Advances made by Landlord pursuant to Section 5.5 during the
construction of any Building or phase prior to the Rent Commencement Date for
such Building or phase.
2.10 COLLATERAL. "Collateral" shall have the meaning set forth
in Section 21.18.
2.11 CONSTRUCTION PERIOD. "Construction Period" for each
Building or phase shall mean that period beginning on the date of the first
Advance for the foundation of the Building or phase and ending on the Rent
Commencement Date for the Building or phase.
2.12 CONTRACTOR. "Contractor" shall mean the general contractor
hired to construct any Improvements, which contractor shall be selected by
Tenant in Tenant's capacity as agent for Landlord, and shall be subject to
Landlord's approval, which shall not be unreasonably withheld or delayed.
Landlord hereby approves Devcon Construction, Inc.
5.
<PAGE> 12
2.13 COVERAGE TEST. "Coverage Test" shall mean a requirement,
wherever referenced in the Lease, that the fair market value of the Land and the
Improvements together be at least three (3) times Equity Funded Amount.
2.14 DEFAULT. "Default" shall have the meaning set forth in
Section 17.1.
2.15 DEFAULT RATE. "Default Rate" means that weighted average
of the interest rates of (i) the Senior Rent Component as set forth in Section
2.62 and (ii) the Equity Rent Component set forth in Section 2.19, plus two
percent (2.0%), or the highest rate permitted by applicable law (if any),
whichever is less. Mathematically, the Default Rate shall be:
(3/86 x Equity Rent Component rate) + (83/86 x Senior Rent Component rate) + 2%
Each change in the Default Rate due to a change in such interest rates under the
Notes shall take effect simultaneously with such change in such interest rates,
without Notice to either party. Notwithstanding the foregoing, in the event that
the foregoing Default Rate shall be in violation of any usury or similar law,
then the Default Rate shall be reduced to the extent necessary to cause the
Default Rate to comply with any usury or similar law.
2.16 ENTITY. "Entity" shall mean any person,
corporation, partnership (general or limited), joint venture,
association, joint stock company, trust or other business entity or
organization.
2.17 EQUITY CONTRIBUTION. "Equity Contribution" shall mean that
portion of the Funded Amount equal to three percent (3%) of the Funded Amount,
which Landlord has paid as Landlord's equity contribution to the Funded Amount
(subject, however, to Tenant's adjusted Base Rent payments in the forty-ninth
(49th) and fiftieth (50th) months of the Term, as set forth in Section 5.1(a)
below).
2.18 EQUITY FUNDED AMOUNT. "Equity Funded Amount" shall mean
that portion of the Funded Amount equal to the amount which Landlord has paid
pursuant to the terms of Section 5.5. The Equity Funded Amount shall be the sum
of the Equity Contribution plus the Security Deposit. In no event shall the
Equity Funded Amount exceed the difference between the Funded Amount minus the
aggregate Guaranteed Residual Value. In no event shall the aggregate of the
Equity Funded Amounts of the Building Leases exceed Nineteen Million Three
Hundred Eighty Thousand Dollars ($19,380,000).
2.19 EQUITY RENT COMPONENT. "Equity Rent Component"
shall mean the quotient equal to the product of the Equity
Contribution (at the time of the relevant calculation of the Equity
Rent Component) multiplied by the LIBOR Rate plus 4.05%, divided by
6.
<PAGE> 13
the Monthly Calculation. Mathematically, the Equity Rent Component
shall be:
[(Equity Contribution) x (LIBOR Rate + 4.05%)]
[ Monthly Calculation ]
2.20 EVENT OF MAJOR DEFAULT. "Event of Major Default" shall
have the meaning set forth in Section 17.2.
2.21 EXTENSION FEE. "Extension Fee" shall have the meaning set
forth in the Section 4.2.
2.22 EXTENSION TERM. "Extension Term" shall have the meaning
set forth in the Basic Lease Provisions.
2.23 FEE MORTGAGE. "Fee Mortgage" shall mean any Mortgage,
other than the Improvements Loan, at any time given by Landlord, and remaining
uncancelled on the Official Records, encumbering all or any portion of
Landlord's right, title and estate in Improvements.
2.24 FUNDED AMOUNT. "Funded Amount" shall mean the aggregate
amount of any Advances requested and actually paid by Landlord pursuant to the
terms of Section 11 (including Capitalized Interest) and the closing costs and
fees set forth in Exhibit J attached hereto (which shall be attributable to the
first Building or phase of the Lease), less any reductions in the principal
amount of the Improvements Loan or any New Loan or in the Equity Funded Amount,
whether such principal reduction or reduction in the Equity Funded Amount is
accomplished by payment to Lenders or the holder of a New Loan, the application
of the Collateral or other collateral by Lenders or the holder of a New Loan,
the payment of insurance proceeds, condemnation awards, or otherwise (subject,
however, to Tenant's obligation to adjust its Base Rent payments in the
forty-ninth (49th) and fiftieth (50th) months of the Term, as set forth in
Section 5.1(a) below).
2.25 GUARANTEED RESIDUAL VALUE. "Guaranteed Residual Value"
shall be calculated on each Building or phase, and shall mean that amount
necessary to cause the present value of the Minimum Lease Payments under this
Lease, including the present value of the Guaranteed Residual Value, to
approximately equal, but not exceed, eighty nine and 9/10 percent (89.9%) of the
estimated Funded Amount, computed at the Lease Inception Date and discounted to
present value as of the expected Rent Commencement Date using the interest rate
implicit in the Lease (or Tenant's best available incremental borrowing rate as
communicated by Tenant to Landlord, if lower), all as calculated and determined
pursuant to Statement of Financial Accounting Standards Number 13. "Minimum
Lease Payments" shall mean the Base Rent payable over the Initial Term and the
Extension Term, plus imputed interest on the Security Deposit imputed at the one
month LIBOR rate of interest, plus the Guaranteed Residual Value, plus the
following to the extent paid in cash: the fees listed on Exhibit J, the
Extension Fee and
7.
<PAGE> 14
reimbursed costs of Landlord paid by Tenant deemed to meet the definition of
Minimum Lease Payments under SFAS No. 13. During the Construction Period for
each Building, the Guaranteed Residual Value shall not exceed an amount
determined by multiplying the then existing Funded Amount for such Building by a
fraction, the numerator of which is the estimated Guaranteed Residual Value to
be allocated to such Building as of the Rent Commencement Date for such Building
and the denominator of which is the estimated Funded Amount to be allocated to
such Building as of such Rent Commencement Date. If, at any time prior to the
determination of the Guaranteed Residual Value for any Building or phase, the
Financial Accounting Standards Board, Emerging Issues Task Force, or the
Securities Exchange Commission, releases any pronouncements which modify FAS 13,
paragraph 7(d) which outlines the criteria for the determination of the
Guaranteed Residual Value, this Section 2.25 shall be modified to insure
compliance with the new standards.
2.26 HSBC. "HSBC" shall mean The Hongkong and Shanghai Banking
Corporation Limited, a Hong Kong banking corporation, acting through its San
Francisco branch.
2.27 IMPROVEMENTS. "Improvements" shall mean any and all
improvements which Tenant may elect, as construction agent for Landlord, to
erect, construct or situate upon the Land or any part thereof during the Term
under and pursuant to the terms of, and using funding provided by or through
Landlord pursuant to Article 11 of this Lease. Any improvements constructed,
erected or situated on the Land which are not funded by or through Landlord
pursuant to the terms of Article 11 of this Lease shall be and remain the
property of Tenant, and shall not be subject to the terms of this Lease.
2.28 IMPROVEMENTS LOAN. "Improvements Loan" shall have the
meaning set forth in Section 13.1(b).
2.29 INITIAL TERM. "Initial Term" shall have the meaning set
forth in the Basic Lease Provisions.
2.30 ILC. "ILC" shall mean Irish Leasing Corporation, a Texas
corporation, or a successor landlord under the Land Lease.
2.31 LAND. "Land" shall have the meaning set forth in the Basic
Lease Provisions.
2.32 LAND LEASE. "Land Lease" shall mean that certain Ground
Lease dated as of February 28, 1995 by and between Tenant and ILC, by which
Tenant leases the Land from ILC.
2.33 LAND LEASE DEED OF TRUST. "Land Lease Deed of Trust" shall
mean that certain fourth priority deed of trust, junior only to the lien of the
Lenders Deed of Trust, the Landlord Deed of Trust and the Tenant Deed of Trust,
by ILC, as trustor, in favor of Tenant, as beneficiary, dated May 1, 1995 and
recorded on
8.
<PAGE> 15
May 1, 1995 in the Official Records as Instrument No. 12877066, and
as more fully described in Section 13.1(g).
2.34 LAND LOAN. "Land Loan" shall mean that loan funded by
Union Bank of Switzerland, a Swiss banking corporation, acting through its Los
Angeles branch, or any other loan authorized pursuant to the terms of the Land
Lease for purposes of ILC's purchase of the Land, as more particularly described
in the Land Lease.
2.35 LANDLORD AFFILIATE. "Landlord Affiliate" shall mean
any Entity which controls or is controlled by or is under the common control of
Landlord or its beneficiary.
2.36 LANDLORD DEED OF TRUST. "Landlord Deed of Trust" shall
mean that certain second priority deed of trust, securing Tenant's obligations
under this Lease, and junior only to the lien of the Lenders Deed of Trust, to
be executed by Tenant in favor of Landlord and recorded in the Official Records
as of the Date of Lease, as more fully described in Section 13.1(e).
2.37 LEASE INCEPTION DATE. "Lease Inception Date" shall mean,
for the first Building or phase constructed (i.e., Building "J" as depicted in
the Site Plan attached hereto as Exhibit C), the date of this Lease. For
subsequent Buildings or phases, "Lease Inception Date" shall be that date when
Tenant's Approval Plans for such Building or phase are approved by Landlord
pursuant to Section 11.3(c).
2.38 LEGAL REQUIREMENTS. "Legal Requirements" shall mean all
statutes, codes, laws, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses, authorizations, directions
and requirements of all federal, state, county, municipal and other governments,
departments, commissions, boards, courts, authorities, officials and officers,
which now or at any time hereafter are applicable to Tenant or this Lease or
applicable to and enforceable against the Premises, the Improvements or any part
thereof, as applicable.
2.39 LENDERS. "Lenders" shall mean HSBC and Sumitomo,
collectively. Individually, the Lenders are sometimes hereinafter referred to as
a Lender.
2.40 LENDERS DEED OF TRUST. "Lenders Deed of Trust" shall mean
that certain first priority deed of trust to be executed by Landlord and Tenant
in favor of HSBC and Sumitomo jointly and recorded in the Official Records as of
the Date of Lease, as more fully described in Section 13.1(d).
2.41 LIBOR BUSINESS DAY. "LIBOR Business Day" shall have the
same meaning as "Business Day" is defined in the Notes or other Authorized Loan.
9.
<PAGE> 16
2.42 LIBOR RATE. "LIBOR Rate" shall mean the LIBOR Rate as
defined in the Notes, or a subsequent Authorized Loan, as selected in accordance
with Section 5.1(d).
2.43 MONTHLY CALCULATION. "Monthly Calculation" shall mean the
quotient resulting from dividing three hundred sixty (360) by the number of days
in any applicable calendar month. The applicable calendar month shall be the
month for which the calculation involving this Monthly Calculation is being
done.
2.44 MORTGAGE. "Mortgage" shall mean any mortgage, deed of
trust, or other instrument in the nature thereof at any time and from time to
time constituting a lien, charge or encumbrance upon any interest or estate of
Tenant or Landlord in the Premises or in this Lease.
2.45 MORTGAGEE. "Mortgagee" shall mean the record holder (as
reflected in the Official Records) from time to time of, or the record
beneficiary (as reflected in the Official Records) from time to time under, a
Mortgage.
2.46 NEW LOAN. "New Loan" shall have the meaning set forth in
Section 13.1(b).
2.47 NOMINAL RATE. "Nominal Rate" shall mean the operative and
relevant rate (or rates) of interest under the Notes from time to time, or if
the Improvements Loan has been replaced by an Authorized Loan, then the relevant
rate of interest under the promissory note evidencing such Authorized Loan, all
subject to the terms of Section 13.1(b).
2.48 NOTES. "Notes" shall have the meaning set forth in Section
13.1(b).
2.49 NOTICE. "Notice" shall mean a written advice, request,
demand or notification required or permitted by this Lease, as more particularly
provided in Section 21.3.
2.50 OFFICIAL RECORDS. "Official Records" shall mean the
official records of Santa Clara County, California.
2.51 PERMITTED EXCEPTIONS. "Permitted Exceptions" shall mean
the following: (1) the exceptions set forth in Exhibit B; (2) any exceptions
created or caused by Tenant or to which Tenant consents in writing; (3) taxes
and assessments not yet due and payable; (4) the Lenders Deed of Trust (or, if
the Lenders Deed of Trust has been reconveyed and removed from title, then a
deed of trust that secures an Authorized Loan); (5) the Landlord Deed of Trust;
(6) the Tenant Deed of Trust; (7) the Land Lease Deed of Trust; (8) all title
defects, liens, encumbrances, deeds of trust, mortgages, rights-of-way, and
restrictive covenants and conditions affecting the Land unless any of the
foregoing arise as a result of Landlord's actions or with Landlord's written
consent (unless such
10.
<PAGE> 17
actions taken or consent given by Landlord are requested in writing by Tenant);
and (9) this Lease.
2.52 PREMISES. "Premises" shall have the meaning set forth in
the Basic Lease Provisions. It is the intention of the parties that the Premises
consist only of the Improvements, and in no event shall the Premises consist of
any portion of the Land.
2.53 REAL ESTATE TAXES. "Real Estate Taxes" shall have the
meaning set forth in Section 6.1(b).
2.54 RENT. "Rent" shall mean Base Rent and Additional Rent.
2.55 RENT COMMENCEMENT DATE. "Rent Commencement Date" shall
have the meaning set forth in the Basic Lease Provisions.
2.56 RENT PAYMENT DATE. "Rent Payment Date" shall have the
meaning set forth in Section 5.1.
2.57 RENT PERIOD. "Rent Period" shall mean each period equal to
one calendar month occurring during the Term hereof, except that the first Rent
Period shall be a partial calendar month commencing on the Rent Commencement
Date and ending on the last day of such calendar month and the last Rent Period
shall be a partial calendar month commencing on the first LIBOR Business Day of
the last calendar month of the Term and ending on the last day of the Term.
2.58 REQUIRED PERMITS. "Required Permits" shall mean each and
every building and development permit including, without limitation, demolition
permits, site permits and addenda thereto (including, without limitation,
foundation permits and structural permits), temporary and final occupancy
permits and any other governmental or quasi-governmental approvals which must be
issued by any governmental authority, department, commission, board, official or
officer as a condition precedent to construction and occupancy of any
Improvements.
2.59 SBNYTC. "SBNYTC" shall mean Sumitomo Bank of New York
Trust Company.
2.60 SECURITY DEPOSIT. "Security Deposit" shall have the
meaning set forth in Section 5.7.
2.61 SENIOR FUNDED AMOUNT. "Senior Funded Amount" of this Lease
shall mean that amount equal to the Funded Amount minus the Equity Funded
Amount, which amount shall not exceed the Guaranteed Residual Value.
2.62 SENIOR RENT COMPONENT. "Senior Rent Component" shall mean
the quotient equal to the product of the Senior Funded Amount (at the time of
the relevant calculation of the Senior Rent
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Component) multiplied by the Nominal Rate, divided by the Monthly
Calculation. Mathematically, the Senior Rent Component shall be:
[ Senior Funded Amount x Nominal Rate ]
[ Monthly Calculation ]
2.63 SITE PLAN. "Site Plan" shall mean the Site Plan attached
hereto as Exhibit C.
2.64 SUMITOMO. "Sumitomo" shall mean The Sumitomo Bank,
Limited, a Japanese banking corporation, acting through its San Francisco
branch.
2.65 TAKING. "Taking" shall have the meaning set forth in
Section 15.1.
2.66 TENANT DEED OF TRUST. "Tenant Deed of Trust" shall mean
that certain third priority deed of trust, securing (i) Landlord's obligation to
return Tenant's Security Deposit under this Lease and (ii) Landlord's obligation
to convey the Premises to Tenant pursuant to Article 19 of this Lease, and shall
be junior only to the liens of the Lenders Deed of Trust and the Landlord Deed
of Trust, to be executed by Landlord, as trustor, in favor of Tenant, as
beneficiary, and recorded in the Official Records as of the Date of Lease, as
more fully described in Section 13.1(f).
2.67 TERM. "Term" shall have the meaning set forth in the Basic
Lease Provisions.
ARTICLE 3
DEMISE
3.1 PREMISES. Subject to the terms, covenants and conditions
contained herein, Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, the Premises, together with all rights, privileges, easements and
appurtenances relating to the Premises.
ARTICLE 4
TERM
The Term of this Lease shall consist of the Initial Term, and
if exercised by Tenant, the Extension Term, as follows:
4.1 INITIAL TERM. The Initial Term of this Lease is specified
in Article 1.
4.2 EXTENSION TERM. Upon Notice of the extension given to
Landlord in accordance with Article 1, so long as the "Extension Conditions"
(defined below) are satisfied at the time of such Notice of extension, Tenant
may extend the Term for the Extension Term specified in Article 1. All
provisions of this Lease shall
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remain in full force and effect for the Extension Term, including, without
limitation, the Base Rent payable hereunder, except that Tenant shall have no
further right to extend the Term of this Lease, and except that the Base Rent
during the Extension Term may be adjusted only to reflect any actual change in
the rate of interest (that is, the spread over LIBOR) charged pursuant to the
Authorized Loan. The "Extension Conditions" shall consist of the following: (1)
Tenant shall satisfy the "Financial Tests" (defined below) at the time of such
Notice and as of the expiration of the Initial Term; (2) Tenant shall pay to
Landlord no later than thirty (30) days before the first day of the Extension
Term an amount equal to the product of the outstanding Funded Amount as of the
end of the fifty-seventh (57th) full calendar month of the Initial Term times
0.25% ("Extension Fee"); (3) there shall exist no ongoing and uncured Event of
Major Default at the time of such Notice and as of the expiration of the Initial
Term; (4) the Improvements Loan shall have been refinanced or repaid as of the
commencement of the Extension Term (the refinancing or repayment of which shall
be subject to the terms of Section 13.1(c)) and (5) the Land and the
Improvements shall satisfy the Coverage Test at the time of the Notice and as of
the expiration of the Initial Term. The "Financial Tests" shall consist of the
following: (a) Tenant shall have a minimum tangible net worth (total assets
minus intangible assets minus total liabilities, as calculated in accordance
with generally accepted accounting principles) ("Tangible Net Worth") of not
less than Seven Hundred Fifty Million Dollars ($750,000,000); (b) Tenant's
leverage (the ratio of funded debt to Tangible Net Worth) shall not exceed a
ratio of 1:1; and (3) Tenant shall not have incurred any net losses in excess of
Ten Million Dollars ($10,000,000) per year during the two complete fiscal years
immediately preceding such Notice of extension.
4.3 HOLDING OVER. If Tenant remains in possession of the
Premises after the expiration of the Term without executing a new lease, such
holding over shall be construed as a tenancy from month-to-month, subject to all
terms, covenants and conditions herein contained, and at the Base Rent required
to be paid by Tenant pursuant to the terms hereof during the last month of the
Term.
ARTICLE 5
RENT
5.1 BASE RENT.
(a) PAYMENT. Base Rent shall accrue in the manner set forth
below commencing on the Rent Commencement Date. Tenant's obligation to pay Base
Rent, with respect to any Building, shall commence accruing on the Rent
Commencement Date for such Building, and shall be payable monthly in arrears
thereafter on the first LIBOR Business Day of each successive month, except that
the last installment of Base Rent shall be payable on the last day of the last
month during the Term (each such date shall be a "Rent Payment
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Date"). Tenant's obligation to pay Base Rent on account of Advances made for any
Building shall not commence accruing until the Rent Commencement Date for that
Building. No sooner than thirty (30) days prior to the due date for any
installment of Base Rent hereunder, Landlord shall deliver to Tenant a Notice
indicating the exact dollar amount of the Base Rent that is due on such due date
("Invoice"). The Base Rent payment due on the first LIBOR Business Day of the
forty-ninth (49th) month of the Term shall be deemed paid entirely to Landlord
to be applied first to the Equity Rent Component then due and the balance to be
applied to the reduction of the Equity Funded Amount. The amount of the Senior
Rent Component that would otherwise have been due but for the preceding sentence
shall be added to the Senior Funded Amount. The Base Rent payment due on the
first LIBOR Business Day of the fiftieth (50th) month of the Term shall be
deemed paid entirely to Lenders under the Improvements Loan to the extent of the
Senior Rent Component for the immediately preceding month and the balance shall
be applied to the reduction of the Senior Funded Amount (excluding any
prepayment premium thereon).
Tenant shall pay Base Rent as follows: The Senior Rent
Component shall be paid to Lenders as set forth in the Basic Lease Provisions,
and the Equity Rent Component shall be paid to Landlord at the Address for Rent
set forth in the Basic Lease Provisions (or, if the Improvements Loan has been
replaced by a New Loan or Replacement Loan, then the Senior Rent Component shall
be paid directly to the holder of such New Loan or Replacement Loan) or at such
other place as Landlord and Tenant may from time to time mutually agree upon, in
their respective sole and absolute discretion. With the exception of payments
made pursuant to the Clearinghouse Debit Account and Clearinghouse Credit
Account, established by Tenant in accordance with the requirements of this
Section 5.1(b) and (c), as set forth below, Tenant shall pay Base Rent by wire
transfer or by check. Landlord, Lenders or such other holder of a New Loan or
Replacement Loan, as the case may be, shall supply Tenant with such bank account
information as Tenant shall require to enable payment by wire transfer. The
parties agree that Tenant is paying the Senior Rent Component of Base Rent
directly to Lenders for the convenience of the parties in order to satisfy
Landlord's obligations to pay interest under the Improvements Loan for the
period of time corresponding to the Term of this Lease; all Base Rent payments
shall be deemed payments to Landlord to the extent of the Equity Rent Component
and payments of the interest due to Lenders under the Improvements Loan to the
extent of the Senior Rent Component.
(b) CLEARINGHOUSE CREDIT ACCOUNT.At any time, and from time to
time, during the Term of the Lease, Tenant shall have the right to request in
writing that a Lender designate a clearinghouse credit account at a financial
institution legally authorized to receive funds on behalf of the Lender
("Clearinghouse Credit Account") for Tenant's payment of the Senior Rent
Component due and payable to the Lender (as set forth in the Basic Lease
Provisions) on a Rent Payment Date. At any time, and from time to
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<PAGE> 21
time, after a Lender's designation of a Clearinghouse Credit Account, Tenant
may, but shall not be obligated to, deposit funds on a Rent Payment Date in the
exact amount of the Senior Rent Component due and payable to the Lender who has
established such a Clearinghouse Credit Account and any payment by Tenant of a
portion of the Senior Rent Component due a Lender by payment directly into a
Lender's Clearinghouse Credit Account shall not prevent Tenant from making
future payments of rent by any other means permitted in this Section 5.1. A
Lender's designation of a Clearinghouse Credit Account for deposit of Tenant's
payment of the Lender's portion of the Senior Rent Component shall be deemed
that Lender's approval of Tenant's payment of the Lender's Senior Rent Component
into the Clearinghouse Credit Account. Tenant's ability to deposit a Lender's
portion of the Senior Rent Component into a Clearinghouse Credit Account shall
not alleviate Landlord's obligation to deliver to Tenant an Invoice as set forth
above.
(c) CLEARINGHOUSE DEBIT ACCOUNT. At any time, and from time to
time, during the Term of the Lease, Tenant and HSBC may agree that Tenant's
payment of HSBC's portion of the Senior Rent Component as set forth in the Basic
Lease Provisions shall be paid to HSBC by funds available to HSBC in a
clearinghouse debit account at a financial institution reasonably acceptable to
HSBC ("Clearinghouse Debit Account"). If Tenant and HSBC agree to payment of
HSBC's portion of the Senior Rent Component through a Clearinghouse Debit
Account, Tenant shall provide written notice of such agreement to Landlord, and
shall indicate the account number and location of the Clearinghouse Debit
Account. The Clearinghouse Debit Account shall be terminable by Tenant at will,
without advance notice to Landlord or HSBC. During any portion of the Term in
which the Clearinghouse Debit Account is available for and contains sufficient
funds to cover the amount of HSBC's portion of the Senior Rent Component due and
payable to HSBC on a Rent Payment Date, interest shall not accrue on (nor shall
Tenant be deemed in default hereunder for failure to pay) any of HSBC's portion
of the Senior Rent Component due hereunder which is not collected on a Rent
Payment Date due to any failure by HSBC to collect its portion of the Senior
Rent Component in a timely manner. HSBC's ability to collect its portion of the
Senior Rent Component from the Clearinghouse Debit Account shall not alleviate
Landlord's obligation to deliver to Tenant an Invoice as set forth above.
Notwithstanding anything to the contrary in this Lease, the Clearinghouse Debit
Account shall not be used for the payment of any amounts (whether or not payable
under the Lease) other than HSBC's portion of the Senior Rent Component as set
forth in the Basic Lease Provisions and which are due and payable on the
then-current Rent Payment Date.
(d) INTEREST RATE SELECTION. The parties acknowledge that the
interest rate applicable under the Improvements Loan (or other Authorized Loan)
and the Equity Rent Component shall affect the amount of Base Rent payable by
Tenant hereunder. Therefore, Tenant shall have the right, by written notice to
Landlord in the form of Exhibit K (which notice may be
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<PAGE> 22
transmitted to Landlord by facsimile), to designate the interest period to be
selected from time to time by Landlord pursuant to the terms of the Notes (or
other Authorized Loan) as the interest period then in effect for interest rate
of the Improvements Loan (or other Authorized Loan) and the Equity Rent
Component. Tenant acknowledges that the rates available to be selected as the
LIBOR Rate after the first partial calendar month of the Term are 1, 3, 6, 9 or
12-month LIBOR rates. In the event that Tenant fails to give such written notice
to Landlord prior to the applicable deadline for selection of such interest
period pursuant to the terms of the Notes (or other Authorized Loan), Landlord
shall select the same interest period then in effect for the Improvements Loan
(or other Authorized Loan) and for the Equity Rent Component. Notwithstanding
the foregoing, the interest rate applicable during the Construction Period for
each Building or phase shall be the one-month LIBOR rate.
5.2 PRORATION. If the Term expires or is otherwise terminated
on a day other than the day before the first LIBOR Business Day of a calendar
month, then Base Rent for such Rent Period shall be prorated on the basis of
actual days elapsed on the basis of a thirty (30) day month.
5.3 NO ABATEMENT OF RENT. Except as a consequence of a
reduction in the Funded Amount or the terms of Section 15 (Taking), Tenant shall
not be entitled to any abatement, diminution, reduction, setoff or postponement
of Base Rent as a consequence of any inconvenience to, interruption of,
cessation of or loss of Tenant's use or enjoyment of the Premises or as a result
of any reason whatsoever.
5.4 DELINQUENT RENT. Any Base Rent not paid on the due date
shall accrue interest at the Default Rate from the date such Base Rent was
originally due until the date such Base Rent is paid. All interest accrued on
past due Base Rent shall be due and payable to Landlord at the time the Base
Rent is paid, or upon demand by Landlord, if earlier.
5.5 EQUITY FUNDING.
(a) For each Building (as such term is defined in Section
5.6 for purposes of this Section 5.5), after the appraisal described in Section
21.25 has been received by Landlord, Landlord shall itself fund any Advances on
a proportionate basis based upon a fraction of the total amount of the Advance,
the numerator of which is the difference between the total estimated Funded
Amount (as of completion of construction, as reasonably estimated by Tenant) for
the Building or phase less the Guaranteed Residual Value for such Building, and
the denominator of which is the total estimated Funded Amount (as of completion)
for such Building or phase; provided that the Equity Funded Amount of Advances
for a Building shall be deemed to be paid on a proportionate basis out of those
funds held by Landlord as Tenant's Security Deposit and out of Landlord's Equity
Contribution. In no event shall Landlord be
16.
<PAGE> 23
required to do any of the following: (a) pay the Equity Funded Amount of
Advances for a Building resulting in such payment exceeding the difference
between the Funded Amount for such Building minus the Guaranteed Residual Value
for such Building; (b) make Advances such that the aggregate Funded Amounts of
the Building Leases exceeds One Hundred Fourteen Million Dollars ($114,000,000)
or the aggregate Equity Funded Amounts of the Building Leases exceeds Nineteen
Million Three Hundred Eighty Thousand Dollars ($19,380,000); or (c) make
Advances such that the Funded Amount under this Lease exceeds Thirty Two Million
Dollars ($32,000,000).
(b) Notwithstanding the foregoing, in the event: (1)
Contractor fails to complete any Building or phase on account of either the
insolvency or bankruptcy of the Contractor or a dispute with the Contractor
concerning an alleged default by the Contractor; and (2) Tenant elects to have
Landlord enter into a construction contract with another contractor for the
purpose of completing such Building or phase; and (3) completion of such
incomplete Building or phase by another contractor requires funds in excess of
the funds that would have been required had Contractor not become insolvent or
bankrupt or had such dispute not existed (excluding change orders), then
Landlord's obligation for funding for such Building or phase under this Section
5.5 shall be equal to the amount that Landlord would have been required to fund
under this Section 5.5 absent such insolvency, bankruptcy or dispute plus the
amount of any change orders. At least two (2) days prior to making such equity
Advance to Tenant, Landlord shall submit to Tenant and shall have obtained
Tenant's prior written approval of the amount of such payment and the basis upon
which such amount has been calculated. Tenant may withhold Tenant's consent to
such payment if Tenant's accountant in good faith disagrees with such amount or
the manner in which it was calculated.
5.6 EXHIBITS REFLECTING INITIAL ADVANCE AND RENT COMMENCEMENT
DATE. Within thirty (30) days after the initial Advance for the foundation for
any Building and within thirty (30) days after the initial Advance under this
Lease, Landlord and Tenant shall execute the "Initial Advance Memorandum" in the
form attached hereto as Exhibit G. With respect to the initial Advance under
this Lease, the Initial Advance Memorandum shall also indicate to which Building
such Advance applies. Within thirty (30) days after the Rent Commencement Date
for any Building under this Lease, Landlord and Tenant shall execute the "Rent
Commencement Date Memorandum" in the form attached hereto as Exhibit H. If the
Rent Commencement Date for any Building under this Lease occurs prior to the
completion or occupancy of such Building, then the parties shall, within thirty
(30) days after the completion or occupancy of such Building, enter into a
memorandum, which shall reflect the Guaranteed Residual Value for such Building
(the parties acknowledge that, except as provided in Section 19.2, they will not
reflect the Guaranteed Residual Value for any Building until such Building has
been completed or occupied). Guaranteed Residual Value for any Building during
construction and
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after construction shall be determined by multiplying the Guaranteed Residual
Value percentage, calculated pursuant to Section 2.25, by the Funded Amount for
any Building at the date of calculation. Whenever the term "Building" is used in
this Lease in connection with the calculation of the Guaranteed Residual Value
during a construction period, in connection with Landlord's equity funding under
Section 5.5 or in connection with Tenant's Security Deposit funding under
Section 5.7, such term shall mean a particular construction phase of the
Improvements.
5.7 SECURITY DEPOSIT. On the date of initial Advance for a
Building, Tenant shall deliver to Landlord a security deposit ("Security
Deposit") in an amount equal to fourteen percent (14%) of the estimated Funded
Amount for the Building as stated in the Initial Advance Memorandum for the
Building in the form attached hereto as Exhibit G. Landlord may use and
commingle the Security Deposit with other funds of Landlord and the Security
Deposit shall not bear interest. On the Rent Commencement Date, the amount of
the Security Deposit shall be increased or decreased to an amount equal to the
difference between the Funded Amount minus the sum of the Landlord's Equity
Contribution and the Guaranteed Residual Value (as of such date, as determined
pursuant to the Rent Commencement Date Memorandum for the Building in the form
attached hereto as Exhibit H). Mathematically, the Security Deposit as of the
Rent Commencement Date shall be:
Funded Amount - (Guaranteed Residual Value + Equity Contribution)
The Security Deposit shall be held by Landlord as security solely for the
payment of Base Rent and Additional Rent by Tenant pursuant to this Lease. If at
any time during the Term any Base Rent shall be overdue, then Landlord may at
its election (but shall not be required to) appropriate and apply any portion of
the Security Deposit to the payment of any such overdue Base Rent. Should the
entire Security Deposit, or any portion thereof, be appropriated and applied by
Landlord as provided herein, then Tenant shall immediately, after receipt of
written demand by Landlord, pay to Landlord a sufficient sum in cash to restore
the Security Deposit to the amount of the Security Deposit as of the Rent
Commencement Date. In the event that the Equity Funded Amount is reduced for any
reason, including without limitation by reason of a sale of any portion of the
Premises or the application of the proceeds of a condemnation award to reduce
the Equity Funded Amount (it being understood that the Equity Funded Amount will
only be reduced in the event and to the extent that the net proceeds of such
condemnation award exceeds the Senior Funded Amount, with such award proceeds to
be applied first to the Senior Funded Amount pursuant to Section 15.4 hereof),
the amount of the Security Deposit required hereunder shall be reduced by a like
amount, and any such excess funds held by Landlord shall immediately be returned
to Tenant. The entire Security Deposit (other than amounts withheld against Base
Rent and Additional Rent due hereunder) shall be returned to Tenant at the end
of the Term.
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5.8 ADDITIONAL RENT. Tenant agrees to pay all Additional Rent
when it becomes due and payable under this Lease.
ARTICLE 6
TAXES
6.1 REAL ESTATE TAXES.
(a) From and after the Rent Commencement Date Tenant shall
pay directly to the appropriate taxing authority all Real Estate Taxes. If the
Rent Commencement Date occurs or the Term expires or otherwise terminates at any
time other than the beginning or end of a taxable year, Tenant's obligation to
pay Real Estate Taxes shall be prorated on the basis of a 365-day year, so as to
include only that portion of the taxable year which is a part of the Term.
Unless a termination of the Lease results from a purchase of the Land pursuant
to Article 19, any Real Estate Taxes levied against the Land which accrue during
the Term of this Lease but which would not be due and payable to the appropriate
taxing authority until after the expiration of the Term of this Lease (as the
same may be extended) shall be paid by Tenant to Landlord upon such termination.
Landlord shall pay such amounts to the appropriate taxing authority on a timely
basis.
(b) Except to the extent that Real Estate Tax bills and
statements are sent directly to Tenant by the taxing authority, upon receipt by
Landlord of the tax bills or statements, Landlord will use reasonable efforts to
promptly advise Tenant in writing of all Real Estate Taxes and shall deliver
copies of all applicable tax bills or statements to Tenant. Tenant shall pay
directly to the taxing authority all Real Estate Taxes prior to the later of (i)
thirty (30) days after receipt by Tenant from Landlord of a copy of such bills
and statements referred to above, or (ii) five (5) days prior to delinquency. As
used herein, the term "Real Estate Taxes" shall mean any and all taxes,
governmental fees and similar charges or assessments levied or assessed against
the Improvements and/or the Land including, without limitation, ad valorem taxes
and special assessments applicable to real property; provided, however, that
Real Estate Taxes shall not include any Landlord Income Taxes. Real Estate Taxes
shall also include any and all documentary, transfer, sales, mortgage, recording
or similar taxes imposed on Landlord or Tenant in connection with (i) the
original acquisition of the Premises by Landlord, (ii) any transfer of the
Premises to Tenant pursuant to the terms of this Lease, or (iii) any sale of the
Premises to a third party pursuant to the terms of this Lease. As used herein,
the term "Landlord Income Taxes" shall mean any and all income, franchise,
gains, gift, succession, excess profits, gross receipts, revenue, estate,
rental, or similar taxes or taxes in lieu thereof imposed upon Landlord or any
party other than Tenant (or an affiliate thereof) and any withholding tax
imposed as a collection device for, in lieu of, or otherwise related to any of
the foregoing without regard to whether such tax is required to be collected by
Tenant and without
19.
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regard to whether Tenant would be liable for such withholding tax in the event
it failed to so withhold. For purposes of the foregoing, an income tax shall
include, without limitation, any tax imposed under the United States Internal
Revenue Code or the California Bank and Corporation Tax Law as well as any tax
which could qualify as an "income tax" under United States Treasury Regulation
Section 1.901-2 (except to the extent any such statute or regulation is
subsequently modified to include a tax or other governmental charge of a
materially different type and nature from the taxes currently described therein)
and any income tax which may be payable under the laws of any jurisdiction
either now or in the future. Real Estate Taxes for any given tax year shall
exclude assessment installments that are not due and payable during such tax
year.
6.2 PERSONAL PROPERTY TAXES. Tenant shall pay directly to the
appropriate taxing authorities prior to delinquency any and all taxes and
assessments levied or assessed during the Term upon or against Tenant's
furniture, equipment, trade fixtures and any other personal property in the
Premises.
6.3 RIGHT TO CONTEST. Tenant shall not be required to pay any
Real Estate Taxes or any other taxes for which Tenant is liable hereunder
(including, without limitation, any taxes for which Tenant is required to
indemnify Landlord under Section 6.5) (including penalties and interest), so
long as (i) Tenant shall contest the same or the validity thereof by appropriate
legal proceedings in such a manner to prevent the tax sale of any portion of the
Premises and (ii) the position to be taken by Tenant pursuant to such contest
would have a realistic possibility of success if litigated. For purposes of this
Lease, Tenant may conclusively establish that a position to be taken in a
contest would have a realistic possibility of success if litigated by providing
to Landlord a letter from counsel stating an opinion to such effect. In the
event of any such contest, Tenant shall, within thirty (30) days after the final
determination thereof, pay and discharge the amounts determined to be due in
accordance therewith and with the provisions of this Lease, together with any
penalties, fines, interest, costs and expenses that may have accrued thereon or
that may have resulted from Tenant's contest. Tenant also shall have a right to
contest any taxes for which it is liable hereunder, but with regard to which the
position to be taken pursuant to such contest would not have a realistic
possibility of success if litigated, provided that Tenant pays such taxes on or
prior to the date upon which such taxes are asserted to be due by the relevant
governmental authority. Notwithstanding the foregoing provisions of this Section
6.3, Tenant shall have an unconditional right to contest (without prior payment)
any taxes imposed by law upon Tenant rather than upon Landlord. Tenant's
decision to pay any taxes prior to contesting its or another party's underlying
liability therefore shall not be deemed to imply or suggest that the position to
be taken in such contest would not have a realistic possibility of success if
litigated. Landlord shall cooperate fully with Tenant in connection with the
exercise of Tenant's right
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of contest contained herein, and in the event that applicable law shall require
that Landlord, rather than Tenant, pursue legal proceedings for such contest,
Landlord will initiate and pursue such contest upon Tenant's request and in
accordance with Tenant's instructions (including, without limitation, Tenant's
instructions as to the selection of legal counsel and matters of strategy or
settlement); provided, however, that Landlord shall not be subject to any
liability for the payment of any costs or expenses in connection with any such
contest or proceedings, and Tenant will indemnify and save harmless Landlord
from any such costs and expenses (including, without limitation, reasonable
attorneys' fees, costs of court and appraisal costs), reimbursing Landlord
therefor upon demand (or paying such costs and expenses directly when due, all
as directed by Landlord). Tenant shall be entitled to any refund of any taxes
and penalties or interest from any governmental authority to the extent the
refund represents monies paid to the governmental authority by Tenant or paid by
Landlord and reimbursed by Tenant.
6.4 WITHHOLDING TAXES. Subject to Section 6.5, but
notwithstanding any other provision of this Lease to the contrary, Tenant may
withhold from any payments under this Lease any Landlord Income Taxes, without
obligation to gross-up, indemnify or otherwise increase payments in consequence
thereof, to the extent required by applicable law. Upon the date hereof or upon
the date a party becomes a Landlord or a transferee of any portion of the
Landlord's interest in the Premises or this Lease, and within thirty (30) days
following the first day of each calendar year or if otherwise requested from
time to time by Tenant, Landlord and each transferee, if organized under the
laws of a jurisdiction outside the United States, shall provide Tenant with
three counterparts of each of the forms prescribed by the Internal Revenue
Service of the United States (Form 1001 or 4224, or successor form(s), as the
case may be) certifying as to Landlord's or such transferee's status for
purposes of determining exemption from United States withholding taxes with
respect to all payments to be made to such person. Without limitation upon the
foregoing, unless Tenant has received such forms or other documents reasonably
satisfactory to it indicating that payments under this Lease are not subject to
withholding tax, Tenant is authorized to and shall withhold taxes from such
payments at the applicable statutory rate. Subject to Section 6.5, but
notwithstanding any other provision of this Lease to the contrary, any
withholding by Tenant under the preceding sentence shall not give rise to any
gross-up, indemnification or other payment obligation on the part of Tenant.
Landlord and each transferee, if organized under the laws of the United States
or any State thereof, shall timely provide Tenant with duplicate documents
conforming to the requirements of Treasury Regulation 1.1441-5(b) or any
successor thereto (which statement may be made on a Form W-9).
6.5 ADDITIONAL PROVISIONS RELATING TO TAXES. Notwithstanding
anything in this Section 6 to the contrary, Tenant shall protect and defend
Landlord from and against all criminal
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prosecution regarding and shall indemnify and hold Landlord harmless from and
against any and all losses, costs, liabilities or damages (including reasonable
attorneys' fees and disbursements and court costs) arising by reason of:
(a) Any and all U.S. Federal, state or local income taxes
imposed upon Landlord in consequence of Landlord being treated as the owner or
lessor of the Premises (or any part thereof) for such tax purposes (provided
that Landlord has fully complied with its obligations under Section 21.2(b));
(b) Any and all taxes imposed upon Tenant (except to the
extent that such taxes are imposed upon Tenant as a result of Landlord's failure
to comply with its obligations under this Lease);
(c) Any and all taxes required to be withheld from payments
made by Tenant to a third party not related to or affiliated with Landlord, HSBC
or Sumitomo;
(d) Any and all Real Estate Taxes;
(e) Any and all taxes owed by Landlord as a result of
payment made by Tenant to Landlord pursuant to Tenant's indemnity obligations
under this Section 6.5; and
(f) Any and all costs, liabilities or damages (including
reasonable attorneys' fees) incurred by Landlord in obtaining indemnification
payments from Tenant under the provisions of this Section 6.5.
Tenant's obligation to reimburse or indemnify Landlord for any
taxes, governmental fees, penalties, interest or other supplemental tax charges
under this Lease shall be reduced by the value of any related or offsetting tax
benefits derived or realized by Landlord. Tenant's duty to indemnify Landlord
under this Section 6.5 shall apply only to taxes arising during the Term
(whether or not due and payable at the conclusion of the Term), but shall
otherwise survive the expiration or earlier termination of this Lease.
ARTICLE 7
INSURANCE
7.1 LIABILITY INSURANCE. At all times during the Term, Tenant
shall obtain at Tenant's sole cost and expense a policy or policies of
comprehensive general liability insurance on an "occurrence" basis against
claims for "personal injury" liability, including bodily injury, death or
property damage liability. The liability insurance policy shall contain coverage
limits no less than the following: (1) Three Million Dollars ($3,000,000) per
person; (2) Five Million Dollars ($5,000,000) per incident; and (3) One Million
Dollars ($1,000,000) for property damage.
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7.2 BUILDERS' RISK INSURANCE. With respect to any Improvements
which may be under construction and not yet covered by insurance under the terms
of Section 7.3, Tenant shall maintain or cause to be maintained a policy or
policies of builders' risk insurance in an amount equal to the value upon
completion of the work (exclusive of land, foundation, excavation, grading,
landscaping, architectural and development fees and other items customarily
excluded from such coverage), insuring against the risks customarily insured
against under such insurance, including fire, vandalism, malicious mischief,
sprinkler leakage, lightning, and windstorm.
7.3 ALL-RISK INSURANCE. With respect to any completed
Improvements, prior to the termination of the builders' risk insurance required
by Section 7.2, and at all times thereafter, Tenant shall, at Tenant's sole cost
and expense, obtain and maintain, or cause to be obtained and maintained: (a) a
policy or policies of all-risk insurance covering the Improvements, providing
coverage against loss or damage by fire, vandalism, malicious mischief,
sprinkler leakage, lightning, windstorm and other insurable perils, as, under
good insurance practice, from time to time are insured against under all-risk
coverage for properties of similar character, age and location in an amount or
amounts not less than one hundred percent (100%) of the then actual replacement
cost (exclusive of land, foundation, excavations, grading, landscaping,
architectural and development fees and other items customarily excluded from
such coverage and without any deduction for depreciation); and (b) a policy or
policies of difference in conditions insurance covering the Improvements,
providing coverage against loss or damage by earthquake and flood as, under good
insurance practice, from time to time are insured against under earthquake
coverage for properties of similar character, age and location in an amount or
amounts not less than the lesser of (i) one hundred percent (100%) of the then
actual replacement cost (exclusive of land, foundation, excavations, grading,
landscaping, architectural and development fees and other items customarily
excluded from such coverage and without any deduction for depreciation) or (ii)
the amount of the Equity Funded Amount.
7.4 GENERAL REQUIREMENTS. The insurance required under this
Article 7 may be furnished under a "primary" policy and an "umbrella" policy or
policies. Landlord and the holder of any Authorized Loan shall be named as an
additional insured under Tenant's policy of insurance required under Section
7.1; Landlord, Tenant and the holder of any Authorized Loan shall each be named
as the loss payees under the policies of insurance required under Sections 7.2
and 7.3; and such policies shall contain an endorsement for cross-liability
coverage. Tenant shall furnish Landlord with certificates from Tenant's insurers
with respect to the insurance required to be carried hereunder on or before the
date such insurance is required to be carried. The certificates shall state that
such insurance is in full force and effect and that coverage will not be reduced
in any amount or otherwise limited or cancelled without twenty (20) days' prior
written notice
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to Landlord. Renewal certificates shall be furnished to Landlord not less than
thirty (30) days prior to the expiration of each such policy. Any blanket
insurance policy or policies that insure Tenant against the risks and for the
amounts herein specified shall be deemed to satisfy the obligation of Tenant
hereunder, provided that any such policy of blanket insurance shall specify the
amount of the total insurance allocated to the risks required to be insured
hereunder and such allocated amount meets the requirements of this Article 7.
All insurance required by this Article 7 shall be with an insurance company
licensed to do business in the State of California, with a general
policyholder's rating, as rated by the most current available "Bests" Insurance
Reports, no less than A-III,and shall be primary and non-contributing.
7.5 WAIVER OF SUBROGATION. Notwithstanding anything to the
contrary contained herein, to the extent permitted by law and so long as any
insurance coverage maintained by Tenant is not diminished by reason thereof,
Tenant hereby (a) releases and waives any rights it may have against Landlord
and its officers, agents and employees on account of any loss or damages
occasioned to Tenant, its property or the Premises, and arising from any risk
covered by any fire and extended coverage insurance maintained by Tenant,
whether or not due to the negligence of Landlord, its agents, employees,
contractors, licensees, invitees or other persons, and (b) waives on behalf of
any insurer providing such insurance to Tenant any right of subrogation that any
such insurer may have or acquire against Landlord or such persons by virtue of
payment of any loss under such insurance. Tenant shall use its best efforts to
cause its insurance policies to contain a waiver of subrogation clauses in
accordance with the foregoing.
7.6 INDEMNITY. Tenant shall protect, defend, indemnify, hold
and save Landlord harmless from and against any and all losses, costs,
liabilities or damages (including reasonable attorneys' fees and disbursements
and court costs) arising by reason of: (i) any and all injury or death of
persons or damage to property against which Tenant is obligated to maintain
insurance for the benefit of Landlord pursuant to this Article 7; (ii) the
failure to obtain the waiver of subrogation clause required by Section 7.5
hereof where such clause could have been obtained through the exercise of
Tenant's best efforts; or (iii) the invalidation of such insurance policy
required to be obtained by Tenant hereunder by Tenant's insurer. Tenant's duty
to indemnify Landlord under this Section 7.6 shall survive the expiration or
earlier termination of this Lease with respect to events occurring during the
Term.
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ARTICLE 8
USE
8.1 USE.
(a) PERMITTED USES. Tenant may use the Premises for any
lawful purpose.
(b) ENVIRONMENTAL COMPLIANCE.
(i) DEFINED TERMS. The term "Applicable
Environmental Laws" shall mean any applicable laws, regulations or ordinances
pertaining to health or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986 or
otherwise (as amended, hereinafter called "CERCLA"), the Resource Conservation
and Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the
Solid Waste Disposal Act Amendments of 1980, the Hazardous and Solid Waste
Amendments of 1984 or otherwise (as amended, hereinafter called "RCRA"), and
California Health & Safety Code Section 25501(j). The terms "hazardous
substance" and "release" as used in this Lease shall have the meanings specified
in CERCLA, and the terms "solid waste" and "disposal" (or "disposed") shall have
the meanings specified in RCRA; provided, in the event either CERCLA or RCRA is
amended or superseded by other laws so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply subsequent to the effective
date of such amendment or other laws; and, provided further, to the extent that
the laws of the State of California establish a meaning for "hazardous
substance", "release", "solid waste", or "disposal" which is broader than that
specified in either CERCLA or RCRA, such broader meaning shall apply. The term
"Pre-existing Agricultural Contamination" means concentrations of any chemical,
compound or substance existing in soil and groundwater on the Land as disclosed
in that certain Phase I Preliminary Environmental Site Assessment and Phase II
Soil and Ground Water Quality Evaluation for Vista Montana and Tasman Drive
Parcels, San Jose, California, performed by Lowney Associates and dated February
1995.
(ii) TENANT'S COVENANTS. Tenant will not
cause or permit the Premises or the Improvements to be in violation of, or do
anything or permit anything to be done which subjects Landlord, Tenant or the
Premises to any remedial obligations under or which creates a claim or cause of
action under, any Applicable Environmental Laws, including, without limitation,
CERCLA, RCRA, and the California Health & Safety Code ss. 25501(j), assuming
disclosure to the applicable governmental authorities of all relevant facts,
conditions and circumstances, if any, pertaining to the Premises and the
Improvements, and Tenant will promptly notify Landlord in writing of any
existing, pending or threatened investigation, claim or inquiry of which Tenant
has knowledge by any governmental authority in connection with any Applicable
Environmental Laws. Tenant shall obtain any permits, licenses or
25.
<PAGE> 32
similar authorizations to construct, occupy, operate or use any Improvements,
fixtures and equipment at any time located on the Premises by reason of any
Applicable Environmental Laws. Tenant will not use the Premises or the
Improvements in a manner which will result in the unlawful disposal or other
unlawful release of any hazardous substance or solid waste on or to the Premises
or the Improvements and covenants and agrees to keep or cause the Premises and
the Improvements to be kept free of any unlawful hazardous substance, unlawful
solid waste or unlawful environmental contaminants (including, without
limitation, friable asbestos and any substance containing asbestos deemed
hazardous and unlawful by any Applicable Environmental Law) and to remove the
unlawful amounts of the same (or if removal is prohibited by law, to take
whatever action is required by law) promptly upon discovery at Tenant's sole
expense. Tenant shall promptly notify Landlord in writing of any unlawful
disposal or other unlawful release of any hazardous substance, environmental
contaminants or solid wastes on or to the Premises or the Improvements.
Notwithstanding the foregoing, Landlord and Tenant acknowledge that Pre-existing
Agricultural Contamination exists on the Land due to agricultural operations of
prior owners and that Tenant has no further obligation to notify Landlord
regarding such Pre-existing Agricultural Contamination. In the event Tenant
fails to comply with or perform any of the foregoing covenants and obligations,
after thirty (30) days' prior written Notice to Tenant, Landlord may, but shall
be under no obligation to, cause the Premises and the Improvements to be freed
from the unlawful hazardous substance, unlawful solid waste or unlawful
environmental contaminants (or if removal is prohibited by law, to take whatever
action is required by law) and the reasonable cost of the removal or such other
action shall be a demand obligation owing by Tenant to Landlord pursuant to this
Lease; provided, however, that this sentence shall not apply to Pre-existing
Agricultural Contamination. Notwithstanding the foregoing, Landlord shall have
no right to cause the removal of such materials so long as Tenant both: (1) is
diligently and in good faith proceeding to comply with Tenant's obligation to
remove the unlawful amounts of such materials; and (2) has the financial ability
to so comply. Subject to the foregoing, Tenant grants to Landlord and Landlord's
agents and employees access to the Premises and the Improvements, and the
license to remove the unlawful hazardous substance, unlawful solid waste or
unlawful environmental contaminants (or if removal is prohibited by law, to take
whatever action is required by law), and agrees to indemnify and save Landlord
harmless from all reasonable costs and expenses involved and from all claims
(including consequential damages) asserted or proven against Landlord by any
party in connection therewith. Upon Landlord's reasonable request for "good
cause" (defined below), at any time and from time to time during the Term,
Tenant will provide at Tenant's sole expense an inspection or audit of the
Premises and the Improvements from an engineering or consulting firm approved by
Landlord, indicating the presence or absence of any hazardous substance, solid
waste or environmental contaminants located on the Premises; provided, however
that this provision shall not apply to Pre-existing Agricultural Contamination.
If Tenant fails to
26.
<PAGE> 33
provide same after sixty (60) days' notice, Landlord may order same, and Tenant
grants to Landlord and Landlord's employees and agents access to the Premises
and the Improvements and a license to undertake any testing reasonably required
to obtain such inspection or audit. The reasonable cost of obtaining such
inspection or audit and any expenses incurred by Landlord in connection
therewith, shall be a demand obligation owing by Tenant to Landlord pursuant to
this Lease. For purposes of this Section 8.1(b)(ii), "good cause" shall mean
that Landlord shall have reasonable grounds to believe that an unlawful release
or unlawful disposal of hazardous substances or solid wastes has occurred on the
Premises or the Improvements, but shall not include Pre-existing Agricultural
Contamination.
(iii) TENANT'S INDEMNITY. Tenant agrees to
indemnify and hold Landlord harmless from and against, and to reimburse Landlord
with respect to, any and all claims, demands, causes of action, losses, damages,
liabilities, costs and expenses (including attorneys' fees and court costs),
fines and/or penalties of any and every kind or character, known or unknown,
fixed or contingent, asserted or potentially asserted against or incurred by
Landlord at any time and from time to time by reason of, in connection with or
arising out of (A) the failure of Tenant to perform any obligation herein
required to be performed by Tenant regarding Applicable Environmental Laws, (B)
any violation of any Applicable Environmental Law by Tenant or with respect to
the Premises or the Improvements, or any disposal or other release by Tenant or
with respect to the Premises or the Improvements of any hazardous substance,
environmental contaminants or solid waste on or to the Premises or the
Improvements, whether or not resulting in a violation of any Applicable
Environmental Law, (C) any act, omission, event or circumstance by Tenant or
with respect to the Premises or the Improvements which constitutes or has
constituted a violation of any Applicable Environmental Law with respect to the
Premises or the Improvements, regardless of whether the act, omission, event or
circumstance constituted a violation of any Applicable Environmental Law at the
time of its existence or occurrence, and (D) any and all claims or proceedings
(whether brought by private party or governmental agencies) for bodily injury,
property damage, abatement or remediation, environmental damage or impairment or
any other injury or damage resulting from or relating to any hazardous or toxic
substance or contaminated material located upon or migrating into, from or
through the Premises or the Improvements (whether or not the release of such
materials was caused by Tenant, a subtenant, or prior owner of the Premises, or
any other Entity) which Landlord may incur. Tenant's duty to indemnify Landlord
under this Section 8.1 shall survive the expiration or earlier termination of
the Lease with respect to events occurring during, or prior to the Term or after
the Term while Landlord has record title to and Tenant is occupying the
Premises.
27.
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(c) COMPLIANCE WITH LEGAL REQUIREMENTS. Tenant
shall at all times comply with all material Legal Requirements
applicable to the Land or the Improvements and/or the use thereof.
8.2 CONTEST OF LEGAL REQUIREMENTS. Tenant shall have the right
at its sole cost and expense to contest the validity of any Legal Requirements
applicable to the Premises by appropriate proceedings diligently conducted in
good faith; and upon the request of Tenant and at Tenant's sole cost and
expense, Landlord will join and cooperate with Tenant in such proceedings.
Subject to Section 6.3, any other provision of this Lease to the contrary
notwithstanding, Tenant's right to contest Legal Requirements must be exercised
in such a manner as to avoid any exposure of the Premises or any part thereof to
foreclosure or execution sale or exposure of Landlord to civil or criminal
penalties arising from Tenant's non-compliance with such Legal Requirements.
Tenant shall defend and indemnify Landlord against, and hold Landlord harmless
from, any and all liability, loss, cost, damage, injury or expense (including,
without limitation, attorneys' fees and costs) which Landlord may sustain or
suffer by reason of Tenant's failure or delay in complying with, or Tenant's
contest of, any such Legal Requirements (or Landlord's contest, if requested in
writing by Tenant), and Tenant's duty to indemnify Landlord under this Section
8.2 shall survive the expiration or earlier termination of this Lease.
8.3 INDEMNIFICATION. Tenant will defend, protect, indemnify and
save harmless Landlord from and against all liabilities, obligations, claims,
damages, causes of action, costs and expenses, imposed upon or incurred by
Landlord by reason of the occurrence or existence of any of the following during
the Term, except to the extent caused by the willful misconduct, gross
negligence, or willful breach of contract of Landlord or its agents or
contractors (but excluding from the term contractors the Contractor and any
subcontractors of the Contractor): (1) any accident, injury to or death of
persons or loss of or damage to property occurring on or about the Premises or
Improvements; (2) performance of any labor or services or the furnishing of any
materials or other property in respect of the Premises or the Improvements; (3)
the negligence or willful misconduct on the part of Tenant or any of its agents,
invitees, employees or contractors or any other persons entering onto the
Premises or the Improvements at the request, behest or with the permission of
Tenant; (4) the construction, use or occupancy of the Improvements which Tenant
may elect to construct; (5) the use of the Land; or (6) any breach by the
"Owner" under the construction contracts entered into by Tenant as Landlord's
agent pursuant to the terms of Section 11.10. Tenant's duty to indemnify
Landlord under this Section 8.3 shall survive the expiration or earlier
termination of this Lease with respect to events occurring during the Term or
after the Term while Landlord has record title to and Tenant is occupying the
Premises.
28.
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ARTICLE 9
UTILITIES AND SERVICES
9.1 SERVICES TO THE PREMISES. At Tenant's sole cost and
expense, Tenant shall make its own arrangements for the provision of all
utilities and services to be provided to or consumed on the Premises, including,
without limitation, air conditioning, ventilation, heating, electric power,
telephone, water (both domestic and fire protection), sanitary sewer, storm
drain, natural gas and janitorial services, including for the installation,
maintenance and repair of service lines and meters to measure Tenant's
consumption of such utilities.
ARTICLE 10
MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES
10.1 TENANT OBLIGATIONS. Except as otherwise provided in this
Lease, Tenant shall maintain the Premises and the Improvements in good repair,
normal wear and tear, casualty and Takings (as defined in Section 15.1)
excepted. All maintenance that Tenant is obligated to perform under this Section
10.1 shall be at the sole expense of Tenant, except to the extent that repairs
are made necessary because of the gross negligence or willful misconduct of
Landlord, its agents, employees or contractors (but excluding from the term
contractor the Contractor and any subcontractors of the Contractor).
10.2 SURRENDER OF THE PREMISES. Except as provided in Section
19, upon the expiration or earlier termination of the Term, Tenant shall
surrender the Premises to Landlord in its then "AS-IS" condition, including,
without limitation, any condition resulting from: (i) wear and tear; (ii)
obsolescence and damage by fire or other casualty, act of God or the elements
(subject to the terms of Article 16); (iii) damage that is caused by Landlord,
its agents, employees or contractors; (iv) Takings; and (v) any improvements,
alterations, additions, repairs, replacements, or decorations in, to or of the
Premises or on the Land which are not Improvements but which Tenant may elect to
remain on the Land or the Premises. Title to all improvements, furniture,
furnishings, fixtures, trade fixtures and personal property of Tenant which have
not been funded by Landlord pursuant to the terms of Article 11 and located in
or upon the Premises or the Land, whether or not affixed to the realty, shall be
and remain in Tenant throughout the Term, and at any time during the Term of
this Lease, the same may be removed by Tenant, or, at Tenant's election,
surrendered with the Premises, in which event title to such surrendered property
shall, if Landlord so elects in Landlord's sole discretion, be deemed
transferred to Landlord. Any of such property that is not removed from the
Premises or the Improvements on or prior to the expiration or earlier
termination of this Lease shall be considered abandoned and Landlord may deal
with it as Landlord elects.
29.
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ARTICLE 11
CONSTRUCTION OF IMPROVEMENTS
11.1 TENANT'S RIGHTS TO CONSTRUCT IMPROVEMENTS. As of the date
of this Lease, no improvements exist on the Land. Tenant shall be under no
obligation whatsoever to construct any Improvements. Tenant shall have the
right, in Tenant's sole discretion, to construct on the Land with Tenant's own
funds, improvements, buildings, and/or alterations to Improvements, without the
necessity of obtaining any approval from Landlord. In addition, Tenant shall
have the right, in Tenant's sole discretion, subject to the terms of this
Article 11, to require Landlord to pay for the construction of the Improvements
which Tenant desires. With respect to any construction which Tenant may elect to
have performed in accordance with this Article 11, Landlord hereby irrevocably
appoints Tenant as Landlord's construction agent. Landlord shall have no right
to construct any improvements, buildings, and/or alterations on the Land unless
Tenant specifically requests that such be constructed, and then only in
accordance with the terms and conditions of this Article 11.
11.2 REQUEST FOR CONSTRUCTION FUNDING; LANDLORD OBLIGATION TO
FUND. At any time during the first forty-eight (48) months of the Initial Term,
Tenant may request Landlord to provide funding for the construction of
Improvements, which may consist of one or more Buildings or phases, or for the
alteration of any existing Buildings. Each such request shall be in writing and
shall generally describe the nature of the Improvements. Landlord shall fund
amounts for: (1) the costs of construction or alteration of the Improvements
pursuant to the terms and conditions set forth in this Article 11; (2)
architectural, engineering, testing, permitting, professional fees and any other
soft costs relating to such Buildings; (3) any Capitalized Interest; and (4) the
amounts described in Exhibit J. If Tenant reduces the Funded Amount by making
payment to Landlord or the holder of any Authorized Loan, except as provided in
Articles 15 and 16, the amount so paid shall not later be available to Tenant in
the form of Advances for construction work. Landlord shall have no obligation to
make Advances to a Mortgagee of Tenant's interest under this Lease, if any,
which Mortgagee has foreclosed on Tenant's interest under this Lease and is then
the "Tenant" under this Lease. Landlord shall have no obligation to make
Advances for any Building or phase after the last day of the twenty-fourth
(24th) month after the initial Advance for such Building or phase.
11.3 CONDITIONS PRECEDENT TO LANDLORD'S OBLIGATION TO FUND
INITIAL ADVANCES. The obligation of Landlord to make an initial Advance
hereunder in respect of each Building shall be subject to the following
conditions precedent:
(a) NO EVENT OF MAJOR DEFAULT. No Event of Major
Default shall exist and be continuing at the time of the initial Advance.
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(b) APPRAISAL. Landlord shall have approved the
appraisal delivered pursuant to Section 21.25 hereof.
(c) LANDLORD APPROVAL OF APPROVAL PLANS. Landlord
shall have approved in accordance with the terms of this Section 11.3(c) (except
as otherwise permitted or already approved pursuant to Section 11.1), Tenant's
proposed site plans (showing the locations and orientations of any proposed
buildings) and exterior shell plans (showing exterior building sections)
(collectively, "Approval Plans") of the Building(s) which Tenant may elect to
construct. Tenant shall deliver a letter to Landlord along with any submitted
Approval Plans in which Tenant states that the submitted Approval Plans do not
violate any Legal Requirements. Landlord may only withhold Landlord's approval
to any such Approval Plans to the extent that the Approval Plans violate any
material Legal Requirements, and Landlord may not withhold its consent on any
other ground. At the option of Tenant, the foregoing documentation may be
submitted to Landlord for approval in stages as Tenant completes it. Landlord
shall have a period of ten (10) days from the date of receipt of each component
of the documentation within which to approve or reject it. The Approval Plans,
as approved from time to time by Landlord pursuant to this Section 11.3(c) shall
constitute the "Authorized Plans." Tenant shall immediately reimburse Landlord
on demand for all reasonable out-of-pocket costs and expenses incurred by
Landlord in connection with the review and approval of any Approval Plans (not
to exceed One Thousand Dollars ($1,000) per approval). Tenant hereby certifies
to Landlord that the Approval Plans attached hereto as Exhibit C and Exhibit D
do not violate any Legal Requirements. Landlord hereby approves the Approval
Plans attached hereto as Exhibit C and Exhibit D. Landlord's approval of any
Authorized Plans does not constitute any representation or warranty by Landlord
with respect to such Authorized Plans, and Landlord hereby specifically
disclaims any such representations and warranties.
(i) FURTHER APPROVALS; PROPOSED CHANGES.
Subsequent to Landlord's approval of any Authorized Plans pursuant to Section
11.3(c), Tenant shall only be obligated to submit to Landlord for approval
documentation showing any proposed material change to the Authorized Plans (but
no approval shall be required with respect to construction or design matters
that are not contained in or addressed by the Authorized Plans), and only to the
extent such change is materially inconsistent with the Authorized Plans.
Landlord shall have a period of ten (10) days from receipt of each material
change within which to approve or reject it. Tenant shall immediately reimburse
Landlord on demand for all reasonable out-of-pocket costs and expenses incurred
by Landlord in connection with the review and approval of any such changes (not
to exceed One Thousand Dollars ($1,000) per approval). Tenant shall have the
right, without further approval of Landlord, to construct Improvements not
materially inconsistent with the Authorized Plans together with such changes
thereto as may be requested or required to comply with Legal Requirements.
31.
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(II) FAILURE TO DISAPPROVE. The failure
by Landlord to disapprove any portion of the proposed Approval Plans submitted
pursuant to this Section 11.3(c) within the specified approval period shall be
deemed to constitute approval thereof as submitted, and such Approval Plans
shall thereupon become Authorized Plans. Any disapproval by Landlord of any
portion of the proposed Approval Plans shall be in writing and shall specify
with particularity the basis for the disapproval.
(d) LANDLORD APPROVAL OF CONSTRUCTION AGREEMENT.
Landlord shall have approved in accordance with the terms of this Section
11.3(d) (except as otherwise permitted or already approved pursuant to Section
11.1), Tenant's proposed construction agreement with Contractor (collectively,
"Construction Agreement") of the Building(s) which Tenant may elect to
construct. Landlord may only withhold Landlord's approval to any such
Construction Agreement to the extent that the Construction Agreement violates
any material Legal Requirements or is not a form of agreement which includes a
guaranteed maximum price and a date certain of completion of the Improvements,
and Landlord may not withhold its consent on any other ground. Landlord shall
have a period of ten (10) days from the date of receipt of the Construction
Agreement within which to approve or reject it. Tenant shall immediately
reimburse Landlord on demand for all reasonable out-of-pocket costs and expenses
incurred by Landlord in connection with the review and approval of the
Construction Agreement (not to exceed One Thousand Dollars ($1,000) per
approval). Landlord acknowledges that Landlord has received and approved the
Construction Agreement between Tenant and Contractor for the Improvements to be
constructed pursuant to this Lease. Landlord's approval of any Construction
Agreement does not constitute any representation or warranty by Landlord with
respect to such Construction Agreement, and Landlord hereby specifically
disclaims any such representations and warranties.
(e) DRAW REQUEST. Landlord shall have received a
written request from Tenant or its agent requesting the Advance ("Draw Request")
in the form attached hereto as Exhibit I. The submission of a Draw Request by
Tenant shall be deemed to be Tenant's approval of the Capitalized Interest which
is to be included in the Funded Amount during the period covered by such Draw
Request pursuant to the terms of Section 2.24.
(f) PLANS AND SPECIFICATIONS. Landlord shall have
received a copy of the plans and specifications for the Building in question.
Landlord acknowledges that Landlord's only approval right with respect to the
plans and specifications is as specified in Section 11.3 (c) above.
(g) CONSTRUCTION AGREEMENT. Landlord shall have
received a copy of Tenant's construction agreement with Contractor for the
Building or phase in question. Landlord acknowledges that Landlord's only
approval right with respect to the plans and specifications is as specified in
Section 11.3(d) above.
32.
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(h) BUILDING PERMITS. With respect to any portion
of an Advance going toward hard costs for any Building, Landlord shall have
received a copy of all building permits and approvals then required for the
construction of the subject Building.
(i) CONTRACTOR'S CERTIFICATE. With respect to any
portion of an Advance going toward hard costs for any Building, Landlord shall
have received a certificate from the Contractor in the form attached hereto as
Exhibit F for the Advance in question ("Contractor's Certificate").
11.4 CONDITIONS PRECEDENT TO LANDLORD'S OBLIGATION TO FUND
SUBSEQUENT ADVANCES. Landlord's obligation to make any Advance for a Building
after the initial Advance for such Improvement shall be subject to the
satisfaction of the following conditions:
(a) NO EVENT OF MAJOR DEFAULT. No Event of Major
Default shall exist and be continuing at the time of such subsequent Advance,
and no "major and material" violations of code or law shall exist with respect
to the portions of such Building which have been constructed as of the date of
the Advance in question. For purposes of this Section 11.4(a), the term "major
and material" shall mean a violation that presents a material risk to the health
and safety of the occupants of the Building in question.
(b) DRAW REQUEST. With respect to any portion of
an Advance going toward hard costs for any Building, Landlord shall have
received a Draw Request for the Advance in question.
(c) CONTRACTOR'S CERTIFICATE. With respect to any
portion of an Advance going toward hard costs for any Building, Landlord shall
have received a Contractor's Certificate for the Advance in question in the form
attached hereto as Exhibit F.
(d) LIEN WAIVERS. Landlord shall have received
conditional lien waivers and releases upon progress payment from Contractor and
any "Major Subcontractor" (defined below) scheduled to receive payment from such
Advance. The term "Major Subcontractor" shall mean any subcontractor which has
executed a subcontract calling for aggregate payments to the subcontractor in
excess of Two Hundred Fifty Thousand Dollars ($250,000).
(e) CHANGES TO AUTHORIZED PLANS. Landlord shall
have approved any material change to the Authorized Plans pursuant to Section
11.3(c)(i)
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11.5 CONDITIONS PRECEDENT TO LANDLORD'S OBLIGATION TO FUND
FINAL ADVANCE. Landlord's obligation to make the final Advance for a Building
shall be subject to the satisfaction of the following conditions:
(a) SECTION 11.4 CONDITIONS. All of the conditions
precedent set forth in Section 11.4 shall have been satisfied with respect to
the final Advance in question.
(b) CERTIFICATE OF OCCUPANCY. Landlord shall have
received a copy of the certificate of occupancy or its equivalent issued by the
appropriate governmental authority for the Building in question.
11.6 ADDITIONAL PROVISIONS REGARDING ADVANCES.
(a) TIMING AND METHOD OF DISBURSEMENT. Advances to
be made hereunder shall not be made more frequently than monthly. For any
calendar month during which Tenant desires to receive an Advance, Tenant shall
submit a Draw Request on or before the date that is five (5) days prior to the
first LIBOR Business Day of such month, and if Tenant submits such Draw Request
by such date, then Landlord shall make the Advance as requested in such Draw
Request to the party(ies) designated by Tenant on the first LIBOR Business Day
of such month (subject to the conditions to funding described in Sections 11.3,
11.4 and 11.5). The Advances shall be made to parties identified by Tenant,
which parties may include Tenant. At the option of Tenant, Landlord shall make
such Advances to one (1) or more parties.
(b) RETAINAGE. Disbursements for construction
costs shall be subject to a ten percent (10%) retainage. The retainage shall be
paid to Tenant or to any Entities designated by Tenant along with the payment of
the Final Advance with respect to any Building. Notwithstanding the foregoing,
Tenant may require Landlord to pay any retainage on account of particular
subcontractors prior to the payment of a final Advance if: (1) Tenant is able to
achieve cost savings as a result of such early payment; and (2) Contractor
delivers to Landlord a letter of credit in the amount of the retainage to be
paid out prematurely. The parties will enter into an agreement with respect to
the letter of credit, which agreement shall reflect the parties' agreement that:
(a) Landlord shall only be entitled to draw on the letter of credit if and to
the extent necessary to complete the work that the subcontractor receiving the
early payment of the retainage was required to perform and failed to perform;
and (b) the letter of credit be returned to Tenant at the time that the
retainage would have been paid pursuant to the second sentence of this Section
11.6(b). The total retainage shall be reduced by the amount of such retainage
paid early pursuant to the terms of the preceding sentence.
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11.7 REQUIRED PERMITS, EASEMENTS, ETC. From time to time, upon
request of Tenant, Landlord (as holder of record of title to the Improvements)
shall execute such reasonable documents, petitions, applications and
authorizations, easements and rights of way (which have been prepared at
Tenant's expense) and shall appear at and participate in such public hearings,
staff meetings and similar gatherings, in each case as may in the reasonable and
good-faith opinion of Tenant be necessary or appropriate for the purpose of
obtaining any Required Permits or private easements or rights of way or utility
services for the Improvements or to remove any title encumbrances on the Land
which may interfere with Tenant's construction of the Improvements. Tenant shall
immediately reimburse Landlord on demand (or pay directly) for all reasonable
out-of-pocket costs and expenses incurred by Landlord in complying with
Landlord's obligations under this Section 11.7.
11.8 ALTERATIONS. Tenant shall notify Landlord in writing in
advance of any alteration to the Improvements which would either cost more than
Five Hundred Thousand Dollars ($500,000), or cause the Land and the Improvements
to fail the Coverage Test. At any time and from time to time, and without the
necessity for obtaining Landlord's approval or giving Notice thereof to Landlord
(except as otherwise specifically provided in this Section 11.8), Tenant shall
have the right, at its expense, to make any improvements, alterations,
additions, repairs, replacements or decorations in, to or of the Premises which
do not materially change the exterior design scope of the Improvements as
previously approved by Landlord pursuant to any Authorized Plans. In
constructing any such improvements, alterations, additions, repairs,
replacements or decorations, Tenant shall do so in a manner which does not
violate any applicable and material Legal Requirements. If, in connection with
any alterations which Tenant may desire to construct, either: (1) the
performance of such alterations would cause the Land and Improvements together
to fail the Coverage Test; or (2) such alterations would materially change the
exterior design scope of the Improvements as previously approved by Landlord
pursuant to Authorized Plans, then such alterations shall be subject to the
prior written approval of Landlord, which shall not be unreasonably withheld or
delayed. In the event that the parties disagree as to whether or not performing
such alterations would cause the Land and the Improvements to fail the Coverage
Test, such matter shall be subject to the appraisal provision contained in
Section 21.23.
11.9 TITLE TO AND NATURE OF IMPROVEMENTS. By virtue of
Tenant's rights under the Land Lease, Tenant hereby grants to Landlord the right
to own and construct the Improvements which Tenant elects to cause to be
constructed with Landlord's funds under this Article 11, and Tenant hereby
grants, conveys and transfers to Landlord all of Tenant's right, title and
interest in and to the Improvements (whether now existing or hereafter
constructed), and Tenant agrees that any and all Improvements of whatever nature
at any time constructed, placed or maintained upon any part of the Land shall be
and remain the property of Landlord,
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subject to Tenant's rights under Section 19 and elsewhere in this Lease. Any
improvements on the Land other than the Improvements shall be and remain the
property of Tenant, subject to the terms of Section 10.2. The severance of fee
title to the Land and Improvements shall not change the character of the
Improvements as real property.
11.10 TENANT AS LANDLORD'S CONSTRUCTION AGENT. Tenant shall
function as Landlord's agent for purposes of the construction of any
Improvements. In this role, Tenant shall have the authority, on Landlord's
behalf, to oversee and direct the construction of all Improvements, including
but not limited to, approval of building, site and other plans, obtaining
building and other permits, negotiating construction contracts, monitoring
construction and making periodic inspections, approval of Contractor's invoice
for payment, and submission of Draw Requests. Within a reasonable time after
Tenant's request, Landlord shall execute construction contracts negotiated by
Tenant for the construction of Improvements on the Land; Landlord shall not
amend, modify or terminate any such construction contract without the prior
written approval of Tenant, which may be withheld in Tenant's sole discretion.
Landlord's appointment of Tenant as Landlord's agent under this Section 11.10
shall be irrevocable unless this Lease is terminated pursuant to the terms of
Section 17.4(b) in connection with an Event of Major Default.
11.11 TENANT'S RELEASE OF FUNDING COMMITMENT. At any time
during the term, Tenant may elect in its sole discretion to release Landlord
from its obligation to fund construction of all or any portion of the
Improvements by written notice to Landlord and Lenders; provided, however, that
Tenant has substantially completed construction of each Building on which
construction has commenced.
ARTICLE 12
LIENS
Except for claims that Tenant is contesting in good faith in
such manner as to avoid any exposure of the Premises or any part thereof to
foreclosure or execution sale, Tenant shall promptly pay and discharge all
claims for work or labor done, supplies furnished or services rendered to the
Premises, and shall keep the Premises free and clear of all mechanics' and
materialmen's liens in connection therewith.
ARTICLE 13
ASSIGNMENT BY LANDLORD
13.1 FURTHER MORTGAGES OR ENCUMBRANCES BY LANDLORD; AUTHORIZED
LOANS.
(a) PROHIBITION. Except for the Lenders Deed of
Trust, the Landlord Deed of Trust, the Tenant Deed of Trust and the
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Land Lease Deed of Trust (which are hereby approved by Tenant) and as
specifically permitted in Section 11.7 or 13.1(b) or 20, Landlord shall not
cause or create any mortgages, deeds of trust, encumbrances or other exceptions
to title (collectively, "New Encumbrances") to exist with respect to the
Premises at any time, and any such encumbrance not authorized in writing by
Tenant shall be null and void. The term "New Encumbrances" shall also include
any bonds or assessments affecting the Premises to which Landlord consents in
writing without the prior written approval of Tenant (which may be withheld in
Tenant's sole and absolute discretion). Without the prior written consent of
Tenant (which may be withheld in Tenant's sole and absolute discretion),
Landlord shall not make or join in an application or other document which
requests or authorizes any bonds or assessments to affect the Premises. Landlord
recognizes that any New Encumbrance may irreparably harm Tenant in connection
with one or more of the following: (1) construction which Tenant may desire to
perform; (2) the use of the Premises; (3) Tenant's rights pursuant to the
Purchase Option in Section 19; (4) the amount of assessments which Tenant is
required to pay; or (5) other matters.
(b) AUTHORIZED LOAN. Tenant has approved the loans to
Landlord ("Improvements Loan") from Lenders which is evidenced by that certain
Promissory Note dated as of the Date of Lease by Landlord in favor of HSBC and
that certain Promissory Note dated as of the Date of Lease by Landlord in favor
of Sumitomo (collectively, the "Notes"), and further evidenced and/or secured by
(a) that certain Pledge Agreement made by Tenant in favor of Lenders, as it may
be amended and supplemented from time to time ("Pledge Agreement"), dated as of
the Date of Lease; (b) the Lenders Deed of Trust (c) that certain Loan
Disbursement Agreement dated as of the Date of Lease; (d) that certain Absolute
Assignment of Leases dated as of the Date of Lease; (e) that certain UCC
Financing Statement; and (f) that certain Environmental Indemnity Agreement
dated as of the Date of Lease. In addition, upon the maturity or prepayment of
the Improvements Loan (whether by its terms, by acceleration or otherwise),
Landlord may (but, subject to the terms of Section 13.1(c), shall not be
obligated to) enter into a new loan (such authorized loan shall be the "New
Loan"), provided Landlord first obtains Tenant's written consent (which consent
shall not be unreasonably withheld), and so long as: (i) the Improvements Loan
is paid off with the proceeds of such New Loan and all documents securing or
reflecting the Improvements Loan are assigned to the lender who makes the New
Loan or are released and satisfied; (ii) the principal amount of the New Loan
does not exceed the principal amount of the Improvements Loan existing at the
time the Improvements Loan is repaid; (iii) the interest rate and payment
provisions under the New Loan would not result in higher monthly payments than
the method under the Improvements Loan, and all such monthly payments shall be
interest only; and (iv) the New Loan documents do not contain terms and
conditions which differ from the Improvements Loan documents in any material
respect (including provisions relating to the Collateral as defined in Section
21.18). The Improvements Loan and the New Loan
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authorized pursuant to the preceding sentence and the Replacement Loan described
in Section 13.1(c) below shall be the "Authorized Loan"; provided that only one
Authorized Loan may exist at any one point in time. Landlord may not modify the
terms of an Authorized Loan without the prior written consent of Tenant, which
Tenant shall not unreasonably withhold (but may be withheld in Tenant's sole and
absolute discretion based upon any of the matters identified in subitems (i)
through (v) above in this Section 13.1(b)).
(c) REPLACEMENT LOAN. Subject to Landlord's prior
written consent (which consent shall not be unreasonably withheld or delayed),
at the request of Tenant, Landlord shall execute loan documents evidencing
and/or securing a new loan to Landlord, the proceeds of which would be used to
retire the Improvements Loan (such loan requested by Tenant shall be a
"Replacement Loan"). Landlord shall only be entitled to refuse to consent to
such new loan if (1) the maturity date of the Replacement Loan is a date on or
after the expiration date of the Extension Term; (2) the principal amount of the
Replacement Loan exceeds the principal amount of the Improvements Loan plus any
accrued interest and fees payable at the time the Improvements Loan is repaid;
(3) the interest rate structure under the Replacement Loan is materially higher
than market conditions would justify at the time; (4) there are prepayment
prohibitions, penalties or other restrictions which would limit rights to retire
the Replacement Loan or require additional payment to do so; or (5) the
Replacement Loan documents contain terms and conditions which differ from the
Improvements Loan documents in any material respect (including provisions
relating to the Collateral as defined in Section 21.18). If Tenant requests and
provides the funds, Landlord shall make all arrangements necessary for, and
shall pay down any Authorized Loan in the amount requested by Tenant, and shall
arrange for all documentation reasonably requested by Tenant to reflect the
reduction or elimination of such Authorized Loan.
(d) LENDERS DEED OF TRUST. On the Date of Lease,
Landlord and Tenant shall execute, acknowledge, and cause to be recorded in the
Official Records, a deed of trust in form acceptable to Lenders and Tenant
("Lenders Deed of Trust"). The Lenders Deed of Trust shall be a first priority
lien against the premises (as defined in the Lenders Deed of Trust).
(e) LANDLORD DEED OF TRUST. On the Date of Lease,
Tenant shall execute, acknowledge, and cause to be recorded in the Official
Records, a deed of trust in form acceptable to Landlord ("Landlord Deed of
Trust"), which Landlord Deed of Trust shall secure Tenant's obligations under
this Lease. The Landlord Deed of Trust shall be junior only to the Lenders Deed
of Trust as a second priority lien against the premises (as defined in the
Landlord Deed of Trust).
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(f) TENANT DEED OF TRUST. On the Date of Lease,
Landlord shall execute, acknowledge, and cause to be recorded in the Official
Records, a deed of trust in form acceptable to Tenant ("Tenant Deed of Trust"),
which Tenant Deed of Trust shall secure Landlord's obligations under this Lease
(i) to return the Security Deposit pursuant to the terms of this Lease and (ii)
to convey the Premises to Tenant as required pursuant to Article 19 hereof. The
Tenant Deed of Trust shall be junior only to the Lenders Deed of Trust and the
Tenant Deed of Trust as a third priority lien against the premises (as defined
in the Tenant Deed of Trust).
(g) LAND LEASE DEED OF TRUST. The Land Lease Deed
of Trust secures ILC's obligations under the Land Lease (i) to return the
security deposits set forth in the Land Lease pursuant to the terms of the Land
Lease, (ii) to convey the Premises to Tenant as required pursuant to Article 19
thereof, and (iii) to comply with Sections 20.3, 20.4 and 20.5 of the Land
Lease. The Tenant Deed of Trust shall be junior only to the Lenders Deed of
Trust, the Landlord Deed of Trust and the Tenant Deed of Trust and shall be a
fourth priority lien against the premises (as defined in the Land Lease Deed of
Trust).
13.2 LANDLORD'S RIGHT TO SELL. Subject to Tenant's Purchase
Option and the mandatory purchase set forth in Article 19 and the terms of
Section 13.1 and Article 20, nothing contained in this Lease shall be deemed in
any way to limit, restrict or otherwise affect the right of Landlord at any time
and from time to time to sell or transfer all or any portion of its right, title
and estate in the Premises to: (1) a financial institution with a capitalization
in excess of One Hundred Million Dollars ($100,000,000) and investments in other
leased assets of at least Twenty Five Million Dollars ($25,000,000); (2) a trust
established by such an institution; or (3) if an Event of Major Default has
occurred and is continuing at the time of such sale or transfer, to any Entity;
provided, however, that such Entity shall assume, in a manner consistent with
Landlord's obligations under this Lease and the Improvements Loan documents, the
Improvements Loan or any other Authorized Loan concurrently with acquisition of
the Premises, after first obtaining Lenders' written consent thereto. Landlord
shall give Tenant prior written notice of any sale or transfer pursuant to this
Section 13.2 together with written evidence of compliance with the terms hereof.
Any sale or transfer by Landlord whatsoever shall by its express terms recognize
and confirm the right of possession of Tenant to the Premises and Tenant's other
rights arising out of this Lease shall not be affected or disturbed in any way
by any such sale, transfer, assignment or conveyance (except for any disturbance
resulting from a foreclosure sale conducted pursuant to the laws of the State of
California at which independent third party bids were permitted, pursuant to the
Lenders Deed of Trust, all subject to the terms of Section 19.2).
13.3 TRANSFER OF FUNDS AND PROPERTY. At each time Landlord
sells, assigns, transfers or conveys the entire right, title and estate of
Landlord in the Premises and in this Lease,
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Landlord shall turn over to the transferee any funds or other property then held
by Landlord under this Lease and thereupon all the liabilities and obligations
on the part of the Landlord under this Lease arising after the effective date of
such sale, assignment, transfer or conveyance shall terminate as to the
transferor and be binding upon the transferee.
ARTICLE 14
ASSIGNMENT AND SUBLEASING
14.1 RIGHT TO ASSIGN.
(a) TENANT'S RIGHT. Tenant shall have the right,
at any time and from time to time during the Term, to assign all or any portion
of its right, title and estate in the Premises and in this Lease without
approval by Landlord. Any such assignee, immediate or remote, shall have the
same right of assignment. Any such assignment shall be evidenced by a written
instrument, properly executed and acknowledged by all parties thereto and, at
Tenant's election, duly recorded in the Official Records, wherein and whereby
the assignee assumes all of the obligations of Tenant under this Lease.
Notwithstanding any such assignment and assumption or any sublease permitted
under Section 14.2 hereof, Tenant shall remain primarily liable for all
obligations and liabilities on the part of Tenant theretofore or thereafter
arising under this Lease.
(b) NOTICE. Tenant shall, promptly after execution
of each assignment, notify Landlord of the name and mailing address of the
assignee and shall, on demand, permit Landlord to examine and copy the
assignment agreement.
14.2 RIGHT TO SUBLET.
(a) TENANT'S RIGHT. Tenant shall have the right,
at any time and from time to time during the Term, to sublet all or any portion
of the Premises and to extend, modify or renew any sublease without the approval
of Landlord.
(b) NOTICE. Tenant shall, promptly after execution
of each sublease, notify Landlord of the name and mailing address of the
subtenant and shall, on demand, permit Landlord to examine and copy the
sublease.
(c) NON-DISTURBANCE AGREEMENT. Upon Tenant's
request, Landlord shall enter into a "landlord agreement" with any subtenant of
Tenant. Such agreement shall provide that Landlord shall recognize the sublease
and not disturb the subtenant's possession thereunder so long as such subtenant
shall not be in default under its sublease, and an Event of Major Default is not
then in existence and continuing under this Lease. Tenant shall immediately
reimburse Landlord on demand for all reasonable out-of-
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pocket costs and expenses incurred by Landlord in complying with Landlord's
obligations under this Section 14.2(c).
14.3 TENANT'S RIGHT TO MORTGAGE.
(a) RIGHT OF TENANT. Tenant shall have the right
from time to time and at any time, without obtaining the approval of Landlord,
to mortgage, pledge or otherwise encumber all or any portion of the right, title
and estate of Tenant in the Premises or in this Lease.
(b) NOTICE. Tenant shall, promptly after execution
of any Mortgage, notify Landlord of the name and mailing address of the
Mortgagee thereunder and shall, on demand, permit Landlord to examine and copy
the Mortgage.
ARTICLE 15
EMINENT DOMAIN
15.1 TOTAL OR SUBSTANTIAL TAKING. If title or access is taken
for any public or quasi-public use, or under any statute or by right of
condemnation or eminent domain, or by sale in lieu thereof (a "Taking") with
respect to all of the Premises, or if title to so much of the Premises or access
thereto is Taken, or if the Premises or access thereto is damaged, blocked or
impaired by the Taking, so that, in Tenant's sole discretion, the Premises or
access thereto, even after a reasonable amount of reconstruction thereof, will
no longer be suitable for Tenant's (and/or Tenant's subtenants') continued
occupancy for the conduct of Tenant's (and/or Tenant's subtenants') business in
a manner consistent with the conduct of such business prior to such Taking, then
in any such event, this Lease shall terminate on the date of such Taking.
15.2 PARTIAL TAKING. If any part of the Premises, or access
thereto, shall be Taken, and the Premises or the remaining part thereof and
access thereto will be, in Tenant's sole discretion, suitable for Tenant's
(and/or Tenant's subtenants') continued occupancy for the conduct of Tenant's
(and/or Tenant's subtenants') business in a manner consistent with the conduct
of such business prior to such Taking, all of the terms, covenants and
conditions of this Lease shall continue, except that Base Rent shall be adjusted
to reflect the decreased Funded Amount remaining after application thereto of
the award made to Landlord for such Taking.
15.3 TEMPORARY TAKING. If the whole or any part of the
Premises is Taken for temporary use or occupancy, this Lease shall not terminate
by reason thereof and Tenant shall continue to pay, in the manner and at the
times herein specified, the full amount of the Base Rent payable by Tenant
hereunder, and, except only to the extent that Tenant may be prevented from so
doing by reason of such Taking, Tenant shall continue to perform and observe all
of the other terms, covenants and conditions hereof on the part of Tenant
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to be performed and observed, as though the Taking had not occurred. In the
event of any such temporary Taking, Tenant shall be entitled to receive the
entire amount of the award made for the Taking, whether paid by way of damages,
rent or otherwise. If the temporary Taking is for a term in excess of thirty
(30) days, then the Taking shall be treated as a permanent Taking and be
governed by Section 15.1 or 15.2, as applicable.
15.4 DAMAGES. The compensation attributable to the
Improvements (in each case the compensation or value shall be determined as of
the date of the Taking) awarded or paid upon any Taking (other than a temporary
Taking, which shall be governed by Section 15.3), whether awarded to Landlord,
Tenant, or both of them, shall be held by the Escrow Agent described in Section
16.3(b) and distributed in the same manner as insurance proceeds pursuant to
Section 16.3. For purposes of this Section 15.4, references to the term
"casualty" or similar terms in Section 16.3 shall be deemed to refer to
"Taking."
15.5 NOTICE AND EXECUTION. Immediately upon service of process
upon Landlord or Tenant in connection with any Taking relating to the Premises
or any portion thereof or access thereto, each party shall give the other Notice
thereof. Each party agrees to execute and deliver to the other all instruments
that may be required to effectuate the provisions of this Article 15. Tenant
reserves the right to appear in and to contest any proceedings in connection
with any such Taking. Tenant shall immediately reimburse Landlord on demand for
all reasonable out-of-pocket costs and expenses incurred by Landlord in
complying with Landlord's obligations under this Section 15.5.
ARTICLE 16
DAMAGE OR DESTRUCTION
16.1 CASUALTY. If any Improvements are damaged or destroyed by
fire or other casualty (including, but not limited to earthquake), except as
provided to the contrary in Section 16.2, this Lease shall continue in full
force and effect without any abatement or reduction in Base Rent, and Tenant, at
Tenant's election, shall either (a) restore the Improvements substantially to
their condition prior to the damage or destruction, or such other condition as
Tenant shall elect in its sole and absolute discretion, subject to Landlord's
approval rights set forth in Section 11.3(c), or (b) not restore the
Improvements, but perform, or cause to be performed, at Tenant's sole cost and
expense, any work or service required by any Legal Requirement for the
protection of persons or property from any risk, or for the abatement of any
nuisance, created by or arising from the casualty or the damage or destruction
caused thereby.
16.2 TERMINATION OF LEASE. In the case of: (a) any damage or
casualty of any Building or Buildings, which in the good faith judgment of
Tenant's Board of Directors would render such
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Building either unsuitable or uneconomic for restoration or continued use by
Tenant; (b) the damage or destruction of all or substantially all (as determined
in good faith by Tenant's Board of Directors) of any Building or Buildings; or
(c) the damage or destruction of any Building or Buildings where restoration
cannot (as determined in good faith by Tenant's Board of Directors) reasonably
be completed either within 365 days or prior to the expiration of the Initial
Term or the Extension Term, then Tenant may elect to terminate this Lease either
as to the Building(s) in question or as to the Lease in its entirety. In the
event Tenant terminates the Lease pursuant to the preceding sentence, Tenant
shall purchase Landlord's interest in the Building(s) in question for a purchase
price equal to the Purchase Price for the Building(s) in question, as such
Purchase Price is defined in Section 19.1. The purchase of Landlord's interest
in such Building(s) shall be pursuant to the terms of Section 19.1, as
applicable to such Building(s). Upon the completion of such purchase, this Lease
and all obligations hereunder in respect of such Building(s) shall terminate.
This Lease shall remain in full force and effect with respect to all remaining
Buildings which Tenant does not elect to purchase pursuant to this Section 16.2,
and such remaining Building(s) shall constitute the "Improvements" for purposes
of this Lease.
16.3 INSURANCE PROCEEDS. In the event of any fire or other
casualty, the proceeds of any insurance policies maintained by Tenant pursuant
to Section 7.2 or 7.3 shall be held, applied and dealt with as follows:
(a) Any proceeds (per occurrence) of such policies
attributable to the Improvements below the amount of Five Hundred Thousand
Dollars ($500,000) shall be paid directly to Tenant and applied and used as
Tenant may direct in its sole discretion for any construction, restoration or
reconstruction purposes in connection with any improvements located on the Land
which were destroyed, damaged or affected by such casualty. Any portion of such
proceeds which Tenant does not want to use (subject to the terms of Section
16.3(d)) for any construction, restoration or reconstruction shall be paid as
follows (the order of payment as set forth below shall be the "Distribution
Formula"): (1) to Lenders, or to any other holder of an Authorized Loan, and to
Landlord, pro rata in proportion to the ratio that the then-existing Senior
Funded Amount bears to the then-existing Funded Amount as compared to the ratio
that the then-existing Equity Funded Amount bears to the then-existing Funded
Amount (provided, however, that in no event shall the amount paid to Landlord
exceed the difference between the Funded Amount and the Guaranteed Residual
Value); and (2) with any remaining excess to be paid to Tenant.
(b) Any proceeds (per occurrence) of such policies
attributable to the Improvements greater than Five Hundred Thousand Dollars
($500,000) shall be paid to an escrow agent ("Escrow Agent") mutually agreeable
to the parties (but such escrow agent
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shall not be a party which is related to or affiliated with either of the
parties to this Lease). Such proceeds shall be invested by the Escrow Agent as
Tenant may direct; provided, however, that such proceeds shall not be invested
in the stock or obligations of Tenant. Such proceeds shall be paid by the Escrow
Agent to Tenant (or to third parties as Tenant may direct), as Tenant may direct
from time to time as restoration, construction or rebuilding progresses to pay
the cost of any restoration, construction or rebuilding which Tenant elects to
take place on the Land or any Improvements located upon the Land, but only upon
the written request of Tenant, and so long as Landlord reasonably determines
that the following conditions are satisfied at the time of such request for
payment by Tenant: (i) the sum requested has been paid or is then due and
payable or will become due and payable within thirty (30) days; (ii) Tenant has
the financial ability (taking into account the insurance proceeds held by the
Escrow Agent) to complete the restoration, construction or rebuilding which
Tenant has elected to perform; (iii) Landlord has approved the Approval Plans,
if any, relating to the restoration of Improvements, pursuant to the terms of
Article 11; and (iv) in Landlord's reasonable judgment, such restoration work
which Tenant desires to perform in connection with the Improvements can be
completed prior to the expiration of the Initial Term (or, if Tenant has
exercised, or within one hundred twenty (120) days after reaching final written
settlement with all insurance companies regarding the amount of proceeds to be
paid for the casualty in question, exercises its right to extend for the
Extension Term, then prior to the expiration of the Extension Term). Landlord
shall promptly upon request instruct the Escrow Agent to make the payments
requested by Tenant unless one of the conditions described above is not
satisfied at the time of such request. Any excess insurance proceeds existing
after either Tenant's completion of the restoration, construction or rebuilding
which Tenant elects to perform or Tenant's failure to comply with the funding
condition described in subitems (ii), (iii) and (iv) immediately above in this
Section 16.3(b), shall be paid pursuant to the Distribution Formula. If Tenant
elects to terminate this Lease as to one or more Buildings, Tenant may use any
insurance proceeds to pay the purchase price described in Section 16.2, and all
rights of Landlord in insurance proceeds not used to pay the purchase price
shall be assigned to Tenant by Landlord at the time Tenant purchases Landlord's
interest in any such Building(s).
(c) Any proceeds of such policies attributable to
improvements or buildings on the Land other than the Improvements shall promptly
be paid directly to Tenant.
(d) If either: (1) Tenant has not delivered
written notice to Landlord within one hundred twenty (120) days after reaching
final written settlement with all insurance companies regarding the amount of
proceeds to be paid for the casualty in question, pursuant to which notice
Tenant elects to either exercise some or all of its termination rights under
Section 16.2 and/or to fully or partially repair or restore
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pursuant to Section 16.1; or (2) Landlord reasonably believes that Tenant has
abandoned reconstruction or restoration work which Tenant may have elected to
perform (and Tenant shall have failed to diligently recommence reconstruction or
restoration work which Tenant is then able to perform within thirty (30) days
after Tenant's receipt from Landlord of a Notice of Landlord's belief of
Tenant's abandonment of the reconstruction or restoration work); then, in either
case, the proceeds attributable to the Improvements shall be paid pursuant to
the Distribution Formula.
(e) Any insurance proceeds paid to Landlord, Lenders
or holder of any Authorized Loan under this Article 16 shall automatically
reduce the Funded Amount by a like amount.
ARTICLE 17
DEFAULT
17.1 DEFAULT. The following event shall constitute a default
("Default") by Tenant:
(a) DEFAULT OTHER THAN EVENT OF MAJOR DEFAULT.
Tenant's failure to perform or comply with any of the terms, covenants or
conditions contained in this Lease other than those referred to in Section 17.2,
where such failure shall continue for a period of thirty (30) days after Notice
thereof from Landlord to Tenant, or in the case of a failure which cannot with
due diligence be cured within the period of thirty (30) days, Tenant's failure
to proceed promptly and with due diligence to cure the failure and thereafter to
prosecute the curing of the failure with all due diligence, it being intended
that in connection with a failure not susceptible of being cured with due
diligence within thirty (30) days, the time of Tenant within which to cure the
failure shall be extended for such period as may be reasonably necessary to
complete the cure with all due diligence.
17.2 EVENT OF MAJOR DEFAULT. Each of the following events
shall constitute an event of major default ("Event of Major Default") by Tenant:
(a) FAILURE TO PAY BASE RENT. Tenant's failure to
pay any Base Rent within ten (10) days after the later to occur of the due date
or Tenant's receipt from Landlord of the Invoice required pursuant to Section
5.1;
(b) FAILURE TO PAY ADDITIONAL RENT. Tenant's
failure to pay any Additional Rent which is due to Landlord within the later to
occur of the due date under this Lease or ten (10) days after Tenant's receipt
of Notice thereof from Landlord that such Additional Rent is due;
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(c) FAILURE TO COMPLY WITH PURCHASE OBLIGATION
UNDER SECTION 19.2. Tenant's failure to comply with Tenant's obligation to
purchase the Premises pursuant to Section 19.2 within the period required in
Section 19.2;
(d) FAILURE TO CARRY INSURANCE. Tenant's failure
to carry the insurance required by Article 7, if such failure continues ten (10)
days after Tenant's receipt of Notice thereof from Landlord that Tenant is not
carrying such required insurance (provided, however, that it shall not be an
Event of Major Default under this Section 17.2 if Tenant is carrying when
required the basic form policies required by Article 7 with respect to the
perils addressed therein and in the amounts required by Article 7,
notwithstanding some other noncompliance);
(e) INSOLVENCY. Subject to Section 17.3, the
occurrence of: (i) an assignment by Tenant for the benefit of creditors
generally; or (ii) the filing of a voluntary or involuntary petition by or
against Tenant under any present or future applicable federal, state or other
statute or law having for its purpose the adjudication of Tenant as a bankrupt;
(iii) the appointment of a receiver, liquidator or trustee for all or a
substantial portion of the Premises by reason of the insolvency or alleged
insolvency of Tenant; or (iv) the taking of possession by any department of
city, county, state or federal government, or any officer thereof duly
authorized, of all or a substantial portion of the Premises by reason of the
insolvency or alleged insolvency of Tenant; and Tenant's failure to timely give
any Notice it is permitted to give pursuant to Section 17.3 (or, in the event
Tenant gives timely Notice and pursues a contest under Section 17.3, Tenant's
failure to finally prevail in the contest).
(f) FAILURE TO REPLENISH UNDER PLEDGE AGREEMENT.
Tenant's failure to replenish the collateral account as required under the
Pledge Agreement (as defined in Section 13.1(b)) after the notice and cure
periods provided in Pledge Agreement;
(g) FAILURE TO REFINANCE THE IMPROVEMENT LOAN.
Tenant's failure to refinance, or repay, the Improvement Loan prior
to the Extension Term;
(h) DEFAULT UNDER OTHER CREDIT FACILITY. Tenant's
suffering or permitting any of the following defaults: (i) A payment default
(after applicable notice and cure periods) under any credit facility of Tenant
which equals or exceeds Twenty Million Dollars ($20,000,000); (ii) An Event of
Major Default (after applicable notice and cure periods) under that certain
lease agreement by and between SGA Development Partnership, Ltd., a Texas
limited partnership, and Tenant, for premises located in San Jose, California,
dated February 25, 1993, as amended; (iii) An Event of Major Default (after
applicable notice and cure periods) under that certain lease agreement by and
between Sumitomo Bank Leasing and Finance, Inc., a Delaware corporation
("SBLF"), and Tenant, for premises located in San Jose, California, dated May
20, 1993, as
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amended; (iv) An Event of Major Default (after applicable notice and cure
periods) under that certain lease agreement by and between SBLF and Tenant for
premises located in Raleigh, North Carolina, dated July 11, 1994, as amended; or
(v) An Event of Major Default (after applicable notice and cure periods) under
that certain lease agreement by and between SBLF and Tenant for premises located
in Raleigh, North Carolina, dated August 12, 1994; or (vi) An Event of Major
Default (after applicable notice and cure periods) under any of the Building
Leases;
(i) TANGIBLE NET WORTH. Tenant's Tangible Net Worth
shall fall below Seven Hundred Fifty Million Dollars ($750,000,000.00);
(j) FRAUD/INTENTIONAL MISREPRESENTATION. Fraud or
intentional misrepresentation by Tenant in connection with the representations
and warranties set forth in Section 21.22 hereof; or
(k) DEFAULT UNDER LAND LEASE. An Event of Major
Default under the Land Lease.
17.3 CONTEST BY TENANT. If upon the filing of any involuntary
petition of the type described in Section 17.2(e) or upon the appointment of a
receiver, other than a receiver appointed in any voluntary proceeding referred
to in Section 17.2(e), or the taking of possession of all or a substantial
portion of the Premises by any department of the city, county, state or federal
government, or any officer thereof duly authorized, by reason of the alleged
insolvency of Tenant without the consent or over the objection of Tenant, should
Tenant desire to contest the same in good faith, Tenant shall, within ninety
(90) days after the filing of the petition or after the appointment or taking of
possession, give Notice to Landlord that Tenant proposes to make the contest,
and the same shall not constitute an Event of Major Default so long as Tenant
shall prosecute the proceedings with due diligence and no part of the Premises
shall be exposed to sale by reason of the continuance of the contest.
17.4 REMEDIES. Landlord shall have the remedies specified
below, the parties hereby acknowledging that the remedies described in Section
17.4(b) may be exercised by Landlord only upon the occurrence of an Event of
Major Default. Tenant shall at all times have the right to exercise and carry
out the terms of the Purchase Option in Section 19.1, notwithstanding the
occurrence or existence of any Default or Event of Major Default under this
Lease, and Landlord shall have the obligation to comply with Landlord's
obligations under Section 19.1 notwithstanding any Default or Event of Major
Default.
(a) CONTINUE LEASE. In connection with a Default
or an Event of Major Default, Landlord shall have the right to enforce, by suit
or otherwise, all other covenants and conditions hereof to be performed or
complied with by Tenant and to exercise
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all other remedies permitted by Section 1951.4 of the California Civil Code, or
any amendments thereof or any successor laws which replace such Section 1951.4.
Landlord has the remedy described in California Civil Code Section 1951.4
(Landlord may continue the Lease in effect after Tenant's breach and abandonment
and recover Base Rent as it becomes due, if Tenant has the right to sublet or
assign, subject only to reasonable limitation). Upon application by Landlord, a
receiver may be appointed to take possession of the Premises and exercise all
rights granted to Landlord as set forth in this Section 17.4(a); and
(b) TERMINATE LEASE. In connection with an Event
of Major Default (but not a Default), Landlord shall have the right to terminate
this Lease, by giving Tenant Notice thereof, at any time after the occurrence of
such Event of Major Default and whether or not Landlord has also exercised any
right under Section 17.4(a). In such event, Tenant shall, within thirty (30)
days after receipt of Notice from Landlord, purchase the Premises pursuant to
Section 19.2. Landlord shall also have its other remedies at law (including its
rights under the Landlord Deed of Trust), provided, however, that Tenant's right
to purchase the Improvements pursuant to Section 19.1 shall survive any
termination of this Lease up through the date of foreclosure sale under the
Lenders Deed of Trust, the Landlord Deed of Trust or any deed of trust securing
an Authorized Loan.
17.5 NO WAIVER. No failure by Landlord or Tenant to insist
upon the strict performance of any term, covenant or condition of this Lease or
to exercise any right or remedy consequent upon a breach thereof and no
acceptance of full or partial Rent during the continuance of any breach shall
constitute a waiver of any such breach or of the term, covenant, or condition.
No term, covenant or condition of this Lease to be performed or complied with by
Tenant or Landlord, and no breach thereof, shall be waived, terminated, altered
or modified except by a written instrument executed by Landlord and Tenant. No
waiver of any breach shall affect or alter this Lease, but each and every term,
covenant, and condition of this Lease shall continue in full force and effect
with respect to any other then existing subsequent breach thereof.
17.6 EFFECT OF ASSIGNMENT. Notwithstanding an Entity's prior
assignment or transfer of its interest as Tenant under this Lease, so long as
Landlord has been given Notice of such assignment pursuant to Sections 14.1(b)
and 21.3, Landlord shall give such Entity copies of all Notices required by this
Article 17 in connection with any Default or Event of Major Default, and such
Entity shall have the period granted hereunder to Tenant to cure such Default or
Event of Major Default, unless such Entity shall have been released from all
obligations arising under this Lease. Landlord may not assert any rights against
such Entity in the absence of such Notice and opportunity to cure, so long as
Landlord has been given Notice of such assignment pursuant to Sections 14.1(b)
and 21.3.
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17.7 LANDLORD CURE RIGHT. If Tenant fails to perform any
covenant or agreement to be performed by Tenant under this Lease, and if the
failure or default continues for thirty (30) days after Notice to Tenant and to
any Mortgagee who has requested in writing notice thereof from Landlord (except
for emergencies and except for payment of any lien or encumbrance threatening
the imminent sale of the Premises or any portion thereof, in which case payment
or cure may be made as soon as necessary to minimize the damage to person or
property caused by such emergency or to prevent any such sale), Landlord may,
but shall have no obligation to, pay the same and cure such default on behalf of
and at the expense of Tenant and do all reasonably necessary work and make all
reasonably necessary payments in connection therewith including, but not limited
to, the payment of reasonable attorneys' fees and disbursements incurred by
Landlord. Notwithstanding the foregoing, Landlord shall have no right to cure
any such failure to perform by Tenant so long as Tenant both: (1) is diligently
and in good faith attempting to cure such matter; and (2) has the financial
ability to so comply, unless Tenant has failed to substantially cure such matter
within ninety (90) days after Tenant's receipt of Notice thereof from Landlord,
in which case Landlord may commence in a reasonable and customary manner and in
good faith to attempt to cure such matter (except that Landlord shall not have a
right to attempt to cure matters addressed in Section 8.1(b) unless specifically
authorized to do so pursuant to Section 8.1(b)). Notwithstanding anything to the
contrary in this Lease, in no event shall Landlord have a right to cure any
matters relating to the Improvements unless Landlord reasonably believes that
the failure to cure such matter could lead to criminal prosecution against
Landlord (except as specifically permitted in Section 8.1(b)). Upon demand,
Tenant shall reimburse Landlord for the reasonable amount so paid, together with
interest at the Default Rate from the date incurred until the date repaid.
Tenant shall defend, indemnify, and hold Landlord harmless from and against any
and all losses, costs, expenses, liabilities, claims, causes of action and
damages of all kinds that may result to Landlord, including reasonable
attorneys' fees and disbursements incurred by Landlord, arising because of any
failure by Tenant to perform any of its obligations under this Lease. Tenant's
duty to indemnify Landlord under this Section 17.7 shall survive the expiration
or earlier termination of this Lease.
17.8 LANDLORD'S DEFAULT.
(a) LANDLORD'S FAILURE TO PERFORM. If Landlord
fails to perform any covenant or agreement to be performed by Landlord under
Article 11, Section 13.1, Section 15.4, Article 20, or Section 21.10 of this
Lease (including, but not limited to, Landlord's failure to keep the Premises
free of any and all liens created by or through Landlord except as approved by
Tenant in writing), and if the failure or default continues for thirty (30) days
after Notice to Landlord and to any holder of an Authorized Loan who has
requested in writing notice thereof from Tenant (except for emergencies, a
default under Section 20.5 or payment of
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any lien or encumbrance threatening the imminent sale of the Premises or any
portion thereof, in which case payment or cure may be made as soon as necessary
to minimize the damage to person or property caused by such emergency, to
prevent foreclosure on the Collateral or to prevent any such sale), Tenant may,
but shall have no obligation to, pay the same and cure such default on behalf of
and, so long as such failure to perform arises due to Landlord's gross
negligence, willful misconduct, or willful breach of this Lease, at the expense
of Landlord and do all reasonably necessary work and make all reasonably
necessary payments in connection therewith including, but not limited to, the
payment of reasonable attorneys' fees and disbursements incurred by Tenant.
Notwithstanding the foregoing, Tenant shall have no right to cure any such
failure to perform by Landlord so long as Landlord both: (1) is diligently and
in good faith attempting to cure such matter; and (2) has the financial ability
to so comply. To the extent that Landlord's failure to perform arises due to its
gross negligence, willful misconduct or willful breach of this Lease, upon
demand, Landlord shall reimburse Tenant for the reasonable amount so paid,
together with interest at the Default Rate from the date incurred until the date
repaid. To the extent that Landlord's failure to perform arises due to its gross
negligence, willful misconduct or willful breach of this Lease, Landlord shall
defend, protect, indemnify, and hold Tenant harmless from and against any and
all losses, costs, expenses, liabilities, claims, causes of action and damages
of all kinds that may result to Tenant, including reasonable attorneys' fees and
disbursements incurred by Tenant, arising because of any failure by Landlord to
perform any of its obligations under Article 11, Section 13.1, Section 15.4,
Article 20 or Section 21.10 of this Lease. Landlord's duty to indemnify Tenant
under this Section 17.8 shall survive the expiration or earlier termination of
this Lease.
(b) DEFAULT UNDER CERTAIN PROVISIONS. In addition
to Tenant's rights set forth in Section (a) above, in the event of a default by
Landlord under Section 20.5, Tenant shall have the right to cure such default on
behalf of and at Landlord's expense, without prior notice to Landlord. In
addition, in the event of any default by Landlord under Section 20.3, 20.4 or
20.5, Tenant shall have the right to exercise its Purchase Option pursuant to
Section 19.1 hereof.
ARTICLE 18
QUIET ENJOYMENT
Landlord covenants to secure to Tenant the quiet possession of
the Premises for the full Term against all persons claiming the same, subject to
Landlord's rights and remedies under Section 17 upon a Default or an Event of
Major Default by Tenant. The existence of any Permitted Exceptions shall not be
deemed to constitute a breach of Landlord's obligations hereunder. Tenant shall,
immediately upon demand, reimburse Landlord for all reasonable costs, expenses
and damages incurred or paid by Landlord
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in the performance of Landlord's obligations under this Article 18 (except for
any costs, expenses or damages arising from Landlord's willful breach of this
Lease).
ARTICLE 19
TENANT'S OPTION TO PURCHASE
19.1 OPTION TO PURCHASE PREMISES.
(a) PURCHASE OPTION. Tenant shall have the option
("Purchase Option") to purchase all or part of the Premises at any time during
the Term; provided that Tenant shall be entitled to purchase less than all of
the Premises only if the portion being purchased is released from any existing
Fee Mortgage and if the portion of the Premises not purchased shall constitute
one or more Buildings or phases after closing of the purchase and shall be
viable as a separate Building or phase as determined in Landlord's sole
discretion. The purchase price ("Purchase Price") for the Building or phase
which Tenant elects to purchase shall be (i) the then-existing Funded Amount for
the Building or phase which Tenant elects to purchase, as the same may be
reduced from time to time, plus (ii) the amount of any prepayment premium and
all other fees, costs, expenses and any accrued but unpaid interest or rent due
to any holder of an Authorized Loan in connection with such loan (to the extent
not already paid pursuant to Section 21.21 (including late charges arising from
Tenant's late payment of Base Rent hereunder and the annual servicing fee
attributable to this Lease) hereof). Tenant shall be entitled to a credit
against the Purchase Price in an amount equal to the sum of (i) the principal
balance(s) of any Fee Mortgage existing immediately prior to the closing under
this Purchase Option if such Fee Mortgage is not fully repaid and all documents
reflecting the same are not cancelled and removed from the public records on or
prior to the closing under this Purchase Option, plus (ii) the amount of the
Security Deposit (or, in the event of a purchase of a portion of the Premises, a
pro rata portion of the Security Deposit), and, upon closing under this Purchase
Option, Landlord shall be released from Landlord's obligation to return the
Security Deposit set forth in Section 5.7 hereof. If Tenant purchases less than
all of the then-existing Premises, then the credit pursuant to the preceding
sentence shall be calculated on a pro rata basis, based upon the ratio of the
area of the Premises being purchased compared to the area of the then-existing
Premises. In lieu of payment of the Purchase Price, Tenant shall have the right
(1) to assume the Improvements Loan or any other Authorized Loan or (2) to cause
Landlord to assign the Authorized Loan and this Lease (including the existing
Security Deposit) to a third party acceptable to the holder of such Authorized
Loan (which third party shall expressly assume such obligations in writing),
provided that Landlord is released from all obligations under the Authorized
Loan and Landlord is paid an amount equal to the Equity Contribution. Landlord
shall execute any and all documents necessary to effect such assumption and
assignment upon Tenant's request, provided that Tenant shall
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reimburse Landlord for all reasonable costs and expenses related thereto.
(b) PURCHASE OPTION EXERCISE NOTICE. If Tenant
desires to exercise the Purchase Option, Tenant shall deliver to Landlord a
written notice ("Purchase Option Exercise Notice") of Tenant's election;
provided, however, that in the event of an assignment by Landlord for the
benefit of creditors generally, the filing of a voluntary or involuntary
bankruptcy petition by or against Landlord or the appointment of a receiver,
liquidator or trustee for all or a substantial portion of the Premises by reason
of Landlord's insolvency or alleged insolvency, the Purchase Option shall be
deemed exercised with respect to the entire Premises as of the calendar day
immediately preceding such assignment, filing or appointment.
(c) TRANSFER. If Tenant exercises the Purchase
Option, the purchase and sale of the Premises shall be consummated as follows.
In the event of a purchase of a portion of the Premises, the term "Premises" as
used in this Section 19.1(c) shall be deemed to mean that portion of the
Premises then to be purchased pursuant to the Purchase Option.
(i) Landlord shall grant and convey the
Premises to Tenant, its authorized agent or assignee, pursuant to a duly
executed and acknowledged grant deed ("Grant Deed"), free and clear of all title
defects, liens, encumbrances, deeds of trust, mortgages, rights-of-way and
restrictive covenants or conditions, except for the Permitted Exceptions;
(ii) The Purchase Price shall be paid upon
delivery of the Grant Deed and any other documents reasonably requested by
Tenant to evidence the transfer of the Premises or to release all liens of
Landlord, including without limitation, any and all reconveyances of mortgages
or other recorded documents as requested by Tenant ("Additional Documents"). In
the event that Tenant elects to assign the Purchase Option pursuant to Section
19.1(d) below, and Tenant's assignee pays an amount less than the Purchase Price
for the Premises, Tenant shall pay to Landlord any excess of the Purchase Price
over the amount paid by such assignee. Landlord shall deliver the Grant Deed and
the Additional Documents to Tenant on the date for closing specified by Tenant
in the Purchase Option Exercise Notice (which date shall be no sooner than ten
(10) days after the date of the Purchase Option Exercise Notice and no later
than the last day of the Term, as the same may be extended). The closing shall
take place at the location and in the manner reasonably set forth by Tenant in
the Purchase Option Exercise Notice;
(iii) If Landlord shall fail to cause title
to be in the condition required in Section 19.1(c)(i) above within the time
herein prescribed for the delivery of the Grant Deed, then Tenant shall have the
right, in addition to all other rights provided by law, by a written notice to
Landlord: (1) to extend
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the time in which Landlord shall clear title and deliver the Grant Deed and
Additional Documents, during which extension this Lease shall remain in full
force and effect, except Tenant shall be released from its obligation to pay
Base Rent during the extension; (2) to accept delivery of the Grant Deed and
Additional Documents subject to such title defects, liens, encumbrances, deeds
of trust, mortgages, rights-of-way and restrictive covenants or conditions
specified and set forth in the Grant Deed and not cleared by Landlord (but
without waiving any rights or remedies available to Tenant on account of such
title exceptions); (3) to rescind, by notice to Landlord and without any penalty
or liability therefor, any and all obligations Tenant may have under and by
virtue of the Purchase Option or the exercise thereof, whereupon this Lease
shall remain in full force and effect; (4) if the title exception is curable by
the payment of money, Tenant may make such payment and such payment shall be a
credit against the Purchase Price in favor of Tenant.
(iv) Refusal of a title company to issue a
standard form of owner's title insurance policy insuring title to the Premises
in the condition specified in subparagraph (c)(i) shall be sufficient evidence
of Landlord's failure to convey clear title and shall entitle Tenant to exercise
any of the rights specified in subparagraph (c)(iii).
(v) Base Rent shall be prorated and paid and
all unpaid Additional Rent shall be paid as of the date title to the Premises is
vested of record in Tenant. Tenant shall pay the escrow fees; the recorder's fee
for recording the Grant Deed; the premium for the title insurance policy; all
documentary transfer taxes; Tenant's attorneys' fees; Landlord's reasonable
attorneys' fees; all other costs and expenses incurred by Tenant in consummating
the transfer of the Premises; and all reasonable expenses (except as specified
in the next sentence) incurred by Landlord in consummating the transfer of the
Premises pursuant to this Section 19.1. Landlord shall pay the costs and
expenses of clearing title as required by Section 19.1(c)(i). In the event of a
purchase by Tenant under this Article 19, Landlord shall have no obligation to
return the Security Deposit to Tenant to the extent the Security Deposit has
been credited against the purchase price to be paid by Tenant pursuant to
Section 19.1(a).
(d) ASSIGNMENT. Tenant shall have the right on
one or more occasions, without Landlord's consent, to assign this purchase
option, in whole or in part, to any Entity at any time, whether or not Tenant
also assigns its interest in the Lease. Tenant shall give prior written notice
to Landlord of any such assignment.
19.2 MANDATORY PURCHASE/SALE OF PREMISES. Notwithstanding
anything to the contrary herein, upon either: (1) the occurrence of an Event of
Major Default or the expiration of the Term of this Lease or upon the occurrence
of any other event terminating this Lease; or (2) the occurrence of any event
which
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causes the Funded Amount to be reduced to zero (0); or (3) Tenant's exercise of
the Purchase Option pursuant to Section 19.1 or 19.2 of the Land Lease, within
thirty (30) days after Tenant's receipt of written Notice of the foregoing and
of Tenant's purchase obligation under this Section 19.2 (except in the case of a
purchase obligation arising on account of the expiration of the Term of this
Lease or exercise of the Purchase Option under the Land Lease; in either such
case no prior Notice shall be required, but Tenant shall have twenty (20) days
after expiration of the Term or exercise of the Purchase Option under the Land
Lease to conclude the purchase), Tenant shall purchase or cause another Entity
to purchase, and Landlord shall sell, the Premises in the same manner as if
Tenant had exercised the Purchase Option on such date. The Purchase Price shall
be the same as if Tenant had exercised the Purchase Option, without regard to
the physical state or condition of the Premises or any Improvements (but Tenant
shall have the rights set forth in Section 19.1, including without limitation,
the terms of Sections 19.1(c)(iii) and (iv)). In the event Tenant fails to
purchase (or to cause another Entity to purchase) the Premises pursuant to its
obligation under this Section 19.2, and if Landlord does not foreclose under the
Landlord Deed of Trust, Landlord (to the extent required under Section 21.19)
shall use commercially reasonable efforts to sell the Premises to an unrelated
third party, and, as applicable, (i) Tenant shall be obligated to pay to
Landlord, immediately upon demand, any shortfall between the Purchase Price and
the amount realized by Landlord in connection with such sale, or (ii) Landlord
shall be obligated to pay to Tenant, immediately upon demand, any excess of the
amount realized by Landlord in connection with such sale over the Purchase
Price. For purposes of the preceding sentence, the amount realized by Landlord
upon a sale of the Premises shall be net of Landlord's reasonable sale expenses
and other expenses incurred by Landlord but required to be paid by Tenant
pursuant to Section 19.1(c)(v). Landlord's obligation to pay such excess to
Tenant shall survive any termination of this Lease. Landlord and Tenant agree
that any and all cash proceeds payable at any foreclosure sale under the
Landlord Deed of Trust shall, after payment of all obligations secured by the
Landlord Deed of Trust, be paid to Tenant or to any other person claiming
through Tenant entitled thereto by applicable law. The aggregate of the
obligations under an Authorized Loan and the obligations secured by the Landlord
Deed of Trust shall not exceed the Purchase Price. Notwithstanding anything to
the contrary in this Lease, in the event of default, breach or violation by
Tenant of any of Tenant's obligations under this Section 19.2, Tenant shall have
no liability to Landlord or any other party in excess of an amount equal to the
then-existing Guaranteed Residual Value, less a credit equal to the sum of (a)
any of the Collateral (including the pledged Security Deposit) which Lenders or
any other holder of an Authorized Loan has used, applied, or otherwise come into
possession of, plus (b) any of the Security Deposit retained by Landlord, and
Landlord shall have no recourse, claim or counterclaim whatsoever against Tenant
in excess of such amount on account of such default, breach or violation. If the
Guaranteed Residual Value has not previously
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been determined as of the date Tenant's liability under this Section 19.2 has
been established, then the Guaranteed Residual Value shall be determined as of
the date Tenant's liability hereunder is established.
19.3 SURVIVAL. The obligations of Landlord and Tenant under
this Article 19 shall survive the expiration or earlier termination of this
Lease.
ARTICLE 20
ADDITIONAL COVENANTS OF LANDLORD
20.1 TITLE AND SUBDIVISION. In the event Tenant so requests in
writing (and so long as either Tenant agrees to indemnify Landlord from any
liabilities or obligations in connection therewith, or Landlord does not incur
any liabilities or obligations in connection therewith), Landlord shall execute
all documents, instruments and agreements reasonably requested by Tenant in
order to accomplish any of the following in the manner reasonably requested by
Tenant and within the time parameters reasonably requested by Tenant: (1) remove
exceptions to title to or affecting the Premises; (2) create exceptions to title
(including, without limitation, easements and rights of way) to or affecting the
Premises (but not including any Mortgage); (3) modify any then-existing
exception to title; or (4) subdivide the Land into two or more separate parcels.
Tenant shall promptly reimburse Landlord for, or at Landlord's request, pay
directly in advance, all reasonable costs, expenses and other amounts incurred
or required to be expended by Landlord in order to comply with Tenant's requests
made in accordance with the preceding sentence, and the failure of Tenant to
reimburse or pay any such amounts shall result in the suspension of Landlord's
obligations under such sentence with respect to that particular request until
the amounts required to be paid by Tenant under this sentence have been paid.
Landlord acknowledges that it is critical to Tenant's ability to construct
improvements on the Premises to have the ability and flexibility to accomplish
the foregoing, and that the parties therefore agree that Landlord shall not be
entitled to withhold Landlord's consent to any of the foregoing requests by
Tenant, except as set forth in the preceding sentence.
20.2 LAND USE. Except where requested by Tenant pursuant to
this Section 20.2, Landlord shall not cause or give its written consent to any
land use or zoning change affecting the Premises or any changes of street grade.
In the event Tenant so requests in writing (and so long as either Tenant agrees
to indemnify Landlord from any liabilities or obligations in connection
therewith, or Landlord does not incur any liabilities or obligations in
connection therewith), Landlord shall execute all documents, instruments and
agreements reasonably requested by Tenant in order to accomplish any of the
following in the manner reasonably requested by Tenant and within the time
parameters reasonably requested by Tenant: (1) cause a change in any land use
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restriction or law affecting the Premises; (2) cause a change in the zoning
affecting the Premises; or (3) cause a change in the street grade with respect
to any street in the vicinity of the Premises. Tenant shall promptly reimburse
Landlord for, or at Landlord's request, pay directly in advance, all reasonable
costs, expenses and other amounts incurred or required to be expended by
Landlord in order to comply with Tenant's requests made in accordance with the
preceding sentence, and the failure of Tenant to reimburse or pay any such
amounts shall result in the suspension of Landlord's obligations under such
sentence with respect to that particular request until the amounts required to
be paid by Tenant under this sentence have been paid. Landlord acknowledges that
it is critical to Tenant's ability to construct improvements on the Premises to
have the ability and flexibility to accomplish the foregoing, and that the
parties therefore agree that Landlord shall not be entitled to withhold
Landlord's request to any of the foregoing requests by Tenant.
20.3 TRANSFER OF PROPERTY INTERESTS. Except as requested by
Tenant pursuant to Section 11.7 or 20.1, Landlord shall not transfer to any
third party any rights inuring to or benefits associated with the Premises
(including, without limitation, zoning rights, development rights, air space
rights, mineral, oil, gas or water rights). Nothing in this Section 20.3 shall
limit Landlord's rights pursuant to Section 13.2; provided that any purchaser of
Landlord's interest in the Premises shall be bound by the terms of this Lease,
including without limitation, the terms of this Section 20.3.
20.4 TRUST EQUITY; NO OTHER ASSET. Landlord covenants and
agrees that during the Term of the Lease, Landlord shall maintain a residual
equity capital investment of at least three percent (3%) of total assets of
Landlord, including assets acquired by this equity investment. In addition,
Landlord shall not, without the prior written consent of Tenant, which consent
may be withheld at Tenant's sole discretion, acquire any significant assets
other than (i) the Land, (ii) the Premises and (iii) the land and any
Improvements thereon, which Improvements are subject to certain leases between
Landlord and Tenant executed concurrently herewith, and which land is described
on Exhibit L attached hereto.
20.5 DEFAULT UNDER AUTHORIZED LOAN. Landlord shall not,
without Tenant's express prior written consent, default under any Authorized
Loan, or any loan documents relating to such Authorized Loan, where such default
does not arise from an Event of Major Default by Tenant under this Lease. Any
such default shall constitute a material default under this Lease, subject to
the limitations on liability of Section 17.8 hereof.
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ARTICLE 21
MISCELLANEOUS
21.1 RELATIONSHIP. Neither this Lease nor any agreements or
transactions contemplated hereby shall in any respect be interpreted, deemed or
construed as constituting Landlord and Tenant as partners or joint venturers,
one with the other, or as creating any partnership, joint venture, association
or, except as set forth in Section 21.2 below, any other relationship other than
that of landlord and tenant; and, except as set forth in Section 21.2 below,
both Landlord and Tenant agree not to make any contrary assertion, contention,
claim or counterclaim in any action, suit or other legal proceeding involving
either Landlord or Tenant or the subject matter of this Lease.
21.2 FORM OF TRANSACTION; CERTAIN TAX MATTERS.
(a) Landlord and Tenant hereby agree and declare
that the transactions contemplated by this Lease are intended to constitute,
both as to matters of form and substance:
(i) an operating lease for financial
accounting and securities regulatory purposes, and
(ii) a financing arrangement (and not a
"true lease") for Federal, state and local income taxes, property tax valuation
or other tax purposes.
Accordingly, and notwithstanding any other provision of this Lease to the
contrary, Landlord and Tenant agree and declare that (A) the transactions
contemplated hereby are intended to have a dual, rather than single, form and
(B) all references in this Lease to the "Lease" of the Premises which fail to
reference such dual form do so as a matter of convenience only and do not
reflect the intent of Landlord and Tenant as to the true form of such
arrangements.
(b) Landlord and Tenant agree that, in accordance
with their intentions and the substance of the transactions contemplated hereby,
Tenant (and not Landlord) shall be treated as the owner of the Premises for
Federal, state, and local income tax and property tax valuation purposes and
this Lease shall be treated as a financing arrangement. Tenant shall be entitled
to take any deduction, credit allowance or other reporting, filing or other tax
position consistent with such characterizations. Landlord shall not file any
Federal, state or local income or property tax returns, reports or other
statements in a manner which is inconsistent with the foregoing provisions of
this Section 21.2.
(c) Each party acknowledges that it has retained
accounting, tax and legal advisors to assist it in structuring this Lease and
neither party is relying on any representations of the other regarding the
proper treatment of this transaction for accounting, income tax, property tax or
any other purpose.
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21.3 NOTICES. Each Notice shall be in writing and shall be
sent by personal delivery, overnight courier (charges prepaid or billed to the
sender) or by the deposit of such with the United States Postal Service, or any
official successor thereto, designated as registered or certified mail, return
receipt requested, bearing adequate postage and in each case addressed as
provided in the Basic Lease Provisions. Each Notice shall be effective upon
being personally delivered or actually received. The time period in which a
response to any such Notice must be given or any action taken with respect
thereto shall commence to run from the date of personal delivery or receipt of
the Notice by the addressee thereof, as reflected on the return receipt of the
Notice. Rejection or other refusal to accept shall be deemed to be receipt of
the Notice sent. By giving to the other party at least thirty (30) days' prior
Notice thereof, either party to this Lease (as well as any Mortgagee) shall have
the right from time to time during the Term of this Lease to change the
address(es) thereof and to specify as the address(es) thereof any other
address(es) within the continental United States of America.
21.4 SEVERABILITY OF PROVISIONS. If any term, covenant or
condition of this Lease, or the application thereof to any Entity or
circumstance, shall be invalid or unenforceable, the remainder of this Lease, or
the application of such term, covenant or condition to Entities or circumstances
other than those as to which it is invalid or unenforceable, shall not be
affected thereby.
21.5 ENTIRE AGREEMENT; AMENDMENT. This Lease constitutes the
entire agreement of Landlord and Tenant with respect to the subject matter
hereof. Neither this Lease nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver, discharge or
termination is sought.
21.6 APPROVALS AND CONSENTS. Except as expressly provided in
this Lease, whenever any provision of this Lease requires an approval or consent
to be given by one of the parties hereto, the approval or consent shall not be
unreasonably withheld or delayed. Whenever this Lease grants either party the
right to take action, exercise discretion, establish rules and regulations, or
make an allocation or other determination, except as otherwise provided, such
party shall act reasonably and in good faith and take no action which might
result in the frustration of the other party's reasonable expectations
concerning the benefits to be enjoyed under this Lease. If either party
withholds its consent or approval, unless by the express terms of this Lease
such consent or approval may be withheld in such party's sole discretion, such
party shall, upon request, promptly deliver to the other party a written
statement specifying in detail the reason or reasons why such consent or
approval was withheld or refused. If neither approval nor rejection is given by
Landlord within the time specified in Article 11 as to any particular approval
requested by
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Tenant under Article 11 (or, if no such time is specified, then within thirty
(30) days after request for approval is given by a Notice), then the approval
thus specifically requested in writing by Tenant shall be conclusively and
irrevocably deemed to have been given by Landlord.
21.7 TERMINOLOGY. All personal pronouns used in this Lease
shall include all other genders. The singular shall include the plural and the
plural shall include the singular. Titles of Articles, Sections and Subsections
in this Lease are for convenience only and neither limit nor amplify the
provisions of this Lease, and all references in this Lease to Articles, Sections
or Subsections shall refer to the corresponding Article, Section or Subsection
of this Lease unless specific reference is made to the articles, sections or
other subdivisions of another document or instrument. The word "days" as used
herein shall mean business days (i.e., excluding holidays when banks in the
State of California or New York are generally closed for business and weekends)
unless otherwise expressly stated.
21.8 MEMORANDUM OF LEASE. Neither party shall record this
Lease. However, concurrently with the execution of this Lease, Landlord and
Tenant have executed a Memorandum of Lease in the form attached hereto as
Exhibit E and by this reference made a part hereof, which Memorandum of Lease
shall be promptly recorded in the Official Records.
21.9 SUCCESSORS AND ASSIGNS. Subject to Articles 13 and 14,
this Lease shall inure to the benefit of and be binding upon Landlord and Tenant
and their respective heirs, executors, legal representatives, successors and
assigns. Whenever in this Lease a reference to any Entity is made, such
reference shall be deemed to include a reference to the heirs, executors, legal
representatives, successors and assigns of such Entity.
21.10 COMMISSIONS. Landlord and Tenant each represent and
warrant that neither has dealt with any broker in connection with this
transaction and that no real estate broker, salesperson or finder has the right
to claim a real estate brokerage, salesperson's commission or finder's fee by
reason of contact between the parties brought about by such broker, salesperson
or finder. Each party shall hold and save the other harmless of and from any and
all loss, cost, damage, injury or expense arising out of or in any way related
to claims for real estate broker's or salesperson's commissions or fees based
upon allegations made by the claimant that it is entitled to such a fee from the
indemnified party arising out of contact with the indemnifying party or alleged
introductions of the indemnifying party to the indemnified party. In addition to
the foregoing, Tenant shall hold and save Landlord harmless of and from any and
all loss, cost, damages, injury or expense arising out of or in any way related
to claims for real estate broker's or salesperson's commissions relating to
Landlord's acquisition of the Premises or fees by The Staubach Company in
connection with this Lease.
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21.11 ATTORNEYS' FEES. In the event any action is brought by
Landlord or Tenant against the other to enforce or for the breach of any of the
terms, covenants or conditions contained in this Lease, the prevailing party
shall be entitled to recover reasonable attorneys' fees to be fixed by the
court, together with costs of suit therein incurred. Tenant shall pay the
reasonable attorneys' fees incurred by Landlord for the review and negotiation
of this Lease and the Improvements Loan documents.
21.12 GOVERNING LAW. This Lease and the obligations of the
parties hereunder shall be governed by and interpreted, construed and enforced
in accordance with the laws of the State of California.
21.13 COUNTERPARTS. This Lease may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall comprise but a single instrument.
21.14 TIME IS OF THE ESSENCE. Time is of the essence of this
Lease, and of each provision hereof.
21.15 NO THIRD PARTY BENEFICIARIES. This Lease is entered into
by Landlord and Tenant for the sole benefit of Landlord and Tenant. There are no
third party beneficiaries to this Lease.
21.16 LIMITATIONS ON RECOURSE. The obligations of Tenant and
Landlord under this Lease shall be without recourse to any partner, officer,
trustee, beneficiary, shareholder, director or employee of Tenant or Landlord.
There shall be no limitation on Landlord's liability with respect to any willful
misconduct, bad faith breach of this Lease, or gross negligence by Landlord
("Identified Matters"). Except for any Identified Matter, Landlord's liability
to Tenant for any default by Landlord under this Lease: (1) shall be limited to
the greater of the Equity Funded Amount less any repayment to Tenant of the
Security Deposit or Landlord's interest in the Premises; and (2) shall extend to
any actual damages of Tenant, but shall not extend to any foreseeable and
unforeseeable consequential damages.
21.17 ESTOPPEL CERTIFICATES. Within thirty (30) days after
request therefor by either party, the non-requesting party shall deliver, in
recordable form, a certificate to any proposed mortgagee, purchaser, sublessee
or assignee and to the requesting party, certifying (if such be the case) that
this Lease is in full force and effect, the date of Tenant's most recent payment
of Rent, that, to the best of its knowledge, the non-requesting party has no
defenses or offsets outstanding, or stating those claimed, and any other
information reasonably requested. Failure to deliver said statement in time
shall be conclusive upon the non-requesting party that: (a) this Lease is in
full force and effect, without modification except as may be represented by the
requesting party; (b) there are no uncured defaults in the requesting party's
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performance and the non-requesting party has no right of offset, counterclaim or
deduction against the non-requesting party's obligations hereunder; (c) no more
than one month's Base Rent has been paid in advance; and (d) any other matters
reasonably requested in such certificate.
21.18 COLLATERAL. The parties acknowledge that Tenant has
pledged certain collateral ("Collateral") to Lenders to secure Landlord's
obligations under the terms of the Note. If the holder of an Authorized Loan
applies any of the Collateral to satisfy an obligation under any Authorized Loan
documents, such application shall be deemed to reduce the Senior Funded Amount
under this Lease on a dollar-for-dollar basis. Tenant shall have no claims,
rights or causes of action against Landlord arising from any application of the
Collateral to satisfy an obligation under the Authorized Loan documents.
21.19 LANDLORD'S CONTINUING OBLIGATION TO SELL. Except in the
case of a foreclosure under the Landlord Deed of Trust, and subject to the
rights of any holder of an Authorized Loan, in the event Landlord obtains
possession of the Premises pursuant to the terms of this Lease (including,
without limitation, upon the expiration or earlier termination of this Lease
where Tenant has defaulted in its obligation to purchase the Premises pursuant
to Section 19.2), Landlord shall be under a continuing obligation to use its
commercially reasonable efforts to sell the Premises to Tenant or to one or more
unrelated third parties; provided, however, that Landlord shall not be required
to sell or attempt to sell any portion of the Premises (i) in a manner, or under
circumstances, that could materially impair Landlord's ability to enforce any of
its rights or remedies under this Lease (as determined in Landlord's sole
discretion exercised in good faith), (ii) at a time when market conditions
render it inadvisable to sell or attempt to sell the Premises (as determined in
Landlord's sole discretion exercised in good faith). Nothing contained in this
paragraph shall be binding upon any holder of an Authorized Loan acquiring title
through foreclosure, to any person acquiring title at any such foreclosure or to
their successors in interest. Upon the occurrence of any such sale Landlord
shall be obligated to pay to Tenant any excess of the amount realized by
Landlord in connection with such sale over the Purchase Price. For purposes of
the preceding sentence, the amount realized by Landlord upon a sale of the
Premises shall be net of Landlord's reasonable sale expenses and other expenses
incurred by Landlord but required to be paid by Tenant pursuant to Section
19.1(c)(v). Landlord's obligation to pay such excess to Tenant shall survive any
termination of this Lease. Landlord shall not deliver to any Mortgagee a deed in
lieu of foreclosure under any circumstances without Tenant's prior written
approval, which may be withheld in Tenant's sole and absolute discretion.
61.
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21.20 AS-IS LEASE. Landlord makes no representations or
warranties concerning the condition, suitability or any other matters relating
to the Premises, and Tenant hereby acknowledges that Tenant leases the Premises
from Landlord on an "as is" basis.
21.21 NET LEASE. Except as otherwise provided in this Lease,
Tenant agrees that this Lease is an absolute net Lease, and the Base Rent called
for hereunder shall be paid as required net of all expenses associated with the
Premises, including without limitation, Real Estate Taxes and insurance premiums
for the insurance required to be carried hereunder, and all other reasonable and
customary costs and expenses incurred by Landlord in connection with the
Premises or this Lease, all of which shall be paid or reimbursed by Tenant
unless otherwise specifically provided herein. Tenant agrees to reimburse
Landlord, within five (5) business days following receipt of any written demand
therefor, for all reasonable and customary fees (including the pro rata portion
of the $3,000 annual servicing fee payable to SBNYTC attributable to this
Lease), late charges, title endorsement and other costs and expenses charged to
Landlord by Lenders pursuant to the terms and conditions of the Note.
21.22 REPRESENTATIONS AND WARRANTIES. Tenant and Landlord each
hereby represents and warrants to the other that: (i) such party is duly
organized and existing under the laws of the jurisdiction in which it is formed;
(ii) such party has the full right and authority to enter into this Lease,
consummate the sale, transfers and assignments contemplated herein and otherwise
perform its obligations under this Lease; (iii) the person or persons signatory
to this Lease and any document executed pursuant hereto on behalf of such party
have full power and authority to bind such party; and (iv) the execution and
delivery of this Lease and the performance of such party's obligations hereunder
do not and shall not result in the violation of its organizational documents or
any contract or agreement to which such party may be a party.
21.23 APPRAISAL PROCEDURE.
(a) If this Lease calls for an appraisal under this
Section 21.23 with respect to the Coverage Test, Landlord and Tenant shall have
thirty (30) days after either party delivers Notice to the other party of a
desire to utilize the appraisal procedure under this Section 21.23 in connection
with the Coverage Test in which to agree on whether the Coverage Test is
satisfied as of the time required under the relevant provision of this Lease. In
determining the Coverage Test, the fair market value of the Land and
Improvements ("Fair Market Value") shall be calculated together, taking into
consideration the quality, size, design and location of the Land and
Improvements, and the value of comparable property in the general locality of
the Land, and any other factors which customarily are evaluated in appraising
land or buildings. If either party elects to utilize the terms of this Section
21.23 and Landlord and Tenant agree on the Fair Market Value during such
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thirty (30) day period, they shall immediately execute a letter agreement
reflecting such agreement.
(b) If Landlord and Tenant are unable to agree on
the Fair Market Value within such thirty (30) day period, then within ten (10)
days after the expiration of the thirty (30) day period, Landlord and Tenant
each, at its cost and by giving notice to the other party, shall appoint a
competent and disinterested real estate appraiser with at least five (5) years'
full-time commercial appraisal experience in the geographical area of the
Building to appraise and set the Fair Market Value. If either Landlord or Tenant
does not appoint an appraiser within ten 10 days after the other party has given
notice of the name of its appraiser, the single appraiser appointed shall be the
sole appraiser and shall set the Fair Market Value. If two (2) appraisers are
appointed by Landlord and Tenant as stated in this Section, they shall meet
promptly and attempt to set the Fair Market Value.
(c) If the two (2) appraisers are unable to agree
on the Fair Market Value within thirty (30) days after the second appraiser has
been appointed, they shall attempt to select a third appraiser meeting the
qualifications stated in this Section within ten (10) days after the last day
the two (2) appraisers are given to set the Fair Market Value. If they are
unable to agree on the third appraiser, either Landlord or Tenant, by giving ten
(10) days' notice to the other party, can apply to the then president of the
real estate board of the county in which the Land is located, or to the
Presiding Judge of the Superior Court of the county in which the Land is
located, for the selection of a third appraiser who meets the qualifications
stated in this Section. Landlord and Tenant each shall bear one-half (l/2) of
the cost of appointing the third appraiser and of paying the third appraiser's
fee. The third appraiser, however selected, shall be a person who has not
previously acted in any capacity for either Landlord or Tenant. Within thirty
(30) days after the selection of the third appraiser, a majority of the
appraisers shall set the Fair Market Value. If a majority of the appraisers is
unable to set the Fair Market Value within the stipulated period of time, the
third appraiser shall arrange for simultaneous exchange of written appraisals
from each of the appraisers and the three (3) appraisals shall be added together
and their total divided by three (3); the resulting quotient shall be the Fair
Market Value. If, however, the low appraisal and/or the high appraisal are/is
more than ten percent (10%) lower and/or higher than the middle appraisal, the
low appraisal and/or the high appraisal shall be disregarded. If only one (1)
appraisal is disregarded, the remaining two (2) appraisals shall be added
together and their total divided by two (2); the resulting quotient shall be the
Fair Market Value. If both the low appraisal and the high appraisal are
disregarded as stated in this Section, the middle appraisal shall be the Fair
Market Value.
(d) After the Fair Market Value has been set, the
appraisers shall immediately notify Landlord and Tenant, and
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Landlord and Tenant shall immediately execute a letter agreement reflecting the
Fair Market Value.
21.24 FINANCIAL REPORTING. Tenant shall provide to Landlord
and Lenders: (1) annually, within one hundred twenty (120) days after the end of
each of Tenant's fiscal years during the Term, an annual report on Form 10-K for
such fiscal years as filed with the Securities and Exchange Commission; (2)
quarterly, within forty five (45) days after the end of each of Tenant's fiscal
quarters during the Term, quarterly reports on Form 10-Q as filed with the
Securities and Exchange Commission; and (3) within thirty (30) days after filing
with the Securities and Exchange Commission, any other reports, proxy
statements, registration statements or prospectuses filed during the Term with
the Securities and Exchange Commission.
21.25 APPRAISAL. Prior to Landlord's making the Initial
Advance pursuant to Section 11.3 hereof, Landlord shall have received an
appraisal conforming to FIRREA guidelines prepared by an appraiser reasonably
satisfactory to Landlord indicating that the current fair market value on an
as-completed basis of the buildings as designed as of the date of such appraisal
which Tenant may desire to have constructed on the Land (based upon a
theoretical current build-out on the Land on the basis of the Site Plan attached
hereto as Exhibit C) is not less than ninety percent (90%) of the estimated cost
of construction of the buildings which Tenant may desire to have constructed on
the Land. The appraisal shall be based upon Tenant's current construction
budget, specifications and intended use (both parties hereby recognizing that
such items are subject to change, and in no event shall Tenant have any
obligation to construct any or all of such buildings). Tenant hereby approves
Landlord's use of either Cushman & Wakefield or CB Commercial Real Estate Group
as the appraiser under this Section 21.25. Landlord hereby acknowledges that the
current fair market value on an as-completed basis of the buildings as designed
as of the date of such appraisal which Tenant proposes to have constructed on
the Land is not less than ninety percent (90%) of the estimated cost of
construction of said buildings.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
64.
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[SIGNATURE PAGE TO BUILDING LEASE]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Lease as of the day and year first above written.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE
UNDER THAT CERTAIN TRUST AGREEMENT
DATED MAY 22, 1995 BETWEEN
SUMITOMO BANK LEASING AND FINANCE,
INC. AND SBNYTC
By: [JOHN McFADDEN]
------------------------------
Name: [JOHN F. McFADDEN]
------------------------------
Its: [VICE PRESIDENT AND
TREASURER]
------------------------------
[Remainder of This Page Intentionally Left Blank]
<PAGE> 72
[SIGNATURE PAGE TO BUILDING LEASE]
"TENANT"
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
By: [JOHN T. CHAMBERS]
------------------------------------------------
Name: [JOHN T. CHAMBERS]
----------------------------------------
Its: [PRESIDENT AND CHIEF EXECUTIVE OFFICER]
----------------------------------------
By: [LARRY R. CARTER]
------------------------------------------------
Name: [LARRY R. CARTER]
----------------------------------------
Its: [CHIEF FINANCIAL OFFICER]
----------------------------------------
<PAGE> 73
EXHIBIT A
LEGAL DESCRIPTION OF LAND
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on July 13, 1983,
in Book 514 of Maps page(s) 47 and 48.
APN: 97-53-14
All of Lot 54 as shown upon that certain Map entitled, "Tract No. 7559", which
Map was filed for record in the Office of the Recorder of the County of Santa
Clara, State of California on December 21, 1983 in Book 522 of Maps, at pages 49
and 50.
APN: 97-53-23
<PAGE> 74
EXHIBIT B
PERMITTED EXCEPTIONS
The following exceptions from coverage of Landlord's title
insurance which affect "Parcel Two" and "Parcel Three":
1. PROPERTY TAXES, including any assessments collected with taxes, for
the fiscal year 1995-1996, a lien not yet due or payable.
2. a) Bond for City of San Jose, Reassessment District No. 93-210 1993
Consolidated Refunding
Bond No. : 24J
Assessment No. : 42V
Balance of principal : $88,186.00
Balance of interest
through maturity : $16,532.60
The above Amount excludes $12,279.07 principal, $5,140.46 interest
and $277.29 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects Lot 59 of Parcel One.
b) Bond for City of San Jose, Reassessment District No. 93-210 1993
Consolidated Refunding
Bond No. : 24J
Assessment No. : 46V
Balance of principal : $100,217.00
Balance of interest
through maturity : $18,788.10
The above Amount excludes $13,954.27 principal, $5,841.76 interest
and $312.93 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects Lot 58 of Parcel One.
c) Bond for Reassessment District #93-210 Consolidated Refunding, as
follows:
Bond No. : 24J
Assessment No. : 48V
Balance of principal : $113,800.32
Balance of interest : $21,334.61
The above Amount to pay in full excludes $15,845.61 principal,
$6,633.65 interest and $353.18 handling charge spread on the 1994-
1995 tax roll, which amounts cannot be prepaid.
Said matter affects Parcel Two.
<PAGE> 75
2. Continued
d) Bond for Reassessment District #93-210 Consolidated Refunding, as
follows:
Bond No. : 24J
Assessment No. : 47V
Balance of principal : $123,177.11
Balance of interest : $23,092.52
The above Amount to pay in full excludes $17,151.24 principal,
$7,180.13 interest and $380.97 handling charge spread on the 1994-
1995 tax roll, which amounts cannot be prepaid.
Said matter affects Parcel Three.
e) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 8V
Balance of principal : $63,238.68
Balance of interest
through maturity : $11,855.62
The above Amount excludes $8,806.39 principal, $3,686.25 interest
and $203.36 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects Parcels Four and Five.
f) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 1V
Balance of principal : $429.87
Balance of interest
through maturity : $80.61
The above Amount excludes $59.86 principal, $25.02 interest and
$1.32 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects a portion of Parcel Six.
g) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 2V
Balance of principal : $91,559.14
Balance of interest
through maturity : $17,164.97
The above Amount excludes $12,748.74 principal, $5,337.09 interest
and $280.03 handling charge spread on the 1994- 1995 tax roll, which
amounts cannot be prepaid.
Said matter affects a portion of Parcel Six.
<PAGE> 76
2. Continued
h) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 9V
Balance of principal : $75,028.33
Balance of interest
through maturity : $14,065.87
The above Amount excludes $10,446.98 principal, $4,373.49 interest
and $229.47 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects a portion of Parcel Six.
i) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 10V
Balance of principal : $360.71
Balance of interest
through maturity : $67.62
The above Amount excludes $50.23 principal, $21.03 interest and
$1.10 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects a portion of Parcel Six.
3. THE LIEN of supplemental taxes, if any, assessed as a result of
transfer of interest and/or new construction, said supplemented
taxes being assessed pursuant to Chapter 3.5 commencing with Section
75 of the California Revenue and Taxation Code, for which no Notice
of Assessment has been issued, as of the date herein.
4. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Right to excavate for, install, replace
(of initial or any other size), maintain
and use for conveying gas such pipe line
or lines as shall from time to time
elect, with necessary values and other
appliances
Granted to : Pacific Gas and Electric Company, a
California corporation
Recorded : July 6, 1944 in Book 1206, page 154,
Official Records
Affects : as follows:
By a Relocation Agreement between Oakmead Associates, a California
general partnership and Pacific Gas and Electric Company, a
California corporation
Recorded : April 5, 1989 in Book K903, page 1344,
Official Records
the easement was relocated as follows:
A strip of land of the uniform width of 15 feet extending from the
Northerly boundary line of said Lot 5, said Northerly boundary line
being the Southerly boundary line of the city street known as Tasman
Drive (128 feet wide), said Tasman Drive is shown on said map,
Southwesterly to the Westerly boundary line of said Lot 5, said
Westerly boundary line being the Easterly boundary line of the
street known as Rio Robles (56 feet wide), said street Rio Robles is
also shown on said map, and lying 7.5 feet on each side of the line
described as follows:
<PAGE> 77
4. Continued
Beginning at a point in the Northerly boundary line of said Lot 5
and running (1) S. 0 degrees 23.5 minutes E. 12.4 feet to a point
which bears, S. 66 degrees 35.0 minutes W. 579.2 feet distant from
the found 5/8 inch brass pin set in concrete accepted as marking the
Southwesterly terminus of a course in the center line of said Tasman
Drive, which course as shown on said map has a bearing of, N. 59
degrees 28 minutes 40 seconds E. and a length of 700.88 feet; thence
(2) S. 29 degrees 04.3 minutes W. 187.8 feet; thence (3) S. 57
degrees 38.6 minutes W. 10.8 feet to a point in the Westerly
boundary line of said Lot 5. Said line being a survey traverse made
by second party in September, 1983. The bearings used in the
foregoing description are based on solar observations made by second
party.
Covenants, conditions and restrictions in the above mentioned
instruments.
Said matter affects Parcel Six.
5. TERMS and conditions as contained in the Grant Deed executed by
Masami Ezaki and Kaoru Ezaki, his wife in favor of the City and
County of San Francisco, a municipal corporation recorded December
8, 1950 in Book 2111, page 319, Official Records.
Said matter affect Parcels Five and Seven and portions of Parcels
Four and Six.
6. THE EFFECT of the Rincon de los Esteros Project Redevelopment Plan
and Ordinances Nos. 17306, 19686, 19835, 20677, 20958, 21417, 21496,
21903, 22660, 22412, 22761, 22761.1 and 22961, 23703, 23732, 23761
and 23934 of the City of San Jose as recorded and as disclosed by
documents recorded July 11, 1975 in Book B502, Page 711; August 6,
1979 in Book E699, Page 245; August 6, 1979 in Book E699, Page 277;
December 21, 1979 in Book F37, Page 585; October 8, 1981 in Book
G382, Page 605; July 28, 1982 in Book G929, Page 703; September 14,
1983 in Book H892, Page 200; January 10, 1984 in Book I220, Page
271; January 6, 1992 in Book L996, Page 508, all of Official
Records, and as disclosed by information provided by the
Redevelopment Agency of the City of San Jose.
7. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Any and all public service facilities,
including, but not limited to, poles, wires,
conduits and vaults, storm sewers, sanitary
sewers, and gas, water, electrical and
communication mains and all appurtenances
thereto
Granted to : City of San Jose, a municipal corporation of the
State of California
Recorded : September 14, 1981 in Book G330, page 497,
Official Records
Affects : That portion of said land as shown upon the map
herein referred to, more particularly described
as follows:
All that certain real property situated in the City of San Jose,
County of Santa Clara, State of California, being a portion of the
parcel of land described and designated as Parcel 1 in the deed to
River Oaks Associates #2, dated November 17, 1979, recorded in Book
E962 of Official Records, at page 145, Santa Clara County Records,
more particularly described as follows:
<PAGE> 78
7. Continued
Beginning at a point in the centerline of North First Street
(formerly San Jose-Alviso Road) as said centerline is described in
said deed at the most Northerly corner of said parcel; thence along
the Northwesterly boundary line of said parcel, S. 59 degrees 28
minutes 40 seconds W. (S. 59 degrees 30 minutes W. per deed), 114.98
feet; thence leaving said line, S. 30 degrees 31 minutes 20 seconds
E. 34.00 feet to the true point of beginning; thence along a
non-tangent curve to the right having a radius of 50.00 feet; whose
radius point bears along the continuation of the last described
course, S. 30 degrees 31 minutes 20 seconds E. through a central
angle of 89 degrees 59 minutes 11 seconds for an arc length of 78.53
feet to a point in a line which is parallel with and 65.00 feet
Southwesterly of said centerline; thence along said parallel line,
S. 30 degrees 32 minutes 09 seconds E. 254.64 feet to a point in the
Northwesterly boundary line of the strip of land described in the
deed to the City of County of San Francisco, dated October 20, 1950;
recorded in Book 2111 of Official Records, at page 319, Santa Clara
County Records; thence along said Northwesterly line, S. 65 degrees
09 minutes 27 seconds W. 10.05 feet to a point in a line that is
parallel with and 75.00 feet Southwesterly from said centerline;
thence along said parallel line, N. 30 degrees 32 minutes 09 seconds
W. 253.64 feet; thence along a curve to the left, having a radius of
40.00 feet, through a central angle of 89 degrees 59 minutes 11
seconds for an arc length of 62.82 feet; thence N. 30 degrees 31
minutes 20 seconds W. 10.00 feet to the true point of beginning; the
bearing of, S. 30 degrees 32 minutes 09 seconds E. of the monument
line of North First Street, as shown on the Parcel Map recorded in
Book 460 of Maps, at page 1, Santa Clara County Records, was used as
the basis of bearings for this description.
Said matter affects Parcel Six.
8. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Landscape Easement
Granted to : City of San Jose, a municipal corporation
Recorded : September 14, 1981 in Book G330, page
504, Official Records
Affects : The Northeasterly 20 feet of Parcel Six.
9. LICENSE for the purposes stated herein and incidents thereto
Purpose : To construct, install, maintain, repair,
renew, replace, operate and use an
interim storm sewer pipe line or lines
and appurtenances of any size of
material, and/or a surface drainage
release
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : September 14, 1981 in Book G330, page
511, Official Records
Affects : that portion of said land as shown upon
the map herein referred to, more
particularly described as follows:
All that certain real property situate in the City of San Jose,
County of Santa Clara, State of California, being a portion of the
parcel of land described and designated as Parcel 1 in the deed to
River Oaks Associates #2, dated November 17, 1979, recorded in Book
E962 of Official Records, at page 145, Santa Clara County Records,
more particularly described as follows:
Beginning at a point in the centerline of North First Street
(formerly San Jose-Alviso Road) as said centerline is described in
said deed at the most Northerly corner of said parcel; thence along
the Northwesterly boundary line of said parcel, S. 59 degrees 29
minutes 40 seconds W. (S. 59 degrees 30 minutes W. per deed), 114.98
feet; thence leaving said boundary line, S. 30 degrees 31 minutes 20
seconds E. 34.00; thence along a non-tangent curve to the right
having a radius of 50.00 feet whose radius point bears along the
continuation of the last described course, S. 30 degrees 31 minutes
20 seconds E. through a central angle of 17 degrees 26 minutes 39
seconds for an arc length of 15.22 feet to the point of beginning;
thence continuing along said curve
<PAGE> 79
9. Continued
to the right having a radius of 50.00 feet, through a central angle
of 19 degrees 24 minutes 44 seconds for an arc length 16.94 feet to
a point in a line that is parallel with and 85.00 feet Southwesterly
of said centerline; thence along said parallel line S. 30 degrees 32
minutes 09 seconds E. 292.64 feet to a point in the Northwesterly
boundary line of the strip of land described in the deed to the City
and County of San Francisco, dated October 20, 1950, recorded in
Book 2111 of Official Records, at page 319, Santa Clara County
Records; thence along said Northwesterly boundary line, S. 65
degrees 09 minutes 27 seconds W. (S. 65 degrees 08 minutes 00
seconds W. per deed), 15.07 feet to a point in a line which is
parallel with and 100.00 feet Southwesterly of said centerline;
thence along said parallel line, N. 30 degrees 32 minutes 09 seconds
W. 298.84 feet to the true point of beginning.
Said matter affects Parcel Six.
10. AN EASEMENT affecting the portion of said land and for the purpose
stated herein and incidental purposes, shown or dedicated by the map
of Tract 7408 filed in Book 506 of Maps, pages 24, 25 and 26.
Purpose : Public Service Easement
Affects : The Southwesterly 10 feet of Parcels One,
Two and Three; the Northwesterly 8 feet
of Parcel Two; the Southwesterly 8 feet
of Parcel Four; the Northeasterly and
Northwesterly 10 feet of Parcel Six; and
the Southwesterly 8 feet of Parcel Six.
11. EASEMENT as shown on the filed map of Tract 7408 filed in Book 506
of Maps, pages 24-26 and incidents thereto
Purpose : Landscape Easement
Affects : The Southwesterly 20 feet of Parcel One,
Two and Three; the Northwesterly 18 feet
of Parcel Two; the Southwesterly 18 feet
of Parcel Four; the Northeasterly and
Northwesterly 20 feet of Parcel Six; and
the Southwesterly 18 feet of Parcel Six.
12. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Service Easement
Granted to : City of San Jose
Recorded : November 19, 1982 in Book H156, page 275,
Official Records
Affects : The Northwesterly 25 feet of Parcel Four
13. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The installation, maintenance and
operation of all landscaping plant forms,
irrigation systems, retaining walls, and
decorative walkway paving now existing or
hereinafter to be constructed
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : May 27, 1983 in Book H590, page 649,
Official Records
Affects : The Southwesterly 20 feet of Parcel One,
Two and Three; the Northwesterly 18 feet
of Parcel Two; the Southwesterly 18 feet
of Parcel Four; the Northeasterly and
Northwesterly 20 feet of Parcel Six; and
the Southwesterly 18 feet of Parcel Six.
<PAGE> 80
14. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The installation, maintenance and
operation of all landscaping plant forms,
irrigation systems, retaining walls, and
decorative walkway paving now existing or
hereinafter to be constructed
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : May 27, 1983 in Book H590, page 652,
Official Records
Affects : The Westerly corner of Parcel Two and the
Northerly and Westerly corner of Parcel
Six
15. AGREEMENT on the terms and conditions contained therein,
For : The installation and maintenance of
landscape improvements
Between : City of San Jose, a municipal corporation
And : Oakmead-San Jose, a California general
partnership and Oakmead-San Jose Sign and
Landscape Maintenance Association, a
California non-profit mutual benefit
corporation
Recorded : May 27, 1983 in Book H590, page 662,
Official Records
Reference is hereby made to the record for further particulars.
16. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The construction, installation, repair
and maintenance of interlocking pavers,
retaining walls and signs, and for
pedestrian and vehicular access as
necessary or desirable thereto, but
subject to the obligation of the
association of the association, its
successors and assigns, to promptly
repair any damage to said improvements
lying within the Sign and Landscape
Easements resulting from the
Association's activities thereon
Granted to : Oakmead-San Jose Sign and Landscape
Maintenance Association, a non-profit
mutual benefit corporation
Recorded : June 3, 1983 in Book H604, page 322,
Official Records
Affects : The Westerly corner of Parcel Two and the
Northerly and Westerly corner of Parcel
Six
17. LIMITATIONS, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting restrictions, if
any, based on race, color, religion or national origin contained in
the document recorded June 3, 1983 in Book H604, page 334, Official
Records.
CONTAINS mortgagee protection clause.
MODIFICATION thereof recorded January 26, 1984 in Book I257, page
252, Official Records.
A Notice of Amendment of Design Guidelines
Executed by : Oakmead-San Jose, a California general
partnership
Recorded : June 21, 1984 in Book I649, page 543,
Official Records
An instrument entitled, "Designation of Approving Agent," whereby
Kimball Small Properties, a California corporation was designated
approving agent under the CC&R's and Design Guidelines.
Recorded : April 29, 1988 in Book K517, page 940,
Official Records
MODIFICATION thereof recorded October 18, 1988 in Book K721, page
265, Official Records.
<PAGE> 81
17. Continued
Said Assignment affects Parcel One.
An instrument entitled, "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 1, 1995
Between : CROCKER PROPERTIES, INC., a California
corporation and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 1, 1995 as Instrument No. 12877064,
Official Records
Said Assignment affects Parcels Two and Three
An Instrument entitled, "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 8, 1995
Between : AMDAHL CORPORATION, a Delaware
corporation and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 8, 1995 as Instrument No. 12882481,
Official Records
Said Assignment affects Parcels Four, Five and Six
18. LIMITATIONS, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting restrictions, if
any, based on race, color, religion or national origin contained in
the document recorded June 3, 1983 in Book H604, page 505, Official
Records.
Said instrument also provides for the levy of assessments, the lien
of which are stated to be subordinate to the lien of a First
Mortgage of First Deed of Trust made in good faith and for value.
MODIFICATION thereof recorded January 26, 1984 in Book I257, page
248, Official Records.
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose and Removal of Approving Agent,"
Dated : October 18, 1988
Between : Oakmead-San Jose, a California general
partnership and Oakmead Associates, a
California general partnership
Recorded : October 18, 1988 in Book K721, page 295,
Official Records
Said Assignment affects Parcels One, Four, Five and Six
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose and Removal of Approving Agent,"
Dated: : April 20, 1989
Between : Oakmead Associates, a California general
partnership and Amdahl Corporation, a
Delaware corporation
Recorded : April 20, 1989 in Book K927, page 332,
Official Records
Said Assignment affects Parcels Four and Five
<PAGE> 82
18. Continued
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : July 12, 1989
Between : Oakmead Associates, a California general
partnership and Amdahl Corporation, a
Delaware corporation
Recorded : July 12, 1989 in Book L017, page 1927,
Official Records
Said Assignment affects Parcel Six
MODIFICATION thereof recorded July 19, 1989 in Book L024, page 587,
Official Records
An instrument entitled "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose"
Between : Oakmead-San Jose, a California general
partnership and Crocker Properties, Inc.,
a California corporation
Recorded : August 10, 1989 in Book L052, page 1001
and page 1011, Official Records.
Said Assignment affects Parcels Two and Three
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 1, 1995
Between : OAKMEAD ASSOCIATES, a California general
partnership and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 1, 1995 as Instrument No. 12877061,
Official Records
Said Assignment affects Parcel One.
An instrument entitled, "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 1, 1995
Between : CROCKER PROPERTIES, INC., a California
corporation and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 1, 1995 as Instrument No. 12877064,
Official Records
Said Assignment affects Parcels Two and Three
An instrument entitled, "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 8, 1995
Between : AMDAHL CORPORATION, a Delaware
corporation and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 8, 1995 as Instrument No. 12882481,
Official Records
Said Assignment affects Parcels Four, Five and Six
<PAGE> 83
19. EASEMENT as shown on the filed map of Tract 7559 filed in Book 522
of Maps, pages 49 ad 50.
Purpose : Public Service Easement
Affects : The Northwesterly 8 Feet and the Westerly
corner of Lot 59 of Parcel One
20. EASEMENT as shown on the filed map of Tract 7559 filed in Book 522
of Maps, pages 49 and 50.
Purpose : Landscape Easement
Affects : The Southeasterly 18 feet and the
Southerly corner of Lot 58 of Parcel One;
and the Northwesterly 18 feet and the
Westerly corner of Lot 59 of Parcel One
21. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Communication facilities
Granted to : Pacific Bell
Recorded : February 21, 1984 in Book I319, page 486,
Official Records
Affects : The Southwesterly 10 feet of Lot 58 of
Parcel One; the Southwesterly 10 feet,
the Northwesterly 8 feet and the Westerly
corner of Lot 59 of Parcel One; and the
Southwesterly 10 Feet of Parcel Three
22. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Underground and above ground
communication facilities
Granted to : Pacific Bell
Recorded : May 17, 1984 in Book 1552, page 624,
Official Records
Affects : The Southwesterly 10 feet of Parcel Four
23. AGREEMENT on the terms and conditions contained therein,
For : Gas and electric service
Between : Pacific Gas and Electric Company, City of
San Jose
And : Oakmead-San Jose
As disclosed by a Memorandum of Agreement
Recorded : February 25, 1985 in Book J271, page 37,
Official Records.
Reference is hereby made to the record for further particulars.
24. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Emergency overland storm drainage release
Granted to : Amdahl Corporation, a Delaware
corporation
Recorded : August 8, 1990, in Book L443, page 754,
Official Records
Affects : The Northwesterly 10 feet of the
Southeasterly 30 feet and the
Northeasterly 10 feet of the
Northwesterly 100 feet of the
Southeasterly 130 feet of Parcel Four.
Terms and conditions contained in the document hereinabove referred
to.
25. TERMS AND CONDITIONS of that certain Site Development Permit
File No. : HSH 90-09-104
Disclosed By : A Notice of Granting of a Site
Development Permit
Recorded : January 24, 1991 in Book L600, page 1242,
Official Records
<PAGE> 84
25. Continued
Said matter affects Parcels Four, Five and Six.
Reference is hereby made to the record for particulars.
26. TERMS AND CONDITIONS of that certain Site Development Permit
File No. : HSH 92-02-011
Disclosed By : A Notice of Granting of a Site
Development Permit
Recorded : August 21, 1992 in Book M340, page 824,
Official Records
Said matter affects Parcel Six.
27. TERMS AND CONDITIONS of that certain Site Development Permit
File No. : H94-07-041
Disclosed By : A Notice of Granting of a Site
Development Permit
Recorded : October 19, 1994 in Book N638, page 215,
Official Records
Said matter affects Parcel Six.
Reference is hereby made to the record for particulars.
29. ANY RIGHTS, interests, or claims adverse to those of the vestee
herein which may exist or arise by reason of the following facts
shown on a survey plat entitled "A.L.T.A./A.C.S.M. Land Title
Survey", dated April 14, 1995, prepared by Kier & Wright, Job. No.
92160-16.
a) The fact that a concrete sign extends across the Northwesterly
boundary of Parcel Six.
30. UNRECORDED LEASE for the term and upon the terms and conditions
contained therein
Dated : February 28, 1995
Lessor : IRISH LEASING CORPORATION, a Texas
corporation
Lessee : CISCO SYSTEMS, INC., a California
corporation
Term : 5 Years
Disclosed by : Memorandum of Land Lease, recorded May 1,
1995, as Instrument No., 12877062,
Official Records.
Affects the fee to Parcel One.
31. OPTION TO PURCHASE as disclosed in the Memorandum of Lease recorded
May 1, 1995 as Instrument No. 12877062, Official Records
Affects the fee to Parcel One.
32. UNRECORDED LEASE for the term and upon the terms and conditions
contained therein
Dated : February 28, 1995
Lessor : IRISH LEASING CORPORATION, a Texas
corporation
Lessee : CISCO SYSTEMS, INC., a California
corporation
Term : 5 Years
Disclosed by : Memorandum of Land Lease, recorded May 1,
1995, as Instrument No. 12677065,
Official Records.
Affects the fee to Parcels Two and Three.
<PAGE> 85
33. OPTION TO PURCHASE as disclosed in the Memorandum of Lease recorded
May 1, 1995 as Instrument No. 12877065, Official Records
Affects the fee to Parcels Two and Three.
34. A DEED OF TRUST to secure an indebtedness in the original principal
sum shown below and any other amounts and/or obligations secured
thereby
Amount : $2,700,000.00
Dated : May 1, 1995
Trustor : IRISH LEASING CORPORATION, a Texas
corporation
Trustee : FIRST AMERICAN TITLE INSURANCE COMPANY, a
California corporation
Beneficiary : CISCO SYSTEMS, INC., a California
corporation
Recorded : May 1, 1995, under Series No. 12877066,
Official Records.
Affects the fee to Parcels One, Two and Three.
35. UNRECORDED LEASE for the term and upon the terms and conditions
contained therein
Dated : April 12, 1995
Lessor : IRISH LEASING CORPORATION, a Texas
corporation
Leesee : CISCO SYSTEMS, INC., a California
corporation
Term : 5 years
Disclosed by : Memorandum of Land Lease, recorded May 8,
1995, as Instrument No. 12882482,
Official Records.
Affects the fee to Parcels Four, Five, Six and Seven.
36. OPTION TO PURCHASE as disclosed in the Memorandum of Lease recorded
May 8, 1995 as Instrument No. 12482482, Official Records
Affects the fee to Parcels Four, Five, Six and Seven.
37. A DEED OF TRUST to secure an indebtedness in the original principal
sum shown below and any other amounts and/or obligations secured
thereby
Amount : $1,500,000.00
Dated : May 1, 1995
Trustor : IRISH LEASING CORPORATION, a Texas
corporation
Trustee : FIRST AMERICAN TITLE INSURANCE COMPANY, a
California corporation
Beneficiary : CISCO SYSTEMS, INC., a California
corporation
Recorded : May 8, 1995, under Series No. 12882483,
Official Records.
Affects the fee to Parcels Four, Five, Six and Seven.
<PAGE> 86
EXHIBIT C
(SITE PLAN)
EXHIBIT C
1.
<PAGE> 87
[AERIAL RENDERING SITE PLAN BUILDING "X"]
<PAGE> 88
[AERIAL RENDERING SITE PLAN BUILDING "J"]
<PAGE> 89
EXHIBIT D
(PRE-APPROVED APPROVAL PLANS)
EXHIBIT D
1.
<PAGE> 90
[ARCHITECTURAL RENDERING EXTERIOR ELEVATIONS BUILDING "I"]
<PAGE> 91
[ARCHITECTURAL RENDERING SITE PLAN BUILDING "I"]
<PAGE> 92
[ARCHITECTURAL RENDERING SITE PLAN BUILDING "J"]
<PAGE> 93
[ARCHITECTURAL RENDERING SITE PLAN BUILDING "J"]
<PAGE> 94
EXHIBIT E
MEMORANDUM OF LEASE
RECORDING REQUESTED BY, AND
WHEN RECORDED, RETURN TO:
Brobeck, Phleger & Harrison
550 West C Street, Suite 1300
San Diego, California 92101
Attention: Todd J. Anson, Esq.
THIS MEMORANDUM OF LEASE ("Memorandum of Lease") is executed as of May
___, 1995, by and between SUMITOMO BANK OF NEW YORK TRUST COMPANY ("SBNYTC"), AS
TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED MAY 22, 1995 BETWEEN SUMITOMO
BANK LEASING AND FINANCE, INC. AND SBNYTC ("Landlord"), and CISCO SYSTEMS, INC.,
a California corporation ("Tenant").
RECITALS
WHEREAS, Landlord and Tenant have executed that certain lease ("Lease")
dated as of May ___, 1995, covering certain improvements ("Premises") which may
come to be located on the real property located in the County of Santa Clara,
State of California and more particularly described in Schedule 1 attached
hereto and incorporated herein by this reference ("Land"); and
WHEREAS, Landlord and Tenant desire to record notice of the Lease in
the real estate records of Santa Clara County, California;
NOW, THEREFORE, in consideration of the foregoing, Landlord and Tenant
hereby declare as follows:
1. DEMISE. Landlord hereby leases the Premises to Tenant and Tenant
hereby leases the Premises from Landlord, subject to the terms, covenants and
conditions contained in the Lease. The Premises leased to Tenant pursuant to the
Lease consists of the Improvements described in Paragraph 5 below, and does not
include the Land.
2. EXPIRATION DATE. The term of the Lease ("Term") shall commence on
May ___, 1995 and shall expire five (5) years thereafter, subject to Tenant's
option to extend the Term pursuant to Section 4.2 of the Lease for one (1)
period of five (5) years.
EXHIBIT E
1.
<PAGE> 95
3. OPTION TO PURCHASE. Tenant has an option to purchase the Premises,
as more particularly described in the Lease, during the Term, as it may be
extended.
4. RESTRICTIONS ON ENCUMBRANCES. Landlord is prohibited from recording
against the Premises liens (including, without limitation, deeds of trust),
encumbrances, and other matters that would constitute exceptions to title, and
from amending or modifying any of the foregoing that may exist now or during the
Term, as more particularly described in the Lease, and any such encumbrance or
modification of an encumbrance not authorized in writing by Tenant shall be null
and void.
5. OWNERSHIP OF CERTAIN IMPROVEMENTS. By virtue of Tenant's rights
under that certain Ground Lease between Tenant and Irish Leasing Corporation, a
Texas corporation, dated February 28, 1995, Tenant hereby grants to Landlord the
right to own and construct the improvements which Tenant may elect, as
construction agent for Landlord, to erect, construct or situate upon the Land or
any part thereof during the Term under and pursuant to the terms of, and using
funding provided by or through Landlord pursuant to Article 11 of the Lease
("Improvements"), and Tenant hereby grants, conveys and transfers to Landlord
all of Tenant's right, title and interest in and to the Improvements (whether
now existing or hereafter constructed), and Tenant agrees that any and all such
Improvements shall be and remain the property of Landlord, subject to Tenant's
rights to purchase the Improvements under Section 19 of the Lease (with
Landlord's agreement that Tenant's purchase rights contemplated under Section 19
of the Lease reflect the primary intent of the parties to the Lease is to treat
the Lease as an operating Lease for financial accounting and securities
regulatory purposes and as a financing arrangement for all federal, state and
local income tax, property tax valuation and other tax purposes).
6. COUNTERPARTS. This Memorandum of Lease may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall comprise but a single instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT E
2.
<PAGE> 96
IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum
of Lease as of the date and year first written above.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST COMPANY
("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN
TRUST AGREEMENT DATED MAY 22, 1995 BETWEEN
SUMITOMO BANK LEASING AND FINANCE, INC.
AND SBNYTC
By: ___________________________
Name:___________________________
Its: ___________________________
STATE OF __________________ )
) ss
COUNTY OF _________________ )
On _____________, before me, ______________________, 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
[SEAL]
[SIGNATURES CONTINUED ON NEXT PAGE]
EXHIBIT E
3.
<PAGE> 97
"TENANT"
CISCO SYSTEMS, INC.
A CALIFORNIA CORPORATION
By: ______________________________
Name:_________________________
Its: _________________________
STATE OF __________________ )
) ss
COUNTY OF _________________ )
On _____________, before me, ______________________, 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
[SEAL]
EXHIBIT E
4.
<PAGE> 98
SCHEDULE 1 TO EXHIBIT E
LEGAL DESCRIPTION
The Premises are described as follows:
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on July 13, 1983,
in Book 514 of Maps page(s) 47 and 48.
APN: 97-53-14
All of Lot 54 as shown upon that certain Map entitled, "Tract No. 7559", which
Map was filed for record in the Office of the Recorder of the County of Santa
Clara, State of California on December 21, 1983 in Book 522 of Maps, at pages 49
and 50.
APN: 97-53-23
SCHEDULE 1 TO EXHIBIT E
<PAGE> 99
EXHIBIT F
FORM OF CONTRACTOR'S CERTIFICATE
EXHIBIT F
1.
<PAGE> 100
APPLICATION AND CERTIFICATE FOR PAYMENT
AIA DOCUMENT G702 (Instructions on reverse side) PAGE ONE OF PAGES
- --------------------------------------------------------------------------------
TO OWNER: PROJECT: APPLICATION NO: Distribution to:
PERIOD TO: / / OWNER
PROJECT NOS.: / / ARCHITECT
/ / CONTRACTOR
FROM CONTRACTOR: VIA ARCHITECT: CONTRACT DATE: / /
/ /
CONTRACT FOR:
- --------------------------------------------------------------------------------
CONTRACTOR'S APPLICATION FOR PAYMENT
Application is made for payment, as shown below, in connection with the
Contract. Continuation Sheet, AIA Document G703, is attached.
<TABLE>
<S> <C> <C>
1. ORIGINAL CONTRACT SUM..................................... $
---------------
2. NET CHANGE BY CHANGE ORDERS............................... $
---------------
3. CONTRACT SUM TO DATE (Line 1 plus or minus 2)............. $
---------------
4. TOTAL COMPLETED & STORED TO DATE.......................... $
(Column G on G703) ---------------
5. RETAINAGE:
a % of Completed Work (Columns D plus E on G703) $
-------- ---------------
b % of Stored Material (Column F on G703) $
-------- ---------------
Total Retainage
(Line 5a plus 5b or Total in Column 1 of G703)............ $
---------------
6. TOTAL EARNED LESS RETAINAGE............................... $
(Line 4 less Line 5 Total) ---------------
7. LESS PREVIOUS CERTIFICATES FOR PAYMENT
(Line 6 from prior Certificate)........................... $
---------------
8. CURRENT PAYMENT DUE....................................... $
===============
9. BALANCE TO FINISH, INCLUDING RETAINAGE
(Line 3 less Line 6) $
---------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CHANGE ORDER SUMMARY ADDITIONS DEDUCTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Total changes approved in
previous months by Owner
- --------------------------------------------------------------------------------
Total approved this Month
- --------------------------------------------------------------------------------
TOTALS
- --------------------------------------------------------------------------------
NET CHANGES by Change Order
- --------------------------------------------------------------------------------
</TABLE>
The undersigned Contractor certifies that to the best of the Contractor's
knowledge, information and belief the Work covered by this Application for
Payment has been completed in accordance with the Contract Documents, that all
amounts have been paid by the Contractor for Work for which previous
Certificates for Payment were issued and payments received from the Owner, and
that current payment shown herein is now due.
CONTRACTOR:
By: Date:
------------------------------ --------------------------------
State of:
County of:
Subscribed and sworn to before me this day of
Notary Public:
My Commission expires:
- --------------------------------------------------------------------------------
ARCHITECT'S CERTIFICATE FOR PAYMENT
In accordance with the Contract Documents, based on on-site observations and the
data comprising this application, the Architect certifies to the Owner that to
the best of the Architect's knowledge, information and belief the Work has
progressed as indicated, the quality of the Work is in accordance with the
Contract Documents, and the Contractor is entitled to payment of the AMOUNT
CERTIFIED.
AMOUNT CERTIFIED................................... $
-----------------------
(Attach explanation if amount certified differs from the amount applied for.
Initial all figures on this Application and on the Continuation Sheet that are
changed to conform to the amount certified.)
ARCHITECT:
By: Date:
------------------------------ --------------------------------
This Certificate is not negotiable. The AMOUNT CERTIFIED is payable only to the
Contractor named herein. Issuance, payment and acceptance of payment are
without prejudice to any rights of the Owner or Contractor under this Contract.
- --------------------------------------------------------------------------------
AIA DOCUMENT G702
APPLICATION AND CERTIFICATE FOR PAYMENT
1992 EDITION
AIA(R)
Copyright 1992
AMERICAN INSTITUTE OF ARCHITECTS
1735 NEW YORK AVENUE, N.W.
WASHINGTON, D.C. 20006-5292
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND WILL SUBJECT
THE VIOLATOR TO LEGAL PROSECUTION.
G702/92
<PAGE> 101
EXHIBIT G
INITIAL ADVANCE MEMORANDUM
THIS INITIAL ADVANCE MEMORANDUM ("Memorandum") is entered into
this ___ day of __________, 199_, by and between SUMITOMO BANK OF NEW YORK
TRUST COMPANY ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED
MAY 22, 1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC
("Landlord"), and CISCO SYSTEMS, INC., a California corporation ("Tenant")
concerning that certain Lease ("Lease") between Landlord and Tenant dated May
22, 1995. Any capitalized terms not defined in this Memorandum shall have the
meaning as defined in the Lease.
1. Pursuant to Section 5.6 of the Lease, Landlord and
Tenant are required to enter into this Memorandum within thirty (30) days after
the initial Advance for the foundation of any Building and within thirty (30)
days after the initial Advance under the Lease.
2. Landlord and Tenant agree that this Memorandum reflects
initial Advances that were made for the following Building(s): ________________
_______________________________________________.
3. Landlord and Tenant agree that the amount(s) of the
initial Advances is (are) as follows (allocated on a Building-by-Building
basis, if this Memorandum reflects Advances for more than one Building): ______
__________________________________________________________________.
4. Landlord and Tenant agree that the Guaranteed Residual
Value for the Building(s) described in Paragraph 2 is _____% of
___________________ (the total Funded Amount for the Building(s)).
5. Landlord and Tenant agree that the estimated Funded
Amount, determined by Tenant pursuant to Section 5.5 of the Lease, is
$______________________.
6. Landlord and Tenant agree that, pursuant to Section 5.7
of the Lease, the Security Deposit to be held by Landlord pursuant to the Lease
is $______________________.
[Remainder of This Page Intentionally Left Blank]
EXHIBIT G
1.
<PAGE> 102
[SIGNATURE PAGE TO INITIAL ADVANCE MEMORANDUM]
IN WITNESS WHEREOF, the parties have executed this Memorandum as
of the date and year first above written.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST COMPANY
("SBNYTC"), AS TRUSTEE UNDER THAT
CERTAIN TRUST AGREEMENT DATED MAY 22,
1995 BETWEEN SUMITOMO BANK LEASING AND
FINANCE, INC. AND SBNYTC
By: __________________________________
Name:__________________________________
Its: __________________________________
[SIGNATURES CONTINUED ON NEXT PAGE]
EXHIBIT G
2.
<PAGE> 103
[SIGNATURE PAGE TO INITIAL ADVANCE MEMORANDUM]
"TENANT"
CISCO SYSTEMS, INC.,
a California corporation
By:___________________________
Name:_________________________
Its: _________________________
EXHIBIT G
3.
<PAGE> 104
EXHIBIT H
RENT COMMENCEMENT DATE MEMORANDUM
THIS RENT COMMENCEMENT DATE MEMORANDUM ("Memorandum") is entered
into this ___ day of _______, 199_, by and between SUMITOMO BANK OF NEW YORK
TRUST COMPANY ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED
MAY 22, 1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC
("Landlord"), and CISCO SYSTEMS, INC., a California corporation ("Tenant")
concerning that certain Lease (Buildings "I" and "J") ("Lease") between
Landlord and Tenant dated May 22, 1995. Any capitalized terms not defined in
this Memorandum shall have their meaning as defined in the Lease.
1. Pursuant to Section 5.6 of the Lease, Landlord and
Tenant are required to enter into this Memorandum within thirty (30) days after
the Rent Commencement Date for any Building.
2. Landlord and Tenant agree the that Rent Commencement
Date for the Building described as follows _______________________, is
___________ ___, 199_.
3. The dollar value of the Funded Amount (defined in
Section 2.24 of the Lease) for the Building described in paragraph 2 is
$______________________.
4. The dollar value of the Landlord's Equity Contribution
(defined in Section 2.17 of the Lease) for the Building described in paragraph
2 above is _____% of $___________________________, (i.e., $__________________).
5. The dollar value of the Guaranteed Residual Value
(defined in Section 2.25 of the Lease) for the Building described in paragraph
2 above is ____% of $_____________________ (i.e. $____________________________).
6. Landlord and Tenant agree that, pursuant to Section 5.7
of the Lease, the Security Deposit held by Landlord pursuant to the Lease shall
be in the amount of $______________________ as of the Rent Commencement Date.
[Remainder of This Page Intentionally Left Blank]
EXHIBIT H
1.
<PAGE> 105
IN WITNESS WHEREOF, the parties have executed this Memorandum as
of the date and year first above written.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST COMPANY
("SBNYTC"), AS TRUSTEE UNDER THAT
CERTAIN TRUST AGREEMENT DATED MAY 22,
1995 BETWEEN SUMITOMO BANK LEASING AND
FINANCE, INC. AND SBNYTC
By: _________________________________
Name:_________________________________
Its: _________________________________
[SIGNATURES CONTINUED ON NEXT PAGE]
EXHIBIT H
<PAGE> 106
[SIGNATURE PAGE TO RENT COMMENCEMENT DATE MEMORANDUM]
"TENANT"
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
By: ___________________________
Name:___________________________
Its: ___________________________
EXHIBIT H
<PAGE> 107
EXHIBIT I
DRAW REQUEST FORM
THIS DRAW REQUEST ("Draw Request") is submitted by CISCO
SYSTEMS, INC., a California corporation ("Tenant") to SUMITOMO BANK OF NEW YORK
TRUST COMPANY ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED
MAY 22, 1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC
("Landlord"), pursuant to Article 11 of that certain Lease (Buildings "I" and
"J") between Landlord and Tenant dated May 22, 1995. Any capitalized terms not
defined in this Draw Request shall have their meaning as defined in the Lease.
Pursuant to the terms of Article 11 of the Lease, Tenant hereby
makes a Draw Request for an Advance from Landlord. The Aggregate of the amount
of the Advance requested by Tenant pursuant to this Draw Request is
$_________________________.
Tenant hereby instructs Landlord to make this Advance to the
parties and in the amounts described below:
<TABLE>
<CAPTION>
Name of Entity Amount
-------------- ------
<S> <C>
</TABLE>
[ADD ADDITIONAL SHEET, IF NECESSARY, TO DESCRIBE ALL
ENTITIES TO RECEIVE A PORTION OF THIS ADVANCE AND THE AMOUNT TO BE PAID TO EACH
SUCH ENTITY.]
IN WITNESS WHEREOF, Tenant has executed this Draw Request as of
the date and year first above written.
"TENANT"
CISCO SYSTEMS, INC.,
a California corporation
By: _______________________
Name:_______________________
Its: _______________________
EXHIBIT I
1.
<PAGE> 108
EXHIBIT J
CLOSING COSTS AND FEES TO BE
INCLUDED IN FUNDED AMOUNT
The following items shall be included in the definition of the
Funded Amount under Section 2.24 of the Lease:
Fees and costs which are
specifically authorized
by Tenant in writing to be
included in the Funded Amount
EXHIBIT J
1.
<PAGE> 109
EXHIBIT K
NOTICE OF INTEREST RATE PERIOD SELECTION
Pursuant to Section 5.1(d) of those certain Leases by and
between Sumitomo Bank of New York Trust Company, ("SBNYTC"), as trustee under
that certain trust agreement dated May 22, 1995 between Sumitomo Bank Leasing
and Finance, Inc. and SBNYTC ("SB Trust"), as Landlord, and Cisco Systems,
Inc., a California corporation ("Cisco"), as Tenant, dated as of May 22, 1995,
Cisco hereby gives notice to SB Trust of its designation of the Loan interest
period as set forth below:
Effective Date Interest Period
-------------- ---------------
_____________, ____ _____ month(s)
This Notice of Borrowing is dated this ___ day of _______,
_____, and may be executed in multiple copies, each of which shall be deemed an
original, and all of which together shall be but a single Notice.
"CISCO"
CISCO SYSTEMS, INC.,
a California corporation
By:_________________________
Title:______________________
By:_________________________
Title:______________________
EXHIBIT K
<PAGE> 110
EXHIBIT L
DESCRIPTION OF ADDITIONAL PROPERTY OWNED BY LANDLORD
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lots 58 and 59, as shown upon that certain map entitled, "Tract No. 7559",
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, on December 21, 1983 in Book 522 of Maps, at pages 49 and 50.
APN: 97-53-18,22
Lot 50, as shown on that certain Map entitled, "Tract No. 7560," which Map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on December 21, 1983 in Book 522 of Maps, pages 51 and 52.
Reserving therefrom a perpetual right and easement to construct, install,
maintain, repair, renew, replace, operate and use a surface drainage release to
benefit Lot 49 of Tract 7560, as contained in that certain Grant of Easement
recorded August 8, 1990 in Book L443, page 0754, Official Records, and
described as follows:
The Northwesterly 10.00 feet of the Southeasterly 30.00 feet and the
Northwesterly 100.00 feet of the Southeasterly 130.00 feet of the Northeasterly
10.00 feet of Lot 50.
That portion of Lot 51, as shown on that certain Map entitled, "Tract No.
7560," which Map was filed for record in the office of the Recorder of the
County of Santa Clara, State of California on December 21, 1983 in Book 522 of
Maps, pages 51 and 52, being more particularly described as follows:
Beginning at the Southeasterly corner of said Lot 51; thence along the
Southerly line of said Lot 51, S. 59 degrees 27 minutes 51 seconds W. 77.00
feet; thence N. 14 degrees 27 minutes 48 seconds E. 108.90 feet to the
Northeasterly line of said Lot 51; thence along said Northeasterly line S.
30 degrees 32 minutes 09 seconds E. 77.00 feet to the point of beginning, as
provided for in that certain Lot Line Adjustment granted by the Director of
Planning of the City of San Jose, a copy of which was recorded March 28, 1984
in the office of the Recorder of the County of Santa Clara in Book I410, page
712 of Official Records.
Lot 5 and 6, as shown on that certain Map of Tract No. 7408, which map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on November 19, 1982 in Book 506 of Maps, pages 24, 25 and
26 and a portion of that certain parcel of land described in the deed recorded
December 22, 1972 in Book 0167, page 623, all as approved by that Lot
Combination recorded September 16, 1992 in Book M381 of Maps, page(s) 0081,
Official Records, more particularly described as follows:
EXHIBIT L
<PAGE> 111
Beginning at a point on the Northeasterly line of Rio Robles, as shown upon
said map, at the most Southerly corner of said Lot 5; thence along said
Northeasterly line of Rio Robles, N. 30 degrees 32 minutes 09 seconds
W. 105.50 feet; thence on a tangent curve to the right, having a radius of
367.00 feet, through a central angle of 36 degrees 30 minutes 00 seconds an
arc distance of 233.80 feet; thence on a curve to the right, tangent to the
previous curve, having a radius of 50.00 feet, through a central angle of
86 degrees 01 minutes 50 seconds an arc distance of 75.08 feet to the Southerly
line of Tasman Drive as shown upon said map; thence along said line on a curve
to the left, tangent to the previous curve, having a radius of 1149.00 feet,
through a central angle of 32 degrees 31 minutes 01 seconds an arc distance of
652.09 feet; thence N. 59 degrees 28 minutes 40 seconds E. 600.40 feet; thence
on a tangent curve to the right, having a radius of 33.00 feet, through a
central angle of 89 degrees 51 minutes 11 seconds an arc distance of
51.83 feet to the Southwesterly line of First Street, as shown upon said map;
thence along said line, S. 30 degrees 32 minutes 09 seconds E. 261.38 feet to
the Northwesterly line of the lands of the City and County of San Francisco,
as shown upon said map; thence along said line of the lands of the City and
the County of San Francisco, S. 65 degrees 09 minutes 27 seconds W.
1396.95 feet to the point of beginning.
Those rights as contained in that certain Grant Deed executed by Masami Ezaki
and Kaoru Ezaki, his wife in favor of the City and County of San Francisco, a
municipal corporation recorded December 8, 1950 in Book 2111, page 319,
Official Records.
A strip of land 80 feet wide, lying 40 feet either side of the following
described line and extensions thereto, across that certain parcel of land
conveyed by Charles Nelson, et ux, to Masami Ezaki by Grant Deed dated February
27, 1936 and recorded March 11, 1936, in Volume No. 765, at page 262, Official
Records, Santa Clara County, hereinafter referred to as the Ezaki Parcel, said
line being more particularly described as commencing at a point in the Westerly
boundary of the existing San Jose-Alviso Road, said point being distant along
said boundary South 30 degrees 32 minutes 30 seconds East 381.31 feet from its
intersection with the Northerly boundary of the above mentioned Ezaki Parcel;
thence, from said point of commencement, South 65 degrees 08 minutes 00 seconds
West 1459.03 feet to a point in the common boundary between the above mentioned
Ezaki Parcel and that certain parcel of land conveyed by Lena Lindgren, et al,
to James A. Pankoski, et ux, by Joint Tenancy Deed dated November 13, 1944
and recorded November 17, 1944 in Volume No. 1227 at Page 327, Official
Records, Santa Clara County, hereinafter referred to as the Pankoski Parcel,
said point being distant along said common boundary South 30 degrees 32 minutes
30 seconds East 237.04 feet from the most Westerly corner of the above
mentioned Ezaki Parcel; the Easterly end of said strip being the above
mentioned Westerly boundary of the San Jose-Alviso Road, and the Westerly
end of said strip being the above mentioned common boundary between the
Pankoski and Ezaki Parcels.
EXHIBIT L
<PAGE> 1
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ("First Amendment") is made and entered
into as of this 18th day of July, 1995, by and between SUMITOMO BANK OF NEW
YORK TRUST COMPANY, ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT
DATED MAY 22, 1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC
("Landlord"), and CISCO SYSTEMS, INC., a California corporation ("Tenant").
THIS FIRST AMENDMENT IS ENTERED INTO upon the basis of the following
facts, understandings and intentions.
RECITALS
A. Landlord and Tenant entered into that certain Lease (Buildings
"I" and "J") dated May 22, 1995 ("Lease"), pursuant to which Landlord is
leasing to Tenant the improvements which Tenant may elect to construct
("Premises"), as agent for Landlord, on that certain land located in San Jose,
California, as more particularly described in the Lease and on Exhibit A
attached hereto and incorporated herein by this reference. Any capitalized
terms used but not defined in this First Amendment which are defined in the
Lease shall have the meaning ascribed in the Lease.
B. Landlord and Tenant now desire to amend the terms of the
Lease, as more particularly described in this First Amendment.
NOW THEREFORE, the parties hereto agree as follows:
1. Capitalized Interest. Section 2.9 of the Lease is hereby
amended to add the following sentence at the end of the Section:
During the Construction Period for a Building or phase of
Buildings, Capitalized Interest for such Building or phase of
Buildings shall be calculated using the Construction Period
Monthly Calculation set forth in Section 2.43.
2. Monthly Calculation. Section 2.43 of the Lease is hereby
amended to add the following sentence at the end of the Section:
During the Construction Period for a Building or phase of
Buildings, "Monthly Calculation" shall mean the quotient
resulting from dividing three hundred sixty (360) by the
number of days in the applicable Rent Period. The applicable
Rent Period shall begin on the twentieth day of the calendar
month for which this Construction Period Monthly Calculation
is being calculated and shall be for a period equal to the
number of days in such calendar month.
<PAGE> 2
3. Rent Period. Section 2.57 of the Lease is hereby deleted, and
is replaced with the following:
2.57 Rent Period. "Rent Period" shall mean each period
equal to one calendar month occurring during the Term hereof,
except that: (a) the first Rent Period shall be a partial
calendar month commencing on the date of disbursement of the
initial proceeds hereof and ending on July 2, 1995, (b) the
second Rent Period shall be a partial calendar month
commencing on July 3, 1995 and ending on July 19, 1995; (c)
Commencing July 20, 1995 and ending on the nineteenth day of
the last calendar month of the Construction Period, the Rent
Period shall commence on the twentieth day of each calendar
month and end on the nineteenth day of the subsequent calendar
month; (d) the Rent Period preceding the Rent Commencement
Date shall be a partial calendar month commencing on the
twentieth day of the last calendar month of the Construction
Period and ending on the last day of such calendar month; and
(e) the last Rent Period shall be a partial calendar month
commencing on the first LIBOR Business Day of the last
calendar month of the Term and ending on the last day of the
Term.
4. Timing and Method of Disbursement. Section 11.6(a) of the
Lease is hereby deleted, and is replaced with the following:
(a) Timing and Method of Disbursement. Advances
to be made hereunder shall not be made more frequently than
monthly. For any calendar month during which Tenant desires
to receive an Advance, Tenant shall submit a Draw Request on
or before the fifteenth day of such month, and if Tenant
submits such Draw Request by such date, then Landlord shall,
subject to the conditions to funding described in Sections
11.3, 11.4 and 11.5, make the Advance as requested in such
Draw Request to the party(ies) designated by Tenant on the
twentieth day of such month, or the next LIBOR Business Day if
the twentieth day of such month is not a LIBOR Business Day
("Advance Date"). The Advances shall be made to parties
identified by Tenant, which parties may include Tenant. At
the option of Tenant, Landlord shall make such Advances to one
(1) or more parties.
5. Counterparts. This First Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall comprise but a single instrument.
6. Existing Lease. Except to the extent specifically amended
hereby, all terms and conditions of the Lease remain in full force and effect.
-2-
<PAGE> 3
[SIGNATURE PAGE TO FIRST AMENDMENT TO LEASE]
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the date and year first above written.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE UNDER
THAT CERTAIN TRUST AGREEMENT DATED
MAY 22, 1995 BETWEEN SUMITOMO BANK
LEASING AND FINANCE, INC. AND SBNYTC
By: [LARRY McFADDEN]
-------------------------------
Name: [LARRY F. McFADDEN]
-------------------------------
Its: [VICE PRESIDENT AND TREASURER]
-------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
-3-
<PAGE> 4
[SIGNATURE PAGE TO RENT FIRST AMENDMENT TO LEASE]
"TENANT"
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
By: [NANCY BAREILLES]
-----------------------------
Name: [NANCY BAREILLES]
----------------------------
By:
----------------------------
Name:
----------------------
Its:
----------------------
-4-
<PAGE> 5
EXHIBIT A
DESCRIPTION OF LAND
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on July 13,
1983, in Book 514 of Maps page(s) 47 and 48.
APN: 97-53-14
All of Lot 54 as shown upon that certain Map entitled, "Tract No. 7559", which
Map was filed for record in the Office of the Recorder of the County of Santa
Clara, State of California on December 21, 1983 in Book 522 of Maps, at pages
49 and 50.
APN: 97-53-23
EXHIBIT A
<PAGE> 1
LEASE
(BUILDINGS "K" AND "L")
By and Between
SUMITOMO BANK OF NEW YORK TRUST COMPANY ("SBNYTC"),
AS TRUSTEE
UNDER THAT CERTAIN TRUST AGREEMENT
DATED MAY 22, 1995
BETWEEN
SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC
as Landlord
and
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
as Tenant
for
Premises located in
San Jose, California
THIS LEASE IS NOT INTENDED TO CONSTITUTE A TRUE LEASE
FOR INCOME TAX PURPOSES. SEE SECTION 21.2
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE 1 BASIC LEASE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Date of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Rent Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Addresses for Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Address for Rent Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Approval Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Authorized Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Authorized Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.8 Building Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.9 Capitalized Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.10 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.11 Construction Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.12 Contractor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.13 Coverage Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.14 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.15 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.16 Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.17 Equity Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.18 Equity Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.19 Equity Rent Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.20 Event of Major Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.21 Extension Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.22 Extension Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.23 Fee Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.24 Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.25 Guaranteed Residual Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.26 HSBC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.27 Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.28 Improvements Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.29 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.30 ILC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.31 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.32 Land Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.33 Land Lease Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.34 Land Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.35 Landlord Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.36 Landlord Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.37 Lease Inception Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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2.38 Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.39 Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.40 Lenders Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.41 LIBOR Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.42 LIBOR Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.43 Monthly Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.44 Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.45 Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.46 New Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.47 Nominal Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.48 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.49 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.50 Official Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.51 Permitted Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.52 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.53 Real Estate Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.54 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.55 Rent Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.56 Rent Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.57 Rent Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.58 Required Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.59 SBNYTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.60 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.61 Senior Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.62 Senior Rent Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.63 Site Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.64 Sumitomo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.65 Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.66 Tenant Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.67 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 3 DEMISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 4 TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.1 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Extension Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 5 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Proration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.3 No Abatement of Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Delinquent Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.5 Equity Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.6 Exhibits Reflecting Initial Advance and Rent Commencement Date . . . . . . . . . . . . . . . . . . . . . 17
5.7 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.8 Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 6 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 Real Estate Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Personal Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3 Right to Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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6.4 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Additional Provisions Relating to Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 7 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.1 Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2 Builders' Risk Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 All-Risk Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.4 General Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.5 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 8 USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Contest of Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 9 UTILITIES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.1 Services to the Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 10 MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.1 Tenant Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Surrender of the Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 11 CONSTRUCTION OF IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.1 Tenant's Rights to Construct Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.2 Request for Construction Funding; Landlord Obligation to Fund . . . . . . . . . . . . . . . . . . . . . . 30
11.3 Conditions Precedent to Landlord's Obligation to Fund Initial Advances . . . . . . . . . . . . . . . . . 30
11.4 Conditions Precedent to Landlord's Obligation to Fund Subsequent Advances . . . . . . . . . . . . . . . . 33
11.5 Conditions Precedent to Landlord's Obligation to Fund Final Advance . . . . . . . . . . . . . . . . . . . 34
11.6 Additional Provisions Regarding Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.7 Required Permits, Easements, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.8 Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.9 Title to and Nature of Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.10 Tenant as Landlord's Construction Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.11 Tenant's Release of Funding Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 12 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 13 ASSIGNMENT BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.1 Further Mortgages or Encumbrances by Landlord; Authorized Loans . . . . . . . . . . . . . . . . . . . . . 36
13.2 Landlord's Right to Sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.3 Transfer of Funds and Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 14 ASSIGNMENT AND SUBLEASING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.1 Right to Assign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.2 Right to Sublet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.3 Tenant's Right to Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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ARTICLE 15 EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.1 Total or Substantial Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.2 Partial Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.3 Temporary Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.4 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
15.5 Notice and Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 16 DAMAGE OR DESTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
16.1 Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
16.2 Termination of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
16.3 Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 17 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
17.1 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
17.2 Event of Major Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
17.3 Contest by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
17.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
17.5 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
17.6 Effect of Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
17.7 Landlord Cure Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
17.8 Landlord's Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 18 QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 19 TENANT'S OPTION TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
19.1 Option To Purchase Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
19.2 Mandatory Purchase/Sale of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
19.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 20 ADDITIONAL COVENANTS OF LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
20.1 Title and Subdivision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
20.2 Land Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
20.3 Transfer of Property Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
20.4 Trust Equity; No Other Asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
20.5 Default Under Authorized Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 21 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
21.1 Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
21.2 Form of Transaction; Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
21.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
21.4 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
21.5 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
21.6 Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
21.7 Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
21.8 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
21.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
21.10 Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
21.11 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
21.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
21.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
21.14 Time Is of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
21.15 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
21.16 Limitations on Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
21.17 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
iv.
<PAGE> 6
<TABLE>
<S> <C>
21.18 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
21.19 Landlord's Continuing Obligation to Sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
21.20 As-Is Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
21.21 Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
21.22 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
21.23 Appraisal Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
21.24 Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
21.25 Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
</TABLE>
List of Exhibits
<TABLE>
<S> <C>
Exhibit A Description of Land
Exhibit B Permitted Exceptions
Exhibit C Site Plan
Exhibit D Pre-Approved Approval Plans
Exhibit E Memorandum of Lease
Exhibit F Form of Contractor's Certificate
Exhibit G Initial Advance Memorandum
Exhibit H Rent Commencement Date Memorandum
Exhibit I Draw Request Form
Exhibit J Closing Costs and Fees to be Included in Funded Amount
Exhibit K Notice of Interest Rate Period Selection
Exhibit L Description of Additional Property Owned by Landlord
</TABLE>
v.
<PAGE> 7
LEASE
THIS LEASE ("Lease") by and between SUMITOMO BANK OF NEW YORK
TRUST COMPANY ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED
MAY 22, 1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC., AND SBNYTC
("Landlord"), and CISCO SYSTEMS, INC., a California corporation ("Tenant"), is
entered into as of the date set forth in Article 1 and shall be effective and
binding upon the parties hereto as of such date. Capitalized terms used in
this Lease shall have the definitions set forth in Article 2 or in the text of
this Lease.
In consideration of the Base Rent reserved herein, and the
terms, covenants and conditions set forth below, Landlord and Tenant hereby
agree as follows:
ARTICLE 1
BASIC LEASE PROVISIONS
1.1 DATE OF LEASE: May 22, 1995.
1.2 LANDLORD: Sumitomo Bank of New York Trust Company, ("SBNYTC"),
as trustee under that certain trust agreement dated
May 22, 1995 between Sumitomo Bank Leasing and
Finance, Inc. and SBNYTC.
1.3 TENANT: Cisco Systems, Inc., a California corporation.
1.4 LAND: That certain tract of land located in the City of
San Jose, Santa Clara County, California, consisting
of two (2) parcels and more particularly described
on Exhibit A attached hereto, together with all
easements, rights of way, appurtenances and other
rights and benefits belonging or pertaining to such
land. The Land does not include the Improvements.
Landlord makes no representations as to the accuracy
of the description of the Land.
1.5 PREMISES: The Improvements which Tenant may elect to
construct, as agent for Landlord, on the Land
pursuant to the terms of this Lease. The Premises
does not include any portion of the Land itself.
1.
<PAGE> 8
1.6 TERM: The initial term ("Initial Term") of this Lease
shall commence on the Date of Lease set forth in
Section 1.1 above and shall expire on May 21, 2000.
Subject to the Extension Conditions contained in
Section 4.2, upon at least ninety (90) days' prior
written notice to Landlord, Tenant may extend the
Initial Term for one (1) additional period of five
(5) years ("Extension Term"). The Initial Term and
(if exercised by Tenant) the Extension Term shall be
referred to collectively herein as the "Term." The
Term shall cease upon, and shall not refer to any
period of time after, termination of this Lease
(whether pursuant to the terms of the Lease, by
operation of law, or otherwise).
1.7 RENT COMMENCEMENT
DATE: Tenant's obligation to pay Base Rent shall commence
on a Building-by-Building basis. With respect to
any particular Building, the rent commencement date
("Rent Commencement Date") shall be the first LIBOR
Business Day of the next calendar month which
commences immediately following the earlier to occur
of: (a) the date Tenant receives from the
applicable governmental authority a final
Certificate of Occupancy for the Building in
question; or (b) eighteen (18) months following the
first Advance by Landlord for the foundation for the
Building in question. If Tenant shall elect to
construct certain Improvements in a phase of
Buildings, then on or before the Lease Inception
Date for such phase of Buildings, Landlord and
Tenant shall execute a memorandum of understanding
that construction is taking place on a phased basis,
and in that event, the Rent Commencement Date for
such phase of Buildings shall be the first LIBOR
Business Day of the next calendar month which
commences immediately following the earlier to occur
of: (i) the date Tenant receives a final Certificate
of Occupancy for the phase in question from the
applicable governmental authority; or
2.
<PAGE> 9
(ii) eighteen (18) months after the first Advance by
Landlord for the foundation for the phase in
question.
1.8 BASE RENT: As described in Section 2.6.
1.9 ADDRESSES FOR
NOTICES:
LANDLORD: TENANT:
Sumitomo Bank of New York Cisco Systems, Inc.
Trust Company Treasury Department
277 Park Avenue 3535 Garrett Drive
New York, NY 10172 Santa Clara, CA 95054
Attn: Corporate Trust Attention: Eugene Hill
Department
With a copy to: With a copy to:
Landels, Ripley & Diamond Cisco Systems, Inc.
Hills Plaza 3535 Garrett Drive
350 Steuart Street Santa Clara, CA 95054
San Francisco, CA 94105 Attention: Nancy Bareilles
Attn: Bruce W. Hyman, Esq.
and
Todd J. Anson, Esq.
Brobeck, Phleger & Harrison
550 West C Street
Suite 1300
San Diego, CA 92101
1.10 ADDRESS FOR RENT
PAYMENTS:
Equity Rent Component: Sumitomo Bank of New York
Trust Company
277 Park Avenue
New York, NY10172
Attn: Corporate Trust
Department
3.
<PAGE> 10
Senior Rent
Component: One half (1/2) of the Senior Rent Component (as
defined in Section 2.62) shall be payable at the
following address:
The Hongkong and Shanghai
Banking Corporation Limited
160 Sansome Street
San Francisco, CA 94104
Attn: Loan Administration
Department
and one half (1/2) of the Senior Rent Component (as
defined in Section 2.62) shall be payable at the
following address:
The Sumitomo Bank, Limited
555 California Street
Suite 3350
San Francisco, CA 94104
Attn: Mr. Dave Kubiak
This Article 1 is intended to supplement and/or summarize the
provisions set forth in the balance of this Lease. If there is any conflict
between any provisions contained in this Article 1 and the balance of this
Lease, the balance of this Lease shall control.
ARTICLE 2
DEFINITIONS
For purposes of this Lease, the following defined terms shall
have the meanings set forth in this Article 2.
2.1 ADDITIONAL RENT. "Additional Rent" shall mean any
amounts other than Base Rent payable by Tenant to Landlord or to other Entities
on Landlord's behalf as required under this Lease, including, without
limitation, interest accrued on past due Base Rent and on other past due
Additional Rent amounts owing to Landlord hereunder (including interest on the
past due amounts payable by Landlord to Lenders under the Improvements Loan, as
described in Section 21.21, excluding interest on interest) at the Default Rate
(to be compounded annually), costs and expenses to be paid or reimbursed by
Tenant hereunder (including any amounts which Tenant owes to Landlord pursuant
to the terms of Section 17.7 or Section 21.21), any charges, fees or other
amounts due under the Improvements Loan and any other Authorized Loan, amounts
due pursuant to Tenant's indemnity obligations hereunder, Real Estate Taxes,
Tenant's obligation to pay condemnation proceeds to Landlord pursuant to
Section 15.4, Tenant's obligation to pay insurance proceeds to Landlord
pursuant to Section 16.3, Tenant's obligation to pay the Purchase Price under
Section 19.2, and Tenant's obligation, if any, to pay the "Margin Increase" (as
defined in that certain side letter regarding "Management of Collateral
4.
<PAGE> 11
Account" between Tenant and HSBC, of even date herewith). Except as provided
in this Section, Additional Rent shall not include interest charged on
interest.
2.2 ADVANCE. "Advance" shall mean any payment by
Landlord for Improvements which has been requested by Tenant and paid pursuant
to the terms of Article 11.
2.3 APPROVAL PLANS. "Approval Plans" shall have the
meaning set forth in Section 11.3(c).
2.4 AUTHORIZED LOAN. "Authorized Loan" shall have the
meaning set forth in Section 13.1(b).
2.5 AUTHORIZED PLANS. "Authorized Plans" shall have the
meaning set forth in Section 11.3(c).
2.6 BASE RENT. "Base Rent" shall mean, as of a Rent
Payment Date, the sum of the following for any Building for which the Rent
Commencement Date has occurred: (1) the Senior Rent Component; and (2) the
Equity Rent Component.
2.7 BUILDING. "Building" shall mean any individual
building which constitutes an Improvement.
2.8 BUILDING LEASES. "Building Leases" shall mean this
Lease and those two (2) certain lease agreements by and between Landlord and
Tenant for premises located in San Jose, California, dated the date hereof,
collectively.
2.9 CAPITALIZED INTEREST. "Capitalized Interest" shall
mean: (1) the Senior Rent Component incurred by Landlord to Lenders under the
Notes on Advances during the construction of any Building or phase prior to the
Rent Commencement Date for such Building or phase; and (2) the Equity Rent
Component as a result of Advances made by Landlord pursuant to Section 5.5
during the construction of any Building or phase prior to the Rent Commencement
Date for such Building or phase.
2.10 COLLATERAL. "Collateral" shall have the meaning set
forth in Section 21.18.
2.11 CONSTRUCTION PERIOD. "Construction Period" for each
Building or phase shall mean that period beginning on the date of the first
Advance for the foundation of the Building or phase and ending on the Rent
Commencement Date for the Building or phase.
2.12 CONTRACTOR. "Contractor" shall mean the general
contractor hired to construct any Improvements, which contractor shall be
selected by Tenant in Tenant's capacity as agent for Landlord, and shall be
subject to Landlord's approval, which shall not be unreasonably withheld or
delayed. Landlord hereby approves Devcon Construction, Inc.
5.
<PAGE> 12
2.13 COVERAGE TEST. "Coverage Test" shall mean a
requirement, wherever referenced in the Lease, that the fair market value of
the Land and the Improvements together be at least three (3) times the Equity
Funded Amount.
2.14 DEFAULT. "Default" shall have the meaning set forth
in Section 17.1.
2.15 DEFAULT RATE. "Default Rate" means that weighted
average of the interest rates of (i) the Senior Rent Component as set forth in
Section 2.62 and (ii) the Equity Rent Component set forth in Section 2.19, plus
two percent (2.0%), or the highest rate permitted by applicable law (if any),
whichever is less. Mathematically, the Default Rate shall be:
(3/86 X Equity Rent Component rate) + (83/86 X Senior Rent Component rate)+ 2%
Each change in the Default Rate due to a change in such interest rates under
the Notes shall take effect simultaneously with such change in such interest
rates, without Notice to either party. Notwithstanding the foregoing, in the
event that the foregoing Default Rate shall be in violation of any usury or
similar law, then the Default Rate shall be reduced to the extent necessary to
cause the Default Rate to comply with any usury or similar law.
2.16 ENTITY. "Entity" shall mean any person, corporation,
partnership (general or limited), joint venture, association, joint stock
company, trust or other business entity or organization.
2.17 EQUITY CONTRIBUTION. "Equity Contribution" shall
mean that portion of the Funded Amount equal to three percent (3%) of the
Funded Amount, which Landlord has paid as Landlord's equity contribution to the
Funded Amount (subject, however, to Tenant's adjusted Base Rent payments in the
forty-ninth (49th) and fiftieth (50th) months of the Term, as set forth in
Section 5.1(a) below).
2.18 EQUITY FUNDED AMOUNT. "Equity Funded Amount" shall
mean that portion of the Funded Amount equal to the amount which Landlord has
paid pursuant to the terms of Section 5.5. The Equity Funded Amount shall be
the sum of the Equity Contribution plus the Security Deposit. In no event
shall the Equity Funded Amount exceed the difference between the Funded Amount
minus the aggregate Guaranteed Residual Value. In no event shall the aggregate
of the Equity Funded Amounts of the Building Leases exceed Nineteen Million
Three Hundred Eighty Thousand Dollars ($19,380,000).
2.19 EQUITY RENT COMPONENT. "Equity Rent Component" shall
mean the quotient equal to the product of the Equity Contribution (at the time
of the relevant calculation of the Equity Rent Component) multiplied by the
LIBOR Rate plus 4.05%, divided by
6.
<PAGE> 13
the Monthly Calculation. Mathematically, the Equity Rent Component shall be:
[(Equity Contribution) X (LIBOR Rate + 4.05%)]
------------------------------------------------
[ Monthly Calculation ]
2.20 EVENT OF MAJOR DEFAULT. "Event of Major Default"
shall have the meaning set forth in Section 17.2.
2.21 EXTENSION FEE. "Extension Fee" shall have the
meaning set forth in the Section 4.2.
2.22 EXTENSION TERM. "Extension Term" shall have the
meaning set forth in the Basic Lease Provisions.
2.23 FEE MORTGAGE. "Fee Mortgage" shall mean any
Mortgage, other than the Improvements Loan, at any time given by Landlord, and
remaining uncancelled on the Official Records, encumbering all or any portion
of Landlord's right, title and estate in Improvements.
2.24 FUNDED AMOUNT. "Funded Amount" shall mean the
aggregate amount of any Advances requested and actually paid by Landlord
pursuant to the terms of Section 11 (including Capitalized Interest) and the
closing costs and fees set forth in Exhibit J attached hereto (which shall be
attributable to the first Building or phase of the Lease), less any reductions
in the principal amount of the Improvements Loan or any New Loan or in the
Equity Funded Amount, whether such principal reduction or reduction in the
Equity Funded Amount is accomplished by payment to Lenders or the holder of a
New Loan, the application of the Collateral or other collateral by Lenders or
the holder of a New Loan, the payment of insurance proceeds, condemnation
awards, or otherwise (subject, however, to Tenant's obligation to adjust its
Base Rent payments in the forty-ninth (49th) and fiftieth (50th) months of the
Term, as set forth in Section 5.1(a) below).
2.25 GUARANTEED RESIDUAL VALUE. "Guaranteed Residual
Value" shall be calculated on each Building or phase, and shall mean that
amount necessary to cause the present value of the Minimum Lease Payments under
this Lease, including the present value of the Guaranteed Residual Value, to
approximately equal, but not exceed, eighty nine and 9/10 percent (89.9%) of
the estimated Funded Amount, computed at the Lease Inception Date and
discounted to present value as of the expected Rent Commencement Date using the
interest rate implicit in the Lease (or Tenant's best available incremental
borrowing rate as communicated by Tenant to Landlord, if lower), all as
calculated and determined pursuant to Statement of Financial Accounting
Standards Number 13. "Minimum Lease Payments" shall mean the Base Rent payable
over the Initial Term and the Extension Term, plus imputed interest on the
Security Deposit imputed at the one month LIBOR rate of interest, plus the
Guaranteed Residual Value, plus the following to the extent paid in cash: the
fees listed on Exhibit J, the Extension Fee and
7.
<PAGE> 14
reimbursed costs of Landlord paid by Tenant deemed to meet the definition of
Minimum Lease Payments under SFAS No. 13. During the Construction Period for
each Building, the Guaranteed Residual Value shall not exceed an amount
determined by multiplying the then existing Funded Amount for such Building by
a fraction, the numerator of which is the estimated Guaranteed Residual Value
to be allocated to such Building as of the Rent Commencement Date for such
Building and the denominator of which is the estimated Funded Amount to be
allocated to such Building as of such Rent Commencement Date. If, at any time
prior to the determination of the Guaranteed Residual Value for any Building or
phase, the Financial Accounting Standards Board, Emerging Issues Task Force, or
the Securities Exchange Commission, releases any pronouncements which modify
FAS 13, paragraph 7(d) which outlines the criteria for the determination of the
Guaranteed Residual Value, this Section 2.25 shall be modified to insure
compliance with the new standards.
2.26 HSBC. "HSBC" shall mean The Hongkong and Shanghai
Banking Corporation Limited, a Hong Kong banking corporation, acting through
its San Francisco branch.
2.27 IMPROVEMENTS. "Improvements" shall mean any and all
improvements which Tenant may elect, as construction agent for Landlord, to
erect, construct or situate upon the Land or any part thereof during the Term
under and pursuant to the terms of, and using funding provided by or through
Landlord pursuant to Article 11 of this Lease. Any improvements constructed,
erected or situated on the Land which are not funded by or through Landlord
pursuant to the terms of Article 11 of this Lease shall be and remain the
property of Tenant, and shall not be subject to the terms of this Lease.
2.28 IMPROVEMENTS LOAN. "Improvements Loan" shall have
the meaning set forth in Section 13.1(b).
2.29 INITIAL TERM. "Initial Term" shall have the meaning
set forth in the Basic Lease Provisions.
2.30 ILC. "ILC" shall mean Irish Leasing Corporation, a
Texas corporation, or a successor landlord under the Land Lease.
2.31 LAND. "Land" shall have the meaning set forth in the
Basic Lease Provisions.
2.32 LAND LEASE. "Land Lease" shall mean that certain
Ground Lease dated as of February 28, 1995 by and between Tenant and ILC, by
which Tenant leases the Land from ILC.
2.33 LAND LEASE DEED OF TRUST. "Land Lease Deed of Trust"
shall mean that certain fourth priority deed of trust, junior only to the lien
of the Lenders Deed of Trust, the Landlord Deed of Trust and the Tenant Deed of
Trust, by ILC, as trustor, in favor of Tenant, as beneficiary, dated May 1,
1995 and recorded on
8.
<PAGE> 15
May 1, 1995 in the Official Records as Instrument No. 12877066, and as more
fully described in Section 13.1(g).
2.34 LAND LOAN. "Land Loan" shall mean that loan funded
by Union Bank of Switzerland, a Swiss banking corporation, acting through its
Los Angeles branch, or any other loan authorized pursuant to the terms of the
Land Lease for purposes of ILC's purchase of the Land, as more particularly
described in the Land Lease.
2.35 LANDLORD AFFILIATE. "Landlord Affiliate" shall mean
any Entity which controls or is controlled by or is under the common control of
Landlord or its beneficiary.
2.36 LANDLORD DEED OF TRUST. "Landlord Deed of Trust"
shall mean that certain second priority deed of trust, securing Tenant's
obligations under this Lease, and junior only to the lien of the Lenders Deed
of Trust, to be executed by Tenant in favor of Landlord and recorded in the
Official Records as of the Date of Lease, as more fully described in Section
13.1(e).
2.37 LEASE INCEPTION DATE. "Lease Inception Date" shall
mean, for the first Building or phase constructed (i.e., Building "L" as
depicted in the Site Plan attached hereto as Exhibit C), the date of this
Lease. For subsequent Buildings or phases, "Lease Inception Date" shall be
that date when Tenant's Approval Plans for such Building or phase are approved
by Landlord pursuant to Section 11.3(c).
2.38 LEGAL REQUIREMENTS. "Legal Requirements" shall mean
all statutes, codes, laws, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses, authorizations, directions
and requirements of all federal, state, county, municipal and other
governments, departments, commissions, boards, courts, authorities, officials
and officers, which now or at any time hereafter are applicable to Tenant or
this Lease or applicable to and enforceable against the Premises, the
Improvements or any part thereof, as applicable.
2.39 LENDERS. "Lenders" shall mean HSBC and Sumitomo,
collectively. Individually, the Lenders are sometimes hereinafter referred to
as a Lender.
2.40 LENDERS DEED OF TRUST. "Lenders Deed of Trust" shall
mean that certain first priority deed of trust to be executed by Landlord and
Tenant in favor of HSBC and Sumitomo jointly and recorded in the Official
Records as of the Date of Lease, as more fully described in Section 13.1(d).
2.41 LIBOR BUSINESS DAY. "LIBOR Business Day" shall have
the same meaning as "Business Day" is defined in the Notes or other Authorized
Loan.
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2.42 LIBOR RATE. "LIBOR Rate" shall mean the LIBOR Rate
as defined in the Notes, or a subsequent Authorized Loan, as selected in
accordance with Section 5.1(d).
2.43 MONTHLY CALCULATION. "Monthly Calculation" shall
mean the quotient resulting from dividing three hundred sixty (360) by the
number of days in any applicable calendar month. The applicable calendar month
shall be the month for which the calculation involving this Monthly Calculation
is being done.
2.44 MORTGAGE. "Mortgage" shall mean any mortgage, deed
of trust, or other instrument in the nature thereof at any time and from time
to time constituting a lien, charge or encumbrance upon any interest or estate
of Tenant or Landlord in the Premises or in this Lease.
2.45 MORTGAGEE. "Mortgagee" shall mean the record holder
(as reflected in the Official Records) from time to time of, or the record
beneficiary (as reflected in the Official Records) from time to time under, a
Mortgage.
2.46 NEW LOAN. "New Loan" shall have the meaning set
forth in Section 13.1(b).
2.47 NOMINAL RATE. "Nominal Rate" shall mean the
operative and relevant rate (or rates) of interest under the Notes from time to
time, or if the Improvements Loan has been replaced by an Authorized Loan, then
the relevant rate of interest under the promissory note evidencing such
Authorized Loan, all subject to the terms of Section 13.1(b).
2.48 NOTES. "Notes" shall have the meaning set forth in
Section 13.1(b).
2.49 NOTICE. "Notice" shall mean a written advice,
request, demand or notification required or permitted by this Lease, as more
particularly provided in Section 21.3.
2.50 OFFICIAL RECORDS. "Official Records" shall mean the
official records of Santa Clara County, California.
2.51 PERMITTED EXCEPTIONS. "Permitted Exceptions" shall
mean the following: (1) the exceptions set forth in Exhibit B; (2) any
exceptions created or caused by Tenant or to which Tenant consents in writing;
(3) taxes and assessments not yet due and payable; (4) the Lenders Deed of
Trust (or, if the Lenders Deed of Trust has been reconveyed and removed from
title, then a deed of trust that secures an Authorized Loan); (5) the Landlord
Deed of Trust; (6) the Tenant Deed of Trust; (7) the Land Lease Deed of Trust;
(8) all title defects, liens, encumbrances, deeds of trust, mortgages,
rights-of-way, and restrictive covenants and conditions affecting the Land
unless any of the foregoing arise as a result of Landlord's actions or with
Landlord's written consent (unless such
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actions taken or consent given by Landlord are requested in writing by Tenant);
and (9) this Lease.
2.52 PREMISES. "Premises" shall have the meaning set
forth in the Basic Lease Provisions. It is the intention of the parties that
the Premises consist only of the Improvements, and in no event shall the
Premises consist of any portion of the Land.
2.53 REAL ESTATE TAXES. "Real Estate Taxes" shall have
the meaning set forth in Section 6.1(b).
2.54 RENT. "Rent" shall mean Base Rent and Additional
Rent.
2.55 RENT COMMENCEMENT DATE. "Rent Commencement Date"
shall have the meaning set forth in the Basic Lease Provisions.
2.56 RENT PAYMENT DATE. "Rent Payment Date" shall have
the meaning set forth in Section 5.1.
2.57 RENT PERIOD. "Rent Period" shall mean each period
equal to one calendar month occurring during the Term hereof, except that the
first Rent Period shall be a partial calendar month commencing on the Rent
Commencement Date and ending on the last day of such calendar month and the
last Rent Period shall be a partial calendar month commencing on the first
LIBOR Business Day of the last calendar month of the Term and ending on the
last day of the Term.
2.58 REQUIRED PERMITS. "Required Permits" shall mean each
and every building and development permit including, without limitation,
demolition permits, site permits and addenda thereto (including, without
limitation, foundation permits and structural permits), temporary and final
occupancy permits and any other governmental or quasi-governmental approvals
which must be issued by any governmental authority, department, commission,
board, official or officer as a condition precedent to construction and
occupancy of any Improvements.
2.59 SBNYTC. "SBNYTC" shall mean Sumitomo Bank of New
York Trust Company.
2.60 SECURITY DEPOSIT. "Security Deposit" shall have the
meaning set forth in Section 5.7.
2.61 SENIOR FUNDED AMOUNT. "Senior Funded Amount" of this
Lease shall mean that amount equal to the Funded Amount minus the Equity Funded
Amount, which amount shall not exceed the Guaranteed Residual Value.
2.62 SENIOR RENT COMPONENT. "Senior Rent Component" shall
mean the quotient equal to the product of the Senior Funded Amount (at the time
of the relevant calculation of the Senior Rent
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Component) multiplied by the Nominal Rate, divided by the Monthly Calculation.
Mathematically, the Senior Rent Component shall be:
[ Senior Funded Amount X Nominal Rate ]
-----------------------------------------
[ Monthly Calculation ]
2.63 SITE PLAN. "Site Plan" shall mean the Site Plan
attached hereto as Exhibit C.
2.64 SUMITOMO. "Sumitomo" shall mean The Sumitomo Bank,
Limited, a Japanese banking corporation, acting through its San Francisco
branch.
2.65 TAKING. "Taking" shall have the meaning set forth in
Section 15.1.
2.66 TENANT DEED OF TRUST. "Tenant Deed of Trust" shall
mean that certain third priority deed of trust, securing (i) Landlord's
obligation to return Tenant's Security Deposit under this Lease and (ii)
Landlord's obligation to convey the Premises to Tenant pursuant to Article 19
of this Lease, and shall be junior only to the liens of the Lenders Deed of
Trust and the Landlord Deed of Trust, to be executed by Landlord, as trustor,
in favor of Tenant, as beneficiary, and recorded in the Official Records as of
the Date of Lease, as more fully described in Section 13.1(f).
2.67 TERM. "Term" shall have the meaning set forth in the
Basic Lease Provisions.
ARTICLE 3
DEMISE
3.1 PREMISES. Subject to the terms, covenants and
conditions contained herein, Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, the Premises, together with all rights,
privileges, easements and appurtenances relating to the Premises.
ARTICLE 4
TERM
The Term of this Lease shall consist of the Initial Term, and if
exercised by Tenant, the Extension Term, as follows:
4.1 INITIAL TERM. The Initial Term of this Lease is
specified in Article 1.
4.2 EXTENSION TERM. Upon Notice of the extension given
to Landlord in accordance with Article 1, so long as the "Extension Conditions"
(defined below) are satisfied at the time of such Notice of extension, Tenant
may extend the Term for the Extension Term specified in Article 1. All
provisions of this Lease shall
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remain in full force and effect for the Extension Term, including, without
limitation, the Base Rent payable hereunder, except that Tenant shall have no
further right to extend the Term of this Lease, and except that the Base Rent
during the Extension Term may be adjusted only to reflect any actual change in
the rate of interest (that is, the spread over LIBOR) charged pursuant to the
Authorized Loan. The "Extension Conditions" shall consist of the following:
(1) Tenant shall satisfy the "Financial Tests" (defined below) at the time of
such Notice and as of the expiration of the Initial Term; (2) Tenant shall pay
to Landlord no later than thirty (30) days before the first day of the
Extension Term an amount equal to the product of the outstanding Funded Amount
as of the end of the fifty-seventh (57th) full calendar month of the Initial
Term times 0.25% ("Extension Fee"); (3) there shall exist no ongoing and
uncured Event of Major Default at the time of such Notice and as of the
expiration of the Initial Term; (4) the Improvements Loan shall have been
refinanced or repaid as of the commencement of the Extension Term (the
refinancing or repayment of which shall be subject to the terms of Section
13.1(c)) and (5) the Land and the Improvements shall satisfy the Coverage Test
at the time of the Notice and as of the expiration of the Initial Term. The
"Financial Tests" shall consist of the following: (a) Tenant shall have a
minimum tangible net worth (total assets minus intangible assets minus total
liabilities as calculated according to generally accepted accounting
principles) ("Tangible Net Worth") of not less than Seven Hundred Fifty Million
Dollars ($750,000,000); (b) Tenant's leverage (the ratio of funded debt to
Tangible Net Worth) shall not exceed a ratio of 1:1; and (3) Tenant shall not
have incurred any net losses in excess of Ten Million Dollars ($10,000,000) per
year during the two complete fiscal years immediately preceding such Notice of
extension.
4.3 HOLDING OVER. If Tenant remains in possession of the
Premises after the expiration of the Term without executing a new lease, such
holding over shall be construed as a tenancy from month-to-month, subject to
all terms, covenants and conditions herein contained, and at the Base Rent
required to be paid by Tenant pursuant to the terms hereof during the last
month of the Term.
ARTICLE 5
RENT
5.1 BASE RENT.
(a) PAYMENT. Base Rent shall accrue in the
manner set forth below commencing on the Rent Commencement Date. Tenant's
obligation to pay Base Rent, with respect to any Building, shall commence
accruing on the Rent Commencement Date for such Building, and shall be payable
monthly in arrears thereafter on the first LIBOR Business Day of each
successive month, except that the last installment of Base Rent shall be
payable on the last day of the last month during the Term (each such date shall
be a "Rent Payment
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Date"). Tenant's obligation to pay Base Rent on account of Advances made for
any Building shall not commence accruing until the Rent Commencement Date for
that Building. No sooner than thirty (30) days prior to the due date for any
installment of Base Rent hereunder, Landlord shall deliver to Tenant a Notice
indicating the exact dollar amount of the Base Rent that is due on such due
date ("Invoice"). The Base Rent payment due on the first LIBOR Business Day of
the forty-ninth (49th) month of the Term shall be deemed paid entirely to
Landlord to be applied first to the Equity Rent Component then due and the
balance to be applied to the reduction of the Equity Funded Amount. The amount
of the Senior Rent Component that would otherwise have been due but for the
preceding sentence shall be added to the Senior Funded Amount. The Base Rent
payment due on the first LIBOR Business Day of the fiftieth (50th) month of the
Term shall be deemed paid entirely to Lenders under the Improvements Loan to
the extent of the Senior Rent Component for the immediately preceding month and
the balance shall be applied to the reduction of the Senior Funded Amount
(excluding any prepayment premium thereon).
Tenant shall pay Base Rent as follows: The Senior
Rent Component shall be paid to Lenders as set forth in the Basic Lease
Provisions, and the Equity Rent Component shall be paid to Landlord at the
Address for Rent set forth in the Basic Lease Provisions (or, if the
Improvements Loan has been replaced by a New Loan or Replacement Loan, then the
Senior Rent Component shall be paid directly to the holder of such New Loan or
Replacement Loan) or at such other place as Landlord and Tenant may from time
to time mutually agree upon, in their respective sole and absolute discretion.
With the exception of payments made pursuant to the Clearinghouse Debit Account
and Clearinghouse Credit Account, established by Tenant in accordance with the
requirements of this Section 5.1(b) and (c), as set forth below, Tenant shall
pay Base Rent by wire transfer or by check. Landlord, Lenders or such other
holder of a New Loan or Replacement Loan, as the case may be, shall supply
Tenant with such bank account information as Tenant shall require to enable
payment by wire transfer. The parties agree that Tenant is paying the Senior
Rent Component of Base Rent directly to Lenders for the convenience of the
parties in order to satisfy Landlord's obligations to pay interest under the
Improvements Loan for the period of time corresponding to the Term of this
Lease; all Base Rent payments shall be deemed payments to Landlord to the
extent of the Equity Rent Component and payments of the interest due to Lenders
under the Improvements Loan to the extent of the Senior Rent Component.
(b) CLEARINGHOUSE CREDIT ACCOUNT. At any time,
and from time to time, during the Term of the Lease, Tenant shall have the
right to request in writing that a Lender designate a clearinghouse credit
account at a financial institution legally authorized to receive funds on
behalf of the Lender ("Clearinghouse Credit Account") for Tenant's payment of
the Senior Rent Component due and payable to the Lender (as set forth in the
Basic Lease Provisions) on a Rent Payment Date. At any time, and from time to
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<PAGE> 21
time, after a Lender's designation of a Clearinghouse Credit Account, Tenant
may, but shall not be obligated to, deposit funds on a Rent Payment Date in the
exact amount of the Senior Rent Component due and payable to the Lender who has
established such a Clearinghouse Credit Account and any payment by Tenant of a
portion of the Senior Rent Component due a Lender by payment directly into a
Lender's Clearinghouse Credit Account shall not prevent Tenant from making
future payments of rent by any other means permitted in this Section 5.1. A
Lender's designation of a Clearinghouse Credit Account for deposit of Tenant's
payment of the Lender's portion of the Senior Rent Component shall be deemed
that Lender's approval of Tenant's payment of the Lender's Senior Rent
Component into the Clearinghouse Credit Account. Tenant's ability to deposit a
Lender's portion of the Senior Rent Component into a Clearinghouse Credit
Account shall not alleviate Landlord's obligation to deliver to Tenant an
Invoice as set forth above.
(c) CLEARINGHOUSE DEBIT ACCOUNT. At any time,
and from time to time, during the Term of the Lease, Tenant and HSBC may agree
that Tenant's payment of HSBC's portion of the Senior Rent Component as set
forth in the Basic Lease Provisions shall be paid to HSBC by funds available to
HSBC in a clearinghouse debit account at a financial institution reasonably
acceptable to HSBC ("Clearinghouse Debit Account"). If Tenant and HSBC agree
to payment of HSBC's portion of the Senior Rent Component through a
Clearinghouse Debit Account, Tenant shall provide written notice of such
agreement to Landlord, and shall indicate the account number and location of
the Clearinghouse Debit Account. The Clearinghouse Debit Account shall be
terminable by Tenant at will, without advance notice to Landlord or HSBC.
During any portion of the Term in which the Clearinghouse Debit Account is
available for and contains sufficient funds to cover the amount of HSBC's
portion of the Senior Rent Component due and payable to HSBC on a Rent Payment
Date, interest shall not accrue on (nor shall Tenant be deemed in default
hereunder for failure to pay) any of HSBC's portion of the Senior Rent
Component due hereunder which is not collected on a Rent Payment Date due to
any failure by HSBC to collect its portion of the Senior Rent Component in a
timely manner. HSBC's ability to collect its portion of the Senior Rent
Component from the Clearinghouse Debit Account shall not alleviate Landlord's
obligation to deliver to Tenant an Invoice as set forth above. Notwithstanding
anything to the contrary in this Lease, the Clearinghouse Debit Account shall
not be used for the payment of any amounts (whether or not payable under the
Lease) other than HSBC's portion of the Senior Rent Component as set forth in
the Basic Lease Provisions and which are due and payable on the then-current
Rent Payment Date.
(d) INTEREST RATE SELECTION. The parties
acknowledge that the interest rate applicable under the Improvements Loan (or
other Authorized Loan) and the Equity Rent Component shall affect the amount of
Base Rent payable by Tenant hereunder. Therefore, Tenant shall have the right,
by written notice to Landlord in the form of Exhibit K (which notice may be
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<PAGE> 22
transmitted to Landlord by facsimile), to designate the interest period to be
selected from time to time by Landlord pursuant to the terms of the Notes (or
other Authorized Loan) as the interest period then in effect for interest rate
of the Improvements Loan (or other Authorized Loan) and the Equity Rent
Component. Tenant acknowledges that the rates available to be selected as the
LIBOR Rate after the first partial calendar month of the Term are 1, 3, 6, 9 or
12-month LIBOR rates. In the event that Tenant fails to give such written
notice to Landlord prior to the applicable deadline for selection of such
interest period pursuant to the terms of the Notes (or other Authorized Loan),
Landlord shall select the same interest period then in effect for the
Improvements Loan (or other Authorized Loan) and for the Equity Rent Component.
Notwithstanding the foregoing, the interest rate applicable during the
Construction Period for each Building or phase shall be the one-month LIBOR
rate.
5.2 PRORATION. If the Term expires or is otherwise
terminated on a day other than the day before the first LIBOR Business Day of a
calendar month, then Base Rent for such Rent Period shall be prorated on the
basis of actual days elapsed on the basis of a thirty (30) day month.
5.3 NO ABATEMENT OF RENT. Except as a consequence of a
reduction in the Funded Amount or the terms of Section 15 (Taking), Tenant
shall not be entitled to any abatement, diminution, reduction, setoff or
postponement of Base Rent as a consequence of any inconvenience to,
interruption of, cessation of or loss of Tenant's use or enjoyment of the
Premises or as a result of any reason whatsoever.
5.4 DELINQUENT RENT. Any Base Rent not paid on the due
date shall accrue interest at the Default Rate from the date such Base Rent was
originally due until the date such Base Rent is paid. All interest accrued on
past due Base Rent shall be due and payable to Landlord at the time the Base
Rent is paid, or upon demand by Landlord, if earlier.
5.5 EQUITY FUNDING.
(a) For each Building (as such term is defined in
Section 5.6 for purposes of this Section 5.5), after the appraisal described in
Section 21.25 has been received by Landlord, Landlord shall itself fund any
Advances on a proportionate basis based upon a fraction of the total amount of
the Advance, the numerator of which is the difference between the total
estimated Funded Amount (as of completion of construction, as reasonably
estimated by Tenant) for the Building or phase less the Guaranteed Residual
Value for such Building, and the denominator of which is the total estimated
Funded Amount (as of completion) for such Building or phase; provided that the
Equity Funded Amount of Advances for a Building shall be deemed to be paid on a
proportionate basis out of those funds held by Landlord as Tenant's Security
Deposit and out of Landlord's Equity Contribution. In no event shall Landlord
be
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required to do any of the following: (a) pay the Equity Funded Amount of
Advances for a Building resulting in such payment exceeding the difference
between the Funded Amount for such Building minus the Guaranteed Residual Value
for such Building; (b) make Advances such that the aggregate Funded Amounts of
the Building Leases exceeds One Hundred Fourteen Million Dollars ($114,000,000)
or the aggregate Equity Funded Amounts of the Building Leases exceeds Nineteen
Million Three Hundred Eighty Thousand Dollars ($19,380,000); or (c) make
Advances such that the Funded Amount under this Lease exceeds Twenty Four
Million Dollars ($24,000,000).
(b) Notwithstanding the foregoing, in the event:
(1) Contractor fails to complete any Building or phase on account of either the
insolvency or bankruptcy of the Contractor or a dispute with the Contractor
concerning an alleged default by the Contractor; and (2) Tenant elects to have
Landlord enter into a construction contract with another contractor for the
purpose of completing such Building or phase; and (3) completion of such
incomplete Building or phase by another contractor requires funds in excess of
the funds that would have been required had Contractor not become insolvent or
bankrupt or had such dispute not existed (excluding change orders), then
Landlord's obligation for funding for such Building or phase under this Section
5.5 shall be equal to the amount that Landlord would have been required to fund
under this Section 5.5 absent such insolvency, bankruptcy or dispute plus the
amount of any change orders. At least two (2) days prior to making such equity
Advance to Tenant, Landlord shall submit to Tenant and shall have obtained
Tenant's prior written approval of the amount of such payment and the basis
upon which such amount has been calculated. Tenant may withhold Tenant's
consent to such payment if Tenant's accountant in good faith disagrees with
such amount or the manner in which it was calculated.
5.6 EXHIBITS REFLECTING INITIAL ADVANCE AND RENT
COMMENCEMENT DATE. Within thirty (30) days after the initial Advance for the
foundation for any Building and within thirty (30) days after the initial
Advance under this Lease, Landlord and Tenant shall execute the "Initial
Advance Memorandum" in the form attached hereto as Exhibit G. With respect to
the initial Advance under this Lease, the Initial Advance Memorandum shall also
indicate to which Building such Advance applies. Within thirty (30) days after
the Rent Commencement Date for any Building under this Lease, Landlord and
Tenant shall execute the "Rent Commencement Date Memorandum" in the form
attached hereto as Exhibit H. If the Rent Commencement Date for any Building
under this Lease occurs prior to the completion or occupancy of such Building,
then the parties shall, within thirty (30) days after the completion or
occupancy of such Building, enter into a memorandum, which shall reflect the
Guaranteed Residual Value for such Building (the parties acknowledge that,
except as provided in Section 19.2, they will not reflect the Guaranteed
Residual Value for any Building until such Building has been completed or
occupied). Guaranteed Residual Value for any Building during construction and
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after construction shall be determined by multiplying the Guaranteed Residual
Value percentage, calculated pursuant to Section 2.25, by the Funded Amount for
any Building at the date of calculation. Whenever the term "Building" is used
in this Lease in connection with the calculation of the Guaranteed Residual
Value during a construction period, in connection with Landlord's equity
funding under Section 5.5 or in connection with Tenant's Security Deposit
funding under Section 5.7, such term shall mean a particular construction phase
of the Improvements.
5.7 SECURITY DEPOSIT. On the date of initial Advance for
a Building, Tenant shall deliver to Landlord a security deposit ("Security
Deposit") in an amount equal to fourteen percent (14%) of the estimated Funded
Amount for the Building as stated in the Initial Advance Memorandum for the
Building in the form attached hereto as Exhibit G. Landlord may use and
commingle the Security Deposit with other funds of Landlord and the Security
Deposit shall not bear interest. On the Rent Commencement Date, the amount of
the Security Deposit shall be increased or decreased to an amount equal to the
difference between the Funded Amount minus the sum of the Landlord's Equity
Contribution and the Guaranteed Residual Value (as of such date, as determined
pursuant to the Rent Commencement Date Memorandum for the Building in the form
attached hereto as Exhibit H). Mathematically, the Security Deposit as of the
Rent Commencement Date shall be:
Funded Amount - (Guaranteed Residual Value + Equity Contribution)
The Security Deposit shall be held by Landlord as security solely for the
payment of Base Rent and Additional Rent by Tenant pursuant to this Lease. If
at any time during the Term any Base Rent shall be overdue, then Landlord may
at its election (but shall not be required to) appropriate and apply any
portion of the Security Deposit to the payment of any such overdue Base Rent.
Should the entire Security Deposit, or any portion thereof, be appropriated and
applied by Landlord as provided herein, then Tenant shall immediately, after
receipt of written demand by Landlord, pay to Landlord a sufficient sum in cash
to restore the Security Deposit to the amount of the Security Deposit as of the
Rent Commencement Date. In the event that the Equity Funded Amount is reduced
for any reason, including without limitation by reason of a sale of any portion
of the Premises or the application of the proceeds of a condemnation award to
reduce the Equity Funded Amount (it being understood that the Equity Funded
Amount will only be reduced in the event and to the extent that the net
proceeds of such condemnation award exceeds the Senior Funded Amount, with such
award proceeds to be applied first to the Senior Funded Amount pursuant to
Section 15.4 hereof), the amount of the Security Deposit required hereunder
shall be reduced by a like amount, and any such excess funds held by Landlord
shall immediately be returned to Tenant. The entire Security Deposit (other
than amounts withheld against Base Rent and Additional Rent due hereunder)
shall be returned to Tenant at the end of the Term.
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5.8 ADDITIONAL RENT. Tenant agrees to pay all Additional
Rent when it becomes due and payable under this Lease.
ARTICLE 6
TAXES
6.1 REAL ESTATE TAXES.
(a) From and after the Rent Commencement Date
Tenant shall pay directly to the appropriate taxing authority all Real Estate
Taxes. If the Rent Commencement Date occurs or the Term expires or otherwise
terminates at any time other than the beginning or end of a taxable year,
Tenant's obligation to pay Real Estate Taxes shall be prorated on the basis of
a 365- day year, so as to include only that portion of the taxable year which
is a part of the Term. Unless a termination of the Lease results from a
purchase of the Land pursuant to Article 19, any Real Estate Taxes levied
against the Land which accrue during the Term of this Lease but which would not
be due and payable to the appropriate taxing authority until after the
expiration of the Term of this Lease (as the same may be extended) shall be
paid by Tenant to Landlord upon such termination. Landlord shall pay such
amounts to the appropriate taxing authority on a timely basis.
(b) Except to the extent that Real Estate Tax
bills and statements are sent directly to Tenant by the taxing authority, upon
receipt by Landlord of the tax bills or statements, Landlord will use
reasonable efforts to promptly advise Tenant in writing of all Real Estate
Taxes and shall deliver copies of all applicable tax bills or statements to
Tenant. Tenant shall pay directly to the taxing authority all Real Estate
Taxes prior to the later of (i) thirty (30) days after receipt by Tenant from
Landlord of a copy of such bills and statements referred to above, or (ii) five
(5) days prior to delinquency. As used herein, the term "Real Estate Taxes"
shall mean any and all taxes, governmental fees and similar charges or
assessments levied or assessed against the Improvements and/or the Land
including, without limitation, ad valorem taxes and special assessments
applicable to real property; provided, however, that Real Estate Taxes shall
not include any Landlord Income Taxes. Real Estate Taxes shall also include
any and all documentary, transfer, sales, mortgage, recording or similar taxes
imposed on Landlord or Tenant in connection with (i) the original acquisition
of the Premises by Landlord, (ii) any transfer of the Premises to Tenant
pursuant to the terms of this Lease, or (iii) any sale of the Premises to a
third party pursuant to the terms of this Lease. As used herein, the term
"Landlord Income Taxes" shall mean any and all income, franchise, gains, gift,
succession, excess profits, gross receipts, revenue, estate, rental, or similar
taxes or taxes in lieu thereof imposed upon Landlord or any party other than
Tenant (or an affiliate thereof) and any withholding tax imposed as a
collection device for, in lieu of, or otherwise related to any of the foregoing
without regard to whether such tax is required to be collected by Tenant and
without
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regard to whether Tenant would be liable for such withholding tax in the event
it failed to so withhold. For purposes of the foregoing, an income tax shall
include, without limitation, any tax imposed under the United States Internal
Revenue Code or the California Bank and Corporation Tax Law as well as any tax
which could qualify as an "income tax" under United States Treasury Regulation
Section 1.901-2 (except to the extent any such statute or regulation is
subsequently modified to include a tax or other governmental charge of a
materially different type and nature from the taxes currently described
therein) and any income tax which may be payable under the laws of any
jurisdiction either now or in the future. Real Estate Taxes for any given tax
year shall exclude assessment installments that are not due and payable during
such tax year.
6.2 PERSONAL PROPERTY TAXES. Tenant shall pay directly
to the appropriate taxing authorities prior to delinquency any and all taxes
and assessments levied or assessed during the Term upon or against Tenant's
furniture, equipment, trade fixtures and any other personal property in the
Premises.
6.3 RIGHT TO CONTEST. Tenant shall not be required to
pay any Real Estate Taxes or any other taxes for which Tenant is liable
hereunder (including, without limitation, any taxes for which Tenant is
required to indemnify Landlord under Section 6.5) (including penalties and
interest), so long as (i) Tenant shall contest the same or the validity thereof
by appropriate legal proceedings in such a manner to prevent the tax sale of
any portion of the Premises and (ii) the position to be taken by Tenant
pursuant to such contest would have a realistic possibility of success if
litigated. For purposes of this Lease, Tenant may conclusively establish that
a position to be taken in a contest would have a realistic possibility of
success if litigated by providing to Landlord a letter from counsel stating an
opinion to such effect. In the event of any such contest, Tenant shall, within
thirty (30) days after the final determination thereof, pay and discharge the
amounts determined to be due in accordance therewith and with the provisions of
this Lease, together with any penalties, fines, interest, costs and expenses
that may have accrued thereon or that may have resulted from Tenant's contest.
Tenant also shall have a right to contest any taxes for which it is liable
hereunder, but with regard to which the position to be taken pursuant to such
contest would not have a realistic possibility of success if litigated,
provided that Tenant pays such taxes on or prior to the date upon which such
taxes are asserted to be due by the relevant governmental authority.
Notwithstanding the foregoing provisions of this Section 6.3, Tenant shall have
an unconditional right to contest (without prior payment) any taxes imposed by
law upon Tenant rather than upon Landlord. Tenant's decision to pay any taxes
prior to contesting its or another party's underlying liability therefore shall
not be deemed to imply or suggest that the position to be taken in such contest
would not have a realistic possibility of success if litigated. Landlord shall
cooperate fully with Tenant in connection with the exercise of Tenant's right
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of contest contained herein, and in the event that applicable law shall require
that Landlord, rather than Tenant, pursue legal proceedings for such contest,
Landlord will initiate and pursue such contest upon Tenant's request and in
accordance with Tenant's instructions (including, without limitation, Tenant's
instructions as to the selection of legal counsel and matters of strategy or
settlement); provided, however, that Landlord shall not be subject to any
liability for the payment of any costs or expenses in connection with any such
contest or proceedings, and Tenant will indemnify and save harmless Landlord
from any such costs and expenses (including, without limitation, reasonable
attorneys' fees, costs of court and appraisal costs), reimbursing Landlord
therefor upon demand (or paying such costs and expenses directly when due, all
as directed by Landlord). Tenant shall be entitled to any refund of any taxes
and penalties or interest from any governmental authority to the extent the
refund represents monies paid to the governmental authority by Tenant or paid
by Landlord and reimbursed by Tenant.
6.4 WITHHOLDING TAXES. Subject to Section 6.5, but
notwithstanding any other provision of this Lease to the contrary, Tenant may
withhold from any payments under this Lease any Landlord Income Taxes, without
obligation to gross-up, indemnify or otherwise increase payments in consequence
thereof, to the extent required by applicable law. Upon the date hereof or
upon the date a party becomes a Landlord or a transferee of any portion of the
Landlord's interest in the Premises or this Lease, and within thirty (30) days
following the first day of each calendar year or if otherwise requested from
time to time by Tenant, Landlord and each transferee, if organized under the
laws of a jurisdiction outside the United States, shall provide Tenant with
three counterparts of each of the forms prescribed by the Internal Revenue
Service of the United States (Form 1001 or 4224, or successor form(s), as the
case may be) certifying as to Landlord's or such transferee's status for
purposes of determining exemption from United States withholding taxes with
respect to all payments to be made to such person. Without limitation upon the
foregoing, unless Tenant has received such forms or other documents reasonably
satisfactory to it indicating that payments under this Lease are not subject to
withholding tax, Tenant is authorized to and shall withhold taxes from such
payments at the applicable statutory rate. Subject to Section 6.5, but
notwithstanding any other provision of this Lease to the contrary, any
withholding by Tenant under the preceding sentence shall not give rise to any
gross-up, indemnification or other payment obligation on the part of Tenant.
Landlord and each transferee, if organized under the laws of the United States
or any State thereof, shall timely provide Tenant with duplicate documents
conforming to the requirements of Treasury Regulation 1.1441-5(b) or any
successor thereto (which statement may be made on a Form W-9).
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6.5 ADDITIONAL PROVISIONS RELATING TO TAXES.
Notwithstanding anything in this Section 6 to the contrary, Tenant shall
protect and defend Landlord from and against all criminal prosecution regarding
and shall indemnify and hold Landlord harmless from and against any and all
losses, costs, liabilities or damages (including reasonable attorneys' fees and
disbursements and court costs) arising by reason of:
(a) Any and all U.S. Federal, state or local
income taxes imposed upon Landlord in consequence of Landlord being treated as
the owner or lessor of the Premises (or any part thereof) for such tax purposes
(provided that Landlord has fully complied with its obligations under Section
21.2(b));
(b) Any and all taxes imposed upon Tenant (except
to the extent that such taxes are imposed upon Tenant as a result of Landlord's
failure to comply with its obligations under this Lease);
(c) Any and all taxes required to be withheld
from payments made by Tenant to a third party not related to or affiliated with
Landlord, HSBC or Sumitomo;
(d) Any and all Real Estate Taxes;
(e) Any and all taxes owed by Landlord as a
result of payment made by Tenant to Landlord pursuant to Tenant's indemnity
obligations under this Section 6.5; and
(f) Any and all costs, liabilities or damages
(including reasonable attorneys' fees) incurred by Landlord in obtaining
indemnification payments from Tenant under the provisions of this Section 6.5.
Tenant's obligation to reimburse or indemnify Landlord for any
taxes, governmental fees, penalties, interest or other supplemental tax charges
under this Lease shall be reduced by the value of any related or offsetting tax
benefits derived or realized by Landlord. Tenant's duty to indemnify Landlord
under this Section 6.5 shall apply only to taxes arising during the Term
(whether or not due and payable at the conclusion of the Term), but shall
otherwise survive the expiration or earlier termination of this Lease.
ARTICLE 7
INSURANCE
7.1 LIABILITY INSURANCE. At all times during the Term,
Tenant shall obtain at Tenant's sole cost and expense a policy or policies of
comprehensive general liability insurance on an "occurrence" basis against
claims for "personal injury" liability, including bodily injury, death or
property damage liability. The liability insurance policy shall contain
coverage limits no less
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than the following: (1) Three Million Dollars ($3,000,000) per person; (2) Five
Million Dollars ($5,000,000) per incident; and (3) One Million Dollars
($1,000,000) for property damage.
7.2 BUILDERS' RISK INSURANCE. With respect to any
Improvements which may be under construction and not yet covered by insurance
under the terms of Section 7.3, Tenant shall maintain or cause to be maintained
a policy or policies of builders' risk insurance in an amount equal to the
value upon completion of the work (exclusive of land, foundation, excavation,
grading, landscaping, architectural and development fees and other items
customarily excluded from such coverage), insuring against the risks
customarily insured against under such insurance, including fire, vandalism,
malicious mischief, sprinkler leakage, lightning, and windstorm.
7.3 ALL-RISK INSURANCE. With respect to any completed
Improvements, prior to the termination of the builders' risk insurance required
by Section 7.2, and at all times thereafter, Tenant shall, at Tenant's sole
cost and expense, obtain and maintain, or cause to be obtained and maintained:
(a) a policy or policies of all-risk insurance covering the Improvements,
providing coverage against loss or damage by fire, vandalism, malicious
mischief, sprinkler leakage, lightning, windstorm and other insurable perils,
as, under good insurance practice, from time to time are insured against under
all-risk coverage for properties of similar character, age and location in an
amount or amounts not less than one hundred percent (100%) of the then actual
replacement cost (exclusive of land, foundation, excavations, grading,
landscaping, architectural and development fees and other items customarily
excluded from such coverage and without any deduction for depreciation); and
(b) a policy or policies of difference in conditions insurance covering the
Improvements, providing coverage against loss or damage by earthquake and flood
as, under good insurance practice, from time to time are insured against under
earthquake coverage for properties of similar character, age and location in an
amount or amounts not less than the lesser of (i) one hundred percent (100%) of
the then actual replacement cost (exclusive of land, foundation, excavations,
grading, landscaping, architectural and development fees and other items
customarily excluded from such coverage and without any deduction for
depreciation) or (ii) the amount of the Equity Funded Amount.
7.4 GENERAL REQUIREMENTS. The insurance required under
this Article 7 may be furnished under a "primary" policy and an "umbrella"
policy or policies. Landlord and the holder of any Authorized Loan shall be
named as an additional insured under Tenant's policy of insurance required
under Section 7.1; Landlord, Tenant and the holder of any Authorized Loan shall
each be named as the loss payees under the policies of insurance required under
Sections 7.2 and 7.3; and such policies shall contain an endorsement for
cross-liability coverage. Tenant shall furnish Landlord with certificates from
Tenant's insurers with respect to the insurance required to be carried
hereunder on or before the
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date such insurance is required to be carried. The certificates shall state
that such insurance is in full force and effect and that coverage will not be
reduced in any amount or otherwise limited or cancelled without twenty (20)
days' prior written notice to Landlord. Renewal certificates shall be
furnished to Landlord not less than thirty (30) days prior to the expiration of
each such policy. Any blanket insurance policy or policies that insure Tenant
against the risks and for the amounts herein specified shall be deemed to
satisfy the obligation of Tenant hereunder, provided that any such policy of
blanket insurance shall specify the amount of the total insurance allocated to
the risks required to be insured hereunder and such allocated amount meets the
requirements of this Article 7. All insurance required by this Article 7 shall
be with an insurance company licensed to do business in the State of
California, with a general policyholder's rating, as rated by the most current
available "Bests" Insurance Reports, no less than A- III,and shall be primary
and non-contributing.
7.5 WAIVER OF SUBROGATION. Notwithstanding anything to
the contrary contained herein, to the extent permitted by law and so long as
any insurance coverage maintained by Tenant is not diminished by reason
thereof, Tenant hereby (a) releases and waives any rights it may have against
Landlord and its officers, agents and employees on account of any loss or
damages occasioned to Tenant, its property or the Premises, and arising from
any risk covered by any fire and extended coverage insurance maintained by
Tenant, whether or not due to the negligence of Landlord, its agents,
employees, contractors, licensees, invitees or other persons, and (b) waives on
behalf of any insurer providing such insurance to Tenant any right of
subrogation that any such insurer may have or acquire against Landlord or such
persons by virtue of payment of any loss under such insurance. Tenant shall
use its best efforts to cause its insurance policies to contain a waiver of
subrogation clauses in accordance with the foregoing.
7.6 INDEMNITY. Tenant shall protect, defend, indemnify,
hold and save Landlord harmless from and against any and all losses, costs,
liabilities or damages (including reasonable attorneys' fees and disbursements
and court costs) arising by reason of: (i) any and all injury or death of
persons or damage to property against which Tenant is obligated to maintain
insurance for the benefit of Landlord pursuant to this Article 7; (ii) the
failure to obtain the waiver of subrogation clause required by Section 7.5
hereof where such clause could have been obtained through the exercise of
Tenant's best efforts; or (iii) the invalidation of such insurance policy
required to be obtained by Tenant hereunder by Tenant's insurer. Tenant's duty
to indemnify Landlord under this Section 7.6 shall survive the expiration or
earlier termination of this Lease with respect to events occurring during the
Term.
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ARTICLE 8
USE
8.1 USE.
(a) PERMITTED USES. Tenant may use the Premises
for any lawful purpose.
(b) ENVIRONMENTAL COMPLIANCE.
(i) DEFINED TERMS. The term
"Applicable Environmental Laws" shall mean any applicable laws, regulations or
ordinances pertaining to health or the environment, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 or otherwise (as amended, hereinafter called
"CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended by
the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of
1980, the Hazardous and Solid Waste Amendments of 1984 or otherwise (as
amended, hereinafter called "RCRA"), and California Health & Safety Code
Section 25501(j). The terms "hazardous substance" and "release" as used in
this Lease shall have the meanings specified in CERCLA, and the terms "solid
waste" and "disposal" (or "disposed") shall have the meanings specified in
RCRA; provided, in the event either CERCLA or RCRA is amended or superseded by
other laws so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent to the effective date of such amendment
or other laws; and, provided further, to the extent that the laws of the State
of California establish a meaning for "hazardous substance", "release", "solid
waste", or "disposal" which is broader than that specified in either CERCLA or
RCRA, such broader meaning shall apply. The term "Pre-existing Agricultural
Contamination" means concentrations of any chemical, compound or substance
existing in soil and groundwater on the Land as disclosed in that certain Phase
I Preliminary Environmental Site Assessment and Phase II Soil and Ground Water
Quality Evaluation for Vista Montana and Tasman Drive Parcels, San Jose,
California, performed by Lowney Associates and dated February 1995.
(ii) TENANT'S COVENANTS. Tenant
will not cause or permit the Premises or the Improvements to be in violation
of, or do anything or permit anything to be done which subjects Landlord,
Tenant or the Premises to any remedial obligations under or which creates a
claim or cause of action under, any Applicable Environmental Laws, including,
without limitation, CERCLA, RCRA, and the California Health & Safety Code
Section 25501(j), assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances, if any,
pertaining to the Premises and the Improvements, and Tenant will promptly
notify Landlord in writing of any existing, pending or threatened
investigation, claim or inquiry of which Tenant has knowledge by any
governmental authority in connection with any Applicable Environmental Laws.
Tenant shall obtain any permits, licenses or
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<PAGE> 32
similar authorizations to construct, occupy, operate or use any Improvements,
fixtures and equipment at any time located on the Premises by reason of any
Applicable Environmental Laws. Tenant will not use the Premises or the
Improvements in a manner which will result in the unlawful disposal or other
unlawful release of any hazardous substance or solid waste on or to the
Premises or the Improvements and covenants and agrees to keep or cause the
Premises and the Improvements to be kept free of any unlawful hazardous
substance, unlawful solid waste or unlawful environmental contaminants
(including, without limitation, friable asbestos and any substance containing
asbestos deemed hazardous and unlawful by any Applicable Environmental Law) and
to remove the unlawful amounts of the same (or if removal is prohibited by law,
to take whatever action is required by law) promptly upon discovery at Tenant's
sole expense. Tenant shall promptly notify Landlord in writing of any unlawful
disposal or other unlawful release of any hazardous substance, environmental
contaminants or solid wastes on or to the Premises or the Improvements.
Notwithstanding the foregoing, Landlord and Tenant acknowledge that
Pre-existing Agricultural Contamination exists on the Land due to agricultural
operations of prior owners and that Tenant has no further obligation to notify
Landlord regarding such Pre-existing Agricultural Contamination. In the event
Tenant fails to comply with or perform any of the foregoing covenants and
obligations, after thirty (30) days' prior written Notice to Tenant, Landlord
may, but shall be under no obligation to, cause the Premises and the
Improvements to be freed from the unlawful hazardous substance, unlawful solid
waste or unlawful environmental contaminants (or if removal is prohibited by
law, to take whatever action is required by law) and the reasonable cost of the
removal or such other action shall be a demand obligation owing by Tenant to
Landlord pursuant to this Lease; provided, however, that this sentence shall
not apply to Pre-existing Agricultural Contamination. Notwithstanding the
foregoing, Landlord shall have no right to cause the removal of such materials
so long as Tenant both: (1) is diligently and in good faith proceeding to
comply with Tenant's obligation to remove the unlawful amounts of such
materials; and (2) has the financial ability to so comply. Subject to the
foregoing, Tenant grants to Landlord and Landlord's agents and employees access
to the Premises and the Improvements, and the license to remove the unlawful
hazardous substance, unlawful solid waste or unlawful environmental
contaminants (or if removal is prohibited by law, to take whatever action is
required by law), and agrees to indemnify and save Landlord harmless from all
reasonable costs and expenses involved and from all claims (including
consequential damages) asserted or proven against Landlord by any party in
connection therewith. Upon Landlord's reasonable request for "good cause"
(defined below), at any time and from time to time during the Term, Tenant will
provide at Tenant's sole expense an inspection or audit of the Premises and the
Improvements from an engineering or consulting firm approved by Landlord,
indicating the presence or absence of any hazardous substance, solid waste or
environmental contaminants located on the Premises; provided, however that this
provision shall not apply to Pre-existing Agricultural Contamination. If
Tenant fails to
26.
<PAGE> 33
provide same after sixty (60) days' notice, Landlord may order same, and Tenant
grants to Landlord and Landlord's employees and agents access to the Premises
and the Improvements and a license to undertake any testing reasonably required
to obtain such inspection or audit. The reasonable cost of obtaining such
inspection or audit and any expenses incurred by Landlord in connection
therewith, shall be a demand obligation owing by Tenant to Landlord pursuant to
this Lease. For purposes of this Section 8.1(b)(ii), "good cause" shall mean
that Landlord shall have reasonable grounds to believe that an unlawful release
or unlawful disposal of hazardous substances or solid wastes has occurred on
the Premises or the Improvements, but shall not include Pre-existing
Agricultural Contamination.
(iii) TENANT'S INDEMNITY. Tenant
agrees to indemnify and hold Landlord harmless from and against, and to
reimburse Landlord with respect to, any and all claims, demands, causes of
action, losses, damages, liabilities, costs and expenses (including attorneys'
fees and court costs), fines and/or penalties of any and every kind or
character, known or unknown, fixed or contingent, asserted or potentially
asserted against or incurred by Landlord at any time and from time to time by
reason of, in connection with or arising out of (A) the failure of Tenant to
perform any obligation herein required to be performed by Tenant regarding
Applicable Environmental Laws, (B) any violation of any Applicable
Environmental Law by Tenant or with respect to the Premises or the
Improvements, or any disposal or other release by Tenant or with respect to the
Premises or the Improvements of any hazardous substance, environmental
contaminants or solid waste on or to the Premises or the Improvements, whether
or not resulting in a violation of any Applicable Environmental Law, (C) any
act, omission, event or circumstance by Tenant or with respect to the Premises
or the Improvements which constitutes or has constituted a violation of any
Applicable Environmental Law with respect to the Premises or the Improvements,
regardless of whether the act, omission, event or circumstance constituted a
violation of any Applicable Environmental Law at the time of its existence or
occurrence, and (D) any and all claims or proceedings (whether brought by
private party or governmental agencies) for bodily injury, property damage,
abatement or remediation, environmental damage or impairment or any other
injury or damage resulting from or relating to any hazardous or toxic substance
or contaminated material located upon or migrating into, from or through the
Premises or the Improvements (whether or not the release of such materials was
caused by Tenant, a subtenant, or prior owner of the Premises, or any other
Entity) which Landlord may incur. Tenant's duty to indemnify Landlord under
this Section 8.1 shall survive the expiration or earlier termination of the
Lease with respect to events occurring during, or prior to the Term or after
the Term while Landlord has record title to and Tenant is occupying the
Premises.
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<PAGE> 34
(c) COMPLIANCE WITH LEGAL REQUIREMENTS. Tenant
shall at all times comply with all material Legal Requirements applicable to
the Land or the Improvements and/or the use thereof.
8.2 CONTEST OF LEGAL REQUIREMENTS. Tenant shall have the
right at its sole cost and expense to contest the validity of any Legal
Requirements applicable to the Premises by appropriate proceedings diligently
conducted in good faith; and upon the request of Tenant and at Tenant's sole
cost and expense, Landlord will join and cooperate with Tenant in such
proceedings. Subject to Section 6.3, any other provision of this Lease to the
contrary notwithstanding, Tenant's right to contest Legal Requirements must be
exercised in such a manner as to avoid any exposure of the Premises or any part
thereof to foreclosure or execution sale or exposure of Landlord to civil or
criminal penalties arising from Tenant's non-compliance with such Legal
Requirements. Tenant shall defend and indemnify Landlord against, and hold
Landlord harmless from, any and all liability, loss, cost, damage, injury or
expense (including, without limitation, attorneys' fees and costs) which
Landlord may sustain or suffer by reason of Tenant's failure or delay in
complying with, or Tenant's contest of, any such Legal Requirements (or
Landlord's contest, if requested in writing by Tenant), and Tenant's duty to
indemnify Landlord under this Section 8.2 shall survive the expiration or
earlier termination of this Lease.
8.3 INDEMNIFICATION. Tenant will defend, protect,
indemnify and save harmless Landlord from and against all liabilities,
obligations, claims, damages, causes of action, costs and expenses, imposed
upon or incurred by Landlord by reason of the occurrence or existence of any of
the following during the Term, except to the extent caused by the willful
misconduct, gross negligence, or willful breach of contract of Landlord or its
agents or contractors (but excluding from the term contractors the Contractor
and any subcontractors of the Contractor): (1) any accident, injury to or
death of persons or loss of or damage to property occurring on or about the
Premises or Improvements; (2) performance of any labor or services or the
furnishing of any materials or other property in respect of the Premises or the
Improvements; (3) the negligence or willful misconduct on the part of Tenant or
any of its agents, invitees, employees or contractors or any other persons
entering onto the Premises or the Improvements at the request, behest or with
the permission of Tenant; (4) the construction, use or occupancy of the
Improvements which Tenant may elect to construct; (5) the use of the Land; or
(6) any breach by the "Owner" under the construction contracts entered into by
Tenant as Landlord's agent pursuant to the terms of Section 11.10. Tenant's
duty to indemnify Landlord under this Section 8.3 shall survive the expiration
or earlier termination of this Lease with respect to events occurring during
the Term or after the Term while Landlord has record title to and Tenant is
occupying the Premises.
28.
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ARTICLE 9
UTILITIES AND SERVICES
9.1 SERVICES TO THE PREMISES. At Tenant's sole cost and
expense, Tenant shall make its own arrangements for the provision of all
utilities and services to be provided to or consumed on the Premises,
including, without limitation, air conditioning, ventilation, heating, electric
power, telephone, water (both domestic and fire protection), sanitary sewer,
storm drain, natural gas and janitorial services, including for the
installation, maintenance and repair of service lines and meters to measure
Tenant's consumption of such utilities.
ARTICLE 10
MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES
10.1 TENANT OBLIGATIONS. Except as otherwise provided in
this Lease, Tenant shall maintain the Premises and the Improvements in good
repair, normal wear and tear, casualty and Takings (as defined in Section 15.1)
excepted. All maintenance that Tenant is obligated to perform under this
Section 10.1 shall be at the sole expense of Tenant, except to the extent that
repairs are made necessary because of the gross negligence or willful
misconduct of Landlord, its agents, employees or contractors (but excluding
from the term contractor the Contractor and any subcontractors of the
Contractor).
10.2 SURRENDER OF THE PREMISES. Except as provided in
Section 19, upon the expiration or earlier termination of the Term, Tenant
shall surrender the Premises to Landlord in its then "AS-IS" condition,
including, without limitation, any condition resulting from: (i) wear and tear;
(ii) obsolescence and damage by fire or other casualty, act of God or the
elements (subject to the terms of Article 16); (iii) damage that is caused by
Landlord, its agents, employees or contractors; (iv) Takings; and (v) any
improvements, alterations, additions, repairs, replacements, or decorations in,
to or of the Premises or on the Land which are not Improvements but which
Tenant may elect to remain on the Land or the Premises. Title to all
improvements, furniture, furnishings, fixtures, trade fixtures and personal
property of Tenant which have not been funded by Landlord pursuant to the terms
of Article 11 and located in or upon the Premises or the Land, whether or not
affixed to the realty, shall be and remain in Tenant throughout the Term, and
at any time during the Term of this Lease, the same may be removed by Tenant,
or, at Tenant's election, surrendered with the Premises, in which event title
to such surrendered property shall, if Landlord so elects in Landlord's sole
discretion, be deemed transferred to Landlord. Any of such property that is
not removed from the Premises or the Improvements on or prior to the expiration
or earlier termination of this Lease shall be considered abandoned and Landlord
may deal with it as Landlord elects.
29.
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ARTICLE 11
CONSTRUCTION OF IMPROVEMENTS
11.1 TENANT'S RIGHTS TO CONSTRUCT IMPROVEMENTS. As of the
date of this Lease, no improvements exist on the Land. Tenant shall be under
no obligation whatsoever to construct any Improvements. Tenant shall have the
right, in Tenant's sole discretion, to construct on the Land with Tenant's own
funds, improvements, buildings, and/or alterations to Improvements, without the
necessity of obtaining any approval from Landlord. In addition, Tenant shall
have the right, in Tenant's sole discretion, subject to the terms of this
Article 11, to require Landlord to pay for the construction of the Improvements
which Tenant desires. With respect to any construction which Tenant may elect
to have performed in accordance with this Article 11, Landlord hereby
irrevocably appoints Tenant as Landlord's construction agent. Landlord shall
have no right to construct any improvements, buildings, and/or alterations on
the Land unless Tenant specifically requests that such be constructed, and then
only in accordance with the terms and conditions of this Article 11.
11.2 REQUEST FOR CONSTRUCTION FUNDING; LANDLORD OBLIGATION
TO FUND. At any time during the first forty-eight (48) months of the Initial
Term, Tenant may request Landlord to provide funding for the construction of
Improvements, which may consist of one or more Buildings or phases, or for the
alteration of any existing Buildings. Each such request shall be in writing
and shall generally describe the nature of the Improvements. Landlord shall
fund amounts for: (1) the costs of construction or alteration of the
Improvements pursuant to the terms and conditions set forth in this Article 11;
(2) architectural, engineering, testing, permitting, professional fees and any
other soft costs relating to such Buildings; (3) any Capitalized Interest; and
(4) the amounts described in Exhibit J. If Tenant reduces the Funded Amount by
making payment to Landlord or the holder of any Authorized Loan, except as
provided in Articles 15 and 16, the amount so paid shall not later be available
to Tenant in the form of Advances for construction work. Landlord shall have
no obligation to make Advances to a Mortgagee of Tenant's interest under this
Lease, if any, which Mortgagee has foreclosed on Tenant's interest under this
Lease and is then the "Tenant" under this Lease. Landlord shall have no
obligation to make Advances for any Building or phase after the last day of the
twenty-fourth (24th) month after the initial Advance for such Building or
phase.
11.3 CONDITIONS PRECEDENT TO LANDLORD'S OBLIGATION TO FUND
INITIAL ADVANCES. The obligation of Landlord to make an initial Advance
hereunder in respect of each Building shall be subject to the following
conditions precedent:
(a) NO EVENT OF MAJOR DEFAULT. No Event of Major
Default shall exist and be continuing at the time of the initial Advance.
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(b) APPRAISAL. Landlord shall have approved the
appraisal delivered pursuant to Section 21.25 hereof.
(c) LANDLORD APPROVAL OF APPROVAL PLANS.
Landlord shall have approved in accordance with the terms of this Section
11.3(c) (except as otherwise permitted or already approved pursuant to Section
11.1), Tenant's proposed site plans (showing the locations and orientations of
any proposed buildings) and exterior shell plans (showing exterior building
sections) (collectively, "Approval Plans") of the Building(s) which Tenant may
elect to construct. Tenant shall deliver a letter to Landlord along with any
submitted Approval Plans in which Tenant states that the submitted Approval
Plans do not violate any Legal Requirements. Landlord may only withhold
Landlord's approval to any such Approval Plans to the extent that the Approval
Plans violate any material Legal Requirements, and Landlord may not withhold
its consent on any other ground. At the option of Tenant, the foregoing
documentation may be submitted to Landlord for approval in stages as Tenant
completes it. Landlord shall have a period of ten (10) days from the date of
receipt of each component of the documentation within which to approve or
reject it. The Approval Plans, as approved from time to time by Landlord
pursuant to this Section 11.3(c) shall constitute the "Authorized Plans."
Tenant shall immediately reimburse Landlord on demand for all reasonable
out-of-pocket costs and expenses incurred by Landlord in connection with the
review and approval of any Approval Plans (not to exceed One Thousand Dollars
($1,000) per approval). Tenant hereby certifies to Landlord that the Approval
Plans attached hereto as Exhibit C and Exhibit D do not violate any Legal
Requirements. Landlord hereby approves the Approval Plans attached hereto as
Exhibit C and Exhibit D. Landlord's approval of any Authorized Plans does not
constitute any representation or warranty by Landlord with respect to such
Authorized Plans, and Landlord hereby specifically disclaims any such
representations and warranties.
(i) FURTHER APPROVALS; PROPOSED
CHANGES. Subsequent to Landlord's approval of any Authorized Plans pursuant to
Section 11.3(c), Tenant shall only be obligated to submit to Landlord for
approval documentation showing any proposed material change to the Authorized
Plans (but no approval shall be required with respect to construction or design
matters that are not contained in or addressed by the Authorized Plans), and
only to the extent such change is materially inconsistent with the Authorized
Plans. Landlord shall have a period of ten (10) days from receipt of each
material change within which to approve or reject it. Tenant shall immediately
reimburse Landlord on demand for all reasonable out-of-pocket costs and
expenses incurred by Landlord in connection with the review and approval of any
such changes (not to exceed One Thousand Dollars ($1,000) per approval).
Tenant shall have the right, without further approval of Landlord, to construct
Improvements not materially inconsistent with the Authorized Plans together
with such changes thereto as may be requested or required to comply with Legal
Requirements.
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(ii) FAILURE TO DISAPPROVE. The
failure by Landlord to disapprove any portion of the proposed Approval Plans
submitted pursuant to this Section 11.3(c) within the specified approval period
shall be deemed to constitute approval thereof as submitted, and such Approval
Plans shall thereupon become Authorized Plans. Any disapproval by Landlord of
any portion of the proposed Approval Plans shall be in writing and shall
specify with particularity the basis for the disapproval.
(d) LANDLORD APPROVAL OF CONSTRUCTION AGREEMENT.
Landlord shall have approved in accordance with the terms of this Section
11.3(d) (except as otherwise permitted or already approved pursuant to Section
11.1), Tenant's proposed construction agreement with Contractor (collectively,
"Construction Agreement") of the Building(s) which Tenant may elect to
construct. Landlord may only withhold Landlord's approval to any such
Construction Agreement to the extent that the Construction Agreement violates
any material Legal Requirements or is not a form of agreement which includes a
guaranteed maximum price and a date certain of completion of the Improvements,
and Landlord may not withhold its consent on any other ground. Landlord shall
have a period of ten (10) days from the date of receipt of the Construction
Agreement within which to approve or reject it. Tenant shall immediately
reimburse Landlord on demand for all reasonable out-of-pocket costs and
expenses incurred by Landlord in connection with the review and approval of the
Construction Agreement (not to exceed One Thousand Dollars ($1,000) per
approval). Landlord acknowledges that Landlord has received and approved the
Construction Agreement between Tenant and Contractor for the Improvements to be
constructed pursuant to this Lease. Landlord's approval of any Construction
Agreement does not constitute any representation or warranty by Landlord with
respect to such Construction Agreement, and Landlord hereby specifically
disclaims any such representations and warranties.
(e) DRAW REQUEST. Landlord shall have received a
written request from Tenant or its agent requesting the Advance ("Draw
Request") in the form attached hereto as Exhibit I. The submission of a Draw
Request by Tenant shall be deemed to be Tenant's approval of the Capitalized
Interest which is to be included in the Funded Amount during the period covered
by such Draw Request pursuant to the terms of Section 2.24.
(f) PLANS AND SPECIFICATIONS. Landlord shall
have received a copy of the plans and specifications for the Building in
question. Landlord acknowledges that Landlord's only approval right with
respect to the plans and specifications is as specified in Section 11.3(c)
above.
(g) CONSTRUCTION AGREEMENT. Landlord shall have
received a copy of Tenant's construction agreement with Contractor for the
Building or phase in question. Landlord acknowledges that Landlord's only
approval right with respect to the plans and specifications is as specified in
Section 11.3(d) above.
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(h) BUILDING PERMITS. With respect to any
portion of an Advance going toward hard costs for any Building, Landlord shall
have received a copy of all building permits and approvals then required for
the construction of the subject Building.
(i) CONTRACTOR'S CERTIFICATE. With respect to
any portion of an Advance going toward hard costs for any Building, Landlord
shall have received a certificate from the Contractor in the form attached
hereto as Exhibit F for the Advance in question ("Contractor's Certificate").
11.4 CONDITIONS PRECEDENT TO LANDLORD'S OBLIGATION TO FUND
SUBSEQUENT ADVANCES. Landlord's obligation to make any Advance for a Building
after the initial Advance for such Improvement shall be subject to the
satisfaction of the following conditions:
(a) NO EVENT OF MAJOR DEFAULT. No Event of Major
Default shall exist and be continuing at the time of such subsequent Advance,
and no "major and material" violations of code or law shall exist with respect
to the portions of such Building which have been constructed as of the date of
the Advance in question. For purposes of this Section 11.4(a), the term "major
and material" shall mean a violation that presents a material risk to the
health and safety of the occupants of the Building in question.
(b) DRAW REQUEST. With respect to any portion of
an Advance going toward hard costs for any Building, Landlord shall have
received a Draw Request for the Advance in question.
(c) CONTRACTOR'S CERTIFICATE. With respect to
any portion of an Advance going toward hard costs for any Building, Landlord
shall have received a Contractor's Certificate for the Advance in question in
the form attached hereto as Exhibit F.
(d) LIEN WAIVERS. Landlord shall have received
conditional lien waivers and releases upon progress payment from Contractor and
any "Major Subcontractor" (defined below) scheduled to receive payment from
such Advance. The term "Major Subcontractor" shall mean any subcontractor
which has executed a subcontract calling for aggregate payments to the
subcontractor in excess of Two Hundred Fifty Thousand Dollars ($250,000).
(e) CHANGES TO AUTHORIZED PLANS. Landlord shall
have approved any material change to the Authorized Plans pursuant to Section
11.3(c)(i)
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11.5 CONDITIONS PRECEDENT TO LANDLORD'S OBLIGATION TO FUND
FINAL ADVANCE. Landlord's obligation to make the final Advance for a Building
shall be subject to the satisfaction of the following conditions:
(a) SECTION 11.4 CONDITIONS. All of the
conditions precedent set forth in Section 11.4 shall have been satisfied with
respect to the final Advance in question.
(b) CERTIFICATE OF OCCUPANCY. Landlord shall
have received a copy of the certificate of occupancy or its equivalent issued
by the appropriate governmental authority for the Building in question.
11.6 ADDITIONAL PROVISIONS REGARDING ADVANCES.
(a) TIMING AND METHOD OF DISBURSEMENT. Advances
to be made hereunder shall not be made more frequently than monthly. For any
calendar month during which Tenant desires to receive an Advance, Tenant shall
submit a Draw Request on or before the date that is five (5) days prior to the
first LIBOR Business Day of such month, and if Tenant submits such Draw Request
by such date, then Landlord shall make the Advance as requested in such Draw
Request to the party(ies) designated by Tenant on the first LIBOR Business Day
of such month (subject to the conditions to funding described in Sections 11.3,
11.4 and 11.5). The Advances shall be made to parties identified by Tenant,
which parties may include Tenant. At the option of Tenant, Landlord shall make
such Advances to one (1) or more parties.
(b) RETAINAGE. Disbursements for construction
costs shall be subject to a ten percent (10%) retainage. The retainage shall
be paid to Tenant or to any Entities designated by Tenant along with the
payment of the Final Advance with respect to any Building. Notwithstanding the
foregoing, Tenant may require Landlord to pay any retainage on account of
particular subcontractors prior to the payment of a final Advance if: (1)
Tenant is able to achieve cost savings as a result of such early payment; and
(2) Contractor delivers to Landlord a letter of credit in the amount of the
retainage to be paid out prematurely. The parties will enter into an agreement
with respect to the letter of credit, which agreement shall reflect the
parties' agreement that: (a) Landlord shall only be entitled to draw on the
letter of credit if and to the extent necessary to complete the work that the
subcontractor receiving the early payment of the retainage was required to
perform and failed to perform; and (b) the letter of credit be returned to
Tenant at the time that the retainage would have been paid pursuant to the
second sentence of this Section 11.6(b). The total retainage shall be reduced
by the amount of such retainage paid early pursuant to the terms of the
preceding sentence.
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11.7 REQUIRED PERMITS, EASEMENTS, ETC. From time to time,
upon request of Tenant, Landlord (as holder of record of title to the
Improvements) shall execute such reasonable documents, petitions, applications
and authorizations, easements and rights of way (which have been prepared at
Tenant's expense) and shall appear at and participate in such public hearings,
staff meetings and similar gatherings, in each case as may in the reasonable
and good-faith opinion of Tenant be necessary or appropriate for the purpose of
obtaining any Required Permits or private easements or rights of way or utility
services for the Improvements or to remove any title encumbrances on the Land
which may interfere with Tenant's construction of the Improvements. Tenant
shall immediately reimburse Landlord on demand (or pay directly) for all
reasonable out-of-pocket costs and expenses incurred by Landlord in complying
with Landlord's obligations under this Section 11.7.
11.8 ALTERATIONS. Tenant shall notify Landlord in writing
in advance of any alteration to the Improvements which would either cost more
than Five Hundred Thousand Dollars ($500,000), or cause the Land and the
Improvements to fail the Coverage Test. At any time and from time to time, and
without the necessity for obtaining Landlord's approval or giving Notice
thereof to Landlord (except as otherwise specifically provided in this Section
11.8), Tenant shall have the right, at its expense, to make any improvements,
alterations, additions, repairs, replacements or decorations in, to or of the
Premises which do not materially change the exterior design scope of the
Improvements as previously approved by Landlord pursuant to any Authorized
Plans. In constructing any such improvements, alterations, additions, repairs,
replacements or decorations, Tenant shall do so in a manner which does not
violate any applicable and material Legal Requirements. If, in connection with
any alterations which Tenant may desire to construct, either: (1) the
performance of such alterations would cause the Land and Improvements together
to fail the Coverage Test; or (2) such alterations would materially change the
exterior design scope of the Improvements as previously approved by Landlord
pursuant to Authorized Plans, then such alterations shall be subject to the
prior written approval of Landlord, which shall not be unreasonably withheld or
delayed. In the event that the parties disagree as to whether or not
performing such alterations would cause the Land and the Improvements to fail
the Coverage Test, such matter shall be subject to the appraisal provision
contained in Section 21.23.
11.9 TITLE TO AND NATURE OF IMPROVEMENTS. By virtue of
Tenant's rights under the Land Lease, Tenant hereby grants to Landlord the
right to own and construct the Improvements which Tenant elects to cause to be
constructed with Landlord's funds under this Article 11, and Tenant hereby
grants, conveys and transfers to Landlord all of Tenant's right, title and
interest in and to the Improvements (whether now existing or hereafter
constructed), and Tenant agrees that any and all Improvements of whatever
nature at any time constructed, placed or maintained upon any part of the Land
shall be and remain the property of Landlord,
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subject to Tenant's rights under Section 19 and elsewhere in this Lease. Any
improvements on the Land other than the Improvements shall be and remain the
property of Tenant, subject to the terms of Section 10.2. The severance of fee
title to the Land and Improvements shall not change the character of the
Improvements as real property.
11.10 TENANT AS LANDLORD'S CONSTRUCTION AGENT. Tenant
shall function as Landlord's agent for purposes of the construction of any
Improvements. In this role, Tenant shall have the authority, on Landlord's
behalf, to oversee and direct the construction of all Improvements, including
but not limited to, approval of building, site and other plans, obtaining
building and other permits, negotiating construction contracts, monitoring
construction and making periodic inspections, approval of Contractor's invoice
for payment, and submission of Draw Requests. Within a reasonable time after
Tenant's request, Landlord shall execute construction contracts negotiated by
Tenant for the construction of Improvements on the Land; Landlord shall not
amend, modify or terminate any such construction contract without the prior
written approval of Tenant, which may be withheld in Tenant's sole discretion.
Landlord's appointment of Tenant as Landlord's agent under this Section 11.10
shall be irrevocable unless this Lease is terminated pursuant to the terms of
Section 17.4(b) in connection with an Event of Major Default.
11.11 TENANT'S RELEASE OF FUNDING COMMITMENT. At any time
during the term, Tenant may elect in its sole discretion to release Landlord
from its obligation to fund construction of all or any portion of the
Improvements by written notice to Landlord and Lenders; provided, however, that
Tenant has substantially completed construction of each Building on which
construction has commenced.
ARTICLE 12
LIENS
Except for claims that Tenant is contesting in good faith in
such manner as to avoid any exposure of the Premises or any part thereof to
foreclosure or execution sale, Tenant shall promptly pay and discharge all
claims for work or labor done, supplies furnished or services rendered to the
Premises, and shall keep the Premises free and clear of all mechanics' and
materialmen's liens in connection therewith.
ARTICLE 13
ASSIGNMENT BY LANDLORD
13.1 FURTHER MORTGAGES OR ENCUMBRANCES BY LANDLORD;
AUTHORIZED LOANS.
(a) PROHIBITION. Except for the Lenders Deed of
Trust, the Landlord Deed of Trust, the Tenant Deed of Trust and the
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Land Lease Deed of Trust (which are hereby approved by Tenant) and as
specifically permitted in Section 11.7 or 13.1(b) or 20, Landlord shall not
cause or create any mortgages, deeds of trust, encumbrances or other exceptions
to title (collectively, "New Encumbrances") to exist with respect to the
Premises at any time, and any such encumbrance not authorized in writing by
Tenant shall be null and void. The term "New Encumbrances" shall also include
any bonds or assessments affecting the Premises to which Landlord consents in
writing without the prior written approval of Tenant (which may be withheld in
Tenant's sole and absolute discretion). Without the prior written consent of
Tenant (which may be withheld in Tenant's sole and absolute discretion),
Landlord shall not make or join in an application or other document which
requests or authorizes any bonds or assessments to affect the Premises.
Landlord recognizes that any New Encumbrance may irreparably harm Tenant in
connection with one or more of the following: (1) construction which Tenant
may desire to perform; (2) the use of the Premises; (3) Tenant's rights
pursuant to the Purchase Option in Section 19; (4) the amount of assessments
which Tenant is required to pay; or (5) other matters.
(b) AUTHORIZED LOAN. Tenant has approved the
loans to Landlord ("Improvements Loan") from Lenders which is evidenced by that
certain Promissory Note dated as of the Date of Lease by Landlord in favor of
HSBC and that certain Promissory Note dated as of the Date of Lease by Landlord
in favor of Sumitomo (collectively, the "Notes"), and further evidenced and/or
secured by (a) that certain Pledge Agreement made by Tenant in favor of
Lenders, as it may be amended and supplemented from time to time ("Pledge
Agreement"), dated as of the Date of Lease; (b) the Lenders Deed of Trust (c)
that certain Loan Disbursement Agreement dated as of the Date of Lease; (d)
that certain Absolute Assignment of Leases dated as of the Date of Lease; (e)
that certain UCC Financing Statement; and (f) that certain Environmental
Indemnity Agreement dated as of the Date of Lease. In addition, upon the
maturity or prepayment of the Improvements Loan (whether by its terms, by
acceleration or otherwise), Landlord may (but, subject to the terms of Section
13.1(c), shall not be obligated to) enter into a new loan (such authorized loan
shall be the "New Loan"), provided Landlord first obtains Tenant's written
consent (which consent shall not be unreasonably withheld), and so long as: (i)
the Improvements Loan is paid off with the proceeds of such New Loan and all
documents securing or reflecting the Improvements Loan are assigned to the
lender who makes the New Loan or are released and satisfied; (ii) the principal
amount of the New Loan does not exceed the principal amount of the Improvements
Loan existing at the time the Improvements Loan is repaid; (iii) the interest
rate and payment provisions under the New Loan would not result in higher
monthly payments than the method under the Improvements Loan, and all such
monthly payments shall be interest only; and (iv) the New Loan documents do not
contain terms and conditions which differ from the Improvements Loan documents
in any material respect (including provisions relating to the Collateral as
defined in Section 21.18). The Improvements Loan and the New Loan
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authorized pursuant to the preceding sentence and the Replacement Loan
described in Section 13.1(c) below shall be the "Authorized Loan"; provided
that only one Authorized Loan may exist at any one point in time. Landlord may
not modify the terms of an Authorized Loan without the prior written consent of
Tenant, which Tenant shall not unreasonably withhold (but may be withheld in
Tenant's sole and absolute discretion based upon any of the matters identified
in subitems (i) through (v) above in this Section 13.1(b)).
(c) REPLACEMENT LOAN. Subject to Landlord's prior
written consent (which consent shall not be unreasonably withheld or delayed),
at the request of Tenant, Landlord shall execute loan documents evidencing
and/or securing a new loan to Landlord, the proceeds of which would be used to
retire the Improvements Loan (such loan requested by Tenant shall be a
"Replacement Loan"). Landlord shall only be entitled to refuse to consent to
such new loan if (1) the maturity date of the Replacement Loan is a date on or
after the expiration date of the Extension Term; (2) the principal amount of
the Replacement Loan exceeds the principal amount of the Improvements Loan plus
any accrued interest and fees payable at the time the Improvements Loan is
repaid; (3) the interest rate structure under the Replacement Loan is
materially higher than market conditions would justify at the time; (4) there
are prepayment prohibitions, penalties or other restrictions which would limit
rights to retire the Replacement Loan or require additional payment to do so;
or (5) the Replacement Loan documents contain terms and conditions which differ
from the Improvements Loan documents in any material respect (including
provisions relating to the Collateral as defined in Section 21.18). If Tenant
requests and provides the funds, Landlord shall make all arrangements necessary
for, and shall pay down any Authorized Loan in the amount requested by Tenant,
and shall arrange for all documentation reasonably requested by Tenant to
reflect the reduction or elimination of such Authorized Loan.
(d) LENDERS DEED OF TRUST. On the Date of Lease,
Landlord and Tenant shall execute, acknowledge, and cause to be recorded in the
Official Records, a deed of trust in form acceptable to Lenders and Tenant
("Lenders Deed of Trust"). The Lenders Deed of Trust shall be a first priority
lien against the premises (as defined in the Lenders Deed of Trust).
(e) LANDLORD DEED OF TRUST. On the Date of
Lease, Tenant shall execute, acknowledge, and cause to be recorded in the
Official Records, a deed of trust in form acceptable to Landlord ("Landlord
Deed of Trust"), which Landlord Deed of Trust shall secure Tenant's obligations
under this Lease. The Landlord Deed of Trust shall be junior only to the
Lenders Deed of Trust as a second priority lien against the premises (as
defined in the Landlord Deed of Trust).
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(f) TENANT DEED OF TRUST. On the Date of
Lease, Landlord shall execute, acknowledge, and cause to be recorded in the
Official Records, a deed of trust in form acceptable to Tenant ("Tenant Deed of
Trust"), which Tenant Deed of Trust shall secure Landlord's obligations under
this Lease (i) to return the Security Deposit pursuant to the terms of this
Lease and (ii) to convey the Premises to Tenant as required pursuant to Article
19 hereof. The Tenant Deed of Trust shall be junior only to the Lenders Deed
of Trust and the Tenant Deed of Trust as a third priority lien against the
premises (as defined in the Tenant Deed of Trust).
(g) LAND LEASE DEED OF TRUST. The Land Lease
Deed of Trust secures ILC's obligations under the Land Lease (i) to return the
security deposits set forth in the Land Lease pursuant to the terms of the Land
Lease, (ii) to convey the Premises to Tenant as required pursuant to Article 19
thereof, and (iii) to comply with Sections 20.3, 20.4 and 20.5 of the Land
Lease. The Tenant Deed of Trust shall be junior only to the Lenders Deed of
Trust, the Landlord Deed of Trust and the Tenant Deed of Trust and shall be a
fourth priority lien against the premises (as defined in the Land Lease Deed of
Trust).
13.2 LANDLORD'S RIGHT TO SELL. Subject to Tenant's
Purchase Option and the mandatory purchase set forth in Article 19 and the
terms of Section 13.1 and Article 20, nothing contained in this Lease shall be
deemed in any way to limit, restrict or otherwise affect the right of Landlord
at any time and from time to time to sell or transfer all or any portion of its
right, title and estate in the Premises to: (1) a financial institution with a
capitalization in excess of One Hundred Million Dollars ($100,000,000) and
investments in other leased assets of at least Twenty Five Million Dollars
($25,000,000); (2) a trust established by such an institution; or (3) if an
Event of Major Default has occurred and is continuing at the time of such sale
or transfer, to any Entity; provided, however, that such Entity shall assume,
in a manner consistent with Landlord's obligations under this Lease and the
Improvements Loan documents, the Improvements Loan or any other Authorized Loan
concurrently with acquisition of the Premises, after first obtaining Lenders'
written consent thereto. Landlord shall give Tenant prior written notice of
any sale or transfer pursuant to this Section 13.2 together with written
evidence of compliance with the terms hereof. Any sale or transfer by Landlord
whatsoever shall by its express terms recognize and confirm the right of
possession of Tenant to the Premises and Tenant's other rights arising out of
this Lease shall not be affected or disturbed in any way by any such sale,
transfer, assignment or conveyance (except for any disturbance resulting from a
foreclosure sale conducted pursuant to the laws of the State of California at
which independent third party bids were permitted, pursuant to the Lenders Deed
of Trust, all subject to the terms of Section 19.2).
13.3 TRANSFER OF FUNDS AND PROPERTY. At each time
Landlord sells, assigns, transfers or conveys the entire right, title and
estate of Landlord in the Premises and in this Lease,
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Landlord shall turn over to the transferee any funds or other property then
held by Landlord under this Lease and thereupon all the liabilities and
obligations on the part of the Landlord under this Lease arising after the
effective date of such sale, assignment, transfer or conveyance shall terminate
as to the transferor and be binding upon the transferee.
ARTICLE 14
ASSIGNMENT AND SUBLEASING
14.1 RIGHT TO ASSIGN.
(a) TENANT'S RIGHT. Tenant shall have the right,
at any time and from time to time during the Term, to assign all or any portion
of its right, title and estate in the Premises and in this Lease without
approval by Landlord. Any such assignee, immediate or remote, shall have the
same right of assignment. Any such assignment shall be evidenced by a written
instrument, properly executed and acknowledged by all parties thereto and, at
Tenant's election, duly recorded in the Official Records, wherein and whereby
the assignee assumes all of the obligations of Tenant under this Lease.
Notwithstanding any such assignment and assumption or any sublease permitted
under Section 14.2 hereof, Tenant shall remain primarily liable for all
obligations and liabilities on the part of Tenant theretofore or thereafter
arising under this Lease.
(b) NOTICE. Tenant shall, promptly after
execution of each assignment, notify Landlord of the name and mailing address
of the assignee and shall, on demand, permit Landlord to examine and copy the
assignment agreement.
14.2 RIGHT TO SUBLET.
(a) TENANT'S RIGHT. Tenant shall have the right,
at any time and from time to time during the Term, to sublet all or any portion
of the Premises and to extend, modify or renew any sublease without the
approval of Landlord.
(b) NOTICE. Tenant shall, promptly after
execution of each sublease, notify Landlord of the name and mailing address of
the subtenant and shall, on demand, permit Landlord to examine and copy the
sublease.
(c) NON-DISTURBANCE AGREEMENT. Upon Tenant's
request, Landlord shall enter into a "landlord agreement" with any subtenant of
Tenant. Such agreement shall provide that Landlord shall recognize the
sublease and not disturb the subtenant's possession thereunder so long as such
subtenant shall not be in default under its sublease, and an Event of Major
Default is not then in existence and continuing under this Lease. Tenant shall
immediately reimburse Landlord on demand for all reasonable out-of-
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pocket costs and expenses incurred by Landlord in complying with Landlord's
obligations under this Section 14.2(c).
14.3 TENANT'S RIGHT TO MORTGAGE.
(a) RIGHT OF TENANT. Tenant shall have the right
from time to time and at any time, without obtaining the approval of Landlord,
to mortgage, pledge or otherwise encumber all or any portion of the right,
title and estate of Tenant in the Premises or in this Lease.
(b) NOTICE. Tenant shall, promptly after
execution of any Mortgage, notify Landlord of the name and mailing address of
the Mortgagee thereunder and shall, on demand, permit Landlord to examine and
copy the Mortgage.
ARTICLE 15
EMINENT DOMAIN
15.1 TOTAL OR SUBSTANTIAL TAKING. If title or access is
taken for any public or quasi-public use, or under any statute or by right of
condemnation or eminent domain, or by sale in lieu thereof (a "Taking") with
respect to all of the Premises, or if title to so much of the Premises or
access thereto is Taken, or if the Premises or access thereto is damaged,
blocked or impaired by the Taking, so that, in Tenant's sole discretion, the
Premises or access thereto, even after a reasonable amount of reconstruction
thereof, will no longer be suitable for Tenant's (and/or Tenant's subtenants')
continued occupancy for the conduct of Tenant's (and/or Tenant's subtenants')
business in a manner consistent with the conduct of such business prior to such
Taking, then in any such event, this Lease shall terminate on the date of such
Taking.
15.2 PARTIAL TAKING. If any part of the Premises, or
access thereto, shall be Taken, and the Premises or the remaining part thereof
and access thereto will be, in Tenant's sole discretion, suitable for Tenant's
(and/or Tenant's subtenants') continued occupancy for the conduct of Tenant's
(and/or Tenant's subtenants') business in a manner consistent with the conduct
of such business prior to such Taking, all of the terms, covenants and
conditions of this Lease shall continue, except that Base Rent shall be
adjusted to reflect the decreased Funded Amount remaining after application
thereto of the award made to Landlord for such Taking.
15.3 TEMPORARY TAKING. If the whole or any part of the
Premises is Taken for temporary use or occupancy, this Lease shall not
terminate by reason thereof and Tenant shall continue to pay, in the manner and
at the times herein specified, the full amount of the Base Rent payable by
Tenant hereunder, and, except only to the extent that Tenant may be prevented
from so doing by reason of such Taking, Tenant shall continue to perform and
observe all of the other terms, covenants and conditions hereof on the part of
Tenant
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to be performed and observed, as though the Taking had not occurred. In the
event of any such temporary Taking, Tenant shall be entitled to receive the
entire amount of the award made for the Taking, whether paid by way of damages,
rent or otherwise. If the temporary Taking is for a term in excess of thirty
(30) days, then the Taking shall be treated as a permanent Taking and be
governed by Section 15.1 or 15.2, as applicable.
15.4 DAMAGES. The compensation attributable to the
Improvements (in each case the compensation or value shall be determined as of
the date of the Taking) awarded or paid upon any Taking (other than a temporary
Taking, which shall be governed by Section 15.3), whether awarded to Landlord,
Tenant, or both of them, shall be held by the Escrow Agent described in Section
16.3(b) and distributed in the same manner as insurance proceeds pursuant to
Section 16.3. For purposes of this Section 15.4, references to the term
"casualty" or similar terms in Section 16.3 shall be deemed to refer to
"Taking."
15.5 NOTICE AND EXECUTION. Immediately upon service of
process upon Landlord or Tenant in connection with any Taking relating to the
Premises or any portion thereof or access thereto, each party shall give the
other Notice thereof. Each party agrees to execute and deliver to the other
all instruments that may be required to effectuate the provisions of this
Article 15. Tenant reserves the right to appear in and to contest any
proceedings in connection with any such Taking. Tenant shall immediately
reimburse Landlord on demand for all reasonable out-of-pocket costs and
expenses incurred by Landlord in complying with Landlord's obligations under
this Section 15.5.
ARTICLE 16
DAMAGE OR DESTRUCTION
16.1 CASUALTY. If any Improvements are damaged or
destroyed by fire or other casualty (including, but not limited to earthquake),
except as provided to the contrary in Section 16.2, this Lease shall continue
in full force and effect without any abatement or reduction in Base Rent, and
Tenant, at Tenant's election, shall either (a) restore the Improvements
substantially to their condition prior to the damage or destruction, or such
other condition as Tenant shall elect in its sole and absolute discretion,
subject to Landlord's approval rights set forth in Section 11.3(c), or (b) not
restore the Improvements, but perform, or cause to be performed, at Tenant's
sole cost and expense, any work or service required by any Legal Requirement
for the protection of persons or property from any risk, or for the abatement
of any nuisance, created by or arising from the casualty or the damage or
destruction caused thereby.
16.2 TERMINATION OF LEASE. In the case of: (a) any
damage or casualty of any Building or Buildings, which in the good faith
judgment of Tenant's Board of Directors would render such
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Building either unsuitable or uneconomic for restoration or continued use by
Tenant; (b) the damage or destruction of all or substantially all (as
determined in good faith by Tenant's Board of Directors) of any Building or
Buildings; or (c) the damage or destruction of any Building or Buildings where
restoration cannot (as determined in good faith by Tenant's Board of Directors)
reasonably be completed either within 365 days or prior to the expiration of
the Initial Term or the Extension Term, then Tenant may elect to terminate this
Lease either as to the Building(s) in question or as to the Lease in its
entirety. In the event Tenant terminates the Lease pursuant to the preceding
sentence, Tenant shall purchase Landlord's interest in the Building(s) in
question for a purchase price equal to the Purchase Price for the Building(s)
in question, as such Purchase Price is defined in Section 19.1. The purchase
of Landlord's interest in such Building(s) shall be pursuant to the terms of
Section 19.1, as applicable to such Building(s). Upon the completion of such
purchase, this Lease and all obligations hereunder in respect of such
Building(s) shall terminate. This Lease shall remain in full force and effect
with respect to all remaining Buildings which Tenant does not elect to purchase
pursuant to this Section 16.2, and such remaining Building(s) shall constitute
the "Improvements" for purposes of this Lease.
16.3 INSURANCE PROCEEDS. In the event of any fire or
other casualty, the proceeds of any insurance policies maintained by Tenant
pursuant to Section 7.2 or 7.3 shall be held, applied and dealt with as
follows:
(a) Any proceeds (per occurrence) of such
policies attributable to the Improvements below the amount of Five Hundred
Thousand Dollars ($500,000) shall be paid directly to Tenant and applied and
used as Tenant may direct in its sole discretion for any construction,
restoration or reconstruction purposes in connection with any improvements
located on the Land which were destroyed, damaged or affected by such casualty.
Any portion of such proceeds which Tenant does not want to use (subject to the
terms of Section 16.3(d)) for any construction, restoration or reconstruction
shall be paid as follows (the order of payment as set forth below shall be the
"Distribution Formula"): (1) to Lenders, or to any other holder of an
Authorized Loan, and to Landlord, pro rata in proportion to the ratio that the
then-existing Senior Funded Amount bears to the then-existing Funded Amount as
compared to the ratio that the then-existing Equity Funded Amount bears to the
then-existing Funded Amount (provided, however, that in no event shall the
amount paid to Landlord exceed the difference between the Funded Amount and the
Guaranteed Residual Value); and (2) with any remaining excess to be paid to
Tenant.
(b) Any proceeds (per occurrence) of such
policies attributable to the Improvements greater than Five Hundred Thousand
Dollars ($500,000) shall be paid to an escrow agent ("Escrow Agent") mutually
agreeable to the parties (but such escrow agent
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shall not be a party which is related to or affiliated with either of the
parties to this Lease). Such proceeds shall be invested by the Escrow Agent as
Tenant may direct; provided, however, that such proceeds shall not be invested
in the stock or obligations of Tenant. Such proceeds shall be paid by the
Escrow Agent to Tenant (or to third parties as Tenant may direct), as Tenant
may direct from time to time as restoration, construction or rebuilding
progresses to pay the cost of any restoration, construction or rebuilding which
Tenant elects to take place on the Land or any Improvements located upon the
Land, but only upon the written request of Tenant, and so long as Landlord
reasonably determines that the following conditions are satisfied at the time
of such request for payment by Tenant: (i) the sum requested has been paid or
is then due and payable or will become due and payable within thirty (30) days;
(ii) Tenant has the financial ability (taking into account the insurance
proceeds held by the Escrow Agent) to complete the restoration, construction or
rebuilding which Tenant has elected to perform; (iii) Landlord has approved the
Approval Plans, if any, relating to the restoration of Improvements, pursuant
to the terms of Article 11; and (iv) in Landlord's reasonable judgment, such
restoration work which Tenant desires to perform in connection with the
Improvements can be completed prior to the expiration of the Initial Term (or,
if Tenant has exercised, or within one hundred twenty (120) days after reaching
final written settlement with all insurance companies regarding the amount of
proceeds to be paid for the casualty in question, exercises its right to extend
for the Extension Term, then prior to the expiration of the Extension Term).
Landlord shall promptly upon request instruct the Escrow Agent to make the
payments requested by Tenant unless one of the conditions described above is
not satisfied at the time of such request. Any excess insurance proceeds
existing after either Tenant's completion of the restoration, construction or
rebuilding which Tenant elects to perform or Tenant's failure to comply with
the funding condition described in subitems (ii), (iii) and (iv) immediately
above in this Section 16.3(b), shall be paid pursuant to the Distribution
Formula. If Tenant elects to terminate this Lease as to one or more Buildings,
Tenant may use any insurance proceeds to pay the purchase price described in
Section 16.2, and all rights of Landlord in insurance proceeds not used to pay
the purchase price shall be assigned to Tenant by Landlord at the time Tenant
purchases Landlord's interest in any such Building(s).
(c) Any proceeds of such policies attributable
to improvements or buildings on the Land other than the Improvements shall
promptly be paid directly to Tenant.
(d) If either: (1) Tenant has not delivered
written notice to Landlord within one hundred twenty (120) days after reaching
final written settlement with all insurance companies regarding the amount of
proceeds to be paid for the casualty in question, pursuant to which notice
Tenant elects to either exercise some or all of its termination rights under
Section 16.2 and/or to fully or partially repair or restore
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pursuant to Section 16.1; or (2) Landlord reasonably believes that Tenant has
abandoned reconstruction or restoration work which Tenant may have elected to
perform (and Tenant shall have failed to diligently recommence reconstruction
or restoration work which Tenant is then able to perform within thirty (30)
days after Tenant's receipt from Landlord of a Notice of Landlord's belief of
Tenant's abandonment of the reconstruction or restoration work); then, in
either case, the proceeds attributable to the Improvements shall be paid
pursuant to the Distribution Formula.
(e) Any insurance proceeds paid to Landlord,
Lenders or holder of any Authorized Loan under this Article 16 shall
automatically reduce the Funded Amount by a like amount.
ARTICLE 17
DEFAULT
17.1 DEFAULT. The following event shall constitute a
default ("Default") by Tenant:
DEFAULT OTHER THAN EVENT OF MAJOR DEFAULT. Tenant's
failure to perform or comply with any of the terms, covenants or conditions
contained in this Lease other than those referred to in Section 17.2, where
such failure shall continue for a period of thirty (30) days after Notice
thereof from Landlord to Tenant, or in the case of a failure which cannot with
due diligence be cured within the period of thirty (30) days, Tenant's failure
to proceed promptly and with due diligence to cure the failure and thereafter
to prosecute the curing of the failure with all due diligence, it being
intended that in connection with a failure not susceptible of being cured with
due diligence within thirty (30) days, the time of Tenant within which to cure
the failure shall be extended for such period as may be reasonably necessary to
complete the cure with all due diligence.
17.2 EVENT OF MAJOR DEFAULT. Each of the following
events shall constitute an event of major default ("Event of Major Default") by
Tenant:
(a) FAILURE TO PAY BASE RENT. Tenant's failure
to pay any Base Rent within ten (10) days after the later to occur of the due
date or Tenant's receipt from Landlord of the Invoice required pursuant to
Section 5.1;
(b) FAILURE TO PAY ADDITIONAL RENT. Tenant's
failure to pay any Additional Rent which is due to Landlord within the later to
occur of the due date under this Lease or ten (10) days after Tenant's receipt
of Notice thereof from Landlord that such Additional Rent is due;
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(c) FAILURE TO COMPLY WITH PURCHASE OBLIGATION
UNDER SECTION 19.2. Tenant's failure to comply with Tenant's obligation to
purchase the Premises pursuant to Section 19.2 within the period required in
Section 19.2;
(d) FAILURE TO CARRY INSURANCE. Tenant's
failure to carry the insurance required by Article 7, if such failure continues
ten (10) days after Tenant's receipt of Notice thereof from Landlord that
Tenant is not carrying such required insurance (provided, however, that it
shall not be an Event of Major Default under this Section 17.2 if Tenant is
carrying when required the basic form policies required by Article 7 with
respect to the perils addressed therein and in the amounts required by Article
7, notwithstanding some other noncompliance);
(e) INSOLVENCY. Subject to Section 17.3, the
occurrence of: (i) an assignment by Tenant for the benefit of creditors
generally; or (ii) the filing of a voluntary or involuntary petition by or
against Tenant under any present or future applicable federal, state or other
statute or law having for its purpose the adjudication of Tenant as a bankrupt;
(iii) the appointment of a receiver, liquidator or trustee for all or a
substantial portion of the Premises by reason of the insolvency or alleged
insolvency of Tenant; or (iv) the taking of possession by any department of
city, county, state or federal government, or any officer thereof duly
authorized, of all or a substantial portion of the Premises by reason of the
insolvency or alleged insolvency of Tenant; and Tenant's failure to timely give
any Notice it is permitted to give pursuant to Section 17.3 (or, in the event
Tenant gives timely Notice and pursues a contest under Section 17.3, Tenant's
failure to finally prevail in the contest).
(f) FAILURE TO REPLENISH UNDER PLEDGE
AGREEMENT. Tenant's failure to replenish the collateral account as required
under the Pledge Agreement (as defined in Section 13.1(b)) after the notice and
cure periods provided in Pledge Agreement;
(g) FAILURE TO REFINANCE THE IMPROVEMENT LOAN.
Tenant's failure to refinance, or repay, the Improvement Loan prior to the
Extension Term;
(h) DEFAULT UNDER OTHER CREDIT FACILITY.
Tenant's suffering or permitting any of the following defaults: (i) A payment
default (after applicable notice and cure periods) under any credit facility of
Tenant which equals or exceeds Twenty Million Dollars ($20,000,000); (ii) An
Event of Major Default (after applicable notice and cure periods) under that
certain lease agreement by and between SGA Development Partnership, Ltd., a
Texas limited partnership, and Tenant, for premises located in San Jose,
California, dated February 25, 1993, as amended; (iii) An Event of Major
Default (after applicable notice and cure periods) under that certain lease
agreement by and between Sumitomo Bank Leasing and Finance, Inc., a Delaware
corporation ("SBLF"), and Tenant, for premises located in San Jose, California,
dated May 20, 1993, as
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amended; (iv) An Event of Major Default (after applicable notice and cure
periods) under that certain lease agreement by and between SBLF and Tenant for
premises located in Raleigh, North Carolina, dated July 11, 1994, as amended;
(v) An Event of Major Default (after applicable notice and cure periods) under
that certain lease agreement by and between SBLF and Tenant for premises
located in Raleigh, North Carolina, dated August 12, 1994; or (vi) An Event of
Major Default (after applicable notice and cure periods) under any of the
Building Leases;
(i) TANGIBLE NET WORTH. Tenant's Tangible Net
Worth shall fall below Seven Hundred Fifty Million Dollars ($750,000,000.00);
(j) FRAUD/INTENTIONAL MISREPRESENTATION. Fraud
or intentional misrepresentation by Tenant in connection with the
representations and warranties set forth in Section 21.22 hereof; or
(k) DEFAULT UNDER LAND LEASE. An Event of
Major Default under the Land Lease.
17.3 CONTEST BY TENANT. If upon the filing of any
involuntary petition of the type described in Section 17.2(e) or upon the
appointment of a receiver, other than a receiver appointed in any voluntary
proceeding referred to in Section 17.2(e), or the taking of possession of all
or a substantial portion of the Premises by any department of the city, county,
state or federal government, or any officer thereof duly authorized, by reason
of the alleged insolvency of Tenant without the consent or over the objection
of Tenant, should Tenant desire to contest the same in good faith, Tenant
shall, within ninety (90) days after the filing of the petition or after the
appointment or taking of possession, give Notice to Landlord that Tenant
proposes to make the contest, and the same shall not constitute an Event of
Major Default so long as Tenant shall prosecute the proceedings with due
diligence and no part of the Premises shall be exposed to sale by reason of the
continuance of the contest.
17.4 REMEDIES. Landlord shall have the remedies
specified below, the parties hereby acknowledging that the remedies described
in Section 17.4(b) may be exercised by Landlord only upon the occurrence of an
Event of Major Default. Tenant shall at all times have the right to exercise
and carry out the terms of the Purchase Option in Section 19.1, notwithstanding
the occurrence or existence of any Default or Event of Major Default under this
Lease, and Landlord shall have the obligation to comply with Landlord's
obligations under Section 19.1 notwithstanding any Default or Event of Major
Default.
(a) CONTINUE LEASE. In connection with a
Default or an Event of Major Default, Landlord shall have the right to enforce,
by suit or otherwise, all other covenants and conditions hereof to be performed
or complied with by Tenant and to exercise
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all other remedies permitted by Section 1951.4 of the California Civil Code, or
any amendments thereof or any successor laws which replace such Section 1951.4.
Landlord has the remedy described in California Civil Code Section 1951.4
(Landlord may continue the Lease in effect after Tenant's breach and
abandonment and recover Base Rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitation). Upon application by
Landlord, a receiver may be appointed to take possession of the Premises and
exercise all rights granted to Landlord as set forth in this Section 17.4(a);
and
(b) TERMINATE LEASE. In connection with an
Event of Major Default (but not a Default), Landlord shall have the right to
terminate this Lease, by giving Tenant Notice thereof, at any time after the
occurrence of such Event of Major Default and whether or not Landlord has also
exercised any right under Section 17.4(a). In such event, Tenant shall, within
thirty (30) days after receipt of Notice from Landlord, purchase the Premises
pursuant to Section 19.2. Landlord shall also have its other remedies at law
(including its rights under the Landlord Deed of Trust), provided, however,
that Tenant's right to purchase the Improvements pursuant to Section 19.1 shall
survive any termination of this Lease up through the date of foreclosure sale
under the Lenders Deed of Trust, the Landlord Deed of Trust or any deed of
trust securing an Authorized Loan.
17.5 NO WAIVER. No failure by Landlord or Tenant to
insist upon the strict performance of any term, covenant or condition of this
Lease or to exercise any right or remedy consequent upon a breach thereof and
no acceptance of full or partial Rent during the continuance of any breach
shall constitute a waiver of any such breach or of the term, covenant, or
condition. No term, covenant or condition of this Lease to be performed or
complied with by Tenant or Landlord, and no breach thereof, shall be waived,
terminated, altered or modified except by a written instrument executed by
Landlord and Tenant. No waiver of any breach shall affect or alter this Lease,
but each and every term, covenant, and condition of this Lease shall continue
in full force and effect with respect to any other then existing subsequent
breach thereof.
17.6 EFFECT OF ASSIGNMENT. Notwithstanding an Entity's
prior assignment or transfer of its interest as Tenant under this Lease, so
long as Landlord has been given Notice of such assignment pursuant to Sections
14.1(b) and 21.3, Landlord shall give such Entity copies of all Notices
required by this Article 17 in connection with any Default or Event of Major
Default, and such Entity shall have the period granted hereunder to Tenant to
cure such Default or Event of Major Default, unless such Entity shall have been
released from all obligations arising under this Lease. Landlord may not
assert any rights against such Entity in the absence of such Notice and
opportunity to cure, so long as Landlord has been given Notice of such
assignment pursuant to Sections 14.1(b) and 21.3.
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17.7 LANDLORD CURE RIGHT. If Tenant fails to perform any
covenant or agreement to be performed by Tenant under this Lease, and if the
failure or default continues for thirty (30) days after Notice to Tenant and to
any Mortgagee who has requested in writing notice thereof from Landlord (except
for emergencies and except for payment of any lien or encumbrance threatening
the imminent sale of the Premises or any portion thereof, in which case payment
or cure may be made as soon as necessary to minimize the damage to person or
property caused by such emergency or to prevent any such sale), Landlord may,
but shall have no obligation to, pay the same and cure such default on behalf
of and at the expense of Tenant and do all reasonably necessary work and make
all reasonably necessary payments in connection therewith including, but not
limited to, the payment of reasonable attorneys' fees and disbursements
incurred by Landlord. Notwithstanding the foregoing, Landlord shall have no
right to cure any such failure to perform by Tenant so long as Tenant both:
(1) is diligently and in good faith attempting to cure such matter; and (2) has
the financial ability to so comply, unless Tenant has failed to substantially
cure such matter within ninety (90) days after Tenant's receipt of Notice
thereof from Landlord, in which case Landlord may commence in a reasonable and
customary manner and in good faith to attempt to cure such matter (except that
Landlord shall not have a right to attempt to cure matters addressed in Section
8.1(b) unless specifically authorized to do so pursuant to Section 8.1(b)).
Notwithstanding anything to the contrary in this Lease, in no event shall
Landlord have a right to cure any matters relating to the Improvements unless
Landlord reasonably believes that the failure to cure such matter could lead to
criminal prosecution against Landlord (except as specifically permitted in
Section 8.1(b)). Upon demand, Tenant shall reimburse Landlord for the
reasonable amount so paid, together with interest at the Default Rate from the
date incurred until the date repaid. Tenant shall defend, indemnify, and hold
Landlord harmless from and against any and all losses, costs, expenses,
liabilities, claims, causes of action and damages of all kinds that may result
to Landlord, including reasonable attorneys' fees and disbursements incurred by
Landlord, arising because of any failure by Tenant to perform any of its
obligations under this Lease. Tenant's duty to indemnify Landlord under this
Section 17.7 shall survive the expiration or earlier termination of this Lease.
17.8 LANDLORD'S DEFAULT.
(a) LANDLORD'S FAILURE TO PERFORM. If Landlord
fails to perform any covenant or agreement to be performed by Landlord under
Article 11, Section 13.1, Section 15.4, Article 20, or Section 21.10 of this
Lease (including, but not limited to, Landlord's failure to keep the Premises
free of any and all liens created by or through Landlord except as approved by
Tenant in writing), and if the failure or default continues for thirty (30)
days after Notice to Landlord and to any holder of an Authorized Loan who has
requested in writing notice thereof from Tenant (except for emergencies, a
default under Section 20.5 or payment of
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any lien or encumbrance threatening the imminent sale of the Premises or any
portion thereof, in which case payment or cure may be made as soon as necessary
to minimize the damage to person or property caused by such emergency, to
prevent foreclosure on the Collateral or to prevent any such sale), Tenant may,
but shall have no obligation to, pay the same and cure such default on behalf
of and, so long as such failure to perform arises due to Landlord's gross
negligence, willful misconduct, or willful breach of this Lease, at the expense
of Landlord and do all reasonably necessary work and make all reasonably
necessary payments in connection therewith including, but not limited to, the
payment of reasonable attorneys' fees and disbursements incurred by Tenant.
Notwithstanding the foregoing, Tenant shall have no right to cure any such
failure to perform by Landlord so long as Landlord both: (1) is diligently and
in good faith attempting to cure such matter; and (2) has the financial ability
to so comply. To the extent that Landlord's failure to perform arises due to
its gross negligence, willful misconduct or willful breach of this Lease, upon
demand, Landlord shall reimburse Tenant for the reasonable amount so paid,
together with interest at the Default Rate from the date incurred until the
date repaid. To the extent that Landlord's failure to perform arises due to
its gross negligence, willful misconduct or willful breach of this Lease,
Landlord shall defend, protect, indemnify, and hold Tenant harmless from and
against any and all losses, costs, expenses, liabilities, claims, causes of
action and damages of all kinds that may result to Tenant, including reasonable
attorneys' fees and disbursements incurred by Tenant, arising because of any
failure by Landlord to perform any of its obligations under Article 11, Section
13.1, Section 15.4, Article 20 or Section 21.10 of this Lease. Landlord's duty
to indemnify Tenant under this Section 17.8 shall survive the expiration or
earlier termination of this Lease.
(b) DEFAULT UNDER CERTAIN PROVISIONS. In
addition to Tenant's rights set forth in Section (a) above, in the event of a
default by Landlord under Section 20.5, Tenant shall have the right to cure
such default on behalf of and at Landlord's expense, without prior notice to
Landlord. In addition, in the event of any default by Landlord under Section
20.3, 20.4 or 20.5, Tenant shall have the right to exercise its Purchase Option
pursuant to Section 19.1 hereof.
ARTICLE 18
QUIET ENJOYMENT
Landlord covenants to secure to Tenant the quiet possession of
the Premises for the full Term against all persons claiming the same, subject
to Landlord's rights and remedies under Section 17 upon a Default or an Event
of Major Default by Tenant. The existence of any Permitted Exceptions shall
not be deemed to constitute a breach of Landlord's obligations hereunder.
Tenant shall, immediately upon demand, reimburse Landlord for all reasonable
costs, expenses and damages incurred or paid by Landlord
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in the performance of Landlord's obligations under this Article 18 (except for
any costs, expenses or damages arising from Landlord's willful breach of this
Lease).
ARTICLE 19
TENANT'S OPTION TO PURCHASE
19.1 OPTION TO PURCHASE PREMISES.
(a) PURCHASE OPTION. Tenant shall have the
option ("Purchase Option") to purchase all or part of the Premises at any time
during the Term; provided that Tenant shall be entitled to purchase less than
all of the Premises only if the portion being purchased is released from any
existing Fee Mortgage and if the portion of the Premises not purchased shall
constitute one or more Buildings or phases after closing of the purchase and
shall be viable as a separate Building or phase as determined in Landlord's
reasonable discretion; further provided that if the portion of the Premises not
purchased will not constitute one or more legal parcels then Landlord may
refuse to sell to Tenant that portion of the Premises in its sole discretion.
The purchase price ("Purchase Price") for the Building or phase which Tenant
elects to purchase shall be (i) the then-existing Funded Amount for the
Building or phase which Tenant elects to purchase, as the same may be reduced
from time to time, plus (ii) the amount of any prepayment premium and all other
fees, costs, expenses and any accrued but unpaid interest or rent due to any
holder of an Authorized Loan in connection with such loan (to the extent not
already paid pursuant to Section 21.21 (including late charges arising from
Tenant's late payment of Base Rent hereunder and the annual servicing fee
attributable to this Lease) hereof). Tenant shall be entitled to a credit
against the Purchase Price in an amount equal to the sum of (i) the principal
balance(s) of any Fee Mortgage existing immediately prior to the closing under
this Purchase Option if such Fee Mortgage is not fully repaid and all documents
reflecting the same are not cancelled and removed from the public records on or
prior to the closing under this Purchase Option, plus (ii) the amount of the
Security Deposit (or, in the event of a purchase of a portion of the Premises,
a pro rata portion of the Security Deposit), and, upon closing under this
Purchase Option, Landlord shall be released from Landlord's obligation to
return the Security Deposit set forth in Section 5.7 hereof. If Tenant
purchases less than all of the then-existing Premises, then the credit pursuant
to the preceding sentence shall be calculated on a pro rata basis, based upon
the ratio of the area of the Premises being purchased compared to the area of
the then-existing Premises. In lieu of payment of the Purchase Price, Tenant
shall have the right (1) to assume the Improvements Loan or any other
Authorized Loan or (2) to cause Landlord to assign the Authorized Loan and this
Lease (including the existing Security Deposit) to a third party acceptable to
the holder of such Authorized Loan (which third party shall expressly assume
such obligations in writing), provided that Landlord is released from all
obligations under the Authorized Loan
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and Landlord is paid an amount equal to the Equity Contribution. Landlord
shall execute any and all documents necessary to effect such assumption and
assignment upon Tenant's request, provided that Tenant shall reimburse Landlord
for all reasonable costs and expenses related thereto.
(b) PURCHASE OPTION EXERCISE NOTICE. If Tenant
desires to exercise the Purchase Option, Tenant shall deliver to Landlord a
written notice ("Purchase Option Exercise Notice") of Tenant's election;
provided, however, that in the event of an assignment by Landlord for the
benefit of creditors generally, the filing of a voluntary or involuntary
bankruptcy petition by or against Landlord or the appointment of a receiver,
liquidator or trustee for all or a substantial portion of the Premises by
reason of Landlord's insolvency or alleged insolvency, the Purchase Option
shall be deemed exercised with respect to the entire Premises as of the
calendar day immediately preceding such assignment, filing or appointment.
(c) TRANSFER. If Tenant exercises the Purchase
Option, the purchase and sale of the Premises shall be consummated as follows.
In the event of a purchase of a portion of the Premises, the term "Premises" as
used in this Section 19.1(c) shall be deemed to mean that portion of the
Premises then to be purchased pursuant to the Purchase Option.
(i) Landlord shall grant and convey the
Premises to Tenant, its authorized agent or assignee, pursuant to a duly
executed and acknowledged grant deed ("Grant Deed"), free and clear of all
title defects, liens, encumbrances, deeds of trust, mortgages, rights-of-way
and restrictive covenants or conditions, except for the Permitted Exceptions;
(ii) The Purchase Price shall be paid
upon delivery of the Grant Deed and any other documents reasonably requested by
Tenant to evidence the transfer of the Premises or to release all liens of
Landlord, including without limitation, any and all reconveyances of mortgages
or other recorded documents as requested by Tenant ("Additional Documents").
In the event that Tenant elects to assign the Purchase Option pursuant to
Section 19.1(d) below, and Tenant's assignee pays an amount less than the
Purchase Price for the Premises, Tenant shall pay to Landlord any excess of the
Purchase Price over the amount paid by such assignee. Landlord shall deliver
the Grant Deed and the Additional Documents to Tenant on the date for closing
specified by Tenant in the Purchase Option Exercise Notice (which date shall be
no sooner than ten (10) days after the date of the Purchase Option Exercise
Notice and no later than the last day of the Term, as the same may be
extended). The closing shall take place at the location and in the manner
reasonably set forth by Tenant in the Purchase Option Exercise Notice;
(iii) If Landlord shall fail to cause
title to be in the condition required in Section 19.1(c)(i) above within the
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time herein prescribed for the delivery of the Grant Deed, then Tenant shall
have the right, in addition to all other rights provided by law, by a written
notice to Landlord: (1) to extend the time in which Landlord shall clear title
and deliver the Grant Deed and Additional Documents, during which extension
this Lease shall remain in full force and effect, except Tenant shall be
released from its obligation to pay Base Rent during the extension; (2) to
accept delivery of the Grant Deed and Additional Documents subject to such
title defects, liens, encumbrances, deeds of trust, mortgages, rights-of-way
and restrictive covenants or conditions specified and set forth in the Grant
Deed and not cleared by Landlord (but without waiving any rights or remedies
available to Tenant on account of such title exceptions); (3) to rescind, by
notice to Landlord and without any penalty or liability therefor, any and all
obligations Tenant may have under and by virtue of the Purchase Option or the
exercise thereof, whereupon this Lease shall remain in full force and effect;
(4) if the title exception is curable by the payment of money, Tenant may make
such payment and such payment shall be a credit against the Purchase Price in
favor of Tenant.
(iv) Refusal of a title company to issue
a standard form of owner's title insurance policy insuring title to the
Premises in the condition specified in subparagraph (c)(i) shall be sufficient
evidence of Landlord's failure to convey clear title and shall entitle Tenant
to exercise any of the rights specified in subparagraph (c)(iii).
(v) Base Rent shall be prorated and
paid and all unpaid Additional Rent shall be paid as of the date title to the
Premises is vested of record in Tenant. Tenant shall pay the escrow fees; the
recorder's fee for recording the Grant Deed; the premium for the title
insurance policy; all documentary transfer taxes; Tenant's attorneys' fees;
Landlord's reasonable attorneys' fees; all other costs and expenses incurred by
Tenant in consummating the transfer of the Premises; and all reasonable
expenses (except as specified in the next sentence) incurred by Landlord in
consummating the transfer of the Premises pursuant to this Section 19.1.
Landlord shall pay the costs and expenses of clearing title as required by
Section 19.1(c)(i). In the event of a purchase by Tenant under this Article
19, Landlord shall have no obligation to return the Security Deposit to Tenant
to the extent the Security Deposit has been credited against the purchase price
to be paid by Tenant pursuant to Section 19.1(a).
(d) ASSIGNMENT. Tenant shall have the right on
one or more occasions, without Landlord's consent, to assign this purchase
option, in whole or in part, to any Entity at any time, whether or not Tenant
also assigns its interest in the Lease. Tenant shall give prior written notice
to Landlord of any such assignment.
19.2 MANDATORY PURCHASE/SALE OF PREMISES.
Notwithstanding anything to the contrary herein, upon either: (1)
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the occurrence of an Event of Major Default or the expiration of the Term of
this Lease or upon the occurrence of any other event terminating this Lease; or
(2) the occurrence of any event which causes the Funded Amount to be reduced to
zero (0); or (3) Tenant's exercise of the Purchase Option pursuant to Section
19.1 or 19.2 of the Land Lease, within thirty (30) days after Tenant's receipt
of written Notice of the foregoing and of Tenant's purchase obligation under
this Section 19.2 (except in the case of a purchase obligation arising on
account of the expiration of the Term of this Lease or exercise of the Purchase
Option under the Land Lease; in either such case no prior Notice shall be
required, but Tenant shall have twenty (20) days after expiration of the Term
or exercise of the Purchase Option under the Land Lease to conclude the
purchase), Tenant shall purchase or cause another Entity to purchase, and
Landlord shall sell, the Premises in the same manner as if Tenant had exercised
the Purchase Option on such date. The Purchase Price shall be the same as if
Tenant had exercised the Purchase Option, without regard to the physical state
or condition of the Premises or any Improvements (but Tenant shall have the
rights set forth in Section 19.1, including without limitation, the terms of
Sections 19.1(c)(iii) and (iv)). In the event Tenant fails to purchase (or to
cause another Entity to purchase) the Premises pursuant to its obligation under
this Section 19.2, and if Landlord does not foreclose under the Landlord Deed
of Trust, Landlord (to the extent required under Section 21.19) shall use
commercially reasonable efforts to sell the Premises to an unrelated third
party, and, as applicable, (i) Tenant shall be obligated to pay to Landlord,
immediately upon demand, any shortfall between the Purchase Price and the
amount realized by Landlord in connection with such sale, or (ii) Landlord
shall be obligated to pay to Tenant, immediately upon demand, any excess of the
amount realized by Landlord in connection with such sale over the Purchase
Price. For purposes of the preceding sentence, the amount realized by Landlord
upon a sale of the Premises shall be net of Landlord's reasonable sale expenses
and other expenses incurred by Landlord but required to be paid by Tenant
pursuant to Section 19.1(c)(v). Landlord's obligation to pay such excess to
Tenant shall survive any termination of this Lease. Landlord and Tenant agree
that any and all cash proceeds payable at any foreclosure sale under the
Landlord Deed of Trust shall, after payment of all obligations secured by the
Landlord Deed of Trust, be paid to Tenant or to any other person claiming
through Tenant entitled thereto by applicable law. The aggregate of the
obligations under an Authorized Loan and the obligations secured by the
Landlord Deed of Trust shall not exceed the Purchase Price. Notwithstanding
anything to the contrary in this Lease, in the event of default, breach or
violation by Tenant of any of Tenant's obligations under this Section 19.2,
Tenant shall have no liability to Landlord or any other party in excess of an
amount equal to the then-existing Guaranteed Residual Value, less a credit
equal to the sum of (a) any of the Collateral (including the pledged Security
Deposit) which Lenders or any other holder of an Authorized Loan has used,
applied, or otherwise come into possession of, plus (b) any of the Security
Deposit retained by Landlord, and Landlord
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shall have no recourse, claim or counterclaim whatsoever against Tenant in
excess of such amount on account of such default, breach or violation. If the
Guaranteed Residual Value has not previously been determined as of the date
Tenant's liability under this Section 19.2 has been established, then the
Guaranteed Residual Value shall be determined as of the date Tenant's liability
hereunder is established.
19.3 SURVIVAL. The obligations of Landlord and Tenant
under this Article 19 shall survive the expiration or earlier termination of
this Lease.
ARTICLE 20
ADDITIONAL COVENANTS OF LANDLORD
20.1 TITLE AND SUBDIVISION. In the event Tenant so
requests in writing (and so long as either Tenant agrees to indemnify Landlord
from any liabilities or obligations in connection therewith, or Landlord does
not incur any liabilities or obligations in connection therewith), Landlord
shall execute all documents, instruments and agreements reasonably requested by
Tenant in order to accomplish any of the following in the manner reasonably
requested by Tenant and within the time parameters reasonably requested by
Tenant: (1) remove exceptions to title to or affecting the Premises; (2)
create exceptions to title (including, without limitation, easements and rights
of way) to or affecting the Premises (but not including any Mortgage); (3)
modify any then-existing exception to title; or (4) subdivide the Land into two
or more separate parcels. Tenant shall promptly reimburse Landlord for, or at
Landlord's request, pay directly in advance, all reasonable costs, expenses and
other amounts incurred or required to be expended by Landlord in order to
comply with Tenant's requests made in accordance with the preceding sentence,
and the failure of Tenant to reimburse or pay any such amounts shall result in
the suspension of Landlord's obligations under such sentence with respect to
that particular request until the amounts required to be paid by Tenant under
this sentence have been paid. Landlord acknowledges that it is critical to
Tenant's ability to construct improvements on the Premises to have the ability
and flexibility to accomplish the foregoing, and that the parties therefore
agree that Landlord shall not be entitled to withhold Landlord's consent to any
of the foregoing requests by Tenant, except as set forth in the preceding
sentence.
20.2 LAND USE. Except where requested by Tenant pursuant
to this Section 20.2, Landlord shall not cause or give its written consent to
any land use or zoning change affecting the Premises or any changes of street
grade. In the event Tenant so requests in writing (and so long as either
Tenant agrees to indemnify Landlord from any liabilities or obligations in
connection therewith, or Landlord does not incur any liabilities or obligations
in connection therewith), Landlord shall execute all documents, instruments and
agreements reasonably requested by
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Tenant in order to accomplish any of the following in the manner reasonably
requested by Tenant and within the time parameters reasonably requested by
Tenant: (1) cause a change in any land use restriction or law affecting the
Premises; (2) cause a change in the zoning affecting the Premises; or (3) cause
a change in the street grade with respect to any street in the vicinity of the
Premises. Tenant shall promptly reimburse Landlord for, or at Landlord's
request, pay directly in advance, all reasonable costs, expenses and other
amounts incurred or required to be expended by Landlord in order to comply with
Tenant's requests made in accordance with the preceding sentence, and the
failure of Tenant to reimburse or pay any such amounts shall result in the
suspension of Landlord's obligations under such sentence with respect to that
particular request until the amounts required to be paid by Tenant under this
sentence have been paid. Landlord acknowledges that it is critical to Tenant's
ability to construct improvements on the Premises to have the ability and
flexibility to accomplish the foregoing, and that the parties therefore agree
that Landlord shall not be entitled to withhold Landlord's request to any of
the foregoing requests by Tenant.
20.3 TRANSFER OF PROPERTY INTERESTS. Except as requested
by Tenant pursuant to Section 11.7 or 20.1, Landlord shall not transfer to any
third party any rights inuring to or benefits associated with the Premises
(including, without limitation, zoning rights, development rights, air space
rights, mineral, oil, gas or water rights). Nothing in this Section 20.3 shall
limit Landlord's rights pursuant to Section 13.2; provided that any purchaser
of Landlord's interest in the Premises shall be bound by the terms of this
Lease, including without limitation, the terms of this Section 20.3.
20.4 TRUST EQUITY; NO OTHER ASSET. Landlord covenants
and agrees that during the Term of the Lease, Landlord shall maintain a
residual equity capital investment of at least three percent (3%) of total
assets of Landlord, including assets acquired by this equity investment. In
addition, Landlord shall not, without the prior written consent of Tenant,
which consent may be withheld at Tenant's sole discretion, acquire any
significant assets other than (i) the Land, (ii) the Premises and (iii) the
land and any Improvements thereon, which Improvements are subject to certain
leases between Landlord and Tenant executed concurrently herewith, and which
land is described on Exhibit L attached hereto.
20.5 DEFAULT UNDER AUTHORIZED LOAN. Landlord shall not,
without Tenant's express prior written consent, default under any Authorized
Loan, or any loan documents relating to such Authorized Loan, where such
default does not arise from an Event of Major Default by Tenant under this
Lease. Any such default shall constitute a material default under this Lease,
subject to the limitations on liability of Section 17.8 hereof.
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ARTICLE 21
MISCELLANEOUS
21.1 RELATIONSHIP. Neither this Lease nor any agreements
or transactions contemplated hereby shall in any respect be interpreted, deemed
or construed as constituting Landlord and Tenant as partners or joint
venturers, one with the other, or as creating any partnership, joint venture,
association or, except as set forth in Section 21.2 below, any other
relationship other than that of landlord and tenant; and, except as set forth
in Section 21.2 below, both Landlord and Tenant agree not to make any contrary
assertion, contention, claim or counterclaim in any action, suit or other legal
proceeding involving either Landlord or Tenant or the subject matter of this
Lease.
21.2 FORM OF TRANSACTION; CERTAIN TAX MATTERS.
(a) Landlord and Tenant hereby agree and
declare that the transactions contemplated by this Lease are intended to
constitute, both as to matters of form and substance:
(i) an operating lease for financial
accounting and securities regulatory purposes, and
(ii) a financing arrangement (and not a
"true lease") for Federal, state and local income taxes, property tax valuation
or other tax purposes.
Accordingly, and notwithstanding any other provision of this Lease to the
contrary, Landlord and Tenant agree and declare that (A) the transactions
contemplated hereby are intended to have a dual, rather than single, form and
(B) all references in this Lease to the "Lease" of the Premises which fail to
reference such dual form do so as a matter of convenience only and do not
reflect the intent of Landlord and Tenant as to the true form of such
arrangements.
(b) Landlord and Tenant agree that, in
accordance with their intentions and the substance of the transactions
contemplated hereby, Tenant (and not Landlord) shall be treated as the owner of
the Premises for Federal, state, and local income tax and property tax
valuation purposes and this Lease shall be treated as a financing arrangement.
Tenant shall be entitled to take any deduction, credit allowance or other
reporting, filing or other tax position consistent with such characterizations.
Landlord shall not file any Federal, state or local income or property tax
returns, reports or other statements in a manner which is inconsistent with the
foregoing provisions of this Section 21.2.
(c) Each party acknowledges that it has retained
accounting, tax and legal advisors to assist it in structuring this Lease and
neither party is relying on any representations of the other regarding the
proper treatment of this transaction for accounting, income tax, property tax
or any other purpose.
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21.3 NOTICES. Each Notice shall be in writing and shall
be sent by personal delivery, overnight courier (charges prepaid or billed to
the sender) or by the deposit of such with the United States Postal Service, or
any official successor thereto, designated as registered or certified mail,
return receipt requested, bearing adequate postage and in each case addressed
as provided in the Basic Lease Provisions. Each Notice shall be effective upon
being personally delivered or actually received. The time period in which a
response to any such Notice must be given or any action taken with respect
thereto shall commence to run from the date of personal delivery or receipt of
the Notice by the addressee thereof, as reflected on the return receipt of the
Notice. Rejection or other refusal to accept shall be deemed to be receipt of
the Notice sent. By giving to the other party at least thirty (30) days' prior
Notice thereof, either party to this Lease (as well as any Mortgagee) shall
have the right from time to time during the Term of this Lease to change the
address(es) thereof and to specify as the address(es) thereof any other
address(es) within the continental United States of America.
21.4 SEVERABILITY OF PROVISIONS. If any term, covenant
or condition of this Lease, or the application thereof to any Entity or
circumstance, shall be invalid or unenforceable, the remainder of this Lease,
or the application of such term, covenant or condition to Entities or
circumstances other than those as to which it is invalid or unenforceable,
shall not be affected thereby.
21.5 ENTIRE AGREEMENT; AMENDMENT. This Lease constitutes
the entire agreement of Landlord and Tenant with respect to the subject matter
hereof. Neither this Lease nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver, discharge or
termination is sought.
21.6 APPROVALS AND CONSENTS. Except as expressly
provided in this Lease, whenever any provision of this Lease requires an
approval or consent to be given by one of the parties hereto, the approval or
consent shall not be unreasonably withheld or delayed. Whenever this Lease
grants either party the right to take action, exercise discretion, establish
rules and regulations, or make an allocation or other determination, except as
otherwise provided, such party shall act reasonably and in good faith and take
no action which might result in the frustration of the other party's reasonable
expectations concerning the benefits to be enjoyed under this Lease. If either
party withholds its consent or approval, unless by the express terms of this
Lease such consent or approval may be withheld in such party's sole discretion,
such party shall, upon request, promptly deliver to the other party a written
statement specifying in detail the reason or reasons why such consent or
approval was withheld or refused. If neither approval nor rejection is given
by Landlord within the time specified in Article 11 as to any particular
approval requested by
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Tenant under Article 11 (or, if no such time is specified, then within thirty
(30) days after request for approval is given by a Notice), then the approval
thus specifically requested in writing by Tenant shall be conclusively and
irrevocably deemed to have been given by Landlord.
21.7 TERMINOLOGY. All personal pronouns used in this
Lease shall include all other genders. The singular shall include the plural
and the plural shall include the singular. Titles of Articles, Sections and
Subsections in this Lease are for convenience only and neither limit nor
amplify the provisions of this Lease, and all references in this Lease to
Articles, Sections or Subsections shall refer to the corresponding Article,
Section or Subsection of this Lease unless specific reference is made to the
articles, sections or other subdivisions of another document or instrument.
The word "days" as used herein shall mean business days (i.e., excluding
holidays when banks in the State of California or New York are generally closed
for business and weekends) unless otherwise expressly stated.
21.8 MEMORANDUM OF LEASE. Neither party shall record
this Lease. However, concurrently with the execution of this Lease, Landlord
and Tenant have executed a Memorandum of Lease in the form attached hereto as
Exhibit E and by this reference made a part hereof, which Memorandum of Lease
shall be promptly recorded in the Official Records.
21.9 SUCCESSORS AND ASSIGNS. Subject to Articles 13 and
14, this Lease shall inure to the benefit of and be binding upon Landlord and
Tenant and their respective heirs, executors, legal representatives, successors
and assigns. Whenever in this Lease a reference to any Entity is made, such
reference shall be deemed to include a reference to the heirs, executors, legal
representatives, successors and assigns of such Entity.
21.10 COMMISSIONS. Landlord and Tenant each represent and
warrant that neither has dealt with any broker in connection with this
transaction and that no real estate broker, salesperson or finder has the right
to claim a real estate brokerage, salesperson's commission or finder's fee by
reason of contact between the parties brought about by such broker, salesperson
or finder. Each party shall hold and save the other harmless of and from any
and all loss, cost, damage, injury or expense arising out of or in any way
related to claims for real estate broker's or salesperson's commissions or fees
based upon allegations made by the claimant that it is entitled to such a fee
from the indemnified party arising out of contact with the indemnifying party
or alleged introductions of the indemnifying party to the indemnified party.
In addition to the foregoing, Tenant shall hold and save Landlord harmless of
and from any and all loss, cost, damages, injury or expense arising out of or
in any way related to claims for real estate broker's or salesperson's
commissions relating to Landlord's acquisition of the Premises or fees by The
Staubach Company in connection with this Lease.
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21.11 ATTORNEYS' FEES. In the event any action is brought
by Landlord or Tenant against the other to enforce or for the breach of any of
the terms, covenants or conditions contained in this Lease, the prevailing
party shall be entitled to recover reasonable attorneys' fees to be fixed by
the court, together with costs of suit therein incurred. Tenant shall pay the
reasonable attorneys' fees incurred by Landlord for the review and negotiation
of this Lease and the Improvements Loan documents.
21.12 GOVERNING LAW. This Lease and the obligations of
the parties hereunder shall be governed by and interpreted, construed and
enforced in accordance with the laws of the State of California.
21.13 COUNTERPARTS. This Lease may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall comprise but a single instrument.
21.14 TIME IS OF THE ESSENCE. Time is of the essence of
this Lease, and of each provision hereof.
21.15 NO THIRD PARTY BENEFICIARIES. This Lease is entered
into by Landlord and Tenant for the sole benefit of Landlord and Tenant. There
are no third party beneficiaries to this Lease.
21.16 LIMITATIONS ON RECOURSE. The obligations of Tenant
and Landlord under this Lease shall be without recourse to any partner,
officer, trustee, beneficiary, shareholder, director or employee of Tenant or
Landlord. There shall be no limitation on Landlord's liability with respect to
any willful misconduct, bad faith breach of this Lease, or gross negligence by
Landlord ("Identified Matters"). Except for any Identified Matter, Landlord's
liability to Tenant for any default by Landlord under this Lease: (1) shall be
limited to the greater of the Equity Funded Amount less any repayment to Tenant
of the Security Deposit or Landlord's interest in the Premises; and (2) shall
extend to any actual damages of Tenant, but shall not extend to any foreseeable
and unforeseeable consequential damages.
21.17 ESTOPPEL CERTIFICATES. Within thirty (30) days
after request therefor by either party, the non- requesting party shall
deliver, in recordable form, a certificate to any proposed mortgagee,
purchaser, sublessee or assignee and to the requesting party, certifying (if
such be the case) that this Lease is in full force and effect, the date of
Tenant's most recent payment of Rent, that, to the best of its knowledge, the
non-requesting party has no defenses or offsets outstanding, or stating those
claimed, and any other information reasonably requested. Failure to deliver
said statement in time shall be conclusive upon the non-requesting party that:
(a) this Lease is in full force and effect, without modification except as may
be represented by the requesting party; (b) there are no uncured defaults in
the requesting party's
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performance and the non-requesting party has no right of offset, counterclaim
or deduction against the non-requesting party's obligations hereunder; (c) no
more than one month's Base Rent has been paid in advance; and (d) any other
matters reasonably requested in such certificate.
21.18 COLLATERAL. The parties acknowledge that Tenant has
pledged certain collateral ("Collateral") to Lenders to secure Landlord's
obligations under the terms of the Note. If the holder of an Authorized Loan
applies any of the Collateral to satisfy an obligation under any Authorized
Loan documents, such application shall be deemed to reduce the Senior Funded
Amount under this Lease on a dollar-for-dollar basis. Tenant shall have no
claims, rights or causes of action against Landlord arising from any
application of the Collateral to satisfy an obligation under the Authorized
Loan documents.
21.19 LANDLORD'S CONTINUING OBLIGATION TO SELL. Except in
the case of a foreclosure under the Landlord Deed of Trust, and subject to the
rights of any holder of an Authorized Loan, in the event Landlord obtains
possession of the Premises pursuant to the terms of this Lease (including,
without limitation, upon the expiration or earlier termination of this Lease
where Tenant has defaulted in its obligation to purchase the Premises pursuant
to Section 19.2), Landlord shall be under a continuing obligation to use its
commercially reasonable efforts to sell the Premises to Tenant or to one or
more unrelated third parties; provided, however, that Landlord shall not be
required to sell or attempt to sell any portion of the Premises (i) in a
manner, or under circumstances, that could materially impair Landlord's ability
to enforce any of its rights or remedies under this Lease (as determined in
Landlord's sole discretion exercised in good faith), (ii) at a time when market
conditions render it inadvisable to sell or attempt to sell the Premises (as
determined in Landlord's sole discretion exercised in good faith). Nothing
contained in this paragraph shall be binding on any holder of an Authorized
Loan acquiring title through foreclosure, to any person acquiring title at any
such foreclosure or to their successors in interest. Upon the occurrence of
any such sale Landlord shall be obligated to pay to Tenant any excess of the
amount realized by Landlord in connection with such sale over the Purchase
Price. For purposes of the preceding sentence, the amount realized by Landlord
upon a sale of the Premises shall be net of Landlord's reasonable sale expenses
and other expenses incurred by Landlord but required to be paid by Tenant
pursuant to Section 19.1(c)(v). Landlord's obligation to pay such excess to
Tenant shall survive any termination of this Lease. Landlord shall not deliver
to any Mortgagee a deed in lieu of foreclosure under any circumstances without
Tenant's prior written approval, which may be withheld in Tenant's sole and
absolute discretion.
21.20 AS-IS LEASE. Landlord makes no representations or
warranties concerning the condition, suitability or any other
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matters relating to the Premises, and Tenant hereby acknowledges that Tenant
leases the Premises from Landlord on an "as is" basis.
21.21 NET LEASE. Except as otherwise provided in this
Lease, Tenant agrees that this Lease is an absolute net Lease, and the Base
Rent called for hereunder shall be paid as required net of all expenses
associated with the Premises, including without limitation, Real Estate Taxes
and insurance premiums for the insurance required to be carried hereunder, and
all other reasonable and customary costs and expenses incurred by Landlord in
connection with the Premises or this Lease, all of which shall be paid or
reimbursed by Tenant unless otherwise specifically provided herein. Tenant
agrees to reimburse Landlord, within five (5) business days following receipt
of any written demand therefor, for all reasonable and customary fees
(including the pro rata portion of the $3,000 annual servicing fee payable to
SBNYTC attributable to this Lease), late charges, title endorsement and other
costs and expenses charged to Landlord by Lenders pursuant to the terms and
conditions of the Note.
21.22 REPRESENTATIONS AND WARRANTIES. Tenant and Landlord
each hereby represents and warrants to the other that: (i) such party is duly
organized and existing under the laws of the jurisdiction in which it is
formed; (ii) such party has the full right and authority to enter into this
Lease, consummate the sale, transfers and assignments contemplated herein and
otherwise perform its obligations under this Lease; (iii) the person or persons
signatory to this Lease and any document executed pursuant hereto on behalf of
such party have full power and authority to bind such party; and (iv) the
execution and delivery of this Lease and the performance of such party's
obligations hereunder do not and shall not result in the violation of its
organizational documents or any contract or agreement to which such party may
be a party.
21.23 APPRAISAL PROCEDURE.
(a) If this Lease calls for an appraisal under
this Section 21.23 with respect to the Coverage Test, Landlord and Tenant shall
have thirty (30) days after either party delivers Notice to the other party of
a desire to utilize the appraisal procedure under this Section 21.23 in
connection with the Coverage Test in which to agree on whether the Coverage
Test is satisfied as of the time required under the relevant provision of this
Lease. In determining the Coverage Test, the fair market value of the Land and
Improvements ("Fair Market Value") shall be calculated together, taking into
consideration the quality, size, design and location of the Land and
Improvements, and the value of comparable property in the general locality of
the Land, and any other factors which customarily are evaluated in appraising
land or buildings. If either party elects to utilize the terms of this Section
21.23 and Landlord and Tenant agree on the Fair Market Value during such thirty
(30) day period, they shall immediately execute a letter agreement reflecting
such agreement.
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(b) If Landlord and Tenant are unable to agree
on the Fair Market Value within such thirty (30) day period, then within ten
(10) days after the expiration of the thirty (30) day period, Landlord and
Tenant each, at its cost and by giving notice to the other party, shall appoint
a competent and disinterested real estate appraiser with at least five (5)
years' full-time commercial appraisal experience in the geographical area of
the Building to appraise and set the Fair Market Value. If either Landlord or
Tenant does not appoint an appraiser within ten 10 days after the other party
has given notice of the name of its appraiser, the single appraiser appointed
shall be the sole appraiser and shall set the Fair Market Value. If two (2)
appraisers are appointed by Landlord and Tenant as stated in this Section, they
shall meet promptly and attempt to set the Fair Market Value.
(c) If the two (2) appraisers are unable to
agree on the Fair Market Value within thirty (30) days after the second
appraiser has been appointed, they shall attempt to select a third appraiser
meeting the qualifications stated in this Section within ten (10) days after
the last day the two (2) appraisers are given to set the Fair Market Value. If
they are unable to agree on the third appraiser, either Landlord or Tenant, by
giving ten (10) days' notice to the other party, can apply to the then
president of the real estate board of the county in which the Land is located,
or to the Presiding Judge of the Superior Court of the county in which the Land
is located, for the selection of a third appraiser who meets the qualifications
stated in this Section. Landlord and Tenant each shall bear one-half (l/2) of
the cost of appointing the third appraiser and of paying the third appraiser's
fee. The third appraiser, however selected, shall be a person who has not
previously acted in any capacity for either Landlord or Tenant. Within thirty
(30) days after the selection of the third appraiser, a majority of the
appraisers shall set the Fair Market Value. If a majority of the appraisers is
unable to set the Fair Market Value within the stipulated period of time, the
third appraiser shall arrange for simultaneous exchange of written appraisals
from each of the appraisers and the three (3) appraisals shall be added
together and their total divided by three (3); the resulting quotient shall be
the Fair Market Value. If, however, the low appraisal and/or the high
appraisal are/is more than ten percent (10%) lower and/or higher than the
middle appraisal, the low appraisal and/or the high appraisal shall be
disregarded. If only one (1) appraisal is disregarded, the remaining two (2)
appraisals shall be added together and their total divided by two (2); the
resulting quotient shall be the Fair Market Value. If both the low appraisal
and the high appraisal are disregarded as stated in this Section, the middle
appraisal shall be the Fair Market Value.
(d) After the Fair Market Value has been set,
the appraisers shall immediately notify Landlord and Tenant, and Landlord and
Tenant shall immediately execute a letter agreement reflecting the Fair Market
Value.
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21.24 FINANCIAL REPORTING. Tenant shall provide to
Landlord and Lenders: (1) annually, within one hundred twenty (120) days after
the end of each of Tenant's fiscal years during the Term, an annual report on
Form 10-K for such fiscal years as filed with the Securities and Exchange
Commission; (2) quarterly, within forty five (45) days after the end of each of
Tenant's fiscal quarters during the Term, quarterly reports on Form 10-Q as
filed with the Securities and Exchange Commission; and (3) within thirty (30)
days after filing with the Securities and Exchange Commission, any other
reports, proxy statements, registration statements or prospectuses filed during
the Term with the Securities and Exchange Commission.
21.25 APPRAISAL. Prior to Landlord's making the Initial
Advance pursuant to Section 11.3 hereof, Landlord shall have received an
appraisal conforming to FIRREA guidelines prepared by an appraiser reasonably
satisfactory to Landlord indicating that the current fair market value on an
as-completed basis of the buildings which Tenant may desire to have constructed
on the Land (based upon a theoretical current build-out on the Land on the
basis of the Site Plan attached hereto as Exhibit C) is not less than ninety
percent (90%) of the estimated cost of construction of the buildings as
designed as of the date of such appraisal which Tenant may desire to have
constructed on the Land. The appraisal shall be based upon Tenant's current
construction budget, specifications and intended use (both parties hereby
recognizing that such items are subject to change, and in no event shall Tenant
have any obligation to construct any or all of such buildings). Tenant hereby
approves Landlord's use of either Cushman & Wakefield or CB Commercial Real
Estate Group as the appraiser under this Section 21.25. Landlord hereby
acknowledges that the current fair market value on an as-completed basis of the
buildings as designed as of the date of such appraisal which Tenant proposes to
have constructed on the Land is not less than ninety percent (90%) of the
estimated cost of construction of said buildings.
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[SIGNATURE PAGE TO BUILDING LEASE]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Lease as of the day and year first above written.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST COMPANY
("SBNYTC"), AS TRUSTEE UNDER THAT
CERTAIN TRUST AGREEMENT DATED MAY 22,
1995 BETWEEN SUMITOMO BANK LEASING AND
FINANCE, INC. AND SBNYTC
By: /s/ JOHN F. McFADDEN
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Name: JOHN F. McFADDEN
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Its: VICE PRESIDENT AND TREASURER
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[Remainder of This Page Intentionally Left Blank]
<PAGE> 72
[SIGNATURE PAGE TO BUILDING LEASE]
"TENANT"
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
By: /s/ JOHN T. CHAMBERS
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Name: JOHN T. CHAMBERS
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Its: PRESIDENT AND CHIEF EXECUTIVE OFFICER
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By: /s/ LARRY R. CARTER
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Name: LARRY R. CARTER
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Its: CHIEF FINANCIAL OFFICER
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<PAGE> 73
EXHIBIT A
LEGAL DESCRIPTION OF LAND
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lots 58 and 59, as shown upon that certain map entitled, "Tract No. 7559",
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, on December 21, 1983 in Book 522 of Maps, at pages 49 and 50.
APN: 97-53-18,22
EXHIBIT A
<PAGE> 74
EXHIBIT B
PERMITTED EXCEPTIONS
The following exceptions from coverage of Landlord's title
insurance which affect "Parcel Two" and "Parcel Three":
1. PROPERTY TAXES, including any assessments collected with taxes, for
the fiscal year 1995-1996, a lien not yet due or payable.
2. a) Bond for City of San Jose, Reassessment District No. 93-210 1993
Consolidated Refunding
Bond No. : 24J
Assessment No. : 42V
Balance of principal : $88,186.00
Balance of interest
through maturity : $16,532.60
The above Amount excludes $12,279.07 principal, $5,140.46 interest
and $277.29 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects Lot 59 of Parcel One.
b) Bond for City of San Jose, Reassessment District No. 93-210 1993
Consolidated Refunding
Bond No. : 24J
Assessment No. : 46V
Balance of principal : $100,217.00
Balance of interest
through maturity : $18,788.10
The above Amount excludes $13,954.27 principal, $5,841.76 interest
and $312.93 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects Lot 58 of Parcel One.
c) Bond for Reassessment District #93-210 Consolidated Refunding, as
follows:
Bond No. : 24J
Assessment No. : 48V
Balance of principal : $113,800.32
Balance of interest : $21,334.61
The above Amount to pay in full excludes $15,845.61 principal,
$6,633.65 interest and $353.18 handling charge spread on the 1994-
1995 tax roll, which amounts cannot be prepaid.
Said matter affects Parcel Two.
<PAGE> 75
2. Continued
d) Bond for Reassessment District #93-210 Consolidated Refunding, as
follows:
Bond No. : 24J
Assessment No. : 47V
Balance of principal : $123,177.11
Balance of interest : $23,092.52
The above Amount to pay in full excludes $17,151.24 principal,
$7,180.13 interest and $380.97 handling charge spread on the 1994-
1995 tax roll, which amounts cannot be prepaid.
Said matter affects Parcel Three.
e) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 8V
Balance of principal : $63,238.68
Balance of interest
through maturity : $11,855.62
The above Amount excludes $8,806.39 principal, $3,686.25 interest
and $203.36 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects Parcels Four and Five.
f) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 1V
Balance of principal : $429.87
Balance of interest
through maturity : $80.61
The above Amount excludes $59.86 principal, $25.02 interest and
$1.32 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects a portion of Parcel Six.
g) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 2V
Balance of principal : $91,559.14
Balance of interest
through maturity : $17,164.97
The above Amount excludes $12,748.74 principal, $5,337.09 interest
and $280.03 handling charge spread on the 1994- 1995 tax roll, which
amounts cannot be prepaid.
Said matter affects a portion of Parcel Six.
<PAGE> 76
2. Continued
h) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 9V
Balance of principal : $75,028.33
Balance of interest
through maturity : $14,065.87
The above Amount excludes $10,446.98 principal, $4,373.49 interest
and $229.47 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects a portion of Parcel Six.
i) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 10V
Balance of principal : $360.71
Balance of interest
through maturity : $67.62
The above Amount excludes $50.23 principal, $21.03 interest and
$1.10 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects a portion of Parcel Six.
3. THE LIEN of supplemental taxes, if any, assessed as a result of
transfer of interest and/or new construction, said supplemented
taxes being assessed pursuant to Chapter 3.5 commencing with Section
75 of the California Revenue and Taxation Code, for which no Notice
of Assessment has been issued, as of the date herein.
4. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Right to excavate for, install, replace
(of initial or any other size), maintain
and use for conveying gas such pipe line
or lines as shall from time to time
elect, with necessary values and other
appliances
Granted to : Pacific Gas and Electric Company, a
California corporation
Recorded : July 6, 1944 in Book 1206, page 154,
Official Records
Affects : as follows:
By a Relocation Agreement between Oakmead Associates, a California
general partnership and Pacific Gas and Electric Company, a
California corporation
Recorded : April 5, 1989 in Book K903, page 1344,
Official Records
the easement was relocated as follows:
A strip of land of the uniform width of 15 feet extending from the
Northerly boundary line of said Lot 5, said Northerly boundary line
being the Southerly boundary line of the city street known as Tasman
Drive (128 feet wide), said Tasman Drive is shown on said map,
Southwesterly to the Westerly boundary line of said Lot 5, said
Westerly boundary line being the Easterly boundary line of the
street known as Rio Robles (56 feet wide), said street Rio Robles is
also shown on said map, and lying 7.5 feet on each side of the line
described as follows:
<PAGE> 77
4. Continued
Beginning at a point in the Northerly boundary line of said Lot 5
and running (1) S. 0 degrees 23.5 minutes E. 12.4 feet to a point
which bears, S. 66 degrees 35.0 minutes W. 579.2 feet distant from
the found 5/8 inch brass pin set in concrete accepted as marking the
Southwesterly terminus of a course in the center line of said Tasman
Drive, which course as shown on said map has a bearing of, N. 59
degrees 28 minutes 40 seconds E. and a length of 700.88 feet; thence
(2) S. 29 degrees 04.3 minutes W. 187.8 feet; thence (3) S. 57
degrees 38.6 minutes W. 10.8 feet to a point in the Westerly
boundary line of said Lot 5. Said line being a survey traverse made
by second party in September, 1983. The bearings used in the
foregoing description are based on solar observations made by second
party.
Covenants, conditions and restrictions in the above mentioned
instruments.
Said matter affects Parcel Six.
5. TERMS and conditions as contained in the Grant Deed executed by
Masami Ezaki and Kaoru Ezaki, his wife in favor of the City and
County of San Francisco, a municipal corporation recorded December
8, 1950 in Book 2111, page 319, Official Records.
Said matter affect Parcels Five and Seven and portions of Parcels
Four and Six.
6. THE EFFECT of the Rincon de los Esteros Project Redevelopment Plan
and Ordinances Nos. 17306, 19686, 19835, 20677, 20958, 21417, 21496,
21903, 22660, 22412, 22761, 22761.1 and 22961, 23703, 23732, 23761
and 23934 of the City of San Jose as recorded and as disclosed by
documents recorded July 11, 1975 in Book B502, Page 711; August 6,
1979 in Book E699, Page 245; August 6, 1979 in Book E699, Page 277;
December 21, 1979 in Book F37, Page 585; October 8, 1981 in Book
G382, Page 605; July 28, 1982 in Book G929, Page 703; September 14,
1983 in Book H892, Page 200; January 10, 1984 in Book I220, Page
271; January 6, 1992 in Book L996, Page 508, all of Official
Records, and as disclosed by information provided by the
Redevelopment Agency of the City of San Jose.
7. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Any and all public service facilities,
including, but not limited to, poles, wires,
conduits and vaults, storm sewers, sanitary
sewers, and gas, water, electrical and
communication mains and all appurtenances
thereto
Granted to : City of San Jose, a municipal corporation of the
State of California
Recorded : September 14, 1981 in Book G330, page 497,
Official Records
Affects : That portion of said land as shown upon the map
herein referred to, more particularly described
as follows:
All that certain real property situated in the City of San Jose,
County of Santa Clara, State of California, being a portion of the
parcel of land described and designated as Parcel 1 in the deed to
River Oaks Associates #2, dated November 17, 1979, recorded in Book
E962 of Official Records, at page 145, Santa Clara County Records,
more particularly described as follows:
<PAGE> 78
7. Continued
Beginning at a point in the centerline of North First Street
(formerly San Jose-Alviso Road) as said centerline is described in
said deed at the most Northerly corner of said parcel; thence along
the Northwesterly boundary line of said parcel, S. 59 degrees 28
minutes 40 seconds W. (S. 59 degrees 30 minutes W. per deed), 114.98
feet; thence leaving said line, S. 30 degrees 31 minutes 20 seconds
E. 34.00 feet to the true point of beginning; thence along a
non-tangent curve to the right having a radius of 50.00 feet; whose
radius point bears along the continuation of the last described
course, S. 30 degrees 31 minutes 20 seconds E. through a central
angle of 89 degrees 59 minutes 11 seconds for an arc length of 78.53
feet to a point in a line which is parallel with and 65.00 feet
Southwesterly of said centerline; thence along said parallel line,
S. 30 degrees 32 minutes 09 seconds E. 254.64 feet to a point in the
Northwesterly boundary line of the strip of land described in the
deed to the City of County of San Francisco, dated October 20, 1950;
recorded in Book 2111 of Official Records, at page 319, Santa Clara
County Records; thence along said Northwesterly line, S. 65 degrees
09 minutes 27 seconds W. 10.05 feet to a point in a line that is
parallel with and 75.00 feet Southwesterly from said centerline;
thence along said parallel line, N. 30 degrees 32 minutes 09 seconds
W. 253.64 feet; thence along a curve to the left, having a radius of
40.00 feet, through a central angle of 89 degrees 59 minutes 11
seconds for an arc length of 62.82 feet; thence N. 30 degrees 31
minutes 20 seconds W. 10.00 feet to the true point of beginning; the
bearing of, S. 30 degrees 32 minutes 09 seconds E. of the monument
line of North First Street, as shown on the Parcel Map recorded in
Book 460 of Maps, at page 1, Santa Clara County Records, was used as
the basis of bearings for this description.
Said matter affects Parcel Six.
8. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Landscape Easement
Granted to : City of San Jose, a municipal corporation
Recorded : September 14, 1981 in Book G330, page
504, Official Records
Affects : The Northeasterly 20 feet of Parcel Six.
9. LICENSE for the purposes stated herein and incidents thereto
Purpose : To construct, install, maintain, repair,
renew, replace, operate and use an
interim storm sewer pipe line or lines
and appurtenances of any size of
material, and/or a surface drainage
release
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : September 14, 1981 in Book G330, page
511, Official Records
Affects : that portion of said land as shown upon
the map herein referred to, more
particularly described as follows:
All that certain real property situate in the City of San Jose,
County of Santa Clara, State of California, being a portion of the
parcel of land described and designated as Parcel 1 in the deed to
River Oaks Associates #2, dated November 17, 1979, recorded in Book
E962 of Official Records, at page 145, Santa Clara County Records,
more particularly described as follows:
Beginning at a point in the centerline of North First Street
(formerly San Jose-Alviso Road) as said centerline is described in
said deed at the most Northerly corner of said parcel; thence along
the Northwesterly boundary line of said parcel, S. 59 degrees 29
minutes 40 seconds W. (S. 59 degrees 30 minutes W. per deed), 114.98
feet; thence leaving said boundary line, S. 30 degrees 31 minutes 20
seconds E. 34.00; thence along a non-tangent curve to the right
having a radius of 50.00 feet whose radius point bears along the
continuation of the last described course, S. 30 degrees 31 minutes
20 seconds E. through a central angle of 17 degrees 26 minutes 39
seconds for an arc length of 15.22 feet to the point of beginning;
thence continuing along said curve
<PAGE> 79
9. Continued
to the right having a radius of 50.00 feet, through a central angle
of 19 degrees 24 minutes 44 seconds for an arc length 16.94 feet to
a point in a line that is parallel with and 85.00 feet Southwesterly
of said centerline; thence along said parallel line S. 30 degrees 32
minutes 09 seconds E. 292.64 feet to a point in the Northwesterly
boundary line of the strip of land described in the deed to the City
and County of San Francisco, dated October 20, 1950, recorded in
Book 2111 of Official Records, at page 319, Santa Clara County
Records; thence along said Northwesterly boundary line, S. 65
degrees 09 minutes 27 seconds W. (S. 65 degrees 08 minutes 00
seconds W. per deed), 15.07 feet to a point in a line which is
parallel with and 100.00 feet Southwesterly of said centerline;
thence along said parallel line, N. 30 degrees 32 minutes 09 seconds
W. 298.84 feet to the true point of beginning.
Said matter affects Parcel Six.
10. AN EASEMENT affecting the portion of said land and for the purpose
stated herein and incidental purposes, shown or dedicated by the map
of Tract 7408 filed in Book 506 of Maps, pages 24, 25 and 26.
Purpose : Public Service Easement
Affects : The Southwesterly 10 feet of Parcels One,
Two and Three; the Northwesterly 8 feet
of Parcel Two; the Southwesterly 8 feet
of Parcel Four; the Northeasterly and
Northwesterly 10 feet of Parcel Six; and
the Southwesterly 8 feet of Parcel Six.
11. EASEMENT as shown on the filed map of Tract 7408 filed in Book 506
of Maps, pages 24-26 and incidents thereto
Purpose : Landscape Easement
Affects : The Southwesterly 20 feet of Parcel One,
Two and Three; the Northwesterly 18 feet
of Parcel Two; the Southwesterly 18 feet
of Parcel Four; the Northeasterly and
Northwesterly 20 feet of Parcel Six; and
the Southwesterly 18 feet of Parcel Six.
12. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Service Easement
Granted to : City of San Jose
Recorded : November 19, 1982 in Book H156, page 275,
Official Records
Affects : The Northwesterly 25 feet of Parcel Four
13. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The installation, maintenance and
operation of all landscaping plant forms,
irrigation systems, retaining walls, and
decorative walkway paving now existing or
hereinafter to be constructed
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : May 27, 1983 in Book H590, page 649,
Official Records
Affects : The Southwesterly 20 feet of Parcel One,
Two and Three; the Northwesterly 18 feet
of Parcel Two; the Southwesterly 18 feet
of Parcel Four; the Northeasterly and
Northwesterly 20 feet of Parcel Six; and
the Southwesterly 18 feet of Parcel Six.
<PAGE> 80
14. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The installation, maintenance and
operation of all landscaping plant forms,
irrigation systems, retaining walls, and
decorative walkway paving now existing or
hereinafter to be constructed
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : May 27, 1983 in Book H590, page 652,
Official Records
Affects : The Westerly corner of Parcel Two and the
Northerly and Westerly corner of Parcel
Six
15. AGREEMENT on the terms and conditions contained therein,
For : The installation and maintenance of
landscape improvements
Between : City of San Jose, a municipal corporation
And : Oakmead-San Jose, a California general
partnership and Oakmead-San Jose Sign and
Landscape Maintenance Association, a
California non-profit mutual benefit
corporation
Recorded : May 27, 1983 in Book H590, page 662,
Official Records
Reference is hereby made to the record for further particulars.
16. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The construction, installation, repair
and maintenance of interlocking pavers,
retaining walls and signs, and for
pedestrian and vehicular access as
necessary or desirable thereto, but
subject to the obligation of the
association of the association, its
successors and assigns, to promptly
repair any damage to said improvements
lying within the Sign and Landscape
Easements resulting from the
Association's activities thereon
Granted to : Oakmead-San Jose Sign and Landscape
Maintenance Association, a non-profit
mutual benefit corporation
Recorded : June 3, 1983 in Book H604, page 322,
Official Records
Affects : The Westerly corner of Parcel Two and the
Northerly and Westerly corner of Parcel
Six
17. LIMITATIONS, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting restrictions, if
any, based on race, color, religion or national origin contained in
the document recorded June 3, 1983 in Book H604, page 334, Official
Records.
CONTAINS mortgagee protection clause.
MODIFICATION thereof recorded January 26, 1984 in Book I257, page
252, Official Records.
A Notice of Amendment of Design Guidelines
Executed by : Oakmead-San Jose, a California general
partnership
Recorded : June 21, 1984 in Book I649, page 543,
Official Records
An instrument entitled, "Designation of Approving Agent," whereby
Kimball Small Properties, a California corporation was designated
approving agent under the CC&R's and Design Guidelines.
Recorded : April 29, 1988 in Book K517, page 940,
Official Records
MODIFICATION thereof recorded October 18, 1988 in Book K721, page
265, Official Records.
<PAGE> 81
17. Continued
Said Assignment affects Parcel One.
An instrument entitled, "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 1, 1995
Between : CROCKER PROPERTIES, INC., a California
corporation and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 1, 1995 as Instrument No. 12877064,
Official Records
Said Assignment affects Parcels Two and Three
An Instrument entitled, "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 8, 1995
Between : AMDAHL CORPORATION, a Delaware
corporation and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 8, 1995 as Instrument No. 12882481,
Official Records
Said Assignment affects Parcels Four, Five and Six
18. LIMITATIONS, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting restrictions, if
any, based on race, color, religion or national origin contained in
the document recorded June 3, 1983 in Book H604, page 505, Official
Records.
Said instrument also provides for the levy of assessments, the lien
of which are stated to be subordinate to the lien of a First
Mortgage of First Deed of Trust made in good faith and for value.
MODIFICATION thereof recorded January 26, 1984 in Book I257, page
248, Official Records.
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose and Removal of Approving Agent,"
Dated : October 18, 1988
Between : Oakmead-San Jose, a California general
partnership and Oakmead Associates, a
California general partnership
Recorded : October 18, 1988 in Book K721, page 295,
Official Records
Said Assignment affects Parcels One, Four, Five and Six
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose and Removal of Approving Agent,"
Dated: : April 20, 1989
Between : Oakmead Associates, a California general
partnership and Amdahl Corporation, a
Delaware corporation
Recorded : April 20, 1989 in Book K927, page 332,
Official Records
Said Assignment affects Parcels Four and Five
<PAGE> 82
18. Continued
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : July 12, 1989
Between : Oakmead Associates, a California general
partnership and Amdahl Corporation, a
Delaware corporation
Recorded : July 12, 1989 in Book L017, page 1927,
Official Records
Said Assignment affects Parcel Six
MODIFICATION thereof recorded July 19, 1989 in Book L024, page 587,
Official Records
An instrument entitled "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose"
Between : Oakmead-San Jose, a California general
partnership and Crocker Properties, Inc.,
a California corporation
Recorded : August 10, 1989 in Book L052, page 1001
and page 1011, Official Records.
Said Assignment affects Parcels Two and Three
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 1, 1995
Between : OAKMEAD ASSOCIATES, a California general
partnership and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 1, 1995 as Instrument No. 12877061,
Official Records
Said Assignment affects Parcel One.
An instrument entitled, "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 1, 1995
Between : CROCKER PROPERTIES, INC., a California
corporation and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 1, 1995 as Instrument No. 12877064,
Official Records
Said Assignment affects Parcels Two and Three
An instrument entitled, "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 8, 1995
Between : AMDAHL CORPORATION, a Delaware
corporation and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 8, 1995 as Instrument No. 12882481,
Official Records
Said Assignment affects Parcels Four, Five and Six
<PAGE> 83
19. EASEMENT as shown on the filed map of Tract 7559 filed in Book 522
of Maps, pages 49 ad 50.
Purpose : Public Service Easement
Affects : The Northwesterly 8 Feet and the Westerly
corner of Lot 59 of Parcel One
20. EASEMENT as shown on the filed map of Tract 7559 filed in Book 522
of Maps, pages 49 and 50.
Purpose : Landscape Easement
Affects : The Southeasterly 18 feet and the
Southerly corner of Lot 58 of Parcel One;
and the Northwesterly 18 feet and the
Westerly corner of Lot 59 of Parcel One
21. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Communication facilities
Granted to : Pacific Bell
Recorded : February 21, 1984 in Book I319, page 486,
Official Records
Affects : The Southwesterly 10 feet of Lot 58 of
Parcel One; the Southwesterly 10 feet,
the Northwesterly 8 feet and the Westerly
corner of Lot 59 of Parcel One; and the
Southwesterly 10 Feet of Parcel Three
22. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Underground and above ground
communication facilities
Granted to : Pacific Bell
Recorded : May 17, 1984 in Book 1552, page 624,
Official Records
Affects : The Southwesterly 10 feet of Parcel Four
23. AGREEMENT on the terms and conditions contained therein,
For : Gas and electric service
Between : Pacific Gas and Electric Company, City of
San Jose
And : Oakmead-San Jose
As disclosed by a Memorandum of Agreement
Recorded : February 25, 1985 in Book J271, page 37,
Official Records.
Reference is hereby made to the record for further particulars.
24. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Emergency overland storm drainage release
Granted to : Amdahl Corporation, a Delaware
corporation
Recorded : August 8, 1990, in Book L443, page 754,
Official Records
Affects : The Northwesterly 10 feet of the
Southeasterly 30 feet and the
Northeasterly 10 feet of the
Northwesterly 100 feet of the
Southeasterly 130 feet of Parcel Four.
Terms and conditions contained in the document hereinabove referred
to.
25. TERMS AND CONDITIONS of that certain Site Development Permit
File No. : HSH 90-09-104
Disclosed By : A Notice of Granting of a Site
Development Permit
Recorded : January 24, 1991 in Book L600, page 1242,
Official Records
<PAGE> 84
25. Continued
Said matter affects Parcels Four, Five and Six.
Reference is hereby made to the record for particulars.
26. TERMS AND CONDITIONS of that certain Site Development Permit
File No. : HSH 92-02-011
Disclosed By : A Notice of Granting of a Site
Development Permit
Recorded : August 21, 1992 in Book M340, page 824,
Official Records
Said matter affects Parcel Six.
27. TERMS AND CONDITIONS of that certain Site Development Permit
File No. : H94-07-041
Disclosed By : A Notice of Granting of a Site
Development Permit
Recorded : October 19, 1994 in Book N638, page 215,
Official Records
Said matter affects Parcel Six.
Reference is hereby made to the record for particulars.
29. ANY RIGHTS, interests, or claims adverse to those of the vestee
herein which may exist or arise by reason of the following facts
shown on a survey plat entitled "A.L.T.A./A.C.S.M. Land Title
Survey", dated April 14, 1995, prepared by Kier & Wright, Job. No.
92160-16.
a) The fact that a concrete sign extends across the Northwesterly
boundary of Parcel Six.
30. UNRECORDED LEASE for the term and upon the terms and conditions
contained therein
Dated : February 28, 1995
Lessor : IRISH LEASING CORPORATION, a Texas
corporation
Lessee : CISCO SYSTEMS, INC., a California
corporation
Term : 5 Years
Disclosed by : Memorandum of Land Lease, recorded May 1,
1995, as Instrument No., 12877062,
Official Records.
Affects the fee to Parcel One.
31. OPTION TO PURCHASE as disclosed in the Memorandum of Lease recorded
May 1, 1995 as Instrument No. 12877062, Official Records
Affects the fee to Parcel One.
32. UNRECORDED LEASE for the term and upon the terms and conditions
contained therein
Dated : February 28, 1995
Lessor : IRISH LEASING CORPORATION, a Texas
corporation
Lessee : CISCO SYSTEMS, INC., a California
corporation
Term : 5 Years
Disclosed by : Memorandum of Land Lease, recorded May 1,
1995, as Instrument No. 12677065,
Official Records.
Affects the fee to Parcels Two and Three.
<PAGE> 85
33. OPTION TO PURCHASE as disclosed in the Memorandum of Lease recorded
May 1, 1995 as Instrument No. 12877065, Official Records
Affects the fee to Parcels Two and Three.
34. A DEED OF TRUST to secure an indebtedness in the original principal
sum shown below and any other amounts and/or obligations secured
thereby
Amount : $2,700,000.00
Dated : May 1, 1995
Trustor : IRISH LEASING CORPORATION, a Texas
corporation
Trustee : FIRST AMERICAN TITLE INSURANCE COMPANY, a
California corporation
Beneficiary : CISCO SYSTEMS, INC., a California
corporation
Recorded : May 1, 1995, under Series No. 12877066,
Official Records.
Affects the fee to Parcels One, Two and Three.
35. UNRECORDED LEASE for the term and upon the terms and conditions
contained therein
Dated : April 12, 1995
Lessor : IRISH LEASING CORPORATION, a Texas
corporation
Leesee : CISCO SYSTEMS, INC., a California
corporation
Term : 5 years
Disclosed by : Memorandum of Land Lease, recorded May 8,
1995, as Instrument No. 12882482,
Official Records.
Affects the fee to Parcels Four, Five, Six and Seven.
36. OPTION TO PURCHASE as disclosed in the Memorandum of Lease recorded
May 8, 1995 as Instrument No. 12482482, Official Records
Affects the fee to Parcels Four, Five, Six and Seven.
37. A DEED OF TRUST to secure an indebtedness in the original principal
sum shown below and any other amounts and/or obligations secured
thereby
Amount : $1,500,000.00
Dated : May 1, 1995
Trustor : IRISH LEASING CORPORATION, a Texas
corporation
Trustee : FIRST AMERICAN TITLE INSURANCE COMPANY, a
California corporation
Beneficiary : CISCO SYSTEMS, INC., a California
corporation
Recorded : May 8, 1995, under Series No. 12882483,
Official Records.
Affects the fee to Parcels Four, Five, Six and Seven.
<PAGE> 86
EXHIBIT C
(SITE PLAN)
EXHIBIT C
1.
<PAGE> 87
[AERIAL RENDERING SITE PLAN BUILDING "K"]
<PAGE> 88
[AERIAL RENDERING SITE PLAN BUILDING "L"]
<PAGE> 89
EXHIBIT D
(PRE-APPROVED APPROVAL PLANS)
EXHIBIT D
1.
<PAGE> 90
[ARCHITECTURAL RENDERING SITE PLAN BUILDING "K"]
<PAGE> 91
[ARCHITECTURAL RENDERING SITE PLAN BUILDING "K"]
<PAGE> 92
[ARCHITECTURAL RENDERING SITE PLAN BUILDING "L"]
<PAGE> 93
[ARCHITECTURAL RENDERING SITE PLAN BUILDING "L"]
<PAGE> 94
EXHIBIT E
MEMORANDUM OF LEASE
RECORDING REQUESTED BY, AND
WHEN RECORDED, RETURN TO:
Brobeck, Phleger & Harrison
550 West C Street, Suite 1300
San Diego, California 92101
Attention: Todd J. Anson, Esq.
- --------------------------------------------------------------------------------
THIS MEMORANDUM OF LEASE ("Memorandum of Lease") is executed
as of May ___, 1995, by and between SUMITOMO BANK OF NEW YORK TRUST COMPANY
("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED MAY 22, 1995
BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC ("Landlord"), and
CISCO SYSTEMS, INC., a California corporation ("Tenant").
RECITALS
WHEREAS, Landlord and Tenant have executed that certain lease
("Lease") dated as of May ___, 1995, covering certain improvements ("Premises")
which may come to be located on the real property located in the County of Santa
Clara, State of California and more particularly described in Schedule 1
attached hereto and incorporated herein by this reference ("Land"); and
WHEREAS, Landlord and Tenant desire to record notice of the
Lease in the real estate records of Santa Clara County, California;
NOW, THEREFORE, in consideration of the foregoing, Landlord
and Tenant hereby declare as follows:
1. DEMISE. Landlord hereby leases the Premises to Tenant and
Tenant hereby leases the Premises from Landlord, subject to the terms, covenants
and conditions contained in the Lease. The Premises leased to Tenant pursuant to
the Lease consists of the Improvements described in Paragraph 5 below, and does
not include the Land.
2. EXPIRATION DATE. The term of the Lease ("Term") shall
commence on May ___, 1995 and shall expire five (5) years thereafter, subject to
Tenant's option to extend the Term pursuant to Section 4.2 of the Lease for one
(1) period of five (5) years.
EXHIBIT E
1.
<PAGE> 95
3. OPTION TO PURCHASE. Tenant has an option to purchase the
Premises, as more particularly described in the Lease, during the Term, as it
may be extended.
4. RESTRICTIONS ON ENCUMBRANCES. Landlord is prohibited from
recording against the Premises liens (including, without limitation, deeds of
trust), encumbrances, and other matters that would constitute exceptions to
title, and from amending or modifying any of the foregoing that may exist now or
during the Term, as more particularly described in the Lease, and any such
encumbrance or modification of an encumbrance not authorized in writing by
Tenant shall be null and void.
5. OWNERSHIP OF CERTAIN IMPROVEMENTS. By virtue of Tenant's
rights under that certain Ground Lease between Tenant and Irish Leasing
Corporation, a Texas corporation, dated February 28, 1995, Tenant hereby grants
to Landlord the right to own and construct the improvements which Tenant may
elect, as construction agent for Landlord, to erect, construct or situate upon
the Land or any part thereof during the Term under and pursuant to the terms of,
and using funding provided by or through Landlord pursuant to Article 11 of the
Lease ("Improvements"), and Tenant hereby grants, conveys and transfers to
Landlord all of Tenant's right, title and interest in and to the Improvements
(whether now existing or hereafter constructed), and Tenant agrees that any and
all such Improvements shall be and remain the property of Landlord, subject to
Tenant's rights to purchase the Improvements under Section 19 of the Lease (with
Landlord's agreement that Tenant's purchase rights contemplated under Section 19
of the Lease reflect the primary intent of the parties to the Lease is to treat
the Lease as an operating Lease for financial accounting and securities
regulatory purposes and as a financing arrangement for all federal, state and
local income tax, property tax valuation and other tax purposes).
6. COUNTERPARTS. This Memorandum of Lease may be executed in
any number of counterparts, each of which shall be deemed to be an original and
all of which together shall comprise but a single instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT E
2.
<PAGE> 96
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Memorandum of Lease as of the date and year first written above.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE
UNDER THAT CERTAIN TRUST AGREEMENT
DATED MAY 22, 1995 BETWEEN
SUMITOMO BANK LEASING AND FINANCE,
INC. AND SBNYTC
By: ___________________________
Name: ___________________________
Its: ___________________________
STATE OF __________________ )
) ss
COUNTY OF _________________ )
On _____________, before me, ______________________, 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
[SEAL]
[SIGNATURES CONTINUED ON NEXT PAGE]
EXHIBIT E
3.
<PAGE> 97
"TENANT"
CISCO SYSTEMS, INC.
A CALIFORNIA CORPORATION
By: _______________________________
Name: _________________________
Its: _________________________
STATE OF __________________ )
) ss
COUNTY OF _________________ )
On _____________, before me, ______________________, 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
[SEAL]
EXHIBIT E
4.
<PAGE> 98
SCHEDULE 1 TO EXHIBIT E
LEGAL DESCRIPTION
The Premises are described as follows:
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lots 58 and 59, as shown upon that certain map entitled, "Tract No. 7559", which
Map was filed for record in the office of the Recorder of the County of Santa
Clara, on December 21, 1983 in Book 522 of Maps, at pages 49 and 50.
APN: 97-53-18,22
SCHEDULE 1 TO EXHIBIT E
<PAGE> 99
EXHIBIT F
FORM OF CONTRACTOR'S CERTIFICATE
EXHIBIT F
1.
<PAGE> 100
APPLICATION AND CERTIFICATE FOR PAYMENT
AIA DOCUMENT G702 (Instructions on reverse side) PAGE ONE OF PAGES
- --------------------------------------------------------------------------------
TO OWNER: PROJECT: APPLICATION NO: Distribution to:
PERIOD TO: / / OWNER
PROJECT NOS.: / / ARCHITECT
/ / CONTRACTOR
FROM CONTRACTOR: VIA ARCHITECT: CONTRACT DATE: / /
/ /
CONTRACT FOR:
- --------------------------------------------------------------------------------
CONTRACTOR'S APPLICATION FOR PAYMENT
Application is made for payment, as shown below, in connection with the
Contract. Continuation Sheet, AIA Document G703, is attached.
<TABLE>
<S> <C> <C>
1. ORIGINAL CONTRACT SUM..................................... $
---------------
2. NET CHANGE BY CHANGE ORDERS............................... $
---------------
3. CONTRACT SUM TO DATE (Line 1 plus or minus 2)............. $
---------------
4. TOTAL COMPLETED & STORED TO DATE.......................... $
(Column G on G703) ---------------
5. RETAINAGE:
a % of Completed Work (Columns D plus E on G703) $
-------- ---------------
b % of Stored Material (Column F on G703) $
-------- ---------------
Total Retainage
(Line 5a plus 5b or Total in Column 1 of G703)............ $
---------------
6. TOTAL EARNED LESS RETAINAGE............................... $
(Line 4 less Line 5 Total) ---------------
7. LESS PREVIOUS CERTIFICATES FOR PAYMENT
(Line 6 from prior Certificate)........................... $
---------------
8. CURRENT PAYMENT DUE....................................... $
===============
9. BALANCE TO FINISH, INCLUDING RETAINAGE
(Line 3 less Line 6) $
---------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CHANGE ORDER SUMMARY ADDITIONS DEDUCTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Total changes approved in
previous months by Owner
- --------------------------------------------------------------------------------
Total approved this Month
- --------------------------------------------------------------------------------
TOTALS
- --------------------------------------------------------------------------------
NET CHANGES by Change Order
- --------------------------------------------------------------------------------
</TABLE>
The undersigned Contractor certifies that to the best of the Contractor's
knowledge, information and belief the Work covered by this Application for
Payment has been completed in accordance with the Contract Documents, that all
amounts have been paid by the Contractor for Work for which previous
Certificates for Payment were issued and payments received from the Owner, and
that current payment shown herein is now due.
CONTRACTOR:
By: Date:
------------------------------ --------------------------------
State of:
County of:
Subscribed and sworn to before me this day of
Notary Public:
My Commission expires:
- --------------------------------------------------------------------------------
ARCHITECT'S CERTIFICATE FOR PAYMENT
In accordance with the Contract Documents, based on on-site observations and the
data comprising this application, the Architect certifies to the Owner that to
the best of the Architect's knowledge, information and belief the Work has
progressed as indicated, the quality of the Work is in accordance with the
Contract Documents, and the Contractor is entitled to payment of the AMOUNT
CERTIFIED.
AMOUNT CERTIFIED................................... $
-----------------------
(Attach explanation if amount certified differs from the amount applied for.
Initial all figures on this Application and on the Continuation Sheet that are
changed to conform to the amount certified.)
ARCHITECT:
By: Date:
------------------------------ --------------------------------
This Certificate is not negotiable. The AMOUNT CERTIFIED is payable only to the
Contractor named herein. Issuance, payment and acceptance of payment are
without prejudice to any rights of the Owner or Contractor under this Contract.
- --------------------------------------------------------------------------------
AIA DOCUMENT G702
APPLICATION AND CERTIFICATE FOR PAYMENT
1992 EDITION
AIA(R)
Copyright 1992
AMERICAN INSTITUTE OF ARCHITECTS
1735 NEW YORK AVENUE, N.W.
WASHINGTON, D.C. 20006-5292
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND WILL SUBJECT
THE VIOLATOR TO LEGAL PROSECUTION.
G702/92
<PAGE> 101
EXHIBIT G
INITIAL ADVANCE MEMORANDUM
THIS INITIAL ADVANCE MEMORANDUM ("Memorandum") is entered into this
___ day of __________, 199_, by and between SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED MAY 22,
1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC ("Landlord"),
and CISCO SYSTEMS, INC., a California corporation ("Tenant") concerning that
certain Lease (Buildings "K" and "L")("Lease") between Landlord and Tenant dated
May 22, 1995. Any capitalized terms not defined in this Memorandum shall have
the meaning as defined in the Lease.
1. Pursuant to Section 5.6 of the Lease, Landlord and Tenant are
required to enter into this Memorandum within thirty (30) days after the initial
Advance for the foundation of any Building and within thirty (30) days after the
initial Advance under the Lease.
2. Landlord and Tenant agree that this Memorandum reflects initial
Advances that were made for the following Building(s):
_______________________________________________.
3. Landlord and Tenant agree that the amount(s) of the initial
Advances is (are) as follows (allocated on a Building-by- Building basis, if
this Memorandum reflects Advances for more than one Building): ________________
_______________________________________________________________________________.
4. Landlord and Tenant agree that the Guaranteed Residual Value for
the Building(s) described in Paragraph 2 is _____% of ___________________ (the
total Funded Amount for the Building(s)).
5. Landlord and Tenant agree that the estimated Funded Amount,
determined by Tenant pursuant to Section 5.5 of the Lease, is
$______________________.
6. Landlord and Tenant agree that, pursuant to Section 5.7 of the
Lease, the Security Deposit to be held by Landlord pursuant to the Lease is
$______________________.
[Remainder of This Page Intentionally Left Blank]
EXHIBIT G
1.
<PAGE> 102
[SIGNATURE PAGE TO INITIAL ADVANCE MEMORANDUM]
IN WITNESS WHEREOF, the parties have executed this Memorandum as of
the date and year first above written.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE
UNDER THAT CERTAIN TRUST
AGREEMENT DATED MAY 22, 1995
BETWEEN SUMITOMO BANK LEASING AND
FINANCE, INC. AND SBNYTC
By: ___________________________
Name:___________________________
Its: ___________________________
[SIGNATURES CONTINUED ON NEXT PAGE]
EXHIBIT G
2.
<PAGE> 103
[SIGNATURE PAGE TO INITIAL ADVANCE MEMORANDUM]
"TENANT"
CISCO SYSTEMS, INC.,
a California corporation
By:___________________________
Name:_________________________
Its: _________________________
EXHIBIT G
3.
<PAGE> 104
EXHIBIT H
RENT COMMENCEMENT DATE MEMORANDUM
THIS RENT COMMENCEMENT DATE MEMORANDUM ("Memorandum") is entered into
this ___ day of _______, 199_, by and between SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED MAY 22,
1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC ("Landlord"),
and CISCO SYSTEMS, INC., a California corporation ("Tenant") concerning that
certain Lease (Buildings "K" and "L")("Lease") between Landlord and Tenant dated
May 22, 1995. Any capitalized terms not defined in this Memorandum shall have
their meaning as defined in the Lease.
1. Pursuant to Section 5.6 of the Lease, Landlord and Tenant are
required to enter into this Memorandum within thirty (30) days after the Rent
Commencement Date for any Building.
2. Landlord and Tenant agree the that Rent Commencement Date for the
Building described as follows _______________________, is ___________ ___, 199_.
3. The dollar value of the Funded Amount (defined in Section 2.24 of
the Lease) for the Building described in paragraph 2 is $_____________________).
4. The dollar value of the Landlord's Equity Contribution (defined in
Section 2.17 of the Lease) for the Building described in paragraph 2 above is
_____% of $_____________________________, (i.e. $_________________________).
5. The dollar value of the Guaranteed Residual Value (defined in
Section 2.25 of the Lease) for the Building described in paragraph 2 above is
_____% of $_____________________________, (i.e. $_____________________________).
6. Landlord and Tenant agree that, pursuant to Section 5.7 of the
Lease, the Security Deposit held by Landlord pursuant to the Lease shall be in
the amount of $______________________ as of the Rent Commencement Date.
[Remainder of This Page Intentionally Left Blank]
EXHIBIT H
1.
<PAGE> 105
[SIGNATURE PAGE TO RENT COMMENCEMENT DATE MEMORANDUM]
IN WITNESS WHEREOF, the parties have executed this Memorandum as of
the date and year first above written.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE
UNDER THAT CERTAIN TRUST
AGREEMENT DATED MAY 22, 1995
BETWEEN SUMITOMO BANK LEASING AND
FINANCE, INC. AND SBNYTC
By: ___________________________
Name:___________________________
Its: ___________________________
[SIGNATURES CONTINUED ON NEXT PAGE]
EXHIBIT H
<PAGE> 106
[SIGNATURE PAGE TO RENT COMMENCEMENT DATE MEMORANDUM]
"TENANT"
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
By: ___________________________
Name:___________________________
Its: ___________________________
EXHIBIT H
<PAGE> 107
EXHIBIT I
DRAW REQUEST FORM
THIS DRAW REQUEST ("Draw Request") is submitted by CISCO SYSTEMS,
INC., a California corporation ("Tenant") to SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED MAY 22,
1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC ("Landlord"),
pursuant to Article 11 of that certain Lease (Buildings "K" and "L") between
Landlord and Tenant dated May 22, 1995. Any capitalized terms not defined in
this Draw Request shall have their meaning as defined in the Lease.
Pursuant to the terms of Article 11 of the Lease, Tenant hereby makes
a Draw Request for an Advance from Landlord. The Aggregate of the amount of the
Advance requested by Tenant pursuant to this Draw Request is $_________________.
Tenant hereby instructs Landlord to make this Advance to the parties
and in the amounts described below:
Name of Entity Amount
[ADD ADDITIONAL SHEET, IF NECESSARY, TO DESCRIBE ALL ENTITIES TO
RECEIVE A PORTION OF THIS ADVANCE AND THE AMOUNT TO BE PAID TO EACH SUCH
ENTITY.]
IN WITNESS WHEREOF, Tenant has executed this Draw Request as of the
date and year first above written.
"TENANT"
CISCO SYSTEMS, INC.,
a California corporation
By: _______________________
Name:_______________________
Its: _______________________
EXHIBIT I
1.
<PAGE> 108
EXHIBIT J
CLOSING COSTS AND FEES TO BE
INCLUDED IN FUNDED AMOUNT
The following items shall be included in the definition of the Funded
Amount under Section 2.24 of the Lease:
1. Title Insurance premiums paid by Landlord at the closing of this
transaction
2. Landlord's Trust Set Up Charge ($5,000)
3. Set Up Charge ($2,000)
4. Arrangement Fee ($3,250)
5. Irish Leasing Corporation Arrangement Fee ($100,000)
6. Landlord Arrangement Fee ($370,500)
7. Other fees and costs which are specifically authorized by Tenant
in writing to be included in the Funded Amount
EXHIBIT J
1.
<PAGE> 109
EXHIBIT K
NOTICE OF INTEREST RATE PERIOD SELECTION
Pursuant to Section 5.1(d) of those certain Leases by and between
Sumitomo Bank of New York Trust Company, ("SBNYTC"), as trustee under that
certain trust agreement dated May 22, 1995 between Sumitomo Bank Leasing and
Finance, Inc. and SBNYTC ("SB Trust"), as Landlord, and Cisco Systems, Inc., a
California corporation ("Cisco"), as Tenant, dated as of May 22, 1995, Cisco
hereby gives notice to SB Trust of its designation of the Loan interest period
as set forth below:
Effective Date Interest Period
_____________, ____ _____ month(s)
This Notice of Borrowing is dated this ___ day of _______, _____, and
may be executed in multiple copies, each of which shall be deemed an original,
and all of which together shall be but a single Notice.
"CISCO"
CISCO SYSTEMS, INC.,
a California corporation
By: ___________________
Title: ___________________
By: ___________________
Title: ___________________
EXHIBIT K
<PAGE> 110
EXHIBIT L
DESCRIPTION OF ADDITIONAL PROPERTY OWNED BY LANDLORD
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on July 13, 1983,
in Book 514 of Maps page(s) 47 and 48.
APN: 97-53-14
All of Lot 54 as shown upon that certain Map entitled, "Tract No. 7559", which
Map was filed for record in the Office of the Recorder of the County of Santa
Clara, State of California on December 21, 1983 in Book 522 of Maps, at pages 49
and 50.
APN: 97-53-23
Lot 50, as shown on that certain Map entitled, "Tract No. 7560," which Map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on December 21, 1983 in Book 522 of Maps, pages 51 and 52.
Reserving therefrom a perpetual right and easement to construct, install,
maintain, repair, renew, replace, operate and use a surface drainage release to
benefit Lot 49 of Tract 7560, as contained in that certain Grant of Easement
recorded August 8, 1990 in Book L443, page 0754, Official Records, and described
as follows:
The Northwesterly 10.00 feet of the Southeasterly 30.00 feet and the
Northwesterly 100.00 feet of the Southeasterly 130.00 feet of the Northeasterly
10.00 feet of Lot 50.
That portion of Lot 51, as shown on that certain Map entitled, "Tract No. 7560,"
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, State of California on December 21, 1983 in Book 522 of Maps, pages
51 and 52, being more particularly described as follows:
Beginning at the Southeasterly corner of said Lot 51; thence along the
Southerly line of said Lot 51, S. 59 degrees 27 minutes 51 seconds W. 77.00
feet; thence N. 14 degrees 27 minutes 48 seconds E. 108.90 feet to the
Northeasterly line of said Lot 51; thence along said Northeasterly line S. 30
degrees 32 minutes 09 seconds E. 77.00 feet to the point of beginning, as
provided for in that certain Lot Line Adjustment granted by the Director of
Planning of the City of San Jose, a copy of which was recorded March 28, 1984
in the office of the Recorder of the County of Santa Clara in Book I410, page
712 of Official Records.
EXHIBIT L
<PAGE> 111
Lot 5 and 6, as shown on that certain Map of Tract No. 7408, which map was filed
for record in the office of the Recorder of the County of Santa Clara, State of
California on November 19, 1982 in Book 506 of Maps, pages 24, 25 and 26 and a
portion of that certain parcel of land described in the deed recorded December
22, 1972 in Book 0167, page 623, all as approved by that Lot Combination
recorded September 16, 1992 in Book M381 of Maps, page(s) 0081, Official
Records, more particularly described as follows:
Beginning at a point on the Northeasterly line of Rio Robles, as shown upon said
map, at the most Southerly corner of said Lot 5; thence along said Northeasterly
line of Rio Robles, N. 30 degrees 32 minutes 09 seconds W. 105.50 feet; thence
on a tangent curve to the right, having a radius of 367.00 feet, through a
central angle of 36 degrees 30 minutes 00 seconds an arc distance of 233.80
feet; thence on a curve to the right, tangent to the previous curve, having a
radius of 50.00 feet, through a central angle of 86 degrees 01 minutes 50
seconds an arc distance of 75.08 feet to the Southerly line of Tasman Drive as
shown upon said map; thence along said line on a curve to the left, tangent to
the previous curve, having a radius of 1149.00 feet, through a central angle of
32 degrees 31 minutes 01 seconds an arc distance of 652.09 feet; thence N. 59
degrees 28 minutes 40 seconds E. 600.40 feet; thence on a tangent curve to the
right, having a radius of 33.00 feet, through a central angle of 89 degrees 51
minutes 11 seconds an arc distance of 51.83 feet to the Southwesterly line of
First Street, as shown upon said map; thence along said line, S. 30 degrees 32
minutes 09 seconds E. 261.38 feet to the Northwesterly line of the lands of the
City and County of San Francisco, as shown upon said map; thence along said line
of the lands of the City and the County of San Francisco, S. 65 degrees 09
minutes 27 seconds W. 1396.95 feet to the point of beginning.
Those rights as contained in that certain Grant Deed executed by Masami Ezaki
and Kaoru Ezaki, his wife in favor of the City and County of San Francisco, a
municipal corporation recorded December 8, 1950 in Book 2111, page 319, Official
Records.
A strip of land 80 feet wide, lying 40 feet either side of the following
described line and extensions thereto, across that certain parcel of land
conveyed by Charles Nelson, et ux, to Masami Ezaki by Grant Deed dated February
27, 1936 and recorded March 11, 1936, in Volume No. 765, at page 262, Official
Records, Santa Clara County, hereinafter referred to as the Ezaki Parcel, said
line being more particularly described as commencing at a point in the Westerly
boundary of the existing San Jose-Alviso Road, said point being distant along
said boundary South 30 degrees 32 minutes 30 seconds East 381.31 feet from its
intersection with the Northerly boundary of the above mentioned Ezaki Parcel;
thence, from said point of commencement, South 65 degrees 08 minutes 00 seconds
West 1459.03 feet to a point in the common boundary between the above mentioned
Ezaki Parcel and that certain parcel of land conveyed by Lena Lindgren, et al,
to James A. Pankoski, et ux, by Joint Tenancy Deed dated November 13, 1944 and
recorded November 17, 1944 in Volume No. 1227 at Page 327, Official Records,
Santa Clara County, hereinafter referred to as the Pankoski Parcel, said point
being distant along said common boundary South 30 degrees 32 minutes 30 seconds
East 237.04 feet from the most Westerly corner of the above mentioned Ezaki
Parcel; the Easterly end of said strip being the above mentioned Westerly
boundary of the San Jose-Alviso Road, and the Westerly end of said strip being
the above mentioned common boundary between the Pankoski and Ezaki Parcels.
EXHIBIT L
<PAGE> 1
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ("First Amendment") is made and entered
into as of this 18th day of July, 1995, by and between SUMITOMO BANK OF NEW
YORK TRUST COMPANY, ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT
DATED MAY 22, 1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC
("Landlord"), and CISCO SYSTEMS, INC., a California corporation ("Tenant").
THIS FIRST AMENDMENT IS ENTERED INTO upon the basis of the following
facts, understandings and intentions.
RECITALS
A. Landlord and Tenant entered into that certain Lease (Buildings
"K" and "L") dated May 22, 1995 ("Lease"), pursuant to which Landlord is
leasing to Tenant the improvements which Tenant may elect to construct
("Premises"), as agent for Landlord, on that certain land located in San Jose,
California, as more particularly described in the Lease and on Exhibit A
attached hereto and incorporated herein by this reference. Any capitalized
terms used but not defined in this First Amendment which are defined in the
Lease shall have the meaning ascribed in the Lease.
B. Landlord and Tenant now desire to amend the terms of the
Lease, as more particularly described in this First Amendment.
NOW THEREFORE, the parties hereto agree as follows:
1. Capitalized Interest. Section 2.9 of the Lease is hereby
amended to add the following sentence at the end of the Section:
During the Construction Period for a Building or phase of
Buildings, Capitalized Interest for such Building or phase of
Buildings shall be calculated using the Construction Period
Monthly Calculation set forth in Section 2.43.
2. Monthly Calculation. Section 2.43 of the Lease is hereby
amended to add the following sentence at the end of the Section:
During the Construction Period for a Building or phase of
Buildings, "Monthly Calculation" shall mean the quotient
resulting from dividing three hundred sixty (360) by the
number of days in the applicable Rent Period. The applicable
Rent Period shall begin on the twentieth day of the calendar
month for which this Construction Period Monthly Calculation
is being calculated and shall be for a period equal to the
number of days in such calendar month.
<PAGE> 2
3. Rent Period. Section 2.57 of the Lease is hereby deleted, and
is replaced with the following:
2.57 Rent Period. "Rent Period" shall mean each period
equal to one calendar month occurring during the Term hereof,
except that: (a) the first Rent Period shall be a partial
calendar month commencing on the date of disbursement of the
initial proceeds hereof and ending on July 2, 1995, (b) the
second Rent Period shall be a partial calendar month
commencing on July 3, 1995 and ending on July 19, 1995; (c)
Commencing July 20, 1995 and ending on the nineteenth day of
the last calendar month of the Construction Period, the Rent
Period shall commence on the twentieth day of each calendar
month and end on the nineteenth day of the subsequent calendar
month; (d) the Rent Period preceding the Rent Commencement
Date shall be a partial calendar month commencing on the
twentieth day of the last calendar month of the Construction
Period and ending on the last day of such calendar month; and
(e) the last Rent Period shall be a partial calendar month
commencing on the first LIBOR Business Day of the last
calendar month of the Term and ending on the last day of the
Term.
4. Timing and Method of Disbursement. Section 11.6(a) of the
Lease is hereby deleted, and is replaced with the following:
(a) Timing and Method of Disbursement. Advances
to be made hereunder shall not be made more frequently than
monthly. For any calendar month during which Tenant desires
to receive an Advance, Tenant shall submit a Draw Request on
or before the fifteenth day of such month, and if Tenant
submits such Draw Request by such date, then Landlord shall,
subject to the conditions to funding described in Sections
11.3, 11.4 and 11.5, make the Advance as requested in such
Draw Request to the party(ies) designated by Tenant on the
twentieth day of such month, or the next LIBOR Business Day if
the twentieth day of such month is not a LIBOR Business Day
("Advance Date"). The Advances shall be made to parties
identified by Tenant, which parties may include Tenant. At
the option of Tenant, Landlord shall make such Advances to one
(1) or more parties.
5. Counterparts. This First Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall comprise but a single instrument.
6. Existing Lease. Except to the extent specifically amended
hereby, all terms and conditions of the Lease remain in full force and effect.
-2-
<PAGE> 3
[SIGNATURE PAGE TO FIRST AMENDMENT TO LEASE]
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the date and year first above written.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST COMPANY
("SBNYTC"), AS TRUSTEE UNDER THAT
CERTAIN TRUST AGREEMENT DATED MAY 22,
1995 BETWEEN SUMITOMO BANK LEASING AND
FINANCE, INC. AND SBNYTC
By:
----------------------------------
Name:
----------------------------------
Its:
----------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
-3-
<PAGE> 4
[SIGNATURE PAGE TO RENT FIRST AMENDMENT TO LEASE]
"TENANT"
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
By:
---------------------
Name:
---------------------
By:
---------------------
Name:
----------------
Its:
----------------
-4-
<PAGE> 5
EXHIBIT A
DESCRIPTION OF LAND
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lots 58 and 59, as shown upon that certain map entitled, "Tract No. 7559",
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, on December 21, 1983 in Book 522 of Maps, at pages 49 and 50.
APN: 97-53-18,22
EXHIBIT A
<PAGE> 1
LEASE
(IMPROVEMENTS PHASE "C")
By and Between
SUMITOMO BANK OF NEW YORK TRUST COMPANY ("SBNYTC"),
AS TRUSTEE
UNDER THAT CERTAIN TRUST AGREEMENT
DATED MAY 22, 1995
BETWEEN
SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC
as Landlord
and
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
as Tenant
for
Premises located in
San Jose, California
THIS LEASE IS NOT INTENDED TO CONSTITUTE A TRUE LEASE
FOR INCOME TAX PURPOSES. SEE SECTION 21.2
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 BASIC LEASE PROVISIONS................................... 1
1.1 Date of Lease............................................ 1
1.2 Landlord................................................. 1
1.3 Tenant................................................... 1
1.4 Land..................................................... 1
1.5 Premises................................................. 1
1.6 Term..................................................... 2
1.7 Rent Commencement Date................................... 2
1.8 Base Rent................................................ 3
1.9 Addresses for Notices.................................... 3
1.10 Address for Rent Payments................................ 3
ARTICLE 2 DEFINITIONS.............................................. 4
2.1 Additional Rent.......................................... 4
2.2 Advance.................................................. 5
2.3 Approval Plans........................................... 5
2.4 Authorized Loan.......................................... 5
2.5 Authorized Plans......................................... 5
2.6 Base Rent................................................ 5
2.7 Building................................................. 5
2.8 Building Leases.......................................... 5
2.9 Capitalized Interest..................................... 5
2.10 Collateral............................................... 5
2.11 Construction Period...................................... 5
2.12 Contractor............................................... 5
2.13 Coverage Test............................................ 6
2.14 Default.................................................. 6
2.15 Default Rate............................................. 6
2.16 Entity................................................... 6
2.17 Equity Contribution...................................... 6
2.18 Equity Funded Amount..................................... 6
2.19 Equity Rent Component.................................... 6
2.20 Event of Major Default................................... 7
2.21 Extension Fee............................................ 7
2.22 Extension Term........................................... 7
2.23 Fee Mortgage............................................. 7
2.24 Funded Amount............................................ 7
2.25 Guaranteed Residual Value................................ 7
2.26 HSBC..................................................... 8
2.27 Improvements............................................. 8
2.28 Improvements Loan........................................ 8
2.29 Initial Term............................................. 8
2.30 ILC...................................................... 8
2.31 Land..................................................... 8
2.32 Land Lease............................................... 8
2.33 Land Lease Deed of Trust................................. 8
2.34 Land Loan................................................ 9
2.35 Landlord Affiliate....................................... 9
2.36 Landlord Deed of Trust................................... 9
2.37 Lease Inception Date..................................... 9
</TABLE>
i.
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
2.38 Legal Requirements...................................... 9
2.39 Lenders................................................. 9
2.40 Lenders Deed of Trust................................... 9
2.41 LIBOR Business Day...................................... 9
2.42 LIBOR Rate. ........................................... 10
2.43 Monthly Calculation..................................... 10
2.44 Mortgage................................................ 10
2.45 Mortgagee............................................... 10
2.46 New Loan................................................ 10
2.47 Nominal Rate............................................ 10
2.48 Notes................................................... 10
2.49 Notice.................................................. 10
2.50 Official Records........................................ 10
2.51 Permitted Exceptions.................................... 10
2.52 Premises................................................ 11
2.53 Real Estate Taxes....................................... 11
2.54 Rent.................................................... 11
2.55 Rent Commencement Date.................................. 11
2.56 Rent Payment Date....................................... 11
2.57 Rent Period............................................. 11
2.58 Required Permits........................................ 11
2.59 SBNYTC.................................................. 11
2.60 Security Deposit........................................ 11
2.61 Senior Funded Amount.................................... 11
2.62 Senior Rent Component................................... 11
2.63 Site Plan............................................... 12
2.64 Sumitomo................................................ 12
2.65 Taking.................................................. 12
2.66 Tenant Deed of Trust.................................... 12
2.67 Term.................................................... 12
ARTICLE 3 DEMISE.................................................. 12
3.1 Premises................................................ 12
ARTICLE 4 TERM.................................................... 12
4.1 Initial Term............................................ 12
4.2 Extension Term.......................................... 12
4.3 Holding Over............................................ 13
ARTICLE 5 RENT.................................................... 13
5.1 Base Rent............................................... 13
5.2 Proration............................................... 16
5.3 No Abatement of Rent.................................... 16
5.4 Delinquent Rent......................................... 16
5.5 Equity Funding.......................................... 16
5.6 Exhibits Reflecting Initial Advance and Rent
Commencement Date...................................... 17
5.7 Security Deposit........................................ 18
5.8 Additional Rent......................................... 19
ARTICLE 6 TAXES................................................... 19
6.1 Real Estate Taxes....................................... 19
6.2 Personal Property Taxes................................. 20
6.3 Right to Contest........................................ 20
6.4 Withholding Taxes....................................... 21
</TABLE>
ii.
<PAGE> 4
<TABLE>
<S> <C> <C>
6.5 Additional Provisions Relating to Taxes...................... 22
ARTICLE 7 INSURANCE.................................................... 22
7.1 Liability Insurance.......................................... 22
7.2 Builders' Risk Insurance..................................... 23
7.3 All-Risk Insurance........................................... 23
7.4 General Requirements......................................... 23
7.5 Waiver of Subrogation........................................ 24
7.6 Indemnity.................................................... 24
ARTICLE 8 USE.......................................................... 25
8.1 Use.......................................................... 25
8.2 Contest of Legal Requirements................................ 28
8.3 Indemnification.............................................. 28
ARTICLE 9 UTILITIES AND SERVICES....................................... 29
9.1 Services to the Premises..................................... 29
ARTICLE 10 MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES........... 29
10.1 Tenant Obligations........................................... 29
10.2 Surrender of the Premises.................................... 29
ARTICLE 11 CONSTRUCTION OF IMPROVEMENTS................................. 30
11.1 Tenant's Rights to Construct Improvements.................... 30
11.2 Request for Construction Funding; Landlord
Obligation to Fund.......................................... 30
11.3 Conditions Precedent to Landlord's Obligation to
Fund Initial Advances....................................... 30
11.4 Conditions Precedent to Landlord's Obligation to
Fund Subsequent Advances.................................... 33
11.5 Conditions Precedent to Landlord's Obligation to
Fund Final Advance.......................................... 34
11.6 Additional Provisions Regarding Advances..................... 34
11.7 Required Permits, Easements, etc............................. 35
11.8 Alterations.................................................. 35
11.9 Title to and Nature of Improvements.......................... 35
11.10 Tenant as Landlord's Construction Agent...................... 36
11.11 Tenant's Release of Funding Commitment....................... 36
ARTICLE 12 LIENS........................................................ 36
ARTICLE 13 ASSIGNMENT BY LANDLORD....................................... 36
13.1 Further Mortgages or Encumbrances by Landlord;
Authorized Loans............................................ 36
13.2 Landlord's Right to Sell..................................... 39
13.3 Transfer of Funds and Property............................... 39
ARTICLE 14 ASSIGNMENT AND SUBLEASING.................................... 40
14.1 Right to Assign.............................................. 40
14.2 Right to Sublet.............................................. 40
14.3 Tenant's Right to Mortgage................................... 41
</TABLE>
iii.
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE 15 EMINENT DOMAIN.......................................... 41
15.1 Total or Substantial Taking............................. 41
15.2 Partial Taking.......................................... 41
15.3 Temporary Taking........................................ 41
15.4 Damages................................................. 42
15.5 Notice and Execution.................................... 42
ARTICLE 16 DAMAGE OR DESTRUCTION................................... 42
16.1 Casualty................................................ 42
16.2 Termination of Lease.................................... 42
16.3 Insurance Proceeds...................................... 43
ARTICLE 17 DEFAULT................................................. 45
17.1 Default................................................. 45
17.2 Event of Major Default.................................. 45
17.3 Contest by Tenant....................................... 47
17.4 Remedies................................................ 47
17.5 No Waiver............................................... 48
17.6 Effect of Assignment.................................... 48
17.7 Landlord Cure Right..................................... 49
17.8 Landlord's Default...................................... 49
ARTICLE 18 QUIET ENJOYMENT......................................... 50
ARTICLE 19 TENANT'S OPTION TO PURCHASE............................. 51
19.1 Option To Purchase Premises............................. 51
19.2 Mandatory Purchase/Sale of Premises..................... 53
19.3 Survival................................................ 55
ARTICLE 20 ADDITIONAL COVENANTS OF LANDLORD........................ 55
20.1 Title and Subdivision................................... 55
20.2 Land Use................................................ 55
20.3 Transfer of Property Interests.......................... 56
20.4 Trust Equity; No Other Asset............................ 56
20.5 Default Under Authorized Loan........................... 56
ARTICLE 21 MISCELLANEOUS........................................... 57
21.1 Relationship............................................ 57
21.2 Form of Transaction; Certain Tax Matters................ 57
21.3 Notices................................................. 58
21.4 Severability of Provisions.............................. 58
21.5 Entire Agreement; Amendment............................. 58
21.6 Approvals and Consents.................................. 58
21.7 Terminology............................................. 59
21.8 Memorandum of Lease..................................... 59
21.9 Successors and Assigns.................................. 59
21.10 Commissions............................................. 59
21.11 Attorneys' Fees......................................... 60
21.12 Governing Law........................................... 60
21.13 Counterparts............................................ 60
21.14 Time Is of the Essence.................................. 60
21.15 No Third Party Beneficiaries............................ 60
21.16 Limitations on Recourse................................. 60
21.17 Estoppel Certificates................................... 60
</TABLE>
iv.
<PAGE> 6
<TABLE>
<S> <C> <C>
21.18 Collateral............................................. 61
21.19 Landlord's Continuing Obligation to Sell............... 61
21.20 As-Is Lease............................................ 61
21.21 Net Lease.............................................. 62
21.22 Representations and Warranties......................... 62
21.23 Appraisal Procedure.................................... 62
21.24 Financial Reporting.................................... 64
21.25 Appraisal.............................................. 64
</TABLE>
List of Exhibits
Exhibit A Description of Land
Exhibit B Permitted Exceptions
Exhibit C Site Plan
Exhibit D Pre-Approved Approval Plans
Exhibit E Memorandum of Lease
Exhibit F Form of Contractor's Certificate
Exhibit G Initial Advance Memorandum
Exhibit H Rent Commencement Date Memorandum
Exhibit I Draw Request Form
Exhibit J Closing Costs and Fees to be Included in Funded Amount
Exhibit K Notice of Interest Rate Period Selection
Exhibit L Description of Additional Property Owned by Landlord
v.
<PAGE> 7
LEASE
THIS LEASE ("Lease") by and between SUMITOMO BANK OF NEW YORK
TRUST COMPANY ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED
MAY 22, 1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC., AND SBNYTC
("Landlord"), and CISCO SYSTEMS, INC., a California corporation ("Tenant"), is
entered into as of the date set forth in Article 1 and shall be effective and
binding upon the parties hereto as of such date. Capitalized terms used in
this Lease shall have the definitions set forth in Article 2 or in the text of
this Lease.
In consideration of the Base Rent reserved herein, and the
terms, covenants and conditions set forth below, Landlord and Tenant hereby
agree as follows:
<TABLE>
<CAPTION>
ARTICLE 1
BASIC LEASE PROVISIONS
<S> <C> <C>
1.1 DATE OF LEASE: May 22, 1995.
1.2 LANDLORD: Sumitomo Bank of New York Trust
Company, ("SBNYTC"), as trustee under
that certain trust agreement dated May
22, 1995 between Sumitomo Bank Leasing
and Finance, Inc. and SBNYTC.
1.3 TENANT: Cisco Systems, Inc., a California
corporation.
1.4 LAND: That certain tract of land located in
the City of San Jose, Santa Clara
County, California, consisting of
three (3) parcels and more
particularly described on Exhibit A
attached hereto, together with all
easements, rights of way,
appurtenances and other rights and
benefits belonging or pertaining to
such land. The Land does not include
the Improvements. Landlord makes no
representations as to the accuracy of
the description of the Land.
1.5 PREMISES: The Improvements which Tenant may
elect to construct, as agent for
Landlord, on the Land pursuant to the
terms of this Lease. The Premises
does not include any portion of the
Land itself.
</TABLE>
1.
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C> <C>
1.6 TERM: The initial term ("Initial Term") of
this Lease shall commence on the Date
of Lease set forth in Section 1.1
above and shall expire on May 21,
2000. Subject to the Extension
Conditions contained in Section 4.2,
upon at least ninety (90) days' prior
written notice to Landlord, Tenant may
extend the Initial Term for one (1)
additional period of five (5) years
("Extension Term"). The Initial Term
and (if exercised by Tenant) the
Extension Term shall be referred to
collectively herein as the "Term."
The Term shall cease upon, and shall
not refer to any period of time after,
termination of this Lease (whether
pursuant to the terms of the Lease, by
operation of law, or otherwise).
1.7 RENT COMMENCEMENT
DATE: Tenant's obligation to pay Base Rent
shall commence on a
Building-by-Building basis. With
respect to any particular Building, the
rent commencement date ("Rent
Commencement Date") shall be the first
LIBOR Business Day of the next calendar
month which commences immediately
following the earlier to occur of: (a)
the date Tenant receives from the
applicable governmental authority a
final Certificate of Occupancy for the
Building in question; or (b) eighteen
(18) months following the first Advance
by Landlord for the foundation for the
Building in question. If Tenant shall
elect to construct certain Improvements
in a phase of Buildings, then on or
before the Lease Inception Date for
such phase of Buildings, Landlord and
Tenant shall execute a memorandum of
understanding that construction is
taking place on a phased basis, and in
that event, the Rent Commencement Date
for such phase of Buildings shall be
the first LIBOR Business Day of the
next calendar month which commences
immediately following the earlier to
occur of: (i) the date Tenant receives
a final Certificate of Occupancy for
the phase in question from the
applicable governmental authority; or
</TABLE>
2.
<PAGE> 9
<TABLE>
<CAPTION>
<S> <C>
(ii) eighteen (18) months after the
first Advance by Landlord for the
foundation for the phase in question.
1.8 BASE RENT: As described in Section 2.6.
1.9 ADDRESSES FOR
NOTICES:
LANDLORD: TENANT:
Sumitomo Bank of New York Cisco Systems, Inc.
Trust Company Treasury Department
277 Park Avenue 3535 Garrett Drive
New York, NY 10172 Santa Clara, CA 95054
Attn: Corporate Trust Attention: Eugene Hill
Department
With a copy to: With a copy to:
Landels, Ripley & Diamond Cisco Systems, Inc.
Hills Plaza 3535 Garrett Drive
350 Steuart Street Santa Clara, CA 95054
San Francisco, CA 94105 Attention: Nancy Bareilles
Attn: Bruce W. Hyman, Esq.
and
Todd J. Anson, Esq.
Brobeck, Phleger & Harrison
550 West C Street
Suite 1300
San Diego, CA 92101
1.10 ADDRESS FOR RENT
PAYMENTS:
Equity Rent Component: Sumitomo Bank of New York Trust
Company
277 Park Avenue
New York, NY 10172
Attn: Corporate Trust Department
</TABLE>
3.
<PAGE> 10
Senior Rent
Component: One half (1/2) of the Senior Rent Component
(as defined in Section 2.62) shall be
payable at the following address:
The Hongkong and Shanghai
Banking Corporation Limited
160 Sansome Street
San Francisco, CA 94104
Attn: Loan Administration
Department
and one half (1/2) of the Senior Rent
Component (as defined in Section 2.62)
shall be payable at the following address:
The Sumitomo Bank, Limited
555 California Street
Suite 3350
San Francisco, CA 94104
Attn: Mr. Dave Kubiak
This Article 1 is intended to supplement and/or summarize the
provisions set forth in the balance of this Lease. If there is any conflict
between any provisions contained in this Article 1 and the balance of this
Lease, the balance of this Lease shall control.
ARTICLE 2
DEFINITIONS
For purposes of this Lease, the following defined terms shall
have the meanings set forth in this Article 2.
2.1 ADDITIONAL RENT. "Additional Rent" shall mean any
amounts other than Base Rent payable by Tenant to Landlord or to other Entities
on Landlord's behalf as required under this Lease, including, without
limitation, interest accrued on past due Base Rent and on other past due
Additional Rent amounts owing to Landlord hereunder (including interest on the
past due amounts payable by Landlord to Lenders under the Improvements Loan, as
described in Section 21.21, excluding interest on interest) at the Default Rate
(to be compounded annually), costs and expenses to be paid or reimbursed by
Tenant hereunder (including any amounts which Tenant owes to Landlord pursuant
to the terms of Section 17.7 or Section 21.21), any charges, fees or other
amounts due under the Improvements Loan and any other Authorized Loan, amounts
due pursuant to Tenant's indemnity obligations hereunder, Real Estate Taxes,
Tenant's obligation to pay condemnation proceeds to Landlord pursuant to
Section 15.4, Tenant's obligation to pay insurance proceeds to Landlord
pursuant to Section 16.3, Tenant's obligation to pay the Purchase Price under
Section 19.2, and Tenant's obligation, if any, to pay the "Margin Increase" (as
defined in that certain side letter regarding "Management of Collateral
4.
<PAGE> 11
Account" between Tenant and HSBC, of even date herewith). Except as provided in
this Section, Additional Rent shall not include interest charged on interest.
2.2 ADVANCE. "Advance" shall mean any payment by
Landlord for Improvements which has been requested by Tenant and paid pursuant
to the terms of Article 11.
2.3 APPROVAL PLANS. "Approval Plans" shall have the
meaning set forth in Section 11.3(c).
2.4 AUTHORIZED LOAN. "Authorized Loan" shall have the
meaning set forth in Section 13.1(b).
2.5 AUTHORIZED PLANS. "Authorized Plans" shall have the
meaning set forth in Section 11.3(c).
2.6 BASE RENT. "Base Rent" shall mean, as of a Rent
Payment Date, the sum of the following for any Building for which the Rent
Commencement Date has occurred: (1) the Senior Rent Component; and (2) the
Equity Rent Component.
2.7 BUILDING. "Building" shall mean any individual
building which constitutes an Improvement.
2.8 BUILDING LEASES. "Building Leases" shall mean this
Lease and those two (2) certain lease agreements by and between Landlord and
Tenant for premises located in San Jose, California, dated the date hereof,
collectively.
2.9 CAPITALIZED INTEREST. "Capitalized Interest" shall
mean: (1) the Senior Rent Component incurred by Landlord to Lenders under the
Notes on Advances during the construction of any Building or phase prior to the
Rent Commencement Date for such Building or phase; and (2) the Equity Rent
Component as a result of Advances made by Landlord pursuant to Section 5.5
during the construction of any Building or phase prior to the Rent Commencement
Date for such Building or phase.
2.10 COLLATERAL. "Collateral" shall have the meaning set
forth in Section 21.18.
2.11 CONSTRUCTION PERIOD. "Construction Period" for each
Building or phase shall mean that period beginning on the date of the first
Advance for the foundation of the Building or phase and ending on the Rent
Commencement Date for the Building or phase.
2.12 CONTRACTOR. "Contractor" shall mean the general
contractor hired to construct any Improvements, which contractor shall be
selected by Tenant in Tenant's capacity as agent for Landlord, and shall be
subject to Landlord's approval, which shall not be unreasonably withheld or
delayed. Landlord hereby approves Devcon Construction, Inc.
5.
<PAGE> 12
2.13 COVERAGE TEST. "Coverage Test" shall mean a
requirement, wherever referenced in the Lease, that the fair market value of the
Land and the Improvements together be at least three (3) times the Equity Funded
Amount.
2.14 DEFAULT. "Default" shall have the meaning set forth
in Section 17.1.
2.15 DEFAULT RATE. "Default Rate" means that weighted
average of the interest rates of (i) the Senior Rent Component as set forth in
Section 2.62 and (ii) the Equity Rent Component set forth in Section 2.19, plus
two percent (2.0%), or the highest rate permitted by applicable law (if any),
whichever is less. Mathematically, the Default Rate shall be:
(3/86 X Equity Rent Component rate) + (83/86 X Senior Rent Component rate)
+ 2%
Each change in the Default Rate due to a change in such interest rates under
the Notes shall take effect simultaneously with such change in such interest
rates, without Notice to either party. Notwithstanding the foregoing, in the
event that the foregoing Default Rate shall be in violation of any usury or
similar law, then the Default Rate shall be reduced to the extent necessary to
cause the Default Rate to comply with any usury or similar law.
2.16 ENTITY. "Entity" shall mean any person, corporation,
partnership (general or limited), joint venture, association, joint stock
company, trust or other business entity or organization.
2.17 EQUITY CONTRIBUTION. "Equity Contribution" shall
mean that portion of the Funded Amount equal to three percent (3%) of the
Funded Amount, which Landlord has paid as Landlord's equity contribution to the
Funded Amount (subject, however, to Tenant's adjusted Base Rent payments in the
forty-ninth (49th) and fiftieth (50th) months of the Term, as set forth in
Section 5.1(a) below).
2.18 EQUITY FUNDED AMOUNT. "Equity Funded Amount" shall
mean that portion of the Funded Amount equal to the amount which Landlord has
paid pursuant to the terms of Section 5.5. The Equity Funded Amount shall be
the sum of the Equity Contribution plus the Security Deposit. In no event
shall the Equity Funded Amount exceed the difference between the Funded Amount
minus the aggregate Guaranteed Residual Value. In no event shall the aggregate
of the Equity Funded Amounts of the Building Leases exceed Nineteen Million
Three Hundred Eighty Thousand Dollars ($19,380,000).
2.19 EQUITY RENT COMPONENT. "Equity Rent Component" shall
mean the quotient equal to the product of the Equity Contribution (at the time
of the relevant calculation of the Equity Rent Component) multiplied by the
LIBOR Rate plus 4.05%, divided by
6.
<PAGE> 13
the Monthly Calculation. Mathematically, the Equity Rent Component shall be:
[(Equity Contribution) X (LIBOR Rate + 4.05%)]
--------------------------------------------------------------
[ Monthly Calculation ]
2.20 EVENT OF MAJOR DEFAULT. "Event of Major Default"
shall have the meaning set forth in Section 17.2.
2.21 EXTENSION FEE. "Extension Fee" shall have the
meaning set forth in the Section 4.2.
2.22 EXTENSION TERM. "Extension Term" shall have the
meaning set forth in the Basic Lease Provisions.
2.23 FEE MORTGAGE. "Fee Mortgage" shall mean any
Mortgage, other than the Improvements Loan, at any time given by Landlord, and
remaining uncancelled on the Official Records, encumbering all or any portion
of Landlord's right, title and estate in Improvements.
2.24 FUNDED AMOUNT. "Funded Amount" shall mean the
aggregate amount of any Advances requested and actually paid by Landlord
pursuant to the terms of Section 11 (including Capitalized Interest) and the
closing costs and fees set forth in Exhibit J attached hereto (which shall be
attributable to the first Building or phase of the Lease), less any reductions
in the principal amount of the Improvements Loan or any New Loan or in the
Equity Funded Amount, whether such principal reduction or reduction in the
Equity Funded Amount is accomplished by payment to Lenders or the holder of a
New Loan, the application of the Collateral or other collateral by Lenders or
the holder of a New Loan, the payment of insurance proceeds, condemnation
awards, or otherwise (subject, however, to Tenant's obligation to adjust its
Base Rent payments in the forty-ninth (49th) and fiftieth (50th) months of the
Term, as set forth in Section 5.1(a) below).
2.25 GUARANTEED RESIDUAL VALUE. "Guaranteed Residual
Value" shall be calculated on each Building or phase, and shall mean that
amount necessary to cause the present value of the Minimum Lease Payments under
this Lease, including the present value of the Guaranteed Residual Value, to
approximately equal, but not exceed, eighty nine and 9/10 percent (89.9%) of
the estimated Funded Amount, computed at the Lease Inception Date and
discounted to present value as of the expected Rent Commencement Date using the
interest rate implicit in the Lease (or Tenant's best available incremental
borrowing rate as communicated by Tenant to Landlord, if lower), all as
calculated and determined pursuant to Statement of Financial Accounting
Standards Number 13. "Minimum Lease Payments" shall mean the Base Rent payable
over the Initial Term and the Extension Term, plus imputed interest on the
Security Deposit imputed at the one month LIBOR rate of interest, plus the
Guaranteed Residual Value, plus the following to the extent paid in cash: the
fees listed on Exhibit J, the Extension Fee and
7.
<PAGE> 14
reimbursed costs of Landlord paid by Tenant deemed to meet the definition of
Minimum Lease Payments under SFAS No. 13. During the Construction Period for
each Building, the Guaranteed Residual Value shall not exceed an amount
determined by multiplying the then existing Funded Amount for such Building by
a fraction, the numerator of which is the estimated Guaranteed Residual Value
to be allocated to such Building as of the Rent Commencement Date for such
Building and the denominator of which is the estimated Funded Amount to be
allocated to such Building as of such Rent Commencement Date. If, at any time
prior to the determination of the Guaranteed Residual Value for any Building or
phase, the Financial Accounting Standards Board, Emerging Issues Task Force, or
the Securities Exchange Commission, releases any pronouncements which modify
FAS 13, paragraph 7(d) which outlines the criteria for the determination of the
Guaranteed Residual Value, this Section 2.25 shall be modified to insure
compliance with the new standards.
2.26 HSBC. "HSBC" shall mean The Hongkong and Shanghai
Banking Corporation Limited, a Hong Kong banking corporation, acting through
its San Francisco branch.
2.27 IMPROVEMENTS. "Improvements" shall mean any and all
improvements which Tenant may elect, as construction agent for Landlord, to
erect, construct or situate upon the Land or any part thereof during the Term
under and pursuant to the terms of, and using funding provided by or through
Landlord pursuant to Article 11 of this Lease. Any improvements constructed,
erected or situated on the Land which are not funded by or through Landlord
pursuant to the terms of Article 11 of this Lease shall be and remain the
property of Tenant, and shall not be subject to the terms of this Lease.
2.28 IMPROVEMENTS LOAN. "Improvements Loan" shall have
the meaning set forth in Section 13.1(b).
2.29 INITIAL TERM. "Initial Term" shall have the meaning
set forth in the Basic Lease Provisions.
2.30 ILC. "ILC" shall mean Irish Leasing Corporation, a
Texas corporation, or a successor landlord under the Land Lease.
2.31 LAND. "Land" shall have the meaning set forth in the
Basic Lease Provisions.
2.32 LAND LEASE. "Land Lease" shall mean that certain
Ground Lease dated as of April 12, 1995 by and between Tenant and ILC, by which
Tenant leases the Land from ILC.
2.33 LAND LEASE DEED OF TRUST. "Land Lease Deed of Trust"
shall mean that certain fourth priority deed of trust, junior only to the lien
of the Lenders Deed of Trust, the Landlord Deed of Trust and the Tenant Deed of
Trust, by ILC, as trustor, in favor of Tenant, as beneficiary, dated May 1,
1995 and recorded on
8.
<PAGE> 15
May 1, 1995 in the Official Records as Instrument No. 12877066, and as more
fully described in Section 13.1(g).
2.34 LAND LOAN. "Land Loan" shall mean that loan funded
by Union Bank of Switzerland, a Swiss banking corporation, acting through its
Los Angeles branch, or any other loan authorized pursuant to the terms of the
Land Lease for purposes of ILC's purchase of the Land, as more particularly
described in the Land Lease.
2.35 LANDLORD AFFILIATE. "Landlord Affiliate" shall mean
any Entity which controls or is controlled by or is under the common control of
Landlord or its beneficiary.
2.36 LANDLORD DEED OF TRUST. "Landlord Deed of Trust"
shall mean that certain second priority deed of trust, securing Tenant's
obligations under this Lease, and junior only to the lien of the Lenders Deed
of Trust, to be executed by Tenant in favor of Landlord and recorded in the
Official Records as of the Date of Lease, as more fully described in Section
13.1(e).
2.37 LEASE INCEPTION DATE. "Lease Inception Date" shall
mean, for the first Building or phase constructed, the date of this Lease. For
subsequent Buildings or phases, "Lease Inception Date" shall be that date when
Tenant's Approval Plans for such Building or phase are approved by Landlord
pursuant to Section 11.3(c).
2.38 LEGAL REQUIREMENTS. "Legal Requirements" shall mean
all statutes, codes, laws, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses, authorizations, directions
and requirements of all federal, state, county, municipal and other
governments, departments, commissions, boards, courts, authorities, officials
and officers, which now or at any time hereafter are applicable to Tenant or
this Lease or applicable to and enforceable against the Premises, the
Improvements or any part thereof, as applicable.
2.39 LENDERS. "Lenders" shall mean HSBC and Sumitomo,
collectively. Individually, the Lenders are sometimes hereinafter referred to
as a Lender.
2.40 LENDERS DEED OF TRUST. "Lenders Deed of Trust" shall
mean that certain first priority deed of trust to be executed by Landlord and
Tenant in favor of HSBC and Sumitomo jointly and recorded in the Official
Records as of the Date of Lease, as more fully described in Section 13.1(d).
2.41 LIBOR BUSINESS DAY. "LIBOR Business Day" shall have
the same meaning as "Business Day" is defined in the Notes or other Authorized
Loan.
2.42 LIBOR RATE. "LIBOR Rate" shall mean the LIBOR Rate
as defined in the Notes, or a subsequent Authorized Loan, as selected in
accordance with Section 5.1(d).
9.
<PAGE> 16
2.43 MONTHLY CALCULATION. "Monthly Calculation" shall
mean the quotient resulting from dividing three hundred sixty (360) by the
number of days in any applicable calendar month. The applicable calendar month
shall be the month for which the calculation involving this Monthly Calculation
is being done.
2.44 MORTGAGE. "Mortgage" shall mean any mortgage, deed
of trust, or other instrument in the nature thereof at any time and from time
to time constituting a lien, charge or encumbrance upon any interest or estate
of Tenant or Landlord in the Premises or in this Lease.
2.45 MORTGAGEE. "Mortgagee" shall mean the record holder
(as reflected in the Official Records) from time to time of, or the record
beneficiary (as reflected in the Official Records) from time to time under, a
Mortgage.
2.46 NEW LOAN. "New Loan" shall have the meaning set
forth in Section 13.1(b).
2.47 NOMINAL RATE. "Nominal Rate" shall mean the
operative and relevant rate (or rates) of interest under the Notes from time to
time, or if the Improvements Loan has been replaced by an Authorized Loan, then
the relevant rate of interest under the promissory note evidencing such
Authorized Loan, all subject to the terms of Section 13.1(b).
2.48 NOTES. "Notes" shall have the meaning set forth in
Section 13.1(b).
2.49 NOTICE. "Notice" shall mean a written advice,
request, demand or notification required or permitted by this Lease, as more
particularly provided in Section 21.3.
2.50 OFFICIAL RECORDS. "Official Records" shall mean the
official records of Santa Clara County, California.
2.51 PERMITTED EXCEPTIONS. "Permitted Exceptions" shall
mean the following: (1) the exceptions set forth in Exhibit B; (2) any
exceptions created or caused by Tenant or to which Tenant consents in writing;
(3) taxes and assessments not yet due and payable; (4) the Lenders Deed of
Trust (or, if the Lenders Deed of Trust has been reconveyed and removed from
title, then a deed of trust that secures an Authorized Loan); (5) the Landlord
Deed of Trust; (6) the Tenant Deed of Trust; (7) the Land Lease Deed of Trust;
(8) all title defects, liens, encumbrances, deeds of trust, mortgages,
rights-of-way, and restrictive covenants and conditions affecting the Land
unless any of the foregoing arise as a result of Landlord's actions or with
Landlord's written consent (unless such actions taken or consent given by
Landlord are requested in writing by Tenant); and (9) this Lease.
2.52 PREMISES. "Premises" shall have the meaning set
forth in the Basic Lease Provisions. It is the intention of the
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<PAGE> 17
parties that the Premises consist only of the Improvements, and in no event
shall the Premises consist of any portion of the Land.
2.53 REAL ESTATE TAXES. "Real Estate Taxes" shall have
the meaning set forth in Section 6.1(b).
2.54 RENT. "Rent" shall mean Base Rent and Additional
Rent.
2.55 RENT COMMENCEMENT DATE. "Rent Commencement Date"
shall have the meaning set forth in the Basic Lease Provisions.
2.56 RENT PAYMENT DATE. "Rent Payment Date" shall have
the meaning set forth in Section 5.1.
2.57 RENT PERIOD. "Rent Period" shall mean each period
equal to one calendar month occurring during the Term hereof, except that the
first Rent Period shall be a partial calendar month commencing on the Rent
Commencement Date and ending on the last day of such calendar month and the
last Rent Period shall be a partial calendar month commencing on the first
LIBOR Business Day of the last calendar month of the Term and ending on the
last day of the Term.
2.58 REQUIRED PERMITS. "Required Permits" shall mean each
and every building and development permit including, without limitation,
demolition permits, site permits and addenda thereto (including, without
limitation, foundation permits and structural permits), temporary and final
occupancy permits and any other governmental or quasi-governmental approvals
which must be issued by any governmental authority, department, commission,
board, official or officer as a condition precedent to construction and
occupancy of any Improvements.
2.59 SBNYTC. "SBNYTC" shall mean Sumitomo Bank of New York Trust
Company.
2.60 SECURITY DEPOSIT. "Security Deposit" shall have the
meaning set forth in Section 5.7.
2.61 SENIOR FUNDED AMOUNT. "Senior Funded Amount" of this
Lease shall mean that amount equal to the Funded Amount minus the Equity Funded
Amount, which amount shall not exceed the Guaranteed Residual Value.
2.62 SENIOR RENT COMPONENT. "Senior Rent Component" shall
mean the quotient equal to the product of the Senior Funded Amount (at the time
of the relevant calculation of the Senior Rent Component) multiplied by the
Nominal Rate, divided by the Monthly Calculation. Mathematically, the Senior
Rent Component shall be:
[ Senior Funded Amount X Nominal Rate ]
-----------------------------------------
[ Monthly Calculation ]
11.
<PAGE> 18
2.63 SUMITOMO. "Sumitomo" shall mean The Sumitomo Bank,
Limited, a Japanese banking corporation, acting through its San Francisco
branch.
2.64 TAKING. "Taking" shall have the meaning set forth in
Section 15.1.
2.65 TENANT DEED OF TRUST. "Tenant Deed of Trust" shall
mean that certain third priority deed of trust, securing (i) Landlord's
obligation to return Tenant's Security Deposit under this Lease and (ii)
Landlord's obligation to convey the Premises to Tenant pursuant to Article 19
of this Lease, and shall be junior only to the liens of the Lenders Deed of
Trust and the Landlord Deed of Trust, to be executed by Landlord, as trustor,
in favor of Tenant, as beneficiary, and recorded in the Official Records as of
the Date of Lease, as more fully described in Section 13.1(f).
2.66 TERM. "Term" shall have the meaning set forth in the
Basic Lease Provisions.
ARTICLE 3
DEMISE
3.1 PREMISES. Subject to the terms, covenants and
conditions contained herein, Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, the Premises, together with all rights,
privileges, easements and appurtenances relating to the Premises.
ARTICLE 4
TERM
The Term of this Lease shall consist of the Initial Term, and if
exercised by Tenant, the Extension Term, as follows:
4.1 INITIAL TERM. The Initial Term of this Lease is
specified in Article 1.
4.2 EXTENSION TERM. Upon Notice of the extension given
to Landlord in accordance with Article 1, so long as the "Extension Conditions"
(defined below) are satisfied at the time of such Notice of extension, Tenant
may extend the Term for the Extension Term specified in Article 1. All
provisions of this Lease shall remain in full force and effect for the
Extension Term, including, without limitation, the Base Rent payable hereunder,
except that Tenant shall have no further right to extend the Term of this
Lease, and except that the Base Rent during the Extension Term may be adjusted
only to reflect any actual change in the rate of interest (that is, the spread
over LIBOR) charged pursuant to the Authorized Loan. The "Extension
Conditions" shall consist of the following: (1) Tenant shall satisfy the
"Financial Tests" (defined below) at the time of such Notice and as of the
expiration of the
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<PAGE> 19
Initial Term; (2) Tenant shall pay to Landlord no later than thirty (30) days
before the first day of the Extension Term an amount equal to the product of the
outstanding Funded Amount as of the end of the fifty-seventh (57th) full
calendar month of the Initial Term times 0.25% ("Extension Fee"); (3) there
shall exist no ongoing and uncured Event of Major Default at the time of such
Notice and as of the expiration of the Initial Term; (4) the Improvements Loan
shall have been refinanced or repaid as of the commencement of the Extension
Term (the refinancing or repayment of which shall be subject to the terms of
Section 13.1(c)) and (5) the Land and the Improvements shall satisfy the
Coverage Test at the time of the Notice and as of the expiration of the Initial
Term. The "Financial Tests" shall consist of the following: (a) Tenant shall
have a minimum tangible net worth (total assets minus intangible assets minus
total liabilities, as calculated in accordance with generally accepted
accounting principles) ("Tangible Net Worth") of not less than Seven Hundred
Fifty Million Dollars ($750,000,000); (b) Tenant's leverage (the ratio of funded
debt to Tangible Net Worth) shall not exceed a ratio of 1:1; and (3) Tenant
shall not have incurred any net losses in excess of Ten Million Dollars
($10,000,000) per year during the two complete fiscal years immediately
preceding such Notice of extension.
4.3 HOLDING OVER. If Tenant remains in possession of the
Premises after the expiration of the Term without executing a new lease, such
holding over shall be construed as a tenancy from month-to-month, subject to
all terms, covenants and conditions herein contained, and at the Base Rent
required to be paid by Tenant pursuant to the terms hereof during the last
month of the Term.
ARTICLE 5
RENT
5.1 BASE RENT.
(a) PAYMENT. Base Rent shall accrue in the
manner set forth below commencing on the Rent Commencement Date. Tenant's
obligation to pay Base Rent, with respect to any Building, shall commence
accruing on the Rent Commencement Date for such Building, and shall be payable
monthly in arrears thereafter on the first LIBOR Business Day of each
successive month, except that the last installment of Base Rent shall be
payable on the last day of the last month during the Term (each such date shall
be a "Rent Payment Date"). Tenant's obligation to pay Base Rent on account of
Advances made for any Building shall not commence accruing until the Rent
Commencement Date for that Building. No sooner than thirty (30) days prior to
the due date for any installment of Base Rent hereunder, Landlord shall deliver
to Tenant a Notice indicating the exact dollar amount of the Base Rent that is
due on such due date ("Invoice"). The Base Rent payment due on the first LIBOR
Business Day of the forty-ninth (49th) month of the Term shall be deemed paid
entirely to Landlord to be applied first to
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<PAGE> 20
the Equity Rent Component then due and the balance to be applied to the
reduction of the Equity Funded Amount. The amount of the Senior Rent Component
that would otherwise have been due but for the preceding sentence shall be added
to the Senior Funded Amount. The Base Rent payment due on the first LIBOR
Business Day of the fiftieth (50th) month of the Term shall be deemed paid
entirely to Lenders under the Improvements Loan to the extent of the Senior Rent
Component for the immediately preceding month and the balance shall be applied
to the reduction of the Senior Funded Amount (excluding any prepayment premium
thereon).
Tenant shall pay Base Rent as follows: The Senior Rent
Component shall be paid to Lenders as set forth in the Basic Lease Provisions,
and the Equity Rent Component shall be paid to Landlord at the Address for Rent
set forth in the Basic Lease Provisions (or, if the Improvements Loan has been
replaced by a New Loan or Replacement Loan, then the Senior Rent Component shall
be paid directly to the holder of such New Loan or Replacement Loan) or at such
other place as Landlord and Tenant may from time to time mutually agree upon, in
their respective sole and absolute discretion. With the exception of payments
made pursuant to the Clearinghouse Debit Account and Clearinghouse Credit
Account, established by Tenant in accordance with the requirements of this
Section 5.1(b) and (c), as set forth below, Tenant shall pay Base Rent by wire
transfer or by check. Landlord, Lenders or such other holder of a New Loan or
Replacement Loan, as the case may be, shall supply Tenant with such bank account
information as Tenant shall require to enable payment by wire transfer. The
parties agree that Tenant is paying the Senior Rent Component of Base Rent
directly to Lenders for the convenience of the parties in order to satisfy
Landlord's obligations to pay interest under the Improvements Loan for the
period of time corresponding to the Term of this Lease; all Base Rent payments
shall be deemed payments to Landlord to the extent of the Equity Rent Component
and payments of the interest due to Lenders under the Improvements Loan to the
extent of the Senior Rent Component.
(b) CLEARINGHOUSE CREDIT ACCOUNT. At any time,
and from time to time, during the Term of the Lease, Tenant shall have the right
to request in writing that a Lender designate a clearinghouse credit account at
a financial institution legally authorized to receive funds on behalf of the
Lender ("Clearinghouse Credit Account") for Tenant's payment of the Senior Rent
Component due and payable to the Lender (as set forth in the Basic Lease
Provisions) on a Rent Payment Date. At any time, and from time to time, after a
Lender's designation of a Clearinghouse Credit Account, Tenant may, but shall
not be obligated to, deposit funds on a Rent Payment Date in the exact amount of
the Senior Rent Component due and payable to the Lender who has established such
a Clearinghouse Credit Account and any payment by Tenant of a portion of the
Senior Rent Component due a Lender by payment directly into a Lender's
Clearinghouse Credit Account shall not prevent Tenant from making future
payments of rent by any other means permitted in this Section 5.1. A Lender's
designation of a Clearinghouse Credit
14.
<PAGE> 21
Account for deposit of Tenant's payment of the Lender's portion of the Senior
Rent Component shall be deemed that Lender's approval of Tenant's payment of the
Lender's Senior Rent Component into the Clearinghouse Credit Account. Tenant's
ability to deposit a Lender's portion of the Senior Rent Component into a
Clearinghouse Credit Account shall not alleviate Landlord's obligation to
deliver to Tenant an Invoice as set forth above.
(c) CLEARINGHOUSE DEBIT ACCOUNT. At any time,
and from time to time, during the Term of the Lease, Tenant and HSBC may agree
that Tenant's payment of HSBC's portion of the Senior Rent Component as set
forth in the Basic Lease Provisions shall be paid to HSBC by funds available to
HSBC in a clearinghouse debit account at a financial institution reasonably
acceptable to HSBC ("Clearinghouse Debit Account"). If Tenant and HSBC agree
to payment of HSBC's portion of the Senior Rent Component through a
Clearinghouse Debit Account, Tenant shall provide written notice of such
agreement to Landlord, and shall indicate the account number and location of
the Clearinghouse Debit Account. The Clearinghouse Debit Account shall be
terminable by Tenant at will, without advance notice to Landlord or HSBC.
During any portion of the Term in which the Clearinghouse Debit Account is
available for and contains sufficient funds to cover the amount of HSBC's
portion of the Senior Rent Component due and payable to HSBC on a Rent Payment
Date, interest shall not accrue on (nor shall Tenant be deemed in default
hereunder for failure to pay) any of HSBC's portion of the Senior Rent
Component due hereunder which is not collected on a Rent Payment Date due to
any failure by HSBC to collect its portion of the Senior Rent Component in a
timely manner. HSBC's ability to collect its portion of the Senior Rent
Component from the Clearinghouse Debit Account shall not alleviate Landlord's
obligation to deliver to Tenant an Invoice as set forth above. Notwithstanding
anything to the contrary in this Lease, the Clearinghouse Debit Account shall
not be used for the payment of any amounts (whether or not payable under the
Lease) other than HSBC's portion of the Senior Rent Component as set forth in
the Basic Lease Provisions and which are due and payable on the then-current
Rent Payment Date.
(d) INTEREST RATE SELECTION. The parties
acknowledge that the interest rate applicable under the Improvements Loan (or
other Authorized Loan) and the Equity Rent Component shall affect the amount of
Base Rent payable by Tenant hereunder. Therefore, Tenant shall have the right,
by written notice to Landlord in the form of Exhibit K (which notice may be
transmitted to Landlord by facsimile), to designate the interest period to be
selected from time to time by Landlord pursuant to the terms of the Notes (or
other Authorized Loan) as the interest period then in effect for interest rate
of the Improvements Loan (or other Authorized Loan) and the Equity Rent
Component. Tenant acknowledges that the rates available to be selected as the
LIBOR Rate after the first partial calendar month of the Term are 1, 3, 6, 9 or
12-month LIBOR rates. In the event that Tenant fails to give such written
notice to Landlord prior to the applicable
15.
<PAGE> 22
deadline for selection of such interest period pursuant to the terms of the
Notes (or other Authorized Loan), Landlord shall select the same interest
period then in effect for the Improvements Loan (or other Authorized Loan) and
for the Equity Rent Component. Notwithstanding the foregoing, the interest
rate applicable during the Construction Period for each Building or phase shall
be the one-month LIBOR rate.
5.2 PRORATION. If the Term expires or is otherwise
terminated on a day other than the day before the first LIBOR Business Day of a
calendar month, then Base Rent for such Rent Period shall be prorated on the
basis of actual days elapsed on the basis of a thirty (30) day month.
5.3 NO ABATEMENT OF RENT. Except as a consequence of a
reduction in the Funded Amount or the terms of Section 15 (Taking), Tenant
shall not be entitled to any abatement, diminution, reduction, setoff or
postponement of Base Rent as a consequence of any inconvenience to,
interruption of, cessation of or loss of Tenant's use or enjoyment of the
Premises or as a result of any reason whatsoever.
5.4 DELINQUENT RENT. Any Base Rent not paid on the due
date shall accrue interest at the Default Rate from the date such Base Rent was
originally due until the date such Base Rent is paid. All interest accrued on
past due Base Rent shall be due and payable to Landlord at the time the Base
Rent is paid, or upon demand by Landlord, if earlier.
5.5 EQUITY FUNDING.
(a) For each Building (as such term is defined in
Section 5.6 for purposes of this Section 5.5), after the appraisal described in
Section 21.25 has been received by Landlord, and provided said appraisal
indicates that the current fair market value on an as-completed basis of the
Building as designed is not less than ninety percent (90%) of the estimated
cost of construction of the Building, Landlord shall itself fund any Advances
on a proportionate basis based upon a fraction of the total amount of the
Advance, the numerator of which is the difference between the total estimated
Funded Amount (as of completion of construction, as reasonably estimated by
Tenant) for the Building or phase less the Guaranteed Residual Value for such
Building, and the denominator of which is the total estimated Funded Amount (as
of completion) for such Building or phase; provided that the Equity Funded
Amount of Advances for a Building shall be deemed to be paid on a proportionate
basis out of those funds held by Landlord as Tenant's Security Deposit and out
of Landlord's Equity Contribution. In no event shall Landlord be required to
do any of the following: (a) pay the Equity Funded Amount of Advances for a
Building resulting in such payment exceeding the difference between the Funded
Amount for such Building minus the Guaranteed Residual Value for such Building;
(b) make Advances such that the aggregate Funded Amounts of the
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<PAGE> 23
Building Leases exceeds One Hundred Fourteen Million Dollars ($114,000,000) or
the aggregate Equity Funded Amounts of the Building Leases exceeds Nineteen
Million Three Hundred Eighty Thousand Dollars ($19,380,000); or (c) make
Advances such that the Funded Amount under this Lease exceeds the fair market
value on an as-completed basis of the Improvements as designed (as determined
by the appraisal described in Section 21.25).
(b) Notwithstanding the foregoing, in the event:
(1) Contractor fails to complete any Building or phase on account of either the
insolvency or bankruptcy of the Contractor or a dispute with the Contractor
concerning an alleged default by the Contractor; and (2) Tenant elects to have
Landlord enter into a construction contract with another contractor for the
purpose of completing such Building or phase; and (3) completion of such
incomplete Building or phase by another contractor requires funds in excess of
the funds that would have been required had Contractor not become insolvent or
bankrupt or had such dispute not existed (excluding change orders), then
Landlord's obligation for funding for such Building or phase under this Section
5.5 shall be equal to the amount that Landlord would have been required to fund
under this Section 5.5 absent such insolvency, bankruptcy or dispute plus the
amount of any change orders. At least two (2) days prior to making such equity
Advance to Tenant, Landlord shall submit to Tenant and shall have obtained
Tenant's prior written approval of the amount of such payment and the basis
upon which such amount has been calculated. Tenant may withhold Tenant's
consent to such payment if Tenant's accountant in good faith disagrees with
such amount or the manner in which it was calculated.
5.6 EXHIBITS REFLECTING INITIAL ADVANCE AND RENT
COMMENCEMENT DATE. Within thirty (30) days after the initial Advance for the
foundation for any Building and within thirty (30) days after the initial
Advance under this Lease, Landlord and Tenant shall execute the "Initial
Advance Memorandum" in the form attached hereto as Exhibit G. With respect to
the initial Advance under this Lease, the Initial Advance Memorandum shall also
indicate to which Building such Advance applies. Within thirty (30) days after
the Rent Commencement Date for any Building under this Lease, Landlord and
Tenant shall execute the "Rent Commencement Date Memorandum" in the form
attached hereto as Exhibit H. If the Rent Commencement Date for any Building
under this Lease occurs prior to the completion or occupancy of such Building,
then the parties shall, within thirty (30) days after the completion or
occupancy of such Building, enter into a memorandum, which shall reflect the
Guaranteed Residual Value for such Building (the parties acknowledge that,
except as provided in Section 19.2, they will not reflect the Guaranteed
Residual Value for any Building until such Building has been completed or
occupied). Guaranteed Residual Value for any Building during construction and
after construction shall be determined by multiplying the Guaranteed Residual
Value percentage, calculated pursuant to Section 2.25, by the Funded Amount for
any Building at the date of calculation. Whenever the term "Building" is used
in this Lease in
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connection with the calculation of the Guaranteed Residual Value during a
construction period, in connection with Landlord's equity funding under Section
5.5 or in connection with Tenant's Security Deposit funding under Section 5.7,
such term shall mean a particular construction phase of the Improvements.
5.7 SECURITY DEPOSIT. On the date of initial Advance for
a Building, Tenant shall deliver to Landlord a security deposit ("Security
Deposit") in an amount equal to fourteen percent (14%) of the estimated Funded
Amount for the Building as stated in the Initial Advance Memorandum for the
Building in the form attached hereto as Exhibit G. Landlord may use and
commingle the Security Deposit with other funds of Landlord and the Security
Deposit shall not bear interest. On the Rent Commencement Date, the amount of
the Security Deposit shall be increased or decreased to an amount equal to the
difference between the Funded Amount minus the sum of the Landlord's Equity
Contribution and the Guaranteed Residual Value (as of such date, as determined
pursuant to the Rent Commencement Date Memorandum for the Building in the form
attached hereto as Exhibit H). Mathematically, the Security Deposit as of the
Rent Commencement Date shall be:
Funded Amount - (Guaranteed Residual Value + Equity Contribution)
The Security Deposit shall be held by Landlord as security solely for the
payment of Base Rent and Additional Rent by Tenant pursuant to this Lease. If
at any time during the Term any Base Rent shall be overdue, then Landlord may
at its election (but shall not be required to) appropriate and apply any
portion of the Security Deposit to the payment of any such overdue Base Rent.
Should the entire Security Deposit, or any portion thereof, be appropriated and
applied by Landlord as provided herein, then Tenant shall immediately, after
receipt of written demand by Landlord, pay to Landlord a sufficient sum in cash
to restore the Security Deposit to the amount of the Security Deposit as of the
Rent Commencement Date. In the event that the Equity Funded Amount is reduced
for any reason, including without limitation by reason of a sale of any portion
of the Premises or the application of the proceeds of a condemnation award to
reduce the Equity Funded Amount (it being understood that the Equity Funded
Amount will only be reduced in the event and to the extent that the net
proceeds of such condemnation award exceeds the Senior Funded Amount, with such
award proceeds to be applied first to the Senior Funded Amount pursuant to
Section 15.4 hereof), the amount of the Security Deposit required hereunder
shall be reduced by a like amount, and any such excess funds held by Landlord
shall immediately be returned to Tenant. The entire Security Deposit (other
than amounts withheld against Base Rent and Additional Rent due hereunder)
shall be returned to Tenant at the end of the Term.
5.8 ADDITIONAL RENT. Tenant agrees to pay all Additional
Rent when it becomes due and payable under this Lease.
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ARTICLE 6
TAXES
6.1 REAL ESTATE TAXES.
(a) From and after the Rent Commencement Date
Tenant shall pay directly to the appropriate taxing authority all Real Estate
Taxes. If the Rent Commencement Date occurs or the Term expires or otherwise
terminates at any time other than the beginning or end of a taxable year,
Tenant's obligation to pay Real Estate Taxes shall be prorated on the basis of
a 365- day year, so as to include only that portion of the taxable year which
is a part of the Term. Unless a termination of the Lease results from a
purchase of the Land pursuant to Article 19, any Real Estate Taxes levied
against the Land which accrue during the Term of this Lease but which would not
be due and payable to the appropriate taxing authority until after the
expiration of the Term of this Lease (as the same may be extended) shall be
paid by Tenant to Landlord upon such termination. Landlord shall pay such
amounts to the appropriate taxing authority on a timely basis.
(b) Except to the extent that Real Estate Tax
bills and statements are sent directly to Tenant by the taxing authority, upon
receipt by Landlord of the tax bills or statements, Landlord will use
reasonable efforts to promptly advise Tenant in writing of all Real Estate
Taxes and shall deliver copies of all applicable tax bills or statements to
Tenant. Tenant shall pay directly to the taxing authority all Real Estate
Taxes prior to the later of (i) thirty (30) days after receipt by Tenant from
Landlord of a copy of such bills and statements referred to above, or (ii) five
(5) days prior to delinquency. As used herein, the term "Real Estate Taxes"
shall mean any and all taxes, governmental fees and similar charges or
assessments levied or assessed against the Improvements and/or the Land
including, without limitation, ad valorem taxes and special assessments
applicable to real property; provided, however, that Real Estate Taxes shall
not include any Landlord Income Taxes. Real Estate Taxes shall also include
any and all documentary, transfer, sales, mortgage, recording or similar taxes
imposed on Landlord or Tenant in connection with (i) the original acquisition
of the Premises by Landlord, (ii) any transfer of the Premises to Tenant
pursuant to the terms of this Lease, or (iii) any sale of the Premises to a
third party pursuant to the terms of this Lease. As used herein, the term
"Landlord Income Taxes" shall mean any and all income, franchise, gains, gift,
succession, excess profits, gross receipts, revenue, estate, rental, or similar
taxes or taxes in lieu thereof imposed upon Landlord or any party other than
Tenant (or an affiliate thereof) and any withholding tax imposed as a
collection device for, in lieu of, or otherwise related to any of the foregoing
without regard to whether such tax is required to be collected by Tenant and
without regard to whether Tenant would be liable for such withholding tax in
the event it failed to so withhold. For purposes of the foregoing, an income
tax shall include, without limitation, any tax imposed under the United States
Internal Revenue Code or the
19.
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California Bank and Corporation Tax Law as well as any tax which could qualify
as an "income tax" under United States Treasury Regulation Section 1.901-2
(except to the extent any such statute or regulation is subsequently modified
to include a tax or other governmental charge of a materially different type
and nature from the taxes currently described therein) and any income tax which
may be payable under the laws of any jurisdiction either now or in the future.
Real Estate Taxes for any given tax year shall exclude assessment installments
that are not due and payable during such tax year.
6.2 PERSONAL PROPERTY TAXES. Tenant shall pay directly
to the appropriate taxing authorities prior to delinquency any and all taxes
and assessments levied or assessed during the Term upon or against Tenant's
furniture, equipment, trade fixtures and any other personal property in the
Premises.
6.3 RIGHT TO CONTEST. Tenant shall not be required to
pay any Real Estate Taxes or any other taxes for which Tenant is liable
hereunder (including, without limitation, any taxes for which Tenant is
required to indemnify Landlord under Section 6.5) (including penalties and
interest), so long as (i) Tenant shall contest the same or the validity thereof
by appropriate legal proceedings in such a manner to prevent the tax sale of
any portion of the Premises and (ii) the position to be taken by Tenant
pursuant to such contest would have a realistic possibility of success if
litigated. For purposes of this Lease, Tenant may conclusively establish that
a position to be taken in a contest would have a realistic possibility of
success if litigated by providing to Landlord a letter from counsel stating an
opinion to such effect. In the event of any such contest, Tenant shall, within
thirty (30) days after the final determination thereof, pay and discharge the
amounts determined to be due in accordance therewith and with the provisions of
this Lease, together with any penalties, fines, interest, costs and expenses
that may have accrued thereon or that may have resulted from Tenant's contest.
Tenant also shall have a right to contest any taxes for which it is liable
hereunder, but with regard to which the position to be taken pursuant to such
contest would not have a realistic possibility of success if litigated,
provided that Tenant pays such taxes on or prior to the date upon which such
taxes are asserted to be due by the relevant governmental authority.
Notwithstanding the foregoing provisions of this Section 6.3, Tenant shall have
an unconditional right to contest (without prior payment) any taxes imposed by
law upon Tenant rather than upon Landlord. Tenant's decision to pay any taxes
prior to contesting its or another party's underlying liability therefore shall
not be deemed to imply or suggest that the position to be taken in such contest
would not have a realistic possibility of success if litigated. Landlord shall
cooperate fully with Tenant in connection with the exercise of Tenant's right
of contest contained herein, and in the event that applicable law shall require
that Landlord, rather than Tenant, pursue legal proceedings for such contest,
Landlord will initiate and pursue such contest upon Tenant's request and in
accordance with Tenant's
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instructions (including, without limitation, Tenant's instructions as to the
selection of legal counsel and matters of strategy or settlement); provided,
however, that Landlord shall not be subject to any liability for the payment of
any costs or expenses in connection with any such contest or proceedings, and
Tenant will indemnify and save harmless Landlord from any such costs and
expenses (including, without limitation, reasonable attorneys' fees, costs of
court and appraisal costs), reimbursing Landlord therefor upon demand (or
paying such costs and expenses directly when due, all as directed by Landlord).
Tenant shall be entitled to any refund of any taxes and penalties or interest
from any governmental authority to the extent the refund represents monies paid
to the governmental authority by Tenant or paid by Landlord and reimbursed by
Tenant.
6.4 WITHHOLDING TAXES. Subject to Section 6.5, but
notwithstanding any other provision of this Lease to the contrary, Tenant may
withhold from any payments under this Lease any Landlord Income Taxes, without
obligation to gross-up, indemnify or otherwise increase payments in consequence
thereof, to the extent required by applicable law. Upon the date hereof or
upon the date a party becomes a Landlord or a transferee of any portion of the
Landlord's interest in the Premises or this Lease, and within thirty (30) days
following the first day of each calendar year or if otherwise requested from
time to time by Tenant, Landlord and each transferee, if organized under the
laws of a jurisdiction outside the United States, shall provide Tenant with
three counterparts of each of the forms prescribed by the Internal Revenue
Service of the United States (Form 1001 or 4224, or successor form(s), as the
case may be) certifying as to Landlord's or such transferee's status for
purposes of determining exemption from United States withholding taxes with
respect to all payments to be made to such person. Without limitation upon the
foregoing, unless Tenant has received such forms or other documents reasonably
satisfactory to it indicating that payments under this Lease are not subject to
withholding tax, Tenant is authorized to and shall withhold taxes from such
payments at the applicable statutory rate. Subject to Section 6.5, but
notwithstanding any other provision of this Lease to the contrary, any
withholding by Tenant under the preceding sentence shall not give rise to any
gross-up, indemnification or other payment obligation on the part of Tenant.
Landlord and each transferee, if organized under the laws of the United States
or any State thereof, shall timely provide Tenant with duplicate documents
conforming to the requirements of Treasury Regulation 1.1441-5(b) or any
successor thereto (which statement may be made on a Form W-9).
6.5 ADDITIONAL PROVISIONS RELATING TO TAXES.
Notwithstanding anything in this Section 6 to the contrary, Tenant shall
protect and defend Landlord from and against all criminal prosecution regarding
and shall indemnify and hold Landlord harmless from and against any and all
losses, costs, liabilities or
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damages (including reasonable attorneys' fees and disbursements and court
costs) arising by reason of:
(a) Any and all U.S. Federal, state or local
income taxes imposed upon Landlord in consequence of Landlord being treated as
the owner or lessor of the Premises (or any part thereof) for such tax purposes
(provided that Landlord has fully complied with its obligations under Section
21.2(b));
(b) Any and all taxes imposed upon Tenant (except
to the extent that such taxes are imposed upon Tenant as a result of Landlord's
failure to comply with its obligations under this Lease);
(c) Any and all taxes required to be withheld
from payments made by Tenant to a third party not related to or affiliated with
Landlord, HSBC or Sumitomo;
(d) Any and all Real Estate Taxes;
(e) Any and all taxes owed by Landlord as a
result of payment made by Tenant to Landlord pursuant to Tenant's indemnity
obligations under this Section 6.5; and
(f) Any and all costs, liabilities or damages
(including reasonable attorneys' fees) incurred by Landlord in obtaining
indemnification payments from Tenant under the provisions of this Section 6.5.
Tenant's obligation to reimburse or indemnify Landlord for any
taxes, governmental fees, penalties, interest or other supplemental tax charges
under this Lease shall be reduced by the value of any related or offsetting tax
benefits derived or realized by Landlord. Tenant's duty to indemnify Landlord
under this Section 6.5 shall apply only to taxes arising during the Term
(whether or not due and payable at the conclusion of the Term), but shall
otherwise survive the expiration or earlier termination of this Lease.
ARTICLE 7
INSURANCE
7.1 LIABILITY INSURANCE. At all times during the Term,
Tenant shall obtain at Tenant's sole cost and expense a policy or policies of
comprehensive general liability insurance on an "occurrence" basis against
claims for "personal injury" liability, including bodily injury, death or
property damage liability. The liability insurance policy shall contain
coverage limits no less than the following: (1) Three Million Dollars
($3,000,000) per person; (2) Five Million Dollars ($5,000,000) per incident;
and (3) One Million Dollars ($1,000,000) for property damage.
22.
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7.2 BUILDERS' RISK INSURANCE. With respect to any
Improvements which may be under construction and not yet covered by insurance
under the terms of Section 7.3, Tenant shall maintain or cause to be maintained
a policy or policies of builders' risk insurance in an amount equal to the
value upon completion of the work (exclusive of land, foundation, excavation,
grading, landscaping, architectural and development fees and other items
customarily excluded from such coverage), insuring against the risks
customarily insured against under such insurance, including fire, vandalism,
malicious mischief, sprinkler leakage, lightning, and windstorm.
7.3 ALL-RISK INSURANCE. With respect to any completed
Improvements, prior to the termination of the builders' risk insurance required
by Section 7.2, and at all times thereafter, Tenant shall, at Tenant's sole
cost and expense, obtain and maintain, or cause to be obtained and maintained:
(a) a policy or policies of all-risk insurance covering the Improvements,
providing coverage against loss or damage by fire, vandalism, malicious
mischief, sprinkler leakage, lightning, windstorm and other insurable perils,
as, under good insurance practice, from time to time are insured against under
all-risk coverage for properties of similar character, age and location in an
amount or amounts not less than one hundred percent (100%) of the then actual
replacement cost (exclusive of land, foundation, excavations, grading,
landscaping, architectural and development fees and other items customarily
excluded from such coverage and without any deduction for depreciation); and
(b) a policy or policies of difference in conditions insurance covering the
Improvements, providing coverage against loss or damage by earthquake and flood
as, under good insurance practice, from time to time are insured against under
earthquake coverage for properties of similar character, age and location in an
amount or amounts not less than the lesser of (i) one hundred percent (100%) of
the then actual replacement cost (exclusive of land, foundation, excavations,
grading, landscaping, architectural and development fees and other items
customarily excluded from such coverage and without any deduction for
depreciation) or (ii) the amount of the Equity Funded Amount.
7.4 GENERAL REQUIREMENTS. The insurance required under
this Article 7 may be furnished under a "primary" policy and an "umbrella"
policy or policies. Landlord and the holder of any Authorized Loan shall be
named as an additional insured under Tenant's policy of insurance required
under Section 7.1; Landlord, Tenant and the holder of any Authorized Loan shall
each be named as the loss payees under the policies of insurance required under
Sections 7.2 and 7.3; and such policies shall contain an endorsement for
cross-liability coverage. Tenant shall furnish Landlord with certificates from
Tenant's insurers with respect to the insurance required to be carried
hereunder on or before the date such insurance is required to be carried. The
certificates shall state that such insurance is in full force and effect and
that coverage will not be reduced in any amount or otherwise limited or
cancelled without twenty (20) days' prior written notice
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to Landlord. Renewal certificates shall be furnished to Landlord not less than
thirty (30) days prior to the expiration of each such policy. Any blanket
insurance policy or policies that insure Tenant against the risks and for the
amounts herein specified shall be deemed to satisfy the obligation of Tenant
hereunder, provided that any such policy of blanket insurance shall specify the
amount of the total insurance allocated to the risks required to be insured
hereunder and such allocated amount meets the requirements of this Article 7.
All insurance required by this Article 7 shall be with an insurance company
licensed to do business in the State of California, with a general
policyholder's rating, as rated by the most current available "Bests" Insurance
Reports, no less than A-III,and shall be primary and non-contributing.
7.5 WAIVER OF SUBROGATION. Notwithstanding anything to
the contrary contained herein, to the extent permitted by law and so long as
any insurance coverage maintained by Tenant is not diminished by reason
thereof, Tenant hereby (a) releases and waives any rights it may have against
Landlord and its officers, agents and employees on account of any loss or
damages occasioned to Tenant, its property or the Premises, and arising from
any risk covered by any fire and extended coverage insurance maintained by
Tenant, whether or not due to the negligence of Landlord, its agents,
employees, contractors, licensees, invitees or other persons, and (b) waives on
behalf of any insurer providing such insurance to Tenant any right of
subrogation that any such insurer may have or acquire against Landlord or such
persons by virtue of payment of any loss under such insurance. Tenant shall
use its best efforts to cause its insurance policies to contain a waiver of
subrogation clauses in accordance with the foregoing.
7.6 INDEMNITY. Tenant shall protect, defend, indemnify,
hold and save Landlord harmless from and against any and all losses, costs,
liabilities or damages (including reasonable attorneys' fees and disbursements
and court costs) arising by reason of: (i) any and all injury or death of
persons or damage to property against which Tenant is obligated to maintain
insurance for the benefit of Landlord pursuant to this Article 7; (ii) the
failure to obtain the waiver of subrogation clause required by Section 7.5
hereof where such clause could have been obtained through the exercise of
Tenant's best efforts; or (iii) the invalidation of such insurance policy
required to be obtained by Tenant hereunder by Tenant's insurer. Tenant's duty
to indemnify Landlord under this Section 7.6 shall survive the expiration or
earlier termination of this Lease with respect to events occurring during the
Term.
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ARTICLE 8
USE
8.1 USE.
(a) PERMITTED USES. Tenant may use the Premises
for any lawful purpose.
(b) ENVIRONMENTAL COMPLIANCE.
(i) DEFINED TERMS. The term
"Applicable Environmental Laws" shall mean any applicable laws, regulations or
ordinances pertaining to health or the environment, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 or otherwise (as amended, hereinafter called
"CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended by
the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of
1980, the Hazardous and Solid Waste Amendments of 1984 or otherwise (as
amended, hereinafter called "RCRA"), and California Health & Safety Code
Section 25501(j). The terms "hazardous substance" and "release" as used in
this Lease shall have the meanings specified in CERCLA, and the terms "solid
waste" and "disposal" (or "disposed") shall have the meanings specified in
RCRA; provided, in the event either CERCLA or RCRA is amended or superseded by
other laws so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent to the effective date of such amendment
or other laws; and, provided further, to the extent that the laws of the State
of California establish a meaning for "hazardous substance", "release", "solid
waste", or "disposal" which is broader than that specified in either CERCLA or
RCRA, such broader meaning shall apply. The term "Pre-existing Agricultural
Contamination" means concentrations of any chemical, compound or substance
existing in soil and groundwater on the Land as disclosed in that certain Phase
I Preliminary Environmental Site Assessment and Phase II Soil and Ground Water
Quality Evaluation for Rio Robles and Tasman Drive Parcels, San Jose,
California, performed by Lowney Associates and dated March 1995.
(ii) TENANT'S COVENANTS. Tenant
will not cause or permit the Premises or the Improvements to be in violation
of, or do anything or permit anything to be done which subjects Landlord,
Tenant or the Premises to any remedial obligations under or which creates a
claim or cause of action under, any Applicable Environmental Laws, including,
without limitation, CERCLA, RCRA, and the California Health & Safety Code
Section 25501(j), assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances, if any,
pertaining to the Premises and the Improvements, and Tenant will promptly
notify Landlord in writing of any existing, pending or threatened
investigation, claim or inquiry of which Tenant has knowledge by any
governmental authority in connection with any Applicable Environmental Laws.
Tenant shall obtain any permits, licenses or
25.
<PAGE> 32
similar authorizations to construct, occupy, operate or use any Improvements,
fixtures and equipment at any time located on the Premises by reason of any
Applicable Environmental Laws. Tenant will not use the Premises or the
Improvements in a manner which will result in the unlawful disposal or other
unlawful release of any hazardous substance or solid waste on or to the
Premises or the Improvements and covenants and agrees to keep or cause the
Premises and the Improvements to be kept free of any unlawful hazardous
substance, unlawful solid waste or unlawful environmental contaminants
(including, without limitation, friable asbestos and any substance containing
asbestos deemed hazardous and unlawful by any Applicable Environmental Law) and
to remove the unlawful amounts of the same (or if removal is prohibited by law,
to take whatever action is required by law) promptly upon discovery at Tenant's
sole expense. Tenant shall promptly notify Landlord in writing of any unlawful
disposal or other unlawful release of any hazardous substance, environmental
contaminants or solid wastes on or to the Premises or the Improvements.
Notwithstanding the foregoing, Landlord and Tenant acknowledge that
Pre-existing Agricultural Contamination exists on the Land due to agricultural
operations of prior owners and that Tenant has no further obligation to notify
Landlord regarding such Pre-existing Agricultural Contamination. In the event
Tenant fails to comply with or perform any of the foregoing covenants and
obligations, after thirty (30) days' prior written Notice to Tenant, Landlord
may, but shall be under no obligation to, cause the Premises and the
Improvements to be freed from the unlawful hazardous substance, unlawful solid
waste or unlawful environmental contaminants (or if removal is prohibited by
law, to take whatever action is required by law) and the reasonable cost of the
removal or such other action shall be a demand obligation owing by Tenant to
Landlord pursuant to this Lease; provided, however, that this sentence shall
not apply to Pre-existing Agricultural Contamination. Notwithstanding the
foregoing, Landlord shall have no right to cause the removal of such materials
so long as Tenant both: (1) is diligently and in good faith proceeding to
comply with Tenant's obligation to remove the unlawful amounts of such
materials; and (2) has the financial ability to so comply. Subject to the
foregoing, Tenant grants to Landlord and Landlord's agents and employees access
to the Premises and the Improvements, and the license to remove the unlawful
hazardous substance, unlawful solid waste or unlawful environmental
contaminants (or if removal is prohibited by law, to take whatever action is
required by law), and agrees to indemnify and save Landlord harmless from all
reasonable costs and expenses involved and from all claims (including
consequential damages) asserted or proven against Landlord by any party in
connection therewith. Upon Landlord's reasonable request for "good cause"
(defined below), at any time and from time to time during the Term, Tenant will
provide at Tenant's sole expense an inspection or audit of the Premises and the
Improvements from an engineering or consulting firm approved by Landlord,
indicating the presence or absence of any hazardous substance, solid waste or
environmental contaminants located on the Premises; provided, however that this
provision shall not apply to Pre-existing Agricultural Contamination. If
Tenant fails to
26.
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provide same after sixty (60) days' notice, Landlord may order same, and Tenant
grants to Landlord and Landlord's employees and agents access to the Premises
and the Improvements and a license to undertake any testing reasonably required
to obtain such inspection or audit. The reasonable cost of obtaining such
inspection or audit and any expenses incurred by Landlord in connection
therewith, shall be a demand obligation owing by Tenant to Landlord pursuant to
this Lease. For purposes of this Section 8.1(b)(ii), "good cause" shall mean
that Landlord shall have reasonable grounds to believe that an unlawful release
or unlawful disposal of hazardous substances or solid wastes has occurred on
the Premises or the Improvements, but shall not include Pre-existing
Agricultural Contamination.
(iii) TENANT'S INDEMNITY. Tenant
agrees to indemnify and hold Landlord harmless from and against, and to
reimburse Landlord with respect to, any and all claims, demands, causes of
action, losses, damages, liabilities, costs and expenses (including attorneys'
fees and court costs), fines and/or penalties of any and every kind or
character, known or unknown, fixed or contingent, asserted or potentially
asserted against or incurred by Landlord at any time and from time to time by
reason of, in connection with or arising out of (A) the failure of Tenant to
perform any obligation herein required to be performed by Tenant regarding
Applicable Environmental Laws, (B) any violation of any Applicable
Environmental Law by Tenant or with respect to the Premises or the
Improvements, or any disposal or other release by Tenant or with respect to the
Premises or the Improvements of any hazardous substance, environmental
contaminants or solid waste on or to the Premises or the Improvements, whether
or not resulting in a violation of any Applicable Environmental Law, (C) any
act, omission, event or circumstance by Tenant or with respect to the Premises
or the Improvements which constitutes or has constituted a violation of any
Applicable Environmental Law with respect to the Premises or the Improvements,
regardless of whether the act, omission, event or circumstance constituted a
violation of any Applicable Environmental Law at the time of its existence or
occurrence, and (D) any and all claims or proceedings (whether brought by
private party or governmental agencies) for bodily injury, property damage,
abatement or remediation, environmental damage or impairment or any other
injury or damage resulting from or relating to any hazardous or toxic substance
or contaminated material located upon or migrating into, from or through the
Premises or the Improvements (whether or not the release of such materials was
caused by Tenant, a subtenant, or prior owner of the Premises, or any other
Entity) which Landlord may incur. Tenant's duty to indemnify Landlord under
this Section 8.1 shall survive the expiration or earlier termination of the
Lease with respect to events occurring during, or prior to the Term or after
the Term while Landlord has record title to and Tenant is occupying the
Premises.
27.
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(c) COMPLIANCE WITH LEGAL REQUIREMENTS. Tenant
shall at all times comply with all material Legal Requirements applicable to
the Land or the Improvements and/or the use thereof.
8.2 CONTEST OF LEGAL REQUIREMENTS. Tenant shall have the
right at its sole cost and expense to contest the validity of any Legal
Requirements applicable to the Premises by appropriate proceedings diligently
conducted in good faith; and upon the request of Tenant and at Tenant's sole
cost and expense, Landlord will join and cooperate with Tenant in such
proceedings. Subject to Section 6.3, any other provision of this Lease to the
contrary notwithstanding, Tenant's right to contest Legal Requirements must be
exercised in such a manner as to avoid any exposure of the Premises or any part
thereof to foreclosure or execution sale or exposure of Landlord to civil or
criminal penalties arising from Tenant's non-compliance with such Legal
Requirements. Tenant shall defend and indemnify Landlord against, and hold
Landlord harmless from, any and all liability, loss, cost, damage, injury or
expense (including, without limitation, attorneys' fees and costs) which
Landlord may sustain or suffer by reason of Tenant's failure or delay in
complying with, or Tenant's contest of, any such Legal Requirements (or
Landlord's contest, if requested in writing by Tenant), and Tenant's duty to
indemnify Landlord under this Section 8.2 shall survive the expiration or
earlier termination of this Lease.
8.3 INDEMNIFICATION. Tenant will defend, protect,
indemnify and save harmless Landlord from and against all liabilities,
obligations, claims, damages, causes of action, costs and expenses, imposed
upon or incurred by Landlord by reason of the occurrence or existence of any of
the following during the Term, except to the extent caused by the willful
misconduct, gross negligence, or willful breach of contract of Landlord or its
agents or contractors (but excluding from the term contractors the Contractor
and any subcontractors of the Contractor): (1) any accident, injury to or
death of persons or loss of or damage to property occurring on or about the
Premises or Improvements; (2) performance of any labor or services or the
furnishing of any materials or other property in respect of the Premises or the
Improvements; (3) the negligence or willful misconduct on the part of Tenant or
any of its agents, invitees, employees or contractors or any other persons
entering onto the Premises or the Improvements at the request, behest or with
the permission of Tenant; (4) the construction, use or occupancy of the
Improvements which Tenant may elect to construct; (5) the use of the Land; or
(6) any breach by the "Owner" under the construction contracts entered into by
Tenant as Landlord's agent pursuant to the terms of Section 11.10. Tenant's
duty to indemnify Landlord under this Section 8.3 shall survive the expiration
or earlier termination of this Lease with respect to events occurring during
the Term or after the Term while Landlord has record title to and Tenant is
occupying the Premises.
28.
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ARTICLE 9
UTILITIES AND SERVICES
9.1 SERVICES TO THE PREMISES. At Tenant's sole cost and
expense, Tenant shall make its own arrangements for the provision of all
utilities and services to be provided to or consumed on the Premises,
including, without limitation, air conditioning, ventilation, heating, electric
power, telephone, water (both domestic and fire protection), sanitary sewer,
storm drain, natural gas and janitorial services, including for the
installation, maintenance and repair of service lines and meters to measure
Tenant's consumption of such utilities.
ARTICLE 10
MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES
10.1 TENANT OBLIGATIONS. Except as otherwise provided in
this Lease, Tenant shall maintain the Premises and the Improvements in good
repair, normal wear and tear, casualty and Takings (as defined in Section 15.1)
excepted. All maintenance that Tenant is obligated to perform under this
Section 10.1 shall be at the sole expense of Tenant, except to the extent that
repairs are made necessary because of the gross negligence or willful
misconduct of Landlord, its agents, employees or contractors (but excluding
from the term contractor the Contractor and any subcontractors of the
Contractor).
10.2 SURRENDER OF THE PREMISES. Except as provided in
Section 19, upon the expiration or earlier termination of the Term, Tenant
shall surrender the Premises to Landlord in its then "AS-IS" condition,
including, without limitation, any condition resulting from: (i) wear and tear;
(ii) obsolescence and damage by fire or other casualty, act of God or the
elements (subject to the terms of Article 16); (iii) damage that is caused by
Landlord, its agents, employees or contractors; (iv) Takings; and (v) any
improvements, alterations, additions, repairs, replacements, or decorations in,
to or of the Premises or on the Land which are not Improvements but which
Tenant may elect to remain on the Land or the Premises. Title to all
improvements, furniture, furnishings, fixtures, trade fixtures and personal
property of Tenant which have not been funded by Landlord pursuant to the terms
of Article 11 and located in or upon the Premises or the Land, whether or not
affixed to the realty, shall be and remain in Tenant throughout the Term, and
at any time during the Term of this Lease, the same may be removed by Tenant,
or, at Tenant's election, surrendered with the Premises, in which event title
to such surrendered property shall, if Landlord so elects in Landlord's sole
discretion, be deemed transferred to Landlord. Any of such property that is
not removed from the Premises or the Improvements on or prior to the expiration
or earlier termination of this Lease shall be considered abandoned and Landlord
may deal with it as Landlord elects.
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ARTICLE 11
CONSTRUCTION OF IMPROVEMENTS
11.1 TENANT'S RIGHTS TO CONSTRUCT IMPROVEMENTS. As of the
date of this Lease, no improvements exist on the Land. Tenant shall be under
no obligation whatsoever to construct any Improvements. Tenant shall have the
right, in Tenant's sole discretion, to construct on the Land with Tenant's own
funds, improvements, buildings, and/or alterations to Improvements, without the
necessity of obtaining any approval from Landlord. In addition, Tenant shall
have the right, in Tenant's sole discretion, subject to the terms of this
Article 11, to require Landlord to pay for the construction of the Improvements
which Tenant desires. With respect to any construction which Tenant may elect
to have performed in accordance with this Article 11, Landlord hereby
irrevocably appoints Tenant as Landlord's construction agent. Landlord shall
have no right to construct any improvements, buildings, and/or alterations on
the Land unless Tenant specifically requests that such be constructed, and then
only in accordance with the terms and conditions of this Article 11.
11.2 REQUEST FOR CONSTRUCTION FUNDING; LANDLORD OBLIGATION
TO FUND. At any time during the first forty-eight (48) months of the Initial
Term, Tenant may request Landlord to provide funding for the construction of
Improvements, which may consist of one or more Buildings or phases, or for the
alteration of any existing Buildings. Each such request shall be in writing
and shall generally describe the nature of the Improvements. Landlord shall
fund amounts for: (1) the costs of construction or alteration of the
Improvements pursuant to the terms and conditions set forth in this Article 11;
(2) architectural, engineering, testing, permitting, professional fees and any
other soft costs relating to such Buildings; (3) any Capitalized Interest; and
(4) the amounts described in Exhibit J. If Tenant reduces the Funded Amount by
making payment to Landlord or the holder of any Authorized Loan, except as
provided in Articles 15 and 16, the amount so paid shall not later be available
to Tenant in the form of Advances for construction work. Landlord shall have
no obligation to make Advances to a Mortgagee of Tenant's interest under this
Lease, if any, which Mortgagee has foreclosed on Tenant's interest under this
Lease and is then the "Tenant" under this Lease. Landlord shall have no
obligation to make Advances for any Building or phase if the appraisal
described in Section 21.25 indicates that the current fair market value on an
as-completed basis of the Building as designed is less than ninety percent
(90%) of the estimated cost of construction of the Building. Landlord shall
have no obligation to make Advances for any Building or phase after the last
day of the twenty-fourth (24th) month after the initial Advance for such
Building or phase.
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11.3 CONDITIONS PRECEDENT TO LANDLORD'S OBLIGATION TO FUND
INITIAL ADVANCES. The obligation of Landlord to make an initial Advance
hereunder in respect of each Building shall be subject to the following
conditions precedent:
(a) NO EVENT OF MAJOR DEFAULT. No Event of Major
Default shall exist and be continuing at the time of the initial Advance.
(b) APPRAISAL. Landlord shall have approved the
appraisal delivered pursuant to Section 21.25 hereof.
(c) LANDLORD APPROVAL OF APPROVAL PLANS.
Landlord shall have approved in accordance with the terms of this Section
11.3(c) (except as otherwise permitted or already approved pursuant to Section
11.1), Tenant's proposed site plans (showing the locations and orientations of
any proposed buildings) and exterior shell plans (showing exterior building
sections) (collectively, "Approval Plans") of the Building(s) which Tenant may
elect to construct. Tenant shall deliver a letter to Landlord along with any
submitted Approval Plans in which Tenant states that the submitted Approval
Plans do not violate any Legal Requirements. Landlord may only withhold
Landlord's approval to any such Approval Plans to the extent that the Approval
Plans violate any material Legal Requirements, and Landlord may not withhold
its consent on any other ground. At the option of Tenant, the foregoing
documentation may be submitted to Landlord for approval in stages as Tenant
completes it. Landlord shall have a period of ten (10) days from the date of
receipt of each component of the documentation within which to approve or
reject it. The Approval Plans, as approved from time to time by Landlord
pursuant to this Section 11.3(c) shall constitute the "Authorized Plans."
Tenant shall immediately reimburse Landlord on demand for all reasonable
out-of-pocket costs and expenses incurred by Landlord in connection with the
review and approval of any Approval Plans (not to exceed One Thousand Dollars
($1,000) per approval). Landlord's approval of any Authorized Plans does not
constitute any representation or warranty by Landlord with respect to such
Authorized Plans, and Landlord hereby specifically disclaims any such
representations and warranties.
(i) FURTHER APPROVALS; PROPOSED
CHANGES. Subsequent to Landlord's approval of any Authorized Plans pursuant to
Section 11.3(c), Tenant shall only be obligated to submit to Landlord for
approval documentation showing any proposed material change to the Authorized
Plans (but no approval shall be required with respect to construction or design
matters that are not contained in or addressed by the Authorized Plans), and
only to the extent such change is materially inconsistent with the Authorized
Plans. Landlord shall have a period of ten (10) days from receipt of each
material change within which to approve or reject it. Tenant shall immediately
reimburse Landlord on demand for all reasonable out-of-pocket costs and
expenses incurred by Landlord in connection with the review and approval of any
such changes (not to
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exceed One Thousand Dollars ($1,000) per approval). Tenant shall have the
right, without further approval of Landlord, to construct Improvements not
materially inconsistent with the Authorized Plans together with such changes
thereto as may be requested or required to comply with Legal Requirements.
(ii) FAILURE TO DISAPPROVE. The
failure by Landlord to disapprove any portion of the proposed Approval Plans
submitted pursuant to this Section 11.3(c) within the specified approval period
shall be deemed to constitute approval thereof as submitted, and such Approval
Plans shall thereupon become Authorized Plans. Any disapproval by Landlord of
any portion of the proposed Approval Plans shall be in writing and shall
specify with particularity the basis for the disapproval.
(d) LANDLORD APPROVAL OF CONSTRUCTION AGREEMENT.
Landlord shall have approved in accordance with the terms of this Section
11.3(d) (except as otherwise permitted or already approved pursuant to Section
11.1), Tenant's proposed construction agreement with Contractor (collectively,
"Construction Agreement") of the Building(s) which Tenant may elect to
construct. Landlord may only withhold Landlord's approval to any such
Construction Agreement to the extent that the Construction Agreement violates
any material Legal Requirements or is not a form of agreement which includes a
guaranteed maximum price and a date certain of completion of the Improvements,
and Landlord may not withhold its consent on any other ground. Landlord shall
have a period of ten (10) days from the date of receipt of the Construction
Agreement within which to approve or reject it. Tenant shall immediately
reimburse Landlord on demand for all reasonable out-of-pocket costs and
expenses incurred by Landlord in connection with the review and approval of the
Construction Agreement (not to exceed One Thousand Dollars ($1,000) per
approval). Landlord's approval of any Construction Agreement does not
constitute any representation or warranty by Landlord with respect to such
Construction Agreement, and Landlord hereby specifically disclaims any such
representations and warranties.
(e) DRAW REQUEST. Landlord shall have received a
written request from Tenant or its agent requesting the Advance ("Draw
Request") in the form attached hereto as Exhibit I. The submission of a Draw
Request by Tenant shall be deemed to be Tenant's approval of the Capitalized
Interest which is to be included in the Funded Amount during the period covered
by such Draw Request pursuant to the terms of Section 2.24.
(f) PLANS AND SPECIFICATIONS. Landlord shall
have received a copy of the plans and specifications for the Building in
question. Landlord acknowledges that Landlord's only approval right with
respect to the plans and specifications is as specified in Section 11.3 (c)
above.
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(g) CONSTRUCTION AGREEMENT. Landlord shall have
received a copy of Tenant's construction agreement with Contractor for the
Building or phase in question.
(h) BUILDING PERMITS. With respect to any
portion of an Advance going toward hard costs for any Building, Landlord shall
have received a copy of all building permits and approvals then required for
the construction of the subject Building.
(i) CONTRACTOR'S CERTIFICATE. With respect to
any portion of an Advance going toward hard costs for any Building, Landlord
shall have received a certificate from the Contractor in the form attached
hereto as Exhibit F for the Advance in question ("Contractor's Certificate").
11.4 CONDITIONS PRECEDENT TO LANDLORD'S OBLIGATION TO FUND
SUBSEQUENT ADVANCES. Landlord's obligation to make any Advance for a Building
after the initial Advance for such Improvement shall be subject to the
satisfaction of the following conditions:
(a) NO EVENT OF MAJOR DEFAULT. No Event of Major
Default shall exist and be continuing at the time of such subsequent Advance,
and no "major and material" violations of code or law shall exist with respect
to the portions of such Building which have been constructed as of the date of
the Advance in question. For purposes of this Section 11.4(a), the term "major
and material" shall mean a violation that presents a material risk to the
health and safety of the occupants of the Building in question.
(b) DRAW REQUEST. With respect to any portion of
an Advance going toward hard costs for any Building, Landlord shall have
received a Draw Request for the Advance in question.
(c) CONTRACTOR'S CERTIFICATE. With respect to
any portion of an Advance going toward hard costs for any Building, Landlord
shall have received a Contractor's Certificate for the Advance in question in
the form attached hereto as Exhibit F.
(d) LIEN WAIVERS. Landlord shall have received
conditional lien waivers and releases upon progress payment from Contractor and
any "Major Subcontractor" (defined below) scheduled to receive payment from
such Advance. The term "Major Subcontractor" shall mean any subcontractor
which has executed a subcontract calling for aggregate payments to the
subcontractor in excess of Two Hundred Fifty Thousand Dollars ($250,000).
(e) CHANGES TO AUTHORIZED PLANS. Landlord shall
have approved any material change to the Authorized Plans pursuant to Section
11.3(c)(i)
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11.5 CONDITIONS PRECEDENT TO LANDLORD'S OBLIGATION TO FUND
FINAL ADVANCE. Landlord's obligation to make the final Advance for a Building
shall be subject to the satisfaction of the following conditions:
(a) SECTION 11.4 CONDITIONS. All of the
conditions precedent set forth in Section 11.4 shall have been satisfied with
respect to the final Advance in question.
(b) CERTIFICATE OF OCCUPANCY. Landlord shall
have received a copy of the certificate of occupancy or its equivalent issued
by the appropriate governmental authority for the Building in question.
11.6 ADDITIONAL PROVISIONS REGARDING ADVANCES.
(a) TIMING AND METHOD OF DISBURSEMENT. Advances
to be made hereunder shall not be made more frequently than monthly. For any
calendar month during which Tenant desires to receive an Advance, Tenant shall
submit a Draw Request on or before the date that is five (5) days prior to the
first LIBOR Business Day of such month, and if Tenant submits such Draw Request
by such date, then Landlord shall make the Advance as requested in such Draw
Request to the party(ies) designated by Tenant on the first LIBOR Business Day
of such month (subject to the conditions to funding described in Sections 11.3,
11.4 and 11.5). The Advances shall be made to parties identified by Tenant,
which parties may include Tenant. At the option of Tenant, Landlord shall make
such Advances to one (1) or more parties.
(b) RETAINAGE. Disbursements for construction
costs shall be subject to a ten percent (10%) retainage. The retainage shall
be paid to Tenant or to any Entities designated by Tenant along with the
payment of the Final Advance with respect to any Building. Notwithstanding the
foregoing, Tenant may require Landlord to pay any retainage on account of
particular subcontractors prior to the payment of a final Advance if: (1)
Tenant is able to achieve cost savings as a result of such early payment; and
(2) Contractor delivers to Landlord a letter of credit in the amount of the
retainage to be paid out prematurely. The parties will enter into an agreement
with respect to the letter of credit, which agreement shall reflect the
parties' agreement that: (a) Landlord shall only be entitled to draw on the
letter of credit if and to the extent necessary to complete the work that the
subcontractor receiving the early payment of the retainage was required to
perform and failed to perform; and (b) the letter of credit be returned to
Tenant at the time that the retainage would have been paid pursuant to the
second sentence of this Section 11.6(b). The total retainage shall be reduced
by the amount of such retainage paid early pursuant to the terms of the
preceding sentence.
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11.7 REQUIRED PERMITS, EASEMENTS, ETC. From time to time,
upon request of Tenant, Landlord (as holder of record of title to the
Improvements) shall execute such reasonable documents, petitions, applications
and authorizations, easements and rights of way (which have been prepared at
Tenant's expense) and shall appear at and participate in such public hearings,
staff meetings and similar gatherings, in each case as may in the reasonable
and good-faith opinion of Tenant be necessary or appropriate for the purpose of
obtaining any Required Permits or private easements or rights of way or utility
services for the Improvements or to remove any title encumbrances on the Land
which may interfere with Tenant's construction of the Improvements. Tenant
shall immediately reimburse Landlord on demand (or pay directly) for all
reasonable out-of-pocket costs and expenses incurred by Landlord in complying
with Landlord's obligations under this Section 11.7.
11.8 ALTERATIONS. Tenant shall notify Landlord in writing
in advance of any alteration to the Improvements which would either cost more
than Five Hundred Thousand Dollars ($500,000), or cause the Land and the
Improvements to fail the Coverage Test. At any time and from time to time, and
without the necessity for obtaining Landlord's approval or giving Notice
thereof to Landlord (except as otherwise specifically provided in this Section
11.8), Tenant shall have the right, at its expense, to make any improvements,
alterations, additions, repairs, replacements or decorations in, to or of the
Premises which do not materially change the exterior design scope of the
Improvements as previously approved by Landlord pursuant to any Authorized
Plans. In constructing any such improvements, alterations, additions, repairs,
replacements or decorations, Tenant shall do so in a manner which does not
violate any applicable and material Legal Requirements. If, in connection with
any alterations which Tenant may desire to construct, either: (1) the
performance of such alterations would cause the Land and Improvements together
to fail the Coverage Test; or (2) such alterations would materially change the
exterior design scope of the Improvements as previously approved by Landlord
pursuant to Authorized Plans, then such alterations shall be subject to the
prior written approval of Landlord, which shall not be unreasonably withheld or
delayed. In the event that the parties disagree as to whether or not
performing such alterations would cause the Land and the Improvements to fail
the Coverage Test, such matter shall be subject to the appraisal provision
contained in Section 21.23.
11.9 TITLE TO AND NATURE OF IMPROVEMENTS. By virtue of
Tenant's rights under the Land Lease, Tenant hereby grants to Landlord the
right to own and construct the Improvements which Tenant elects to cause to be
constructed with Landlord's funds under this Article 11, and Tenant hereby
grants, conveys and transfers to Landlord all of Tenant's right, title and
interest in and to the Improvements (whether now existing or hereafter
constructed), and Tenant agrees that any and all Improvements of whatever
nature at any time constructed, placed or maintained upon any part of the Land
shall be and remain the property of Landlord,
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subject to Tenant's rights under Section 19 and elsewhere in this Lease. Any
improvements on the Land other than the Improvements shall be and remain the
property of Tenant, subject to the terms of Section 10.2. The severance of fee
title to the Land and Improvements shall not change the character of the
Improvements as real property.
11.10 TENANT AS LANDLORD'S CONSTRUCTION AGENT. Tenant
shall function as Landlord's agent for purposes of the construction of any
Improvements. In this role, Tenant shall have the authority, on Landlord's
behalf, to oversee and direct the construction of all Improvements, including
but not limited to, approval of building, site and other plans, obtaining
building and other permits, negotiating construction contracts, monitoring
construction and making periodic inspections, approval of Contractor's invoice
for payment, and submission of Draw Requests. Within a reasonable time after
Tenant's request, Landlord shall execute construction contracts negotiated by
Tenant for the construction of Improvements on the Land; Landlord shall not
amend, modify or terminate any such construction contract without the prior
written approval of Tenant, which may be withheld in Tenant's sole discretion.
Landlord's appointment of Tenant as Landlord's agent under this Section 11.10
shall be irrevocable unless this Lease is terminated pursuant to the terms of
Section 17.4(b) in connection with an Event of Major Default.
11.11 TENANT'S RELEASE OF FUNDING COMMITMENT. At any time
during the term, Tenant may elect in its sole discretion to release Landlord
from its obligation to fund construction of all or any portion of the
Improvements by written notice to Landlord and Lenders; provided, however, that
Tenant has substantially completed construction of each Building on which
construction has commenced.
ARTICLE 12
LIENS
Except for claims that Tenant is contesting in good faith in
such manner as to avoid any exposure of the Premises or any part thereof to
foreclosure or execution sale, Tenant shall promptly pay and discharge all
claims for work or labor done, supplies furnished or services rendered to the
Premises, and shall keep the Premises free and clear of all mechanics' and
materialmen's liens in connection therewith.
ARTICLE 13
ASSIGNMENT BY LANDLORD
13.1 FURTHER MORTGAGES OR ENCUMBRANCES BY LANDLORD;
AUTHORIZED LOANS.
(a) PROHIBITION. Except for the Lenders Deed of
Trust, the Landlord Deed of Trust, the Tenant Deed of Trust and the
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Land Lease Deed of Trust (which are hereby approved by Tenant) and as
specifically permitted in Section 11.7 or 13.1(b) or 20, Landlord shall not
cause or create any mortgages, deeds of trust, encumbrances or other exceptions
to title (collectively, "New Encumbrances") to exist with respect to the
Premises at any time, and any such encumbrance not authorized in writing by
Tenant shall be null and void. The term "New Encumbrances" shall also include
any bonds or assessments affecting the Premises to which Landlord consents in
writing without the prior written approval of Tenant (which may be withheld in
Tenant's sole and absolute discretion). Without the prior written consent of
Tenant (which may be withheld in Tenant's sole and absolute discretion),
Landlord shall not make or join in an application or other document which
requests or authorizes any bonds or assessments to affect the Premises.
Landlord recognizes that any New Encumbrance may irreparably harm Tenant in
connection with one or more of the following: (1) construction which Tenant
may desire to perform; (2) the use of the Premises; (3) Tenant's rights
pursuant to the Purchase Option in Section 19; (4) the amount of assessments
which Tenant is required to pay; or (5) other matters.
(b) AUTHORIZED LOAN. Tenant has approved the
loans to Landlord ("Improvements Loan") from Lenders which is evidenced by that
certain Promissory Note dated as of the Date of Lease by Landlord in favor of
HSBC and that certain Promissory Note dated as of the Date of Lease by Landlord
in favor of Sumitomo (collectively, the "Notes"), and further evidenced and/or
secured by (a) that certain Pledge Agreement made by Tenant in favor of
Lenders, as it may be amended and supplemented from time to time ("Pledge
Agreement"), dated as of the Date of Lease; (b) the Lenders Deed of Trust (c)
that certain Loan Disbursement Agreement dated as of the Date of Lease; (d)
that certain Absolute Assignment of Leases dated as of the Date of Lease; (e)
that certain UCC Financing Statement; and (f) that certain Environmental
Indemnity Agreement dated as of the Date of Lease. In addition, upon the
maturity or prepayment of the Improvements Loan (whether by its terms, by
acceleration or otherwise), Landlord may (but, subject to the terms of Section
13.1(c), shall not be obligated to) enter into a new loan (such authorized loan
shall be the "New Loan"), provided Landlord first obtains Tenant's written
consent (which consent shall not be unreasonably withheld), and so long as: (i)
the Improvements Loan is paid off with the proceeds of such New Loan and all
documents securing or reflecting the Improvements Loan are assigned to the
lender who makes the New Loan or are released and satisfied; (ii) the principal
amount of the New Loan does not exceed the principal amount of the Improvements
Loan existing at the time the Improvements Loan is repaid; (iii) the interest
rate and payment provisions under the New Loan would not result in higher
monthly payments than the method under the Improvements Loan, and all such
monthly payments shall be interest only; and (iv) the New Loan documents do not
contain terms and conditions which differ from the Improvements Loan documents
in any material respect (including provisions relating to the Collateral as
defined in Section 21.18). The Improvements Loan and the New Loan
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authorized pursuant to the preceding sentence and the Replacement Loan described
in Section 13.1(c) below shall be the "Authorized Loan"; provided that only one
Authorized Loan may exist at any one point in time. Landlord may not modify the
terms of an Authorized Loan without the prior written consent of Tenant, which
Tenant shall not unreasonably withhold (but may be withheld in Tenant's sole and
absolute discretion based upon any of the matters identified in subitems (i)
through (v) above in this Section 13.1(b)).
(c) REPLACEMENT LOAN. Subject to Landlord's prior written consent
(which consent shall not be unreasonably withheld or delayed), at the request of
Tenant, Landlord shall execute loan documents evidencing and/or securing a new
loan to Landlord, the proceeds of which would be used to retire the Improvements
Loan (such loan requested by Tenant shall be a "Replacement Loan"). Landlord
shall only be entitled to refuse to consent to such new loan if (1) the maturity
date of the Replacement Loan is a date on or after the expiration date of the
Extension Term; (2) the principal amount of the Replacement Loan exceeds the
principal amount of the Improvements Loan plus any accrued interest and fees
payable at the time the Improvements Loan is repaid; (3) the interest rate
structure under the Replacement Loan is materially higher than market conditions
would justify at the time; (4) there are prepayment prohibitions, penalties or
other restrictions which would limit rights to retire the Replacement Loan or
require additional payment to do so; or (5) the Replacement Loan documents
contain terms and conditions which differ from the Improvements Loan documents
in any material respect (including provisions relating to the Collateral as
defined in Section 21.18). If Tenant requests and provides the funds, Landlord
shall make all arrangements necessary for, and shall pay down any Authorized
Loan in the amount requested by Tenant, and shall arrange for all documentation
reasonably requested by Tenant to reflect the reduction or elimination of such
Authorized Loan.
(d) LENDERS DEED OF TRUST. On the Date of Lease, Landlord and
Tenant shall execute, acknowledge, and cause to be recorded in the Official
Records, a deed of trust in form acceptable to Lenders and Tenant ("Lenders Deed
of Trust"). The Lenders Deed of Trust shall be a first priority lien against the
premises (as defined in the Lenders Deed of Trust).
(e) LANDLORD DEED OF TRUST. On the Date of Lease, Tenant shall
execute, acknowledge, and cause to be recorded in the Official Records, a deed
of trust in form acceptable to Landlord ("Landlord Deed of Trust"), which
Landlord Deed of Trust shall secure Tenant's obligations under this Lease. The
Landlord Deed of Trust shall be junior only to the Lenders Deed of Trust as a
second priority lien against the premises (as defined in the Landlord Deed of
Trust).
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(f) TENANT DEED OF TRUST. On the Date of Lease, Landlord shall
execute, acknowledge, and cause to be recorded in the Official Records, a deed
of trust in form acceptable to Tenant ("Tenant Deed of Trust"), which Tenant
Deed of Trust shall secure Landlord's obligations under this Lease (i) to return
the Security Deposit pursuant to the terms of this Lease and (ii) to convey the
Premises to Tenant as required pursuant to Article 19 hereof. The Tenant Deed of
Trust shall be junior only to the Lenders Deed of Trust and the Tenant Deed of
Trust as a third priority lien against the premises (as defined in the Tenant
Deed of Trust).
(g) LAND LEASE DEED OF TRUST. The Land Lease Deed of Trust
secures ILC's obligations under the Land Lease (i) to return the security
deposits set forth in the Land Lease pursuant to the terms of the Land Lease,
(ii) to convey the Premises to Tenant as required pursuant to Article 19
thereof, and (iii) to comply with Sections 20.3, 20.4 and 20.5 of the Land
Lease. The Tenant Deed of Trust shall be junior only to the Lenders Deed of
Trust, the Landlord Deed of Trust and the Tenant Deed of Trust and shall be a
fourth priority lien against the premises (as defined in the Land Lease Deed of
Trust).
13.2 LANDLORD'S RIGHT TO SELL. Subject to Tenant's Purchase Option and
the mandatory purchase set forth in Article 19 and the terms of Section 13.1 and
Article 20, nothing contained in this Lease shall be deemed in any way to limit,
restrict or otherwise affect the right of Landlord at any time and from time to
time to sell or transfer all or any portion of its right, title and estate in
the Premises to: (1) a financial institution with a capitalization in excess of
One Hundred Million Dollars ($100,000,000) and investments in other leased
assets of at least Twenty Five Million Dollars ($25,000,000); (2) a trust
established by such an institution; or (3) if an Event of Major Default has
occurred and is continuing at the time of such sale or transfer, to any Entity;
provided, however, that such Entity shall assume, in a manner consistent with
Landlord's obligations under this Lease and the Improvements Loan documents, the
Improvements Loan or any other Authorized Loan concurrently with acquisition of
the Premises, after first obtaining Lenders' written consent thereto. Landlord
shall give Tenant prior written notice of any sale or transfer pursuant to this
Section 13.2 together with written evidence of compliance with the terms hereof.
Any sale or transfer by Landlord whatsoever shall by its express terms recognize
and confirm the right of possession of Tenant to the Premises and Tenant's other
rights arising out of this Lease shall not be affected or disturbed in any way
by any such sale, transfer, assignment or conveyance (except for any disturbance
resulting from a foreclosure sale conducted pursuant to the laws of the State of
California at which independent third party bids were permitted, pursuant to the
Lenders Deed of Trust, all subject to the terms of Section 19.2).
13.3 TRANSFER OF FUNDS AND PROPERTY. At each time Landlord sells,
assigns, transfers or conveys the entire right, title and estate of Landlord in
the Premises and in this Lease,
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Landlord shall turn over to the transferee any funds or other property then held
by Landlord under this Lease and thereupon all the liabilities and obligations
on the part of the Landlord under this Lease arising after the effective date of
such sale, assignment, transfer or conveyance shall terminate as to the
transferor and be binding upon the transferee.
ARTICLE 14
ASSIGNMENT AND SUBLEASING
14.1 RIGHT TO ASSIGN.
(a) TENANT'S RIGHT. Tenant shall have the right, at any time and
from time to time during the Term, to assign all or any portion of its right,
title and estate in the Premises and in this Lease without approval by Landlord.
Any such assignee, immediate or remote, shall have the same right of assignment.
Any such assignment shall be evidenced by a written instrument, properly
executed and acknowledged by all parties thereto and, at Tenant's election, duly
recorded in the Official Records, wherein and whereby the assignee assumes all
of the obligations of Tenant under this Lease. Notwithstanding any such
assignment and assumption or any sublease permitted under Section 14.2 hereof,
Tenant shall remain primarily liable for all obligations and liabilities on the
part of Tenant theretofore or thereafter arising under this Lease.
(b) NOTICE. Tenant shall, promptly after execution of each
assignment, notify Landlord of the name and mailing address of the assignee and
shall, on demand, permit Landlord to examine and copy the assignment agreement.
14.2 RIGHT TO SUBLET.
(a) TENANT'S RIGHT. Tenant shall have the right, at any time and
from time to time during the Term, to sublet all or any portion of the Premises
and to extend, modify or renew any sublease without the approval of Landlord.
(b) NOTICE. Tenant shall, promptly after execution of each
sublease, notify Landlord of the name and mailing address of the subtenant and
shall, on demand, permit Landlord to examine and copy the sublease.
(c) NON-DISTURBANCE AGREEMENT. Upon Tenant's request, Landlord
shall enter into a "landlord agreement" with any subtenant of Tenant. Such
agreement shall provide that Landlord shall recognize the sublease and not
disturb the subtenant's possession thereunder so long as such subtenant shall
not be in default under its sublease, and an Event of Major Default is not then
in existence and continuing under this Lease. Tenant shall immediately reimburse
Landlord on demand for all reasonable out-of-
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pocket costs and expenses incurred by Landlord in complying with Landlord's
obligations under this Section 14.2(c).
14.3 TENANT'S RIGHT TO MORTGAGE.
(a) RIGHT OF TENANT. Tenant shall have the right from time to
time and at any time, without obtaining the approval of Landlord, to mortgage,
pledge or otherwise encumber all or any portion of the right, title and estate
of Tenant in the Premises or in this Lease.
(b) NOTICE. Tenant shall, promptly after execution of any
Mortgage, notify Landlord of the name and mailing address of the Mortgagee
thereunder and shall, on demand, permit Landlord to examine and copy the
Mortgage.
ARTICLE 15
EMINENT DOMAIN
15.1 TOTAL OR SUBSTANTIAL TAKING. If title or access is taken for any
public or quasi-public use, or under any statute or by right of condemnation or
eminent domain, or by sale in lieu thereof (a "Taking") with respect to all of
the Premises, or if title to so much of the Premises or access thereto is Taken,
or if the Premises or access thereto is damaged, blocked or impaired by the
Taking, so that, in Tenant's sole discretion, the Premises or access thereto,
even after a reasonable amount of reconstruction thereof, will no longer be
suitable for Tenant's (and/or Tenant's subtenants') continued occupancy for the
conduct of Tenant's (and/or Tenant's subtenants') business in a manner
consistent with the conduct of such business prior to such Taking, then in any
such event, this Lease shall terminate on the date of such Taking.
15.2 PARTIAL TAKING. If any part of the Premises, or access thereto,
shall be Taken, and the Premises or the remaining part thereof and access
thereto will be, in Tenant's sole discretion, suitable for Tenant's (and/or
Tenant's subtenants') continued occupancy for the conduct of Tenant's (and/or
Tenant's subtenants') business in a manner consistent with the conduct of such
business prior to such Taking, all of the terms, covenants and conditions of
this Lease shall continue, except that Base Rent shall be adjusted to reflect
the decreased Funded Amount remaining after application thereto of the award
made to Landlord for such Taking.
15.3 TEMPORARY TAKING. If the whole or any part of the Premises is
Taken for temporary use or occupancy, this Lease shall not terminate by reason
thereof and Tenant shall continue to pay, in the manner and at the times herein
specified, the full amount of the Base Rent payable by Tenant hereunder, and,
except only to the extent that Tenant may be prevented from so doing by reason
of such Taking, Tenant shall continue to perform and observe all of the other
terms, covenants and conditions hereof on the part of Tenant
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to be performed and observed, as though the Taking had not occurred. In the
event of any such temporary Taking, Tenant shall be entitled to receive the
entire amount of the award made for the Taking, whether paid by way of damages,
rent or otherwise. If the temporary Taking is for a term in excess of thirty
(30) days, then the Taking shall be treated as a permanent Taking and be
governed by Section 15.1 or 15.2, as applicable.
15.4 DAMAGES. The compensation attributable to the Improvements (in
each case the compensation or value shall be determined as of the date of the
Taking) awarded or paid upon any Taking (other than a temporary Taking, which
shall be governed by Section 15.3), whether awarded to Landlord, Tenant, or both
of them, shall be held by the Escrow Agent described in Section 16.3(b) and
distributed in the same manner as insurance proceeds pursuant to Section 16.3.
For purposes of this Section 15.4, references to the term "casualty" or similar
terms in Section 16.3 shall be deemed to refer to "Taking."
15.5 NOTICE AND EXECUTION. Immediately upon service of process upon
Landlord or Tenant in connection with any Taking relating to the Premises or any
portion thereof or access thereto, each party shall give the other Notice
thereof. Each party agrees to execute and deliver to the other all instruments
that may be required to effectuate the provisions of this Article 15. Tenant
reserves the right to appear in and to contest any proceedings in connection
with any such Taking. Tenant shall immediately reimburse Landlord on demand for
all reasonable out-of-pocket costs and expenses incurred by Landlord in
complying with Landlord's obligations under this Section 15.5.
ARTICLE 16
DAMAGE OR DESTRUCTION
16.1 CASUALTY. If any Improvements are damaged or destroyed by fire or
other casualty (including, but not limited to earthquake), except as provided to
the contrary in Section 16.2, this Lease shall continue in full force and effect
without any abatement or reduction in Base Rent, and Tenant, at Tenant's
election, shall either (a) restore the Improvements substantially to their
condition prior to the damage or destruction, or such other condition as Tenant
shall elect in its sole and absolute discretion, subject to Landlord's approval
rights set forth in Section 11.3(c), or (b) not restore the Improvements, but
perform, or cause to be performed, at Tenant's sole cost and expense, any work
or service required by any Legal Requirement for the protection of persons or
property from any risk, or for the abatement of any nuisance, created by or
arising from the casualty or the damage or destruction caused thereby.
16.2 TERMINATION OF LEASE. In the case of: (a) any damage or casualty
of any Building or Buildings, which in the good faith judgment of Tenant's Board
of Directors would render such
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Building either unsuitable or uneconomic for restoration or continued use by
Tenant; (b) the damage or destruction of all or substantially all (as determined
in good faith by Tenant's Board of Directors) of any Building or Buildings; or
(c) the damage or destruction of any Building or Buildings where restoration
cannot (as determined in good faith by Tenant's Board of Directors) reasonably
be completed either within 365 days or prior to the expiration of the Initial
Term or the Extension Term, then Tenant may elect to terminate this Lease either
as to the Building(s) in question or as to the Lease in its entirety. In the
event Tenant terminates the Lease pursuant to the preceding sentence, Tenant
shall purchase Landlord's interest in the Building(s) in question for a purchase
price equal to the Purchase Price for the Building(s) in question, as such
Purchase Price is defined in Section 19.1. The purchase of Landlord's interest
in such Building(s) shall be pursuant to the terms of Section 19.1, as
applicable to such Building(s). Upon the completion of such purchase, this Lease
and all obligations hereunder in respect of such Building(s) shall terminate.
This Lease shall remain in full force and effect with respect to all remaining
Buildings which Tenant does not elect to purchase pursuant to this Section 16.2,
and such remaining Building(s) shall constitute the "Improvements" for purposes
of this Lease.
16.3 INSURANCE PROCEEDS. In the event of any fire or other casualty,
the proceeds of any insurance policies maintained by Tenant pursuant to Section
7.2 or 7.3 shall be held, applied and dealt with as follows:
(a) Any proceeds (per occurrence) of such policies attributable
to the Improvements below the amount of Five Hundred Thousand Dollars ($500,000)
shall be paid directly to Tenant and applied and used as Tenant may direct in
its sole discretion for any construction, restoration or reconstruction purposes
in connection with any improvements located on the Land which were destroyed,
damaged or affected by such casualty. Any portion of such proceeds which Tenant
does not want to use (subject to the terms of Section 16.3(d)) for any
construction, restoration or reconstruction shall be paid as follows (the order
of payment as set forth below shall be the "Distribution Formula"): (1) to
Lenders, or to any other holder of an Authorized Loan, and to Landlord, pro rata
in proportion to the ratio that the then-existing Senior Funded Amount bears to
the then-existing Funded Amount as compared to the ratio that the then-existing
Equity Funded Amount bears to the then-existing Funded Amount (provided,
however, that in no event shall the amount paid to Landlord exceed the
difference between the Funded Amount and the Guaranteed Residual Value); and (2)
with any remaining excess to be paid to Tenant.
Any proceeds (per occurrence) of such policies attributable to
the Improvements greater than Five Hundred Thousand Dollars ($500,000) shall be
paid to an escrow agent ("Escrow Agent") mutually agreeable to the parties (but
such escrow agent
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shall not be a party which is related to or affiliated with either of the
parties to this Lease). Such proceeds shall be invested by the Escrow Agent as
Tenant may direct; provided, however, that such proceeds shall not be invested
in the stock or obligations of Tenant. Such proceeds shall be paid by the Escrow
Agent to Tenant (or to third parties as Tenant may direct), as Tenant may direct
from time to time as restoration, construction or rebuilding progresses to pay
the cost of any restoration, construction or rebuilding which Tenant elects to
take place on the Land or any Improvements located upon the Land, but only upon
the written request of Tenant, and so long as Landlord reasonably determines
that the following conditions are satisfied at the time of such request for
payment by Tenant: (i) the sum requested has been paid or is then due and
payable or will become due and payable within thirty (30) days; (ii) Tenant has
the financial ability (taking into account the insurance proceeds held by the
Escrow Agent) to complete the restoration, construction or rebuilding which
Tenant has elected to perform; (iii) Landlord has approved the Approval Plans,
if any, relating to the restoration of Improvements, pursuant to the terms of
Article 11; and (iv) in Landlord's reasonable judgment, such restoration work
which Tenant desires to perform in connection with the Improvements can be
completed prior to the expiration of the Initial Term (or, if Tenant has
exercised, or within one hundred twenty (120) days after reaching final written
settlement with all insurance companies regarding the amount of proceeds to be
paid for the casualty in question, exercises its right to extend for the
Extension Term, then prior to the expiration of the Extension Term). Landlord
shall promptly upon request instruct the Escrow Agent to make the payments
requested by Tenant unless one of the conditions described above is not
satisfied at the time of such request. Any excess insurance proceeds existing
after either Tenant's completion of the restoration, construction or rebuilding
which Tenant elects to perform or Tenant's failure to comply with the funding
condition described in subitems (ii), (iii) and (iv) immediately above in this
Section 16.3(b), shall be paid pursuant to the Distribution Formula. If Tenant
elects to terminate this Lease as to one or more Buildings, Tenant may use any
insurance proceeds to pay the purchase price described in Section 16.2, and all
rights of Landlord in insurance proceeds not used to pay the purchase price
shall be assigned to Tenant by Landlord at the time Tenant purchases Landlord's
interest in any such Building(s).
(b) Any proceeds of such policies attributable to improvements or
buildings on the Land other than the Improvements shall promptly be paid
directly to Tenant.
(c) If either: (1) Tenant has not delivered written notice to
Landlord within one hundred twenty (120) days after reaching final written
settlement with all insurance companies regarding the amount of proceeds to be
paid for the casualty in question, pursuant to which notice Tenant elects to
either exercise some or all of its termination rights under Section 16.2 and/or
to fully or partially repair or restore
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pursuant to Section 16.1; or (2) Landlord reasonably believes that Tenant has
abandoned reconstruction or restoration work which Tenant may have elected to
perform (and Tenant shall have failed to diligently recommence reconstruction or
restoration work which Tenant is then able to perform within thirty (30) days
after Tenant's receipt from Landlord of a Notice of Landlord's belief of
Tenant's abandonment of the reconstruction or restoration work); then, in either
case, the proceeds attributable to the Improvements shall be paid pursuant to
the Distribution Formula.
(d) Any insurance proceeds paid to Landlord, Lenders or holder of
any Authorized Loan under this Article 16 shall automatically reduce the Funded
Amount by a like amount.
ARTICLE 17
DEFAULT
17.1 DEFAULT. The following event shall constitute a default
("Default") by Tenant:
(a) DEFAULT OTHER THAN EVENT OF MAJOR DEFAULT. Tenant's failure
to perform or comply with any of the terms, covenants or conditions contained in
this Lease other than those referred to in Section 17.2, where such failure
shall continue for a period of thirty (30) days after Notice thereof from
Landlord to Tenant, or in the case of a failure which cannot with due diligence
be cured within the period of thirty (30) days, Tenant's failure to proceed
promptly and with due diligence to cure the failure and thereafter to prosecute
the curing of the failure with all due diligence, it being intended that in
connection with a failure not susceptible of being cured with due diligence
within thirty (30) days, the time of Tenant within which to cure the failure
shall be extended for such period as may be reasonably necessary to complete the
cure with all due diligence.
17.2 EVENT OF MAJOR DEFAULT. Each of the following events shall
constitute an event of major default ("Event of Major Default") by Tenant:
(a) FAILURE TO PAY BASE RENT. Tenant's failure to pay any Base
Rent within ten (10) days after the later to occur of the due date or Tenant's
receipt from Landlord of the Invoice required pursuant to Section 5.1;
(b) FAILURE TO PAY ADDITIONAL RENT. Tenant's failure to pay any
Additional Rent which is due to Landlord within the later to occur of the due
date under this Lease or ten (10) days after Tenant's receipt of Notice thereof
from Landlord that such Additional Rent is due;
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(c) FAILURE TO COMPLY WITH PURCHASE OBLIGATION UNDER SECTION
19.2. Tenant's failure to comply with Tenant's obligation to purchase the
Premises pursuant to Section 19.2 within the period required in Section 19.2;
(d) FAILURE TO CARRY INSURANCE. Tenant's failure to carry the
insurance required by Article 7, if such failure continues ten (10) days after
Tenant's receipt of Notice thereof from Landlord that Tenant is not carrying
such required insurance (provided, however, that it shall not be an Event of
Major Default under this Section 17.2 if Tenant is carrying when required the
basic form policies required by Article 7 with respect to the perils addressed
therein and in the amounts required by Article 7, notwithstanding some other
noncompliance);
(e) INSOLVENCY. Subject to Section 17.3, the occurrence of: (i)
an assignment by Tenant for the benefit of creditors generally; or (ii) the
filing of a voluntary or involuntary petition by or against Tenant under any
present or future applicable federal, state or other statute or law having for
its purpose the adjudication of Tenant as a bankrupt; (iii) the appointment of a
receiver, liquidator or trustee for all or a substantial portion of the Premises
by reason of the insolvency or alleged insolvency of Tenant; or (iv) the taking
of possession by any department of city, county, state or federal government, or
any officer thereof duly authorized, of all or a substantial portion of the
Premises by reason of the insolvency or alleged insolvency of Tenant; and
Tenant's failure to timely give any Notice it is permitted to give pursuant to
Section 17.3 (or, in the event Tenant gives timely Notice and pursues a contest
under Section 17.3, Tenant's failure to finally prevail in the contest).
(f) FAILURE TO REPLENISH UNDER PLEDGE AGREEMENT. Tenant's failure
to replenish the collateral account as required under the Pledge Agreement (as
defined in Section 13.1(b)) after the notice and cure periods provided in Pledge
Agreement;
(g) FAILURE TO REFINANCE THE IMPROVEMENT LOAN. Tenant's failure
to refinance, or repay, the Improvement Loan prior to the Extension Term;
(h) DEFAULT UNDER OTHER CREDIT FACILITY. Tenant's suffering or
permitting any of the following defaults: (i) A payment default (after
applicable notice and cure periods) under any credit facility of Tenant which
equals or exceeds Twenty Million Dollars ($20,000,000); (ii) An Event of Major
Default (after applicable notice and cure periods) under that certain lease
agreement by and between SGA Development Partnership, Ltd., a Texas limited
partnership, and Tenant, for premises located in San Jose, California, dated
February 25, 1993, as amended; (iii) An Event of Major Default (after applicable
notice and cure periods) under that certain lease agreement by and between
Sumitomo Bank Leasing and Finance, Inc., a Delaware corporation ("SBLF"), and
Tenant, for premises located in San Jose, California, dated May 20, 1993, as
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amended; (iv) An Event of Major Default (after applicable notice and cure
periods) under that certain lease agreement by and between SBLF and Tenant for
premises located in Raleigh, North Carolina, dated July 11, 1994, as amended;
(v) An Event of Major Default (after applicable notice and cure periods) under
that certain lease agreement by and between SBLF and Tenant for premises located
in Raleigh, North Carolina, dated August 12, 1994; or (vi) An Event of Major
Default (after applicable notice and cure periods) under any of the Building
Leases;
(i) TANGIBLE NET WORTH. Tenant's Tangible Net Worth shall fall
below Seven Hundred Fifty Million Dollars ($750,000,000.00);
(j) FRAUD/INTENTIONAL MISREPRESENTATION. Fraud or intentional
misrepresentation by Tenant in connection with the representations and
warranties set forth in Section 21.22 hereof; or
(k) DEFAULT UNDER LAND LEASE. An Event of Major Default under the
Land Lease.
17.3 CONTEST BY TENANT. If upon the filing of any involuntary petition
of the type described in Section 17.2(e) or upon the appointment of a receiver,
other than a receiver appointed in any voluntary proceeding referred to in
Section 17.2(e), or the taking of possession of all or a substantial portion of
the Premises by any department of the city, county, state or federal government,
or any officer thereof duly authorized, by reason of the alleged insolvency of
Tenant without the consent or over the objection of Tenant, should Tenant desire
to contest the same in good faith, Tenant shall, within ninety (90) days after
the filing of the petition or after the appointment or taking of possession,
give Notice to Landlord that Tenant proposes to make the contest, and the same
shall not constitute an Event of Major Default so long as Tenant shall prosecute
the proceedings with due diligence and no part of the Premises shall be exposed
to sale by reason of the continuance of the contest.
17.4 REMEDIES. Landlord shall have the remedies specified below, the
parties hereby acknowledging that the remedies described in Section 17.4(b) may
be exercised by Landlord only upon the occurrence of an Event of Major Default.
Tenant shall at all times have the right to exercise and carry out the terms of
the Purchase Option in Section 19.1, notwithstanding the occurrence or existence
of any Default or Event of Major Default under this Lease, and Landlord shall
have the obligation to comply with Landlord's obligations under Section 19.1
notwithstanding any Default or Event of Major Default.
(a) CONTINUE LEASE. In connection with a Default or an Event of
Major Default, Landlord shall have the right to enforce, by suit or otherwise,
all other covenants and conditions hereof to be performed or complied with by
Tenant and to exercise
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all other remedies permitted by Section 1951.4 of the California Civil Code, or
any amendments thereof or any successor laws which replace such Section 1951.4.
Landlord has the remedy described in California Civil Code Section 1951.4
(Landlord may continue the Lease in effect after Tenant's breach and abandonment
and recover Base Rent as it becomes due, if Tenant has the right to sublet or
assign, subject only to reasonable limitation). Upon application by Landlord, a
receiver may be appointed to take possession of the Premises and exercise all
rights granted to Landlord as set forth in this Section 17.4(a); and
(b) TERMINATE LEASE. In connection with an Event of Major Default
(but not a Default), Landlord shall have the right to terminate this Lease, by
giving Tenant Notice thereof, at any time after the occurrence of such Event of
Major Default and whether or not Landlord has also exercised any right under
Section 17.4(a). In such event, Tenant shall, within thirty (30) days after
receipt of Notice from Landlord, purchase the Premises pursuant to Section 19.2.
Landlord shall also have its other remedies at law (including its rights under
the Landlord Deed of Trust), provided, however, that Tenant's right to purchase
the Improvements pursuant to Section 19.1 shall survive any termination of this
Lease up through the date of foreclosure sale under the Lenders Deed of Trust,
the Landlord Deed of Trust or any deed of trust securing an Authorized Loan.
17.5 NO WAIVER. No failure by Landlord or Tenant to insist upon the
strict performance of any term, covenant or condition of this Lease or to
exercise any right or remedy consequent upon a breach thereof and no acceptance
of full or partial Rent during the continuance of any breach shall constitute a
waiver of any such breach or of the term, covenant, or condition. No term,
covenant or condition of this Lease to be performed or complied with by Tenant
or Landlord, and no breach thereof, shall be waived, terminated, altered or
modified except by a written instrument executed by Landlord and Tenant. No
waiver of any breach shall affect or alter this Lease, but each and every term,
covenant, and condition of this Lease shall continue in full force and effect
with respect to any other then existing subsequent breach thereof.
17.6 EFFECT OF ASSIGNMENT. Notwithstanding an Entity's prior
assignment or transfer of its interest as Tenant under this Lease, so long as
Landlord has been given Notice of such assignment pursuant to Sections 14.1(b)
and 21.3, Landlord shall give such Entity copies of all Notices required by this
Article 17 in connection with any Default or Event of Major Default, and such
Entity shall have the period granted hereunder to Tenant to cure such Default or
Event of Major Default, unless such Entity shall have been released from all
obligations arising under this Lease. Landlord may not assert any rights against
such Entity in the absence of such Notice and opportunity to cure, so long as
Landlord has been given Notice of such assignment pursuant to Sections 14.1(b)
and 21.3.
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17.7 LANDLORD CURE RIGHT. If Tenant fails to perform any covenant or
agreement to be performed by Tenant under this Lease, and if the failure or
default continues for thirty (30) days after Notice to Tenant and to any
Mortgagee who has requested in writing notice thereof from Landlord (except for
emergencies and except for payment of any lien or encumbrance threatening the
imminent sale of the Premises or any portion thereof, in which case payment or
cure may be made as soon as necessary to minimize the damage to person or
property caused by such emergency or to prevent any such sale), Landlord may,
but shall have no obligation to, pay the same and cure such default on behalf of
and at the expense of Tenant and do all reasonably necessary work and make all
reasonably necessary payments in connection therewith including, but not limited
to, the payment of reasonable attorneys' fees and disbursements incurred by
Landlord. Notwithstanding the foregoing, Landlord shall have no right to cure
any such failure to perform by Tenant so long as Tenant both: (1) is diligently
and in good faith attempting to cure such matter; and (2) has the financial
ability to so comply, unless Tenant has failed to substantially cure such matter
within ninety (90) days after Tenant's receipt of Notice thereof from Landlord,
in which case Landlord may commence in a reasonable and customary manner and in
good faith to attempt to cure such matter (except that Landlord shall not have a
right to attempt to cure matters addressed in Section 8.1(b) unless specifically
authorized to do so pursuant to Section 8.1(b)). Notwithstanding anything to the
contrary in this Lease, in no event shall Landlord have a right to cure any
matters relating to the Improvements unless Landlord reasonably believes that
the failure to cure such matter could lead to criminal prosecution against
Landlord (except as specifically permitted in Section 8.1(b)). Upon demand,
Tenant shall reimburse Landlord for the reasonable amount so paid, together with
interest at the Default Rate from the date incurred until the date repaid.
Tenant shall defend, indemnify, and hold Landlord harmless from and against any
and all losses, costs, expenses, liabilities, claims, causes of action and
damages of all kinds that may result to Landlord, including reasonable
attorneys' fees and disbursements incurred by Landlord, arising because of any
failure by Tenant to perform any of its obligations under this Lease. Tenant's
duty to indemnify Landlord under this Section 17.7 shall survive the expiration
or earlier termination of this Lease.
17.8 LANDLORD'S DEFAULT.
(a) LANDLORD'S FAILURE TO PERFORM. If Landlord fails to perform
any covenant or agreement to be performed by Landlord under Article 11, Section
13.1, Section 15.4, Article 20, or Section 21.10 of this Lease (including, but
not limited to, Landlord's failure to keep the Premises free of any and all
liens created by or through Landlord except as approved by Tenant in writing),
and if the failure or default continues for thirty (30) days after Notice to
Landlord and to any holder of an Authorized Loan who has requested in writing
notice thereof from Tenant (except for emergencies, a default under Section 20.5
or payment of
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any lien or encumbrance threatening the imminent sale of the Premises or any
portion thereof, in which case payment or cure may be made as soon as necessary
to minimize the damage to person or property caused by such emergency, to
prevent foreclosure on the Collateral or to prevent any such sale), Tenant may,
but shall have no obligation to, pay the same and cure such default on behalf of
and, so long as such failure to perform arises due to Landlord's gross
negligence, willful misconduct, or willful breach of this Lease, at the expense
of Landlord and do all reasonably necessary work and make all reasonably
necessary payments in connection therewith including, but not limited to, the
payment of reasonable attorneys' fees and disbursements incurred by Tenant.
Notwithstanding the foregoing, Tenant shall have no right to cure any such
failure to perform by Landlord so long as Landlord both: (1) is diligently and
in good faith attempting to cure such matter; and (2) has the financial ability
to so comply. To the extent that Landlord's failure to perform arises due to its
gross negligence, willful misconduct or willful breach of this Lease, upon
demand, Landlord shall reimburse Tenant for the reasonable amount so paid,
together with interest at the Default Rate from the date incurred until the date
repaid. To the extent that Landlord's failure to perform arises due to its gross
negligence, willful misconduct or willful breach of this Lease, Landlord shall
defend, protect, indemnify, and hold Tenant harmless from and against any and
all losses, costs, expenses, liabilities, claims, causes of action and damages
of all kinds that may result to Tenant, including reasonable attorneys' fees and
disbursements incurred by Tenant, arising because of any failure by Landlord to
perform any of its obligations under Article 11, Section 13.1, Section 15.4,
Article 20 or Section 21.10 of this Lease. Landlord's duty to indemnify Tenant
under this Section 17.8 shall survive the expiration or earlier termination of
this Lease.
(b) DEFAULT UNDER CERTAIN PROVISIONS. In addition to Tenant's
rights set forth in Section (a) above, in the event of a default by Landlord
under Section 20.5, Tenant shall have the right to cure such default on behalf
of and at Landlord's expense, without prior notice to Landlord. In addition, in
the event of any default by Landlord under Section 20.3, 20.4 or 20.5, Tenant
shall have the right to exercise its Purchase Option pursuant to Section 19.1
hereof.
ARTICLE 18
QUIET ENJOYMENT
Landlord covenants to secure to Tenant the quiet possession of the
Premises for the full Term against all persons claiming the same, subject to
Landlord's rights and remedies under Section 17 upon a Default or an Event of
Major Default by Tenant. The existence of any Permitted Exceptions shall not be
deemed to constitute a breach of Landlord's obligations hereunder. Tenant shall,
immediately upon demand, reimburse Landlord for all reasonable costs, expenses
and damages incurred or paid by Landlord
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in the performance of Landlord's obligations under this Article 18 (except for
any costs, expenses or damages arising from Landlord's willful breach of this
Lease).
ARTICLE 19
TENANT'S OPTION TO PURCHASE
19.1 OPTION TO PURCHASE PREMISES.
(a) PURCHASE OPTION. Tenant shall have the option ("Purchase
Option") to purchase all or part of the Premises at any time during the Term;
provided that Tenant shall be entitled to purchase less than all of the Premises
only if the portion being purchased is released from any existing Fee Mortgage
and if the portion of the Premises not purchased shall constitute one or more
Buildings or phases after closing of the purchase and shall be viable as a
separate Building or phase as determined in Landlord's reasonable discretion;
further provided that if the portion of the Premises not purchased will not
constitute one or more legal parcels then Landlord may refuse to sell to Tenant
that portion of the Premises in its sole discretion. The purchase price
("Purchase Price") for the Building or phase which Tenant elects to purchase
shall be (i) the then-existing Funded Amount for the Building or phase which
Tenant elects to purchase, as the same may be reduced from time to time, plus
(ii) the amount of any prepayment premium and all other fees, costs, expenses
and any accrued but unpaid interest or rent due to any holder of an Authorized
Loan in connection with such loan (to the extent not already paid pursuant to
Section 21.21 (including late charges arising from Tenant's late payment of Base
Rent hereunder and the annual servicing fee attributable to this Lease) hereof).
Tenant shall be entitled to a credit against the Purchase Price in an amount
equal to the sum of (i) the principal balance(s) of any Authorized Loan and/or
Fee Mortgage existing immediately prior to the closing under this Purchase
Option if such Authorized Loan and/or Fee Mortgage are not fully repaid and all
documents reflecting the same are not cancelled and removed from the public
records on or prior to the closing under this Purchase Option, plus (ii) the
amount of the Security Deposit (or, in the event of a purchase of a portion of
the Premises, a pro rata portion of the Security Deposit), and, upon closing
under this Purchase Option, Landlord shall be released from Landlord's
obligation to return the Security Deposit set forth in Section 5.7 hereof. If
Tenant purchases less than all of the then-existing Premises, then the credit
pursuant to the preceding sentence shall be calculated on a pro rata basis,
based upon the ratio of the area of the Premises being purchased compared to the
area of the then-existing Premises. In lieu of payment of the Purchase Price,
Tenant shall have the right (1) to assume the Improvements Loan or any other
Authorized Loan or (2) to cause Landlord to assign the Authorized Loan and this
Lease (including the existing Security Deposit) to a third party acceptable to
the holder of such Authorized Loan (which third party shall expressly assume
such obligations in writing), provided that Landlord is
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released from all obligations under the Authorized Loan and Landlord is paid an
amount equal to the Equity Contribution. Landlord shall execute any and all
documents necessary to effect such assumption and assignment upon Tenant's
request, provided that Tenant shall reimburse Landlord for all reasonable costs
and expenses related thereto.
(b) PURCHASE OPTION EXERCISE NOTICE. If Tenant desires to
exercise the Purchase Option, Tenant shall deliver to Landlord a written notice
("Purchase Option Exercise Notice") of Tenant's election; provided, however,
that in the event of an assignment by Landlord for the benefit of creditors
generally, the filing of a voluntary or involuntary bankruptcy petition by or
against Landlord or the appointment of a receiver, liquidator or trustee for all
or a substantial portion of the Premises by reason of Landlord's insolvency or
alleged insolvency, the Purchase Option shall be deemed exercised with respect
to the entire Premises as of the calendar day immediately preceding such
assignment, filing or appointment.
(c) TRANSFER. If Tenant exercises the Purchase Option, the
purchase and sale of the Premises shall be consummated as follows. In the event
of a purchase of a portion of the Premises, the term "Premises" as used in this
Section 19.1(c) shall be deemed to mean that portion of the Premises then to be
purchased pursuant to the Purchase Option.
(i) Landlord shall grant and convey the Premises to Tenant,
its authorized agent or assignee, pursuant to a duly executed and acknowledged
grant deed ("Grant Deed"), free and clear of all title defects, liens,
encumbrances, deeds of trust, mortgages, rights-of-way and restrictive covenants
or conditions, except for the Permitted Exceptions;
(ii) The Purchase Price shall be paid upon delivery of the
Grant Deed and any other documents reasonably requested by Tenant to evidence
the transfer of the Premises or to release all liens of Landlord, including
without limitation, any and all reconveyances of mortgages or other recorded
documents as requested by Tenant ("Additional Documents"). In the event that
Tenant elects to assign the Purchase Option pursuant to Section 19.1(d) below,
and Tenant's assignee pays an amount less than the Purchase Price for the
Premises, Tenant shall pay to Landlord any excess of the Purchase Price over the
amount paid by such assignee. Landlord shall deliver the Grant Deed and the
Additional Documents to Tenant on the date for closing specified by Tenant in
the Purchase Option Exercise Notice (which date shall be no sooner than ten (10)
days after the date of the Purchase Option Exercise Notice and no later than the
last day of the Term, as the same may be extended). The closing shall take place
at the location and in the manner reasonably set forth by Tenant in the Purchase
Option Exercise Notice;
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(iii) If Landlord shall fail to cause title to be in the
condition required in Section 19.1(c)(i) above within the time herein prescribed
for the delivery of the Grant Deed, then Tenant shall have the right, in
addition to all other rights provided by law, by a written notice to Landlord:
(1) to extend the time in which Landlord shall clear title and deliver the Grant
Deed and Additional Documents, during which extension this Lease shall remain in
full force and effect, except Tenant shall be released from its obligation to
pay Base Rent during the extension; (2) to accept delivery of the Grant Deed and
Additional Documents subject to such title defects, liens, encumbrances, deeds
of trust, mortgages, rights-of-way and restrictive covenants or conditions
specified and set forth in the Grant Deed and not cleared by Landlord (but
without waiving any rights or remedies available to Tenant on account of such
title exceptions); (3) to rescind, by notice to Landlord and without any penalty
or liability therefor, any and all obligations Tenant may have under and by
virtue of the Purchase Option or the exercise thereof, whereupon this Lease
shall remain in full force and effect; (4) if the title exception is curable by
the payment of money, Tenant may make such payment and such payment shall be a
credit against the Purchase Price in favor of Tenant.
(iv) Refusal of a title company to issue a standard form of
owner's title insurance policy insuring title to the Premises in the condition
specified in subparagraph (c)(i) shall be sufficient evidence of Landlord's
failure to convey clear title and shall entitle Tenant to exercise any of the
rights specified in subparagraph (c)(iii).
(v) Base Rent shall be prorated and paid and all unpaid
Additional Rent shall be paid as of the date title to the Premises is vested of
record in Tenant. Tenant shall pay the escrow fees; the recorder's fee for
recording the Grant Deed; the premium for the title insurance policy; all
documentary transfer taxes; Tenant's attorneys' fees; Landlord's reasonable
attorneys' fees; all other costs and expenses incurred by Tenant in consummating
the transfer of the Premises; and all reasonable expenses (except as specified
in the next sentence) incurred by Landlord in consummating the transfer of the
Premises pursuant to this Section 19.1. Landlord shall pay the costs and
expenses of clearing title as required by Section 19.1(c)(i). In the event of a
purchase by Tenant under this Article 19, Landlord shall have no obligation to
return the Security Deposit to Tenant to the extent the Security Deposit has
been credited against the purchase price to be paid by Tenant pursuant to
Section 19.1(a).
(d) ASSIGNMENT. Tenant shall have the right on one or more
occasions, without Landlord's consent, to assign this purchase option, in whole
or in part, to any Entity at any time, whether or not Tenant also assigns its
interest in the Lease. Tenant shall give prior written notice to Landlord of any
such assignment.
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19.2 MANDATORY PURCHASE/SALE OF PREMISES. Notwithstanding anything to
the contrary herein, upon either: (1) the occurrence of an Event of Major
Default or the expiration of the Term of this Lease or upon the occurrence of
any other event terminating this Lease; or (2) the occurrence of any event which
causes the Funded Amount to be reduced to zero (0); or (3) Tenant's exercise of
the Purchase Option pursuant to Section 19.1 or 19.2 of the Land Lease, within
thirty (30) days after Tenant's receipt of written Notice of the foregoing and
of Tenant's purchase obligation under this Section 19.2 (except in the case of a
purchase obligation arising on account of the expiration of the Term of this
Lease or exercise of the Purchase Option under the Land Lease; in either such
case no prior Notice shall be required, but Tenant shall have twenty (20) days
after expiration of the Term or exercise of the Purchase Option under the Land
Lease to conclude the purchase), Tenant shall purchase or cause another Entity
to purchase, and Landlord shall sell, the Premises in the same manner as if
Tenant had exercised the Purchase Option on such date. The Purchase Price shall
be the same as if Tenant had exercised the Purchase Option, without regard to
the physical state or condition of the Premises or any Improvements (but Tenant
shall have the rights set forth in Section 19.1, including without limitation,
the terms of Sections 19.1(c)(iii) and (iv)). In the event Tenant fails to
purchase (or to cause another Entity to purchase) the Premises pursuant to its
obligation under this Section 19.2, and if Landlord does not foreclose under the
Landlord Deed of Trust, Landlord (to the extent required under Section 21.19)
shall use commercially reasonable efforts to sell the Premises to an unrelated
third party, and, as applicable, (i) Tenant shall be obligated to pay to
Landlord, immediately upon demand, any shortfall between the Purchase Price and
the amount realized by Landlord in connection with such sale, or (ii) Landlord
shall be obligated to pay to Tenant, immediately upon demand, any excess of the
amount realized by Landlord in connection with such sale over the Purchase
Price. For purposes of the preceding sentence, the amount realized by Landlord
upon a sale of the Premises shall be net of Landlord's reasonable sale expenses
and other expenses incurred by Landlord but required to be paid by Tenant
pursuant to Section 19.1(c)(v). Landlord's obligation to pay such excess to
Tenant shall survive any termination of this Lease. Landlord and Tenant agree
that any and all cash proceeds payable at any foreclosure sale under the
Landlord Deed of Trust shall, after payment of all obligations secured by the
Landlord Deed of Trust, be paid to Tenant or to any other person claiming
through Tenant entitled thereto by applicable law. The aggregate of the
obligations under an Authorized Loan and the obligations secured by the Landlord
Deed of Trust shall not exceed the Purchase Price. Notwithstanding anything to
the contrary in this Lease, in the event of default, breach or violation by
Tenant of any of Tenant's obligations under this Section 19.2, Tenant shall have
no liability to Landlord or any other party in excess of an amount equal to the
then-existing Guaranteed Residual Value, less a credit equal to the sum of (a)
any of the Collateral (including the pledged Security Deposit) which Lenders or
any other holder of an Authorized Loan
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has used, applied, or otherwise come into possession of, plus (b) any of the
Security Deposit retained by Landlord, and Landlord shall have no recourse,
claim or counterclaim whatsoever against Tenant in excess of such amount on
account of such default, breach or violation. If the Guaranteed Residual Value
has not previously been determined as of the date Tenant's liability under this
Section 19.2 has been established, then the Guaranteed Residual Value shall be
determined as of the date Tenant's liability hereunder is established.
19.3 SURVIVAL. The obligations of Landlord and Tenant under this
Article 19 shall survive the expiration or earlier termination of this Lease.
ARTICLE 20
ADDITIONAL COVENANTS OF LANDLORD
20.1 TITLE AND SUBDIVISION. In the event Tenant so requests in writing
(and so long as either Tenant agrees to indemnify Landlord from any liabilities
or obligations in connection therewith, or Landlord does not incur any
liabilities or obligations in connection therewith), Landlord shall execute all
documents, instruments and agreements reasonably requested by Tenant in order to
accomplish any of the following in the manner reasonably requested by Tenant and
within the time parameters reasonably requested by Tenant: (1) remove exceptions
to title to or affecting the Premises; (2) create exceptions to title
(including, without limitation, easements and rights of way) to or affecting the
Premises (but not including any Mortgage); (3) modify any then-existing
exception to title; or (4) subdivide the Land into two or more separate parcels.
Tenant shall promptly reimburse Landlord for, or at Landlord's request, pay
directly in advance, all reasonable costs, expenses and other amounts incurred
or required to be expended by Landlord in order to comply with Tenant's requests
made in accordance with the preceding sentence, and the failure of Tenant to
reimburse or pay any such amounts shall result in the suspension of Landlord's
obligations under such sentence with respect to that particular request until
the amounts required to be paid by Tenant under this sentence have been paid.
Landlord acknowledges that it is critical to Tenant's ability to construct
improvements on the Premises to have the ability and flexibility to accomplish
the foregoing, and that the parties therefore agree that Landlord shall not be
entitled to withhold Landlord's consent to any of the foregoing requests by
Tenant, except as set forth in the preceding sentence.
20.2 LAND USE. Except where requested by Tenant pursuant to this
Section 20.2, Landlord shall not cause or give its written consent to any land
use or zoning change affecting the Premises or any changes of street grade. In
the event Tenant so requests in writing (and so long as either Tenant agrees to
indemnify Landlord from any liabilities or obligations in connection therewith,
or Landlord does not incur any liabilities or
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obligations in connection therewith), Landlord shall execute all documents,
instruments and agreements reasonably requested by Tenant in order to accomplish
any of the following in the manner reasonably requested by Tenant and within the
time parameters reasonably requested by Tenant: (1) cause a change in any land
use restriction or law affecting the Premises; (2) cause a change in the zoning
affecting the Premises; or (3) cause a change in the street grade with respect
to any street in the vicinity of the Premises. Tenant shall promptly reimburse
Landlord for, or at Landlord's request, pay directly in advance, all reasonable
costs, expenses and other amounts incurred or required to be expended by
Landlord in order to comply with Tenant's requests made in accordance with the
preceding sentence, and the failure of Tenant to reimburse or pay any such
amounts shall result in the suspension of Landlord's obligations under such
sentence with respect to that particular request until the amounts required to
be paid by Tenant under this sentence have been paid. Landlord acknowledges that
it is critical to Tenant's ability to construct improvements on the Premises to
have the ability and flexibility to accomplish the foregoing, and that the
parties therefore agree that Landlord shall not be entitled to withhold
Landlord's request to any of the foregoing requests by Tenant.
20.3 TRANSFER OF PROPERTY INTERESTS. Except as requested by Tenant
pursuant to Section 11.7 or 20.1, Landlord shall not transfer to any third party
any rights inuring to or benefits associated with the Premises (including,
without limitation, zoning rights, development rights, air space rights,
mineral, oil, gas or water rights). Nothing in this Section 20.3 shall limit
Landlord's rights pursuant to Section 13.2; provided that any purchaser of
Landlord's interest in the Premises shall be bound by the terms of this Lease,
including without limitation, the terms of this Section 20.3.
20.4 TRUST EQUITY; NO OTHER ASSET. Landlord covenants and agrees that
during the Term of the Lease, Landlord shall maintain a residual equity capital
investment of at least three percent (3%) of total assets of Landlord, including
assets acquired by this equity investment. In addition, Landlord shall not,
without the prior written consent of Tenant, which consent may be withheld at
Tenant's sole discretion, acquire any significant assets other than (i) the
Land, (ii) the Premises and (iii) the land and any Improvements thereon, which
Improvements are subject to certain leases between Landlord and Tenant executed
concurrently herewith, and which land is described on Exhibit L attached hereto.
20.5 DEFAULT UNDER AUTHORIZED LOAN. Landlord shall not, without
Tenant's express prior written consent, default under any Authorized Loan, or
any loan documents relating to such Authorized Loan, where such default does not
arise from an Event of Major Default by Tenant under this Lease. Any such
default shall constitute a material default under this Lease, subject to the
limitations on liability of Section 17.8 hereof.
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ARTICLE 21
MISCELLANEOUS
21.1 RELATIONSHIP. Neither this Lease nor any agreements or
transactions contemplated hereby shall in any respect be interpreted, deemed or
construed as constituting Landlord and Tenant as partners or joint venturers,
one with the other, or as creating any partnership, joint venture, association
or, except as set forth in Section 21.2 below, any other relationship other than
that of landlord and tenant; and, except as set forth in Section 21.2 below,
both Landlord and Tenant agree not to make any contrary assertion, contention,
claim or counterclaim in any action, suit or other legal proceeding involving
either Landlord or Tenant or the subject matter of this Lease.
21.2 FORM OF TRANSACTION; CERTAIN TAX MATTERS.
(a) Landlord and Tenant hereby agree and declare that the
transactions contemplated by this Lease are intended to constitute, both as to
matters of form and substance:
(i) an operating lease for financial accounting and
securities regulatory purposes, and
(ii) a financing arrangement (and not a "true lease") for
Federal, state and local income taxes, property tax valuation or other tax
purposes.
Accordingly, and notwithstanding any other provision of this Lease to the
contrary, Landlord and Tenant agree and declare that (A) the transactions
contemplated hereby are intended to have a dual, rather than single, form and
(B) all references in this Lease to the "Lease" of the Premises which fail to
reference such dual form do so as a matter of convenience only and do not
reflect the intent of Landlord and Tenant as to the true form of such
arrangements.
(b) Landlord and Tenant agree that, in accordance with their
intentions and the substance of the transactions contemplated hereby, Tenant
(and not Landlord) shall be treated as the owner of the Premises for Federal,
state, and local income tax and property tax valuation purposes and this Lease
shall be treated as a financing arrangement. Tenant shall be entitled to take
any deduction, credit allowance or other reporting, filing or other tax position
consistent with such characterizations. Landlord shall not file any Federal,
state or local income or property tax returns, reports or other statements in a
manner which is inconsistent with the foregoing provisions of this Section 21.2.
(c) Each party acknowledges that it has retained accounting, tax
and legal advisors to assist it in structuring this Lease and neither party is
relying on any representations of the other regarding the proper treatment of
this transaction for accounting, income tax, property tax or any other purpose.
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21.3 NOTICES. Each Notice shall be in writing and shall be sent by
personal delivery, overnight courier (charges prepaid or billed to the sender)
or by the deposit of such with the United States Postal Service, or any official
successor thereto, designated as registered or certified mail, return receipt
requested, bearing adequate postage and in each case addressed as provided in
the Basic Lease Provisions. Each Notice shall be effective upon being personally
delivered or actually received. The time period in which a response to any such
Notice must be given or any action taken with respect thereto shall commence to
run from the date of personal delivery or receipt of the Notice by the addressee
thereof, as reflected on the return receipt of the Notice. Rejection or other
refusal to accept shall be deemed to be receipt of the Notice sent. By giving to
the other party at least thirty (30) days' prior Notice thereof, either party to
this Lease (as well as any Mortgagee) shall have the right from time to time
during the Term of this Lease to change the address(es) thereof and to specify
as the address(es) thereof any other address(es) within the continental United
States of America.
21.4 SEVERABILITY OF PROVISIONS. If any term, covenant or condition of
this Lease, or the application thereof to any Entity or circumstance, shall be
invalid or unenforceable, the remainder of this Lease, or the application of
such term, covenant or condition to Entities or circumstances other than those
as to which it is invalid or unenforceable, shall not be affected thereby.
21.5 ENTIRE AGREEMENT; AMENDMENT. This Lease constitutes the entire
agreement of Landlord and Tenant with respect to the subject matter hereof.
Neither this Lease nor any provision hereof may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought.
21.6 APPROVALS AND CONSENTS. Except as expressly provided in this
Lease, whenever any provision of this Lease requires an approval or consent to
be given by one of the parties hereto, the approval or consent shall not be
unreasonably withheld or delayed. Whenever this Lease grants either party the
right to take action, exercise discretion, establish rules and regulations, or
make an allocation or other determination, except as otherwise provided, such
party shall act reasonably and in good faith and take no action which might
result in the frustration of the other party's reasonable expectations
concerning the benefits to be enjoyed under this Lease. If either party
withholds its consent or approval, unless by the express terms of this Lease
such consent or approval may be withheld in such party's sole discretion, such
party shall, upon request, promptly deliver to the other party a written
statement specifying in detail the reason or reasons why such consent or
approval was withheld or refused. If neither approval nor rejection is given by
Landlord within the time specified in Article 11 as to any particular approval
requested by
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Tenant under Article 11 (or, if no such time is specified, then within thirty
(30) days after request for approval is given by a Notice), then the approval
thus specifically requested in writing by Tenant shall be conclusively and
irrevocably deemed to have been given by Landlord.
21.7 TERMINOLOGY. All personal pronouns used in this Lease shall
include all other genders. The singular shall include the plural and the plural
shall include the singular. Titles of Articles, Sections and Subsections in this
Lease are for convenience only and neither limit nor amplify the provisions of
this Lease, and all references in this Lease to Articles, Sections or
Subsections shall refer to the corresponding Article, Section or Subsection of
this Lease unless specific reference is made to the articles, sections or other
subdivisions of another document or instrument. The word "days" as used herein
shall mean business days (i.e., excluding holidays when banks in the State of
California or New York are generally closed for business and weekends) unless
otherwise expressly stated.
21.8 MEMORANDUM OF LEASE. Neither party shall record this Lease.
However, concurrently with the execution of this Lease, Landlord and Tenant have
executed a Memorandum of Lease in the form attached hereto as Exhibit E and by
this reference made a part hereof, which Memorandum of Lease shall be promptly
recorded in the Official Records.
21.9 SUCCESSORS AND ASSIGNS. Subject to Articles 13 and 14, this
Lease shall inure to the benefit of and be binding upon Landlord and Tenant and
their respective heirs, executors, legal representatives, successors and
assigns. Whenever in this Lease a reference to any Entity is made, such
reference shall be deemed to include a reference to the heirs, executors, legal
representatives, successors and assigns of such Entity.
21.10 COMMISSIONS. Landlord and Tenant each represent and warrant that
neither has dealt with any broker in connection with this transaction and that
no real estate broker, salesperson or finder has the right to claim a real
estate brokerage, salesperson's commission or finder's fee by reason of contact
between the parties brought about by such broker, salesperson or finder. Each
party shall hold and save the other harmless of and from any and all loss, cost,
damage, injury or expense arising out of or in any way related to claims for
real estate broker's or salesperson's commissions or fees based upon allegations
made by the claimant that it is entitled to such a fee from the indemnified
party arising out of contact with the indemnifying party or alleged
introductions of the indemnifying party to the indemnified party. In addition to
the foregoing, Tenant shall hold and save Landlord harmless of and from any and
all loss, cost, damages, injury or expense arising out of or in any way related
to claims for real estate broker's or salesperson's commissions relating to
Landlord's acquisition of the Premises or fees by The Staubach Company in
connection with this Lease.
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21.11 ATTORNEYS' FEES. In the event any action is brought by Landlord
or Tenant against the other to enforce or for the breach of any of the terms,
covenants or conditions contained in this Lease, the prevailing party shall be
entitled to recover reasonable attorneys' fees to be fixed by the court,
together with costs of suit therein incurred. Tenant shall pay the reasonable
attorneys' fees incurred by Landlord for the review and negotiation of this
Lease and the Improvements Loan documents.
21.12 GOVERNING LAW. This Lease and the obligations of the parties
hereunder shall be governed by and interpreted, construed and enforced in
accordance with the laws of the State of California.
21.13 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall comprise but a single instrument.
21.14 TIME IS OF THE ESSENCE. Time is of the essence of this Lease,
and of each provision hereof.
21.15 NO THIRD PARTY BENEFICIARIES. This Lease is entered into by
Landlord and Tenant for the sole benefit of Landlord and Tenant. There are no
third party beneficiaries to this Lease.
21.16 LIMITATIONS ON RECOURSE. The obligations of Tenant and Landlord
under this Lease shall be without recourse to any partner, officer, trustee,
beneficiary, shareholder, director or employee of Tenant or Landlord. There
shall be no limitation on Landlord's liability with respect to any willful
misconduct, bad faith breach of this Lease, or gross negligence by Landlord
("Identified Matters"). Except for any Identified Matter, Landlord's liability
to Tenant for any default by Landlord under this Lease: (1) shall be limited to
the greater of the Equity Funded Amount less any repayment to Tenant of the
Security Deposit or Landlord's interest in the Premises; and (2) shall extend to
any actual damages of Tenant, but shall not extend to any foreseeable and
unforeseeable consequential damages.
21.17 ESTOPPEL CERTIFICATES. Within thirty (30) days after request
therefor by either party, the non- requesting party shall deliver, in recordable
form, a certificate to any proposed mortgagee, purchaser, sublessee or assignee
and to the requesting party, certifying (if such be the case) that this Lease is
in full force and effect, the date of Tenant's most recent payment of Rent,
that, to the best of its knowledge, the non-requesting party has no defenses or
offsets outstanding, or stating those claimed, and any other information
reasonably requested. Failure to deliver said statement in time shall be
conclusive upon the non-requesting party that: (a) this Lease is in full force
and effect, without modification except as may be represented by the requesting
party; (b) there are no uncured defaults in the requesting party's
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performance and the non-requesting party has no right of offset, counterclaim or
deduction against the non-requesting party's obligations hereunder; (c) no more
than one month's Base Rent has been paid in advance; and (d) any other matters
reasonably requested in such certificate.
21.18 COLLATERAL. The parties acknowledge that Tenant has pledged
certain collateral ("Collateral") to Lenders to secure Landlord's obligations
under the terms of the Note. If the holder of an Authorized Loan applies any of
the Collateral to satisfy an obligation under any Authorized Loan documents,
such application shall be deemed to reduce the Senior Funded Amount under this
Lease on a dollar-for-dollar basis. Tenant shall have no claims, rights or
causes of action against Landlord arising from any application of the Collateral
to satisfy an obligation under the Authorized Loan documents.
21.19 LANDLORD'S CONTINUING OBLIGATION TO SELL. Except in the case of
a foreclosure under the Landlord Deed of Trust, and subject to the rights of any
holder of an Authorized Loan, in the event Landlord obtains possession of the
Premises pursuant to the terms of this Lease (including, without limitation,
upon the expiration or earlier termination of this Lease where Tenant has
defaulted in its obligation to purchase the Premises pursuant to Section 19.2),
Landlord shall be under a continuing obligation to use its commercially
reasonable efforts to sell the Premises to Tenant or to one or more unrelated
third parties; provided, however, that Landlord shall not be required to sell or
attempt to sell any portion of the Premises (i) in a manner, or under
circumstances, that could materially impair Landlord's ability to enforce any of
its rights or remedies under this Lease (as determined in Landlord's sole
discretion exercised in good faith), (ii) at a time when market conditions
render it inadvisable to sell or attempt to sell the Premises (as determined in
Landlord's sole discretion exercised in good faith). Nothing contained in this
paragraph shall be binding on any holder of an Authorized Loan acquiring title
through foreclosure, to any person acquiring title at any such foreclosure or to
their successors in interest. Upon the occurrence of any such sale Landlord
shall be obligated to pay to Tenant any excess of the amount realized by
Landlord in connection with such sale over the Purchase Price. For purposes of
the preceding sentence, the amount realized by Landlord upon a sale of the
Premises shall be net of Landlord's reasonable sale expenses and other expenses
incurred by Landlord but required to be paid by Tenant pursuant to Section
19.1(c)(v). Landlord's obligation to pay such excess to Tenant shall survive any
termination of this Lease. Landlord shall not deliver to any Mortgagee a deed in
lieu of foreclosure under any circumstances without Tenant's prior written
approval, which may be withheld in Tenant's sole and absolute discretion.
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21.20 AS-IS LEASE. Landlord makes no representations or warranties
concerning the condition, suitability or any other matters relating to the
Premises, and Tenant hereby acknowledges that Tenant leases the Premises from
Landlord on an "as is" basis.
21.21 NET LEASE. Except as otherwise provided in this Lease, Tenant
agrees that this Lease is an absolute net Lease, and the Base Rent called for
hereunder shall be paid as required net of all expenses associated with the
Premises, including without limitation, Real Estate Taxes and insurance premiums
for the insurance required to be carried hereunder, and all other reasonable and
customary costs and expenses incurred by Landlord in connection with the
Premises or this Lease, all of which shall be paid or reimbursed by Tenant
unless otherwise specifically provided herein. Tenant agrees to reimburse
Landlord, within five (5) business days following receipt of any written demand
therefor, for all reasonable and customary fees (including the pro rata portion
of the $3,000 annual servicing fee payable to SBNYTC attributable to this
Lease), late charges, title endorsement and other costs and expenses charged to
Landlord by Lenders pursuant to the terms and conditions of the Note.
21.22 REPRESENTATIONS AND WARRANTIES. Tenant and Landlord each hereby
represents and warrants to the other that: (i) such party is duly organized and
existing under the laws of the jurisdiction in which it is formed; (ii) such
party has the full right and authority to enter into this Lease, consummate the
sale, transfers and assignments contemplated herein and otherwise perform its
obligations under this Lease; (iii) the person or persons signatory to this
Lease and any document executed pursuant hereto on behalf of such party have
full power and authority to bind such party; and (iv) the execution and delivery
of this Lease and the performance of such party's obligations hereunder do not
and shall not result in the violation of its organizational documents or any
contract or agreement to which such party may be a party.
21.23 APPRAISAL PROCEDURE.
(a) If this Lease calls for an appraisal under this Section
21.23 with respect to the Coverage Test, Landlord and Tenant shall have thirty
(30) days after either party delivers Notice to the other party of a desire to
utilize the appraisal procedure under this Section 21.23 in connection with the
Coverage Test in which to agree on whether the Coverage Test is satisfied as of
the time required under the relevant provision of this Lease. In determining the
Coverage Test, the fair market value of the Land and Improvements ("Fair Market
Value") shall be calculated together, taking into consideration the quality,
size, design and location of the Land and Improvements, and the value of
comparable property in the general locality of the Land, and any other factors
which customarily are evaluated in appraising land or buildings. If either party
elects to utilize the terms of this Section 21.23 and Landlord and Tenant agree
on the Fair Market Value during such
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thirty (30) day period, they shall immediately execute a letter agreement
reflecting such agreement.
(b) If Landlord and Tenant are unable to agree on the Fair
Market Value within such thirty (30) day period, then within ten (10) days after
the expiration of the thirty (30) day period, Landlord and Tenant each, at its
cost and by giving notice to the other party, shall appoint a competent and
disinterested real estate appraiser with at least five (5) years' full-time
commercial appraisal experience in the geographical area of the Building to
appraise and set the Fair Market Value. If either Landlord or Tenant does not
appoint an appraiser within ten 10 days after the other party has given notice
of the name of its appraiser, the single appraiser appointed shall be the sole
appraiser and shall set the Fair Market Value. If two (2) appraisers are
appointed by Landlord and Tenant as stated in this Section, they shall meet
promptly and attempt to set the Fair Market Value.
(c) If the two (2) appraisers are unable to agree on the Fair
Market Value within thirty (30) days after the second appraiser has been
appointed, they shall attempt to select a third appraiser meeting the
qualifications stated in this Section within ten (10) days after the last day
the two (2) appraisers are given to set the Fair Market Value. If they are
unable to agree on the third appraiser, either Landlord or Tenant, by giving ten
(10) days' notice to the other party, can apply to the then president of the
real estate board of the county in which the Land is located, or to the
Presiding Judge of the Superior Court of the county in which the Land is
located, for the selection of a third appraiser who meets the qualifications
stated in this Section. Landlord and Tenant each shall bear one-half (l/2) of
the cost of appointing the third appraiser and of paying the third appraiser's
fee. The third appraiser, however selected, shall be a person who has not
previously acted in any capacity for either Landlord or Tenant. Within thirty
(30) days after the selection of the third appraiser, a majority of the
appraisers shall set the Fair Market Value. If a majority of the appraisers is
unable to set the Fair Market Value within the stipulated period of time, the
third appraiser shall arrange for simultaneous exchange of written appraisals
from each of the appraisers and the three (3) appraisals shall be added together
and their total divided by three (3); the resulting quotient shall be the Fair
Market Value. If, however, the low appraisal and/or the high appraisal are/is
more than ten percent (10%) lower and/or higher than the middle appraisal, the
low appraisal and/or the high appraisal shall be disregarded. If only one (1)
appraisal is disregarded, the remaining two (2) appraisals shall be added
together and their total divided by two (2); the resulting quotient shall be the
Fair Market Value. If both the low appraisal and the high appraisal are
disregarded as stated in this Section, the middle appraisal shall be the Fair
Market Value.
(d) After the Fair Market Value has been set, the appraisers
shall immediately notify Landlord and Tenant, and
63.
<PAGE> 70
EXHIBIT A
LEGAL DESCRIPTION OF LAND
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lot 50, as shown on that certain Map entitled, "Tract No. 7560," which Map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on December 21, 1983 in Book 522 of Maps, pages 51 and 52.
Reserving therefrom a perpetual right and easement to construct, install,
maintain, repair, renew, replace, operate and use a surface drainage release to
benefit Lot 49 of Tract 7560, as contained in that certain Grant of Easement
recorded August 8, 1990 in Book L443, page 0754, Official Records, and described
as follows:
The Northwesterly 10.00 feet of the Southeasterly 30.00 feet and the
Northwesterly 100.00 feet of the Southeasterly 130.00 feet of the Northeasterly
10.00 feet of Lot 50.
That portion of Lot 51, as shown on that certain Map entitled, "Tract No. 7560,"
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, State of California on December 21, 1983 in Book 522 of Maps, pages
51 and 52, being more particularly described as follows:
Beginning at the Southeasterly corner of said Lot 51; thence along the Southerly
line of said Lot 51, S. 59 degrees 27 minutes 51 seconds W. 77.00 feet; thence
N. 14 degrees 27 minutes 48 seconds E. 108.90 feet to the Northeasterly line of
said Lot 51; thence along said Northeasterly line S. 30 degrees 32 minutes 09
seconds E. 77.00 feet to the point of beginning, as provided for in that certain
Lot Line Adjustment granted by the Director of Planning of the City of San Jose,
a copy of which was recorded March 28, 1984 in the office of the Recorder of the
County of Santa Clara in Book I410, page 712 of Official Records.
Lot 5 and 6, as shown on that certain Map of Tract No. 7408, which map was filed
for record in the office of the Recorder of the County of Santa Clara, State of
California on November 19, 1982 in Book 506 of Maps, pages 24, 25 and 26 and a
portion of that certain parcel of land described in the deed recorded December
22, 1972 in Book 0167, page 623, all as approved by that Lot Combination
recorded September 16, 1992 in Book M381 of Maps, page(s) 0081, Official
Records, more particularly described as follows:
Beginning at a point on the Northeasterly line of Rio Robles, as shown upon said
map, at the most Southerly corner of said Lot 5; thence along said Northeasterly
line of Rio Robles, N. 30 degrees 32 minutes 09 seconds W. 105.50 feet; thence
on a tangent curve to the right, having a radius of 367.00 feet, through a
central angle of 36 degrees 30 minutes 00 seconds an
EXHIBIT A
<PAGE> 71
arc distance of 233.80 feet; thence on a curve to the right, tangent to the
previous curve, having a radius of 50.00 feet, through a central angle of 86
degrees 01 minutes 50 seconds an arc distance of 75.08 feet to the Southerly
line of Tasman Drive as shown upon said map; thence along said line on a curve
to the left, tangent to the previous curve, having a radius of 1149.00 feet,
through a central angle of 32 degrees 31 minutes 01 degrees an arc distance of
652.09 feet; thence N. 59 degrees 28 minutes 40 seconds E. 600.40 feet; thence
on a tangent curve to the right, having a radius of 33.00 feet, through a
central angle of 89 degrees 51 minutes 11 seconds an arc distance of 51.83 feet
to the Southwesterly line of First Street, as shown upon said map; thence along
said line, S. 30 degrees 32 minutes 09 seconds E. 261.38 feet to the
Northwesterly line of the lands of the City and County of San Francisco, as
shown upon said map; thence along said line of the lands of the City and the
County of San Francisco, S. 65 degrees 09 minutes 27 seconds W. 1396.95 feet to
the point of beginning.
Those rights as contained in that certain Grant Deed executed by Masami Ezaki
and Kaoru Ezaki, his wife in favor of the City and County of San Francisco, a
municipal corporation recorded December 8, 1950 in Book 2111, page 319, Official
Records, over the following described property:
A strip of land 80 feet wide, lying 40 feet either side of the following
described line and extensions thereto, across that certain parcel of land
conveyed by Charles Nelson, et ux, to Masami Ezaki by Grant Deed dated February
27, 1936 and recorded March 11, 1936, in Volume No. 765, at page 262, Official
Records, Santa Clara County, hereinafter referred to as the Ezaki Parcel, said
line being more particularly described as commencing at a point in the Westerly
boundary of the existing San Jose-Alviso Road, said point being distant along
said boundary South 30 degrees 32 minutes 30 seconds East 381.31 feet from its
intersection with the Northerly boundary of the above mentioned Ezaki Parcel;
thence, from said point of commencement, South 65 degrees 08 minutes 00 seconds
West 1459.03 feet to a point in the common boundary between the above mentioned
Ezaki Parcel and that certain parcel of land conveyed by Lena Lindgren, et al,
to James A. Pankoski, et ux, by Joint Tenancy Deed dated November 13, 1944 and
recorded November 17, 1944 in Volume No. 1227 at Page 327, Official Records,
Santa Clara County, hereinafter referred to as the Pankoski Parcel, said point
being distant along said common boundary South 30 degrees 32 minutes 30 seconds
East 237.04 feet from the most Westerly corner of the above mentioned Ezaki
Parcel; the Easterly end of said strip being the above mentioned Westerly
boundary of the San Jose-Alviso Road, and the Westerly end of said strip being
the above mentioned common boundary between the Pankoski and Ezaki Parcels.
EXHIBIT A
<PAGE> 72
EXHIBIT B
PERMITTED EXCEPTIONS
The following exceptions from coverage of Landlord's title
insurance which affect "Parcel Two" and "Parcel Three":
1. PROPERTY TAXES, including any assessments collected with taxes, for
the fiscal year 1995-1996, a lien not yet due or payable.
2. a) Bond for City of San Jose, Reassessment District No. 93-210 1993
Consolidated Refunding
Bond No. : 24J
Assessment No. : 42V
Balance of principal : $88,186.00
Balance of interest
through maturity : $16,532.60
The above Amount excludes $12,279.07 principal, $5,140.46 interest
and $277.29 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects Lot 59 of Parcel One.
b) Bond for City of San Jose, Reassessment District No. 93-210 1993
Consolidated Refunding
Bond No. : 24J
Assessment No. : 46V
Balance of principal : $100,217.00
Balance of interest
through maturity : $18,788.10
The above Amount excludes $13,954.27 principal, $5,841.76 interest
and $312.93 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects Lot 58 of Parcel One.
c) Bond for Reassessment District #93-210 Consolidated Refunding, as
follows:
Bond No. : 24J
Assessment No. : 48V
Balance of principal : $113,800.32
Balance of interest : $21,334.61
The above Amount to pay in full excludes $15,845.61 principal,
$6,633.65 interest and $353.18 handling charge spread on the 1994-
1995 tax roll, which amounts cannot be prepaid.
Said matter affects Parcel Two.
<PAGE> 73
2. Continued
d) Bond for Reassessment District #93-210 Consolidated Refunding, as
follows:
Bond No. : 24J
Assessment No. : 47V
Balance of principal : $123,177.11
Balance of interest : $23,092.52
The above Amount to pay in full excludes $17,151.24 principal,
$7,180.13 interest and $380.97 handling charge spread on the 1994-
1995 tax roll, which amounts cannot be prepaid.
Said matter affects Parcel Three.
e) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 8V
Balance of principal : $63,238.68
Balance of interest
through maturity : $11,855.62
The above Amount excludes $8,806.39 principal, $3,686.25 interest
and $203.36 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects Parcels Four and Five.
f) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 1V
Balance of principal : $429.87
Balance of interest
through maturity : $80.61
The above Amount excludes $59.86 principal, $25.02 interest and
$1.32 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects a portion of Parcel Six.
g) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 2V
Balance of principal : $91,559.14
Balance of interest
through maturity : $17,164.97
The above Amount excludes $12,748.74 principal, $5,337.09 interest
and $280.03 handling charge spread on the 1994- 1995 tax roll, which
amounts cannot be prepaid.
Said matter affects a portion of Parcel Six.
<PAGE> 74
2. Continued
h) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 9V
Balance of principal : $75,028.33
Balance of interest
through maturity : $14,065.87
The above Amount excludes $10,446.98 principal, $4,373.49 interest
and $229.47 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects a portion of Parcel Six.
i) Bond for Reassessment District #93-210 Consolidated Refunding
Bond No. : 24J
Assessment No. : 10V
Balance of principal : $360.71
Balance of interest
through maturity : $67.62
The above Amount excludes $50.23 principal, $21.03 interest and
$1.10 handling charge spread on the 1994-1995 tax roll, which
amounts cannot be prepaid.
Said matter affects a portion of Parcel Six.
3. THE LIEN of supplemental taxes, if any, assessed as a result of
transfer of interest and/or new construction, said supplemented
taxes being assessed pursuant to Chapter 3.5 commencing with Section
75 of the California Revenue and Taxation Code, for which no Notice
of Assessment has been issued, as of the date herein.
4. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Right to excavate for, install, replace
(of initial or any other size), maintain
and use for conveying gas such pipe line
or lines as shall from time to time
elect, with necessary values and other
appliances
Granted to : Pacific Gas and Electric Company, a
California corporation
Recorded : July 6, 1944 in Book 1206, page 154,
Official Records
Affects : as follows:
By a Relocation Agreement between Oakmead Associates, a California
general partnership and Pacific Gas and Electric Company, a
California corporation
Recorded : April 5, 1989 in Book K903, page 1344,
Official Records
the easement was relocated as follows:
A strip of land of the uniform width of 15 feet extending from the
Northerly boundary line of said Lot 5, said Northerly boundary line
being the Southerly boundary line of the city street known as Tasman
Drive (128 feet wide), said Tasman Drive is shown on said map,
Southwesterly to the Westerly boundary line of said Lot 5, said
Westerly boundary line being the Easterly boundary line of the
street known as Rio Robles (56 feet wide), said street Rio Robles is
also shown on said map, and lying 7.5 feet on each side of the line
described as follows:
<PAGE> 75
4. Continued
Beginning at a point in the Northerly boundary line of said Lot 5
and running (1) S. 0 degrees 23.5 minutes E. 12.4 feet to a point
which bears, S. 66 degrees 35.0 minutes W. 579.2 feet distant from
the found 5/8 inch brass pin set in concrete accepted as marking the
Southwesterly terminus of a course in the center line of said Tasman
Drive, which course as shown on said map has a bearing of, N. 59
degrees 28 minutes 40 seconds E. and a length of 700.88 feet; thence
(2) S. 29 degrees 04.3 minutes W. 187.8 feet; thence (3) S. 57
degrees 38.6 minutes W. 10.8 feet to a point in the Westerly
boundary line of said Lot 5. Said line being a survey traverse made
by second party in September, 1983. The bearings used in the
foregoing description are based on solar observations made by second
party.
Covenants, conditions and restrictions in the above mentioned
instruments.
Said matter affects Parcel Six.
5. TERMS and conditions as contained in the Grant Deed executed by
Masami Ezaki and Kaoru Ezaki, his wife in favor of the City and
County of San Francisco, a municipal corporation recorded December
8, 1950 in Book 2111, page 319, Official Records.
Said matter affect Parcels Five and Seven and portions of Parcels
Four and Six.
6. THE EFFECT of the Rincon de los Esteros Project Redevelopment Plan
and Ordinances Nos. 17306, 19686, 19835, 20677, 20958, 21417, 21496,
21903, 22660, 22412, 22761, 22761.1 and 22961, 23703, 23732, 23761
and 23934 of the City of San Jose as recorded and as disclosed by
documents recorded July 11, 1975 in Book B502, Page 711; August 6,
1979 in Book E699, Page 245; August 6, 1979 in Book E699, Page 277;
December 21, 1979 in Book F37, Page 585; October 8, 1981 in Book
G382, Page 605; July 28, 1982 in Book G929, Page 703; September 14,
1983 in Book H892, Page 200; January 10, 1984 in Book I220, Page
271; January 6, 1992 in Book L996, Page 508, all of Official
Records, and as disclosed by information provided by the
Redevelopment Agency of the City of San Jose.
7. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Any and all public service facilities,
including, but not limited to, poles, wires,
conduits and vaults, storm sewers, sanitary
sewers, and gas, water, electrical and
communication mains and all appurtenances
thereto
Granted to : City of San Jose, a municipal corporation of the
State of California
Recorded : September 14, 1981 in Book G330, page 497,
Official Records
Affects : That portion of said land as shown upon the map
herein referred to, more particularly described
as follows:
All that certain real property situated in the City of San Jose,
County of Santa Clara, State of California, being a portion of the
parcel of land described and designated as Parcel 1 in the deed to
River Oaks Associates #2, dated November 17, 1979, recorded in Book
E962 of Official Records, at page 145, Santa Clara County Records,
more particularly described as follows:
<PAGE> 76
7. Continued
Beginning at a point in the centerline of North First Street
(formerly San Jose-Alviso Road) as said centerline is described in
said deed at the most Northerly corner of said parcel; thence along
the Northwesterly boundary line of said parcel, S. 59 degrees 28
minutes 40 seconds W. (S. 59 degrees 30 minutes W. per deed), 114.98
feet; thence leaving said line, S. 30 degrees 31 minutes 20 seconds
E. 34.00 feet to the true point of beginning; thence along a
non-tangent curve to the right having a radius of 50.00 feet; whose
radius point bears along the continuation of the last described
course, S. 30 degrees 31 minutes 20 seconds E. through a central
angle of 89 degrees 59 minutes 11 seconds for an arc length of 78.53
feet to a point in a line which is parallel with and 65.00 feet
Southwesterly of said centerline; thence along said parallel line,
S. 30 degrees 32 minutes 09 seconds E. 254.64 feet to a point in the
Northwesterly boundary line of the strip of land described in the
deed to the City of County of San Francisco, dated October 20, 1950;
recorded in Book 2111 of Official Records, at page 319, Santa Clara
County Records; thence along said Northwesterly line, S. 65 degrees
09 minutes 27 seconds W. 10.05 feet to a point in a line that is
parallel with and 75.00 feet Southwesterly from said centerline;
thence along said parallel line, N. 30 degrees 32 minutes 09 seconds
W. 253.64 feet; thence along a curve to the left, having a radius of
40.00 feet, through a central angle of 89 degrees 59 minutes 11
seconds for an arc length of 62.82 feet; thence N. 30 degrees 31
minutes 20 seconds W. 10.00 feet to the true point of beginning; the
bearing of, S. 30 degrees 32 minutes 09 seconds E. of the monument
line of North First Street, as shown on the Parcel Map recorded in
Book 460 of Maps, at page 1, Santa Clara County Records, was used as
the basis of bearings for this description.
Said matter affects Parcel Six.
8. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Landscape Easement
Granted to : City of San Jose, a municipal corporation
Recorded : September 14, 1981 in Book G330, page
504, Official Records
Affects : The Northeasterly 20 feet of Parcel Six.
9. LICENSE for the purposes stated herein and incidents thereto
Purpose : To construct, install, maintain, repair,
renew, replace, operate and use an
interim storm sewer pipe line or lines
and appurtenances of any size of
material, and/or a surface drainage
release
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : September 14, 1981 in Book G330, page
511, Official Records
Affects : that portion of said land as shown upon
the map herein referred to, more
particularly described as follows:
All that certain real property situate in the City of San Jose,
County of Santa Clara, State of California, being a portion of the
parcel of land described and designated as Parcel 1 in the deed to
River Oaks Associates #2, dated November 17, 1979, recorded in Book
E962 of Official Records, at page 145, Santa Clara County Records,
more particularly described as follows:
Beginning at a point in the centerline of North First Street
(formerly San Jose-Alviso Road) as said centerline is described in
said deed at the most Northerly corner of said parcel; thence along
the Northwesterly boundary line of said parcel, S. 59 degrees 29
minutes 40 seconds W. (S. 59 degrees 30 minutes W. per deed), 114.98
feet; thence leaving said boundary line, S. 30 degrees 31 minutes 20
seconds E. 34.00; thence along a non-tangent curve to the right
having a radius of 50.00 feet whose radius point bears along the
continuation of the last described course, S. 30 degrees 31 minutes
20 seconds E. through a central angle of 17 degrees 26 minutes 39
seconds for an arc length of 15.22 feet to the point of beginning;
thence continuing along said curve
<PAGE> 77
9. Continued
to the right having a radius of 50.00 feet, through a central angle
of 19 degrees 24 minutes 44 seconds for an arc length 16.94 feet to
a point in a line that is parallel with and 85.00 feet Southwesterly
of said centerline; thence along said parallel line S. 30 degrees 32
minutes 09 seconds E. 292.64 feet to a point in the Northwesterly
boundary line of the strip of land described in the deed to the City
and County of San Francisco, dated October 20, 1950, recorded in
Book 2111 of Official Records, at page 319, Santa Clara County
Records; thence along said Northwesterly boundary line, S. 65
degrees 09 minutes 27 seconds W. (S. 65 degrees 08 minutes 00
seconds W. per deed), 15.07 feet to a point in a line which is
parallel with and 100.00 feet Southwesterly of said centerline;
thence along said parallel line, N. 30 degrees 32 minutes 09 seconds
W. 298.84 feet to the true point of beginning.
Said matter affects Parcel Six.
10. AN EASEMENT affecting the portion of said land and for the purpose
stated herein and incidental purposes, shown or dedicated by the map
of Tract 7408 filed in Book 506 of Maps, pages 24, 25 and 26.
Purpose : Public Service Easement
Affects : The Southwesterly 10 feet of Parcels One,
Two and Three; the Northwesterly 8 feet
of Parcel Two; the Southwesterly 8 feet
of Parcel Four; the Northeasterly and
Northwesterly 10 feet of Parcel Six; and
the Southwesterly 8 feet of Parcel Six.
11. EASEMENT as shown on the filed map of Tract 7408 filed in Book 506
of Maps, pages 24-26 and incidents thereto
Purpose : Landscape Easement
Affects : The Southwesterly 20 feet of Parcel One,
Two and Three; the Northwesterly 18 feet
of Parcel Two; the Southwesterly 18 feet
of Parcel Four; the Northeasterly and
Northwesterly 20 feet of Parcel Six; and
the Southwesterly 18 feet of Parcel Six.
12. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Service Easement
Granted to : City of San Jose
Recorded : November 19, 1982 in Book H156, page 275,
Official Records
Affects : The Northwesterly 25 feet of Parcel Four
13. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The installation, maintenance and
operation of all landscaping plant forms,
irrigation systems, retaining walls, and
decorative walkway paving now existing or
hereinafter to be constructed
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : May 27, 1983 in Book H590, page 649,
Official Records
Affects : The Southwesterly 20 feet of Parcel One,
Two and Three; the Northwesterly 18 feet
of Parcel Two; the Southwesterly 18 feet
of Parcel Four; the Northeasterly and
Northwesterly 20 feet of Parcel Six; and
the Southwesterly 18 feet of Parcel Six.
<PAGE> 78
14. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The installation, maintenance and
operation of all landscaping plant forms,
irrigation systems, retaining walls, and
decorative walkway paving now existing or
hereinafter to be constructed
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : May 27, 1983 in Book H590, page 652,
Official Records
Affects : The Westerly corner of Parcel Two and the
Northerly and Westerly corner of Parcel
Six
15. AGREEMENT on the terms and conditions contained therein,
For : The installation and maintenance of
landscape improvements
Between : City of San Jose, a municipal corporation
And : Oakmead-San Jose, a California general
partnership and Oakmead-San Jose Sign and
Landscape Maintenance Association, a
California non-profit mutual benefit
corporation
Recorded : May 27, 1983 in Book H590, page 662,
Official Records
Reference is hereby made to the record for further particulars.
16. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The construction, installation, repair
and maintenance of interlocking pavers,
retaining walls and signs, and for
pedestrian and vehicular access as
necessary or desirable thereto, but
subject to the obligation of the
association of the association, its
successors and assigns, to promptly
repair any damage to said improvements
lying within the Sign and Landscape
Easements resulting from the
Association's activities thereon
Granted to : Oakmead-San Jose Sign and Landscape
Maintenance Association, a non-profit
mutual benefit corporation
Recorded : June 3, 1983 in Book H604, page 322,
Official Records
Affects : The Westerly corner of Parcel Two and the
Northerly and Westerly corner of Parcel
Six
17. LIMITATIONS, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting restrictions, if
any, based on race, color, religion or national origin contained in
the document recorded June 3, 1983 in Book H604, page 334, Official
Records.
CONTAINS mortgagee protection clause.
MODIFICATION thereof recorded January 26, 1984 in Book I257, page
252, Official Records.
A Notice of Amendment of Design Guidelines
Executed by : Oakmead-San Jose, a California general
partnership
Recorded : June 21, 1984 in Book I649, page 543,
Official Records
An instrument entitled, "Designation of Approving Agent," whereby
Kimball Small Properties, a California corporation was designated
approving agent under the CC&R's and Design Guidelines.
Recorded : April 29, 1988 in Book K517, page 940,
Official Records
MODIFICATION thereof recorded October 18, 1988 in Book K721, page
265, Official Records.
<PAGE> 79
17. Continued
Said Assignment affects Parcel One.
An instrument entitled, "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 1, 1995
Between : CROCKER PROPERTIES, INC., a California
corporation and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 1, 1995 as Instrument No. 12877064,
Official Records
Said Assignment affects Parcels Two and Three
An Instrument entitled, "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 8, 1995
Between : AMDAHL CORPORATION, a Delaware
corporation and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 8, 1995 as Instrument No. 12882481,
Official Records
Said Assignment affects Parcels Four, Five and Six
18. LIMITATIONS, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting restrictions, if
any, based on race, color, religion or national origin contained in
the document recorded June 3, 1983 in Book H604, page 505, Official
Records.
Said instrument also provides for the levy of assessments, the lien
of which are stated to be subordinate to the lien of a First
Mortgage of First Deed of Trust made in good faith and for value.
MODIFICATION thereof recorded January 26, 1984 in Book I257, page
248, Official Records.
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose and Removal of Approving Agent,"
Dated : October 18, 1988
Between : Oakmead-San Jose, a California general
partnership and Oakmead Associates, a
California general partnership
Recorded : October 18, 1988 in Book K721, page 295,
Official Records
Said Assignment affects Parcels One, Four, Five and Six
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose and Removal of Approving Agent,"
Dated: : April 20, 1989
Between : Oakmead Associates, a California general
partnership and Amdahl Corporation, a
Delaware corporation
Recorded : April 20, 1989 in Book K927, page 332,
Official Records
Said Assignment affects Parcels Four and Five
<PAGE> 80
18. Continued
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : July 12, 1989
Between : Oakmead Associates, a California general
partnership and Amdahl Corporation, a
Delaware corporation
Recorded : July 12, 1989 in Book L017, page 1927,
Official Records
Said Assignment affects Parcel Six
MODIFICATION thereof recorded July 19, 1989 in Book L024, page 587,
Official Records
An instrument entitled "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose"
Between : Oakmead-San Jose, a California general
partnership and Crocker Properties, Inc.,
a California corporation
Recorded : August 10, 1989 in Book L052, page 1001
and page 1011, Official Records.
Said Assignment affects Parcels Two and Three
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 1, 1995
Between : OAKMEAD ASSOCIATES, a California general
partnership and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 1, 1995 as Instrument No. 12877061,
Official Records
Said Assignment affects Parcel One.
An instrument entitled, "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 1, 1995
Between : CROCKER PROPERTIES, INC., a California
corporation and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 1, 1995 as Instrument No. 12877064,
Official Records
Said Assignment affects Parcels Two and Three
An instrument entitled, "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose,"
Dated : May 8, 1995
Between : AMDAHL CORPORATION, a Delaware
corporation and IRISH LEASING
CORPORATION, a Texas corporation
Recorded : May 8, 1995 as Instrument No. 12882481,
Official Records
Said Assignment affects Parcels Four, Five and Six
<PAGE> 81
19. EASEMENT as shown on the filed map of Tract 7559 filed in Book 522
of Maps, pages 49 ad 50.
Purpose : Public Service Easement
Affects : The Northwesterly 8 Feet and the Westerly
corner of Lot 59 of Parcel One
20. EASEMENT as shown on the filed map of Tract 7559 filed in Book 522
of Maps, pages 49 and 50.
Purpose : Landscape Easement
Affects : The Southeasterly 18 feet and the
Southerly corner of Lot 58 of Parcel One;
and the Northwesterly 18 feet and the
Westerly corner of Lot 59 of Parcel One
21. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Communication facilities
Granted to : Pacific Bell
Recorded : February 21, 1984 in Book I319, page 486,
Official Records
Affects : The Southwesterly 10 feet of Lot 58 of
Parcel One; the Southwesterly 10 feet,
the Northwesterly 8 feet and the Westerly
corner of Lot 59 of Parcel One; and the
Southwesterly 10 Feet of Parcel Three
22. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Underground and above ground
communication facilities
Granted to : Pacific Bell
Recorded : May 17, 1984 in Book 1552, page 624,
Official Records
Affects : The Southwesterly 10 feet of Parcel Four
23. AGREEMENT on the terms and conditions contained therein,
For : Gas and electric service
Between : Pacific Gas and Electric Company, City of
San Jose
And : Oakmead-San Jose
As disclosed by a Memorandum of Agreement
Recorded : February 25, 1985 in Book J271, page 37,
Official Records.
Reference is hereby made to the record for further particulars.
24. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Emergency overland storm drainage release
Granted to : Amdahl Corporation, a Delaware
corporation
Recorded : August 8, 1990, in Book L443, page 754,
Official Records
Affects : The Northwesterly 10 feet of the
Southeasterly 30 feet and the
Northeasterly 10 feet of the
Northwesterly 100 feet of the
Southeasterly 130 feet of Parcel Four.
Terms and conditions contained in the document hereinabove referred
to.
25. TERMS AND CONDITIONS of that certain Site Development Permit
File No. : HSH 90-09-104
Disclosed By : A Notice of Granting of a Site
Development Permit
Recorded : January 24, 1991 in Book L600, page 1242,
Official Records
<PAGE> 82
25. Continued
Said matter affects Parcels Four, Five and Six.
Reference is hereby made to the record for particulars.
26. TERMS AND CONDITIONS of that certain Site Development Permit
File No. : HSH 92-02-011
Disclosed By : A Notice of Granting of a Site
Development Permit
Recorded : August 21, 1992 in Book M340, page 824,
Official Records
Said matter affects Parcel Six.
27. TERMS AND CONDITIONS of that certain Site Development Permit
File No. : H94-07-041
Disclosed By : A Notice of Granting of a Site
Development Permit
Recorded : October 19, 1994 in Book N638, page 215,
Official Records
Said matter affects Parcel Six.
Reference is hereby made to the record for particulars.
29. ANY RIGHTS, interests, or claims adverse to those of the vestee
herein which may exist or arise by reason of the following facts
shown on a survey plat entitled "A.L.T.A./A.C.S.M. Land Title
Survey", dated April 14, 1995, prepared by Kier & Wright, Job. No.
92160-16.
a) The fact that a concrete sign extends across the Northwesterly
boundary of Parcel Six.
30. UNRECORDED LEASE for the term and upon the terms and conditions
contained therein
Dated : February 28, 1995
Lessor : IRISH LEASING CORPORATION, a Texas
corporation
Lessee : CISCO SYSTEMS, INC., a California
corporation
Term : 5 Years
Disclosed by : Memorandum of Land Lease, recorded May 1,
1995, as Instrument No., 12877062,
Official Records.
Affects the fee to Parcel One.
31. OPTION TO PURCHASE as disclosed in the Memorandum of Lease recorded
May 1, 1995 as Instrument No. 12877062, Official Records
Affects the fee to Parcel One.
32. UNRECORDED LEASE for the term and upon the terms and conditions
contained therein
Dated : February 28, 1995
Lessor : IRISH LEASING CORPORATION, a Texas
corporation
Lessee : CISCO SYSTEMS, INC., a California
corporation
Term : 5 Years
Disclosed by : Memorandum of Land Lease, recorded May 1,
1995, as Instrument No. 12677065,
Official Records.
Affects the fee to Parcels Two and Three.
<PAGE> 83
33. OPTION TO PURCHASE as disclosed in the Memorandum of Lease recorded
May 1, 1995 as Instrument No. 12877065, Official Records
Affects the fee to Parcels Two and Three.
34. A DEED OF TRUST to secure an indebtedness in the original principal
sum shown below and any other amounts and/or obligations secured
thereby
Amount : $2,700,000.00
Dated : May 1, 1995
Trustor : IRISH LEASING CORPORATION, a Texas
corporation
Trustee : FIRST AMERICAN TITLE INSURANCE COMPANY, a
California corporation
Beneficiary : CISCO SYSTEMS, INC., a California
corporation
Recorded : May 1, 1995, under Series No. 12877066,
Official Records.
Affects the fee to Parcels One, Two and Three.
35. UNRECORDED LEASE for the term and upon the terms and conditions
contained therein
Dated : April 12, 1995
Lessor : IRISH LEASING CORPORATION, a Texas
corporation
Leesee : CISCO SYSTEMS, INC., a California
corporation
Term : 5 years
Disclosed by : Memorandum of Land Lease, recorded May 8,
1995, as Instrument No. 12882482,
Official Records.
Affects the fee to Parcels Four, Five, Six and Seven.
36. OPTION TO PURCHASE as disclosed in the Memorandum of Lease recorded
May 8, 1995 as Instrument No. 12482482, Official Records
Affects the fee to Parcels Four, Five, Six and Seven.
37. A DEED OF TRUST to secure an indebtedness in the original principal
sum shown below and any other amounts and/or obligations secured
thereby
Amount : $1,500,000.00
Dated : May 1, 1995
Trustor : IRISH LEASING CORPORATION, a Texas
corporation
Trustee : FIRST AMERICAN TITLE INSURANCE COMPANY, a
California corporation
Beneficiary : CISCO SYSTEMS, INC., a California
corporation
Recorded : May 8, 1995, under Series No. 12882483,
Official Records.
Affects the fee to Parcels Four, Five, Six and Seven.
<PAGE> 84
EXHIBIT C
Intentionally Omitted
EXHIBIT C
1.
<PAGE> 85
EXHIBIT D
Intentionally Omitted
EXHIBIT D
1.
<PAGE> 86
EXHIBIT E
MEMORANDUM OF LEASE
RECORDING REQUESTED BY, AND
WHEN RECORDED, RETURN TO:
Brobeck, Phleger & Harrison
550 West C Street, Suite 1300
San Diego, California 92101
Attention: Todd J. Anson, Esq.
THIS MEMORANDUM OF LEASE ("Memorandum of Lease") is executed as of
May ___, 1995, by and between SUMITOMO BANK OF NEW YORK TRUST COMPANY
("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED MAY 22, 1995
BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC ("Landlord"), and
CISCO SYSTEMS, INC., a California corporation ("Tenant").
RECITALS
WHEREAS, Landlord and Tenant have executed that certain lease
("Lease") dated as of May ___, 1995, covering certain improvements ("Premises")
which may come to be located on the real property located in the County of Santa
Clara, State of California and more particularly described in Schedule 1
attached hereto and incorporated herein by this reference ("Land"); and
WHEREAS, Landlord and Tenant desire to record notice of the Lease in
the real estate records of Santa Clara County, California;
NOW, THEREFORE, in consideration of the foregoing, Landlord and
Tenant hereby declare as follows:
1. DEMISE. Landlord hereby leases the Premises to Tenant and Tenant
hereby leases the Premises from Landlord, subject to the terms, covenants and
conditions contained in the Lease. The Premises leased to Tenant pursuant to the
Lease consists of the Improvements described in Paragraph 5 below, and does not
include the Land.
2. EXPIRATION DATE. The term of the Lease ("Term") shall commence on
May ___, 1995 and shall expire five (5) years thereafter, subject to Tenant's
option to extend the Term pursuant to Section 4.2 of the Lease for one (1)
period of five (5) years.
EXHIBIT E
1.
<PAGE> 87
3. OPTION TO PURCHASE. Tenant has an option to purchase the Premises,
as more particularly described in the Lease, during the Term, as it may be
extended.
4. RESTRICTIONS ON ENCUMBRANCES. Landlord is prohibited from
recording against the Premises liens (including, without limitation, deeds of
trust), encumbrances, and other matters that would constitute exceptions to
title, and from amending or modifying any of the foregoing that may exist now or
during the Term, as more particularly described in the Lease, and any such
encumbrance or modification of an encumbrance not authorized in writing by
Tenant shall be null and void.
5. OWNERSHIP OF CERTAIN IMPROVEMENTS. By virtue of Tenant's rights
under that certain Ground Lease between Tenant and Irish Leasing Corporation, a
Texas corporation, dated April 12, 1995, Tenant hereby grants to Landlord the
right to own and construct the improvements which Tenant may elect, as
construction agent for Landlord, to erect, construct or situate upon the Land or
any part thereof during the Term under and pursuant to the terms of, and using
funding provided by or through Landlord pursuant to Article 11 of the Lease
("Improvements"), and Tenant hereby grants, conveys and transfers to Landlord
all of Tenant's right, title and interest in and to the Improvements (whether
now existing or hereafter constructed), and Tenant agrees that any and all such
Improvements shall be and remain the property of Landlord, subject to Tenant's
rights to purchase the Improvements under Section 19 of the Lease (with
Landlord's agreement that Tenant's purchase rights contemplated under Section 19
of the Lease reflect the primary intent of the parties to the Lease is to treat
the Lease as an operating Lease for financial accounting and securities
regulatory purposes and as a financing arrangement for all federal, state and
local income tax, property tax valuation and other tax purposes).
6. COUNTERPARTS. This Memorandum of Lease may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall comprise but a single instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT E
2.
<PAGE> 88
IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum
of Lease as of the date and year first written above.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE
UNDER THAT CERTAIN TRUST AGREEMENT
DATED MAY 22, 1995 BETWEEN
SUMITOMO BANK LEASING AND FINANCE,
INC. AND SBNYTC
By: ___________________________
Name:___________________________
Its: ___________________________
STATE OF __________________ )
) ss
COUNTY OF _________________ )
On _____________, before me, ______________________, 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
[SEAL]
[SIGNATURES CONTINUED ON NEXT PAGE]
EXHIBIT E
3.
<PAGE> 89
"TENANT"
CISCO SYSTEMS, INC.
A CALIFORNIA CORPORATION
By: ______________________________
Name: ________________________
Its: ________________________
STATE OF __________________ )
) ss
COUNTY OF _________________ )
On _____________, before me, ______________________, 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
[SEAL]
EXHIBIT E
4.
<PAGE> 90
SCHEDULE 1 TO EXHIBIT E
LEGAL DESCRIPTION
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lot 50, as shown on that certain Map entitled, "Tract No. 7560," which Map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on December 21, 1983 in Book 522 of Maps, pages 51 and 52.
Reserving therefrom a perpetual right and easement to construct, install,
maintain, repair, renew, replace, operate and use a surface drainage release to
benefit Lot 49 of Tract 7560, as contained in that certain Grant of Easement
recorded August 8, 1990 in Book L443, page 0754, Official Records, and described
as follows:
The Northwesterly 10.00 feet of the Southeasterly 30.00 feet and the
Northwesterly 100.00 feet of the Southeasterly 130.00 feet of the Northeasterly
10.00 feet of Lot 50.
That portion of Lot 51, as shown on that certain Map entitled, "Tract No. 7560,"
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, State of California on December 21, 1983 in Book 522 of Maps, pages
51 and 52, being more particularly described as follows:
Beginning at the Southeasterly corner of said Lot 51; thence along the Southerly
line of said Lot 51, S. 59 degrees 27 minutes 51 seconds W. 77.00 feet; thence
N. 14 degrees 27 minutes 48 seconds E. 108.90 feet to the Northeasterly line of
said Lot 51; thence along said Northeasterly line S. 30 degrees 32 minutes 09
seconds E. 77.00 feet to the point of beginning, as provided for in that certain
Lot Line Adjustment granted by the Director of Planning of the City of San Jose,
a copy of which was recorded March 28, 1984 in the office of the Recorder of the
County of Santa Clara in Book I410, page 712 of Official Records.
Lot 5 and 6, as shown on that certain Map of Tract No. 7408, which map was filed
for record in the office of the Recorder of the County of Santa Clara, State of
California on November 19, 1982 in Book 506 of Maps, pages 24, 25 and 26 and a
portion of that certain parcel of land described in the deed recorded December
22, 1972 in Book 0167, page 623, all as approved by that Lot Combination
recorded September 16, 1992 in Book M381 of Maps, page(s) 0081, Official
Records, more particularly described as follows:
Beginning at a point on the Northeasterly line of Rio Robles, as shown upon said
map, at the most Southerly corner of said Lot 5; thence along said Northeasterly
line of Rio Robles, N. 30 degrees 32 minutes 09 seconds W. 105.50 feet; thence
on a tangent curve to the right, having a radius of 367.00 feet, through a
central angle of 36 degrees 30 minutes 00 seconds an
SCHEDULE 1 TO EXHIBIT E
<PAGE> 91
arc distance of 233.80 feet; thence on a curve to the right, tangent to the
previous curve, having a radius of 50.00 feet, through a central angle of 86
degrees 01 minutes 50 seconds an arc distance of 75.08 feet to the Southerly
line of Tasman Drive as shown upon said map; thence along said line on a curve
to the left, tangent to the previous curve, having a radius of 1149.00 feet,
through a central angle of 32 degrees 31 minutes 01 seconds an arc distance of
652.09 feet; thence N. 59 degrees 28 minutes 40 seconds E. 600.40 feet; thence
on a tangent curve to the right, having a radius of 33.00 feet, through a
central angle of 89 degrees 51 minutes 11 seconds an arc distance of 51.83 feet
to the Southwesterly line of First Street, as shown upon said map; thence along
said line, S. 30 degrees 32 minutes 09 seconds E. 261.38 feet to the
Northwesterly line of the lands of the City and County of San Francisco, as
shown upon said map; thence along said line of the lands of the City and the
County of San Francisco, S. 65 degrees 09 minutes 27 seconds W. 1396.95 feet to
the point of beginning.
Those rights as contained in that certain Grant Deed executed by Masami Ezaki
and Kaoru Ezaki, his wife in favor of the City and County of San Francisco, a
municipal corporation recorded December 8, 1950 in Book 2111, page 319, Official
Records, over the following described property:
A strip of land 80 feet wide, lying 40 feet either side of the following
described line and extensions thereto, across that certain parcel of land
conveyed by Charles Nelson, et ux, to Masami Ezaki by Grant Deed dated February
27, 1936 and recorded March 11, 1936, in Volume No. 765, at page 262, Official
Records, Santa Clara County, hereinafter referred to as the Ezaki Parcel, said
line being more particularly described as commencing at a point in the Westerly
boundary of the existing San Jose-Alviso Road, said point being distant along
said boundary South 30 degrees 32 minutes 30 seconds East 381.31 feet from its
intersection with the Northerly boundary of the above mentioned Ezaki Parcel;
thence, from said point of commencement, South 65 degrees 08 minutes 00 seconds
West 1459.03 feet to a point in the common boundary between the above mentioned
Ezaki Parcel and that certain parcel of land conveyed by Lena Lindgren, et al,
to James A. Pankoski, et ux, by Joint Tenancy Deed dated November 13, 1944 and
recorded November 17, 1944 in Volume No. 1227 at Page 327, Official Records,
Santa Clara County, hereinafter referred to as the Pankoski Parcel, said point
being distant along said common boundary South 30 degrees 32 minutes 30 seconds
East 237.04 feet from the most Westerly corner of the above mentioned Ezaki
Parcel; the Easterly end of said strip being the above mentioned Westerly
boundary of the San Jose-Alviso Road, and the Westerly end of said strip being
the above mentioned common boundary between the Pankoski and Ezaki Parcels.
SCHEDULE 1 TO EXHIBIT E
<PAGE> 92
EXHIBIT F
FORM OF CONTRACTOR'S CERTIFICATE
EXHIBIT F
1.
<PAGE> 93
APPLICATION AND CERTIFICATE FOR PAYMENT
AIA DOCUMENT G702 (Instructions on reverse side) PAGE ONE OF PAGES
- --------------------------------------------------------------------------------
TO OWNER: PROJECT: APPLICATION NO: Distribution to:
PERIOD TO: / / OWNER
PROJECT NOS.: / / ARCHITECT
/ / CONTRACTOR
FROM CONTRACTOR: VIA ARCHITECT: CONTRACT DATE: / /
/ /
CONTRACT FOR:
- --------------------------------------------------------------------------------
CONTRACTOR'S APPLICATION FOR PAYMENT
Application is made for payment, as shown below, in connection with the
Contract. Continuation Sheet, AIA Document G703, is attached.
<TABLE>
<S> <C> <C>
1. ORIGINAL CONTRACT SUM..................................... $
---------------
2. NET CHANGE BY CHANGE ORDERS............................... $
---------------
3. CONTRACT SUM TO DATE (Line 1 plus or minus 2)............. $
---------------
4. TOTAL COMPLETED & STORED TO DATE.......................... $
(Column G on G703) ---------------
5. RETAINAGE:
a % of Completed Work (Columns D plus E on G703) $
-------- ---------------
b % of Stored Material (Column F on G703) $
-------- ---------------
Total Retainage
(Line 5a plus 5b or Total in Column 1 of G703)............ $
---------------
6. TOTAL EARNED LESS RETAINAGE............................... $
(Line 4 less Line 5 Total) ---------------
7. LESS PREVIOUS CERTIFICATES FOR PAYMENT
(Line 6 from prior Certificate)........................... $
---------------
8. CURRENT PAYMENT DUE....................................... $
===============
9. BALANCE TO FINISH, INCLUDING RETAINAGE
(Line 3 less Line 6) $
---------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CHANGE ORDER SUMMARY ADDITIONS DEDUCTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Total changes approved in
previous months by Owner
- --------------------------------------------------------------------------------
Total approved this Month
- --------------------------------------------------------------------------------
TOTALS
- --------------------------------------------------------------------------------
NET CHANGES by Change Order
- --------------------------------------------------------------------------------
</TABLE>
The undersigned Contractor certifies that to the best of the Contractor's
knowledge, information and belief the Work covered by this Application for
Payment has been completed in accordance with the Contract Documents, that all
amounts have been paid by the Contractor for Work for which previous
Certificates for Payment were issued and payments received from the Owner, and
that current payment shown herein is now due.
CONTRACTOR:
By: Date:
------------------------------ --------------------------------
State of:
County of:
Subscribed and sworn to before me this day of
Notary Public:
My Commission expires:
- --------------------------------------------------------------------------------
ARCHITECT'S CERTIFICATE FOR PAYMENT
In accordance with the Contract Documents, based on on-site observations and the
data comprising this application, the Architect certifies to the Owner that to
the best of the Architect's knowledge, information and belief the Work has
progressed as indicated, the quality of the Work is in accordance with the
Contract Documents, and the Contractor is entitled to payment of the AMOUNT
CERTIFIED.
AMOUNT CERTIFIED................................... $
-----------------------
(Attach explanation if amount certified differs from the amount applied for.
Initial all figures on this Application and on the Continuation Sheet that are
changed to conform to the amount certified.)
ARCHITECT:
By: Date:
------------------------------ --------------------------------
This Certificate is not negotiable. The AMOUNT CERTIFIED is payable only to the
Contractor named herein. Issuance, payment and acceptance of payment are
without prejudice to any rights of the Owner or Contractor under this Contract.
- --------------------------------------------------------------------------------
AIA DOCUMENT G702
APPLICATION AND CERTIFICATE FOR PAYMENT
1992 EDITION
AIA(R)
Copyright 1992
AMERICAN INSTITUTE OF ARCHITECTS
1735 NEW YORK AVENUE, N.W.
WASHINGTON, D.C. 20006-5292
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND WILL SUBJECT
THE VIOLATOR TO LEGAL PROSECUTION.
G702/92
<PAGE> 94
EXHIBIT G
INITIAL ADVANCE MEMORANDUM
THIS INITIAL ADVANCE MEMORANDUM ("Memorandum") is entered into
this ___ day of __________, 199_, by and between SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED MAY 22,
1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC ("Landlord"),
and CISCO SYSTEMS, INC., a California corporation ("Tenant") concerning that
certain Lease ("Lease") between Landlord and Tenant dated May 22, 1995. Any
capitalized terms not defined in this Memorandum shall have the meaning as
defined in the Lease.
1. Pursuant to Section 5.6 of the Lease, Landlord and
Tenant are required to enter into this Memorandum within thirty (30) days after
the initial Advance for the foundation of any Building and within thirty (30)
days after the initial Advance under the Lease.
2. Landlord and Tenant agree that this Memorandum reflects
initial Advances that were made for the following Building(s):__________________
_______________________________________________.
3. Landlord and Tenant agree that the amount(s) of the
initial Advances is (are) as follows (allocated on a Building-by-Building basis,
if this Memorandum reflects Advances for more than one Building):_______________
_______________________________________________.
4. Landlord and Tenant agree that the Guaranteed Residual
Value for the Building(s) described in Paragraph 2 is _____% of_________________
______ (the total Funded Amount for the Building(s)).
5. Landlord and Tenant agree that the estimated Funded
Amount, determined by Tenant pursuant to Section 5.5 of the Lease, is
$______________________.
6. Landlord and Tenant agree that, pursuant to Section 5.7
of the Lease, the Security Deposit to be held by Landlord pursuant to the Lease
is $______________________.
[Remainder of This Page Intentionally Left Blank]
EXHIBIT G
1.
<PAGE> 95
[SIGNATURE PAGE TO INITIAL ADVANCE MEMORANDUM]
IN WITNESS WHEREOF, the parties have executed this Memorandum as
of the date and year first above written.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE UNDER
THAT CERTAIN TRUST AGREEMENT DATED MAY
22, 1995 BETWEEN SUMITOMO BANK LEASING
AND FINANCE, INC. AND SBNYTC
By:
------------------------------------
Name:
------------------------------------
Its:
------------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
EXHIBIT G
2.
<PAGE> 96
[SIGNATURE PAGE TO INITIAL ADVANCE MEMORANDUM]
"TENANT"
CISCO SYSTEMS, INC.,
a California corporation
By:
--------------------------------------
Name:
------------------------------------
Its:
------------------------------------
EXHIBIT G
3.
<PAGE> 97
EXHIBIT H
RENT COMMENCEMENT DATE MEMORANDUM
THIS RENT COMMENCEMENT DATE MEMORANDUM ("Memorandum") is entered
into this ___ day of _______, 199_, by and between SUMITOMO BANK OF NEW YORK
TRUST COMPANY ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED
MAY 22, 1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC
("Landlord"), and CISCO SYSTEMS, INC., a California corporation ("Tenant")
concerning that certain Lease (Buildings "I" and "J") ("Lease") between Landlord
and Tenant dated May 22, 1995. Any capitalized terms not defined in this
Memorandum shall have their meaning as defined in the Lease.
1. Pursuant to Section 5.6 of the Lease, Landlord and
Tenant are required to enter into this Memorandum within thirty (30) days after
the Rent Commencement Date for any Building.
2. Landlord and Tenant agree the that Rent Commencement
Date for the Building described as follows _______________________, is
___________ ___, 199_.
3. The dollar value of the Funded Amount (defined in
Section 2.24 of the Lease) for the Building described in paragraph 2 is
$______________________.
4. The dollar value of the Landlord's Equity Contribution
(defined in Section 2.17 of the Lease) for the Building described in paragraph 2
above is _____% of $_____________________________, (i.e.,
$______________________).
5. The dollar value of the Guaranteed Residual Value
(defined in Section 2.25 of the Lease) for the Building described in paragraph 2
above is ____% of $_____________________ (i.e. $_____________________________).
6. Landlord and Tenant agree that, pursuant to Section 5.7
of the Lease, the Security Deposit held by Landlord pursuant to the Lease shall
be in the amount of $______________________ as of the Rent Commencement Date.
[Remainder of This Page Intentionally Left Blank]
EXHIBIT H
1.
<PAGE> 98
[SIGNATURE PAGE TO RENT COMMENCEMENT DATE MEMORANDUM]
IN WITNESS WHEREOF, the parties have executed this Memorandum as
of the date and year first above written.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE
UNDER THAT CERTAIN TRUST
AGREEMENT DATED MAY 22, 1995
BETWEEN SUMITOMO BANK LEASING
AND FINANCE, INC. AND SBNYTC
By:
------------------------------------
Name:
------------------------------------
Its:
------------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
EXHIBIT H
<PAGE> 99
[SIGNATURE PAGE TO RENT COMMENCEMENT DATE MEMORANDUM]
"TENANT"
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
By:
------------------------------------
Name:
------------------------------------
Its:
------------------------------------
EXHIBIT H
<PAGE> 100
EXHIBIT I
DRAW REQUEST FORM
THIS DRAW REQUEST ("Draw Request") is submitted by CISCO SYSTEMS,
INC., a California corporation ("Tenant") to SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED MAY 22,
1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC ("Landlord"),
pursuant to Article 11 of that certain Lease (Buildings "I" and "J") between
Landlord and Tenant dated May 22, 1995. Any capitalized terms not defined in
this Draw Request shall have their meaning as defined in the Lease.
Pursuant to the terms of Article 11 of the Lease, Tenant hereby
makes a Draw Request for an Advance from Landlord. The Aggregate of the amount
of the Advance requested by Tenant pursuant to this Draw Request is
$_________________________.
Tenant hereby instructs Landlord to make this Advance to the
parties and in the amounts described below:
<TABLE>
<CAPTION>
Name of Entity Amount
-------------- ------
<S> <C>
</TABLE>
[ADD ADDITIONAL SHEET, IF NECESSARY, TO DESCRIBE ALL
ENTITIES TO RECEIVE A PORTION OF THIS ADVANCE AND THE AMOUNT TO BE PAID TO EACH
SUCH ENTITY.]
IN WITNESS WHEREOF, Tenant has executed this Draw Request as of
the date and year first above written.
"TENANT"
CISCO SYSTEMS, INC.,
a California corporation
By:
--------------------------------------
Name:
---------------------------------
Its:
---------------------------------
EXHIBIT I
1.
<PAGE> 101
EXHIBIT J
CLOSING COSTS AND FEES TO BE
INCLUDED IN FUNDED AMOUNT
The following items shall be included in the definition of the
Funded Amount under Section 2.24 of the Lease:
Fees and costs which are
specifically authorized
by Tenant in writing to be
included in the Funded Amount
EXHIBIT J
1.
<PAGE> 102
EXHIBIT K
NOTICE OF INTEREST RATE PERIOD SELECTION
Pursuant to Section 5.1(d) of those certain Leases by and between
Sumitomo Bank of New York Trust Company, ("SBNYTC"), as trustee under that
certain trust agreement dated May 22, 1995 between Sumitomo Bank Leasing and
Finance, Inc. and SBNYTC ("SB Trust"), as Landlord, and Cisco Systems, Inc., a
California corporation ("Cisco"), as Tenant, dated as of May 22, 1995, Cisco
hereby gives notice to SB Trust of its designation of the Loan interest period
as set forth below:
Effective Date Interest Period
_____________, ____ _____ month(s)
This Notice of Borrowing is dated this ___ day of _______, _____,
and may be executed in multiple copies, each of which shall be deemed an
original, and all of which together shall be but a single Notice.
"CISCO"
CISCO SYSTEMS, INC.,
a California corporation
By:
------------------------------------
Title:
----------------------------------
By:
------------------------------------
Title:
----------------------------------
EXHIBIT K
<PAGE> 103
EXHIBIT L
DESCRIPTION OF ADDITIONAL PROPERTY OWNED BY LANDLORD
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on July 13, 1983,
in Book 514 of Maps page(s) 47 and 48.
APN: 97-53-14
All of Lot 54 as shown upon that certain Map entitled, "Tract No. 7559", which
Map was filed for record in the Office of the Recorder of the County of Santa
Clara, State of California on December 21, 1983 in Book 522 of Maps, at pages 49
and 50.
APN: 97-53-23
Lots 58 and 59, as shown upon that certain map entitled, "Tract No. 7559", which
Map was filed for record in the office of the Recorder of the County of Santa
Clara, on December 21, 1983 in Book 522 of Maps, at pages 49 and 50.
APN: 97-53-18,22
EXHIBIT L
<PAGE> 104
Landlord and Tenant shall immediately execute a letter agreement reflecting the
Fair Market Value.
21.24 FINANCIAL REPORTING. Tenant shall provide to Landlord and
Lenders: (1) annually, within one hundred twenty (120) days after the end of
each of Tenant's fiscal years during the Term, an annual report on Form 10-K for
such fiscal years as filed with the Securities and Exchange Commission; (2)
quarterly, within forty five (45) days after the end of each of Tenant's fiscal
quarters during the Term, quarterly reports on Form 10-Q as filed with the
Securities and Exchange Commission; and (3) within thirty (30) days after filing
with the Securities and Exchange Commission, any other reports, proxy
statements, registration statements or prospectuses filed during the Term with
the Securities and Exchange Commission.
21.25 APPRAISAL. Prior to Landlord's making the Initial Advance
pursuant to Section 11.3 hereof, Landlord shall have received an appraisal
conforming to FIRREA guidelines prepared by an appraiser reasonably satisfactory
to Landlord indicating that the current fair market value on an as-completed
basis of the buildings as designed as of the date of such appraisal which Tenant
may desire to have constructed on the Land is not less than ninety percent (90%)
of the estimated cost of construction of the buildings which Tenant may desire
to have constructed on the Land. The appraisal shall be based upon Tenant's
current construction budget, specifications and intended use (both parties
hereby recognizing that such items are subject to change, and in no event shall
Tenant have any obligation to construct any or all of such buildings). Tenant
hereby approves Landlord's use of either Cushman & Wakefield or CB Commercial
Real Estate Group as the appraiser under this Section 21.25.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
64.
<PAGE> 105
[SIGNATURE PAGE TO BUILDING LEASE]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Lease as of the day and year first above written.
"LANDLORD"
SUMITOMO BANK OF NEW YORK TRUST
COMPANY ("SBNYTC"), AS TRUSTEE
UNDER THAT CERTAIN TRUST AGREEMENT
DATED MAY 22, 1995 BETWEEN
SUMITOMO BANK LEASING AND FINANCE,
INC. AND SBNYTC
By: /s/ JOHN F. McFADDEN
-----------------------------------
Name: JOHN F. McFADDEN
-----------------------------------
VICE PRESIDENT
Its: AND TREASURER
-----------------------------------
[Remainder of This Page Intentionally Left Blank]
<PAGE> 106
[SIGNATURE PAGE TO BUILDING LEASE]
"TENANT"
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
By: /s/ JOHN T. CHAMBERS
-------------------------------------
Name: JOHN T. CHAMBERS
-----------------------------
Its: PRESIDENT AND CHIEF
EXECUTIVE OFFICER
-----------------------------
By: /s/ LARRY R. CARTER
-------------------------------------
Name: LARRY R. CARTER
-----------------------------
CHIEF FINANCIAL
Its: OFFICER
-----------------------------
<PAGE> 1
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ("First Amendment") is made and entered
into as of this 18th day of July, 1995, by and between SUMITOMO BANK OF NEW YORK
TRUST COMPANY, ("SBNYTC"), AS TRUSTEE UNDER THAT CERTAIN TRUST AGREEMENT DATED
MAY 22, 1995 BETWEEN SUMITOMO BANK LEASING AND FINANCE, INC. AND SBNYTC
("Landlord"), and CISCO SYSTEMS, INC., a California corporation ("Tenant").
THIS FIRST AMENDMENT IS ENTERED INTO upon the basis of the following
facts, understandings and intentions.
RECITALS
A. Landlord and Tenant entered into that certain Lease
(Improvements Phase "C") dated May 22, 1995 ("Lease"), pursuant to which
Landlord is leasing to Tenant the improvements which Tenant may elect to
construct ("Premises"), as agent for Landlord, on that certain land located in
San Jose, California, as more particularly described in the Lease and on Exhibit
A attached hereto and incorporated herein by this reference. Any capitalized
terms used but not defined in this First Amendment which are defined in the
Lease shall have the meaning ascribed in the Lease.
B. Landlord and Tenant now desire to amend the terms of the Lease,
as more particularly described in this First Amendment.
NOW THEREFORE, the parties hereto agree as follows:
1. Capitalized Interest. Section 2.9 of the Lease is hereby
amended to add the following sentence at the end of the Section:
During the Construction Period for a Building or phase of
Buildings, Capitalized Interest for such Building or phase of
Buildings shall be calculated using the Construction Period
Monthly Calculation set forth in Section 2.43.
2. Monthly Calculation. Section 2.43 of the Lease is hereby
amended to add the following sentence at the end of the Section:
During the Construction Period for a Building or phase of
Buildings, "Monthly Calculation" shall mean the quotient
resulting from dividing three hundred sixty (360) by the number
of days in the applicable Rent Period. The applicable Rent
Period shall begin on the twentieth day of the calendar month
for which this Construction Period Monthly Calculation is being
calculated and shall be for a period equal to the number of
days in such calendar month.
<PAGE> 2
3. Rent Period. Section 2.57 of the Lease is hereby deleted, and
is replaced with the following:
2.57 Rent Period. "Rent Period" shall mean each period equal to
one calendar month occurring during the Term hereof, except
that: (a) the first Rent Period shall be a partial calendar
month commencing on the date of the initial Advance for a
Building or phase of Buildings and ending on the nineteenth day
of the subsequent calendar month; (b) thereafter during the
Construction Period, and ending on the nineteenth day of the
last calendar month of the Construction Period, the Rent Period
shall commence on the twentieth day of each calendar month and
end on the nineteenth day of the subsequent calendar month; (c)
the Rent Period preceding the Rent Commencement Date shall be a
partial calendar month commencing on the twentieth day of the
last calendar month of the Construction Period and ending on
the last day of such calendar month; and (d) the last Rent
Period shall be a partial calendar month commencing on the
first LIBOR Business Day of the last calendar month of the Term
and ending on the last day of the Term.
4. Timing and Method of Disbursement. Section 11.6(a) of the
Lease is hereby deleted, and is replaced with the following:
(a) Timing and Method of Disbursement. Advances to be
made hereunder shall not be made more frequently than monthly.
For any calendar month during which Tenant desires to receive
an Advance, Tenant shall submit a Draw Request on or before the
fifteenth day of such month, and if Tenant submits such Draw
Request by such date, then Landlord shall, subject to the
conditions to funding described in Sections 11.3, 11.4 and
11.5, make the Advance as requested in such Draw Request to the
party(ies) designated by Tenant on the twentieth day of such
month, or the next LIBOR Business Day if the twentieth day of
such month is not a LIBOR Business Day ("Advance Date"). The
Advances shall be made to parties identified by Tenant, which
parties may include Tenant. At the option of Tenant, Landlord
shall make such Advances to one (1) or more parties.
5. Counterparts. This First Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall comprise but a single instrument.
6. Existing Lease. Except to the extent specifically amended
hereby, all terms and conditions of the Lease remain in full force and effect.
-2-
<PAGE> 3
[SIGNATURE PAGE TO FIRST AMENDMENT TO LEASE]
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the date and year first above written.
"LANDLORD"
SUMITOMO BANK OF NEW YORK
TRUST COMPANY ("SBNYTC"), AS TRUSTEE UNDER
THAT CERTAIN TRUST AGREEMENT DATED
MAY 22, 1995 BETWEEN SUMITOMO BANK
LEASING AND FINANCE, INC. AND SBNYTC
By:
--------------------------------------
Name:
--------------------------------------
Its:
--------------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
-3-
<PAGE> 4
[SIGNATURE PAGE TO RENT FIRST AMENDMENT TO LEASE]
"TENANT"
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
By:
--------------------------------------
Name:
---------------------------------
By:
---------------------------------
Name:
---------------------------
Its:
---------------------------
-4-
<PAGE> 5
EXHIBIT A
DESCRIPTION OF LAND
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lot 50, as shown on that certain Map entitled, "Tract No. 7560," which Map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on December 21, 1983 in Book 522 of Maps, pages 51 and 52.
Reserving therefrom a perpetual right and easement to construct, install,
maintain, repair, renew, replace, operate and use a surface drainage release to
benefit Lot 49 of Tract 7560, as contained in that certain Grant of Easement
recorded August 8, 1990 in Book L443, page 0754, Official Records, and described
as follows:
The Northwesterly 10.00 feet of the Southeasterly 30.00 feet and the
Northwesterly 100.00 feet of the Southeasterly 130.00 feet of the Northeasterly
10.00 feet of Lot 50.
That portion of Lot 51, as shown on that certain Map entitled, "Tract No. 7560,"
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, State of California on December 21, 1983 in Book 522 of Maps, pages
51 and 52, being more particularly described as follows:
Beginning at the Southeasterly corner of said Lot 51; thence along the Southerly
line of said Lot 51, S. 590 27; 51 W. 77.00 feet; thence N. 14 Degrees 27
Minutes 48 Seconds E. 108.90 feet to the Northeasterly line of said Lot 51;
thence along said Northeasterly line S. 30 Degrees 32 Minutes 09 Seconds E.
77.00 feet to the point of beginning, as provided for in that certain Lot Line
Adjustment granted by the Director of Planning of the City of San Jose, a copy
of which was recorded March 28, 1984 in the office of the Recorder of the County
of Santa Clara in Book I410, page 712 of Official Records.
Lot 5 and 6, as shown on that certain Map of Tract No. 7408, which map was filed
for record in the office of the Recorder of the County of Santa Clara, State of
California on November 19, 1982 in Book 506 of Maps, pages 24, 25 and 26 and a
portion of that certain parcel of land described in the deed recorded December
22, 1972 in Book 0167, page 623, all as approved by that Lot Combination
recorded September 16, 1992 in Book M381 of Maps, page(s) 0081, Official
Records, more particularly described as follows:
Beginning at a point on the Northeasterly line of Rio Robles, as shown upon said
map, at the most Southerly corner of said Lot 5; thence along said Northeasterly
line of Rio Robles, N. 30 Degrees 32 Minutes 09 Seconds W. 105.50 feet; thence
on a tangent curve to the right, having a
EXHIBIT A
<PAGE> 6
radius of 367.00 feet, through a central angle of 36 Degrees 30 Minutes 00
Seconds an arc distance of 233.80 feet; thence on a curve to the right, tangent
to the previous curve, having a radius of 50.00 feet, through a central angle of
86 Degrees 01 Minute 50 Seconds an arc distance of 75.08 feet to the Southerly
line of Tasman Drive as shown upon said map; thence along said line on a curve
to the left, tangent to the previous curve, having a radius of 1149.00 feet,
through a central angle of 32 Degrees 31 Minutes 01 Seconds an arc distance of
652.09 feet; thence N. 59 Degrees 28 Minutes 40 Seconds E. 600.40 feet; thence
on a tangent curve to the right, having a radius of 33.00 feet, through a
central angle of 89 Degrees 51 Minutes 11 Seconds an arc distance of 51.83 feet
to the Southwesterly line of First Street, as shown upon said map; thence along
said line, S. 30 Degrees 32 Minutes 09 Seconds E. 261.38 feet to the
Northwesterly line of the lands of the City and County of San Francisco, as
shown upon said map; thence along said line of the lands of the City and the
County of San Francisco, S. 65 Degrees 09 Minutes 27 Seconds W. 1396.95 feet to
the point of beginning.
Those rights as contained in that certain Grant Deed executed by Masami Ezaki
and Kaoru Ezaki, his wife in favor of the City and County of San Francisco, a
municipal corporation recorded December 8, 1950 in Book 2111, page 319, Official
Records, over the following described property:
A strip of land 80 feet wide, lying 40 feet either side of the following
described line and extensions thereto, across that certain parcel of land
conveyed by Charles Nelson, et ux, to Masami Ezaki by Grant Deed dated February
27, 1936 and recorded March 11, 1936, in Volume No. 765, at page 262, Official
Records, Santa Clara County, hereinafter referred to as the Ezaki Parcel, said
line being more particularly described as commencing at a point in the Westerly
boundary of the existing San Jose-Alviso Road, said point being distant along
said boundary South 30 Degrees 32 Minutes 30 Seconds East 381.31 feet from its
intersection with the Northerly boundary of the above mentioned Ezaki Parcel;
thence, from said point of commencement, South 65 Degrees 08 Minutes 00 Seconds
West 1459.03 feet to a point in the common boundary between the above mentioned
Ezaki Parcel and that certain parcel of land conveyed by Lena Lindgren, et al,
to James A. Pankoski, et ux, by Joint Tenancy Deed dated November 13, 1944 and
recorded November 17, 1944 in Volume No. 1227 at Page 327, Official Records,
Santa Clara County, hereinafter referred to as the Pankoski Parcel, said point
being distant along said common boundary South 30 Degrees 32 Minutes 30 Seconds
East 237.04 feet from the most Westerly corner of the above mentioned Ezaki
Parcel; the Easterly end of said strip being the above mentioned Westerly
boundary of the San Jose-Alviso Road, and the Westerly end of said strip being
the above mentioned common boundary between the Pankoski and Ezaki Parcels.
EXHIBIT A
<PAGE> 1
GROUND LEASE
(PARCEL 2 AND LOT 54)
By and Between
IRISH LEASING CORPORATION
A TEXAS CORPORATION
as Landlord
and
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION,
as Tenant
for
Premises located in
San Jose, California
THIS LEASE IS NOT INTENDED TO CONSTITUTE A TRUE LEASE
FOR INCOME TAX PURPOSES. SEE SECTION 21.2
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 BASIC LEASE PROVISIONS . . . . . . . . . . . . . . . . . . . . 1
1.1 Date of Lease . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 Lease Commencement Date . . . . . . . . . . . . . . . . . . . 2
1.8 Rent Commencement Date . . . . . . . . . . . . . . . . . . . . 2
1.9 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Addresses for Notices . . . . . . . . . . . . . . . . . . . . 2
1.11 Addresses for Rent Payments . . . . . . . . . . . . . . . . . 2
ARTICLE 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Additional Rent . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Approval Plans . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Authorized Loan . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Authorized Plans . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Equity Funded Amount . . . . . . . . . . . . . . . . . . . . . 4
2.11 Equity Rent Component . . . . . . . . . . . . . . . . . . . . 4
2.12 Event of Major Default . . . . . . . . . . . . . . . . . . . . 4
2.13 Extension Term . . . . . . . . . . . . . . . . . . . . . . . . 4
2.14 Fee Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.15 Fee Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . 4
2.16 Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . 4
2.17 Guaranteed Residual Value . . . . . . . . . . . . . . . . . . 4
2.18 Improvements . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.19 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.20 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.21 Landlord Affiliate . . . . . . . . . . . . . . . . . . . . . . 5
2.22 Lease Commencement Date . . . . . . . . . . . . . . . . . . . 5
2.23 Lease Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.24 Legal Requirements . . . . . . . . . . . . . . . . . . . . . . 5
2.25 LIBOR Business Day . . . . . . . . . . . . . . . . . . . . . . 5
2.26 LIBOR Rate. . . . . . . . . . . . . . . . . . . . . . . . . 5
2.27 Loan Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.28 Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.29 Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.30 New Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.31 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.32 Official Records . . . . . . . . . . . . . . . . . . . . . . . 6
2.33 Permitted Exceptions . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
i.
<PAGE> 3
<TABLE>
<S> <C> <C>
2.34 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.35 Real Estate Taxes . . . . . . . . . . . . . . . . . . . . . . 6
2.36 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.37 Rent Commencement Date . . . . . . . . . . . . . . . . . . . . 6
2.38 Rent Payment Date . . . . . . . . . . . . . . . . . . . . . . 6
2.39 Replacement Loan . . . . . . . . . . . . . . . . . . . . . . . 6
2.40 Required Permits . . . . . . . . . . . . . . . . . . . . . . . 6
2.41 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . 7
2.42 Senior Funded Amount . . . . . . . . . . . . . . . . . . . . . 7
2.43 Senior Rent Component . . . . . . . . . . . . . . . . . . . . 7
2.44 SGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.45 Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.46 Tenant Deed of Trust . . . . . . . . . . . . . . . . . . . . . 7
2.47 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.48 UBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.49 UBS Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.50 UBS Note . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3 DEMISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 4 TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Extension Term . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 5 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Proration . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.3 No Abatement of Rent . . . . . . . . . . . . . . . . . . . . . 10
5.4 Delinquent Rent . . . . . . . . . . . . . . . . . . . . . . . 10
5.5 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 6 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 Real Estate Taxes . . . . . . . . . . . . . . . . . . . . . . 11
6.2 Personal Property Taxes . . . . . . . . . . . . . . . . . . . 12
6.3 Right to Contest . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . 13
6.5 Additional Provisions Relating to Taxes . . . . . . . . . . . 14
ARTICLE 7 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Liability Insurance . . . . . . . . . . . . . . . . . . . . . 15
7.2 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . 15
7.3 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 8 USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.1 Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Contest of Legal Requirements . . . . . . . . . . . . . . . . 19
8.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
ii.
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 9 UTILITIES AND SERVICES . . . . . . . . . . . . . . . . . . . . 20
9.1 Services to the Premises . . . . . . . . . . . . . . . . . . . 20
ARTICLE 10 MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES . . . . . . 20
10.1 Tenant Obligations . . . . . . . . . . . . . . . . . . . . . . 20
10.2 Surrender of the Premises . . . . . . . . . . . . . . . . . . 21
ARTICLE 11 CONSTRUCTION OF IMPROVEMENTS AND COMMON AREA . . . . . . . . . 21
11.1 Tenant's Rights to Construct Improvements . . . . . . . . . . 21
11.2 Required Permits, Easements, etc . . . . . . . . . . . . . . . 23
11.3 Demolition and Reconstruction . . . . . . . . . . . . . . . . 23
11.4 Title to and Nature of Improvements . . . . . . . . . . . . . 23
ARTICLE 12 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 13 ASSIGNMENT BY LANDLORD . . . . . . . . . . . . . . . . . . . . 24
13.1 Further Mortgages or Encumbrances by Landlord;
Authorized Loans . . . . . . . . . . . . . . . . . . . . . . 24
13.2 Landlord's Right to Sell . . . . . . . . . . . . . . . . . . . 26
13.3 Transfer of Funds and Property . . . . . . . . . . . . . . . . 26
ARTICLE 14 ASSIGNMENT AND SUBLEASING . . . . . . . . . . . . . . . . . . 27
14.1 Right to Assign . . . . . . . . . . . . . . . . . . . . . . . 27
14.2 Right to Sublet . . . . . . . . . . . . . . . . . . . . . . . 27
14.3 Tenant's Right to Mortgage . . . . . . . . . . . . . . . . . . 28
ARTICLE 15 EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . 28
15.1 Total or Substantial Taking . . . . . . . . . . . . . . . . . 28
15.2 Partial Taking . . . . . . . . . . . . . . . . . . . . . . . . 28
15.3 Temporary Taking . . . . . . . . . . . . . . . . . . . . . . . 28
15.4 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15.5 Notice and Execution . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 16 DAMAGE OR DESTRUCTION . . . . . . . . . . . . . . . . . . . . 29
16.1 Insured Casualty . . . . . . . . . . . . . . . . . . . . . . . 29
16.2 Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 17 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.1 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.2 Event of Major Default . . . . . . . . . . . . . . . . . . . . 31
17.3 Contest by Tenant . . . . . . . . . . . . . . . . . . . . . . 31
17.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
17.5 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 32
17.6 Effect of Assignment . . . . . . . . . . . . . . . . . . . . . 32
17.7 Landlord Cure Right . . . . . . . . . . . . . . . . . . . . . 32
17.8 Landlord's Default . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 18 QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . 34
18.1 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
iii.
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE 19 TENANT'S OPTION TO PURCHASE . . . . . . . . . . . . . . . . . 35
19.1 Option To Purchase Premises . . . . . . . . . . . . . . . . . 35
19.2 Mandatory Purchase/Sale of Premises . . . . . . . . . . . . . 37
19.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 20 ADDITIONAL COVENANTS OF LANDLORD . . . . . . . . . . . . . . . 38
20.1 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
20.2 Land Use . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
20.3 Transfer of Property Interests . . . . . . . . . . . . . . . . 40
20.4 Shareholder Equity; No Other Asset . . . . . . . . . . . . . . 40
20.5 Recourse Obligations . . . . . . . . . . . . . . . . . . . . . 40
20.6 Default Under Authorized Loan . . . . . . . . . . . . . . . . 40
ARTICLE 21 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 40
21.1 Relationship . . . . . . . . . . . . . . . . . . . . . . . . . 40
21.2 Form of Transaction; Certain Tax Matters . . . . . . . . . . . 41
21.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
21.4 Severability of Provisions . . . . . . . . . . . . . . . . . . 42
21.5 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . 42
21.6 Approvals and Consents . . . . . . . . . . . . . . . . . . . . 42
21.7 Terminology . . . . . . . . . . . . . . . . . . . . . . . . . 42
21.8 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . 43
21.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 43
21.10 Commissions . . . . . . . . . . . . . . . . . . . . . . . . . 43
21.11 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . 43
21.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 43
21.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 43
21.14 Time Is of the Essence . . . . . . . . . . . . . . . . . . . . 44
21.15 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . 44
21.16 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . 44
21.17 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . 44
21.18 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 44
21.19 Landlord's Continuing Obligation to Sell . . . . . . . . . . . 45
21.20 As-Is Lease . . . . . . . . . . . . . . . . . . . . . . . . . 45
21.21 Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . 45
21.22 Representations and Warranties . . . . . . . . . . . . . . . . 45
</TABLE>
List of Exhibits
Exhibit A Description of Land
Exhibit B Permitted Exceptions
Exhibit C Memorandum of Lease
Exhibit D Closing Costs and Fees to be Included in Funded Amount
Exhibit E Lease Commencement Date Memorandum
Exhibit F Description of Additional Property Owned by Landlord
iv.
<PAGE> 6
GROUND LEASE
THIS GROUND LEASE ("Lease") by and between IRISH LEASING CORPORATION,
a Texas corporation ("Landlord"), and CISCO SYSTEMS, INC., a California
corporation ("Tenant"), is entered into as of the date set forth in Article 1
and shall be effective and binding upon the parties hereto as of such date.
Capitalized terms used in this Lease shall have the definitions set forth in
Article 2 or in the text of this Lease.
In consideration of the Base Rent reserved herein, and the terms,
covenants and conditions set forth below, Landlord and Tenant hereby agree as
follows:
ARTICLE 1
BASIC LEASE PROVISIONS
1.1 DATE OF LEASE: February 28, 1995.
1.2 LANDLORD: Irish Leasing Corporation, a Texas corporation.
1.3 TENANT: Cisco Systems, Inc., a California corporation.
1.4 LAND: That certain tract of land located in the City
of San Jose, Santa Clara County, California,
consisting of two (2) parcels and more
particularly described on Exhibit A attached
hereto, together with all easements, rights of
way, appurtenances and other rights and benefits
belonging or pertaining to such land.
1.5 PREMISES: The Land.
1.6 TERM: The initial term ("Initial Term") of this Lease
shall be for five (5) years commencing on the
Lease Commencement Date (as defined in Section
4.1). Subject to the conditions set forth in
Section 4.2, Tenant may extend the Initial Term
for one (1) additional period of five (5) years
("Extension Term"). The Initial Term and (if
exercised by Tenant) the Extension Term shall be
referred to collectively herein as the "Term."
The Term shall cease upon, and shall not refer
to any period of time after, termination of this
Lease (whether
1.
<PAGE> 7
pursuant to the terms of the Lease, by operation
of law, or otherwise).
1.7 LEASE COMMENCEMENT
DATE: As described in Section 4.1.
1.8 RENT COMMENCEMENT
DATE: The rent commencement date ("Rent Commencement
Date") shall be the first LIBOR Business Day (as
defined in Section 2.25) of the calendar month
which commences immediately following the Lease
Commencement Date.
1.9 BASE RENT: As described in Section 2.5.
1.10 ADDRESSES FOR
NOTICES:
LANDLORD: TENANT:
Irish Leasing Corporation Cisco Systems, Inc.
6750 LBJ Freeway, Suite 1100 3535 Garrett Drive
Dallas, TX 75240 Santa Clara, CA 95054
Attn: Mr. Greg England Attention: Eugene Hill
With a copy to: With a copy to:
Lorne Liechty, Esq. Cisco Systems, Inc.
Liechty, McGinnis & Kolitz 3535 Garrett Drive
12750 Merit Drive Santa Clara, CA 95054
Suite 1150 Attention: Nancy Bareilles
Dallas, Texas 75251
and
Todd J. Anson, Esq.
Brobeck, Phleger & Harrison
550 West C Street
Suite 1300
San Diego, CA 92101
1.11 ADDRESSES FOR RENT
PAYMENTS:
Senior Rent Component: Union Bank of Switzerland
444 South Flower Street
Los Angeles, CA 90071
Attn: Victor Massarano
Equity Rent Component: Irish Leasing Corporation
6750 LBJ Freeway, Suite 1100
Dallas, TX 75240
Attn: Mr. Greg England
2.
<PAGE> 8
This Article 1 is intended to supplement and/or summarize the
provisions set forth in the balance of this Lease. If there is any conflict
between any provisions contained in this Article 1 and the balance of this
Lease, the balance of this Lease shall control.
ARTICLE 2
DEFINITIONS
For purposes of this Lease, the following defined terms shall have the
meanings set forth in this Article 2.
2.1 ADDITIONAL RENT. "Additional Rent" shall mean any amounts other
than Base Rent payable by Tenant to Landlord or to other Entities on Landlord's
behalf as required under this Lease, including, without limitation, interest at
the Default Rate accrued on past due Base Rent and other amounts past due
hereunder, costs and expenses to be paid or reimbursed by Tenant hereunder,
amounts due pursuant to Tenant's indemnity obligations hereunder, and Real
Estate Taxes.
2.2 APPROVAL PLANS. "Approval Plans" shall have the meaning set forth
in Section 11.1(a).
2.3 AUTHORIZED LOAN. "Authorized Loan" shall have the meaning set
forth in Section 13.1(b).
2.4 AUTHORIZED PLANS. "Authorized Plans" shall have the meaning set
forth in Section 11.1(a).
2.5 BASE RENT. "Base Rent" shall mean, as of a Rent Payment Date, the
product of the Funded Amount as of the Rent Payment Date multiplied by the Lease
Rate.
2.6 COLLATERAL. "Collateral" shall have the meaning set forth in
Section 21.18.
2.7 DEFAULT. "Default" shall have the meaning set forth in Section
17.1.
2.8 DEFAULT RATE. "Default Rate" shall mean the interest rate charged
or chargeable pursuant to the UBS Note or other Authorized Loan on any amounts
not paid when due. Notwithstanding the foregoing, in the event that the
foregoing Default Rate shall be in violation of any usury or similar law, then
the Default Rate shall be reduced to the extent necessary to cause the Default
Rate to comply with any usury or similar law.
2.9 ENTITY. "Entity" shall mean any person, corporation, partnership
(general or limited), joint venture, association, joint stock company, trust or
other business entity or organization.
3.
<PAGE> 9
2.10 EQUITY FUNDED AMOUNT. "Equity Funded Amount" shall mean that
portion of the Funded Amount equal to the Funded Amount minus the Senior Funded
Amount.
2.11 EQUITY RENT COMPONENT. "Equity Rent Component" shall mean the
Base Rent as of a Rent Payment Date minus the Senior Rent Component.
2.12 EVENT OF MAJOR DEFAULT. "Event of Major Default" shall have the
meaning set forth in Section 17.2.
2.13 EXTENSION TERM. "Extension Term" shall have the meaning set forth
in the Basic Lease Provisions.
2.14 FEE MORTGAGE. "Fee Mortgage" shall mean any Mortgage at any time
given by Landlord and remaining uncancelled on the Official Records, encumbering
all or any portion of Landlord's right, title and estate in the Land or in this
Lease.
2.15 FEE MORTGAGEE. "Fee Mortgagee" shall mean the Mortgagee from time
to time of a Fee Mortgage.
2.16 FUNDED AMOUNT. "Funded Amount" shall mean the aggregate amount of
the sum paid by Landlord to acquire the Land, plus the closing costs and fees
set forth on Exhibit D attached hereto; less any reductions in the amount of the
UBS Loan or any other Authorized Loan or in the Equity Funded Amount, whether
such principal reduction or reduction in the Equity Funded Amount is
accomplished by payment to UBS or the holder of an Authorized Loan, the
application of the Collateral or other collateral by UBS or the holder of an
Authorized Loan, the payment of insurance proceeds, condemnation awards, or
otherwise.
2.17 GUARANTEED RESIDUAL VALUE. "Guaranteed Residual Value" shall mean
that amount necessary to cause the present value of the aggregate Minimum Lease
Payments under this Lease, including the present value of the Guaranteed
Residual Value, to not exceed eighty nine and 9/10 percent (89.9%) of the Funded
Amount, computed at the Date of Lease and discounted to present value as of the
Rent Commencement Date using the interest rate implicit in the Lease or the
incremental borrowing rate, whichever is higher, all as calculated and
determined pursuant to Statement of Financial Accounting Standards Number 13.
"Minimum Lease Payments" shall mean the sum of the aggregate Base Rent payable
over the Initial Term and the Extension Term, plus imputed interest on the
non-interest bearing portion of the Security Deposit imputed at a market rate of
interest for an investment for a similar term, plus the Guaranteed Residual
Value, plus the following to the extent paid in cash: custodial and other fees
paid by Tenant, and any other reimbursed costs of Landlord paid by Tenant deemed
to meet the definition of Minimum Lease Payments under SFAS No. 13.
4.
<PAGE> 10
2.18 IMPROVEMENTS. "Improvements" shall mean any and all improvements
erected, constructed or situated upon the Land or any part thereof during the
Term.
2.19 INITIAL TERM. "Initial Term" shall have the meaning set forth in
the Basic Lease Provisions.
2.20 LAND. "Land" shall have the meaning set forth in the Basic Lease
Provisions.
2.21 LANDLORD AFFILIATE. "Landlord Affiliate" shall mean any Entity
which controls is controlled by or is under the common control of SGA
Development Partnership, Ltd., or The Staubach Company, a Texas corporation.
2.22 LEASE COMMENCEMENT DATE. "Lease Commencement Date" shall have the
meaning set forth in Section 4.1.
2.23 LEASE RATE. "Lease Rate" shall mean interest at the rate of the
product of 0.846 times the then-effective LIBOR Rate plus .0046 per annum.
2.24 LEGAL REQUIREMENTS. "Legal Requirements" shall mean all statutes,
codes, laws, acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and requirements of
all federal, state, county, municipal and other governments, departments,
commissions, boards, courts, authorities, officials and officers, and any
covenants, conditions and restrictions and other matters of record (subject to
the provisions of Section 13.1(a) hereof), which now or at any time hereafter
are applicable to Tenant or this Lease or applicable to and enforceable against
the Premises, the Improvements or any part thereof, as applicable.
2.25 LIBOR BUSINESS DAY. "LIBOR Business Day" shall have the same
meaning as such term is defined in the UBS Note or other Authorized Loan.
2.26 LIBOR RATE. "LIBOR Rate" shall mean the LIBOR interest rate as
defined in the UBS Note, or a subsequent Authorized Loan.
2.27 LOAN RATE. "Loan Rate" shall mean the relevant rate (or rates) of
interest, as the same may change from time to time, applicable under the UBS
Note (or if the UBS Loan has been replaced by an Authorized Loan, then the
relevant rate of interest under the promissory note evidencing such Authorized
Loan), all subject to the terms of Section 13.1(b).
2.28 MORTGAGE. "Mortgage" shall mean any mortgage, deed of trust, or
other instrument in the nature thereof at any time and from time to time
constituting a lien, charge or encumbrance upon any interest or estate of Tenant
or Landlord in the Premises or in this Lease.
5.
<PAGE> 11
2.29 MORTGAGEE. "Mortgagee" shall mean the record holder (as reflected
in the Official Records) from time to time of, or the record beneficiary (as
reflected in the Official Records) from time to time under, a Mortgage.
2.30 NEW LOAN. "New Loan" shall have the meaning set forth in Section
13.1(b).
2.31 NOTICE. "Notice" shall mean a written advice, request, demand or
notification required or permitted by this Lease, as more particularly provided
in Section 21.3.
2.32 OFFICIAL RECORDS. "Official Records" shall mean the official
records of Santa Clara County, California.
2.33 PERMITTED EXCEPTIONS. "Permitted Exceptions" shall mean the
following: (1) the exceptions set forth in Exhibit B; (2) any exceptions created
or caused by Tenant or to which Tenant consents in writing; (3) taxes and
assessments not yet due and payable; (4) a deed of trust or mortgage which
secures a New Loan authorized pursuant to the terms of Section 13.1(b); (5) the
Tenant Deed of Trust; (6) all title defects, liens, encumbrances, deeds of
trust, mortgages, rights-of-way, and restrictive covenants and conditions
affecting the Land unless any of the foregoing arise as a result of Landlord's
actions or with Landlord's written consent (unless such actions taken or consent
given by Landlord are requested in writing by Tenant pursuant to Section 11.2,
20.1 or 20.2); and (7) this Lease.
2.34 PREMISES. "Premises" shall have the meaning set forth in the
Basic Lease Provisions. It is the intention of the parties that the Premises
consist only of the Land, and in no event shall the Premises consist of any
Improvements whatsoever.
2.35 REAL ESTATE TAXES. "Real Estate Taxes" shall have the meaning set
forth in Section 6.1(b).
2.36 RENT. "Rent" shall mean Base Rent and Additional Rent.
2.37 RENT COMMENCEMENT DATE. "Rent Commencement Date" shall have the
meaning set forth in the Basic Lease Provisions.
2.38 RENT PAYMENT DATE. "Rent Payment Date" shall have the meaning set
forth in Section 5.1.
2.39 REPLACEMENT LOAN. "Replacement Loan" shall have the meaning set
forth in Section 13.1(c).
2.40 REQUIRED PERMITS. "Required Permits" shall mean each and every
building and development permit including, without limitation, demolition
permits, site permits and addenda thereto (including, without limitation,
foundation permits and structural permits), temporary and final occupancy
permits and any other
6.
<PAGE> 12
governmental or quasi-governmental approvals which must be issued by any
governmental authority, department, commission, board, official or officer as a
condition precedent to construction and occupancy of any Improvements.
2.41 SECURITY DEPOSIT. "Security Deposit" shall have the meaning set
forth in Section 5.5.
2.42 SENIOR FUNDED AMOUNT. "Senior Funded Amount" shall mean the
principal amount of the UBS Loan as of the Lease Commencement Date, less any
reductions in the principal amount of the UBS Loan or any other Authorized Loan,
whether such principal reduction is accomplished by payment to UBS or the holder
of the Authorized Loan, the application of the Collateral or other collateral by
UBS or the holder of the Authorized Loan, the payment of condemnation awards, or
otherwise.
2.43 SENIOR RENT COMPONENT. "Senior Rent Component" shall mean the
product of the Senior Funded Amount as of a Rent Payment Date times the Loan
Rate.
2.44 SGA. "SGA" shall mean SGA Development Partnership, Ltd., a Texas
limited partnership, the sole shareholder of Landlord.
2.45 TAKING. "Taking" shall have the meaning set forth in Section
15.1.
2.46 TENANT DEED OF TRUST. "Tenant Deed of Trust" shall mean that
certain deed of trust to be executed by Landlord in favor of Tenant and recorded
in the Official Records as of the Lease Commencement Date, as more fully
described in Section 13.1(d).
2.47 TERM. "Term" shall have the meaning set forth in the Basic Lease
Provisions.
2.48 UBS. "UBS" shall mean the Union Bank of Switzerland, a Swiss
banking corporation, acting through its Los Angeles branch.
2.49 UBS LOAN. "UBS Loan" shall have the meaning set forth in Section
13.1(b).
2.50 UBS NOTE. "UBS Note" shall have the meaning set forth in Section
13.1(b).
ARTICLE 3
DEMISE
3.1 PREMISES. Subject to the terms, covenants and conditions contained
herein, Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the Premises, together with all rights, privileges, easements and
appurtenances relating to the Premises.
7.
<PAGE> 13
ARTICLE 4
TERM
The Term of this Lease shall consist of the Initial Term, and if
exercised by Tenant, the Extension Term, as follows:
4.1 INITIAL TERM. The Initial Term of this Lease is specified in
Article 1. The Initial Term shall commence on the date ("Lease Commencement
Date") that Landlord acquires title to the Land pursuant to that certain
Purchase and Sale Agreement ("Purchase Agreement") executed or to be executed by
Crocker Properties, Inc. as Seller ("Seller") and Landlord as Buyer. Within
thirty (30) days after the Lease Commencement Date, Landlord and Tenant shall
execute the Lease Commencement Date Memorandum in the form attached hereto as
Exhibit E. In the event that the Initial Term does not commence on or before
July 1, 1995, Tenant shall have the unilateral right to terminate this Lease by
written notice to Landlord, and upon such termination Landlord shall immediately
return the Security Deposit to Tenant, plus all interest earned thereon. In the
event the Purchase Agreement is terminated as a result of any default under or
breach of the Purchase Agreement by Landlord which is not the result of
Landlord's gross negligence, willful misconduct or breach of this Lease,
Landlord shall not be obligated to return any portion of the Security Deposit
retained by Seller as liquidated damages pursuant to the terms of the Purchase
Agreement; provided that, at Tenant's request, Landlord shall assign to Tenant
any and all rights, claims and causes of action which Landlord may have with
respect to the Purchase Agreement, excluding, however, any rights, claims and
causes of action which may be necessary for Landlord to retain in order for
Landlord to avoid or seek reimbursement for any liability, loss, cost, damage,
injury or expense (including without limitation reasonable attorneys' fees and
costs) which Landlord may sustain or suffer or be entitled to recover in
connection with the Purchase Agreement.
4.2 EXTENSION TERM. Upon at least ninety (90) days' prior written
Notice to Landlord, and provided that a New Loan or Replacement Loan has been
obtained as of the commencement of the Extension Term (subject to the terms and
conditions set forth in Sections 13.1(b) and 13.1(c)), Tenant may extend the
Term for the Extension Term specified in Article 1. All provisions of this Lease
shall remain in full force and effect for the Extension Term, including, without
limitation, the Base Rent payable hereunder, except that Tenant shall have no
further right to extend the Term of this Lease, and except that the Lease Rate
may be adjusted only to reflect any actual change in the rate of interest (that
is, the spread over LIBOR) charged pursuant to the Authorized Loan.
4.3 HOLDING OVER. If Tenant remains in possession of the Premises
after the expiration of the Term without executing a new lease, such holding
over shall be construed as a tenancy from month-to-month, subject to all terms,
covenants and conditions herein contained (except that Tenant shall have no
right to extend the Term of this Lease), and at the Base Rent required to be
paid by Tenant pursuant to the terms hereof during the last month of the Term.
8.
<PAGE> 14
ARTICLE 5
RENT
5.1 BASE RENT.
(a) Tenant shall pay Base Rent in the manner set forth below.
Base Rent shall be payable monthly, in arrears, without notice on the Rent
Commencement Date, and continuing thereafter on the first LIBOR Business Day of
each successive month, except that the last installment of Base Rent shall be
payable on the last day of the Term (each such date shall be a "Rent Payment
Date") and shall be an amount sufficient to pay all Base Rent accrued through
the end of the Term.
Tenant shall pay Base Rent as follows: The Senior Rent Component
shall be paid to UBS, and the Equity Rent Component shall be paid to Landlord,
at the Address for Rent set forth in the Basic Lease Provisions (or, if the UBS
Loan has been replaced by a New Loan or Replacement Loan, then the Senior Rent
Component shall be paid directly to the holder of such New Loan or Replacement
Loan) or at such other place as Landlord and Tenant may from time to time
mutually agree upon, in their respective sole and absolute discretion. Tenant
shall pay Base Rent by wire transfer or by check. Landlord or UBS or such other
holder of a New Loan, as the case may be, shall supply Tenant with such bank
account information as Tenant shall require to enable payment by wire transfer.
The parties agree that Tenant is paying the Senior Rent Component of Base Rent
directly to UBS for the convenience of the parties in order to satisfy
Landlord's obligations to pay interest under the UBS Loan for the period of time
corresponding to the Term of this Lease; all Base Rent payments shall be deemed
payments to Landlord to the extent of the Equity Rent Component and payments of
the interest due to UBS under the UBS Loan to the extent of the Senior Rent
Component.
(b) INTEREST RATE SELECTION. The parties acknowledge that the
interest rate applicable under the UBS Loan (or other Authorized Loan) shall
affect the amount of Base Rent payable by Tenant hereunder. Therefore, Tenant
shall have the right, by written notice to UBS (or the holder of any Authorized
Loan), SGA and Landlord, to designate the interest period to be selected from
time to time by SGA pursuant to the terms of the UBS Note (or other Authorized
Loan). Tenant acknowledges that the rates available to be selected under the UBS
Loan after the first partial calendar month of the Term are 1, 3, 6, 9 or
12-month LIBOR rates. In the event that Tenant fails to give such written notice
to UBS (or other holder of an Authorized Loan), SGA and Landlord prior to the
applicable deadline for selection of such interest period pursuant to the terms
of the UBS Note (or other Authorized Loan), the same interest period then in
effect for the UBS Loan (or other Authorized Loan) shall be selected.
5.2 PRORATION. If the Term expires or is otherwise terminated on a
day other than the day before the first LIBOR
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Business Day of a calendar month, Base Rent for such calendar month shall be
prorated on the basis of actual days elapsed on the basis of a thirty (30) day
month.
5.3 NO ABATEMENT OF RENT. Except as a consequence of a reduction in
the Funded Amount or the terms of Section 15 (Taking), Tenant shall not be
entitled to any abatement, diminution, reduction, setoff or postponement of Base
Rent as a consequence of any inconvenience to, interruption of, cessation of or
loss of Tenant's use or enjoyment of the Premises or as a result of any reason
whatsoever.
5.4 DELINQUENT RENT. Any Base Rent not paid on the due date shall
accrue interest at the Default Rate from the date such Base Rent was originally
due until the date such Base Rent is paid. All interest accrued on past due Base
Rent shall be due and payable to Landlord at the time the Base Rent is paid, or
upon demand by Landlord, if earlier.
5.5 SECURITY DEPOSIT. On the Date of Lease, Tenant shall deliver to
Landlord a security deposit ("Security Deposit") in an amount equal to One
Million Two Hundred Sixty Thousand Dollars ($1,260,000), to be held in an
interest bearing account requiring authorization by both Landlord and Tenant for
withdrawal. On the Lease Commencement Date, the Security Deposit plus all
interest earned thereon shall be released to Landlord, and Tenant shall deliver
to Landlord an amount sufficient to increase the Security Deposit to an amount
equal to the Equity Funded Amount as of such date; provided that Tenant shall
receive a credit for any interest earned on the Security Deposit prior to the
Lease Commencement Date. The Security Deposit shall be held by Landlord as
security solely for the payment of Base Rent and Additional Rent by Tenant
pursuant to this Lease. One-fifth of the Security Deposit shall bear interest
from the Lease Commencement Date at the rate of 6.75% per annum, simple
interest, paid by Landlord to Tenant in cash on an annual basis on each
anniversary of the Lease Commencement Date; and the remainder of the Security
Deposit shall not bear interest. If at any time during the Term any Base Rent
shall be overdue, then Landlord may at its election (but shall not be required
to) appropriate and apply any portion of the Security Deposit to the payment of
any such overdue Base Rent; provided, however, that Landlord shall use the
non-interest bearing portion of the Security Deposit first, before appropriating
any portion of the Security Deposit that shall bear interest pursuant hereto.
Should the entire Security Deposit, or any portion thereof, be appropriated and
applied by Landlord as provided herein, then Tenant shall immediately, after
receipt of written demand by Landlord, pay to Landlord a sufficient sum in cash
to restore the Security Deposit to the original sum of the Security Deposit.
Landlord shall have no obligation to segregate the Security Deposit from other
funds. In the event that the Equity Funded Amount is reduced for any reason,
including without limitation by reason of a sale of any portion of the Premises
or the application of the proceeds of a condemnation award to reduce the Equity
Funded Amount
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(it being understood that the Equity Funded Amount will only be reduced in the
event and to the extent that the net proceeds of such condemnation award exceeds
the Senior Funded Amount, with such award proceeds to be applied first to the
Senior Funded Amount pursuant to Section 15.4 hereof), the amount of the
Security Deposit required hereunder shall be reduced (pro rata between the
interest bearing and non-interest bearing portions of the Security Deposit) by a
like amount, and any such excess funds held by Landlord shall immediately be
returned to Tenant. The entire Security Deposit (other than amounts withheld
against Base Rent due hereunder), plus any accrued and unpaid interest required
to be paid thereon pursuant to this Lease, shall be returned to Tenant at the
end of the Term.
ARTICLE 6
TAXES
6.1 REAL ESTATE TAXES.
(a) From and after the Lease Commencement Date, Tenant shall pay
directly to the appropriate taxing authority all Real Estate Taxes. If the Lease
Commencement Date occurs or the Term expires or otherwise terminates at any time
other than the beginning or end of a taxable year, Tenant's obligation to pay
Real Estate Taxes shall be prorated on the basis of a 365-day year, so as to
include only that portion of the taxable year which is a part of the Term.
Unless a termination of the Lease results from a purchase of the Land pursuant
to Article 19, any Real Estate Taxes levied against the Land which accrue during
the Term of this Lease but which would not be due and payable to the appropriate
taxing authority until after the expiration of the Term of this Lease (as the
same may be extended) shall be paid by Tenant to Landlord upon such termination.
Landlord shall pay such amounts to the appropriate taxing authority on a timely
basis.
(b) Except to the extent that Real Estate Tax bills and
statements are sent directly to Tenant by the taxing authority, upon receipt by
Landlord of the tax bills or statements, Landlord will use reasonable efforts to
promptly advise Tenant in writing of all Real Estate Taxes and shall deliver
copies of all applicable tax bills or statements to Tenant. Tenant shall pay
directly to the taxing authority all Real Estate Taxes prior to the later of (i)
thirty (30) days after receipt by Tenant of a copy of such bills and statements
referred to above, or (ii) five (5) days prior to delinquency. As used herein,
the term "Real Estate Taxes" shall mean any and all taxes, governmental fees and
similar charges or assessments levied or assessed against the Improvements
and/or the Land including, without limitation, ad valorem taxes and special
assessments applicable to real property; provided, however, that Real Estate
Taxes shall not include any Landlord Income Taxes. Real Estate Taxes shall also
include any and all documentary, transfer, sales, mortgage, recording or similar
taxes imposed on Landlord or Tenant in connection with (i) the original
acquisition
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of the Premises by Landlord, (ii) any transfer of the Premises to Tenant
pursuant to the terms of this Lease, or (iii) any sale of the Premises to a
third party pursuant to the terms of this Lease. As used herein, the term
"Landlord Income Taxes" shall mean any and all income, franchise, gains, gift,
succession, excess profits, gross receipts, revenue, estate, rental, or similar
taxes or taxes in lieu thereof imposed upon Landlord or any party other than
Tenant (or an affiliate thereof) and any withholding tax imposed as a collection
device for, in lieu of, or otherwise related to any of the foregoing without
regard to whether such tax is required to be collected by Tenant and without
regard to whether Tenant would be liable for such withholding tax in the event
it failed to so withhold. For purposes of the foregoing, an income tax shall
include, without limitation, any tax imposed under the United States Internal
Revenue Code or the California Bank and Corporation Tax Law as well as any tax
which could qualify as an "income tax" under United States Treasury Regulation
Section 1.901-2 (except to the extent any such statute or regulation is
subsequently modified to include a tax or other governmental charge of a
materially different type and nature from the taxes currently described therein)
and any income tax which may be payable under the laws of any jurisdiction
either now or in the future. Real Estate Taxes for any given tax year shall
exclude assessment installments that are not due and payable during such tax
year.
6.2 PERSONAL PROPERTY TAXES. Tenant shall pay directly to the
appropriate taxing authorities prior to delinquency any and all taxes and
assessments levied or assessed during the Term upon or against Tenant's
furniture, equipment, trade fixtures and any other personal property in the
Premises.
6.3 RIGHT TO CONTEST. Tenant shall not be required to pay any Real
Estate Taxes or any other taxes for which Tenant is liable hereunder (including,
without limitation, any taxes for which Tenant is required to indemnify Landlord
under Section 6.5) (including penalties and interest), so long as (i) Tenant
shall contest the same or the validity thereof by appropriate legal proceedings
in such a manner to prevent the tax sale of any portion of the Premises and (ii)
the position to be taken by Tenant pursuant to such contest would have a
realistic possibility of success if litigated. For purposes of this Lease,
Tenant may conclusively establish that a position to be taken in a contest would
have a realistic possibility of success if litigated by providing to Landlord a
letter from counsel stating an opinion to such effect. In the event of any such
contest, Tenant shall, within thirty (30) days after the final determination
thereof, pay and discharge the amounts determined to be due in accordance
therewith and with the provisions of this Lease, together with any penalties,
fines, interest, costs and expenses that may have accrued thereon or that may
have resulted from Tenant's contest. Tenant also shall have a right to contest
any taxes for which it is liable hereunder, but with regard to which the
position to be taken pursuant to such contest would not have a realistic
possibility of success if litigated, provided that Tenant pays such taxes on or
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prior to the date upon which such taxes are asserted to be due by the relevant
governmental authority. Notwithstanding the foregoing provisions of this Section
6.3, Tenant shall have an unconditional right to contest (without prior payment)
any taxes imposed by law upon Tenant rather than upon Landlord. Tenant's
decision to pay any taxes prior to contesting its or another party's underlying
liability therefore shall not be deemed to imply or suggest that the position to
be taken in such contest would not have a realistic possibility of success if
litigated. Landlord shall cooperate fully with Tenant in connection with the
exercise of Tenant's right of contest contained herein, and in the event that
applicable law shall require that Landlord, rather than Tenant, pursue legal
proceedings for such contest, Landlord will initiate and pursue such contest
upon Tenant's request and in accordance with Tenant's instructions (including,
without limitation, Tenant's instructions as to the selection of legal counsel
and matters of strategy or settlement); provided, however, that Landlord shall
not be subject to any liability for the payment of any costs or expenses in
connection with any such contest or proceedings, and Tenant will indemnify,
defend and save harmless Landlord from and against any such costs and expenses
(including, without limitation, reasonable attorneys' fees, costs of court and
appraisal costs), reimbursing Landlord therefor upon demand (or paying such
costs and expenses directly when due, all as directed by Landlord). Tenant shall
be entitled to any refund of any taxes and penalties or interest from any
governmental authority to the extent the refund represents monies paid to the
governmental authority by Tenant or paid by Landlord and reimbursed by Tenant.
6.4 WITHHOLDING TAXES. Subject to Section 6.5, but notwithstanding any
other provision of this Lease to the contrary, Tenant may withhold from any
payments under this Lease any Landlord Income Taxes, without obligation to
gross-up, indemnify or otherwise increase payments in consequence thereof, to
the extent required by applicable law (as determined by Tenant in its reasonable
discretion). Upon the date hereof or upon the date a party becomes a Landlord or
a transferee of any portion of the Landlord's interest in the Premises or this
Lease, and within thirty (30) days following the first day of each calendar year
or if otherwise requested from time to time by Tenant, Landlord and each
transferee, if organized under the laws of a jurisdiction outside the United
States, shall provide Tenant with three counterparts of each of the forms
prescribed by the Internal Revenue Service of the United States (Form 1001 or
4224, or successor form(s), as the case may be) certifying as to Landlord's or
such transferee's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to such person.
Without limitation upon the foregoing, unless Tenant has received such forms or
other documents reasonably satisfactory to it indicating that payments under
this Lease are not subject to United States withholding tax, Tenant is
authorized to and shall withhold taxes from such payments at the applicable
statutory rate. Landlord and each transferee, if organized under the laws of the
United States or any State thereof, shall timely
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provide Tenant with duplicate documents conforming to the requirements of
Treasury Regulation 1.1441-5(b) or any successor thereto (which statement may be
made on a Form W-9).
6.5 ADDITIONAL PROVISIONS RELATING TO TAXES.
Notwithstanding anything in this Section 6 to the contrary, Tenant
shall indemnify, defend and hold Landlord harmless from and against:
(a) Any and all Landlord Income Taxes imposed upon Landlord in
consequence of Landlord being treated as the owner or lessor of the Premises (or
any part thereof) for such tax purposes (provided that Landlord has fully
complied with its obligations under Section 21.2(b));
(b) Any and all minimum franchise taxes imposed in respect of
doing business within the State of California, business qualification taxes, and
similar governmental charges for which Landlord would not be liable but for its
participation in the transactions described in this Lease, including obtaining
the UBS Loan or any other Authorized Loan pursuant to this Lease;
(c) Any and all taxes imposed upon Tenant (except to the extent
that such taxes are imposed upon Tenant as a result of Landlord's failure to
comply with its obligations under this Lease);
(d) Any and all taxes required to be withheld from payments made
by Tenant to a third party not related to or affiliated with Landlord or The
Staubach Company;
(e) Any and all taxes imposed upon Landlord on cancellation or
discharge of indebtedness income arising in connection with a write-down, payoff
modification or cancellation of the UBS Loan or other Authorized Loan (other
than in connection with Landlord's or SGA's bankruptcy or insolvency or any
write-down, payoff, modification or cancellation of the SGA Loan (as defined in
Section 12.1(b)) not authorized in advance by Tenant) and provided that Landlord
has fully complied with its obligations under Section 21.2(b);
(f) Any and all Real Estate Taxes; and (g) Any and all taxes owed
by Landlord as a result of payment made by Tenant to or for the benefit of
Landlord pursuant to Tenant's indemnity obligations under this Section 6.5.
(g) Any and all taxes owed by Landlord as a result of payment
made by Tenant to or for the benefit of Landlord pursuant to Tenant's
indemnity obligations under this Section 6.5.
Tenant's obligation to reimburse or indemnify Landlord for any taxes,
governmental fees, penalties, interest or other supplemental tax charges under
this Lease shall be reduced by the value of any related or offsetting tax
benefits derived or realized by Landlord. For purposes of calculation of tax
benefits derived or realized by Landlord, any net operating loss attributable to
the
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<PAGE> 20
Premises for any year shall be deemed to be available to offset against income
from the Premises in subsequent years regardless of whether it is in fact
available. Tenant's duty to indemnify Landlord under this Section 6.5 shall
apply only to taxes arising during the Term (whether or not due and payable at
the conclusion of the Term), but shall otherwise survive the expiration or
earlier termination of this Lease.
ARTICLE 7
INSURANCE
7.1 LIABILITY INSURANCE. At all times during the Term, Tenant shall
obtain at Tenant's sole cost and expense a policy or policies of comprehensive
general liability insurance on an "occurrence" basis against claims for
"personal injury" liability, including, without limitation, bodily injury, death
or property damage liability. The liability insurance policy shall contain
coverage limits no less than a combined single limit of $5,000,000 per
occurrence. The insurance may be furnished under a "primary" policy and an
"umbrella" policy or policies. Landlord shall be named as an additional insured
under Tenant's policy and Tenant's policy shall contain an endorsement for
cross-liability coverage. Tenant shall furnish Landlord with certificates from
Tenant's insurers with respect to the insurance required to be carried hereunder
on or before the date of execution of this Lease. The certificates shall state
that such insurance is in full force and effect and that coverage will not be
cancelled without twenty (20) days' prior written notice to Landlord. Renewal
certificates shall be furnished to Landlord not less than thirty (30) days prior
to the expiration of each such policy. Any blanket insurance policy or policies
that insure Tenant against the risks and for the amounts herein specified shall
be deemed to satisfy the obligation of Tenant hereunder, provided that any such
policy of blanket insurance shall specify the amount of the total insurance
allocated to the risks required to be insured hereunder and such allocated
amount meets the requirements of this Article 7. All insurance required by this
Article 7 shall be with an insurance company licensed to do business in the
State of California with a general policyholder's rating, as rated by the most
current available "Bests" Insurance Reports, no less than A-III, and shall be
primary and non-contributing.
7.2 WAIVER OF SUBROGATION. Notwithstanding anything to the contrary
contained herein, to the extent permitted by law and so long as any insurance
coverage maintained by Tenant is not diminished by reason thereof, Tenant hereby
(a) releases and waives any rights it may have against Landlord and its
officers, agents and employees on account of any loss or damages occasioned to
Tenant, its property or the Premises, and arising from any risk covered by any
fire and extended coverage insurance maintained by Tenant, whether or not due to
the negligence of Landlord, its agents, employees, contractors, licensees,
invitees or other persons, and (b) waives on behalf of any insurer providing
such
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insurance to Tenant any right of subrogation that any such insurer may have or
acquire against Landlord or such persons by virtue of payment of any loss under
such insurance. Tenant shall use its best efforts to cause its insurance
policies to contain a waiver of subrogation clauses in accordance with the
foregoing.
7.3 INDEMNITY. Tenant shall protect, defend, indemnify, hold and save
Landlord harmless from and against any and all losses, costs, liabilities or
damages (including reasonable attorneys' fees and disbursements and court costs)
arising by reason of: (i) any and all injury or death of persons or damage to
property against which Tenant is obligated to maintain insurance for the benefit
of Landlord pursuant to this Article 7; (ii) the failure to obtain the waiver of
subrogation clause required by Section 7.2 hereof where such clause could have
been obtained through the exercise of Tenant's best efforts; or (iii) the
invalidation of such insurance policy required to be obtained by Tenant
hereunder by Tenant's insurer. Tenant's duty to indemnify Landlord under this
Section 7.3 shall survive the expiration or earlier termination of this Lease
with respect to events occurring during the Term.
ARTICLE 8
USE
8.1 USE.
(a) PERMITTED USES. Tenant may use the Premises for any lawful
purpose.
(b) ENVIRONMENTAL COMPLIANCE.
(i) DEFINED TERMS. The term "Applicable Environmental
Laws" shall mean any applicable laws, regulations or ordinances pertaining to
health or the environment, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 or otherwise (as
amended, hereinafter called "CERCLA"), the Resource Conservation and Recovery
Act of 1976, as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, the Hazardous and Solid Waste Amendments of
1984 or otherwise (as amended, hereinafter called "RCRA"), and California Health
& Safety Code Section 25501(j). The terms "hazardous substance" and "release" as
used in this Lease shall have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" (or "disposed") shall have the meanings specified
in RCRA; provided, in the event either CERCLA or RCRA is amended or superseded
by other laws so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent to the effective date of such amendment
or other laws; and, provided further, to the extent that the laws of the State
of California establish a meaning for "hazardous substance", "release", "solid
waste", or "disposal"
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which is broader than that specified in either CERCLA or RCRA, such broader
meaning shall apply. The term "Pre-existing Contamination" means concentrations
of arsenic and lead existing in soil and groundwater at the Premises as of the
Lease Commencement Date.
(ii) TENANT'S COVENANTS. Tenant will not cause or permit
the Premises or the Improvements to be in violation of, or do anything or permit
anything to be done which subjects Landlord, Tenant or the Premises to any
remedial obligations under or which creates a claim or cause of action under,
any Applicable Environmental Laws, including, without limitation, CERCLA, RCRA,
and the California Health and Safety Code Section 25501(j), assuming disclosure
to the applicable governmental authorities of all relevant facts, conditions and
circumstances, if any, pertaining to the Premises and the Improvements, and
Tenant will promptly notify Landlord in writing of any existing, pending or
threatened investigation, claim or inquiry of which Tenant has knowledge by any
governmental authority in connection with any Applicable Environmental Laws.
Tenant shall obtain any permits, licenses or similar authorizations to
construct, occupy, operate or use any Improvements, fixtures and equipment at
any time located on the Premises by reason of any Applicable Environmental Laws.
Tenant will not use the Premises or the Improvements in a manner which will
result in the unlawful disposal or other unlawful release of any hazardous
substance or solid waste on or to the Premises or the Improvements and covenants
and agrees to keep or cause the Premises and the Improvements to be kept free of
any unlawful hazardous substance, unlawful solid waste or unlawful environmental
contaminants (including, without limitation, friable asbestos and any substance
containing asbestos deemed hazardous and unlawful by any Applicable
Environmental Law) and to remove the unlawful amounts of the same (or if removal
is prohibited by law, to take whatever action is required by law) promptly upon
discovery at Tenant's sole expense. Tenant shall promptly notify Landlord in
writing of any unlawful disposal or other unlawful release of any hazardous
substance, environmental contaminants or solid wastes on or to the Premises or
the Improvements. Landlord and Tenant acknowledge that Pre-existing
Contamination exists at the Premises due to operations of prior owners and that
Tenant has no further obligation to notify Landlord regarding such Pre-existing
Contamination. Landlord acknowledges receipt of that certain Phase I
Environmental Assessment and Phase II Soil and Groundwater Evaluation dated
February 1995 prepared by Lowney Associates ("Report"); provided that delivery
of such Report shall in no way limit or modify Tenant's indemnity obligations
pursuant to Section 8.1(b)(iii) hereof. Tenant acknowledges that Landlord will
not acquire the Premises if any environmental contamination of the Premises in
violation of applicable law, which contamination is not disclosed in the Report,
occurs or is discovered before the Lease Commencement Date. In the event Tenant
fails to comply with or perform any of the foregoing covenants and obligations,
after thirty (30) days' prior written Notice to Tenant, Landlord may, but shall
be under no obligation to, cause the Premises and the Improvements to be freed
from the unlawful hazardous substance,
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unlawful solid waste or unlawful environmental contaminants (or if removal is
prohibited by law, to take whatever action is required by law) and the
reasonable cost of the removal or such other action shall be a demand obligation
owing by Tenant to Landlord pursuant to this Lease; provided, however that this
sentence shall not apply to Pre-existing Contamination. Notwithstanding the
foregoing, Landlord shall have no right to cause the removal of such materials
so long as Tenant both: (1) is diligently and in good faith proceeding to comply
with Tenant's obligation to remove the unlawful amounts of such materials; and
(2) has the financial ability to so comply. Subject to the foregoing, Tenant
grants to Landlord and Landlord's agents and employees access to the Premises
and the Improvements, and the license to remove the unlawful hazardous
substance, unlawful solid waste or unlawful environmental contaminants (or if
removal is prohibited by law, to take whatever action is required by law) and
agrees to indemnify, defend and save Landlord harmless from and against all
reasonable costs and expenses involved and from all claims (including
consequential damages) asserted or proven against Landlord by any party in
connection therewith. Upon Landlord's reasonable request for "good cause"
(defined below), at any time and from time to time during the Term, Tenant will
provide at Tenant's sole expense an inspection or audit of the Premises and the
Improvements from an engineering or consulting firm approved by Landlord,
indicating the presence or absence of any hazardous substance, solid waste or
environmental contaminants located on the Premises; provided, however that this
provision shall not apply to Pre-existing Contamination. If Tenant fails to
provide same after sixty (60) days' notice, Landlord may order same, and Tenant
grants to Landlord and Landlord's employees and agents access to the Premises
and the Improvements and a license to undertake any testing reasonably required
to obtain such inspection or audit. The reasonable cost of obtaining such
inspection or audit and any expenses incurred by Landlord in connection
therewith, shall be a demand obligation owing by Tenant to Landlord pursuant to
this Lease. For purposes of this Section 8.1(b)(ii), "good cause" shall mean
that Landlord shall have reasonable grounds to believe that an unlawful release
or unlawful disposal of hazardous substances or solid wastes has occurred on the
Premises or the Improvements, but shall not include Pre-existing Contamination.
(iii) TENANT'S INDEMNITY. Tenant agrees to indemnify,
defend and hold Landlord harmless from and against, and to reimburse Landlord
with respect to, any and all claims, demands, causes of action, losses, damages,
liabilities, costs and expenses (including without limitation attorneys' fees
and court costs), fines and/or penalties of any and every kind or character,
known or unknown, fixed or contingent, asserted or potentially asserted against
or incurred by Landlord at any time and from time to time by reason of, in
connection with or arising out of (A) the failure of Tenant to perform any
obligation herein required to be performed by Tenant regarding Applicable
Environmental Laws, (B) any violation of any Applicable Environmental Law by
Tenant or with respect to the Premises or the Improvements, or any disposal or
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other release by Tenant or with respect to the Premises or the Improvements of
any hazardous substance, environmental contaminants or solid waste on or to the
Premises or the Improvements, whether or not resulting in a violation of any
Applicable Environmental Law, (C) any act, omission, event or circumstance by
Tenant or with respect to the Premises or the Improvements which constitutes or
has constituted a violation of any Applicable Environmental Law with respect to
the Premises or the Improvements, regardless of whether the act, omission, event
or circumstance constituted a violation of any Applicable Environmental Law at
the time of its existence or occurrence, and (D) any and all claims or
proceedings (whether brought by private party or governmental agencies) for
bodily injury, property damage, abatement or remediation, environmental damage
or impairment or any other injury or damage resulting from or relating to any
hazardous or toxic substance or contaminated material located upon or migrating
into, from or through the Premises or the Improvements (whether or not the
release of such materials was caused by Tenant, a subtenant, a prior owner of
the Premises or any other Entity) which Landlord may incur. Tenant's duty to
indemnify Landlord under this Section 8.1 shall survive the expiration or
earlier termination of the Lease with respect to events occurring during or
prior to the Term or after the Term while Landlord has record title to and
Tenant is occupying the Premises.
8.2 CONTEST OF LEGAL REQUIREMENTS. Tenant shall have the right at its
sole cost and expense to contest the validity of any Legal Requirements
applicable to the Premises by appropriate proceedings diligently conducted in
good faith; and upon the request of Tenant and at Tenant's sole cost and
expense, Landlord will join and cooperate with Tenant in such proceedings. Any
other provision of this Lease (other than Section 6.3) to the contrary
notwithstanding, Tenant's right to contest Legal Requirements must be exercised
in such a manner as to avoid any exposure of the Premises or any part thereof to
foreclosure or execution sale or exposure of Landlord to civil or criminal
penalties arising from Tenant's non-compliance with such Legal Requirements.
Tenant shall defend and indemnify Landlord against, and hold Landlord harmless
from, any and all liability, loss, cost, damage, injury or expense (including,
without limitation, attorneys' fees and costs) which Landlord may sustain or
suffer by reason of Tenant's failure or delay in complying with, or Tenant's
contest of, any such Legal Requirements (or Landlord's contest, if requested in
writing by Tenant), and Tenant's duty to indemnify Landlord under this Section
8.2 shall survive the expiration or earlier termination of this Lease.
8.3 INDEMNIFICATION. Tenant will defend, protect, indemnify and save
harmless Landlord from and against all liabilities, obligations, claims,
damages, causes of action, costs and expenses, imposed upon or incurred by
Landlord by reason of the occurrence or existence of any of the following during
the Term, except to the extent caused by the willful misconduct, gross
negligence, or willful breach of contract of Landlord or its agents
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or contractors: (1) any claims of Seller arising from the Purchase Agreement
described in Section 4.1 (provided, that, without limitation of Tenant's
indemnity obligations hereunder, Tenant's indemnity obligation under this Clause
1 shall apply notwithstanding a willful breach of the Purchase Agreement by
Landlord if such breach is caused, directly or indirectly, by Tenant or any
actions or failure to act by Tenant or as a result of Landlord's following
Tenant's instructions with respect to the Purchase Agreement or in the event
that Landlord is unable to obtain the UBS Loan); (2) any accident, injury to or
death of persons or loss of or damage to property occurring on or about the
Premises or Improvements; (3) performance of any labor or services or the
furnishing of any materials or other property in respect of the Premises or the
Improvements; (4) the negligence or willful misconduct on the part of Tenant or
any of its agents, invitees, employees or contractors or any other persons
entering onto the Premises or the Improvements at the request, behest or with
the permission of Tenant; (5) the construction, use or occupancy of the
Improvements which Tenant may elect to construct; (6) the existence or
application of any Legal Requirements with respect to the Premises or
Improvements; or (7) the use of the Premises or Improvements. Tenant's duty to
indemnify Landlord under this Section 8.3 shall survive the expiration or
earlier termination of this Lease with respect to events occurring prior to the
commencement of the Term, during the Term or after the Term while Landlord has
record title to and Tenant is occupying the Premises. Notwithstanding anything
to the contrary herein, Tenant's duty to indemnify Landlord pursuant to Clause 1
above shall apply only with respect to events or occurrences occurring prior to
commencement of the Term.
ARTICLE 9
UTILITIES AND SERVICES
9.1 SERVICES TO THE PREMISES. At Tenant's sole cost and expense,
Tenant shall make its own arrangements for the provision of all utilities and
services to be provided to or consumed on the Premises, including, without
limitation, air conditioning, ventilation, heating, electric power, telephone,
water (both domestic and fire protection), sanitary sewer, storm drain, natural
gas and janitorial services, including for the installation, maintenance and
repair of service lines and meters to measure Tenant's consumption of such
utilities.
ARTICLE 10
MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES
10.1 TENANT OBLIGATIONS. Except as otherwise provided in this Lease,
Tenant shall maintain the Premises in good repair, normal wear and tear,
casualty and Takings (as defined in Section 15.1) excepted. All maintenance that
Tenant is obligated to perform under this Section 10.1 shall be at the sole
expense of
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Tenant, except to the extent that repairs are made necessary because of the
gross negligence or willful misconduct of Landlord, its agents, employees or
contractors.
10.2 SURRENDER OF THE PREMISES. Except as provided in Section 19, upon
the expiration or earlier termination of the Term, Tenant shall surrender the
Premises to Landlord in its then "AS-IS" condition, including, without
limitation, any condition resulting from: (i) wear and tear; (ii) obsolescence
and damage by fire or other casualty, act of God or the elements; (iii) damage
that is beyond Tenant's reasonable control or is caused by Landlord, its agents,
employees or contractors; (iv) any Improvements which Tenant may elect to
construct (in compliance with the terms of this Lease) and leave on the Premises
(subject to the rights of any other Entity in such Improvements); (v) Takings;
and (vi) Tenant's alterations, additions, removals, repairs, replacements, or
decorations in, to or of the Premises. Title to all Improvements, furniture,
furnishings, fixtures, trade fixtures and personal property of Tenant located in
or upon the Premises, whether or not affixed to the realty, shall be and remain
in Tenant, and upon the expiration or earlier termination of this Lease, or
within thirty (30) days thereafter (or as soon thereafter as reasonably
practical), the same may be removed by Tenant, or, at Tenant's election,
surrendered with the Premises, in which event title to such surrendered property
shall, if Landlord so elects in Landlord's sole discretion, be deemed
transferred to Landlord (subject to the rights of any other Entity in such
Improvements).
ARTICLE 11
CONSTRUCTION OF IMPROVEMENTS AND COMMON AREA
11.1 TENANT'S RIGHTS TO CONSTRUCT IMPROVEMENTS. Tenant shall be under
no obligation whatsoever to construct any Improvements. Tenant shall have the
right, in Tenant's sole discretion, to construct Improvements which Tenant
desires, subject only to the specific approvals required from Landlord pursuant
to the terms of this Section 11.1. Notwithstanding anything to the contrary,
without obtaining Landlord's approval, Tenant may perform work on the Premises
which does not consist of the actual construction of above-ground buildings (for
example, Tenant may perform grading, trenching and similar work, and may install
and construct utilities, parking lots, driveways, roadways, foundations, and the
like).
(a) APPROVAL PLANS. Prior to commencing any actual construction
of Improvements (except as otherwise permitted or already approved pursuant to
this Section 11.1), Tenant's proposed site plans (showing the locations and
orientations of any proposed buildings) and exterior shell plans (showing
exterior building sections) (collectively, "Approval Plans") of any Improvements
which Tenant may elect to construct shall be submitted to and approved by
Landlord in accordance with the following (in each case to the extent
applicable). Tenant shall deliver a letter to
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Landlord along with any submitted Approval Plans in which Tenant states that the
submitted Approval Plans do not violate any Legal Requirements. Landlord may
only withhold Landlord's approval to any such Approval Plans to the extent that
the Approval Plans violate any material Legal Requirements, and Landlord may not
withhold its consent on any other ground. At the option of Tenant, the foregoing
documentation may be submitted to Landlord for approval in stages as Tenant
completes it. Landlord shall have a period of ten (10) days from the date of
receipt of each component of the documentation within which to approve or reject
it. The Approval Plans, as approved from time to time by Landlord pursuant to
this Section 11.1 shall constitute the "Authorized Plans." Tenant shall
immediately reimburse Landlord on demand for all reasonable out-of-pocket costs
and expenses incurred by Landlord in connection with the review and approval of
any Approval Plans, provided that Landlord first gives Tenant a detailed written
notice that it has reasonable grounds to believe that the Approval Plans violate
material Legal Requirements, and Tenant fails either to revise such Approval
Plans to comply with such material Legal Requirements or to provide reasonable
evidence that the Approval Plans do not violate material Legal Requirements.
Landlord's approval of any Authorized Plans does not constitute any
representation or warranty by Landlord with respect to such Authorized Plans,
and Landlord hereby specifically disclaims any such representations and
warranties.
(b) FURTHER APPROVALS; PROPOSED CHANGES. Subsequent to Landlord's
approval of any Authorized Plans pursuant to Section 11.1(a), Tenant shall only
be obligated to submit to Landlord for approval documentation showing any
proposed material change to the Authorized Plans (but no approval shall be
required with respect to construction or design matters that are not contained
or addressed by the Authorized Plans), and only to the extent such change is
materially inconsistent with the Authorized Plans. Landlord shall have a period
of ten (10) days from receipt of each material change within which to approve or
reject it. Landlord may only withhold Landlord's approval to any such change to
the Authorized Plans to the extent that such change violates any material Legal
Requirements, and Landlord may not withhold its consent on any other ground.
Tenant shall immediately reimburse Landlord on demand for all reasonable
out-of-pocket costs and expenses incurred by Landlord in connection with the
review and approval of any such changes, provided that Landlord first gives
Tenant a detailed written notice that it has reasonable grounds to believe that
the Approval Plans violate material Legal Requirements, and Tenant fails either
to revise such Approval Plans to comply with such material Legal Requirements or
to provide reasonable evidence that the Approval Plans do not violate material
Legal Requirements. Tenant shall have the right, without further approval of
Landlord, to construct Improvements not inconsistent with the Authorized Plans
together with such changes thereto as may be requested or required to comply
with Legal Requirements.
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(c) FAILURE TO DISAPPROVE. The failure by Landlord to disapprove
any portion of the proposed Approval Plans submitted pursuant to this Section
11.1, or send Notice that it has grounds to believe the proposed Approval Plans
violate a material Legal Requirement within the specified approval period shall
be deemed to constitute approval thereof as submitted, and such Approval Plans
shall thereupon become Authorized Plans. Any disapproval by Landlord of any
portion of the proposed Approval Plans shall be in writing and shall specify
with particularity the basis for the disapproval.
(d) OTHER IMPROVEMENTS AND ALTERATIONS. At any time and from time
to time, and without the necessity for obtaining Landlord's approval or giving
Notice thereof to Landlord, Tenant shall have the right, at its expense, to make
any Improvements, alterations, additions, repairs, replacements or decorations
in, to or of the Premises which do not materially change the exterior design
scope of the Improvements as previously approved by Landlord pursuant to any
Authorized Plans. In constructing any Improvements, Tenant shall do so in a
manner which does not violate any applicable and material Legal Requirements.
11.2 REQUIRED PERMITS, EASEMENTS, ETC. From time to time, upon request
of Tenant, Landlord (as holder of record of title to the Land) shall execute
such reasonable documents, petitions, applications and authorizations, easements
and rights of way (which have been prepared at Tenant's expense) and shall
appear at and participate in such public hearings, staff meetings and similar
gatherings, in each case as may in the reasonable and good-faith opinion of
Tenant be necessary or appropriate for the purpose of obtaining any Required
Permits or private easements or rights of way or utility services for the
Improvements or to remove any title encumbrances on the Land which may interfere
with Tenant's construction of the Improvements. Tenant shall immediately
reimburse Landlord on demand (or pay directly) for all reasonable out-of-pocket
costs and expenses incurred by Landlord in complying with Landlord's obligations
under this Section 11.2.
11.3 DEMOLITION AND RECONSTRUCTION. At any time and from time to time,
Tenant shall have the right to demolish or alter all or any portion of the then
existing Improvements and construct additional Improvements in their place. The
additional Improvements, if any, to be constructed shall be submitted to and
approved by Landlord only to the extent required by Section 11.1, as applicable.
11.4 TITLE TO AND NATURE OF IMPROVEMENTS. Any and all Improvements of
whatever nature at any time constructed, placed or maintained upon any part of
the Land shall be and remain the property of Tenant, subject to Tenant's right
to assign or sublease. The severance of fee title to the Land and Improvements
shall not change the character of the Improvements as real property.
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ARTICLE 12
LIENS
Except for claims that Tenant is contesting in good faith in such
manner as to avoid any exposure of the Premises or any part thereof to
foreclosure or execution sale, Tenant shall promptly pay and discharge all
claims for work or labor done, supplies furnished or services rendered to the
Premises, and shall keep the Premises free and clear of all mechanics' and
materialmen's liens in connection therewith.
ARTICLE 13
ASSIGNMENT BY LANDLORD
13.1 FURTHER MORTGAGES OR ENCUMBRANCES BY LANDLORD; AUTHORIZED LOANS.
(a) PROHIBITION. Except for the Tenant Deed of Trust and as
specifically permitted in Section 11.2, 13.1(b) or 20, Landlord shall not cause
or create any mortgages, deeds of trust, encumbrances or other exceptions to
title (collectively, "New Encumbrances") to exist with respect to the Premises
at any time, and any such encumbrance not authorized in writing by Tenant shall
be null and void. The term "New Encumbrances" shall also include any bonds or
assessments affecting the Premises to which Landlord consents in writing without
the prior written approval of Tenant (which may be withheld in Tenant's sole and
absolute discretion). Without the prior written consent of Tenant (which may be
withheld in Tenant's sole and absolute discretion), Landlord shall not make or
join in an application or other document which requests or authorizes any bonds
or assessments to affect the Premises. Landlord recognizes that any New
Encumbrance may irreparably harm Tenant in connection with one or more of the
following: (1) construction which Tenant may desire to perform; (2) the use of
the Premises; (3) Tenant's rights pursuant to the Purchase Option in Section 19;
(4) the amount of assessments which Tenant is required to pay; or (5) other
matters.
(b) AUTHORIZED LOAN. Tenant has approved the terms of the loan
("UBS Loan") to be made by UBS to SGA which shall be evidenced by that certain
Tranche B Promissory Note dated as of the Lease Commencement Date by SGA in
favor of UBS ("UBS Note"), and further evidenced and/or secured by (a) that
certain General Terms and Conditions of Credit Arrangement between SGA and UBS,
(b) that certain Additional Terms and Conditions between SGA and UBS, (c) that
certain Pledge Agreement, as amended by Rider No. 1 thereto, made by Tenant in
favor of UBS, and (d) certain documents (including, without limitation a
promissory note and related documents) evidencing a loan ("SGA Loan") from SGA
to Landlord in the principal amount of the UBS Note, all dated as of the Lease
Commencement Date; provided, however, that Tenant, Landlord and SGA reserve the
right to approve, in their sole discretion, the final form of all documents
related to the UBS Loan. In addition, upon
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the maturity or prepayment of the UBS Loan (whether by its terms, by
acceleration or otherwise), Landlord may (but, subject to the terms of Section
13.1(c), shall not be obligated to) enter into a new loan (such authorized loan
shall be the "New Loan"), provided Landlord first obtains Tenant's written
consent (which consent shall not be unreasonably withheld except with respect to
the matters contained in clauses (i) through (v) below so long as: (i) the UBS
Loan is paid off with the proceeds of such New Loan and all documents securing
or reflecting the UBS Loan are assigned to the lender who makes the New Loan or
are released and satisfied; (ii) the principal amount of the New Loan does not
exceed the principal amount of the UBS Loan existing at the time the UBS Loan is
repaid; (iii) the interest rate and payment provisions under the New Loan would
not result in higher monthly payments than the method under the UBS Loan, and
all such monthly payments shall be interest only; (iv) there are no prepayment
prohibitions, penalties or other restrictions which would limit rights to retire
the New Loan or require additional payment to do so; and (v) the New Loan
documents do not contain terms and conditions which differ from the UBS Loan
documents in any material respect, including provisions relating to the
Collateral as defined in Section 21.18. The UBS Loan, the New Loan authorized
pursuant to the preceding sentence and the Replacement Loan described in Section
13.1(c) below shall be the "Authorized Loan"; provided that only one Authorized
Loan may exist at any one point in time. Landlord may not modify the terms of an
Authorized Loan without the prior written consent of Tenant, which Tenant shall
not unreasonably withhold (but may be withheld in Tenant's sole and absolute
discretion based upon any of the matters identified in subitems (i) through (v)
above in this Section 13.1(b)).
(c) REPLACEMENT LOAN. Subject to Landlord's prior written consent
(which consent shall not be unreasonably withheld or delayed), at the request of
Tenant, Landlord shall execute and/or shall cause SGA to execute loan documents
evidencing and/or securing a new loan to Landlord or SGA, the proceeds of which
would be used to retire the UBS Loan (such loan requested by Tenant shall be a
"Replacement Loan"). Landlord shall only be entitled to refuse to consent to
such new loan if (1) the maturity date of the Replacement Loan is a date before
the expiration date of the Extension Term; (2) the principal amount of the
Replacement Loan exceeds the principal amount of the UBS Loan plus any accrued
interest and fees payable at the time the UBS Loan is prepaid; (3) the interest
rate structure under the Replacement Loan is materially higher than market
conditions would justify at the time; (4) there are prepayment prohibitions,
penalties or other restrictions which would limit rights to retire the
Replacement Loan or require additional payment to do so; (5) the Replacement
Loan creates greater liability for Landlord or SGA than otherwise would exist
for Landlord and SGA, or would result in the violation of any law, rule or
regulation applicable to Landlord or SGA, or (6) the Replacement Loan documents
contain terms and conditions which differ from the UBS Loan documents in any
material respect (including provisions relating to the Collateral as defined in
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Section 21.18); provided, however, that Landlord shall not be entitled to object
to a Replacement Loan on the ground that Landlord, rather than SGA, shall be the
borrower under such Replacement Loan. Tenant shall pay all reasonable costs,
including without limitation reasonable attorneys' fees, incurred by Landlord in
connection with obtaining such a Replacement Loan. If Tenant requests and
provides the funds, Landlord shall make all arrangements necessary for, and
shall pay down any Authorized Loan in the amount requested by Tenant, and shall
arrange for all documentation reasonably requested by Tenant to reflect the
reduction or elimination of such Authorized Loan.
(d) On the Lease Commencement Date, Landlord shall execute,
acknowledge, and cause to be recorded in the Official Records, a deed of trust
in form acceptable to Tenant ("Tenant Deed of Trust"), which Tenant Deed of
Trust shall secure Landlord's obligations under this Lease (i) to return the
Security Deposit pursuant to the terms of this Lease, (ii) to convey the
Premises to Tenant as required pursuant to Article 19 hereof, and (iii) to
comply with Sections 20.4, 20.5 and 20.6. The Tenant Deed of Trust shall be a
first priority lien against the Premises.
13.2 LANDLORD'S RIGHT TO SELL. Subject to Tenant's Purchase Option and
the mandatory purchase set forth in Article 19 and the terms of Section 13.1 and
Article 20, nothing contained in this Lease shall be deemed in any way to limit,
restrict or otherwise affect the right of Landlord at any time and from time to
time to sell or transfer all of its right, title and estate in the Premises to a
Landlord Affiliate or, if an Event of Major Default has occurred and is
continuing at the time of such sale or transfer, to any Entity, provided that
such buyer or transferee shall concurrently assume without incurring personal
liability except as expressly provided in this Lease, in writing, in a manner
consistent with this Lease and in compliance with all requirements of the UBS
Loan documents, all of Landlord's and/or SGA's obligations under the UBS Loan or
any other Authorized Loan and the Landlord's obligations under this Lease.
Notwithstanding anything to the contrary in this Lease, without the prior
written consent of Tenant (which may be withheld in Tenant's sole discretion),
in no event shall Landlord sell or transfer all or any portion of Landlord's
right, title or estate in the Premises to any Entity which does not then comply
with the requirements of Sections 20.4 and 20.5 if an Event of Major Default
does not then exist at the time of such sale or transfer. Any sale or transfer
by Landlord whatsoever shall by its express terms recognize and confirm the
right of possession of Tenant to the Premises and Tenant's other rights arising
out of this Lease shall not be affected or disturbed in any way by any such
sale, transfer, assignment or conveyance.
13.3 TRANSFER OF FUNDS AND PROPERTY. At each time Landlord sells,
assigns, transfers or conveys the entire right, title and estate of Landlord in
the Premises and in this Lease, Landlord shall turn over to the transferee the
Security Deposit and any other funds or other property then held by Landlord
under this
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Lease and thereupon all the liabilities and obligations on the part of the
Landlord under this Lease arising after the effective date of such sale,
assignment, transfer or conveyance shall terminate as to the transferor and be
binding upon the transferee.
ARTICLE 14
ASSIGNMENT AND SUBLEASING
14.1 RIGHT TO ASSIGN.
(a) TENANT'S RIGHT. Tenant shall have the right, at any time and
from time to time during the Term, to assign all or any portion of its right,
title and estate in the Premises and in this Lease without approval by Landlord.
Any such assignee, immediate or remote, shall have the same right of assignment.
Any such assignment shall be evidenced by a written instrument, properly
executed and acknowledged by all parties thereto and, at Tenant's election, duly
recorded in the Official Records, wherein and whereby the assignee assumes all
of the obligations of Tenant under this Lease. Notwithstanding any such
assignment and assumption or any sublease permitted under Section 14.2 hereof,
Tenant shall remain primarily liable for all obligations and liabilities on the
part of Tenant theretofore or thereafter arising under this Lease.
(b) NOTICE. Tenant shall, promptly after execution of each
assignment, notify Landlord of the name and mailing address of the assignee and
shall, on demand, permit Landlord to examine and copy the assignment agreement.
14.2 RIGHT TO SUBLET.
(a) TENANT'S RIGHT. Tenant shall have the right, at any time and
from time to time during the Term, to sublet all or any portion of the Premises
and to extend, modify or renew any sublease without the approval of Landlord.
(b) NOTICE. Tenant shall, promptly after execution of each
sublease, notify Landlord of the name and mailing address of the subtenant and
shall, on demand, permit Landlord to examine and copy the sublease.
(c) NON-DISTURBANCE AGREEMENT. Upon Tenant's request, Landlord
shall enter into a "landlord agreement" with any subtenant of Tenant. Such
agreement shall provide that Landlord shall recognize the sublease and not
disturb the subtenant's possession thereunder so long as such subtenant shall
not be in default under its sublease, and an Event of Major Default is not then
in existence and continuing under this Lease. Tenant shall immediately reimburse
Landlord on demand for all reasonable out-of- pocket costs and expenses incurred
by Landlord in complying with Landlord's obligations under this Section 14.2(c).
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14.3 TENANT'S RIGHT TO MORTGAGE.
(a) RIGHT OF TENANT. Tenant shall have the right from time to
time and at any time, without obtaining the approval of Landlord, to mortgage,
pledge or otherwise encumber all or any portion of the right, title and estate
of Tenant in the Premises or in this Lease.
(b) NOTICE. Tenant shall, promptly after execution of any
Mortgage, notify Landlord of the name and mailing address of the Mortgagee
thereunder and shall, on demand, permit Landlord to examine and copy the
Mortgage.
ARTICLE 15
EMINENT DOMAIN
15.1 TOTAL OR SUBSTANTIAL TAKING. If title or access is taken for any
public or quasi-public use, or under any statute or by right of condemnation or
eminent domain, or by sale in lieu thereof (a "Taking") with respect to all of
the Premises, or if title to so much of the Premises or access thereto is Taken,
or if the Premises or access thereto is damaged, blocked or impaired by the
Taking, so that, in Tenant's sole discretion, the Premises or access thereto,
even after a reasonable amount of reconstruction thereof, will no longer be
suitable for Tenant's (and/or Tenant's subtenants') continued occupancy for the
conduct of Tenant's (and/or Tenant's subtenants') business in a manner
consistent with the conduct of such business prior to such Taking, then in any
such event, this Lease shall terminate on the date of such Taking.
15.2 PARTIAL TAKING. If any part of the Premises, or access thereto,
shall be Taken, and the Premises or the remaining part thereof and access
thereto will be, in Tenant's sole discretion, suitable for Tenant's (and/or
Tenant's subtenants') continued occupancy for the conduct of Tenant's (and/or
Tenant's subtenants') business in a manner consistent with the conduct of such
business prior to such Taking, all of the terms, covenants and conditions of
this Lease shall continue, except that Base Rent shall be adjusted to reflect
the decreased Funded Amount remaining after application thereto of the award
made to Landlord for such Taking (subject to Section 15.3 below).
15.3 TEMPORARY TAKING. If the whole or any part of the Premises is
Taken for temporary use or occupancy, this Lease shall not terminate by reason
thereof and Tenant shall continue to pay, in the manner and at the times herein
specified, the full amount of the Base Rent payable by Tenant hereunder, and,
except only to the extent that Tenant may be prevented from so doing by reason
of such Taking, Tenant shall continue to perform and observe all of the other
terms, covenants and conditions hereof on the part of Tenant to be performed and
observed, as though the Taking had not occurred. In the event of any such
temporary Taking, Tenant shall be entitled to receive the entire amount of the
award made for the
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Taking, whether paid by way of damages, rent or otherwise. If the temporary
Taking is for a term in excess of thirty (30) days, then the Taking shall be
treated as a permanent Taking and be governed by Section 15.1 or 15.2, as
applicable.
15.4 DAMAGES. The compensation awarded or paid upon any Taking (other
than a temporary Taking, which shall be governed by Section 15.3), whether
awarded to Landlord, Tenant, or both of them, shall be distributed as set forth
below (in each case the compensation or value shall be determined as of the date
of the Taking):
(a) to Landlord, any amounts payable on account of the value of
the Land, but not to exceed an amount equal to the Funded Amount (or, if less
than the entire Premises is Taken, not to exceed a pro rata portion of the
Funded Amount equal to the ratio that the square footage of the portion of the
Premises Taken bears to the square footage of the entire Premises prior to the
Taking) plus all accrued Rent hereunder; and
(b) to Tenant, any other award, or portion thereof, including any
portion of the award above the Funded Amount (or the pro rata portion thereof)
pursuant to Section 15.4(a)).
Landlord shall promptly pay over to UBS or the holder of an Authorized
Loan, as the case may be, any award (not exceeding, however, the Senior Funded
Amount) paid to Landlord hereunder, and Tenant shall be entitled to establish
reasonable security arrangements to ensure the prompt payment of such amounts to
such holder. The Funded Amount shall be reduced on a dollar-for-dollar basis by
the amount of any award required to be paid by Landlord to such holder of an
Authorized Loan pursuant to the preceding sentence.
15.5 NOTICE AND EXECUTION. Immediately upon service of process upon
Landlord or Tenant in connection with any Taking relating to the Premises or any
portion thereof or access thereto, each party shall give the other Notice
thereof. Each party agrees to execute and deliver to the other all instruments
that may be required to effectuate the provisions of this Article 15. Tenant
reserves the right to appear in and to contest any proceedings in connection
with any such Taking. Tenant shall immediately reimburse Landlord on demand for
all reasonable out-of-pocket costs and expenses incurred by Landlord in
complying with Landlord's obligations under this Section 15.5.
ARTICLE 16
DAMAGE OR DESTRUCTION
16.1 INSURED CASUALTY. If any Improvements are damaged or destroyed by
fire or other casualty, this Lease shall continue in full force and effect
without any abatement or reduction in Base Rent, and Tenant, at Tenant's
election, may either (a) restore the
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Improvements to their condition prior to the damage or destruction, or such
other condition as Tenant shall elect in its sole and absolute discretion,
subject to Landlord's approval rights set forth in Section 11.1, or (b) not
restore the Improvements, but perform, or cause to be performed, at Tenant's
sole cost and expense, any work or service required by any Legal Requirement for
the protection of persons or property from any risk, or for the abatement of any
nuisance, created by or arising from the casualty or the damage or destruction
caused thereby.
16.2 INSURANCE PROCEEDS. In the event of any fire or other casualty,
the proceeds of any insurance policies maintained by Tenant shall be distributed
to Tenant, and Landlord shall have no claim or right with respect thereto.
ARTICLE 17
DEFAULT
17.1 DEFAULT. Each of the following events shall constitute a default
("Default") by Tenant:
(a) DEFAULT OTHER THAN EVENT OF MAJOR DEFAULT. Tenant's failure
to perform or comply with any of the terms, covenants or conditions contained in
this Lease other than those referred to in Section 17.2, where such failure
shall continue for a period of thirty (30) days after Notice thereof from
Landlord to Tenant, or in the case of a failure which cannot with due diligence
be cured within the period of thirty (30) days, Tenant's failure to proceed
promptly and with due diligence to cure the failure and thereafter to prosecute
the curing of the failure with all due diligence, it being intended that in
connection with a failure not susceptible of being cured with due diligence
within thirty (30) days, the time of Tenant within which to cure the failure
shall be extended for such period as may be reasonably necessary to complete the
cure with all due diligence; and
(b) INSOLVENCY. Subject to Section 17.3, the occurrence of: (i)
an assignment by Tenant for the benefit of creditors generally; or (ii) the
filing of a voluntary or involuntary petition by or against Tenant under any
present or future applicable federal, state or other statute or law having for
its purpose the adjudication of Tenant as a bankrupt; (iii) the appointment of a
receiver, liquidator or trustee for all or a substantial portion of the Premises
by reason of the insolvency or alleged insolvency of Tenant; or (iv) the taking
of possession by any department of city, county, state or federal government, or
any officer thereof duly authorized, of all or a substantial portion of the
Premises by reason of the insolvency or alleged insolvency of Tenant; and
Tenant's failure to timely give any Notice it is permitted to give pursuant to
Section 17.3 (or, in the event Tenant gives timely Notice and pursues a contest
under Section 17.3, Tenant's failure to finally prevail in the contest).
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17.2 EVENT OF MAJOR DEFAULT. Each of the following events shall
constitute an event of major default ("Event of Major Default") by Tenant:
(a) FAILURE TO PAY BASE RENT. Tenant's failure to pay any Base
Rent within five (5) days after Tenant's receipt of Notice thereof from Landlord
that the Base Rent is past due; or
(b) FAILURE TO PAY ADDITIONAL RENT. Tenant's failure to pay any
Additional Rent which is due to Landlord within ten (10) days after Tenant's
receipt of Notice thereof from Landlord that such Additional Rent is past due;
(c) FAILURE TO COMPLY WITH PURCHASE OBLIGATION UNDER SECTION
19.2. Tenant's failure to comply with Tenant's obligation to purchase the
Premises pursuant to Section 19.2 within twenty (20) days after Tenant's receipt
of Notice thereof from Landlord that Tenant has so failed, except in the case of
a purchase obligation arising on account of expiration of the Term of this
Lease, in which case no such Notice shall be required;
(d) FAILURE TO CARRY LIABILITY INSURANCE. Tenant's failure to
carry the liability insurance required by Section 7.1, if such failure continues
ten (10) days after Tenant's receipt of Notice thereof from Landlord that Tenant
is not carrying such required liability insurance.
17.3 CONTEST BY TENANT. If upon the filing of any involuntary petition
of the type described in Section 17.1(b) or upon the appointment of a receiver,
other than a receiver appointed in any voluntary proceeding referred to in
Section 17.1(b), or the taking of possession of all or a substantial portion of
the Premises by any department of the city, county, state or federal government,
or any officer thereof duly authorized, by reason of the alleged insolvency of
Tenant without the consent or over the objection of Tenant, should Tenant desire
to contest the same in good faith, Tenant shall, within ninety (90) days after
the filing of the petition or after the appointment or taking of possession,
give Notice to Landlord that Tenant proposes to make the contest, and the same
shall not constitute a Default so long as Tenant shall prosecute the proceedings
with due diligence and no part of the Premises shall be exposed to sale by
reason of the continuance of the contest.
17.4 REMEDIES. Landlord shall have the remedies specified below, the
parties hereby acknowledging that the remedies described in Section 17.4(b) may
be exercised by Landlord only upon the occurrence of an Event of Major Default.
Tenant shall at all times have the right to exercise and carry out the terms of
the Purchase Option in Section 19.1, notwithstanding the occurrence or existence
of any Default or Event of Major Default under this Lease, and Landlord shall
have the obligation to comply with Landlord's obligations under Section 19.1
notwithstanding any Default or Event of Major Default.
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(a) CONTINUE LEASE. In connection with a Default or an Event of
Major Default, Landlord shall have the right to enforce, by suit or otherwise,
all other covenants and conditions hereof to be performed or complied with by
Tenant and to exercise all other remedies permitted by Section 1951.4 of the
California Civil Code, or any amendments thereof or any successor laws which
replace such Section 1951.4. Landlord has the remedy described in California
Civil Code Section 1951.4 (Landlord may continue the Lease in effect after
Tenant's breach and abandonment and recover Base Rent as it becomes due, if
Tenant has right to sublet or assign, subject only to reasonable limitation).
Upon application by Landlord, a receiver may be appointed to take possession of
the Premises and exercise all rights granted to Landlord as set forth in this
Section 17.4(a); and
(b) TERMINATE LEASE. In connection with an Event of Major Default
(but not a Default), Landlord shall have the right to terminate this Lease, by
giving Tenant Notice thereof, at any time after the occurrence of such Event of
Major Default and whether or not Landlord has also exercised any right under
Section 17.4(a). In such event, Tenant shall, within twenty (20) days after
receipt of Notice from Landlord, purchase the Premises pursuant to Section 19.2.
17.5 NO WAIVER. No failure by Landlord or Tenant to insist upon the
strict performance of any term, covenant or condition of this Lease or to
exercise any right or remedy consequent upon a breach thereof and no acceptance
of full or partial Rent during the continuance of any breach shall constitute a
waiver of any such breach or of the term, covenant, or condition. No term,
covenant or condition of this Lease to be performed or complied with by Tenant
or Landlord, and no breach thereof, shall be waived, terminated, altered or
modified except by a written instrument executed by Landlord and Tenant. No
waiver of any breach shall affect or alter this Lease, but each and every term,
covenant, and condition of this Lease shall continue in full force and effect
with respect to any other then existing subsequent breach thereof.
17.6 EFFECT OF ASSIGNMENT. Notwithstanding an Entity's prior
assignment or transfer of its interest as Tenant under this Lease, so long as
Landlord has been given Notice of such assignment pursuant to Sections 14.1(b)
and 21.3, Landlord shall give such Entity copies of all Notices required by this
Article 17 in connection with any Default, and such Entity shall have the period
granted hereunder to Tenant to cure such Default, unless such Entity shall have
been released from all obligations arising under this Lease. Landlord may not
assert any rights against such Entity in the absence of such Notice and
opportunity to cure, so long as Landlord has been given Notice of such
assignment pursuant to Sections 14.1(b) and 21.3.
17.7 LANDLORD CURE RIGHT. If Tenant fails to perform any covenant or
agreement to be performed by Tenant under this
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Lease, and if the failure or default continues for thirty (30) days after Notice
to Tenant and to any Mortgagee who has requested in writing notice thereof from
Landlord (except for emergencies and except for payment of any lien or
encumbrance threatening the imminent sale of the Premises or any portion
thereof, in which case payment or cure may be made as soon as necessary to
minimize the damage to person or property caused by such emergency or to prevent
any such sale), Landlord may, but shall have no obligation to, pay the same and
cure such default on behalf of and at the expense of Tenant and do all
reasonably necessary work and make all reasonably necessary payments in
connection therewith including, but not limited to, the payment of reasonable
attorneys' fees and disbursements incurred by Landlord. Notwithstanding the
foregoing, Landlord shall have no right to cure any such failure to perform by
Tenant so long as Tenant both: (1) is diligently and in good faith attempting to
cure such matter; and (2) has the financial ability to so comply.
Notwithstanding anything to the contrary in this Lease, in no event shall
Landlord have a right to cure any matters relating to the Improvements unless
such matter constitutes a crime by Landlord and subjects Landlord to criminal
penalties (except as specifically permitted in Section 8.1(b)). Upon demand,
Tenant shall reimburse Landlord for the reasonable amount so paid, together with
interest at the Lease Rate from the date incurred until the date repaid. Tenant
shall defend, indemnify, and hold Landlord harmless from and against any and all
losses, costs, expenses, liabilities, claims, causes of action and damages of
all kinds that may result to Landlord, including reasonable attorneys' fees and
disbursements incurred by Landlord, arising because of any failure by Tenant to
perform any of its obligations under this Lease. Tenant's duty to indemnify
Landlord under this Section 17.7 shall survive the expiration or earlier
termination of this Lease.
17.8 LANDLORD'S DEFAULT.
(a) GENERAL. If Landlord fails to perform any covenant or
agreement to be performed by Landlord under Article 11, Section 13.1, Section
15.4, Article 20, or Section 21.10 of this Lease (including, but not limited to,
Landlord's failure to keep the Premises free of any and all liens created by or
through Landlord except as approved by Tenant in writing), and if the failure or
default continues for thirty (30) days after Notice to Landlord and to any Fee
Mortgagee who has requested in writing notice thereof from Tenant (except for
(i) emergencies, or (ii) payment of any lien or encumbrance threatening the
imminent sale of the Premises or any portion thereof, in which case payment or
cure may be made as soon as necessary to minimize the damage to person or
property caused by such emergency or to prevent any such sale), Tenant may, but
shall have no obligation to, pay the same and cure such default on behalf of
and, so long as such failure to perform arises due to Landlord's gross
negligence, willful misconduct, or willful breach of this Lease, at the expense
of Landlord and do all reasonably necessary work and make all reasonably
necessary payments in connection therewith including, but not limited to, the
payment of reasonable attorneys' fees and
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disbursements incurred by Tenant. Notwithstanding the foregoing, Tenant shall
have no right to cure any such failure to perform by Landlord so long as
Landlord both: (1) is diligently and in good faith attempting to cure such
matter; and (2) has the financial ability to so comply. To the extent that
Landlord's failure to perform arises due to its gross negligence, willful
misconduct or willful breach of this Lease, upon demand, Landlord shall
reimburse Tenant for the reasonable amount so paid, together with interest at
the Lease Rate from the date incurred until the date repaid. To the extent that
Landlord's failure to perform arises due to its gross negligence, willful
misconduct or willful breach of this Lease, Landlord shall defend, protect,
indemnify, and hold Tenant harmless from and against any and all losses, costs,
expenses, liabilities, claims, causes of action and damages of all kinds that
may result to Tenant, including reasonable attorneys' fees and disbursements
incurred by Tenant, arising because of any failure by Landlord to perform any of
its obligations under Article 11, Section 13.1, Section 15.4, Article 20 or
Section 21.10 of this Lease. Landlord's duty to indemnify Tenant under this
Section 17.8 shall survive the expiration or earlier termination of this Lease.
(b) DEFAULT UNDER CERTAIN PROVISIONS. Notwithstanding anything to
the contrary in Section (a) above, in the event of a default by Landlord under
Section 20.6, Tenant shall have the right to cure such default on behalf of and
at Landlord's expense, without prior notice to Landlord. In addition, in the
event of any default by Landlord under Section 20.4, 20.5 or 20.6, Tenant shall
have the right to exercise its Purchase Option pursuant to Section 19.1 hereof,
and to offset against the Purchase Price the amount of all losses and reasonable
costs and expenses (including without limitation reasonable attorneys' fees)
incurred by Tenant arising from such default by Landlord, including without
limitation all losses arising by reason of Tenant's inability to treat the
transactions contemplated by this Lease as an operating lease for financial
accounting and securities regulatory purposes, and all costs and expenses
incurred in connection with negotiating and entering into a new lease upon
exercise of the Purchase Option.
ARTICLE 18
QUIET ENJOYMENT
18.1 QUIET ENJOYMENT. Landlord covenants to secure to Tenant the quiet
possession of the Premises for the full Term against all persons claiming the
same, subject to Landlord's rights and remedies under Section 17 upon a Default
or an Event of Major Default by Tenant. The existence of any Permitted
Exceptions shall not be deemed to constitute a breach of Landlord's obligations
hereunder. Tenant shall, immediately upon demand, reimburse Landlord for all
reasonable costs, expenses and damages incurred or paid by Landlord in the
performance of Landlord's obligations under this Article 18 (except for any
costs, expenses or damages arising from Landlord's willful breach of this
Lease).
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ARTICLE 19
TENANT'S OPTION TO PURCHASE
19.1 OPTION TO PURCHASE PREMISES.
(a) PURCHASE OPTION. Tenant shall have the option ("Purchase
Option") to purchase all or part of the Premises at any time during the Term;
provided that Tenant shall be entitled to purchase less than all of the Premises
only if the portion being purchased is released from any existing Fee Mortgage
and if the portion of the Premises not purchased shall constitute one or more
legal lots after closing of the purchase and shall be reasonably viable as a
separate property. The purchase price ("Purchase Price") for the portion of the
Premises which Tenant elects to purchase shall be (i) the then-existing Funded
Amount applicable to the portion of the Premises which Tenant elects to purchase
(determined in a pro rata basis on the basis of the area being purchased), as
the same may be reduced from time to time, plus (ii) the amount of any
prepayment premium and all other fees, costs, and expenses due to any holder of
an Authorized Loan in connection with such loan (to the extent not already paid
pursuant to Section 21.21 hereof), less (iii) the amount of the Security Deposit
(or, in the event of a purchase of a portion of the Premises, a pro rata portion
of the Security Deposit). Tenant shall be entitled to a credit against the
Purchase Price equal to the principal balance(s) of any Authorized Loan and/or
Fee Mortgage existing immediately prior to the closing under this Purchase
Option if such Authorized Loan and/or Fee Mortgage are not fully repaid and all
documents reflecting the same are not cancelled and removed from the public
records on or prior to the closing under this Purchase Option. If Tenant
purchases less than all of the then-existing Premises, then the credit pursuant
to the preceding sentence shall be calculated on a pro rata basis, based upon
the ratio of the area of the Premises being purchased compared to the area of
the then-existing Premises. In lieu of payment of the Purchase Price, Tenant
shall have the right (1) to assume the UBS Loan or any other Authorized Loan or
(2) to cause Landlord to assign the Authorized Loan to a third party acceptable
to the holder of such Authorized Loan (which third party shall expressly assume
such obligations in writing), provided that Landlord is released from all
obligations under the Authorized Loan. Landlord shall execute any and all
documents necessary to effect such assumption and assignment upon Tenant's
request, provided that Tenant shall reimburse Landlord for all reasonable costs
and expenses related thereto. Notwithstanding anything to the contrary herein,
the Purchase Price shall not include any interest, fees, late charges or any
other costs or expenses incurred or charged to Landlord or Tenant by reason of a
default by Landlord under Section 20.6 hereof.
(b) PURCHASE OPTION EXERCISE NOTICE. If Tenant desires to
exercise the Purchase Option, Tenant shall deliver to Landlord a written notice
("Purchase Option Exercise Notice") of Tenant's election; provided, however,
that in the event of an
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assignment by Landlord for the benefit of creditors generally, the filing of a
voluntary or involuntary bankruptcy petition by or against Landlord or the
appointment of a receiver, liquidator or trustee for all or a substantial
portion of the Premises by reason of Landlord's insolvency or alleged
insolvency, the Purchase Option shall be deemed exercised with respect to the
entire Premises as of the calendar day immediately preceding such assignment,
filing or appointment.
(c) TRANSFER. If Tenant exercises the Purchase Option, the
purchase and sale of the Premises being purchased shall be consummated as
follows. In the event of a purchase of a portion of the Premises, the term
"Premises" as used in this Section 19.1(c) shall be deemed to mean that portion
of the Premises then to be purchased pursuant to the Purchase Option.
(i) Landlord shall grant and convey the Premises to Tenant,
its authorized agent or assignee, pursuant to a duly executed and acknowledged
grant deed ("Grant Deed"), free and clear of all title defects, liens,
encumbrances, deeds of trust, mortgages, rights-of-way and restrictive covenants
or conditions, except for the Permitted Exceptions. Landlord shall assign and
Tenant shall assume all rights, duties and obligations under the Legal
Requirements affecting the Premises, effective as of the date of recordation of
the Grant Deed;
(ii) The Purchase Price shall be paid upon delivery of the
Grant Deed and any other documents reasonably requested by Tenant to evidence
the transfer of the Premises or to release all liens of Landlord, including,
without limitation, any and all reconveyances of mortgages or other recorded
documents as requested by Tenant ("Additional Documents"). In the event that
Tenant elects to assign the Purchase Option pursuant to Section 19.1(d) below,
and Tenant's assignee pays an amount less than the Purchase Price for the
Premises, Tenant shall pay to Landlord any excess of the Purchase Price over the
amount paid by such assignee. Landlord shall deliver the Grant Deed and the
Additional Documents to Tenant on the date for closing specified by Tenant in
the Purchase Option Exercise Notice (which date shall be no sooner than ten (10)
days after the date of the Purchase Option Exercise Notice and no later than the
last day of the Term, as the same may be extended). The closing shall take place
at the location and in the manner reasonably set forth by Tenant in the Purchase
Option Exercise Notice;
(iii) If Landlord shall fail to cause title to be in the
condition required in Section 19.1(c)(i) above within the time herein prescribed
for the delivery of the Grant Deed, then Tenant shall have the right, in
addition to all other rights provided by law, by a written notice to Landlord:
(1) to extend the time in which Landlord shall clear title and deliver the Grant
Deed and Additional Documents, during which extension this Lease shall remain in
full force and effect, except Tenant shall be released from its obligation to
pay Base Rent during the extension; (2) to
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accept delivery of the Grant Deed and Additional Documents subject to such title
defects, liens, encumbrances, deeds of trust, mortgages, rights-of-way and
restrictive covenants or conditions specified and set forth in the Grant Deed
and not cleared by Landlord (but without waiving any rights or remedies
available to Tenant on account of such title exceptions); (3) to rescind, by
notice to Landlord and without any penalty or liability therefor, any and all
obligations Tenant may have under and by virtue of the Purchase Option or the
exercise thereof, whereupon this Lease shall remain in full force and effect;
(4) if the title exception is curable by the payment of money, Tenant may make
such payment and such payment shall be a credit against the Purchase Price in
favor of Tenant.
(iv) Refusal of a title company to issue a standard form of
owner's title insurance policy insuring title to the Premises in the condition
specified in subparagraph (c)(i) shall be sufficient evidence of Landlord's
failure to convey clear title and shall entitle Tenant to exercise any of the
rights specified in subparagraph (c)(iii).
(v) Base Rent shall be prorated and paid and all unpaid
Additional Rent shall be paid as of the date title to the Premises is vested of
record in Tenant. Tenant shall pay the escrow fees; the recorder's fee for
recording the Grant Deed; the premium for the title insurance policy; all
documentary transfer taxes; Tenant's attorneys' fees; Landlord's reasonable
attorneys' fees; all other costs and expenses incurred by Tenant in consummating
the transfer of the Premises; and all reasonable expenses (except as specified
in the next sentence) incurred by Landlord in consummating the transfer of the
Premises pursuant to this Section 19.1. Landlord shall pay the costs and
expenses of clearing title as required by Section 19.1(c)(i). In the event of a
purchase by Tenant under this Article 19, Landlord shall have no obligation to
return the Security Deposit to Tenant to the extent the Security Deposit has
been credited against the purchase price to be paid by Tenant pursuant to
Section 19.1(a).
(d) ASSIGNMENT. Tenant shall have the right on one or more
occasions, without Landlord's consent, to assign this purchase option, in whole
or in part, to any Entity at any time, whether or not Tenant also assigns its
interest in the Lease. Tenant shall give prior written notice to Landlord of any
such assignment.
19.2 MANDATORY PURCHASE/SALE OF PREMISES. Notwithstanding anything to
the contrary herein, upon either: (1) expiration of the Term of this Lease or
upon the occurrence of any other event terminating this Lease; or (2) the
occurrence of any event which causes the Funded Amount to be reduced to zero
(0), within thirty (30) days after Tenant's receipt of written notice of the
foregoing and of Tenant's purchase obligation under this Section 19.2, Tenant
shall purchase or cause another Entity to purchase, and Landlord shall sell, the
Premises in the same manner
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as if Tenant had exercised the Purchase Option on such date. The Purchase Price
shall be the same as if Tenant had exercised the Purchase Option, without regard
to the physical state or condition of the Premises or any Improvements (but
Tenant shall have the rights set forth in Section 19.1, including without
limitation, the terms of Sections 19.1(c)(iii) and (iv)). In the event Tenant
fails to purchase (or cause another Entity to purchase) the Premises pursuant to
its obligation under this Section 19.2, Landlord (to the extent required under
Section 21.19) shall sell the Premises to an unrelated third party and, as
applicable, (i) Tenant shall be obligated to pay to Landlord, immediately upon
demand, any excess of the Purchase Price over the amount realized by Landlord in
connection with such sale, or (ii) Landlord shall be obligated to pay to Tenant,
immediately upon demand, any excess of the amount realized by Landlord in
connection with such sale over the Purchase Price. For purposes of the preceding
sentence, the amount realized by Landlord upon a sale of the Premises shall be
net of Landlord's reasonable sale expenses and other expenses incurred by
Landlord but required to be paid by Tenant pursuant to Section 19.1(c)(v).
Landlord's obligation to pay such excess to Tenant shall survive any termination
of this Lease. Notwithstanding anything set forth elsewhere herein, if Tenant
fails to timely comply with Tenant's obligation to purchase the Premises
pursuant to this Section 19.2, upon ten (10) days' prior written Notice, then so
long as title is in the condition required by Section 19.1(c)(i), Landlord may
transfer title to the Premises to Tenant by way of the Grant Deed described in
Section 19.1(c)(i), and Tenant shall accept such Grant Deed and promptly and
properly file the same of record. Notwithstanding anything to the contrary in
this Lease, in the event of default, breach or violation by Tenant of any of
Tenant's obligations under this Section 19.2, Tenant shall have no liability to
Landlord or any other party in excess of an amount equal to the then-existing
Guaranteed Residual Value, less a credit equal to the sum of (a) any of the
Collateral which UBS or any other holder of an Authorized Loan has used,
applied, or otherwise come into possession of, plus (b) any of the Security
Deposit retained by Landlord, and Landlord shall have no recourse, claim or
counterclaim whatsoever against Tenant in excess of such amount on account of
such default, breach or violation. If the Guaranteed Residual Value has not
previously been determined as of the date Tenant's liability under this Section
19.2 has been established, then the Guaranteed Residual Value shall be
determined as of the date Tenant's liability hereunder is established.
19.3 SURVIVAL. The obligations of Landlord and Tenant under this
Article 19 shall survive the expiration or earlier termination of this Lease.
ARTICLE 20
ADDITIONAL COVENANTS OF LANDLORD
20.1 TITLE. In the event Tenant so requests in writing (and so long as
either Tenant agrees to indemnify Landlord from any liabilities or obligations
in connection therewith, or Landlord
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does not incur any liabilities or obligations in connection therewith), Landlord
shall execute all documents, instruments and agreements reasonably requested by
Tenant in order to accomplish any of the following in the manner reasonably
requested by Tenant and within the time parameters reasonably requested by
Tenant: (1) remove exceptions to title to or affecting the Premises; (2) create
exceptions to title (including, without limitation, easements and rights of way)
to or affecting the Premises (but not including any Mortgage); (3) modify any
then-existing exception to title or (4) subdivide the Premises into two or more
separate parcels. Tenant shall promptly reimburse Landlord for, or at Landlord's
request, pay directly in advance, all reasonable costs, expenses and other
amounts incurred or required to be expended by Landlord in order to comply with
Tenant's requests made in accordance with the preceding sentence, and the
failure of Tenant to reimburse or pay any such amounts shall result in the
suspension of Landlord's obligations under such sentence with respect to that
particular request until the amounts required to be paid by Tenant under this
sentence have been paid. Landlord acknowledges that it is critical to Tenant's
ability to construct improvements on the Premises to have the ability and
flexibility to accomplish the foregoing, and that the parties therefore agree
that Landlord shall not be entitled to withhold Landlord's consent to any of the
foregoing requests by Tenant, except as set forth in the preceding sentence.
20.2 LAND USE. Except where requested by Tenant pursuant to this
Section 20.2, Landlord shall not cause or give its written consent to any land
use or zoning change affecting the Premises or any changes of street grade. In
the event Tenant so requests in writing (and so long as either Tenant agrees to
indemnify Landlord from any liabilities or obligations in connection therewith,
or Landlord does not incur any liabilities or obligations in connection
therewith), Landlord shall execute all documents, instruments and agreements
reasonably requested by Tenant in order to accomplish any of the following in
the manner reasonably requested by Tenant and within the time parameters
reasonably requested by Tenant: (1) cause a change in any land use restriction
or law affecting the Premises; (2) cause a change in the zoning affecting the
Premises; or (3) cause a change in the street grade with respect to any street
in the vicinity of the Premises. Tenant shall promptly reimburse Landlord for,
or at Landlord's request, pay directly in advance, all reasonable costs,
expenses and other amounts incurred or required to be expended by Landlord in
order to comply with Tenant's requests made in accordance with the preceding
sentence, and the failure of Tenant to reimburse or pay any such amounts shall
result in the suspension of Landlord's obligations under such sentence with
respect to that particular request until the amounts required to be paid by
Tenant under this sentence have been paid. Landlord acknowledges that it is
critical to Tenant's ability to construct improvements on the Premises to have
the ability and flexibility to accomplish the foregoing, and that the parties
therefore agree that Landlord shall not be entitled to withhold Landlord's
request to any of the foregoing requests by Tenant.
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20.3 TRANSFER OF PROPERTY INTERESTS. Except as requested by Tenant
pursuant to Section 11.2 or 20.1, Landlord shall not transfer to any third party
any rights inuring to or benefits associated with the Premises (including,
without limitation, zoning rights, development rights, air space rights,
mineral, oil, gas or water rights). Nothing in this Section 20.3 shall limit
Landlord's rights pursuant to Section 13.2; provided that any purchaser of
Landlord's interest in the Premises shall be bound by the terms of this Lease,
including without limitation, the terms of this Section 20.3.
20.4 SHAREHOLDER EQUITY; NO OTHER ASSET. Landlord covenants and agrees
that during the Term of the Lease, Landlord shall maintain a shareholder equity
balance of not less than three percent (3%) of its total assets, including
without limitation, the Property. In addition, Landlord shall not, without the
prior written consent of Tenant, which consent may be withheld at Tenant's sole
discretion, acquire any significant assets other than (i) the Premises, (ii) any
Improvements to be built on the Premises, and (iii) the land and any
Improvements thereon, which is subject to those certain Ground Leases between
Landlord and Tenant, which land is described on Exhibit F attached hereto.
20.5 RECOURSE OBLIGATIONS. Landlord agrees that during the Term of
this Lease, Landlord will not incur any indebtedness for borrowed money or any
other material obligations to which the holder or obligee thereof has recourse
against Landlord to satisfy the same without Tenant's prior written consent,
which consent Tenant may withhold in its sole discretion.
20.6 DEFAULT UNDER AUTHORIZED LOAN. Landlord shall not, without
Tenant's express prior written consent, default under any Authorized Loan, or
any loan documents relating to such Authorized Loan, where such default is not
caused, directly or indirectly by a breach of any of Tenant's obligations under
this Lease, under the Pledge Agreement securing the UBS Loan or under any
documents relating to any Authorized Loan.
ARTICLE 21
MISCELLANEOUS
21.1 RELATIONSHIP. Neither this Lease nor any agreements or
transactions contemplated hereby shall in any respect be interpreted, deemed or
construed as constituting Landlord and Tenant as partners or joint venturers,
one with the other, or as creating any lender/borrower, partnership, joint
venture, association or, except as set forth in Section 21.2 below, any other
relationship other than that of landlord and tenant; and, except as set forth in
Section 21.2 below, both Landlord and Tenant agree not to make any contrary
assertion, contention, claim or counterclaim in any action, suit or other legal
proceeding involving either Landlord or Tenant or the subject matter of this
Lease.
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21.2 FORM OF TRANSACTION; CERTAIN TAX MATTERS.
(a) Landlord and Tenant hereby agree and declare that the
transactions contemplated by this Lease are intended to constitute, both as to
matters of form and substance:
(i) an operating lease for financial accounting and
securities regulatory purposes, and
(ii) a financing arrangement (and not a "true lease") for
Federal, state and local income tax purposes.
Accordingly, and notwithstanding any other provision of this Lease to the
contrary, Landlord and Tenant agree and declare that (A) the transactions
contemplated hereby are intended to have a dual, rather than single, form and
(B) all references in this Lease to the "Lease" of the Premises which fail to
reference such dual form do so as a matter of convenience only and do not
reflect the intent of Landlord and Tenant as to the true form of such
arrangements.
(b) Landlord and Tenant agree that, in accordance with their
intentions and the substance of the transactions contemplated hereby, Tenant
(and not Landlord) shall be treated as the owner of the Premises for Federal,
state, and local income tax purposes and this Lease shall be treated as a
financing arrangement. Tenant shall be entitled to take any deduction, credit
allowance or other reporting, filing or other tax position consistent with such
characterizations. Landlord and Tenant shall not file any Federal, state or
local income tax returns, reports or other statements, or take any other
actions, in a manner which is inconsistent with the foregoing provisions of this
Section 21.2.
(c) Each party acknowledges that it has retained accounting, tax
and legal advisors to assist it in structuring this Lease and neither party is
relying on any representations of the other regarding the proper treatment of
this transaction for accounting, income tax or any other purpose. Nothing in
this Section 21.2(c) shall increase or diminish any liability or obligation of
the parties that otherwise exists pursuant to this Lease.
21.3 NOTICES. Each Notice shall be in writing and shall be sent by
personal delivery, overnight courier (charges prepaid or billed to the sender)
or by the deposit of such with the United States Postal Service, or any official
successor thereto, designated as registered or certified mail, return receipt
requested, bearing adequate postage and in each case addressed as provided in
the Basic Lease Provisions. Each Notice shall be effective upon being personally
delivered or actually received. The time period in which a response to any such
Notice must be given or any action taken with respect thereto shall commence to
run from the date of personal delivery or receipt of the Notice by the addressee
thereof, as reflected on the return receipt of the Notice. Rejection or other
refusal to accept shall be deemed to be
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receipt of the Notice sent. By giving to the other party at least thirty (30)
days' prior Notice thereof, either party to this Lease (as well as any
Mortgagee) shall have the right from time to time during the Term of this Lease
to change the address(es) thereof and to specify as the address(es) thereof any
other address(es) within the continental United States of America.
21.4 SEVERABILITY OF PROVISIONS. If any term, covenant or condition of
this Lease, or the application thereof to any Entity or circumstance, shall be
invalid or unenforceable, the remainder of this Lease, or the application of
such term, covenant or condition to Entities or circumstances other than those
as to which it is invalid or unenforceable, shall not be affected thereby.
21.5 ENTIRE AGREEMENT; AMENDMENT. This Lease and other documents
expressly referred to herein constitute the entire agreement of Landlord and
Tenant with respect to the subject matter hereof. Neither this Lease nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
21.6 APPROVALS AND CONSENTS. Except as expressly provided in this
Lease, whenever any provision of this Lease requires an approval or consent to
be given by one of the parties hereto, the approval or consent shall not be
unreasonably withheld or delayed. Whenever this Lease grants either party the
right to take action, exercise discretion, establish rules and regulations, or
make an allocation or other determination, except as otherwise provided, such
party shall act reasonably and in good faith and take no action which might
result in the frustration of the other party's reasonable expectations
concerning the benefits to be enjoyed under this Lease. If either party
withholds its consent or approval, unless by the express terms of this Lease
such consent or approval may be withheld in such party's sole discretion, such
party shall, upon request, promptly deliver to the other party a written
statement specifying in detail the reason or reasons why such consent or
approval was withheld or refused. If neither approval nor rejection is given by
Landlord within the time specified in Article 11 as to any particular approval
requested by Tenant under Article 11 (or, if no such time is specified, then
within thirty (30) days after request for approval is given by a Notice), then
the approval thus specifically requested in writing by Tenant shall be
conclusively and irrevocably deemed to have been given by Landlord.
21.7 TERMINOLOGY. All personal pronouns used in this Lease shall
include all other genders. The singular shall include the plural and the plural
shall include the singular. Titles of Articles, Sections and Subsections in this
Lease are for convenience only and neither limit nor amplify the provisions of
this Lease, and all references in this Lease to Articles, Sections or
Subsections shall refer to the corresponding Article, Section or
42.
<PAGE> 48
Subsection of this Lease unless specific reference is made to the articles,
sections or other subdivisions of another document or instrument. The word
"days" as used herein shall mean calendar days unless otherwise expressly
stated.
21.8 MEMORANDUM OF LEASE. Neither party shall record this Lease.
However, concurrently with the execution of this Lease, Landlord and Tenant have
executed a Memorandum of Lease in the form attached hereto as Exhibit C and by
this reference made a part hereof, which Memorandum of Lease shall be promptly
recorded in the Official Records.
21.9 SUCCESSORS AND ASSIGNS. Subject to Articles 13 and 14, this Lease
shall inure to the benefit of and be binding upon Landlord and Tenant and their
respective heirs, executors, legal representatives, successors and assigns.
Whenever in this Lease a reference to any Entity is made, such reference shall
be deemed to include a reference to the heirs, executors, legal representatives,
successors and assigns of such Entity.
21.10 COMMISSIONS. Landlord and Tenant each represent and warrant that
neither has dealt with any broker in connection with this transaction and that
no real estate broker, salesperson or finder has the right to claim a real
estate brokerage, salesperson's commission or finder's fee by reason of contact
between the parties brought about by such broker, salesperson or finder. Each
party shall hold and save the other harmless of and from any and all loss, cost,
damage, injury or expense arising out of or in any way related to claims for
real estate broker's or salesperson's commissions or fees based upon allegations
made by the claimant that it is entitled to such a fee from the indemnified
party arising out of contact with the indemnifying party or alleged
introductions of the indemnifying party to the indemnified party.
21.11 ATTORNEYS' FEES. In the event any action is brought by Landlord
or Tenant against the other to enforce or for the breach of any of the terms,
covenants or conditions contained in this Lease, the prevailing party shall be
entitled to recover reasonable attorneys' fees to be fixed by the court,
together with costs of suit therein incurred. Tenant shall pay the reasonable
attorneys' fees incurred by Landlord for the review and negotiation of this
Lease and the UBS Loan documents.
21.12 GOVERNING LAW. This Lease and the obligations of the parties
hereunder shall be governed by and interpreted, construed and enforced in
accordance with the laws of the State of California.
21.13 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall comprise but a single instrument.
43.
<PAGE> 49
21.14 TIME IS OF THE ESSENCE. Time is of the essence of this Lease,
and of each provision hereof.
21.15 NO THIRD PARTY BENEFICIARIES. This Lease is entered into by
Landlord and Tenant for the sole benefit of Landlord and Tenant. There are no
third party beneficiaries to this Lease.
21.16 NO RECOURSE. The obligations of Tenant and Landlord (including,
without limitation, the obligations of Landlord with respect to the Identified
Matters set forth below) under this Lease shall be without recourse to any
partner, officer, trustee, beneficiary, shareholder, director or employee of
Tenant or Landlord. There shall be no limitation on Landlord's liability with
respect to any willful misconduct, bad faith breach of this Lease, gross
negligence by Landlord, or any breach by Landlord of its obligations with
respect to Sections 20.4, 20.5 or 20.6 ("Identified Matters"). Except for
Identified Matters, Landlord's liability to Tenant for any default by Landlord
under this Lease is limited to Landlord's interest in the Premises, and Tenant
agrees to look solely to Landlord's interest therein for the recovery of any
judgment against Landlord, it being intended that neither Landlord nor any of
its shareholders, employees, agents, representatives, affiliates, officers or
directors shall be personally liable for any judgment or deficiency.
21.17 ESTOPPEL CERTIFICATES. Within thirty (30) days after request
therefor by either party, the non-requesting party shall deliver, in recordable
form, a certificate to any proposed mortgagee, purchaser, sublessee or assignee
and to the requesting party, certifying (if such be the case) that this Lease is
in full force and effect, the date of Tenant's most recent payment of Rent,
that, to the best of its knowledge, the non-requesting party has no defenses or
offsets outstanding, or stating those claimed, and any other information
reasonably requested. Failure to deliver said statement in time shall be
conclusive upon the non-requesting party that: (a) this Lease is in full force
and effect, without modification except as may be represented by the requesting
party; (b) there are no uncured defaults in the requesting party's performance
and the non-requesting party has no right of offset, counterclaim or deduction
against the non-requesting party's obligations hereunder; (c) no more than one
month's Base Rent has been paid in advance; and (d) any other matters reasonably
requested in such certificate.
21.18 COLLATERAL. The parties acknowledge that Tenant has pledged
certain collateral ("Collateral") to UBS to secure SGA's obligations under the
terms of the UBS Note. If the holder of an Authorized Loan applies any of the
Collateral to satisfy an obligation under any Authorized Loan documents, such
application shall be deemed to reduce the Senior Funded Amount under this Lease
on a dollar-for-dollar basis. Tenant shall have no claims, rights or causes of
action against Landlord arising from any application of the Collateral to
satisfy an obligation under the Authorized
44.
<PAGE> 50
Loan documents; provided, however, that nothing herein shall release Landlord
from any claims, rights or causes of action of Tenant for any breach of this
Lease by Landlord or any default by Landlord under any documents relating to an
Authorized Loan, which default does not arise, directly or indirectly from or as
a result of any default by Tenant of its obligations under the Lease.
21.19 LANDLORD'S CONTINUING OBLIGATION TO SELL. Notwithstanding
anything to the contrary herein, in the event Landlord obtains possession of the
Premises pursuant to the terms of this Lease (including, without limitation,
upon the expiration or earlier termination of this Lease where Tenant has
defaulted in its obligation to purchase the Premises pursuant to Section 19.2),
Landlord shall be under a continuing obligation to use its commercially
reasonable efforts to sell the Premises to Tenant or to one or more unrelated
third parties; provided, however, that Landlord shall not be required to sell or
attempt to sell any portion of the Premises (i) in a manner, or under
circumstances, that could materially impair Landlord's ability to enforce any of
its rights or remedies under this Lease (as determined in Landlord's sole
discretion exercised in good faith) or (ii) at a time when market conditions
render it inadvisable to sell or attempt to sell the Premises (as determined in
Landlord's sole discretion exercised in good faith).
21.20 AS-IS LEASE. Landlord makes no representations or warranties
concerning the condition, suitability or any other matters relating to the
Premises, and Tenant hereby acknowledges that Tenant leases the Premises from
Landlord on an "as is" basis.
21.21 NET LEASE. Except as otherwise provided in this Lease, Tenant
agrees that this Lease is an absolute net Lease, and the Base Rent called for
hereunder shall be paid as required net of all expenses associated with the
Premises, including without limitation, Real Estate Taxes and insurance premiums
for the insurance required to be carried hereunder, and all other reasonable and
customary costs and expenses incurred by Landlord in connection with the
Premises or this Lease, all of which shall be paid or reimbursed by Tenant
unless otherwise specifically provided herein. Tenant agrees to reimburse
Landlord, within ten (10) days following receipt of any written demand therefor,
for all fees, accrued but unpaid interest, late charges, prepayment penalties,
costs and expenses charged to Landlord or SGA by UBS (or other holder of an
Authorized Loan) pursuant to the terms and conditions of the UBS Note or other
Authorized Loan.
21.22 REPRESENTATIONS AND WARRANTIES. Tenant and Landlord each hereby
represents and warrants to the other that: (i) such party is duly organized and
existing under the laws of the jurisdiction in which it is formed, and is
qualified to do business in the State of California; (ii) such party has the
full right and authority to enter into this Lease, consummate the sale,
transfers and assignments contemplated herein and otherwise perform its
obligations under this Lease; (iii) the person or persons signatory
45.
<PAGE> 51
to this Lease and any document executed pursuant hereto on behalf of such party
have full power and authority to bind such party; and (iv) the execution and
delivery of this Lease and the performance of such party's obligations hereunder
do not and shall not result in the violation of its organizational documents or
any contract or agreement to which such party may be a party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
46.
<PAGE> 52
[SIGNATURE PAGE TO GROUND LEASE]
IN WITNESS WHEREOF, the parties hereto have duly executed this Lease
as of the day and year first above written.
"LANDLORD"
IRISH LEASING CORPORATION,
A Texas Corporation
By: /s/ KRISTIN MARKHAM
---------------------------
Name: KRISTIN MARKHAM
---------------------------
"TENANT"
CISCO SYSTEMS, INC.,
A California Corporation
By: /s/ JOHN T. CHAMBERS
---------------------------
Name: John T. Chambers
Its: President and Chief
Executive Officer
By: /s/ LARRY R. CARTER
---------------------------
Name: Larry R. Carter
Its: Chief Financial
Officer
<PAGE> 53
EXHIBIT A
DESCRIPTION OF LAND
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on July 13, 1983,
in Book 514 of Maps page(s) 47 and 48.
PARCEL TWO:
All of Lot 54, as shown upon that certain Map entitled, "Tract No. 7559", which
Map was filed for record in the Office of the Recorder of the County of Santa
Clara, State of California on December 21, 1983 in Book 522 of Maps, at pages 49
and 50.
APN: 97-53-14 and 23
EXHIBIT A
<PAGE> 54
EXHIBIT B
PERMITTED EXCEPTIONS
[To include all matters of record against
the Land on the date it is acquired by Landlord]
EXHIBIT B
1.
<PAGE> 55
EXHIBIT C
(MEMORANDUM OF LEASE)
RECORDING REQUESTED BY, AND
WHEN RECORDED, RETURN TO:
Brobeck, Phleger & Harrison
550 West C Street, Suite 1300
San Diego, California 92101
Attention: Todd J. Anson, Esq.
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE ("Memorandum of Lease") is executed as of
_________________, 1995, by and between IRISH LEASING CORPORATION, a Texas
corporation ("Landlord"), and CISCO SYSTEMS, INC., a California corporation
("Tenant").
RECITALS
WHEREAS, Landlord and Tenant have executed that certain lease
("Lease") dated as of _____________, 1995, covering certain premises and related
improvements ("Premises") located in the City of San Jose, Santa Clara County,
California and more particularly described in Schedule 1 attached hereto and
incorporated herein by this reference; and
WHEREAS, Landlord and Tenant desire to record notice of the Lease in
the real estate records of Santa Clara County, California;
NOW, THEREFORE, in consideration of the foregoing, Landlord and Tenant
hereby declare as follows:
1. DEMISE. Landlord hereby leases the Premises to Tenant and Tenant
hereby leases the Premises from Landlord, subject to the terms, covenants and
conditions contained in the Lease.
2. EXPIRATION DATE. The term of the Lease ("Term") shall commence on
______________, 1995 and shall expire five (5) years thereafter, subject to
Tenant's option to extend the Term pursuant to Section 4.2 of the Lease for one
(1) period of five (5) years.
3. OPTION TO PURCHASE. Tenant has an option to purchase the Premises,
as more particularly described in the Lease, during the Term, as it may be
extended.
EXHIBIT C
1.
<PAGE> 56
4. RESTRICTIONS ON ENCUMBRANCES. Landlord is prohibited from recording
against the Premises liens (including, without limitation, deeds of trust),
encumbrances, and other matters that would constitute exceptions to title, and
from amending or modifying any of the foregoing that may exist now or during the
Term, as more particularly described in the Lease, and any such encumbrance or
modification of an encumbrance not authorized in writing by Tenant shall be null
and void.
5. COUNTERPARTS. This Memorandum of Lease may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall comprise but a single instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT C
2.
<PAGE> 57
[SIGNATURE PAGE TO MEMORANDUM OF LEASE]
IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum
of Lease as of the date and year first written above.
"LANDLORD"
IRISH LEASING CORPORATION,
A TEXAS CORPORATION
By: ___________________________
Its: ___________________________
By: ___________________________
Its: ___________________________
STATE OF __________________ )
) ss
COUNTY OF _________________ )
On _____________, before me, ______________________, 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
[SEAL]
EXHIBIT C
3.
<PAGE> 58
[SIGNATURE PAGE TO MEMORANDUM OF LEASE]
"TENANT"
CISCO SYSTEMS,
A CALIFORNIA CORPORATION
By: ____________________________
Name: ______________________
Its: ______________________
Executive Officer
By: ____________________________
Name: ______________________
Its: ______________________
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _____________, before me, ______________________, 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
[SEAL]
EXHIBIT C
4.
<PAGE> 59
SCHEDULE 1 TO EXHIBIT C
The Premises are described as follows:
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on July 13, 1983,
in Book 514 of Maps page(s) 47 and 48.
PARCEL TWO:
All of Lot 54, as shown upon that certain Map entitled, "Tract No. 7559", which
Map was filed for record in the Office of the Recorder of the County of Santa
Clara, State of California on December 21, 1983 in Book 522 of Maps, at pages 49
and 50.
APN: 97-53-14 and 23
SCHEDULE 1 TO EXHIBIT C
<PAGE> 60
EXHIBIT D
CLOSING COSTS AND FEES TO BE INCLUDED IN FUNDED AMOUNT
The following items shall be included in the definition of the Funded
Amount under Section 2.16 of the Lease:
1. Title Insurance premiums
2. Arrangement Fee payable to Irish
3. Brokerage Commissions
4. Other fees and costs which are specifically authorized by
Tenant in writing to be included in the Funded Amount
EXHIBIT D
1.
<PAGE> 61
EXHIBIT E
LEASE COMMENCEMENT DATE MEMORANDUM
THIS LEASE COMMENCEMENT DATE MEMORANDUM ("Memorandum") is entered into
this ___ day of ____________, 1995, by and between IRISH LEASING CORPORATION, a
Texas corporation ("Landlord"), and CISCO SYSTEMS, INC., a California
corporation ("Tenant") concerning that certain Lease ("Lease") between Landlord
and Tenant dated February ___, 1995. Any capitalized terms not defined in this
Memorandum shall have their meaning as defined in the Lease.
1. Pursuant to Section 4.1 of the Lease, Landlord and Tenant are
required to enter into this Memorandum within thirty (30) days after the Lease
Commencement Date.
2. Landlord and Tenant agree the that Lease Commencement Date is
_______________, 1995.
3. Landlord and Tenant agree that the Rent Commencement Date is
_______________, 1995.
4. The dollar value of the Guaranteed Residual Value (defined in
Section 2.17 of the Lease) described in paragraph 2 above is _____% of
$_____________________________, (i.e. $_____________________________).
5. The Equity Funded Amount as of the Lease Commencement Date is
$__________________.
IN WITNESS WHEREOF, the parties have executed this Memorandum as of
the date and year first above written.
"LANDLORD"
IRISH LEASING CORPORATION,
a Texas corporation
By: ___________________________
Name:______________________
Its: ______________________
"TENANT"
CISCO SYSTEMS, INC.,
a California corporation
By: ___________________________
Name:______________________
Its: ______________________
EXHIBIT E
<PAGE> 62
EXHIBIT F
DESCRIPTION OF ADDITIONAL PROPERTY OWNED BY LANDLORD
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lots 58 and 59, as shown upon that certain map entitled, "Tract No. 7559", which
Map was filed for record in the office of the Recorder of the County of Santa
Clara, on December 21, 1983 in Book 522 of Maps, at pages 49 and 50.
APN: 97-53-18,22
PARCEL ONE:
Lot 50, as shown on that certain Map entitled, "Tract No. 7560," which Map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on December 21, 1983 in Book 522 of Maps, pages 51 and 52.
Reserving therefrom a perpetual right and easement to construct, install,
maintain, repair, renew, replace, operate and use a surface drainage release to
benefit Lot 49 of Tract 7560, as contained in that certain Grant of Easement
recorded August 8, 1990 in Book L443, page 0754, Official Records, and described
as follows:
The Northwesterly 10.00 feet of the Southeasterly 30.00 feet and the
Northwesterly 100.00 feet of the Southeasterly 130.00 feet of the Northeasterly
10.00 feet of Lot 50.
PARCEL TWO:
That portion of Lot 51, as shown on that certain Map entitled, "Tract No. 7560,"
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, State of California on December 21, 1983 in Book 522 of Maps, pages
51 and 52, being more particularly described as follows:
Beginning at the Southeasterly corner of said Lot 51; thence along the Southerly
line of said Lot 51, S. 59 degrees 27; 51 W. 77.00 feet; thence N. 14 degrees 27
minutes 48 seconds E. 108.90 feet to the Northeasterly line of said Lot 51;
thence along said Northeasterly line S. 30 degrees 32 minutes 09 seconds E.
77.00 feet to the point of beginning, as provided for in that certain Lot Line
Adjustment granted by the Director of Planning of the City of San Jose, a copy
of which was recorded March 28, 1984 in the office of the Recorder of the County
of Santa Clara in Book I410, page 712 of Official Records.
EXHIBIT F
<PAGE> 63
PARCEL THREE:
Lot 5 and 6, as shown on that certain Map of Tract No. 7408, which map was filed
for record in the office of the Recorder of the County of Santa Clara, State of
California on November 19, 1982 in Book 506 of Maps, pages 24, 25 and 26 and a
portion of that certain parcel of land described in the deed recorded December
22, 1972 in Book 0167, page 623, all as approved by that Lot Combination
recorded September 16, 1992 in Book M381 of Maps, page(s) 0081, Official
Records, more particularly described as follows:
Beginning at a point on the Northeasterly line of Rio Robles, as shown upon said
map, at the most Southerly corner of said Lot 5; thence along said Northeasterly
line of Rio Robles, N. 30 degrees 32 minutes 09 seconds W. 105.50 feet; thence
on a tangent curve to the right, having a radius of 367.00 feet, through a
central angle of 36 degrees 30 minutes 00 seconds an arc distance of 233.80
feet; thence on a curve to the right, tangent to the previous curve, having a
radius of 50.00 feet, through a central angle of 86 degrees 01 minutes 50
seconds an arc distance of 75.08 feet to the Southerly line of Tasman Drive as
shown upon said map; thence along said line on a curve to the left, tangent to
the previous curve, having a radius of 1149.00 feet, through a central angle of
32 degrees 31 minutes 01 seconds an arc distance of 652.09 feet; thence N. 59
degrees 28 minutes 40 seconds E. 600.40 feet; thence on a tangent curve to the
right, having a radius of 33.00 feet, through a central angle of 89 degrees 51
minutes 11 seconds an arc distance of 51.83 feet to the Southwesterly line of
First Street, as shown upon said map; thence along said line, S. 30 degrees 32
minutes 09 seconds E. 261.38 feet to the Northwesterly line of the lands of the
City and County of San Francisco, as shown upon said map; thence along said line
of the lands of the City and the County of San Francisco, S. 65 degrees 09
minutes 27 seconds W. 1396.95 feet to the point of beginning.
PARCEL FOUR:
Those rights as contained in that certain Grant Deed executed by Masami Ezaki
and Kaoru Ezaki, his wife in favor of the City and County of San Francisco, a
municipal corporation recorded December 8, 1950 in Book 2111, page 319, Official
Records.
PARCEL FIVE:
A strip of land 80 feet wide, lying 40 feet either side of the following
described line and extensions thereto, across that certain parcel of land
conveyed by Charles Nelson, et ux, to Masami Ezaki by Grant Deed dated February
27, 1936 and recorded March 11, 1936, in Volume No. 765, at page 262, Official
Records, Santa Clara County, hereinafter referred to as the Ezaki Parcel, said
line being more particularly described as commencing at a point in the Westerly
boundary of the existing San Jose-Alviso Road, said point being distant along
said boundary South 30 degrees 32 minutes 30 seconds East 381.31
EXHIBIT F
<PAGE> 64
feet from its intersection with the Northerly boundary of the above mentioned
Ezaki Parcel; thence, from said point of commencement, South 65 degrees 08
minutes 00 seconds West 1459.03 feet to a point in the common boundary between
the above mentioned Ezaki Parcel and that certain parcel of land conveyed by
Lena Lindgren, et al, to James A. Pankoski, et ux, by Joint Tenancy Deed dated
November 13, 1944 and recorded November 17, 1944 in Volume No. 1227 at Page 327,
Official Records, Santa Clara County, hereinafter referred to as the Pankoski
Parcel, said point being distant along said common boundary South 30 degrees 32
minutes 30 seconds East 237.04 feet from the most Westerly corner of the above
mentioned Ezaki Parcel; the Easterly end of said strip being the above mentioned
Westerly boundary of the San Jose-Alviso Road, and the Westerly end of said
strip being the above mentioned common boundary between the Pankoski and Ezaki
Parcels.
EXHIBIT F
<PAGE> 1
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ("First Amendment") is made and entered
into as of May 1, 1995, by and between IRISH LEASING CORPORATION, a Texas
corporation ("Landlord"), and CISCO SYSTEMS, INC., a California corporation
("Tenant").
THIS FIRST AMENDMENT IS ENTERED INTO upon the basis of the following
facts, understandings and intentions.
A. Landlord and Tenant entered into that certain Lease dated
February 28, 1995 ("Lease"), pursuant to which Landlord is leasing to Tenant
that certain land located in San Jose, California, as more particularly
described in the Lease and on Exhibit A attached hereto and incorporated herein
by this reference ("Premises"). Any capitalized terms used but not defined in
this First Amendment which are defined in the Lease shall have the meaning
ascribed in the Lease.
B. Landlord and Tenant now desire to amend the terms of the Lease,
as more particularly described in this First Amendment.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
1. Equity Funded Amount. Section 2.10 is hereby deleted, and is
replaced with the following:
2.10 Equity Funded Amount. "Equity Funded Amount" shall mean
that portion of the Funded Amount equal to the Funded Amount
minus the Senior Funded Amount and which shall be an amount
equal to fifteen percent (15%) of the Funded Amount.
2. Lease Rate. Section 2.23 is hereby deleted, and is replaced
with the following:
2.23 Lease Rate. "Lease Rate" shall mean interest at the rate
of the product of 0.850 times the then-effective LIBOR Rate,
plus .0045, per annum.
3. Lease Rate. Section 2.26 is hereby deleted, and is replaced
with the following:
2.26 LIBOR Rate. "LIBOR Rate" shall mean the LIBOR interest
rate as defined in that certain Schedule I, Additional Terms
and Conditions of Credit Arrangement between SGA and UBS dated
May 1, 1995, relating to the UBS Loan ("Schedule I"), or as
defined in a subsequent Authorized Loan.
4. Interest Rate Selection. Section 5.1(b) is hereby deleted, and
is replaced with the following:
(b) Interest Rate Selection. The parties acknowledge that the
interest rate applicable under the UBS Loan (or other
Authorized Loan) shall affect the amount of Base Rent payable
by Tenant hereunder. Therefore, Tenant shall have the right, by
written notice to UBS (or the holder of any Authorized Loan),
SGA and Landlord, to designate the interest period to be
selected from time to time by SGA pursuant to Schedule I (or
other Authorized Loan). Tenant acknowledges that the rates
available to be selected under the UBS Loan after the first
partial calendar month of the Term are 1, 2, 3, 6, 9 or
12-month LIBOR rates. In the event that Tenant fails to give
such written notice to UBS (or other holder of an Authorized
Loan), SGA and Landlord prior to the applicable deadline for
selection of such interest period pursuant to the
<PAGE> 2
terms of Schedule I (or other Authorized Loan), Tenant shall be
deemed to have selected an interest period of one month for the
UBS Loan (or other Authorized Loan).
5. Further Mortgages or Encumbrances by Landlord.
The first sentence of Article 13, Section 13.1, subparagraph (b)
Authorized Loan that begins with "Tenant has approved . . ." and ends with ". .
. all documents related to the UBS Loan" is hereby deleted and replaced with the
following:
Tenant has approved the terms of the loan ("UBS Loan") to be
made by UBS to SGA which shall be evidenced by that certain
Tranche A Promissory Note dated as of the Lease Commencement
Date by SGA in favor of UBS ("UBS Note"), and further evidenced
and/or secured by (a) that certain General Terms and Conditions
of Credit Arrangement between SGA and UBS, (b) that certain
Schedule 1 Additional Terms and Conditions of Credit
Arrangements between SGA and UBS, (c) that certain Pledge
Agreement, as amended by Rider No. 1 thereto, made by Tenant in
favor of UBS, and (d) certain documents (including, without
limitation a promissory note and related documents) evidencing
a loan ("SGA Loan") from SGA to Landlord in the principal
amount of the UBS Note, all dated as of the Lease Commencement
Date; provided, however, that Tenant, Landlord and SGA reserve
the right to approve, in their sole discretion, the final form
of all documents related to the UBS Loan.
6. Option to Purchase Premises. (a) In Section 19.1(a), Purchase
Option , the two (2) sentences beginning with "The purchase price ("Purchase
Price") . . ." on line 8 of Section 19.1(a) and ending with ". . . this Purchase
Option" on line 26 of Section 19.1(a) are hereby deleted in their entirety and
the following inserted in their place:
The purchase price ("Purchase Price") for the portion of the
Premises which Tenant elects to purchase shall be (i) the
then-existing Funded Amount applicable to the portion of the
Premises which Tenant elects to purchase (determined in a pro
rata basis on the basis of the area being purchased), as the
same may be reduced from time to time, plus (ii) the amount of
any prepayment premium and all other fees, costs, and expenses
due to any holder of an Authorized Loan in connection with such
loan (to the extent not already paid pursuant to Section 21.21
hereof). Tenant shall be entitled to a credit against the
Purchase Price in an amount equal to the sum of (i) the
principal balance(s) of any Authorized Loan and/or Fee Mortgage
existing immediately prior to the closing under this Purchase
Option if such Authorized Loan and/or Fee Mortgage are not
fully repaid and all documents reflecting the same are not
cancelled and removed from the public records on or prior to
the closing under this Purchase Option, plus (ii) the amount of
the Security Deposit (or, in the event of a purchase of a
portion of the Premises, a pro rata portion of the Security
Deposit), and, upon closing under this Purchase Option,
Landlord shall be released from Landlord's obligation to return
the Security Deposit set forth in Section 5.5 hereof.
-2-
<PAGE> 3
(b) In Section 19.1(a), Purchase Option , following the
sentence beginning with "Landlord . . ." on line 36 of Section 19.1(a) and
ending with ". . . expenses related thereto" on line 40 of Section 19.1(a), the
following sentence is inserted:
Notwithstanding the foregoing, Landlord agrees to, upon
Tenant's written demand, assign the UBS Loan or any other
Authorized Loan and its obligations thereunder to Sumitomo Bank
Leasing and Finance, Inc., a Delaware corporation ("SBLF");
provided that SBLF shall first expressly assume Landlord's
obligations under the UBS Loan (or any other Authorized Loan)
in writing and hold Landlord harmless from any liabilities
arising after the date of such assignment.
7. Form of Transaction; Certain Tax Matters.
a. Section 21.2(a)(ii) is hereby deleted, and is replaced
with the following:
(a) a financing arrangement (and not a "true
lease") for Federal, state and local income tax and
local property tax purposes.
b. Section 21.2(b) is hereby deleted, and is replaced with
the following:
Landlord and Tenant agree that, in accordance with
their intentions and the substance of the transactions
contemplated hereby, Tenant (and not Landlord) shall be
treated as the owner of the Premises for Federal,
state, and local income tax and property tax purposes
and this Lease shall be treated as a financing
arrangement. Tenant shall be entitled to take any
deduction, credit allowance or other reporting, filing
or other tax position consistent with such
characterizations. Landlord and Tenant shall not file
any Federal, state or local income tax or property tax
returns, reports or other statements, or take any other
actions, in a manner which is inconsistent with the
foregoing provisions of this Section 21.2, unless
required to do so by applicable law or Legal
Requirement.
c. Section 21.2(c) is hereby deleted, and is replaced with
the following:
Each party acknowledges that it has retained
accounting, tax and legal advisors to assist it in
structuring this Lease and neither party is relying on
any representations of the other regarding the proper
treatment of this transaction for accounting, income
tax, property tax or any other purpose. Nothing in this
Section 21.2(c) shall increase or diminish any
liability or obligation of the parties that otherwise
exists pursuant to this Lease.
8. Exhibits. Exhibit B is hereby deleted and the attached Exhibit
B inserted in its place.
9. Counterparts. This First Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall comprise but a single instrument.
10. Existing Lease. Except to the extent specifically amended
hereby, all terms and conditions of the Lease remain in full force and effect.
-3-
<PAGE> 4
[SIGNATURE PAGE TO FIRST AMENDMENT TO LEASE]
IN WITNESS WHEREOF, Landlord and Tenant have executed this First
Amendment as of the date and year first written above.
"LANDLORD"
IRISH LEASING CORPORATION,
a Texas corporation
By: GREG ENGLAND
-----------------------------
Name: /s/GREG ENGLAND
-----------------------
Its: VICE PRESIDENT
------------------------
"TENANT"
CISCO SYSTEMS, INC., a California
corporation
By: /s/JOHN CHAMBERS
-----------------------------
Name:
-----------------------
Its:
------------------------
By: /s/LARRY R. CARTER
-----------------------------
Name:
-----------------------
Its:
------------------------
-4-
<PAGE> 5
EXHIBIT A
DESCRIPTION OF LAND
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on July 13, 1983,
in Book 514 of Maps page(s) 47 and 48.
PARCEL TWO:
All of Lot 54, as shown upon that certain Map entitled, "Tract No. 7559", which
Map was filed for record in the Office of the Recorder of the County of Santa
Clara, State of California on December 21, 1983 in Book 522 of Maps, at pages 49
and 50.
APN: 97-53-14 and 23
EXHIBIT A
<PAGE> 6
EXHIBIT B
PERMITTED EXCEPTIONS
1. Bond for REASSESSMENT DISTRICT #93-210 CONSOLIDATED REFUNDING, as
follows:
2. THE LIEN of supplemental taxes, if any, assessed as a result of
transfer of interest and/or new construction, said supplemented taxes
being assessed pursuant to Chapter 3.5 commencing with Section 75 of
the California Revenue and Taxation Code, for which no Notice of
Assessment has been issued, as of the date herein.
3. THE EFFECT of the Rincon de los Esteros Project Redevelopment Plan and
Ordinances Nos. 17306, 19686. 19835, 20677, 20958. 21417, 21496, 21903,
22660, 22412, 22761, 22761.1 and 22961,23703, 23732, 23761 and 23934 of
the City of San Jose as recorded and as disclosed by documents recorded
July 11, 1975 in Book B502, Page 711;August 6, 1979 in Book E699, Page
245; August 6, 1979 in Book E699. Page 277; December 21,1979 in Book
F37, Page 585; October 8, 1981 in Book G382, Page 605; July 28, 1982 in
Book G929, Page 703; September 14, 1983 in Book H892, Page 200; January
10, 1984 in Book 1220, Page 271; January 6, 1992 in Book L996, Page
508, all of Official Records, and as disclosed by information provided
by the Redevelopment Agency of the City of San Jose.
4. AN EASEMENT affecting the portion of said land and for the purpose
stated herein and incidental purposes, shown or dedicated by the map of
Tract 7408 filed in Book 506 of Maps, pages 24, 25 and 26.
Purpose : Public Service Easement
Affects : The Southwesterly 10 feet of Parcels One, Two and
Three and the Northwesterly 8 feet of Parcel Two
5. EASEMENT as shown on the filed map of Tract 7408 filed in Book 506 of
Maps, pages 24-26 and incidents thereto
Purpose : Landscape Easement
Affects : The Southwesterly 20 feet of Parcel One, Two and
Three and the Northwesterly 18 feet of Parcel Two
6. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The installation, maintenance and operation of all
landscaping plant forms, irrigation systems,
retaining walls, and decorative walkway paving now
existing or hereinafter to be constructed
Granted to : City of San Jose, a municipal corporation of the
State of California
Recorded : May 27, 1983 in Book H590, Page 649, Official
Records
Affects : The Southwesterly 20 feet of Parcel One, Two and
Three and the Northwesterly 18 feet of Parcel Two.
7. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The installation, maintenance and operation of all
landscaping plant forms, irrigation systems,
retaining walls, and decorative walkway paving now
existing or hereinafter to be constructed
Granted to : City of San Jose, a municipal corporation of the
State of California
Recorded : May 27, 1983 in Book H590, page 652, Official
Records
Affects : The Westerly corner of parcel two
EXHIBIT B
1.
<PAGE> 7
8. AGREEMENT on the terms and conditions contained therein,
For : The Installation and maintenance of landscape
Improvements
Between : City of San Jose, a municipal corporation
And : Oakmead-San Jose, a California general partnership
and Oakmead-San Jose Sign and Landscape
Maintenance Association, A California Non Profit
Mutual Benefit Corporation
Recorded : May 27, 1983 in Book H590, page 662, Official
Records.
9. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The construction, installation, repair and
maintenance of interlocking pavers, retaining
walls and signs, and for pedestrian and vehicular
access as necessary or desirable thereto, but
subject to the obligation of the association of
the association, its successors and assigns, to
promptly repair any damage to said improvements
lying within the Sign and Landscape Easements
resulting from the Association's activities
thereon
Granted to : Oakmead-San Jose Sign and Landscape Maintenance
Association, a non-profit mutual benefit
corporation
Recorded : June 3, 1983 in Book H604, page 322, Official
Records
Affects : The Westerly corner of Parcel Two
10. LIMITATIONS, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting restrictions, if any,
based on race, color, religion or national origin contained in the
document recorded June 3, 1983 in Book H604, page 334, Official
Records.
CONTAINS mortgagee protection clause.
MODIFICATION thereof recorded January 26, 1984 in Book 1257, page 252,
Official Records.
A Notice of Amendment of Design Guidelines
Executed by : Oakmead-San Jose, a California general partnership
Recorded : June 21, 1984 in Book 1649, page 543, Official
Records
An instrument entitled, "Designation of Approving Agent," whereby
Kimball Small Properties, a California corporation was designated
approving agent under the CC&R's and Design Guidelines,
Recorded : April 29, 1988 in Book K517, page 940, Official
Records
MODIFICATION thereof recorded JULY 19, 1989 IN BOOK L024, PAGE 587,
Official Records. An Instrument entitled "Assignment and Assumption of
Certain Rights under Declaration of Covenants, Conditions and
Restrictions for Oakmead-San Jose"
Between : Oakmead-San Jose, a California general partnership
and Crocker Properties, Inc., a California
corporation
Recorded : August 10, 1989 in Book LO52, page 1001 and page
1011, Official Records.
Partial Termination as to other property recorded September 18. 1989 in
Book L097, page 1662, Official Records.
11. LIMITATIONS, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting restrictions, if any,
based on race, color, religion or national origin contained in the
document recorded June 3, 1983 in book H604, PAGE 505, Official
Records.
EXHIBIT B
2.
<PAGE> 8
Said instrument also provides for the levy of assessments, the lien of
which are stated to be subordinate to the lien of a First Mortgage or
First Deed of Trust made in good faith and for value.
MODIFICATION thereof recorded JULY 19, 1989 IN BOOK L024, PAGE 587,
Official Records.
An Instrument entitled "Assignment and Assumption of Certain Rights
under Declaration of Covenants, Conditions and Restrictions for
Oakmead-San Jose"
Between : Oakmead-San Jose, a California general partnership
and Crocker Properties, Inc., a California
corporation
Recorded : August 10, 1989 in Book L052, page 1001 and page
1011, Official Records.
12. EASEMENT as shown on the map of Tract 7559 filed in Book 522 of Maps,
pages 49 and 50.
Purpose : Public Service Easement
Affects : The Northwesterly 8 Feet and the Westerly corner
of Lot 59 of Pan:el One
13. EASEMENT as shown on the map of Tract 7559 filed in Book 522 of Maps,
pages 49 and 50.
Purpose : Landscape Easement
Affects : The Southeasterly 18 feet and the Southerly corner
of Lot 58 of Parcel One; and the Northwesterly 18
feet and the Westerly corner of Lot 59 of Parcel
One
14. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Communication Facilities
Granted to : Pacific Bell
Recorded : February 21, 1984 in Book 1319, page 486, Official
Records
Affects : The Southwesterly 10 feet of Lot 58 of Parcel One;
the Southwesterly 10 feet, the Northwesterly 8
feet and the Westerly corner Of Lot 59 Of Parcel
One; and the Southwesterly 10 feet of Parcel Three
15. AGREEMENT on the terms and conditions contained therein,
For : Gas and Electric Service
Between : Pacific Gas and Electric Company, city of San Jose
And : Oakmead-San Jose
As disclosed by a Memorandum of Agreement
Recorded : February 25, 1985 in Book J271, page 37, Official
Records.
EXHIBIT B
3.
<PAGE> 1
SECOND AMENDMENT TO LEASE
(Parcel 2 and Lot 54)
This Second Amendment to Lease ("Second Amendment") is made and entered
into as of May 22, 1995 by and between Irish Leasing Corporation, a Texas
corporation ("Landlord"), and Cisco Systems, Inc., a California corporation
("Tenant").
WHEREAS, Landlord and Tenant have previously entered into that certain
Ground Lease dated February 28, 1995, pursuant to which Landlord is leasing to
Tenant those certain parcels of land located in San Jose, California as more
particularly described on Exhibit A attached hereto (the "Premises"), which
Ground Lease was amended by that certain First Amendment to Lease dated as of
May 1, 1995, by and between Landlord and Tenant (the Ground Lease, as so
amended, is referred to herein as the "Lease"); and
WHEREAS, Landlord and Tenant now wish to further amend the terms of the
Lease as more particularly described in this Second Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. Amendment to Lease. The Landlord and Tenant hereby agree to amend the
Lease as hereinafter set forth and as set forth in other sections of this Second
Amendment.
(a) Section 2.33 of the Lease is hereby amended to read in its entirety
as follows:
2.33 Permitted Exceptions. "Permitted Exceptions" shall mean the
following: (1) the exceptions set forth in Exhibit B; (2) any exceptions
created or caused by Tenant or to which Tenant consents in writing; (3)
taxes and assessments not yet due and payable; (4) a deed of trust or
mortgage which secures a New Loan authorized pursuant to the terms of
Section 13.1(b); (5) the Tenant Deed of Trust; (6) all title defects,
liens, encumbrances, deeds of trust, mortgages, rights-of-way, and
restrictive covenants and conditions affecting the Land unless any of the
foregoing arise as a result of Landlord's actions or with Landlord's
written consent (unless such actions taken or consent given by Landlord
are requested in writing by Tenant pursuant to Sections 11.2, 20.1 or
20.2); (7) this Lease; (8) that certain Construction Deed of Trust,
Financing Statement, Security Agreement and Fixture Filing (With
Assignment of Rents and Leases) (the "Construction Deed of Trust") dated
as of even date herewith executed by Landlord, Tenant and Sumitomo Bank
of New York Trust Company ("SBNYTC"), as Trustee under that certain Trust
Agreement dated May 22, 1995 between Sumitomo Bank Leasing and Finance,
Inc. and SBNYTC ("SB Trust") for the benefit of the Sumitomo Bank,
Limited ("Sumitomo") and the Hongkong and Shanghai Banking Corporation
Limited ("HKS"); (9) that certain Deed of Trust, Financing Statement,
Security Agreement and Fixture Filing (with Assignment of Rents and
Leases)(the "Second Deed of Trust") dated as of even date
<PAGE> 2
herewith executed by Landlord and Tenant for the benefit of SB Trust;
(10) that certain Absolute Assignment of Leases (the "HKS Assignment")
dated as of even date herewith executed by Landlord, SB Trust, Cisco, HKS
and Sumitomo; and (11) that certain Subordination Agreement (herein so
called) dated as of even date herewith and executed by Sumitomo, HKS, SB
Trust, Landlord and Tenant.
(b) The last sentence of Section 5.5 of the Lease is hereby amended to
read in its entirety as follows:
The entire Security Deposit (other than amounts withheld against Base
Rent due hereunder), plus any accrued and unpaid interest required to be
paid thereon pursuant to this Lease, shall be returned to Tenant at the
end of the Term; provided, however, that, notwithstanding anything to the
contrary contained in this Lease, Landlord shall have no obligation to
return the Security Deposit to Tenant in the event of a foreclosure, deed
in lieu of foreclosure, or other exercise of remedies by the
beneficiaries or trustees under the Tenant Deed of Trust, the
Construction Deed of Trust, the Second Deed of Trust, the HKS Assignment,
or any other Mortgage on the Premises caused by Tenant to which Tenant
consents in writing.
(c) Section 20.5 of the Lease is hereby amended to read in its entirety
as follows:
20.5 Recourse Obligations. Landlord agrees that during the Term of
this Lease, except for the SGA Loan, Landlord will not incur any
indebtedness for borrowed money or any other material obligations to
which the holder or obligee thereof has recourse against Landlord to
satisfy the same without Tenant's prior written consent, which consent
Tenant may withhold in its sole discretion.
(d) Section 20.6 of the Lease is hereby amended to read in its entirety
as follows:
20.6 Default Under Authorized Loan. Landlord shall not, without
Tenant's express prior written consent, default under any Authorized
Loan, or any loan documents relating to such Authorized Loan, where such
default is not caused, directly or indirectly by, or arising, directly or
indirectly as a result of (a) a breach of any of Tenant's obligations
under this Lease, under the Pledge Agreement securing the UBS Loan or
under any documents relating to any Authorized Loan, or (b) the
occurrence of a default or an Event of Default under the Construction
Deed of Trust, the Second Deed of Trust or the HKS Assignment.
2. Existence of Permitted Exceptions. Tenant hereby acknowledges that the
existence of any Permitted Exception, and the exercise of any rights or remedies
granted to any third party pursuant to any Permitted Exceptions shall not
constitute a breach by Landlord under the terms of Section 20.3 or any other
provision of the Lease.
3. Quiet Enjoyment. The first sentence of Section 18.1 of the Lease is
hereby amended by adding the following language at the end of such sentence:
<PAGE> 3
"and subject to the rights of a Fee Mortgagee under the Construction Deed
of Trust, and/or the Second Deed of Trust, the rights of the "Assignees"
under the HKS Assignment, and the rights of any Fee Mortgagee under any
Authorized Loan."
4. Net Lease. The last sentence of Section 21.21 of the Lease is hereby
to read in its entirety as follows:
Tenant agrees to reimburse Landlord and/or SGA, within ten days following
receipt of any written demand therefor, for all fees, accrued but unpaid
interest, late charges, prepayment penalties, costs, expenses,
indemnification obligations, and other amounts charged to Landlord and/or
SGA by UBS, the holder of any Authorized Loan, the holders or
beneficiaries of the Construction Deed of Trust and the Second Deed of
Trust, and the "Assignees" under the HKS Assignment pursuant to the terms
and conditions of the UBS Note, any Authorized Loan, the Construction
Deed of Trust, the Second Deed of Trust, the HKS Assignment and the
Subordination Agreement."
5. Consent to Encumbrances. Tenant hereby consents to Landlord's
execution, delivery and recording of the Construction Deed of Trust, the Second
Deed of Trust, the HKS Assignment and the Subordination Agreement, and all
documents, instruments and agreements executed in connection therewith by
Landlord.
6. Terms. All terms used in this Second Amendment with their initial
letter capitalized which are specially defined in the Lease (as amended by this
Second Amendment) shall have the same meanings in this Second Amendment as in
the Lease (as amended by this Second Amendment).
7. Continuing Obligations. Except as modified by this Second Amendment,
the terms of the Lease remain in full force and effect. To the extent of any
conflict between the terms of the Lease and the terms of this Second Amendment,
the terms of this Second Amendment shall control.
8. Counterparts. This Second Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall comprise but a single instrument.
IN WITNESS WHEREOF, the Landlord and Tenant have executed this Second
Amendment as of the date first set forth above.
<PAGE> 4
IRISH LEASING CORPORATION,
a Texas corporation
By: /s/GREG ENGLAND
----------------------------
Its: VICE PRESIDENT
------------------------
CISCO SYSTEMS, INC.,
a California corporation
By: /s/LARRY R. CARTER
----------------------------
Its:
------------------------
<PAGE> 5
EXHIBIT A
Description of Land
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on July 13, 1983,
in Book 514 of Maps page(s) 47 and 48.
PARCEL TWO:
All of Lot 54 as shown upon that certain Map entitled, "Tract No. 7559", which
Map was filed for record in the Office of the Recorder of the County of Santa
Clara, State of California on December 21, 1983 in Book 522 of Maps, at pages 49
and 50.
APN: 97-53-14 and 23
EXHIBIT A
<PAGE> 1
GROUND LEASE
(Lots 58 & 59)
By and Between
IRISH LEASING CORPORATION
A TEXAS CORPORATION
as Landlord
and
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION,
as Tenant
for
Premises located in
San Jose, California
THIS LEASE IS NOT INTENDED TO CONSTITUTE A TRUE LEASE
FOR INCOME TAX PURPOSES. SEE SECTION 21.2
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 BASIC LEASE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Date of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 Lease Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Rent Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Addresses for Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Addresses for Rent Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Approval Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Authorized Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Authorized Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Equity Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 Equity Rent Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.12 Event of Major Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 Extension Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.14 Fee Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.15 Fee Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.16 Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.17 Guaranteed Residual Value . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.18 Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.19 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.20 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.21 Landlord Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.22 Lease Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.23 Lease Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.24 Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.25 LIBOR Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.26 LIBOR Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.27 Loan Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.28 Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.29 Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.30 New Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.31 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.32 Official Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.33 Permitted Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.34 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.35 Real Estate Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
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2.36 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.37 Rent Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.38 Rent Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.39 Replacement Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.40 Required Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.41 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.42 Senior Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.43 Senior Rent Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.44 SGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.45 Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.46 Tenant Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.47 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.48 UBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.49 UBS Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.50 UBS Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3 DEMISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 4 TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Extension Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 5 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Proration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.3 No Abatement of Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4 Delinquent Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.5 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 6 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 Real Estate Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.2 Personal Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 Right to Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.5 Additional Provisions Relating to Taxes . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 7 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.3 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 8 USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.1 Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Contest of Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 9 UTILITIES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.1 Services to the Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 10 MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES . . . . . . . . . . . . . . . 20
10.1 Tenant Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.2 Surrender of the Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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ARTICLE 11 CONSTRUCTION OF IMPROVEMENTS AND COMMON AREA . . . . . . . . . . . . . . . . . . 21
11.1 Tenant's Rights to Construct Improvements . . . . . . . . . . . . . . . . . . . 21
11.2 Required Permits, Easements, etc . . . . . . . . . . . . . . . . . . . . . . . . 23
11.3 Demolition and Reconstruction . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.4 Title to and Nature of Improvements . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 12 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 13 ASSIGNMENT BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
13.1 Further Mortgages or Encumbrances by Landlord; Authorized Loans . . . . . . . . 24
13.2 Landlord's Right to Sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.3 Transfer of Funds and Property . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 14 ASSIGNMENT AND SUBLEASING . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
14.1 Right to Assign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
14.2 Right to Sublet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
14.3 Tenant's Right to Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 15 EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
15.1 Total or Substantial Taking . . . . . . . . . . . . . . . . . . . . . . . . . . 28
15.2 Partial Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
15.3 Temporary Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
15.4 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15.5 Notice and Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 16 DAMAGE OR DESTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16.1 Insured Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16.2 Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 17 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.1 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.2 Event of Major Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
17.3 Contest by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
17.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
17.5 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
17.6 Effect of Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
17.7 Landlord Cure Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
17.8 Landlord's Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 18 QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
18.1 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 19 TENANT'S OPTION TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . 35
19.1 Option To Purchase Premises . . . . . . . . . . . . . . . . . . . . . . . . . . 35
19.2 Mandatory Purchase/Sale of Premises . . . . . . . . . . . . . . . . . . . . . . 37
19.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 20 ADDITIONAL COVENANTS OF LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . 38
20.1 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
20.2 Land Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
20.3 Transfer of Property Interests . . . . . . . . . . . . . . . . . . . . . . . . . 40
20.4 Shareholder Equity; No Other Asset . . . . . . . . . . . . . . . . . . . . . . . 40
20.5 Recourse Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
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20.6 Default Under Authorized Loan . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 21 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
21.1 Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
21.2 Form of Transaction; Certain Tax Matters . . . . . . . . . . . . . . . . . . . . 41
21.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
21.4 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
21.5 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 42
21.6 Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
21.7 Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
21.8 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
21.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
21.10 Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
21.11 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
21.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
21.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
21.14 Time Is of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
21.15 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 44
21.16 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
21.17 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
21.18 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
21.19 Landlord's Continuing Obligation to Sell . . . . . . . . . . . . . . . . . . . . 45
21.20 As-Is Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
21.21 Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
21.22 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
List of Exhibits
Exhibit A Description of Land
Exhibit B Permitted Exceptions
Exhibit C Memorandum of Lease
Exhibit D Closing Costs and Fees to be Included in Funded
Amount
Exhibit E Lease Commencement Date Memorandum
Exhibit F Description of Additional Property Owned by Landlord
iv.
<PAGE> 6
GROUND LEASE
THIS GROUND LEASE ("Lease") by and between IRISH LEASING
CORPORATION, a Texas corporation ("Landlord"), and CISCO SYSTEMS, INC., a
California corporation ("Tenant"), is entered into as of the date set forth in
Article 1 and shall be effective and binding upon the parties hereto as of such
date. Capitalized terms used in this Lease shall have the definitions set forth
in Article 2 or in the text of this Lease.
In consideration of the Base Rent reserved herein, and the terms,
covenants and conditions set forth below, Landlord and Tenant hereby agree as
follows:
ARTICLE 1
BASIC LEASE PROVISIONS
1.1 DATE OF LEASE: February 28, 1995.
1.2 LANDLORD: Irish Leasing Corporation,
a Texas corporation.
1.3 TENANT: Cisco Systems, Inc., a California
corporation.
1.4 LAND: That certain tract of land located in
the City of San Jose, Santa Clara
County, California, consisting of five
(5) parcels and more particularly
described on Exhibit A attached hereto,
together with all easements, rights of
way, appurtenances and other rights and
benefits belonging or pertaining to
such land.
1.5 PREMISES: The Land.
1.6 TERM: The initial term ("Initial Term") of
this Lease shall be for five (5) years
commencing on the Lease Commencement
Date (as defined in Section 4.1).
Subject to the conditions set forth in
Section 4.2, Tenant may extend the
Initial Term for one (1) additional
period of five (5) years ("Extension
Term"). The Initial Term and (if
exercised by Tenant) the Extension Term
shall be referred to collectively
herein as the "Term." The Term shall
cease upon, and shall not refer to any
period of time after, termination of
this Lease (whether
1.
<PAGE> 7
pursuant to the terms of the Lease, by
operation of law, or otherwise).
1.7 LEASE COMMENCEMENT
DATE: As described in Section 4.1.
1.8 RENT COMMENCEMENT
DATE: The rent commencement date ("Rent
Commencement Date") shall be the first
LIBOR Business Day (as defined in
Section 2.25) of the calendar month
which commences immediately following
the Lease Commencement Date.
1.9 BASE RENT: As described in Section 2.5.
1.10 ADDRESSES FOR
NOTICES:
LANDLORD: TENANT:
Irish Leasing Corporation Cisco Systems, Inc.
6750 LBJ Freeway, Suite 1100 3535 Garrett Drive
Dallas, TX 75240 Santa Clara, CA 95054
Attn: Mr. Greg England Attention: Eugene Hill
With a copy to: With a copy to:
Lorne Liechty, Esq. Cisco Systems, Inc.
Liechty, McGinnis & Kolitz 3535 Garrett Drive
12750 Merit Drive Santa Clara, CA 95054
Suite 1150 Attention: Nancy Bareilles
Dallas, Texas 75251
and
Todd J. Anson, Esq.
Brobeck, Phleger & Harrison
550 West C Street
Suite 1300
San Diego, CA 92101
1.11 ADDRESSES FOR RENT
PAYMENTS:
Senior Rent Component: Union Bank of Switzerland
444 South Flower Street
Los Angeles, CA 90071
Attn: Victor Massarano
Equity Rent Component: Irish Leasing Corporation
6750 LBJ Freeway, Suite 1100
Dallas, TX 75240
Attn: Mr. Greg England
2.
<PAGE> 8
This Article 1 is intended to supplement and/or summarize the
provisions set forth in the balance of this Lease. If there is any conflict
between any provisions contained in this Article 1 and the balance of this
Lease, the balance of this Lease shall control.
ARTICLE 2
DEFINITIONS
For purposes of this Lease, the following defined terms shall
have the meanings set forth in this Article 2.
2.1 ADDITIONAL RENT. "Additional Rent" shall mean any
amounts other than Base Rent payable by Tenant to Landlord or to other Entities
on Landlord's behalf as required under this Lease, including, without
limitation, interest at the Default Rate accrued on past due Base Rent and other
amounts past due hereunder, costs and expenses to be paid or reimbursed by
Tenant hereunder, amounts due pursuant to Tenant's indemnity obligations
hereunder, and Real Estate Taxes.
2.2 APPROVAL PLANS. "Approval Plans" shall have the
meaning set forth in Section 11.1(a).
2.3 AUTHORIZED LOAN. "Authorized Loan" shall have the
meaning set forth in Section 13.1(b).
2.4 AUTHORIZED PLANS. "Authorized Plans" shall have the
meaning set forth in Section 11.1(a).
2.5 BASE RENT. "Base Rent" shall mean, as of a Rent
Payment Date, the product of the Funded Amount as of the Rent Payment Date
multiplied by the Lease Rate.
2.6 COLLATERAL. "Collateral" shall have the meaning set
forth in Section 21.18.
2.7 DEFAULT. "Default" shall have the meaning set forth
in Section 17.1.
2.8 DEFAULT RATE. "Default Rate" shall mean the interest
rate charged or chargeable pursuant to the UBS Note or other Authorized Loan on
any amounts not paid when due. Notwithstanding the foregoing, in the event that
the foregoing Default Rate shall be in violation of any usury or similar law,
then the Default Rate shall be reduced to the extent necessary to cause the
Default Rate to comply with any usury or similar law.
2.9 ENTITY. "Entity" shall mean any person, corporation,
partnership (general or limited), joint venture, association, joint stock
company, trust or other business entity or organization.
3.
<PAGE> 9
2.10 EQUITY FUNDED AMOUNT. "Equity Funded Amount" shall
mean that portion of the Funded Amount equal to the Funded Amount minus the
Senior Funded Amount.
2.11 EQUITY RENT COMPONENT. "Equity Rent Component" shall
mean the Base Rent as of a Rent Payment Date minus the Senior Rent Component.
2.12 EVENT OF MAJOR DEFAULT. "Event of Major Default"
shall have the meaning set forth in Section 17.2.
2.13 EXTENSION TERM. "Extension Term" shall have the
meaning set forth in the Basic Lease Provisions.
2.14 FEE MORTGAGE. "Fee Mortgage" shall mean any Mortgage
at any time given by Landlord and remaining uncancelled on the Official Records,
encumbering all or any portion of Landlord's right, title and estate in the Land
or in this Lease.
2.15 FEE MORTGAGEE. "Fee Mortgagee" shall mean the
Mortgagee from time to time of a Fee Mortgage.
2.16 FUNDED AMOUNT. "Funded Amount" shall mean the
aggregate amount of the sum paid by Landlord to acquire the Land, plus the
closing costs and fees set forth on Exhibit D attached hereto; less any
reductions in the amount of the UBS Loan or any other Authorized Loan or in the
Equity Funded Amount, whether such principal reduction or reduction in the
Equity Funded Amount is accomplished by payment to UBS or the holder of an
Authorized Loan, the application of the Collateral or other collateral by UBS or
the holder of an Authorized Loan, the payment of insurance proceeds,
condemnation awards, or otherwise.
2.17 GUARANTEED RESIDUAL VALUE. "Guaranteed Residual Value"
shall mean that amount necessary to cause the present value of the aggregate
Minimum Lease Payments under this Lease, including the present value of the
Guaranteed Residual Value, to not exceed eighty nine and 9/10 percent (89.9%) of
the Funded Amount, computed at the Date of Lease and discounted to present value
as of the Rent Commencement Date using the interest rate implicit in the Lease
or the incremental borrowing rate, whichever is higher, all as calculated and
determined pursuant to Statement of Financial Accounting Standards Number 13.
"Minimum Lease Payments" shall mean the sum of the aggregate Base Rent payable
over the Initial Term and the Extension Term, plus imputed interest on the
non-interest bearing portion of the Security Deposit imputed at a market rate of
interest for an investment for a similar term, plus the Guaranteed Residual
Value, plus the following to the extent paid in cash: custodial and other fees
paid by Tenant, and any other reimbursed costs of Landlord paid by Tenant deemed
to meet the definition of Minimum Lease Payments under SFAS No. 13.
4.
<PAGE> 10
2.18 IMPROVEMENTS. "Improvements" shall mean any and all
improvements erected, constructed or situated upon the Land or any part thereof
during the Term.
2.19 INITIAL TERM. "Initial Term" shall have the meaning
set forth in the Basic Lease Provisions.
2.20 LAND. "Land" shall have the meaning set forth in the
Basic Lease Provisions.
2.21 LANDLORD AFFILIATE. "Landlord Affiliate" shall mean
any Entity which controls is controlled by or is under the common control of SGA
Development Partnership, Ltd., or The Staubach Company, a Texas corporation.
2.22 LEASE COMMENCEMENT DATE. "Lease Commencement Date"
shall have the meaning set forth in Section 4.1.
2.23 LEASE RATE. "Lease Rate" shall mean interest at the
rate of the product of 0.846 times the then-effective LIBOR Rate plus .0046 per
annum.
2.24 LEGAL REQUIREMENTS. "Legal Requirements" shall mean
all statutes, codes, laws, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses, authorizations, directions
and requirements of all federal, state, county, municipal and other governments,
departments, commissions, boards, courts, authorities, officials and officers,
and any covenants, conditions and restrictions and other matters of record
(subject to the provisions of Section 13.1(a) hereof), which now or at any time
hereafter are applicable to Tenant or this Lease or applicable to and
enforceable against the Premises, the Improvements or any part thereof, as
applicable.
2.25 LIBOR BUSINESS DAY. "LIBOR Business Day" shall have
the same meaning as such term is defined in the UBS Note or other Authorized
Loan.
2.26 LIBOR RATE. "LIBOR Rate" shall mean the LIBOR
interest rate as defined in the UBS Note, or a subsequent Authorized Loan.
2.27 LOAN RATE. "Loan Rate" shall mean the relevant rate
(or rates) of interest, as the same may change from time to time, applicable
under the UBS Note (or if the UBS Loan has been replaced by an Authorized Loan,
then the relevant rate of interest under the promissory note evidencing such
Authorized Loan), all subject to the terms of Section 13.1(b).
2.28 MORTGAGE. "Mortgage" shall mean any mortgage, deed of
trust, or other instrument in the nature thereof at any time and from time to
time constituting a lien, charge or encumbrance upon any interest or estate of
Tenant or Landlord in the Premises or in this Lease.
5.
<PAGE> 11
2.29 MORTGAGEE. "Mortgagee" shall mean the record holder
(as reflected in the Official Records) from time to time of, or the record
beneficiary (as reflected in the Official Records) from time to time under, a
Mortgage.
2.30 NEW LOAN. "New Loan" shall have the meaning set
forth in Section 13.1(b).
2.31 NOTICE. "Notice" shall mean a written advice,
request, demand or notification required or permitted by this Lease, as more
particularly provided in Section 21.3.
2.32 OFFICIAL RECORDS. "Official Records" shall mean the
official records of Santa Clara County, California.
2.33 PERMITTED EXCEPTIONS. "Permitted Exceptions" shall
mean the following: (1) the exceptions set forth in Exhibit B; (2) any
exceptions created or caused by Tenant or to which Tenant consents in writing;
(3) taxes and assessments not yet due and payable; (4) a deed of trust or
mortgage which secures a New Loan authorized pursuant to the terms of Section
13.1(b); (5) the Tenant Deed of Trust; (6) all title defects, liens,
encumbrances, deeds of trust, mortgages, rights-of-way, and restrictive
covenants and conditions affecting the Land unless any of the foregoing arise as
a result of Landlord's actions or with Landlord's written consent (unless such
actions taken or consent given by Landlord are requested in writing by Tenant
pursuant to Section 11.2, 20.1 or 20.2); and (7) this Lease.
2.34 PREMISES. "Premises" shall have the meaning set forth
in the Basic Lease Provisions. It is the intention of the parties that the
Premises consist only of the Land, and in no event shall the Premises consist of
any Improvements whatsoever.
2.35 REAL ESTATE TAXES. "Real Estate Taxes" shall have the
meaning set forth in Section 6.1(b).
2.36 RENT. "Rent" shall mean Base Rent and Additional
Rent.
2.37 RENT COMMENCEMENT DATE. "Rent Commencement Date"
shall have the meaning set forth in the Basic Lease Provisions.
2.38 RENT PAYMENT DATE. "Rent Payment Date" shall have the
meaning set forth in Section 5.1.
2.39 REPLACEMENT LOAN. "Replacement Loan" shall have the
meaning set forth in Section 13.1(c).
2.40 REQUIRED PERMITS. "Required Permits" shall mean each
and every building and development permit including, without limitation,
demolition permits, site permits and addenda thereto (including, without
limitation, foundation permits and structural permits), temporary and final
occupancy permits and any other
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governmental or quasi-governmental approvals which must be issued by any
governmental authority, department, commission, board, official or officer as a
condition precedent to construction and occupancy of any Improvements.
2.41 SECURITY DEPOSIT. "Security Deposit" shall have the
meaning set forth in Section 5.5.
2.42 SENIOR FUNDED AMOUNT. "Senior Funded Amount" shall
mean the principal amount of the UBS Loan as of the Lease Commencement Date,
less any reductions in the principal amount of the UBS Loan or any other
Authorized Loan, whether such principal reduction is accomplished by payment to
UBS or the holder of the Authorized Loan, the application of the Collateral or
other collateral by UBS or the holder of the Authorized Loan, the payment of
condemnation awards, or otherwise.
2.43 SENIOR RENT COMPONENT. "Senior Rent Component" shall
mean the product of the Senior Funded Amount as of a Rent Payment Date times the
Loan Rate.
2.44 SGA. "SGA" shall mean SGA Development Partnership,
Ltd., a Texas limited partnership, the sole shareholder of Landlord.
2.45 TAKING. "Taking" shall have the meaning set forth
in Section 15.1.
2.46 TENANT DEED OF TRUST. "Tenant Deed of Trust" shall
mean that certain deed of trust to be executed by Landlord in favor of Tenant
and recorded in the Official Records as of the Lease Commencement Date, as more
fully described in Section 13.1(d).
2.47 TERM. "Term" shall have the meaning set forth in the
Basic Lease Provisions.
2.48 UBS. "UBS" shall mean the Union Bank of Switzerland,
a Swiss banking corporation, acting through its Los Angeles branch.
2.49 UBS LOAN. "UBS Loan" shall have the meaning set forth
in Section 13.1(b).
2.50 UBS NOTE. "UBS Note" shall have the meaning set forth
in Section 13.1(b).
ARTICLE 3
DEMISE
3.1 PREMISES. Subject to the terms, covenants and
conditions contained herein, Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, the Premises, together with all rights, privileges,
easements and appurtenances relating to the Premises.
7.
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ARTICLE 4
TERM
The Term of this Lease shall consist of the Initial Term, and if
exercised by Tenant, the Extension Term, as follows:
4.1 INITIAL TERM. The Initial Term of this Lease is specified in
Article 1. The Initial Term shall commence on the date ("Lease Commencement
Date") that Landlord acquires title to the Land pursuant to that certain
Purchase and Sale Agreement ("Purchase Agreement") executed or to be executed by
Amdahl Corporation, as Seller ("Seller"), and Landlord, as Buyer. Within thirty
(30) days after the Lease Commencement Date, Landlord and Tenant shall execute
the Lease Commencement Date Memorandum in the form attached hereto as Exhibit E.
In the event that the Initial Term does not commence on or before July 1, 1995,
Tenant shall have the unilateral right to terminate this Lease by written notice
to Landlord, and upon such termination Landlord shall immediately return the
Security Deposit to Tenant, plus all interest earned thereon. In the event the
Purchase Agreement is terminated as a result of any default under or breach of
the Purchase Agreement by Landlord which is not the result of Landlord's gross
negligence or willful misconduct, Landlord shall not be obligated to return any
portion of the Security Deposit retained by Seller as liquidated damages
pursuant to the terms of the Purchase Agreement; provided that, at Tenant's
request, Landlord shall assign to Tenant any and all rights, claims and causes
of action which Landlord may have with respect to the Purchase Agreement,
excluding, however, any rights, claims and causes of action which may be
necessary for Landlord to retain in order for Landlord to avoid or seek
reimbursement for any liability, loss, cost, damage, injury or expense
(including without limitation reasonable attorneys' fees and costs) which
Landlord may sustain or suffer or be entitled to recover in connection with the
Purchase Agreement.
4.2 EXTENSION TERM. Upon at least ninety (90) days' prior written
Notice to Landlord, and provided that a New Loan or Replacement Loan has been
obtained as of the commencement of the Extension Term (subject to the terms and
conditions set forth in Sections 13.1(b) and 13.1(c)), Tenant may extend the
Term for the Extension Term specified in Article 1. All provisions of this Lease
shall remain in full force and effect for the Extension Term, including, without
limitation, the Base Rent payable hereunder, except that Tenant shall have no
further right to extend the Term of this Lease, and except that the Lease Rate
may be adjusted only to reflect any actual change in the rate of interest (that
is, the spread over LIBOR) charged pursuant to the Authorized Loan.
4.3 HOLDING OVER. If Tenant remains in possession of the Premises
after the expiration of the Term without executing a new lease, such holding
over shall be construed as a tenancy from month-to-month, subject to all terms,
covenants and conditions herein contained (except that Tenant shall have no
right to extend the Term of this Lease), and at the Base Rent required to be
paid by Tenant pursuant to the terms hereof during the last month of the Term.
8.
<PAGE> 14
ARTICLE 5
RENT
5.1 BASE RENT.
(a) Tenant shall pay Base Rent in the manner set
forth below. Base Rent shall be payable monthly, in arrears, without notice on
the Rent Commencement Date, and continuing thereafter on the first LIBOR
Business Day of each successive month, except that the last installment of Base
Rent shall be payable on the last day of the Term (each such date shall be a
"Rent Payment Date") and shall be an amount sufficient to pay all Base Rent
accrued through the end of the Term.
Tenant shall pay Base Rent as follows: The Senior Rent
Component shall be paid to UBS, and the Equity Rent Component shall be paid to
Landlord, at the Address for Rent set forth in the Basic Lease Provisions (or,
if the UBS Loan has been replaced by a New Loan or Replacement Loan, then the
Senior Rent Component shall be paid directly to the holder of such New Loan or
Replacement Loan) or at such other place as Landlord and Tenant may from time to
time mutually agree upon, in their respective sole and absolute discretion.
Tenant shall pay Base Rent by wire transfer or by check. Landlord or UBS or such
other holder of a New Loan, as the case may be, shall supply Tenant with such
bank account information as Tenant shall require to enable payment by wire
transfer. The parties agree that Tenant is paying the Senior Rent Component of
Base Rent directly to UBS for the convenience of the parties in order to satisfy
Landlord's obligations to pay interest under the UBS Loan for the period of time
corresponding to the Term of this Lease; all Base Rent payments shall be deemed
payments to Landlord to the extent of the Equity Rent Component and payments of
the interest due to UBS under the UBS Loan to the extent of the Senior Rent
Component.
(b) INTEREST RATE SELECTION. The parties
acknowledge that the interest rate applicable under the UBS Loan (or other
Authorized Loan) shall affect the amount of Base Rent payable by Tenant
hereunder. Therefore, Tenant shall have the right, by written notice to UBS (or
the holder of any Authorized Loan), SGA and Landlord, to designate the interest
period to be selected from time to time by SGA pursuant to the terms of the UBS
Note (or other Authorized Loan). Tenant acknowledges that the rates available to
be selected under the UBS Loan after the first partial calendar month of the
Term are 1, 3, 6, 9 or 12-month LIBOR rates. In the event that Tenant fails to
give such written notice to UBS (or other holder of an Authorized Loan), SGA and
Landlord prior to the applicable deadline for selection of such interest period
pursuant to the terms of the UBS Note (or other Authorized Loan), the same
interest period then in effect for the UBS Loan (or other Authorized Loan) shall
be selected.
5.2 PRORATION. If the Term expires or is otherwise
terminated on a day other than the day before the first LIBOR
9.
<PAGE> 15
Business Day of a calendar month, Base Rent for such calendar month shall be
prorated on the basis of actual days elapsed on the basis of a thirty (30) day
month.
5.3 NO ABATEMENT OF RENT. Except as a consequence of a
reduction in the Funded Amount or the terms of Section 15 (Taking), Tenant shall
not be entitled to any abatement, diminution, reduction, setoff or postponement
of Base Rent as a consequence of any inconvenience to, interruption of,
cessation of or loss of Tenant's use or enjoyment of the Premises or as a result
of any reason whatsoever.
5.4 DELINQUENT RENT. Any Base Rent not paid on the due
date shall accrue interest at the Default Rate from the date such Base Rent was
originally due until the date such Base Rent is paid. All interest accrued on
past due Base Rent shall be due and payable to Landlord at the time the Base
Rent is paid, or upon demand by Landlord, if earlier.
5.5 SECURITY DEPOSIT. On the Date of Lease, Tenant shall
deliver to Landlord a security deposit ("Security Deposit") in an amount equal
to One Million Dollars ($1,000,000), to be held in an interest bearing account
requiring authorization by both Landlord and Tenant for withdrawal. On the Lease
Commencement Date, the Security Deposit plus all interest earned thereon shall
be released to Landlord, and Tenant shall deliver to Landlord an amount
sufficient to increase the Security Deposit to an amount equal to the Equity
Funded Amount as of such date; provided that Tenant shall receive a credit for
any interest earned on the Security Deposit prior to the Lease Commencement
Date. The Security Deposit shall be held by Landlord as security solely for the
payment of Base Rent and Additional Rent by Tenant pursuant to this Lease.
One-fifth of the Security Deposit shall bear interest from the Lease
Commencement Date at the rate of 6.75% per annum, simple interest, paid by
Landlord to Tenant in cash on an annual basis on each anniversary of the Lease
Commencement Date; and the remainder of the Security Deposit shall not bear
interest. If at any time during the Term any Base Rent shall be overdue, then
Landlord may at its election (but shall not be required to) appropriate and
apply any portion of the Security Deposit to the payment of any such overdue
Base Rent; provided, however, that Landlord shall use the non-interest bearing
portion of the Security Deposit first, before appropriating any portion of the
Security Deposit that shall bear interest pursuant hereto. Should the entire
Security Deposit, or any portion thereof, be appropriated and applied by
Landlord as provided herein, then Tenant shall immediately, after receipt of
written demand by Landlord, pay to Landlord a sufficient sum in cash to restore
the Security Deposit to the original sum of the Security Deposit. Landlord shall
have no obligation to segregate the Security Deposit from other funds. In the
event that the Equity Funded Amount is reduced for any reason, including without
limitation by reason of a sale of any portion of the Premises or the application
of the proceeds of a condemnation award to reduce the Equity Funded Amount (it
being
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<PAGE> 16
understood that the Equity Funded Amount will only be reduced in the event and
to the extent that the net proceeds of such condemnation award exceeds the
Senior Funded Amount, with such award proceeds to be applied first to the Senior
Funded Amount pursuant to Section 15.4 hereof), the amount of the Security
Deposit required hereunder shall be reduced (pro rata between the interest
bearing and non-interest bearing portions of the Security Deposit) by a like
amount, and any such excess funds held by Landlord shall immediately be returned
to Tenant. The entire Security Deposit (other than amounts withheld against Base
Rent due hereunder), plus any accrued and unpaid interest required to be paid
thereon pursuant to this Lease, shall be returned to Tenant at the end of the
Term.
ARTICLE 6
TAXES
6.1 REAL ESTATE TAXES.
(a) From and after the Lease Commencement Date,
Tenant shall pay directly to the appropriate taxing authority all Real Estate
Taxes. If the Lease Commencement Date occurs or the Term expires or otherwise
terminates at any time other than the beginning or end of a taxable year,
Tenant's obligation to pay Real Estate Taxes shall be prorated on the basis of a
365-day year, so as to include only that portion of the taxable year which is a
part of the Term. Unless a termination of the Lease results from a purchase of
the Land pursuant to Article 19, any Real Estate Taxes levied against the Land
which accrue during the Term of this Lease but which would not be due and
payable to the appropriate taxing authority until after the expiration of the
Term of this Lease (as the same may be extended) shall be paid by Tenant to
Landlord upon such termination. Landlord shall pay such amounts to the
appropriate taxing authority on a timely basis.
(b) Except to the extent that Real Estate Tax
bills and statements are sent directly to Tenant by the taxing authority, upon
receipt by Landlord of the tax bills or statements, Landlord will use reasonable
efforts to promptly advise Tenant in writing of all Real Estate Taxes and shall
deliver copies of all applicable tax bills or statements to Tenant. Tenant shall
pay directly to the taxing authority all Real Estate Taxes prior to the later of
(i) thirty (30) days after receipt by Tenant of a copy of such bills and
statements referred to above, or (ii) five (5) days prior to delinquency. As
used herein, the term "Real Estate Taxes" shall mean any and all taxes,
governmental fees and similar charges or assessments levied or assessed against
the Improvements and/or the Land including, without limitation, ad valorem taxes
and special assessments applicable to real property; provided, however, that
Real Estate Taxes shall not include any Landlord Income Taxes. Real Estate Taxes
shall also include any and all documentary, transfer, sales, mortgage, recording
or similar taxes imposed on Landlord or Tenant in connection with (i) the
original acquisition
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of the Premises by Landlord, (ii) any transfer of the Premises to Tenant
pursuant to the terms of this Lease, or (iii) any sale of the Premises to a
third party pursuant to the terms of this Lease. As used herein, the term
"Landlord Income Taxes" shall mean any and all income, franchise, gains, gift,
succession, excess profits, gross receipts, revenue, estate, rental, or similar
taxes or taxes in lieu thereof imposed upon Landlord or any party other than
Tenant (or an affiliate thereof) and any withholding tax imposed as a collection
device for, in lieu of, or otherwise related to any of the foregoing without
regard to whether such tax is required to be collected by Tenant and without
regard to whether Tenant would be liable for such withholding tax in the event
it failed to so withhold. For purposes of the foregoing, an income tax shall
include, without limitation, any tax imposed under the United States Internal
Revenue Code or the California Bank and Corporation Tax Law as well as any tax
which could qualify as an "income tax" under United States Treasury Regulation
Section 1.901-2 (except to the extent any such statute or regulation is
subsequently modified to include a tax or other governmental charge of a
materially different type and nature from the taxes currently described therein)
and any income tax which may be payable under the laws of any jurisdiction
either now or in the future. Real Estate Taxes for any given tax year shall
exclude assessment installments that are not due and payable during such tax
year.
6.2 PERSONAL PROPERTY TAXES. Tenant shall pay directly to
the appropriate taxing authorities prior to delinquency any and all taxes and
assessments levied or assessed during the Term upon or against Tenant's
furniture, equipment, trade fixtures and any other personal property in the
Premises.
6.3 RIGHT TO CONTEST. Tenant shall not be required to pay
any Real Estate Taxes or any other taxes for which Tenant is liable hereunder
(including, without limitation, any taxes for which Tenant is required to
indemnify Landlord under Section 6.5) (including penalties and interest), so
long as (i) Tenant shall contest the same or the validity thereof by appropriate
legal proceedings in such a manner to prevent the tax sale of any portion of the
Premises and (ii) the position to be taken by Tenant pursuant to such contest
would have a realistic possibility of success if litigated. For purposes of this
Lease, Tenant may conclusively establish that a position to be taken in a
contest would have a realistic possibility of success if litigated by providing
to Landlord a letter from counsel stating an opinion to such effect. In the
event of any such contest, Tenant shall, within thirty (30) days after the final
determination thereof, pay and discharge the amounts determined to be due in
accordance therewith and with the provisions of this Lease, together with any
penalties, fines, interest, costs and expenses that may have accrued thereon or
that may have resulted from Tenant's contest. Tenant also shall have a right to
contest any taxes for which it is liable hereunder, but with regard to which the
position to be taken pursuant to such contest would not have a realistic
possibility of success if litigated, provided that Tenant pays such taxes on or
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<PAGE> 18
prior to the date upon which such taxes are asserted to be due by the relevant
governmental authority. Notwithstanding the foregoing provisions of this Section
6.3, Tenant shall have an unconditional right to contest (without prior payment)
any taxes imposed by law upon Tenant rather than upon Landlord. Tenant's
decision to pay any taxes prior to contesting its or another party's underlying
liability therefore shall not be deemed to imply or suggest that the position to
be taken in such contest would not have a realistic possibility of success if
litigated. Landlord shall cooperate fully with Tenant in connection with the
exercise of Tenant's right of contest contained herein, and in the event that
applicable law shall require that Landlord, rather than Tenant, pursue legal
proceedings for such contest, Landlord will initiate and pursue such contest
upon Tenant's request and in accordance with Tenant's instructions (including,
without limitation, Tenant's instructions as to the selection of legal counsel
and matters of strategy or settlement); provided, however, that Landlord shall
not be subject to any liability for the payment of any costs or expenses in
connection with any such contest or proceedings, and Tenant will indemnify,
defend and save harmless Landlord from and against any such costs and expenses
(including, without limitation, reasonable attorneys' fees, costs of court and
appraisal costs), reimbursing Landlord therefor upon demand (or paying such
costs and expenses directly when due, all as directed by Landlord). Tenant shall
be entitled to any refund of any taxes and penalties or interest from any
governmental authority to the extent the refund represents monies paid to the
governmental authority by Tenant or paid by Landlord and reimbursed by Tenant.
6.4 WITHHOLDING TAXES. Subject to Section 6.5, but
notwithstanding any other provision of this Lease to the contrary, Tenant may
withhold from any payments under this Lease any Landlord Income Taxes, without
obligation to gross-up, indemnify or otherwise increase payments in consequence
thereof, to the extent required by applicable law (as determined by Tenant in
its reasonable discretion). Upon the date hereof or upon the date a party
becomes a Landlord or a transferee of any portion of the Landlord's interest in
the Premises or this Lease, and within thirty (30) days following the first day
of each calendar year or if otherwise requested from time to time by Tenant,
Landlord and each transferee, if organized under the laws of a jurisdiction
outside the United States, shall provide Tenant with three counterparts of each
of the forms prescribed by the Internal Revenue Service of the United States
(Form 1001 or 4224, or successor form(s), as the case may be) certifying as to
Landlord's or such transferee's status for purposes of determining exemption
from United States withholding taxes with respect to all payments to be made to
such person. Without limitation upon the foregoing, unless Tenant has received
such forms or other documents reasonably satisfactory to it indicating that
payments under this Lease are not subject to United States withholding tax,
Tenant is authorized to and shall withhold taxes from such payments at the
applicable statutory rate. Landlord and each transferee, if organized under the
laws of the United States or any State thereof, shall timely
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provide Tenant with duplicate documents conforming to the requirements of
Treasury Regulation 1.1441-5(b) or any successor thereto (which statement may be
made on a Form W-9).
6.5 ADDITIONAL PROVISIONS RELATING TO TAXES.
Notwithstanding anything in this Section 6 to the contrary,
Tenant shall indemnify, defend and hold Landlord harmless from and against:
(a) Any and all Landlord Income Taxes imposed upon
Landlord in consequence of Landlord being treated as the owner or lessor of the
Premises (or any part thereof) for such tax purposes (provided that Landlord has
fully complied with its obligations under Section 21.2(b));
(b) Any and all minimum franchise taxes imposed in
respect of doing business within the State of California, business qualification
taxes, and similar governmental charges for which Landlord would not be liable
but for its participation in the transactions described in this Lease, including
obtaining the UBS Loan or any other Authorized Loan pursuant to this Lease;
(c) Any and all taxes imposed upon Tenant (except
to the extent that such taxes are imposed upon Tenant as a result of Landlord's
failure to comply with its obligations under this Lease);
(d) Any and all taxes required to be withheld from
payments made by Tenant to a third party not related to or affiliated with
Landlord or The Staubach Company;
(e) Any and all taxes imposed upon Landlord on
cancellation or discharge of indebtedness income arising in connection with a
write-down, payoff modification or cancellation of the UBS Loan or other
Authorized Loan (other than in connection with Landlord's or SGA's bankruptcy or
insolvency or any write-down, payoff, modification or cancellation of the SGA
Loan (as defined in Section 12.1(b)) not authorized in advance by Tenant) and
provided that Landlord has fully complied with its obligations under Section
21.2(b);
(f) Any and all Real Estate Taxes; and
(g) Any and all taxes owed by Landlord as a result
of payment made by Tenant to or for the benefit of Landlord pursuant to Tenant's
indemnity obligations under this Section 6.5.
Tenant's obligation to reimburse or indemnify Landlord for any
taxes, governmental fees, penalties, interest or other supplemental tax charges
under this Lease shall be reduced by the value of any related or offsetting tax
benefits derived or realized by Landlord. For purposes of calculation of tax
benefits derived or realized by Landlord, any net operating loss attributable to
the
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<PAGE> 20
Premises for any year shall be deemed to be available to offset against income
from the Premises in subsequent years regardless of whether it is in fact
available. Tenant's duty to indemnify Landlord under this Section 6.5 shall
apply only to taxes arising during the Term (whether or not due and payable at
the conclusion of the Term), but shall otherwise survive the expiration or
earlier termination of this Lease.
ARTICLE 7
INSURANCE
7.1 LIABILITY INSURANCE. At all times during the Term,
Tenant shall obtain at Tenant's sole cost and expense a policy or policies of
comprehensive general liability insurance on an "occurrence" basis against
claims for "personal injury" liability, including, without limitation, bodily
injury, death or property damage liability. The liability insurance policy shall
contain coverage limits no less than a combined single limit of $5,000,000 per
occurrence. The insurance may be furnished under a "primary" policy and an
"umbrella" policy or policies. Landlord shall be named as an additional insured
under Tenant's policy and Tenant's policy shall contain an endorsement for
cross-liability coverage. Tenant shall furnish Landlord with certificates from
Tenant's insurers with respect to the insurance required to be carried hereunder
on or before the date of execution of this Lease. The certificates shall state
that such insurance is in full force and effect and that coverage will not be
cancelled without twenty (20) days' prior written notice to Landlord. Renewal
certificates shall be furnished to Landlord not less than thirty (30) days prior
to the expiration of each such policy. Any blanket insurance policy or policies
that insure Tenant against the risks and for the amounts herein specified shall
be deemed to satisfy the obligation of Tenant hereunder, provided that any such
policy of blanket insurance shall specify the amount of the total insurance
allocated to the risks required to be insured hereunder and such allocated
amount meets the requirements of this Article 7. All insurance required by this
Article 7 shall be with an insurance company licensed to do business in the
State of California with a general policyholder's rating, as rated by the most
current available "Bests" Insurance Reports, no less than A-III, and shall be
primary and non-contributing.
7.2 WAIVER OF SUBROGATION. Notwithstanding anything to the
contrary contained herein, to the extent permitted by law and so long as any
insurance coverage maintained by Tenant is not diminished by reason thereof,
Tenant hereby (a) releases and waives any rights it may have against Landlord
and its officers, agents and employees on account of any loss or damages
occasioned to Tenant, its property or the Premises, and arising from any risk
covered by any fire and extended coverage insurance maintained by Tenant,
whether or not due to the negligence of Landlord, its agents, employees,
contractors, licensees, invitees or other persons, and (b) waives on behalf of
any insurer providing such
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insurance to Tenant any right of subrogation that any such insurer may have or
acquire against Landlord or such persons by virtue of payment of any loss under
such insurance. Tenant shall use its best efforts to cause its insurance
policies to contain a waiver of subrogation clauses in accordance with the
foregoing.
7.3 INDEMNITY. Tenant shall protect, defend, indemnify,
hold and save Landlord harmless from and against any and all losses, costs,
liabilities or damages (including reasonable attorneys' fees and disbursements
and court costs) arising by reason of: (i) any and all injury or death of
persons or damage to property against which Tenant is obligated to maintain
insurance for the benefit of Landlord pursuant to this Article 7; (ii) the
failure to obtain the waiver of subrogation clause required by Section 7.2
hereof where such clause could have been obtained through the exercise of
Tenant's best efforts; or (iii) the invalidation of such insurance policy
required to be obtained by Tenant hereunder by Tenant's insurer. Tenant's duty
to indemnify Landlord under this Section 7.3 shall survive the expiration or
earlier termination of this Lease with respect to events occurring during the
Term.
ARTICLE 8
USE
8.1 USE.
(a) PERMITTED USES. Tenant may use the Premises
for any lawful purpose.
(b) ENVIRONMENTAL COMPLIANCE.
(i) DEFINED TERMS. The term
"Applicable Environmental Laws" shall mean any applicable laws, regulations or
ordinances pertaining to health or the environment, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 or otherwise (as amended, hereinafter called
"CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended by the
Used Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980,
the Hazardous and Solid Waste Amendments of 1984 or otherwise (as amended,
hereinafter called "RCRA"), and California Health & Safety Code Section
25501(j). The terms "hazardous substance" and "release" as used in this Lease
shall have the meanings specified in CERCLA, and the terms "solid waste" and
"disposal" (or "disposed") shall have the meanings specified in RCRA; provided,
in the event either CERCLA or RCRA is amended or superseded by other laws so as
to broaden the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment or other laws; and,
provided further, to the extent that the laws of the State of California
establish a meaning for "hazardous substance", "release", "solid waste", or
"disposal"
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which is broader than that specified in either CERCLA or RCRA, such broader
meaning shall apply. The term "Pre-existing Contamination" means concentrations
of arsenic and lead existing in soil and groundwater at the Premises as of the
Lease Commencement Date.
(ii) TENANT'S COVENANTS. Tenant
will not cause or permit the Premises or the Improvements to be in violation of,
or do anything or permit anything to be done which subjects Landlord, Tenant or
the Premises to any remedial obligations under or which creates a claim or cause
of action under, any Applicable Environmental Laws, including, without
limitation, CERCLA, RCRA, and the California Health and Safety Code Section
25501(j), assuming disclosure to the applicable governmental authorities of all
relevant facts, conditions and circumstances, if any, pertaining to the Premises
and the Improvements, and Tenant will promptly notify Landlord in writing of any
existing, pending or threatened investigation, claim or inquiry of which Tenant
has knowledge by any governmental authority in connection with any Applicable
Environmental Laws. Tenant shall obtain any permits, licenses or similar
authorizations to construct, occupy, operate or use any Improvements, fixtures
and equipment at any time located on the Premises by reason of any Applicable
Environmental Laws. Tenant will not use the Premises or the Improvements in a
manner which will result in the unlawful disposal or other unlawful release of
any hazardous substance or solid waste on or to the Premises or the Improvements
and covenants and agrees to keep or cause the Premises and the Improvements to
be kept free of any unlawful hazardous substance, unlawful solid waste or
unlawful environmental contaminants (including, without limitation, friable
asbestos and any substance containing asbestos deemed hazardous and unlawful by
any Applicable Environmental Law) and to remove the unlawful amounts of the same
(or if removal is prohibited by law, to take whatever action is required by law)
promptly upon discovery at Tenant's sole expense. Tenant shall promptly notify
Landlord in writing of any unlawful disposal or other unlawful release of any
hazardous substance, environmental contaminants or solid wastes on or to the
Premises or the Improvements. Landlord and Tenant acknowledge that Pre-existing
Contamination exists at the Premises due to operations of prior owners and that
Tenant has no further obligation to notify Landlord regarding such Pre-existing
Contamination. Landlord acknowledges receipt of that certain Phase I
Environmental Assessment and Phase II Soil and Groundwater Evaluation dated
March 31, 1995 prepared by Lowney Associates ("Report"); provided that delivery
of such Report shall in no way limit or modify Tenant's indemnity obligations
pursuant to Section 8.1(b)(iii) hereof. Tenant acknowledges that Landlord will
not acquire the Premises if any environmental contamination of the Premises in
violation of applicable law, which contamination is not disclosed in the Report,
occurs or is discovered before the Lease Commencement Date. In the event Tenant
fails to comply with or perform any of the foregoing covenants and obligations,
after thirty (30) days' prior written Notice to Tenant, Landlord may, but shall
be under no obligation to, cause the Premises and the Improvements to be freed
from the unlawful hazardous substance,
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unlawful solid waste or unlawful environmental contaminants (or if removal is
prohibited by law, to take whatever action is required by law) and the
reasonable cost of the removal or such other action shall be a demand obligation
owing by Tenant to Landlord pursuant to this Lease; provided, however that this
sentence shall not apply to Pre-existing Contamination. Notwithstanding the
foregoing, Landlord shall have no right to cause the removal of such materials
so long as Tenant both: (1) is diligently and in good faith proceeding to comply
with Tenant's obligation to remove the unlawful amounts of such materials; and
(2) has the financial ability to so comply. Subject to the foregoing, Tenant
grants to Landlord and Landlord's agents and employees access to the Premises
and the Improvements, and the license to remove the unlawful hazardous
substance, unlawful solid waste or unlawful environmental contaminants (or if
removal is prohibited by law, to take whatever action is required by law) and
agrees to indemnify, defend and save Landlord harmless from and against all
reasonable costs and expenses involved and from all claims (including
consequential damages) asserted or proven against Landlord by any party in
connection therewith. Upon Landlord's reasonable request for "good cause"
(defined below), at any time and from time to time during the Term, Tenant will
provide at Tenant's sole expense an inspection or audit of the Premises and the
Improvements from an engineering or consulting firm approved by Landlord,
indicating the presence or absence of any hazardous substance, solid waste or
environmental contaminants located on the Premises; provided, however that this
provision shall not apply to Pre-existing Contamination. If Tenant fails to
provide same after sixty (60) days' notice, Landlord may order same, and Tenant
grants to Landlord and Landlord's employees and agents access to the Premises
and the Improvements and a license to undertake any testing reasonably required
to obtain such inspection or audit. The reasonable cost of obtaining such
inspection or audit and any expenses incurred by Landlord in connection
therewith, shall be a demand obligation owing by Tenant to Landlord pursuant to
this Lease. For purposes of this Section 8.1(b)(ii), "good cause" shall mean
that Landlord shall have reasonable grounds to believe that an unlawful release
or unlawful disposal of hazardous substances or solid wastes has occurred on the
Premises or the Improvements, but shall not include Pre-existing Contamination.
(iii) TENANT'S INDEMNITY. Tenant
agrees to indemnify, defend and hold Landlord harmless from and against, and to
reimburse Landlord with respect to, any and all claims, demands, causes of
action, losses, damages, liabilities, costs and expenses (including without
limitation attorneys' fees and court costs), fines and/or penalties of any and
every kind or character, known or unknown, fixed or contingent, asserted or
potentially asserted against or incurred by Landlord at any time and from time
to time by reason of, in connection with or arising out of (A) the failure of
Tenant to perform any obligation herein required to be performed by Tenant
regarding Applicable Environmental Laws, (B) any violation of any Applicable
Environmental Law by Tenant or with respect to the Premises or the Improvements,
or any disposal or
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other release by Tenant or with respect to the Premises or the Improvements of
any hazardous substance, environmental contaminants or solid waste on or to the
Premises or the Improvements, whether or not resulting in a violation of any
Applicable Environmental Law, (C) any act, omission, event or circumstance by
Tenant or with respect to the Premises or the Improvements which constitutes or
has constituted a violation of any Applicable Environmental Law with respect to
the Premises or the Improvements, regardless of whether the act, omission, event
or circumstance constituted a violation of any Applicable Environmental Law at
the time of its existence or occurrence, and (D) any and all claims or
proceedings (whether brought by private party or governmental agencies) for
bodily injury, property damage, abatement or remediation, environmental damage
or impairment or any other injury or damage resulting from or relating to any
hazardous or toxic substance or contaminated material located upon or migrating
into, from or through the Premises or the Improvements (whether or not the
release of such materials was caused by Tenant, a subtenant, a prior owner of
the Premises or any other Entity) which Landlord may incur. Tenant's duty to
indemnify Landlord under this Section 8.1 shall survive the expiration or
earlier termination of the Lease with respect to events occurring during or
prior to the Term or after the Term while Landlord has record title to and
Tenant is occupying the Premises.
8.2 CONTEST OF LEGAL REQUIREMENTS. Tenant shall have the
right at its sole cost and expense to contest the validity of any Legal
Requirements applicable to the Premises by appropriate proceedings diligently
conducted in good faith; and upon the request of Tenant and at Tenant's sole
cost and expense, Landlord will join and cooperate with Tenant in such
proceedings. Any other provision of this Lease (other than Section 6.3) to the
contrary notwithstanding, Tenant's right to contest Legal Requirements must be
exercised in such a manner as to avoid any exposure of the Premises or any part
thereof to foreclosure or execution sale or exposure of Landlord to civil or
criminal penalties arising from Tenant's non-compliance with such Legal
Requirements. Tenant shall defend and indemnify Landlord against, and hold
Landlord harmless from, any and all liability, loss, cost, damage, injury or
expense (including, without limitation, attorneys' fees and costs) which
Landlord may sustain or suffer by reason of Tenant's failure or delay in
complying with, or Tenant's contest of, any such Legal Requirements (or
Landlord's contest, if requested in writing by Tenant), and Tenant's duty to
indemnify Landlord under this Section 8.2 shall survive the expiration or
earlier termination of this Lease.
8.3 INDEMNIFICATION. Tenant will defend, protect,
indemnify and save harmless Landlord from and against all liabilities,
obligations, claims, damages, causes of action, costs and expenses, imposed upon
or incurred by Landlord by reason of the occurrence or existence of any of the
following during the Term, except to the extent caused by the willful
misconduct, gross negligence, or willful breach of contract of Landlord or its
agents
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or contractors: (1) any claims of Seller arising from the Purchase Agreement
described in Section 4.1 (provided, that, without limitation of Tenant's
indemnity obligations hereunder, Tenant's indemnity obligation under this Clause
1 shall apply notwithstanding a willful breach of the Purchase Agreement by
Landlord if such breach is caused, directly or indirectly, by Tenant or any
actions or failure to act by Tenant or as a result of Landlord's following
Tenant's instructions with respect to the Purchase Agreement or in the event
that Landlord is unable to obtain the UBS Loan); (2) any accident, injury to or
death of persons or loss of or damage to property occurring on or about the
Premises or Improvements; (3) performance of any labor or services or the
furnishing of any materials or other property in respect of the Premises or the
Improvements; (4) the negligence or willful misconduct on the part of Tenant or
any of its agents, invitees, employees or contractors or any other persons
entering onto the Premises or the Improvements at the request, behest or with
the permission of Tenant; (5) the construction, use or occupancy of the
Improvements which Tenant may elect to construct; (6) the existence or
application of any Legal Requirements with respect to the Premises or
Improvements; or (7) the use of the Premises or Improvements. Tenant's duty to
indemnify Landlord under this Section 8.3 shall survive the expiration or
earlier termination of this Lease with respect to events occurring prior to the
commencement of the Term, during the Term or after the Term while Landlord has
record title to and Tenant is occupying the Premises. Notwithstanding anything
to the contrary herein, Tenant's duty to indemnify Landlord pursuant to Clause 1
above shall apply only with respect to events or occurrences occurring prior to
commencement of the Term.
ARTICLE 9
UTILITIES AND SERVICES
9.1 SERVICES TO THE PREMISES. At Tenant's sole cost and
expense, Tenant shall make its own arrangements for the provision of all
utilities and services to be provided to or consumed on the Premises, including,
without limitation, air conditioning, ventilation, heating, electric power,
telephone, water (both domestic and fire protection), sanitary sewer, storm
drain, natural gas and janitorial services, including for the installation,
maintenance and repair of service lines and meters to measure Tenant's
consumption of such utilities.
ARTICLE 10
MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES
10.1 TENANT OBLIGATIONS. Except as otherwise provided in
this Lease, Tenant shall maintain the Premises in good repair, normal wear and
tear, casualty and Takings (as defined in Section 15.1) excepted. All
maintenance that Tenant is obligated to perform under this Section 10.1 shall be
at the sole expense of Tenant, except to the extent that repairs are made
necessary
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because of the gross negligence or willful misconduct of Landlord, its agents,
employees or contractors.
10.2 SURRENDER OF THE PREMISES. Except as provided in
Section 19, upon the expiration or earlier termination of the Term, Tenant
shall surrender the Premises to Landlord in its then "AS-IS" condition,
including, without limitation, any condition resulting from: (i) wear and tear;
(ii) obsolescence and damage by fire or other casualty, act of God or the
elements; (iii) damage that is beyond Tenant's reasonable control or is caused
by Landlord, its agents, employees or contractors; (iv) any Improvements which
Tenant may elect to construct (in compliance with the terms of this Lease) and
leave on the Premises (subject to the rights of any other Entity in such
Improvements); (v) Takings; and (vi) Tenant's alterations, additions, removals,
repairs, replacements, or decorations in, to or of the Premises. Title to all
Improvements, furniture, furnishings, fixtures, trade fixtures and personal
property of Tenant located in or upon the Premises, whether or not affixed to
the realty, shall be and remain in Tenant, and upon the expiration or earlier
termination of this Lease, or within thirty (30) days thereafter (or as soon
thereafter as reasonably practical), the same may be removed by Tenant, or, at
Tenant's election, surrendered with the Premises, in which event title to such
surrendered property shall, if Landlord so elects in Landlord's sole
discretion, be deemed transferred to Landlord (subject to the rights of any
other Entity in such Improvements).
ARTICLE 11
CONSTRUCTION OF IMPROVEMENTS AND COMMON AREA
11.1 TENANT'S RIGHTS TO CONSTRUCT IMPROVEMENTS. Tenant
shall be under no obligation whatsoever to construct any Improvements. Tenant
shall have the right, in Tenant's sole discretion, to construct Improvements
which Tenant desires, subject only to the specific approvals required from
Landlord pursuant to the terms of this Section 11.1. Notwithstanding anything
to the contrary, without obtaining Landlord's approval, Tenant may perform work
on the Premises which does not consist of the actual construction of
above-ground buildings (for example, Tenant may perform grading, trenching and
similar work, and may install and construct utilities, parking lots, driveways,
roadways, foundations, and the like).
(a) APPROVAL PLANS. Prior to commencing any
actual construction of Improvements (except as otherwise permitted or already
approved pursuant to this Section 11.1), Tenant's proposed site plans (showing
the locations and orientations of any proposed buildings) and exterior shell
plans (showing exterior building sections) (collectively, "Approval Plans") of
any Improvements which Tenant may elect to construct shall be submitted to and
approved by Landlord in accordance with the following (in each case to the
extent applicable). Tenant shall deliver a letter to Landlord along with any
submitted Approval Plans in which Tenant
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states that the submitted Approval Plans do not violate any Legal Requirements.
Landlord may only withhold Landlord's approval to any such Approval Plans to the
extent that the Approval Plans violate any material Legal Requirements, and
Landlord may not withhold its consent on any other ground. At the option of
Tenant, the foregoing documentation may be submitted to Landlord for approval in
stages as Tenant completes it. Landlord shall have a period of ten (10) days
from the date of receipt of each component of the documentation within which to
approve or reject it. The Approval Plans, as approved from time to time by
Landlord pursuant to this Section 11.1 shall constitute the "Authorized Plans."
Tenant shall immediately reimburse Landlord on demand for all reasonable
out-of-pocket costs and expenses incurred by Landlord in connection with the
review and approval of any Approval Plans, provided that Landlord first gives
Tenant a detailed written notice that it has reasonable grounds to believe that
the Approval Plans violate material Legal Requirements, and Tenant fails either
to revise such Approval Plans to comply with such material Legal Requirements or
to provide reasonable evidence that the Approval Plans do not violate material
Legal Requirements. Landlord's approval of any Authorized Plans does not
constitute any representation or warranty by Landlord with respect to such
Authorized Plans, and Landlord hereby specifically disclaims any such
representations and warranties.
(b) FURTHER APPROVALS; PROPOSED CHANGES.
Subsequent to Landlord's approval of any Authorized Plans pursuant to Section
11.1(a), Tenant shall only be obligated to submit to Landlord for approval
documentation showing any proposed material change to the Authorized Plans (but
no approval shall be required with respect to construction or design matters
that are not contained or addressed by the Authorized Plans), and only to the
extent such change is materially inconsistent with the Authorized Plans.
Landlord shall have a period of ten (10) days from receipt of each material
change within which to approve or reject it. Landlord may only withhold
Landlord's approval to any such change to the Authorized Plans to the extent
that such change violates any material Legal Requirements, and Landlord may not
withhold its consent on any other ground. Tenant shall immediately reimburse
Landlord on demand for all reasonable out-of-pocket costs and expenses incurred
by Landlord in connection with the review and approval of any such changes,
provided that Landlord first gives Tenant a detailed written notice that it has
reasonable grounds to believe that the Approval Plans violate material Legal
Requirements, and Tenant fails either to revise such Approval Plans to comply
with such material Legal Requirements or to provide reasonable evidence that
the Approval Plans do not violate material Legal Requirements. Tenant shall
have the right, without further approval of Landlord, to construct Improvements
not inconsistent with the Authorized Plans together with such changes thereto
as may be requested or required to comply with Legal Requirements.
(c) FAILURE TO DISAPPROVE. The failure by
Landlord to disapprove any portion of the proposed Approval Plans submitted
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pursuant to this Section 11.1, or send Notice that it has grounds to believe the
proposed Approval Plans violate a material Legal Requirement within the
specified approval period shall be deemed to constitute approval thereof as
submitted, and such Approval Plans shall thereupon become Authorized Plans. Any
disapproval by Landlord of any portion of the proposed Approval Plans shall be
in writing and shall specify with particularity the basis for the disapproval.
(d) OTHER IMPROVEMENTS AND ALTERATIONS. At any
time and from time to time, and without the necessity for obtaining Landlord's
approval or giving Notice thereof to Landlord, Tenant shall have the right, at
its expense, to make any Improvements, alterations, additions, repairs,
replacements or decorations in, to or of the Premises which do not materially
change the exterior design scope of the Improvements as previously approved by
Landlord pursuant to any Authorized Plans. In constructing any Improvements,
Tenant shall do so in a manner which does not violate any applicable and
material Legal Requirements.
11.2 REQUIRED PERMITS, EASEMENTS, ETC. From time to time,
upon request of Tenant, Landlord (as holder of record of title to the Land)
shall execute such reasonable documents, petitions, applications and
authorizations, easements and rights of way (which have been prepared at
Tenant's expense) and shall appear at and participate in such public hearings,
staff meetings and similar gatherings, in each case as may in the reasonable
and good-faith opinion of Tenant be necessary or appropriate for the purpose of
obtaining any Required Permits or private easements or rights of way or utility
services for the Improvements or to remove any title encumbrances on the Land
which may interfere with Tenant's construction of the Improvements. Tenant
shall immediately reimburse Landlord on demand (or pay directly) for all
reasonable out-of-pocket costs and expenses incurred by Landlord in complying
with Landlord's obligations under this Section 11.2.
11.3 DEMOLITION AND RECONSTRUCTION. At any time and from
time to time, Tenant shall have the right to demolish or alter all or any
portion of the then existing Improvements and construct additional Improvements
in their place. The additional Improvements, if any, to be constructed shall
be submitted to and approved by Landlord only to the extent required by Section
11.1, as applicable.
11.4 TITLE TO AND NATURE OF IMPROVEMENTS. Any and all
Improvements of whatever nature at any time constructed, placed or maintained
upon any part of the Land shall be and remain the property of Tenant, subject
to Tenant's right to assign or sublease. The severance of fee title to the Land
and Improvements shall not change the character of the Improvements as real
property.
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ARTICLE 12
LIENS
Except for claims that Tenant is contesting in good faith in
such manner as to avoid any exposure of the Premises or any part thereof to
foreclosure or execution sale, Tenant shall promptly pay and discharge all
claims for work or labor done, supplies furnished or services rendered to the
Premises, and shall keep the Premises free and clear of all mechanics' and
materialmen's liens in connection therewith.
ARTICLE 13
ASSIGNMENT BY LANDLORD
13.1 FURTHER MORTGAGES OR ENCUMBRANCES BY LANDLORD;
AUTHORIZED LOANS.
(a) PROHIBITION. Except for the Tenant Deed of
Trust and as specifically permitted in Section 11.2, 13.1(b) or 20, Landlord
shall not cause or create any mortgages, deeds of trust, encumbrances or other
exceptions to title (collectively, "New Encumbrances") to exist with respect to
the Premises at any time, and any such encumbrance not authorized in writing by
Tenant shall be null and void. The term "New Encumbrances" shall also include
any bonds or assessments affecting the Premises to which Landlord consents in
writing without the prior written approval of Tenant (which may be withheld in
Tenant's sole and absolute discretion). Without the prior written consent of
Tenant (which may be withheld in Tenant's sole and absolute discretion),
Landlord shall not make or join in an application or other document which
requests or authorizes any bonds or assessments to affect the Premises.
Landlord recognizes that any New Encumbrance may irreparably harm Tenant in
connection with one or more of the following: (1) construction which Tenant
may desire to perform; (2) the use of the Premises; (3) Tenant's rights
pursuant to the Purchase Option in Section 19; (4) the amount of assessments
which Tenant is required to pay; or (5) other matters.
(b) AUTHORIZED LOAN. Tenant has approved the
terms of the loan ("UBS Loan") to be made by UBS to SGA which shall be
evidenced by that certain Tranche B Promissory Note dated as of the Lease
Commencement Date by SGA in favor of UBS ("UBS Note"), and further evidenced
and/or secured by (a) that certain General Terms and Conditions of Credit
Arrangement between SGA and UBS, (b) that certain Additional Terms and
Conditions between SGA and UBS, (c) that certain Pledge Agreement, as amended
by Rider No. 1 thereto, made by Tenant in favor of UBS, and (d) certain
documents (including, without limitation a promissory note and related
documents) evidencing a loan ("SGA Loan") from SGA to Landlord in the principal
amount of the UBS Note, all dated as of the Lease Commencement Date; provided,
however, that Tenant, Landlord and SGA reserve the right to approve, in their
sole discretion, the final form of all documents related to the UBS Loan. In
addition, upon
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the maturity or prepayment of the UBS Loan (whether by its terms, by
acceleration or otherwise), Landlord may (but, subject to the terms of Section
13.1(c), shall not be obligated to) enter into a new loan (such authorized loan
shall be the "New Loan"), provided Landlord first obtains Tenant's written
consent (which consent shall not be unreasonably withheld except with respect
to the matters contained in clauses (i) through (v) below so long as: (i) the
UBS Loan is paid off with the proceeds of such New Loan and all documents
securing or reflecting the UBS Loan are assigned to the lender who makes the
New Loan or are released and satisfied; (ii) the principal amount of the New
Loan does not exceed the principal amount of the UBS Loan existing at the time
the UBS Loan is repaid; (iii) the interest rate and payment provisions under
the New Loan would not result in higher monthly payments than the method under
the UBS Loan, and all such monthly payments shall be interest only; (iv) there
are no prepayment prohibitions, penalties or other restrictions which would
limit rights to retire the New Loan or require additional payment to do so; and
(v) the New Loan documents do not contain terms and conditions which differ
from the UBS Loan documents in any material respect, including provisions
relating to the Collateral as defined in Section 21.18. The UBS Loan, the New
Loan authorized pursuant to the preceding sentence and the Replacement Loan
described in Section 13.1(c) below shall be the "Authorized Loan"; provided
that only one Authorized Loan may exist at any one point in time. Landlord may
not modify the terms of an Authorized Loan without the prior written consent of
Tenant, which Tenant shall not unreasonably withhold (but may be withheld in
Tenant's sole and absolute discretion based upon any of the matters identified
in subitems (i) through (v) above in this Section 13.1(b)).
(c) REPLACEMENT LOAN. Subject to Landlord's
prior written consent (which consent shall not be unreasonably withheld or
delayed), at the request of Tenant, Landlord shall execute and/or shall cause
SGA to execute loan documents evidencing and/or securing a new loan to Landlord
or SGA, the proceeds of which would be used to retire the UBS Loan (such loan
requested by Tenant shall be a "Replacement Loan"). Landlord shall only be
entitled to refuse to consent to such new loan if (1) the maturity date of the
Replacement Loan is a date before the expiration date of the Extension Term;
(2) the principal amount of the Replacement Loan exceeds the principal amount
of the UBS Loan plus any accrued interest and fees payable at the time the UBS
Loan is prepaid; (3) the interest rate structure under the Replacement Loan is
materially higher than market conditions would justify at the time; (4) there
are prepayment prohibitions, penalties or other restrictions which would limit
rights to retire the Replacement Loan or require additional payment to do so;
(5) the Replacement Loan creates greater liability for Landlord or SGA than
otherwise would exist for Landlord and SGA, or would result in the violation of
any law, rule or regulation applicable to Landlord or SGA, or (6) the
Replacement Loan documents contain terms and conditions which differ from the
UBS Loan documents in any material respect (including provisions relating to
the Collateral as defined in
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Section 21.18); provided, however, that Landlord shall not be entitled to object
to a Replacement Loan on the ground that Landlord, rather than SGA, shall be the
borrower under such Replacement Loan. Tenant shall pay all reasonable costs,
including without limitation reasonable attorneys' fees, incurred by Landlord in
connection with obtaining such a Replacement Loan. If Tenant requests and
provides the funds, Landlord shall make all arrangements necessary for, and
shall pay down any Authorized Loan in the amount requested by Tenant, and shall
arrange for all documentation reasonably requested by Tenant to reflect the
reduction or elimination of such Authorized Loan.
(d) On the Lease Commencement Date, Landlord
shall execute, acknowledge, and cause to be recorded in the Official Records, a
deed of trust in form acceptable to Tenant ("Tenant Deed of Trust"), which
Tenant Deed of Trust shall secure Landlord's obligations under this Lease (i)
to return the Security Deposit pursuant to the terms of this Lease, (ii) to
convey the Premises to Tenant as required pursuant to Article 19 hereof, and
(iii) to comply with Sections 20.4, 20.5 and 20.6. The Tenant Deed of Trust
shall be a first priority lien against the Premises.
13.2 LANDLORD'S RIGHT TO SELL. Subject to Tenant's
Purchase Option and the mandatory purchase set forth in Article 19 and the
terms of Section 13.1 and Article 20, nothing contained in this Lease shall be
deemed in any way to limit, restrict or otherwise affect the right of Landlord
at any time and from time to time to sell or transfer all of its right, title
and estate in the Premises to a Landlord Affiliate or, if an Event of Major
Default has occurred and is continuing at the time of such sale or transfer, to
any Entity, provided that such buyer or transferee shall concurrently assume
without incurring personal liability except as expressly provided in this
Lease, in writing, in a manner consistent with this Lease and in compliance
with all requirements of the UBS Loan documents, all of Landlord's and/or SGA's
obligations under the UBS Loan or any other Authorized Loan and the Landlord's
obligations under this Lease. Notwithstanding anything to the contrary in this
Lease, without the prior written consent of Tenant (which may be withheld in
Tenant's sole discretion), in no event shall Landlord sell or transfer all or
any portion of Landlord's right, title or estate in the Premises to any Entity
which does not then comply with the requirements of Sections 20.4 and 20.5 if
an Event of Major Default does not then exist at the time of such sale or
transfer. Any sale or transfer by Landlord whatsoever shall by its express
terms recognize and confirm the right of possession of Tenant to the Premises
and Tenant's other rights arising out of this Lease shall not be affected or
disturbed in any way by any such sale, transfer, assignment or conveyance.
13.3 TRANSFER OF FUNDS AND PROPERTY. At each time
Landlord sells, assigns, transfers or conveys the entire right, title and
estate of Landlord in the Premises and in this Lease, Landlord shall turn over
to the transferee the Security Deposit and any other funds or other property
then held by Landlord under this
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Lease and thereupon all the liabilities and obligations on the part of the
Landlord under this Lease arising after the effective date of such sale,
assignment, transfer or conveyance shall terminate as to the transferor and be
binding upon the transferee.
ARTICLE 14
ASSIGNMENT AND SUBLEASING
14.1 RIGHT TO ASSIGN.
(a) TENANT'S RIGHT. Tenant shall have the right,
at any time and from time to time during the Term, to assign all or any portion
of its right, title and estate in the Premises and in this Lease without
approval by Landlord. Any such assignee, immediate or remote, shall have the
same right of assignment. Any such assignment shall be evidenced by a written
instrument, properly executed and acknowledged by all parties thereto and, at
Tenant's election, duly recorded in the Official Records, wherein and whereby
the assignee assumes all of the obligations of Tenant under this Lease.
Notwithstanding any such assignment and assumption or any sublease permitted
under Section 14.2 hereof, Tenant shall remain primarily liable for all
obligations and liabilities on the part of Tenant theretofore or thereafter
arising under this Lease.
(b) NOTICE. Tenant shall, promptly after
execution of each assignment, notify Landlord of the name and mailing address
of the assignee and shall, on demand, permit Landlord to examine and copy the
assignment agreement.
14.2 RIGHT TO SUBLET.
(a) TENANT'S RIGHT. Tenant shall have the right,
at any time and from time to time during the Term, to sublet all or any portion
of the Premises and to extend, modify or renew any sublease without the
approval of Landlord.
(b) NOTICE. Tenant shall, promptly after
execution of each sublease, notify Landlord of the name and mailing address of
the subtenant and shall, on demand, permit Landlord to examine and copy the
sublease.
(c) NON-DISTURBANCE AGREEMENT. Upon Tenant's
request, Landlord shall enter into a "landlord agreement" with any subtenant of
Tenant. Such agreement shall provide that Landlord shall recognize the
sublease and not disturb the subtenant's possession thereunder so long as such
subtenant shall not be in default under its sublease, and an Event of Major
Default is not then in existence and continuing under this Lease. Tenant shall
immediately reimburse Landlord on demand for all reasonable out-of-pocket
costs and expenses incurred by Landlord in complying with Landlord's
obligations under this Section 14.2(c).
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14.3 TENANT'S RIGHT TO MORTGAGE.
(a) RIGHT OF TENANT. Tenant shall have the right
from time to time and at any time, without obtaining the approval of Landlord,
to mortgage, pledge or otherwise encumber all or any portion of the right,
title and estate of Tenant in the Premises or in this Lease.
(b) NOTICE. Tenant shall, promptly after
execution of any Mortgage, notify Landlord of the name and mailing address of
the Mortgagee thereunder and shall, on demand, permit Landlord to examine and
copy the Mortgage.
ARTICLE 15
EMINENT DOMAIN
15.1 TOTAL OR SUBSTANTIAL TAKING. If title or access is
taken for any public or quasi-public use, or under any statute or by right of
condemnation or eminent domain, or by sale in lieu thereof (a "Taking") with
respect to all of the Premises, or if title to so much of the Premises or
access thereto is Taken, or if the Premises or access thereto is damaged,
blocked or impaired by the Taking, so that, in Tenant's sole discretion, the
Premises or access thereto, even after a reasonable amount of reconstruction
thereof, will no longer be suitable for Tenant's (and/or Tenant's subtenants')
continued occupancy for the conduct of Tenant's (and/or Tenant's subtenants')
business in a manner consistent with the conduct of such business prior to such
Taking, then in any such event, this Lease shall terminate on the date of such
Taking.
15.2 PARTIAL TAKING. If any part of the Premises, or
access thereto, shall be Taken, and the Premises or the remaining part thereof
and access thereto will be, in Tenant's sole discretion, suitable for Tenant's
(and/or Tenant's subtenants') continued occupancy for the conduct of Tenant's
(and/or Tenant's subtenants') business in a manner consistent with the conduct
of such business prior to such Taking, all of the terms, covenants and
conditions of this Lease shall continue, except that Base Rent shall be
adjusted to reflect the decreased Funded Amount remaining after application
thereto of the award made to Landlord for such Taking (subject to Section 15.3
below).
15.3 TEMPORARY TAKING. If the whole or any part of the
Premises is Taken for temporary use or occupancy, this Lease shall not
terminate by reason thereof and Tenant shall continue to pay, in the manner and
at the times herein specified, the full amount of the Base Rent payable by
Tenant hereunder, and, except only to the extent that Tenant may be prevented
from so doing by reason of such Taking, Tenant shall continue to perform and
observe all of the other terms, covenants and conditions hereof on the part of
Tenant to be performed and observed, as though the Taking had not occurred. In
the event of any such temporary Taking, Tenant shall be entitled to receive the
entire amount of the award made for the
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Taking, whether paid by way of damages, rent or otherwise. If the temporary
Taking is for a term in excess of thirty (30) days, then the Taking shall be
treated as a permanent Taking and be governed by Section 15.1 or 15.2, as
applicable.
15.4 DAMAGES. The compensation awarded or paid upon any
Taking (other than a temporary Taking, which shall be governed by Section
15.3), whether awarded to Landlord, Tenant, or both of them, shall be
distributed as set forth below (in each case the compensation or value shall be
determined as of the date of the Taking):
(a) to Landlord, any amounts payable on account
of the value of the Land, but not to exceed an amount equal to the Funded
Amount (or, if less than the entire Premises is Taken, not to exceed a pro rata
portion of the Funded Amount equal to the ratio that the square footage of the
portion of the Premises Taken bears to the square footage of the entire
Premises prior to the Taking) plus all accrued Rent hereunder; and
(b) to Tenant, any other award, or portion
thereof, including any portion of the award above the Funded Amount (or the pro
rata portion thereof) pursuant to Section 15.4(a)).
Landlord shall promptly pay over to UBS or the holder of an
Authorized Loan, as the case may be, any award (not exceeding, however, the
Senior Funded Amount) paid to Landlord hereunder, and Tenant shall be entitled
to establish reasonable security arrangements to ensure the prompt payment of
such amounts to such holder. The Funded Amount shall be reduced on a dollar-
for-dollar basis by the amount of any award required to be paid by Landlord to
such holder of an Authorized Loan pursuant to the preceding sentence.
15.5 NOTICE AND EXECUTION. Immediately upon service of
process upon Landlord or Tenant in connection with any Taking relating to the
Premises or any portion thereof or access thereto, each party shall give the
other Notice thereof. Each party agrees to execute and deliver to the other
all instruments that may be required to effectuate the provisions of this
Article 15. Tenant reserves the right to appear in and to contest any
proceedings in connection with any such Taking. Tenant shall immediately
reimburse Landlord on demand for all reasonable out-of-pocket costs and
expenses incurred by Landlord in complying with Landlord's obligations under
this Section 15.5.
ARTICLE 16
DAMAGE OR DESTRUCTION
16.1 INSURED CASUALTY. If any Improvements are damaged
or destroyed by fire or other casualty, this Lease shall continue in full force
and effect without any abatement or reduction in Base Rent, and Tenant, at
Tenant's election, may either (a) restore the
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Improvements to their condition prior to the damage or destruction, or such
other condition as Tenant shall elect in its sole and absolute discretion,
subject to Landlord's approval rights set forth in Section 11.1, or (b) not
restore the Improvements, but perform, or cause to be performed, at Tenant's
sole cost and expense, any work or service required by any Legal Requirement
for the protection of persons or property from any risk, or for the abatement
of any nuisance, created by or arising from the casualty or the damage or
destruction caused thereby.
16.2 INSURANCE PROCEEDS. In the event of any fire or
other casualty, the proceeds of any insurance policies maintained by Tenant
shall be distributed to Tenant, and Landlord shall have no claim or right with
respect thereto.
ARTICLE 17
DEFAULT
17.1 DEFAULT. Each of the following events shall
constitute a default ("Default") by Tenant:
(a) DEFAULT OTHER THAN EVENT OF MAJOR DEFAULT.
Tenant's failure to perform or comply with any of the terms, covenants or
conditions contained in this Lease other than those referred to in Section
17.2, where such failure shall continue for a period of thirty (30) days after
Notice thereof from Landlord to Tenant, or in the case of a failure which
cannot with due diligence be cured within the period of thirty (30) days,
Tenant's failure to proceed promptly and with due diligence to cure the failure
and thereafter to prosecute the curing of the failure with all due diligence,
it being intended that in connection with a failure not susceptible of being
cured with due diligence within thirty (30) days, the time of Tenant within
which to cure the failure shall be extended for such period as may be
reasonably necessary to complete the cure with all due diligence; and
(b) INSOLVENCY. Subject to Section 17.3, the
occurrence of: (i) an assignment by Tenant for the benefit of creditors
generally; or (ii) the filing of a voluntary or involuntary petition by or
against Tenant under any present or future applicable federal, state or other
statute or law having for its purpose the adjudication of Tenant as a bankrupt;
(iii) the appointment of a receiver, liquidator or trustee for all or a
substantial portion of the Premises by reason of the insolvency or alleged
insolvency of Tenant; or (iv) the taking of possession by any department of
city, county, state or federal government, or any officer thereof duly
authorized, of all or a substantial portion of the Premises by reason of the
insolvency or alleged insolvency of Tenant; and Tenant's failure to timely give
any Notice it is permitted to give pursuant to Section 17.3 (or, in the event
Tenant gives timely Notice and pursues a contest under Section 17.3, Tenant's
failure to finally prevail in the contest).
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17.2 EVENT OF MAJOR DEFAULT. Each of the following
events shall constitute an event of major default ("Event of Major Default") by
Tenant:
(a) FAILURE TO PAY BASE RENT. Tenant's failure to
pay any Base Rent within five (5) days after Tenant's receipt of Notice thereof
from Landlord that the Base Rent is past due; or
(b) FAILURE TO PAY ADDITIONAL RENT. Tenant's
failure to pay any Additional Rent which is due to Landlord within ten (10) days
after Tenant's receipt of Notice thereof from Landlord that such Additional Rent
is past due;
(c) FAILURE TO COMPLY WITH PURCHASE OBLIGATION
UNDER SECTION 19.2. Tenant's failure to comply with Tenant's obligation to
purchase the Premises pursuant to Section 19.2 within twenty (20) days after
Tenant's receipt of Notice thereof from Landlord that Tenant has so failed,
except in the case of a purchase obligation arising on account of expiration of
the Term of this Lease, in which case no such Notice shall be required;
(d) FAILURE TO CARRY LIABILITY INSURANCE. Tenant's
failure to carry the liability insurance required by Section 7.1, if such
failure continues ten (10) days after Tenant's receipt of Notice thereof from
Landlord that Tenant is not carrying such required liability insurance.
17.3 CONTEST BY TENANT. If upon the filing of any
involuntary petition of the type described in Section 17.1(b) or upon the
appointment of a receiver, other than a receiver appointed in any voluntary
proceeding referred to in Section 17.1(b), or the taking of possession of all
or a substantial portion of the Premises by any department of the city, county,
state or federal government, or any officer thereof duly authorized, by reason
of the alleged insolvency of Tenant without the consent or over the objection
of Tenant, should Tenant desire to contest the same in good faith, Tenant
shall, within ninety (90) days after the filing of the petition or after the
appointment or taking of possession, give Notice to Landlord that Tenant
proposes to make the contest, and the same shall not constitute a Default so
long as Tenant shall prosecute the proceedings with due diligence and no part
of the Premises shall be exposed to sale by reason of the continuance of the
contest.
17.4 REMEDIES. Landlord shall have the remedies
specified below, the parties hereby acknowledging that the remedies described
in Section 17.4(b) may be exercised by Landlord only upon the occurrence of an
Event of Major Default. Tenant shall at all times have the right to exercise
and carry out the terms of the Purchase Option in Section 19.1, notwithstanding
the occurrence or existence of any Default or Event of Major Default under this
Lease, and Landlord shall have the obligation to comply with Landlord's
obligations under Section 19.1 notwithstanding any Default or Event of Major
Default.
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(a) CONTINUE LEASE. In connection with a
Default or an Event of Major Default, Landlord shall have the right to enforce,
by suit or otherwise, all other covenants and conditions hereof to be performed
or complied with by Tenant and to exercise all other remedies permitted by
Section 1951.4 of the California Civil Code, or any amendments thereof or any
successor laws which replace such Section 1951.4. Landlord has the remedy
described in California Civil Code Section 1951.4 (Landlord may continue the
Lease in effect after Tenant's breach and abandonment and recover Base Rent as
it becomes due, if Tenant has right to sublet or assign, subject only to
reasonable limitation). Upon application by Landlord, a receiver may be
appointed to take possession of the Premises and exercise all rights granted to
Landlord as set forth in this Section 17.4(a); and
(b) TERMINATE LEASE. In connection with an
Event of Major Default (but not a Default), Landlord shall have the right to
terminate this Lease, by giving Tenant Notice thereof, at any time after the
occurrence of such Event of Major Default and whether or not Landlord has also
exercised any right under Section 17.4(a). In such event, Tenant shall, within
twenty (20) days after receipt of Notice from Landlord, purchase the Premises
pursuant to Section 19.2.
17.5 NO WAIVER. No failure by Landlord or Tenant to
insist upon the strict performance of any term, covenant or condition of this
Lease or to exercise any right or remedy consequent upon a breach thereof and
no acceptance of full or partial Rent during the continuance of any breach
shall constitute a waiver of any such breach or of the term, covenant, or
condition. No term, covenant or condition of this Lease to be performed or
complied with by Tenant or Landlord, and no breach thereof, shall be waived,
terminated, altered or modified except by a written instrument executed by
Landlord and Tenant. No waiver of any breach shall affect or alter this Lease,
but each and every term, covenant, and condition of this Lease shall continue
in full force and effect with respect to any other then existing subsequent
breach thereof.
17.6 EFFECT OF ASSIGNMENT. Notwithstanding an Entity's
prior assignment or transfer of its interest as Tenant under this Lease, so
long as Landlord has been given Notice of such assignment pursuant to Sections
14.1(b) and 21.3, Landlord shall give such Entity copies of all Notices
required by this Article 17 in connection with any Default, and such Entity
shall have the period granted hereunder to Tenant to cure such Default, unless
such Entity shall have been released from all obligations arising under this
Lease. Landlord may not assert any rights against such Entity in the absence
of such Notice and opportunity to cure, so long as Landlord has been given
Notice of such assignment pursuant to Sections 14.1(b) and 21.3.
17.7 LANDLORD CURE RIGHT. If Tenant fails to perform any
covenant or agreement to be performed by Tenant under this
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Lease, and if the failure or default continues for thirty (30) days after Notice
to Tenant and to any Mortgagee who has requested in writing notice thereof from
Landlord (except for emergencies and except for payment of any lien or
encumbrance threatening the imminent sale of the Premises or any portion
thereof, in which case payment or cure may be made as soon as necessary to
minimize the damage to person or property caused by such emergency or to prevent
any such sale), Landlord may, but shall have no obligation to, pay the same and
cure such default on behalf of and at the expense of Tenant and do all
reasonably necessary work and make all reasonably necessary payments in
connection therewith including, but not limited to, the payment of reasonable
attorneys' fees and disbursements incurred by Landlord. Notwithstanding the
foregoing, Landlord shall have no right to cure any such failure to perform by
Tenant so long as Tenant both: (1) is diligently and in good faith attempting
to cure such matter; and (2) has the financial ability to so comply.
Notwithstanding anything to the contrary in this Lease, in no event shall
Landlord have a right to cure any matters relating to the Improvements unless
such matter constitutes a crime by Landlord and subjects Landlord to criminal
penalties (except as specifically permitted in Section 8.1(b)). Upon demand,
Tenant shall reimburse Landlord for the reasonable amount so paid, together with
interest at the Lease Rate from the date incurred until the date repaid. Tenant
shall defend, indemnify, and hold Landlord harmless from and against any and all
losses, costs, expenses, liabilities, claims, causes of action and damages of
all kinds that may result to Landlord, including reasonable attorneys' fees and
disbursements incurred by Landlord, arising because of any failure by Tenant to
perform any of its obligations under this Lease. Tenant's duty to indemnify
Landlord under this Section 17.7 shall survive the expiration or earlier
termination of this Lease.
17.8 LANDLORD'S DEFAULT.
(a) General. If Landlord fails to perform any
covenant or agreement to be performed by Landlord under Article 11, Section
13.1, Section 15.4, Article 20, or Section 21.10 of this Lease (including, but
not limited to, Landlord's failure to keep the Premises free of any and all
liens created by or through Landlord except as approved by Tenant in writing),
and if the failure or default continues for thirty (30) days after Notice to
Landlord and to any Fee Mortgagee who has requested in writing notice thereof
from Tenant (except for (i) emergencies, or (ii) payment of any lien or
encumbrance threatening the imminent sale of the Premises or any portion
thereof, in which case payment or cure may be made as soon as necessary to
minimize the damage to person or property caused by such emergency or to
prevent any such sale), Tenant may, but shall have no obligation to, pay the
same and cure such default on behalf of and, so long as such failure to perform
arises due to Landlord's gross negligence, willful misconduct, or willful
breach of this Lease, at the expense of Landlord and do all reasonably
necessary work and make all reasonably necessary payments in connection
therewith including, but not limited to, the payment of reasonable attorneys'
fees and
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disbursements incurred by Tenant. Notwithstanding the foregoing, Tenant shall
have no right to cure any such failure to perform by Landlord so long as
Landlord both: (1) is diligently and in good faith attempting to cure such
matter; and (2) has the financial ability to so comply. To the extent that
Landlord's failure to perform arises due to its gross negligence, willful
misconduct or willful breach of this Lease, upon demand, Landlord shall
reimburse Tenant for the reasonable amount so paid, together with interest at
the Lease Rate from the date incurred until the date repaid. To the extent that
Landlord's failure to perform arises due to its gross negligence, willful
misconduct or willful breach of this Lease, Landlord shall defend, protect,
indemnify, and hold Tenant harmless from and against any and all losses, costs,
expenses, liabilities, claims, causes of action and damages of all kinds that
may result to Tenant, including reasonable attorneys' fees and disbursements
incurred by Tenant, arising because of any failure by Landlord to perform any of
its obligations under Article 11, Section 13.1, Section 15.4, Article 20 or
Section 21.10 of this Lease. Landlord's duty to indemnify Tenant under this
Section 17.8 shall survive the expiration or earlier termination of this Lease.
(b) Default Under Certain Provisions.
Notwithstanding anything to the contrary in Section (a) above, in the event of
a default by Landlord under Section 20.6, Tenant shall have the right to cure
such default on behalf of and at Landlord's expense, without prior notice to
Landlord. In addition, in the event of any default by Landlord under Section
20.4, 20.5 or 20.6, Tenant shall have the right to exercise its Purchase Option
pursuant to Section 19.1 hereof, and to offset against the Purchase Price the
amount of all losses and reasonable costs and expenses (including without
limitation reasonable attorneys' fees) incurred by Tenant arising from such
default by Landlord, including without limitation all losses arising by reason
of Tenant's inability to treat the transactions contemplated by this Lease as
an operating lease for financial accounting and securities regulatory purposes,
and all costs and expenses incurred in connection with negotiating and entering
into a new lease upon exercise of the Purchase Option.
ARTICLE 18
QUIET ENJOYMENT
18.1 QUIET ENJOYMENT. Landlord covenants to secure to
Tenant the quiet possession of the Premises for the full Term against all
persons claiming the same, subject to Landlord's rights and remedies under
Section 17 upon a Default or an Event of Major Default by Tenant. The
existence of any Permitted Exceptions shall not be deemed to constitute a
breach of Landlord's obligations hereunder. Tenant shall, immediately upon
demand, reimburse Landlord for all reasonable costs, expenses and damages
incurred or paid by Landlord in the performance of Landlord's obligations under
this Article 18 (except for any costs, expenses or damages arising from
Landlord's willful breach of this Lease).
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ARTICLE 19
TENANT'S OPTION TO PURCHASE
19.1 OPTION TO PURCHASE PREMISES.
(a) PURCHASE OPTION. Tenant shall have the
option ("Purchase Option") to purchase all or part of the Premises at any time
during the Term; provided that Tenant shall be entitled to purchase less than
all of the Premises only if the portion being purchased is released from any
existing Fee Mortgage and if the portion of the Premises not purchased shall
constitute one or more legal lots after closing of the purchase and shall be
reasonably viable as a separate property. The purchase price ("Purchase
Price") for the portion of the Premises which Tenant elects to purchase shall
be (i) the then-existing Funded Amount applicable to the portion of the
Premises which Tenant elects to purchase (determined in a pro rata basis on the
basis of the area being purchased), as the same may be reduced from time to
time, plus (ii) the amount of any prepayment premium and all other fees, costs,
and expenses due to any holder of an Authorized Loan in connection with such
loan (to the extent not already paid pursuant to Section 21.21 hereof), less
(iii) the amount of the Security Deposit (or, in the event of a purchase of a
portion of the Premises, a pro rata portion of the Security Deposit). Tenant
shall be entitled to a credit against the Purchase Price equal to the principal
balance(s) of any Authorized Loan and/or Fee Mortgage existing immediately
prior to the closing under this Purchase Option if such Authorized Loan and/or
Fee Mortgage are not fully repaid and all documents reflecting the same are not
cancelled and removed from the public records on or prior to the closing under
this Purchase Option. If Tenant purchases less than all of the then- existing
Premises, then the credit pursuant to the preceding sentence shall be
calculated on a pro rata basis, based upon the ratio of the area of the
Premises being purchased compared to the area of the then-existing Premises.
In lieu of payment of the Purchase Price, Tenant shall have the right (1) to
assume the UBS Loan or any other Authorized Loan or (2) to cause Landlord to
assign the Authorized Loan to a third party acceptable to the holder of such
Authorized Loan (which third party shall expressly assume such obligations in
writing), provided that Landlord is released from all obligations under the
Authorized Loan. Landlord shall execute any and all documents necessary to
effect such assumption and assignment upon Tenant's request, provided that
Tenant shall reimburse Landlord for all reasonable costs and expenses related
thereto. Notwithstanding anything to the contrary herein, the Purchase Price
shall not include any interest, fees, late charges or any other costs or
expenses incurred or charged to Landlord or Tenant by reason of a default by
Landlord under Section 20.6 hereof.
(b) PURCHASE OPTION EXERCISE NOTICE. If Tenant
desires to exercise the Purchase Option, Tenant shall deliver to Landlord a
written notice ("Purchase Option Exercise Notice") of Tenant's election;
provided, however, that in the event of an
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assignment by Landlord for the benefit of creditors generally, the filing of a
voluntary or involuntary bankruptcy petition by or against Landlord or the
appointment of a receiver, liquidator or trustee for all or a substantial
portion of the Premises by reason of Landlord's insolvency or alleged
insolvency, the Purchase Option shall be deemed exercised with respect to the
entire Premises as of the calendar day immediately preceding such assignment,
filing or appointment.
(c) TRANSFER. If Tenant exercises the Purchase
Option, the purchase and sale of the Premises being purchased shall be
consummated as follows. In the event of a purchase of a portion of the
Premises, the term "Premises" as used in this Section 19.1(c) shall be deemed
to mean that portion of the Premises then to be purchased pursuant to the
Purchase Option.
(i) Landlord shall grant and convey the
Premises to Tenant, its authorized agent or assignee, pursuant to a duly
executed and acknowledged grant deed ("Grant Deed"), free and clear of all
title defects, liens, encumbrances, deeds of trust, mortgages, rights-of-way
and restrictive covenants or conditions, except for the Permitted Exceptions.
Landlord shall assign and Tenant shall assume all rights, duties and
obligations under the Legal Requirements affecting the Premises, effective as
of the date of recordation of the Grant Deed;
(ii) The Purchase Price shall be paid
upon delivery of the Grant Deed and any other documents reasonably requested by
Tenant to evidence the transfer of the Premises or to release all liens of
Landlord, including, without limitation, any and all reconveyances of mortgages
or other recorded documents as requested by Tenant ("Additional Documents").
In the event that Tenant elects to assign the Purchase Option pursuant to
Section 19.1(d) below, and Tenant's assignee pays an amount less than the
Purchase Price for the Premises, Tenant shall pay to Landlord any excess of the
Purchase Price over the amount paid by such assignee. Landlord shall deliver
the Grant Deed and the Additional Documents to Tenant on the date for closing
specified by Tenant in the Purchase Option Exercise Notice (which date shall be
no sooner than ten (10) days after the date of the Purchase Option Exercise
Notice and no later than the last day of the Term, as the same may be
extended). The closing shall take place at the location and in the manner
reasonably set forth by Tenant in the Purchase Option Exercise Notice;
(iii) If Landlord shall fail to cause
title to be in the condition required in Section 19.1(c)(i) above within the
time herein prescribed for the delivery of the Grant Deed, then Tenant shall
have the right, in addition to all other rights provided by law, by a written
notice to Landlord: (1) to extend the time in which Landlord shall clear title
and deliver the Grant Deed and Additional Documents, during which extension
this Lease shall remain in full force and effect, except Tenant shall be
released from its obligation to pay Base Rent during the extension; (2) to
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accept delivery of the Grant Deed and Additional Documents subject to such title
defects, liens, encumbrances, deeds of trust, mortgages, rights-of-way and
restrictive covenants or conditions specified and set forth in the Grant Deed
and not cleared by Landlord (but without waiving any rights or remedies
available to Tenant on account of such title exceptions); (3) to rescind, by
notice to Landlord and without any penalty or liability therefor, any and all
obligations Tenant may have under and by virtue of the Purchase Option or the
exercise thereof, whereupon this Lease shall remain in full force and effect;
(4) if the title exception is curable by the payment of money, Tenant may make
such payment and such payment shall be a credit against the Purchase Price in
favor of Tenant.
(iv) Refusal of a title company to issue
a standard form of owner's title insurance policy insuring title to the
Premises in the condition specified in subparagraph (c)(i) shall be sufficient
evidence of Landlord's failure to convey clear title and shall entitle Tenant
to exercise any of the rights specified in subparagraph (c)(iii).
(v) Base Rent shall be prorated and
paid and all unpaid Additional Rent shall be paid as of the date title to the
Premises is vested of record in Tenant. Tenant shall pay the escrow fees; the
recorder's fee for recording the Grant Deed; the premium for the title
insurance policy; all documentary transfer taxes; Tenant's attorneys' fees;
Landlord's reasonable attorneys' fees; all other costs and expenses incurred by
Tenant in consummating the transfer of the Premises; and all reasonable
expenses (except as specified in the next sentence) incurred by Landlord in
consummating the transfer of the Premises pursuant to this Section 19.1.
Landlord shall pay the costs and expenses of clearing title as required by
Section 19.1(c)(i). In the event of a purchase by Tenant under this Article
19, Landlord shall have no obligation to return the Security Deposit to Tenant
to the extent the Security Deposit has been credited against the purchase price
to be paid by Tenant pursuant to Section 19.1(a).
(d) ASSIGNMENT. Tenant shall have the right on
one or more occasions, without Landlord's consent, to assign this purchase
option, in whole or in part, to any Entity at any time, whether or not Tenant
also assigns its interest in the Lease. Tenant shall give prior written notice
to Landlord of any such assignment.
19.2 MANDATORY PURCHASE/SALE OF PREMISES.
Notwithstanding anything to the contrary herein, upon either: (1) expiration of
the Term of this Lease or upon the occurrence of any other event terminating
this Lease; or (2) the occurrence of any event which causes the Funded Amount
to be reduced to zero (0), within thirty (30) days after Tenant's receipt of
written notice of the foregoing and of Tenant's purchase obligation under this
Section 19.2, Tenant shall purchase or cause another Entity to purchase, and
Landlord shall sell, the Premises in the same manner
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as if Tenant had exercised the Purchase Option on such date. The Purchase Price
shall be the same as if Tenant had exercised the Purchase Option, without regard
to the physical state or condition of the Premises or any Improvements (but
Tenant shall have the rights set forth in Section 19.1, including without
limitation, the terms of Sections 19.1(c)(iii) and (iv)). In the event Tenant
fails to purchase (or cause another Entity to purchase) the Premises pursuant to
its obligation under this Section 19.2, Landlord (to the extent required under
Section 21.19) shall sell the Premises to an unrelated third party and, as
applicable, (i) Tenant shall be obligated to pay to Landlord, immediately upon
demand, any excess of the Purchase Price over the amount realized by Landlord in
connection with such sale, or (ii) Landlord shall be obligated to pay to Tenant,
immediately upon demand, any excess of the amount realized by Landlord in
connection with such sale over the Purchase Price. For purposes of the
preceding sentence, the amount realized by Landlord upon a sale of the Premises
shall be net of Landlord's reasonable sale expenses and other expenses incurred
by Landlord but required to be paid by Tenant pursuant to Section 19.1(c)(v).
Landlord's obligation to pay such excess to Tenant shall survive any termination
of this Lease. Notwithstanding anything set forth elsewhere herein, if Tenant
fails to timely comply with Tenant's obligation to purchase the Premises
pursuant to this Section 19.2, upon ten (10) days' prior written Notice, then so
long as title is in the condition required by Section 19.1(c)(i), Landlord may
transfer title to the Premises to Tenant by way of the Grant Deed described in
Section 19.1(c)(i), and Tenant shall accept such Grant Deed and promptly and
properly file the same of record. Notwithstanding anything to the contrary in
this Lease, in the event of default, breach or violation by Tenant of any of
Tenant's obligations under this Section 19.2, Tenant shall have no liability to
Landlord or any other party in excess of an amount equal to the then-existing
Guaranteed Residual Value, less a credit equal to the sum of (a) any of the
Collateral which UBS or any other holder of an Authorized Loan has used,
applied, or otherwise come into possession of, plus (b) any of the Security
Deposit retained by Landlord, and Landlord shall have no recourse, claim or
counterclaim whatsoever against Tenant in excess of such amount on account of
such default, breach or violation. If the Guaranteed Residual Value has not
previously been determined as of the date Tenant's liability under this Section
19.2 has been established, then the Guaranteed Residual Value shall be
determined as of the date Tenant's liability hereunder is established.
19.3 SURVIVAL. The obligations of Landlord and Tenant
under this Article 19 shall survive the expiration or earlier termination of
this Lease.
ARTICLE 20
ADDITIONAL COVENANTS OF LANDLORD
20.1 TITLE. In the event Tenant so requests in writing
(and so long as either Tenant agrees to indemnify Landlord from any
38.
<PAGE> 44
liabilities or obligations in connection therewith, or Landlord does not incur
any liabilities or obligations in connection therewith), Landlord shall execute
all documents, instruments and agreements reasonably requested by Tenant in
order to accomplish any of the following in the manner reasonably requested by
Tenant and within the time parameters reasonably requested by Tenant: (1)
remove exceptions to title to or affecting the Premises; (2) create exceptions
to title (including, without limitation, easements and rights of way) to or
affecting the Premises (but not including any Mortgage); (3) modify any
then-existing exception to title or (4) subdivide the Premises into two or more
separate parcels. Tenant shall promptly reimburse Landlord for, or at
Landlord's request, pay directly in advance, all reasonable costs, expenses and
other amounts incurred or required to be expended by Landlord in order to
comply with Tenant's requests made in accordance with the preceding sentence,
and the failure of Tenant to reimburse or pay any such amounts shall result in
the suspension of Landlord's obligations under such sentence with respect to
that particular request until the amounts required to be paid by Tenant under
this sentence have been paid. Landlord acknowledges that it is critical to
Tenant's ability to construct improvements on the Premises to have the ability
and flexibility to accomplish the foregoing, and that the parties therefore
agree that Landlord shall not be entitled to withhold Landlord's consent to any
of the foregoing requests by Tenant, except as set forth in the preceding
sentence.
20.2 LAND USE. Except where requested by Tenant pursuant
to this Section 20.2, Landlord shall not cause or give its written consent to
any land use or zoning change affecting the Premises or any changes of street
grade. In the event Tenant so requests in writing (and so long as either
Tenant agrees to indemnify Landlord from any liabilities or obligations in
connection therewith, or Landlord does not incur any liabilities or obligations
in connection therewith), Landlord shall execute all documents, instruments and
agreements reasonably requested by Tenant in order to accomplish any of the
following in the manner reasonably requested by Tenant and within the time
parameters reasonably requested by Tenant: (1) cause a change in any land use
restriction or law affecting the Premises; (2) cause a change in the zoning
affecting the Premises; or (3) cause a change in the street grade with respect
to any street in the vicinity of the Premises. Tenant shall promptly reimburse
Landlord for, or at Landlord's request, pay directly in advance, all reasonable
costs, expenses and other amounts incurred or required to be expended by
Landlord in order to comply with Tenant's requests made in accordance with the
preceding sentence, and the failure of Tenant to reimburse or pay any such
amounts shall result in the suspension of Landlord's obligations under such
sentence with respect to that particular request until the amounts required to
be paid by Tenant under this sentence have been paid. Landlord acknowledges
that it is critical to Tenant's ability to construct improvements on the
Premises to have the ability and flexibility to accomplish the foregoing, and
that the parties therefore agree that Landlord shall
39.
<PAGE> 45
not be entitled to withhold Landlord's request to any of the foregoing requests
by Tenant.
20.3 TRANSFER OF PROPERTY INTERESTS. Except as requested
by Tenant pursuant to Section 11.2 or 20.1, Landlord shall not transfer to any
third party any rights inuring to or benefits associated with the Premises
(including, without limitation, zoning rights, development rights, air space
rights, mineral, oil, gas or water rights). Nothing in this Section 20.3 shall
limit Landlord's rights pursuant to Section 13.2; provided that any purchaser
of Landlord's interest in the Premises shall be bound by the terms of this
Lease, including without limitation, the terms of this Section 20.3.
20.4 SHAREHOLDER EQUITY; NO OTHER ASSET. Landlord
covenants and agrees that during the Term of the Lease, Landlord shall maintain
a shareholder equity balance of not less than three percent (3%) of its total
assets, including without limitation, the Property. In addition, Landlord
shall not, without the prior written consent of Tenant, which consent may be
withheld at Tenant's sole discretion, acquire any significant assets other than
(i) the Premises, (ii) any Improvements to be built on the Premises, and (iii)
the land and any Improvements thereon, which is subject to those certain Ground
Leases between Landlord and Tenant, which land is described on Exhibit F
attached hereto.
20.5 RECOURSE OBLIGATIONS. Landlord agrees that during
the Term of this Lease, Landlord will not incur any indebtedness for borrowed
money or any other material obligations to which the holder or obligee thereof
has recourse against Landlord to satisfy the same without Tenant's prior
written consent, which consent Tenant may withhold in its sole discretion.
20.6 DEFAULT UNDER AUTHORIZED LOAN. Landlord shall not,
without Tenant's express prior written consent, default under any Authorized
Loan, or any loan documents relating to such Authorized Loan, where such
default is not caused, directly or indirectly by a breach of any of Tenant's
obligations under this Lease, under the Pledge Agreement securing the UBS Loan
or under any documents relating to any Authorized Loan.
ARTICLE 21
MISCELLANEOUS
21.1 RELATIONSHIP. Neither this Lease nor any agreements
or transactions contemplated hereby shall in any respect be interpreted, deemed
or construed as constituting Landlord and Tenant as partners or joint
venturers, one with the other, or as creating any lender/borrower, partnership,
joint venture, association or, except as set forth in Section 21.2 below, any
other relationship other than that of landlord and tenant; and, except as set
forth in Section 21.2 below, both Landlord and Tenant agree not to make any
contrary assertion, contention, claim or
40.
<PAGE> 46
counterclaim in any action, suit or other legal proceeding involving either
Landlord or Tenant or the subject matter of this Lease.
21.2 FORM OF TRANSACTION; CERTAIN TAX MATTERS.
(a) Landlord and Tenant hereby agree and declare
that the transactions contemplated by this Lease are intended to constitute,
both as to matters of form and substance:
(i) an operating lease for financial
accounting and securities regulatory purposes, and
(ii) a financing arrangement (and not a
"true lease") for Federal, state and local income tax purposes.
Accordingly, and notwithstanding any other provision of this Lease to the
contrary, Landlord and Tenant agree and declare that (A) the transactions
contemplated hereby are intended to have a dual, rather than single, form and
(B) all references in this Lease to the "Lease" of the Premises which fail to
reference such dual form do so as a matter of convenience only and do not
reflect the intent of Landlord and Tenant as to the true form of such
arrangements.
(b) Landlord and Tenant agree that, in accordance
with their intentions and the substance of the transactions contemplated hereby,
Tenant (and not Landlord) shall be treated as the owner of the Premises for
Federal, state, and local income tax purposes and this Lease shall be treated as
a financing arrangement. Tenant shall be entitled to take any deduction, credit
allowance or other reporting, filing or other tax position consistent with such
characterizations. Landlord and Tenant shall not file any Federal, state or
local income tax returns, reports or other statements, or take any other
actions, in a manner which is inconsistent with the foregoing provisions of this
Section 21.2.
(c) Each party acknowledges that it has retained
accounting, tax and legal advisors to assist it in structuring this Lease and
neither party is relying on any representations of the other regarding the
proper treatment of this transaction for accounting, income tax or any other
purpose. Nothing in this Section 21.2(c) shall increase or diminish any
liability or obligation of the parties that otherwise exists pursuant to this
Lease.
21.3 NOTICES. Each Notice shall be in writing and shall
be sent by personal delivery, overnight courier (charges prepaid or billed to
the sender) or by the deposit of such with the United States Postal Service, or
any official successor thereto, designated as registered or certified mail,
return receipt requested, bearing adequate postage and in each case addressed
as provided in the Basic Lease Provisions. Each Notice shall be effective upon
being personally delivered or actually received. The time period in which a
response to any such Notice must be
41.
<PAGE> 47
given or any action taken with respect thereto shall commence to run from the
date of personal delivery or receipt of the Notice by the addressee thereof, as
reflected on the return receipt of the Notice. Rejection or other refusal to
accept shall be deemed to be receipt of the Notice sent. By giving to the other
party at least thirty (30) days' prior Notice thereof, either party to this
Lease (as well as any Mortgagee) shall have the right from time to time during
the Term of this Lease to change the address(es) thereof and to specify as the
address(es) thereof any other address(es) within the continental United States
of America.
21.4 SEVERABILITY OF PROVISIONS. If any term, covenant
or condition of this Lease, or the application thereof to any Entity or
circumstance, shall be invalid or unenforceable, the remainder of this Lease,
or the application of such term, covenant or condition to Entities or
circumstances other than those as to which it is invalid or unenforceable,
shall not be affected thereby.
21.5 ENTIRE AGREEMENT; AMENDMENT. This Lease and other
documents expressly referred to herein constitute the entire agreement of
Landlord and Tenant with respect to the subject matter hereof. Neither this
Lease nor any provision hereof may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.
21.6 APPROVALS AND CONSENTS. Except as expressly
provided in this Lease, whenever any provision of this Lease requires an
approval or consent to be given by one of the parties hereto, the approval or
consent shall not be unreasonably withheld or delayed. Whenever this Lease
grants either party the right to take action, exercise discretion, establish
rules and regulations, or make an allocation or other determination, except as
otherwise provided, such party shall act reasonably and in good faith and take
no action which might result in the frustration of the other party's reasonable
expectations concerning the benefits to be enjoyed under this Lease. If either
party withholds its consent or approval, unless by the express terms of this
Lease such consent or approval may be withheld in such party's sole discretion,
such party shall, upon request, promptly deliver to the other party a written
statement specifying in detail the reason or reasons why such consent or
approval was withheld or refused. If neither approval nor rejection is given
by Landlord within the time specified in Article 11 as to any particular
approval requested by Tenant under Article 11 (or, if no such time is
specified, then within thirty (30) days after request for approval is given by
a Notice), then the approval thus specifically requested in writing by Tenant
shall be conclusively and irrevocably deemed to have been given by Landlord.
21.7 TERMINOLOGY. All personal pronouns used in this
Lease shall include all other genders. The singular shall include the plural
and the plural shall include the singular. Titles of
42.
<PAGE> 48
Articles, Sections and Subsections in this Lease are for convenience only and
neither limit nor amplify the provisions of this Lease, and all references in
this Lease to Articles, Sections or Subsections shall refer to the corresponding
Article, Section or Subsection of this Lease unless specific reference is made
to the articles, sections or other subdivisions of another document or
instrument. The word "days" as used herein shall mean calendar days unless
otherwise expressly stated.
21.8 MEMORANDUM OF LEASE. Neither party shall record
this Lease. However, concurrently with the execution of this Lease, Landlord
and Tenant have executed a Memorandum of Lease in the form attached hereto as
Exhibit C and by this reference made a part hereof, which Memorandum of Lease
shall be promptly recorded in the Official Records.
21.9 SUCCESSORS AND ASSIGNS. Subject to Articles 13 and
14, this Lease shall inure to the benefit of and be binding upon Landlord and
Tenant and their respective heirs, executors, legal representatives, successors
and assigns. Whenever in this Lease a reference to any Entity is made, such
reference shall be deemed to include a reference to the heirs, executors, legal
representatives, successors and assigns of such Entity.
21.10 COMMISSIONS. Landlord and Tenant each represent and
warrant that neither has dealt with any broker in connection with this
transaction and that no real estate broker, salesperson or finder has the right
to claim a real estate brokerage, salesperson's commission or finder's fee by
reason of contact between the parties brought about by such broker, salesperson
or finder. Each party shall hold and save the other harmless of and from any
and all loss, cost, damage, injury or expense arising out of or in any way
related to claims for real estate broker's or salesperson's commissions or fees
based upon allegations made by the claimant that it is entitled to such a fee
from the indemnified party arising out of contact with the indemnifying party
or alleged introductions of the indemnifying party to the indemnified party.
21.11 ATTORNEYS' FEES. In the event any action is brought
by Landlord or Tenant against the other to enforce or for the breach of any of
the terms, covenants or conditions contained in this Lease, the prevailing
party shall be entitled to recover reasonable attorneys' fees to be fixed by
the court, together with costs of suit therein incurred. Tenant shall pay the
reasonable attorneys' fees incurred by Landlord for the review and negotiation
of this Lease and the UBS Loan documents.
21.12 GOVERNING LAW. This Lease and the obligations of
the parties hereunder shall be governed by and interpreted, construed and
enforced in accordance with the laws of the State of California.
21.13 COUNTERPARTS. This Lease may be executed in any
number of counterparts, each of which shall be deemed to be an
43.
<PAGE> 49
original and all of which together shall comprise but a single instrument.
21.14 TIME IS OF THE ESSENCE. Time is of the essence of
this Lease, and of each provision hereof.
21.15 NO THIRD PARTY BENEFICIARIES. This Lease is entered
into by Landlord and Tenant for the sole benefit of Landlord and Tenant. There
are no third party beneficiaries to this Lease.
21.16 NO RECOURSE. The obligations of Tenant and Landlord
(including, without limitation, the obligations of Landlord with respect to the
Identified Matters set forth below) under this Lease shall be without recourse
to any partner, officer, trustee, beneficiary, shareholder, director or
employee of Tenant or Landlord. There shall be no limitation on Landlord's
liability with respect to any willful misconduct, bad faith breach of this
Lease, gross negligence by Landlord, or any breach by Landlord of its
obligations with respect to Sections 20.4, 20.5 or 20.6 ("Identified Matters").
Except for Identified Matters, Landlord's liability to Tenant for any default
by Landlord under this Lease is limited to Landlord's interest in the Premises,
and Tenant agrees to look solely to Landlord's interest therein for the
recovery of any judgment against Landlord, it being intended that neither
Landlord nor any of its shareholders, employees, agents, representatives,
affiliates, officers or directors shall be personally liable for any judgment
or deficiency.
21.17 ESTOPPEL CERTIFICATES. Within thirty (30) days
after request therefor by either party, the non- requesting party shall
deliver, in recordable form, a certificate to any proposed mortgagee,
purchaser, sublessee or assignee and to the requesting party, certifying (if
such be the case) that this Lease is in full force and effect, the date of
Tenant's most recent payment of Rent, that, to the best of its knowledge, the
non-requesting party has no defenses or offsets outstanding, or stating those
claimed, and any other information reasonably requested. Failure to deliver
said statement in time shall be conclusive upon the non-requesting party that:
(a) this Lease is in full force and effect, without modification except as may
be represented by the requesting party; (b) there are no uncured defaults in
the requesting party's performance and the non-requesting party has no right of
offset, counterclaim or deduction against the non-requesting party's
obligations hereunder; (c) no more than one month's Base Rent has been paid in
advance; and (d) any other matters reasonably requested in such certificate.
21.18 COLLATERAL. The parties acknowledge that Tenant has
pledged certain collateral ("Collateral") to UBS to secure SGA's obligations
under the terms of the UBS Note. If the holder of an Authorized Loan applies
any of the Collateral to satisfy an obligation under any Authorized Loan
documents, such application shall be deemed to reduce the Senior Funded Amount
under this Lease
44.
<PAGE> 50
on a dollar-for-dollar basis. Tenant shall have no claims, rights or causes of
action against Landlord arising from any application of the Collateral to
satisfy an obligation under the Authorized Loan documents; provided, however,
that nothing herein shall release Landlord from any claims, rights or causes of
action of Tenant for any breach of this Lease by Landlord or any default by
Landlord under any documents relating to an Authorized Loan, which default does
not arise, directly or indirectly from or as a result of any default by Tenant
of its obligations under the Lease.
21.19 LANDLORD'S CONTINUING OBLIGATION TO SELL.
Notwithstanding anything to the contrary herein, in the event Landlord obtains
possession of the Premises pursuant to the terms of this Lease (including,
without limitation, upon the expiration or earlier termination of this Lease
where Tenant has defaulted in its obligation to purchase the Premises pursuant
to Section 19.2), Landlord shall be under a continuing obligation to use its
commercially reasonable efforts to sell the Premises to Tenant or to one or
more unrelated third parties; provided, however, that Landlord shall not be
required to sell or attempt to sell any portion of the Premises (i) in a
manner, or under circumstances, that could materially impair Landlord's ability
to enforce any of its rights or remedies under this Lease (as determined in
Landlord's sole discretion exercised in good faith) or (ii) at a time when
market conditions render it inadvisable to sell or attempt to sell the Premises
(as determined in Landlord's sole discretion exercised in good faith).
21.20 AS-IS LEASE. Landlord makes no representations or
warranties concerning the condition, suitability or any other matters relating
to the Premises, and Tenant hereby acknowledges that Tenant leases the Premises
from Landlord on an "as is" basis.
21.21 NET LEASE. Except as otherwise provided in this
Lease, Tenant agrees that this Lease is an absolute net Lease, and the Base
Rent called for hereunder shall be paid as required net of all expenses
associated with the Premises, including without limitation, Real Estate Taxes
and insurance premiums for the insurance required to be carried hereunder, and
all other reasonable and customary costs and expenses incurred by Landlord in
connection with the Premises or this Lease, all of which shall be paid or
reimbursed by Tenant unless otherwise specifically provided herein. Tenant
agrees to reimburse Landlord, within ten (10) days following receipt of any
written demand therefor, for all fees, accrued but unpaid interest, late
charges, prepayment penalties, costs and expenses charged to Landlord or SGA by
UBS (or other holder of an Authorized Loan) pursuant to the terms and
conditions of the UBS Note or other Authorized Loan.
21.22 REPRESENTATIONS AND WARRANTIES. Tenant and Landlord
each hereby represents and warrants to the other that: (i) such party is duly
organized and existing under the laws of the jurisdiction in which it is
formed, and is qualified to do business in the State of California; (ii) such
party has the full right and
45.
<PAGE> 51
authority to enter into this Lease, consummate the sale, transfers and
assignments contemplated herein and otherwise perform its obligations under this
Lease; (iii) the person or persons signatory to this Lease and any document
executed pursuant hereto on behalf of such party have full power and authority
to bind such party; and (iv) the execution and delivery of this Lease and the
performance of such party's obligations hereunder do not and shall not result in
the violation of its organizational documents or any contract or agreement to
which such party may be a party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
46.
<PAGE> 52
[SIGNATURE PAGE TO GROUND LEASE]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Lease as of the day and year first above written.
"LANDLORD"
IRISH LEASING CORPORATION,
A TEXAS CORPORATION
By: /s/ KRISTIN MARKHAM
---------------------
Name: /s/ KRISTIN MARKHAM
---------------------
<PAGE> 53
[SIGNATURE PAGE TO GROUND LEASE]
"TENANT"
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
By: /s/ JOHN T. CHAMBERS
-----------------------------------
Name: John T. Chambers
Its: President and Chief Executive
Officer
By: /s/ LARRY R. CARTER
----------------------------------
Name: Larry R. Carter
Its: Chief Financial Officer
<PAGE> 54
EXHIBIT A
Description of Land
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lots 58 and 59, as shown upon that certain map entitled, "Tract No. 7559", which
Map was filed for record in the office of the Recorder of the County of Santa
Clara, on December 21, 1983 in Book 522 of Maps, at ages 49 and 50.
APN: 97-53-18,22
EXHIBIT A
<PAGE> 55
EXHIBIT B
PERMITTED EXCEPTIONS
[To include all matters of record against
the Land on the date it is acquired by Landlord]
EXHIBIT B
1.
<PAGE> 56
EXHIBIT C
RECORDING REQUESTED BY, AND
WHEN RECORDED, RETURN TO:
Brobeck, Phleger & Harrison
550 West C Street, Suite 1300
San Diego, California 92101
Attn: Todd J. Anson, Esq.
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE ("Memorandum of Lease") is executed
as of _________________, 1995, by and between IRISH LEASING CORPORATION, a
Texas corporation ("Landlord"), and CISCO SYSTEMS, INC., a California
corporation ("Tenant").
RECITALS
WHEREAS, Landlord and Tenant have executed that certain lease
("Lease") dated as of _____________, 1995, covering certain premises and
related improvements ("Premises") located in the City of San Jose, Santa Clara
County, California and more particularly described in Schedule 1 attached
hereto and incorporated herein by this reference; and
WHEREAS, Landlord and Tenant desire to record notice of the
Lease in the real estate records of Santa Clara County, California;
NOW, THEREFORE, in consideration of the foregoing, Landlord
and Tenant hereby declare as follows:
1. DEMISE. Landlord hereby leases the Premises to
Tenant and Tenant hereby leases the Premises from Landlord, subject to the
terms, covenants and conditions contained in the Lease.
2. EXPIRATION DATE. The term of the Lease ("Term")
shall commence on ______________, 1995 and shall expire five (5) years
thereafter, subject to Tenant's option to extend the Term pursuant to Section
4.2 of the Lease for one (1) period of five (5) years.
3. OPTION TO PURCHASE. Tenant has an option to purchase
the Premises, as more particularly described in the Lease, during the Term, as
it may be extended.
EXHIBIT C
1.
<PAGE> 57
4. RESTRICTIONS ON ENCUMBRANCES. Landlord is prohibited
from recording against the Premises liens (including, without limitation, deeds
of trust), encumbrances, and other matters that would constitute exceptions to
title, and from amending or modifying any of the foregoing that may exist now or
during the Term, as more particularly described in the Lease, and any such
encumbrance or modification of an encumbrance not authorized in writing by
Tenant shall be null and void.
5. COUNTERPARTS. This Memorandum of Lease may be
executed in any number of counterparts, each of which shall be deemed to be an
original and all of which together shall comprise but a single instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT C
2.
<PAGE> 58
[SIGNATURE PAGE TO MEMORANDUM OF LEASE]
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Memorandum of Lease as of the date and year first written above.
"LANDLORD"
IRISH LEASING CORPORATION,
A TEXAS CORPORATION
By:_______________________
Its:______________________
By:_______________________
Its:______________________
STATE OF __________________ )
) ss
COUNTY OF _________________ )
On _____________, before me, ______________________, 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
[SEAL]
EXHIBIT C
3.
<PAGE> 59
[SIGNATURE PAGE TO MEMORANDUM OF LEASE]
"TENANT"
CISCO SYSTEMS,
A CALIFORNIA CORPORATION
By: ______________________________
Name:_________________________
Its: _________________________
Executive Officer
By: _______________________________
Name: _________________________
Its: _________________________
STATE OF _______________ )
) ss
COUNTY OF _____________ )
On _____________, before me, ______________________, 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
[SEAL]
EXHIBIT C
4.
<PAGE> 60
SCHEDULE 1 TO EXHIBIT C
The Premises are described as follows:
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lots 58 and 59, as shown upon that certain map entitled, "Tract No. 7559",
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, on December 21, 1983 in Book 522 of Maps, at pages 49 and 50.
APN: 97-53-18,22
SCHEDULE 1 TO EXHIBIT C
<PAGE> 61
EXHIBIT D
CLOSING COSTS AND FEES TO BE INCLUDED IN FUNDED AMOUNT
The following items shall be included in the definition of the
Funded Amount under Section 2.16 of the Lease:
1. Title Insurance premiums
2. Arrangement Fee payable to Irish
3. Brokerage Commissions
4. Other fees and costs which are specifically authorized
by Tenant in writing to be included in the Funded
Amount
EXHIBIT D
1.
<PAGE> 62
EXHIBIT E
LEASE COMMENCEMENT DATE MEMORANDUM
THIS LEASE COMMENCEMENT DATE MEMORANDUM ("Memorandum") is
entered into this ___ day of ____________, 1995, by and between IRISH LEASING
CORPORATION, a Texas corporation ("Landlord"), and CISCO SYSTEMS, INC., a
California corporation ("Tenant") concerning that certain Lease ("Lease")
between Landlord and Tenant dated February ___, 1995. Any capitalized terms
not defined in this Memorandum shall have their meaning as defined in the
Lease.
1. Pursuant to Section 4.1 of the Lease, Landlord and Tenant
are required to enter into this Memorandum within thirty (30) days after the
Lease Commencement Date.
2. Landlord and Tenant agree the that Lease Commencement Date
is _______________, 1995.
3. Landlord and Tenant agree that the Rent Commencement Date
is _______________, 1995.
4. The dollar value of the Guaranteed Residual Value (defined in
Section 2.17 of the Lease) described in paragraph 2 above is _____% of
$_____________________________, (i.e. $_____________________________).
5. The Equity Funded Amount as of the Lease Commencement Date
is $__________________.
IN WITNESS WHEREOF, the parties have executed this Memorandum as
of the date and year first above written.
"LANDLORD"
IRISH LEASING CORPORATION,
a Texas corporation
By:___________________________
Name:______________________
Its: ______________________
"TENANT"
CISCO SYSTEMS, INC.,
a California corporation
By:___________________________
Name:______________________
Its: ______________________
EXHIBIT E
<PAGE> 63
EXHIBIT F
DESCRIPTION OF ADJACENT PROPERTY OWNED BY LANDLORD
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on July 13,
1983, in Book 514 of Maps page(s) 47 and 48.
PARCEL TWO:
All of Lot 54, as shown upon that certain Map entitled, "Tract No. 7559", which
Map was filed for record in the Office of the Recorder of the County of Santa
Clara, State of California on December 21, 1983 in Book 522 of Maps, at pages
49 and 50.
APN: 97-53-14 and 23
PARCEL ONE:
Lot 50, as shown on that certain Map entitled, "Tract No. 7560," which Map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on December 21, 1983 in Book 522 of Maps, pages 51 and 52.
Reserving therefrom a perpetual right and easement to construct, install,
maintain, repair, renew, replace, operate and use a surface drainage release to
benefit Lot 49 of Tract 7560, as contained in that certain Grant of Easement
recorded August 8, 1990 in Book L443, page 0754, Official Records, and
described as follows:
The Northwesterly 10.00 feet of the Southeasterly 30.00 feet and the
Northwesterly 100.00 feet of the Southeasterly 130.00 feet of the Northeasterly
10.00 feet of Lot 50.
PARCEL TWO:
That portion of Lot 51, as shown on that certain Map entitled, "Tract No.
7560," which Map was filed for record in the office of the Recorder of the
County of Santa Clara, State of California on December 21, 1983 in Book 522 of
Maps, pages 51 and 52, being more particularly described as follows:
Beginning at the Southeasterly corner of said Lot 51; thence along the
Southerly line of said Lot 51, S. 59# 27; 51 W. 77.00 feet; thence N. 14# 27'
48" E. 108.90 feet to the Northeasterly line of said Lot 51; thence along said
Northeasterly line S. 30# 32' 09" E.
EXHIBIT E
<PAGE> 64
77.00 feet to the point of beginning, as provided for in that certain Lot Line
Adjustment granted by the Director of Planning of the City of San Jose, a copy
of which was recorded March 28, 1984 in the office of the Recorder of the County
of Santa Clara in Book I410, page 712 of Official Records.
PARCEL THREE:
Lot 5 and 6, as shown on that certain Map of Tract No. 7408, which map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on November 19, 1982 in Book 506 of Maps, pages 24, 25 and
26 and a portion of that certain parcel of land described in the deed recorded
December 22, 1972 in Book 0167, page 623, all as approved by that Lot
Combination recorded September 16, 1992 in Book M381 of Maps, page(s) 0081,
Official Records, more particularly described as follows:
Beginning at a point on the Northeasterly line of Rio Robles, as shown upon
said map, at the most Southerly corner of said Lot 5; thence along said
Northeasterly line of Rio Robles, N. 30# 32' 09" W. 105.50 feet; thence on a
tangent curve to the right, having a radius of 367.00 feet, through a central
angle of 36# 30' 00" an arc distance of 233.80 feet; thence on a curve to the
right, tangent to the previous curve, having a radius of 50.00 feet, through a
central angle of 86# 01' 50" an arc distance of 75.08 feet to the Southerly
line of Tasman Drive as shown upon said map; thence along said line on a curve
to the left, tangent to the previous curve, having a radius of 1149.00 feet,
through a central angle of 32# 31' 01" an arc distance of 652.09 feet; thence
N. 59# 28' 40" E. 600.40 feet; thence on a tangent curve to the right, having a
radius of 33.00 feet, through a central angle of 89# 51' 11" an arc distance of
51.83 feet to the Southwesterly line of First Street, as shown upon said map;
thence along said line, S. 30# 32' 09" E. 261.38 feet to the Northwesterly
line of the lands of the City and County of San Francisco, as shown upon said
map; thence along said line of the lands of the City and the County of San
Francisco, S. 65# 09' 27" W. 1396.95 feet to the point of beginning.
PARCEL FOUR:
Those rights as contained in that certain Grant Deed executed by Masami Ezaki
and Kaoru Ezaki, his wife in favor of the City and County of San Francisco, a
municipal corporation recorded December 8, 1950 in Book 2111, page 319,
Official Records.
PARCEL FIVE:
A strip of land 80 feet wide, lying 40 feet either side of the following
described line and extensions thereto, across that certain parcel of land
conveyed by Charles Nelson, et ux, to Masami Ezaki by Grant Deed dated February
27, 1936 and recorded March 11, 1936, in Volume No. 765, at page 262, Official
Records, Santa Clara County, hereinafter referred to as the Ezaki Parcel, said
line
EXHIBIT E
<PAGE> 65
being more particularly described as commencing at a point in the Westerly
boundary of the existing San Jose-Alviso Road, said point being distant along
said boundary South 30# 32' 30" East 381.31 feet from its intersection with the
Northerly boundary of the above mentioned Ezaki Parcel; thence, from said point
of commencement, South 65# 08' 00" West 1459.03 feet to a point in the common
boundary between the above mentioned Ezaki Parcel and that certain parcel of
land conveyed by Lena Lindgren, et al, to James A. Pankoski, et ux, by Joint
Tenancy Deed dated November 13, 1944 and recorded November 17, 1944 in Volume
No. 1227 at Page 327, Official Records, Santa Clara County, hereinafter
referred to as the Pankoski Parcel, said point being distant along said common
boundary South 30# 32' 30" East 237.04 feet from the most Westerly corner of
the above mentioned Ezaki Parcel; the Easterly end of said strip being the
above mentioned Westerly boundary of the San Jose-Alviso Road, and the Westerly
end of said strip being the above mentioned common boundary between the
Pankoski and Ezaki Parcels.
EXHIBIT F
<PAGE> 1
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ("First Amendment") is made and entered
into as of May 1, 1995, by and between IRISH LEASING CORPORATION, a Texas
corporation ("Landlord"), and CISCO SYSTEMS, INC., a California corporation
("Tenant").
THIS FIRST AMENDMENT IS ENTERED INTO upon the basis of the following
facts, understandings and intentions.
A. Landlord and Tenant entered into that certain Lease dated
February 28, 1995 ("Lease"), pursuant to which Landlord is leasing to Tenant
that certain land located in San Jose, California, as more particularly
described in the Lease and on Exhibit A attached hereto and incorporated herein
by this reference ("Premises"). Any capitalized terms used but not defined in
this First Amendment which are defined in the Lease shall have the meaning
ascribed in the Lease.
B. Landlord and Tenant now desire to amend the terms of the
Lease, as more particularly described in this First Amendment.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
1. Equity Funded Amount. Section 2.10 is hereby deleted, and is
replaced with the following:
2.10 Equity Funded Amount. "Equity Funded Amount" shall
mean that portion of the Funded Amount equal to the Funded
Amount minus the Senior Funded Amount and which shall be an
amount equal to fifteen percent (15%) of the Funded Amount.
2. Lease Rate. Section 2.23 is hereby deleted, and is replaced
with the following:
2.23 Lease Rate. "Lease Rate" shall mean interest at the
rate of the product of 0.850 times the then-effective LIBOR
Rate, plus .0045, per annum.
3. Lease Rate. Section 2.26 is hereby deleted, and is replaced
with the following:
2.26 LIBOR Rate. "LIBOR Rate" shall mean the LIBOR
interest rate as defined in that certain Schedule I,
Additional Terms and Conditions of Credit Arrangement between
SGA and UBS dated May 1, 1995, relating to the UBS Loan
("Schedule I"), or as defined in a subsequent Authorized Loan.
4. Interest Rate Selection. Section 5.1(b) is hereby deleted,
and is replaced with the following:
(b) Interest Rate Selection. The parties acknowledge
that the interest rate applicable under the UBS Loan (or other
Authorized Loan) shall affect the amount of Base Rent payable
by Tenant hereunder. Therefore, Tenant shall have the right,
by written notice to UBS (or the holder of any Authorized
Loan), SGA and Landlord, to designate the interest period to
be selected from time to time by SGA pursuant to Schedule I
(or other Authorized Loan). Tenant acknowledges that the
rates available to be selected under the UBS Loan after the
first partial calendar month of the Term are 1, 2, 3, 6, 9 or
12-month LIBOR rates. In the event that Tenant fails to give
such written notice to UBS (or other holder of an Authorized
Loan), SGA and Landlord prior to the applicable deadline for
selection of such interest period pursuant to the
<PAGE> 2
terms of Schedule I (or other Authorized Loan), Tenant shall be
deemed to have selected an interest period of one month for the
UBS Loan (or other Authorized Loan).
5. Further Mortgages or Encumbrances by Landlord.
The first sentence of Article 13, Section 13.1, subparagraph (b)
Authorized Loan that begins with "Tenant has approved . . ." and ends with ". .
all documents related to the UBS Loan" is hereby deleted and replaced with the
following:
Tenant has approved the terms of the loan ("UBS Loan") to be
made by UBS to SGA which shall be evidenced by that certain
Tranche B Promissory Note dated as of the Lease Commencement
Date by SGA in favor of UBS ("UBS Note"), and further
evidenced and/or secured by (a) that certain General Terms and
Conditions of Credit Arrangement between SGA and UBS, (b) that
certain Schedule 1 Additional Terms and Conditions of Credit
Arrangements between SGA and UBS, (c) that certain Pledge
Agreement, as amended by Rider No. 1 thereto, made by Tenant
in favor of UBS, and (d) certain documents (including, without
limitation a promissory note and related documents) evidencing
a loan ("SGA Loan") from SGA to Landlord in the principal
amount of the UBS Note, all dated as of the Lease Commencement
Date; provided, however, that Tenant, Landlord and SGA reserve
the right to approve, in their sole discretion, the final form
of all documents related to the UBS Loan.
6. Option to Purchase Premises. (a) In Section 19.1(a),
Purchase Option , the two (2) sentences beginning with "The purchase price
("Purchase Price") . . ." on line 8 of Section 19.1(a) and ending with ". . .
this Purchase Option" on line 26 of Section 19.1(a) are hereby deleted in their
entirety and the following inserted in their place:
The purchase price ("Purchase Price") for the portion of the
Premises which Tenant elects to purchase shall be (i) the
then-existing Funded Amount applicable to the portion of the
Premises which Tenant elects to purchase (determined in a pro
rata basis on the basis of the area being purchased), as the
same may be reduced from time to time, plus (ii) the amount of
any prepayment premium and all other fees, costs, and expenses
due to any holder of an Authorized Loan in connection with
such loan (to the extent not already paid pursuant to Section
21.21 hereof). Tenant shall be entitled to a credit against
the Purchase Price in an amount equal to the sum of (i) the
principal balance(s) of any Authorized Loan and/or Fee
Mortgage existing immediately prior to the closing under this
Purchase Option if such Authorized Loan and/or Fee Mortgage
are not fully repaid and all documents reflecting the same are
not cancelled and removed from the public records on or prior
to the closing under this Purchase Option, plus (ii) the
amount of the Security Deposit (or, in the event of a purchase
of a portion of the Premises, a pro rata portion of the
Security Deposit), and, upon closing under this Purchase
Option, Landlord shall be released from Landlord's obligation
to return the Security Deposit set forth in Section 5.5
hereof.
-2-
<PAGE> 3
(b) In Section 19.1(a), Purchase Option , following the
sentence beginning with "Landlord . . ." on line 36 of Section 19.1(a) and
ending with ". . . expenses related thereto" on line 40 of Section 19.1(a), the
following sentence is inserted:
Notwithstanding the foregoing, Landlord agrees to, upon
Tenant's written demand, assign the UBS Loan or any other
Authorized Loan and its obligations thereunder to Sumitomo
Bank Leasing and Finance, Inc., a Delaware corporation
("SBLF"); provided that SBLF shall first expressly assume
Landlord's obligations under the UBS Loan (or any other
Authorized Loan) in writing and hold Landlord harmless from
any liabilities arising after the date of such assignment.
7. Form of Transaction; Certain Tax Matters.
a. Section 21.2(a)(ii) is hereby deleted, and is replaced
with the following:
(a) a financing arrangement (and
not a "true lease") for Federal, state and local
income tax and local property tax purposes.
b. Section 21.2(b) is hereby deleted, and is replaced
with the following:
Landlord and Tenant agree that, in accordance with
their intentions and the substance of the
transactions contemplated hereby, Tenant (and not
Landlord) shall be treated as the owner of the
Premises for Federal, state, and local income tax and
property tax purposes and this Lease shall be treated
as a financing arrangement. Tenant shall be entitled
to take any deduction, credit allowance or other
reporting, filing or other tax position consistent
with such characterizations. Landlord and Tenant
shall not file any Federal, state or local income tax
or property tax returns, reports or other statements,
or take any other actions, in a manner which is
inconsistent with the foregoing provisions of this
Section 21.2, unless required to do so by applicable
law or Legal Requirement.
c. Section 21.2(c) is hereby deleted, and is replaced
with the following:
Each party acknowledges that it has retained
accounting, tax and legal advisors to assist it in
structuring this Lease and neither party is relying
on any representations of the other regarding the
proper treatment of this transaction for accounting,
income tax, property tax or any other purpose.
Nothing in this Section 21.2(c) shall increase or
diminish any liability or obligation of the parties
that otherwise exists pursuant to this Lease.
8. Exhibits. Exhibit B is hereby deleted and the attached
Exhibit B inserted in its place.
9. Counterparts. This First Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall comprise but a single instrument.
10. Existing Lease. Except to the extent specifically amended
hereby, all terms and conditions of the Lease remain in full force and effect.
-3-
<PAGE> 4
[SIGNATURE PAGE TO FIRST AMENDMENT TO LEASE]
IN WITNESS WHEREOF, Landlord and Tenant have executed this First
Amendment as of the date and year first written above.
"LANDLORD"
IRISH LEASING CORPORATION,
a Texas corporation
By: /s/ GREG ENGLAND
-----------------------------
Name: GREG ENGLAND
-----------------------
Its: VICE PRESIDENT
-----------------------
"TENANT"
CISCO SYSTEMS, INC., a California
corporation
By: /s/ John T. Chambers
-----------------------------
Name:
-----------------------------
Its:
-----------------------------
By: /s/ Larry R. Carter
-----------------------------
Name:
-----------------------------
Its:
-----------------------------
-4-
<PAGE> 5
EXHIBIT A
DESCRIPTION OF LAND
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lots 58 and 59, as shown upon that certain map entitled, "Tract No. 7559",
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, on December 21, 1983 in Book 522 of Maps, at pages 49 and 50.
APN: 97-53-18,22
EXHIBIT A
<PAGE> 6
EXHIBIT B
PERMITTED EXCEPTIONS
1. Bond for City of San Jose, Reassessment District No. 93-210 1993
Consolidated Refunding
2. THE LIEN of supplemental taxes, if any, assessed as a result of
transfer of interest and/or new construction, said supplemented taxes
being assessed pursuant to Chapter 3.5 commencing with Section 75 of
the California Revenue and Taxation Code, for which no Notice of
Assessment has been issued, as of the date herein.
3. THE EFFECT of the Rincon de los Esteros Project Redevelopment Plan and
Ordinances Nos. 17306, 19686. 19835, 20677, 20958. 21417, 21496,
21903, 22660, 22412, 22761, 22761.1 and 22961, 23703, 23732, 23761 and
23934 of the City of San Jose as recorded and as disclosed by
documents recorded July 11, 1975 in Book B502, Page 711; August 6, 1979
in Book E699, Page 245; August 6, 1979 in Book E699. Page 277;
December 21, 1979 in Book F37, Page 585; October 8, 1981 in Book G382,
Page 605; July 28, 1982 in Book G929, Page 703; September 14, 1983 in
Book H892, Page 200; January 10, 1984 in Book 1220, Page 271; January
6, 1992 in Book L996, Page 508, all of Official Records, and as
disclosed by information provided by the Redevelopment Agency of the
City of San Jose.
4. AN EASEMENT affecting the portion of said land and for the purpose
stated herein and incidental purposes, shown or dedicated by the map
of Tract 7408 filed in Book 506 of Maps, pages 24, 25 and 26.
Purpose : PUBLIC SERVICE EASEMENT
Affects : THE SOUTHWESTERLY 10 FEET OF PARCELS ONE, TWO AND THREE
AND THE NORTHWESTERLY 8 FEET OF PARCEL TWO
5. EASEMENT as shown on the filed map of Tract 7408 filed in Book 506 of
Maps, pages 24-26 and incidents thereto
Purpose : LANDSCAPE EASEMENT
Affects : THE SOUTHWESTERLY 20 FEET OF PARCEL ONE, TWO AND THREE
AND THE NORTHWESTERLY 18 FEET OF PARCEL TWO
6. EASEMENT for the purposes stated herein and incidents thereto
Purpose : THE INSTALLATION, MAINTENANCE AND OPERATION OF ALL
LANDSCAPING PLANT FORMS, IRRIGATION SYSTEMS,
RETAINING WALLS, AND DECORATIVE WALKWAY PAVING NOW
EXISTING OR HEREINAFTER TO BE CONSTRUCTED
Granted to : CITY OF SAN JOSE, A MUNICIPAL CORPORATION OF THE STATE
OF CALIFORNIA
Recorded : MAY 27, 1983 IN BOOK H590, PAGE 649, OFFICIAL RECORDS
Affects : THE SOUTHWESTERLY 20 FEET OF PARCEL ONE, TWO AND THREE
AND THE NORTHWESTERLY 18 FEET OF PARCEL TWO.
7. EASEMENT for the purposes stated herein and incidents thereto
Purpose : THE INSTALLATION, MAINTENANCE AND OPERATION OF ALL
LANDSCAPING PLANT FORMS, IRRIGATION SYSTEMS,
RETAINING WALLS, AND DECORATIVE WALKWAY PAVING NOW
EXISTING OR HEREINAFTER TO BE CONSTRUCTED
Granted to : CITY OF SAN JOSE, A MUNICIPAL CORPORATION OF THE STATE
OF CALIFORNIA
Recorded : MAY 27, 1983 IN BOOK H590, PAGE 652, OFFICIAL RECORDS
Affects : THE WESTERLY CORNER OF PARCEL TWO
EXHIBIT B
1.
<PAGE> 7
8. AGREEMENT on the terms and conditions contained therein,
For : THE INSTALLATION AND MAINTENANCE OF LANDSCAPE
IMPROVEMENTS
Between : CITY OF SAN JOSE, A MUNICIPAL CORPORATION
And : OAKMEAD-SAN JOSE, A CALIFORNIA GENERAL PARTNERSHIP AND
OAKMEAD-SAN JOSE SIGN AND LANDSCAPE MAINTENANCE
ASSOCIATION, A CALIFORNIA NON PROFIT MUTUAL BENEFIT
CORPORATION
Recorded : MAY 27, 1983 IN BOOK H590, PAGE 662, OFFICIAL RECORDS.
9. EASEMENT for the purposes stated herein and incidents thereto
Purpose : THE CONSTRUCTION, INSTALLATION, REPAIR AND MAINTENANCE
OF INTERLOCKING PAVERS, RETAINING WALLS AND SIGNS, AND
FOR PEDESTRIAN AND VEHICULAR ACCESS AS NECESSARY OR
DESIRABLE THERETO, BUT SUBJECT TO THE OBLIGATION OF THE
ASSOCIATION, ITS SUCCESSORS AND ASSIGNS, TO PROMPTLY
REPAIR ANY DAMAGE TO SAID IMPROVEMENTS LYING WITHIN THE
SIGN AND LANDSCAPE EASEMENTS RESULTING FROM THE
ASSOCIATION'S ACTIVITIES THEREON
Granted to : OAKMEAD-SAN JOSE SIGN AND LANDSCAPE MAINTENANCE
ASSOCIATION, A NON-PROFIT MUTUAL BENEFIT CORPORATION
Recorded : JUNE 3, 1983 IN BOOK H604, PAGE 322, OFFICIAL RECORDS
Affects : THE WESTERLY CORNER OF PARCEL TWO
10. LIMITATIONS, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting restrictions, if
any, based on race, color, religion or national origin contained in
the document recorded June 3, 1983 in Book H604, page 334, Official
Records.
CONTAINS mortgagee protection clause.
MODIFICATION thereof recorded January 26, 1984 in Book 1257, page 252,
Official Records.
A Notice of Amendment of Design Guidelines
Executed by : OAKMEAD-SAN JOSE, A CALIFORNIA GENERAL PARTNERSHIP
Recorded : JUNE 21, 1984 IN BOOK 1649, PAGE 543, OFFICIAL RECORDS
An instrument entitled, "Designation of Approving Agent," whereby
Kimball Small Properties, a California corporation was designated
approving agent under the CC&R's and Design Guidelines,
Recorded : APRIL 29, 1988 IN BOOK K517, PAGE 940, OFFICIAL RECORDS
MODIFICATION thereof recorded OCTOBER 18, 1988 IN BOOK K721, PAGE 265,
Official Records.
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for Oakmead-San
Jose and Removal of Approving Agent,"
Dated : OCTOBER 18, 1988
Between : OAKMEAD-SAN JOSE, A CALIFORNIA GENERAL PARTNERSHIP AND
OAKMEAD ASSOCIATES, A CALIFORNIA GENERAL PARTNERSHIP
Recorded : OCTOBER 18, 1988 IN BOOK K721, PAGE 295, OFFICIAL
RECORDS
Partial Termination as to other property recorded September 18, 1989 in
Book L097, page 1662, Official Records.
EXHIBIT B
2.
<PAGE> 1
SECOND AMENDMENT TO LEASE
(Lots 58 and 59)
This Second Amendment to Lease ("Second Amendment") is made and entered
into as of May 22, 1995 by and between Irish Leasing Corporation, a Texas
corporation ("Landlord"), and Cisco Systems, Inc., a California corporation
("Tenant").
WHEREAS, Landlord and Tenant have previously entered into that certain
Ground Lease dated February 28, 1995, pursuant to which Landlord is leasing to
Tenant those certain parcels of land located in San Jose, California as more
particularly described on Exhibit A attached hereto (the "Premises"), which
Ground Lease was amended by that certain First Amendment to Lease dated as of
May 1, 1995, by and between Landlord and Tenant (the Ground Lease, as so
amended, is referred to herein as the "Lease"); and
WHEREAS, Landlord and Tenant now wish to further amend the terms of the
Lease as more particularly described in this Second Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. Amendment to Lease. The Landlord and Tenant hereby agree to amend
the Lease as hereinafter set forth and as set forth in other sections of this
Second Amendment.
(a) Section 2.33 of the Lease is hereby amended to read in its
entirety as follows:
2.33 Permitted Exceptions. "Permitted Exceptions" shall mean the
following: (1) the exceptions set forth in Exhibit B; (2) any exceptions
created or caused by Tenant or to which Tenant consents in writing; (3)
taxes and assessments not yet due and payable; (4) a deed of trust or
mortgage which secures a New Loan authorized pursuant to the terms of
Section 13.1(b); (5) the Tenant Deed of Trust; (6) all title defects,
liens, encumbrances, deeds of trust, mortgages, rights-of-way, and
restrictive covenants and conditions affecting the Land unless any of the
foregoing arise as a result of Landlord's actions or with Landlord's
written consent (unless such actions taken or consent given by Landlord
are requested in writing by Tenant pursuant to Sections 11.2, 20.1 or
20.2); (7) this Lease; (8) that certain Construction Deed of Trust,
Financing Statement, Security Agreement and Fixture Filing (With
Assignment of Rents and Leases) (the "Construction Deed of Trust") dated
as of even date herewith executed by Landlord, Tenant and Sumitomo Bank
of New York Trust Company ("SBNYTC"), as Trustee under that certain Trust
Agreement dated May 22, 1995 between Sumitomo Bank Leasing and Finance,
Inc. and SBNYTC ("SB Trust") for the benefit of the Sumitomo Bank,
Limited ("Sumitomo") and the Hongkong and Shanghai Banking Corporation
Limited ("HKS"); (9) that certain Deed of Trust, Financing Statement,
Security Agreement and Fixture Filing (with Assignment of Rents and
Leases)(the "Second Deed of Trust") dated as of even date
<PAGE> 2
herewith executed by Landlord and Tenant for the benefit of SB Trust;
(10) that certain Absolute Assignment of Leases (the "HKS Assignment")
dated as of even date herewith executed by Landlord, SB Trust, Cisco, HKS
and Sumitomo; and (11) that certain Subordination Agreement (herein so
called) dated as of even date herewith and executed by Sumitomo, HKS, SB
Trust, Landlord and Tenant.
(b) The last sentence of Section 5.5 of the Lease is hereby amended to
read in its entirety as follows:
The entire Security Deposit (other than amounts withheld against
Base Rent due hereunder), plus any accrued and unpaid interest required
to be paid thereon pursuant to this Lease, shall be returned to Tenant at
the end of the Term; provided, however, that, notwithstanding anything to
the contrary contained in this Lease, Landlord shall have no obligation
to return the Security Deposit to Tenant in the event of a foreclosure,
deed in lieu of foreclosure, or other exercise of remedies by the
beneficiaries or trustees under the Tenant Deed of Trust, the
Construction Deed of Trust, the Second Deed of Trust, the HKS Assignment,
or any other Mortgage on the Premises caused by Tenant to which Tenant
consents in writing.
(c) Section 20.5 of the Lease is hereby amended to read in its
entirety as follows:
20.5 Recourse Obligations. Landlord agrees that during the Term of
this Lease, except for the SGA Loan, Landlord will not incur any
indebtedness for borrowed money or any other material obligations to
which the holder or obligee thereof has recourse against Landlord to
satisfy the same without Tenant's prior written consent, which consent
Tenant may withhold in its sole discretion.
(d) Section 20.6 of the Lease is hereby amended to read in its
entirety as follows:
20.6 Default Under Authorized Loan. Landlord shall not, without
Tenant's express prior written consent, default under any Authorized
Loan, or any loan documents relating to such Authorized Loan, where such
default is not caused, directly or indirectly by, or arising, directly or
indirectly as a result of (a) a breach of any of Tenant's obligations
under this Lease, under the Pledge Agreement securing the UBS Loan or
under any documents relating to any Authorized Loan, or (b) the
occurrence of a default or an Event of Default under the Construction
Deed of Trust, the Second Deed of Trust or the HKS Assignment.
2. Existence of Permitted Exceptions. Tenant hereby acknowledges that
the existence of any Permitted Exception, and the exercise of any rights or
remedies granted to any third party pursuant to any Permitted Exceptions shall
not constitute a breach by Landlord under the terms of Section 20.3 or any other
provision of the Lease.
3. Quiet Enjoyment. The first sentence of Section 18.1 of the Lease
is hereby amended by adding the following language at the end of such sentence:
<PAGE> 3
"and subject to the rights of a Fee Mortgagee under the Construction Deed
of Trust, and/or the Second Deed of Trust, the rights of the "Assignees"
under the HKS Assignment, and the rights of any Fee Mortgagee under any
Authorized Loan."
4. Net Lease. The last sentence of Section 21.21 of the Lease is
hereby to read in its entirety as follows:
Tenant agrees to reimburse Landlord and/or SGA, within ten days following
receipt of any written demand therefor, for all fees, accrued but unpaid
interest, late charges, prepayment penalties, costs, expenses,
indemnification obligations, and other amounts charged to Landlord and/or
SGA by UBS, the holder of any Authorized Loan, the holders or
beneficiaries of the Construction Deed of Trust and the Second Deed of
Trust, and the "Assignees" under the HKS Assignment pursuant to the terms
and conditions of the UBS Note, any Authorized Loan, the Construction
Deed of Trust, the Second Deed of Trust, the HKS Assignment and the
Subordination Agreement."
5. Consent to Encumbrances. Tenant hereby consents to Landlord's
execution, delivery and recording of the Construction Deed of Trust, the Second
Deed of Trust, the HKS Assignment and the Subordination Agreement, and all
documents, instruments and agreements executed in connection therewith by
Landlord.
6. Terms. All terms used in this Second Amendment with their initial
letter capitalized which are specially defined in the Lease (as amended by this
Second Amendment) shall have the same meanings in this Second Amendment as in
the Lease (as amended by this Second Amendment).
7. Continuing Obligations. Except as modified by this Second
Amendment, the terms of the Lease remain in full force and effect. To the extent
of any conflict between the terms of the Lease and the terms of this Second
Amendment, the terms of this Second Amendment shall control.
8. Counterparts. This Second Amendment may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which taken together shall comprise but a single instrument.
IN WITNESS WHEREOF, the Landlord and Tenant have executed this Second
Amendment as of the date first set forth above.
<PAGE> 4
IRISH LEASING CORPORATION,
a Texas corporation
By: /s/GREG ENGLAND
-----------------------
Its: /s/VICE PRESIDENT
-------------------
CISCO SYSTEMS, INC.,
a California corporation
By: /s/LARRY R. CARTER
-----------------------
Its:
-------------------
<PAGE> 5
EXHIBIT A
Description of Land
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lots 58 and 59, as shown upon that certain map entitled, "Tract No. 7559", which
Map was filed for record in the office of the Recorder of the County of Santa
Clara, on December 21, 1983 in Book 522 of Maps, at ages 49 and 50.
APN: 97-53-18,22
<PAGE> 1
GROUND LEASE
(TASMAN PHASE C)
By and Between
IRISH LEASING CORPORATION
A TEXAS CORPORATION
as Landlord
and
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION,
as Tenant
for
Premises located in
San Jose, California
THIS LEASE IS NOT INTENDED TO CONSTITUTE A TRUE LEASE
FOR INCOME TAX PURPOSES. SEE SECTION 21.2
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TABLE OF CONTENTS
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ARTICLE 1 BASIC LEASE PROVISIONS......................................................................... 1
1.1 Date of Lease.................................................................................. 1
1.2 Landlord....................................................................................... 1
1.3 Tenant......................................................................................... 1
1.4 Land........................................................................................... 1
1.5 Premises....................................................................................... 1
1.6 Term........................................................................................... 1
1.7 Lease Commencement Date........................................................................ 2
1.8 Rent Commencement Date......................................................................... 2
1.9 Base Rent...................................................................................... 2
1.10 Addresses for Notices.......................................................................... 2
1.11 Addresses for Rent Payments.................................................................... 2
ARTICLE 2 DEFINITIONS.................................................................................... 3
2.1 Additional Rent................................................................................ 3
2.2 Approval Plans................................................................................. 3
2.3 Authorized Loan................................................................................ 3
2.4 Authorized Plans............................................................................... 3
2.5 Base Rent...................................................................................... 3
2.6 Collateral..................................................................................... 3
2.7 Default........................................................................................ 3
2.8 Default Rate................................................................................... 3
2.9 Entity......................................................................................... 3
2.10 Equity Funded Amount........................................................................... 4
2.11 Equity Rent Component.......................................................................... 4
2.12 Event of Major Default......................................................................... 4
2.13 Extension Term................................................................................. 4
2.14 Fee Mortgage................................................................................... 4
2.15 Fee Mortgagee.................................................................................. 4
2.16 Funded Amount.................................................................................. 4
2.17 Guaranteed Residual Value...................................................................... 4
2.18 Improvements................................................................................... 5
2.19 Initial Term................................................................................... 5
2.20 Land........................................................................................... 5
2.21 Landlord Affiliate............................................................................. 5
2.22 Lease Commencement Date........................................................................ 5
2.23 Lease Rate..................................................................................... 5
2.24 Legal Requirements............................................................................. 5
2.25 LIBOR Business Day............................................................................. 5
2.26 LIBOR Rate. .................................................................................. 5
2.27 Loan Rate...................................................................................... 5
2.28 Mortgage....................................................................................... 5
2.29 Mortgagee...................................................................................... 6
2.30 New Loan....................................................................................... 6
2.31 Notice......................................................................................... 6
2.32 Official Records............................................................................... 6
2.33 Permitted Exceptions........................................................................... 6
2.34 Premises....................................................................................... 6
2.35 Real Estate Taxes.............................................................................. 6
2.36 Rent........................................................................................... 6
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2.37 Rent Commencement Date......................................................................... 6
2.38 Rent Payment Date.............................................................................. 6
2.39 Replacement Loan............................................................................... 6
2.40 Required Permits............................................................................... 6
2.41 Security Deposit............................................................................... 7
2.42 Senior Funded Amount........................................................................... 7
2.43 Senior Rent Component.......................................................................... 7
2.44 SGA............................................................................................ 7
2.45 Taking......................................................................................... 7
2.46 Tenant Deed of Trust........................................................................... 7
2.47 Term........................................................................................... 7
2.48 UBS............................................................................................ 7
2.49 UBS Loan....................................................................................... 7
2.50 UBS Note....................................................................................... 7
ARTICLE 3 DEMISE......................................................................................... 7
3.1 Premises....................................................................................... 7
ARTICLE 4 TERM........................................................................................... 8
4.1 Initial Term................................................................................... 8
4.2 Extension Term................................................................................. 8
4.3 Holding Over................................................................................... 8
ARTICLE 5 RENT........................................................................................... 9
5.1 Base Rent...................................................................................... 9
5.2 Proration...................................................................................... 9
5.3 No Abatement of Rent........................................................................... 10
5.4 Delinquent Rent................................................................................ 10
5.5 Security Deposit............................................................................... 10
ARTICLE 6 TAXES.......................................................................................... 11
6.1 Real Estate Taxes.............................................................................. 11
6.2 Personal Property Taxes........................................................................ 12
6.3 Right to Contest............................................................................... 12
6.4 Withholding Taxes.............................................................................. 13
6.5 Additional Provisions Relating to Taxes........................................................ 14
ARTICLE 7 INSURANCE...................................................................................... 15
7.1 Liability Insurance............................................................................ 15
7.2 Waiver of Subrogation.......................................................................... 15
7.3 Indemnity...................................................................................... 16
ARTICLE 8 USE............................................................................................ 16
8.1 Use............................................................................................ 16
8.2 Contest of Legal Requirements.................................................................. 19
8.3 Indemnification................................................................................ 19
ARTICLE 9 UTILITIES AND SERVICES......................................................................... 20
9.1 Services to the Premises....................................................................... 20
ARTICLE 10 MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES............................................. 20
10.1 Tenant Obligations............................................................................. 20
10.2 Surrender of the Premises...................................................................... 21
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ARTICLE 11 CONSTRUCTION OF IMPROVEMENTS AND COMMON AREA................................................... 21
11.1 Tenant's Rights to Construct Improvements...................................................... 21
11.2 Required Permits, Easements, etc............................................................... 23
11.3 Demolition and Reconstruction.................................................................. 23
11.4 Title to and Nature of Improvements............................................................ 23
ARTICLE 12 LIENS.......................................................................................... 24
ARTICLE 13 ASSIGNMENT BY LANDLORD......................................................................... 24
13.1 Further Mortgages or Encumbrances by Landlord;
Authorized Loans............................................................................... 24
13.2 Landlord's Right to Sell....................................................................... 26
13.3 Transfer of Funds and Property................................................................. 26
ARTICLE 14 ASSIGNMENT AND SUBLEASING...................................................................... 27
14.1 Right to Assign................................................................................ 27
14.2 Right to Sublet................................................................................ 27
14.3 Tenant's Right to Mortgage..................................................................... 28
ARTICLE 15 EMINENT DOMAIN................................................................................. 28
15.1 Total or Substantial Taking.................................................................... 28
15.2 Partial Taking................................................................................. 28
15.3 Temporary Taking............................................................................... 28
15.4 Damages........................................................................................ 29
15.5 Notice and Execution........................................................................... 29
ARTICLE 16 DAMAGE OR DESTRUCTION.......................................................................... 29
16.1 Insured Casualty............................................................................... 29
16.2 Insurance Proceeds............................................................................. 30
ARTICLE 17 DEFAULT........................................................................................ 30
17.1 Default........................................................................................ 30
17.2 Event of Major Default......................................................................... 31
17.3 Contest by Tenant.............................................................................. 31
17.4 Remedies....................................................................................... 31
17.5 No Waiver...................................................................................... 32
17.6 Effect of Assignment........................................................................... 32
17.7 Landlord Cure Right............................................................................ 32
17.8 Landlord's Default............................................................................. 33
ARTICLE 18 QUIET ENJOYMENT................................................................................ 34
18.1 Quiet Enjoyment................................................................................ 34
ARTICLE 19 TENANT'S OPTION TO PURCHASE.................................................................... 35
19.1 Option To Purchase Premises.................................................................... 35
19.2 Mandatory Purchase/Sale of Premises............................................................ 37
19.3 Survival....................................................................................... 38
ARTICLE 20 ADDITIONAL COVENANTS OF LANDLORD............................................................... 38
20.1 Title.......................................................................................... 38
20.2 Land Use....................................................................................... 39
20.3 Transfer of Property Interests................................................................. 40
20.4 Shareholder Equity; No Other Asset............................................................. 40
20.5 Recourse Obligations........................................................................... 40
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20.6 Default Under Authorized Loan.................................................................. 40
ARTICLE 21 MISCELLANEOUS.................................................................................. 40
21.1 Relationship................................................................................... 40
21.2 Form of Transaction; Certain Tax Matters....................................................... 41
21.3 Notices........................................................................................ 41
21.4 Severability of Provisions..................................................................... 42
21.5 Entire Agreement; Amendment.................................................................... 42
21.6 Approvals and Consents......................................................................... 42
21.7 Terminology.................................................................................... 42
21.8 Memorandum of Lease............................................................................ 43
21.9 Successors and Assigns......................................................................... 43
21.10 Commissions.................................................................................... 43
21.11 Attorneys' Fees................................................................................ 43
21.12 Governing Law.................................................................................. 43
21.13 Counterparts................................................................................... 43
21.14 Time Is of the Essence......................................................................... 44
21.15 No Third Party Beneficiaries................................................................... 44
21.16 No Recourse.................................................................................... 44
21.17 Estoppel Certificates.......................................................................... 44
21.18 Collateral..................................................................................... 44
21.19 Landlord's Continuing Obligation to Sell....................................................... 45
21.20 As-Is Lease.................................................................................... 45
21.21 Net Lease...................................................................................... 45
21.22 Representations and Warranties................................................................. 45
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List of Exhibits
Exhibit A Description of Land
Exhibit B Permitted Exceptions
Exhibit C Memorandum of Lease
Exhibit D Closing Costs and Fees to be Included in Funded
Amount
Exhibit E Lease Commencement Date Memorandum
Exhibit F Description of Additional Property Owned by Landlord
iv.
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GROUND LEASE
THIS GROUND LEASE ("Lease") by and between IRISH LEASING
CORPORATION, a Texas corporation ("Landlord"), and CISCO SYSTEMS, INC., a
California corporation ("Tenant"), is entered into as of the date set forth in
Article 1 and shall be effective and binding upon the parties hereto as of such
date. Capitalized terms used in this Lease shall have the definitions set forth
in Article 2 or in the text of this Lease.
In consideration of the Base Rent reserved herein, and the
terms, covenants and conditions set forth below, Landlord and Tenant hereby
agree as follows:
ARTICLE 1
BASIC LEASE PROVISIONS
1.1 DATE OF LEASE: April 12, 1995.
1.2 LANDLORD: Irish Leasing Corporation,
a Texas corporation.
1.3 TENANT: Cisco Systems, Inc., a California
corporation.
1.4 LAND: That certain tract of land located in
the City of San Jose, Santa Clara
County, California, consisting of
five (5) parcels and more
particularly described on Exhibit A
attached hereto, together with all
easements, rights of way,
appurtenances and other rights and
benefits belonging or pertaining to
such land.
1.5 PREMISES: The Land.
1.6 TERM: The initial term ("Initial Term") of
this Lease shall be for five (5)
years commencing on the Lease
Commencement Date (as defined in
Section 4.1). Subject to the
conditions set forth in Section 4.2,
Tenant may extend the Initial Term
for one (1) additional period of five
(5) years ("Extension Term"). The
Initial Term and (if exercised by
Tenant) the Extension Term shall be
referred to collectively herein as
the "Term." The Term shall cease
upon, and shall not refer to any
period of time after, termination of
this Lease (whether
1.
<PAGE> 7
pursuant to the terms of the Lease,
by operation of law, or otherwise).
1.7 LEASE COMMENCEMENT
DATE: As described in Section 4.1.
1.8 RENT COMMENCEMENT
DATE: The rent commencement date ("Rent
Commencement Date") shall be the
first LIBOR Business Day (as defined
in Section 2.25) of the calendar
month which commences immediately
following the Lease Commencement
Date.
1.9 BASE RENT: As described in Section 2.5.
1.10 ADDRESSES FOR
NOTICES:
LANDLORD: TENANT:
Irish Leasing Corporation Cisco Systems, Inc.
6750 LBJ Freeway, Suite 1100 3535 Garrett Drive
Dallas, TX 75240 Santa Clara, CA 95054
Attn: Mr. Greg England Attention: Eugene Hill
With a copy to: With a copy to:
Lorne Liechty, Esq. Cisco Systems, Inc.
Liechty, McGinnis & Kolitz 3535 Garrett Drive
12750 Merit Drive Santa Clara, CA 95054
Suite 1150 Attention: Nancy Bareilles
Dallas, Texas 75251
and
Todd J. Anson, Esq.
Brobeck, Phleger & Harrison
550 West C Street
Suite 1300
San Diego, CA 92101
1.11 ADDRESSES FOR RENT
PAYMENTS:
Senior Rent Component: Union Bank of Switzerland
444 South Flower Street
Los Angeles, CA 90071
Attn: Victor Massarano
Equity Rent Component: Irish Leasing Corporation
6750 LBJ Freeway, Suite 1100
Dallas, TX 75240
Attn: Mr. Greg England
2.
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This Article 1 is intended to supplement and/or summarize the
provisions set forth in the balance of this Lease. If there is any conflict
between any provisions contained in this Article 1 and the balance of this
Lease, the balance of this Lease shall control.
ARTICLE 2
DEFINITIONS
For purposes of this Lease, the following defined terms shall
have the meanings set forth in this Article 2.
2.1 ADDITIONAL RENT. "Additional Rent" shall mean any
amounts other than Base Rent payable by Tenant to Landlord or to other Entities
on Landlord's behalf as required under this Lease, including, without
limitation, interest at the Default Rate accrued on past due Base Rent and other
amounts past due hereunder, costs and expenses to be paid or reimbursed by
Tenant hereunder, amounts due pursuant to Tenant's indemnity obligations
hereunder, and Real Estate Taxes.
2.2 APPROVAL PLANS. "Approval Plans" shall have the
meaning set forth in Section 11.1(a).
2.3 AUTHORIZED LOAN. "Authorized Loan" shall have the
meaning set forth in Section 13.1(b).
2.4 AUTHORIZED PLANS. "Authorized Plans" shall have the
meaning set forth in Section 11.1(a).
2.5 BASE RENT. "Base Rent" shall mean, as of a Rent
Payment Date, the product of the Funded Amount as of the Rent
Payment Date multiplied by the Lease Rate.
2.6 COLLATERAL. "Collateral" shall have the meaning set
forth in Section 21.18.
2.7 DEFAULT. "Default" shall have the meaning set forth
in Section 17.1.
2.8 DEFAULT RATE. "Default Rate" shall mean the interest
rate charged or chargeable pursuant to the UBS Note or other Authorized Loan on
any amounts not paid when due. Notwithstanding the foregoing, in the event that
the foregoing Default Rate shall be in violation of any usury or similar law,
then the Default Rate shall be reduced to the extent necessary to cause the
Default Rate to comply with any usury or similar law.
2.9 ENTITY. "Entity" shall mean any person, corporation,
partnership (general or limited), joint venture, association, joint stock
company, trust or other business entity or organization.
3.
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2.10 EQUITY FUNDED AMOUNT. "Equity Funded Amount" shall
mean that portion of the Funded Amount equal to the Funded Amount
minus the Senior Funded Amount.
2.11 EQUITY RENT COMPONENT. "Equity Rent Component"
shall mean the Base Rent as of a Rent Payment Date minus the Senior
Rent Component.
2.12 EVENT OF MAJOR DEFAULT. "Event of Major Default"
shall have the meaning set forth in Section 17.2.
2.13 EXTENSION TERM. "Extension Term" shall have the
meaning set forth in the Basic Lease Provisions.
2.14 FEE MORTGAGE. "Fee Mortgage" shall mean any
Mortgage at any time given by Landlord and remaining uncancelled on
the Official Records, encumbering all or any portion of Landlord's
right, title and estate in the Land or in this Lease.
2.15 FEE MORTGAGEE. "Fee Mortgagee" shall mean the
Mortgagee from time to time of a Fee Mortgage.
2.16 FUNDED AMOUNT. "Funded Amount" shall mean the
aggregate amount of the sum paid by Landlord to acquire the Land, plus the
closing costs and fees set forth on Exhibit D attached hereto; less any
reductions in the amount of the UBS Loan or any other Authorized Loan or in the
Equity Funded Amount, whether such principal reduction or reduction in the
Equity Funded Amount is accomplished by payment to UBS or the holder of an
Authorized Loan, the application of the Collateral or other collateral by UBS or
the holder of an Authorized Loan, the payment of insurance proceeds,
condemnation awards, or otherwise.
2.17 GUARANTEED RESIDUAL VALUE. "Guaranteed Residual Value"
shall mean that amount necessary to cause the present value of the aggregate
Minimum Lease Payments under this Lease, including the present value of the
Guaranteed Residual Value, to not exceed eighty nine and 9/10 percent (89.9%) of
the Funded Amount, computed at the Date of Lease and discounted to present value
as of the Rent Commencement Date using the interest rate implicit in the Lease
or the incremental borrowing rate, whichever is higher, all as calculated and
determined pursuant to Statement of Financial Accounting Standards Number 13.
"Minimum Lease Payments" shall mean the sum of the aggregate Base Rent payable
over the Initial Term and the Extension Term, plus imputed interest on the
non-interest bearing portion of the Security Deposit imputed at a market rate of
interest for an investment for a similar term, plus the Guaranteed Residual
Value, plus the following to the extent paid in cash: custodial and other fees
paid by Tenant, and any other reimbursed costs of Landlord paid by Tenant deemed
to meet the definition of Minimum Lease Payments under SFAS No. 13.
4.
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2.18 IMPROVEMENTS. "Improvements" shall mean any and all
improvements erected, constructed or situated upon the Land or any part thereof
during the Term.
2.19 INITIAL TERM. "Initial Term" shall have the meaning
set forth in the Basic Lease Provisions.
2.20 LAND. "Land" shall have the meaning set forth in
the Basic Lease Provisions.
2.21 LANDLORD AFFILIATE. "Landlord Affiliate" shall mean
any Entity which controls is controlled by or is under the common control of SGA
Development Partnership, Ltd., or The Staubach Company, a Texas corporation.
2.22 LEASE COMMENCEMENT DATE. "Lease Commencement Date"
shall have the meaning set forth in Section 4.1.
2.23 LEASE RATE. "Lease Rate" shall mean interest at the
rate of the product of 0.846 times the then-effective LIBOR Rate plus .0046 per
annum.
2.24 LEGAL REQUIREMENTS. "Legal Requirements" shall mean
all statutes, codes, laws, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses, authorizations, directions
and requirements of all federal, state, county, municipal and other governments,
departments, commissions, boards, courts, authorities, officials and officers,
and any covenants, conditions and restrictions and other matters of record
(subject to the provisions of Section 13.1(a) hereof), which now or at any time
hereafter are applicable to Tenant or this Lease or applicable to and
enforceable against the Premises, the Improvements or any part thereof, as
applicable.
2.25 LIBOR BUSINESS DAY. "LIBOR Business Day" shall have
the same meaning as such term is defined in the UBS Note or other
Authorized Loan.
2.26 LIBOR RATE. "LIBOR Rate" shall mean the LIBOR
interest rate as defined in the UBS Note, or a subsequent Authorized Loan.
2.27 LOAN RATE. "Loan Rate" shall mean the relevant rate
(or rates) of interest, as the same may change from time to time, applicable
under the UBS Note (or if the UBS Loan has been replaced by an Authorized Loan,
then the relevant rate of interest under the promissory note evidencing such
Authorized Loan), all subject to the terms of Section 13.1(b).
2.28 MORTGAGE. "Mortgage" shall mean any mortgage, deed of
trust, or other instrument in the nature thereof at any time and from time to
time constituting a lien, charge or encumbrance upon any interest or estate of
Tenant or Landlord in the Premises or in this Lease.
5.
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2.29 MORTGAGEE. "Mortgagee" shall mean the record holder
(as reflected in the Official Records) from time to time of, or the record
beneficiary (as reflected in the Official Records) from time to time under, a
Mortgage.
2.30 NEW LOAN. "New Loan" shall have the meaning set
forth in Section 13.1(b).
2.31 NOTICE. "Notice" shall mean a written advice,
request, demand or notification required or permitted by this Lease, as more
particularly provided in Section 21.3.
2.32 OFFICIAL RECORDS. "Official Records" shall mean the
official records of Santa Clara County, California.
2.33 PERMITTED EXCEPTIONS. "Permitted Exceptions" shall mean the
following: (1) the exceptions set forth in Exhibit B; (2) any exceptions created
or caused by Tenant or to which Tenant consents in writing; (3) taxes and
assessments not yet due and payable; (4) a deed of trust or mortgage which
secures a New Loan authorized pursuant to the terms of Section 13.1(b); (5) the
Tenant Deed of Trust; (6) all title defects, liens, encumbrances, deeds of
trust, mortgages, rights-of-way, and restrictive covenants and conditions
affecting the Land unless any of the foregoing arise as a result of Landlord's
actions or with Landlord's written consent (unless such actions taken or consent
given by Landlord are requested in writing by Tenant pursuant to Section 11.2,
20.1 or 20.2); and (7) this Lease.
2.34 PREMISES. "Premises" shall have the meaning set
forth in the Basic Lease Provisions. It is the intention of the
parties that the Premises consist only of the Land, and in no event
shall the Premises consist of any Improvements whatsoever.
2.35 REAL ESTATE TAXES. "Real Estate Taxes" shall have
the meaning set forth in Section 6.1(b).
2.36 RENT. "Rent" shall mean Base Rent and Additional
Rent.
2.37 RENT COMMENCEMENT DATE. "Rent Commencement Date"
shall have the meaning set forth in the Basic Lease Provisions.
2.38 RENT PAYMENT DATE. "Rent Payment Date" shall have
the meaning set forth in Section 5.1.
2.39 REPLACEMENT LOAN. "Replacement Loan" shall have the
meaning set forth in Section 13.1(c).
2.40 REQUIRED PERMITS. "Required Permits" shall mean
each and every building and development permit including, without
limitation, demolition permits, site permits and addenda thereto
(including, without limitation, foundation permits and structural
permits), temporary and final occupancy permits and any other
6.
<PAGE> 12
governmental or quasi-governmental approvals which must be issued by any
governmental authority, department, commission, board, official or officer as a
condition precedent to construction and occupancy of any Improvements.
2.41 SECURITY DEPOSIT. "Security Deposit" shall have the
meaning set forth in Section 5.5.
2.42 SENIOR FUNDED AMOUNT. "Senior Funded Amount" shall
mean the principal amount of the UBS Loan as of the Lease Commencement Date,
less any reductions in the principal amount of the UBS Loan or any other
Authorized Loan, whether such principal reduction is accomplished by payment to
UBS or the holder of the Authorized Loan, the application of the Collateral or
other collateral by UBS or the holder of the Authorized Loan, the payment of
condemnation awards, or otherwise.
2.43 SENIOR RENT COMPONENT. "Senior Rent Component"
shall mean the product of the Senior Funded Amount as of a Rent Payment Date
times the Loan Rate.
2.44 SGA. "SGA" shall mean SGA Development Partnership,
Ltd., a Texas limited partnership, the sole shareholder of Landlord.
2.45 TAKING. "Taking" shall have the meaning set forth
in Section 15.1.
2.46 TENANT DEED OF TRUST. "Tenant Deed of Trust" shall
mean that certain deed of trust to be executed by Landlord in favor
of Tenant and recorded in the Official Records as of the Lease
Commencement Date, as more fully described in Section 13.1(d).
2.47 TERM. "Term" shall have the meaning set forth in
the Basic Lease Provisions.
2.48 UBS. "UBS" shall mean the Union Bank of
Switzerland, a Swiss banking corporation, acting through its Los
Angeles branch.
2.49 UBS LOAN. "UBS Loan" shall have the meaning set
forth in Section 13.1(b).
2.50 UBS NOTE. "UBS Note" shall have the meaning set
forth in Section 13.1(b).
ARTICLE 3
DEMISE
3.1 PREMISES. Subject to the terms, covenants and conditions
contained herein, Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, the Premises, together with all rights, privileges, easements and
appurtenances relating to the Premises.
7.
<PAGE> 13
ARTICLE 4
TERM
The Term of this Lease shall consist of the Initial Term, and if
exercised by Tenant, the Extension Term, as follows:
4.1 INITIAL TERM. The Initial Term of this Lease is
specified in Article 1. The Initial Term shall commence on the date ("Lease
Commencement Date") that Landlord acquires title to the Land pursuant to that
certain Purchase and Sale Agreement ("Purchase Agreement") executed or to be
executed by Amdahl Corporation, as Seller ("Seller"), and Landlord, as Buyer.
Within thirty (30) days after the Lease Commencement Date, Landlord and Tenant
shall execute the Lease Commencement Date Memorandum in the form attached hereto
as Exhibit E. In the event that the Initial Term does not commence on or before
July 1, 1995, Tenant shall have the unilateral right to terminate this Lease by
written notice to Landlord, and upon such termination Landlord shall immediately
return the Security Deposit to Tenant, plus all interest earned thereon. In the
event the Purchase Agreement is terminated as a result of any default under or
breach of the Purchase Agreement by Landlord which is not the result of
Landlord's gross negligence or willful misconduct, Landlord shall not be
obligated to return any portion of the Security Deposit retained by Seller as
liquidated damages pursuant to the terms of the Purchase Agreement; provided
that, at Tenant's request, Landlord shall assign to Tenant any and all rights,
claims and causes of action which Landlord may have with respect to the Purchase
Agreement, excluding, however, any rights, claims and causes of action which may
be necessary for Landlord to retain in order for Landlord to avoid or seek
reimbursement for any liability, loss, cost, damage, injury or expense
(including without limitation reasonable attorneys' fees and costs) which
Landlord may sustain or suffer or be entitled to recover in connection with the
Purchase Agreement.
4.2 EXTENSION TERM. Upon at least ninety (90) days' prior
written Notice to Landlord, and provided that a New Loan or Replacement Loan has
been obtained as of the commencement of the Extension Term (subject to the terms
and conditions set forth in Sections 13.1(b) and 13.1(c)), Tenant may extend the
Term for the Extension Term specified in Article 1. All provisions of this Lease
shall remain in full force and effect for the Extension Term, including, without
limitation, the Base Rent payable hereunder, except that Tenant shall have no
further right to extend the Term of this Lease, and except that the Lease Rate
may be adjusted only to reflect any actual change in the rate of interest (that
is, the spread over LIBOR) charged pursuant to the Authorized Loan.
4.3 HOLDING OVER. If Tenant remains in possession of the
Premises after the expiration of the Term without executing a new lease, such
holding over shall be construed as a tenancy from month-to-month, subject to all
terms, covenants and conditions herein contained (except that Tenant shall have
no right to extend the Term of this Lease), and at the Base Rent required to be
paid by Tenant pursuant to the terms hereof during the last month of the Term.
8.
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ARTICLE 5
RENT
5.1 BASE RENT.
(a) Tenant shall pay Base Rent in the manner set
forth below. Base Rent shall be payable monthly, in arrears, without notice on
the Rent Commencement Date, and continuing thereafter on the first LIBOR
Business Day of each successive month, except that the last installment of Base
Rent shall be payable on the last day of the Term (each such date shall be a
"Rent Payment Date") and shall be an amount sufficient to pay all Base Rent
accrued through the end of the Term.
Tenant shall pay Base Rent as follows: The Senior
Rent Component shall be paid to UBS, and the Equity Rent Component shall be paid
to Landlord, at the Address for Rent set forth in the Basic Lease Provisions
(or, if the UBS Loan has been replaced by a New Loan or Replacement Loan, then
the Senior Rent Component shall be paid directly to the holder of such New Loan
or Replacement Loan) or at such other place as Landlord and Tenant may from time
to time mutually agree upon, in their respective sole and absolute discretion.
Tenant shall pay Base Rent by wire transfer or by check. Landlord or UBS or such
other holder of a New Loan, as the case may be, shall supply Tenant with such
bank account information as Tenant shall require to enable payment by wire
transfer. The parties agree that Tenant is paying the Senior Rent Component of
Base Rent directly to UBS for the convenience of the parties in order to satisfy
Landlord's obligations to pay interest under the UBS Loan for the period of time
corresponding to the Term of this Lease; all Base Rent payments shall be deemed
payments to Landlord to the extent of the Equity Rent Component and payments of
the interest due to UBS under the UBS Loan to the extent of the Senior Rent
Component.
(b) INTEREST RATE SELECTION. The parties
acknowledge that the interest rate applicable under the UBS Loan (or other
Authorized Loan) shall affect the amount of Base Rent payable by Tenant
hereunder. Therefore, Tenant shall have the right, by written notice to UBS (or
the holder of any Authorized Loan), SGA and Landlord, to designate the interest
period to be selected from time to time by SGA pursuant to the terms of the UBS
Note (or other Authorized Loan). Tenant acknowledges that the rates available to
be selected under the UBS Loan after the first partial calendar month of the
Term are 1, 3, 6, 9 or 12-month LIBOR rates. In the event that Tenant fails to
give such written notice to UBS (or other holder of an Authorized Loan), SGA and
Landlord prior to the applicable deadline for selection of such interest period
pursuant to the terms of the UBS Note (or other Authorized Loan), the same
interest period then in effect for the UBS Loan (or other Authorized Loan) shall
be selected.
5.2 PRORATION. If the Term expires or is otherwise
terminated on a day other than the day before the first LIBOR
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Business Day of a calendar month, Base Rent for such calendar month shall be
prorated on the basis of actual days elapsed on the basis of a thirty (30) day
month.
5.3 NO ABATEMENT OF RENT. Except as a consequence of a
reduction in the Funded Amount or the terms of Section 15 (Taking), Tenant shall
not be entitled to any abatement, diminution, reduction, setoff or postponement
of Base Rent as a consequence of any inconvenience to, interruption of,
cessation of or loss of Tenant's use or enjoyment of the Premises or as a result
of any reason whatsoever.
5.4 DELINQUENT RENT. Any Base Rent not paid on the due
date shall accrue interest at the Default Rate from the date such Base Rent was
originally due until the date such Base Rent is paid. All interest accrued on
past due Base Rent shall be due and payable to Landlord at the time the Base
Rent is paid, or upon demand by Landlord, if earlier.
5.5 SECURITY DEPOSIT. On the Date of Lease, Tenant shall
deliver to Landlord a security deposit ("Security Deposit") in an amount equal
to One Million Dollars ($1,000,000), to be held in an interest bearing account
requiring authorization by both Landlord and Tenant for withdrawal. On the Lease
Commencement Date, the Security Deposit plus all interest earned thereon shall
be released to Landlord, and Tenant shall deliver to Landlord an amount
sufficient to increase the Security Deposit to an amount equal to the Equity
Funded Amount as of such date; provided that Tenant shall receive a credit for
any interest earned on the Security Deposit prior to the Lease Commencement
Date. The Security Deposit shall be held by Landlord as security solely for the
payment of Base Rent and Additional Rent by Tenant pursuant to this Lease.
One-fifth of the Security Deposit shall bear interest from the Lease
Commencement Date at the rate of 6.75% per annum, simple interest, paid by
Landlord to Tenant in cash on an annual basis on each anniversary of the Lease
Commencement Date; and the remainder of the Security Deposit shall not bear
interest. If at any time during the Term any Base Rent shall be overdue, then
Landlord may at its election (but shall not be required to) appropriate and
apply any portion of the Security Deposit to the payment of any such overdue
Base Rent; provided, however, that Landlord shall use the non-interest bearing
portion of the Security Deposit first, before appropriating any portion of the
Security Deposit that shall bear interest pursuant hereto. Should the entire
Security Deposit, or any portion thereof, be appropriated and applied by
Landlord as provided herein, then Tenant shall immediately, after receipt of
written demand by Landlord, pay to Landlord a sufficient sum in cash to restore
the Security Deposit to the original sum of the Security Deposit. Landlord shall
have no obligation to segregate the Security Deposit from other funds. In the
event that the Equity Funded Amount is reduced for any reason, including without
limitation by reason of a sale of any portion of the Premises or the application
of the proceeds of a condemnation award to reduce the Equity Funded Amount (it
being
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understood that the Equity Funded Amount will only be reduced in the event and
to the extent that the net proceeds of such condemnation award exceeds the
Senior Funded Amount, with such award proceeds to be applied first to the Senior
Funded Amount pursuant to Section 15.4 hereof), the amount of the Security
Deposit required hereunder shall be reduced (pro rata between the interest
bearing and non-interest bearing portions of the Security Deposit) by a like
amount, and any such excess funds held by Landlord shall immediately be returned
to Tenant. The entire Security Deposit (other than amounts withheld against Base
Rent due hereunder), plus any accrued and unpaid interest required to be paid
thereon pursuant to this Lease, shall be returned to Tenant at the end of the
Term.
ARTICLE 6
TAXES
6.1 REAL ESTATE TAXES.
(a) From and after the Lease Commencement Date,
Tenant shall pay directly to the appropriate taxing authority all Real Estate
Taxes. If the Lease Commencement Date occurs or the Term expires or otherwise
terminates at any time other than the beginning or end of a taxable year,
Tenant's obligation to pay Real Estate Taxes shall be prorated on the basis of a
365-day year, so as to include only that portion of the taxable year which is a
part of the Term. Unless a termination of the Lease results from a purchase of
the Land pursuant to Article 19, any Real Estate Taxes levied against the Land
which accrue during the Term of this Lease but which would not be due and
payable to the appropriate taxing authority until after the expiration of the
Term of this Lease (as the same may be extended) shall be paid by Tenant to
Landlord upon such termination. Landlord shall pay such amounts to the
appropriate taxing authority on a timely basis.
(b) Except to the extent that Real Estate Tax
bills and statements are sent directly to Tenant by the taxing authority, upon
receipt by Landlord of the tax bills or statements, Landlord will use reasonable
efforts to promptly advise Tenant in writing of all Real Estate Taxes and shall
deliver copies of all applicable tax bills or statements to Tenant. Tenant shall
pay directly to the taxing authority all Real Estate Taxes prior to the later of
(i) thirty (30) days after receipt by Tenant of a copy of such bills and
statements referred to above, or (ii) five (5) days prior to delinquency. As
used herein, the term "Real Estate Taxes" shall mean any and all taxes,
governmental fees and similar charges or assessments levied or assessed against
the Improvements and/or the Land including, without limitation, ad valorem taxes
and special assessments applicable to real property; provided, however, that
Real Estate Taxes shall not include any Landlord Income Taxes. Real Estate Taxes
shall also include any and all documentary, transfer, sales, mortgage, recording
or similar taxes imposed on Landlord or Tenant in connection with (i) the
original acquisition
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of the Premises by Landlord, (ii) any transfer of the Premises to Tenant
pursuant to the terms of this Lease, or (iii) any sale of the Premises to a
third party pursuant to the terms of this Lease. As used herein, the term
"Landlord Income Taxes" shall mean any and all income, franchise, gains, gift,
succession, excess profits, gross receipts, revenue, estate, rental, or similar
taxes or taxes in lieu thereof imposed upon Landlord or any party other than
Tenant (or an affiliate thereof) and any withholding tax imposed as a collection
device for, in lieu of, or otherwise related to any of the foregoing without
regard to whether such tax is required to be collected by Tenant and without
regard to whether Tenant would be liable for such withholding tax in the event
it failed to so withhold. For purposes of the foregoing, an income tax shall
include, without limitation, any tax imposed under the United States Internal
Revenue Code or the California Bank and Corporation Tax Law as well as any tax
which could qualify as an "income tax" under United States Treasury Regulation
Section 1.901-2 (except to the extent any such statute or regulation is
subsequently modified to include a tax or other governmental charge of a
materially different type and nature from the taxes currently described therein)
and any income tax which may be payable under the laws of any jurisdiction
either now or in the future. Real Estate Taxes for any given tax year shall
exclude assessment installments that are not due and payable during such tax
year.
6.2 PERSONAL PROPERTY TAXES. Tenant shall pay directly to
the appropriate taxing authorities prior to delinquency any and all taxes and
assessments levied or assessed during the Term upon or against Tenant's
furniture, equipment, trade fixtures and any other personal property in the
Premises.
6.3 RIGHT TO CONTEST. Tenant shall not be required to pay
any Real Estate Taxes or any other taxes for which Tenant is liable hereunder
(including, without limitation, any taxes for which Tenant is required to
indemnify Landlord under Section 6.5) (including penalties and interest), so
long as (i) Tenant shall contest the same or the validity thereof by appropriate
legal proceedings in such a manner to prevent the tax sale of any portion of the
Premises and (ii) the position to be taken by Tenant pursuant to such contest
would have a realistic possibility of success if litigated. For purposes of this
Lease, Tenant may conclusively establish that a position to be taken in a
contest would have a realistic possibility of success if litigated by providing
to Landlord a letter from counsel stating an opinion to such effect. In the
event of any such contest, Tenant shall, within thirty (30) days after the final
determination thereof, pay and discharge the amounts determined to be due in
accordance therewith and with the provisions of this Lease, together with any
penalties, fines, interest, costs and expenses that may have accrued thereon or
that may have resulted from Tenant's contest. Tenant also shall have a right to
contest any taxes for which it is liable hereunder, but with regard to which the
position to be taken pursuant to such contest would not have a realistic
possibility of success if litigated, provided that Tenant pays such taxes on or
12.
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prior to the date upon which such taxes are asserted to be due by the relevant
governmental authority. Notwithstanding the foregoing provisions of this Section
6.3, Tenant shall have an unconditional right to contest (without prior payment)
any taxes imposed by law upon Tenant rather than upon Landlord. Tenant's
decision to pay any taxes prior to contesting its or another party's underlying
liability therefore shall not be deemed to imply or suggest that the position to
be taken in such contest would not have a realistic possibility of success if
litigated. Landlord shall cooperate fully with Tenant in connection with the
exercise of Tenant's right of contest contained herein, and in the event that
applicable law shall require that Landlord, rather than Tenant, pursue legal
proceedings for such contest, Landlord will initiate and pursue such contest
upon Tenant's request and in accordance with Tenant's instructions (including,
without limitation, Tenant's instructions as to the selection of legal counsel
and matters of strategy or settlement); provided, however, that Landlord shall
not be subject to any liability for the payment of any costs or expenses in
connection with any such contest or proceedings, and Tenant will indemnify,
defend and save harmless Landlord from and against any such costs and expenses
(including, without limitation, reasonable attorneys' fees, costs of court and
appraisal costs), reimbursing Landlord therefor upon demand (or paying such
costs and expenses directly when due, all as directed by Landlord). Tenant shall
be entitled to any refund of any taxes and penalties or interest from any
governmental authority to the extent the refund represents monies paid to the
governmental authority by Tenant or paid by Landlord and reimbursed by Tenant.
6.4 WITHHOLDING TAXES. Subject to Section 6.5, but
notwithstanding any other provision of this Lease to the contrary, Tenant may
withhold from any payments under this Lease any Landlord Income Taxes, without
obligation to gross-up, indemnify or otherwise increase payments in consequence
thereof, to the extent required by applicable law (as determined by Tenant in
its reasonable discretion). Upon the date hereof or upon the date a party
becomes a Landlord or a transferee of any portion of the Landlord's interest in
the Premises or this Lease, and within thirty (30) days following the first day
of each calendar year or if otherwise requested from time to time by Tenant,
Landlord and each transferee, if organized under the laws of a jurisdiction
outside the United States, shall provide Tenant with three counterparts of each
of the forms prescribed by the Internal Revenue Service of the United States
(Form 1001 or 4224, or successor form(s), as the case may be) certifying as to
Landlord's or such transferee's status for purposes of determining exemption
from United States withholding taxes with respect to all payments to be made to
such person. Without limitation upon the foregoing, unless Tenant has received
such forms or other documents reasonably satisfactory to it indicating that
payments under this Lease are not subject to United States withholding tax,
Tenant is authorized to and shall withhold taxes from such payments at the
applicable statutory rate. Landlord and each transferee, if organized under the
laws of the United States or any State thereof, shall timely
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<PAGE> 19
provide Tenant with duplicate documents conforming to the requirements of
Treasury Regulation 1.1441-5(b) or any successor thereto (which statement may be
made on a Form W-9).
6.5 ADDITIONAL PROVISIONS RELATING TO TAXES.
Notwithstanding anything in this Section 6 to the contrary,
Tenant shall indemnify, defend and hold Landlord harmless from and against:
(a) Any and all Landlord Income Taxes imposed
upon Landlord in consequence of Landlord being treated as the owner or lessor of
the Premises (or any part thereof) for such tax purposes (provided that Landlord
has fully complied with its obligations under Section 21.2(b));
(b) Any and all minimum franchise taxes imposed
in respect of doing business within the State of California, business
qualification taxes, and similar governmental charges for which Landlord would
not be liable but for its participation in the transactions described in this
Lease, including obtaining the UBS Loan or any other Authorized Loan pursuant to
this Lease;
(c) Any and all taxes imposed upon Tenant
(except to the extent that such taxes are imposed upon Tenant as a result of
Landlord's failure to comply with its obligations under this Lease);
(d) Any and all taxes required to be withheld
from payments made by Tenant to a third party not related to or affiliated with
Landlord or The Staubach Company;
(e) Any and all taxes imposed upon Landlord on
cancellation or discharge of indebtedness income arising in connection with a
write-down, payoff modification or cancellation of the UBS Loan or other
Authorized Loan (other than in connection with Landlord's or SGA's bankruptcy or
insolvency or any write-down, payoff, modification or cancellation of the SGA
Loan (as defined in Section 12.1(b)) not authorized in advance by Tenant) and
provided that Landlord has fully complied with its obligations under Section
21.2(b);
(f) Any and all Real Estate Taxes; and
(g) Any and all taxes owed by Landlord as a
result of payment made by Tenant to or for the benefit of Landlord pursuant to
Tenant's indemnity obligations under this Section 6.5.
Tenant's obligation to reimburse or indemnify Landlord for any
taxes, governmental fees, penalties, interest or other supplemental tax charges
under this Lease shall be reduced by the value of any related or offsetting tax
benefits derived or realized by Landlord. For purposes of calculation of tax
benefits derived or realized by Landlord, any net operating loss attributable to
the
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<PAGE> 20
Premises for any year shall be deemed to be available to offset against income
from the Premises in subsequent years regardless of whether it is in fact
available. Tenant's duty to indemnify Landlord under this Section 6.5 shall
apply only to taxes arising during the Term (whether or not due and payable at
the conclusion of the Term), but shall otherwise survive the expiration or
earlier termination of this Lease.
ARTICLE 7
INSURANCE
7.1 LIABILITY INSURANCE. At all times during the Term,
Tenant shall obtain at Tenant's sole cost and expense a policy or policies of
comprehensive general liability insurance on an "occurrence" basis against
claims for "personal injury" liability, including, without limitation, bodily
injury, death or property damage liability. The liability insurance policy shall
contain coverage limits no less than a combined single limit of $5,000,000 per
occurrence. The insurance may be furnished under a "primary" policy and an
"umbrella" policy or policies. Landlord shall be named as an additional insured
under Tenant's policy and Tenant's policy shall contain an endorsement for
cross-liability coverage. Tenant shall furnish Landlord with certificates from
Tenant's insurers with respect to the insurance required to be carried hereunder
on or before the date of execution of this Lease. The certificates shall state
that such insurance is in full force and effect and that coverage will not be
cancelled without twenty (20) days' prior written notice to Landlord. Renewal
certificates shall be furnished to Landlord not less than thirty (30) days prior
to the expiration of each such policy. Any blanket insurance policy or policies
that insure Tenant against the risks and for the amounts herein specified shall
be deemed to satisfy the obligation of Tenant hereunder, provided that any such
policy of blanket insurance shall specify the amount of the total insurance
allocated to the risks required to be insured hereunder and such allocated
amount meets the requirements of this Article 7. All insurance required by this
Article 7 shall be with an insurance company licensed to do business in the
State of California with a general policyholder's rating, as rated by the most
current available "Bests" Insurance Reports, no less than A-III, and shall be
primary and non-contributing.
7.2 WAIVER OF SUBROGATION. Notwithstanding anything to
the contrary contained herein, to the extent permitted by law and so long as any
insurance coverage maintained by Tenant is not diminished by reason thereof,
Tenant hereby (a) releases and waives any rights it may have against Landlord
and its officers, agents and employees on account of any loss or damages
occasioned to Tenant, its property or the Premises, and arising from any risk
covered by any fire and extended coverage insurance maintained by Tenant,
whether or not due to the negligence of Landlord, its agents, employees,
contractors, licensees, invitees or other persons, and (b) waives on behalf of
any insurer providing such
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insurance to Tenant any right of subrogation that any such insurer may have or
acquire against Landlord or such persons by virtue of payment of any loss under
such insurance. Tenant shall use its best efforts to cause its insurance
policies to contain a waiver of subrogation clauses in accordance with the
foregoing.
7.3 INDEMNITY. Tenant shall protect, defend, indemnify,
hold and save Landlord harmless from and against any and all losses, costs,
liabilities or damages (including reasonable attorneys' fees and disbursements
and court costs) arising by reason of: (i) any and all injury or death of
persons or damage to property against which Tenant is obligated to maintain
insurance for the benefit of Landlord pursuant to this Article 7; (ii) the
failure to obtain the waiver of subrogation clause required by Section 7.2
hereof where such clause could have been obtained through the exercise of
Tenant's best efforts; or (iii) the invalidation of such insurance policy
required to be obtained by Tenant hereunder by Tenant's insurer. Tenant's duty
to indemnify Landlord under this Section 7.3 shall survive the expiration or
earlier termination of this Lease with respect to events occurring during the
Term.
ARTICLE 8
USE
8.1 USE.
(a) PERMITTED USES. Tenant may use the Premises
for any lawful purpose.
(b) ENVIRONMENTAL COMPLIANCE.
(i) DEFINED TERMS. The term
"Applicable Environmental Laws" shall mean any applicable laws, regulations or
ordinances pertaining to health or the environment, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 or otherwise (as amended, hereinafter called
"CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended by the
Used Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980,
the Hazardous and Solid Waste Amendments of 1984 or otherwise (as amended,
hereinafter called "RCRA"), and California Health & Safety Code Section
25501(j). The terms "hazardous substance" and "release" as used in this Lease
shall have the meanings specified in CERCLA, and the terms "solid waste" and
"disposal" (or "disposed") shall have the meanings specified in RCRA; provided,
in the event either CERCLA or RCRA is amended or superseded by other laws so as
to broaden the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment or other laws; and,
provided further, to the extent that the laws of the State of California
establish a meaning for "hazardous substance", "release", "solid waste", or
"disposal"
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which is broader than that specified in either CERCLA or RCRA, such broader
meaning shall apply. The term "Pre-existing Contamination" means concentrations
of arsenic and lead existing in soil and groundwater at the Premises as of the
Lease Commencement Date.
(ii) TENANT'S COVENANTS. Tenant
will not cause or permit the Premises or the Improvements to be in violation of,
or do anything or permit anything to be done which subjects Landlord, Tenant or
the Premises to any remedial obligations under or which creates a claim or cause
of action under, any Applicable Environmental Laws, including, without
limitation, CERCLA, RCRA, and the California Health and Safety Code ss.25501(j),
assuming disclosure to the applicable governmental authorities of all relevant
facts, conditions and circumstances, if any, pertaining to the Premises and the
Improvements, and Tenant will promptly notify Landlord in writing of any
existing, pending or threatened investigation, claim or inquiry of which Tenant
has knowledge by any governmental authority in connection with any Applicable
Environmental Laws. Tenant shall obtain any permits, licenses or similar
authorizations to construct, occupy, operate or use any Improvements, fixtures
and equipment at any time located on the Premises by reason of any Applicable
Environmental Laws. Tenant will not use the Premises or the Improvements in a
manner which will result in the unlawful disposal or other unlawful release of
any hazardous substance or solid waste on or to the Premises or the Improvements
and covenants and agrees to keep or cause the Premises and the Improvements to
be kept free of any unlawful hazardous substance, unlawful solid waste or
unlawful environmental contaminants (including, without limitation, friable
asbestos and any substance containing asbestos deemed hazardous and unlawful by
any Applicable Environmental Law) and to remove the unlawful amounts of the same
(or if removal is prohibited by law, to take whatever action is required by law)
promptly upon discovery at Tenant's sole expense. Tenant shall promptly notify
Landlord in writing of any unlawful disposal or other unlawful release of any
hazardous substance, environmental contaminants or solid wastes on or to the
Premises or the Improvements. Landlord and Tenant acknowledge that Pre-existing
Contamination exists at the Premises due to operations of prior owners and that
Tenant has no further obligation to notify Landlord regarding such Pre-existing
Contamination. Landlord acknowledges receipt of that certain Phase I
Environmental Assessment and Phase II Soil and Groundwater Evaluation dated
March 31, 1995 prepared by Lowney Associates ("Report"); provided that delivery
of such Report shall in no way limit or modify Tenant's indemnity obligations
pursuant to Section 8.1(b)(iii) hereof. Tenant acknowledges that Landlord will
not acquire the Premises if any environmental contamination of the Premises in
violation of applicable law, which contamination is not disclosed in the Report,
occurs or is discovered before the Lease Commencement Date. In the event Tenant
fails to comply with or perform any of the foregoing covenants and obligations,
after thirty (30) days' prior written Notice to Tenant, Landlord may, but shall
be under no obligation to, cause the Premises and the Improvements to be freed
from the unlawful hazardous substance,
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unlawful solid waste or unlawful environmental contaminants (or if removal is
prohibited by law, to take whatever action is required by law) and the
reasonable cost of the removal or such other action shall be a demand obligation
owing by Tenant to Landlord pursuant to this Lease; provided, however that this
sentence shall not apply to Pre-existing Contamination. Notwithstanding the
foregoing, Landlord shall have no right to cause the removal of such materials
so long as Tenant both: (1) is diligently and in good faith proceeding to comply
with Tenant's obligation to remove the unlawful amounts of such materials; and
(2) has the financial ability to so comply. Subject to the foregoing, Tenant
grants to Landlord and Landlord's agents and employees access to the Premises
and the Improvements, and the license to remove the unlawful hazardous
substance, unlawful solid waste or unlawful environmental contaminants (or if
removal is prohibited by law, to take whatever action is required by law) and
agrees to indemnify, defend and save Landlord harmless from and against all
reasonable costs and expenses involved and from all claims (including
consequential damages) asserted or proven against Landlord by any party in
connection therewith. Upon Landlord's reasonable request for "good cause"
(defined below), at any time and from time to time during the Term, Tenant will
provide at Tenant's sole expense an inspection or audit of the Premises and the
Improvements from an engineering or consulting firm approved by Landlord,
indicating the presence or absence of any hazardous substance, solid waste or
environmental contaminants located on the Premises; provided, however that this
provision shall not apply to Pre-existing Contamination. If Tenant fails to
provide same after sixty (60) days' notice, Landlord may order same, and Tenant
grants to Landlord and Landlord's employees and agents access to the Premises
and the Improvements and a license to undertake any testing reasonably required
to obtain such inspection or audit. The reasonable cost of obtaining such
inspection or audit and any expenses incurred by Landlord in connection
therewith, shall be a demand obligation owing by Tenant to Landlord pursuant to
this Lease. For purposes of this Section 8.1(b)(ii), "good cause" shall mean
that Landlord shall have reasonable grounds to believe that an unlawful release
or unlawful disposal of hazardous substances or solid wastes has occurred on the
Premises or the Improvements, but shall not include Pre-existing Contamination.
(iii) TENANT'S INDEMNITY. Tenant
agrees to indemnify, defend and hold Landlord harmless from and against, and to
reimburse Landlord with respect to, any and all claims, demands, causes of
action, losses, damages, liabilities, costs and expenses (including without
limitation attorneys' fees and court costs), fines and/or penalties of any and
every kind or character, known or unknown, fixed or contingent, asserted or
potentially asserted against or incurred by Landlord at any time and from time
to time by reason of, in connection with or arising out of (A) the failure of
Tenant to perform any obligation herein required to be performed by Tenant
regarding Applicable Environmental Laws, (B) any violation of any Applicable
Environmental Law by Tenant or with respect to the Premises or the Improvements,
or any disposal or
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other release by Tenant or with respect to the Premises or the Improvements of
any hazardous substance, environmental contaminants or solid waste on or to the
Premises or the Improvements, whether or not resulting in a violation of any
Applicable Environmental Law, (C) any act, omission, event or circumstance by
Tenant or with respect to the Premises or the Improvements which constitutes or
has constituted a violation of any Applicable Environmental Law with respect to
the Premises or the Improvements, regardless of whether the act, omission, event
or circumstance constituted a violation of any Applicable Environmental Law at
the time of its existence or occurrence, and (D) any and all claims or
proceedings (whether brought by private party or governmental agencies) for
bodily injury, property damage, abatement or remediation, environmental damage
or impairment or any other injury or damage resulting from or relating to any
hazardous or toxic substance or contaminated material located upon or migrating
into, from or through the Premises or the Improvements (whether or not the
release of such materials was caused by Tenant, a subtenant, a prior owner of
the Premises or any other Entity) which Landlord may incur. Tenant's duty to
indemnify Landlord under this Section 8.1 shall survive the expiration or
earlier termination of the Lease with respect to events occurring during or
prior to the Term or after the Term while Landlord has record title to and
Tenant is occupying the Premises.
8.2 CONTEST OF LEGAL REQUIREMENTS. Tenant shall have the
right at its sole cost and expense to contest the validity of any Legal
Requirements applicable to the Premises by appropriate proceedings diligently
conducted in good faith; and upon the request of Tenant and at Tenant's sole
cost and expense, Landlord will join and cooperate with Tenant in such
proceedings. Any other provision of this Lease (other than Section 6.3) to the
contrary notwithstanding, Tenant's right to contest Legal Requirements must be
exercised in such a manner as to avoid any exposure of the Premises or any part
thereof to foreclosure or execution sale or exposure of Landlord to civil or
criminal penalties arising from Tenant's non-compliance with such Legal
Requirements. Tenant shall defend and indemnify Landlord against, and hold
Landlord harmless from, any and all liability, loss, cost, damage, injury or
expense (including, without limitation, attorneys' fees and costs) which
Landlord may sustain or suffer by reason of Tenant's failure or delay in
complying with, or Tenant's contest of, any such Legal Requirements (or
Landlord's contest, if requested in writing by Tenant), and Tenant's duty to
indemnify Landlord under this Section 8.2 shall survive the expiration or
earlier termination of this Lease.
8.3 INDEMNIFICATION. Tenant will defend, protect,
indemnify and save harmless Landlord from and against all liabilities,
obligations, claims, damages, causes of action, costs and expenses, imposed upon
or incurred by Landlord by reason of the occurrence or existence of any of the
following during the Term, except to the extent caused by the willful
misconduct, gross negligence, or willful breach of contract of Landlord or its
agents
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or contractors: (1) any claims of Seller arising from the Purchase Agreement
described in Section 4.1 (provided, that, without limitation of Tenant's
indemnity obligations hereunder, Tenant's indemnity obligation under this Clause
1 shall apply notwithstanding a willful breach of the Purchase Agreement by
Landlord if such breach is caused, directly or indirectly, by Tenant or any
actions or failure to act by Tenant or as a result of Landlord's following
Tenant's instructions with respect to the Purchase Agreement or in the event
that Landlord is unable to obtain the UBS Loan); (2) any accident, injury to or
death of persons or loss of or damage to property occurring on or about the
Premises or Improvements; (3) performance of any labor or services or the
furnishing of any materials or other property in respect of the Premises or the
Improvements; (4) the negligence or willful misconduct on the part of Tenant or
any of its agents, invitees, employees or contractors or any other persons
entering onto the Premises or the Improvements at the request, behest or with
the permission of Tenant; (5) the construction, use or occupancy of the
Improvements which Tenant may elect to construct; (6) the existence or
application of any Legal Requirements with respect to the Premises or
Improvements; or (7) the use of the Premises or Improvements. Tenant's duty to
indemnify Landlord under this Section 8.3 shall survive the expiration or
earlier termination of this Lease with respect to events occurring prior to the
commencement of the Term, during the Term or after the Term while Landlord has
record title to and Tenant is occupying the Premises. Notwithstanding anything
to the contrary herein, Tenant's duty to indemnify Landlord pursuant to Clause 1
above shall apply only with respect to events or occurrences occurring prior to
commencement of the Term.
ARTICLE 9
UTILITIES AND SERVICES
9.1 SERVICES TO THE PREMISES. At Tenant's sole cost and
expense, Tenant shall make its own arrangements for the provision of all
utilities and services to be provided to or consumed on the Premises, including,
without limitation, air conditioning, ventilation, heating, electric power,
telephone, water (both domestic and fire protection), sanitary sewer, storm
drain, natural gas and janitorial services, including for the installation,
maintenance and repair of service lines and meters to measure Tenant's
consumption of such utilities.
ARTICLE 10
MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES
10.1 TENANT OBLIGATIONS. Except as otherwise provided in
this Lease, Tenant shall maintain the Premises in good repair, normal wear and
tear, casualty and Takings (as defined in Section 15.1) excepted. All
maintenance that Tenant is obligated to perform under this Section 10.1 shall be
at the sole expense of Tenant, except to the extent that repairs are made
necessary
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because of the gross negligence or willful misconduct of Landlord,
its agents, employees or contractors.
10.2 SURRENDER OF THE PREMISES. Except as provided in
Section 19, upon the expiration or earlier termination of the Term, Tenant shall
surrender the Premises to Landlord in its then "AS-IS" condition, including,
without limitation, any condition resulting from: (i) wear and tear; (ii)
obsolescence and damage by fire or other casualty, act of God or the elements;
(iii) damage that is beyond Tenant's reasonable control or is caused by
Landlord, its agents, employees or contractors; (iv) any Improvements which
Tenant may elect to construct (in compliance with the terms of this Lease) and
leave on the Premises (subject to the rights of any other Entity in such
Improvements); (v) Takings; and (vi) Tenant's alterations, additions, removals,
repairs, replacements, or decorations in, to or of the Premises. Title to all
Improvements, furniture, furnishings, fixtures, trade fixtures and personal
property of Tenant located in or upon the Premises, whether or not affixed to
the realty, shall be and remain in Tenant, and upon the expiration or earlier
termination of this Lease, or within thirty (30) days thereafter (or as soon
thereafter as reasonably practical), the same may be removed by Tenant, or, at
Tenant's election, surrendered with the Premises, in which event title to such
surrendered property shall, if Landlord so elects in Landlord's sole discretion,
be deemed transferred to Landlord (subject to the rights of any other Entity in
such Improvements).
ARTICLE 11
CONSTRUCTION OF IMPROVEMENTS AND COMMON AREA
11.1 TENANT'S RIGHTS TO CONSTRUCT IMPROVEMENTS. Tenant
shall be under no obligation whatsoever to construct any Improvements. Tenant
shall have the right, in Tenant's sole discretion, to construct Improvements
which Tenant desires, subject only to the specific approvals required from
Landlord pursuant to the terms of this Section 11.1. Notwithstanding anything to
the contrary, without obtaining Landlord's approval, Tenant may perform work on
the Premises which does not consist of the actual construction of above-ground
buildings (for example, Tenant may perform grading, trenching and similar work,
and may install and construct utilities, parking lots, driveways, roadways,
foundations, and the like).
(a) APPROVAL PLANS. Prior to commencing any
actual construction of Improvements (except as otherwise permitted or already
approved pursuant to this Section 11.1), Tenant's proposed site plans (showing
the locations and orientations of any proposed buildings) and exterior shell
plans (showing exterior building sections) (collectively, "Approval Plans") of
any Improvements which Tenant may elect to construct shall be submitted to and
approved by Landlord in accordance with the following (in each case to the
extent applicable). Tenant shall deliver a letter to Landlord along with any
submitted Approval Plans in which Tenant
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states that the submitted Approval Plans do not violate any Legal Requirements.
Landlord may only withhold Landlord's approval to any such Approval Plans to the
extent that the Approval Plans violate any material Legal Requirements, and
Landlord may not withhold its consent on any other ground. At the option of
Tenant, the foregoing documentation may be submitted to Landlord for approval in
stages as Tenant completes it. Landlord shall have a period of ten (10) days
from the date of receipt of each component of the documentation within which to
approve or reject it. The Approval Plans, as approved from time to time by
Landlord pursuant to this Section 11.1 shall constitute the "Authorized Plans."
Tenant shall immediately reimburse Landlord on demand for all reasonable
out-of-pocket costs and expenses incurred by Landlord in connection with the
review and approval of any Approval Plans, provided that Landlord first gives
Tenant a detailed written notice that it has reasonable grounds to believe that
the Approval Plans violate material Legal Requirements, and Tenant fails either
to revise such Approval Plans to comply with such material Legal Requirements or
to provide reasonable evidence that the Approval Plans do not violate material
Legal Requirements. Landlord's approval of any Authorized Plans does not
constitute any representation or warranty by Landlord with respect to such
Authorized Plans, and Landlord hereby specifically disclaims any such
representations and warranties.
(b) FURTHER APPROVALS; PROPOSED CHANGES.
Subsequent to Landlord's approval of any Authorized Plans pursuant to Section
11.1(a), Tenant shall only be obligated to submit to Landlord for approval
documentation showing any proposed material change to the Authorized Plans (but
no approval shall be required with respect to construction or design matters
that are not contained or addressed by the Authorized Plans), and only to the
extent such change is materially inconsistent with the Authorized Plans.
Landlord shall have a period of ten (10) days from receipt of each material
change within which to approve or reject it. Landlord may only withhold
Landlord's approval to any such change to the Authorized Plans to the extent
that such change violates any material Legal Requirements, and Landlord may not
withhold its consent on any other ground. Tenant shall immediately reimburse
Landlord on demand for all reasonable out-of-pocket costs and expenses incurred
by Landlord in connection with the review and approval of any such changes,
provided that Landlord first gives Tenant a detailed written notice that it has
reasonable grounds to believe that the Approval Plans violate material Legal
Requirements, and Tenant fails either to revise such Approval Plans to comply
with such material Legal Requirements or to provide reasonable evidence that the
Approval Plans do not violate material Legal Requirements. Tenant shall have the
right, without further approval of Landlord, to construct Improvements not
inconsistent with the Authorized Plans together with such changes thereto as may
be requested or required to comply with Legal Requirements.
(c) FAILURE TO DISAPPROVE. The failure by
Landlord to disapprove any portion of the proposed Approval Plans submitted
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pursuant to this Section 11.1, or send Notice that it has grounds to believe the
proposed Approval Plans violate a material Legal Requirement within the
specified approval period shall be deemed to constitute approval thereof as
submitted, and such Approval Plans shall thereupon become Authorized Plans. Any
disapproval by Landlord of any portion of the proposed Approval Plans shall be
in writing and shall specify with particularity the basis for the disapproval.
(d) OTHER IMPROVEMENTS AND ALTERATIONS. At any
time and from time to time, and without the necessity for obtaining Landlord's
approval or giving Notice thereof to Landlord, Tenant shall have the right, at
its expense, to make any Improvements, alterations, additions, repairs,
replacements or decorations in, to or of the Premises which do not materially
change the exterior design scope of the Improvements as previously approved by
Landlord pursuant to any Authorized Plans. In constructing any Improvements,
Tenant shall do so in a manner which does not violate any applicable and
material Legal Requirements.
11.2 REQUIRED PERMITS, EASEMENTS, ETC. From time to time,
upon request of Tenant, Landlord (as holder of record of title to the Land)
shall execute such reasonable documents, petitions, applications and
authorizations, easements and rights of way (which have been prepared at
Tenant's expense) and shall appear at and participate in such public hearings,
staff meetings and similar gatherings, in each case as may in the reasonable and
good-faith opinion of Tenant be necessary or appropriate for the purpose of
obtaining any Required Permits or private easements or rights of way or utility
services for the Improvements or to remove any title encumbrances on the Land
which may interfere with Tenant's construction of the Improvements. Tenant shall
immediately reimburse Landlord on demand (or pay directly) for all reasonable
out-of-pocket costs and expenses incurred by Landlord in complying with
Landlord's obligations under this Section 11.2.
11.3 DEMOLITION AND RECONSTRUCTION. At any time and from
time to time, Tenant shall have the right to demolish or alter all or any
portion of the then existing Improvements and construct additional Improvements
in their place. The additional Improvements, if any, to be constructed shall be
submitted to and approved by Landlord only to the extent required by Section
11.1, as applicable.
11.4 TITLE TO AND NATURE OF IMPROVEMENTS. Any and all
Improvements of whatever nature at any time constructed, placed or maintained
upon any part of the Land shall be and remain the property of Tenant, subject to
Tenant's right to assign or sublease. The severance of fee title to the Land and
Improvements shall not change the character of the Improvements as real
property.
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ARTICLE 12
LIENS
Except for claims that Tenant is contesting in good faith in
such manner as to avoid any exposure of the Premises or any part thereof to
foreclosure or execution sale, Tenant shall promptly pay and discharge all
claims for work or labor done, supplies furnished or services rendered to the
Premises, and shall keep the Premises free and clear of all mechanics' and
materialmen's liens in connection therewith.
ARTICLE 13
ASSIGNMENT BY LANDLORD
13.1 FURTHER MORTGAGES OR ENCUMBRANCES BY LANDLORD;
AUTHORIZED LOANS.
(a) PROHIBITION. Except for the Tenant Deed of
Trust and as specifically permitted in Section 11.2, 13.1(b) or 20, Landlord
shall not cause or create any mortgages, deeds of trust, encumbrances or other
exceptions to title (collectively, "New Encumbrances") to exist with respect to
the Premises at any time, and any such encumbrance not authorized in writing by
Tenant shall be null and void. The term "New Encumbrances" shall also include
any bonds or assessments affecting the Premises to which Landlord consents in
writing without the prior written approval of Tenant (which may be withheld in
Tenant's sole and absolute discretion). Without the prior written consent of
Tenant (which may be withheld in Tenant's sole and absolute discretion),
Landlord shall not make or join in an application or other document which
requests or authorizes any bonds or assessments to affect the Premises. Landlord
recognizes that any New Encumbrance may irreparably harm Tenant in connection
with one or more of the following: (1) construction which Tenant may desire to
perform; (2) the use of the Premises; (3) Tenant's rights pursuant to the
Purchase Option in Section 19; (4) the amount of assessments which Tenant is
required to pay; or (5) other matters.
(b) AUTHORIZED LOAN. Tenant has approved the
terms of the loan ("UBS Loan") to be made by UBS to SGA which shall be evidenced
by that certain Tranche C Promissory Note dated as of the Lease Commencement
Date by SGA in favor of UBS ("UBS Note"), and further evidenced and/or secured
by (a) that certain General Terms and Conditions of Credit Arrangement between
SGA and UBS, (b) that certain Additional Terms and Conditions between SGA and
UBS, (c) that certain Pledge Agreement, as amended by Rider No. 1 thereto, made
by Tenant in favor of UBS, and (d) certain documents (including, without
limitation a promissory note and related documents) evidencing a loan ("SGA
Loan") from SGA to Landlord in the principal amount of the UBS Note, all dated
as of the Lease Commencement Date; provided, however, that Tenant, Landlord and
SGA reserve the right to approve, in their sole discretion, the final form of
all documents related to the UBS Loan. In addition, upon
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the maturity or prepayment of the UBS Loan (whether by its terms, by
acceleration or otherwise), Landlord may (but, subject to the terms of Section
13.1(c), shall not be obligated to) enter into a new loan (such authorized loan
shall be the "New Loan"), provided Landlord first obtains Tenant's written
consent (which consent shall not be unreasonably withheld except with respect to
the matters contained in clauses (i) through (v) below so long as: (i) the UBS
Loan is paid off with the proceeds of such New Loan and all documents securing
or reflecting the UBS Loan are assigned to the lender who makes the New Loan or
are released and satisfied; (ii) the principal amount of the New Loan does not
exceed the principal amount of the UBS Loan existing at the time the UBS Loan is
repaid; (iii) the interest rate and payment provisions under the New Loan would
not result in higher monthly payments than the method under the UBS Loan, and
all such monthly payments shall be interest only; (iv) there are no prepayment
prohibitions, penalties or other restrictions which would limit rights to retire
the New Loan or require additional payment to do so; and (v) the New Loan
documents do not contain terms and conditions which differ from the UBS Loan
documents in any material respect, including provisions relating to the
Collateral as defined in Section 21.18. The UBS Loan, the New Loan authorized
pursuant to the preceding sentence and the Replacement Loan described in Section
13.1(c) below shall be the "Authorized Loan"; provided that only one Authorized
Loan may exist at any one point in time. Landlord may not modify the terms of an
Authorized Loan without the prior written consent of Tenant, which Tenant shall
not unreasonably withhold (but may be withheld in Tenant's sole and absolute
discretion based upon any of the matters identified in subitems (i) through (v)
above in this Section 13.1(b)).
(c) REPLACEMENT LOAN. Subject to Landlord's
prior written consent (which consent shall not be unreasonably withheld or
delayed), at the request of Tenant, Landlord shall execute and/or shall cause
SGA to execute loan documents evidencing and/or securing a new loan to Landlord
or SGA, the proceeds of which would be used to retire the UBS Loan (such loan
requested by Tenant shall be a "Replacement Loan"). Landlord shall only be
entitled to refuse to consent to such new loan if (1) the maturity date of the
Replacement Loan is a date before the expiration date of the Extension Term; (2)
the principal amount of the Replacement Loan exceeds the principal amount of the
UBS Loan plus any accrued interest and fees payable at the time the UBS Loan is
prepaid; (3) the interest rate structure under the Replacement Loan is
materially higher than market conditions would justify at the time; (4) there
are prepayment prohibitions, penalties or other restrictions which would limit
rights to retire the Replacement Loan or require additional payment to do so;
(5) the Replacement Loan creates greater liability for Landlord or SGA than
otherwise would exist for Landlord and SGA, or would result in the violation of
any law, rule or regulation applicable to Landlord or SGA, or (6) the
Replacement Loan documents contain terms and conditions which differ from the
UBS Loan documents in any material respect (including provisions relating to the
Collateral as defined in
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Section 21.18); provided, however, that Landlord shall not be entitled to object
to a Replacement Loan on the ground that Landlord, rather than SGA, shall be the
borrower under such Replacement Loan. Tenant shall pay all reasonable costs,
including without limitation reasonable attorneys' fees, incurred by Landlord in
connection with obtaining such a Replacement Loan. If Tenant requests and
provides the funds, Landlord shall make all arrangements necessary for, and
shall pay down any Authorized Loan in the amount requested by Tenant, and shall
arrange for all documentation reasonably requested by Tenant to reflect the
reduction or elimination of such Authorized Loan.
(d) On the Lease Commencement Date, Landlord
shall execute, acknowledge, and cause to be recorded in the Official Records, a
deed of trust in form acceptable to Tenant ("Tenant Deed of Trust"), which
Tenant Deed of Trust shall secure Landlord's obligations under this Lease (i) to
return the Security Deposit pursuant to the terms of this Lease, (ii) to convey
the Premises to Tenant as required pursuant to Article 19 hereof, and (iii) to
comply with Sections 20.4, 20.5 and 20.6. The Tenant Deed of Trust shall be a
first priority lien against the Premises.
13.2 LANDLORD'S RIGHT TO SELL. Subject to Tenant's
Purchase Option and the mandatory purchase set forth in Article 19 and the terms
of Section 13.1 and Article 20, nothing contained in this Lease shall be deemed
in any way to limit, restrict or otherwise affect the right of Landlord at any
time and from time to time to sell or transfer all of its right, title and
estate in the Premises to a Landlord Affiliate or, if an Event of Major Default
has occurred and is continuing at the time of such sale or transfer, to any
Entity, provided that such buyer or transferee shall concurrently assume without
incurring personal liability except as expressly provided in this Lease, in
writing, in a manner consistent with this Lease and in compliance with all
requirements of the UBS Loan documents, all of Landlord's and/or SGA's
obligations under the UBS Loan or any other Authorized Loan and the Landlord's
obligations under this Lease. Notwithstanding anything to the contrary in this
Lease, without the prior written consent of Tenant (which may be withheld in
Tenant's sole discretion), in no event shall Landlord sell or transfer all or
any portion of Landlord's right, title or estate in the Premises to any Entity
which does not then comply with the requirements of Sections 20.4 and 20.5 if an
Event of Major Default does not then exist at the time of such sale or transfer.
Any sale or transfer by Landlord whatsoever shall by its express terms recognize
and confirm the right of possession of Tenant to the Premises and Tenant's other
rights arising out of this Lease shall not be affected or disturbed in any way
by any such sale, transfer, assignment or conveyance.
13.3 TRANSFER OF FUNDS AND PROPERTY. At each time Landlord
sells, assigns, transfers or conveys the entire right, title and estate of
Landlord in the Premises and in this Lease, Landlord shall turn over to the
transferee the Security Deposit and any other funds or other property then held
by Landlord under this
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Lease and thereupon all the liabilities and obligations on the part of the
Landlord under this Lease arising after the effective date of such sale,
assignment, transfer or conveyance shall terminate as to the transferor and be
binding upon the transferee.
ARTICLE 14
ASSIGNMENT AND SUBLEASING
14.1 RIGHT TO ASSIGN.
(a) TENANT'S RIGHT. Tenant shall have the
right, at any time and from time to time during the Term, to assign all or any
portion of its right, title and estate in the Premises and in this Lease without
approval by Landlord. Any such assignee, immediate or remote, shall have the
same right of assignment. Any such assignment shall be evidenced by a written
instrument, properly executed and acknowledged by all parties thereto and, at
Tenant's election, duly recorded in the Official Records, wherein and whereby
the assignee assumes all of the obligations of Tenant under this Lease.
Notwithstanding any such assignment and assumption or any sublease permitted
under Section 14.2 hereof, Tenant shall remain primarily liable for all
obligations and liabilities on the part of Tenant theretofore or thereafter
arising under this Lease.
(b) NOTICE. Tenant shall, promptly after
execution of each assignment, notify Landlord of the name and mailing address of
the assignee and shall, on demand, permit Landlord to examine and copy the
assignment agreement.
14.2 RIGHT TO SUBLET.
(a) TENANT'S RIGHT. Tenant shall have the
right, at any time and from time to time during the Term, to sublet all or any
portion of the Premises and to extend, modify or renew any sublease without the
approval of Landlord.
(b) NOTICE. Tenant shall, promptly after
execution of each sublease, notify Landlord of the name and mailing address of
the subtenant and shall, on demand, permit Landlord to examine and copy the
sublease.
(c) NON-DISTURBANCE AGREEMENT. Upon Tenant's
request, Landlord shall enter into a "landlord agreement" with any subtenant of
Tenant. Such agreement shall provide that Landlord shall recognize the sublease
and not disturb the subtenant's possession thereunder so long as such subtenant
shall not be in default under its sublease, and an Event of Major Default is not
then in existence and continuing under this Lease. Tenant shall immediately
reimburse Landlord on demand for all reasonable out-of-pocket costs and expenses
incurred by Landlord in complying with Landlord's obligations under this Section
14.2(c).
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14.3 TENANT'S RIGHT TO MORTGAGE.
(a) RIGHT OF TENANT. Tenant shall have the
right from time to time and at any time, without obtaining the approval of
Landlord, to mortgage, pledge or otherwise encumber all or any portion of the
right, title and estate of Tenant in the Premises or in this Lease.
(b) NOTICE. Tenant shall, promptly after
execution of any Mortgage, notify Landlord of the name and mailing address of
the Mortgagee thereunder and shall, on demand, permit Landlord to examine and
copy the Mortgage.
ARTICLE 15
EMINENT DOMAIN
15.1 TOTAL OR SUBSTANTIAL TAKING. If title or access is
taken for any public or quasi-public use, or under any statute or by right of
condemnation or eminent domain, or by sale in lieu thereof (a "Taking") with
respect to all of the Premises, or if title to so much of the Premises or access
thereto is Taken, or if the Premises or access thereto is damaged, blocked or
impaired by the Taking, so that, in Tenant's sole discretion, the Premises or
access thereto, even after a reasonable amount of reconstruction thereof, will
no longer be suitable for Tenant's (and/or Tenant's subtenants') continued
occupancy for the conduct of Tenant's (and/or Tenant's subtenants') business in
a manner consistent with the conduct of such business prior to such Taking, then
in any such event, this Lease shall terminate on the date of such Taking.
15.2 PARTIAL TAKING. If any part of the Premises, or
access thereto, shall be Taken, and the Premises or the remaining part thereof
and access thereto will be, in Tenant's sole discretion, suitable for Tenant's
(and/or Tenant's subtenants') continued occupancy for the conduct of Tenant's
(and/or Tenant's subtenants') business in a manner consistent with the conduct
of such business prior to such Taking, all of the terms, covenants and
conditions of this Lease shall continue, except that Base Rent shall be adjusted
to reflect the decreased Funded Amount remaining after application thereto of
the award made to Landlord for such Taking (subject to Section 15.3 below).
15.3 TEMPORARY TAKING. If the whole or any part of the
Premises is Taken for temporary use or occupancy, this Lease shall not terminate
by reason thereof and Tenant shall continue to pay, in the manner and at the
times herein specified, the full amount of the Base Rent payable by Tenant
hereunder, and, except only to the extent that Tenant may be prevented from so
doing by reason of such Taking, Tenant shall continue to perform and observe all
of the other terms, covenants and conditions hereof on the part of Tenant to be
performed and observed, as though the Taking had not occurred. In the event of
any such temporary Taking, Tenant shall be entitled to receive the entire amount
of the award made for the
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Taking, whether paid by way of damages, rent or otherwise. If the temporary
Taking is for a term in excess of thirty (30) days, then the Taking shall be
treated as a permanent Taking and be governed by Section 15.1 or 15.2, as
applicable.
15.4 DAMAGES. The compensation awarded or paid upon any
Taking (other than a temporary Taking, which shall be governed by Section 15.3),
whether awarded to Landlord, Tenant, or both of them, shall be distributed as
set forth below (in each case the compensation or value shall be determined as
of the date of the Taking):
(a) to Landlord, any amounts payable on account
of the value of the Land, but not to exceed an amount equal to the Funded Amount
(or, if less than the entire Premises is Taken, not to exceed a pro rata portion
of the Funded Amount equal to the ratio that the square footage of the portion
of the Premises Taken bears to the square footage of the entire Premises prior
to the Taking) plus all accrued Rent hereunder; and
(b) to Tenant, any other award, or portion
thereof, including any portion of the award above the Funded Amount (or the pro
rata portion thereof) pursuant to Section 15.4(a)).
Landlord shall promptly pay over to UBS or the holder of an
Authorized Loan, as the case may be, any award (not exceeding, however, the
Senior Funded Amount) paid to Landlord hereunder, and Tenant shall be entitled
to establish reasonable security arrangements to ensure the prompt payment of
such amounts to such holder. The Funded Amount shall be reduced on a
dollar-for-dollar basis by the amount of any award required to be paid by
Landlord to such holder of an Authorized Loan pursuant to the preceding
sentence.
15.5 NOTICE AND EXECUTION. Immediately upon service of
process upon Landlord or Tenant in connection with any Taking relating to the
Premises or any portion thereof or access thereto, each party shall give the
other Notice thereof. Each party agrees to execute and deliver to the other all
instruments that may be required to effectuate the provisions of this Article
15. Tenant reserves the right to appear in and to contest any proceedings in
connection with any such Taking. Tenant shall immediately reimburse Landlord on
demand for all reasonable out-of-pocket costs and expenses incurred by Landlord
in complying with Landlord's obligations under this Section 15.5.
ARTICLE 16
DAMAGE OR DESTRUCTION
16.1 INSURED CASUALTY. If any Improvements are damaged
or destroyed by fire or other casualty, this Lease shall continue
in full force and effect without any abatement or reduction in Base
Rent, and Tenant, at Tenant's election, may either (a) restore the
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Improvements to their condition prior to the damage or destruction, or such
other condition as Tenant shall elect in its sole and absolute discretion,
subject to Landlord's approval rights set forth in Section 11.1, or (b) not
restore the Improvements, but perform, or cause to be performed, at Tenant's
sole cost and expense, any work or service required by any Legal Requirement for
the protection of persons or property from any risk, or for the abatement of any
nuisance, created by or arising from the casualty or the damage or destruction
caused thereby.
16.2 INSURANCE PROCEEDS. In the event of any fire or
other casualty, the proceeds of any insurance policies maintained by Tenant
shall be distributed to Tenant, and Landlord shall have no claim or right with
respect thereto.
ARTICLE 17
DEFAULT
17.1 DEFAULT. Each of the following events shall
constitute a default ("Default") by Tenant:
(a) DEFAULT OTHER THAN EVENT OF MAJOR DEFAULT.
Tenant's failure to perform or comply with any of the terms, covenants or
conditions contained in this Lease other than those referred to in Section 17.2,
where such failure shall continue for a period of thirty (30) days after Notice
thereof from Landlord to Tenant, or in the case of a failure which cannot with
due diligence be cured within the period of thirty (30) days, Tenant's failure
to proceed promptly and with due diligence to cure the failure and thereafter to
prosecute the curing of the failure with all due diligence, it being intended
that in connection with a failure not susceptible of being cured with due
diligence within thirty (30) days, the time of Tenant within which to cure the
failure shall be extended for such period as may be reasonably necessary to
complete the cure with all due diligence; and
(b) INSOLVENCY. Subject to Section 17.3, the
occurrence of: (i) an assignment by Tenant for the benefit of creditors
generally; or (ii) the filing of a voluntary or involuntary petition by or
against Tenant under any present or future applicable federal, state or other
statute or law having for its purpose the adjudication of Tenant as a bankrupt;
(iii) the appointment of a receiver, liquidator or trustee for all or a
substantial portion of the Premises by reason of the insolvency or alleged
insolvency of Tenant; or (iv) the taking of possession by any department of
city, county, state or federal government, or any officer thereof duly
authorized, of all or a substantial portion of the Premises by reason of the
insolvency or alleged insolvency of Tenant; and Tenant's failure to timely give
any Notice it is permitted to give pursuant to Section 17.3 (or, in the event
Tenant gives timely Notice and pursues a contest under Section 17.3, Tenant's
failure to finally prevail in the contest).
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17.2 EVENT OF MAJOR DEFAULT. Each of the following
events shall constitute an event of major default ("Event of Major
Default") by Tenant:
(a) FAILURE TO PAY BASE RENT. Tenant's failure
to pay any Base Rent within five (5) days after Tenant's receipt of Notice
thereof from Landlord that the Base Rent is past due; or
(b) FAILURE TO PAY ADDITIONAL RENT. Tenant's
failure to pay any Additional Rent which is due to Landlord within ten (10) days
after Tenant's receipt of Notice thereof from Landlord that such Additional Rent
is past due;
(c) FAILURE TO COMPLY WITH PURCHASE OBLIGATION
UNDER SECTION 19.2. Tenant's failure to comply with Tenant's obligation to
purchase the Premises pursuant to Section 19.2 within twenty (20) days after
Tenant's receipt of Notice thereof from Landlord that Tenant has so failed,
except in the case of a purchase obligation arising on account of expiration of
the Term of this Lease, in which case no such Notice shall be required;
(d) FAILURE TO CARRY LIABILITY INSURANCE.
Tenant's failure to carry the liability insurance required by Section 7.1, if
such failure continues ten (10) days after Tenant's receipt of Notice thereof
from Landlord that Tenant is not carrying such required liability insurance.
17.3 CONTEST BY TENANT. If upon the filing of any
involuntary petition of the type described in Section 17.1(b) or upon the
appointment of a receiver, other than a receiver appointed in any voluntary
proceeding referred to in Section 17.1(b), or the taking of possession of all or
a substantial portion of the Premises by any department of the city, county,
state or federal government, or any officer thereof duly authorized, by reason
of the alleged insolvency of Tenant without the consent or over the objection of
Tenant, should Tenant desire to contest the same in good faith, Tenant shall,
within ninety (90) days after the filing of the petition or after the
appointment or taking of possession, give Notice to Landlord that Tenant
proposes to make the contest, and the same shall not constitute a Default so
long as Tenant shall prosecute the proceedings with due diligence and no part of
the Premises shall be exposed to sale by reason of the continuance of the
contest.
17.4 REMEDIES. Landlord shall have the remedies specified
below, the parties hereby acknowledging that the remedies described in Section
17.4(b) may be exercised by Landlord only upon the occurrence of an Event of
Major Default. Tenant shall at all times have the right to exercise and carry
out the terms of the Purchase Option in Section 19.1, notwithstanding the
occurrence or existence of any Default or Event of Major Default under this
Lease, and Landlord shall have the obligation to comply with Landlord's
obligations under Section 19.1 notwithstanding any Default or Event of Major
Default.
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(a) CONTINUE LEASE. In connection with a
Default or an Event of Major Default, Landlord shall have the right to enforce,
by suit or otherwise, all other covenants and conditions hereof to be performed
or complied with by Tenant and to exercise all other remedies permitted by
Section 1951.4 of the California Civil Code, or any amendments thereof or any
successor laws which replace such Section 1951.4. Landlord has the remedy
described in California Civil Code Section 1951.4 (Landlord may continue the
Lease in effect after Tenant's breach and abandonment and recover Base Rent as
it becomes due, if Tenant has right to sublet or assign, subject only to
reasonable limitation). Upon application by Landlord, a receiver may be
appointed to take possession of the Premises and exercise all rights granted to
Landlord as set forth in this Section 17.4(a); and
(b) TERMINATE LEASE. In connection with an
Event of Major Default (but not a Default), Landlord shall have the right to
terminate this Lease, by giving Tenant Notice thereof, at any time after the
occurrence of such Event of Major Default and whether or not Landlord has also
exercised any right under Section 17.4(a). In such event, Tenant shall, within
twenty (20) days after receipt of Notice from Landlord, purchase the Premises
pursuant to Section 19.2.
17.5 NO WAIVER. No failure by Landlord or Tenant to insist
upon the strict performance of any term, covenant or condition of this Lease or
to exercise any right or remedy consequent upon a breach thereof and no
acceptance of full or partial Rent during the continuance of any breach shall
constitute a waiver of any such breach or of the term, covenant, or condition.
No term, covenant or condition of this Lease to be performed or complied with by
Tenant or Landlord, and no breach thereof, shall be waived, terminated, altered
or modified except by a written instrument executed by Landlord and Tenant. No
waiver of any breach shall affect or alter this Lease, but each and every term,
covenant, and condition of this Lease shall continue in full force and effect
with respect to any other then existing subsequent breach thereof.
17.6 EFFECT OF ASSIGNMENT. Notwithstanding an Entity's
prior assignment or transfer of its interest as Tenant under this Lease, so long
as Landlord has been given Notice of such assignment pursuant to Sections
14.1(b) and 21.3, Landlord shall give such Entity copies of all Notices required
by this Article 17 in connection with any Default, and such Entity shall have
the period granted hereunder to Tenant to cure such Default, unless such Entity
shall have been released from all obligations arising under this Lease. Landlord
may not assert any rights against such Entity in the absence of such Notice and
opportunity to cure, so long as Landlord has been given Notice of such
assignment pursuant to Sections 14.1(b) and 21.3.
17.7 LANDLORD CURE RIGHT. If Tenant fails to perform
any covenant or agreement to be performed by Tenant under this
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Lease, and if the failure or default continues for thirty (30) days after Notice
to Tenant and to any Mortgagee who has requested in writing notice thereof from
Landlord (except for emergencies and except for payment of any lien or
encumbrance threatening the imminent sale of the Premises or any portion
thereof, in which case payment or cure may be made as soon as necessary to
minimize the damage to person or property caused by such emergency or to prevent
any such sale), Landlord may, but shall have no obligation to, pay the same and
cure such default on behalf of and at the expense of Tenant and do all
reasonably necessary work and make all reasonably necessary payments in
connection therewith including, but not limited to, the payment of reasonable
attorneys' fees and disbursements incurred by Landlord. Notwithstanding the
foregoing, Landlord shall have no right to cure any such failure to perform by
Tenant so long as Tenant both: (1) is diligently and in good faith attempting to
cure such matter; and (2) has the financial ability to so comply.
Notwithstanding anything to the contrary in this Lease, in no event shall
Landlord have a right to cure any matters relating to the Improvements unless
such matter constitutes a crime by Landlord and subjects Landlord to criminal
penalties (except as specifically permitted in Section 8.1(b)). Upon demand,
Tenant shall reimburse Landlord for the reasonable amount so paid, together with
interest at the Lease Rate from the date incurred until the date repaid. Tenant
shall defend, indemnify, and hold Landlord harmless from and against any and all
losses, costs, expenses, liabilities, claims, causes of action and damages of
all kinds that may result to Landlord, including reasonable attorneys' fees and
disbursements incurred by Landlord, arising because of any failure by Tenant to
perform any of its obligations under this Lease. Tenant's duty to indemnify
Landlord under this Section 17.7 shall survive the expiration or earlier
termination of this Lease.
17.8 LANDLORD'S DEFAULT.
(a) GENERAL. If Landlord fails to perform any
covenant or agreement to be performed by Landlord under Article 11, Section
13.1, Section 15.4, Article 20, or Section 21.10 of this Lease (including, but
not limited to, Landlord's failure to keep the Premises free of any and all
liens created by or through Landlord except as approved by Tenant in writing),
and if the failure or default continues for thirty (30) days after Notice to
Landlord and to any Fee Mortgagee who has requested in writing notice thereof
from Tenant (except for (i) emergencies, or (ii) payment of any lien or
encumbrance threatening the imminent sale of the Premises or any portion
thereof, in which case payment or cure may be made as soon as necessary to
minimize the damage to person or property caused by such emergency or to prevent
any such sale), Tenant may, but shall have no obligation to, pay the same and
cure such default on behalf of and, so long as such failure to perform arises
due to Landlord's gross negligence, willful misconduct, or willful breach of
this Lease, at the expense of Landlord and do all reasonably necessary work and
make all reasonably necessary payments in connection therewith including, but
not limited to, the payment of reasonable attorneys' fees and
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disbursements incurred by Tenant. Notwithstanding the foregoing, Tenant shall
have no right to cure any such failure to perform by Landlord so long as
Landlord both: (1) is diligently and in good faith attempting to cure such
matter; and (2) has the financial ability to so comply. To the extent that
Landlord's failure to perform arises due to its gross negligence, willful
misconduct or willful breach of this Lease, upon demand, Landlord shall
reimburse Tenant for the reasonable amount so paid, together with interest at
the Lease Rate from the date incurred until the date repaid. To the extent that
Landlord's failure to perform arises due to its gross negligence, willful
misconduct or willful breach of this Lease, Landlord shall defend, protect,
indemnify, and hold Tenant harmless from and against any and all losses, costs,
expenses, liabilities, claims, causes of action and damages of all kinds that
may result to Tenant, including reasonable attorneys' fees and disbursements
incurred by Tenant, arising because of any failure by Landlord to perform any of
its obligations under Article 11, Section 13.1, Section 15.4, Article 20 or
Section 21.10 of this Lease. Landlord's duty to indemnify Tenant under this
Section 17.8 shall survive the expiration or earlier termination of this Lease.
(b) DEFAULT UNDER CERTAIN PROVISIONS.
Notwithstanding anything to the contrary in Section (a) above, in the event of a
default by Landlord under Section 20.6, Tenant shall have the right to cure such
default on behalf of and at Landlord's expense, without prior notice to
Landlord. In addition, in the event of any default by Landlord under Section
20.4, 20.5 or 20.6, Tenant shall have the right to exercise its Purchase Option
pursuant to Section 19.1 hereof, and to offset against the Purchase Price the
amount of all losses and reasonable costs and expenses (including without
limitation reasonable attorneys' fees) incurred by Tenant arising from such
default by Landlord, including without limitation all losses arising by reason
of Tenant's inability to treat the transactions contemplated by this Lease as an
operating lease for financial accounting and securities regulatory purposes, and
all costs and expenses incurred in connection with negotiating and entering into
a new lease upon exercise of the Purchase Option.
ARTICLE 18
QUIET ENJOYMENT
18.1 QUIET ENJOYMENT. Landlord covenants to secure to
Tenant the quiet possession of the Premises for the full Term against all
persons claiming the same, subject to Landlord's rights and remedies under
Section 17 upon a Default or an Event of Major Default by Tenant. The existence
of any Permitted Exceptions shall not be deemed to constitute a breach of
Landlord's obligations hereunder. Tenant shall, immediately upon demand,
reimburse Landlord for all reasonable costs, expenses and damages incurred or
paid by Landlord in the performance of Landlord's obligations under this Article
18 (except for any costs, expenses or damages arising from Landlord's willful
breach of this Lease).
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ARTICLE 19
TENANT'S OPTION TO PURCHASE
19.1 OPTION TO PURCHASE PREMISES.
(a) PURCHASE OPTION. Tenant shall have the option
("Purchase Option") to purchase all or part of the Premises at any time during
the Term; provided that Tenant shall be entitled to purchase less than all of
the Premises only if the portion being purchased is released from any existing
Fee Mortgage and if the portion of the Premises not purchased shall constitute
one or more legal lots after closing of the purchase and shall be reasonably
viable as a separate property. The purchase price ("Purchase Price") for the
portion of the Premises which Tenant elects to purchase shall be (i) the
then-existing Funded Amount applicable to the portion of the Premises which
Tenant elects to purchase (determined in a pro rata basis on the basis of the
area being purchased), as the same may be reduced from time to time, plus (ii)
the amount of any prepayment premium and all other fees, costs, and expenses due
to any holder of an Authorized Loan in connection with such loan (to the extent
not already paid pursuant to Section 21.21 hereof), less (iii) the amount of the
Security Deposit (or, in the event of a purchase of a portion of the Premises, a
pro rata portion of the Security Deposit). Tenant shall be entitled to a credit
against the Purchase Price equal to the principal balance(s) of any Authorized
Loan and/or Fee Mortgage existing immediately prior to the closing under this
Purchase Option if such Authorized Loan and/or Fee Mortgage are not fully repaid
and all documents reflecting the same are not cancelled and removed from the
public records on or prior to the closing under this Purchase Option. If Tenant
purchases less than all of the then-existing Premises, then the credit pursuant
to the preceding sentence shall be calculated on a pro rata basis, based upon
the ratio of the area of the Premises being purchased compared to the area of
the then-existing Premises. In lieu of payment of the Purchase Price, Tenant
shall have the right (1) to assume the UBS Loan or any other Authorized Loan or
(2) to cause Landlord to assign the Authorized Loan to a third party acceptable
to the holder of such Authorized Loan (which third party shall expressly assume
such obligations in writing), provided that Landlord is released from all
obligations under the Authorized Loan. Landlord shall execute any and all
documents necessary to effect such assumption and assignment upon Tenant's
request, provided that Tenant shall reimburse Landlord for all reasonable costs
and expenses related thereto. Notwithstanding anything to the contrary herein,
the Purchase Price shall not include any interest, fees, late charges or any
other costs or expenses incurred or charged to Landlord or Tenant by reason of a
default by Landlord under Section 20.6 hereof.
(b) PURCHASE OPTION EXERCISE NOTICE. If Tenant
desires to exercise the Purchase Option, Tenant shall deliver to Landlord a
written notice ("Purchase Option Exercise Notice") of Tenant's election;
provided, however, that in the event of an
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assignment by Landlord for the benefit of creditors generally, the filing of a
voluntary or involuntary bankruptcy petition by or against Landlord or the
appointment of a receiver, liquidator or trustee for all or a substantial
portion of the Premises by reason of Landlord's insolvency or alleged
insolvency, the Purchase Option shall be deemed exercised with respect to the
entire Premises as of the calendar day immediately preceding such assignment,
filing or appointment.
(c) TRANSFER. If Tenant exercises the Purchase
Option, the purchase and sale of the Premises being purchased shall be
consummated as follows. In the event of a purchase of a portion of the Premises,
the term "Premises" as used in this Section 19.1(c) shall be deemed to mean that
portion of the Premises then to be purchased pursuant to the Purchase Option.
(i) Landlord shall grant and convey the
Premises to Tenant, its authorized agent or assignee, pursuant to a duly
executed and acknowledged grant deed ("Grant Deed"), free and clear of all title
defects, liens, encumbrances, deeds of trust, mortgages, rights-of-way and
restrictive covenants or conditions, except for the Permitted Exceptions.
Landlord shall assign and Tenant shall assume all rights, duties and obligations
under the Legal Requirements affecting the Premises, effective as of the date of
recordation of the Grant Deed;
(ii) The Purchase Price shall be paid upon
delivery of the Grant Deed and any other documents reasonably requested by
Tenant to evidence the transfer of the Premises or to release all liens of
Landlord, including, without limitation, any and all reconveyances of mortgages
or other recorded documents as requested by Tenant ("Additional Documents"). In
the event that Tenant elects to assign the Purchase Option pursuant to Section
19.1(d) below, and Tenant's assignee pays an amount less than the Purchase Price
for the Premises, Tenant shall pay to Landlord any excess of the Purchase Price
over the amount paid by such assignee. Landlord shall deliver the Grant Deed and
the Additional Documents to Tenant on the date for closing specified by Tenant
in the Purchase Option Exercise Notice (which date shall be no sooner than ten
(10) days after the date of the Purchase Option Exercise Notice and no later
than the last day of the Term, as the same may be extended). The closing shall
take place at the location and in the manner reasonably set forth by Tenant in
the Purchase Option Exercise Notice;
(iii) If Landlord shall fail to cause title to
be in the condition required in Section 19.1(c)(i) above within the time herein
prescribed for the delivery of the Grant Deed, then Tenant shall have the right,
in addition to all other rights provided by law, by a written notice to
Landlord: (1) to extend the time in which Landlord shall clear title and deliver
the Grant Deed and Additional Documents, during which extension this Lease shall
remain in full force and effect, except Tenant shall be released from its
obligation to pay Base Rent during the extension; (2) to
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accept delivery of the Grant Deed and Additional Documents subject to such title
defects, liens, encumbrances, deeds of trust, mortgages, rights-of-way and
restrictive covenants or conditions specified and set forth in the Grant Deed
and not cleared by Landlord (but without waiving any rights or remedies
available to Tenant on account of such title exceptions); (3) to rescind, by
notice to Landlord and without any penalty or liability therefor, any and all
obligations Tenant may have under and by virtue of the Purchase Option or the
exercise thereof, whereupon this Lease shall remain in full force and effect;
(4) if the title exception is curable by the payment of money, Tenant may make
such payment and such payment shall be a credit against the Purchase Price in
favor of Tenant.
(iv) Refusal of a title company to issue a
standard form of owner's title insurance policy insuring title to the Premises
in the condition specified in subparagraph (c)(i) shall be sufficient evidence
of Landlord's failure to convey clear title and shall entitle Tenant to exercise
any of the rights specified in subparagraph (c)(iii).
(v) Base Rent shall be prorated and paid and
all unpaid Additional Rent shall be paid as of the date title to the Premises is
vested of record in Tenant. Tenant shall pay the escrow fees; the recorder's fee
for recording the Grant Deed; the premium for the title insurance policy; all
documentary transfer taxes; Tenant's attorneys' fees; Landlord's reasonable
attorneys' fees; all other costs and expenses incurred by Tenant in consummating
the transfer of the Premises; and all reasonable expenses (except as specified
in the next sentence) incurred by Landlord in consummating the transfer of the
Premises pursuant to this Section 19.1. Landlord shall pay the costs and
expenses of clearing title as required by Section 19.1(c)(i). In the event of a
purchase by Tenant under this Article 19, Landlord shall have no obligation to
return the Security Deposit to Tenant to the extent the Security Deposit has
been credited against the purchase price to be paid by Tenant pursuant to
Section 19.1(a).
(d) ASSIGNMENT. Tenant shall have the right on one
or more occasions, without Landlord's consent, to assign this purchase option,
in whole or in part, to any Entity at any time, whether or not Tenant also
assigns its interest in the Lease. Tenant shall give prior written notice to
Landlord of any such assignment.
19.2 MANDATORY PURCHASE/SALE OF PREMISES. Notwithstanding
anything to the contrary herein, upon either: (1) expiration of the Term of this
Lease or upon the occurrence of any other event terminating this Lease; or (2)
the occurrence of any event which causes the Funded Amount to be reduced to zero
(0), within thirty (30) days after Tenant's receipt of written notice of the
foregoing and of Tenant's purchase obligation under this Section 19.2, Tenant
shall purchase or cause another Entity to purchase, and Landlord shall sell, the
Premises in the same manner
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as if Tenant had exercised the Purchase Option on such date. The Purchase Price
shall be the same as if Tenant had exercised the Purchase Option, without regard
to the physical state or condition of the Premises or any Improvements (but
Tenant shall have the rights set forth in Section 19.1, including without
limitation, the terms of Sections 19.1(c)(iii) and (iv)). In the event Tenant
fails to purchase (or cause another Entity to purchase) the Premises pursuant to
its obligation under this Section 19.2, Landlord (to the extent required under
Section 21.19) shall sell the Premises to an unrelated third party and, as
applicable, (i) Tenant shall be obligated to pay to Landlord, immediately upon
demand, any excess of the Purchase Price over the amount realized by Landlord in
connection with such sale, or (ii) Landlord shall be obligated to pay to Tenant,
immediately upon demand, any excess of the amount realized by Landlord in
connection with such sale over the Purchase Price. For purposes of the preceding
sentence, the amount realized by Landlord upon a sale of the Premises shall be
net of Landlord's reasonable sale expenses and other expenses incurred by
Landlord but required to be paid by Tenant pursuant to Section 19.1(c)(v).
Landlord's obligation to pay such excess to Tenant shall survive any termination
of this Lease. Notwithstanding anything set forth elsewhere herein, if Tenant
fails to timely comply with Tenant's obligation to purchase the Premises
pursuant to this Section 19.2, upon ten (10) days' prior written Notice, then so
long as title is in the condition required by Section 19.1(c)(i), Landlord may
transfer title to the Premises to Tenant by way of the Grant Deed described in
Section 19.1(c)(i), and Tenant shall accept such Grant Deed and promptly and
properly file the same of record. Notwithstanding anything to the contrary in
this Lease, in the event of default, breach or violation by Tenant of any of
Tenant's obligations under this Section 19.2, Tenant shall have no liability to
Landlord or any other party in excess of an amount equal to the then-existing
Guaranteed Residual Value, less a credit equal to the sum of (a) any of the
Collateral which UBS or any other holder of an Authorized Loan has used,
applied, or otherwise come into possession of, plus (b) any of the Security
Deposit retained by Landlord, and Landlord shall have no recourse, claim or
counterclaim whatsoever against Tenant in excess of such amount on account of
such default, breach or violation. If the Guaranteed Residual Value has not
previously been determined as of the date Tenant's liability under this Section
19.2 has been established, then the Guaranteed Residual Value shall be
determined as of the date Tenant's liability hereunder is established.
19.3 SURVIVAL. The obligations of Landlord and Tenant under this
Article 19 shall survive the expiration or earlier termination of this Lease.
ARTICLE 20
ADDITIONAL COVENANTS OF LANDLORD
20.1 TITLE. In the event Tenant so requests in writing (and so
long as either Tenant agrees to indemnify Landlord from any
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liabilities or obligations in connection therewith, or Landlord does not incur
any liabilities or obligations in connection therewith), Landlord shall execute
all documents, instruments and agreements reasonably requested by Tenant in
order to accomplish any of the following in the manner reasonably requested by
Tenant and within the time parameters reasonably requested by Tenant: (1) remove
exceptions to title to or affecting the Premises; (2) create exceptions to title
(including, without limitation, easements and rights of way) to or affecting the
Premises (but not including any Mortgage); (3) modify any then-existing
exception to title or (4) subdivide the Premises into two or more separate
parcels. Tenant shall promptly reimburse Landlord for, or at Landlord's request,
pay directly in advance, all reasonable costs, expenses and other amounts
incurred or required to be expended by Landlord in order to comply with Tenant's
requests made in accordance with the preceding sentence, and the failure of
Tenant to reimburse or pay any such amounts shall result in the suspension of
Landlord's obligations under such sentence with respect to that particular
request until the amounts required to be paid by Tenant under this sentence have
been paid. Landlord acknowledges that it is critical to Tenant's ability to
construct improvements on the Premises to have the ability and flexibility to
accomplish the foregoing, and that the parties therefore agree that Landlord
shall not be entitled to withhold Landlord's consent to any of the foregoing
requests by Tenant, except as set forth in the preceding sentence.
20.2 LAND USE. Except where requested by Tenant pursuant to this
Section 20.2, Landlord shall not cause or give its written consent to any land
use or zoning change affecting the Premises or any changes of street grade. In
the event Tenant so requests in writing (and so long as either Tenant agrees to
indemnify Landlord from any liabilities or obligations in connection therewith,
or Landlord does not incur any liabilities or obligations in connection
therewith), Landlord shall execute all documents, instruments and agreements
reasonably requested by Tenant in order to accomplish any of the following in
the manner reasonably requested by Tenant and within the time parameters
reasonably requested by Tenant: (1) cause a change in any land use restriction
or law affecting the Premises; (2) cause a change in the zoning affecting the
Premises; or (3) cause a change in the street grade with respect to any street
in the vicinity of the Premises. Tenant shall promptly reimburse Landlord for,
or at Landlord's request, pay directly in advance, all reasonable costs,
expenses and other amounts incurred or required to be expended by Landlord in
order to comply with Tenant's requests made in accordance with the preceding
sentence, and the failure of Tenant to reimburse or pay any such amounts shall
result in the suspension of Landlord's obligations under such sentence with
respect to that particular request until the amounts required to be paid by
Tenant under this sentence have been paid. Landlord acknowledges that it is
critical to Tenant's ability to construct improvements on the Premises to have
the ability and flexibility to accomplish the foregoing, and that the parties
therefore agree that Landlord shall
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not be entitled to withhold Landlord's request to any of the
foregoing requests by Tenant.
20.3 TRANSFER OF PROPERTY INTERESTS. Except as requested by
Tenant pursuant to Section 11.2 or 20.1, Landlord shall not transfer to any
third party any rights inuring to or benefits associated with the Premises
(including, without limitation, zoning rights, development rights, air space
rights, mineral, oil, gas or water rights). Nothing in this Section 20.3 shall
limit Landlord's rights pursuant to Section 13.2; provided that any purchaser of
Landlord's interest in the Premises shall be bound by the terms of this Lease,
including without limitation, the terms of this Section 20.3.
20.4 SHAREHOLDER EQUITY; NO OTHER ASSET. Landlord covenants and
agrees that during the Term of the Lease, Landlord shall maintain a shareholder
equity balance of not less than three percent (3%) of its total assets,
including without limitation, the Property. In addition, Landlord shall not,
without the prior written consent of Tenant, which consent may be withheld at
Tenant's sole discretion, acquire any significant assets other than (i) the
Premises, (ii) any Improvements to be built on the Premises, and (iii) the land
and any Improvements thereon, which is subject to those certain Ground Leases
between Landlord and Tenant, which land is described on Exhibit F attached
hereto.
20.5 RECOURSE OBLIGATIONS. Landlord agrees that during the Term
of this Lease, Landlord will not incur any indebtedness for borrowed money or
any other material obligations to which the holder or obligee thereof has
recourse against Landlord to satisfy the same without Tenant's prior written
consent, which consent Tenant may withhold in its sole discretion.
20.6 DEFAULT UNDER AUTHORIZED LOAN. Landlord shall not, without
Tenant's express prior written consent, default under any Authorized Loan, or
any loan documents relating to such Authorized Loan, where such default is not
caused, directly or indirectly by a breach of any of Tenant's obligations under
this Lease, under the Pledge Agreement securing the UBS Loan or under any
documents relating to any Authorized Loan.
ARTICLE 21
MISCELLANEOUS
21.1 RELATIONSHIP. Neither this Lease nor any agreements or
transactions contemplated hereby shall in any respect be interpreted, deemed or
construed as constituting Landlord and Tenant as partners or joint venturers,
one with the other, or as creating any lender/borrower, partnership, joint
venture, association or, except as set forth in Section 21.2 below, any other
relationship other than that of landlord and tenant; and, except as set forth in
Section 21.2 below, both Landlord and Tenant agree not to make any contrary
assertion, contention, claim or
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counterclaim in any action, suit or other legal proceeding involving either
Landlord or Tenant or the subject matter of this Lease.
21.2 FORM OF TRANSACTION; CERTAIN TAX MATTERS.
(a) Landlord and Tenant hereby agree and declare that the
transactions contemplated by this Lease are intended to constitute, both as to
matters of form and substance:
(i) an operating lease for financial accounting and
securities regulatory purposes, and
(ii) a financing arrangement (and not a "true lease")
for Federal, state and local income tax purposes.
Accordingly, and notwithstanding any other provision of this Lease to the
contrary, Landlord and Tenant agree and declare that (A) the transactions
contemplated hereby are intended to have a dual, rather than single, form and
(B) all references in this Lease to the "Lease" of the Premises which fail to
reference such dual form do so as a matter of convenience only and do not
reflect the intent of Landlord and Tenant as to the true form of such
arrangements.
(b) Landlord and Tenant agree that, in accordance with
their intentions and the substance of the transactions contemplated hereby,
Tenant (and not Landlord) shall be treated as the owner of the Premises for
Federal, state, and local income tax purposes and this Lease shall be treated as
a financing arrangement. Tenant shall be entitled to take any deduction, credit
allowance or other reporting, filing or other tax position consistent with such
characterizations. Landlord and Tenant shall not file any Federal, state or
local income tax returns, reports or other statements, or take any other
actions, in a manner which is inconsistent with the foregoing provisions of this
Section 21.2.
(c) Each party acknowledges that it has retained
accounting, tax and legal advisors to assist it in structuring this Lease and
neither party is relying on any representations of the other regarding the
proper treatment of this transaction for accounting, income tax or any other
purpose. Nothing in this Section 21.2(c) shall increase or diminish any
liability or obligation of the parties that otherwise exists pursuant to this
Lease.
21.3 NOTICES. Each Notice shall be in writing and shall be sent
by personal delivery, overnight courier (charges prepaid or billed to the
sender) or by the deposit of such with the United States Postal Service, or any
official successor thereto, designated as registered or certified mail, return
receipt requested, bearing adequate postage and in each case addressed as
provided in the Basic Lease Provisions. Each Notice shall be effective upon
being personally delivered or actually received. The time period in which a
response to any such Notice must be
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given or any action taken with respect thereto shall commence to run from the
date of personal delivery or receipt of the Notice by the addressee thereof, as
reflected on the return receipt of the Notice. Rejection or other refusal to
accept shall be deemed to be receipt of the Notice sent. By giving to the other
party at least thirty (30) days' prior Notice thereof, either party to this
Lease (as well as any Mortgagee) shall have the right from time to time during
the Term of this Lease to change the address(es) thereof and to specify as the
address(es) thereof any other address(es) within the continental United States
of America.
21.4 SEVERABILITY OF PROVISIONS. If any term, covenant or
condition of this Lease, or the application thereof to any Entity or
circumstance, shall be invalid or unenforceable, the remainder of this Lease, or
the application of such term, covenant or condition to Entities or circumstances
other than those as to which it is invalid or unenforceable, shall not be
affected thereby.
21.5 ENTIRE AGREEMENT; AMENDMENT. This Lease and other documents
expressly referred to herein constitute the entire agreement of Landlord and
Tenant with respect to the subject matter hereof. Neither this Lease nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
21.6 APPROVALS AND CONSENTS. Except as expressly provided in
this Lease, whenever any provision of this Lease requires an approval or consent
to be given by one of the parties hereto, the approval or consent shall not be
unreasonably withheld or delayed. Whenever this Lease grants either party the
right to take action, exercise discretion, establish rules and regulations, or
make an allocation or other determination, except as otherwise provided, such
party shall act reasonably and in good faith and take no action which might
result in the frustration of the other party's reasonable expectations
concerning the benefits to be enjoyed under this Lease. If either party
withholds its consent or approval, unless by the express terms of this Lease
such consent or approval may be withheld in such party's sole discretion, such
party shall, upon request, promptly deliver to the other party a written
statement specifying in detail the reason or reasons why such consent or
approval was withheld or refused. If neither approval nor rejection is given by
Landlord within the time specified in Article 11 as to any particular approval
requested by Tenant under Article 11 (or, if no such time is specified, then
within thirty (30) days after request for approval is given by a Notice), then
the approval thus specifically requested in writing by Tenant shall be
conclusively and irrevocably deemed to have been given by Landlord.
21.7 TERMINOLOGY. All personal pronouns used in this Lease shall
include all other genders. The singular shall include the plural and the plural
shall include the singular. Titles of
42.
<PAGE> 48
Articles, Sections and Subsections in this Lease are for convenience only and
neither limit nor amplify the provisions of this Lease, and all references in
this Lease to Articles, Sections or Subsections shall refer to the corresponding
Article, Section or Subsection of this Lease unless specific reference is made
to the articles, sections or other subdivisions of another document or
instrument. The word "days" as used herein shall mean calendar days unless
otherwise expressly stated.
21.8 MEMORANDUM OF LEASE. Neither party shall record this Lease.
However, concurrently with the execution of this Lease, Landlord and Tenant have
executed a Memorandum of Lease in the form attached hereto as Exhibit C and by
this reference made a part hereof, which Memorandum of Lease shall be promptly
recorded in the Official Records.
21.9 SUCCESSORS AND ASSIGNS. Subject to Articles 13 and 14, this
Lease shall inure to the benefit of and be binding upon Landlord and Tenant and
their respective heirs, executors, legal representatives, successors and
assigns. Whenever in this Lease a reference to any Entity is made, such
reference shall be deemed to include a reference to the heirs, executors, legal
representatives, successors and assigns of such Entity.
21.10 COMMISSIONS. Landlord and Tenant each represent and
warrant that neither has dealt with any broker in connection with this
transaction and that no real estate broker, salesperson or finder has the right
to claim a real estate brokerage, salesperson's commission or finder's fee by
reason of contact between the parties brought about by such broker, salesperson
or finder. Each party shall hold and save the other harmless of and from any and
all loss, cost, damage, injury or expense arising out of or in any way related
to claims for real estate broker's or salesperson's commissions or fees based
upon allegations made by the claimant that it is entitled to such a fee from the
indemnified party arising out of contact with the indemnifying party or alleged
introductions of the indemnifying party to the indemnified party.
21.11 ATTORNEYS' FEES. In the event any action is brought by
Landlord or Tenant against the other to enforce or for the breach of any of the
terms, covenants or conditions contained in this Lease, the prevailing party
shall be entitled to recover reasonable attorneys' fees to be fixed by the
court, together with costs of suit therein incurred. Tenant shall pay the
reasonable attorneys' fees incurred by Landlord for the review and negotiation
of this Lease and the UBS Loan documents.
21.12 GOVERNING LAW. This Lease and the obligations of the
parties hereunder shall be governed by and interpreted, construed and enforced
in accordance with the laws of the State of California.
21.13 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed to be an
43.
<PAGE> 49
original and all of which together shall comprise but a single
instrument.
21.14 TIME IS OF THE ESSENCE. Time is of the essence of this
Lease, and of each provision hereof.
21.15 NO THIRD PARTY BENEFICIARIES. This Lease is entered into
by Landlord and Tenant for the sole benefit of Landlord and Tenant. There are no
third party beneficiaries to this Lease.
21.16 NO RECOURSE. The obligations of Tenant and Landlord
(including, without limitation, the obligations of Landlord with respect to the
Identified Matters set forth below) under this Lease shall be without recourse
to any partner, officer, trustee, beneficiary, shareholder, director or employee
of Tenant or Landlord. There shall be no limitation on Landlord's liability with
respect to any willful misconduct, bad faith breach of this Lease, gross
negligence by Landlord, or any breach by Landlord of its obligations with
respect to Sections 20.4, 20.5 or 20.6 ("Identified Matters"). Except for
Identified Matters, Landlord's liability to Tenant for any default by Landlord
under this Lease is limited to Landlord's interest in the Premises, and Tenant
agrees to look solely to Landlord's interest therein for the recovery of any
judgment against Landlord, it being intended that neither Landlord nor any of
its shareholders, employees, agents, representatives, affiliates, officers or
directors shall be personally liable for any judgment or deficiency.
21.17 ESTOPPEL CERTIFICATES. Within thirty (30) days after
request therefor by either party, the non-requesting party shall deliver, in
recordable form, a certificate to any proposed mortgagee, purchaser, sublessee
or assignee and to the requesting party, certifying (if such be the case) that
this Lease is in full force and effect, the date of Tenant's most recent payment
of Rent, that, to the best of its knowledge, the non-requesting party has no
defenses or offsets outstanding, or stating those claimed, and any other
information reasonably requested. Failure to deliver said statement in time
shall be conclusive upon the non-requesting party that: (a) this Lease is in
full force and effect, without modification except as may be represented by the
requesting party; (b) there are no uncured defaults in the requesting party's
performance and the non-requesting party has no right of offset, counterclaim or
deduction against the non-requesting party's obligations hereunder; (c) no more
than one month's Base Rent has been paid in advance; and (d) any other matters
reasonably requested in such certificate.
21.18 COLLATERAL. The parties acknowledge that Tenant has
pledged certain collateral ("Collateral") to UBS to secure SGA's obligations
under the terms of the UBS Note. If the holder of an Authorized Loan applies any
of the Collateral to satisfy an obligation under any Authorized Loan documents,
such application shall be deemed to reduce the Senior Funded Amount under this
Lease
44.
<PAGE> 50
on a dollar-for-dollar basis. Tenant shall have no claims, rights or causes of
action against Landlord arising from any application of the Collateral to
satisfy an obligation under the Authorized Loan documents; provided, however,
that nothing herein shall release Landlord from any claims, rights or causes of
action of Tenant for any breach of this Lease by Landlord or any default by
Landlord under any documents relating to an Authorized Loan, which default does
not arise, directly or indirectly from or as a result of any default by Tenant
of its obligations under the Lease.
21.19 LANDLORD'S CONTINUING OBLIGATION TO SELL. Notwithstanding
anything to the contrary herein, in the event Landlord obtains possession of the
Premises pursuant to the terms of this Lease (including, without limitation,
upon the expiration or earlier termination of this Lease where Tenant has
defaulted in its obligation to purchase the Premises pursuant to Section 19.2),
Landlord shall be under a continuing obligation to use its commercially
reasonable efforts to sell the Premises to Tenant or to one or more unrelated
third parties; provided, however, that Landlord shall not be required to sell or
attempt to sell any portion of the Premises (i) in a manner, or under
circumstances, that could materially impair Landlord's ability to enforce any of
its rights or remedies under this Lease (as determined in Landlord's sole
discretion exercised in good faith) or (ii) at a time when market conditions
render it inadvisable to sell or attempt to sell the Premises (as determined in
Landlord's sole discretion exercised in good faith).
21.20 AS-IS LEASE. Landlord makes no representations or
warranties concerning the condition, suitability or any other matters relating
to the Premises, and Tenant hereby acknowledges that Tenant leases the Premises
from Landlord on an "as is" basis.
21.21 NET LEASE. Except as otherwise provided in this Lease,
Tenant agrees that this Lease is an absolute net Lease, and the Base Rent called
for hereunder shall be paid as required net of all expenses associated with the
Premises, including without limitation, Real Estate Taxes and insurance premiums
for the insurance required to be carried hereunder, and all other reasonable and
customary costs and expenses incurred by Landlord in connection with the
Premises or this Lease, all of which shall be paid or reimbursed by Tenant
unless otherwise specifically provided herein. Tenant agrees to reimburse
Landlord, within ten (10) days following receipt of any written demand therefor,
for all fees, accrued but unpaid interest, late charges, prepayment penalties,
costs and expenses charged to Landlord or SGA by UBS (or other holder of an
Authorized Loan) pursuant to the terms and conditions of the UBS Note or other
Authorized Loan.
21.22 REPRESENTATIONS AND WARRANTIES. Tenant and Landlord each
hereby represents and warrants to the other that: (i) such party is duly
organized and existing under the laws of the jurisdiction in which it is formed,
and is qualified to do business in the State of California; (ii) such party has
the full right and
45.
<PAGE> 51
authority to enter into this Lease, consummate the sale, transfers and
assignments contemplated herein and otherwise perform its obligations under this
Lease; (iii) the person or persons signatory to this Lease and any document
executed pursuant hereto on behalf of such party have full power and authority
to bind such party; and (iv) the execution and delivery of this Lease and the
performance of such party's obligations hereunder do not and shall not result in
the violation of its organizational documents or any contract or agreement to
which such party may be a party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
46.
<PAGE> 52
[SIGNATURE PAGE TO GROUND LEASE]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Lease as of the day and year first above written.
"LANDLORD"
IRISH LEASING CORPORATION,
A Texas Corporation
By: /s/ GREG ENGLAND
---------------------------
Name: Greg England
-------------------------
"TENANT"
CISCO SYSTEMS, INC.,
A California Corporation
By: /s/ JOHN T. CHAMBERS
---------------------------
Name: John T. Chambers
Its: President and Chief Executive
Officer
By: /s/ LARRY R. CARTER
---------------------------
Name: Larry R. Carter
Its: Chief Financial Officer
<PAGE> 53
EXHIBIT A
DESCRIPTION OF LAND
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
Lot 50, as shown on that certain Map entitled, "Tract No. 7560," which Map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on December 21, 1983 in Book 522 of Maps, pages 51 and 52.
Reserving therefrom a perpetual right and easement to construct, install,
maintain, repair, renew, replace, operate and use a surface drainage release to
benefit Lot 49 of Tract 7560, as contained in that certain Grant of Easement
recorded August 8, 1990 in Book L443, page 0754, Official Records, and described
as follows:
The Northwesterly 10.00 feet of the Southeasterly 30.00 feet and the
Northwesterly 100.00 feet of the Southeasterly 130.00 feet of the Northeasterly
10.00 feet of Lot 50.
PARCEL TWO:
That portion of Lot 51, as shown on that certain Map entitled, "Tract No. 7560,"
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, State of California on December 21, 1983 in Book 522 of Maps, pages
51 and 52, being more particularly described as follows:
Beginning at the Southeasterly corner of said Lot 51; thence along the
Southerly line of said Lot 51, S. 59 degrees 27 minutes 51 seconds W. 77.00
feet; thence N. 14 degrees 27 minutes 48 seconds E. 108.90 feet to the
Northeasterly line of said Lot 51; thence along said Northeasterly line S. 30
degrees 32 minutes 09 seconds E. 77.00 feet to the point of beginning, as
provided for in that certain Lot Line Adjustment granted by the Director of
Planning of the City of San Jose, a copy of which was recorded March 28, 1984
in the office of the Recorder of the County of Santa Clara in Book I410, page
712 of Official Records.
PARCEL THREE:
Lot 5 and 6, as shown on that certain Map of Tract No. 7408, which map was filed
for record in the office of the Recorder of the County of Santa Clara, State of
California on November 19, 1982 in Book 506 of Maps, pages 24, 25 and 26 and a
portion of that certain parcel of land described in the deed recorded December
22, 1972 in Book 0167, page 623, all as approved by that Lot Combination
recorded September 16, 1992 in Book M381 of Maps, page(s) 0081, Official
Records, more particularly described as follows:
Beginning at a point on the Northeasterly line of Rio Robles, as shown upon
said map, at the most Southerly corner of said Lot 5; thence along said
Northeasterly line of Rio Robles, N. 30 degrees 32 minutes 09 seconds W. 105.50
feet; thence on a tangent curve to the right, having a radius of 367.00 feet,
through a central angle of 36 degrees 30 minutes 00 seconds an arc distance of
233.80 feet; thence on a curve to the right, tangent to the previous curve,
having a radius of 50.00 feet, through a central angle of 86 degrees 01 minutes
50 seconds an arc distance of 75.08 feet to the Southerly line of Tasman Drive
as shown upon said map; thence along said line on a curve to the left, tangent
to the previous curve, having a radius of 1149.00 feet, through a central angle
of 32 degrees 31 minutes 01 seconds an arc distance of 652.09 feet; thence N.
59 degrees 28 minutes 40 seconds E. 600.40 feet; thence on a tangent curve to
the right, having a radius of 33.00 feet, through a central angle of 89 degrees
51 minutes 11 seconds an arc distance of 51.83 feet to the Southwesterly line
of First Street, as shown upon said map; thence along said line, S. 30 degrees
32 minutes 09 seconds E. 261.38 feet to the Northwesterly line of the lands of
EXHIBIT A
<PAGE> 54
the City and County of San Francisco, as shown upon said map; thence along said
line of the lands of the City and the County of San Francisco, S. 65 degrees
09 minutes 27 seconds W. 1396.95 feet to the point of beginning.
PARCEL FOUR:
Those rights as contained in that certain Grant Deed executed by Masami Ezaki
and Kaoru Ezaki, his wife in favor of the City and County of San Francisco, a
municipal corporation recorded December 8, 1950 in Book 2111, page 319, Official
Records.
PARCEL FIVE:
A strip of land 80 feet wide, lying 40 feet either side of the following
described line and extensions thereto, across that certain parcel of land
conveyed by Charles Nelson, et ux, to Masami Ezaki by Grant Deed dated February
27, 1936 and recorded March 11, 1936, in Volume No. 765, at page 262, Official
Records, Santa Clara County, hereinafter referred to as the Ezaki Parcel, said
line being more particularly described as commencing at a point in the Westerly
boundary of the existing San Jose-Alviso Road, said point being distant along
said boundary South 30 degrees 32 minutes 30 seconds East 381.31 feet from its
intersection with the Northerly boundary of the above mentioned Ezaki Parcel;
thence, from said point of commencement, South 65 degrees 08 minutes 00 seconds
West 1459.03 feet to a point in the common boundary between the above mentioned
Ezaki Parcel and that certain parcel of land conveyed by Lena Lindgren, et al,
to James A. Pankoski, et ux, by Joint Tenancy Deed dated November 13, 1944 and
recorded November 17, 1944 in Volume No. 1227 at Page 327, Official Records,
Santa Clara County, hereinafter referred to as the Pankoski Parcel, said point
being distant along said common boundary South 30 degrees 32 minutes 30 seconds
East 237.04 feet from the most Westerly corner of the above mentioned Ezaki
Parcel; the Easterly end of said strip being the above mentioned Westerly
boundary of the San Jose-Alviso Road, and the Westerly end of said strip being
the above mentioned common boundary between the Pankoski and Ezaki Parcels.
EXHIBIT A
<PAGE> 55
EXHIBIT B
PERMITTED EXCEPTIONS
[To include all matters of record against
the Land on the date it is acquired by Landlord]
EXHIBIT B
1.
<PAGE> 56
EXHIBIT C
(MEMORANDUM OF LEASE)
RECORDING REQUESTED BY, AND
WHEN RECORDED, RETURN TO:
Brobeck, Phleger & Harrison
550 West C Street, Suite 1300
San Diego, California 92101
Attention: Todd J. Anson, Esq.
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE ("Memorandum of Lease") is executed
as of _________________, 1995, by and between IRISH LEASING CORPORATION, a Texas
corporation ("Landlord"), and CISCO SYSTEMS, INC., a California corporation
("Tenant").
RECITALS
WHEREAS, Landlord and Tenant have executed that certain lease
("Lease") dated as of April 12, 1995, covering certain premises and related
improvements ("Premises") located in the City of San Jose, Santa Clara County,
California and more particularly described in Schedule 1 attached hereto and
incorporated herein by this reference; and
WHEREAS, Landlord and Tenant desire to record notice of the
Lease in the real estate records of Santa Clara County, California;
NOW, THEREFORE, in consideration of the foregoing, Landlord
and Tenant hereby declare as follows:
1. DEMISE. Landlord hereby leases the Premises to
Tenant and Tenant hereby leases the Premises from Landlord, subject
to the terms, covenants and conditions contained in the Lease.
2. EXPIRATION DATE. The term of the Lease ("Term")
shall commence on ______________, 1995 and shall expire five (5)
years thereafter, subject to Tenant's option to extend the Term
pursuant to Section 4.2 of the Lease for one (1) period of five (5)
years.
3. OPTION TO PURCHASE. Tenant has an option to
purchase the Premises, as more particularly described in the Lease,
during the Term, as it may be extended.
EXHIBIT C
1.
<PAGE> 57
4. RESTRICTIONS ON ENCUMBRANCES. Landlord is prohibited from
recording against the Premises liens (including, without limitation, deeds of
trust), encumbrances, and other matters that would constitute exceptions to
title, and from amending or modifying any of the foregoing that may exist now or
during the Term, as more particularly described in the Lease, and any such
encumbrance or modification of an encumbrance not authorized in writing by
Tenant shall be null and void.
5. COUNTERPARTS. This Memorandum of Lease may be executed in
any number of counterparts, each of which shall be deemed to be an original and
all of which together shall comprise but a single instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT C
2.
<PAGE> 58
[SIGNATURE PAGE TO MEMORANDUM OF LEASE]
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Memorandum of Lease as of the date and year first written above.
"LANDLORD"
IRISH LEASING CORPORATION,
A TEXAS CORPORATION
By:
---------------------------
Its:
--------------------------
By:
---------------------------
Its:
--------------------------
STATE OF_____________________ )
) ss
COUNTY OF____________________ )
On _____________, before me, ______________________, 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
[SEAL]
EXHIBIT C
3.
<PAGE> 59
[SIGNATURE PAGE TO MEMORANDUM OF LEASE]
"TENANT"
CISCO SYSTEMS,
A CALIFORNIA CORPORATION
By:
---------------------------
Name:
-------------------------
Its:
-------------------------
Executive Officer
By:
---------------------------
Name:
-------------------------
Its:
-------------------------
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _____________, before me, ______________________, 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
[SEAL]
EXHIBIT C
4.
<PAGE> 60
SCHEDULE 1 TO EXHIBIT C
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
Lot 50, as shown on that certain Map entitled, "Tract No. 7560," which Map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on December 21, 1983 in Book 522 of Maps, pages 51 and 52.
Reserving therefrom a perpetual right and easement to construct, install,
maintain, repair, renew, replace, operate and use a surface drainage release to
benefit Lot 49 of Tract 7560, as contained in that certain Grant of Easement
recorded August 8, 1990 in Book L443, page 0754, Official Records, and described
as follows:
The Northwesterly 10.00 feet of the Southeasterly 30.00 feet and the
Northwesterly 100.00 feet of the Southeasterly 130.00 feet of the Northeasterly
10.00 feet of Lot 50.
PARCEL TWO:
That portion of Lot 51, as shown on that certain Map entitled, "Tract No. 7560,"
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, State of California on December 21, 1983 in Book 522 of Maps, pages
51 and 52, being more particularly described as follows:
Beginning at the Southeasterly corner of said Lot 51; thence along the
Southerly line of said Lot 51, S. 59 degrees 27 minutes 51 seconds W. 77.00
feet; thence N. 14 degrees 27 minutes 48 seconds E. 108.90 feet to the
Northeasterly line of said Lot 51; thence along said Northeasterly line S. 30
degrees 32 minutes 09 seconds E. 77.00 feet to the point of beginning, as
provided for in that certain Lot Line Adjustment granted by the Director of
Planning of the City of San Jose, a copy of which was recorded March 28, 1984
in the office of the Recorder of the County of Santa Clara in Book I410, page
712 of Official Records.
PARCEL THREE:
Lot 5 and 6, as shown on that certain Map of Tract No. 7408, which map was filed
for record in the office of the Recorder of the County of Santa Clara, State of
California on November 19, 1982 in Book 506 of Maps, pages 24, 25 and 26 and a
portion of that certain parcel of land described in the deed recorded December
22, 1972 in Book 0167, page 623, all as approved by that Lot Combination
recorded September 16, 1992 in Book M381 of Maps, page(s) 0081, Official
Records, more particularly described as follows:
Beginning at a point on the Northeasterly line of Rio Robles, as shown upon
said map, at the most Southerly corner of said Lot 5; thence along said
Northeasterly line of Rio Robles, N. 30 degrees 32 minutes 09 seconds W. 105.50
feet; thence on a tangent curve to the right, having a radius of 367.00 feet,
through a central angle of 36 degrees 30 minutes 00 seconds an arc distance of
233.80 feet; thence on a curve to the right, tangent to the previous curve,
having a radius of 50.00 feet, through a central angle of 86 degrees 01 minutes
50 seconds an arc distance of 75.08 feet to the Southerly line of Tasman Drive
as shown upon said map; thence along said line on a curve to the left, tangent
to the previous curve, having a radius of 1149.00 feet, through a central angle
of 32 degrees 31 minutes 01 seconds an arc distance of 652.09 feet; thence N.
59 degrees 28 minutes 40 seconds E. 600.40 feet; thence on a tangent curve to
the right, having a radius of 33.00 feet, through a central angle of 89 degrees
51 minutes 11 seconds an arc distance of 51.83 feet to the Southwesterly line
of First Street, as shown upon said map; thence along said line, S. 30 degrees
32 minutes 09 seconds E. 261.38 feet to the Northwesterly line of the lands of
SCHEDULE 1 TO EXHIBIT C
<PAGE> 61
the City and County of San Francisco, as shown upon said map; thence along said
line of the lands of the City and the County of San Francisco, S. 65 degrees 09
minutes 27 seconds W. 1396.95 feet to the point of beginning.
PARCEL FOUR:
Those rights as contained in that certain Grant Deed executed by Masami Ezaki
and Kaoru Ezaki, his wife in favor of the City and County of San Francisco, a
municipal corporation recorded December 8, 1950 in Book 2111, page 319, Official
Records.
PARCEL FIVE:
A strip of land 80 feet wide, lying 40 feet either side of the following
described line and extensions thereto, across that certain parcel of land
conveyed by Charles Nelson, et ux, to Masami Ezaki by Grant Deed dated February
27, 1936 and recorded March 11, 1936, in Volume No. 765, at page 262, Official
Records, Santa Clara County, hereinafter referred to as the Ezaki Parcel, said
line being more particularly described as commencing at a point in the Westerly
boundary of the existing San Jose-Alviso Road, said point being distant along
said boundary South 30 degrees 32 minutes 30 seconds East 381.31 feet from its
intersection with the Northerly boundary of the above mentioned Ezaki Parcel;
thence, from said point of commencement, South 65 degrees 08 minutes 00 seconds
West 1459.03 feet to a point in the common boundary between the above mentioned
Ezaki Parcel and that certain parcel of land conveyed by Lena Lindgren, et al,
to James A. Pankoski, et ux, by Joint Tenancy Deed dated November 13, 1944 and
recorded November 17, 1944 in Volume No. 1227 at Page 327, Official Records,
Santa Clara County, hereinafter referred to as the Pankoski Parcel, said point
being distant along said common boundary South 30 degrees 32 minutes 30 seconds
East 237.04 feet from the most Westerly corner of the above mentioned Ezaki
Parcel; the Easterly end of said strip being the above mentioned Westerly
boundary of the San Jose-Alviso Road, and the Westerly end of said strip being
the above mentioned common boundary between the Pankoski and Ezaki Parcels.
SCHEDULE 1 TO EXHIBIT C
<PAGE> 62
EXHIBIT D
CLOSING COSTS AND FEES TO BE INCLUDED IN FUNDED AMOUNT
The following items shall be included in the definition of the
Funded Amount under Section 2.16 of the Lease:
1. Title Insurance premiums
2. Arrangement Fee payable to Irish
3. Brokerage Commissions
4. Other fees and costs which are specifically
authorized by Tenant in writing to be included in the
Funded Amount
EXHIBIT D
1.
<PAGE> 63
EXHIBIT E
LEASE COMMENCEMENT DATE MEMORANDUM
THIS LEASE COMMENCEMENT DATE MEMORANDUM ("Memorandum") is
entered into this ___ day of ____________, 1995, by and between IRISH LEASING
CORPORATION, a Texas corporation ("Landlord"), and CISCO SYSTEMS, INC., a
California corporation ("Tenant") concerning that certain Lease ("Lease")
between Landlord and Tenant dated April 12, 1995. Any capitalized terms not
defined in this Memorandum shall have their meaning as defined in the Lease.
1. Pursuant to Section 4.1 of the Lease, Landlord and Tenant are
required to enter into this Memorandum within thirty (30) days after the Lease
Commencement Date.
2. Landlord and Tenant agree the that Lease Commencement
Date is _______________, 1995.
3. Landlord and Tenant agree that the Rent Commencement
Date is _______________, 1995.
4. The dollar value of the Guaranteed Residual Value (defined in
Section 2.17 of the Lease) described in paragraph 2 above is _____% of
$_____________________________, (i.e.
$_____________________________).
5. The Equity Funded Amount as of the Lease Commencement
Date is $__________________.
IN WITNESS WHEREOF, the parties have executed this Memorandum as
of the date and year first above written.
"LANDLORD"
IRISH LEASING CORPORATION,
A TEXAS CORPORATION
By:
---------------------------
Name:
----------------------
Its:
----------------------
"TENANT"
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
By:
---------------------------
Name:
----------------------
Its:
----------------------
EXHIBIT H
<PAGE> 64
EXHIBIT F
DESCRIPTION OF ADDITIONAL PROPERTY OWNED BY LANDLORD
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on July 13, 1983,
in Book 514 of Maps page(s) 47 and 48.
APN: 97-53-14
All of Lots 54, 58 and 59, as shown upon that certain Map entitled, "Tract No.
7559", which Map was filed for record in the Office of the Recorder of the
County of Santa Clara, State of California on December 21, 1983 in Book 522 of
Maps, at pages 49 and 50.
APN: 97-53-18, 22 and 23
EXHIBIT F
<PAGE> 1
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ("First Amendment") is made and entered
into as of May 1, 1995, by and between IRISH LEASING CORPORATION, a Texas
corporation ("Landlord"), and CISCO SYSTEMS, INC., a California corporation
("Tenant").
THIS FIRST AMENDMENT IS ENTERED INTO upon the basis of the following
facts, understandings and intentions.
A. Landlord and Tenant entered into that certain Lease dated April 12,
1995 ("Lease"), pursuant to which Landlord is leasing to Tenant that certain
land located in San Jose, California, as more particularly described in the
Lease and on Exhibit A attached hereto and incorporated herein by this reference
("Premises"). Any capitalized terms used but not defined in this First Amendment
which are defined in the Lease shall have the meaning ascribed in the Lease.
B. Landlord and Tenant now desire to amend the terms of the Lease, as
more particularly described in this First Amendment.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
1. Equity Funded Amount. Section 2.10 is hereby deleted, and is
replaced with the following: 2.10 Equity Funded Amount. "Equity
Funded Amount" shall mean that portion of the Funded Amount equal to
the Funded Amount minus the Senior Funded Amount and which shall be
an amount equal to fifteen percent (15%) of the Funded Amount.
2. Lease Rate. Section 2.23 is hereby deleted, and is replaced with the
following: 2.23 Lease Rate. "Lease Rate" shall mean interest at the
rate of the product of 0.850 times the then-effective LIBOR Rate,
plus .0045, per annum.
3. Lease Rate. Section 2.26 is hereby deleted, and is replaced with the
following: 2.26 LIBOR Rate. "LIBOR Rate" shall mean the LIBOR
interest rate as defined in that certain Schedule I, Additional
Terms and Conditions of Credit Arrangement between SGA and UBS dated
May 1, 1995, relating to the UBS Loan ("Schedule I"), or as defined
in a subsequent Authorized Loan.
4. Interest Rate Selection. Section 5.1(b) is hereby deleted, and is
replaced with the following: (b) Interest Rate Selection. The
parties acknowledge that the interest rate applicable under the UBS
Loan (or other Authorized Loan) shall affect the amount of Base Rent
payable by Tenant hereunder. Therefore, Tenant shall have the right,
by written notice to UBS (or the holder of any Authorized Loan), SGA
and Landlord, to designate the interest period to be selected from
time to time by SGA pursuant to Schedule I (or other Authorized
Loan). Tenant acknowledges that the rates available to be selected
under the UBS Loan after the first partial calendar month of the
Term are 1, 2, 3, 6, 9 or 12- month LIBOR rates. In the event that
Tenant fails to give such written notice to UBS (or other holder of
an Authorized Loan), SGA and Landlord prior to the applicable
deadline for selection of such interest period pursuant to the
<PAGE> 2
terms of Schedule I (or other Authorized Loan), Tenant shall be
deemed to have selected an interest period of one month for the UBS
Loan (or other Authorized Loan).
5. Option to Purchase Premises. (a) In Section 19.1(a), Purchase Option
, the two (2) sentences beginning with "The purchase price ("Purchase Price") .
. ." on line 8 of Section 19.1(a) and ending with ". . . this Purchase Option"
on line 26 of Section 19.1(a) are hereby deleted in their entirety and the
following inserted in their place:
The purchase price ("Purchase Price") for the portion of the
Premises which Tenant elects to purchase shall be (i) the
then-existing Funded Amount applicable to the portion of the
Premises which Tenant elects to purchase (determined in a pro rata
basis on the basis of the area being purchased), as the same may be
reduced from time to time, plus (ii) the amount of any prepayment
premium and all other fees, costs, and expenses due to any holder of
an Authorized Loan in connection with such loan (to the extent not
already paid pursuant to Section 21.21 hereof). Tenant shall be
entitled to a credit against the Purchase Price in an amount equal
to the sum of (i) the principal balance(s) of any Authorized Loan
and/or Fee Mortgage existing immediately prior to the closing under
this Purchase Option if such Authorized Loan and/or Fee Mortgage are
not fully repaid and all documents reflecting the same are not
cancelled and removed from the public records on or prior to the
closing under this Purchase Option, plus (ii) the amount of the
Security Deposit (or, in the event of a purchase of a portion of the
Premises, a pro rata portion of the Security Deposit), and, upon
closing under this Purchase Option, Landlord shall be released from
Landlord's obligation to return the Security Deposit set forth in
Section 5.5 hereof.
(b) In Section 19.1(a), Purchase Option , following the sentence
beginning with "Landlord . . ." on line 36 of Section 19.1(a) and ending with ".
. . expenses related thereto" on line 40 of Section 19.1(a), the following
sentence is inserted:
Notwithstanding the foregoing, Landlord agrees to, upon Tenant's
written demand, assign the UBS Loan or any other Authorized Loan and
its obligations thereunder to Sumitomo Bank Leasing and Finance,
Inc., a Delaware corporation ("SBLF"); provided that SBLF shall
first expressly assume Landlord's obligations under the UBS Loan (or
any other Authorized Loan) in writing and hold Landlord harmless
from any liabilities arising after the date of such assignment.
6. Form of Transaction; Certain Tax Matters.
a. Section 21.2(a)(ii) is hereby deleted, and is replaced with the
following:
(a) a financing arrangement (and not a "true
lease") for Federal, state and local income tax and local
property tax purposes.
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<PAGE> 3
b. Section 21.2(b) is hereby deleted, and is replaced with the
following: Landlord and Tenant agree that, in accordance with
their intentions and the substance of the transactions
contemplated hereby, Tenant (and not Landlord) shall be treated
as the owner of the Premises for Federal, state, and local income
tax and property tax purposes and this Lease shall be treated as
a financing arrangement. Tenant shall be entitled to take any
deduction, credit allowance or other reporting, filing or other
tax position consistent with such characterizations. Landlord and
Tenant shall not file any Federal, state or local income tax or
property tax returns, reports or other statements, or take any
other actions, in a manner which is inconsistent with the
foregoing provisions of this Section 21.2, unless required to do
so by applicable law or Legal Requirement.
c. Section 21.2(c) is hereby deleted, and is replaced with the
following:
Each party acknowledges that it has retained accounting, tax and
legal advisors to assist it in structuring this Lease and neither
party is relying on any representations of the other regarding
the proper treatment of this transaction for accounting, income
tax, property tax or any other purpose. Nothing in this Section
21.2(c) shall increase or diminish any liability or obligation of
the parties that otherwise exists pursuant to this Lease.
7. Exhibits. Exhibit B is hereby deleted and the attached Exhibit B
inserted in its place.
8. Counterparts. This First Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall comprise but a single instrument.
9. Existing Lease. Except to the extent specifically amended hereby,
all terms and conditions of the Lease remain in full force and effect.
[Remainder of This Page Intentionally Left Blank]
-3-
<PAGE> 4
[SIGNATURE PAGE TO FIRST AMENDMENT TO LEASE]
IN WITNESS WHEREOF, Landlord and Tenant have executed this First
Amendment as of the date and year first written above.
"LANDLORD"
IRISH LEASING CORPORATION,
A TEXAS CORPORATION
By: /s/ GREG ENGLAND
---------------------------
Name: GREG ENGLAND
----------------------
Its: VICE PRESIDENT
----------------------
"TENANT"
CISCO SYSTEMS, INC., a California
corporation
By: /s/ JOHN CHAMBERS
---------------------------
Name:
----------------------
Its:
-----------------------
By: /s/ LARRY R. CARTER
---------------------------
Name:
----------------------
Its:
-----------------------
-4-
<PAGE> 5
EXHIBIT A
DESCRIPTION OF LAND
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
Lot 50, as shown on that certain Map entitled, "Tract No. 7560," which Map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on December 21, 1983 in Book 522 of Maps, pages 51 and 52.
Reserving therefrom a perpetual right and easement to construct, install,
maintain, repair, renew, replace, operate and use a surface drainage release to
benefit Lot 49 of Tract 7560, as contained in that certain Grant of Easement
recorded August 8, 1990 in Book L443, page 0754, Official Records, and described
as follows:
The Northwesterly 10.00 feet of the Southeasterly 30.00 feet and the
Northwesterly 100.00 feet of the Southeasterly 130.00 feet of the Northeasterly
10.00 feet of Lot 50.
That portion of Lot 51, as shown on that certain Map entitled, "Tract No. 7560,"
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, State of California on December 21, 1983 in Book 522 of Maps, pages
51 and 52, being more particularly described as follows:
Beginning at the Southeasterly corner of said Lot 51; thence along the
Southerly line of said Lot 51, S. 59 degrees 27 minutes 51 seconds W. 77.00
feet; thence N. 14 degrees 27 minutes 48 seconds E. 108.90 feet to the
Northeasterly line of said Lot 51; thence along said Northeasterly line S. 30
degrees 32 minutes 09 seconds E. 77.00 feet to the point of beginning, as
provided for in that certain Lot Line Adjustment granted by the Director of
Planning of the City of San Jose, a copy of which was recorded March 28, 1984
in the office of the Recorder of the County of Santa Clara in Book I410, page
712 of Official Records.
Lot 5 and 6, as shown on that certain Map of Tract No. 7408, which map was filed
for record in the office of the Recorder of the County of Santa Clara, State of
California on November 19, 1982 in Book 506 of Maps, pages 24, 25 and 26 and a
portion of that certain parcel of land described in the deed recorded December
22, 1972 in Book 0167, page 623, all as approved by that Lot Combination
recorded September 16, 1992 in Book M381 of Maps, page(s) 0081, Official
Records, more particularly described as follows:
Beginning at a point on the Northeasterly line of Rio Robles, as shown upon
said map, at the most Southerly corner of said Lot 5; thence along said
Northeasterly line of Rio Robles, N. 30 degrees 32 minutes 09 seconds W. 105.50
feet; thence on a tangent curve to the right, having a radius of 367.00 feet,
through a central angle of 36 degrees 30 minutes 00 seconds an arc distance of
233.80 feet; thence on a curve to the right, tangent to the previous curve,
having a radius of 50.00 feet, through a central angle of 86 degrees 01 minutes
50 seconds an arc distance of 75.08 feet to the Southerly line of Tasman Drive
as shown upon said map; thence along said line on a curve to the left, tangent
to the previous curve, having a radius of 1149.00 feet, through a central angle
of 32 degrees 31 minutes 01 seconds an arc distance of 652.09 feet; thence N.
59 degrees 28 minutes 40 seconds E. 600.40 feet; thence on a tangent curve to
the right, having a radius of 33.00 feet, through a central angle of 89 degrees
51 minutes 11 seconds an arc distance of 51.83 feet to the Southwesterly line
of First Street, as shown upon said map; thence along said line, S. 30 degrees
32 minutes 09 seconds E. 261.38 feet to the Northwesterly line of the lands of
the City and County of San Francisco, as shown upon said map; thence along said
line of the lands of the City and the County of San Francisco, S. 65 degrees 09
minutes 27 seconds W. 1396.95 feet to the point of beginning.
Those rights as contained in that certain Grant Deed executed by Masami Ezaki
and Kaoru Ezaki, his wife in favor of the City and County of San Francisco, a
municipal corporation recorded December 8, 1950 in Book 2111, page 319, Official
Records.
EXHIBIT A
<PAGE> 6
A strip of land 80 feet wide, lying 40 feet either side of the following
described line and extensions thereto, across that certain parcel of land
conveyed by Charles Nelson, et ux, to Masami Ezaki by Grant Deed dated February
27, 1936 and recorded March 11, 1936, in Volume No. 765, at page 262, Official
Records, Santa Clara County, hereinafter referred to as the Ezaki Parcel, said
line being more particularly described as commencing at a point in the Westerly
boundary of the existing San Jose-Alviso Road, said point being distant along
said boundary South 30 degrees 32 minutes 30 seconds East 381.31 feet from its
intersection with the Northerly boundary of the above mentioned Ezaki Parcel;
thence, from said point of commencement, South 65 degrees 08 minutes 00 seconds
West 1459.03 feet to a point in the common boundary between the above mentioned
Ezaki Parcel and that certain parcel of land conveyed by Lena Lindgren, et al,
to James A. Pankoski, et ux, by Joint Tenancy Deed dated November 13, 1944 and
recorded November 17, 1944 in Volume No. 1227 at Page 327, Official Records,
Santa Clara County, hereinafter referred to as the Pankoski Parcel, said point
being distant along said common boundary South 30 degrees 32 minutes 30 seconds
East 237.04 feet from the most Westerly corner of the above mentioned Ezaki
Parcel; the Easterly end of said strip being the above mentioned Westerly
boundary of the San Jose-Alviso Road, and the Westerly end of said strip being
the above mentioned common boundary between the Pankoski and Ezaki Parcels.
EXHIBIT A
<PAGE> 7
EXHIBIT B
PERMITTED EXCEPTIONS
1. Bond for Reassessment District #93-210 Consolidated Refunding
2. THE LIEN of supplemental taxes, if any, assessed as a result of
transfer of interest and/or new construction, said supplemented taxes
being assessed pursuant to Chapter 3.5 commencing with Section 75 of
the California Revenue and Taxation Code, for which no Notice of
Assessment has been issued, as of the date herein.
3. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Right to excavate for, install, replace
(of initial or any other size), maintain
and use for conveying gas such pipe line
or lines as shall from time to time
elect, with necessary values and other
appliances
Granted to : Pacific Gas and Electric Company, a
California corporation
Recorded : July 6, 1944 in Book 1206, page 154,
Official Records
Affects : as follows:
By a Relocation Agreement between Oakmead Associates, a California
general partnership and Pacific Gas and Electric Company, a California
corporation
Recorded : April 5, 1989 In Book K903, page 1344,
Official Records
the easement was relocated as follows:
A strip of land of the uniform width of 15 feet extending from the
Northerly boundary line of said Lot 5, said Northerly boundary line
being the Southerly boundary line of the city street known as Tasman
Drive (128 feet wide), said Tasman Drive is shown on said map,
Southwesterly to the Westerly boundary line of said Lot 5, said
Westerly boundary line being the Easterly boundary line of the street
known as Rio Robles (66 feet wide), said street Rio Robles is also
shown on said map, and lying 7.5 feet on each side of the line
described as follows:
Beginning at a point in the Northerly boundary line of said Lot 5 and
running (1) S. 0 degrees 23.5 minutes E. 12.4 feet to a point which
bears, S. 66 degrees 35.0 minutes W. 579.2 feet distant from the found
5/8" brass pin set in concrete accepted as marking the Southwesterly
terminus of a course in the center line of said Tasman Drive, which
course as shown on said map has a bearing of, N. 59 degrees 28 minutes
40 seconds E. and a length of 700.88 feet; thence (2) S. 29 degrees
04.3 minutes W. 187.8 feet; thence (3) S. 57 degrees 38.6 minutes W.
10.8 feet to a point in the Westerly boundary line of said Lot 5. Said
line being a survey traverse made by second party in September, 1983.
The bearings used in the foregoing description are based on solar
observations made by second party.
EXHIBIT B
<PAGE> 8
4. TERMS and conditions as contained in the Grant Deed executed by Masami
Ezaki and Kaoru Ezaki, his wife in favor of the City and County of San
Francisco, a municipal corporation recorded December 8, 1950 in Book
2111, page 319, Official Records.
5. THE EFFECT of the Rincon de los Esteros Project Redevelopment Plan and
Ordinances Nos. 17306, 19686, 19835, 20677, 20958, 21417, 21496,
21903. 22660, 22412, 22761, 22761.1 and 22961, 23703, 23732, 23761
and 23934 of the City of San Jose as recorded and as disclosed by
documents recorded July 11, 1975 in Book B502, Page 711; August 6,
1979 in Book E699, Page 245; August 6, 1979 in Book E699, Page 277;
December 21, 1979 in Book F37, Page 585; October 8, 1981 in Book G382,
Page 605; July 28, 1982 in Book G929, Page 703; September 14, 1983 in
Book H892, Page 200; January 10, 1984 in Book 1220, Page 271; January
6, 1992 in Book L996, Page 508, all of Official Records, and as
disclosed by information provided by the Redevelopment Agency of the
City of San Jose.
6. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Any and all public service facilities,
including, but not limited to, poles,
wires, conduits and vaults, storm sewers,
sanitary sewers, and gas, water,
electrical and communication mains and
all appurtenances thereto
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : September 14, 1981 in Book G330, page
497, Official Records
Affects : That portion of said land as shown upon
the map herein referred to, more
particularly described as follows:
All that certain real property situated in the City of San Jose, County
of Santa Clara, State of California, being a portion of the parcel of
land described and designated as Parcel 1 in the deed to River Oaks
Associates 12, dated November 17, 1979, recorded in Book E962 of
Official Records, at page 145, Santa Clara County Records, more
particularly described as follows:
Beginning at a point in the centerline of North First Street (formerly
San Jose-Alviso Road) as said centerline is described in said deed at
the most Northerly corner of said parcel; thence along the
Northwesterly boundary line of said parcel, S. 59 degrees 28 minutes
40 seconds W. (S. 59 degrees 30 minutes W. per deed), 114.98 feet;
thence leaving said line, S. 30 degrees 31 minutes 20 seconds E. 34.00
feet to the true point of beginning; thence along a non-tangent curve
to the right having a radius of 50.00 feet; whose radius point bears
along the continuation of the last described course, S. 30 degrees 31
minutes 20 seconds E. through a central angle of 89 degrees 59
minutes 11 seconds for an arc length of 78.53 feet to a point in a
line which is parallel with and 65.00 feet Southwesterly of said
centerline; thence along said parallel line. S. 30 degrees 32 minutes
09 seconds E. 254.64 feet to a point in the Northwesterly boundary
line of the strip of land described in the deed to the City of County
of San Francisco, dated October 20,
EXHIBIT B
<PAGE> 9
1950; recorded in Book 2111 of Official Records, at page 319, Santa
Clara County Records; thence along said Northwesterly line, S.
65 degrees 09 minutes 27 seconds W. 10.05 feet to a point in a line
that is parallel with and 75.00 feet Southwesterly from said
centerline; thence along said parallel line, N. 30 degrees 32 minutes
09 seconds W. 253.64 feet; thence along a curve to the left, having a
radius of 40.00 feet, through a central angle of 89 degrees 59 minutes
11 seconds for an arc length of 62.82 feet; thence N. 30 degrees 31
minutes 20 seconds W. 10.00 feet to the true point of beginning; the
bearing of, S. 30 degrees 32 minutes 09 seconds E. of the monument
line of North First Street, as shown on the Parcel Map recorded in
Book 460 of Maps, at page 1, Santa Clara County Records, was used as
the basis of bearings for this description.
7. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Landscape Easement
Granted to : City of San Jose, a municipal corporation
Recorded : September 14, 1981 in Book G330, page
504, Official Records
Affects : The Northeasterly 20 feet of Parcel Three
8. LICENSE for the purposes stated herein and incidents thereto
Purpose : To construct, install, maintain,
repair, renew, replace, operate and use
an interim storm sewer pipe line or lines
and appurtenances of any size of
material, and/or a surface drainage
release
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : September 14, 1981 in Book G330, page
511, Official Records
Affects : that portion of said land as shown upon
the map herein referred to, more
particularly described as follows:
All that certain real property situated in the City of San Jose, County
of Santa Clara, State of California, being a portion of the parcel of
land described and designated as Parcel 1 in the deed to River Oaks
Associates #2, dated November 17, 1979, recorded in Book E962 of
Official Records, at page 145, Santa Clara County Records, more
particularly described as follows:
Beginning at a point in the centerline of North First Street (formerly
San Jose-Alviso Road) as said centerline is described in said deed at
the most Northerly corner of said parcel; thence along the
Northwesterly boundary line of said parcel, S. 59 degrees 28 minutes
40 seconds W. (S. 59 degrees 30 minutes W. per deed), 114.98 feet;
thence leaving said boundary line, S. 30 degrees 31 minutes 20 seconds
E 34.00; thence along a non-tangent curve to the right having a radius
of 50.00 feet whose radius point bears along the continuation of the
last described course, S. 30 degrees 31 minutes 20 seconds E. through
a central angle of 17 degrees 26 minutes 39 seconds for an arc length
of 15.22 feet to the point of beginning; thence continuing along said
curve to the right having a radius of 50.00 feet, through a central
angle of 19 degrees 24 minutes 44 seconds for an arc length 16.94 feet
to a point in a line that is parallel with and 85.00 feet
Southwesterly of said centerline;
EXHIBIT B
<PAGE> 10
thence along said parallel line S. 30 degrees 32 minutes 09 seconds E.
292.64 feet to a point in the Northwesterly boundary line of the
strip of land described in the deed to the City and County of San
Francisco, dated October 20, 1950, recorded in Book 2111 of Official
Records, at page 319, Santa Clara County Records; thence along said
Northwesterly boundary line, S. 65 degrees 09 minutes 27 seconds W.
(S. 65 degrees 08 minutes 00 seconds W. per deed), 15.07 feet to a
point in a line which is parallel with and 100.00 feet Southwesterly
of said centerline; thence along said parallel line, N. 32 minutes
09 seconds W. 298.84 feet to the true point of beginning.
9. AN EASEMENT affecting the portion of said land and for the purpose
stated herein and incidental purposes, shown or dedicated by the map of
Tract 7408 filed in Book 506 of Maps, pages 24, 25 and 26.
Purpose : Public Service Easement
Affects : The Southwesterly 8 feet of
Parcel One; the Northeasterly and
Northwesterly 10 feet of Parcel Three;
and the Southwesterly 8 feet of Parcel
Three
10. EASEMENT as shown on the filed map of Tract 7408 filed in Book 506 of
Maps, pages 24-26 and incidents thereto
Purpose : Landscape Easement
Affects : The Southwesterly 18 feet of Parcel
One; the Northeasterly and Northwesterly
20 feet of Parcel Three; and the
Southwesterly 18 feet of Parcel Three.
11. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Service Easement
Granted to : City of San Jose
Recorded : November 19, 1982 in Book H156, page 275,
Official Records
Affects : The Northwesterly 25 feet of Parcel One.
12. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The installation, maintenance and
operation of all landscaping plant forms,
irrigation systems, retaining walls, and
decorative walkway paving now existing or
hereinafter to be constructed
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : May 27, 1983 in Book H590, page 649,
Official Records
Affects : The Southwesterly 18 feet of Parcel One;
the Northeasterly and Northwesterly 20
feet of Parcel Three; and the
Southwesterly 18 feet of Parcel Three.
EXHIBIT B
<PAGE> 11
13. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The installation, maintenance and
operation of all landscaping plant forms,
irrigation systems, retaining walls, and
decorative walkway paving now existing or
hereinafter to be constructed
Granted to : City of San Jose, a municipal corporation
of the State of California
Recorded : May 27, 1983 in Book H590, page 6S2,
Official Records
Affects : The Northerly and Westerly corner of
Parcel Three.
14. AGREEMENT on the terms and conditions contained therein,
For : The installation and maintenance of
landscape improvements
Between : City of San Jose, a municipal corporation
And : Oakmead-San Jose, a California general
partnership and Oakmead-San Jose Sign and
Landscape Maintenance Association, a
California non-profit mutual benefit
corporation
Recorded : May 27, 1983 in Book H590, page 862,
Official Records.
15. EASEMENT for the purposes stated herein and incidents thereto
Purpose : The construction, installation, repair
and maintenance of interlocking pavers,
retaining walls and signs, and for
pedestrian and vehicular access as
necessary or desirable thereto, but
subject to the obligation of the
association of the association, its
successors and assigns, to promptly
repair any damage to said Improvements
lying within the Sign and Landscape
Easements resulting from the
Association's activities thereon
Granted to : Oakmead-San Jose Sign and Landscape
Maintenance Association, a non-profit
mutual benefit corporation
Recorded : June 3, 1983 in Book H604, page 322,
Official Records
Affects : The Northerly and Westerly corner of
Parcel Three
16. LIMITATIONS, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting restrictions, if any,
based on race, color, religion or national origin contained in the
document recorded June 3, 1983 in Book H604, page 334, Official
Records.
CONTAINS mortgagee protection clause.
MODIFICATION thereof recorded January 26, 1984 in Book 1257, page 252,
Official Records.
EXHIBIT B
<PAGE> 12
16. Continued.
A Notice of Amendment of Design Guidelines
Executed by : Oakmead-San Jose, a California general
partnership
Recorded : June 21, 1984 in Book 1649, page 543,
Official Records
An instrument entitled, "Designation of Approving Agent," whereby
Kimball Small Properties, a California corporation was designated
approving agent under the CC&R's and Design Guidelines, Recorded :
April 29, 1988 in Book K517, page 940, Official Records
MODIFICATION thereof recorded October 18, 1988 in Book K721, page 265,
Official Records.
An instrument entitled, "Assignment of Grantors Rights under
Declaration of Covenants, Conditions and Restrictions for Oakmead-San
Jose and Removal of Approving Agent,"
Dated : October 18, 1988
Between : Oakmead-San Jose, a California general
partnership and Oakmead Associates, a
California general partnership
Recorded : October 18, 1988 in Book K721, page 295,
Official Records
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for Oakmead-San
Jose and Removal of Approving Agent,"
Dated : April 20,1989
Between : Oakmead Associates, a California general
partnership and Amdahl Corporation, a
Delaware corporation
Recorded : April 21, 1989 in Book K927, page 332,
Official Records
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants. Conditions and Restrictions for Oakmead-San
Jose,"
Dated : July 12, 1989
Between : Oakmead Associates, a California general
partnership and Amdahl Corporation, a
Delaware corporation
Recorded : July 12, 1989 in Book L017, page 1927,
Official Records
Partial Termination as to other property recorded September 18, 1989 in
Book L097, page 1662, Official Records.
EXHIBIT B
<PAGE> 13
17. LIMITATIONS, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting restrictions, if any,
based on race, color, religion or national origin contained in the
document recorded June 3, 1983 in Book H604, page 505, Official
Records.
Said instrument also provides for the levy of assessments, the lien of
which are stated to be subordinate to the lien of a First Mortgage or
First Deed of Trust made In good faith and for value.
MODIFICATION thereof recorded January 26, 1984 in Book 1257, page 246,
Official Records.
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for Oakmead-San
Jose and Removal of Approving Agent,"
Dated : October 18, 1988
Between : Oakmead-San Jose, a California general
partnership and Oakmead Associates, a
California general partnership
Recorded : October 18, 1988 in Book K721, page 295,
Official Records
An instrument entitled, "Assignment of Grantor's Rights under
Declaration of Covenants, Conditions and Restrictions for Oakmead-San
Jose and Removal of Approving Agent,"
Dated : April 20, 1989
Between : Oakmead Associates, a California general
partnership and Amdahl Corporation, a
Delaware corporation
Recorded : April 20, 1989 in Book K927, page 332,
Official Records
An instrument entitled, "Assignment of Grantors Rights under
Declaration of Covenants, Conditions and Restrictions for Oakmead-San
Jose,"
Dated : July 12, 1989
Between : Oakmead Associates, a California general
partnership and Amdahl Corporation, a
Delaware corporation
Recorded : July 12, 1989 in Book L017, page 1927,
Official Records
MODIFICATION thereof recorded July 19, 1989 in Book L024, page 587,
Official Records.
18. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Underground and above ground
communication facilities
Granted to : Pacific Bell
Recorded : May 17, 1984 in Book 1552, page 624,
Official Records
Affects : The Southwesterly 10 feet of Parcel One
EXHIBIT B
<PAGE> 14
19. AGREEMENT on the terms and conditions contained therein,
For : Gas and electric service
Between : Pacific Gas and Electric Company, City of
San Jose
And : Oakmead-San Jose
As disclosed by a Memorandum of Agreement
Recorded : February 25, 1985 In Book J271, page 37,
Official Records.
20. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Emergency overland storm drainage release
Granted to : Amdahl Corporation, a Delaware
corporation
Recorded : August 8, 1990, in Book L443, page 754,
Official Records
Affects : The Northwesterly 10 feet of the
Southeasterly 30 feet and the
Northeasterly 10 feet of the
Northwesterly 100 feet of the
Southeasterly 130 feet of Parcel One.
21. TERMS AND CONDITIONS of that certain Site Development Permit
File No. : HSH 90-09-104
As disclosed by a Notice of Granting of a Site Development Permit
Recorded : January 24, 1991 in Book L600, page 1242,
Official Records
22. TERMS AND CONDITIONS of that certain Site Development Permit
File No. : HSH 92-02-011
As disclosed by a Notice of Granting of a Site Development Permit
Recorded : August 21, 1992 in Book M340, page 824,
Official Records
23. TERMS AND CONDITIONS of that certain Site Development Permit
File No. : H94-07-041
As disclosed by a Notice of Granting of a Site Development Permit
Recorded : October 19, 1994 in Book N638, page 21.5,
Official Records
EXHIBIT B
<PAGE> 1
SECOND AMENDMENT TO LEASE
(Tasman Phase C)
This Second Amendment to Lease ("Second Amendment") is made and entered
into as of May 22, 1995 by and between Irish Leasing Corporation, a Texas
corporation ("Landlord"), and Cisco Systems, Inc., a California corporation
("Tenant").
WHEREAS, Landlord and Tenant have previously entered into that certain
Ground Lease dated April 12, 1995, pursuant to which Landlord is leasing to
Tenant those certain parcels of land located in San Jose, California as more
particularly described on Exhibit A attached hereto (the "Premises"), which
Ground Lease was amended by that certain First Amendment to Lease dated as of
May 1, 1995, by and between Landlord and Tenant (the Ground Lease, as so
amended, is referred to herein as the "Lease"); and
WHEREAS, Landlord and Tenant now wish to further amend the terms of the
Lease as more particularly described in this Second Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. Amendment to Lease. The Landlord and Tenant hereby agree to amend
the Lease as hereinafter set forth and as set forth in other sections of this
Second Amendment.
(a) Section 2.33 of the Lease is hereby amended to read in its entirety
as follows:
2.33 Permitted Exceptions. "Permitted Exceptions" shall mean the
following: (1) the exceptions set forth in Exhibit B; (2) any
exceptions created or caused by Tenant or to which Tenant consents in
writing; (3) taxes and assessments not yet due and payable; (4) a deed
of trust or mortgage which secures a New Loan authorized pursuant to
the terms of Section 13.1(b); (5) the Tenant Deed of Trust; (6) all
title defects, liens, encumbrances, deeds of trust, mortgages,
rights-of-way, and restrictive covenants and conditions affecting the
Land unless any of the foregoing arise as a result of Landlord's
actions or with Landlord's written consent (unless such actions taken
or consent given by Landlord are requested in writing by Tenant
pursuant to Sections 11.2, 20.1 or 20.2); (7) this Lease; (8) that
certain Construction Deed of Trust, Financing Statement, Security
Agreement and Fixture Filing (With Assignment of Rents and Leases) (the
"Construction Deed of Trust") dated as of even date herewith executed
by Landlord, Tenant and Sumitomo Bank of New York Trust Company
("SBNYTC"), as Trustee under that certain Trust Agreement dated May 22,
1995 between Sumitomo Bank Leasing and Finance, Inc. and SBNYTC ("SB
Trust") for the benefit of the Sumitomo Bank, Limited ("Sumitomo") and
the Hongkong and Shanghai Banking Corporation Limited ("HKS"); (9) that
certain Deed of Trust, Financing Statement, Security Agreement and
Fixture Filing (with Assignment of Rents and Leases)(the "Second Deed
of Trust") dated as of even date
<PAGE> 2
herewith executed by Landlord and Tenant for the benefit of SB Trust;
(10) that certain Absolute Assignment of Leases (the "HKS Assignment")
dated as of even date herewith executed by Landlord, SB Trust, Cisco,
HKS and Sumitomo; and (11) that certain Subordination Agreement (herein
so called) dated as of even date herewith and executed by Sumitomo,
HKS, SB Trust, Landlord and Tenant.
(b) The last sentence of Section 5.5 of the Lease is hereby amended to
read in its entirety as follows:
The entire Security Deposit (other than amounts withheld against
Base Rent due hereunder), plus any accrued and unpaid interest required
to be paid thereon pursuant to this Lease, shall be returned to Tenant
at the end of the Term; provided, however, that, notwithstanding
anything to the contrary contained in this Lease, Landlord shall have
no obligation to return the Security Deposit to Tenant in the event of
a foreclosure, deed in lieu of foreclosure, or other exercise of
remedies by the beneficiaries or trustees under the Tenant Deed of
Trust, the Construction Deed of Trust, the Second Deed of Trust, the
HKS Assignment, or any other Mortgage on the Premises caused by Tenant
to which Tenant consents in writing.
(c) Section 20.5 of the Lease is hereby amended to read in its entirety
as follows:
20.5 Recourse Obligations. Landlord agrees that during the Term of
this Lease, except for the SGA Loan, Landlord will not incur any
indebtedness for borrowed money or any other material obligations to
which the holder or obligee thereof has recourse against Landlord to
satisfy the same without Tenant's prior written consent, which consent
Tenant may withhold in its sole discretion.
(d) Section 20.6 of the Lease is hereby amended to read in its entirety
as follows:
20.6 Default Under Authorized Loan. Landlord shall not, without
Tenant's express prior written consent, default under any Authorized
Loan, or any loan documents relating to such Authorized Loan, where
such default is not caused, directly or indirectly by, or arising,
directly or indirectly as a result of (a) a breach of any of Tenant's
obligations under this Lease, under the Pledge Agreement securing the
UBS Loan or under any documents relating to any Authorized Loan, or (b)
the occurrence of a default or an Event of Default under the
Construction Deed of Trust, the Second Deed of Trust or the HKS
Assignment.
2. Existence of Permitted Exceptions. Tenant hereby acknowledges that
the existence of any Permitted Exception, and the exercise of any rights or
remedies granted to any third party pursuant to any Permitted Exceptions shall
not constitute a breach by Landlord under the terms of Section 20.3 or any other
provision of the Lease.
3. Quiet Enjoyment. The first sentence of Section 18.1 of the Lease is
hereby amended by adding the following language at the end of such sentence:
<PAGE> 3
"and subject to the rights of a Fee Mortgagee under the Construction
Deed of Trust, and/or the Second Deed of Trust, the rights of the
"Assignees" under the HKS Assignment, and the rights of any Fee
Mortgagee under any Authorized Loan."
4. Net Lease. The last sentence of Section 21.21 of the Lease is hereby
to read in its entirety as follows:
Tenant agrees to reimburse Landlord and/or SGA, within ten days
following receipt of any written demand therefor, for all fees, accrued
but unpaid interest, late charges, prepayment penalties, costs,
expenses, indemnification obligations, and other amounts charged to
Landlord and/or SGA by UBS, the holder of any Authorized Loan, the
holders or beneficiaries of the Construction Deed of Trust and the
Second Deed of Trust, and the "Assignees" under the HKS Assignment
pursuant to the terms and conditions of the UBS Note, any Authorized
Loan, the Construction Deed of Trust, the Second Deed of Trust, the HKS
Assignment and the Subordination Agreement."
5. Consent to Encumbrances. Tenant hereby consents to Landlord's
execution, delivery and recording of the Construction Deed of Trust, the Second
Deed of Trust, the HKS Assignment and the Subordination Agreement, and all
documents, instruments and agreements executed in connection therewith by
Landlord.
6. Terms. All terms used in this Second Amendment with their initial
letter capitalized which are specially defined in the Lease (as amended by this
Second Amendment) shall have the same meanings in this Second Amendment as in
the Lease (as amended by this Second Amendment).
7. Continuing Obligations. Except as modified by this Second Amendment,
the terms of the Lease remain in full force and effect. To the extent of any
conflict between the terms of the Lease and the terms of this Second Amendment,
the terms of this Second Amendment shall control.
8. Counterparts. This Second Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall comprise but a single instrument.
IN WITNESS WHEREOF, the Landlord and Tenant have executed this Second
Amendment as of the date first set forth above.
<PAGE> 4
IRISH LEASING CORPORATION,
a Texas corporation
By: /s/ GREG ENGLAND
---------------------------
Its: VICE PRESIDENT
-----------------------
CISCO SYSTEMS, INC.,
a California corporation
By: /s/ LARRY R. CARTER
---------------------------
Its:
-----------------------
<PAGE> 5
EXHIBIT A
Description of Land
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
Lot 50, as shown on that certain Map entitled, "Tract No. 7560," which Map was
filed for record in the office of the Recorder of the County of Santa Clara,
State of California on December 21, 1983 in Book 522 of Maps, pages 51 and 52.
Reserving therefrom a perpetual right and easement to construct, install,
maintain, repair, renew, replace, operate and use a surface drainage release to
benefit Lot 49 of Tract 7560, as contained in that certain Grant of Easement
recorded August 8, 1990 in Book L443, page 0754, Official Records, and described
as follows:
The Northwesterly 10.00 feet of the Southeasterly 30.00 feet and the
Northwesterly 100.00 feet of the Southeasterly 130.00 feet of the Northeasterly
10.00 feet of Lot 50.
PARCEL TWO:
That portion of Lot 51, as shown on that certain Map entitled, "Tract No. 7560,"
which Map was filed for record in the office of the Recorder of the County of
Santa Clara, State of California on December 21, 1983 in Book 522 of Maps, pages
51 and 52, being more particularly described as follows:
Beginning at the Southeasterly corner of said Lot 51; thence along the
Southerly line of said Lot 51, S. 59 degrees 27 minutes 51 seconds W. 77.00
feet; thence N. 14 degrees 27 minutes 48 seconds E. 108.90 feet to the
Northeasterly line of said Lot 51; thence along said Northeasterly line S. 30
degrees 32 minutes 09 seconds E. 77.00 feet to the point of beginning, as
provided for in that certain Lot Line Adjustment granted by the Director of
Planning of the City of San Jose, a copy of which was recorded March 28, 1984
in the office of the Recorder of the County of Santa Clara in Book I410, page
712 of Official Records.
PARCEL THREE:
Lot 5 and 6, as shown on that certain Map of Tract No. 7408, which map was filed
for record in the office of the Recorder of the County of Santa Clara, State of
California on November 19, 1982 in Book 506 of Maps, pages 24, 25 and 26 and a
portion of that certain parcel of land described in the deed recorded December
22, 1972 in Book 0167, page 623, all as approved by that Lot Combination
recorded September 16, 1992 in Book M381 of Maps, page(s) 0081, Official
Records, more particularly described as follows:
Beginning at a point on the Northeasterly line of Rio Robles, as shown upon
said map, at the most Southerly corner of said Lot 5; thence along said
Northeasterly line of Rio Robles, N. 30 degrees 32 minutes 09 seconds W. 105.50
feet; thence on a tangent curve to the right, having a radius of 367.00 feet,
through a central angle of 36 degrees 30 minutes 00 seconds an arc distance of
233.80 feet; thence on a curve to the right, tangent to the previous curve,
having a radius of 50.00 feet, through a central angle of 86 degrees 01 minutes
50 seconds an arc distance of 75.08 feet to the Southerly line of Tasman Drive
as shown upon said map; thence along said line on a curve to the left, tangent
to the previous curve, having a radius of 1149.00 feet, through a central angle
of 32 degrees 31 minutes 01 seconds an arc distance of 652.09 feet; thence N.
59 degrees 28 minutes 40 seconds E. 600.40 feet; thence on a tangent curve to
the right, having a radius of 33.00 feet, through a central angle of 89 degrees
51 minutes 11 seconds an arc distance of 51.83 feet to the Southwesterly line
of First Street, as shown upon said map; thence along said line, S. 30 degrees
32 minutes 09 seconds E. 261.38 feet to the Northwesterly line of the lands of
EXHIBIT A
<PAGE> 6
the City and County of San Francisco, as shown upon said map; thence along said
line of the lands of the City and the County of San Francisco, S. 65 degrees
09 minutes 27 seconds W. 1396.95 feet to the point of beginning.
PARCEL FOUR:
Those rights as contained in that certain Grant Deed executed by Masami Ezaki
and Kaoru Ezaki, his wife in favor of the City and County of San Francisco, a
municipal corporation recorded December 8, 1950 in Book 2111, page 319, Official
Records, over the following described property:
PARCEL FIVE:
A strip of land 80 feet wide, lying 40 feet either side of the following
described line and extensions thereto, across that certain parcel of land
conveyed by Charles Nelson, et ux, to Masami Ezaki by Grant Deed dated February
27, 1936 and recorded March 11, 1936, in Volume No. 765, at page 262, Official
Records, Santa Clara County, hereinafter referred to as the Ezaki Parcel, said
line being more particularly described as commencing at a point in the Westerly
boundary of the existing San Jose-Alviso Road, said point being distant along
said boundary South 30 degrees 32 minutes 30 seconds East 381.31 feet from its
intersection with the Northerly boundary of the above mentioned Ezaki Parcel;
thence, from said point of commencement, South 65 degrees 08 minutes 00 seconds
West 1459.03 feet to a point in the common boundary between the above mentioned
Ezaki Parcel and that certain parcel of land conveyed by Lena Lindgren, et al,
to James A. Pankoski, et ux, by Joint Tenancy Deed dated November 13, 1944 and
recorded November 17, 1944 in Volume No. 1227 at Page 327, Official Records,
Santa Clara County, hereinafter referred to as the Pankoski Parcel, said point
being distant along said common boundary South 30 degrees 32 minutes 30 seconds
East 237.04 feet from the most Westerly corner of the above mentioned Ezaki
Parcel; the Easterly end of said strip being the above mentioned Westerly
boundary of the San JoseAlviso Road, and the Westerly end of said strip being
the above mentioned common boundary between the Pankoski and Ezaki Parcels.
EXHIBIT A
<PAGE> 1
[CONFORMED COPY]
$100,000,000
CREDIT AGREEMENT
dated as of
May 22, 1995
among
Cisco Systems, Inc.,
The Banks Listed Herein,
Bank of America National Trust and Savings Association, as Administrative
Agent,
Morgan Guaranty Trust Company of New York,
as Documentation Agent
and
Bank of America National Trust and Savings Association, as Issuing Bank
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1
DEFINITIONS
<S> <C>
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.3. Types of Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 2
THE CREDITS
2.1. Commitments to Lend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.2. Notice of Committed Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3. Money Market Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4. Notice to Banks; Funding of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.5. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.6. Maturity of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.7. Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.8. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.9. Optional Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.10. Mandatory Termination of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.11. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.12. General Provisions as to Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.13. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.14. Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.15. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 3
CONDITIONS
3.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.2. Credit Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1. Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.2. Corporate and Governmental Authorization; No Contravention . . . . . . . . . . . . . . . . . . . . . . . 33
4.3. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.4. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
i
<PAGE> 3
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<S> <C>
4.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.6. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.7. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.9. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.10. Regulatory Restrictions on Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.11. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 5
COVENANTS
5.1. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.2. Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.3. Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.4. Conduct of Business and Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.5. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.6. Inspection of Property, Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.7. Mergers and Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.8. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.9. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.10. Debt to Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.11. Quick Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.12. Minimum Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.13. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.14. Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 6
DEFAULTS
6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.2. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.3. Cash Cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 7
THE AGENTS
7.1. Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.2. Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.3. Liability of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.4. Reliance by Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.5. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.6. Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.7. Indemnification of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.8. Agents in Individual Capacities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
ii
<PAGE> 4
<TABLE>
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7.9. Successor Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 8
CHANGE IN CIRCUMSTANCES
8.1. Basis for Determining Interest Rate Unfair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.2. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.3. Increased Cost and Reduced Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.4. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.5. Base Rate Loans Substituted for Affected Fixed Rate Loans . . . . . . . . . . . . . . . . . . . . . . . 55
8.6. Substitution of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 9
MISCELLANEOUS
9.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.2. No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.3. Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.4. Sharing of Set-Offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.5. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.6. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.7. Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.8. Governing Law; Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.9. Counterparts; Integration; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.10 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
EXHIBIT A - Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXHIBIT B - Money Market Quote Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXHIBIT C - Invitation for Money Market Quotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXHIBIT D - Money Market Quote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXHIBIT E - Opinion of Counsel for the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXHIBIT F - Opinion of Special Counsel for the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXHIBIT G - Assignment and Assumption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
</TABLE>
iii
<PAGE> 5
AGREEMENT dated as of May 22, 1995 among CISCO SYSTEMS, INC., the
BANKS listed on the signature pages hereof, BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative Agent, MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Documentation Agent and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Issuing Bank.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein,
have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market
Quotes setting forth Money Market Absolute Rates pursuant to Section 2.3.
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section
2.7(b).
"Administrative Agent" means Bank of America National Trust and
Savings Association, in its capacity as Administrative Agent for the Banks
hereunder, and its successors in such capacity.
"Administrative Questionnaire" means, with respect to each Bank,
an administrative questionnaire in the form prepared by the Administrative
Agent and submitted to the Administrative Agent (with a copy to the Borrower)
duly completed by such Bank.
"Affiliate" means, with respect to any Person, (i) any Person that
directly, or indirectly through one or more intermediaries, controls such
Person (a "Controlling Person") or (ii) any Person (other than such Person or
any of its Subsidiaries) which is controlled by or is under common control with
a Controlling Person. As used herein, the term "control" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
<PAGE> 6
"Agent" means the Administrative Agent or the Documentation Agent,
and "Agents" both of them.
"Agent-Related Persons" means either Agent and any successor agent
arising under Section 7.9, together with their respective Affiliates (including
the Arrangers), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and affiliates.
"Applicable Lending Office" means, with respect to any Bank, (i)
in the case of its Base Rate Loans, its Domestic Lending Office, (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the
case of its Money Market Loans, its Money Market Lending Office.
"Arrangers" means BA Securities, Inc. and J.P. Morgan Securities
Inc.
"Assignee" has the meaning set forth in Section 9.6(c).
"Attorney Costs" means and includes all fees and disbursements of
any law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.6(c), and their respective
successors and shall include, as the context may require, the Issuing Bank in
such capacity.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Reference Rate for such day and (ii) the sum of 1/2 of 1%
plus the Federal Funds Rate for such day.
"Base Rate Loan" means a Committed Loan to be made by a Bank as a
Base Rate Loan in accordance with the applicable Notice of Committed Borrowing
or pursuant to Article 8.
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"BofA" means Bank of America National Trust and Savings
Association.
"Borrower" means Cisco Systems, Inc., a California corporation,
and its successors.
"Borrower's 1994 Form 10-K" means the Borrower's annual report on
Form 10-K for July 31, 1994, as filed with the
2
<PAGE> 7
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
"Borrower's Latest Form 10-Q" means the Borrower's quarterly
report on Form 10-Q for the quarter ended January 29, 1995, as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
"Borrowing" has the meaning set forth in Section 1.3.
"Closing Date" means the date (which must occur prior to June 30,
1995) on or after the Effective Date on which the Documentation Agent shall
have received the documents specified in or pursuant to Section 3.1.
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages hereof, as such
amount may be reduced from time to time pursuant to Section 2.9.
"Committed Loan" means a loan made by a Bank pursuant to Section
2.1.
"Consolidated Debt" means at any date the Debt of the Borrower and
its Consolidated Subsidiaries, determined on a consolidated basis as of such
date.
"Consolidated Interest Expense" means, for any period, the
interest expense of the Borrower and its Consolidated Subsidiaries determined
on a consolidated basis for such period.
"Consolidated Net Income" means, for any fiscal period, the net
income of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis for such period.
"Consolidated Operating Income" means, for any fiscal period,
Consolidated Net Income for such period plus, to the extent deducted in
determining Consolidated Net Income for such period, the aggregate amount of
Consolidated Interest Expense and income tax expense and minus, to the extent
included in determining Consolidated Net Income for such period, interest and
other income.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements if such statements were
prepared as of such date.
3
<PAGE> 8
"Consolidated Tangible Net Worth" means at any date the
consolidated stockholders' equity of the Borrower and its Consolidated
Subsidiaries less their consolidated Intangible Assets, all determined as of
such date. For purposes of this definition, "Intangible Assets" means the
amount (to the extent reflected in determining such consolidated stockholders'
equity) of (i) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of assets of a going concern business made
within twelve months after the acquisition of such business) subsequent to
January 29, 1995 in the book value of any asset owned by the Borrower or a
Consolidated Subsidiary, (ii) all investments in unconsolidated Subsidiaries
and all equity investments in Persons which are not Subsidiaries and (iii) all
unamortized debt discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, anticipated future benefit of
tax loss carry-forwards, copyrights, organization or developmental expenses and
other intangible assets.
"Credit Event" means the making of a Loan or the issuance of a
Letter of Credit.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable or accrued liabilities in
respect of accrued expenses arising in the ordinary course of business, (iv)
all obligations of such Person as lessee which are capitalized in accordance
with generally accepted accounting principles, (v) all non-contingent
obligations (and, for purposes of Section 5.9 and the definitions of Material
Debt and Material Financial Obligations, all contingent obligations) of such
Person to reimburse any bank or other Person in respect of amounts paid under a
letter of credit or similar instrument, (vi) any of the foregoing secured by a
Lien on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person and (vii) any of the foregoing of others Guaranteed
by such Person.
"Default" means any condition or event which constitutes an Event
of Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of
such Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or
4
<PAGE> 9
equity index option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction, currency
swap transaction, cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect to any of the
foregoing transactions) or any combination of the foregoing transactions.
"Documentation Agent" means Morgan Guaranty Trust Company of New
York in its capacity as documentation agent for the Banks hereunder, and its
successors in such capacity.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in San Francisco, California are authorized
by law to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Borrower and the Administrative Agent.
"Effective Date" means the date this Agreement becomes effective
in accordance with Section 9.9.
"Eligible Assignee" means (i) a commercial bank organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (ii) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision
of any such country, and having a combined capital and surplus of at least
$100,000,000, provided that such bank is acting through a branch or agency
located and licensed in the United States; and (iii) a Person that is primarily
engaged in the business of commercial banking and that is (A) a Subsidiary of a
Bank, (B) a Subsidiary of a Person of which a Bank is a Subsidiary, or (C) a
Person of which a Bank is a Subsidiary.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
5
<PAGE> 10
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members
of a controlled group of corporations and all trades or businesses (whether or
not incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London, England.
"Euro-Dollar Lending Office" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Administrative Agent.
"Euro-Dollar Loan" means a Committed Loan to be made by a Bank as
a Euro-Dollar Loan in accordance with the applicable Notice of Committed
Borrowing.
"Euro-Dollar Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.7(b).
"Event of Default" has the meaning set forth in Section 6.1.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and (ii) if no such
rate is so published on such next succeeding Domestic Business Day, the
6
<PAGE> 11
Federal Funds Rate for such day shall be the average rate quoted to Bank of
America National Trust and Savings Association on such day on such transactions
as determined by the Administrative Agent.
"Fixed Rate Loans" means Euro-Dollar Loans or Money Market Loans
(excluding Money Market LIBOR Loans bearing interest at the Base Rate pursuant
to Section 8.1) or any combination of the foregoing.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt (whether arising by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other manner the holder of
such Debt of the payment thereof or to protect such holder against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnified Liabilities" has the meaning set forth in Section
9.3(b).
"Indemnitee" has the meaning set forth in Section 9.3(b).
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or
7
<PAGE> 12
(b) any general assignment for the benefit of creditors, composition,
marshalling of assets for creditors, or other, similar arrangement in respect
of its creditors generally or any substantial portion of its creditors,
undertaken under U.S. Federal, state or foreign law, including the Federal
Bankruptcy Reform Act of 1978 (11 U.S.C. Sec 101, et seq.).
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending one,
two, three or six months thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to clause (c) below, be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-Dollar Business
Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(2) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 90 days thereafter;
provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to clause (b) below, be
extended to the next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(3) with respect to each Money Market LIBOR Borrowing, the period
commencing on the date of such Borrowing and ending one, two, three or six
months thereafter as the Borrower may elect in accordance with Section 2.3;
provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to
8
<PAGE> 13
clause (b) below, be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month,
in which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(4) with respect to each Money Market Absolute Rate Borrowing,
the period commencing on the date of such Borrowing and ending such number of
days thereafter (but not less than 14 days or more than 366 days) as the
Borrower may elect in accordance with Section 2.3; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to clause (b) below, be
extended to the next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
"Issuing Bank" means Bank of America National Trust and Savings
Association, as issuer of a Letter of Credit.
"Letter of Credit" means a standby letter of credit to be issued
hereunder by the Issuing Bank.
"Letter of Credit Liabilities" means, for any Bank and at any
time, the sum of (x) the amounts then owing to such Bank (including in its
capacity as the Issuing Bank) under Section 2.15 to reimburse it in respect of
amounts drawn under Letters of Credit and (y) such Bank's ratable participation
in the aggregate amount then available for drawing under all Letters of Credit,
calculated in accordance with Section 2.15.
"LIBOR Auction" means a solicitation of Money Market Quotes
setting forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.3.
9
<PAGE> 14
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
"Loan" means a Base Rate Loan, a Euro-Dollar Loan or a Money
Market Loan and "Loans" means Base Rate Loans, Euro-Dollar Loans or Money
Market Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.7(b).
"Material Adverse Effect" means (i) any material adverse effect
upon the business, financial position or results of operations of the Borrower
and its Consolidated Subsidiaries, taken as a whole; (ii) a material adverse
effect on the ability of the Borrower to remain at all times in compliance with
the requirements of this Agreement or (iii) a material adverse effect on the
rights and remedies of the Agent and the Banks under this Agreement.
"Material Debt" means Debt (other than the Notes) of the Borrower
and/or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal or face amount exceeding
$20,000,000.
"Material Financial Obligations" means a principal or face amount
of Debt and/or payment obligations in respect of Derivatives Obligations of the
Borrower and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, exceeding in the aggregate $20,000,000.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $20,000,000.
"Material Subsidiary" means at any time any Subsidiary which at
such time is a "significant subsidiary" as such term is defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission.
"Money Market Absolute Rate" has the meaning set forth in Section
2.3(d)(ii)(D).
"Money Market Absolute Rate Loan" means a loan to be made by a
Bank pursuant to an Absolute Rate Auction.
10
<PAGE> 15
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the
Borrower and the Administrative Agent; provided that any Bank may from time to
time by notice to the Borrower and the Administrative Agent designate separate
Money Market Lending Offices for its Money Market LIBOR Loans, on the one hand,
and its Money Market Absolute Rate Loans, on the other hand, in which case all
references herein to the Money Market Lending Office of such Bank shall be
deemed to refer to either or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank
pursuant to a LIBOR Auction (including such a loan bearing interest at the Base
Rate pursuant to Section 8.1).
"Money Market Loan" means a Money Market LIBOR Loan or a Money
Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section
2.3(d)(ii)(C).
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.3.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"Notes" means promissory notes of the Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of the Borrower to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing or a
Notice of Money Market Borrowing.
"Notice of Committed Borrowing" has the meaning set forth in
Section 2.2.
"Notice of Issuance" has the meaning set forth in Section 2.15.
"Notice of Money Market Borrowing" has the meaning set forth in
Section 2.3(f)).
11
<PAGE> 16
"Parent" means, with respect to any Bank, any Person controlling
such Bank.
"Participant" has the meaning set forth in Section 9.6(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Internal Revenue Code
and either (i) is maintained, or contributed to, by any member of the ERISA
Group for employees of any member of the ERISA Group or (ii) has at any time
within the preceding five years been maintained, or contributed to, by any
Person which was at such time a member of the ERISA Group for employees of any
Person which was at such time a member of the ERISA Group.
"Pricing Schedule" means the Schedule attached hereto identified
as such.
"Quick Ratio" means, at any date, the ratio of (i) Unrestricted
Cash and Cash Equivalents and accounts receivable of the Borrower and its
Consolidated Subsidiaries to (ii) the current liabilities of the Borrower and
its Consolidated Subsidiaries, each determined on a consolidated basis as of
such date.
"Reference Banks" means the principal London offices of ABN AMRO
Bank N.V., Bank of America National Trust and Savings Association and Morgan
Guaranty Trust Company of New York or replacements thereof selected by the
Administrative Agent and reasonably acceptable to the Borrower.
"Reference Rate" means the rate of interest publicly announced by
BofA in San Francisco, California from time to time as its "reference rate".
Any change in the reference rate announced by BofA shall take effect at the
opening of business on the day specified in the public announcement of such
change. (The "reference rate" is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic conditions and
other factors, and is used as a reference point
12
<PAGE> 17
for pricing some loans, which may be priced at, above, or below such announced
rate.)
"Refunding Borrowing" means a Committed Borrowing which, after
application of the proceeds thereof, results in no net increase in the
outstanding principal amount of Committed Loans made by any Bank.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having at least 60% of
the aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 60% of the aggregate unpaid
principal amount of the Loans or, if the Commitments shall have been terminated
and the Notes shall have been repaid in full, having at least 60% of the
aggregate outstanding Letter of Credit Liabilities.
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person;
unless otherwise specified, "Subsidiary" means a Subsidiary of the Borrower.
"Termination Date" means May 19, 1998, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA
Group to the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Unrestricted Cash and Cash Equivalents " means (i) cash, (ii)
cash equivalents and (iii) marketable securities to be
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disposed within one year of the date of acquisition thereof (other than any
such cash, cash equivalents and marketable securities subject to a Lien
permitted by Section 5.9(a), (b) or (j).)
SECTION 1.2 Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks; provided that, no change in generally
accepted accounting principles shall affect the operation of any covenant if
the Borrower notifies the Administrative Agent that the Borrower wishes to
amend such covenant in Article 5 to eliminate such effect (or if the
Administrative Agent notifies the Borrower that the Required Banks wish to
amend Article 5 for such purpose) until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Borrower and the Required
Banks. Until such notice is given or withdrawal is made, as the case may be,
the Borrower's compliance with such covenant shall be determined on the basis
of generally accepted accounting principles in effect immediately before the
relevant change in generally accepted accounting principles became effective.
SECTION 1.3. Types of Borrowings. The term "Borrowing" denotes
the aggregation of Loans of one or more Banks to be made to the Borrower
pursuant to Article 2 on a single date and for a single Interest Period.
Borrowings are classified for purposes of this Agreement either by reference to
the pricing of Loans comprising such Borrowing (e.g., a "Fixed Rate Borrowing"
is a Euro-Dollar Borrowing or a Money Market Borrowing (excluding any such
Borrowing consisting of Money Market LIBOR Loans bearing interest at the Base
Rate pursuant to Section 8.1), and a "Euro-Dollar Borrowing" is a Borrowing
comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2
under which participation therein is determined (i.e., a "Committed Borrowing"
is a Borrowing under Section 2.1 in which all Banks participate in proportion
to their Commitments, while a "Money Market Borrowing" is a Borrowing under
Section 2.3 in which the Bank participants are determined on the basis of their
bids in accordance therewith).
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ARTICLE 2
THE CREDITS
SECTION 2.1. Commitments to Lend. Each Bank severally agrees, on
the terms and conditions set forth in this Agreement, to make loans to the
Borrower pursuant to this Section from time to time from the Closing Date to
but excluding the Termination Date in amounts such that the sum of (i) the
aggregate principal amount of Committed Loans by such Bank at any one time
outstanding and (ii) the Letter of Credit Liabilities of such Bank at any one
time outstanding shall not exceed the amount of its Commitment. Each Borrowing
under this Section shall be in an aggregate principal amount of $5,000,000 or
any larger multiple of $1,000,000 (except that any such Borrowing may be in the
aggregate amount available in accordance with Section 3.2) and shall be made
from the several Banks ratably in proportion to their respective Commitments.
Within the foregoing limits, the Borrower may borrow under this Section, repay,
or to the extent permitted by Section 2.11, prepay Loans and reborrow at any
time under this Section.
SECTION 2.2. Notice of Committed Borrowing. The Borrower shall
give the Administrative Agent notice (a "Notice of Committed Borrowing") (x)
not later than 9:00 A.M. (San Francisco, California time) on the date of each
Base Rate Borrowing and (y) not later than 10:30 A.M. (San Francisco,
California time) on the third Euro-Dollar Business Day before each Euro-Dollar
Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a Euro-Dollar Business
Day in the case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are to be Base Rate
Loans or Euro-Dollar Loans; and
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
Notwithstanding the foregoing, no more than 10 Euro-Dollar Borrowings shall be
outstanding at any one time, and any Borrowing which would exceed such
limitation shall be made as a Base Rate Borrowing.
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SECTION 2.3. Money Market Borrowings. (a) The Money Market
Option. In addition to Committed Borrowings pursuant to Section 2.1, the
Borrower may, at any time while Level I, II or III Status (each as defined in
the Pricing Schedule) exists, request the Banks to make offers to make Money
Market Loans to the Borrower in accordance with this Section. The Banks may,
but shall have no obligation to, make such offers and the Borrower may, but
shall have no obligation to, accept any such offers in the manner set forth in
this Section.
(b) Money Market Quote Request. When the Borrower wishes to
request offers to make Money Market Loans under this Section, it shall transmit
to the Administrative Agent by telex or facsimile transmission a Money Market
Quote Request substantially in the form of Exhibit B hereto so as to be
received not later than 10:30 A.M. (San Francisco, California time) on (x) the
fourth Euro-Dollar Business Day prior to the date of Borrowing proposed
therein, in the case of a LIBOR Auction or (y) the Domestic Business Day next
preceding the date of Borrowing proposed therein, in the case of an Absolute
Rate Auction (or, in either case, such other time or date as the Borrower and
the Administrative Agent shall have mutually agreed and shall have notified to
the Banks not later than the date of the Money Market Quote Request for the
first LIBOR Auction or Absolute Rate Auction for which such change is to be
effective) specifying:
(i) the proposed date of Borrowing, which shall be a Euro-Dollar
Business Day in the case of a LIBOR Auction or a Domestic Business Day in
the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be $5,000,000
or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth a Money
Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for up to three
different Interest Periods in a single Money Market Quote Request. No Money
Market Quote Request shall be given within five Euro-Dollar Business Days (or
such other number of days as the Borrower and the Administrative Agent may
agree) of any other Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of
a Money Market Quote Request, the Administrative Agent
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shall send to the Banks by telex or facsimile transmission an Invitation for
Money Market Quotes substantially in the form of Exhibit C hereto, which shall
constitute an invitation by the Borrower to each Bank to submit Money Market
Quotes offering to make the Money Market Loans to which such Money Market Quote
Request relates in accordance with this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each
Bank may submit a Money Market Quote containing an offer or offers to make
Money Market Loans in response to any Invitation for Money Market Quotes. Each
Money Market Quote must comply with the requirements of this subsection (d) and
must be submitted to the Administrative Agent by telex or facsimile
transmission at its offices specified in or pursuant to Section 9.1 not later
than (x) 1:00 P.M. (San Francisco, California time) on the fourth Euro-Dollar
Business Day prior to the proposed date of Borrowing, in the case of a LIBOR
Auction or (y) 9:30 A.M. (San Francisco, California time) on the proposed date
of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Administrative Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective); provided that Money Market
Quotes submitted by the Administrative Agent (or any affiliate of the
Administrative Agent) in the capacity of a Bank may be submitted, and may only
be submitted, if the Administrative Agent or such affiliate notifies the
Borrower of the terms of the offer or offers contained therein not later than
(x) one hour prior to the deadline for the other Banks, in the case of a LIBOR
Auction or (y) 15 minutes prior to the deadline for the other Banks, in the
case of an Absolute Rate Auction. Subject to Articles 3 and 6, any Money
Market Quote so made shall be irrevocable except with the written consent of
the Administrative Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form
of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for which each
such offer is being made, which principal amount (w) may be greater than or
less than the Commitment of the quoting Bank, (x) must be $5,000,000 or a
larger multiple of $1,000,000, (y) may not exceed the principal amount of
Money Market Loans for which offers were requested and (z) may be subject
to an aggregate limitation as to the principal amount of Money Market Loans
for which offers being made by such quoting Bank may be accepted,
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(C) in the case of a LIBOR Auction, the margin above or below the
applicable London Interbank Offered Rate (the "Money Market Margin")
offered for each such Money Market Loan, expressed as a percentage
(specified to the nearest 1/10,000th of 1%) to be added to or subtracted
from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of interest
per annum (specified to the nearest 1/10,000th of 1%) (the "Money Market
Absolute Rate") offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D hereto or
does not specify all of the information required by subsection (d)(ii);
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set forth
in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (d)(i).
(e) Notice to Borrower. The Administrative Agent shall promptly
notify the Borrower of the terms (x) of any Money Market Quote submitted by a
Bank that is in accordance with subsection (d) and (y) of any Money Market
Quote that amends, modifies or is otherwise inconsistent with a previous Money
Market Quote submitted by such Bank with respect to the same Money Market Quote
Request. Any such subsequent Money Market Quote shall be disregarded by the
Administrative Agent unless such subsequent Money Market Quote is submitted
solely to correct a manifest error in such former Money Market Quote. The
Administrative Agent's notice to the Borrower shall specify (A) the aggregate
principal amount of Money Market Loans for which offers have been received for
each Interest Period specified in the related Money Market Quote Request, (B)
the respective principal amounts and Money Market Margins or Money Market
Absolute Rates, as the case may be, so offered and (C) if applicable,
limitations on the
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aggregate principal amount of Money Market Loans for which offers in any single
Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M.
(San Francisco, California time) on (x) the third Euro-Dollar Business Day
prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y)
the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the Administrative
Agent shall have mutually agreed and shall have notified to the Banks not later
than the date of the Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be effective), the Borrower
shall notify the Administrative Agent of its acceptance or non-acceptance of
the offers so notified to it pursuant to subsection (e). The Borrower may, but
shall have no obligation to, accept any such offers in the manner set forth in
this Section. In the case of acceptance, such notice (a "Notice of Money
Market Borrowing") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower may accept any Money
Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market Borrowing
may not exceed the applicable amount set forth in the related Money Market
Quote Request;
(ii) the aggregate principal amount of each Money Market Borrowing must
be $5,000,000 or a larger multiple of $1,000,000;
(iii) acceptance of offers for any requested Interest Period may only
be made on the basis of ascending Money Market Margins or Money Market
Absolute Rates, as the case may be; and
(iv) the Borrower may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the requirements
of this Agreement.
(g) Allocation by Administrative Agent. If offers are made by
two or more Banks with the same Money Market Margins or Money Market Absolute
Rates, as the case may be, for a greater aggregate principal amount than the
amount in respect of which such offers are accepted for the related Interest
Period, the principal amount of Money Market Loans in respect of which such
offers are accepted shall be allocated by the Administrative Agent among such
Banks as nearly as possible (in multiples of $1,000,000, as the Administrative
Agent may deem appropriate) in proportion to the aggregate principal amounts of
such offers.
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Determinations by the Administrative Agent of the amounts of Money Market Loans
shall be conclusive in the absence of manifest error.
(h) Notice by Administrative Agent. Promptly following each Money
Market Borrowing, the Administrative Agent shall notify each Bank of (i) the
ranges of bids submitted, (ii) the highest and lowest bids accepted for such
Borrowing and (iii) the aggregate principal amount of the Loans included in
such Borrowing.
SECTION 2.4. Notice to Banks; Funding of Loans. (a) Upon
receipt of a Notice of Borrowing, the Administrative Agent shall promptly
notify each Bank of the contents thereof and of such Bank's share (if any) of
such Borrowing and such Notice of Borrowing shall not thereafter be revocable
by the Borrower.
(b) Not later than 12:00 Noon (San Francisco, California time) on
the date of each Borrowing, each Bank participating therein shall (except as
provided in subsection (c) of this Section) make available its share of such
Borrowing, in federal or other funds immediately available in San Francisco,
California, to the Administrative Agent at its address referred to in Section
9.1. Unless the Administrative Agent determines that any applicable condition
specified in Article 3 has not been satisfied, the Administrative Agent will
make the funds so received from the Banks available to the Borrower at the
Administrative Agent's aforesaid address.
(c) If any Bank makes a new Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Loan from such Bank,
such Bank shall apply the proceeds of its new Loan to make such repayment and
only an amount equal to the difference (if any) between the amount being
borrowed and the amount being repaid shall be made available by such Bank to
the Administrative Agent as provided in subsection (b) of this Section, or
remitted by the Borrower to the Administrative Agent as provided in Section
2.12, as the case may be.
(d) Unless the Administrative Agent shall have received notice
from a Bank prior to the date of any Borrowing that such Bank will not make
available to the Administrative Agent such Bank's share of such Borrowing, the
Administrative Agent may assume that such Bank has made such share available to
the Administrative Agent on the date of such Borrowing in accordance with
subsections (b) and (c) of this Section and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so
made such share available to the Administrative Agent, such Bank and the
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Borrower severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, at (i) in the case of the
Borrower, a rate per annum equal to the higher of the Federal Funds Rate and
the interest rate applicable thereto pursuant to Section 2.7 and (ii) in the
case of such Bank, the Federal Funds Rate. If such Bank shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
SECTION 2.5. Notes. (a) The Loans of each Bank shall be
evidenced by a single Note payable to the order of such Bank for the account of
its Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the
Administrative Agent, request that its Loans of a particular type be evidenced
by a separate Note in an amount equal to the aggregate unpaid principal amount
of such Loans. Each such Note shall be in substantially the form of Exhibit A
hereto with appropriate modifications to reflect the fact that it evidences
solely Loans of the relevant type. Each reference in this Agreement to the
"Note" of such Bank shall be deemed to refer to and include any or all of such
Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.1(a),
the Documentation Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount, type and maturity of each Loan made by it and the date
and amount of each payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection with any transfer or
enforcement of its Note, endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to
each such Loan then outstanding; provided that the failure of any Bank to make
any such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Notes. Each Bank is hereby irrevocably
authorized by the Borrower so to endorse its Note and to attach to and make a
part of its Note a continuation of any such schedule as and when required.
SECTION 2.6. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such Borrowing.
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SECTION 2.7. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per annum equal to the
Base Rate for such day. Such interest shall be payable in arrears for each
Interest Period on the last day thereof. Any overdue principal of or interest
on any Base Rate Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 2% plus the rate otherwise
applicable to Base Rate Loans for such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for
such day plus the Adjusted London Interbank Offered Rate applicable to such
Interest Period. Such interest shall be payable in arrears for each Interest
Period on the last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first day thereof.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next higher
1/100 of 1%) of the respective rates per annum at which deposits in United
States dollars are offered to each of the Reference Banks in the London
interbank market at approximately 11:00 A.M. (London time) two Euro-Dollar
Business Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Euro-Dollar Loan of such
Euro- Dollar Reference Bank to which such Interest Period is to apply and for a
period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in San Francisco, California with deposits exceeding five
billion dollars in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or
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other assets which includes loans by a non-United States office of any Bank to
United States residents). The Adjusted London Interbank Offered Rate shall be
adjusted automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
(c) Any overdue principal of or interest on any Euro-Dollar Loan
shall bear interest, payable on demand, for each day until paid at a rate per
annum equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for
such day plus the Adjusted London Interbank Offered Rate applicable to the
Interest Period for such Loan or (ii) the sum of 2% plus the rate applicable to
Base Rate Loans for such day.
(d) Subject to Section 8.1, each Money Market LIBOR Loan shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the sum of the London
Interbank Offered Rate for such Interest Period (determined in accordance with
Section 2.7(b) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.3. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.3. Such interest shall be payable in arrears for
each Interest Period on the last day thereof and, if such Interest Period is
longer than three months, at intervals of three months after the first day
thereof. Any overdue principal of or interest on any Money Market Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the sum of 2% plus the Base Rate for such day.
(e) The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder. The Administrative Agent shall give prompt
notice to the Borrower and the participating Banks of each rate of interest so
determined, and its determination thereof shall be conclusive in the absence of
manifest error.
(f) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Administrative Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Administrative Agent
shall determine the relevant interest rate on the basis of the quotation or
quotations furnished by the remaining Reference Bank or Banks or, if none of
such quotations is available on a timely basis, the provisions of Section 8.1
shall apply.
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SECTION 2.8. Fees.
(a) Facility Fees. The Borrower shall pay to the
Administrative Agent for the account of the Banks ratably a facility fee as set
forth in this paragraph at the Facility Fee Rate (determined daily in
accordance with the Pricing Schedule). Such facility fee shall accrue (i) from
and including May 1, 1995 to but excluding the date of termination of the
Commitments in their entirety, on the daily aggregate amount of the Commitments
(whether used or unused) and (ii) from and including such date of termination
to but excluding the date the Loans and the Letter of Credit Liabilities shall
be repaid in their entirety, on the sum of (x) the daily aggregate outstanding
principal amount of the Loans and (y) the daily aggregate amount of the Letter
of Credit Liabilities. Accrued fees under this subsection (a) shall be payable
quarterly in arrears on each March 31, June 30, September 30 and December 31
and on the date of termination of the Commitments in their entirety (and, if
later, the date the Loans and the Letter of Credit Liabilities shall be repaid
in their entirety).
(b) Letter of Credit Fees. The Borrower shall pay to the
Administrative Agent for the account of the Banks ratably with respect to each
Letter of Credit issued hereunder a letter of credit fee at the LC Fee Rate
(determined daily in accordance with the Pricing Schedule) on the aggregate
amount available for drawing under such Letter of Credit. Such letter of
credit fee shall accrue from and including the date such Letter of Credit is
issued to but excluding the date of termination thereof. The Borrower shall
pay to the Issuing Bank with respect to each Letter of Credit issued hereunder
a fronting fee in the amount agreed upon between the Borrower and the Issuing
Bank. Accrued fees under this subsection (b) shall be payable in arrears on
each March 31, June 30, September 30 and December 31 and, with respect to each
Letter or Credit, on the date of termination of such Letter of Credit. The
Borrower shall also pay to the Issuing Bank issuance, drawing, amendment and
extension charges in the amounts and at the times as agreed between the
Borrower and the Issuing Bank.
SECTION 2.9. Optional Termination or Reduction of Commitments.
The Borrower may, upon at least three Domestic Business Days' notice to the
Administrative Agent, (i) terminate the Commitments at any time, if no Loans
and no Letters of Credit are outstanding at such time or (ii) ratably reduce
from time to time by an aggregate amount of $10,000,000 or a larger multiple of
$1,000,000, the aggregate amount of the Commitments in excess of the sum of (i)
the aggregate outstanding principal amount of the Loans and (ii) the aggregate
amount of Letter of Credit Liabilities.
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SECTION 2.10. Mandatory Termination of Commitments. The
Commitments shall terminate on the Termination Date and any Loans then
outstanding (together with accrued interest thereon) shall be due and payable
on such date.
SECTION 2.11. Optional Prepayments. (a) Subject in the case of
any Euro-Dollar Borrowing to Section 2.13, the Borrower may, upon at least one
Domestic Business Day's notice to the Administrative Agent, prepay any Base
Rate Borrowing (or any Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.1) or upon at least three Euro-Dollar Business Days'
notice to the Administrative Agent, prepay any Euro-Dollar Borrowing, in each
case in whole at any time, or from time to time in part in amounts aggregating
$5,000,000 or any larger multiple of $1,000,000, by paying the principal amount
to be prepaid together with accrued interest thereon to the date of prepayment.
Each such optional prepayment shall be applied to prepay ratably the Loans of
the several Banks included in such Borrowing.
(b) Except (i) as provided in subsection (a) above or (ii) with
respect to any particular Money Market Loan, as agreed upon between the Bank
making such Loan and the Borrower, the Borrower may not prepay all or any
portion of the principal amount of any Money Market Loan prior to the maturity
thereof.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Administrative Agent shall promptly notify each Bank of the
contents thereof and of such Bank's ratable share (if any) of such prepayment
and such notice shall not thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans,
and facility fees and letter of credit fees not later than 12:00 Noon (San
Francisco, California time) on the date when due, in Federal or other funds
immediately available in San Francisco, California, to the Administrative Agent
at its address referred to in Section 9.1. The Administrative Agent will
promptly distribute to each Bank its ratable share of each such payment
received by the Administrative Agent for the account of the Banks. Whenever
any payment of principal of, or interest on, the Base Rate Loans or of fees
shall be due on a day which is not a Domestic Business Day, the date for
payment thereof shall be extended to the next succeeding Domestic Business Day.
Whenever any payment of principal of, or interest on, the Euro-Dollar Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar
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month, in which case the date for payment thereof shall be the next preceding
Euro-Dollar Business Day. Whenever any payment of principal of, or interest
on, the Money Market Loans shall be due on a day which is not a Euro-Dollar
Business Day, the date for payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day. If the date for any payment of principal
is extended by operation of law or otherwise, interest thereon shall be payable
for such extended time.
(b) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Banks
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent
that the Borrower shall not have so made such payment, each Bank shall repay to
the Administrative Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment
of principal with respect to any Fixed Rate Loan (pursuant to Article 2, 6 or 8
otherwise) on any day other than the last day of the Interest Period applicable
thereto, or the last day of an applicable period fixed pursuant to Section
2.7(c), or if the Borrower fails to borrow or prepay any Fixed Rate Loans after
notice has been given to any Bank in accordance with Section 2.4(a), the
Borrower shall reimburse each Bank within 15 days after demand for any
resulting loss or expense incurred by it including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment or
failure to borrow or prepay, provided that such Bank shall have delivered to
the Borrower a certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error; and provided
further that the Borrower shall not be required to make any payment to any Bank
pursuant to this Section 2.13 as a result of any prepayment of any Euro-Dollar
Loan of such Bank made by the Borrower pursuant to Section 8.2 if such Bank
shall not have complied with the provisions of the second sentence of Section
8.2.
SECTION 2.14. Computation of Interest and Fees. Interest based
on the Reference Rate hereunder shall be computed on the basis of a year of 365
days (or 366 days in a leap year)
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and paid for the actual number of days elapsed (including the first day but
excluding the last day). All other interest and fees shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).
SECTION 2.15. Letters of Credit. (a) Subject to the terms and
conditions hereof, the Issuing Bank agrees to issue letters of credit hereunder
from time to time before the tenth day before the Termination Date upon the
request of the Borrower (the "Letters of Credit"); provided that (i) each
Letter of Credit shall be in an amount in excess of $10,000,000 and (ii)
immediately after each Letter of Credit is issued, the aggregate amount of the
Letter of Credit Liabilities plus the aggregate principal amount of all Loans
outstanding at such time does not exceed the aggregate amount of the
Commitments. The Issuing Bank shall be under no obligation to issue any Letter
of Credit if: (x) any order, judgment or decree of any Governmental Authority
or arbitrator shall by its terms purport to enjoin or restrain the Issuing Bank
from issuing such Letter of Credit, or any requirement of law applicable to the
Issuing Bank or any request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over the Issuing Bank
shall prohibit, or request that the Issuing Bank refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon the Issuing Bank with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the Issuing Bank is not
otherwise compensated hereunder) not in effect on the Closing Date, or shall
impose upon the Issuing Bank any unreimbursed loss, cost or expense which was
not applicable on the Closing Date and which the Issuing Bank in good faith
deems material to it; or (y) the issuance of a Letter of Credit shall violate
any applicable general policies of the Issuing Bank. Upon the date of issuance
by the Issuing Bank of a Letter of Credit, the Issuing Bank shall be deemed,
without further action by any party hereto, to have sold to each Bank, and each
Bank shall be deemed, without further action by any party hereto, to have
purchased from the Issuing Bank, a participation in such Letter of Credit and
the related Letter of Credit Liabilities in the proportion their respective
Commitments bear to the aggregate Commitments.
(b) The Borrower shall give the Issuing Bank notice (which, at
the option of the Issuing Bank, may be in the form of a completed application
for issuance or amendment, in form and substance acceptable to the Issuing
Bank; provided that no term of such application shall be effective with respect
to any Letter of Credit to the extent it is inconsistent with the terms of this
Agreement or sets forth terms in addition to those set forth in this Agreement
with respect to fees) at least five Domestic
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Business Days prior to the requested issuance of a Letter of Credit specifying
the date such Letter of Credit is to be issued, and describing the terms of
such Letter of Credit and the nature of the transactions to be supported
thereby (such notice, including any such notice given in connection with the
extension or amendment of a Letter of Credit, a "Notice of Issuance"). Upon
receipt of a Notice of Issuance, the Issuing Bank shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each
Bank of the amount of the Letter of Credit, its expiry date, and its issuance
date. The issuance by the Issuing Bank of each Letter of Credit shall, in
addition to the conditions precedent set forth in Article 3, be subject to the
conditions precedent that such Letter of Credit shall be in such form and
contain such terms as shall be satisfactory to the Issuing Bank and that the
Borrower shall have executed and delivered such other instruments and
agreements relating to such Letter of Credit as the Issuing Bank shall have
reasonably requested. The extension or amendment (including a renewal) of any
Letter of Credit shall be deemed to be an issuance of such Letter of Credit,
and if any Letter of Credit contains a provision pursuant to which it is deemed
to be extended unless notice of termination is given by the Issuing Bank, the
Issuing Bank shall timely give such notice of termination unless it has
theretofore timely received a Notice of Issuance and the other conditions to
issuance of a Letter of Credit have also theretofore been met with respect to
such extension. No Letter of Credit shall have a term of more than one year;
provided that a Letter of Credit may contain a provision pursuant to which it
is deemed to be extended on an annual basis unless notice of termination is
given by the Issuing Bank; provided further that no Letter of Credit shall have
a term extending or be so extendible beyond the tenth day before the
Termination Date.
(c) Upon receipt from the beneficiary of any Letter of Credit of
any notice of drawing or of any drawing under such Letter of Credit, the
Issuing Bank shall notify the Administrative Agent and the Administrative Agent
shall promptly notify the Borrower and each other Bank as to the amount to be
paid as a result of such demand or drawing and the payment date. The Borrower
shall be irrevocably and unconditionally obligated within three Domestic
Business Days thereafter to reimburse the Issuing Bank for any amounts paid by
the Issuing Bank upon any drawing under any Letter of Credit. All such amounts
paid by the Issuing Bank and remaining unpaid by the Borrower within one
Business Day thereafter shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 2% plus the rate applicable
to Base Rate Loans for such day. In addition, each Bank will pay to the
Administrative Agent, for the account of the Issuing Bank, immediately upon the
Issuing Bank's demand at any time during the period commencing after such
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drawing until reimbursement therefor in full by the Borrower, an amount equal
to such Bank's ratable share of such drawing (in proportion to its
participation therein), together with interest on such amount for each day from
the date of the Issuing Bank's demand for such payment (or, if such demand is
made after 9:00 A.M. (San Francisco, California time) on such date, from the
next succeeding Domestic Business Day to the date of payment) by such Bank of
such amount at a rate of interest per annum equal to the rate applicable to
Base Rate Loans for such period. The Issuing Bank will pay to each Bank
ratably all amounts received from the Borrower for application in payment of
its reimbursement obligations in respect of any Letter of Credit (including
interest thereon, for each day from the date of the Issuing Bank's demand for
such payment or, if such demand is made after 9:00 A.M. (San Francisco,
California time) on such date, from the next succeeding Domestic Business Day)
to the date of payment, but only to the extent such Bank has made payment to
the Issuing Bank in respect of such Letter of Credit pursuant hereto. If the
Administrative Agent or the Issuing Bank is required at any time to return to
the Borrower, or to a trustee, receiver, liquidator, custodian, or any official
in any Insolvency Proceeding, any portion of the payments made by the Borrower
to the Administrative Agent for the account of the Issuing Bank in
reimbursement of a payment made under the Letter of Credit or interest or fee
thereon, each Bank shall, on demand of the Agent, forthwith return to the Agent
or the Issuing Bank the amount of its pro rata share of any amounts so returned
by the Administrative Agent or the Issuing Bank plus interest thereon from the
date such demand is made to the date such amounts are returned by such Bank to
the Agent or the Issuing Bank, at a rate per annum equal to the Federal Funds
Rate in effect from time to time.
(d) The obligations of the Borrower and each Bank under
subsection (c) above shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement,
under all circumstances whatsoever, including without limitation the following
circumstances:
(i) any lack of validity or enforceability of this
Agreement or any Letter of Credit or any document related hereto
or thereto;
(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of this Agreement or any Letter
of Credit or any document related hereto or thereto;
(iii) the use which may be made of the Letter of Credit by, or
any acts or omission of, a beneficiary of a
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Letter of Credit (or any Person for whom the beneficiary may be
acting);
(iv) the existence of any claim, set-off, defense or other
rights that the Borrower may have at any time against a
beneficiary of a Letter of Credit (or any Person for whom the
beneficiary may be acting), the Banks (including the Issuing Bank)
or any other Person, whether in connection with this Agreement or
the Letter of Credit or any document related hereto or thereto or
any unrelated transaction;
(v) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent or invalid in
any respect or any statement therein being untrue or inaccurate in
any respect whatsoever;
(vi) payment under a Letter of Credit against presentation to
the Issuing Bank of a draft or certificate that does not comply
with the terms of the Letter of Credit, provided that the Issuing
Bank's determination that documents presented under the Letter of
Credit comply with the terms thereof shall not have constituted
gross negligence or willful misconduct of the Issuing Bank;
(vii) any other act or omission to act or delay of any kind by
any Bank (including the Issuing Bank), the Agent or any other
Person or any other event or circumstance whatsoever that might,
but for the provisions of this subsection (vii), constitute a
legal or equitable discharge of the Borrower's or the Bank's
obligations hereunder; or
(vii) the occurrence or continuance of a Default or any event
or condition which has had a Material Adverse Effect.
(e) The Borrower hereby indemnifies and holds harmless each Bank
(including the Issuing Bank) and the Administrative Agent from and against any
and all claims, damages, losses, liabilities, costs or expenses which such Bank
or the Agent may incur (including, without limitation, any claims, damages,
losses, liabilities, costs or expenses which the Issuing Bank may incur by
reason of or in connection with the failure of any other Bank to fulfill or
comply with its obligations to such Issuing Bank hereunder (but nothing herein
contained shall affect any rights the Borrower may have against such defaulting
Bank)), and none of the Banks (including the Issuing Bank) nor the
Administrative Agent, their respective affiliates nor any of
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their respective officers or directors or employees or agents shall be liable
or responsible, by reason of or in connection with the execution and delivery
or transfer of or payment or failure to pay under any Letter of Credit,
including without limitation any of the circumstances enumerated in subsection
(d) above, as well as (i) any error, omission, interruption or delay in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, (ii) any error in interpretation of technical terms, (iii) any loss
or delay in the transmission of any document required in order to make a
drawing under a Letter of Credit, (iv) any consequences arising from causes
beyond the control of the Issuing Bank, including without limitation any
government acts, or any other circumstances whatsoever in making or failing to
make payment under such Letter of Credit; provided that the Borrower shall not
be required to indemnify the Issuing Bank for any claims, damages, losses,
liabilities, costs or expenses, and the Borrower shall have a claim for direct
(but not consequential) damage suffered by it, to the extent found by a court
of competent jurisdiction to have been caused by (x) the willful misconduct or
gross negligence of the Issuing Bank in determining whether a request presented
under any Letter of Credit complied with the terms of such Letter of Credit or
(y) the Issuing Bank's failure to pay under any Letter of Credit after the
presentation to it of a request strictly complying with the terms and
conditions of the Letter of Credit. Nothing in this subsection (e) is intended
to limit the obligations of the Borrower under any other provision of this
Agreement.
(f) The Uniform Customs and Practice for Documentary Credits as
published by the International Chamber of Commerce ("UCP") most recently at the
time of issuance of any Letter of Credit shall (unless otherwise expressly
provided in the Letters of Credit) apply to such Letter of Credit.
(g) Each Bank and the Borrower agree that, in paying any drawing
under a Letter of Credit, the Issuing Bank shall not have any responsibility to
obtain any document (other than any sight draft and certificates expressly
required by the Letter of Credit) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the Person
executing or delivering any such document.
ARTICLE 3
CONDITIONS
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SECTION 3.1. Closing. The closing hereunder shall occur upon
receipt by the Documentation Agent of the following documents, each dated the
Closing Date unless otherwise indicated:
(a) a duly executed Note for the account of each Bank dated on or
before the Closing Date complying with the provisions of Section 2.5;
(b) an opinion of Fenwick & West, special counsel for the
Borrower, substantially in the form of Exhibit E hereto;
(c) an opinion of Davis Polk & Wardwell, special counsel for the
Agents, substantially in the form of Exhibit F hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(d) evidence satisfactory to the Documentation Agent that all
fees payable by the Borrower to the Documentation Agent and the
Administrative Agent, in the amounts previously agreed upon between the
Borrower and each such Agent, shall have been paid in full; and
(e) all documents the Documentation Agent may reasonably request
relating to the existence of the Borrower, the corporate authority for and
the validity of this Agreement and the Notes and the transactions
contemplated hereby, all in form and substance satisfactory to the
Documentation Agent.
The Documentation Agent shall promptly notify the Borrower, the Banks and the
Administrative Agent of the Closing Date, and such notice shall be conclusive
and binding on all parties hereto. The Documentation Agent will forward to the
Administrative Agent copies of all documents referred to in Section 3.1
promptly after the Closing Date.
SECTION 3.2. Credit Events. The obligation of any Bank to make a
Loan on the occasion of any Borrowing and the obligation of the Issuing Bank to
issue a Letter of Credit on the occasion of any request therefor are each
subject to the satisfaction of the following conditions:
(a) the fact that the Closing Date shall have occurred;
(b) solely with respect to any Borrowing, receipt by the
Administrative Agent of a Notice of Borrowing as required by Section 2.2 or
2.3, as the case may be;
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(c) solely with respect to any issuance of a Letter of Credit,
receipt by the Issuing Bank, with a copy to the Administrative Agent, of a
Notice of Issuance as required by Section 2.15;
(d) the fact that, immediately after such Credit Event, the
aggregate outstanding principal amount of the Loans plus the aggregate
Letters of Credit Liabilities will not exceed the aggregate amount of the
Commitments;
(e) the fact that, immediately before and after such Credit
Event, no Default shall have occurred and be continuing; and
(f) the fact that the representations and warranties of the
Borrower contained in this Agreement (except, in the case of a Refunding
Borrowing, the representations and warranties set forth in Sections 4.4(c)
and 4.5 as to any matter which has theretofore been disclosed in writing by
the Borrower to the Banks) shall be true on and as of the date of such
Credit Event.
Each Credit Event hereunder shall be deemed to be a representation and warranty
by the Borrower on the date of such Credit Event as to the facts specified in
clauses (d), (e) and (f) of this Section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.1. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and has all corporate powers and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
SECTION 4.2. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the corporate powers of the Borrower, have
been duly authorized by all necessary corporate action, require no action by or
in respect of, or filing with, any governmental body, agency or official and do
not contravene, or constitute a default under, any provision of applicable law
or regulation or of the certificate of
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incorporation or by-laws of the Borrower or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or any
of its Subsidiaries or result in the creation or imposition of any Lien on any
asset of the Borrower or any of its Subsidiaries.
SECTION 4.3. Binding Effect. This Agreement constitutes a valid
and binding agreement of the Borrower and each Note, when executed and
delivered in accordance with this Agreement, will constitute a valid and
binding obligation of the Borrower, in each case enforceable in accordance with
its terms except as the same may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by general principles of
equity.
SECTION 4.4. Financial Information. (a) The consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of July 31,
1994 and the related consolidated statements of operations and cash flows for
the fiscal year then ended, reported on by Coopers & Lybrand and set forth in
the Borrower's 1994 Form 10-K, a copy of which has been delivered to each of
the Banks, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of January 29, 1995 and the related unaudited
consolidated statements of operations and cash flows for the six months then
ended, set forth in the Borrower's Latest Form 10-Q, a copy of which has been
delivered to each of the Banks, fairly present, in conformity with generally
accepted accounting principles applied on a basis consistent with the financial
statements referred to in subsection (a) of this Section, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and cash flows for such
six-month period (subject to normal year-end adjustments).
(c) Since July 31, 1994 there has been no material adverse change
in the business, financial position or results of operations of the Borrower
and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.5. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any of its Subsidiaries before any court or
arbitrator or any governmental
34
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body, agency or official in which there is a reasonable possibility of an
adverse decision which could materially adversely affect the business,
consolidated financial position or consolidated results of operations of the
Borrower and its Consolidated Subsidiaries, considered as a whole, or which in
any manner draws into question the validity of this Agreement or the Notes.
SECTION 4.6. Compliance with ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of
ERISA and the Internal Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Internal Revenue Code with respect to each Plan. No member of
the ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan or in
respect of any Benefit Arrangement, or made any amendment to any Plan or
Benefit Arrangement, which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA or the Internal
Revenue Code or (iii) incurred any liability under Title IV of ERISA other than
a liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.7. Environmental Matters. The Borrower has reasonably
concluded that the liabilities and costs associated with the effect of
Environmental Laws on the business, operations and properties of the Borrower
and its Subsidiaries (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or
as a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site
disposal of wastes or Hazardous Substances, and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses) could not reasonably be expected to have a Material Adverse Effect.
SECTION 4.8. Taxes. The Borrower and its Subsidiaries have filed
all United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Borrower or any
Subsidiary. The charges, accruals and reserves on the books of the Borrower
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and its Subsidiaries in respect of taxes or other governmental charges are, in
the opinion of the Borrower, adequate.
SECTION 4.9. Subsidiaries. Each of the Borrower's corporate
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
SECTION 4.10. Regulatory Restrictions on Borrowing. The Borrower
is not an "investment company" within the meaning of the Investment Company Act
of 1940, as amended, a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or otherwise subject to any
regulatory scheme which restricts its ability to incur debt.
SECTION 4.11. Full Disclosure. All information heretofore
furnished by the Borrower to the Administrative Agent or any Bank for purposes
of or in connection with this Agreement or any transaction contemplated hereby,
taken as a whole is, and all such information hereafter furnished by the
Borrower to the Administrative Agent or any Bank, taken as a whole, will be,
true and accurate in all material respects on the date as of which such
information is stated or certified. The Borrower has disclosed to the Banks in
writing any and all facts which materially and adversely affect or may affect
(to the extent the Borrower can now reasonably foresee), the business,
operations or financial condition of the Borrower and its Consolidated
Subsidiaries, taken as a whole, or the ability of the Borrower to perform its
obligations under this Agreement.
ARTICLE 5
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder, any amount payable under any Note remains unpaid or any Letter of
Credit Liability is outstanding:
SECTION 5.1. Information. The Borrower will deliver to the
Administrative Agent for distribution to each of the Banks:
(a) as soon as available and in any event within 105 days after
the end of each fiscal year of the Borrower, a consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries as of the end of such
fiscal year and the related consolidated statements of operations and cash
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flows for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on in a manner
acceptable to the Securities and Exchange Commission by Coopers & Lybrand
or other independent public accountants of nationally recognized standing;
(b) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related consolidated
statements of operations and cash flows for such quarter and for the
portion of the Borrower's fiscal year ended at the end of such quarter,
setting forth in the case of such statements of operations and cash flows,
in comparative form the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of presentation,
generally accepted accounting principles and consistency by the chief
financial officer or the chief accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Sections
5.10 to 5.12, inclusive, on the date of such financial statements and (ii)
stating whether any Default exists and is continuing on the date of such
certificate and, if any Default then exists and is continuing, setting
forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(d) within five Domestic Business Days after any officer of the
Borrower obtains knowledge of any Default, if such Default is then
continuing, a certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto;
(e) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(f) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and
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reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which the
Borrower shall have filed with the Securities and Exchange Commission;
(g) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer any Plan, a copy of such notice; (iv)
applies for a waiver of the minimum funding standard under Section 412 of
the Internal Revenue Code, a copy of such application; (v) gives notice of
intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could
result in the imposition of a Lien or the posting of a bond or other
security, a certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth details as to such
occurrence and action, if any, which the Borrower or applicable member of
the ERISA Group is required or proposes to take;
(h) promptly upon the Borrower's obtaining knowledge thereof,
notice of each change in or withdrawal of the ratings of the Borrower's
senior unsecured long-term debt securities by either Moody's Investors
Service, Inc. and its successors or Standard & Poor's Ratings Group and its
successors and all information relating to such change or withdrawal; and
(i) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Administrative Agent, at the request of any Bank, may reasonably request.
SECTION 5.2. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and
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discharge, at or before maturity, all their respective obligations and
liabilities in excess of $5,000,000 in any one case and in the aggregate in
excess of $30,000,000 (including, without limitation, tax liabilities and
claims of materialmen, warehousemen and the like which if unpaid might by law
give rise to a Lien), except where the same may be contested in good faith by
appropriate proceedings, and will maintain, and will cause each Subsidiary to
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of the same.
SECTION 5.3. Maintenance of Property; Insurance. (a) The
Borrower will keep, and will cause each Subsidiary to keep, all property useful
and necessary in its business in good working order and condition, ordinary
wear and tear excepted.
(b) The Borrower will, and will cause each of its Subsidiaries
to, maintain (either in the name of the Borrower or in such Subsidiary's own
name) with financially sound and responsible insurance companies, insurance on
all their respective properties in at least such amounts, against at least such
risks and with such risk retention as are usually maintained, insured against
or retained, as the case may be, in the same general area by companies of
established repute engaged in the same or a similar business; and will furnish
to the Banks, upon request from the Administrative Agent, information presented
in reasonable detail as to the insurance so carried.
SECTION 5.4. Conduct of Business and Maintenance of Existence.
The Borrower will continue, and will cause each Subsidiary to continue, to
engage in business in the same industry as the industry which the business now
conducted by the Borrower and its Subsidiaries is in, and will preserve, renew
and keep in full force and effect, and will cause each Subsidiary to preserve,
renew and keep in full force and effect their respective corporate existence
and their respective rights, privileges and franchises necessary or desirable
in the normal conduct of business; provided that nothing in this Section 5.4
shall prohibit (i) the merger of a Subsidiary into the Borrower or the merger
or consolidation of a Subsidiary with or into another Person if the corporation
surviving such consolidation or merger is a Subsidiary and if, in each case,
after giving effect thereto, no Default shall have occurred and be continuing
or (ii) the termination of the corporate existence of any Subsidiary if the
Borrower in good faith determines that such termination is in the best interest
of the Borrower and is not materially disadvantageous to the Banks.
SECTION 5.5. Compliance with Laws. The Borrower will comply, and
cause each Subsidiary to comply, with all applicable
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laws, ordinances, rules, regulations, and requirements of Governmental
Authorities (including, without limitation, Environmental Laws and ERISA and
the rules and regulations thereunder) except where (i) the necessity of
compliance therewith is contested in good faith by appropriate proceedings or
(ii) noncompliance could not reasonably be expected to have a Material Adverse
Effect.
SECTION 5.6. Inspection of Property, Books and Records. The
Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of any Bank
at such Bank's expense to visit and inspect any of their respective properties,
to examine and make abstracts from any of their respective books and records
and to discuss their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants, all at such
reasonable times during normal business hours and as often as may reasonably be
desired, subject to the provisions of Section 9.11.
SECTION 5.7. Mergers and Sales of Assets. The Borrower will not
(i) consolidate or merge with or into any other Person or (ii) sell, lease or
otherwise transfer, directly or indirectly, all or any substantial part of the
assets of the Borrower and its Subsidiaries, taken as a whole, to any other
Person; provided that the Borrower may merge with another Person if (x) the
Borrower is the corporation surviving such merger and (y) after giving effect
to such merger, no Default shall have occurred and be continuing.
SECTION 5.8. Use of Proceeds. The proceeds of the Loans made
under this Agreement will be used by the Borrower for working capital and
general corporate purposes. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U.
SECTION 5.9. Negative Pledge. Neither the Borrower nor any
Subsidiary will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal or face
amount not exceeding $170,000,000;
(b) any Lien on any asset of or relating to the North Carolina and
San Jose campuses (including without limitation
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cash and marketable securities) securing Debt in an aggregate principal or
face amount not exceeding $135,000,000 incurred by the Borrower for the
purpose of acquiring, developing and financing or constructing the North
Carolina and San Jose campuses;
(c) any Lien existing on any asset of any corporation at the time
such corporation becomes a Subsidiary and not created in contemplation of
such event;
(d) any Lien (other than any Lien described in clause (b) above)
on any asset securing Debt incurred or assumed for the purpose of financing
all or any part of the cost of acquiring or leasing such asset, provided
that such Lien attaches to such asset concurrently with or within 90 days
after the acquisition or lease thereof;
(e) any Lien on any asset of any corporation existing at the time
such corporation is merged or consolidated with or into the Borrower or a
Subsidiary and not created in contemplation of such event;
(f) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Subsidiary and not created in contemplation of
such acquisition;
(g) any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that the principal or face
amount of such Debt is not increased and such Debt is not then secured by
any additional assets;
(h) Liens arising in the ordinary course of its business which
(i) do not secure Debt or Derivatives Obligations, (ii) do not secure any
obligation in an amount exceeding $75,000,000 and (iii) do not in the
aggregate materially detract from the value of its assets or materially
impair the use thereof in the operation of its business;
(i) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed $50,000,000; and
(j) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an aggregate principal or face amount at any
date not to exceed 5% of Consolidated Tangible Net Worth.
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SECTION 5.10. Debt to Consolidated Tangible Net Worth.
Consolidated Debt will at no time exceed 100% of Consolidated Tangible Net
Worth.
SECTION 5.11. Quick Ratio. The Quick Ratio will at no time be
less than 1.0 to 1.0.
SECTION 5.12. Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth will at no time be less than an amount equal to
the sum of (i) $814,000,000 plus (ii) an amount equal to 50% of Consolidated
Net Income for each fiscal quarter of the Borrower ending after January 29,
1995 but prior to the date of determination, in each case, for which
Consolidated Net Income is positive (but with no deduction on account of
negative Consolidated Net Income for any fiscal quarter of the Borrower) plus
(iii) 100% of the aggregate net proceeds, including the fair market value of
property other than cash (as determined in good faith by the Board of Directors
of the Borrower), received by the Borrower from the issuance and sale after the
date hereof of any capital stock of the Borrower (other than the proceeds of
any issuance and sale of any capital stock (x) to a Subsidiary of the Borrower
or (y) which is required to be redeemed, or is redeemable at the option of the
holder, if certain events or conditions occur or exist or otherwise) or in
connection with the conversion or exchange of any Debt of the Borrower into
capital stock of the Borrower after January 29, 1995 minus (iv) an amount equal
to the lesser of (x) $250,000,000 and (y) the aggregate amount paid by the
Borrower for the repurchase of shares of its capital stock subsequent to
January 29, 1995.
SECTION 5.13. Transactions with Affiliates. The Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, pay any
funds to or for the account of, make any investment (whether by acquisition of
stock or indebtedness, by loan, advance, transfer of property, guarantee or
other agreement to pay, purchase or service, directly or indirectly, any Debt,
or otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect, any transaction with,
any Affiliate of the Borrower or such Subsidiary except on an arms-length basis
on terms at least as favorable to the Borrower or such Subsidiary or Affiliate
than could have been obtained from a third party who was not an Affiliate;
provided that the foregoing provisions of this Section shall not prohibit (i)
any such Person from declaring or paying any lawful dividend or other payment
ratably in respect of all of its capital stock of the relevant class so long
as, after giving effect thereto, no Default shall have occurred and be
continuing or (ii) the Borrower from repurchasing shares of its capital stock
from officers, directors, employees
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or consultants of the Borrower who received such shares as compensation.
SECTION 5.14. Ratings. The Borrower has instructed S&P to
disclose to any Bank or the Agent, upon request, any Private Rating assigned by
S&P to the Borrower's senior unsecured long term debt securities. The Borrower
will take all actions necessary or that the Agent or any Bank may request to
ensure that such Rating will at all times be available to any Bank or the
Agent, upon request.
ARTICLE 6
DEFAULTS
SECTION 6.1. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Loan or any reimbursement obligation with respect to any drawing under any
Letter of Credit or shall fail to pay within five days of the due date
thereof any interest, any fees or any other amount payable hereunder;
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.7 and 5.8, 5.10 through 5.14, or any covenant
contained in Section 5.9, solely with respect to Liens securing Debt or
Derivative Obligations;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause
(a) or (b) above) for 30 days after written notice thereof has been given
to the Borrower by the Administrative Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made
by the Borrower in this Agreement or in any certificate, financial
statement or other document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect when made (or deemed
made);
(e) the Borrower or any Subsidiary shall fail to make any payment
in respect of any Material Financial Obligations when due or within any
applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with the
giving of notice or lapse of time or
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both, would enable) the holder of such Debt or any Person acting on such
holder's behalf to accelerate the maturity thereof;
(g) the Borrower or any Material Subsidiary shall commence a
voluntary Insolvency Proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(h) an involuntary Insolvency Proceeding shall be commenced
against the Borrower or any Material Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be entered
against the Borrower or any Material Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $10,000,000 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
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 $10,000,000;
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(j) judgments or orders for the payment of money, which
individually or in the aggregate (net of applicable insurance for which the
insurer has acknowledged coverage) shall exceed $25,000,000 shall be
rendered against the Borrower or any Material Subsidiary and such judgments
or orders shall continue unsatisfied and unstayed for a period of 45 days;
or
(k) any person or group of persons (within the meaning of Section
13 or 14 of the Securities Exchange Act of 1934, as amended) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under said Act) of 35% or more of
the outstanding shares of common stock of the Borrower; or, during any
period of 12 consecutive calendar months, individuals who were directors of
the Borrower on the first day of such period shall cease to constitute a
majority of the board of directors of the Borrower (other than as a result
of death or disability);
then, and in every such event, the Administrative Agent shall (i) if requested
by the Required Banks, by notice to the Borrower terminate the Commitments and
they shall thereupon terminate, and (ii) if requested by Banks holding more
than 60% of the aggregate principal amount of the Loans, by notice to the
Borrower declare the Loans (together with accrued interest thereon) to be, and
the Loans shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided that in the case of any of the Events
of Default specified in clause 6.1(g) (other than a failure generally to pay
debts as they become due, or the taking of any corporate action to authorize
the same) or 6.1(h) above with respect to the Borrower, without any notice to
the Borrower or any other act by the Administrative Agent or the Banks, the
Commitments shall thereupon terminate and the Loans (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.
SECTION 6.2. Notice of Default. The Administrative Agent shall
give written notice to the Borrower under Section 6.1(c) promptly upon being
requested to do so by any Bank and shall thereupon notify all the Banks
thereof.
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SECTION 6.3. Cash Cover. The Borrower agrees, in addition to the
provisions of Section 6.1 hereof, that upon the occurrence and during the
continuance of any Event of Default, it shall, if requested by the
Administrative Agent upon the instruction of the Banks having more than 60% in
aggregate amount of the Commitments (or, if the Commitments shall have been
terminated, holding at least 60% of the Letter of Credit Liabilities), upon
five days' notice, pay to the Administrative Agent an amount in immediately
available funds (which funds shall be held as collateral pursuant to
arrangements reasonably satisfactory to the Administrative Agent) equal to the
aggregate amount available for drawing under all Letters of Credit then
outstanding at such time, provided that, upon the occurrence of any Event of
Default specified in clause (g) or (h) of Section 6.1 with respect to the
Borrower, the Borrower shall pay such amount forthwith without any notice or
demand or any other act by the Administrative Agent or the Banks.
ARTICLE 7
THE AGENTS
SECTION 7.1. Appointment and Authorization. (a) Each Bank hereby
irrevocably (subject to Section 7.9) appoints, designates and authorizes each
Agent to take such action on its behalf under the provisions of this Agreement
and to exercise such powers and perform such duties as are expressly delegated
to such Agent by the terms of this Agreement, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement, neither Agent shall have any duties or
responsibilities, except those expressly set forth herein, nor shall either
Agent have or be deemed to have any fiduciary relationship with any Bank, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against
either Agent.
(b) The Issuing Bank shall act on behalf of the Banks with respect
to any Letters of Credit issued by it and the documents associated therewith
until such time and except for so long as the Administrative Agent may agree at
the request of the Required Banks to act for such Issuing Bank with respect
thereto; provided, however, that the Issuing Bank shall have all of the
benefits and immunities (i) provided to the Administrative Agent in this
Article with respect to any acts taken or omissions suffered by the Issuing
Bank in connection with Letters of Credit issued by it or proposed to be issued
by it and the application and agreements for letters of credit pertaining to
the Letters of
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Credit as fully as if the term "Administrative Agent", as used in this Article,
included the Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to the Issuing Bank.
SECTION 7.2. Delegation of Duties. Each Agent may execute any of
its duties under this Agreement by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Neither Agent shall be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
SECTION 7.3. Liability of Agents. None of the Agent-Related
Persons shall (i) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or the transactions
contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Banks for any
recital, statement, representation or warranty made by the Borrower or any
Subsidiary or Affiliate, or any officer thereof, contained in this Agreement,
or in any certificate, report, statement or other document referred to or
provided for in, or received by either Agent under or in connection with, this
Agreement, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement, or for any failure of the Borrower to perform
its obligations hereunder or thereunder. No Agent-Related Person shall be
under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Borrower or any of its Subsidiaries or Affiliates.
SECTION 7.4. Reliance by Agents. Each Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement 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
counsel to the Borrower), independent accountants and other experts selected by
such Agent. Each Agent shall be fully justified in failing or refusing to take
any action under this Agreement unless it shall first receive such advice or
concurrence of the Required Banks as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Each Agent shall in all cases
be fully protected in acting, or in refraining from acting,
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under this Agreement in accordance with a request or consent of the Required
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
SECTION 7.5. Notice of Default. Each Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to such Agent for the account of the Banks, unless such Agent shall
have received written notice from a Bank or the Borrower referring to this
Agreement, describing such Default and stating that such notice is a "notice of
default". Each Agent will notify the Banks of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default as
may be requested by the Required Banks in accordance with Article 6; provided,
however, that unless and until the Administrative Agent has received any such
request, the Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default as it
shall deem advisable or in the best interest of the Banks.
SECTION 7.6. Credit Decision. Each Bank acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it, and
that no act by either Agent hereinafter taken, including any review of the
affairs of the Borrower and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Bank. Each Bank
represents to each Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Borrower
hereunder. Each Bank also represents that it will, independently and without
reliance upon any Agent- Related Person 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 Agreement, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of the Borrower. Except for notices, reports
and other documents expressly herein required to be furnished to the Banks by
either Agent, such Agent shall not have any duty or responsibility to provide
any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and
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other condition or creditworthiness of the Borrower which may come into the
possession of any of the Agent-Related Persons.
SECTION 7.7. Indemnification of Agents. Whether or not the
transactions contemplated hereby are consummated, the Banks shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Borrower and without limiting the obligation of the Borrower to
do so), pro rata, from and against any and all Indemnified Liabilities;
provided, however, that no Bank shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Bank shall reimburse each Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by such Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, or any
document contemplated by or referred to herein, to the extent that such Agent
is not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this Section shall survive the payment of all obligations
hereunder and the resignation or replacement of one or both Agents.
SECTION 7.8. Agents in Individual Capacities. Each 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 Borrower and its Subsidiaries and Affiliates as though BofA and Morgan
Guaranty Trust Company of New York ("Morgan") were not Agents hereunder and
BofA were not the Issuing Bank and without notice to or consent of the Banks.
The Banks acknowledge that, pursuant to such activities, each Agent or its
Affiliates may receive information regarding the Borrower or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Borrower or such Subsidiary) and acknowledge that neither Agent
shall be under any obligation to provide such information to them. With
respect to its Loans, each of Morgan and BofA shall have the same rights and
powers under this Agreement as any other Bank and may exercise the same as
though it were not an Agent or the Issuing Bank, and the terms "Bank" and
"Banks" include Morgan and BofA in their individual capacities.
SECTION 7.9. Successor Agents. Each Agent may resign as Agent
upon 30 days' notice to the Banks. If either Agent resigns under this
Agreement, the Required Banks shall appoint from among
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the Banks a successor agent for the Banks. If no successor agent is appointed
prior to the effective date of the resignation of either Agent, such Agent may
appoint, after consulting with the Banks and the Borrower, a successor agent
from among the Banks. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall include such
successor agent and the retiring Agent's appointment, powers and duties as
Agent shall be terminated. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article 7 and Section 9.3 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent
by the date which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the duties of such Agent
hereunder until such time, if any, as the Required Banks appoint a successor
agent as provided for above. Notwithstanding the foregoing, however, BofA may
not be removed as the Administrative Agent at the request of the Required Banks
unless BofA shall also simultaneously be replaced as "Issuing Bank" hereunder
pursuant to documentation in form and substance reasonably satisfactory to
BofA.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.1. Basis for Determining Interest Rate Unfair. If on
or prior to the first day of any Interest Period for any Euro-Dollar Borrowing
or Money Market LIBOR Borrowing:
(a) the Administrative Agent is advised in good faith by the
Reference Banks that deposits in dollars (in the applicable amounts) are
not being offered to the Reference Banks in the relevant market for such
Interest Period, or
(b) in the case of a Committed Borrowing, Banks having 60% or
more of the aggregate amount of the Commitments in good faith advise the
Administrative Agent that the Adjusted London Interbank Offered Rate as
determined by the Administrative Agent will not fairly reflect the cost to
such Banks of funding their Euro-Dollar Loans for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to the Borrower
and the Banks, whereupon until the Administrative Agent notifies the Borrower
that the circumstances giving rise to
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such suspension no longer exist, the obligations of the Banks to make
Euro-Dollar Loans shall be suspended. Unless the Borrower notifies the
Administrative Agent at least two Domestic Business Days before the date of any
Fixed Rate Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is
a Euro-Dollar Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the first day to but excluding the
last day of the Interest Period applicable thereto at the Base Rate for such
day.
SECTION 8.2. Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall make it unlawful or
impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain
or fund its Euro-Dollar Loans and such Bank shall so notify the Administrative
Agent, the Administrative Agent shall forthwith give notice thereof to the
other Banks and the Borrower, whereupon until the circumstances giving rise to
such suspension no longer exist (at which time such Bank shall so notify the
Borrower and the Administrative Agent), the obligation of such Bank to make
Euro-Dollar Loans shall be suspended. Before giving any notice to the
Administrative Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need
for giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank shall determine that it may not
lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans
to maturity and shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each such Euro-Dollar
Loan, together with accrued interest thereon. Concurrently with prepaying each
such Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Banks), and such Bank shall make such a Base Rate Loan.
SECTION 8.3. Increased Cost and Reduced Return. (a) If on or
after (x) the date hereof, in the case of any Euro- Dollar
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Loan or Letter of Credit or any obligation to make Euro-Dollar Loans or issue
Letters of Credit or (y) the date of the related Money Market Quote, in the
case of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall impose, modify
or deem applicable any reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System,
but excluding with respect to any Euro-Dollar Loan any such requirement
included in an applicable Euro-Dollar Reserve Percentage), special deposit,
insurance assessment or similar requirement against assets of, deposits with or
for the account of, or credit extended by, any Bank (or its Applicable Lending
Office) or shall impose on any Bank (or its Applicable Lending Office) or on
the London interbank market any other condition affecting its Fixed Rate Loans,
its Note or its obligation to make Fixed Rate Loans, its Letters of Credit or
its obligation to issue or participate in any Letters or Credit and the result
of any of the foregoing is to increase the cost to such Bank (or its Applicable
Lending Office) of making or maintaining any Fixed Rate Loan, or issuing or
participating in any Letters of Credit, or to reduce the amount of any sum
received or receivable by such Bank (or its Applicable Lending Office) under
this Agreement or under its Note with respect thereto, by an amount deemed by
such Bank to be material, then, within 15 days after written demand by such
Bank (with a copy to the Administrative Agent), the Borrower shall pay to such
Bank such additional amount or amounts as will compensate such Bank for such
increased cost or reduction.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be
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<PAGE> 57
material, then from time to time, within 15 days after demand by such Bank
(with a copy to the Administrative Agent), the Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank (or its Parent)
for such reduction.
(c) Each Bank will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Bank to compensation pursuant to this
Section and will designate a different Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the judgment of such Bank, be otherwise disadvantageous to such Bank. Any Bank
claiming compensation under this Section shall provide the Borrower with a
certificate setting forth the additional amount or amounts to be paid to it
hereunder and in reasonable detail the event or events entitling such Bank to
compensation and the method of calculation of such compensation, which shall be
conclusive in the absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution methods. If any Bank
shall have successfully contested the change in law, rule, regulation,
interpretation, administration, request or directive, as the case may be, for
which the Borrower has paid any amount under this Section 8.3 and as result of
such contest such Bank shall have received a refund of such amount (or any
portion thereof), such Bank shall refund to the Borrower such amount or portion
thereof, net of any costs incurred by such Bank with respect to such contest.
Nothing in the immediately preceding sentence shall be construed to require any
Bank to contest any such change. If any Bank claiming any increased cost or
reduction has changed its Applicable Lending Office as provided in this
subsection or the Borrower has elected that the provisions of Section 8.5 shall
apply to such Bank, the calculation of such increased costs or reduction
payable by the Borrower to such Bank pursuant to this Section for any date
after the date such change in Applicable Lending Office or such election has
been made shall take into account the effect of such change or election.
SECTION 8.4. Taxes. (a) For the purposes of this Section 8.4(a),
the following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Borrower pursuant to this Agreement or under any Note or under any Letter of
Credit or any Letter of Credit Liability, and all liabilities with respect
thereto, excluding (i) in the case of each Bank and the Administrative Agent,
taxes imposed on its income, and franchise or similar taxes imposed on it, by a
jurisdiction under the laws of which such Bank or the Administrative Agent (as
the case may be) is
53
<PAGE> 58
organized or in which its principal executive office is located or, in the case
of each Bank, in which its Applicable Lending Office is located and (ii) in the
case of each Bank, any United States withholding tax imposed on such payments
but only to the extent that such Bank is subject to United States withholding
tax at the time such Bank first becomes a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or levies,
which arise from any payment made pursuant to this Agreement or under any Note
or under any Letter of Credit or any Letter of Credit Liability or from the
execution or delivery of, or otherwise with respect to, this Agreement or any
Note or under any Letter of Credit or any Letter of Credit Liability.
(b) Any and all payments by the Borrower to or for the account of
any Bank or the Administrative Agent hereunder or under any Note or under any
Letter of Credit or any Letter of Credit Liability shall be made without
deduction for any Taxes or Other Taxes; provided that, if the Borrower shall be
required by law to deduct any Taxes or Other Taxes from any such payments, (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) such Bank or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law, (iv) the Borrower shall
also pay to each Bank or the Administrative Agent for the account of such Bank,
at the time interest is paid, all additional amounts which such Bank specifies
as necessary to preserve the after-tax yield the Bank would have received if
such Taxes or Other Taxes had not been imposed and (v) the Borrower shall
furnish to the Administrative Agent, at its address referred to in Section 9.1,
the original or a certified copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and the
Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section) paid by such Bank or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
This indemnification shall be paid within 15 days after such Bank or the
Administrative Agent (as the case may be) makes demand therefor.
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<PAGE> 59
(d) Each Bank organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of
this Agreement in the case of each Bank listed on the signature pages hereof
and on or prior to the date on which it becomes a Bank in the case of each
other Bank, and from time to time thereafter if requested in writing by the
Borrower or the Administrative Agent (but only so long as such Bank remains
lawfully able to do so), shall provide the Borrower and the Administrative
Agent with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Bank is entitled to benefits under an income tax treaty to which the United
States is a party which exempts the Bank from United States withholding tax or
reduces the rate of withholding tax on payments of interest for the account of
such Bank or certifying that the income receivable pursuant to this Agreement
is effectively connected with the conduct of a trade or business in the United
States.
(e) For any period with respect to which a Bank has failed to
provide the Borrower with the appropriate form pursuant to Section 8.4(d)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
8.4(b) or (c) with respect to Taxes imposed by the United States solely as a
result of such failure; provided that if a Bank, which is otherwise exempt from
or subject to a reduced rate of withholding tax, becomes subject to Taxes or
additional Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes or additional Taxes.
(f) If the Borrower is required to pay additional amounts to or
for the account of any Bank pursuant to this Section, then such Bank will
change the jurisdiction of its Applicable Lending Office if, in the sole
judgment of such Bank, such change (i) will eliminate or reduce any such
additional payment which may thereafter accrue and (ii) is not disadvantageous
to such Bank.
SECTION 8.5. Base Rate Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans has been
suspended pursuant to Section 8.2 or (ii) any Bank has demanded compensation
under Section 8.3 or 8.4 with respect to its Euro-Dollar Loans and the Borrower
shall, by at least five Euro-Dollar Business Days' prior notice to such Bank
through the Administrative Agent, have elected that the provisions of this
Section shall apply to such Bank, then, unless
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<PAGE> 60
and until the circumstances giving rise to such suspension or demand for
compensation no longer exist (at which time such Bank shall so notify the
Borrower and the Administrative Agent):
(a) all Loans which would otherwise be made by such Bank as
Euro-Dollar Loans shall be made instead as Base Rate Loans (on which
interest and principal shall be payable contemporaneously with the related
Fixed Rate Loans of the other Banks); and
(b) after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such
Euro-Dollar Loans shall be applied to repay its Base Rate Loans instead.
SECTION 8.6. Substitution of Bank. If (i) the obligation of any
Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.2 or
(ii) any Bank has demanded compensation under Section 8.3 or 8.4, the Borrower
shall have the right, with the assistance of the Administrative Agent, to seek
a mutually satisfactory substitute bank or banks (which may be one or more of
the Banks) to purchase the Note and assume the Commitment and Letter of Credit
Liabilities of such Bank. Each such substitute bank must be acceptable to the
Issuing Bank.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (a) in the case of the Borrower or the Agents, at the applicable
address, facsimile number or telex number set forth on the signature pages
hereof, (b) in the case of any Bank, at its address, facsimile number or telex
number set forth in its Administrative Questionnaire or (c) in the case of any
party, such other address, facsimile number or telex number as such party may
hereafter specify for the purpose by notice to the Administrative Agent and the
Borrower. Each such notice, request or other communication shall be effective
(i) if given by telex, when such telex is transmitted to the telex number
specified in this Section and the appropriate answerback is received, (ii) if
given by facsimile transmission, when transmitted to the facsimile number
specified in this Section and confirmation of receipt is received, (iii) if
given by mail, 72 hours after such communication is deposited in the
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mails with first class postage prepaid, addressed as aforesaid or (iv) if given
by any other means, when delivered at the address specified in this Section;
provided that notices to the Administrative Agent under Article 2 or Article 8
and notices to the Issuing Bank under Article 2 shall not be effective until
actually received by the Administrative Agent and the Issuing Bank at the
addresses specified for the Administrative Agent and the Issuing Bank,
respectively, pursuant to this Section.
SECTION 9.2. No Waivers. No failure or delay by either Agent or
any Bank in exercising any right, power or privilege hereunder or under any
Note shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.3. Expenses; Indemnification. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses of the Agents and the Issuing
Bank, including (without duplication) the fees and disbursements of special
counsel for the Agents or the Issuing Bank and the allocated cost of inside
counsel for the Administrative Agent and the Issuing Bank, in connection with
the preparation and administration of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by
each Agent and each Bank, including (without duplication) the fees and
disbursements of outside counsel and the allocated cost of inside counsel, in
connection with such Event of Default and collection, bankruptcy, insolvency
and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify each Agent and each Bank,
their respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of this Agreement, any of the Letters of
Credit, or any of the Letter of Credit Liabilities or any actual or proposed
use of proceeds of Loans hereunder (collectively, "Indemnified Liabilities");
provided that no Indemnitee shall have the right to be indemnified hereunder
for such Indemnitee's own gross
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negligence or willful misconduct as determined by a court of competent
jurisdiction.
SECTION 9.4. Sharing of Set-Offs. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it or of the Letter of Credit Liabilities held
by it,as the case may be, which is greater than the proportion received by any
other Bank in respect of the aggregate amount of principal and interest due
with respect to any Note held by such other Bank or of the Letter of Credit
Liabilities held by such other Bank, as the case may be, the Bank receiving
such proportionately greater payment shall purchase such participations in the
Notes held by the other Banks or in the Letter of Credit Liabilities held by
the other Banks, as the case may be, and such other adjustments shall be made,
as may be required so that all such payments of principal and interest with
respect to the Notes held by the Banks or of the Letter of Credit Liabilities
held by the Banks shall be shared by the Banks pro rata; provided that nothing
in this Section shall impair the right of any Bank to exercise any right of
set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other than its
indebtedness hereunder. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in a
Note or in a Letter or Credit Liability, as the case may be, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of set-off
or counterclaim and other rights with respect to such participation as fully as
if such holder of a participation were a direct creditor of the Borrower in the
amount of such participation.
SECTION 9.5. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of either Agent or the Issuing Bank are affected
thereby, by such Agent or the Issuing Bank, as the case may be); provided that
no such amendment or waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable decrease in the
Commitments of all Banks) or subject any Bank to any obligation in addition to
the obligations to which such Bank is subject hereunder on the Effective Date,
(ii) reduce the principal of or rate of interest on any Loan, the amount of any
Letter of Credit Liability or any fees hereunder, (iii) postpone the date fixed
for any payment of principal of or interest on any Loan, of any Letter of
Credit Liability or any interest thereon or any fees hereunder or for any
scheduled termination of any Commitment or (iv) change the percentage of
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the Commitments or of the aggregate unpaid principal amount of the Notes or of
the Letter of Credit Liabilities, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this Section or
any other provision of this Agreement.
SECTION 9.6. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment
or any or all of its Loans or Letter of Credit Liabilities. In the event of
any such grant by a Bank of a participating interest to a Participant, whether
or not upon notice to the Borrower, the Agents and the Issuing Bank, such Bank
shall remain responsible for the performance of its obligations hereunder, and
the Borrower, the Agents and the Issuing Bank shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement. Any agreement pursuant to which any Bank may grant such
a participating interest shall provide that such Bank shall retain the sole
right and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i), (ii), or (iii)
of Section 9.5 without the consent of the Participant. The Borrower agrees
that each Bank shall be entitled to the benefits of Section 2.13 and Article 8
without regard to whether it has granted any participating interests, and that
all amounts payable to a Bank for the account of a Participant under Section
2.13 and Article 8 shall be determined as if such Bank had not granted a
participating interest to such Participant. An assignment or other transfer
which is not permitted by subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more Eligible
Assignees all, or a proportionate part (equivalent to an initial Commitment of
not less than $5,000,000) of all, of its rights and obligations under this
Agreement (including its Letter of Credit Liabilities) and the Notes, and each
such Eligible Assignee shall assume such rights and obligations, pursuant to an
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Assignment and Assumption Agreement in substantially the form of Exhibit G
hereto executed by such Eligible Assignee and such transferor Bank, with (and
subject to) the subscribed consent of the Borrower, the Administrative Agent
and the Issuing Bank; provided that if an Eligible Assignee is an Affiliate of
such transferor Bank or was a Bank immediately prior to such assignment, no
such consent shall be required; and provided further that such assignment may,
but need not, include rights of the transferor Bank in respect of outstanding
Money Market Loans. Upon execution and delivery of such instrument and payment
by such Eligible Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such Eligible Assignee,
such Eligible Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Administrative Agent
and the Borrower shall make appropriate arrangements so that, if required, a
new Note is issued to the Eligible Assignee. In connection with any such
assignment, the transferor Bank shall pay to the Administrative Agent an
administrative fee for processing such assignment in the amount of $2,500. If
the Eligible Assignee is not incorporated under the laws of the United States
of America or a state thereof, it shall deliver to the Borrower and the Agent
certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 8.4.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Eligible Assignee, Participant or other transferee of any
Bank's rights shall be entitled to receive any greater payment under Section
8.3 or 8.4 than such Bank would have been entitled to receive with respect to
the rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.2, 8.3 or 8.4
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
(f) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent a copy of each Assignment
and Assumption Agreement delivered to it and a
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record of the names and addresses of the Banks and the Commitments of and
principal amounts of the Loans owing to, each Bank from time to time. Such
record shall be conclusive, in the absence of manifest error, and the Borrower,
the Administrative Agent and the Banks shall treat each Person whose name is
recorded as the owner of a Loan or other obligation hereunder as the owner
thereof for all purposes of this Agreement, notwithstanding any notice to the
contrary or anything to the contrary in this Agreement. Any assignment of any
Loan or other right or obligation hereunder shall be effective, in the absence
of manifest error, only upon appropriate records with respect thereto being
made by the Administrative Agent, notwithstanding anything to the contrary in
this Agreement. Such records shall be available for inspection by the Borrower
or any Bank at any reasonable time and from time to time upon reasonable prior
notice.
SECTION 9.7. Collateral. Each of the Banks represents to each
Agent and each of the other Banks that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.8. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York, without reference to its conflicts of law
principles. Each Letter of Credit and the application(s) and agreement(s)
relating thereto shall be governed by the laws of the State of California. The
Borrower hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
court sitting in New York City for purposes of all legal proceedings arising
out of or relating to this Agreement or the transactions contemplated hereby.
The Borrower irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
SECTION 9.9. Counterparts; Integration; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective upon receipt by the
Documentation Agent of counterparts hereof signed by each of the parties hereto
(or, in the case of any
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party as to which an executed counterpart shall not have been received, receipt
by the Documentation Agent in form satisfactory to it of telegraphic, telex,
facsimile or other written confirmation from such party of execution of a
counterpart hereof by such party).
SECTION 9.10 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
AGENTS AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.11 Confidentiality. Each of the Agents and the Banks
shall keep confidential any information provided by Borrower or any Subsidiary
or Affiliate of the Borrower and clearly identified as confidential (including
without limitation any credit rating (other than a "public rating") obtained
from S&P or Moody's); provided that nothing herein shall prevent any Agent or
any Bank from disclosing such information (i) to its officers, directors,
employees, agents, attorneys and accountants who have a need to know such
information in accordance with customary banking practices and who receive such
information having been made subject to the restrictions set forth in this
Section, (ii) upon the order of a court or administrative agency, (iii) upon
demand of any regulatory agency or authority having jurisdiction over such
party and authority to compel disclosure of such information, (iv) which has
become publicly available without breach of any agreement between the parties
hereto, including this Agreement, (v) as necessary for the exercise of any
remedy under this Agreement, (vi) subject to provisions similar to those
contained in this Section, to any prospective Participant or Assignee, (vii)
when required to do so in accordance with the provisions of any applicable law,
(viii) to the extent reasonably required in connection with any litigation or
proceeding between the Borrower and any Agent, any Bank or their respective
Affiliates or (ix) as to any Bank or any of its Affiliates, as expressly
permitted under the terms of any document or agreement regarding
confidentiality to which the Borrower or any Subsidiary is party or is deemed
party with such Bank or such Affiliate.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
CISCO SYSTEMS, INC.
By: /s/ Larry R. Carter
------------------------------
Name: Larry R. Carter
Title: Secretary/CFO
Address: Cisco Systems, Inc.
170 West Tasman
Drive
San Jose, CA
95134
Telephone: 408-526-8211
Facsimile: 408-526-4545
Attention: Chief Financial
Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent
By: /s/ Judith L. Kramer
------------------------------
Name: Judith L. Kramer
Title: Vice President
Address: Agency Management Services
#5596
Bank of America National
Trust and Savings
Association
1455 Market Street
12th Floor
San Francisco, CA 94103
Telephone: 415-953-2506
Facsimile: 415-622-4894
Attention: Judith L. Kramer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Issuing Bank
By: /s/ Stephen L. Parry
------------------------------
Name: Stephen L. Parry
Title: Vice President
Address: 350 Lytton Avenue
2nd Floor
Palo Alto, CA 94301
Telephone: 415-853-4625
Facsimile: 415-853-4476
Attention: Stephen Parry
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as
Documentation Agent
By: /s/ Carl J. Mehldau, Jr.
------------------------------
Name: Carl J. Mehldau, Jr.
Title: Associate
Address: J.P. Morgan
60 Wall Street
New York, NY 10260
Telex: 177615 MGT UT
Telephone: 212-648-7638
Facsimile: 212-648-5014
Attention: David Ellis
Commitments:
$22,000,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ Carl J. Mehldau, Jr.
------------------------------
Name: Carl J. Mehldau, Jr.
Title: Associate
$22,000,000 BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION
By: /s/ Stephen L. Parry
------------------------------
Name: Stephen L. Parry
Title: Vice President
$14,000,000 ABN AMRO BANK N.V.
By: /s/ Robin S. Yim
------------------------------
Name: Robin S. Yim
Title: Vice President
By: /s/ Robert N. Hartinger
------------------------------
Name: Robert N. Hartinger
Title: Group Vice President
$14,000,0000 DEUTSCHE BANK AG
LOS ANGELES AND/OR
CAYMAN ISLANDS BRANCHES
By: /s/ Christine N. Lane
------------------------------
Name: Christine N. Lane
Title: Vice President
By: /s/ J. Scott Jessup
------------------------------
Name: J. Scott Jessup
Title: Vice President
$14,000,000 THE MITSUBISHI BANK, LTD.
By: /s/ Hiroaki Fuchida
------------------------------
Name: Hiroaki Fuchida
Title: Vice President, Manager
$14,000,000 THE SUMITOMO BANK, LIMITED
SAN FRANCISCO BRANCH
By: /s/ Yuji Harada
------------------------------
Name: Yuji Harada
Title: General Manager
By: /s/ Herman White Jr.
------------------------------
Name: Herman White Jr.
Title: Vice President
_____________
Total:
$100,000,000
<PAGE> 68
EXHIBIT A - Note
NOTE
New York, New York
___________ __, 199_
For value received, CISCO SYSTEMS, INC., a California corporation
(the "Borrower"), promises to pay to the order of ______________________ (the
"Bank"), for the account of its Applicable Lending Office, the unpaid principal
amount of each Loan made by the Bank to the Borrower pursuant to the Credit
Agreement referred to below on the last day of the Interest Period relating to
such Loan. The Borrower promises to pay interest on the unpaid principal
amount of each such Loan on the dates and at the rate or rates provided for in
the Credit Agreement. All such payments of principal and interest shall be
made in lawful money of the United States in Federal or other immediately
available funds at the office of Agency Management Services #5596, Bank of
America National Trust and Savings Association, 1455 Market Street, 12th Floor,
San Francisco, California.
All Loans made by the Bank, the respective types and maturities
thereof and all repayments of the principal thereof shall be recorded by the
Bank and, if the Bank so elects in connection with any transfer or enforcement
hereof, appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding may be endorsed by the Bank on the
schedule attached hereto, or on a continuation of such schedule attached to and
made a part hereof; provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement
dated as of May 22, 1995 among Cisco Systems, Inc., the banks listed on the
signature pages thereof, Bank of America National Trust and Savings
Association, as Administrative Agent, Morgan Guaranty Trust Company of New
York, as Documentation Agent
2
<PAGE> 69
and Bank of America National Trust and Savings Association, as Issuing Bank (as
the same may be amended from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof.
CISCO SYSTEMS, INC.
By____________________
Name:
Title:
3
<PAGE> 70
LOANS AND PAYMENTS OF PRINCIPAL
__________________________________________________________________________
Amount Type Amount of
of of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
4
<PAGE> 71
EXHIBIT B - Money Market Quote Request
Form of Money Market Quote Request
[Date]
To: Bank of America National Trust and Savings
Association (the "Administrative Agent")
From: Cisco Systems, Inc.
Re: Credit Agreement (the "Credit Agreement") dated as of May 22,
1995 among Cisco Systems, Inc., the Banks listed on the
signature pages thereof, the Administrative Agent, Morgan
Guaranty Trust Company of New York, as Documentation Agent and
Bank of America National Trust and Savings Association, as
Issuing Bank
We hereby give notice pursuant to Section 2.3 of the Credit
Agreement that we request Money Market Quotes for the following proposed Money
Market Borrowing(s):
Date of Borrowing: __________________
<TABLE>
<CAPTION>
Principal Amount(1) Interest Period(2)
- ---------------- ---------------
<S> <C>
$
</TABLE>
____________________
(1) Amount must be $5,000,000 or a larger multiple of $1,000,000.
(2) Not less than one month (LIBOR Auction) or not less than 14 days or
more than 366 days (Absolute Rate Auction), subject to the provisions of the
definition of Interest Period. No more than three different Interest Periods.
<PAGE> 72
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate.]
Terms used herein have the meanings assigned to them in the
Credit Agreement.
CISCO SYSTEMS, INC.
By_______________________________
Name:
Title:
2
<PAGE> 73
EXHIBIT C - Invitation for Money Market Quotes
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to [Name of Borrower] (the
"Borrower")
Pursuant to Section 2.3 of the Credit Agreement dated as of
May 22, 1995 among Cisco Systems, Inc., the Banks parties thereto, the
undersigned, as Administrative Agent, Morgan Guaranty Trust Company of New
York, as Documentation Agent and Bank of America National Trust and Savings
Association, as Issuing Bank, we are pleased on behalf of the Borrower to
invite you to submit Money Market Quotes to the Borrower for the following
proposed Money Market Borrowing(s):
Date of Borrowing: __________________
<TABLE>
<CAPTION>
Principal Amount Interest Period
- ---------------- ---------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate.]
Please respond to this invitation by no later than [1:00 P.M.]
[9:30 A.M.] (San Francisco, California time) on [date].
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By______________________
Authorized Officer
<PAGE> 74
EXHIBIT D - Money Market Quote
Form of Money Market Quote
To: Bank of America National Trust and Savings Association, as
Administrative Agent
Re: Money Market Quote to [Name of Borrower] (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at the
following rates:
<TABLE>
<CAPTION>
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
- -------- --------- ------------ --------------------
<S> <C> <C> <C>
$
$
</TABLE>
[Provided, that the aggregate principal amount of Money Market Loans
for which the above offers may be accepted shall not exceed
$____________.]**
__________
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed principal
amount requested. Specify aggregate limitation if the sum of the individual
offers exceeds the
(notes continued on following page)
<PAGE> 75
We understand and agree that the offer(s) set forth above,
subject to the satisfaction of the applicable conditions set forth in the Credit
Agreement dated as of May 22, 1995 among Cisco Systems, Inc., the Banks listed
on the signature pages thereof, yourselves, as Administrative Agent, Morgan
Guaranty Trust Company of New York, as Documentation Agent and Bank of America
National Trust and Savings Association, as Issuing Bank irrevocably obligates us
to make the Money Market Loan(s) for which any offer(s) are accepted, in whole
or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
__________
amount the Bank is willing to lend. Bids must be made for $5,000,000 or a
larger multiple of $1,000,000.
*** Not less than one month or not less than 14 days or more than 365 days, as
specified in the related Invitation. No more than five bids are permitted for
each Interest Period.
**** Margin over or under the London Interbank Offered Rate determined for the
applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%)
and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
2
<PAGE> 76
EXHIBIT E - Opinion of Counsel for the Borrower
OPINION OF
COUNSEL FOR THE BORROWER
________________, 199_
To the Banks and the Agents Referred
to Below
c/o Morgan Guaranty Trust Company of New York,
as Documentation Agent
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
Pursuant to Section 3.1(b) of the Credit Agreement (the
"Credit Agreement") dated as of May 22, 1995 among Cisco Systems, Inc., a
California corporation (the "Borrower"), the Banks listed on the signature
pages thereof and Bank of America National Trust and Savings Association, as
Administrative Agent, Morgan Guaranty Trust Company of New York, as
Documentation Agent and Bank of America National Trust and Savings Association,
as Issuing Bank, we are giving our opinion as counsel for the Borrower on
certain matters set forth below. Capitalized terms used in this opinion that
are not defined herein have the same meanings given to such terms in the Credit
Agreement.
In order to render this opinion we have examined the following:
(1) The Credit Agreement and the Notes.
(2) A copy of the Borrower's Articles of Incorporation, as
certified by the office of the California Secretary of State
on May __, 1995 (the "Articles").
(3) A copy of the Borrower's Bylaws, as amended through
______________, as certified by the Secretary of the Borrower
(the "Bylaws").
<PAGE> 77
(4) A copy of the minutes of the organizational meeting of the
Borrower's Board of Directors dated March 10, 1985.
(5) A copy of the minutes of the meeting of the Board of Directors
of the Borrower dated as of January 31, 1995 approving the
execution and delivery by the Borrower of the Credit Agreement
and the Notes and the performance by the Borrower of its
obligations thereunder.
(6) A Management Certificate addressed to us and dated of even
date herewith executed by the Borrower (the "Management
Certificate").
(7) A Certificate of Status regarding the Borrower issued by the
California Secretary of State dated May __, 1995 and a letter
from the California Franchise Tax Board dated May __, 1995 to
the effect that the Borrower is in good standing with respect
to its California franchise tax filings and has no known
unpaid franchise tax liability to the California Franchise Tax
Board.
(8) The following documents which the Borrower has informed us are
all of the documents governing Material Financial Obligations
(the "Reviewed Agreements"):
(A) Pledge Agreement between the Borrower, The Hongkong
and Shanghai Banking Corporation Limited ("Hongkong")
and the Sumitomo Bank, Limited ("Sumitomo") dated May
20, 1993, as amended May 20, 1993 and May 19, 1994;
(B) Lease by and between the Borrower, as tenant, and
Sumitomo Bank Leasing and Finance, Inc. ("SBLF"), as
landlord dated May 20, 1993 and amended May 19, 1994;
(C) Lease by and between the Borrower, as tenant, and SGA
Development Partnership, Ltd ("SGA"), as landlord
dated February 25, 1993, as amended May 20, 1993 and
May 19, 1994;
2
<PAGE> 78
(D) Security Agreement by and between SGA and the
Borrower for the benefit of SBLF dated May 20, 1993
and amended May 19, 1994;
(E) Security Agreement by and between SGA, SBLF and the
Borrower for the benefit of Sumitomo and Hongkong
dated May 20, 1993 and amended May 19, 1994;
(F) The Credit Agreement and the Notes;
(G) Agreement between Cisco and Sumitomo Bank Leasing and
Finance, Inc. ("Sumitomo") dated June 14, 1994;
(H) Ground Lease between Cisco and Sumitomo dated July
11, 1994, as amended August 12, 1994;
(I) Lease [Building] between Cisco and Sumitomo dated
August 12, 1994;
(J) Third Party Pledge Agreement dated July 11, 1994 by
Cisco in favor of Union Bank of Switzerland;
(K) Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing between Cisco,
Chicago Title Company and Sumitomo dated August 12,
1994;
(9) A certificate executed by the Borrower's Secretary dated May
__, 1995 (the "Secretary's Certificate").
(10) An Incumbency Certificate executed by the Borrower's Executive
Vice-President and the Borrower's Secretary (the "Incumbency
Certificate").
In connection with this opinion we have not examined any
documents other than those expressly referred to above and have not made any
factual investigation except for our review of the documents and notices
expressly referred to above and, with respect to the opinion expressed in
paragraph 4 below, our discussions with management of the Borrower regarding
the subject matter of such opinion, and we have assumed, based solely upon the
Borrower's representations to us and the Secretary's Certificate, that neither
the Borrower nor its assets is a party to, bound by
3
<PAGE> 79
or subject to any agreement or instrument which, if known by us, would change
any conclusion stated in this opinion. By way of illustration and not
limitation, we have not examined, and we express no opinion with respect to,
any documents other than the Reviewed Agreements, exclusive of any documents
ancillary to the Reviewed Agreements, including without limitation any letter
of credit, security agreement, extension of credit, promissory note or guaranty
that has been or may be executed in connection with the Credit Agreement (other
than the Notes) or any of the other Reviewed Agreements.
In our examination of documents for purposes of this opinion,
we have assumed, based solely upon the Borrower's representations to us and the
Secretary's Certificate and Incumbency Certificate, and express no opinion as
to, the genuineness of all signatures on original documents, the authenticity
of all documents submitted to us as originals, the conformity to originals of
all documents submitted to us as copies, the lack of any undisclosed
terminations, modifications, waivers or amendments to any agreements or other
documents reviewed by us and the due execution and delivery of all documents
where due execution and delivery are prerequisites to the effectiveness
thereof. We did not witness the execution or delivery by the Borrower of the
Credit Agreement and the Notes and are not familiar with the handwriting of the
officer executing the Credit Agreement and the Notes. We have reviewed copies
of the signature pages of the Credit Agreement and the Notes delivered to us,
and we have been advised by the President or Chief Financial Officer of the
Borrower or his designated agent that he has duly executed and delivered the
Credit Agreement and the Notes for and on behalf of the Borrower and have
assumed the due execution and delivery of the Credit Agreement by the Borrower
for purposes of rendering the opinions herein.
As used in this opinion, the phrases "to our knowledge" or
"known to us" refer only to the actual knowledge of the attorneys currently in
this firm who have rendered legal services to the Borrower and mean that, while
such attorneys have not been informed by the Borrower that the matters stated
are factually incorrect and have no actual knowledge that the matters stated
are factually incorrect, we have made no independent investigation of such
matters other than our examination of the documents expressly referred to in
the second paragraph of this letter and, with respect to the opinion expressed
in paragraph 4
4
<PAGE> 80
below, discussions with management of the Borrower regarding the subject matter
of such opinion. However, nothing has been brought to our attention by
Borrower to make us believe such a statement was incorrect.
As to matters of fact relevant to this opinion, we have relied
solely upon: (i) our examination of the documents referred to in the second
paragraph of this letter, and we have assumed the current accuracy and
completeness of the information obtained from public officials and records and
reports of professional filing service companies (if any) including in the
documents referred to above, (ii) representations and warranties made by
representatives of the Borrower to us, including without limitation those set
forth in the Management Certificate and the representations and warranties made
by the Borrower in the Credit Agreement. We have made no independent
investigations or other attempts to verify the accuracy of any of such
information, representations, warranties or other facts as represented by the
Borrower or to verify the existence or non-existence of any other factual
matters; however, we are not aware of any facts that would lead us to believe
that any of the opinions expressed herein are not accurate.
For the purposes of this opinion, we have also assumed: (a)
that the Banks and the Agents have all requisite power and authority, and have
taken any and all action, necessary for the due authorization by them of the
execution, delivery and performance by them of the Credit Agreement and all
agreements, other documents and transactions to be entered into pursuant to the
Credit Agreement and the performance by them of all their obligations under the
Credit Agreement and such other agreements; (b) that the Credit Agreement is
the legal, valid and binding obligation of each of the Banks and the Agents
enforceable against it in accordance with its terms; and (c) the current
accuracy and completeness of all representations and warranties made by the
Banks and the Agents in the Credit Agreement and in all agreements to be
entered into in connection therewith.
The opinion expressed in paragraph 3 below is qualified by and
is subject to, and we render no opinion with respect to, the limitations and
exceptions to the enforceability of contracts and obligations generally,
including, without limitation: (a) the effect of
5
<PAGE> 81
bankruptcy, insolvency, reorganization, arrangement, moratorium, bulk sales,
fraudulent conveyance and other similar laws relating to or affecting the
rights of creditors generally; (b) the effect of general principles of equity
and similar principles, including, without limitation, concepts of materiality,
reasonableness, unconscionability, good faith and fair dealing and the possible
unavailability of specific performance, injunctive relief or other equitable
remedies, regardless of whether considered in a proceeding in equity or at law,
and the effect of public policy; (c) the enforceability of any waivers or
releases of rights by the Borrower in the Credit Agreement or the documents
ancillary thereto, to the extent any of such waivers or releases is not
enforceable under applicable law; (d) the effect of Section 1670.5 of the
California Civil Code and of California court decisions, invoking statutes or
principles of equity, which have held that certain covenants and provisions of
agreements are unenforceable where (i) the breach of such covenants or
provisions imposes restrictions or burdens upon the other party and it cannot
be demonstrated that the enforcement of such restrictions or burdens is
reasonably necessary for the protection of the party seeking to enforce such
provisions or (ii) the enforcement of such covenants or provisions under the
circumstances would violate the implied covenant of good faith and fair
dealing; and (e) any implied duty or covenant of good faith and fair dealing
which the Bank may have or be subject to.
We also advise you that a California court may limit the right
of a lender to exercise remedies or impose penalties for late payment or other
default if it is determined that the default is not material, the remedies or
penalties bear no reasonable relation to the damage suffered by the lender as a
result of the default or it cannot be demonstrated that the enforcement of the
remedies or penalties is reasonably necessary for the protection of the lender.
We assume that the Credit Agreement and any Loans made thereunder are not and
will not be secured by any security interest in any property of Borrower or its
Subsidiaries.
In rendering the opinion expressed in paragraph 3 below, we
have assumed with your consent and without independent investigation: (a) that
each Bank is a bank organized or licensed under and pursuant to the laws of the
United States or a State thereof and is exempt from the
6
<PAGE> 82
usury laws of the State of California; and (b) that the Borrower is not
insolvent and by executing and delivering the Credit Agreement and the Notes
will not become insolvent.
In rendering the opinions expressed in paragraphs 2 and 4
below, we have relied solely on representations made to us by the Borrower, and
we have not caused the search of any docket of any court, tribunal, agency or
similar authority or any other search. To date, we have represented the
Borrower only on discrete and specific matters involving international tax, and
certain transactional and corporate issues and have not acted as general
corporate counsel to the Borrower, nor have we been engaged to represent the
Borrower in connection with any litigation, administrative hearing, arbitration
or other proceeding.
We are admitted to practice law in the State of California,
and we express no opinion herein with respect to the application or effect of
the laws of any jurisdiction other than the existing laws of the State of
California and the existing federal laws of the United States of America.
Although pursuant to their terms the Credit Agreement and the Notes are
governed by the laws of the State of New York, we have, with your consent,
opined herein regarding the Credit Agreement and the Notes are as if they were
to be governed under the internal laws of the State of California applicable to
contracts entered into between California residents and entirely performed in
California. Accordingly we render no opinion regarding the Credit Agreement
and the Notes are to the extent that they may be evaluated by a court or other
tribunal applying the laws of any jurisdiction other than such laws of the
State of California.
We also call your attention to the fact that under various
reports published by committees of the State Bar of California, certain
assumptions, qualifications and exceptions are implicit in opinions of lawyers.
Although we have expressly set forth certain assumptions, qualifications and
exceptions herein, we are not limiting or omitting any others set forth in the
various reports or otherwise deemed standard by practice for lawyers in
California such as the 1990 California Opinion Reports published by the State
Bar of California.
7
<PAGE> 83
In rendering the opinions below, we are opining only as to the
specific legal issues expressly set forth herein, and no opinion shall be
inferred as to any other matters.
Based upon the foregoing, and subject to all the assumptions,
limitations and qualifications referred to herein, it is our opinion that:
1. The Borrower has been duly incorporated and is validly existing in
good standing, under the laws of the State of California.
2. The execution, delivery, and performance by the Borrower of the Credit
Agreement and the Notes have been duly authorized by all necessary
corporate action on the part of the Borrower, and do not and will not
(assuming no change in the Articles or Bylaws, in the Credit Agreement
and the Notes or in the Reviewed Agreements) conflict with or result
in a violation of the Articles or Bylaws, the Reviewed Agreements, or,
to our knowledge, any law to which the Borrower is subject.
3. The Credit Agreement and each Note is a legal, valid, and binding
obligation of the Borrower, enforceable against the Borrower in
accordance with its terms.
4. To our knowledge, there is no litigation, administrative or other
governmental proceeding, or arbitration proceeding pending, or
threatened in writing, against or affecting the Borrower, the adverse
determination of which would result in a Material Adverse Effect.
This opinion is intended solely for the use of the Banks and
the Agents (and for the use of Participants and Assignees) for the purpose of
the above transaction, and is not to be used or relied upon by any Bank or
Agent (or any Participants or Assignees) for any other purpose or made
available to or used or relied upon by any other persons or entities, without
our prior written consent. We assume no obligation to advise you of any facts,
circumstances, events or changes in the law that may hereafter be brought to
our attention, whether or not they would affect or modify any of the opinions
expressed herein.
8
<PAGE> 84
Very truly yours,
[COUNSEL FOR THE BORROWER]
9
<PAGE> 85
EXHIBIT F - Opinion of Special Counsel for the Agent
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENTS
________________, 199_
To the Banks and the Agents
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Documentation Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Credit
Agreement (the "Credit Agreement") dated as of May 22, 1995 among Cisco
Systems, Inc., a Delaware corporation (the "Borrower"), the banks listed on the
signature pages thereof (the "Banks"), Bank of America National Trust and
Savings Association, as Administrative Agent, Morgan Guaranty Trust Company of
New York, as Documentation Agent (the "Agent") and Bank of America National
Trust and Savings Association, as Issuing Bank , and have acted as special
counsel for the Agent for the purpose of rendering this opinion pursuant to
Section 3.1(c) of the Credit Agreement. Terms defined in the Credit Agreement
are used herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
We have assumed that the execution, delivery and performance
by the Borrower of the Credit Agreement and the Notes are within its corporate
powers and have been duly authorized by all necessary action.
<PAGE> 86
Upon the basis of the foregoing, we are of the opinion that
the Credit Agreement constitutes a valid and binding agreement of the Borrower
and each Note constitutes a valid and binding obligation of the Borrower, in
each case enforceable in accordance with its terms except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York and the
federal laws of the United States of America. In giving the foregoing opinion,
we express no opinion as to the effect (if any) of any law of any jurisdiction
(except the State of New York) in which any Bank is located which limits the
rate of interest that such Bank may charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other person without our prior written consent.
Very truly yours,
2
<PAGE> 87
EXHIBIT G - Assignment and Assumption Agreement
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of ____, 1995 among [NAME OF ASSIGNOR] (the
"Assignor"), [NAME OF ASSIGNEE] (the "Assignee"), CISCO SYSTEMS, INC. (the
"Borrower"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Administrative Agent and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Issuing Bank (the "Issuing Bank").
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Credit Agreement dated as of May 22, 1995 among the
Borrower, the Assignor and the other Banks party thereto, as Banks, the
Administrative Agent, Morgan Guaranty Trust Company of New York, as
Documentation Agent and the Issuing Bank (as amended from time to time, the
"Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has
a Commitment to make Loans to the Borrower and to participate in Letters of
Credit issued for the account of the Borrower such that the aggregate principal
amount of such Loans outstanding at any time plus the Letter of Credit
Liabilities of the Assignor outstanding at any time shall not exceed
$__________;
WHEREAS, Committed Loans made to the Borrower by the Assignor
under the Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof;
WHEREAS, Letter of Credit Liabilities of the Assignor in the
amount of $__________ are outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of
the rights of the Assignor under the Credit Agreement in respect of a portion
of its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding Committed
Loans and Letter of Credit
<PAGE> 88
Liabilities, and the Assignee proposes to accept assignment of such rights and
assume the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Credit
Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and
sells to the Assignee all of the rights of the Assignor under the Credit
Agreement to the extent of the Assigned Amount, and the Assignee hereby accepts
such assignment from the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the Assigned Amount,
including the purchase from the Assignor of the corresponding portion of the
principal amount of the Committed Loans made by the Assignor outstanding at the
date hereof and of the Letter of Credit Liabilities of the Assignor outstanding
on the date hereof. Upon the execution and delivery hereof by the Assignor,
the Assignee, [the Borrower, the Agents and the Issuing Bank] and the payment
of the amounts specified in Section 3 required to be paid on the date hereof
(i) the Assignee shall, as of the date hereof, succeed to the rights and be
obligated to perform the obligations of a Bank under the Credit Agreement with
a Commitment in an amount equal to the Assigned Amount, and (ii) the Commitment
of the Assignor shall, as of the date hereof, be reduced by a like amount and
the Assignor released from its obligations under the Credit Agreement to the
extent such obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment
and sale contemplated in Section 2 hereof, the Assignee shall pay to the
Assignor on the date hereof in Federal funds the amount heretofore agreed
between them.(1) It
(1) Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any
portion of any upfront fee to be paid by the Assignor to the Assignee. It may
be preferable in an appropriate
2
<PAGE> 89
is understood that commitment and/or facility fees accrued to the date hereof
are for the account of the Assignor and such fees accruing from and including
the date hereof are for the account of the Assignee. Each of the Assignor and
the Assignee hereby agrees that if it receives any amount under the Credit
Agreement which is for the account of the other party hereto, it shall receive
the same for the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such other party.
[SECTION 4. Consent of the Borrower, the Administrative Agent
and the Issuing Bank. This Agreement is conditioned upon the consent of the
Borrower, the Administrative Agent and the Issuing Bank pursuant to Section
9.6(c) of the Credit Agreement. The execution of this Agreement by the
Borrower, the Administrative Agent and the Issuing Bank is evidence of this
consent. Pursuant to Section 9.6(c), the Borrower agrees to execute and
deliver a Note payable to the order of the Assignee to evidence the assignment
and assumption provided for herein.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Borrower, or the validity and enforceability of the obligations of the Borrower
in respect of the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be
____________________
case to specify these amounts generically or by formula rather than as a fixed
sum.
3
<PAGE> 90
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[NAME OF ASSIGNOR]
By_________________________
Name:
Title:
[NAME OF ASSIGNEE]
By__________________________
Name:
Title:
[CISCO SYSTEMS, INC.
By__________________________
Name:
Title:]
[BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent
By__________________________
Name:
Title:]
4
<PAGE> 91
[BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Issuing Bank
By__________________________
Name:
Title:]
5
<PAGE> 1
EXHIBIT 11.01
COMPUTATION OF NET INCOME PER SHARE
IN ACCORDANCE WITH INTERPRETIVE RELEASE NO. 34-9083
(In thousands, except per-share amounts)
<TABLE>
<CAPTION>
Years Ended
-----------------------------------------
July 30, July 31, July 25,
1995 1994 1993
------------ ------------ -------------
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Actual weighted average common shares outstanding
for the period 267,679 254,787 244,436
Weighted average shares assuming exercise of
employees' stock options using average market price 9,619 10,264 13,697
------------ ------------ -------------
Shares used in per-share calculations 277,298 265,051 258,133
============ ============ =============
Net income applicable to primary income per share $ 421,008 $ 314,867 $ 171,955
============ ============ =============
Net income per share based on SEC Interpretive
Release No. 34-9083 $ 1.52 $ 1.19 $ .67
============ ============ =============
</TABLE>
- -----------
(A) These calculations are submitted in accordance with Securities Exchange
Act of 1934 Release No. 34-9083.
46
<PAGE> 2
EXHIBIT 11.01
(CONTINUED)
COMPUTATION OF NET INCOME PER SHARE
IN ACCORDANCE WITH INTERPRETIVE RELEASE NO. 34-9083
(In thousands, except per-share amounts)
<TABLE>
<CAPTION>
Years Ended
-----------------------------------------
July 30, July 31, July 25,
1995 1994 1993
------------ ------------ -------------
<S> <C> <C> <C>
FULLY DILUTED EARNINGS PER SHARE:
Actual weighted average common shares outstanding
for the period 267,679 254,787 244,436
Weighted average shares assuming exercise of
employees' stock options using ending market price 11,744 10,388 13,989
------------ ------------ -------------
Shares used in per-share calculations 279,423 265,175 258,425
============ ============ =============
Net income applicable to fully diluted income per share $ 421,008 $ 314,867 $ 171,955
============ ============ =============
Net income per share based on SEC Interpretive
Release No. 34-9083 $ 1.51 $ 1.19 $ .66
============ ============ =============
</TABLE>
- -----------
(A) These calculations are submitted in accordance with Securities Exchange
Act of 1934 Release No. 34-9083.
47
<PAGE> 1
EXHIBIT 21.01
SUBSIDIARIES
Cisco Systems Canada Limited
Cisco Systems Europe, S.A.R.L. (France)
Cisco Systems Import/Export Corporation (U.S. Virgin Islands)
Cisco Systems Belgium, S.A.
Cisco Systems Limited (U.K.)
Cisco Systems Australia PTY. Limited
Nihon Cisco Systems, K.K. (Japan)
Cisco Systems de Mexico, S.A. de C.V.
Cisco Systems New Zealand Limited
Cisco Systems (HK) Limited (Hong Kong)
Cisco Systems GmbH (Germany)
Cisco Systems (Italy) Srl
Cisco Systems GesmbH (Austria)
Cisco do Brasil Ltda. (Brazil)
Cisco Systems (Korea) Ltd.
VZ, Cisco Systems, C.A. (Venezuela)
Cisco Systems South Africa (Pty) Ltd.
Cisco Systems Sweden Aktiebolag
Cisco Systems (Switzerland) AG
48
<PAGE> 1
EXHIBIT 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Cisco Systems, Inc. on Form S-8 (File No. 0-7285) of our reports dated August
15, 1995, on our audits of the consolidated financial statements and financial
statement schedule of Cisco Systems, Inc. as of July 30, 1995 and July 31, 1994,
and for the years ended July 30, 1995, July 31, 1994, and July 25, 1993, which
reports are included in this Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
San Jose, California
October 20, 1995
49
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED
STATEMENT OF CASH FLOWS INCLUDED IN THE COMPANY'S FORM 10-K FOR THE PERIOD
ENDING JULY 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-30-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-30-1995
<CASH> 204,846
<SECURITIES> 811,609
<RECEIVABLES> 397,547
<ALLOWANCES> 13,305
<INVENTORY> 71,160
<CURRENT-ASSETS> 995,969
<PP&E> 242,878
<DEPRECIATION> 106,243
<TOTAL-ASSETS> 1,757,279
<CURRENT-LIABILITIES> 337,756
<BONDS> 0
<COMMON> 362,292
0
0
<OTHER-SE> 1,016,439
<TOTAL-LIABILITY-AND-EQUITY> 1,757,279
<SALES> 1,978,916
<TOTAL-REVENUES> 1,978,916
<CGS> 644,152
<TOTAL-COSTS> 1,335,977
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 679,046
<INCOME-TAX> 258,038
<INCOME-CONTINUING> 421,008
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 421,008
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 0
</TABLE>
