================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q
----------------
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the period ended June 29, 1996.
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number: 0-24360
SPECTRIAN CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA 77-0023003
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
350 West Java Drive
Sunnyvale, California 94089
(Address of principal executive offices)
Telephone Number (408) 745-5400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and, (2) has been subject to such
filing requirements for the past 90 days.
Yes X No___
---
As of June 29, 1996 there were 8,117,322 shares of the Registrant's Common Stock
outstanding.
================================================================================
<PAGE>
SPECTRIAN
CORPORATION
Form 10-Q
INDEX
Page No.
Cover Page 1
Index 2
PART I - Financial Information
ITEM 1 - Condensed consolidated financial statements
Condensed consolidated balance sheets -
June 29, 1996 and March 31, 1996 3
Condensed consolidated statements of operations -
three months ended
June 29, 1996 and July 1, 1995 4
Condensed consolidated statements of cash flows -
three months ended June 29, 1996 and
July 1, 1995 5
Notes to condensed consolidated financial statements 6
ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II - Other Information
ITEM 4- Submission of Matters to a Vote of 13
Security Holders
ITEM 6 - Exhibits and Reports on Form 8-K 14
Signatures 15
2
<PAGE>
<TABLE>
SPECTRIAN CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<CAPTION>
March 31, June 29,
Assets 1996 1996
----------- ----------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,163 $ 881
Short-term investments 3,002 --
Accounts receivable, less allowance for doubtful
accounts of $339 and $348, respectively 11,980 6,012
Inventories 7,229 12,384
Prepaid expenses and other current assets 420 567
---------- ----------
Total current assets 23,794 19,844
Property and equipment, net 32,128 35,373
---------- ----------
$ 55,922 $ 55,217
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 6,964 $ 5,556
Accrued liabilities 4,120 3,309
Current portion of debt obligations -- 240
---------- ----------
Total current liabilities 11,084 9,105
Debt obligations, net of current portion -- 5,760
---------- ----------
Total liabilities 11,084 14,865
---------- ----------
Shareholders' Equity:
Common Stock, no par value, 20,000,000 shares authorized;
8,014,525 and 8,117,322 shares issued and outstanding,
respectively 51,956 52,761
Deferred compensation expense (182) (157)
Unrealized gains on investments 2 --
Accumulated deficit (6,938) (12,252)
---------- ----------
Total shareholders' equity 44,838 40,352
---------- ----------
$ 55,922 $ 55,217
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
SPECTRIAN CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three months ended
July 1, June 29,
-----------------------------
1995 1996
---- ----
Revenues:
Product sales $ 20,262 $ 9,560
Non-recurring engineering revenues 199 363
----------- -----------
20,461 9,923
----------- -----------
Costs and expenses:
Cost of product sales 13,010 8,491
Research and development 3,295 4,293
Selling, general and administrative 2,058 2,379
----------- -----------
18,363 15,163
----------- -----------
Operating income (loss) 2,098 (5,240)
Interest income (expense), net 367 (74)
----------- -----------
Income (loss) before income taxes 2,465 (5,314)
Income tax expense (benefit) 201 --
----------- -----------
Net income (loss) $ 2,264 $ (5,314)
=========== ===========
Net income (loss) per share $ 0.27 $ (0.66)
=========== ===========
Shares used in computing per
share amounts 8,276 8,039
=========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
SPECTRIAN CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months Ended
July 1, June 29,
---------------------
1995 1996
---- ----
Cash flows from operating activities:
Net income (loss) $ 2,264 $ (5,314)
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Depreciation and amortization 922 1,453
Stock option compensation expense 50 25
Tax benefit associated with stock options 191 --
Changes in operating assets and liabilities
Accounts receivable 1,176 5,968
Inventories (455) (5,155)
Prepaid expenses and other assets (188) (147)
Accounts payable 474 (1,408)
Accrued liabilities 337 (811)
--------- ---------
Net cash provided by (used for)
operating activities 4,771 (5,389)
--------- ---------
Cash used for investing activities:
Purchase of short-term investments (8,734) --
Proceeds from sale of short-term investments 2,913 3,002
Purchase of property and equipment (2,366) (4,699)
--------- ---------
Net cash used for investing activities (8,187) (1,697)
--------- ---------
Cash flows from financing activities:
Proceeds from debt -- 6,000
Proceeds from sales of Common Stock, net 670 804
--------- ---------
Net cash provided by financing activities 670 6,804
--------- ---------
Net decrease in cash and cash equivalents (2,746) (282)
Cash and cash equivalents, beginning of period 8,420 1,163
--------- ---------
Cash and cash equivalents, end of period $ 5,674 $ 881
========= =========
The accompanying notes are an integral part of these condensed consolidated
financial statements
5
<PAGE>
SPECTRIAN CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: Basis of Presentation
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles. However, certain information or
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of the management, the statements include all
adjustments (which are of a normal and recurring nature) necessary for the fair
presentation of the financial information set forth therein. These financial
statements should be read in conjunction with the Company's audited consolidated
financial statements as incorporated by reference in the Company's Form 10-K for
fiscal year ended March 31, 1996. The interim results presented herein are not
necessarily indicative of the results of operations that may be expected for the
full fiscal year ending March 31, 1997, or any other future period.
NOTE 2: Balance Sheet Components
Balance sheet components are as follows:
March 31, June 29,
1996 1996
------------- -------------
(In thousands)
Inventories:
Raw materials $ 1,512 $ 1,980
Work in process 4,842 6,097
Finished goods 875 4,307
------------- -------------
$ 7,229 $ 12,384
============= =============
Property and equipment:
Machinery and equipment $ 26,053 $ 30,113
Land, building and improvements 15,682 16,076
Furniture and fixtures 1,342 1,449
Leasehold improvements 927 901
------------- -------------
44,004 48,539
Less accumulated depreciation and
amortization 11,876 13,166
------------- -------------
$ 32,128 $ 35,373
============= =============
Accrued liabilities:
Employee compensation and benefits $ 2,673 $ 1,809
Warranty 699 699
Other accrued liabilities 748 801
------------- -------------
$ 4,120 $ 3,309
============= =============
6
<PAGE>
NOTE 3: Investments
The Company accounts for investments in accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("FAS 115"). Under the provisions of FAS 115, the Company has
classified its investments in certain debt and equity securities as
"available-for-sale". Such investments are recorded at fair market value, with
unrealized gains and losses reported as a separate component of shareholders'
equity. Interest income is recorded using an effective interest rate, with the
associated premium or discount amortized to "Interest income, net".
As of June 29, 1996, available-for-sale securities consisted of the following:
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
------------------------------------------------
(In thousands)
Corporate debt securities $ 776 $ - $ - $ 776
------------------------------------------------
$ 776 $ - $ - $ 776
------------------------------------------------
As of June 29, 1996, these securities were classified as follows:
(In thousands)
Cash equivalents $ 776
Short-term investments
-
------------------
$ 776
------------------
As of June 29, 1996 all securities held were due in less than one year.
NOTE 4: Revenue Recognition
The Company recognizes product sales upon shipment and concurrently accrues for
expected warranty expenses. Repair and service revenues are recognized when the
service is performed.
Non-recurring engineering revenues relate to customer funded development
projects and are deferred and recognized upon completion of project milestones.
The Company is under no obligation to repay funds once related milestones are
achieved. Costs associated with such customer funded research and development of
$735,000 and $952,000 for the three months ended June 29, 1996 and July 1, 1995,
respectively, are included in research and development expense.
7
<PAGE>
NOTE 5: Earnings Per Share Computation
Net income (loss) per share has been computed using the weighted average number
of outstanding shares of Common Stock, common shares from convertible Preferred
Stock (when dilutive using the if-converted method at date of issuance) and
common equivalent shares from stock options outstanding (when dilutive using the
treasury stock method). Common Stock Options are assumed to be exercised and the
proceeds used to buy back Common Stock at the fair market value (the treasury
stock method). Due to the loss during the three month period ending June 29,
1996, Common Stock Options outstanding would be antidilutive and are therefore
not included in the earnings per share calculation.
NOTE 6: Debt
In June 1996, the Company was extended a $6.0 million Term Loan, secured by all
of the Company's real estate. Under the terms of the agreement, which expires
June 2001, the Company will make monthly payments against the loan based on a
25-year fixed amortization schedule, plus interest at a rate equal to current
prime plus 3/4%. Upon the June 2001 expiration, all remaining principle will
become due and payable. Under the terms of the agreement, the Company is
required to maintain certain minimum working capital, net worth, profitability,
and other specific financial ratios. As of June 29, 1996, the Company was in
violation of certain of these convenants. However, the Company has obtained a
waiver such that the Company is no longer in default on the terms of the loan.
This loan is reflected in the Balance Sheet as of June 29, 1996 as $240,000
current portion of debt obligations, with the remainder as long term liability.
In July, 1996 the Company used all $6,000,000 of its available revolving line of
credit. Under the terms of the agreement, the Company is required to maintain
certain minimum working capital, net worth, profitability, and other specific
financial ratios. As of June 29, 1996, the Company was in violation of certain
of these convenants. However, the Company has obtained a waiver such that the
Company is no longer in default under the terms of the loan.
8
<PAGE>
SPECTRIAN CORPORATION AND SUBSIDIARY
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Overview
Spectrian provides highly linear power amplifiers to wireless
communications infrastructure original equipment manufacturers ("OEMs"). The
Company designs, manufactures, and markets single carrier and multicarrier
amplifiers that support a broad range of worldwide analog and digital
transmission standards, including AMPS, TDMA, CDMA, TACS, GSM and DCS-1800.
Spectrian's customers include many of the world's largest manufacturers of
wireless infrastructure equipment, including Ericsson and Northern Telecom, as
well as other equipment manufacturers in emerging wireless markets. The
Company's revenues are derived from a limited number of OEM customers and
products. In recent periods, sales to the Company's major customers as a
percentage of total revenues have fluctuated significantly. During the three
months ended June 29, 1996, Northern Telecom Limited and Matra Communication, in
which Northern Telecom has an equity investment, accounted for 50% and 10% of
the Company's total revenues, respectively. The concentration of sales among a
limited number of OEM customers, in particular Northern Telecom, increases the
potential volatility of the Company's revenues and results of operations. The
Company expects that it will continue to experience volatility in customer
orders and requested ship rates that is inherent in an OEM business, but is
working to diversify its customer base to reduce this risk.
The Company's business, financial condition and results of operations
have been materially adversely affected in the past by the failure of
anticipated orders to materialize and by deferrals or cancellations of orders as
a result of changes in OEM requirements. In addition, growth in the cellular
market has slowed considerably from prior levels, causing the Company's largest
customer to carry much lower inventory levels than in previous periods. This
softening demand from the Company's largest customer, compounded by delays in
the availability for sale of new products, caused revenues during the three
months ended June 29, 1996 to decrease to $9.9 million. As a result, the Company
incurred a net loss during the three months ended June 29, 1996 of $5.2 million.
The Company executed a reduction in force of approximately 10% of its regular
and temporary employees during the three months ended June 29, 1996, which was
intended to lower operating costs without significantly impacting the Company's
ability to develop new products or meet future production requirements. The
Company incurred one-time costs of approximately $300,000 in relation to this
reduction in force during the three months ended June 29, 1996. Results during
the three months ended June 29, 1996 were also impacted by redundant costs
associated with developing the Company's new 4-inch wafer fabrication facility
while still maintaining its 3-inch facility for wafer production. The Company
expects these redundant costs to continue until the fourth quarter of fiscal
1997, when the full qualification of the 4-inch wafer fabrication facility is
anticipated.
Spectrian pursues a strategy of vertical integration of its manufacturing
process, and expends significant resources for research and development in all
aspects of the design of power amplification products. In order to offset
declining average sales prices and improve gross margins, the Company believes
that it must develop new products that can be sold at higher average prices.
Significant delays in the release of these new products coming out of
development, as well as the inherent cost risks associated with introducing new
products into manufacturing, have had an adverse impact on the Company's results
of operations, and will continue to have a similar impact as future products are
introduced.
9
<PAGE>
Results of Operations
Three Month Period Ended July 1, 1995 and June 29, 1996
Revenues. The Company generates product sales revenue from the sale of power
amplifiers to OEMs in cellular and other markets, as well as from amplifier
repair and service. A portion of the Company's revenues is also generated
through non-recurring engineering ("NRE") revenues, which represent funding from
the Company's OEM customers for specific development projects. The Company's
revenues decreased by 52% from $20.5 million in the three months ended July 1,
1995 to $9.9 million in the three months ended June 29, 1996, primarily due to
softening demand by the Company's largest customer, as well as delays in the
availability for sale of new products. The Company's revenues were reduced
further when the Company's largest customer had a large order change from TDMA,
where the Company produces 100% of the requirements, to analog, where the
Company has only a 30% share.
The Company's revenues are derived primarily from a limited number of OEM
customers and products. During the three months ended June 29, 1996, Northern
Telecom Limited and Matra Communication, in which Northern Telecom has an equity
investment, accounted for 50% and 10% of revenues, respectively. If the Company
were to lose a major OEM customer, in particular Northern Telecom, or if orders
by a major OEM customer were to otherwise decrease, as has been the case in the
three months ended June 29, 1996, the Company's business, financial condition
and results of operations would be materially adversely affected.
Cost of Product Sales. Cost of product sales consists primarily of raw
materials, RF transistor fabrication costs, amplifier assembly and test costs,
overhead and warranty costs, and does not include costs incurred in connection
with NRE revenues. The Company's cost of product sales decreased by 35% from
$13.0 million in the three months ended July 1, 1995 to $8.5 million in the
three months ended June 29, 1996.
Gross margin on product sales decreased from 36% in the three month period
ended July 1, 1995 to 11% in the three month period ended June 29, 1996,
primarily due to fixed manufacturing overhead spending spread over lower revenue
in the current period and inefficiencies and high material costs driven by new
products coming out of development into production.
Despite the focus on designing products for manufacturability, the Company
has experienced high manufacturing costs, including high scrap and material
waste, significant material obsolescence, labor inefficiencies, high overtime
hours, inefficient material procurement and an inability to recognize economies
of scale. The Company's high manufacturing costs have historically had a
material adverse effect on gross margins. Although the Company has initiated
actions to reduce its manufacturing costs, any failure to achieve these
reductions could have a material adverse effect on the Company's business,
financial condition and results of operations.
Research and Development. Research and development expenses include the cost of
designing, developing or cost reducing amplifiers and RF transistors, including
the cost associated with NRE revenues. NRE funding received from OEM customers
may be greater or less than the related development costs. Research and
development also includes the expenses associated with the design and start up
expenses of the Company's new 4-inch wafer fabrication facility.
The Company's research and development expenses increased by 30% from $3.3
million in the three months ended July 1, 1995 to $4.3 million in the three
months ended June 29, 1996. The increase in research and development spending is
attributable to additional headcount and related salaries and benefits,
development costs associated with the Company's new 4-inch wafer fabrication
facility, research costs associated with the advanced develop laboratory in
Tennessee and increased spending for semiconductor research and development.
Research and development expenses as a percentage of revenues increased
from 16% in the three months ended July 1, 1995 to 43% for the three months
ended June 29, 1996. The increase in research and development spending
10
<PAGE>
as a percentage of revenues reflects the Company's decision to continue the
current level of investment in product development, despite lower revenues for
the most recent three month period.
Selling, General and Administrative. Selling, general and administrative
expenses include compensation and benefits for sales, marketing, senior
management and administrative personnel, commissions paid to independent sales
representatives, professional fees and other expenses. The Company's selling,
general and administrative expenses increased by 16% from $2.1 million in the
three months ended July 1, 1995 to $2.4 million in the three months ended June
29, 1996, primarily due to increases in the Company's sales force and outside
services for information systems support.
Selling, general and administrative expenses as a percentage of revenues
increased from 10% in the three months ended July 1, 1995 to 24% for the three
months ended June 29,1996, primarily driven by lower levels of revenue.
Interest Income (Expense), Net. Net interest income for the three months ended
July 1, 1995 was $367,000 compared to net interest expense of $74,000 for the
three months ended June 29, 1996, as a result of the Company's lower cash
balances and the interest and fees associated with incurring $6 million in debt
toward the end of the current period.
Income Taxes. The Company recorded a provision of $201,000 for the three month
period ended July 1, 1995 compared to an income tax benefit of $159,000 for the
three month period ended June 29, 1996, due to the loss in the current period.
Effective tax rates were 8% and 3%, respectively, for these periods and reflect
the use of net operating loss carryforwards. At March 31, 1996, the Company had
federal and state net operating loss carryforwards for tax reporting purposes of
approximately $25.0 million and $9.0 million, respectively. The Company's
ability to use its net operating loss carryforwards against taxable income may
be subject to restrictions and limitations under Section 382 of the Internal
Revenue Code of 1986, as amended, in the event of a change in ownership of the
Company as defined therein.
Variability of Operating Results. The Company's quarterly operating results have
in the past, and will in the future, vary significantly due to a number of
factors, including the timing, cancellation, or rescheduling of customer
shipments; the timing and level of NRE revenues; variations in manufacturing
efficiencies and costs; the narrow supply line from the Company's wafer
fabrication facility; changes in the mix of products having differing gross
margins; average sales prices; competitive factors; the long sales cycles
associated with the Company's customer-specific products; development risks
associated with the introduction of new products that comprise much of the
Company's future sales; and variations in product development or other operating
expenses. In the near term, operating results may be adversely affected by
continuing delays in the availability for sale of the Company's new products or
by any failure to meet acceptable wafer production levels during the Company's
transition from its current 3-inch wafer fabrication facility to the new 4-inch
wafer fabrication facility currently nearing completion.
Liquidity and Capital Resources
Cash provided by operations was $4.8 million for the three months ended
July 1, 1995 compared to cash used for operations of $5.4 million for the three
months ended June 29, 1996. The decrease in cash provided by operations in the
three months ended June 29, 1996 primarily related to the decrease in
profitability over the comparable period of the prior year and increases in the
Company's inventory levels, partially offset by improved accounts receivable
collections.
As of June 29, 1996, the Company had working capital of $10.7 million,
including $881,000 in cash and cash equivalents. In addition, the Company has a
revolving line of credit with a bank, secured by substantially all of the
11
<PAGE>
Company's assets. Under the terms of the agreement, which expires March 1997,
the Company is required to maintain certain minimum working capital, net worth,
profitability, and other specific financial ratios. In July 1996, the Company
used the $6,000,000 of credit avaliable in this agreement. As of June 29, 1996,
the Company was in violation of certain of these convenants. However, the
Company has obtained a waiver such that the Company is no longer in default on
the terms of the loan. In addition, the line of credit prohibits the payment of
cash dividends without the prior written consent of the lender.
In June 1996, the Company was extended a $6.0 million Term Loan, secured
by all of the Company's real estate. Under the terms of the agreement, which
expires June 2001, the Company will make monthly payments against the loan based
on a 25-year fixed amortization schedule, plus interest at a rate equal to
current prime plus 3/4%. Upon the June 2001 expiration, all remaining principle
will become due and payable. Under the terms of the agreement, the Company is
required to maintain certain minimum working capital, net worth, profitability,
and other specific financial ratios. As of June 29, 1996, the Company was in
violation of certain of these convenants. However, the Company has obtained a
waiver such that the Company is no longer in default on the terms of the loan.
Additions to property and equipment in the three months ended July 1,
1995 were $2.4 million. Additions to property and equipment were $4.7 million in
the three months ended June 29, 1996, including $2.9 million for equipment for
the Company's new 4-inch wafer fabrication facility.
The Company expects capital additions for the remainder of fiscal 1997 to
be approximately $8.0 million, primarily for test equipment for manufacturing.
Based on the Company's current working capital, expected cash flows and the
Company's debt capacity, the Company believes that sufficient cash will be
available to meet the Company's needs through at least the next 12 months.
In connection with the operation of American Microwave Technology, Inc.
("AMT"), the Company's wholly-owned subsidiary located in Brea, California, the
Company occupies approximately 14,400 square feet of a facility pursuant to a
lease which expired in July 1996. In July 1996, the Company renewed the lease
for an additional six months, which will expire in January 1997.
The Company notes that the above forward-looking statements are subject to
risks and uncertainties. The Company's results could differ materially based on
various factors including, without limitation, cancellation or deferral of
customer orders, the timely development and market acceptance of new products,
particularly the second generation multicarrier product, continued growth in
wireless communications, including new PCS wireless networks, the ability to
manufacture new or existing products in sufficient quantity or quality, or
economic conditions. Further information on factors which could effect the
Company's financial results are included in the Company's 1996 Form 10-K.
12
<PAGE>
ITEM 4: Submission of Matters to a Vote of Security Holders
On June 14, 1996, the Company held an Annual Meeting of Shareholders for
which it solicited votes by proxy. The following is a brief description of the
matters voted upon at the meeting and a statement of the number of votes cast
for and against, and the number of abstentions.
1. To elect six directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected.
DIRECTOR FOR ABSTAIN
---------------------- ------------- ------------
Garrett A. Garrettson 6,115,133 86,540
David S. Wisherd 6,115,796 85,877
James A. Cole 6,128,096 73,577
Martin Cooper 6,128,196 73,477
Robert C. Wilson 6,118,688 82,985
Eric A. Young 6,119,796 81,877
2. To approve an amendment to the 1994 Employee Stock Purchase Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 25,000 shares.
FOR: 4,028,115 AGAINST: 280,835 ABSTAIN: 46,251 BROKER NON-VOTES: 4,108
3. To approve an amendment to the 1992 Stock Purchase Plan to increase the
number of shares of Common Stock reserved thereunder by 625,000.
FOR: 2,229,333 AGAINST: 1,926,726 ABSTAIN: 48,172 BROKER NON-VOTES: 4,108
4. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company for the fiscal year ending March 31, 1997.
FOR: 6,106,442 AGAINST: 75,258 ABSTAIN: 20,338
13
<PAGE>
ITEM 6: Exhibits and Reports on Form 8-K
(a) Exhibits
10.21 Term Loan Agreement between Silicon Valley Bank and Registrant
11.1 Statement regarding computation of net income (loss) per share
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K on April 11, 1996.
This Form 8-K was filed with respect to the resignation of C. Woodrow Rea, Jr.
as President, Chief Executive Officer and a member of the Registrant's Board of
Directors. The Form 8-K also indicated that Garrett A. Garrettson had been
appointed as the new President, Chief Executive Officer and a member of the
Registrant's Board of Directors.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 2, 1996
SPECTRIAN CORPORATION
(Registrant)
/S/ EDWARD A. SUPPLEE, JR.
-----------------------------------
Edward A. Supplee, Jr.
Executive Vice President, Finance and Administration,
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
15
<PAGE>
INDEX TO EXHIBITS
EXHIBITS
10.21 Term Loan Agreement between Silicon Valley Bank and Registrant
11.1 Statement regarding computation of net income (loss) per share
27.1 Financial Data Schedule
16
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT ("Agreement") is made as of this 15th day of
May, 1996, by and between SPECTRIAN CORPORATION, a California corporation
("Borrower"), and SILICON VALLEY BANK, a California Banking Corporation
("Lender").
1. DEFINITIONS OF TERMS USED IN THIS AGREEMENT.
1.1 Authorization to Borrow: The form, substantially in the form of
Exhibit A attached hereto and made a part hereof, which is submitted to Lender
by Borrower when a disbursement of Loan proceeds is requested.
1.2 Borrower's Interest: The rate of interest to be paid to Lender in
respect to the Loan as set forth in the Note.
1.3 Default Interest: That rate of interest specified in the Note which
shall be in effect in the event of default hereunder.
1.4 Environmental Indemnity: The unsecured environmental indemnity
agreement executed in favor of Lender in the form attached hereto as Exhibit B.
1.5 Financial Statements: Financial statements of the Borrower and such
other entity required by Lender including operating statements, balance sheets
and such other financial reports that Lender may require.
1.6 Gibraltar Property: The real property legally described in the
Gibraltar Trust Deed and the Improvements thereon commonly known as 160
Gibraltar Court, Sunnyvale, California, as described more particularly in the
Gibraltar Trust Deed.
1.7 Gibraltar Trust Deed. The Deed of Trust, Security Agreement and
Fixture Filing (With Assignment of Rents and Leases) in the form attached hereto
as Exhibit C in favor of Lender encumbering the Gibraltar Property and executed
to secure the Note and the other Loan Documents.
1.8 Governmental Authority: The authority of the United States, the
State in which the Property is located, any political subdivision thereof, any
city and any governmental or quasi-governmental agency, department, commission,
board, bureau or instrumentality of any of them, or any court, administrative
tribunal, or public utility.
1.9 Governmental Requirements: Any present or future law, ordinance,
order, rule or regulation of a Governmental Authority applicable to Borrower or
the construction, maintenance, use, operation or sale of the Property.
1.10 Improvements: All buildings, structures and other improvements now
or in the future located or to be constructed on the Gibraltar Property and/or
the Java Property.
1.11 Java Property: The real property legally described in the
Gibraltar Trust Deed and the Improvements thereon commonly known as 350 Java
Drive, Sunnyvale, California, as described more particularly in the Java Trust
Deed.
1.12 Java Trust Deed. The Deed of Trust, Security Agreement and Fixture
Filing (With Assignment of Rents and Leases) in the form attached hereto as
Exhibit D in favor of Lender encumbering the Java Property and executed to
secure the Note and the other Loan Documents.
1.13 Litigation Amount: The lesser of (a) Two Hundred Fifty Thousand
Dollars ($250,000) and (b) the amount by which the litigation damages
recoverable by the claimant would exceed any insurance coverage of Borrower,
excluding any deductibles or self insured retentions.
1.14 Loan: The amount evidenced by the Note and described in Paragraph
2 hereof.
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1.15 Loan Documents: This Agreement, the loan documents and instruments
listed in Paragraph 4.1 of this Agreement, and all documents given to Lender
from time to time to secure the Loan, provided, however, that the Environmental
Indemnity and the Revolving Credit Loan Documents referred to in Paragraph 1.23
below are not Loan Documents and Borrower's obligations thereunder are not
secured by the Trust Deeds.
1.16 Loan Fee: The fee to be paid to Lender in consideration for Lender
agreeing to make the Loan and entering into this Agreement, which fee shall not
be subject to reduction or be refundable under any circumstances, and which fee
is the sum of Thirty Thousand and No/100 Dollars ($30,000), payable upon
execution of this Agreement.
1.17 Loan-to-Value Ratio: Seventy percent (70%).
1.18 Note: The Promissory Note Secured by Deed of Trust of even date in
the form attached hereto as Exhibit E, executed by Borrower as maker and payable
to Lender or order, in the principal amount of the Loan.
1.19 Permitted Liens: (a) The liens and encumbrances against the
Property approved in writing by Lender pursuant to Paragraph 7.2 hereof; (b)
liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings, provided the same have no priority over Lender's security
interests; (c) liens (i) upon or in any equipment acquired or held by Borrower
and located on the Property to secure the purchase price of such equipment or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment, or (ii) existing on such equipment at the time of its
acquisition, provided that the lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment; and (d)
liens for providers of work and materials for the Property so long as the
aggregate amount of such liens does not exceed at any time the sum of Three
Hundred Thousand Dollars ($300,000) and so long as such liens do not have
priority over Lender's liens and security interests.
1.20 Personal Property: That personal property described in the Trust
Deeds and which is collateral for the Loan.
1.21 Project: The Property, the Improvements and the Personal Property.
1.22 Property: The real property legally described in the Trust Deeds
and the Improvements thereon commonly known as 350 Java Drive, Sunnyvale,
California (the "Java Property"), and 160 Gibraltar Court, Sunnyvale, California
(the "Gibraltar Property").
1.23 Recordation: The act of recording the Trust Deeds in the official
records of the County in which the Property is situated.
1.24 Revolving Credit Loan Documents: The revolving line credit
facility in the maximum amount of Six Million Dollars ($6,000,000), as evidenced
by that certain Business Loan Agreement, dated May 21, 1992, as amended (the
"Business Loan Agreement"), and Promissory Note, dated May 21, 1992, as amended
by various amendment and modification agreements dated December 23, 1992, March
31, 1993, June 2, 1993, June 27, 1994, January 11, 1995, July 3, 1995, September
27, 1995, and January 25, 1996, and as may subsequently be amended by the
written agreement of Borrower and Lender.
1.25 Title Insurer: Chicago Title Insurance Company or such other
issuer of the title insurance policies required by Paragraph 7.2.
1.26 Trust Deeds: The Java Trust Deed and the Gibraltar Trust Deed.
2. LOAN.
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2.1 The term "Loan" as used means the amount computed as the seventy
percent (70%) of the lesser of (i) the aggregate appraised value of the
Property, as determined by the appraisal completed by Hulberg & Associates,
dated March 18, 1996, or (ii) the actual purchase price paid by Borrower
(including any amounts of indebtedness assumed by Borrower) to acquire the
Property, exclusive of closing costs. Notwithstanding the foregoing, in no event
shall the principal amount of the Loan exceed Six Million and No/100 Dollars
($6,000,000).
2.2 Lender and Borrower agree that Lender shall make the Loan to
Borrower and Borrower shall accept the Loan upon the terms, conditions,
covenants, representations and warranties contained herein. All Loan funds
disbursed hereunder shall be evidenced by the Note, shall bear interest at the
rate of Borrower's Interest or Default Interest, as the case may be, and shall
be secured by the Trust Deeds.
2.3 All principal and accrued unpaid interest under the Loan shall be
due and payable on June 30, 2001.
3. LOAN PROCEEDS; ADVANCES. Upon Recordation, Lender is authorized to disburse
all or such portion of the Loan to Borrower pursuant to the instructions given
by Borrower to Lender in the Authorization to Borrow in the form attached as
Exhibit A hereto and made a part hereof. Subject to the terms and conditions
hereof, Borrower shall be entitled to receive up to four (4) advances of the
Loan, provided each advance shall be for an amount not less than Two Hundred
Fifty Thousand Dollars ($250,000) and provided further that the aggregate amount
of all advances shall not exceed the amounts specified in Paragraph 2.1 hereof.
Subject to all terms and conditions hereof, Borrower may request advances of the
Loan during the period (the "Disbursement Period") starting on the date this
Agreement is executed by Borrower and delivered to Lender and ending on June 30,
1996. From and after the expiration of the Disbursement Period, Lender shall
have no obligation whatsoever to make advances of the Loan.
4. CONDITIONS PRECEDENT TO RECORDATION. Lender shall have no obligation to make
advances of the Loan and the Recordation shall not occur until each of the
following conditions precedent shall have been satisfied or waived in writing by
Lender:
4.1 Lender shall have received:
4.1.1 the executed Note;
4.1.2 the executed Trust Deeds;
4.1.3 the executed Environmental Indemnity;
4.1.4 executed UCC-1 financing statements;
4.1.5 UCC-3 search for Borrower;
4.1.6 the Financial Statements;
4.1.7 original insurance policies or certificates thereof
for the insurance required by Paragraph 7.5 hereof;
4.1.8 Preliminary title report issued by Title Insurer
showing the condition of title to the Property with
the Property's legal description and a copy of all
documents listed as exceptions to said Report;
4.1.9 evidence satisfactory to Lender that the current
use of the Property complies with the applicable
zoning ordinances;
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4.1.10 an architectural/engineering report from an
architectural/engineering firm acceptable to
Lender, which report shall be in form and content
acceptable to Lender, assessing the physical
condition and structural integrity of the
Improvements; and
4.1.11 a "phase one" environmental assessment, in form and
substance satisfactory to Lender ("Environmental
Assessment") prepared by a qualified licensed
environmental consultant acceptable to Lender
confirming the absence of hazardous or toxic
materials in, on, under or around the Property. The
Environmental Assessment shall, at a minimum,
include a description of current and former uses of
the Property and the results of an inspection of
the Property and adjacent and neighboring property
sufficient to form a basis for a reasoned opinion
concerning the existence of, or potential for,
hazardous material contamination on or in the
vicinity of the Property. In the event the
Environmental Assessment indicates that the
Property may be affected by hazardous or toxic
materials, or is otherwise unsatisfactory to
Lender, in Lender's sole discretion, Lender may
require additional or further environmental
testing, inspection and/or assessment of the
Property.
4.1.12 A current ALTA/ACSM Land Title Survey of the
Property including dimensions, delineations and
locations of all easements thereon, satisfactory to
the Title Insurer if required by it and to Lender;
and
4.1.13 The following corporate formation documents:
(a) a certified copy of its Articles of Incor-
poration and by-laws and all amendments
thereof, as filed with the Office of the
Secretary of State;
(b) a Certificate of Status;
(c) certified Resolution of Board of Directors
of Borrower authorizing the consummation of
the transactions contemplated hereby and
providing for the execution of a written
direction of payment if Loan proceeds are to
be paid to a person other than Borrower; and
(d) a Certificate of Secretary and Incumbency.
4.2 To comply with California legislation, the title company handling
funds in an escrow capacity is required to have deposited into its escrow
depository account before recording a transaction immediately available funds
representing disbursements to be made by it.
5. CONDITIONS PRECEDENT TO DISBURSEMENT. Prior to any disbursement of the Loan
Proceeds, the following conditions shall have been satisfied:
5.1 The Title Insurer shall have issued or agreed to issue the title
policies described in Paragraph 7.2 hereof, naming Lender as insured to the
extent of the Loan amount.
5.2 Lender shall have received a Loan Disbursement Authorization
executed by Borrower.
5.3 UCC-1 Financing Statements shall have been filed with the Secretary
of State for the state where the Property is situated describing the Personal
Property.
5.4 Lender shall have been furnished with a Certificate issued by the
filing officer of the Secretary of State for the state in which the Property is
situated showing Lender's Financing Statement as prior to all other Financing
Statements in Borrower's name relative to the Personal Property.
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5.5 The representations and warranties of Borrower made in Paragraph 6
hereof shall be true and correct on and as of the date of the disbursement with
the same effect as if made on such date.
5.6 No default or Event of Default shall have occurred hereunder or
under any other Loan Document, and no event that with the passage of time, the
giving of notice, or both, shall have occurred hereunder or under any other Loan
Document.
5.7 Borrower shall have paid the fees and expenses of Lender's outside
counsel, as described in Paragraph 7.9 below, as well as any title insurance
fees and escrow fees and other costs and expenses as specified in Exhibit "A"
hereto incurred or payable by Lender or Borrower in connection herewith.
5.8 For all advances made after Recordation, Lender shall have been
provided by the Title Insurer with a CLTA 122 endorsement or such other
endorsement to Lender's Title Policies required by Paragraph 7.2 hereof,
insuring the priority of all advances of the Loan made by Lender, subject only
to those exceptions to title approved in writing by Lender.
6. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower represents and warrants,
which representations and warranties shall survive any investigations,
inspections or inquiries made by Lender or any of its representatives or the
disbursement of Loan proceeds hereunder, that:
6.1 Corporate Status: Borrower is duly organized and validly existing,
in good standing under the laws of the state of its incorporation, has stock
outstanding which has been duly and validly issued, is qualified to do business,
and is in good standing under the laws of the state in which the Property is
situated, with full power and authority to consummate the transactions
contemplated hereby.
6.2 Financial Statements: The Financial Statements heretofore delivered
to Lender are true and correct in all material respects, have been prepared in
accordance with generally accepted accounting practice, fairly present the
respective financial conditions of the subjects thereof as of their respective
dates; no materially adverse change has occurred in the financial conditions
reflected therein since their respective dates and no additional borrowings have
been made by Borrower or any guarantor of the Loan since the date thereof other
than the borrowing contemplated hereby or approved by Lender.
6.3 Litigation: There are no actions, suits or proceedings in which the
damages alleged or recoverable may exceed the Litigation Amount pending or, to
the knowledge of Borrower, threatened against or affecting it, the Property or
any guarantor of the Loan, or involving the validity or enforceability of the
Trust Deeds or the priority of the lien thereof, at law or in equity, or before
or by any Governmental Authority. To Borrower's knowledge, it is not in default
with respect to any order, writ, injunction, decree or demand of any court or
any Governmental Authority.
6.4 No Breach: The consummation of the transaction hereby contemplated
and performance of this Agreement and the other Loan Documents and the
Environmental Indemnity will not result in any breach of, or constitute a
default under any mortgage, deed of trust, lease, bank loan or security
agreement, corporate charter, by laws or other instrument to which the Borrower
or any guarantor of the Loan is a party or by which it may be bound or affected.
6.5 Other Liens: Borrower has made no contract or arrangement of any
kind, the performance of which by the other party thereto would give rise to a
lien on the Property, other than Permitted Liens.
6.6 No Default: There is no default or Event of Default on the part of
Borrower under this Agreement, any other Loan Document, or the Environmental
Indemnity and no event has occurred and is continuing which with notice or the
passage of time or either would constitute a default or Event of Default under
any thereof.
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6.7 CC&R's; Zoning: It has examined, is familiar with, and the
Improvements in all respects conform to and comply in all material respects
with, all covenants, conditions, restrictions, reservations and zoning
ordinances affecting the Property.
6.8 Title to Personal Property: Any personal property required by
Lender as additional security for the Note is vested in Borrower free and clear
of all liens, encumbrances and adverse claims and that the security interest of
Lender in the personal property shall be a first lien thereon.
6.9 Other Financing: It has not received other financing for the
Property and/or the Improvements except as has been specifically disclosed to
and approved by Lender prior to Recordation.
6.10 Borrower's Powers; Enforceability: Borrower has full power and
authority to execute this Agreement, the Note, and the other Loan Documents and
to undertake and consummate the transactions contemplated hereby and thereby,
and to pay, perform and observe its conditions, covenants, agreements and
obligations herein and therein contained. Each of the Loan Documents, the
Environmental Indemnity and the Guaranty, if any, when executed and delivered to
Lender, will constitute a legal, binding and valid obligation, enforceable in
accordance with its terms.
6.11 Finder's Fees: Borrower hereby warrants and represents that it has
not dealt with any person, firm or corporation who is or may be entitled to any
finder's fee, brokerage commission, loan commission or other sum in connection
with the execution of this Agreement, consummation of the transactions
contemplated hereby and the making of the Loan by Lender to Borrower, and
Borrower does hereby indemnify and agree to hold Lender harmless from and
against any and all loss, cost, liability or expense, including reasonable
attorney's fees Lender may suffer or sustain should such warranty or
representation prove inaccurate in whole or in part.
6.12 Accuracy: All documents, reports, instruments, papers, information
and forms of evidence delivered to Lender by Borrower with respect to the Loan
are in all material respects accurate and correct, are in all material respects
complete insofar as completeness may be necessary to give Lender true and
accurate knowledge of the subject matter thereof, and do not contain any
material misrepresentations or omissions. Lender may rely on such documents,
reports, instruments, papers, information and forms of evidence without
investigation or inquiry, and any payment made by Lender in reliance thereon
shall be a complete release in its favor of all sums so paid.
7. BORROWER'S COVENANTS. Borrower covenants and agrees until the full and final
payment of the Loan, unless Lender waives compliance in writing, that it will
7.1 Inspection: Permit Lender, or its representatives (and Lender shall
have the right) to enter upon the Property and inspect the Property and the
Improvements to determine Borrower's compliance with the Loan Documents, and
will cooperate with Lender in making its inspections. Inspections by Lender
shall be for the purpose of protecting the security of Lender and preserving
Lender's rights under the Loan Documents. No inspection shall be deemed to
constitute a waiver of any default or Event of Default of Borrower.
7.2 Title Insurance: Deliver or cause to be delivered to Lender at
Recordation or within a reasonable time thereafter the following (collectively
the "Title Policies"):
7.2.1 An ALTA lender's policies of title insurance or its
equivalent (Form 1 extended coverage or equivalent) with a liability limit of
not less than the face amount of the Note, issued by Title Insurer, insuring
Lender's interest under the Java Trust Deed as a valid first lien on the Java
Property, insuring the validity and the priority of the Java Trust Deed, subject
only to those exceptions to title approved in writing by Lender, together with
CLTA endorsements 100, 103.3, 103.7, 111.5, 111.11 and 116, together with an
"aggregation" or "tie in" endorsement with the Gibraltar Title Policy (as
defined below) for a total coverage amount of $6,000,000, and an endorsement
deleting the "creditor's rights" exception (item 7 of the exclusions from
coverage) and such reinsurance or coinsurance agreements and such other
endorsements to said policy as Lender may require (the "Java Title Policy"); and
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7.2.2 An ALTA lender's policy of title insurance or its
equivalent (Form 1 extended coverage or equivalent) with a liability limit of
not less than the face amount of the Note, issued by Title Insurer, insuring
Lender's interest under the Gibraltar Trust Deed as a valid first lien on the
Gibraltar Property, insuring the validity and the priority of the Gibraltar
Trust Deed, subject only to those exceptions to title approved in writing by
Lender, together with CLTA endorsements 100, 103.7, 111.5, 111.11 and 116, and
together with an "aggregation" or "tie in" endorsement with the Java Title
Policy for a total coverage amount of $6,000,000 and an endorsement deleting the
"creditor's rights" exception (item 7 of the exclusions from coverage) and such
reinsurance or coinsurance agreements and such other endorsements to said policy
as Lender may require (the "Gibraltar Title Policy").
After Recordation, Borrower shall, at its own cost and expense,
maintain the Trust Deeds as a first lien on the Property. Borrower shall furnish
to Title Insurer surveys and any other information required to enable it to
issue the Title Policies and endorsements. All costs and expenses incurred in
connection with obtaining the Title Policies (including all endorsements
thereto) shall be paid by Borrower.
7.3 Personal Property Installation: Not install materials, personal
property, equipment, or fixtures subject to any security agreement or other
agreement or contract wherein the right is reserved to any person, firm or
corporation to remove or repossess any such material, equipment or fixtures, or
whereby title to any of the same is not completely vested in Borrower at time of
installation, except with Lender's written consent (which shall not be
unreasonably withheld by Lender), excluding trade fixtures.
7.4 Insurance: Prior to Recordation, procure and deliver to Lender and
thereafter maintain a policy or policies of insurance in form and content and by
an insurer or insurers satisfactory to Lender, including a clause giving Lender
a minimum of thirty (30) days' notice if such insurance is canceled, as follows:
(i) hazard insurance in an amount not less than the face amount of the Note or
the full insurable value of the Improvements on a replacement cost basis,
whichever amount is lesser, with the normal conditions including fire, extended
coverage, vandalism, malicious mischief, and a lender's loss payable endorsement
naming Lender as loss payee; (ii) comprehensive liability insurance on an
"occurrence" basis, indicating coverage satisfactory to Lender, and naming
Lender as an additional insured; (iii) any additional or different coverage as
may be specified in Lender's insurance letter; and (iv) any and all additional
insurance that Lender in its reasonable judgment may from time to time require
against insurable hazards which at the time are commonly insured against in the
case of property similarly situated. At Lender's request, Borrower shall supply
Lender with a counterpart original of such insurance policy.
7.5 Maintain Records: Keep and maintain full and accurate books,
accounts and records of its operations according to generally accepted
accounting principles and practices for its type of business. All records
relating to the income, expenses, management, operation, maintenance, repair,
construction, alteration of or addition to the Property shall be kept at the
principal business office of Borrower for not less than three (3) years after
delivery of the annual statement required to be delivered pursuant to Paragraph
7.7. Borrower shall permit Lender and its representatives or agents to audit
and/or examine from time to time upon reasonable written notice, all books and
accounts and records pertaining to the Property and to make extracts therefrom
and copies thereof. Borrower shall make all such books and records specified in
the notice available at the time specified in the notice and at the place where
the records are kept, or at the election of Lender, at Lender's office. If
Borrower defaults in any obligations under this Agreement or the Loan Documents,
Lender may perform any of the acts authorized by this paragraph at the sole cost
of Borrower. Borrower shall promptly reimburse Lender for its costs and such
costs shall be secured by the Trust Deeds.
7.6 Financial Information: Without limiting Borrower's obligations to
furnish financial information or otherwise comply with reporting obligations
under the Revolving Credit Loan Documents, furnish to Lender at least annually,
within ninety (90) days after the end of its fiscal year, or more frequently if
requested by Lender, a full and complete financial statement concerning income,
expenses, assets, and liabilities applicable or attributable to the Property and
the operations thereof. Such statement shall be prepared in accordance with
generally accepted accounting principles and shall be certified as true,
complete and correct by Borrower.
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7.7 Taxes: Pay and discharge all lawful claims, including taxes,
assessments, and governmental charges or levies imposed upon it or its income or
profits or upon any properties belonging to it prior to the date upon which
penalties attach thereto; provided that Borrower shall not be required to pay
any such tax, assessment, charge, or levy, the payment of which is being
contested in good faith and by proper proceedings.
7.8 Notification of Default: Promptly notify Lender in writing of the
occurrence of any event of default under this Agreement, the Note, the Trust
Deeds or the Environmental Indemnity or of any facts then in existence which
would become an event of default hereunder or thereunder upon the giving of
notice or the lapse of time or both.
7.9 Payment of Costs: Pay all costs and expenses required to satisfy
the conditions of this Agreement. Without limitation of the generality for the
foregoing, Borrower will pay:
7.9.1 all taxes and recording expenses, including stamp taxes,
if any; and
7.9.2 all fees and expenses of Lender's counsel in connection
with the negotiation, preparation, administration and enforcement of this
Agreement and the Loan Documents, as set forth on Exhibit "A" hereto.
7.10 No Conveyance or Encumbrance: Not to sell, convey, transfer,
dispose of or further encumber the Property or the Improvements or any part
thereof or any interest therein or enter into a lease covering all or any
portion thereof or an undivided interest therein, either voluntarily,
involuntarily or otherwise, or enter into an agreement so to do without the
prior written consent of Lender being first had and obtained, provided that
Borrower shall be entitled without the prior written consent of Lender to enter
into a lease of the Property in Borrower's ordinary course of business on
commercially reasonable terms for a term not exceeding five (5) years. All
easements, declarations of covenants, conditions and restrictions, and private
or public dedications affecting the Property shall be submitted to Lender for
its approval and such approval shall be obtained prior to the execution or
granting of any thereof by Borrower, accompanied by a drawing or survey showing
the precise location of each thereof.
7.11 Loan-to-Value Ratio: Maintain the ratio of (i) the then
outstanding principal balance of the Loan to (ii) the value of the Property at
less than or equal to the Loan-to-Value Ratio. Lender may from time to time
determine the value of the Property using a method which (a) conforms to
then-current regulatory requirements, (b) is determined by Lender to be
reasonable and appropriate under the circumstances, (c) takes into account
then-current market conditions, including vacancy factors, estimated date of
stabilization, rental rates and concessions, and (d) assumes the Property is to
be sold for its highest and best use in a transaction between a willing buyer
and a willing seller, neither acting under compulsion or duress, all as
determined by Lender. If Lender at any time determines (based on a written
appraisal prepared by an appraiser in accordance with the standards of the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended
("FIRREA")) that the Loan-to-Value Ratio has been exceeded, Lender may, at
Lender's option, make written demand on Borrower to repay principal of the Loan
in an amount sufficient to reduce the then outstanding principal balance of the
Loan so that the Loan-to- Value Ratio is not exceeded. The cost of any such
appraisal shall be paid by Lender, provided that if an Event of Default has
occurred and is continuing, the cost of such appraisal shall be paid by
Borrower. Borrower shall make any such payment of principal within fifteen (15)
days after delivery of such demand by Lender.
7.12 Compliance with Governmental Requirements: Comply promptly with
any Governmental Requirement. Within ten (10) days after Borrower's receipt of
any governmental permits, approvals or disapprovals, Borrower shall deliver
copies of all such matters to Lender.
7.13 Satisfy Conditions: Cause all conditions hereof to be satisfied at
the time and in the manner herein provided.
7.14 Furnishing Notices: Borrower shall promptly furnish Lender with
copies, or notify Lender in writing, of the following:
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7.14.1 any litigation affecting Borrower or any guarantor of
the Loan, or if Borrower is a partnership, any general partner of Borrower,
where the amount claimed is in excess of the Litigation Amount;
7.14.2 any communication, whether written or oral, that
Borrower may receive from any governmental, judicial or legal authority, giving
notice of any claim or assertion that the Improvements fail in any respect to
comply with any Governmental Requirements, or of any dispute which may exist
between Borrower and any governmental, judicial or legal authority that may
adversely affect Borrower, the Property or the Project;
7.14.3 any material adverse change in Borrower's or any
guarantor's financial condition or operations or in the physical condition of
the Property and if Borrower is a partnership, in the financial condition or
operation of its general partner(s);
7.14.4 any filings (with true copies thereof) with any
Governmental Authority regarding or pursuant to any law related to Hazardous
Materials (as defined in the Trust Deeds) or the environment, provided that
Borrower shall not be required to provide notice of or copies of any such
filings relating to the transportation, storage or handling of Hazardous
Materials in the ordinary course of Borrower's business except upon Lender's
written request;
7.14.5 any proceeding or inquiry by any Governmental Authority
(including, without limitation, the California State Department of Health
Services) with respect to the presence of any Hazardous Materials on the
Property or the migration thereof from or to other property;
7.14.6 all material claims made by or notices received from
any third party against Borrower or the Property relating to any loss or injury
resulting from any Hazardous Materials;
7.14.7 Borrower's discovery of any occurrence or condition on
any real property adjoining or in the vicinity of the Property or any part
thereof to be subject to any restriction on the ownership, occupancy,
transferability or use of the Property under any Hazardous Materials Laws;
7.14.8 any material change in the organization or management
of Borrower or in the nature of its business; or
7.14.9 any change in Borrower's name, any reincorporation of
Borrower under the laws of a jurisdiction other than that under which Borrower
currently is incorporated, or any reorganization of Borrower as a partnership or
limited liability company.
7.15 Financial Covenants. Comply at all times with the terms and
provisions of the paragraph of the Business Loan Agreement entitled "Financial
Covenants", including without limitation all covenants relative to the current
ratio, quick ratio, minimum tangible net worth, profitability, and other
covenants, whether negative or affirmative in nature, relating to the financial
condition of Borrower, as amended from time to time.
8. DEFAULT. At the option of Lender, the following shall constitute events of
default hereunder (including, if Borrower consists of more than one person, the
occurrence of any of such events which respect to any one or more of said
persons) (in each case an "Event of Default" and, collectively, "Events of
Default"):
8.1 Borrower's failure in the performance of any material covenant,
condition or agreement set forth herein, in the Trust Deeds, in the Note or in
any other Loan Documents (other than a failure referred to in Paragraphs 8.2
through 8.11, inclusive, of this Agreement) that is not fully cured within
fifteen (15) days after the first to occur of (a) the date Borrower or any
officer of Borrower learns of the occurrence of such failure, or (b) Borrower or
any officer of Borrower receives written notice thereof.
8.2 Borrower's failure to pay the principal of, or any interest on, any
indebtedness evidenced by the Note or the other Loan Documents, as and when such
amounts become due and payable.
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8.3 Any failure, breach, or default in the performance of the covenants
referred to in Paragraph 7.15 hereof.
8.4 Borrower voluntarily suspends the transaction of business or there
is an attachment, execution or other judicial seizure of any portion of
Borrower's assets and such seizure is not discharged within ten (10) days.
8.5 Borrower becomes insolvent or unable to pay its debts as they
mature or makes an assignment for the benefit of creditors.
8.6 Borrower files or there is filed against Borrower a petition to
have Borrower adjudicated a bankrupt or a petition of reorganization or
arrangement under any law relating to bankruptcy unless, in the case of a
petition filed against Borrower, the same is dismissed within sixty (60) days.
8.7 Borrower applies for or consents to the appointment of a receiver,
trustee or conservator for any portion of Borrower's property or such
appointment is made without Borrower's consent and is not vacated within sixty
(60) days.
8.8 Any representation by Borrower to Lender concerning Borrower's
financial condition or credit standing or any representation or warranty
contained herein proves to be false or misleading.
8.9 Default by Borrower on payment of any other debt owed to Lender,
including without limitation the indebtedness evidenced by the Revolving Credit
Loan Documents, or the occurrence of any breach, default or event of default
under the Revolving Credit Loan Documents.
8.10 The imposition, voluntary or involuntary, of any lien or
encumbrance upon the Property (other than Permitted Liens) without Lender's
written consent or unless an adequate counter bond is provided and such lien is
accordingly released within ten (10) days of the imposition of such lien.
8.11 The occurrence of any Event of Default enumerated in Paragraphs
8.4, 8.5, 8.6, 8.7, 8.8, 8.9 or 8.10 hereof with respect to any guarantor of the
Loan.
9. REMEDIES. If any of the Events of Default set forth in Paragraph 8 occur,
then Lender, in addition to its other rights hereunder, may at its option,
without prior demand or notice:
9.1 Declare the Note immediately due and payable.
9.2 Proceed as authorized by law to satisfy the indebtedness of
Borrower to Lender and in that regard, Lender shall be entitled to all of the
rights, privileges and benefits contained in the Trust Deeds or other Loan
Documents.
10. SECURITY INTEREST. Borrower does hereby give and grant to Lender a security
interest in all funds and deposits of Borrower on deposit at Lender or any
branch of Lender, as additional security for the obligations of Borrower
contained in the Note, Trust Deeds and the other Loan Documents.
11. RELEASE AND INDEMNITY. Borrower agrees to release and indemnify, defend and
hold Lender harmless from and against all liabilities, claims, actions, damages,
costs and expenses (including all reasonable legal fees and expenses of Lender's
counsel) arising out of or resulting from Borrower's failure to satisfy any of
the Governmental Requirements; Lender's performance of any act permitted under
the Loan Documents (excluding Lender's active negligence or willful misconduct);
breach of any representation or warranty made or given by Borrower to Lender;
breach of any obligation of Borrower contained in any of the Loan Documents; or
any claim or cause of action of any kind by any party that Lender is liable for
any act or omission committed or made by Borrower or by its employees, agents or
contractors in connection with the ownership or operation of the Property,
whether on account of any theory of derivative liability, comparative negligence
or otherwise. Upon demand by
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Lender, Borrower shall defend any action or proceeding brought against Lender
arising out of or alleging any claim or cause of action covered by this
indemnity, all at Borrower's own cost and by counsel to be approved by Lender in
the exercise of its reasonable judgment. In the alternative, Lender may elect to
conduct its own defense. The provisions of this Paragraph 11 shall survive the
termination of this Agreement, the repayment of the Loan, and the release of the
Property or any portion of it from the Trust Deeds.
12. GENERAL CONDITIONS.
12.1 No Waiver: No delay or omission of Lender in exercising any right
or power arising from any default by Borrower shall be construed as a waiver of
such default or as an acquiescence therein, nor shall any single or partial
exercise thereof preclude any further exercise thereof. Lender may, at its
option, waive any of the conditions herein and any such waiver shall not be
deemed a waiver of Lender's rights hereunder but shall be deemed to have been
made in pursuance of this Agreement and not in modification thereof. No waiver
of any event of default shall be construed to be a waiver of or acquiescence in
or consent to any preceding or subsequent event of default.
12.2 No Third Party Benefits: This Agreement is made for the sole
benefit of Borrower and Lender, their successors and assigns and no other person
or persons shall have any rights or remedies under or by reason of this
Agreement nor shall Lender owe any duty whatsoever to any claimant to exercise
any right or power of Lender hereunder or arising from any default by Borrower.
12.3 Notice: All notices or demands of any kind which either party may
be required or desire to serve upon the other under the terms of this Agreement
shall be in writing and shall be given by personal delivery, national overnight
courier, or by certified or registered United States mail, postage prepaid, to
the address for the party to be served set forth below its signature. Notices
shall be effective upon receipt or when proper delivery is refused. In case of
service by mail, notices shall be deemed complete at the expiration of the
second day after the date of mailing. If Borrower consists of more than one
person, service of any notice or demand of any kind by Lender upon any one of
said persons in the manner hereinabove provided shall be complete service upon
all. Either party may change its address for purposes of notice by giving notice
of such change of address to the other party in accordance with the provisions
of this paragraph.
12.4 Entire Agreement: This Agreement, the other Loan Documents and the
Environmental Indemnity constitute the entire understanding between the parties
regarding the matters mentioned in or incidental to this Agreement. The Loan
Documents and the Environmental Indemnity supersede all oral negotiations and
prior writings concerning the subject matter of the Loan Documents and the
Environmental Indemnity, including any inconsistent terms of Lender's loan
commitment to Borrower, if any; provided, however, that all obligations of
Borrower under the loan commitment (including, without limitation, the
obligation to pay any fees to Lender and any costs and expenses relating to the
Loan) shall survive the execution and delivery of this Agreement, the other Loan
Documents and the Environmental Indemnity, and any failure by Borrower to
perform any such obligation shall constitute an event of default hereunder. If
there is any conflict between the terms, conditions and provisions of this
Agreement and those of any other agreement or instrument, including any of the
Loan Documents or the Environmental Indemnity, the terms, conditions and
provisions of this Agreement shall prevail. This Agreement may not be modified,
amended or terminated except by a written agreement signed by each of the
parties hereto.
12.5 Documentation: In addition to the instruments and documents
mentioned or referred to herein, Borrower will, at its own cost and expense,
supply Lender with such other instruments, documents, information and data as
may be reasonably necessary for the purposes hereof, all of which shall be in
form and content reasonably acceptable to Lender.
12.6 Borrower Information: Borrower agrees that Lender may provide any
financial or other information, data or material in Lender's possession relating
to Borrower, the Loan, this Agreement, the Property or the Improvements, to
Lender's parent, affiliate, subsidiary, or participants without further notice
to Borrower.
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12.7 Not Assignable: Neither this Agreement nor any right of Borrower
to receive any sums, proceeds or disbursements hereunder, or under the Note may
be assigned, pledged, hypothecated, anticipated or otherwise encumbered by
Borrower without the prior written consent of Lender. Subject to the foregoing
restrictions, this Agreement shall inure to the benefit of Lender, its
successors and assigns and bind Borrower, its heirs, executors, administrators,
successors and assigns.
12.8 Time is of the Essence: Time is hereby declared to be of the
essence of this Agreement and of every part hereof.
12.9 Supplement to Loan Documents: The provisions of this Agreement are
not intended to supersede the provisions of the Trust Deeds or any other Loan
Document or the Environmental Indemnity but shall be construed as supplemental
thereto.
12.10 Joint and Several Obligations: If Borrower consists of more than
one legal entity, the obligations of Borrower shall be the joint and several
obligations of all such legal entities. When the context and construction so
require, all words used in the singular herein shall be deemed to have been used
in the plural and the masculine shall include the feminine and neuter and vice
versa.
12.11 Governing Law: This Agreement (and any and all disputes between
the parties arising directly or indirectly from the transaction or from the
lending relationship contemplated hereunder) shall be governed by and construed
in accordance with the laws of the State of California.
12.12 Governmental Regulations: If payment of the indebtedness secured
by the Trust Deeds is to be insured or guaranteed by any governmental agency,
Borrower shall comply with all rules, regulations, requirements and statutes
relating thereto or provided in any commitment issued by any such agency to
insure or guarantee payment of such indebtedness.
12.13 Collection Costs: Borrower shall pay promptly to Lender without
demand, with interest thereon from date of expenditure at the Default Interest
rate, reasonable attorneys' fees and all costs and other expenses paid or
incurred by Lender in enforcing or exercising its rights or remedies created by,
connected with or provided in this Agreement, and payment thereof shall be
secured by the Trust Deeds.
12.14 Survival: The representations, warranties and covenants herein
shall survive the disbursement of the Loan and shall remain in force and effect
until the Loan is paid in full.
12.15 Waiver of Jury Trial: BORROWER AND LENDER EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
13. SEVERABILITY. Invalidation of any one or more of the provisions of this
Agreement, the Trust Deeds, the other Loan Documents or the Environmental
Indemnity by judgment or court order shall in no way affect any of the other
provisions thereof which shall remain in force and effect.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
LENDER:
SILICON VALLEY BANK,
a California Banking Corporation
By: /s/ Mark Piper
-----------------------------------
Its: Vice President
-----------------------------------
Address:
1731 Embarcadero Road, Suite 220
Palo Alto, CA 94303
Attn: Mr. Mark Piper
BORROWER:
SPECTRIAN CORPORATION,
a California corporation
By: /s/ Edward A. Supplee, Jr.
-----------------------------------
Its: Vice President
-----------------------------------
By: ___________________________________
Its: ___________________________________
Address:
350 West Java Drive
Sunnyvale, CA 94089
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EXHIBIT A
AUTHORIZATION TO BORROW
(Exhibit A)
SPECTRIAN CORPORATION, A CALIFORNIA CORPORATION ("BORROWER"), HEREBY
REQUESTS AND DIRECTS THAT SILICON VALLEY BANK ("LENDER") DISBURSE LOAN PROCEEDS
IN THE AMOUNT OF $6,000,000 AS FOLLOWS:
1. To Santa Clara Land Title Company, for payment of title policy
premiums and/or endorsements and recording fees, the
approximate sum of $________________.
2. For payment of taxes, the sum of $_______________.
3. To Lender, for appraisal fees and other costs of processing
the Loan the approximate sum of $_____________.
4. To Lender, for payment of attorneys' fees and costs, the sum
of $_________________.
5. To Lender, for loan commitment fees, the sum of
$_____________________.
6. To Borrower, the sum of $6,000,000.
The undersigned authorized officer of Borrower hereby certifies that in
accordance with the terms and conditions of the Term Loan Agreement between
Borrower and Lender (the "Agreement"), (i) Borrower is in compliance with all
required covenants except as noted in the attachments hereto, if any, (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct in all material respects as of the date hereof, and (iii) Borrower is
not in default under the Agreement or under any other Loan Document (as defined
in the Loan Agreement).
BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND WARRANTS TO
LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND THAT THERE
HAS BEEN NO ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS DISCLOSED IN
BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS AUTHORIZATION IS
DATED AS OF MAY 15, 1996.
BORROWER LENDER
SPECTRIAN CORPORATION, SILICON VALLEY BANK,
a California corporation a California banking corporation
By: /s/ Edward A. Supplee, Jr. By: /s/ Mark Piper
------------------------------ -------------------------------
Its: Vice President Its: Vice President
------------------------------ -------------------------------
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EXHIBIT B
ENVIRONMENTAL INDEMNITY
THIS ENVIRONMENTAL INDEMNITY ("Indemnity") is entered into as of May
15, 1996, by Spectrian Corporation, a California corporation ("Indemnitor"), to
and for the benefit of Silicon Valley Bank and its successors, assigns and
participants, and the respective directors, officers, agents, attorneys, and
employees of each of the foregoing (collectively, "Lender").
W I T N E S S E T H:
A. Lender has agreed to make, among other loans, a loan to Indemnitor
in the original principal amount of up to Six Million and No/100 Dollars
($6,000,000) (the "Loan"). The Loan is evidenced by that certain Promissory Note
Secured by Deed of Trust of even date herewith, executed by Indemnitor, as maker
and payable to Lender, as holder (the "Note"). The repayment of the Note is
secured by, inter alia, (i) a Deed of Trust, Security Agreement and Fixture
Filing (With Assignment of Rents and Leases) (the "Java Deed of Trust") of even
date encumbering that certain real property described in Exhibit A attached
hereto (collectively, the "Java Property"), and (ii) a Deed of Trust, Security
Agreement and Fixture Filing (With Assignment of Rents and Leases) (the
"Gibraltar Deed of Trust") of even date encumbering that certain real property
described in Exhibit B attached hereto (collectively, the "Gibraltar Property").
The Java Deed of Trust and the Gibraltar Deed of Trust (collectively, the "Deeds
of Trust) are executed by Borrower, as trustor, in favor of Santa Clara Land
Title Company, as trustee, and name Lender as beneficiary. The Gibraltar
Property and the Java Property (collectively, the "Property") and the
improvements constructed thereon are referred to herein as the "Project." The
Note, the Deeds of Trust and any other document or agreement which now or
hereafter evidences and/or secures the Loan are collectively referred to herein
as the "Loan Documents."
B. As a result of the exercise of Lender's rights and remedies in
connection with the Loan transaction, Lender may hereafter become the owner of
the Project pursuant to a foreclosure sale or deed in lieu thereof or may
otherwise incur or suffer certain liabilities, costs, and expenses in connection
with the Project relating to Hazardous Substances (defined in Section 1(d)
below) which were located on the Property prior to the reconveyance of the
Project to Borrower or a foreclosure sale or deed in lieu thereof. Lender has
therefore made it a condition of making the Loan that this Indemnity be executed
and delivered by Indemnitor in order to protect Lender from any such
liabilities, costs and expenses and all other Post Transfer Environmental Losses
(defined in Section 1(g) below).
NOW, THEREFORE, in consideration of the foregoing and of Lender making
the Loan, and other valuable consideration, the receipt of which is hereby
acknowledged, Indemnitor hereby agrees as follows:
1. As used in this Indemnity, the following terms shall have the
following meanings:
(a) "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. ss.ss. 9601 et seq.), as
heretofore or hereafter amended from time to time.
(b) "Environmental Laws" means any and all present and future
federal, state and local laws (whether under common law, statute, rule,
regulation or otherwise), permits, and other requirements of governmental
authorities relating to the environment or to any Hazardous Substance or
Hazardous Substance Activity (including, without limitation, CERCLA and the
applicable provisions of the California Health and Safety Code and the
California Water Code).
(c) "Transfer" means (i) the reconveyance of either Deed of
Trust on repayment of the Loan or (ii) the transfer of title to all or any part
of the Property or the Project at a foreclosure sale
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under either Deed of Trust, either pursuant to judicial decree or the power of
sale contained in such Deed of Trust, or by deed in lieu of such foreclosure.
(d) "Hazardous Substance" or "Hazardous Substances" means (i)
any chemical compound, material, mixture or substance that is now or hereafter
defined or listed in, or otherwise classified pursuant to, any Environmental
Laws as a "hazardous substance," "hazardous material," "hazardous waste,"
"extremely hazardous waste," "infectious waste," "toxic substance," "toxic
pollutant" or any other formulation intended to define, list, or classify
substances by reason of deleterious properties, such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, or
"EP toxicity"; (ii) asbestos; and (iii) any petroleum, natural gas, natural gas
liquids, liquified natural gas, or synthetic gas usable for fuel (or mixtures of
natural gas and such synthetic gas).
(e) "Hazardous Substance Activity" means any actual, proposed
or threatened use, storage, holding, existence, release, emission, discharge,
generation, processing, abatement, removal, disposition, handling or
transportation (collectively, "Handling") of any Hazardous Substance from,
under, into or on the Property or the Project or surrounding property, excluding
any Handling of Hazardous Substances by Lender or its agents or employees.
(f) "Losses" means any and all losses, liabilities, damages,
judgments, assessments, penalties, costs and expenses, including, without
limitation, the following costs and expenses, all of which shall,
notwithstanding anything in this Indemnity or any applicable law to the
contrary, be due and payable by Indemnitee immediately upon presentation of
invoices evidencing any of the following: the reasonable fees and disbursements
of legal counsel, experts, engineering consultants, and accountants; compliance
with any third party agreements affecting the Property which are binding upon
Indemnitor; capital, operating and maintenance costs incurred in connection with
any investigation or monitoring of site conditions; and any clean-up,
containment, remedial, removal or restoration work required or performed in
connection with establishing or maintaining compliance with any Environmental
Laws.
(g) "Post Transfer Environmental Losses" means Losses suffered
or incurred by Lender following a Transfer, arising out of or as a result of:
(i) the occurrence, at any time prior to a Transfer, of any Hazardous Substance
Activity; (ii) any violation, at any time prior to such Transfer, of any
applicable Environmental Laws relating to the Property or the Project or to the
ownership, use, occupancy or operation thereof; (iii) any investigation,
inquiry, order, hearing, action, or other proceeding by or before any
governmental agency in connection with any Hazardous Substance Activity
occurring or allegedly occurring at any time prior to a Transfer; or (iv) any
claim, demand or cause of action, or any action or other proceeding, whether
meritorious or not, brought or asserted against Lender which directly or
indirectly relates to, arises from or is based on any of the matters described
in clauses (i), (ii), or (iii), or any allegation of any such matters. As used
in this definition, the phrase "at any time prior to a Transfer" includes (x)
the period prior to the time of Borrower's acquisition of the Property as well
as (y) the period between the time of Borrower's disposition of the Property or
the Project and the time of a Transfer (in the event that Borrower disposes of
the Property or the Project prior to a Transfer) as well as the period that
Borrower holds title to the Property.
2. Indemnitor hereby agrees to indemnify, defend, and hold harmless
Lender, from and against any and all Post Transfer Environmental Losses.
3. Indemnitor agrees that Lender may provide any financial or other
information, data or material in Lender's possession relating to Indemnitor, the
Borrower, the Loan, this Indemnity, the Property or the improvements, to
Lender's parent, affiliate, subsidiary, participants, without further notice to
Indemnitor.
4. Indemnitor shall have no liability hereunder prior to a Transfer,
and no claim may be made hereunder by Lender prior to a Transfer. This Indemnity
is given solely to protect Lender against Post Transfer Environmental Losses,
and not as additional security for, or as a means of repayment of, the Loan. The
obligations of Indemnitor under this Indemnity are independent of, and shall not
be measured
2
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or affected by (i) any amounts at any time owing under the Loan or secured by
either Deed of Trust; (ii) the sufficiency or insufficiency of any collateral
(including, without limitation, the Project) given to Lender to secure repayment
of the Loan; (iii) the consideration given by Lender or any other party in order
to acquire the Property or the Project, or any portion thereof; (iv) the
modification, expiration or termination of the Note or any other document or
instrument relating thereto; or (v) the discharge or repayment in full of the
Loan (including, without limitation, by amounts paid or by credit bid at a
foreclosure sale or by discharge in connection with a deed in lieu of
foreclosure). Notwithstanding the provisions of any document or instrument, none
of the obligations of the Indemnitor hereunder shall be in any way secured by
the lien of the Deeds of Trust or any other document or instrument securing the
Loan.
5. Indemnitor's obligations hereunder shall survive the sale or other
transfer of the Property or the Project prior to a Transfer. The rights of
Lender under this Indemnity shall be in addition to any other rights and
remedies of Lender against Indemnitor under any other document or instrument now
or hereafter executed by Indemnitor, or at law or in equity (including, without
limitation, any right of reimbursement or contribution pursuant to CERCLA), and
shall not in any way be deemed a waiver of any such rights.
6. All obligations of Indemnitor hereunder shall be payable on demand,
and any amount due and payable hereunder to Lender by any Indemnitor which is
not paid within thirty (30) days after written demand therefor from Lender with
an explanation of the amounts demanded shall bear interest from the date of such
demand at the default rate set forth in the Note.
7. Indemnitor shall pay to Lender all costs and expenses (including,
without limitation, the reasonable fees and disbursements of Lender's legal
counsel) incurred by Lender in connection with this Indemnity or the enforcement
hereof.
8. This Indemnity shall be binding upon Indemnitor, its
representatives, administrators, executors, successors and assigns and shall
inure to the benefit of and shall be enforceable by Lender and its successors,
endorsees and assigns, and to any transferee of the Property to whom Lender
specifically assigns this Indemnity. As used herein, the singular shall include
the plural and the masculine shall include the feminine and neuter and vice
versa, if the context so requires.
9. If this Indemnity is executed by more than one person or entity, the
liability of the undersigned hereunder shall be joint and several. Indemnitor
agrees that it shall have no right of contribution (including, without
limitation, any right of contribution under CERCLA) or segregation against any
other Indemnitor hereunder unless and until all obligations of Indemnitor have
been satisfied. Indemnitor further agrees that, to the extent the waiver of its
rights of segregation and contribution as set forth herein is found by a court
of competent jurisdiction to be void or voidable for any reason, any rights of
segregation or contribution of Indemnitor shall be junior and subordinate to the
rights of Lender against Indemnitor hereunder.
10. This Indemnity shall be governed by and construed in accordance
with the laws of the State of California.
11. Every provision of this Indemnity is intended to be severable. If
any provision of this Indemnity or the application of any provision hereof to
any third party or circumstance is declared to be illegal, invalid or
unenforceable for any reason whatsoever by a court of competent jurisdiction,
such invalidity shall not affect the balance of the terms and provisions hereof
or the application of the provision in question to any other party or
circumstance, all of which shall continue in full force and effect.
12. No failure or delay on the part of Lender to exercise any power,
right or privilege under this Indemnity shall impair any such power, right or
privilege, or be construed to be a waiver of any default or an acquiescence
therein, nor shall any single or partial exercise of such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege. No provision of this
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Indemnity may be changed, waived, discharged or terminated except by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
13. This Indemnity may be executed in any number of counterparts, each
of which shall be deemed an original and all of which shall constitute one and
the same agreement, with the same effect as if all parties had signed the same
signature page.
IN WITNESS WHEREOF, this Indemnity is executed as of the date first set
forth above.
INDEMNITOR:
SPECTRIAN CORPORATION, a California
corporation
By: /s/ Edward A. Supplee, Jr.
-----------------------------------
Its: VP
-----------------------------------
4
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EXHIBIT A
LEGAL DESCRIPTION
(JAVA DRIVE)
ALL THAT CERTAIN PROPERTY SITUATE IN THE CITY OF SUNNYVALE, COUNTY OF SANTA
CLARA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL ONE, AS SHOWN ON THAT PARCEL MAP FILED FOR RECORD IN THE OFFICE OF THE
RECORDER OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA ON MAY 25, 1984, IN
BOOK 529 OF MAPS, PAGE(S) 34.
ARB NO: 110-2-49.02 & 49.03
COMMONLY KNOWN AS:
350 JAVA DRIVE
SUNNYVALE, CALIFORNIA
5
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EXHIBIT B
LEGAL DESCRIPTION
(GIBRALTAR COURT)
ALL THAT CERTAIN PROPERTY SITUATE IN THE CITY OF SUNNYVALE, COUNTY OF SANTA
CLARA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL B, AS SHOWN ON THAT PARCEL MAP FILED FOR RECORD IN THE OFFICE OF THE
RECORDER OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA ON JANUARY 31, 1977,
IN BOOK 388 OF MAPS, PAGE(S) 32.
ARB NO: 110-2-49.08
COMMONLY KNOWN AS:
160 GIBRALTAR COURT
SUNNYVALE, CALIFORNI
6
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EXHIBIT C
RECORDING REQUESTED BY
SILICON VALLEY BANK
1731 EMBARCADERO ROAD, SUITE 220
PALO ALTO, CALIFORNIA 94303
ATTN: MR. MARK PIPER
AND WHEN RECORDED MAIL TO
Name SILICON VALLEY BANK
Street 1731 EMBARCADERO ROAD
Address SUITE 220
City PALO ALTO, CA 94303
State ATTN: MR. MARK PIPER
Zip
- --------------------------------------------------------------------------------
SPACE ABOVE THIS LINE FOR RECORDER'S USE
DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING
(WITH ASSIGNMENT OF RENTS AND LEASES)
ATTENTION: COUNTY RECORDER -- THIS INSTRUMENT COVERS GOODS
THAT ARE OR ARE TO BECOME FIXTURES ON THE PROPERTY DESCRIBED
HEREIN AND IS TO BE FILED OF RECORD IN THE RECORDS WHERE
DEEDS OF TRUST ON REAL ESTATE ARE RECORDED. ADDITIONALLY,
THIS INSTRUMENT SHOULD BE APPROPRIATELY INDEXED NOT ONLY AS A
DEED OF TRUST BUT ALSO AS AN ASSIGNMENT OF LEASES AND RENTS
AND AS A FINANCING STATEMENT COVERING GOODS THAT ARE, OR ARE
TO BECOME, FIXTURES ON THE PROPERTY DESCRIBED HEREIN. THE
MAILING ADDRESSES OF THE TRUSTOR (DEBTOR) AND THE BENEFICIARY
(SECURED PARTY) ARE SET FORTH BELOW.
THIS DEED OF TRUST SECURES A PROMISSORY NOTE BEARING INTEREST
AT A VARIABLE RATE.
This Deed of Trust, Security Agreement and Fixture Filing (With
Assignment of Rents and Leases) is made as of this 15th day of May, 1996, by
SPECTRIAN CORPORATION, a California corporation (hereinafter called "Trustor"),
whose address is 350 Java Drive, Sunnyvale, California 94089, to SANTA CLARA
LAND TITLE COMPANY, a corporation (hereinafter called "Trustee"), whose address
is 701 Miller Street, San Jose, California, 95110, for the benefit of Silicon
Valley Bank, a California banking corporation (hereinafter called
"Beneficiary"), whose address is 1731 Embarcadero Road, Suite 220, Palo Alto,
California, 94303.
Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to
Trustee, its successors and assigns, in Trust, with POWER OF SALE TOGETHER WITH
RIGHT OF ENTRY AND POSSESSION the following property (the "Trust Estate"):
(a) all that certain real property now or hereafter acquired, in the
City of Sunnyvale, County of Santa Clara, State of California (the "Land"),
commonly known as 160 Gibraltar Court, Sunnyvale, California, more particularly
described as set forth below:
ALL THAT CERTAIN PROPERTY SITUATE IN THE CITY OF SUNNYVALE, COUNTY OF
SANTA CLARA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
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PARCEL B, AS SHOWN ON THAT PARCEL MAP FILED FOR RECORD IN THE
OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA, STATE OF
CALIFORNIA ON JANUARY 31, 1977, IN BOOK 388 OF MAPS, PAGE(S)
32.
ARB NO: 110-2-49.08
(b) all buildings, structures and other improvements now or in the
future located or to be constructed on the Land (the "Improvements");
(c) all tenements, hereditaments, appurtenances, privileges, franchises
and other rights and interests now or in the future benefitting or otherwise
relating to the Land or the Improvements, including easements, rights-of-way,
development rights, mineral rights, water and water rights, pumps and pumping
plants and all shares of stock evidencing the same (the "Appurtenances," and
together with the Land and the Improvements, the "Real Property");
(d) subject to the assignment to Beneficiary set forth in Paragraph 11
below, all rents, issues, income, revenues, royalties and profits now or in the
future payable with respect to or otherwise derived from the Trust Estate or the
ownership, use, management, operation, leasing or occupancy of the Trust Estate,
including those past due and unpaid (the "Rents");
(e) all present and future right, title and interest of Trustor in and
to all inventory, equipment, fixtures and other goods (as those terms are
defined in Division 9 of the California Uniform Commercial Code (the "UCC"), and
whether existing now or in the future) now or in the future located at, upon or
about, or affixed or attached to or installed in, the Real Property, or used or
to be used in connection with or otherwise relating to the Real Property or the
ownership, use, development, construction, maintenance, management, operation,
marketing, leasing or occupancy of the Real Property, including furniture,
furnishings, machinery, appliances, building materials and supplies, generators,
boilers, furnaces, water tanks, heating, ventilating and air conditioning
equipment and all other types of tangible personal property of any kind or
nature, and all accessories, additions, attachments, parts, proceeds, products,
repairs, replacements and substitutions of or to any of such property (the
"Goods," and together with the Real Property, the "Property"); and
(f) all present and future right, title and interest of Trustor in and
to all accounts, general intangibles, chattel paper, deposit accounts, money,
instruments and documents (as those terms are defined in the UCC) and all other
agreements, obligations, rights and written materials (in each case whether
existing now or in the future) now or in the future relating to or otherwise
arising in connection with or derived from the Property or any other part of the
Trust Estate or the ownership, use, development, construction, maintenance,
management, operation, marketing, leasing, occupancy, sale or financing of the
Property or any other part of the Trust Estate, including (to the extent
applicable to the Property or any other portion of the Trust Estate) (i)
permits, approvals and other governmental authorizations, (ii) improvement plans
and specifications and architectural drawings, (iii) agreements with
contractors, subcontractors, suppliers, project managers, supervisors,
designers, architects, engineers, sales agents, leasing agents, consultants and
property managers, (iv) takeout, refinancing and permanent loan commitments, (v)
warranties, guaranties, indemnities and insurance policies, together with
insurance payments and unearned insurance premiums, (vi) claims, demands,
awards, settlements and other payments arising or resulting from or otherwise
relating to any insurance or any loss or destruction of, injury or damage to,
trespass on or taking, condemnation (or conveyance in lieu of condemnation) or
public use of any of the Property, (vii) license agreements, service and
maintenance agreements, purchase and sale agreements and purchase options,
together with advance payments, security deposits and other amounts paid to or
deposited with Trustor under any such agreements, (viii) reserves, deposits,
bonds, deferred payments, refunds, rebates, discounts, cost savings, escrow
proceeds, sale proceeds and other rights to the payment of money, trade names,
trademarks, goodwill and all other types of intangible personal property of any
kind or nature, and (ix) all supplements, modifications, amendments, renewals,
extensions, proceeds, replacements and substitutions of or to any of such
property (the "Intangibles").
Trustor further grants to Trustee and Beneficiary, pursuant to the UCC,
a security interest in all present and future right, title and interest of
Trustor in and to all Goods and Intangibles and all of the Trust Estates
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described above in which a security interest may be created under the UCC
(collectively, the "Personal Property"). This Deed of Trust constitutes a
security agreement under the UCC, conveying a security interest in the Personal
Property to Trustee and Beneficiary. Trustee and Beneficiary shall have, in
addition to all rights and remedies provided herein, all the rights and remedies
of a "secured party" under the UCC and other applicable California law. Trustor
covenants and agrees that this Deed of Trust constitutes a fixture filing under
Section 9313 and 9402(6) of the UCC.
FOR THE PURPOSE OF SECURING, in such order of priority as Beneficiary
may elect, (1) payment of an indebtedness in the sum of Six Million and No/100
Dollars ($6,000,000.00) evidenced by that certain Promissory Note Secured by
Deed of Trust (the "note" or the "promissory note") of even date, executed by
Trustor to the order of Beneficiary and any and all modifications, extensions or
renewals thereof, whether hereafter evidenced by said note or otherwise; (2)
payment of interest on said indebtedness according to the terms of said
promissory note; (3) payment of all other sums, with interest as herein
provided, becoming due or payable under the provisions hereof to Trustee or
Beneficiary; (4) due, prompt and complete observance, performance and discharge
of each and every condition, obligation, covenant and agreement contained
herein, or in said note, or in that certain Term Loan Agreement of even date
(the "Loan Agreement"), relative to any indebtedness evidenced by said note or
in any document or instrument evidencing, securing or pertaining to the
indebtedness evidenced by said note, excluding, however, any guaranty or
unsecured environmental indemnity ("Loan Documents") and all modifications,
renewals or extensions of any of the foregoing; and (5) payment of such
additional sums with interest thereon as may be hereafter borrowed from
Beneficiary, its successors or assigns by Trustor or the then record owner or
owners of the Trust Estate when evidenced by another promissory note or notes,
which are by the terms thereof secured by this Deed of Trust.
TO PROTECT AND MAINTAIN THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
AGREES:
(1) To pay, perform, observe and discharge each and every condition,
obligation, covenant and agreement for which this Deed of Trust has been given
as security as provided above.
(2) To keep the Property in good condition and repair; not to remove or
demolish any improvement thereon; to complete or restore promptly and in good
and workmanlike manner any improvement which may be constructed, damaged or
destroyed thereon and to pay when due all claims for labor performed and
materials furnished therefor; to comply with all laws affecting the Trust Estate
or requiring any alterations or improvements to be made thereon; not to commit
or permit waste thereof; to perform, in the event all or any portion of the
Trust Estate constitutes a leasehold estate belonging to Trustor, each and every
obligation of Trustor under the terms of the lease agreement relating to the
demise of such property; not to commit, suffer or permit any act upon the Trust
Estate in violation of law; to do all acts which from the character or use of
the Property may be reasonably necessary, the specific enumerations herein not
excluding the general.
(3) To fully insure, or cause to be insured, the Property against loss
or damage by fire, earthquake, flood, and such other risks as Beneficiary shall,
from time to time, require. Trustor shall carry public liability and other
insurance as Beneficiary may require. Trustor shall maintain all required
insurance in companies, amounts, coverages, deductibles, and forms satisfactory
to the Beneficiary and at least equal to that required on the date of this Deed
of Trust. Such insurance shall be carried in amounts not less than amounts
determined by the insurance company or Beneficiary to prevent the application of
co-insurance or similar clauses, or in such greater amounts as Beneficiary may
require. Neither Beneficiary nor Trustee, by reason of accepting, rejecting,
approving or obtaining insurance, shall incur any liability for (i) the
existence, nonexistence, form or legal sufficiency thereof, (ii) the solvency or
insolvency of any insurer, or (iii) the payment of losses. All property
insurance policies shall name Beneficiary as the primary loss payee, all
liability insurance policies shall name Beneficiary as an additional insured,
and all policies shall provide that they cannot be terminated as to Beneficiary
except upon thirty (30) days' prior written notice to Beneficiary. Trustor shall
deliver to Beneficiary the original of all such policies, or with Beneficiary's
consent certificates, together with receipts satisfactory to the Beneficiary,
evidencing payment of the premiums therefor.
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As of the date this Deed of Trust is recorded and continuously until
this Deed of Trust is fully reconveyed, the insurance policies shall conform to
the following requirements:
(a) All insurance policies must be underwritten by insurers with a
Best's rating of B+, VI or better;
(b) In the event all or any portion of the Real Property secured by
this Deed of Trust constitutes rental or non-residential property, Trustor shall
maintain a Commercial General Liability insurance policy, including broad form
coverages or their equivalents, with One Million Dollars ($1,000,000) combined
single limit coverage for bodily injury and property damage; provided, however,
if improvements similar to the Improvements secured hereby are generally insured
at higher limits of coverage, such higher limits shall be obtained. In all other
cases, Trustor shall maintain such liability insurance coverages as Beneficiary
may require from time to time;
(c) Trustor shall provide Beneficiary with additional property and
rental income insurance coverages as follows:
1. All risk coverage (including earthquake insurance) in the
amount of the full replacement cost of the Improvements;
2. A waiver of co-insurance endorsement or agreed value
endorsement (relative to casualty);
3. A replacement cost coverage endorsement (relative to
casualty);
4. A standard mortgage clause (438BFU or CP12-18) with
Beneficiary named as loss payee in the Declarations;
5. A waiver of subrogation clause;
6. To the extent that any portion of the Real Property
constitutes rental property, loss of rents coverage in an amount equal to at
least twelve (12) months of rentals from the Real Property secured hereby and
any expenses that are payable or reimbursable by tenants;
7. Flood insurance in an amount sufficient to provide full
replacement cost coverage of the Real Property in the event the Real Property is
located within any flood hazard area; and
8. Such other coverages as Beneficiary may request from time
to time.
The amount collected under any fire or other insurance policy may be applied by
Beneficiary upon any indebtedness secured hereby and in such order as
Beneficiary may determine, or at option of Beneficiary the entire amount so
collected or any part thereof may be released to Trustor. Such application or
release shall not cure or waive any default or notice of default hereunder or
invalidate any act done pursuant to such notice.
(4) To appear in and defend any action or proceeding purporting to
affect the security hereof or the rights or powers of Beneficiary or Trustee;
and to pay all costs and expenses, including cost of evidence of title and
attorney's fees in a reasonable sum, in any such action or proceeding in which
Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to
foreclose this Deed of Trust.
(5) To pay and discharge, at least ten days prior to delinquency, all
taxes of every kind and nature, including real and personal property taxes and
income, franchise, withholding, profits and gross receipts taxes, all general
and special assessments, including assessments on appurtenant water stock,
levies, permits, inspection and license fees, all water and sewer rents and
charges, and all other public charges whether of a like or different nature,
imposed upon or assessed against Trustor or the Trust Estate or any part thereof
or upon the revenues, rents, issues, income and profits thereof or upon this
Deed of Trust or the indebtedness now or
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hereafter secured hereby; when due, all encumbrances, charges and liens, with
interest, on the Trust Estate or any part thereof, which appear to be prior or
superior hereto or subject or subordinate hereto; all costs, fees and expenses
of this Trust; or, if and as required by Beneficiary, to pay to Beneficiary in
equal installments on the day on which monthly payments of principal and
interest are due under said note, sufficient funds (as estimated by Beneficiary
from time to time) to pay when due the next maturing taxes, assessments and
hazard insurance premiums. When so provided with sufficient funds, Beneficiary
shall pay such taxes, assessments and hazard insurance premiums before
delinquency. Any excess over the amount required for such purposes shall be held
for future use, applied to any indebtedness hereby secured or refunded to
Trustor at Beneficiary's option.
To promptly and completely observe, perform, and discharge each and
every condition, obligation, covenant and agreement affecting the Trust Estate,
whether the same is prior and superior or subject and subordinate hereto
including, if the security hereunder is or will be a condominium, community
apartment or part of a planned development, each and every provision to be
performed by Trustor under any Declaration of Covenants, Conditions and
Restrictions pertaining to the condominium, community apartment or planned
development project and, upon written request of Beneficiary, to pay maintenance
charges, if the same have not been paid or legal steps have not been initiated
to enforce such payment within ninety (90) days after such written request is
made.
Should Trustor fail to make any payment or to do any act as herein
provided, then Beneficiary or Trustee, but without obligation so to do and
without notice to or demand upon Trustor and without releasing Trustor from any
obligation hereof, may: make or do the same in such manner and to such extent as
either may deem necessary to protect the security hereof, Beneficiary or Trustee
being authorized to enter upon the Real Property for such purposes; appear in
and defend any action or proceeding purporting to affect the security hereof or
the rights or powers of Beneficiary or Trustee; pay, purchase, contest or
compromise any encumbrance, charge or lien which in the judgment of either
appears to be prior or superior hereto; and, in exercising any such powers, pay
necessary expenses, employ counsel and pay reasonable attorneys' fees and costs
in connection therewith.
(6) To pay immediately and without demand all sums so expended by
Beneficiary or Trustee, with interest from date of expenditure until paid in
full by Trustor at a rate equal to five percent (5%) per annum over and above
the rate set forth in the promissory note secured hereby, which sums shall be
secured by this Deed of Trust to the same extent and with the same priority as
the principal and interest payable under the promissory note hereby secured, and
such sums shall be deemed mandatory advances required for the preservation and
protection of the lien of this Deed of Trust and Trustee's and Beneficiary's
rights hereunder.
(7) That any award of damages in connection with any condemnation for
public use of or injury to the Property or any part thereof is hereby assigned
and shall be paid to Beneficiary who may apply or release such moneys received
by him in the same manner and with the same effect as above provided for
disposition of proceeds of fire or other insurance. Notwithstanding the fact
that the security given hereby may not be impaired by a partial condemnation,
Beneficiary, in its sole and absolute discretion, shall have the right to apply
all compensation, award or other payments or relief therefor made on account
thereof to either the payment of accrued but unpaid interest and second to the
prepayment of principal under said promissory note or reimbursement of Trustor
for expenses incurred by it in the restoration of the Property, and in respect
thereto, Trustor hereby waives the benefit of any statute or rule of law which
may be contrary thereto.
(8) That by accepting the payment, performance or observance of any
condition, obligation, covenant or agreement contained herein after the date to
be paid, performed or observed as provided hereunder, Beneficiary does not waive
its right either to require prompt payment, performance or observance when due
of all other conditions, obligations, covenants or agreements contained herein
or to declare a default for failure so to do.
(9) That at any time or from time to time, without liability therefor
and without notice, upon written request of Beneficiary and presentation of this
Deed of Trust and said note for endorsement, and without affecting the personal
liability of any person for payment of the indebtedness secured hereby, Trustee
may: reconvey any part of the Trust Estate; consent to the making of any map or
plat thereof; join in granting any
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easement thereon; join in the execution of or subordination of the lien or
charge hereof to any covenants, conditions or restrictions affecting said
property; or join in any extension agreement or any agreement subordinating the
lien or charge hereof.
(10) That upon written request of Beneficiary stating that all sums
secured hereby have been paid, and upon surrender of this Deed of Trust and said
note to Trustee for cancellation and retention and upon payment by Trustor of
its fees, Trustee shall reconvey, without warranty, the Trust Estate then held
hereunder. The recitals in such reconveyance of any matters or facts shall be
conclusive proof of the truthfulness thereof. The grantee in such reconveyance
may be described as "the person or persons legally entitled thereto."
(11) That Trustor absolutely and unconditionally hereby assigns,
transfers, conveys and sets over to Beneficiary all the Rents; provided,
however, prior to any default by Trustor in the payment, observance, performance
and discharge of any condition, obligation, covenant or agreement of Trustor
contained herein, Trustor shall have the right as the agent and fiduciary
representative of Beneficiary for collection and distribution purposes only, to
collect and receive the Rents as they become due and payable to be applied by
Trustor to the payment of the principal and interest and all other sums due or
payable on said promissory note and to the payment of all other sums payable
under this Deed of Trust and, thereafter, so long as no default as aforesaid has
occurred, the balance shall be distributed to the account of Trustor. Upon any
such default, Beneficiary may at any time without notice, either in person, by
agent or by a receiver to be appointed by a court, and without regard to the
adequacy of any security for the indebtedness hereby secured, enter upon and
take possession of the Property or any part thereof, in its own name or in the
name of Trustor, sue for or otherwise collect the Rents, including those past
due and unpaid and apply the same, less costs and expenses of operation and
collection, including reasonable attorneys' fees and expenses, to the payment of
the principal and interest and all other sums due or payable on said promissory
note and to the payment of all other sums payable under this Deed of Trust and
in such order as Beneficiary may determine. The entering upon and taking
possession of the Property, the collection of the Rents and the application
thereof as aforesaid, shall not cure or waive any default or notice of default
hereunder or invalidate any act done pursuant to such notice.
All leases and rental agreements now or hereafter affecting the Real
Property, including all oil and gas leases and other subsurface leases and the
royalties derived therefrom, are hereby assigned and transferred to Beneficiary
by the Trustor, and Trustor hereby agrees and covenants that none of said leases
or rental agreements will be modified or terminated without the consent in
writing of Beneficiary. Trustor shall provide to Beneficiary a non-disturbance
and attornment agreement, in form acceptable to Beneficiary, executed by each
tenant under a lease or rental agreement for a portion of said Real Property
executed after the date hereof.
Trustor agrees that it will not (a) execute any further assignment of
any of its right, title and interest in the Rents without the prior written
consent of Beneficiary; (b) accept prepayments of any installments of Rents to
become due under any leases or rental agreements in excess of one (1) month
except prepayments in the nature of security which security will not exceed an
amount equal to one (1) month's rent under the lease or rental agreement; (c)
with respect to any lease or rental agreement having a term of two (2) years or
more, Trustor will not terminate, amend or modify any such lease or rental
agreement without the prior written consent of the Beneficiary or (d) accept a
surrender of any such lease or rental agreement.
(12) Trustor hereby represents, warrants and covenants that:
(a) To the best of its knowledge, neither the Real Property
which is the subject of this Deed of Trust nor any other real property occupied
and/or owned by Trustor has ever been used by Trustor or any other previous
owner and/or operator in connection with the disposal of or to refine, generate,
manufacture, produce, store, handle, treat, transfer, release, process or
transport flammable explosives, radioactive materials, asbestos, PCB, hazardous
wastes, toxic substances or related materials, including, without limitation,
any substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," or "toxic substances"
under any Hazardous Materials Laws (defined below) (collectively, "Hazardous
Materials") other than in strict compliance with applicable law, and Trustor
will not at any time use the Real Property or such other real property for the
disposal, refining, generating, manufacturing, producing,
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storing, handling, treating, transferring, releasing, processing or transporting
of any Hazardous Materials other than in strict compliance with applicable law.
(b) After diligent investigation including, but not limited
to, engineering reports and an environmental assessment report provided to
Beneficiary, Trustor warrants and represents to the best of its knowledge that
the Real Property is free of Hazardous Materials and contaminants which are or
could be detrimental to the Real Property, human health or the environment or in
violation of any governmental laws or regulations.
(c) To the best of its knowledge, neither the Real Property or
any other real property owned and/or occupied by Trustor has been designated,
listed or identified in any manner by the United States Environmental Protection
Agency ("EPA") or under and pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, set forth at 42
U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act of
1986, as amended, set forth at 42 U.S.C. 6901 et seq. ("RCRA"), or any other
environmental protection statute as a hazardous waste or hazardous substance
disposal or removal site, superfund or cleanup site or candidate for removal of
closure pursuant to RCRA, CERCLA or any other environmental protection statute.
(d) Trustor has not received a notice, summons, citation,
directive, letter or other communication, written or oral (collectively,
"Notice") from the EPA or any other federal or state governmental agency or
instrumentality, authorized pursuant to an environmental protection statute,
concerning any intentional or unintentional action or omission by Trustor
resulting in the releasing, spilling, leaking, pumping, pouring, emitting,
emptying, dumping or otherwise disposing of Hazardous Materials into the
environment resulting in damage thereto or to the fish, shellfish, wildlife,
biota or other natural resources.
Trustor shall, and shall cause all tenants, employees, agents,
contractors and subcontractors of Trustor and any other persons present on or
occupying the Real Property to, keep and maintain the Real Property, including
the soil and groundwater thereof, in compliance with, and not cause or permit
the Real Property, including the soil and groundwater thereof, to be in
violation of, any federal, state or local laws, ordinances or regulations
relating to industrial hygiene or to the environmental conditions thereon,
including but not limited to any Hazardous Materials Laws. Neither Trustor nor
tenants, employees, agents, contractors and subcontractors of Trustor nor any
other persons occupying or present on the Real Property shall use, generate,
manufacture, store or dispose of on, under or about the Real Property or
transport to or from the Real Property any Hazardous Materials.
The intended use of the Real Property is for office and research and
development purposes ("Permitted Use") and Trustor shall not change or alter the
Permitted Use unless Trustor shall have first notified Beneficiary thereof in
writing and Beneficiary shall have determined, in its sole and absolute
discretion, that such change or modification will not result in the presence of
Hazardous Materials on the Real Property in such a level that would increase the
potential liability for Hazardous Materials Claims.
Trustor shall immediately advise Beneficiary in writing of: (a) any
Notices (whether such Notices are received from the EPA, the Occupational Safety
and Health Agency, the Department of Health Services, the State Water Quality
Control Board, the Department of Sanitation, the Department of Public Works or
any other federal, state or local governmental agency or regional office
thereof) of violation or potential violation which are received by Trustor of
any applicable federal, state or local laws, ordinances or regulations relating
to any Hazardous Materials, including but not limited to CERCLA, RCRA, the
Hazardous Materials Transportation Act, the Hazardous Substances Account Act,
the Hazardous Substances Act, the Occupational Health and Safety Act, the
Porter-Cologne Water Quality Control Act, the Solid Waste Management Act of
1980, the Toxic Pit Cleanup Act, the Underground Tank Act of 1984, and the
California Water Quality Improvement Act (collectively, "Hazardous Materials
Laws"); (b) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened pursuant to any Hazardous
Materials Laws; (c) all claims made or threatened by any third party against
Trustor or the Trust Estate relating to damage, contribution, cost recovery
compensation, loss or injury resulting from any Hazardous Materials (the matters
set forth in clauses (a), (b) and (c) above are collectively referred to herein
as "Hazardous Materials
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Claims"); and (d) Trustor's discovery of any occurrence or condition on any real
property adjoining or in the vicinity of the Real Property that could cause the
Real Property or any part thereof to be classified as "border-zone property"
under the provisions of California Health and Safety Code, Sections 25220 et
seq., or any regulation adopted in accordance therewith, or to be otherwise
subject to any restrictions on the ownership, occupancy, transferability or use
of the Real Property under any Hazardous Materials Laws.
To the extent Beneficiary has a reasonable basis to believe its
security for the Loan is or might be impaired by any Hazardous Materials Claims
or in the event of any default hereunder or under any other Loan Document,
Beneficiary shall have the right but not the obligation to join and participate
in, as a party if it so elects, any legal proceedings or actions initiated in
connection with any Hazardous Materials Claims and to have its reasonable
attorneys' and consultants' fees in connection therewith paid by Trustor upon
demand.
Trustor shall be solely responsible for, and shall indemnify and hold
harmless Beneficiary, its directors, officers, employees, agents, successors and
assigns, from and against any loss, damage, cost, expense or liability directly
or indirectly arising out of or attributable to the use, generation, storage,
release, threatened release, discharge, disposal or presence (whether prior to
or during the term of the Loan) of Hazardous Materials on, under or about the
Real Property (whether by Trustor or a predecessor in title or any employees,
agents, contractor or subcontractors of Trustor, or any predecessor in title,
any third persons at any time occupying or present on the Real Property, or from
any other cause whatsoever), including, without limitation: (a) all foreseeable
and unforeseeable consequential damages including third party claims; (b) the
costs of any required or necessary repair, cleanup or detoxification of the Real
Property, including the soil and groundwater thereof, and the preparation and
implementation of any closure, remedial or other required plans; (c) damage to
any natural resources; and (d) all reasonable costs and expenses incurred by
Beneficiary in connection with clauses (a), (b) and (c), including but not
limited to reasonable attorneys' and consultants' fees.
Any costs or expenses incurred by Beneficiary for which Trustor is
responsible or for which Trustor has indemnified Beneficiary shall be paid to
Beneficiary on demand, and failing prompt reimbursement, shall be added to the
indebtedness secured by this Deed of Trust and earn interest at the default rate
set forth in the note secured hereby until paid in full.
Trustor shall not take any cleanup, containment, restoration, removal
or other remedial work (collectively, "Remedial Work") in response to the
presence of any Hazardous Materials on, under or about the Real Property without
prior written notice to Beneficiary of the scope and nature of such Remedial
Work; provided, however, that prior written notice shall not be necessary in the
event that the presence of Hazardous Materials on, under or about the Real
Property either poses an immediate threat to the health, safety or welfare of
any individual or is of such a nature that an immediate remedial response is
necessary and it is not possible to notify Beneficiary before taking such
action. In such event, Trustor shall notify Beneficiary as soon as practicable
of any action so taken. Trustor shall not, without Beneficiary's prior written
consent, which shall not be unreasonably withheld, enter into any settlement
agreement, consent decree or other compromise in respect to any Hazardous
Material Claims, which remedial action, settlement, consent or compromise might,
in Beneficiary's reasonable judgment, impair the value of Beneficiary's security
hereunder.
In the event any investigation or monitoring of conditions on the Real
Property or any Remedial Work is required under any applicable Hazardous
Materials Laws, by any judicial order, by any governmental entity, or in order
to comply with any agreements affecting the Real Property because of or in
connection with any Hazardous Material Claims, Trustor shall perform or cause to
be performed the Remedial Work in compliance with such Hazardous Material Laws
or agreement. All Remedial Work shall be performed by one or more contractors,
selected by Trustor and approved in advance in writing by Beneficiary, and under
the supervision of a consulting engineer, selected by Trustor and approved in
writing by Beneficiary. All costs and expenses of such Remedial Work shall be
paid by Trustor, including, without limitation, the charges of such contractors
and/or the consulting engineer, and Beneficiary's reasonable attorneys' fees and
costs incurred in connection with monitoring or reviewing such Remedial Work. In
the event Trustor shall fail to timely commence or cause to be commenced, or
fail to diligently prosecute to completion, such Remedial Work, Beneficiary may,
but shall not be required to, cause such Remedial Work to be performed, and all
costs and expenses thereof shall be due and payable upon demand therefor by
Trustor.
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If during the term of the loan secured by this Deed of Trust
Beneficiary has reasonable cause to believe that Hazardous Materials have
migrated onto the Real Property or have otherwise come onto the Real Property in
violation of the terms of this Deed of Trust or there has been a default by
Trustor hereunder with respect to Hazardous Materials, at Beneficiary's request,
Trustor shall retain, at Trustor's sole cost and expense, a licensed geologist,
industrial hygienist or an environmental consultant (a "Consultant") acceptable
to Beneficiary to conduct an environmental site assessment of the Real Property
for the presence of Hazardous Materials ("Environmental Audit"). The
Environmental Audit shall be performed in a manner reasonably calculated to
discover the presence of Hazardous Materials contamination. The Consultant shall
concurrently deliver the results of its investigation in writing directly to
Trustor and Beneficiary without prior consultation with either party unless
conducted in the presence of the other party.
If Trustor fails to pay for or obtain an Environmental Audit as
provided for herein, Beneficiary may, but shall not be obligated to, obtain the
Environmental Audit, and either demand reimbursement from Trustor or add the
cost thereof to the indebtedness secured by this Deed of Trust, in which case
interest shall accrue on such sum at the default rate set forth in the note
secured hereby. Furthermore, Trustor hereby grants Beneficiary, its employees
and agents the right, exercisable at any time and at Beneficiary's sole cost and
expense, to enter upon the Real Property for the purpose of conducting an
inspection, sampling and testing to determine whether there have been any
violations of the covenants contained in this Paragraph 12.
Trustor's liability under this Paragraph 12 shall not terminate until
the earlier of (i) the sale of the Real Property pursuant to the enforcement of
the lien of this Deed of Trust, the proceeds of which are applied to the
indebtedness secured hereby, or (ii) the payment in full of the indebtedness.
(13) Trustor agrees to indemnify, defend and hold harmless Trustee and
Beneficiary from and against any and all losses, liabilities, suits,
obligations, fines, damages, judgments, penalties, claims, charges, costs and
expenses (including attorneys' fees and disbursements) which may be imposed on,
incurred or paid by or asserted against Trustee and/or Beneficiary by reason or
on account of, or in connection with (a) any willful misconduct of Trustor or
any default or event of default by Trustor hereunder or under any other Loan
Document; (b) Trustee's and/or Beneficiary's good faith and commercially
reasonable exercise of any of their rights and remedies, or the performance of
any of their duties hereunder or under the other Loan Documents to which Trustor
is a party; (c) Trustor's failure to perform or comply with any of the covenants
set forth in Paragraph 12 above; (d) the construction, reconstruction or
alteration of the Real Property; (e) any negligence of Trustor, or any
negligence or willful misconduct of any lessee of the Real Property or any
portion thereof, or any of their respective agents, contractors, employees,
licensees or invitees; or (f) any accidents, injury, death or damage to any
person or property occurring in, on or about the Real Property or any street,
drive, sidewalk, curb or passageway adjacent thereto, except for the willful
misconduct or gross negligence of Beneficiary or Trustee. Upon demand by Trustee
and/or Beneficiary, Trustor shall defend any action or proceeding brought
against Trustee and/or Beneficiary arising out of or alleging any claim or cause
of action covered by this indemnity, all at Trustor's own cost and by counsel to
be approved by Beneficiary in the exercise of its reasonable judgment. In the
alternative, Trustee and/or Beneficiary may elect to conduct its own defense at
the expense of Trustor. The provisions of this Paragraph 13 shall survive the
foreclosure or the delivery of a deed in lieu of foreclosure of this Deed of
Trust or the payment in full of the indebtedness secured hereby and the
termination and reconveyance of this Deed of Trust, as the case may be.
Any amount payable to Trustee or Beneficiary under Paragraph 12 or this
Paragraph 13 shall be due and payable immediately after demand therefor and
receipt by Trustor of a statement setting forth in reasonable detail the amount
claimed and the basis therefor, and such amounts shall bear interest at the rate
specified in Paragraph 6 hereof from and after the date such amounts are paid by
Beneficiary or Trustee, as the case may be, until paid in full by Trustor.
(14) That upon default by Trustor in payment of any indebtedness
secured hereby or in performance of any agreement hereunder or under any other
Loan Document (including the breach of any representation or warranty, which
shall be deemed for the purpose of this Paragraph 14 to be absolute and not
merely to Trustor's best knowledge), Beneficiary may take any action or pursue
any right or remedy permitted under applicable law specifically including,
without limiting, impairing or otherwise affecting its other rights and remedies
declare all
9
<PAGE>
sums secured hereby immediately due and payable by delivery to Trustee written
declaration of default and demand for sale and of written notice of default and
of election to cause to be sold the Real Property, which notice Trustee shall
cause to be filed for record. Beneficiary also shall deposit with Trustee this
Deed of Trust, said note and all documents evidencing expenditures secured
hereby.
After the lapse of such time as may then be required by law following
the recordation of said notice of default, and notice of the sale having been
given as then required by law, Trustee, without demand on Trustor, shall sell
the Real Property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine,
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. Trustee may postpone sale of all or any portion
of said Real Property by public announcement at such time and place of sale, and
from time to time thereafter may postpone such sale by public announcement at
the time fixed by the preceding postponement. Trustee shall deliver to such
purchaser its deed conveying the Real Property so sold, but without any covenant
or warranty, express or implied. The recitals in such deed of any matters or
facts shall be conclusive proof of the truthfulness thereof. Any person,
including Trustor, Trustee, or Beneficiary as herein defined, may purchase at
such sale.
After deducting all costs, fees and expenses of Trustee and of this
Trust, including cost of evidence of title in connection with sale, Trustee
shall apply the proceeds of sale to payment of: all sums expended under the
terms hereof, not then repaid, with accrued interest at the rate specified in
Paragraph 6 hereof; all other sums then secured hereby; and the remainder, if
any, to the person or persons legally entitled thereto.
If this Deed of Trust or any note secured hereby provides for any
charge for prepayment of any indebtedness secured hereby, Trustor agrees to pay
said charge if any of said indebtedness shall be paid prior to the date thereof
stated in said note or this Deed of Trust, even if and notwithstanding Trustor
shall have defaulted in payment thereof, or in performance of any agreement
hereunder, and Beneficiary, by reason thereof, shall have declared all sums
secured hereby immediately due and payable.
(15) Following recordation of a notice of default, Beneficiary and
prospective bidders at any foreclosure sale shall have the right to enter and
inspect said Real Property at reasonable times and upon reasonable notice to
Trustor. Trustor shall, promptly following the recordation of a notice of
default, but in any event prior to the date of sale set in the notice of sale,
disclose to Beneficiary in writing all material facts regarding said Real
Property.
Trustor hereby waives any claims against Beneficiary or Trustee arising
out of or in connection with any disclosures regarding said Real Property which
may be made by Beneficiary or Trustee to prospective bidders at or prior to the
foreclosure sale. In addition, Trustor shall indemnify, defend and hold harmless
Trustee and Beneficiary from and against all losses, liabilities, suits, damages
claims or judgments which may arise out of or in connection with any disclosures
regarding said Real Property which may be made by Beneficiary or Trustee to
prospective bidders at or prior to the foreclosure sale. All costs, fees and
expenses incurred by Beneficiary or Trustee in connection with such inspections
and disclosures shall be payable by Trustor upon demand therefor, and such
amounts shall bear interest at the rate specified in Paragraph 6 hereof from the
date paid by Beneficiary until paid in full by Trustor, and if not so paid shall
be added to the amount secured hereby.
(16) That if the Trustor, or any subsequent owner of the Real Property
covered hereby, shall occupy said property, or any part thereof, after any
default in payment of any amount secured by this Deed of Trust, the Trustor, or
such owner, shall pay to the Beneficiary in advance on the first day of each
month a reasonable rental for the premises so occupied, and upon failure to pay
such reasonable rental, the Trustor, or such owner, may be removed from said
premises by summary dispossess proceedings or by any other appropriate action or
proceeding.
(17) Trustor hereby represents and warrants: (a) that it is or will be
the lawful owner of all of the Trust Estate free of all claims, liens or
encumbrances whatsoever, other than the security interests granted pursuant
hereto and such other matters as may be approved in writing by Lender in
Lender's sole and absolute
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<PAGE>
discretion; (b) all information, including but not limited to financial
statements furnished by Trustor to Beneficiary heretofore or hereafter, whether
oral or written, is and will be correct and true as of the date given; and (c)
if Trustor is a business entity, the execution, delivery and performance hereof
are within its powers and have been duly authorized.
(18) With respect to the Personal Property and the security interest
granted to Beneficiary under the Deed of Trust, the following shall apply:
(a) Trustor shall: (i) execute such financing statements and
other documents and do such other acts and things, all as Beneficiary may from
time to time require, to establish and maintain a valid security interest in the
Personal Property, including payment of all costs and fees in connection with
any of the foregoing when deemed necessary by Beneficiary; (ii) keep the
Personal Property separate and identifiable and at the location described herein
and permit Beneficiary and its representatives to inspect the Personal Property
and/or records pertaining thereto from time to time during normal business
hours; (iii) at Trustor's expense upon Beneficiary's request remove any
unauthorized lien or security interest and defend any claim affecting the
Personal Property; (iv) reimburse Beneficiary for any expenses including but not
limited to reasonable attorneys' fees and legal expenses, incurred by
Beneficiary in seeking to protect, collect or enforce any rights in the Personal
Property; (v) maintain the Personal Property in good condition and not use the
Personal Property for any unlawful purpose; and (vi) at its own expense, upon
request of Beneficiary, notify any parties obligated to Trustor on any of the
Personal Property to make payment to Beneficiary, and Trustor hereby irrevocably
grants Beneficiary power of attorney to make said notifications and collections.
Trustor does hereby authorize Beneficiary to perform any and all acts which
Beneficiary in good faith deems necessary for the protection and preservation of
the Personal Property or its value or Beneficiary's security interest therein,
including transferring any of the Personal Property into its own name and
receiving the income thereon as additional security hereunder.
(b) Whenever a default exists under this Deed of Trust,
Beneficiary, at its option may: (i) transfer any of the Personal Property into
its own name or that of its nominee; (ii) notify any parties obligated on any of
the Personal Property consisting of accounts, instruments, chattel paper, choses
in action or the like to make payment to Beneficiary and enforce collection of
any of the Personal Property herein; (iii) require Trustor to assemble and
deliver any of the Personal Property to Beneficiary at a reasonable convenient
place designated by Beneficiary. No delay on the part of Beneficiary in the
exercise of any right or remedy shall constitute a waiver thereof and any
exercise, or partial exercise, by Beneficiary of any right or remedy under this
Paragraph 18 shall not preclude the exercise of any other right or remedy of
Beneficiary under this Paragraph 18, this Deed of Trust or at law or in equity
or the further exercise of the same remedy. This Paragraph 18 shall not be
construed to derogate or impair the lien or provisions of any other provision of
the Deed of Trust with respect to any property described in the Deed of Trust
that is real property or which the parties have agreed to treat as real
property. Beneficiary's rights, power and remedies as to the Personal Property
shall be exercisable as to any part or all of the Personal Property as
Beneficiary may elect.
(c) Trustor hereby assumes, and releases Beneficiary from, all
risk of loss, destruction or damage to all or any part of the Personal Property
by reason of any casualty or cause whatsoever except as caused by the
intentional misconduct of Beneficiary, and Trustor shall indemnify and hold
Beneficiary harmless from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including, reasonable
attorneys' fees and costs) imposed upon or incurred by or asserted against
Beneficiary by reason of (i) any failure by Trustor to perform or comply with
the terms of this Deed of Trust or (ii) the exercise by Beneficiary of any
rights or remedies provided hereunder or at law or in equity, except as caused
by Beneficiary's intentional misconduct.
(d) Upon transfer by Beneficiary of any part of the
obligations secured hereby, Beneficiary shall be fully discharged from all
liability with respect to the Personal Property transferred therewith.
11
<PAGE>
(e) The grant of a security interest in proceeds,
replacements, substitutions or the like does not imply any right of Trustor to
sell or dispose of any Personal Property described herein without the express
written consent by Beneficiary.
(19) Beneficiary, acting alone, may from time to time, by instrument in
writing, substitute a successor or successors to any Trustee named herein or
acting hereunder, which instrument, executed and acknowledged by each and
recorded in the office of the recorder of the county or counties where said
property is situated, shall be conclusive proof of proper substitution of such
successor Trustee or Trustees, who shall, without conveying from the Trustee
predecessor, succeed to all its title, estate, rights, powers and duties. Said
instrument must contain the name of the original Trustor, Trustee and
Beneficiary hereunder, the book and page or document number where this Deed of
Trust is recorded, and the name and address of the new Trustee. If notice of
default shall have been recorded, this power of substitution cannot be exercised
until after the costs, fees and expenses of the then acting Trustee shall have
been paid to such Trustee, who shall endorse receipt thereof upon such
instrument of substitution.
(20) That any Trustor who is a married person hereby expressly agrees
that recourse may be had against his or her separate property, but without
hereby creating any lien or charge thereon, for any deficiency after sale of the
property hereunder.
(21) If requested, that Trustor shall furnish at least annually, within
ninety (90) days after the end of its fiscal year, or more frequently if
requested by Beneficiary, a full and complete financial statement concerning
income, expenses, assets and liabilities of Trustor, and/or applicable or
attributable to the Trust Estate encumbered hereby and the operations thereof,
and such other information as Beneficiary may request. Such statement shall be
prepared in accordance with generally accepted accounting principles and shall
be certified as true, complete and correct by Trustor. Trustor shall keep true
and correct records upon which annual statements are based for not less than
three (3) years after delivery of the required annual statement. Beneficiary
shall have the right, at its cost and at any time and from time to time after
giving prior written notice to Trustor, to do or cause to be done any of the
following: to audit the records; to cause an audit of the records to be made; to
make abstracts from the records; to make copies of any or all of the records; to
examine any or all leases and rental agreements (if such leases and rental
agreements exist); and to make copies of any or all leases and rental agreements
(to the extent such leases and rental agreements exist). Trustor shall make all
records specified in the notice available at the time specified in the notice
and at the place where the records are customarily kept, or at Beneficiary's
option at Beneficiary's office. Upon any default under the note described above,
this Deed of Trust or other Loan Documents, Beneficiary may perform any of the
acts authorized by this paragraph at the sole cost of Trustor. Trustor shall
promptly reimburse Beneficiary for its costs and such costs shall be secured by
this Deed of Trust.
(22) That the pleading of any statute of limitations as a defense to
any and all obligations secured by this Deed of Trust is hereby waived to the
full extent permissible by law.
(23) That this Deed of Trust applies to, inures to the benefit of, and
binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors and assigns. The term Beneficiary shall mean the owner and
holder, including pledgees, of the note secured hereby, whether or not named as
Beneficiary herein. In this Deed of Trust, whenever the context so requires, the
masculine gender includes the feminine and neuter, and the singular number
includes the plural. If more than one (1) person executes this Deed of Trust as
Trustor, the obligations of such persons are joint and several.
(24) That Trustee accepts this Trust when this Deed of Trust, duly
executed and acknowledged, is made a public record as provided by law. Trustee
is not obligated to notify any party hereto of pending sale under any other deed
of trust or of any action or proceeding in which Trustor, Beneficiary or Trustee
shall be a party unless brought by Trustee.
(25) To pay Beneficiary for each and every beneficiary statement
furnished at Trustor's request the maximum fee allowed by law and if there be no
maximum, then in accordance with Beneficiary's schedule therefor. Such fee shall
be computed as of the time said statement is furnished.
12
<PAGE>
(26) That should Trustor sell, convey, transfer, dispose of or further
encumber (collectively, "Transfer") the Trust Estate or any part thereof or any
interest therein or enter into a lease (other than a lease entered into by
Trustor in the ordinary course of business on commercially reasonable terms for
a term not exceeding five (5) years) upon commercially reasonable terms covering
all or any portion thereof or an undivided interest therein, either voluntarily,
involuntarily or otherwise, or enter into an agreement so to do, without the
prior written consent of Beneficiary being first had and obtained, then
Beneficiary may, at its option, declare all sums secured hereby immediately due
and payable. . . . Consent to one such transaction shall not be deemed to be a
waiver of the right to require such consent to future or successive
transactions.
(27) In addition, without limiting the foregoing, if (i) there should
occur a sale, conveyance, transfer, disposition or encumbrance, either voluntary
or involuntary, or should an agreement be entered into to accomplish any thereof
(in each case, an "Acquisition") of all the issued and outstanding capital stock
of Trustor, and (ii) the net worth of the acquiring or surviving corporation
(after giving effect to any transfer of assets and liabilities between Trustor
and the acquiring or surviving corporation) shall be less than the net worth of
Trustor existing immediately prior to the effective date of such Acquisition,
then in such event Beneficiary may, at its option, declare all sums secured
hereby immediately due and payable unless Beneficiary shall have given its prior
written consent thereto. Consent to one such transaction shall not be deemed to
be a waiver of the right to require such consent to future or successive
transactions.
(28) That in the event of the passage after the date hereof of any law
deducting from the value of real property, for taxation purposes, any lien
thereon or changing in any way the laws now in force for the taxation of deeds
of trust or debts whether or not secured thereby for federal, state or local
purposes or the manner of the collection of any such taxes so as to affect this
Deed of Trust or the obligations hereby secured, Trustor agrees to pay any
thereof and if Trustor fails to so do or if it would be illegal for Trustor so
to do then, the whole of the principal sum secured by this Deed of Trust,
together with accrued interest thereon shall, at the option of Beneficiary,
without demand or notice, immediately become due and payable.
(29) To the fullest extent permitted by law, Trustor hereby waives the
provisions of Section 431.70 of the California Code of Civil Procedure and all
amendments thereto.
(30) That no remedy herein conferred upon, reserved to Trustee or
Beneficiary is intended to be exclusive of any other remedy herein or by law
provided, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute. No delay or omission of Trustee or Beneficiary in the exercising of any
right or power accruing upon any event of default hereunder shall impair such
right or power or any other right or power nor shall the same be construed to be
a waiver of any default or any acquiescence therein; and every power and remedy
given by this Deed of Trust to Trustee or Beneficiary may be exercised from time
to time as often as may be deemed expedient by Trustee or Beneficiary. If there
exists additional security for the obligations secured hereby, Beneficiary, at
its sole option, and without limiting or affecting any of the rights or remedies
hereunder, may exercise any of the rights or remedies to which it may be
entitled hereunder either concurrently with whatever rights it may have in
connection with such other security or in such order and in such manner as
Beneficiary may deem fit without waiving any rights with respect to any other
security. The granting of consent by Beneficiary to any transaction as required
by the terms hereunder shall not be deemed a waiver of the right to secure the
consent of Beneficiary to future or successive transactions.
(31) That in the event any one or more of the provisions contained in
this Deed of Trust or in the promissory note hereby secured shall for any reason
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this Deed
of Trust or said promissory note, but this Deed of Trust and said promissory
note shall be construed as if such invalid, illegal or unenforceable provision
had never been contained herein or therein.
(32) TRUSTOR ACKNOWLEDGE(S) AND AGREE(S) THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT OR THE LENDING RELATIONSHIP ESTABLISHED HEREBY WOULD
BE BASED UPON DIFFICULT AND COMPLEX ISSUES, AND THEREFORE, TRUSTOR HEREBY
WAIVE(S) ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
13
<PAGE>
(INCLUDING ACTIONS SOUNDING IN TORT) TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
DEED OF TRUST OR ANY OTHER LOAN DOCUMENT OR ARISING FROM THE TRANSACTION
CONTEMPLATED HEREUNDER OR THE LENDING RELATIONSHIP ESTABLISHED HEREBY AND
AGREE(S) THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE AND NOT BY A JURY.
(33) This Deed of Trust has been executed and delivered in the State of
California and is to be construed and enforced according to and governed by the
laws thereof except that with respect to any portion of the Trust Estate covered
hereby located outside of the State of California, only to the extent required
for Trustee or Beneficiary to enforce or realize upon the rights and remedies
hereunder with respect thereto, the laws of the state in which such property is
located shall be applicable hereto.
The undersigned Trustor requests that a copy of any notice of default
and of any notice of sale hereunder be mailed to him at his address hereinbefore
set forth.
TRUSTOR:
SPECTRIAN CORPORATION, a California
corporation
By: /s/ Edward A. Supplee, Jr.
--------------------------------------
Title: VP
--------------------------------------
14
<PAGE>
State of California On May 15, 1996
-------------------------- -------------------------------
} SS.
County of Santa Clara before me, /s/ Jodie Capron ,
-------------------------- -----------------------
personally appeared
/s/ Ed Supplee ,
---------------------------------
proved to me on the basis of
satisfactory evidence to be the
persons whose names are subscribed
to the within instrument, and
acknowledged to me that they
executed the same in their
authorized capacities, and that by
their signatures on the instrument
the persons, or the entity upon
behalf of which the persons acted,
executed the instrument.
==========================================
JODIE L. CAPRON WITNESS my hand and official seal.
CALIFORNIA COMM. # 981494
SEAL NOTARY PUBLIC -- CALIFORNIA /s/ Jodie L. Capron
COUNTY OF SANTA CLARA ---------------------------------
Notary's Signature
Comm. Exp. Dec. 20, 1996
==========================================
15
<PAGE>
EXHIBIT D
RECORDING REQUESTED BY
SILICON VALLEY BANK
1731 EMBARCADERO ROAD, SUITE 220
PALO ALTO, CALIFORNIA 94303
ATTN: MR. MARK PIPER
AND WHEN RECORDED MAIL TO
Name SILICON VALLEY BANK
Street 1731 EMBARCADERO ROAD
Address SUITE 220
City PALO ALTO, CA 94303
State ATTN: MR. MARK PIPER
Zip
- --------------------------------------------------------------------------------
SPACE ABOVE THIS LINE FOR RECORDER'S USE
DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING
(WITH ASSIGNMENT OF RENTS AND LEASES)
ATTENTION: COUNTY RECORDER -- THIS INSTRUMENT COVERS GOODS
THAT ARE OR ARE TO BECOME FIXTURES ON THE PROPERTY DESCRIBED
HEREIN AND IS TO BE FILED OF RECORD IN THE RECORDS WHERE
DEEDS OF TRUST ON REAL ESTATE ARE RECORDED. ADDITIONALLY,
THIS INSTRUMENT SHOULD BE APPROPRIATELY INDEXED NOT ONLY AS A
DEED OF TRUST BUT ALSO AS AN ASSIGNMENT OF LEASES AND RENTS
AND AS A FINANCING STATEMENT COVERING GOODS THAT ARE, OR ARE
TO BECOME, FIXTURES ON THE PROPERTY DESCRIBED HEREIN. THE
MAILING ADDRESSES OF THE TRUSTOR (DEBTOR) AND THE BENEFICIARY
(SECURED PARTY) ARE SET FORTH BELOW.
THIS DEED OF TRUST SECURES A PROMISSORY NOTE BEARING INTEREST
AT A VARIABLE RATE.
This Deed of Trust, Security Agreement and Fixture Filing (With
Assignment of Rents and Leases) is made as of this 15th day of May, 1996, by
SPECTRIAN CORPORATION, a California corporation (hereinafter called "Trustor"),
whose address is 350 Java Drive, Sunnyvale, California 94089, to SANTA CLARA
LAND TITLE COMPANY, a corporation (hereinafter called "Trustee"), whose address
is 701 Miller Street, San Jose, California, 95110, for the benefit of Silicon
Valley Bank, a California banking corporation (hereinafter called
"Beneficiary"), whose address is 1731 Embarcadero Road, Suite 220, Palo Alto,
California, 94303.
Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to
Trustee, its successors and assigns, in Trust, with POWER OF SALE TOGETHER WITH
RIGHT OF ENTRY AND POSSESSION the following property (the "Trust Estate"):
(a) all that certain real property now or hereafter acquired, in the
City of Sunnyvale, County of Santa Clara, State of California (the "Land"),
commonly known as 350 Java Drive, Sunnyvale, California, more particularly
described as set forth below:
ALL THAT CERTAIN PROPERTY SITUATE IN THE CITY OF SUNNYVALE, COUNTY OF
SANTA CLARA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
1
<PAGE>
PARCEL ONE, AS SHOWN ON THAT PARCEL MAP FILED FOR RECORD IN
THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA,
STATE OF CALIFORNIA ON MAY 25, 1984, IN BOOK 529 OF MAPS,
PAGE(S) 34.
ARB NO: 110-2-49.02 & 49.03
(b) all buildings, structures and other improvements now or in the
future located or to be constructed on the Land (the "Improvements");
(c) all tenements, hereditaments, appurtenances, privileges, franchises
and other rights and interests now or in the future benefitting or otherwise
relating to the Land or the Improvements, including easements, rights-of-way,
development rights, mineral rights, water and water rights, pumps and pumping
plants and all shares of stock evidencing the same (the "Appurtenances," and
together with the Land and the Improvements, the "Real Property");
(d) subject to the assignment to Beneficiary set forth in Paragraph 11
below, all rents, issues, income, revenues, royalties and profits now or in the
future payable with respect to or otherwise derived from the Trust Estate or the
ownership, use, management, operation, leasing or occupancy of the Trust Estate,
including those past due and unpaid (the "Rents");
(e) all present and future right, title and interest of Trustor in and
to all inventory, equipment, fixtures and other goods (as those terms are
defined in Division 9 of the California Uniform Commercial Code (the "UCC"), and
whether existing now or in the future) now or in the future located at, upon or
about, or affixed or attached to or installed in, the Real Property, or used or
to be used in connection with or otherwise relating to the Real Property or the
ownership, use, development, construction, maintenance, management, operation,
marketing, leasing or occupancy of the Real Property, including furniture,
furnishings, machinery, appliances, building materials and supplies, generators,
boilers, furnaces, water tanks, heating, ventilating and air conditioning
equipment and all other types of tangible personal property of any kind or
nature, and all accessories, additions, attachments, parts, proceeds, products,
repairs, replacements and substitutions of or to any of such property (the
"Goods," and together with the Real Property, the "Property"); and
(f) all present and future right, title and interest of Trustor in and
to all accounts, general intangibles, chattel paper, deposit accounts, money,
instruments and documents (as those terms are defined in the UCC) and all other
agreements, obligations, rights and written materials (in each case whether
existing now or in the future) now or in the future relating to or otherwise
arising in connection with or derived from the Property or any other part of the
Trust Estate or the ownership, use, development, construction, maintenance,
management, operation, marketing, leasing, occupancy, sale or financing of the
Property or any other part of the Trust Estate, including (to the extent
applicable to the Property or any other portion of the Trust Estate) (i)
permits, approvals and other governmental authorizations, (ii) improvement plans
and specifications and architectural drawings, (iii) agreements with
contractors, subcontractors, suppliers, project managers, supervisors,
designers, architects, engineers, sales agents, leasing agents, consultants and
property managers, (iv) takeout, refinancing and permanent loan commitments, (v)
warranties, guaranties, indemnities and insurance policies, together with
insurance payments and unearned insurance premiums, (vi) claims, demands,
awards, settlements and other payments arising or resulting from or otherwise
relating to any insurance or any loss or destruction of, injury or damage to,
trespass on or taking, condemnation (or conveyance in lieu of condemnation) or
public use of any of the Property, (vii) license agreements, service and
maintenance agreements, purchase and sale agreements and purchase options,
together with advance payments, security deposits and other amounts paid to or
deposited with Trustor under any such agreements, (viii) reserves, deposits,
bonds, deferred payments, refunds, rebates, discounts, cost savings, escrow
proceeds, sale proceeds and other rights to the payment of money, trade names,
trademarks, goodwill and all other types of intangible personal property of any
kind or nature, and (ix) all supplements, modifications, amendments, renewals,
extensions, proceeds, replacements and substitutions of or to any of such
property (the "Intangibles").
2
<PAGE>
Trustor further grants to Trustee and Beneficiary, pursuant to the UCC,
a security interest in all present and future right, title and interest of
Trustor in and to all Goods and Intangibles and all of the Trust Estates
described above in which a security interest may be created under the UCC
(collectively, the "Personal Property"). This Deed of Trust constitutes a
security agreement under the UCC, conveying a security interest in the Personal
Property to Trustee and Beneficiary. Trustee and Beneficiary shall have, in
addition to all rights and remedies provided herein, all the rights and remedies
of a "secured party" under the UCC and other applicable California law. Trustor
covenants and agrees that this Deed of Trust constitutes a fixture filing under
Section 9313 and 9402(6) of the UCC.
FOR THE PURPOSE OF SECURING, in such order of priority as Beneficiary
may elect, (1) payment of an indebtedness in the sum of Six Million and No/100
Dollars ($6,000,000.00) evidenced by that certain Promissory Note Secured by
Deed of Trust (the "note" or the "promissory note") of even date, executed by
Trustor to the order of Beneficiary and any and all modifications, extensions or
renewals thereof, whether hereafter evidenced by said note or otherwise; (2)
payment of interest on said indebtedness according to the terms of said
promissory note; (3) payment of all other sums, with interest as herein
provided, becoming due or payable under the provisions hereof to Trustee or
Beneficiary; (4) due, prompt and complete observance, performance and discharge
of each and every condition, obligation, covenant and agreement contained
herein, or in said note, or in that certain Term Loan Agreement of even date
(the "Loan Agreement"), relative to any indebtedness evidenced by said note or
in any document or instrument evidencing, securing or pertaining to the
indebtedness evidenced by said note, excluding, however, any guaranty or
unsecured environmental indemnity ("Loan Documents") and all modifications,
renewals or extensions of any of the foregoing; and (5) payment of such
additional sums with interest thereon as may be hereafter borrowed from
Beneficiary, its successors or assigns by Trustor or the then record owner or
owners of the Trust Estate when evidenced by another promissory note or notes,
which are by the terms thereof secured by this Deed of Trust.
TO PROTECT AND MAINTAIN THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
AGREES:
(1) To pay, perform, observe and discharge each and every condition,
obligation, covenant and agreement for which this Deed of Trust has been given
as security as provided above.
(2) To keep the Property in good condition and repair; not to remove or
demolish any improvement thereon; to complete or restore promptly and in good
and workmanlike manner any improvement which may be constructed, damaged or
destroyed thereon and to pay when due all claims for labor performed and
materials furnished therefor; to comply with all laws affecting the Trust Estate
or requiring any alterations or improvements to be made thereon; not to commit
or permit waste thereof; to perform, in the event all or any portion of the
Trust Estate constitutes a leasehold estate belonging to Trustor, each and every
obligation of Trustor under the terms of the lease agreement relating to the
demise of such property; not to commit, suffer or permit any act upon the Trust
Estate in violation of law; to do all acts which from the character or use of
the Property may be reasonably necessary, the specific enumerations herein not
excluding the general.
(3) To fully insure, or cause to be insured, the Property against loss
or damage by fire, earthquake, flood, and such other risks as Beneficiary shall,
from time to time, require. Trustor shall carry public liability and other
insurance as Beneficiary may require. Trustor shall maintain all required
insurance in companies, amounts, coverages, deductibles, and forms satisfactory
to the Beneficiary and at least equal to that required on the date of this Deed
of Trust. Such insurance shall be carried in amounts not less than amounts
determined by the insurance company or Beneficiary to prevent the application of
co-insurance or similar clauses, or in such greater amounts as Beneficiary may
require. Neither Beneficiary nor Trustee, by reason of accepting, rejecting,
approving or obtaining insurance, shall incur any liability for (i) the
existence, nonexistence, form or legal sufficiency thereof, (ii) the solvency or
insolvency of any insurer, or (iii) the payment of losses. All property
insurance policies shall name Beneficiary as the primary loss payee, all
liability insurance policies shall name Beneficiary as an additional insured,
and all policies shall provide that they cannot be terminated as to Beneficiary
except upon thirty (30) days' prior written notice to Beneficiary. Trustor shall
deliver to Beneficiary the original of all such policies, or with Beneficiary's
consent certificates, together with receipts satisfactory to the Beneficiary,
evidencing payment of the premiums therefor.
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As of the date this Deed of Trust is recorded and continuously until
this Deed of Trust is fully reconveyed, the insurance policies shall conform to
the following requirements:
(a) All insurance policies must be underwritten by insurers with a
Best's rating of B+, VI or better;
(b) In the event all or any portion of the Real Property secured by
this Deed of Trust constitutes rental or non-residential property, Trustor shall
maintain a Commercial General Liability insurance policy, including broad form
coverages or their equivalents, with One Million Dollars ($1,000,000) combined
single limit coverage for bodily injury and property damage; provided, however,
if improvements similar to the Improvements secured hereby are generally insured
at higher limits of coverage, such higher limits shall be obtained. In all other
cases, Trustor shall maintain such liability insurance coverages as Beneficiary
may require from time to time;
(c) Trustor shall provide Beneficiary with additional property and
rental income insurance coverages as follows:
1. All risk coverage (including earthquake insurance) in the
amount of the full replacement cost of the Improvements;
2. A waiver of co-insurance endorsement or agreed value
endorsement (relative to casualty);
3. A replacement cost coverage endorsement (relative to
casualty);
4. A standard mortgage clause (438BFU or CP12-18) with
Beneficiary named as loss payee in the Declarations;
5. A waiver of subrogation clause;
6. To the extent that any portion of the Real Property
constitutes rental property, loss of rents coverage in an amount equal to at
least twelve (12) months of rentals from the Real Property secured hereby and
any expenses that are payable or reimbursable by tenants;
7. Flood insurance in an amount sufficient to provide full
replacement cost coverage of the Real Property in the event the Real Property is
located within any flood hazard area; and
8. Such other coverages as Beneficiary may request from time
to time.
The amount collected under any fire or other insurance policy may be applied by
Beneficiary upon any indebtedness secured hereby and in such order as
Beneficiary may determine, or at option of Beneficiary the entire amount so
collected or any part thereof may be released to Trustor. Such application or
release shall not cure or waive any default or notice of default hereunder or
invalidate any act done pursuant to such notice.
(4) To appear in and defend any action or proceeding purporting to
affect the security hereof or the rights or powers of Beneficiary or Trustee;
and to pay all costs and expenses, including cost of evidence of title and
attorney's fees in a reasonable sum, in any such action or proceeding in which
Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to
foreclose this Deed of Trust.
(5) To pay and discharge, at least ten days prior to delinquency, all
taxes of every kind and nature, including real and personal property taxes and
income, franchise, withholding, profits and gross receipts taxes, all general
and special assessments, including assessments on appurtenant water stock,
levies, permits, inspection and license fees, all water and sewer rents and
charges, and all other public charges whether of a like or different nature,
imposed upon or assessed against Trustor or the Trust Estate or any part thereof
or upon the revenues, rents, issues, income and profits thereof or upon this
Deed of Trust or the indebtedness now or
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hereafter secured hereby; when due, all encumbrances, charges and liens, with
interest, on the Trust Estate or any part thereof, which appear to be prior or
superior hereto or subject or subordinate hereto; all costs, fees and expenses
of this Trust; or, if and as required by Beneficiary, to pay to Beneficiary in
equal installments on the day on which monthly payments of principal and
interest are due under said note, sufficient funds (as estimated by Beneficiary
from time to time) to pay when due the next maturing taxes, assessments and
hazard insurance premiums. When so provided with sufficient funds, Beneficiary
shall pay such taxes, assessments and hazard insurance premiums before
delinquency. Any excess over the amount required for such purposes shall be held
for future use, applied to any indebtedness hereby secured or refunded to
Trustor at Beneficiary's option.
To promptly and completely observe, perform, and discharge each and
every condition, obligation, covenant and agreement affecting the Trust Estate,
whether the same is prior and superior or subject and subordinate hereto
including, if the security hereunder is or will be a condominium, community
apartment or part of a planned development, each and every provision to be
performed by Trustor under any Declaration of Covenants, Conditions and
Restrictions pertaining to the condominium, community apartment or planned
development project and, upon written request of Beneficiary, to pay maintenance
charges, if the same have not been paid or legal steps have not been initiated
to enforce such payment within ninety (90) days after such written request is
made.
Should Trustor fail to make any payment or to do any act as herein
provided, then Beneficiary or Trustee, but without obligation so to do and
without notice to or demand upon Trustor and without releasing Trustor from any
obligation hereof, may: make or do the same in such manner and to such extent as
either may deem necessary to protect the security hereof, Beneficiary or Trustee
being authorized to enter upon the Real Property for such purposes; appear in
and defend any action or proceeding purporting to affect the security hereof or
the rights or powers of Beneficiary or Trustee; pay, purchase, contest or
compromise any encumbrance, charge or lien which in the judgment of either
appears to be prior or superior hereto; and, in exercising any such powers, pay
necessary expenses, employ counsel and pay reasonable attorneys' fees and costs
in connection therewith.
(6) To pay immediately and without demand all sums so expended by
Beneficiary or Trustee, with interest from date of expenditure until paid in
full by Trustor at a rate equal to five percent (5%) per annum over and above
the rate set forth in the promissory note secured hereby, which sums shall be
secured by this Deed of Trust to the same extent and with the same priority as
the principal and interest payable under the promissory note hereby secured, and
such sums shall be deemed mandatory advances required for the preservation and
protection of the lien of this Deed of Trust and Trustee's and Beneficiary's
rights hereunder.
(7) That any award of damages in connection with any condemnation for
public use of or injury to the Property or any part thereof is hereby assigned
and shall be paid to Beneficiary who may apply or release such moneys received
by him in the same manner and with the same effect as above provided for
disposition of proceeds of fire or other insurance. Notwithstanding the fact
that the security given hereby may not be impaired by a partial condemnation,
Beneficiary, in its sole and absolute discretion, shall have the right to apply
all compensation, award or other payments or relief therefor made on account
thereof to either the payment of accrued but unpaid interest and second to the
prepayment of principal under said promissory note or reimbursement of Trustor
for expenses incurred by it in the restoration of the Property, and in respect
thereto, Trustor hereby waives the benefit of any statute or rule of law which
may be contrary thereto.
(8) That by accepting the payment, performance or observance of any
condition, obligation, covenant or agreement contained herein after the date to
be paid, performed or observed as provided hereunder, Beneficiary does not waive
its right either to require prompt payment, performance or observance when due
of all other conditions, obligations, covenants or agreements contained herein
or to declare a default for failure so to do.
(9) That at any time or from time to time, without liability therefor
and without notice, upon written request of Beneficiary and presentation of this
Deed of Trust and said note for endorsement, and without affecting the personal
liability of any person for payment of the indebtedness secured hereby, Trustee
may: reconvey any part of the Trust Estate; consent to the making of any map or
plat thereof; join in granting any
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easement thereon; join in the execution of or subordination of the lien or
charge hereof to any covenants, conditions or restrictions affecting said
property; or join in any extension agreement or any agreement subordinating the
lien or charge hereof.
(10) That upon written request of Beneficiary stating that all sums
secured hereby have been paid, and upon surrender of this Deed of Trust and said
note to Trustee for cancellation and retention and upon payment by Trustor of
its fees, Trustee shall reconvey, without warranty, the Trust Estate then held
hereunder. The recitals in such reconveyance of any matters or facts shall be
conclusive proof of the truthfulness thereof. The grantee in such reconveyance
may be described as "the person or persons legally entitled thereto."
(11) That Trustor absolutely and unconditionally hereby assigns,
transfers, conveys and sets over to Beneficiary all the Rents; provided,
however, prior to any default by Trustor in the payment, observance, performance
and discharge of any condition, obligation, covenant or agreement of Trustor
contained herein, Trustor shall have the right as the agent and fiduciary
representative of Beneficiary for collection and distribution purposes only, to
collect and receive the Rents as they become due and payable to be applied by
Trustor to the payment of the principal and interest and all other sums due or
payable on said promissory note and to the payment of all other sums payable
under this Deed of Trust and, thereafter, so long as no default as aforesaid has
occurred, the balance shall be distributed to the account of Trustor. Upon any
such default, Beneficiary may at any time without notice, either in person, by
agent or by a receiver to be appointed by a court, and without regard to the
adequacy of any security for the indebtedness hereby secured, enter upon and
take possession of the Property or any part thereof, in its own name or in the
name of Trustor, sue for or otherwise collect the Rents, including those past
due and unpaid and apply the same, less costs and expenses of operation and
collection, including reasonable attorneys' fees and expenses, to the payment of
the principal and interest and all other sums due or payable on said promissory
note and to the payment of all other sums payable under this Deed of Trust and
in such order as Beneficiary may determine. The entering upon and taking
possession of the Property, the collection of the Rents and the application
thereof as aforesaid, shall not cure or waive any default or notice of default
hereunder or invalidate any act done pursuant to such notice.
All leases and rental agreements now or hereafter affecting the Real
Property, including all oil and gas leases and other subsurface leases and the
royalties derived therefrom, are hereby assigned and transferred to Beneficiary
by the Trustor, and Trustor hereby agrees and covenants that none of said leases
or rental agreements will be modified or terminated without the consent in
writing of Beneficiary. Trustor shall provide to Beneficiary a non-disturbance
and attornment agreement, in form acceptable to Beneficiary, executed by each
tenant under a lease or rental agreement for a portion of said Real Property
executed after the date hereof.
Trustor agrees that it will not (a) execute any further assignment of
any of its right, title and interest in the Rents without the prior written
consent of Beneficiary; (b) accept prepayments of any installments of Rents to
become due under any leases or rental agreements in excess of one (1) month
except prepayments in the nature of security which security will not exceed an
amount equal to one (1) month's rent under the lease or rental agreement; (c)
with respect to any lease or rental agreement having a term of two (2) years or
more, Trustor will not terminate, amend or modify any such lease or rental
agreement without the prior written consent of the Beneficiary or (d) accept a
surrender of any such lease or rental agreement.
(12) Trustor hereby represents, warrants and covenants that:
(a) To the best of its knowledge, neither the Real Property
which is the subject of this Deed of Trust nor any other real property occupied
and/or owned by Trustor has ever been used by Trustor or any other previous
owner and/or operator in connection with the disposal of or to refine, generate,
manufacture, produce, store, handle, treat, transfer, release, process or
transport flammable explosives, radioactive materials, asbestos, PCB, hazardous
wastes, toxic substances or related materials, including, without limitation,
any substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," or "toxic substances"
under any Hazardous Materials Laws (defined below) (collectively, "Hazardous
Materials") other than in strict compliance with applicable law, and Trustor
will not at any time use the Real Property or such other real property for the
disposal, refining, generating, manufacturing, producing,
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storing, handling, treating, transferring, releasing, processing or transporting
of any Hazardous Materials other than in strict compliance with applicable law.
(b) After diligent investigation including, but not limited
to, engineering reports and an environmental assessment report provided to
Beneficiary, Trustor warrants and represents to the best of its knowledge that
the Real Property is free of Hazardous Materials and contaminants which are or
could be detrimental to the Real Property, human health or the environment or in
violation of any governmental laws or regulations.
(c) To the best of its knowledge, neither the Real Property or
any other real property owned and/or occupied by Trustor has been designated,
listed or identified in any manner by the United States Environmental Protection
Agency ("EPA") or under and pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, set forth at 42
U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act of
1986, as amended, set forth at 42 U.S.C. 6901 et seq. ("RCRA"), or any other
environmental protection statute as a hazardous waste or hazardous substance
disposal or removal site, superfund or cleanup site or candidate for removal of
closure pursuant to RCRA, CERCLA or any other environmental protection statute.
(d) Trustor has not received a notice, summons, citation,
directive, letter or other communication, written or oral (collectively,
"Notice") from the EPA or any other federal or state governmental agency or
instrumentality, authorized pursuant to an environmental protection statute,
concerning any intentional or unintentional action or omission by Trustor
resulting in the releasing, spilling, leaking, pumping, pouring, emitting,
emptying, dumping or otherwise disposing of Hazardous Materials into the
environment resulting in damage thereto or to the fish, shellfish, wildlife,
biota or other natural resources.
Trustor shall, and shall cause all tenants, employees, agents,
contractors and subcontractors of Trustor and any other persons present on or
occupying the Real Property to, keep and maintain the Real Property, including
the soil and groundwater thereof, in compliance with, and not cause or permit
the Real Property, including the soil and groundwater thereof, to be in
violation of, any federal, state or local laws, ordinances or regulations
relating to industrial hygiene or to the environmental conditions thereon,
including but not limited to any Hazardous Materials Laws. Neither Trustor nor
tenants, employees, agents, contractors and subcontractors of Trustor nor any
other persons occupying or present on the Real Property shall use, generate,
manufacture, store or dispose of on, under or about the Real Property or
transport to or from the Real Property any Hazardous Materials.
The intended use of the Real Property is for office and research and
development purposes ("Permitted Use") and Trustor shall not change or alter the
Permitted Use unless Trustor shall have first notified Beneficiary thereof in
writing and Beneficiary shall have determined, in its sole and absolute
discretion, that such change or modification will not result in the presence of
Hazardous Materials on the Real Property in such a level that would increase the
potential liability for Hazardous Materials Claims.
Trustor shall immediately advise Beneficiary in writing of: (a) any
Notices (whether such Notices are received from the EPA, the Occupational Safety
and Health Agency, the Department of Health Services, the State Water Quality
Control Board, the Department of Sanitation, the Department of Public Works or
any other federal, state or local governmental agency or regional office
thereof) of violation or potential violation which are received by Trustor of
any applicable federal, state or local laws, ordinances or regulations relating
to any Hazardous Materials, including but not limited to CERCLA, RCRA, the
Hazardous Materials Transportation Act, the Hazardous Substances Account Act,
the Hazardous Substances Act, the Occupational Health and Safety Act, the
Porter-Cologne Water Quality Control Act, the Solid Waste Management Act of
1980, the Toxic Pit Cleanup Act, the Underground Tank Act of 1984, and the
California Water Quality Improvement Act (collectively, "Hazardous Materials
Laws"); (b) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened pursuant to any Hazardous
Materials Laws; (c) all claims made or threatened by any third party against
Trustor or the Trust Estate relating to damage, contribution, cost recovery
compensation, loss or injury resulting from any Hazardous Materials (the matters
set forth in clauses (a), (b) and (c) above are collectively referred to herein
as "Hazardous Materials
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Claims"); and (d) Trustor's discovery of any occurrence or condition on any real
property adjoining or in the vicinity of the Real Property that could cause the
Real Property or any part thereof to be classified as "border-zone property"
under the provisions of California Health and Safety Code, Sections 25220 et
seq., or any regulation adopted in accordance therewith, or to be otherwise
subject to any restrictions on the ownership, occupancy, transferability or use
of the Real Property under any Hazardous Materials Laws.
To the extent Beneficiary has a reasonable basis to believe its
security for the Loan is or might be impaired by any Hazardous Materials Claims
or in the event of any default hereunder or under any other Loan Document,
Beneficiary shall have the right but not the obligation to join and participate
in, as a party if it so elects, any legal proceedings or actions initiated in
connection with any Hazardous Materials Claims and to have its reasonable
attorneys' and consultants' fees in connection therewith paid by Trustor upon
demand.
Trustor shall be solely responsible for, and shall indemnify and hold
harmless Beneficiary, its directors, officers, employees, agents, successors and
assigns, from and against any loss, damage, cost, expense or liability directly
or indirectly arising out of or attributable to the use, generation, storage,
release, threatened release, discharge, disposal or presence (whether prior to
or during the term of the Loan) of Hazardous Materials on, under or about the
Real Property (whether by Trustor or a predecessor in title or any employees,
agents, contractor or subcontractors of Trustor, or any predecessor in title,
any third persons at any time occupying or present on the Real Property, or from
any other cause whatsoever), including, without limitation: (a) all foreseeable
and unforeseeable consequential damages including third party claims; (b) the
costs of any required or necessary repair, cleanup or detoxification of the Real
Property, including the soil and groundwater thereof, and the preparation and
implementation of any closure, remedial or other required plans; (c) damage to
any natural resources; and (d) all reasonable costs and expenses incurred by
Beneficiary in connection with clauses (a), (b) and (c), including but not
limited to reasonable attorneys' and consultants' fees.
Any costs or expenses incurred by Beneficiary for which Trustor is
responsible or for which Trustor has indemnified Beneficiary shall be paid to
Beneficiary on demand, and failing prompt reimbursement, shall be added to the
indebtedness secured by this Deed of Trust and earn interest at the default rate
set forth in the note secured hereby until paid in full.
Trustor shall not take any cleanup, containment, restoration, removal
or other remedial work (collectively, "Remedial Work") in response to the
presence of any Hazardous Materials on, under or about the Real Property without
prior written notice to Beneficiary of the scope and nature of such Remedial
Work; provided, however, that prior written notice shall not be necessary in the
event that the presence of Hazardous Materials on, under or about the Real
Property either poses an immediate threat to the health, safety or welfare of
any individual or is of such a nature that an immediate remedial response is
necessary and it is not possible to notify Beneficiary before taking such
action. In such event, Trustor shall notify Beneficiary as soon as practicable
of any action so taken. Trustor shall not, without Beneficiary's prior written
consent, which shall not be unreasonably withheld, enter into any settlement
agreement, consent decree or other compromise in respect to any Hazardous
Material Claims, which remedial action, settlement, consent or compromise might,
in Beneficiary's reasonable judgment, impair the value of Beneficiary's security
hereunder.
In the event any investigation or monitoring of conditions on the Real
Property or any Remedial Work is required under any applicable Hazardous
Materials Laws, by any judicial order, by any governmental entity, or in order
to comply with any agreements affecting the Real Property because of or in
connection with any Hazardous Material Claims, Trustor shall perform or cause to
be performed the Remedial Work in compliance with such Hazardous Material Laws
or agreement. All Remedial Work shall be performed by one or more contractors,
selected by Trustor and approved in advance in writing by Beneficiary, and under
the supervision of a consulting engineer, selected by Trustor and approved in
writing by Beneficiary. All costs and expenses of such Remedial Work shall be
paid by Trustor, including, without limitation, the charges of such contractors
and/or the consulting engineer, and Beneficiary's reasonable attorneys' fees and
costs incurred in connection with monitoring or reviewing such Remedial Work. In
the event Trustor shall fail to timely commence or cause to be commenced, or
fail to diligently prosecute to completion, such Remedial Work, Beneficiary may,
but shall not be required to, cause such Remedial Work to be performed, and all
costs and expenses thereof shall be due and payable upon demand therefor by
Trustor.
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If during the term of the loan secured by this Deed of Trust
Beneficiary has reasonable cause to believe that Hazardous Materials have
migrated onto the Real Property or have otherwise come onto the Real Property in
violation of the terms of this Deed of Trust or there has been a default by
Trustor hereunder with respect to Hazardous Materials, at Beneficiary's request,
Trustor shall retain, at Trustor's sole cost and expense, a licensed geologist,
industrial hygienist or an environmental consultant (a "Consultant") acceptable
to Beneficiary to conduct an environmental site assessment of the Real Property
for the presence of Hazardous Materials ("Environmental Audit"). The
Environmental Audit shall be performed in a manner reasonably calculated to
discover the presence of Hazardous Materials contamination. The Consultant shall
concurrently deliver the results of its investigation in writing directly to
Trustor and Beneficiary without prior consultation with either party unless
conducted in the presence of the other party.
If Trustor fails to pay for or obtain an Environmental Audit as
provided for herein, Beneficiary may, but shall not be obligated to, obtain the
Environmental Audit, and either demand reimbursement from Trustor or add the
cost thereof to the indebtedness secured by this Deed of Trust, in which case
interest shall accrue on such sum at the default rate set forth in the note
secured hereby. Furthermore, Trustor hereby grants Beneficiary, its employees
and agents the right, exercisable at any time and at Beneficiary's sole cost and
expense, to enter upon the Real Property for the purpose of conducting an
inspection, sampling and testing to determine whether there have been any
violations of the covenants contained in this Paragraph 12.
Trustor's liability under this Paragraph 12 shall not terminate until
the earlier of (i) the sale of the Real Property pursuant to the enforcement of
the lien of this Deed of Trust, the proceeds of which are applied to the
indebtedness secured hereby, or (ii) the payment in full of the indebtedness.
(13) Trustor agrees to indemnify, defend and hold harmless Trustee and
Beneficiary from and against any and all losses, liabilities, suits,
obligations, fines, damages, judgments, penalties, claims, charges, costs and
expenses (including attorneys' fees and disbursements) which may be imposed on,
incurred or paid by or asserted against Trustee and/or Beneficiary by reason or
on account of, or in connection with (a) any willful misconduct of Trustor or
any default or event of default by Trustor hereunder or under any other Loan
Document; (b) Trustee's and/or Beneficiary's good faith and commercially
reasonable exercise of any of their rights and remedies, or the performance of
any of their duties hereunder or under the other Loan Documents to which Trustor
is a party; (c) Trustor's failure to perform or comply with any of the covenants
set forth in Paragraph 12 above; (d) the construction, reconstruction or
alteration of the Real Property; (e) any negligence of Trustor, or any
negligence or willful misconduct of any lessee of the Real Property or any
portion thereof, or any of their respective agents, contractors, employees,
licensees or invitees; or (f) any accidents, injury, death or damage to any
person or property occurring in, on or about the Real Property or any street,
drive, sidewalk, curb or passageway adjacent thereto, except for the willful
misconduct or gross negligence of Beneficiary or Trustee. Upon demand by Trustee
and/or Beneficiary, Trustor shall defend any action or proceeding brought
against Trustee and/or Beneficiary arising out of or alleging any claim or cause
of action covered by this indemnity, all at Trustor's own cost and by counsel to
be approved by Beneficiary in the exercise of its reasonable judgment. In the
alternative, Trustee and/or Beneficiary may elect to conduct its own defense at
the expense of Trustor. The provisions of this Paragraph 13 shall survive the
foreclosure or the delivery of a deed in lieu of foreclosure of this Deed of
Trust or the payment in full of the indebtedness secured hereby and the
termination and reconveyance of this Deed of Trust, as the case may be.
Any amount payable to Trustee or Beneficiary under Paragraph 12 or this
Paragraph 13 shall be due and payable immediately after demand therefor and
receipt by Trustor of a statement setting forth in reasonable detail the amount
claimed and the basis therefor, and such amounts shall bear interest at the rate
specified in Paragraph 6 hereof from and after the date such amounts are paid by
Beneficiary or Trustee, as the case may be, until paid in full by Trustor.
(14) That upon default by Trustor in payment of any indebtedness
secured hereby or in performance of any agreement hereunder or under any other
Loan Document (including the breach of any representation or warranty, which
shall be deemed for the purpose of this Paragraph 14 to be absolute and not
merely to Trustor's best knowledge), Beneficiary may take any action or pursue
any right or remedy permitted under applicable law specifically including,
without limiting, impairing or otherwise affecting its other rights and remedies
declare all
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sums secured hereby immediately due and payable by delivery to Trustee written
declaration of default and demand for sale and of written notice of default and
of election to cause to be sold the Real Property, which notice Trustee shall
cause to be filed for record. Beneficiary also shall deposit with Trustee this
Deed of Trust, said note and all documents evidencing expenditures secured
hereby.
After the lapse of such time as may then be required by law following
the recordation of said notice of default, and notice of the sale having been
given as then required by law, Trustee, without demand on Trustor, shall sell
the Real Property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine,
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. Trustee may postpone sale of all or any portion
of said Real Property by public announcement at such time and place of sale, and
from time to time thereafter may postpone such sale by public announcement at
the time fixed by the preceding postponement. Trustee shall deliver to such
purchaser its deed conveying the Real Property so sold, but without any covenant
or warranty, express or implied. The recitals in such deed of any matters or
facts shall be conclusive proof of the truthfulness thereof. Any person,
including Trustor, Trustee, or Beneficiary as herein defined, may purchase at
such sale.
After deducting all costs, fees and expenses of Trustee and of this
Trust, including cost of evidence of title in connection with sale, Trustee
shall apply the proceeds of sale to payment of: all sums expended under the
terms hereof, not then repaid, with accrued interest at the rate specified in
Paragraph 6 hereof; all other sums then secured hereby; and the remainder, if
any, to the person or persons legally entitled thereto.
If this Deed of Trust or any note secured hereby provides for any
charge for prepayment of any indebtedness secured hereby, Trustor agrees to pay
said charge if any of said indebtedness shall be paid prior to the date thereof
stated in said note or this Deed of Trust, even if and notwithstanding Trustor
shall have defaulted in payment thereof, or in performance of any agreement
hereunder, and Beneficiary, by reason thereof, shall have declared all sums
secured hereby immediately due and payable.
(15) Following recordation of a notice of default, Beneficiary and
prospective bidders at any foreclosure sale shall have the right to enter and
inspect said Real Property at reasonable times and upon reasonable notice to
Trustor. Trustor shall, promptly following the recordation of a notice of
default, but in any event prior to the date of sale set in the notice of sale,
disclose to Beneficiary in writing all material facts regarding said Real
Property.
Trustor hereby waives any claims against Beneficiary or Trustee arising
out of or in connection with any disclosures regarding said Real Property which
may be made by Beneficiary or Trustee to prospective bidders at or prior to the
foreclosure sale. In addition, Trustor shall indemnify, defend and hold harmless
Trustee and Beneficiary from and against all losses, liabilities, suits, damages
claims or judgments which may arise out of or in connection with any disclosures
regarding said Real Property which may be made by Beneficiary or Trustee to
prospective bidders at or prior to the foreclosure sale. All costs, fees and
expenses incurred by Beneficiary or Trustee in connection with such inspections
and disclosures shall be payable by Trustor upon demand therefor, and such
amounts shall bear interest at the rate specified in Paragraph 6 hereof from the
date paid by Beneficiary until paid in full by Trustor, and if not so paid shall
be added to the amount secured hereby.
(16) That if the Trustor, or any subsequent owner of the Real Property
covered hereby, shall occupy said property, or any part thereof, after any
default in payment of any amount secured by this Deed of Trust, the Trustor, or
such owner, shall pay to the Beneficiary in advance on the first day of each
month a reasonable rental for the premises so occupied, and upon failure to pay
such reasonable rental, the Trustor, or such owner, may be removed from said
premises by summary dispossess proceedings or by any other appropriate action or
proceeding.
(17) Trustor hereby represents and warrants: (a) that it is or will be
the lawful owner of all of the Trust Estate free of all claims, liens or
encumbrances whatsoever, other than the security interests granted pursuant
hereto and such other matters as may be approved in writing by Lender in
Lender's sole and absolute
10
<PAGE>
discretion; (b) all information, including but not limited to financial
statements furnished by Trustor to Beneficiary heretofore or hereafter, whether
oral or written, is and will be correct and true as of the date given; and (c)
if Trustor is a business entity, the execution, delivery and performance hereof
are within its powers and have been duly authorized.
(18) With respect to the Personal Property and the security interest
granted to Beneficiary under the Deed of Trust, the following shall apply:
(a) Trustor shall: (i) execute such financing statements and
other documents and do such other acts and things, all as Beneficiary may from
time to time require, to establish and maintain a valid security interest in the
Personal Property, including payment of all costs and fees in connection with
any of the foregoing when deemed necessary by Beneficiary; (ii) keep the
Personal Property separate and identifiable and at the location described herein
and permit Beneficiary and its representatives to inspect the Personal Property
and/or records pertaining thereto from time to time during normal business
hours; (iii) at Trustor's expense upon Beneficiary's request remove any
unauthorized lien or security interest and defend any claim affecting the
Personal Property; (iv) reimburse Beneficiary for any expenses including but not
limited to reasonable attorneys' fees and legal expenses, incurred by
Beneficiary in seeking to protect, collect or enforce any rights in the Personal
Property; (v) maintain the Personal Property in good condition and not use the
Personal Property for any unlawful purpose; and (vi) at its own expense, upon
request of Beneficiary, notify any parties obligated to Trustor on any of the
Personal Property to make payment to Beneficiary, and Trustor hereby irrevocably
grants Beneficiary power of attorney to make said notifications and collections.
Trustor does hereby authorize Beneficiary to perform any and all acts which
Beneficiary in good faith deems necessary for the protection and preservation of
the Personal Property or its value or Beneficiary's security interest therein,
including transferring any of the Personal Property into its own name and
receiving the income thereon as additional security hereunder.
(b) Whenever a default exists under this Deed of Trust,
Beneficiary, at its option may: (i) transfer any of the Personal Property into
its own name or that of its nominee; (ii) notify any parties obligated on any of
the Personal Property consisting of accounts, instruments, chattel paper, choses
in action or the like to make payment to Beneficiary and enforce collection of
any of the Personal Property herein; (iii) require Trustor to assemble and
deliver any of the Personal Property to Beneficiary at a reasonable convenient
place designated by Beneficiary. No delay on the part of Beneficiary in the
exercise of any right or remedy shall constitute a waiver thereof and any
exercise, or partial exercise, by Beneficiary of any right or remedy under this
Paragraph 18 shall not preclude the exercise of any other right or remedy of
Beneficiary under this Paragraph 18, this Deed of Trust or at law or in equity
or the further exercise of the same remedy. This Paragraph 18 shall not be
construed to derogate or impair the lien or provisions of any other provision of
the Deed of Trust with respect to any property described in the Deed of Trust
that is real property or which the parties have agreed to treat as real
property. Beneficiary's rights, power and remedies as to the Personal Property
shall be exercisable as to any part or all of the Personal Property as
Beneficiary may elect.
(c) Trustor hereby assumes, and releases Beneficiary from, all
risk of loss, destruction or damage to all or any part of the Personal Property
by reason of any casualty or cause whatsoever except as caused by the
intentional misconduct of Beneficiary, and Trustor shall indemnify and hold
Beneficiary harmless from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including, reasonable
attorneys' fees and costs) imposed upon or incurred by or asserted against
Beneficiary by reason of (i) any failure by Trustor to perform or comply with
the terms of this Deed of Trust or (ii) the exercise by Beneficiary of any
rights or remedies provided hereunder or at law or in equity, except as caused
by Beneficiary's intentional misconduct.
(d) Upon transfer by Beneficiary of any part of the
obligations secured hereby, Beneficiary shall be fully discharged from all
liability with respect to the Personal Property transferred therewith.
11
<PAGE>
(e) The grant of a security interest in proceeds,
replacements, substitutions or the like does not imply any right of Trustor to
sell or dispose of any Personal Property described herein without the express
written consent by Beneficiary.
(19) Beneficiary, acting alone, may from time to time, by instrument in
writing, substitute a successor or successors to any Trustee named herein or
acting hereunder, which instrument, executed and acknowledged by each and
recorded in the office of the recorder of the county or counties where said
property is situated, shall be conclusive proof of proper substitution of such
successor Trustee or Trustees, who shall, without conveying from the Trustee
predecessor, succeed to all its title, estate, rights, powers and duties. Said
instrument must contain the name of the original Trustor, Trustee and
Beneficiary hereunder, the book and page or document number where this Deed of
Trust is recorded, and the name and address of the new Trustee. If notice of
default shall have been recorded, this power of substitution cannot be exercised
until after the costs, fees and expenses of the then acting Trustee shall have
been paid to such Trustee, who shall endorse receipt thereof upon such
instrument of substitution.
(20) That any Trustor who is a married person hereby expressly agrees
that recourse may be had against his or her separate property, but without
hereby creating any lien or charge thereon, for any deficiency after sale of the
property hereunder.
(21) If requested, that Trustor shall furnish at least annually, within
ninety (90) days after the end of its fiscal year, or more frequently if
requested by Beneficiary, a full and complete financial statement concerning
income, expenses, assets and liabilities of Trustor, and/or applicable or
attributable to the Trust Estate encumbered hereby and the operations thereof,
and such other information as Beneficiary may request. Such statement shall be
prepared in accordance with generally accepted accounting principles and shall
be certified as true, complete and correct by Trustor. Trustor shall keep true
and correct records upon which annual statements are based for not less than
three (3) years after delivery of the required annual statement. Beneficiary
shall have the right, at its cost and at any time and from time to time after
giving prior written notice to Trustor, to do or cause to be done any of the
following: to audit the records; to cause an audit of the records to be made; to
make abstracts from the records; to make copies of any or all of the records; to
examine any or all leases and rental agreements (if such leases and rental
agreements exist); and to make copies of any or all leases and rental agreements
(to the extent such leases and rental agreements exist). Trustor shall make all
records specified in the notice available at the time specified in the notice
and at the place where the records are customarily kept, or at Beneficiary's
option at Beneficiary's office. Upon any default under the note described above,
this Deed of Trust or other Loan Documents, Beneficiary may perform any of the
acts authorized by this paragraph at the sole cost of Trustor. Trustor shall
promptly reimburse Beneficiary for its costs and such costs shall be secured by
this Deed of Trust.
(22) That the pleading of any statute of limitations as a defense to
any and all obligations secured by this Deed of Trust is hereby waived to the
full extent permissible by law.
(23) That this Deed of Trust applies to, inures to the benefit of, and
binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors and assigns. The term Beneficiary shall mean the owner and
holder, including pledgees, of the note secured hereby, whether or not named as
Beneficiary herein. In this Deed of Trust, whenever the context so requires, the
masculine gender includes the feminine and neuter, and the singular number
includes the plural. If more than one (1) person executes this Deed of Trust as
Trustor, the obligations of such persons are joint and several.
(24) That Trustee accepts this Trust when this Deed of Trust, duly
executed and acknowledged, is made a public record as provided by law. Trustee
is not obligated to notify any party hereto of pending sale under any other deed
of trust or of any action or proceeding in which Trustor, Beneficiary or Trustee
shall be a party unless brought by Trustee.
(25) To pay Beneficiary for each and every beneficiary statement
furnished at Trustor's request the maximum fee allowed by law and if there be no
maximum, then in accordance with Beneficiary's schedule therefor. Such fee shall
be computed as of the time said statement is furnished.
12
<PAGE>
(26) That should Trustor sell, convey, transfer, dispose of or further
encumber (collectively, "Transfer") the Trust Estate or any part thereof or any
interest therein or enter into a lease (other than a lease entered into by
Trustor in the ordinary course of business on commercially reasonable terms for
a term not exceeding five (5) years) upon commercially reasonable terms covering
all or any portion thereof or an undivided interest therein, either voluntarily,
involuntarily or otherwise, or enter into an agreement so to do, without the
prior written consent of Beneficiary being first had and obtained, then
Beneficiary may, at its option, declare all sums secured hereby immediately due
and payable. . . . Consent to one such transaction shall not be deemed to be a
waiver of the right to require such consent to future or successive
transactions.
(27) In addition, without limiting the foregoing, if (i) there should
occur a sale, conveyance, transfer, disposition or encumbrance, either voluntary
or involuntary, or should an agreement be entered into to accomplish any thereof
(in each case, an "Acquisition") of all the issued and outstanding capital stock
of Trustor, and (ii) the net worth of the acquiring or surviving corporation
(after giving effect to any transfer of assets and liabilities between Trustor
and the acquiring or surviving corporation) shall be less than the net worth of
Trustor existing immediately prior to the effective date of such Acquisition,
then in such event Beneficiary may, at its option, declare all sums secured
hereby immediately due and payable unless Beneficiary shall have given its prior
written consent thereto. Consent to one such transaction shall not be deemed to
be a waiver of the right to require such consent to future or successive
transactions.
(28) That in the event of the passage after the date hereof of any law
deducting from the value of real property, for taxation purposes, any lien
thereon or changing in any way the laws now in force for the taxation of deeds
of trust or debts whether or not secured thereby for federal, state or local
purposes or the manner of the collection of any such taxes so as to affect this
Deed of Trust or the obligations hereby secured, Trustor agrees to pay any
thereof and if Trustor fails to so do or if it would be illegal for Trustor so
to do then, the whole of the principal sum secured by this Deed of Trust,
together with accrued interest thereon shall, at the option of Beneficiary,
without demand or notice, immediately become due and payable.
(29) To the fullest extent permitted by law, Trustor hereby waives the
provisions of Section 431.70 of the California Code of Civil Procedure and all
amendments thereto.
(30) That no remedy herein conferred upon, reserved to Trustee or
Beneficiary is intended to be exclusive of any other remedy herein or by law
provided, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute. No delay or omission of Trustee or Beneficiary in the exercising of any
right or power accruing upon any event of default hereunder shall impair such
right or power or any other right or power nor shall the same be construed to be
a waiver of any default or any acquiescence therein; and every power and remedy
given by this Deed of Trust to Trustee or Beneficiary may be exercised from time
to time as often as may be deemed expedient by Trustee or Beneficiary. If there
exists additional security for the obligations secured hereby, Beneficiary, at
its sole option, and without limiting or affecting any of the rights or remedies
hereunder, may exercise any of the rights or remedies to which it may be
entitled hereunder either concurrently with whatever rights it may have in
connection with such other security or in such order and in such manner as
Beneficiary may deem fit without waiving any rights with respect to any other
security. The granting of consent by Beneficiary to any transaction as required
by the terms hereunder shall not be deemed a waiver of the right to secure the
consent of Beneficiary to future or successive transactions.
(31) That in the event any one or more of the provisions contained in
this Deed of Trust or in the promissory note hereby secured shall for any reason
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this Deed
of Trust or said promissory note, but this Deed of Trust and said promissory
note shall be construed as if such invalid, illegal or unenforceable provision
had never been contained herein or therein.
(32) TRUSTOR ACKNOWLEDGE(S) AND AGREE(S) THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT OR THE LENDING RELATIONSHIP ESTABLISHED HEREBY WOULD
BE BASED UPON DIFFICULT AND COMPLEX ISSUES, AND THEREFORE, TRUSTOR HEREBY
WAIVE(S) ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
13
<PAGE>
(INCLUDING ACTIONS SOUNDING IN TORT) TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
DEED OF TRUST OR ANY OTHER LOAN DOCUMENT OR ARISING FROM THE TRANSACTION
CONTEMPLATED HEREUNDER OR THE LENDING RELATIONSHIP ESTABLISHED HEREBY AND
AGREE(S) THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE AND NOT BY A JURY.
(33) This Deed of Trust has been executed and delivered in the State of
California and is to be construed and enforced according to and governed by the
laws thereof except that with respect to any portion of the Trust Estate covered
hereby located outside of the State of California, only to the extent required
for Trustee or Beneficiary to enforce or realize upon the rights and remedies
hereunder with respect thereto, the laws of the state in which such property is
located shall be applicable hereto.
The undersigned Trustor requests that a copy of any notice of default
and of any notice of sale hereunder be mailed to him at his address hereinbefore
set forth.
TRUSTOR:
SPECTRIAN CORPORATION, a California
corporation
By: /s/ Edward A. Supplee, Jr.
----------------------------------------
Title: VP
-------------------------------------
14
<PAGE>
State of California On May 15, 1996
-------------------------- -------------------------------
} SS.
County of Santa Clara before me, /s/ Jodie Capron ,
-------------------------- -----------------------
personally appeared
/s/ Ed Supplee ,
---------------------------------
proved to me on the basis of
satisfactory evidence to be the
persons whose names are subscribed
to the within instrument, and
acknowledged to me that they
executed the same in their
authorized capacities, and that by
their signatures on the instrument
the persons, or the entity upon
behalf of which the persons acted,
executed the instrument.
==========================================
JODIE L. CAPRON WITNESS my hand and official seal.
CALIFORNIA COMM. # 981494
SEAL NOTARY PUBLIC -- CALIFORNIA /s/ Jodie L. Capron
COUNTY OF SANTA CLARA ---------------------------------
Notary's Signature
Comm. Exp. Dec. 20, 1996
==========================================
15
<PAGE>
EXHIBIT E
PROMISSORY NOTE SECURED BY DEED OF TRUST
$6,000,000.00 May 15, 1996
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to
Silicon Valley Bank, or order ("Holder"), at 1731 Embarcadero Road, Palo Alto,
California, 94303, or at such other place or to such other party as Holder may
from time to time designate, the principal sum of Six Million and No/100 Dollars
($6,000,000.00), or so much of that sum as may be advanced under this Note by
Holder (such amount herein called the "Loan"), plus interest as computed below.
This Note is made by Maker as of the date first set forth above in
accordance with the terms and conditions of that certain Term Loan Agreement of
even date (herein called the "Loan Agreement") between Maker and Holder. Holder
is authorized to make advances of the Loan to Maker in accordance with the Loan
Agreement in an amount not to exceed the total aggregate sum of Six Million and
No/100 Dollars ($6,000,000.00).
This Note is secured by (i) a Deed of Trust, Security Agreement,
Assignment of Rents and Fixture Filing (With Assignment of Rents and Leases) of
even date (the "Java Deed of Trust"), encumbering the "Trust Estate" (as defined
therein) including the real property commonly known as 350 Java Drive,
Sunnyvale, California, as described more particularly in the Java Deed of Trust,
and (ii) a Deed of Trust, Security Agreement, Assignment of Rents and Fixture
Filing (With Assignment of Rents and Leases) of even date (the "Gibraltar Deed
of Trust"), encumbering the "Trust Estate" (as defined therein) including the
real property commonly known as 160 Gibraltar Court, Sunnyvale, California, as
described more particularly in the Gibraltar Deed of Trust (collectively, the
"Deeds of Trust").
Interest on the principal balance of the indebtedness outstanding from
time to time on this Note shall be computed at the per annum rate of
three-fourths percent (0.75%) in excess of the rate of interest announced from
time to time by Holder as its prime interest rate (the "Prime Rate"), which as
of the date of this Note is Eight and One-Quarter percent (8.25%), with any
change in that prime rate to result in a change in the rate of interest payable
on this Note, effective on the date of each such change. Interest will be
computed on a Three Hundred Sixty (360) day basis and the actual number of days
elapsed. Should Holder no longer exist or fail to announce a Prime Rate, the
Prime Rate shall be the annual rate of interest publicly announced from time to
time by Bank of America National Trust and Savings Association at its corporate
headquarters in San Francisco, California, as its "reference" rate of interest.
Maker recognizes that default by Maker in making the payments required
under this Note, the Loan Agreement, the Deeds of Trust, and other documents
evidencing or securing this loan (collectively, the "Loan Documents"),
including, but not limited to,
1
<PAGE>
payments of interest and principal, will result in Holder incurring additional
expense in servicing this Note, in loss to Holder of the use of the money due,
and in frustration to Holder in meeting its loan commitments. Maker agrees that
if, for any reason, Maker fails to pay when due any interest or principal due
under this Note or any amounts due under the other Loan Documents, Holder shall
be entitled to damages for the detriment caused thereby, but that it is
extremely difficult and impracticable to ascertain the extent of such damages.
Maker therefore agrees that a reasonable estimate of such damages to Holder,
which sum Maker agrees to pay on demand, is the sum of the following amounts:
(i) an amount equal to four percent (4.0%) of each payment not paid when due;
and (ii) an amount equal to the Additional Interest described below. For
purposes of this paragraph the "Additional Interest" shall be computed as
follows: Such delinquent payment shall bear interest commencing on the date any
such delinquent payment was due and continuing for so long as the default
continues, regardless of whether or not there has been an acceleration of the
Loan, at the rate of four percent (4.0%) in excess of Prime Rate per annum,
until paid ("Default Rate"), such interest to be compounded annually.
In the event the payment of principal due on Maturity Date (as
hereinafter defined) is not made when due, such principal amount (together with
any accrued interest) shall, at the option of Holder, bear interest at the
Default Rate, until paid, such interest to be compounded annually.
Holder shall have no liability to Maker if in fact Holder charges any
person or entity a rate or rates different from its announced prime rate, it
being the intention of Holder and Maker that the prime rate as announced by
Holder shall be the basis upon which interest shall be computed upon the
indebtedness evidenced by this Note.
All unpaid principal and accrued unpaid interest on this Note shall be
due and payable in full on June 30, 2001 (the "Maturity Date").
From the date of the first advance of the Loan until June 30, 1996,
interest-only payments shall be paid monthly on the first (1st) day of the month
following the date of the advance at the rate set forth herein. For the period
from and after July 1, 1996, and continuing through the Maturity Date, principal
on the indebtedness evidenced by this Note shall be payable in equal monthly
installments based on a twenty-five (25) year amortization schedule for
repayment of such principal indebtedness, plus interest accruing on the unpaid
principal at the current rate of interest hereunder. Such installments of
principal plus interest each shall be due and payable monthly on the first day
of each calendar month commencing August 1, 1996, and ending on the Maturity
Date, at which time all unpaid principal and accrued unpaid interest shall be
due and payable in full. If, on the due date of the first installment of
principal and interest, interest is due and accrued for a period of more, or
less, than one month, the amount of said installment shall be increased or
decreased to the extent that the amount of interest due and accrued exceeds or
is less than one month's interest. In the event of
2
<PAGE>
any change in the interest rate on indebtedness hereunder resulting from a
change to the Prime Rate, the interest payable by Maker shall be adjusted
effective as of the date of such change.
The books and records of Holder shall be the best evidence of the
principal amount and the unpaid interest amount owing at any time under this
Note and shall be conclusive absent manifest error.
Maker agrees that Holder may, without notice to Maker and without
affecting the liability of Maker, accept additional or substitute security for
this Note, or release any security or any party liable for this Note, or extend
or renew this Note.
If Maker consists of more than one entity, their obligations under this
Note shall be joint and several.
All amounts payable under this Note are payable in lawful money of the
United States, without notice, demand, offset or deduction. Checks will
constitute payment only when collected. Any amount paid on this Note shall be
applied first to payment of accrued but unpaid interest on this Note, then
toward the outstanding balance of this Note, or applied to such other
obligations of Maker then due and owing to Holder under any of the Loan
Documents, as determined by Holder in its sole discretion. Maker hereby waives
California Civil Code Section 2822(a) which provides that Maker has the right to
designate the portion of the obligation that is satisfied by any partial
payment.
This Note may be prepaid in whole or in part at any time by Maker
without penalty.
An "Event of Default" shall have occurred under this Note upon the
occurrence of an Event of Default under and as defined by the Loan Agreement. At
any time following an Event of Default, Holder may, at its option and without
notice or demand, declare immediately due and payable the entire unpaid
principal sum of this Note together with all accrued interest.
Maker and any guarantors of this Note for themselves, their heirs,
legal representatives, successors and assigns, respectively, severally waive
presentment, demand, protest, and notice of dishonor and waive any right to be
released by reason of any extension of time or change in terms of payment or any
change, alteration, or release of any security given for the payment hereof.
Maker agrees to pay all costs of collection when incurred, by Holder,
including but not limited to attorneys' fees and all related costs. If any suit
or action is instituted to enforce this Note, Maker promises to pay, in addition
to the costs and disbursements otherwise allowed by law, such sum as the court
may adjudge reasonable attorneys' fees
3
<PAGE>
and costs in such suit or action to Holder as the prevailing party. This Note
shall be governed by and construed in accordance with the laws of the State of
California. This Note has been delivered to Holder and accepted by Holder in the
State of California. If there is a lawsuit on this Note, Maker shall submit, at
Holder's request, to the jurisdiction of the courts of Santa Clara County,
California.
No single or partial exercise of any power hereunder or under any other
of the Loan Documents shall preclude other or further exercises thereof or the
exercise of any other power. Holder shall at all times have the right to proceed
against any portion of the security for this Note in such order and in such
manner as Holder may consider appropriate, without waiving any rights with
respect to any of the security. Any delay or omission on the part of Holder in
exercising any right hereunder or under any of the Loan Documents shall not
operate as a waiver of such right, or of any other right under this Note or the
other Loan Documents.
Any terms used in this Note which are not expressly defined herein
shall have the meaning ascribed to them in the Loan Agreement.
This Note shall inure to the benefit of Holder and its successors and
assigns. The obligations of Maker hereunder or under any of the other Loan
Documents shall not be delegated to any person or entity without the prior
written consent of Holder.
The Deeds of Trust securing this Note contain the following
provisions:
That should Trustor sell, convey, transfer, dispose of or
further encumber (collectively, "Transfer") the Trust Estate
or any part thereof or any interest therein or enter into a
lease (other than a lease entered into by Trustor in the
ordinary course of business on commercially reasonable terms
for a term not exceeding five (5) years) upon commercially
reasonable terms covering all or any portion thereof or an
undivided interest therein, either voluntarily, involuntarily
or otherwise, or enter into an agreement so to do, without
the prior written consent of Beneficiary being first had and
obtained, then Beneficiary may, at its option, declare all
sums secured hereby immediately due and payable. . . .
Consent to one such transaction shall not be deemed to be a
waiver of the right to require such consent to future or
successive transactions.
In addition, without limiting the foregoing, if (i) there
should occur a sale, conveyance, transfer, disposition or
encumbrance, either voluntary or involuntary, or should an
agreement be entered into to accomplish any thereof (in each
case, an "Acquisition") of all the issued and outstanding
capital stock of Trustor, and (ii) the net worth of the
acquiring or surviving corporation (after giving effect to
any transfer of assets and liabilities between Trustor and
the acquiring or surviving corporation) shall be less
4
<PAGE>
than the net worth of Trustor existing immediately prior to
the effective date of such Acquisition, then in such event
Beneficiary may, at its option, declare all sums secured
hereby immediately due and payable unless Beneficiary shall
have given its prior written consent thereto. Consent to one
such transaction shall not be deemed to be a waiver of the
right to require such consent to future or successive
transactions.
MAKER ACKNOWLEDGE(S) AND AGREE(S) THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS NOTE OR THE LENDING RELATIONSHIP ESTABLISHED HEREBY WOULD BE BASED
UPON DIFFICULT AND COMPLEX ISSUES, AND, THEREFORE, MAKER HEREBY WAIVE(S) ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING ACTIONS SOUNDING
IN TORT) TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR ARISING FROM THE
TRANSACTION CONTEMPLATED HEREUNDER OR THE LENDING RELATIONSHIP ESTABLISHED
HEREBY AND AGREE(S) THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED IN A COURT
OF COMPETENT JURISDICTION BY A JUDGE AND NOT BY A JURY.
MAKER:
SPECTRIAN CORPORATION,
a California corporation
By: /s/ Edward A. Supplee, Jr.
----------------------------------------
Its: VP
----------------------------------------
5
Exhibit 11.1
SPECTRIAN CORPORATION AND SUBSIDIARY
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(In thousands except per share data)
Three months ended
July 1, June 29,
-------------------------
1995 1996
--------- ----------
Net income (loss) $ 2,264 $ (5,314)
========= ==========
Weighted average number of shares
outstanding used in computation:
Common Stock 7,368 8,039
Common Stock equivalents
as a result of stock options
outstanding 908 n/a *
--------- ----------
Shares used in computing per
share amounts ** 8,276 8,039
========= ==========
Net income (loss) per share $ 0.27 $ (0.66)
========= ==========
* Due to the loss in this period, stock options outstanding would be
antidilutive and are therefore not included in the calculation.
** The dilutive impact of options determined using the fully diluted
calculation is not materially different from the dilutive impact
represented in this statement determined using the primary method.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS, CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<NAME> SPECTRIAN CORP /CA/
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