California-Sunnyvale-100/150 Mathilda Place Assignment and Security Agreement - Handspring Facility Co. LLC and M-F Downtown Sunnyvale LLC
ASSIGNMENT AND SECURITY AGREEMENT
THIS ASSIGNMENT AND SECURITY AGREEMENT ("Assignment Agreement") is made
as of January 29, 2003, by and between HANDSPRING FACILITY COMPANY, LLC, a
Delaware limited liability company ("HFC") and M-F DOWNTOWN SUNNYVALE, LLC, a
Delaware limited liability company ("M-F Downtown").
RECITALS
This Agreement is entered into upon the basis of the following facts,
understandings and intentions of the parties:
A. M-F Downtown owns certain real property located in Sunnyvale, Santa
Clara County, California, commonly known as 150 Mathilda Place and more
particularly described on Exhibit A hereto (the "Building 2 Parcel") a
multi-story office building ("Building 2") situated therein.
B. M-F Downtown also owns certain real property located in Sunnyvale,
Santa Clara County, California, commonly known as 100 Mathilda Place and more
particularly described on Exhibit B hereto (the "Building 3 Parcel" and,
together with the Building 2 Parcel, the "Property") and a multi-story office
building ("Building 3" and, together with Building 2, the "Buildings") situated
therein.
C. On or about February 14, 2001, M-F Downtown, as landlord, and
Handspring, as tenant entered into that certain Lease Agreement (Building 2) (as
the same has been amended by the parties prior to the date hereof, the "Building
2 Lease"), whereby M-F Downtown agreed to lease to Handspring, and Handspring
agreed to lease from M-F Downtown, all of the Rentable Area within Building 2
(as the term "Rentable Area" is defined in the Building 2 Lease) and certain
associated parking and other rights. As security for the performance of its
obligations under the Building 2 Lease, Handspring caused Wells Fargo Bank to
issue to M-F Downtown an unconditional, irrevocable, transferable letter of
credit (the "Building 2 Security Deposit Letter of Credit") in the amount of
Nine Million Five Hundred Fifty-Seven Thousand Dollars ($9,557,000).
D. In connection with the Building 2 Lease, M-F Downtown and Handspring
entered into that certain Work Letter (Building 2) (as the same has been amended
by the parties prior to the date hereof, the "Building 2 Work Letter") governing
the completion of construction of Building 2 by M-F Downtown and Handspring and
the construction of certain tenant improvements therein by Handspring. As
security for the performance of its obligations under the Building 2 Work
Letter, Handspring caused Wells Fargo Bank to issue to M-F Downtown an
unconditional, irrevocable, transferable letter of credit (the "Building 2 TI
Letter of Credit") in the amount of Nine Million Two Hundred Eighty-Four
Thousand Dollars ($9,284,000).
-1-
<PAGE>
E. On or about February 14, 2001, M-F Downtown, as landlord, and
Handspring, as tenant entered into that certain Lease Agreement (Building 3) (as
the same has been amended by the parties prior to the date hereof, the "Building
3 Lease"), whereby M-F Downtown agreed to lease to Handspring, and Handspring
agreed to lease from M-F Downtown, all of the Rentable Area within Building 3
other than the Excluded Space (as the terms "Rentable Area" and "Excluded Space"
are defined in the Building 3 Lease) and certain associated parking and other
rights. As security for the performance of its obligations under the Building 3
Lease, Handspring caused Wells Fargo Bank to issue to M-F Downtown an
unconditional, irrevocable, transferable letter of credit (the "Building 3
Security Deposit Letter of Credit") in the amount of Fourteen Million Three
Hundred Thirty-Five Thousand Dollars ($14,335,000).
F. In connection with the Building 3 Lease, M-F Downtown and Handspring
entered into that certain Work Letter (Building 3) (as the same has been amended
by the parties prior to the date hereof, the "Building 3 Work Letter") governing
the completion of construction of Building 3 by M-F Downtown and Handspring and
the construction of certain tenant improvements therein by Handspring. As
security for the performance of its obligations under the Building 3 Work
Letter, Handspring caused Wells Fargo Bank to issue to M-F Downtown an
unconditional, irrevocable, transferable letter of credit (the "Building 3 TI
Letter of Credit") in the amount of Fourteen Million Two Hundred Thousand
Dollars ($14,200,000).
G. As contemplated by the Building 2 Lease and the Building 3 Lease
(collectively, the "Leases") and by the Building 2 Work Letter and the Building
3 Work Letter (collectively, the "Work Letters"), Bank of America, N.A., as
administrative agent for M-F Downtown's construction lenders (collectively, the
"Construction Lenders") (Bank of America, N.A., acting in such capacity being
referred to herein as ("Bank of America"), has become the beneficiary under the
Building 2 Security Deposit Letter of Credit and the Building 3 Security Deposit
Letter of Credit (collectively, the "Security Deposit Letters of Credit") and
under the Building 2 TI Letter of Credit and the Building 3 TI Letter of Credit
(collectively, the "TI Letters of Credit" and, together with the Security
Deposit Letters of Credit, the "Letters of Credit"). Neither the Building 2
Security Deposit Letter of Credit nor the Building 3 Security Deposit Letter of
Credit has been drawn upon by M-F Downtown or Bank of America. In accordance
with the terms of the Building 2 Work Letter, the principal amount of the
Building 2 TI Letter of Credit has been reduced to Six Million Seven Hundred
Twenty Thousand Eight Hundred Fifty-Eight and 80/100 ($6,720,858.80) to and in
accordance with the terms of the Building 3 Work Letter, the principal amount of
the Building 3 TI Letter of Credit has been reduced to Ten Million Three Hundred
Twenty-Eight Thousand One Hundred Twenty-Four and 23/100 Dollars
($10,328,124.23); neither of the TI Letters of Credit have been drawn upon by
M-F Downtown or Bank of America.
H. In light of the current business cycle and the local market for
commercial real estate leasing and sub-leasing, Handspring has requested that
M-F Downtown provide Handspring with significant economic relief under the terms
of the Buildings 2 Lease and the Building 3 Lease (collectively, the "Leases").
On careful analysis, Handspring has concluded that if the parties can agree on
terms for modifying the Leases, Handspring will benefit both as to the
immediately quantifiable economic relief bargained for and as to the opportunity
afforded Handspring to thereby continue its business.
-2-
<PAGE>
I. In light of the current business cycle and the local market for
commercial real estate leases and sub-leasing, M-F Downtown is willing to enter
into a material restructuring of the Leases, but only if the transaction is
economically balanced, fair in fact and on arms' length terms.
J. The parties have agreed to co-operate in the form of a unified
transaction involving the restructuring of the Leases in a manner which includes
the sale of Building 3 by M-F Downtown in order to provide Handspring with the
requested economic relief, to minimize financial loss to the parties, and to
adopt a single, integrated structure that will enable Handspring to perform its
modified obligations to M-F Downtown, while minimizing the risk to M-F Downtown
should Handspring subsequently be unwilling or unable to so perform. In order to
accomplish such restructuring, Handspring, HFC and Mozart have entered into a
Property Purchase and Lease Modification Agreement dated as of January 16, 2003.
The transactions contemplated by such agreement are collectively referred to
herein as the "Transaction".
K. M-F Downtown has relied on the statements and agreements contained
herein in agreeing to consummate the Transaction. The execution and delivery of
this Assignment Agreement is a condition precedent to the consummation of the
Transaction by M-F Downtown.
L. In order to induce M-F Downtown to consummate the Transaction, and as
a direct material benefit to HFC, HFC has agreed to transfer, deliver, pledge,
assign and grant a perfected security interest in the Settlement Funding Note
(defined below) to and for the benefit of M-F Downtown as security for HFC's
payment and performance of the Obligations (defined below).
Accordingly, the parties hereto hereby agree as follows:
1. DEFINITIONS. In addition to all of the other capitalized terms
defined herein, the following terms shall have the following respective
meanings:
(a) "Building 3 Lease" means that certain Amended and Restated
Lease Agreement (Building 3) between HFC, as tenant, and M-F Downtown, as
landlord, of even date herewith,
(b) "Code" means the California Commercial Code, as in effect
from time to time in the State of California.
(c) "Collateral" means (i) the Settlement Funding Note, (ii) all
Proceeds, and (iii) rights of HFC, if any, as a creditor of Handspring or any of
its affiliates.
(d) "Five Year Note" means that certain promissory note from
HFC, as maker, to M-F Downtown, as payee, of even date herewith in the principal
sum of Three Million Dollars ($3,000,000).
(e) "Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code, as amended, or
under any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or
-3-
<PAGE>
informal moratoria, compositions, extensions generally with its creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.
(f) "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset.
(g) "Note" or "Notes" means the Five Year Note and/or the One
Year Note, as the context shall require.
(h) "Obligation Document" or "Obligation Documents" means the
Five Year Note, the One Year Note and/or the Building 3 Lease, as the context
shall require.
(i) "Obligations" means all obligations and liabilities of HFC
to M-F Downtown under the Obligation Documents, whether now owing or hereafter
arising.
(j) "One Year Note" means that certain promissory note from HFC,
as maker, to M-F Downtown, as payee, of even date herewith in the principal sum
of One Million Dollars ($1,000,000).
(k) "Person" shall mean an individual, a corporation, a
partnership, a limited liability company, a limited liability partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
(l) "Proceeds" means (i) all "proceeds" (as such term is defined
in Section 9102(a)(64) of the Code) with respect to the Collateral, and (ii)
includes whatever is receivable or received when Collateral is sold, collected,
exchanged or otherwise disposed of, whether such disposition is voluntary or
involuntary, and including, without limitation, all rights to payment, including
returned premiums, with respect to any insurance relating thereto and also
includes all interests, dividends and other property receivable or received on
account of the Collateral or proceeds thereof.
(m) "Settlement Funding Note" means that certain Promissory Note
from Handspring, as maker, to HFC, as payee, and dated of even date herewith.
2. PLEDGED COLLATERAL.
(a) GRANT OF SECURITY INTEREST IN COLLATERAL. In order to secure
the due and punctual payment and performance of the Obligations, HFC hereby (i)
assigns the Collateral to M-F Downtown, and (ii) grants to M-F Downtown a first
priority lien on and security interest in the Collateral, for the benefit and
security of M-F Downtown and its successors and assigns.
(b) COLLATERAL AS SECURITY ONLY. The assignment and grant of the
Collateral to M-F Downtown hereunder is as security only and shall not subject
M-F Downtown to, or transfer or in any way affect or modify, any obligation or
liability of HFC under any of the Collateral or any transactions which gave rise
thereto. Anything herein to the contrary notwithstanding: (a) HFC shall remain
liable under the contracts and agreements included in or relating to the
Collateral and they shall perform all of their respective duties and obligations
-4-
<PAGE>
thereunder to the same extent as if this Assignment Agreement had not been
executed; and (b) the exercise by M-F Downtown of any of the rights hereunder
shall not release HFC from any of their respective duties or obligations under
such contracts and agreements.
3. HFC'S REPRESENTATIONS, WARRANTIES AND COVENANTS. HFC represents,
warrants, covenants and agrees as follows:
(a) TITLE. HFC has and will at all times maintain good title to
all Collateral free of all security interests, liens and encumbrances.
(b) PRESERVATION OF RIGHTS. HFC shall at its expense protect,
warrant, and defend forever its rights in the Collateral as described in Section
3(a), and the rights of M-F Downtown therein and thereto, against the claims and
demands of all Persons whomsoever.
(c) NO CONSENT. No authorization, approval, or other action by,
and no notice to or filing with, any governmental authority or regulatory body
or other Person is required for the exercise by M-F Downtown of the voting or
other rights provided for in this Assignment Agreement or the remedies in
respect of the Collateral pursuant to this Assignment Agreement; and HFC
covenants and agrees that no authorization, approval, or other action by, and no
notice to or filing with, any governmental authority or regulatory body or other
Person will be required for the exercise by M-F Downtown of the voting or other
rights provided for in this Assignment Agreement or the remedies in respect of
the Collateral pursuant to this Assignment Agreement except (i) as may be
required by applicable law including without limitation the California Uniform
Commercial Code, (ii) any agreement to which M-F Downtown is a party, (iii) for
notices to third-party creditors of HFC, and (iv) with respect to any action
that constitutes an assignment for the benefit of creditors which requires the
consent of the Independent Manager of HFC. The making and performance of this
Assignment Agreement are within HFC's power and authority and have been duly
authorized by all necessary action of HFC. This Assignment Agreement is
enforceable against HFC in accordance with its terms subject to the effect of
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
other similar laws relating to or affecting creditors' rights generally.
(d) PERFECTION OF LIENS. HFC will cooperate with M-F Downtown in
connection with M-F Downtown's present and future actions to protect and perfect
the liens and security interests of M-F Downtown hereof upon, and the rights and
interests of M-F Downtown in, the Collateral. The security interest created
hereby or intended so to be represents a first priority lien on and security
interest in the Collateral, and such security interest is superior and prior in
right to the rights of all third Persons.
(e) OTHER ASSURANCES. Without limiting the provisions of Section
3(d), HFC upon request shall do, execute, acknowledge and deliver all and every
such further acts, conveyances, supplemental agreements, assignments,
instruments, notices of assignments, registrations, financing statements,
continuation statements, transfers, assurances and other instruments, documents,
writings and agreements (herein collectively called "Other Assurances") as M-F
Downtown may from time to time reasonably deem necessary or advisable, for the
better assuring, conveying, assigning, transferring, hypothecating, pledging and
confirming unto M-F Downtown the Collateral and rights hereby granted, conveyed
or assigned or which HFC may be
-5-
<PAGE>
or may hereafter become bound to convey or assign to M-F Downtown, or for
carrying out the intention of or facilitating the performance of the terms of
this Assignment Agreement or for filing, registering or recording this
Assignment Agreement or subjecting any portion of the Collateral to the lien and
security interest hereof with the priority required therefor hereunder or for
facilitating M-F Downtown's exercise of its rights and remedies hereunder. To
the extent M-F Downtown elects to do so, M-F Downtown may do any of the acts
described in this paragraph in the name of HFC or M-F Downtown, on HFC's behalf
(but in no event shall M-F Downtown be obligated to do any such acts, nor shall
M-F Downtown have any liability to HFC or any person or entity claiming by or
through HFC if M-F Downtown fails to do any such acts). The power and authority
hereby given and granted by HFC to M-F Downtown shall be deemed coupled with an
interest and shall not be revocable by HFC. If any provision of any Other
Assurance is inconsistent with any provision hereof, the provisions hereof shall
control, except that any remedy provided, or any obligation of HFC required, by
any Other Assurance which may be greater than or in addition to the remedies
provided or obligations required hereunder shall not be deemed to be an
inconsistency.
(f) NO OTHER FINANCING STATEMENTS. Without the prior written
consent of M-F Downtown, HFC will not file or authorize or permit to be filed in
any jurisdiction any financing statement or like instrument covering or relating
to any Collateral in which M-F Downtown is not named as the secured party.
(g) MAINTENANCE OF RECORDS. HFC shall keep and maintain at its
own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of any and all payments received
(subject to the collection rights of M-F-Downtown pursuant to Section 4(b)
below) and any and all credits granted with respect to the Collateral and all
other dealings with the Collateral. Upon at least three (3) business days prior
notice to HFC and at the request of M-F Downtown (unless an Event of Default has
occurred and is continuing, in which case no notice is necessary), M-F Downtown
at all times shall have full and free access during normal business hours to all
of the books and records and correspondence of HFC pertaining to the Collateral,
and M-F Downtown or its representatives may examine the same. HFC shall, upon
request by M-F Downtown, provide legible photocopies thereof to M-F Downtown,
and HFC agrees to render to M-F Downtown, at HFC's cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto. Upon the occurrence and during the continuation of any Event of
Default, HFC shall deliver to M-F Downtown or its representatives at any time
upon demand of M-F Downtown one set of legible photocopies of HFC's books and
records pertaining to the Collateral. This Section 3(g) shall not be construed
as entitling M-F Downtown to receive, and HFC shall not have any obligation to
disclose, any material non-public information regarding Handspring or HFC
pursuant to the provisions of this Section 3(g) which M-F Downtown would be
required to maintain confidential pursuant to applicable law unless M-F Downtown
first enters into a commercially reasonable confidentiality agreement with
Handspring with respect to such material non-public information.
(h) MAINTENANCE OF OFFICE. HFC represents and warrants that it
maintains an office and its address for service of process is located at 189
Bernardo Avenue, Mountain View, California. HFC covenants and agrees that it
will not change such address unless HFC, at least thirty (30) days prior to such
change, notifies M-F Downtown of such change and takes all action
-6-
<PAGE>
necessary or that M-F Downtown may reasonably request to preserve, perfect,
confirm and protect (to the extent contemplated hereby) M-F Downtown's liens and
security interests in the Collateral.
(i) LIENS AND ENCUMBRANCES. HFC shall pay all obligations,
including tax claims, prior to any lien or encumbrance attaching to or on any of
the Collateral as a result of its failure to pay any such obligations.
(j) NOTICES. HFC shall advise M-F Downtown promptly, in
reasonable detail of (a) any material Lien or other encumbrance attaching to or
asserted against any of the Collateral, and (b) any material change in the
composition of the Collateral.
(k) TRANSFER OF COLLATERAL. HFC agrees that it will not sell,
assign, transfer or otherwise dispose of, or mortgage, encumber, assign, pledge
or grant a security interest in, any of the Collateral or any interest therein
or suffer or permit any of the foregoing to occur (any of the foregoing, a
"Transfer"). Any Transfer made in violation of the foregoing provisions shall be
an immediate Event of Default hereunder without notice or opportunity to cure
and such Transfer shall be void and of no force or effect, and upon demand of
M-F Downtown shall forthwith be canceled or satisfied by an appropriate
instrument in writing.
(l) DELIVERY OF PROCEEDS. After the occurrence of an Event of
Default, and in addition to M-F Downtown's collection rights pursuant to Section
4(b) below, all proceeds of the Collateral received by HFC shall be promptly
delivered to M-F Downtown, in the same form as received, with the addition only
of such endorsements and assignments as may be necessary to transfer title to
M-F Downtown, and pending such delivery, such proceeds shall be held in trust
for M-F Downtown; and such proceeds shall be applied to the obligations secured
hereby in such order as M-F Downtown shall elect in its sole discretion.
(m) INFORMATION SUPPLIED BY HFC. All information heretofore,
herein or hereafter supplied in writing to M-F Downtown by HFC with respect to
the Collateral was, is and shall be accurate and complete in all material
respects as of the date furnished.
(n) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
foregoing representations, warranties, covenants and other agreements shall
survive the execution and delivery of this Assignment Agreement until all of the
Obligations have been indefeasibly paid in full or otherwise satisfied.
4. PARTICULAR PROVISIONS RESPECTING COLLATERAL
(a) DELIVERY OF COLLATERAL. Upon execution of this Assignment
Agreement, HFC shall deliver physical possession of the Settlement Funding Note,
which is an instrument, to M-F Downtown. All Collateral in which HFC may acquire
rights shall be immediately delivered to M-F Downtown (to the extent such
Collateral is capable of possession).
-7-
<PAGE>
(b) RIGHTS OF HFC TO COLLATERAL.
(i) So long as this Assignment is outstanding, and so
long as an Event of Default has not occurred and is continuing, M-F
Downtown shall receive all payments made or other Proceeds generated on,
of or from the Collateral directly from HFC ("Collateral Payments").
Upon an Event of Default and during the time that such Event of Default
is continuing, M-F Downtown shall receive all payments made or other
Proceeds generated on, of or from the Collateral directly from all
underlying makers, account debtors or obligation parties.
(ii) Whether or not an Event of Default has occurred or
is continuing, M-F Downtown shall apply Collateral Payments to the
obligations of HFC in the following order: FIRST, to pay for the costs
and expenses of M-F Downtown for any attorney's fees, costs or other
compensation due pursuant to Section 5(d) hereof or due to M-F Downtown
by assignment pursuant to the terms of any underlying instrument which
is Collateral; and SECOND, to principal, interest, default interest,
late charges, or fees or costs of any kind, if any, due to M-F Downtown
under or in respect to any of the Obligations in any order determined by
M-F Downtown in its sole discretion.
(c) POWER OF ATTORNEY.
(i) HFC hereby irrevocably constitutes and appoints M-F
Downtown and any officer of M-F Downtown and any agent designated by
such officer, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place
and stead of HFC and in the name of HFC, or in its own name, from time
to time in M-F Downtown's discretion, for the purpose of carrying out
the terms of this Assignment Agreement, to take any and all appropriate
action and to execute and deliver any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Assignment Agreement and, without limiting the generality of the
foregoing, hereby gives M-F Downtown the power and right, on behalf of
HFC, without notice to or assent by HFC to do the following after an
Event of Default:
(A) to ask, demand, collect, receive and give
acquittance and receipts for any and all moneys due and to
become due under any Collateral and, in the name of HFC, or its
own name or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Collateral
and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by
M-F Downtown for the purpose of collecting any and all such
moneys due under or in connection with any Collateral whenever
payable and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by M-F Downtown for the purpose of collecting any
and all such moneys due under any Collateral whenever payable;
(B) to pay or discharge taxes, liens, security
interests or other encumbrances levied or placed on or
threatened against the Collateral;
-8-
<PAGE>
(C) (I) to direct any party liable for any
payment under any of the Collateral to make payment of any and
all moneys due, and to become due thereunder, directly to M-F
Downtown or as M-F Downtown shall direct; (II) to receive
payment of and receipt for any and all moneys, claims and other
amounts due, and to become due at any time, in respect of or
arising out of any Collateral; (III) to sign and endorse any
assignments, verifications and notices in connection with
documents constituting or relating to the Collateral; (IV) to
commence and prosecute any suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect
the Collateral or any part thereof and to enforce any other
right in respect of any Collateral; (V) to defend any suit,
action or proceeding brought against HFC with respect to any
Collateral; (VI) to settle, compromise or adjust any suit,
action or proceeding described above and, in connection
therewith, to give such discharges or releases as M-F Downtown
may deem reasonably appropriate; and (VII) generally to sell,
make any agreement with respect to or otherwise deal with any of
the Collateral as fully and completely as though M-F Downtown
were the absolute owner thereof for all purposes, and to do, at
M-F Downtown's option and HFC's expense, at any time, or from
time to time, all acts and things which M-F Downtown reasonably
deems necessary to protect, preserve or realize upon the
Collateral and M-F Downtown's Lien therein, in order to effect
the intent of this Assignment Agreement, all as fully and
effectively as HFC might do; and
(D) to receive any and all distributions paid in
respect of the Collateral and to make application thereof to the
Obligations, and M-F Downtown or its nominee may exercise any
and all rights, privileges or options pertaining to the
Collateral as if it were the absolute owner thereof, all without
liability except to account for property actually received by
it, but M-F Downtown shall have no duty to exercise any such
right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing.
(ii) The powers conferred on M-F Downtown hereunder are
solely to protect M-F Downtown's interests in the Collateral and shall
not impose any duty upon it to exercise any such powers. M-F Downtown
shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers and neither it nor any of its
officers, directors, employees, attorneys, or agents shall be
responsible to HFC for any act or failure to act, except for its own
gross negligence or wilful misconduct.
(iii) HFC also authorizes M-F Downtown, at any time and
from time to time upon the occurrence and during the continuation of an
Event of Default, to execute, in connection with the sale provided for
in Section 5 hereof, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral.
5. DEFAULT.
(a) DEFAULT; EVENTS OF DEFAULT. HFC agrees that the occurrence
of the following, together with the expiration of any applicable notice and/or
cure period (if any), shall constitute an "Event of Default" under this
Assignment Agreement:
-9-
<PAGE>
(i) If a default occurs under the Obligation Documents;
or
(ii) If HFC fails to pay any fees, costs or other
amounts as and when required to be paid under this Assignment Agreement
within three (3) business days after written demand by M-F Downtown; or
(iii) If M-F Downtown shall cease to have a first
priority security interest in any of the Collateral or if HFC violates
Section 3(k) hereof; or
(iv) If HFC takes any action or permits any action to be
taken that is reasonably likely to, or does, materially and irreparably
impair the value of the Collateral; or
(v) If a bankruptcy case or other arrangement,
composition or reorganization proceeding of any kind is filed by or
against HFC; provided, however, that in the event of the filing of an
involuntary bankruptcy petition, such Default may be cured by obtaining
dismissal of such petition with sixty (60) days after filing; or
(vi) If a decree or order is entered for the appointment
of a trustee, receiver or liquidator for HFC or the property of HFC;
provided, however, that the Default arising in consequence thereof shall
be cured if such decree or order is vacated within sixty (60) days after
the date of entry; or
(vii) If HFC commences any proceeding for dissolution or
liquidation; or any such proceeding is commenced against HFC and the
proceeding is not dismissed within ninety (90) days after the date of
commencement; or
(viii) If HFC makes an assignment for the benefit of his
creditors, or admits in writing his inability to pay his debts generally
as they become due; or
(ix) If there is an attachment, execution or other
judicial seizure of any property of HFC; provided, however, that the
Default arising in consequence thereof shall be cured if such seizure is
discharged within ten (10) days; or
(x) If a judgment or other claim becomes a lien or
encumbrance upon any material portion of HFC's properties or assets; or
(xi) If any representation or disclosure made in writing
to M-F Downtown by HFC in connection with the Transaction proves to be
materially false or misleading when made; or
(xii) If there is a default in any material agreement to
which HFC is a party with one or more third Persons resulting in a right
by such third Persons, irrespective of whether exercised, to accelerate
the maturity of HFC's obligations thereunder; or
(xiii) Except with respect to (i) the payment of money
and (ii) the other matters hereinbefore and hereinafter specified in
this Section 5(a), if HFC shall default in
-10-
<PAGE>
the observance or performance of any covenant or agreement contained in
this Assignment Agreement for thirty (30) days after the giving by M-F
Downtown to HFC of written notice thereof (or, with respect to a default
which, in the judgment of M-F Downtown, shall be of such a nature that
it cannot be cured or remedied within thirty (30) day period, if HFC
shall not (x) promptly commence to cure within such thirty (30) day
period and thereafter exercise due diligence and continuous good faith
effort to remedy the same or (y) cure such failure within sixty (60)
days after the giving by M-F Downtown to HFC of written notice thereof),
or failure for such lesser time period as may be specified elsewhere in
this Assignment Agreement.
(b) REMEDIES GENERALLY. Following the occurrence and during the
continuation of an Event of Default, M-F Downtown may, in addition to all other
rights and remedies granted to it herein, exercise all the rights and remedies
of a secured party under the Code and, in addition, M-F Downtown may, without
being required to give any notice, except as hereinafter provided or as may be
required by mandatory provisions of law, continue to apply any cash payments
then held by it, and/or sell the Collateral, or any part thereof, at public or
private sale or at any broker's board or on any securities exchange, for cash,
upon credit or for future delivery, and at such price or prices as M-F Downtown
may deem satisfactory. M-F Downtown may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations, at any private sale) and
thereafter hold the same, absolutely, free from any right or claim of HFC
whatsoever. To the fullest extent permitted by law, HFC hereby specifically
waives all rights of stay or appraisal which it has or may have under any rule
of law or statute now existing or hereafter in force. M-F Downtown shall give
HFC at least five (5) days prior written notice of its intention to make any
such public or private sale or sale at a broker's board or on a securities
exchange. Such notice, in case of a public sale, shall state the time and place
fixed for such sale, and, in case of sale at a broker's board or on a securities
exchange, shall state the board or exchange at which such sale is to be made and
the day on or after which the Collateral or the portion thereof so being sold
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as M-F Downtown may fix in the notice of such sale. At any such
sale the Collateral may be sold in one lot as an entirety or in separate
parcels, as M-F Downtown may determine. M-F Downtown shall not be obligated to
make any such sale pursuant to any such notice. M-F Downtown may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by M-F Downtown
until the selling price is paid by the purchaser thereof, but M-F Downtown shall
not incur any liability in case of the failure of such purchaser to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may again be sold upon like notice. M-F Downtown, instead of exercising the
power of sale herein conferred upon it, may proceed by a suit or suits at law or
in equity to foreclose the security interests herein granted and sell the
Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.
-11-
<PAGE>
(c) APPLICATION OF MONEYS. The proceeds of any sale, disposition
or other realization upon all or any part of the Collateral (other than a
retention of all or part of the Collateral in full satisfaction of the
Obligations) shall be distributed by M-F Downtown in the following order of
priority, to the fullest extent permitted by law, as soon as practicable:
First: To M-F Downtown for any unpaid fees and other
amounts payable to M-F Downtown pursuant to Section 5(d) hereof;
Second: To M-F Downtown in an amount equal to the
aggregate amount of Obligations which are then unpaid; and
Third: Any surplus then remaining shall be distributed
without recourse or warranty, to HFC.
(d) COMPENSATION AND EXPENSES. HFC shall pay to M-F Downtown,
from time to time upon demand (i) all reasonable fees and out-of-pocket expenses
of counsel for M-F Downtown, in connection with the enforcement of this
Assignment Agreement and Other Assurances or the Collateral, and (ii) all other
out-of-pocket costs and expenses of M-F Downtown in connection with the
enforcement of this Assignment Agreement and each Other Assurance, including,
without limitation, any advance made by M-F Downtown on behalf of HFC under any
Other Assurance, the sale or other disposition of Collateral pursuant to any
Other Assurance and the preservation, protection or defense of M-F Downtown's
rights under this Assignment Agreement and any Other Assurance and in and to the
Collateral.
6. MISCELLANEOUS
(a) NATURE OF RELATIONSHIP. M-F Downtown and HFC intend that the
relationship between them shall be solely that of creditor and debtor. Nothing
in this Assignment Agreement or the Obligation Documents shall be construed to
create a partnership or any other relationship which would make M-F Downtown in
any way responsible or liable for the debts, losses, obligations or duties of
HFC. In that regard, HFC acknowledges and agrees that:
(i) M-F Downtown shall not be directly or indirectly
liable or responsible for any loss or injury of any kind to any Person
or property arising from any act or omission of HFC or any of HFC's
agents, independent contractors, licensees or invitees;
(ii) M-F Downtown shall not be responsible or liable to
HFC for the validity, sufficiency or genuineness of any documents
(except as to M-F Downtown's signatures thereon), or of any endorsements
thereon, even if such documents should in fact prove to be in any
respect invalid, insufficient, inaccurate, fraudulent or forged.
(b) NOTICES. Any notice or other communication hereunder shall
be in writing and shall be given personally, or by prepaid registered mail with
return receipt requested or by commercial airfreight delivery service
guaranteeing next day delivery. Notices may also effectively be given by
transmittal over electronic transmitting devices such as facsimile, telex or
telecopy machine if the party to whom the notice is being sent has such a device
in its office,
-12-
<PAGE>
provided that a standard machine-printed confirmation of the electronic
transmission is provided and also provided that a complete copy of any notice so
transmitted shall also be mailed in the same manner as required for a mailed
notice. Notices which are mailed or forwarded by commercial airfreight delivery
service shall be addressed as follows:
If to M-F Downtown:
------------------
M-F Downtown Sunnyvale, LLC
c/o Mozart Development Company
1068 East Meadow Circle
Palo Alto, CA 94303
Attention: Mr. John Mozart and
Mr. James Freitas
Facsimile No.: (650) 493-9050
With a copy to:
--------------
Ellman, Burke, Hoffman & Johnson
One Ecker Street, Suite 200
San Francisco, California 94105
Attention: Mr. Jeffrey W. Johnson and
Mr. Thomas M. Sherwood
Facsimile No.: (415) 495-7587
If to HFC:
---------
Handspring Facility Company, LLC
189 Bernardo Avenue
Mountain View, CA 94043-5203
Attention: Mr. David Pine
Facsimile No.: (650) 230-5477
With a copy to:
--------------
Coblentz, Patch, Duffy & Bass, LLP
222 Kearny Street, 7th Floor
San Francisco, California 94108
Attention: Richard R. Patch
Facsimile No: (415) 989-1663
(c) THIRD PARTIES. No provision of this Assignment Agreement is
intended or shall be construed to be for the benefit of any third party.
(d) SINGULAR AND PLURAL. Whenever in this Assignment Agreement
the context so requires, the neuter gender shall include the masculine and the
feminine, the singular number shall include the plural, and the plural shall
include the singular, and vice versa as the context may require.
-13-
<PAGE>
(e) CAPTIONS. All section or paragraph division, numbering, and
captions are for convenience of reference only, and shall not affect the
interpretation or construction of this Assignment Agreement or of any term,
condition, or provision hereof.
(f) MODIFICATIONS. No modification or amendment of this
Assignment Agreement shall be effective unless set forth in writing and signed
by M-F Downtown and HFC.
(g) COUNTERPARTS. This Assignment Agreement may be executed in
one or more counterparts, all of which together shall constitute one and the
same original.
(h) SEVERABILITY. If any term or provision of this Assignment
Agreement is illegal or invalid for any reason, such illegality or invalidity
shall not affect the enforceability of the remaining provisions of this
Assignment Agreement.
(i) GOVERNING LAW. This Assignment Agreement shall be governed
by the laws of the State of California.
(j) TIME. Time is of the essence in connection with all
obligations of HFC herein.
(k) HEIRS, SUCCESSORS AND ASSIGNS; JOINT AND SEVERAL LIABILITY.
Except as otherwise expressly provided under the terms and conditions of this
Assignment Agreement, the terms hereof shall bind and inure to the benefit of
the parties hereto and their respective heirs, devisees, legatees,
administrators, executors, successors and assigns. Without limiting the
generality of the foregoing, HFC acknowledges and agrees that the rights of M-F
Downtown hereunder are being assigned concurrently herewith to Bank of America,
N.A., as administrative agent for certain lenders who have made a loan to M-F
Downtown which is secured by a deed of trust against the Parcels and Buildings
and hereby consents to such assignment. Each person executing this Assignment
Agreement as HFC shall be jointly and severally liable for all obligations of
HFC hereunder.
(l) M-F DOWNTOWN'S CONSENT. Wherever in this Assignment
Agreement there is a requirement for M-F Downtown's consent, documents to be
provided and/or an action taken to M-F Downtown's satisfaction, M-F Downtown may
exercise its consent, right or judgment in its sole discretion unless such
provision expressly provides to the contrary.
(m) COLLECTION EXPENSES. HFC shall reimburse M-F Downtown on
demand for all reasonable legal fees an other costs and expenses incurred in
collecting or enforcing this Assignment Agreement and the Obligation Documents,
and protecting or realizing on any collateral. Such fees, costs and expenses
shall include those incurred with or without suit and in any appeal, any
proceedings under any present or future federal bankruptcy act or state
receivership, and any post-judgment collection proceedings.
-14-
<PAGE>
7. JURISDICTION. To the greatest extent permitted by law, HFC hereby
waives any and all rights to require marshalling of assets by M-F Downtown. With
respect to any suit, action or proceedings relating to this Assignment Agreement
(each, a "Proceeding"), HFC irrevocably (a) submits to the non-exclusive
jurisdiction of the State and Federal courts having jurisdiction in the County
of Santa Clara and State of California, and (b) waives any objection which it
may have at any time to the laying of venue of any proceeding brought in any
such court, waives any claim that any proceeding has been brought in an
inconvenient forum and further waives the right to object, with respect to such
proceeding, that such court does not have jurisdiction over such party. Nothing
in this Assignment Agreement shall preclude M-F downtown from bringing a
proceeding in any other jurisdiction nor will the bringing of a proceeding in
any one or more jurisdictions preclude the bringing of a proceeding in any other
jurisdiction.
8. WAIVER OF JURY TRIAL. HFC AND M-F DOWNTOWN EACH, TO THE MAXIMUM
EXTENT PERMITTED BY LAW, WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY
HERETO WITH RESPECT TO THIS ASSIGNMENT AGREEMENT AND THE OBLIGATION DOCUMENTS OR
RELATING THERETO OR ARISING FROM THE RELATIONSHIP WHICH IS THE SUBJECT OF THIS
ASSIGNMENT AGREEMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY. HFC AND M-F DOWNTOWN HEREBY AGREE THAT
THIS ASSIGNMENT AGREEMENT CONSTITUTES A WRITTEN CONSENT TO WAIVER OF TRIAL BY
JURY PURSUANT TO THE PROVISIONS OF SECTION 631 OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE. HFC AND M-F DOWNTOWN HEREBY AGREE THAT THIS ASSIGNMENT AGREEMENT
CONSTITUTES A WRITTEN CONSENT TO WAIVER OF TRIAL BY JURY PURSUANT TO THE
PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 631. HFC DOES HEREBY
CONSTITUTE AND APPOINT M-F DOWNTOWN ITS TRUE AND LAWFUL ATTORNEY-IN-FACT, WHICH
APPOINTMENT IS COUPLED WITH AN INTEREST, AND HFC DOES HEREBY AUTHORIZE AND
EMPOWER M-F DOWNTOWN, IN THE NAME, PLACE AND STEAD OF HFC, TO FILE THIS
ASSIGNMENT AGREEMENT WITH THE CLERK OR JUDGE OF ANY COURT OF COMPETENT
JURISDICTION AS A STATUTORY WRITTEN CONSENT TO WAIVER OF TRIAL BY JURY.
HFC'S INITIALS: DD M-F DOWNTOWN'S INITIALS: JM
[SIGNATURES BEGIN ON NEXT PAGE]
-15-
<PAGE>
IN WITNESS WHEREOF, HFC and M-F Downtown have executed this Assignment
Agreement as of the date first above written.
"HFC" "M-F DOWNTOWN"
HANDSPRING FACILITY COMPANY, LLC, M-F DOWNTOWN SUNNYVALE, LLC,
a Delaware limited liability company a Delaware limited liability company
By: Handspring, Inc., a Delaware By: M-D Ventures, Inc., a California
Corporation, its Managing Member corporation, its Manager
By: /s/ Donna Dubinsky By: /s/ John Mozart
__________________ John Mozart
Its CEO Its President
-16-