California-Redwood City-Electronic Arts Business Park Option Agreement, Agreement of Purchase and Sale and Escrow Instructions - Electronic Arts Redwood Inc. and Spieker Properties LP
OPTION AGREEMENT,
AGREEMENT OF PURCHASE AND SALE
AND
ESCROW INSTRUCTIONS
FOR
ZONES 2 AND 4
ELECTRONIC ARTS BUSINESS PARK
REDWOOD SHORES, CALIFORNIA
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TABLE OF CONTENTS
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ARTICLE 1: DEFINITIONS..................................................................Page 1
ARTICLE 2: OPTION TO PURCHASE...........................................................Page 6
2.1 Payment of Option Price......................................................Page 6
2.2 Exercise of Option...........................................................Page 6
2.3 Approval of Title Condition..................................................Page 7
2.3.1 Title Report and Survey.............................................Page 7
2.3.2 Objectionable Title Matters and Permitted Exceptions................Page 7
2.3.3 Cure of Objectionable Title Matters.................................Page 7
2.3.4 Removal of Liens....................................................Page 7
2.4 Items to be Delivered Outside of Escrow......................................Page 8
2.4.1 Property Records and Documents......................................Page 8
2.4.2 Buyer's Financial Statements; Financial Condition...................Page 8
2.4.3 Return of Documents; Copies of Buyer Reports........................Page 8
2.5 Due Diligence................................................................Page 8
2.6 Effect of Exercise of Option.................................................Page 9
ARTICLE 3: COVENANT OF PURCHASE AND SALE AND
INSTRUCTIONS TO ESCROW AGENT.................................................Page 9
3.1 Payment of Purchase Price....................................................Page 9
3.1.1 Deposit.............................................................Page 9
3.1.1.1 Deposit Amount and Payment ................................Page 9
3.1.1.2 Investment of Deposit. ....................................Page 9
3.1.1.3 Application of Deposit ....................................Page 9
3.1.1.4 EINs ......................................................Page 9
3.1.2 Down Payment and Other Funds Required for Closing...................Page 9
3.1.3 Balance of Purchase Price...........................................Page 10
3.2 Escrow Deposits..............................................................Page 10
3.2.1 Instruments for Conveyance of the Property .........................Page 10
3.2.2 Other Escrow Deposits by Seller.....................................Page 10
3.2.2 Other Escrow Deposits by Buyer......................................Page 11
3.3 Prorations and Credits.......................................................Page 11
3.3.1 Prorated Items......................................................Page 11
3.3.1.1 Taxes .....................................................Page 11
3.3.1.2 Association Assessments ...................................Page 11
3.3.1.3 Other Revenue and Expenses ................................Page 11
3.3.2 Determination of Prorations and Credits.............................Page 12
3.3.3 Utility Charges.....................................................Page 12
3.4 Closing Costs................................................................Page 12
3.4.1 Allocation of Closing Costs.........................................Page 12
3.4.2 Preliminary Closing Statement.......................................Page 13
3.5 Closing......................................................................Page 13
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3.5.1 Time and Place......................................................Page 13
3.5.2 Closing Instructions................................................Page 13
3.6 Cancellation of Escrow Without Closing.......................................Page 14
3.7 Supplemental Escrow Agreement................................................Page 15
ARTICLE 4: FURTHER AGREEMENTS BETWEEN BUYER AND SELLER
(OF NO CONCERN TO ESCROW AGENT EXCEPT AS
EXPRESSLY REFERENCED IN ARTICLES 1 OR 3).....................................Page 15
4.1 Warranties, Representations and Covenants....................................Page 15
4.1.1 By Seller...........................................................Page 15
4.1.2 By Buyer............................................................Page 17
4.1.3 Survival............................................................Page 18
4.2 Conditions to Buyer's Obligation.............................................Page 19
4.2.1 Performance of Seller's Obligations.................................Page 19
4.2.2 Accuracy of Warranties and Representations..........................Page 19
4.2.3 City Approvals......................................................Page 19
4.3 Conditions to Seller's Obligation............................................Page 19
4.3.1 Performance of Buyer's Obligations..................................Page 19
4.3.2 No Material Change in Financial Condition...........................Page 19
4.3.3 Satisfactory Title..................................................Page 20
4.3.4 Accuracy of Warranties and Representations..........................Page 20
4.4 Indemnities..................................................................Page 20
4.4.1 Buyer's Activities on the Property..................................Page 20
4.4.2 Survival............................................................Page 20
4.5 Damage, Destruction or Condemnation..........................................Page 20
4.5.1 Termination Rights..................................................Page 20
4.5.2 If No Termination...................................................Page 20
4.5.3 Materiality.........................................................Page 21
4.6 Assignment by Buyer..........................................................Page 21
4.7 Rights of Parties Upon Default...............................................Page 21
4.7.1 Seller's Rights ....................................................Page 21
4.7.2 Buyer's Rights .....................................................Page 22
4.8 Termination..................................................................Page 22
4.8.1 By Buyer............................................................Page 22
4.8.2 By Seller...........................................................Page 22
4.8.3 Effect of Termination...............................................Page 22
4.9 Brokerage Commission.........................................................Page 23
4.10 Post-Closing Prorations and Adjustments......................................Page 23
4.10.1 Real Estate Taxes and Assessments...................................Page 23
4.10.2 Determinations of Post-Closing Prorations and Adjustments...........Page 23
4.11 Design Review................................................................Page 24
4.12 Buyer's Covenants and Agreements.............................................Page 24
4.12.1 Agreement for Covenants Running With the Land.......................Page 24
4.12.2 Development Agreement...............................................Page 24
4.12.3 Payment for Improvements............................................Page 25
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4.12.4 Facility Charges, School Facilities Fees and Proposed
Impact Fees.........................................................Page 26
4.12.5 Surplus Earth Material..............................................Page 27
4.12.6 San Carlos Airport..................................................Page 27
4.12.7 Density; Height of Construction.....................................Page 27
4.12.8 No Construction Area................................................Page 28
4.13 Enforcement Costs............................................................Page 28
4.14 Notices......................................................................Page 29
4.15 Binding Effect...............................................................Page 30
4.16 Entire Agreement; Modification...............................................Page 30
4.17 Captions.....................................................................Page 30
4.18 Interpretation...............................................................Page 30
4.19 Mutual Cooperation; Further Assurances.......................................Page 30
4.20 Exhibits.....................................................................Page 30
4.21 Counterparts.................................................................Page 31
4.22 Governing Law................................................................Page 31
4.23 Recording....................................................................Page 31
4.24 TIME OF THE ESSENCE..........................................................Page 31
4.25 Confidentiality..............................................................Page 31
4.26 Buyer's Financing Covenants; Remedies........................................Page 32
4.26.1 Permits and Legal Requirements......................................Page 32
4.26.2 Notices of Change...................................................Page 32
4.26.3 Insurance...........................................................Page 32
4.26.4 Financial Covenants and Future Financial Condition..................Page 33
4.26.5 Environmental Compliance............................................Page 33
4.26.6 Default and Remedies................................................Page 33
Exhibit
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A Description of Property
B Form of Grant Deed
C Form of Transferor's Certification of Non-Foreign Status
D Form of Seller's Closing Certificate
E Exceptions to Seller's Representations and Warranties
F Schedule of Property Records
G Form of Assumption and Covenants Agreement
H Terms of Surplus Earth Materials Option
I Form of Assignment of Sewage Treatment Capacity
J Form of Assignment and Assumption of Development Agreement and Permits
K Form of Promissory Note
L Form of Deed of Trust
M Form of Continuing Guaranty
N No Build Zones
O Form of Easement Agreement
P Form of Exercise Notice
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OPTION AGREEMENT,
AGREEMENT OF PURCHASE AND SALE
AND
ESCROW INSTRUCTIONS
FOR
ZONES 2 AND 4
ELECTRONIC ARTS BUSINESS PARK
REDWOOD SHORES, CALIFORNIA
THIS AGREEMENT AND THESE ESCROW INSTRUCTIONS ("Agreement") are made as
of April 5, 1999, by and between ELECTRONIC ARTS REDWOOD, INC., a Delaware
corporation ("Seller"), and Spieker Properties, L.P., a California limited
partnership ("Buyer").
Article 1 of this Agreement consists of definitions used throughout
this Agreement.
Article 2 of this Agreement consists of the Option to Purchase granted
to Buyer, and includes certain instructions to Escrow Agent.
Article 3 of this Agreement constitutes instructions to Escrow Agent
(defined below), as well as agreements between Buyer and Seller.
Article 4 of this Agreement consists of further agreements between
Buyer and Seller, with which Escrow Agent need not be concerned (except as
otherwise directed in Article 3). Escrow Agent may rely entirely on the
instructions contained in Article 3; however, as between Buyer and Seller, the
provisions of Article 4 shall control if there is any inconsistency between
those provisions and the instructions in Article 3.
NOW, in consideration of the mutual covenants and conditions contained
herein, Seller and Buyer hereby agree as follows:
ARTICLE 1: DEFINITIONS
The following terms, wherever used in this Agreement, shall have the respective
meanings set forth below:
1.1 Broker. "Broker" means The Commercial Property Services Company,
1740 Technology Drive, Suite 180, San Jose, California 95110.
1.2 Buyer's Closing Documents. "Buyer's Closing Documents" has the
meaning specified in Section 3.2.3.
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1.3 Buyer's Title Policy. "Buyer's Title Policy" means a standard CLTA
Owner's Policy of Title Insurance in the amount of the Purchase Price, insuring
fee title to the Property in Buyer subject only to Permitted Exceptions,
together with such endorsements as the Title Company commits to issue.
1.4 Closing Date. "Closing Date" means the date upon which Closing
occurs, which shall be two (2) business days after the Parties have secured the
City Approvals required pursuant to Section 4.3.3; provided, however, in the
event title to the Property has not been conveyed to Seller by FFLP on or before
the said Closing Date, the Closing Date shall be delayed up to sixty (60) days
after the Option Date to permit such conveyance.
1.5 Closing. "Closing" means the recordation of the Deed in the
Official Records of San Mateo County, California, concurrently with the delivery
of the Down Payment, the Note, the Deed of Trust, and the Guaranty.
1.6 Contract Assignment. "Contract Assignment" has the meaning
specified in Section 3.2.1.
1.7 Days and Business Days. The term "day" means a calendar day, and
the term "Business Day" means any day on which commercial banks are generally
open for business in the State of California. Any period of time specified in
this Agreement which would otherwise end upon a non-Business Day shall be
extended to, and shall end upon, the next following Business Day.
1.8 Deed. "Deed" means a grant deed in the form attached hereto as
Exhibit B, conveying the Property to Buyer.
1.9 Deed of Trust. "Deed of Trust" means a deed of trust of Buyer
substantially in the form of Exhibit L attached hereto covering the Property and
securing the Note. The Deed of Trust shall be a first priority lien on the
Property.
1.10 Deposit. "Deposit" shall have the meaning ascribed to that term in
Section 3.1.1.
1.11 Development Agreement. "Development Agreement" means that certain
Development Agreement dated as of November 7, 1996, by and between Flatirons
Funding, Limited Partnership, a Delaware limited partnership, and the City of
Redwood City (the "City") and recorded November 8, 1996, as Instrument No.
96-138988, Official Records, San Mateo County, California, as amended by that
First Amendment to Development Agreement dated as of April 15, 1998 and recorded
on April 15, 1998, as Instrument No. 98-054809, Official Records, San Mateo
County, California; that First Amendment to Development Agreement dated as of
April 6, 1998 and recorded on August 25, 1998 (recorded to correct typographical
errors of the First Amendment recorded on April 15, 1998), as Instrument No.
98-135753, Official Records, San Mateo County, California; and that Second
Amendment to Development Agreement dated as of August 31, 1998 and recorded on
September 2, 1998, as Instrument No. 98-141937, Official Records, San Mateo
County, California.
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1.12 District Agreement. "District Agreement" means that certain
Development Agreement GID 1-64, dated June 16, 1982, by and between Redwood
Shores Properties (as assignee of Redwood Shores, Inc.), City, and the Redwood
City General Improvement District No. 1-64, and recorded July 8, 1982, as
Instrument No. 82-057195, Official Records, San Mateo County, California, as
amended.
1.13 Down Payment. "Down Payment" means that amount equal to seventeen
percent (17%) of the Purchase Price.
1.14 Effective Date. "Effective Date" means the date first above
written.
1.15 Environmental Laws. "Environmental Laws" means any federal, state,
local or administrative agency ordinance, law, rule, regulation, order or
requirement relating to environmental conditions or Hazardous Substances.
1.16 Environmental Report. "Environmental Report" means that certain
"Environmental Site Assessment" dated February 7, 1995, prepared by Applied
Geosciences, Inc. together with that certain "Phase II Subsurface Investigation"
dated February 13, 1995, prepared by Applied Geosciences, Inc., covering the
Property.
1.17 Escrow Agent. "Escrow Agent" means the Title Company, acting
through its offices at 1737 North First Street, Suite 100, San Jose, California
95112, Attn: Susan Melton.
1.18 Escrow. "Escrow" means the escrow established by and pursuant to
this Agreement, with Escrow Agent, for purposes of consummating the sale and
purchase of the Property in accordance with this Agreement.
1.19 Exercise Notice. "Exercise Notice" means the notice from Buyer to
Seller whereby Buyer elects to exercise its option to purchase set forth in
Article 2, such notice to be in the form of Exhibit P attached hereto.
1.20 FFLP. "FFLP" means Flatirons Funding, Limited Partnership, a
Delaware limited partnership.
1.21 Gross Building Floor Area. "Gross Building Floor Area" or "GBFA"
means the sum total of all floor areas contained within the exterior walls of
office buildings and special purpose accessory structures, including but not
limited to cafeteria, day care, fitness and conferencing facilities, constructed
on the Property including stairways, elevator shafts, other shafts, mechanical
rooms, vents, and internal support facilities, but excluding those portions of
mechanical or utility structures and storage areas located on the roof to the
extent such structures are not considered by the City as building floor area for
purposes of determining parking requirements, traffic generation, building
density or other similar development limitations under existing development
regulations.
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1.22 Guaranty. "Guaranty" means the corporate guaranty of Spieker
Properties, Inc. substantially in the form of Exhibit M attached hereto provided
by Buyer as additional security for the Note.
1.23 Hazardous Substance. "Hazardous Substance" means any petroleum or
petroleum-related product, any materials containing friable asbestos or any
other hazardous or toxic waste or substance (as such terms are used in
applicable federal and/or state Laws regulating the generation, storage,
transportation, discharge, disposal, release or removal of environmentally
hazardous substances).
1.24 Last Closing Date. "Last Closing Date" means [60 days after Option
Date].
1.25 Laws. "Laws" means any and all:
(i) Constitutions, statutes, ordinances, rules, regulations,
orders, rulings or decrees of the United States, the State of
California, or of the county and any municipality in which the Property
is located or any authority, agency, division, district, court or other
authority thereof; and
(ii) Agreements with or covenants or commitments to any
government agency or other authority which are binding upon Seller or
any of the Property (including, without limitation, any requirements or
conditions for the use or enjoyment of any license, permit, approval,
authorization or consent legally required for the operation of the
Property).
1.26 Note. "Note" means a promissory note in the form of Exhibit K
attached hereto, secured by the Deed of Trust and the Guaranty.
1.27 Option Date. "Option Date" means April 9, 1999.
1.28 Option Price. "Option Price" means $250,000.00 (Two Hundred Fifty
Thousand Dollars).
1.29 Park. "Park" means the Electronic Arts Business Park.
1.30 Park CC&Rs. "Park CC&Rs" shall mean that certain Declaration of
Covenants, Conditions, Easements and Restrictions of the Electronic Arts
Business Park, dated September 3, 1998, and recorded September 18, 1998, as
Instrument No. 98-150182 in the Official Records, San Mateo County, California.
1.31 Parties and Party. "Parties" means Buyer and Seller together and
"Party" may mean either Buyer or Seller, as the case may be.
1.32 Permit. "Permit" means any permit, certificate, license or other
form of authorization or approval issued by a government agency or authority and
legally required for the proper operation and use of the Property (including,
without limitation, any conditional use
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permits and zoning variances) to the extent held and assignable by Seller or
otherwise transferable with the Property.
1.33 Permitted Exceptions. "Permitted Exceptions" means (i) liens for
real property taxes and assessments for the current year, not yet delinquent,
(ii) liens or encumbrances arising out of any activity of Buyer with respect to
the Property, (iii) the Development Agreement; (iv) the District Agreement, (v)
covenants, conditions, easements, and restrictions of record approved by Buyer
pursuant to Section 2.3, (vi) the Park CC&Rs, (vii) standard "printed form"
exceptions and exclusions from coverage customarily included within the form of
the Buyer's Title Policy, and (viii) any other matter deemed to be a Permitted
Exception pursuant to Section 2.3.
1.34 Property. "Property" means (1) that certain parcel described in
Exhibit A hereto, together with (2) all appurtenant rights (including, without
limitation, rights of access to adjoining streets and rights-of-way, water and
riparian rights, and easements).
1.35 Purchase Price. "Purchase Price" means the gross purchase price
being paid by Buyer to Seller for the Property, namely $35,500,000.00 (Thirty
Five Million Five Hundred Thousand Dollars).
1.36 Right of Way Easement. "Right of Way Easement" means that easement
from FFLP to Buyer set forth in Exhibit O.
1.37 RSP. "RSP" means Redwood Shores Properties, a California joint
venture general partnership.
1.38 Seller's Closing Documents. "Seller's Closing Documents" has the
meaning specified in Section 3.2.2.
1.39 Seller's Knowledge. "Seller's Knowledge" means the actual (and not
the constructive) current knowledge of James F. Healey, who is responsible for
asset management of the Property, and does not imply any inspection, examination
or other inquiry undertaken by Seller or said individual to determine the
accuracy of any representation, warranty or other statement made "to Seller's
Knowledge" in this Agreement or in any of Seller's Closing Documents.
1.40 Seller's Title Policy. "Seller's Title Policy" means an ALTA
Lender's Policy of Title Insurance in the amount of the Note, showing title to
the Property vested in Buyer, subject only to the first deed of trust lien of
the Deed of Trust and to the Permitted Exceptions.
1.41 Shores CC&Rs means that certain The Shores Business Center
Declaration of Covenants, Conditions, Restrictions and Charges for Commercial
Development dated January 8, 1981, and recorded February 6, 1981, as Instrument
No. 69666AS, Official Records, San Mateo County, California.
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1.42 Survey. "Survey" means that certain ALTA survey of the Park,
prepared by Bohley/Maley Associates, as job number 97023 and certified as of
March 27, 1998, by Lisa M. Maley, L.S.
1.43 Title Report. "Title Report" means the Preliminary Report prepared
by Title Company pursuant to Section 2.3.1.
1.44 Title Company. "Title Company" means First American Title
Insurance Company.
1.45 Title Policies. "Title Policies" means, collectively, the Buyer's
Title Policy and the Seller's Title Policy.
1.46 Other Definitions. Terms defined in any other part of this
Agreement shall have the defined meanings wherever capitalized herein. As used
in this Agreement, the terms "herein," "hereof" and "hereunder" refer to this
Agreement in its entirety and are not limited to any specific sections; and the
term "person" means any natural person, other legal entity, or combination of
natural persons and/or other legal entities acting as a unit. Wherever
appropriate in this Agreement, the singular shall be deemed to refer to the
plural and the plural to the singular, and pronouns of certain genders shall be
deemed to comprehend either or both of the other genders.
ARTICLE 2: OPTION TO PURCHASE
In accordance with and subject to the terms of this Agreement, Seller grants
Buyer an option to purchase the Property in consideration for Buyer's payment to
Seller of the Option Price. No later than two Business Days after the Effective
Date, Buyer shall open Escrow by delivery of a copy of this Agreement to Escrow
Agent, and Escrow Agent shall promptly notify Seller of such delivery and shall
evidence its agreement to act as Escrow Agent hereunder by countersigning and
delivering to each Party a copy of this Agreement.
2.1 Payment of Option Price. Concurrently with the execution of this
Agreement, Buyer shall pay to Seller the Option Price. The Option Price shall be
deemed fully earned and not refundable except as expressly provided herein, and
Seller may deposit the Option Price in Seller's own accounts without
restrictions. At the Closing, the Option Price shall be applied against the Down
Payment.
2.2 Exercise of Option. At any time on or before 5:00 p.m. Pacific Time
on the Option Date, Buyer may elect to purchase the Property in accordance with
the terms of this Agreement by delivering the Exercise Notice in the form of
Exhibit P to Seller in accordance with the provisions of Section 4.14 hereof,
and by simultaneously depositing the Deposit into Escrow in accordance with the
provisions of Section 3.1.1 hereof. Delivery of the Exercise Notice and Deposit
shall be irrevocable except as specifically provided herein.
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2.3 Approval of Title Condition.
2.3.1 Title Report and Survey. Within two (2) business days
after the Effective Date, Seller shall deliver the Survey to Buyer and
shall cause Title Company to prepare the Title Report and to deliver
the Title Report to Buyer, together with copies of all recorded
documents referenced in the Title Report or on the Survey.
2.3.2 Objectionable Title Matters and Permitted Exceptions.
Buyer shall promptly review the Title Report and shall within ten (10)
days after receipt thereof advise Seller in writing of any exceptions
to or defects in Seller's title to which Buyer objects ("Objectionable
Title Matters"). In case any exceptions to or defects in Seller's title
may be first disclosed to or discovered by Buyer after delivery of the
Title Report, Buyer shall have five (5) days to review and approve or
object to such exceptions, in the latter case such objections also
becoming Objectionable Title Matters. All exceptions and other defects
disclosed by the Title Report or the Survey or as disclosed to or
discovered by Buyer after delivery of the Title Report and which Seller
has not elected to cure in accordance with Section 2.3.3, shall, from
and after the Option Date, be deemed Permitted Exceptions. No
exceptions for a mortgage, deed of trust, or other consensual lien for
repayment of money shall be deemed to be a Permitted Exception.
2.3.3 Cure of Objectionable Title Matters. Seller shall have
no obligation to cure any Objectionable Title Matter. Seller may, at
Seller's option, elect to cure any Objectionable Title Matter by any of
the following, delivered to Buyer prior to the Option Date:
(i) Where such Objectionable Title Matter would
otherwise be within the scope of coverage of Buyer's Title
Policy, written confirmation from the Title Company that such
Objectionable Title Matter will not be scheduled as an
exception in Buyer's Title Policy,
(ii) Written confirmation from the Title Company that
it will affirmatively insure Buyer against loss resulting from
such Objectionable Title Matter, by an endorsement to Buyer's
Title Policy in a form reasonably satisfactory to Buyer,
provided that Buyer shall not be obligated to incur any cost
or liability with respect to an endorsement over an
Objectionable Title Matter, or
(iii) Seller's unconditional written undertaking to
take, at or before Closing, such steps as the Title Company
requires to accomplish either (i) or (ii) above.
2.3.4 Removal of Liens. Notwithstanding any other provision
hereof, Seller shall obtain the full reconveyance, release or other
discharge, of record, at or prior to Closing, or any mortgage, deed of
trust or other consensual lien created by Seller, Seller shall instruct
the Escrow Agent to pay all such liens from funds in Escrow, and Seller
shall convey the Property to Buyer free of any such lien.
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2.4 Items to be Delivered Outside of Escrow.
2.4.1 Property Records and Documents. Within 2 days after the
Effective Date, Seller shall deliver to Buyer, or make available to
Buyer in Seller's office, each of the items specified in the schedule
of Property Records attached hereto as Exhibit F, to the extent such
item is within Seller's possession or control. On receipt of such
items, Buyer shall acknowledge that it has received delivery of the
items indicated to be delivered to it on Exhibit F and that it has
generally had access, at such location, to the other items indicated on
Exhibit F.
2.4.2 Buyer's Financial Statements; Financial Condition. Buyer
shall submit to Seller, for approval by Seller, Buyer's financial
statements for its two most recent fiscal years and a year-to-date
financial statement for the period from the date of the last financial
statement. After review of Buyer's financial statements, Seller may
request, in its sole discretion, additional collateral for Buyer's
obligations under the Note. If Buyer fails or refuses to provide such
additional collateral, Seller may terminate this Agreement without any
further liability to Buyer and Seller shall promptly repay the Option
Price to Buyer. Buyer shall not be entitled to any interest on the
Option Price.
2.4.3 Return of Documents; Copies of Buyer Reports. If this
Agreement terminates without Closing, each party shall promptly return
to the other each item provided pursuant to this Section 2.4, and shall
diligently undertake either to have delivered to such other party or
destroyed every copy, digest or summary made of any such item; and
Buyer shall also furnish Seller with the original or a true and
complete copy of each survey, inspection report and other written study
concerning the Property which Buyer obtained from other sources, but
without any representation or warranty by Buyer.
2.5 Due Diligence. During the period between the Effective Date and the
Option Date, Buyer shall conduct its due diligence, including but not limited
to, the following:
(i) The environmental integrity of the Property;
(ii) All other aspects of the physical condition of the
Property;
(iii) The condition of Seller's title to the Property;
(iv) The condition of the entitlements and permits for the
Property;
(v) The operating history of the Property;
(vi) Acquisition of a commitment from the Title Company to
issue Buyer's Title Policy in accordance with Section
2.7.2.
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2.6 Effect of Exercise of Option. Upon Buyer's delivery of the Exercise
Notice to Seller, Buyer shall be deemed to have waived all its due diligence
requirements and to have accepted the Property in accordance with the terms of
this Agreement with title subject to the Permitted Exceptions as determined
under Section 2.3 hereof.
ARTICLE 3: COVENANT OF PURCHASE AND SALE AND INSTRUCTIONS TO ESCROW AGENT
Upon Buyer's exercise of the Option to purchase granted in Article 2 hereof, in
accordance with and subject to the terms and conditions of this Agreement,
Seller shall sell and convey the Property to Buyer, and Buyer shall purchase and
accept the Property from Seller, for the Purchase Price. In connection with the
administration of Escrow and Closing, Buyer and Seller hereby agree, and advise
and instruct Escrow Agent, as follows:
3.1 Payment of Purchase Price.
3.1.1 Deposit.
3.1.1.1 Deposit Amount and Payment. Concurrently with
delivery of the Exercise Notice, Buyer shall deliver the
Deposit into Escrow. For purposes of this Agreement, the
"Deposit" shall be that amount equal to the difference between
the Down Payment and the Option Price, or the sum of
$5,785,000.00 (Five Million Seven Hundred Eighty Five Thousand
Dollars).
3.1.1.2 Investment of Deposit. The Deposit, while
held in Escrow, shall be held by the Escrow Agent in a
federally-insured, interest-bearing account with a national
banking association. All interest earned on the Deposit while
in Escrow shall be added to, and become part of, the Deposit.
3.1.1.3 Application of Deposit. If Buyer, in breach
of its obligations under this Agreement, fails to purchase the
Property, Seller upon termination of this Agreement shall be
entitled to retain the Deposit as liquidated damages (and not
as a penalty), as provided in Section 4.7 (with which Escrow
Agent need not otherwise be concerned after its delivery of
the Deposit to Seller). At Closing, the Deposit shall be
applied against the Down Payment.
3.1.1.4 EINs. For Escrow Agent's information, Buyer's
Employer Identification Number is 94-3188774 and Seller's
Employer Identification Number is 94-2838567.
3.1.2 Down Payment and Other Funds Required for Closing. Not
later than five (5) Business Days after the Option Date, Buyer shall
deposit in Escrow current funds in an amount equal to Buyer's share of
Closing costs under Section 3.4, plus or minus (as the case may be) the
net amount of prorations and other credits under Section 3.3.
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3.1.3. Balance of Purchase Price. Not later than five (5)
Business Days after the Option Date, Buyer shall deposit in Escrow the
Note and Deed of Trust for the balance of the Purchase Price. The Note
shall bear interest at the rate of seven percent (7%) per annum.
Principal and interest shall be payable in level quarterly payments of
principal and interest, due the twentieth day of March, June,
September, and December of each year, commencing September 20, 1999,
with a final payment of all unpaid principal and accrued and unpaid
interest due on June 20, 2001. Buyer shall have no right to prepay the
Note. Seller shall have the right to call all or any portion of the
outstanding principal upon thirty (30) days written notice.
3.2 Escrow Deposits.
3.2.1 Instruments for Conveyance of the Property. Except as
noted in this Section 3.2.1, not later than five (5) Business Days
after the Option Date, Seller shall deposit or cause to be deposited in
Escrow:
(i) The Deed; provided the Deed may be deposited into
Escrow up to two (2) Business Days after the deed from FFLP
conveying title to the Property to Seller is deposited into
Escrow if such date is later than the date specified above.
(ii) Two counterparts of an assignment and assumption
agreement (the "Contract Assignment"), substantially in the
form attached hereto as Exhibit J, assigning to Buyer the
Development Agreement and the Permits.
(iii) Two counterparts of a covenants agreement (the
"Covenants Agreement") in the form attached hereto as Exhibit
G, in accordance with Section 4.13.1 hereof.
(iv) Right of Way Easement.
3.2.2 Other Escrow Deposits by Seller. In addition to the
deposits required under Section 3.2.1, Seller shall also deposit in
Escrow, at least one Business Day prior to the Closing Date:
(i) A Certificate of Non-Foreign Ownership with
respect to the Property (a "FIRPTA Certificate"),
substantially in the form attached hereto as Exhibit C,
together with the California equivalent thereof.
(ii) A certificate, dated as of Closing,
substantially in the form attached hereto as Exhibit D, that
all of the warranties and representations of Seller contained
in Section 3.2.1 are true and correct in all material respects
as of the Closing Date, except for matters specified in such
certificate ("Seller's Closing Certificate").
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(iii) Such other documents as the Title Company may
reasonably require to effect Closing (but without materially
increasing Seller's obligations, liabilities or expenses
hereunder).
Each of the documents specified in this Section and in Section 3.2.1
("Seller's Closing Documents") shall have been duly executed and, if
appropriate, acknowledged, by Seller.
3.2.3 Other Escrow Deposits by Buyer. In addition to the
deposit of funds under Section 3.1.2 and documents under Section 3.1.3,
Buyer shall deposit in Escrow, not later than five (5) Business Days
after the Option Date:
(i) The Note.
(ii) The Deed of Trust.
(iii) The Guaranty.
(iv) Two counterparts of the Contract Assignment.
(v) Two counterparts of the Covenants Agreement.
(vi) Such other documents as the Title Company may
reasonably require to effect Closing (but without materially
increasing Buyer's obligations, liabilities or expenses
hereunder); provided that for any documents which Title
Company first request after the Option Date, Buyer shall have
five (5) Business Days after such request to deposit such
documents into Escrow.
Each of the documents specified in this Section ("Buyer's Closing
Documents") shall have been duly executed and, if appropriate, acknowledged by
Buyer.
3.3 Prorations and Credits.
3.3.1 Prorated Items. The following items shall be prorated
between Seller and Buyer as of 12:00:01 a.m., local time, on the
Closing Date:
3.3.1.1 Taxes. All real estate taxes and assessments
(including, without limitation, the current year's installment
of any bond assessments) and all personal property taxes with
respect to the Property.
3.3.1.2 Association Assessments. All Assessments due
the Shores Business Center Association or the Electronic Arts
Business Park Association.
3.3.1.3 Other Revenue and Expenses. All other
periodic revenues and periodic charges attributable to the
Property, but excluding insurance premiums.
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(Seller's insurance with respect to the Property shall
terminate as of Closing and shall not be assigned to Buyer.)
3.3.2 Determination of Prorations and Credits. The prorations
and credits provided for in this Section 3.3 shall be effected through
Escrow, based upon:
(i) In the case of real estate taxes and assessments,
the most recent available tax bill for the Property;
(ii) In the case of all other prorations and credits,
a proration statement which Buyer and Seller shall jointly
prepare and deliver to Escrow Agent not later than five (5)
Business Days after the Option Date, to be updated at least
two (2) Business Days prior to the Closing Date.
After taking all such prorations and credits into account, the net
amount owing to Seller or Buyer (as the case may be) shall be added to
or deducted from the proceeds of the Down Payment payable to Seller at
Closing.
3.3.3 Utility Charges. Notwithstanding any other provision
hereof, use charges for any utility serving the Property shall be
prorated only if Seller and Buyer are unable to arrange for a final
billing to Seller through the day preceding Closing, without
interruption of such utility service. The Parties shall cooperate, each
using reasonable efforts, to make such arrangements for each utility
serving the Property.
3.4 Closing Costs.
3.4.1 Allocation of Closing Costs. Closing costs shall be
allocated between Buyer and Seller as follows:
(i) Seller shall pay:
(A) Applicable County transfer taxes; and
(B) Recording charges.
(ii) Buyer shall pay:
(A) All costs associated with the issuance
of the Title Policies, including without limitation,
the charges for any title insurance endorsements
requested by Buyer, and the cost of updating or
replacing the Survey;
(B) Escrow Agent's fees and expenses for
administering Escrow; and
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(C) All fees charges and expenses related to
Buyer's financing for the purchase of the Property
(including, without limitation, any additional
premium for a lender's policy of title insurance).
Any other charges and expenses incurred by Escrow Agent in effecting
Closing shall be allocated between the Parties in accordance with the
custom of the county in which the Property is located. Each of the
parties shall pay the fees of its attorneys, accountants and
consultants.
3.4.2 Preliminary Closing Statement. At least one Business Day
prior to the Closing Date, Escrow Agent shall prepare and submit to
each of Buyer and Seller preliminary Closing statements, showing the
Parties' respective amounts of Closing costs, the Deposit balance
(including interest earned to such date), the net credit due to Seller
or Buyer under Section 3.3 and the net amount of funds required to be
deposited by Buyer in order to effect Closing hereunder.
3.5 Closing.
3.5.1 Time and Place. Closing shall take place at the Escrow
Agent's offices, as soon as the conditions specified in clauses (i)
through (iii) of Section 3.5.2 are satisfied. If Escrow Agent is unable
to close Escrow by the Last Closing Date in compliance with Section
3.5.2, Escrow Agent shall hold Escrow open and effect Closing as soon
as it is able to do so in compliance with such provision, unless Escrow
Agent receives written demand from either Buyer or Seller for
cancellation of Escrow (in which event, Escrow Agent shall proceed in
accordance with Section 3.6).
3.5.2 Closing Instructions. As soon as:
(i) Seller has delivered into Escrow Seller's Closing
Documents and Buyer has approved each of the same as
satisfying the requirements of this Agreement; and
(ii) Buyer has delivered into Escrow the funds
required to effect Closing hereunder and Buyer's Closing
Documents, and Seller has approved Buyer's Closing Documents
as satisfying the requirements of this Agreement; and
(iii) Title Company is prepared (a) to issue to Buyer
the Buyer's Title Policy in the amount of the Purchase Price
subject only to the Permitted Exceptions and (b) to issue to
Seller the Seller's Title Policy in the amount of the Note,
subject only to the first deed of trust lien as to the Deed of
Trust and to the Permitted Exceptions; and
(iv) City has delivered to Escrow the duly signed
resolutions authorizing and approving the Contracts Assignment
in accordance with Section 4.12.2;
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Escrow Agent shall cause the Title Company to record the Deed
and shall then close Escrow by:
(iv) Disbursing the funds in Escrow as follows:
(A) To cover Closing costs and payment of
commissions to Seller's Broker;
(B) To Seller, the amount of the Down
Payment, plus the net credit, if any, to Seller under
Section 3.3 and minus (1) the net credit, if any, to
Buyer under Section 3.3 and (2) Seller's share of
Closing costs; and
(C) To Buyer, any funds remaining in Escrow
after the foregoing disbursement to Seller and
payment of all of the Closing costs;
(v) Delivering to Buyer a copy of the Deed as
recorded, showing the recording data thereon, and the rest of
Seller's Closing Documents; and
(vi) Delivering to Seller Buyer's Closing Documents.
3.6 Cancellation of Escrow Without Closing. After the Last Closing
Date, upon receiving a written demand from either Party for cancellation of
Escrow, Escrow Agent shall promptly deliver a copy of such demand to the other
Party and shall then proceed as follows:
(i) If, by close of business on the fifth Business Day after
Escrow Agent gives the other Party a copy of such demand for
cancellation, Escrow Agent has not received from such other Party
written instructions which conflict in any way with such demand, Escrow
Agent shall cancel Escrow, disburse the Deposit as directed in such
demand (or, if no directions are given in such demand regarding the
Deposit, disburse the Deposit to Seller) and return every other item
deposited in Escrow to the Party which deposited the same; or
(ii) If, by close of business on the fifth Business Day after
Escrow Agent gives the other Party a copy of such demand for
cancellation, Escrow Agent has received conflicting written
instructions from such other Party, Escrow Agent shall take no further
actions with respect to Escrow (other than to continue to invest and
reinvest the Deposit as provided in Section 3.1.1) except (A) in
accordance with joint written instructions of Seller and Buyer or (B),
upon advice of Escrow Agent's legal counsel, in accordance with a
certified copy of the order or judgment of court; provided, however,
that if Seller and Buyer have not provided Escrow Agent with joint
written instructions as to the disposition of Escrow (and all items
deposited therein) within 60 days after Escrow Agent's receipt of such
demand for cancellation, Escrow Agent shall have the right (at any time
thereafter) to commence an action in interpleader against Seller and
Buyer and, in connection therewith, to deposit all funds and other
items held in Escrow with the
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court hearing such action, whereupon Escrow Agent shall be relieved of
all further obligations and duties with respect to Escrow.
Buyer and Seller, jointly and severally, shall hold harmless and indemnify
Escrow Agent from and against any costs and expenses incurred by it in
connection with any interpleader action commenced pursuant to clause (ii) above.
Upon cancellation of Escrow, either pursuant to this Section or other joint
written instructions of the Parties, Buyer and Seller shall each pay one-half of
Escrow Agent's reasonable and customary cancellation fees.
3.7 Supplemental Escrow Agreement. Buyer and Seller shall execute such
supplemental escrow instructions or supplemental escrow agreement as Escrow
Agent may reasonably request, provided the provisions of such instructions or
agreement do not materially conflict with the provisions of this Agreement. In
the event of any conflict between this Agreement and such supplemental
instructions, this Agreement shall control.
ARTICLE 4: FURTHER AGREEMENTS BETWEEN BUYER AND SELLER (OF NO CONCERN TO ESCROW
AGENT EXCEPT AS EXPRESSLY REFERENCED IN ARTICLES 1 OR 3)
4.1 Warranties, Representations and Covenants.
4.1.1 By Seller. Seller hereby warrants, represents and/or
covenants to Buyer that, except as disclosed in Exhibit E attached
hereto:
(i) Title to the Property is held of record by FFLP.
Seller has the contractual right and ability to acquire record
title to the Property at or before the Closing hereunder. In
all other respects, Seller has full right and power to convey
the Property in accordance with this Agreement.
(ii) To Seller's Knowledge, Seller has not received
written notice from any government authority, agency or
officer that the current condition, occupancy or use of the
Property causes a material violation of any applicable Law.
(iii) There are no lawsuits pending or, to Seller's
Knowledge, threatened whose outcome could adversely affect
title to or the use, occupancy or operation of the Property or
Seller's ability to convey any of the Property to Buyer under
this Agreement (including, without limitation, actions for
condemnation).
(iv) Seller is a corporation organized and existing
under the laws of the State of Delaware; is in good standing
and qualified to do business in every other jurisdiction where
such qualification is legally required; has full power to
enter into this Agreement and to fulfill its obligations
hereunder; and has caused this Agreement to be duly executed
and delivered to Buyer.
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(v) No government or third party approvals or
consents are required for Seller's execution and delivery of,
or performance of its obligations under, this Agreement.
Seller's execution and performance of this Agreement do not
and will not violate, and are not restricted by, any other
contractual obligation or any Law to which Seller is a party
or by which Seller or any of the Property is bound.
(vi) With respect to environmental matters affecting
the Property:
(A) To Seller's Knowledge, the Property is
not in violation of any of the Environmental Laws
(hereinafter defined). Neither Seller nor to Seller's
Knowledge any third party has engaged in any
operations or activities upon, or any use or
occupancy of the Property, or any portion thereof,
for the purpose of or in any way involving the
handling, manufacture, treatment, storage, use,
generation, release, discharge, refining, dumping or
disposal of any Hazardous Substance (whether legal or
illegal, accidental or intentional) on, under or in
the Property, or transported any Hazardous Substance
to, from or across the Property.
(B) No Hazardous Substance has been
constructed, deposited, stored, or otherwise located
on, under or in the Property by Seller or to Seller's
Knowledge by any third party.
(C) Seller has not received notice, nor is
Seller aware, that any Hazardous Substance has
migrated from other properties upon or beneath the
Property.
(vii) Except for Broker, Seller has not engaged or
dealt with any broker, finder or similar agent in connection
with the transaction contemplated by this Agreement.
(viii) During the period from the Effective Date to
Closing, Seller shall:
(A) Maintain the Property in its present
condition and state of repair and maintenance
(subject to casualty damage and to normal wear and
tear); and
(B) Take reasonable measures to preserve and
enforce all of its rights and remedies with respect
to the Property and the Development Agreement.
(ix) During the period from the Effective Date to
Closing, Seller shall not do anything else which would impair
its title to any of the Property or materially alter the
operation of the Property.
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(x) During the period from the Effective Date to
Closing, Seller shall provide to Buyer, its agents,
consultants, accountants and counsel upon 24 hours' prior
notice (which may be by telephone or facsimile transmission),
(A) access at all reasonable times to all of Seller's
contracts, books and records and other documents, pertaining
to the period of time commencing February 15, 1995, and
relating to the acquisition, occupancy, operation, maintenance
and repair of the Property by Seller (excluding any
appraisals, internal valuations or attorney-client privileged
materials), with the right to make photocopies thereof, (B)
subject to the foregoing exclusions, access to all such other
information pertaining to the period of time commencing
February 15, 1995 regarding the Property and in Seller's
possession or control (including copies of such contracts,
books and records and other documents) as Buyer may reasonably
request, and (C) access to the Property at all reasonable
times for purposes of conducting (at Buyer's expense and
liability) any examinations, surveys and tests as Buyer may
reasonably require; provided, however, that Buyer shall not
have any right to conduct any drilling, boring or other
intrusive or destructive testing of the Property without
Seller's prior written consent.
4.1.2 By Buyer. Buyer hereby warrants, represents and
covenants to Seller that:
(i) Buyer is a limited partnership duly organized,
validly existing and in good standing under the laws of the
state of California; is in good standing and qualified to do
business in every other jurisdiction where such qualification
is legally required; has full power to enter into this
Agreement and to fulfill its obligations hereunder; and has
caused this Agreement to be duly executed and delivered to
Seller.
(ii) No government or other third-party approvals or
consents are required for Buyer's execution and delivery of or
performance of its obligations under, this Agreement. Buyer's
execution and performance of this Agreement do not and will
not violate, and are not restricted by any other contractual
obligation or applicable Law to which Buyer is a party or by
which Buyer is otherwise bound.
(iii) There are no lawsuits pending or, to Buyer's
knowledge, threatened whose outcome could adversely affect
Buyer's ability to purchase the Property under this Agreement
or to make payments required under the Note.
(iv) Buyer's Financial Statements have been and will
be prepared in accordance with generally accepted accounting
principles and do or will fairly present the financial
condition of the Buyer for the period covered.
(v) Except for Broker, Buyer has not engaged or dealt
with any broker, finder or similar agent in connection with
the transaction contemplated by this Agreement.
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(vi) BUYER'S PURCHASE OF THE PROPERTY HEREUNDER WILL
BE "AS-IS, WHERE IS, WITH ALL FAULTS" AND, EXCEPT FOR THE
WARRANTIES, REPRESENTATIONS AND COVENANTS OF SELLER EXPRESSLY
SET FORTH IN SECTION 4.1.1, BUYER WILL BE CONCLUDING THE
PURCHASE OF THE PROPERTY BASED SOLELY ON ITS INSPECTION AND
INVESTIGATION OF THE PROPERTY AND ON ALL DOCUMENTS RELATED
THERETO. WITHOUT LIMITING THE FOREGOING, BUYER ACKNOWLEDGES
THAT SELLER HAS NOT MADE ANY REPRESENTATIONS AND WARRANTIES,
EXCEPT AS EXPRESSLY SET FORTH IN SECTION 4.1.1, ON WHICH BUYER
IS RELYING AS TO ANY MATTERS CONCERNING THE PROPERTY
(INCLUDING, WITHOUT LIMITATION, THE LAND, IMPROVEMENTS,
DEVELOPMENT RIGHTS, POWER TRANSMISSION LINES, TAXES, BONDS,
PERMISSIBLE USES, WATER OR WATER RIGHTS, TOPOGRAPHY,
UTILITIES, ZONING, SOIL, SUBSOIL, THE PURPOSES FOR WHICH THE
PROPERTY IS TO BE USED, LATENT OR PATENT PHYSICAL, OR
ENVIRONMENTAL CONDITIONS, VALUATION, OPERATING HISTORY OR
PROJECTIONS, DRAINAGE, ENVIRONMENTAL OR BUILDING LAWS, RULES
OR REGULATIONS, ANY WORK TO BE PERFORMED OR SERVICES TO BE
PROVIDED PURSUANT TO THE DEVELOPMENT AGREEMENT, OR ANY OTHER
REPRESENTATIONS OR WARRANTIES). UPON CLOSING, BUYER SHALL
ASSUME THE RISK THAT ADVERSE MATERIAL MATTERS, INCLUDING BUT
NOT LIMITED TO ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS,
MAY EXIST ON THE PROPERTY.
AS A MATERIAL PART OF THE CONSIDERATION TO SELLER FOR THE SALE
OF THE PROPERTY. BUYER HEREBY IRREVOCABLY WAIVES, AND RELEASES
SELLER (AND SELLER'S SHAREHOLDERS, AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS, INCLUDING (WITHOUT
LIMITATION), BROKER, ELECTRONIC ARTS, INC. (AND THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES)
FROM, ANY AND ALL CLAIMS (OTHER THAN FOR INTENTIONAL FRAUD)
BASED ON ANY WARRANTY OR REPRESENTATION (INCLUDING, WITHOUT
LIMITATIONS, THOSE IMPLIED BY LAW) NOT EXPRESSLY CONTAINED IN
THIS AGREEMENT; OR ANY MISREPRESENTATION OR FAILURE TO
DISCLOSE INFORMATION RELATING TO THE PROPERTY OTHER THAN A
CLAIM BASED ON A REPRESENTATION OR WARRANTY CONTAINED HEREIN;
OR ANY DEFAULTS, DEFECTS, INADEQUACIES, OR OTHER MATTERS
RELATED EITHER DIRECTLY OR INDIRECTLY TO THE WORK TO BE
PERFORMED OR SERVICES TO BE PROVIDED PURSUANT TO THE
DEVELOPMENT AGREEMENT.
4.1.3 Survival. Except as provided below, the foregoing
warranties, representations and covenants (and the Parties' respective
liability for any breach thereof)
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shall survive Closing and shall not be deemed to merge in the Deed or
any other instrument. Notwithstanding any other provision of this
Agreement or Seller's Closing Documents, any claim based on a breach of
Seller's representations, warranties, and covenants in Section 4.1.1 or
in Seller's Closing Certificate shall be forever barred, and Buyer
shall bring no action thereon, unless (A) Buyer gives Seller written
notice of such claim within one hundred eighty (180) days of the
Closing Date, describing with particularity in such notice each
representation, warranty, or covenant of Seller which Buyer claims to
have been breached and the facts on which such claim is based, and (B)
Buyer commences action on such claim on or before the first anniversary
of the Closing Date.
4.2 Conditions to Buyer's Obligation. Buyer's obligation to close
Escrow shall be subject to timely satisfaction of each of the following
conditions:
4.2.1 Performance of Seller's Obligations. Performance by
Seller of all of Seller's obligations under this Agreement to be
performed at or before Closing.
4.2.2 Accuracy of Warranties and Representations. The accuracy
in all material respects, as of Closing, of each of the warranties and
representations of Seller set forth in Section 4.1.1.
4.2.3 City Approvals. Approval by the City within sixty (60)
days after the Option Date of the Assignment and Assumption of
Development Agreement in accordance with Section 4.12.2, and delivery
by the City of an Estoppel Certificate pursuant to Section 27 of the
Development Agreement substantially in the form of Exhibit Q.
4.2.4 Satisfactory Title. Acquisition of a commitment from the
Title Company to issue Buyer's Title Policy in accordance with Section
3.5.2.
If any of the foregoing conditions is not timely satisfied (or waived by Buyer
in writing), Buyer shall have the right to terminate this Agreement before
Closing by written notice of such termination to Seller and Escrow Agent given
at any time prior to the satisfaction of such condition; but once Closing has
occurred all of the foregoing conditions, to the extent not satisfied at
Closing, shall be deemed to have been irrevocably waived. If this Agreement is
terminated prior to Closing and provided Buyer has cooperated in good faith with
Seller's efforts to secure City approval of the Assignment of the Development
Agreement in accordance with Section 4.12.2, all funds deposited by Buyer with
the Escrow Agent shall promptly be returned to Buyer and Seller shall promptly
repay the Option Price (without interest) to Buyer.
4.3 Conditions to Seller's Obligation. Seller's obligation to close
Escrow shall be subject to the timely satisfaction of each of the follow
conditions:
4.3.1 Performance of Buyer's Obligations. Performance by Buyer
of all of Buyer's obligations under this Agreement to be performed at
or before Closing.
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4.3.2 No Material Change in Financial Condition. No material
adverse change in Buyer's financial condition between the Effective
Date and the Closing Date. Buyer shall provide Seller with a
certificate to that effect at least three (3) business days prior to
the Closing Date, together with a year-to-date financial statement for
the period since the most recent annual financial statement.
4.3.3 Satisfactory Title. Acquisition of a commitment from the
Title Company to issue Seller's Title Policy in accordance with Section
3.5.2.
4.3.4 Accuracy of Warranties and Representations. The accuracy
in all material respects, as of Closing, of each of the warranties and
representations of Buyer set forth in Section 4.1.2.
If any such condition is not timely satisfied (or waived by Seller in writing),
Seller shall have the right to terminate this Agreement before Closing by
written notice of such termination to Buyer and Escrow Agent given at any time
prior to the satisfaction of such condition; but once Closing has occurred all
of the foregoing conditions, to the extent not satisfied at Closing, shall be
deemed to have been irrevocably waived.
4.4 Indemnities.
4.4.1 Buyer's Activities on the Property. Buyer shall hold
harmless, indemnify and defend FFLP and Seller from and against any and
all claims, liability and losses, and expenses related thereto
(including reasonable attorneys' fees), which FFLP or Seller incurs by
reason of any damage to the Property caused by, or any third-person
claim against FFLP or Seller arising or asserted to arise out of, any
activity of Buyer, or any of Buyer's agents, conducted on the Property
prior to Closing. Buyer shall, with reasonable promptness, repair any
damage caused to the Property by any such activity.
4.4.2 Survival. The provisions of, and Buyer's obligations
under, this Section 4.4 shall survive Closing or termination of this
Agreement. The indemnifications contained in this Section 4.4 shall run
to the benefit of FFLP and Seller and their respective constituent
partners, shareholders, directors, officers, employees, agents,
successors and assigns.
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4.5 Damage, Destruction or Condemnation.
4.5.1 Termination Rights. If, prior to Closing, the Property
suffers any material damage, destruction or taking by eminent domain (a
"Casualty"), Buyer shall have the right, at its election, to terminate
this Agreement, by written notice given to the Seller prior to the Last
Closing Date. If a Casualty occurs fewer than ten Business Days before
the Last Closing Date, Seller shall have the right in its sole
discretion to extend the Last Closing Date until the tenth Business Day
after the occurrence of such Casualty in order for Buyer to make the
election permitted by this Section.
4.5.2 If No Termination. In the event that a Casualty occurs
and Buyer either does not have or does not elect to exercise a right to
terminate this Agreement, this Agreement shall continue in force and,
upon Closing, Buyer shall be entitled to all insurance proceeds,
condemnation awards or other amounts which have been paid or may
thereafter be payable to FFLP or Seller by any person in connection
with such Casualty ("Proceeds"), and at Closing Seller shall pay over
to Buyer the amount of any Proceeds already received by FFLP or Seller
and shall assign Buyer all of Seller's or FFLP's rights to Proceeds
which may then be or thereafter become payable.
4.5.3 Materiality. For purposes hereof, a material Casualty is
one in which the extent of the damage, destruction or taking (measured
by the cost of repairing or replacing the damaged, destroyed or taken
portion of the Property) exceeds twenty-five percent (25%) of the
Purchase Price.
4.6 Assignment by Buyer. Because Buyer has been selected by Seller to
purchase this Property through a bid process and the identity of the Buyer is of
the utmost important to Seller, prior to Closing Buyer shall have no right to
assign or transfer its rights under this Agreement except with prior written
consent of Seller, which Seller may in its sole discretion deny; provided,
however, that Seller will not unreasonably withhold its consent if Buyer seeks
to assign its rights under this Agreement to a corporation or partnership which
is at least fifty percent (50%) owned by Buyer. Sale of shares or partnership
interests or other ownership units in Buyer (other than on a nationally
recognized stock exchange or over-the-counter market) shall constitute an
assignment subject to the terms of this Section. Seller shall have no obligation
to respect any assignment in violation of this Section and such an assignment
shall constitute a material breach of this Agreement on the part of Buyer. No
assignment shall relieve or excuse Buyer of its obligations and liability
hereunder. Seller's consent to any one assignment shall not be deemed consent to
any other assignment or a waiver of the requirement for its consent to any other
assignment.
4.7 Rights of Parties Upon Default.
4.7.1 Seller's Rights. IF CLOSING FAILS TO OCCUR UNDER THIS
AGREEMENT DUE TO A DEFAULT ON THE PART OF BUYER, SELLER SHALL BE
ENTITLED, AS ITS SOLE AND EXCLUSIVE REMEDY ON ACCOUNT OF SUCH FAILURE
AND IN CONSIDERATION OF ITS WITHDRAWAL OF THE
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PROPERTY FROM THE MARKET DURING THE TERM OF THIS AGREEMENT, TO RECEIVE
AND RETAIN, AS LIQUIDATED DAMAGES (AND NOT AS A PENALTY), THE DEPOSIT;
AND SELLER SPECIFICALLY WAIVES ANY RIGHT SPECIFICALLY TO ENFORCE
BUYER'S OBLIGATION HEREUNDER TO PURCHASE THE PROPERTY.
BUYER AND SELLER ACKNOWLEDGE THAT SUCH LIQUIDATED DAMAGES ARE
REASONABLE IN AMOUNT CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING ON
THE DATE OF THIS AGREEMENT, INCLUDING THE PARTIES' ESTIMATION OF THE
POSSIBLE RANGE OF DAMAGES TO SELLER IN THE EVENT OF SUCH A BREACH, THE
DIFFICULTY AND IMPRACTICABILITY OF ASCERTAINING OR PROVING WITH ANY
DEGREE OF CERTAINTY THE AMOUNT OF SUCH DAMAGES AND THE DESIRE OF BUYER
TO LIMIT ITS POTENTIAL LIABILITY TO SELLER IN THE EVENT OF SUCH A
BREACH. THE FOREGOING SHALL NOT, HOWEVER, LIMIT SELLER'S RIGHTS AND
REMEDIES TO ENFORCE OBLIGATIONS OF BUYER UNDER SECTIONS 2.4.2, 2.4.3,
4.4.1, and 4.13 (INCLUDING COSTS OF ENFORCING THIS LIQUIDATED DAMAGES
PROVISION) OR, IF CLOSING OCCURS, TO ENFORCE ANY OTHER OBLIGATIONS OF
BUYER HEREUNDER.
/s/ /s/
---------------- -----------------
Buyer's Initials Seller's Initials
4.7.2 Buyer's Rights. IF CLOSING FAILS TO OCCUR UNDER THIS
AGREEMENT DUE TO A DEFAULT ON THE PART OF SELLER, BUYER SHALL BE
ENTITLED, AS ITS SOLE AND EXCLUSIVE REMEDY ON ACCOUNT OF SUCH FAILURE,
TO THE FOLLOWING: (i) REIMBURSEMENT OF BUYER'S ACTUAL OUT-OF-POCKET
COSTS INCURRED IN ITS REVIEW AND INVESTIGATION OF THE PROPERTY, PAYABLE
UPON DELIVERY TO SELLER OF VALID RECEIPTS THEREFOR; (ii) RETURN OF THE
OPTION PRICE (WITHOUT INTEREST THEREON); (iii) RELEASE AND RETURN OF
THE DEPOSIT AND ANY OTHER FUNDS DEPOSITED BY BUYER INTO ESCROW; AND
(iv) SOLELY IF CLOSING FAILS TO OCCUR UNDER THIS AGREEMENT DUE TO
SELLER'S INTENTIONAL FAILURE TO DELIVER DOCUMENTS INTO ESCROW AND TO
CLOSE THE PURCHASE AND SALE HEREUNDER, LIQUIDATED DAMAGES IN THE AMOUNT
OF $1,000,000; AND BUYER SPECIFICALLY WAIVES ANY RIGHT SPECIFICALLY TO
ENFORCE SELLER'S OBLIGATION HEREUNDER TO SELL THE PROPERTY; AND,
FURTHER, BUYER SPECIFICALLY WAIVES ANY RIGHT TO RECORD A LIS PENDENS
AGAINST THE PROPERTY OR ANY PART THEREOF, IN THE OFFICIAL RECORDS OF
SAN MATEO COUNTY.
BUYER AND SELLER ACKNOWLEDGE THAT SUCH THE SPECIFIED LIQUIDATED DAMAGES
ARE NOT BY WAY OF A PENALTY AND ARE REASONABLE IN AMOUNT CONSIDERING
ALL OF THE CIRCUMSTANCES
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EXISTING ON THE DATE OF THIS AGREEMENT, INCLUDING THE PARTIES'
ESTIMATION OF THE POSSIBLE RANGE OF DAMAGES TO BUYER IN THE EVENT OF
SUCH A BREACH, THE DIFFICULTY AND IMPRACTICABILITY OF ASCERTAINING OR
PROVING WITH ANY DEGREE OF CERTAINTY THE AMOUNT OF SUCH DAMAGES AND THE
DESIRE OF SELLER TO LIMIT ITS POTENTIAL LIABILITY TO BUYER IN THE EVENT
OF SUCH A BREACH. THE FOREGOING SHALL NOT, HOWEVER, LIMIT BUYER'S
RIGHTS AND REMEDIES TO ENFORCE OBLIGATIONS OF SELLER UNDER SECTION 4.13
(INCLUDING COSTS OF ENFORCING THIS LIQUIDATED DAMAGES PROVISION).
4.8 Termination.
4.8.1 By Buyer. If Buyer has and timely exercises any right
hereunder to terminate this Agreement, Buyer shall be immediately
entitled to the return of the Deposit and all undisbursed interest
earned thereon while in Escrow and, promptly upon receiving notice of
such termination, Seller shall join with Buyer in a written notice to
Escrow Agent acknowledging the termination of this Agreement and
instructing Escrow Agent to return the Deposit to Buyer and to return
every other item deposited in Escrow to the Party which deposited the
same. In addition, Seller shall promptly repay the Option Price
(without interest) to Buyer.
4.8.2 By Seller. If Seller has and exercises any right
hereunder to terminate this Agreement for a breach by Buyer of its
obligations, warranties or representations hereunder, promptly upon
receiving notice of such termination Buyer shall join with Seller in a
written notice to Escrow Agent acknowledging the termination of this
Agreement and instructing the Title Company to deliver the Deposit to
Seller and to return all other funds and every other item deposited in
Escrow to the Party which deposited the same. If Seller terminates this
Agreement for any other reason, including without limitation, pursuant
to the provisions of Sections 2.4.2, 4.3 (except as a result of Buyer's
breach), and 4.5.1, Seller shall promptly, upon Buyer's written
request, join with Buyer in a written notice to Escrow Agent
acknowledging the termination of this Agreement and instructing Escrow
Agent to return the Deposit to Buyer and to return every other item
deposited in Escrow to the Party which deposited the same and Seller
shall promptly repay the Option Price (without interest) to Buyer.
4.8.3 Effect of Termination. Upon any termination of this
Agreement, neither Party shall have any further obligation or liability
to the other hereunder except (i) any remaining obligation or liability
of Buyer under Section 2.4.3 (for return, destruction and/ or delivery
of documents to Seller) or under Section 4.4.1 (with respect to
activities of Buyer or its agents upon the Property), (ii) any
liability which either Party may have hereunder by reason of the fact
that such termination either (A) was wrongfully made by it or (B)
resulted from a breach of its warranties, covenants or other
obligations hereunder, and (iii) any obligation under Section 4.13.
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4.9 Brokerage Commission. Upon Closing, Seller shall pay any commission
due to Broker, in connection with the sale and purchase of the Property as set
forth in this Agreement, under a separate, written agreement between Seller and
Broker. Nothing contained herein shall be deemed to make Broker a third-party
beneficiary of this Agreement or to create any obligation on the part of either
Party to close the sale and purchase of the Property for Broker's benefit. Each
Party shall hold harmless, indemnify and defend the other from and against any
claim or liability for a commission, fee or other compensation to broker,
salesman, finder or similar intermediary, and for any expenses (including,
without limitation, reasonable attorneys' fees and expenses) related to the
defense of any such claim, which results constitute a breach of such Party's
representation, contained in Section 4.1.1(vii) or Section 4.1.2(iv).
4.10 Post-Closing Prorations and Adjustments. After Closing, the
Parties shall make the following additional prorations and settlements:
4.10.1 Real Estate Taxes and Assessments. If Closing
prorations of real estate taxes and assessments are based on other than
the current year's tax bill, within 30 days after such bill is issued
to Buyer, Buyer shall recompute such proration. If such recomputation
results in a larger proration credit to Seller, Buyer shall pay Seller
the additional amount due Seller within such 30 days. If such
recomputation results in a larger proration credit to Buyer, Seller
shall pay Buyer the additional amount due Buyer within 30 days after
receiving Buyer's written recomputation of such proration, accompanied
by a copy of such tax bill.
4.10.2 Determinations of Post-Closing Prorations and
Adjustments. Except where expressly provided otherwise, Buyer shall
make the required determinations and computations of all post-Closing
prorations and other adjustments under this Section 4.10 (the
"Post-Closing Prorations") and shall provide Seller with a reasonably
detailed written summary of each Post-Closing Proration, concurrently
with or prior to making any payment to or requesting any payment from
Seller under this Section 4.10 with respect thereto. Seller shall have
the right to audit all of Buyer's books and records pertaining to the
Post-Closing Prorations. For this purpose, Buyer shall allow Seller's
designated representatives access to such books and records, at the
Property or Buyer's principal place of business within the United
States, at any time during normal business hours, and Seller shall have
the right to make copies of such books and records (and the right to
use Buyer's photocopying equipment to make such copies, paying Buyer
its actual out-of-pocket cost for such copying). Except to the extent
that Seller, before the second anniversary of the Closing Date, gives
Buyer written notice of objections to Buyer's determinations of the
Post-Closing Prorations, Buyer's determinations and computations of
such prorations and adjustments shall be conclusive, if made in good
faith and with full disclosure to Seller. If Seller does give Buyer
timely written notice of objection to Buyer's determination of any
Post-Closing Proration and the Parties are unable to resolve such
objection by mutual agreement within 30 days thereafter, either Party
shall have the right to submit such dispute to binding arbitration by,
and under the applicable rules of, the American Arbitration
Association, in San Mateo or San Francisco counties, California. The
arbitrator in such arbitration shall, to the extent reasonably
necessary to
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the enforcement of Seller's rights hereunder, order the production to
Seller of any or all of Buyer's books and records pertaining to the
Post-Closing Prorations. The arbitrator shall endeavor to resolve any
such submitted dispute and render a written award within 90 days after
the arbitrator's appointment.
4.11 Design Review. The Property is subject to the Shores CC&Rs, which
provides for design review of any proposed improvements to be constructed by
Buyer. Pursuant to the Shores CC&Rs, the Shores Business Center Association
Architectural Review Committee ("Shores Review Committee") has been formed, and
said Review Committee has promulgated Guidelines. Buyer acknowledges its
receipt, review and acceptance of the Shores CC&Rs and the Guidelines, and
agrees that it shall, at all times, comply with said Shores CC&Rs and the
Guidelines and any existing or future supplements or amendments thereto. Buyer
agrees that it shall inform itself of the procedures of the Review Committee and
shall comply with such procedures, including, without limitation, lead times for
the submission of plans and documents to be reviewed.
4.12 Buyer's Covenants and Agreements. Buyer hereby covenants and
agrees with Seller as follows:
4.12.1 Agreement for Covenants Running With the Land. On or
before Closing, Buyer and FFLP shall execute in recordable form and
deliver into Escrow, for recording at Closing, that certain "Covenants
Agreement" in the form attached hereto as Exhibit G. At Closing, the
Covenants Agreement shall be recorded against the Property immediately
after the Grant Deed and prior to the recording of any other documents,
instruments or conveyances.
4.12.2 Development Agreement. Buyer acknowledges receipt of a
copy of the Development Agreement. Buyer further acknowledges it is
aware of the terms thereof, including in particular, the following
provisions:
Section 3: Term
Section 4: Land Use: Density; and Intensity; including
provisions concerning minimum and maximum
Gross Building Floor Area, minimum, and
maximum height.
Section 5: Project Timing.
Section 6: Project Review and Approval Process.
Section 8: The Facilities and Site Evaluation;
including the obligation to dedicate lands
for right and left turn lanes on Redwood
Shores Parkway, and including the
obligation to comply with engineering
design standards and construction standards
developed by Declarant pursuant to said
Section.
Section 9: Facilities Fees and other Exactions.
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Section 11: On-Site Privately Owned Improvements;
including the obligation of Owner to fund
such Improvements located on Owner's
Parcels.
Section 12: Traffic Assessment District.
Section 17: Construction Requirements
Section 20: Annual Review; including the obligation to
initiate such review and demonstrate good
faith compliance with Owner's Parcel.
Section 24: Events of Default; Remedies; Termination;
Attorneys' Fees.
Promptly upon Buyer's delivery of the Exercise Notice, Seller
shall undertake to obtain the City's approval of the Assignment of the
Development Agreement and Permits in accordance with Section 29 of the
Development Agreement. Buyer shall cooperate fully and in good faith
with Seller in connection with obtaining such approval and shall
promptly deliver any documents or other information required by the
City in its discretion to process the request for approval.
4.12.3 Payment for Improvements. Buyer acknowledges and agrees
that Seller shall not be required to pay any funds, perform any acts,
or dedicate, donate or grant any property (whether real or personal) to
satisfy any condition imposed on development of the Property, whether
such condition is imposed by a governmental authority or entity or by
the terms of any recorded document which constitutes a Permitted
Exception. Buyer acknowledges and agrees that the construction of any
and all improvements and utilities required to be installed within the
perimeter of the Property in order to serve the Property, as developed
by Buyer (collectively, the "On-Site Improvements"), and all costs and
expenses of such On-Site Improvements, shall be the sole and exclusive
responsibility of Buyer, including, without limitation, the following:
(i) the obligation to pay for, construct, furnish or install and
maintain all on-site utility extensions to serve the Property,
including, without limitation, water from the public water lines within
the public streets, sanitary and storm sewers from the public sewer
system within the public streets, electricity and gas from the off-site
facilities designated by Pacific Gas & Electric Company, and
electricity and gas by payment or reimbursement to the electric and gas
utility company in excess of the extension allowance (if any); (ii)
payment for all City, District or utility company connection, extension
or hook-up fees, facilities fees, license fees or charges for water,
sewer, electricity, gas, telephone, garbage or other utility service
for the Property or any part thereof; (iii) addition or removal of any
fill required in order to alter the elevation of the Property, or any
part thereof; and (iv) any grading, piling, excavation, bulkhead or
foundation work required for the Property. Buyer further acknowledges
and agrees that none of Seller's representatives and Seller's
affiliates has made any covenants, representations, warranties, or
undertakings, of any nature whatsoever, concerning or regarding the
availability, quantity or quality of water, gas, sewer, telephone or
electrical services available to or at the Property. Buyer acknowledges
and agrees that it is the responsibility of Buyer to deal directly with
any and all utility companies in order to procure all utility services.
Buyer further
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acknowledges that the costs of extending utilities to the Property may
exceed the utility company's free extension allowance, if any, and that
Buyer shall be solely responsible for all such costs. The parties
acknowledge that Buyer has further improvement obligations relative to
the Property, as such obligations are set forth in the Covenants
Agreement.
4.12.4 Facility Charges, School Facilities Fees and Proposed
Impact Fees. Buyer acknowledges (i) that FFLP and the City have entered
into a Development Agreement which during its term sets the amount of
facilities fees and other exactions which may be charged by the City
for the issuance of building permits for the Property; (ii) that the
City has adopted an ordinance and recorded an agreement requiring
property owners to pay a facilities fee as a condition precedent to
receiving a building permit, and that said ordinance and agreement
applies to the Property; (iii) that an application fee may be required
by the Architectural Review Committees described in Section 4.11; (iv)
that a fire service fee and participation in the cost of a reclaimed
water system program may be imposed upon Buyer and the Property by the
City; (v) that the Belmont School District and the Sequoia Union High
School District have adopted a requirement that the property owners
within said districts pay a school facilities fee as a condition
precedent to receiving a building permit (the "School Facilities Fees")
and that said requirement applies to the Property; (vi) that the
Sequoia Union High School District has formed a landscaping and
lighting maintenance assessment district, and that such assessment
district includes the Property; and (vii) that a multi-jurisdictional
traffic assessment district for improvements to Highway 101 and other
area-wide traffic improvements has been proposed and is being
considered by the City and other nearby cities (including, without
limitation, the City of Belmont and the City of San Carlos), that such
assessment district would include the Property and that in Section 12
of the Development Agreement, FFLP has waived objection, subject to the
limitations in Section 12 of the Development Agreement, on behalf of
itself, its successors and assigns, including Buyer, to the formation
thereof. Buyer acknowledges and agrees that Buyer, and neither Seller
nor FFLP, shall be solely responsible for the payment of the City's
facilities fee and the School Facilities Fees and for all other
charges, taxes, fees or costs, of any nature whatsoever, which are
imposed or incurred after Closing and which are related (whether
directly or indirectly) to the development of the Property, it being
specifically agreed that neither Seller nor FFLP has and shall not have
any responsibility or liability of any nature whatsoever to pay, or
contribute to the payment of, any of the fees, costs, taxes or charges
contemplated in this Agreement and imposed or incurred from and after
the Closing. Buyer acknowledges that pursuant to the Development
Agreement, Seller or FFLP may be required to prepay certain facilities
fees to the City which could be credited against facilities fees and
exactions Buyer would otherwise be required to pay. If such
circumstance occurs, Buyer shall, simultaneously with Buyer's payment
of facilities fees and other exactions to the City, reimburse Seller
the full amount of any such credit Buyer receives. The provisions of
this Section 4.12.4 are solely for the benefit of Seller, Buyer and
FFLP and not for the benefit of any other person or entity (including,
without limitation, the Belmont School District and the Sequoia Union
High School District), and no party other than FFLP and Seller (and
Seller's successors and assigns) shall be entitled to rely on the
provisions of this section or receive any benefit therefrom or enforce
against Buyer any of the provisions of this section.
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4.12.5 Surplus Earth Material. Buyer acknowledges that FFLP
has granted RSP, its successors and assigns an exclusive and
irrevocable option to acquire surplus earth material generated from the
development of the Property and that FFLP and RSP executed and recorded
a Memorandum thereof. The terms, provisions, and conditions of the
option, as set forth in Section 11.8 of that certain Agreement of
Purchase and Sale by and between RSP and FFLP predecessor in interest
("Terms") and the Memorandum of Option are set forth as Exhibit H
hereto. Buyer agrees that it is bound, as to the Property, as successor
in interest to FFLP, to the Terms and the Memorandum of Option, and
undertakes to comply with each and every term, provision, and condition
thereof imposed upon FFLP thereby as it applies to the Property.
4.12.6 San Carlos Airport. Buyer acknowledges that (i) the San
Carlos Airport and its flight path are in close proximity to the
Property, and (ii) that the San Mateo County Airport Land Use
Commission has been presented with and is considering an amendment to
the San Mateo County Airport Land Use Plan which would, in part,
require local land owners within the Redwood Shores Project to grant
avigation easements to the County. Buyer acknowledges that such
proximity to the San Carlos Airport, and any proposed amendments to the
San Mateo County Airport Land Use Plan may have an impact or effect on
the Property or Buyer's use of the Property, including, without
limitation, (a) the production of noise, odors, pollution, traffic,
glare and/or other impacts, and (b) requiring that development of the
Property be conditioned on the granting of an avigation easement(s)
and/or other restrictions (collectively, the "Airport Matters"). Buyer
expressly acknowledges and agrees that Seller shall have no
responsibility for any costs, expenses, liabilities or obligations of
any kind or nature whatsoever arising out of or in any way related to
the Airport Matters.
4.12.7 Density; Height of Construction. Buyer acknowledges
that matters of density and height of buildings constructed on the
Property are governed by the terms of the Development Agreement and of
that certain Covenants Agreement by and between RSP and FFLP dated
February 14, 1995, and recorded February 15, 1995, as Instrument No.
95015506, Official Records, San Mateo County, California, as the same
has been amended, and by other factors such as available sewer
capacity. Buyer covenants and agrees to the following restrictions with
respect to the improvements to be constructed on the Property:
Zone 2 Zone 4
Maximum Square Footage of GBFA 200,000 140,000
Minimum Number of Stories per Building 4 4
Maximum Number of Stories per Building 8 8
Maximum Height of Permitted Structures 130 Ft. 130 Ft.
subject to the following conditions:
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(a) The Maximum Square Footage of GBFA
assumes that Buyer secures adequate sewer capacity to permit such
construction. Seller has advised Buyer that FFLP has received an
assignment from RSP of allocation of sewage treatment capacity with the
South Bayside System Authority sufficient to permit FFLP to construct
up to 885,000 square feet of GBFA in the Park, which has been confirmed
in that certain Second Amendment to Development Agreement dated August
31, 1998, by and between the City and FFLP (the "Second Amendment").
Furthermore, the City, pursuant to the Development Agreement, as
amended by the Second Amendment, has agreed to sell to FFLP additional
sanitary sewage treatment capacity up to 25,000 gallons per day ("gpd")
at $2.50 per gpd, as needed to permit construction of the full
1,000,000 square feet of GBFA authorized for office space in the Park
by the Development Agreement. At Closing, Seller shall cause FFLP to
assign to Buyer, by an Assignment in the form of Exhibit I hereto,
sufficient sewage treatment capacity from its rights received from RSP
to construct an aggregate 340,000 square feet of GBFA in Zones 2 and 4.
Buyer acknowledges that the foregoing assignments are the entirety of
what Seller can and will offer to Buyer for sewage treatment capacity
and Seller has no further or greater obligation to Buyer. If additional
sewage treatment capacity is still required, Buyer must purchase,
lease, or otherwise acquire such capacity on the open market at Buyer's
sole expense.
(b) The Maximum Height of Permitted
Structures is calculated as the height to the highest point of the
building and all superstructures above mean sea level.
4.12.8 No Construction Area. Buyer, on behalf of itself, its
successors and assigns, covenants that it shall not construct, nor seek
or accept any authorization to construct, any structure or portion
thereof (excluding landscaping, surface roadways and parking, awnings
or other protrusions over entrance doorways, covered walkways, patio
facilities, related outbuildings not to exceed fifteen (15) feet in
height, and related installations such as light standards) in those
portions of Zone 2 described in Exhibit N attached hereto and
incorporated herein. Buyer shall execute and record at Closing such
documents as Seller shall reasonably request to memorialize this
obligation of record.
4.13. Enforcement Costs. Should either Party institute any action or
proceeding to enforce any provision of this Agreement or for damages by reason
of an alleged breach of any provision hereof (including, without limitation, an
arbitration proceeding under Section 4.10), the prevailing Party shall be
entitled to receive all costs and expenses (including reasonable attorneys'
fees) incurred by such prevailing Party in connection with such action or
proceeding.
A Party entitled to recover costs and expenses under this Section shall
also be entitled to recover all costs and expenses (including reasonable
attorneys' fees) incurred in the enforcement of any judgment or settlement
obtained in such action or proceeding and provision (and in any such judgment
provision shall be made for the recovery of such postjudgment costs and
expenses).
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4.14 Notices. Except in the case (if any) where this Agreement
expressly provides for an alternate form of communication, any notice, consent,
demand or other communication to be delivered to a Party hereunder shall be
deemed delivered and received when made in writing and transmitted to the
applicable Party either by receipted courier service, or by the United States
Postal Service, first class registered or certified mail, postage prepaid,
return receipt requested, or by electronic facsimile transmission ("Fax"), at
the address or addresses indicated for such Party below (and/or to such other
address as such Party may from time to time by written notice designate to the
other):
If to Seller: Electronic Arts Redwood, Inc.
207 Redwood Shores Parkway
Redwood City, California 94065
Fax No. (650) 628-1384
Attn: James F. Healey, President
and a copy to: Electronic Arts, Inc.
207 Redwood Shores Parkway
Redwood City, California 94065
Fax No. (650) 628-1422
Attn: Ruth Kennedy, General Counsel
and a copy to: Nossaman, Guthner, Knox & Elliott, LLP
50 California Street, 34th Floor
San Francisco, CA 94111
Fax No. (415) 398-2438
Attention: David L. Kimport, Esq.
If to Buyer: Spieker Properties, L.P.
1255 Treat Boulevard Ste 150
Walnut Creek, Ca. 94596
Fax No.: 925-935-5619
Attention: Peter H. Schnugg
with a copy to: Spieker Properties, L.P.
2180 Sand Hill Road
Menlo Park, Ca. 94526
Fax No.:
Attention: Sara Steppe, General Counsel
and shall be deemed delivered and received only upon actual delivery or
attempted delivery (as evidenced by receipt) or upon completion of facsimile
transmission (as evidenced by telecopier confirmation sheet) provided that such
facsimile transmission is confirmed within three Business Days by duplicate
notice delivered as otherwise provided herein.
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4.15 Binding Effect. Except as otherwise expressly provided herein,
this Agreement shall bind and inure to the benefit of the Parties and their
respective successors and assigns.
4.16 Entire Agreement; Modification. This Agreement constitutes the
entire agreement between the Parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings and representations of the
Parties with respect to the subject matter hereof (including, without
limitation, any letter of intent or other such written proposal). This Agreement
may not be modified, amended, supplemented or otherwise changed, except by a
writing executed by both Parties.
4.17 Captions. Article and section headings used herein are for
convenience of reference only and shall not affect the construction of any
provision of this Agreement.
4.18 Interpretation. Each Party acknowledges that it and its legal
counsel have participated substantially in the drafting of this Agreement and
agree that, accordingly, in the interpretation and construction of this
Agreement, no ambiguity, real or apparent, in any provision hereof shall be
construed against either Party by reason of the role of such Party or its
counsel in the drafting of such provision.
4.19 Mutual Cooperation; Further Assurances. The Parties shall
cooperate with each other as reasonably necessary to effect the provisions of
this Agreement, shall use reasonable and good faith efforts to satisfy
conditions to Closing and, at and after Closing, shall each execute and deliver
such additional instruments or other documents as the other may reasonably
request to accomplish the purposes and intent of this Agreement; provided,
however, that nothing in this Section shall be deemed to enlarge the obligations
of the Parties hereunder or to require either Party to incur any material
expense or liability not otherwise required of it hereunder.
4.20 Exhibits. Each of the following Exhibits hereto:
Exhibit Title
------- -----
A Description of Property
B Form of Deed
C Form of Transferor's Certification of
Non-Foreign Status
D Form of Seller's Closing Certificate
E Exceptions to Seller's Warranties and
Representations
F Schedule of Property Records
G Form of Covenants Agreement
H Terms of Surplus Earth Materials Option
I Form of Assignment of Sewage Treatment
Capacity
J Form of Assignment and Assumption of
Development Agreement and Permits
K Form of Note
L Form of Deed of Trust
M Form of Guaranty
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N No Build Zones
O Right of Way Easement
P Exercise Notice
is hereby incorporated herein.
4.21 Counterparts. This Agreement, and any amendment hereto, may be
executed in any number of counterparts and by each Party on separate
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which taken together shall constitute but one and the same
instrument.
4.22 Governing Law. This Agreement shall be deemed to be an agreement
made under the laws of California and for all purposes shall be governed by and
construed in accordance with such laws.
4.23 Recording. Neither this Agreement nor any notice or memorandum
hereof shall be recorded in any public record. A violation of this prohibition
shall constitute a material breach of this Agreement.
4.24 TIME OF THE ESSENCE. TIME IS OF THE ESSENCE OF THIS AGREEMENT, AND
OF EACH COVENANT, AGREEMENT AND CONDITION REPRESENTED HEREOF WHICH PROVIDES FOR
NOTICE TO BE GIVEN OR ACTION TAKEN ON A SPECIFIC DATE OR WITHIN A SPECIFIED
PERIOD OF TIME.
4.25 Confidentiality. Buyer and its representatives shall hold in
strictest confidence the terms of this transaction, the contents of all items
delivered to Buyer pursuant to Section 2.4, and all data and information
obtained with respect to the Property or Seller or its business, whether
obtained before or after the Effective Date, and until after the Option Date,
the existence of this Agreement, and shall not disclose the same to others;
provided, however, that it is understood and agreed that Buyer may disclose such
data and information to employees, consultants, accountants and attorneys of
Buyer provided that such persons agree in writing to treat such data and
information confidentially and not to disclose any such information or data to
others. In the event of a breach or threatened breach by Buyer or its agent or
representatives of this Section 4.25, Seller shall be entitled to an injunction
restraining Buyer from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting Seller from
pursuing any other available remedy at law or in equity for such breach or
threatened breach. Prior to Closing, Buyer and Seller shall confer and agree on
a press release to be issued jointly by Buyer and Seller disclosing the
transaction and the appropriate time for making such release. Buyer shall not
issue any press releases with respect to the transaction contemplated in this
Agreement without Seller's prior written approval. Notwithstanding the first
sentence in this Section, Buyer shall be permitted to make any disclosures
necessary to comply with SEC rules and regulations, or any other applicable laws
and regulations governing Buyer. Subject to the foregoing, any press release
regarding this transaction shall be subject to the prior written approval of
both parties. The provisions of this Section 4.25 shall survive Closing.
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4.26 Buyer's Financing Covenants; Remedies. Until the Note has been
paid in full, Buyer covenants and agrees with the Seller as follows:
4.26.1 Permits and Legal Requirements. Buyer will comply with
and keep in effect all permits and approvals obtained from any governmental
bodies that relate to Buyer's ownership and operation of the Property and the
development and construction on the Property of one or more buildings
(collectively, the "Buildings"), together with parking, landscaping and common
areas and all infrastructure required of Buyer in connection with the
development and construction of the Buildings (collectively, the
"Improvements"). Buyer will comply with all existing and future laws,
regulations, orders, and requirements of all governmental, judicial, or legal
authorities having jurisdiction over the Property or the Improvements, and with
all recorded restrictions affecting the Property.
4.26.2 Notices of Change. Buyer shall give Seller written
notice of any material adverse change, fact, or circumstance relating to the
business of Buyer or of the interest of Seller under this Agreement, which may
materially affect Buyer's ability to make payments pursuant to the Note, within
five (5) days of such change, fact, or circumstance.
4.26.3 Insurance. Buyer shall purchase and maintain all
insurance required by its construction lender and its permanent lender. Buyer
shall at its own cost, and at all times, provide, maintain, and keep in full
force and effect:
(a) Policies of insurance insuring the Property and
the Improvements against loss or damage by risks embraced in coverage
of the type now known as the broad form of all-risk, extended coverage,
including, without limitation, coverage against loss by fire,
vandalism, and malicious mischief, in an amount not less than the
lesser of (i) the Note; or (ii) the full replacement cost of the
Improvements (exclusive of the cost of excavations, foundations, and
footings below the lowest basement floor, but including any
Improvements hereafter made); subject to reasonable deductibles from
the loss payable for any casualty.
(b) Comprehensive public liability insurance,
including coverage for completed operations for two years after the
construction of such Improvements has been completed, on an "occurrence
basis" against claims for "personal injury," including, without
limitation, bodily injury, death or property damage, occurring on, in
or about the Property and the adjoining streets and sidewalks, or
arising from or connected with the use, conduct or operation of Buyer's
business or interest, in an amount of not less than ONE MILLION DOLLARS
($1,000,000) per occurrence and THREE MILLION DOLLARS ($3,000,000) per
annum, in the aggregate, with respect to personal injury or death of
one or more persons and with respect to damage to property.
(c) Such other insurance against such risks or
hazards, or other risks and hazards, and in such amounts, as may from
time to time be reasonably required by Seller.
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<PAGE>
All policies of insurance shall be issued by companies
licensed to do business in California with a financial rating of at least A+
rating in the most recent edition of Best's Insurance Reports, shall contain the
Standard Non-Contributory mortgagee clause and the Standard Lender's Loss
Payable Clause, or their equivalents, in favor of Seller, and shall provide that
the proceeds thereof shall be payable to Seller to the extent of its interest.
In the event of the foreclosure of the Deed of Trust or other transfer of title
to the Property in extinguishment, in whole or in part, of the indebtedness
secured hereby, all right, title and interest of Buyer in and to any policy then
in force shall pass to the purchaser or grantee. Seller shall be furnished with
a certificate of insurance of each policy required to be provided by Buyer
hereunder, which policy shall provide that it shall not be modified or canceled
without thirty (30) days' written notice to Seller.
4.26.4 Financial Covenants and Future Financial Condition.
(a) Buyer shall not, as disclosed in its financial
statements previously presented to and approved by Seller, suffer
material adverse change, and shall not suffer any lien, judgment, writs
or attachment or other obligation which may materially affect Buyer's
ability to make payments pursuant to the Note without immediate
disclosure thereof to Seller in writing.
(b) Buyer shall deliver, or caused to be delivered,
to Seller audited year end financial statements, prepared by a
certified public accounting firm, of Buyer within 90 days of each
fiscal year end.
4.26.5 Environmental Compliance. Except as specifically
disclosed to and permitted by Seller, Buyer shall not use, generate,
manufacture, produce, store, release, discharge, or dispose of any Hazardous
Substance on, under or about the Property (including leasehold interests) or
transport to or from the Property any Hazardous Substance, in each case in
violation of applicable Requirements of Law.
4.26.6 Default and Remedies. In the event:
(a) Buyer fails to make any payment of principal or
interest to Seller under the Note within three (3) Business
Days after receipt of written notice from Seller; or
(b) Buyer fails to comply with any covenant or
obligation contained in this Agreement, the Note, the Deed of
Trust, or the Guaranty, and does not cure that failure within
thirty (30) days, unless such failure is capable of being
cured but is not reasonably capable of being cured within such
thirty (30) day period and Buyer commences action to cure such
failure within such thirty (30) day period and diligently and
continuously prosecutes such action to completion; or
(c) (i) A petition for relief under any present or
future state or federal law regarding bankruptcy,
reorganization or other relief to debtors is filed by or
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against Buyer (and, if filed against Buyer, is not discharged
within thirty (30) days of the date of such filing); (ii) a
receiver, liquidator, sequestrator, trustee, conservator or
other similar official of any property of Buyer, is appointed;
(iii) Buyer makes a general assignment for the benefit of
creditors, becomes insolvent, or unable to pay its debts
generally as they mature; (iv) an attachment or execution is
levied against any substantial portion of the Property; or (v)
a liquidation or dissolution of Buyer or a filing by or
against Buyer of a petition for liquidation or dissolution of
Buyer; or
(d) An event of default occurs under any lien or deed
of trust having priority over the Deed of Trust,
then Seller may exercise any one or more of the following rights or remedies:
(i) Any right or remedy it has under the Note, the Deed of
Trust, or the Guaranty; or
(ii) Declare the principal of and interest on the obligations
owing under the Note immediately due and payable; or
(iii) Pursue any other action available to Seller at law or in
equity.
All of Seller's rights and remedies will be cumulative. The
exercise of any rights of Seller hereunder shall not in any way constitute a
cure or waiver of a default hereunder or elsewhere, or invalidate any act done
pursuant to any notice of default, or prejudice Seller in the exercise of any of
its other rights hereunder or elsewhere unless, in the exercise of said rights,
Seller realizes all amounts owed to it hereunder. Notwithstanding the foregoing,
whether or not Seller elects to employ any or all of the remedies available to
it upon a default, Seller shall not be liable for the construction or failure to
construct or complete or protect the Improvements or for payment of any expense
incurred in connection with the exercise of any remedy available to Seller or
for the construction or completion of the Improvements or for the performance of
any other obligation of Buyer.
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<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed and delivered by their respective representatives, thereunto duly
authorized, as of the date first above written.
SELLER:
ELECTRONIC ARTS REDWOOD, INC.
a Delaware corporation
By: /s/ E. Stanton McKee
-------------------------------------
Name: E. Stanton McKee
-----------------------------------
Title: Exec Vice President
----------------------------------
BUYER:
Spieker Properties, L.P.,
a California limited Partnership
By: Spieker Properties, Inc.,
a Maryland corporation
By: /s/ Peter H. Schnugg
-------------------------------------
Name: Peter H. Schnugg
-----------------------------------
Title: Senior Vice President
----------------------------------
The undersigned agrees to serve as Escrow
Agent under the foregoing Agreement:
By:
-------------------------------------
Susan Melton, Escrow Officer
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<PAGE>
EXHIBIT A
DESCRIPTION OF PROPERTY
PARCEL I:
Parcel 1, as shown on Parcel Map No. 98-6 filed September 2, 1998, Book 70 of
Parcel Maps, pages 78 and 79, San Mateo County Records.
PARCEL II:
Parcel 2, as shown on Parcel Map No. 98-6 filed September 2, 1998, Book 70 of
Parcel Maps, pages 78 and 79, San Mateo County Records.
PARCEL III:
Non-exclusive easements appurtenant to Parcels I and II above for utilities as
defined in that certain Easement and Covenants Agreement dated March 27, 1997,
by and between Shores Business Center Association and Flatirons Funding, Limited
Partnership, recorded March 27, 1997, Document No. 97034607, San Mateo County
Records, as amended by First Amendment to Easement and Covenants Agreement dated
August 31, 1998, recorded September 2, 1998, Document No. 98-141940, San Mateo
County Records ("First Amendment") over under and across that area described as
"Utility Easement No. l -- Parcel A" in Exhibit D of the First Amendment.
PARCEL IV:
Non-exclusive easements appurtenant to Parcel I above for ingress/egress as
defined in that certain Easement and Covenants Agreement dated March 27, 1997,
by and between Shores Business Center Association and Flatirons Funding, Limited
Partnership, recorded March 27, 1997, Document No. 97034607, San Mateo County
Records, as amended by First Amendment to Easement and Covenants Agreement dated
August 31, 1998, recorded September 2, 1998, Document No. 98-141940, San Mateo
County Records ("First Amendment") over under and across that area described as
"Ingress/Egress Easement No. 2 -- Parcel B" in Exhibit D of the First Amendment.
PARCEL V:
Non-exclusive easements appurtenant to Parcels I and II above for utilities as
defined in that certain Easement and Covenants Agreement dated March 27, 1997,
by and between Shores Business Center Association and Flatirons Funding, Limited
Partnership, recorded March 27, 1997, Document No. 97034607, San Mateo County
Records, as amended by First Amendment to
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<PAGE>
Easement and Covenants Agreement dated August 31, 1998, recorded September 2,
1998, Document No. 98-141940, San Mateo County Records ("First Amendment") over
under and across that area described as "Utility Easement No. 9 -- Parcel B" in
Exhibit D of the First Amendment.
PARCEL VI:
Easements appurtenant to Parcels I and II above for the purposes set forth in
Sections 11.4(a), 11.4(c), 11.5, 11.6 and 11.7 in the Declaration of Covenants,
Conditions, Easements and Restrictions Electronic Arts Business Park recorded
September 18, 1998, Document No. 98-150182, San Mateo County Records.
A.P. No.: 095-221-080 JPN 127 086 000 01 A
095-221-090 127 086 000 02 A
095-221-110
095-233-130
095-233-140
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<PAGE>
EXHIBIT B
RECORDING REQUESTED BY AND x
WHEN RECORDED MAIL TO: x
x
x
x
x
--------------------------------------------------------------------------------
Above Space for Recorder's Use Only
FORM OF
GRANT DEED
The undersigned Grantor declares that Documentary Transfer Tax is not
part of the public records and is being paid in accordance with a separate
statement:
FOR VALUE RECEIVED, ELECTRONIC ARTS REDWOOD, INC., a Delaware
corporation ("Grantor"), grants to __________________________________, a
_______________________ ("Grantee"), all that certain real property ("Property")
located in the City of Redwood City, County of San Mateo, State of California,
as more particularly described on Exhibit A attached hereto.
RESERVING THEREFROM easements as set forth in Sections 11.4, 11.5, 11.6
and 11.7 in the Declaration of Covenants, Conditions, Easements and Restrictions
Electronic Arts Business Park recorded September 18, 1998, Document No.
98-150182, San Mateo County Records.
AND RESERVING THEREFROM the non-exclusive right to use and enjoy and to
grant and to convey to others on a non-exclusive basis the easements described
as Parcels III, IV, and V in Exhibit A hereof.
This Grant Deed is made by Grantor and accepted by Grantee subject to:
(i) non-delinquent real property taxes and assessments; (ii) all covenants,
conditions, restrictions and easements and all rights of way, encumbrances, and
all other exceptions to title of record; (iii) all matters ascertainable by a
reasonable inspection or survey of the Property; and (iv) all matters affecting
the condition of title to the Property suffered or created by or with the
written consent of Grantee.
[Continued on Next Page]
MAIL TAX STATEMENTS:
--------------------
--------------------
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<PAGE>
IN WITNESS WHEREOF, Grantor has executed this Grant Deed this ___ day
of __________, 1999.
GRANTOR:
ELECTRONIC ARTS REDWOOD, INC., a
Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
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<PAGE>
SEPARATE STATEMENT OF
DOCUMENTARY TRANSFER TAX
County Recorder
San Mateo County
Dear Sir/Madam:
In accordance with Revenue and Taxation Code Section 11932, it is
requested that this Statement of Documentary Transfer Tax due not be recorded
with the attached deed, but be affixed to the deed after recordation and before
return as directed on the deed.
The deed names the undersigned, as Grantor, and ______________________
__________________________, a __________________________, as Grantee. The real
property being transferred is located in the City of Redwood City, County of San
Mateo, State of California, as more particularly described in the attached deed.
The amount of the documentary transfer tax due on the attached deed is
$______________, computed on the basis of:
(__) computed on the consideration or value of property conveyed; or
(__) computed on the consideration or value less liens or encumbrances
remaining at the time of sale.
Very truly yours,
ELECTRONIC ARTS REDWOOD, INC., a
Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
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<PAGE>
EXHIBIT C
FORM OF
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
To inform Name, entity, jurisdiction of Buyer or nominees
("Transferee"), that withholding of tax under Section 1445 of the Internal
Revenue Code of 1986, as amended (the "Code"), will not be required upon the
transfer of certain real property to Transferee by ELECTRONIC ARTS REDWOOD,
INC., a Delaware corporation, the undersigned hereby certifies the following on
behalf of Transferor:
1. Transferor is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Code and the
Income Tax Regulations promulgated thereunder);
2. Transferor's U.S. employer identification number is 94-2838567; and
3. Transferor's office address is 207 Redwood Shores Parkway, Redwood
City, California 94065.
Transferor understands that this Certification may be disclosed to the
Internal Revenue Service by Transferee and that any false statement contained
herein could be punished by fine, imprisonment, or both.
Under penalty of perjury the undersigned declares that he or she has
examined this Certification and to the best of his/her knowledge and belief it
is true, correct and complete, and the undersigned further declares that he/she
has authority to sign this document on behalf of Transferor.
Dated: ___________________ ELECTRONIC ARTS REDWOOD, INC.,
a Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
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<PAGE>
EXHIBIT D
FORM OF
SELLER'S CLOSING CERTIFICATE
ELECTRONIC ARTS REDWOOD, INC. ("Seller"), a Delaware corporation, and
_________________________ ("Buyer"), a __________________________, have entered
into that certain Agreement of Purchase and Sale and Escrow Instructions dated
Insert date of Agreement (the "Purchase Agreement"). Seller hereby certifies to
Buyer that, as of the date of this certificate, the representations and
warranties contained in Section 3.2.1 of the Purchase Agreement, as qualified by
references to Seller's Knowledge, are true in all material respects, except as
otherwise expressly disclosed in the schedule of exceptions attached to this
Certificate.
Dated: ___________________ ELECTRONIC ARTS REDWOOD, INC.,
a Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
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<PAGE>
EXHIBIT E
EXCEPTIONS TO SELLER'S REPRESENTATIONS AND WARRANTIES
Nothing in this schedule constitutes an admission of any liability or
obligation of Buyer to any third party, nor an admission to any third party of
Buyer's interests. Documents referenced herein form an integral part of this
disclosure and are incorporated herein by reference for all purposes set forth
herein. Matters reflected in this schedule are not necessarily limited to
matters required by the Agreement to be reflected herein; such additional
matters are included for informational purposes only. Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to them
in the Agreement.
Section 3.2.1(vi)
1. Equipment used for staging materials, storage of hazardous
substances and other construction-related functions have been
operated on the Property and have traversed the property, in a
manner consistent with accepted construction practices.
2. The possible presence of Hazardous Substances in the soil of
the Property, as set forth in the Preliminary Geotechnical
Report issued by Treadwell and Rollo, dated as of February 14,
1995, and the Phase I and Phase II reports issued by Applied
Geosciences.
Section 3.2.1(viii)
1. Prior to Closing, Seller may engage in hydro-seeding of the
Property.
2. Seller may install roads, sidewalks and landscaping, in
accordance with the Landscaping Drawings prepared by the SWA
Group dated February 12, 1997 and the Civil Drawings prepared
by Bohley, Malley Associates dated as of February 12, 1997.
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<PAGE>
EXHIBIT F
SCHEDULE OF PROPERTY RECORDS
1. ALTA survey of the Real Property, prepared by Bohley/Maley Associates,
as job number 97023 and certified as of March 27, 1998, by Lisa M.
Maley, L.S.
2. Applications dated January 6, 1996, for (a) a Vesting Tentative Map and
(b) a Planned Development Permit with schedules and exhibits.
3. Development Agreement dated as of November 7, 1996, by and between
Flatirons Funding, Limited Partnership, a Delaware limited partnership,
and the City of Redwood City and recorded November 8, 1996, as
Instrument No. 96-138988, Official Records, San Mateo County,
California, as amended by First Amendment to Development Agreement
dated April 15, 1998 and recorded April 15, 1998, as Instrument No.
98-054809, Official Records, San Mateo County, California, by First
Amendment to Development Agreement dated April 6, 1998, and recorded
August 25, 1998, as Instrument No. 98-135753 (recorded to correct
typographical errors in document recorded April 15, 1998), and by
Second Amendment dated August 31, 1998 and recorded September 2, 1998,
as Instrument No. 98-141937, Official Records, San Mateo County,
California.
4. Phase I and Phase II Environmental Assessment Reports prepared by
Applied Geosciences, Inc., dated February 7, 1995, and February 13,
1995, respectively.
5. Preliminary Geotechnical Investigation prepared by Treadwell & Rollo,
Inc., dated February 14, 1995.
6. All real estate tax assessments and bills affecting the Property
(including, without limitation, special assessments) for the current
tax year.
7. Covenants, Conditions, Easements and Restrictions of the Electronic
Arts Business Park dated August 31, 1998 and recorded September 18,
1998, as Instrument No. 98-150182, Official Records, San Mateo County,
California.
8. Covenants Agreement by and between Redwood Shores Properties and
Flatirons Funding, Limited Partnership, dated February 14, 1995, and
recorded February 15, 1995, as Instrument No. 95015506, Official
Records, San Mateo County, California, as amended by an Amendment to
Covenants Agreement, dated March 27, 1997.
9. Assignment of Sewage Treatment Capacity dated February 14, 1995, by and
between Redwood Shores Properties and Flatirons Funding, Limited
Partnership.
10. Shores Center Development Handbook.
11. Documents concerning Entitlements.
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<PAGE>
EXHIBIT G
RECORDING REQUESTED BY, AND )
WHEN RECORDED MAIL TO: )
)
Nossaman, Guthner, Knox & Elliott, LLP )
50 California Street, 34th Floor )
San Francisco, California 94111 )
Attention: David L. Kimport, Esq. )
)
--------------------------------------------------------------------------------
FORM OF
ASSUMPTION AND COVENANTS AGREEMENT
THIS ASSUMPTION AND COVENANTS AGREEMENT ("Covenants Agreement") is made
and entered into as of this ___ day of __________________, 1999, by and between
FLATIRONS FUNDING, LIMITED PARTNERSHIP, a Delaware limited partnership,
("FFLP"), and __________________________, a _______________________________
("Buyer") (FFLP and Buyer are the "Parties" to this Covenants Agreement).
ELECTRONIC ARTS REDWOOD, INC., a Delaware corporation ("EAR") is a party with
respect to Sections 1.3, 6, and 9 only.
RECITALS
A. Concurrent with the recording of this Covenants Agreement, FFLP has
sold and conveyed to EAR and EAR has sold and conveyed to Buyer, and Buyer has
purchased from EAR, approximately 13.85 gross acres of vacant land comprised of
two (2) legal lots in the City of Redwood City, County of San Mateo, California,
as more particularly described in Exhibit A attached hereto (the "Conveyed
Property").
B. FFLP is the owner of four (4) legal lots in the City of Redwood
City, County of San Mateo, California, as more particularly described in Exhibit
B attached hereto (the "Retained Property"). (The term "Property" alone is used
occasionally to refer to either the Retained Property or the Conveyed Property
as the context may require and the term "Properties" is used occasionally to
refer to the Conveyed Property and the Retained Property collectively.)
C. FFLP acquired the Conveyed Property, the Retained Property and
certain other real property in the vicinity of the Conveyed Property
(collectively, the "Project") on February
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<PAGE>
15, 1995. The Project has common or related service needs, infrastructure
components (including landscaping, parks, utilities, sewer, drainage, road,
highway components), and building density limitations.
D. In connection with its acquisition of the Project, FFLP entered into
that certain Covenants Agreement dated February 14, 1995, by and between FFLP
and Redwood Shores Properties, and recorded February 15, 1995, as Instrument No.
95-015506, Official Records, San Mateo County, California, as amended by an
Amendment to Covenants Agreement dated March 27, 1997, and recorded March 27,
1997, as Instrument No. 97-034602, Official Records, San Mateo County,
California ("Redwood Shores Covenants Agreement").
E. As a material inducement and condition to EAR selling the Conveyed
Property to Buyer, and as an integral part of the negotiations between EAR and
Buyer as to the purchase price, terms and conditions of sale of the Conveyed
Property by EAR, Buyer has agreed to execute this Covenants Agreement (i) to
assume FFLP's duties and obligations with respect to the Conveyed Property under
the Redwood Shores Covenants Agreement; (ii) to create personal covenants of the
Parties and their Successors (as defined in Section 4 below) to and for the
exclusive benefit of each other and their Designated Assigns (as defined in
Section 4 below) and (iii) to also create covenants running with the land under
California Civil Code Section 1468 in favor of and benefiting the Properties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of FFLP and Buyer, the
parties agree as follows:
1. Assumption of Redwood Shores Covenants Agreement.
1.1 Assignment. FFLP, for itself, its successors and assigns,
expressly and unconditionally assigns to Buyer, its successors and assigns, all
of its rights and benefits under the Redwood Shores Covenants Agreements with
respect to the Conveyed Property. FFLP expressly hereby (i) designates Buyer as
being entitled to enforce all provisions of the Redwood Shores Covenants
Agreement insofar as they affect the Conveyed Property in the same manner and to
the same extent as FFLP has heretofore been entitled; (ii) designates Buyer as
being entitled to participate in amendments to the Redwood Shores Covenants
Agreement insofar as they affect the Conveyed Property in the same manner and to
the same extent as FFLP has heretofore been entitled; and (iii) declares that
Buyer is FFLP's "Assign" as that term is used in Section 3 of the Redwood Shores
Covenants Agreement.
1.2 Assumption. Buyer, for itself, its successors and assigns,
expressly and unconditionally assumes all of the obligations and liabilities of
FFLP under the Redwood Shores Covenants Agreement with respect to the Conveyed
Property arising from and after the date hereof, and agrees to perform and
comply with all covenants of FFLP with respect to the Conveyed Property as set
forth in the Redwood Shores Covenants Agreement. Buyer covenants that Buyer
shall at all times fully comply with, and the development, construction and use
of the
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<PAGE>
Conveyed Property and Improvements shall at all times be in full compliance
with, the Redwood Shores Covenants Agreement.
1.3 Indemnification. Buyer shall indemnify and hold FFLP, its
successors and assigns, and including EAR, its successors and assigns, harmless
from any and all liability, cost, loss, damage, or expense, including attorney's
fees, arising out of Buyer's failure to observe and perform any of the
obligations, liabilities, and covenants hereby assumed. EAR shall indemnify and
hold Buyer, its successors and assigns, harmless from any and all liability,
cost, loss, damage, or expense, including attorney's fees, arising out of EAR's
or FFLP's failure to observe and perform any of the obligations, liabilities,
and covenants hereby retained.
2. Mutual Covenants. In connection with and as a material inducement
and condition to EAR's sale of the Conveyed Property to Buyer, FFLP and Buyer
make the following covenants. Each of these covenants shall constitute both (i)
the personal covenants of the covenantor and its Successors to and for the
exclusive benefit of the covenantee and its Designated Assigns (as defined in
Section 4 below), and (ii) covenants running with the land in favor of and
benefiting the Retained Property or the Conveyed Property, as the case may be.
2.1 Buyer's Covenant Not to Exceed Density. Buyer covenants to
FFLP that at all times during the term of this covenant (as such term is set
forth in Section 6 below) the Buildings on the Conveyed Property shall not
contain more than an aggregate three hundred forty thousand (340,000) square
feet of Gross Building Floor Area (as defined below) in Zones 2 and 4,
distributed among Zones 2 and 4 in accordance with that certain Development
Agreement dated November 7, 1996, by and between FFLP and the City of Redwood
City and recorded November 8, 1996, as Instrument No. 96-138988, as the same may
be amended from time to time (the "Development Agreement"); and that Buyer shall
not develop and construct more than an aggregate 340,000 square feet of Gross
Building Floor Area on Zones 2 and 4 on the Conveyed Property. The term "Gross
Building Floor Area" shall mean the sum total of all areas contained within the
exterior walls of all Buildings including, without limitation, stairways,
elevator shafts, other shafts, mechanical rooms, vents, and internal support
facilities, but excluding those portions of mechanical or utility structures and
storage areas located on the roof to the extent such structures are not
considered by the City as building floor area for purposes of determining
parking requirements, traffic generation, building density or other similar
development limitations.
2.2 FFLP's Covenant Not to Exceed Density. FFLP covenants to
Buyer that at all times during the term of this covenant (as such term is set
forth in Section 6 below) the Buildings on the Retained Property shall not
contain more than six hundred sixty thousand (660,000) square feet of Gross
Building Floor Area for office space nor more than 50,000 square feet of special
purpose accessory structures and that FFLP shall not develop and construct more
than 660,000 square feet of Gross Building Floor Area for office space nor more
than 50,000 square feet of special purpose accessory structures on the Retained
Property. Moreover, FFLP covenants to Buyer that it shall not commence
construction of more than 550,000 square feet of Gross Building Floor Area for
office space nor of more than 50,000 square feet of special
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<PAGE>
purpose accessory structures (including all construction commenced from and
after November 8, 1996) on the Retained Property prior to November 8, 2000.
2.3 Compliance with Declaration. Each of Buyer and FFLP
covenants to the other that it shall at all times fully comply with, and that
the development, construction and use of the Conveyed Property or the Retained
Property, as the case may be, and the Improvements shall at all times be in full
compliance with, the Declaration of Covenants, Conditions, Easements and
Restrictions of the Electronic Arts Business Park dated August 31, 1998, and
recorded in the Official Records of San Mateo County on September 18, 1998, as
Document No. 98-150182 ("Park Declaration").
2.4 Buyer's Covenant Not to Build. Buyer shall not construct
any structure or portion thereof within that portion of the Conveyed Property
described in Exhibit C attached hereto and incorporated herein by reference;
except for landscaping, surface roadways and parking, awnings or other
protrusions over entrance doorways, covered walkways, outdoor patio facilities,
related outbuildings not exceeding fifteen (15) feet in height above the grade
of the Property, as of the date hereof, and related installations such as light
standards.
3. Benefit and Burden of Covenants Generally; Equitable Enforcement.
Buyer and FFLP acknowledge and agree that the assumptions set forth in Section 1
above and the covenants set forth in Section 2 above relate to the use, repair,
maintenance, improvement and development of, or payment of taxes and assessments
on, the Project or some part thereof, and that these covenants are intended to
both bind Buyer and Buyer's Successors (as defined in Section 4 hereof) for the
personal benefit of FFLP and FFLP's Designated Assigns (as defined in Section 4
hereof), or to bind FFLP and FFLP's Successors for the personal benefit of Buyer
and Buyer's Designated Assigns, as the case may be, as more fully set forth in
Section 4 below, and to burden the Conveyed Property for the benefit of the
Retained Property, or to burden the Retained Property for the benefit of the
Conveyed Property, as the case may be, as more fully set forth in Section 5
below. Each of Buyer and FFLP acknowledges and agrees that the assumptions set
forth in Section 1 and the covenants set forth in Section 2 above and all other
terms and provisions of this Covenants Agreement have been negotiated between
Buyer and FFLP in an arm's length commercial transaction between sophisticated,
knowledgeable parties, each possessing substantial experience in real estate
transactions and represented by independent counsel; that this Covenants
Agreement has been an integral part of negotiations concerning the purchase
price, terms and conditions of the sale of the Conveyed Property to Buyer; that
the Parties' execution, delivery and recording of this Covenants Agreement
constitutes a material part of their agreement to purchase and sell the Conveyed
Property and that the Parties would not close the sale of the Conveyed Property
to Buyer without the execution, delivery and recording of this Covenants
Agreement; that each Party has a legitimate personal business interest in the
other's development and construction of the Improvements on their respective
Property in conjunction with the continued development and sale of the balance
of the Project; that the purchase price paid by Buyer for the Conveyed Property
takes into account the assumption set forth in Section 1 and the covenants set
forth in Section 2 above (including, without limitation, the density limitations
set forth in Sections 2.1 and 2.2 and the covenant not to build set forth in
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Section 2.4); and that it is and shall be equitable for the Parties and their
Designated Assigns or any beneficial owner of the Property, in its sole and
absolute discretion and without any obligation to do so, to enforce any breach
of these covenants by a Party or its Successors in accordance with the
provisions of Section 8.3 below, notwithstanding that the use of the respective
Property unrestricted by said covenants might be more profitable to its owner or
that enforcement of these covenants might financially benefit the enforcing
Party or its Designated Assigns.
4. Covenants as Personal Covenants. Each of Buyer and FFLP acknowledges
and agrees that each of the covenants assumed as set forth in Section 2 above
constitutes a personal covenant of the covenanting Party and its successors,
assigns, transferees, grantees, devisees, executors, administrators and
representatives (collectively "Successors") (whether such Successors have
succeeded to the Party's interest in the respective Property in whole or in
part, directly, indirectly (whether by merger, consolidation, liquidation,
reorganization, sale of assets or sale of stock of the Party), by operation of
law or through foreclosure, deed in lieu of foreclosure, trustee's sale or
otherwise), to and for the sole benefit of (i) the other Party (the "Benefited
Party") and only such of the Benefited Party's successors, assigns, transferees,
grantees, heirs, devisees, executors, administrators and representatives (x) who
hold an interest in real property within the Project and (y) who have been
expressly designated by the Benefited Party (in a written designation document
recorded by the Benefited Party against the applicable Property) as being
entitled to enforce all or certain specified provisions of this Covenants
Agreement (collectively, a Party's "Designated Assigns") and (ii) the beneficial
owner(s) of the Benefited Party's Property. Buyer further acknowledges and
agrees that the indemnification obligation set forth in Section 1 above
constitutes a personal covenant of Buyer and Buyer's Successors (whether such
Buyer's Successors have succeeded to Buyer's interest in the Property in whole
or in part, directly, indirectly (whether by merger, consolidation, liquidation,
reorganization, sale of assets or sale of stock of Buyer), by operation of law
or through foreclosure, deed in lieu of foreclosure, trustee's sale or
otherwise), to and for the sole benefit of (i) FFLP and FFLP's Designated
Assigns and including EAR and (ii) the beneficial owner(s) of the Retained
Property. The indemnity and defense obligations set forth in this Section shall
survive for twenty (20) years after the date of recordation of this Covenants
Agreement notwithstanding that a Party may no longer possess any beneficial
ownership interest in the Property. Except as expressly set forth above and in
Section 5 below, the covenants set forth in Section 2 above shall not be for the
benefit of or enforceable by any other person or entity owning any property in
the Project. Neither FFLP or Buyer or their Designated Assigns nor the
beneficial owner(s) of either the Retained Property or the Conveyed Property
shall have any obligation to enforce any such covenants for the benefit of any
other person or entity.
5. Covenants Running With the Land. All covenants and restrictions
contained in Section 2 above shall also be covenants running with the land for
the benefit of the Retained Property, or the Conveyed Property, as the case may
be, and shall, in any event, and without regard to technical classification or
designation, legal or otherwise, be to the fullest extent permitted by law and
equity, binding for the benefit of and in favor of, and enforceable by any
person (including, without limitation, the Parties and their Designated Assigns)
having any
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beneficial ownership in the Retained Property or the Conveyed Property, as the
case may be. Buyer and FFLP acknowledge and agree that given the close vicinity
of the Conveyed Property and the Retained Property, that the development,
construction and operation of the Improvements on the Properties pursuant to the
covenants in Section 2 above shall directly benefit each Party's Property by
enhancing the value of each Party's Property.
6. Term. The Assumption and Indemnification set forth in Section 1
shall be of the same duration as that of the Redwood Shores Covenants Agreement.
The covenants set forth in Sections 2.1, 2.2, and 2.4 above shall automatically
terminate and become null and void on the date twenty (20) years after the
recordation date of this Covenants Agreement. The covenants set forth in Section
2.3 above shall be of the same duration as that of the Park Declaration.
7. Priority of Mortgage Lien. No violation or breach of the covenants,
conditions, restrictions, provisions or limitations contained in this Covenants
Agreement shall defeat or render invalid or in any way impair the lien or charge
of any mortgage or deed of trust or security interest recorded against either
the Conveyed Property or the Retained Property; provided, however, that any
subsequent owner of the Conveyed Property or Retained Property, as the case may
be, or portion thereof shall constitute a Successor and be bound by such
remaining covenants, conditions, restrictions, limitations, and provisions,
whether such owner's title was acquired by foreclosure, deed in lieu of
foreclosure, trustee's sale or otherwise.
8. Defaults: No Waiver of Rights; Remedies.
8.1 Defaults. If a Party should breach any of the covenants
set forth herein or default in the performance of any of its obligations
hereunder, then the other Party, its Designated Assigns or the beneficial
owner(s) of a Property shall have the immediate and absolute right to enforce
any or all of the remedies set forth in Section 8.3 below without the necessity
of providing the breaching Party with any notice of the default or opportunity
to cure the default.
8.2 No Waiver of Rights. Any failures or delays by a
non-breaching Party or its Designated Assigns or the beneficial owner(s) of a
Property to provide any default notices to a breaching Party or to assert any of
their rights and remedies as to any breach or default by a breaching Party under
this Covenants Agreement shall not deprive them of their right to later
institute and maintain any actions or proceedings which they or any one of them
may deem necessary to protect, assert or enforce any such rights or remedies.
Each Party acknowledges and agrees that the other Party reserves the right to
determine whether or not and when, if at all, it will seek to enforce any of its
rights and remedies with respect to a breach of any of the covenants in this
Covenants Agreement and that any delay of or reservation in enforcing such
rights and remedies shall not constitute a waiver or relinquishment of any
future enforcement of this Covenants Agreement by a Party or its Designated
Assigns or the beneficial owner(s) of a Property.
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8.3 Remedies. A Party, its Designated Assigns or the
beneficial owner(s) of a Property may institute any legal or equitable action to
cure, correct, or remedy any default, to recover damages for any default, or to
obtain any other remedy consistent with the purposes of this Covenants
Agreement, including, without limitation, specific performance and/or injunctive
relief (both mandatory and prohibitory), abatement proceedings, constructive
trust or equitable liens. The rights and remedies of the Parties, their
Designated Assigns and/or the beneficial owner of a Property are cumulative, and
the exercise by the Parties, their Designated Assigns or the beneficial owner of
a Property of one or more of such rights or remedies shall not preclude the
exercise by it, at the same or different times, of any other rights or remedies
for the same default or any other default.
9. General Provisions.
9.1 Attorneys' Fees. In the event of litigation between the
parties in connection with this Covenants Agreement, the prevailing party shall
be entitled to its reasonable costs and expenses incurred in connection with
such litigation, including reasonable attorneys' fees and costs.
9.2 No Merger. None of the terms, covenants, agreements or
conditions heretofore agreed upon in writing in any other agreements between the
parties to this Covenants Agreement with respect to obligations to be performed,
kept or observed by Buyer or FFLP in respect to said Conveyed Property or
Retained Property or any part thereof shall be deemed to be merged with this
Covenants Agreement.
9.3 Construction. Headings in this Covenants Agreement are for
convenience and reference use only, and are not part of this Covenants
Agreement, and shall be of no legal force or effect. When the context so
requires, words in the masculine, feminine or neuter gender shall include each
other gender; and words in the singular or plural shall include each other.
Recitals A through E above and Exhibits A, B, and C, are incorporated into this
Covenants Agreement by this reference. This Covenants Agreement is executed and
delivered in the State of California, and shall be construed and enforced in
accordance with, and governed by, the laws of the State of California.
9.4 Notices. Any notice, demand or request which may be
permitted, required or desired to be given in connection with this Covenants
Agreement shall be given in writing and directed as follows:
If to FFLP: Flatirons Funding, Limited Partnership
c/o ML Leasing Equipment Corp.
North Tower, 27th Floor
World Financial Center
250 Vesey Street
New York, New York 10281-1327
Attn: Jean M. Tomaselli
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With a copy to: Electronic Arts Redwood, Inc.
207 Redwood Shores Parkway
Redwood City, California 94065
Attn: James F. Healey, President
and a copy to: Nossaman, Guthner, Knox & Elliott, LLP
50 California Street, 34th Floor
San Francisco, California 94111
Attn: Michael B. Wilmar, Esq.
If to Buyer:
With a copy to:
Notices shall be either (i) personally delivered (including delivery by Federal
Express or other courier service) to the offices set forth above, in which case
they shall be deemed delivered on the date of delivery to said offices; (ii)
sent by telecopy, in which case they shall be deemed delivered on the date sent
(provided, however, that any notices sent by telecopy shall also be sent by
overnight courier on the same day); or (iii) sent by certified mail, postage
prepaid, return receipt requested, in which case they shall be deemed delivered
on the date shown on the receipt unless delivery is refused or delayed by the
addressee, in which event the notice shall be deemed delivered on the date of
deposit in the United States mail. The addresses and addressees may be changed
by giving notice of such change in the manner provided for in this Section 9.4.
9.5 Severability. In the event any portion of this Covenants
Agreement shall be declared by any court of competent jurisdiction to be
invalid, illegal or unenforceable, such portion shall be deemed severed from
this Covenants Agreement, and the remaining parts of this Covenants Agreement
shall remain in full force and effect, as fully as though such invalid, illegal
or unenforceable portion had never been part of this Covenants Agreement.
9.6 Due Execution. The persons executing this Covenants
Agreement on behalf of Buyer, FFLP, and EAR, respectively, represent and warrant
that they have the right, power, legal capacity and authority to execute this
Covenants Agreement and to bind the party for whom they are signing.
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9.7 No Liability of Parties.
(a) FFLP. None of FFLP, FFLP's Designated Assigns or
the beneficial owner(s) of the Retained Property or any of their respective
present or future partners, officers, directors, shareholders, agents,
employees, guarantors, parents, subsidiaries or affiliates, and including EAR
(collectively the "FFLP Parties") shall be directly or indirectly liable or
responsible for any loss, claim, cause of action, liability, indebtedness,
damage or injury of any kind or character to any person, entity or property
(collectively, "Claims") arising from any construction on, or occupancy or use
of, any of the Conveyed Property or Improvements, including, without limitation,
any Claims caused by, or arising from: (i) any defect in any building,
structure, grading, fill, landscaping or other improvements on the Conveyed
Property or in any on-site or off-site improvement or other facility; (ii) any
act or omission of Buyer or any of Buyer's agents, employees, independent
contractors, licensees or invitees; (iii) any accident in, on or about the
Conveyed Property or Improvements, or any fire, flood, or other casualty or
hazard or Act of God thereon; (iv) the failure of Buyer, any of Buyer's
licensees, employees, invitees, agents, independent contractors or other
representatives to maintain all or any part of the Conveyed Property or the
Improvements in a safe condition; and (v) any nuisance made or suffered on any
part of the Conveyed Property or Improvements. In addition, none of the FFLP
Parties shall be liable to Buyer or any other party on the basis of any actions
or failure to act under this Covenants Agreement, including, without limitation,
mistakes of judgment, negligent or otherwise, unless and to the extent resulting
from the FFLP Parties' intentional torts or willful misconduct.
(b) Buyer. None of Buyer, Buyer's Designated Assigns
or the beneficial owner(s) of the Conveyed Property or any of their respective
present or future partners, officers, directors, shareholders, members, agents,
employees, guarantors, parents, subsidiaries or affiliates (collectively the
"Buyer Parties") shall be directly or indirectly liable or responsible for any
loss, claim, cause of action, liability, indebtedness, damage or injury of any
kind or character to any person, entity or property (collectively, "Claims")
arising from any construction on, or occupancy or use of, any of the Retained
Property or Improvements, including, without limitation, any Claims caused by,
or arising from: (i) any defect in any building, structure, grading, fill,
landscaping or other improvements on the Retained Property or in any on-site or
off-site improvement or other facility; (ii) any act or omission of FFLP or any
of FFLP's agents, employees, independent contractors, licensees or invitees, and
including EAR; (iii) any accident in, on or about the Retained Property or
Improvements, or any fire, flood, or other casualty or hazard or Act of God
thereon; (iv) the failure of FFLP, any of FFLP's licensees, employees, invitees,
agents, independent contractors or other representatives to maintain all or any
part of the Retained Property or the Improvements in a safe condition; and (v)
any nuisance made or suffered on any part of the Retained Property or
Improvements. In addition, none of the Buyer Parties shall be liable to FFLP or
any other party on the basis of any actions or failure to act under this
Covenants Agreement, including, without limitation, mistakes of judgment,
negligent or otherwise, unless and to the extent resulting from the Buyer
Parties' intentional torts or willful misconduct.
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9.8 Limitation on Liability.
(a) Buyer. Notwithstanding anything set forth in this
Agreement to the contrary, the officers, directors, shareholders, partners,
members, and direct and indirect owners of Buyer shall not be liable for any
debts or other obligations of Buyer or in respect of any claims against Buyer
arising under this Covenants Agreement, and any such debts, obligations or
claims shall be satisfied solely out of the assets of Buyer. No personal
judgment shall be sought or obtained against any officer, director, shareholder,
partner, member, or direct or indirect owner of Buyer.
(b) EAR. Notwithstanding anything set forth in this
Agreement to the contrary, the officers, directors, shareholders, partners,
members, and direct and indirect owners of EAR shall not be liable for any debts
or other obligations of EAR or in respect of any claims against EAR arising
under this Covenants Agreement, and any such debts, obligations or claims shall
be satisfied solely out of the assets of EAR. No personal judgment shall be
sought or obtained against any officer, director, shareholder, partner, member,
or direct or indirect owner of EAR.
9.9 Certain Obligations of FFLP Non-Recourse. FFLP's
obligations hereunder are intended to be the obligations of the limited
partnership and of the corporations which are the managing general partner and
any other general partner thereof only, and no recourse for the payment of any
amount due under this Covenants Agreement or for any claim based thereon or
otherwise in respect thereof, shall be held against any limited partner of FFLP
or any incorporator, shareholder, officer, director or affiliate, as such, past,
present or future of such corporate managing general partner or other general
partner or of any corporate limited partner or of any successor corporation to
such corporate managing general partner or other general partner or any
corporate limited partner of FFLP, or against any direct or indirect parent
corporation of such corporate managing general partner or other general partner
or of any limited partner of FFLP or any other subsidiary or affiliate of any
such direct or indirect parent corporation or any incorporator, shareholder
officer or director, as such, past, present or future, of any such parent or
other subsidiary or affiliate, it being understood that FFLP is a limited
partnership formed for the purpose of acquiring and owning the Project and
acting as lessor to Electronic Arts Redwood, Inc., on the express understanding
aforesaid. Nothing contained in this Section 9.9 shall be construed to limit the
exercise or enforcement, in accordance with the terms of this Covenants
Agreement and any other documents referred to herein, of rights and remedies
against the limited partnership or the corporate managing general partner or any
other general partner of FFLP or the assets of the limited partnership or the
corporate managing general partner or any other general partner of FFLP. As used
in this Section 9.9, "affiliate" means any other person controlling, controlled
by or under direct or indirect common control with such person; "person" means
any individual, corporation, partnership, limited liability company, private
limited company, joint venture, association joint-stock company, trust,
unincorporated association, organ of government or any agency or political
subdivision thereof; and "control," when used with any specified person, means
the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting
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securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
9.10 Amendment. This Covenants Agreement may be amended or
modified only by a written amendment executed and acknowledged by each of Buyer
and FFLP, (and EAR if such amendment or modification would affect EAR's rights
or obligations under this Covenants Agreement), and their respective Successors
(if any), Designated Assigns (if any, and if and to the extent Buyer or FFLP has
granted them the right to participate in any amendments to this Covenant
Agreement in the recorded designation document referred to in Section 4 above)
and the beneficial owner(s) of the Retained Property or the Conveyed Property,
as the case may be, and recorded with the San Mateo County recorder. The party
recording such amendment shall be entitled to rely on such executed and
acknowledged amendment as the valid, enforceable and insurable amendment to this
Covenants Agreement. Each Party shall deliver to any of its Successor copies of
all amendments to this Covenants Agreement (with written evidence of such
notification to the other Party), all as more fully set forth in Section 4
above.
THIS COVENANTS AGREEMENT IS EXECUTED as of the date first written
above.
FLATIRONS FUNDING, LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Flatirons Capital, Inc.
Managing General Partner
By:
--------------------------------
Its:
------------------------------
BUYER
-----------------------------------------,
a
------------------------
By:
--------------------------------------
Its:
--------------------------------------
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FOR VALUABLE CONSIDERATION, the receipt and adequacy of which is acknowledged
hereby, the undersigned executes this Assignment and becomes a party thereto for
the purposes of Sections 1.3, 6, and 9 only.
ELECTRONIC ARTS REDWOOD, INC., a
Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
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EXHIBIT H
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EXHIBIT I
FORM OF
ASSIGNMENT OF SEWAGE TREATMENT CAPACITY
THIS ASSIGNMENT ("Assignment") is made and entered into as of
___________________, 1999, by and between FLATIRONS FUNDING, LIMITED
PARTNERSHIP, ("Assignor"), and _____________________________________________, a
__________________ ("Assignee").
RECITALS
A. Electronic Arts Redwood, Inc. ("EAR") and Assignee, as
successor-in-interest, are parties to that certain Agreement of Purchase and
Sale dated ______________ (the "Purchase Agreement") whereby EAR agreed to sell
to Assignee, and Assignee agreed to purchase from EAR, certain real property (as
more particularly described in Exhibit "A" of the Purchase Agreement) (the
"Property"), all in accordance with the terms and conditions of the Purchase
Agreement.
B. Pursuant to the Purchase Agreement, EAR agreed to cause
Assignor to assign to Assignee, at the closing under the Purchase Agreement
("Closing"), a sufficient allocation of sewage treatment capacity from sources
available to Assignor to permit Assignee to construct up to an aggregate of
Three Hundred Forty Thousand (340,000) square feet of Gross Building Floor Area
on Zones 2 and 4 ("Maximum Square Footage") (but no more) on the Property. As
used in this Assignment, the term "Gross Building Floor Area" or "GBFA" means
the sum total of all floor areas contained within the exterior walls of all
Buildings including, without limitation, stairways, elevator shafts, other
shafts, mechanical rooms, vents, and internal support facilities, but excluding
those portions of mechanical or utility structures and storage areas located on
the roof to the extent such structures are not considered by the City as
building floor area for purposes of determining parking requirements, traffic
generation, building density or other similar development limitations.
C. Assignor holds certain rights to sewage treatment capacity
applicable to the Property and other lands owned by Assignor consisting of (a)
rights to sufficient sewage treatment capacity to construct 885,000 square feet
of GBFA for office use derived by mesne assignments from a grant by the City of
Redwood City (the "City") to Mobil Oil Estates (Redwood) Limited dated May 1,
1978 (the "Mobil Rights") which the City and Assignor confirmed in that certain
Second Amendment to Development Agreement dated August 31, 1998, ("Second
Amendment") and (b) rights to purchase additional sewage treatment capacity from
the City up to 25,000 gallons per day ("gpd"), as needed, at $2.50 per gpd as
confirmed in and pursuant to the Second Amendment (the "Purchase Rights").
Assignor intends to assign to
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Assignee sufficient sewage treatment capacity from the Mobil Rights to enable
Assignee to construct the Maximum Square Footage.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee
hereby agree as follows:
1. Assignment. Assignor hereby assigns to Assignee the
following rights to sewage treatment capacity (the "Sewage Capacity Rights"):
(a) Assignor assigns to Assignee from its Mobil
Rights sufficient sewage treatment capacity with the South Bayside System
Authority ("SBSA") to permit construction of 340,000 square feet of GBFA for
office use.
(b) If for any reason the foregoing grant is not
sufficient to permit Assignee to construct the Maximum Square Footage, Assignee
must purchase, lease, or otherwise acquire any needed sewage treatment capacity
on the open market. Neither City, EAR, nor Assignor is in any way obligated to
provide Assignee with sewage treatment capacity except as set forth herein, and
in particular, neither EAR nor Assignor has any obligation to assign to Assignee
any of the Purchase Rights. City has agreed in the Development Agreement to use
its best efforts to assist Assignor in obtaining any additional capacity deemed
necessary, and Assignor, to the extent such agreement of the City is assignable,
hereby assigns to Assignee such agreement of the City to use best efforts.
(c) Assignee acknowledges and agrees that the
foregoing assignment of Sewage Capacity Rights specifically excludes any right
by Assignee to sell, assign, convey or otherwise transfer in any way (and,
therefore, Assignee is specifically prohibited from selling, assigning,
conveying or otherwise transferring in any way) such Sewage Capacity Rights to
any third party for any use outside the Property. Any Sewage Capacity Rights
assigned hereunder but not actually required by Assignee for the construction of
the Maximum Square Footage shall revert to Assignor. Assignee further
acknowledges and agrees that, other than the limited assignment of the Sewage
Capacity Rights hereunder, Assignor is not assigning, conveying or transferring
to Assignee any other right, title or interest of Assignor of any nature
whatsoever.
2. Representations and Warranties. Assignor represents and
warrants that it holds sufficient Sewage Capacity Rights to enable it to make
this Assignment and that it has due power and authorization to make this
Assignment.
3. No Further Obligations. Neither Assignor nor EAR shall have
any obligation or liability whatsoever with respect to the Sewage Capacity
Rights, including, without limitation, any obligation to obtain the City's, the
SBSA's or any other governmental or other entity's approval or consent to this
Assignment, or to incur any costs, expenses or other liabilities or pay any fees
(whether directly or indirectly), dedicate any land, provide any parking or
reduce the density on, or the allotment of sewage treatment capacity with
respect to, any other property owned by Assignor or EAR, or in any other manner
adversely affect Assignor or EAR or any property owned by Assignor or EAR or
take any action whatsoever with respect to the Sewage
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<PAGE>
Capacity Rights or in pursuit of any development rights or approvals whatsoever.
Notwithstanding the foregoing, Assignor shall cooperate with and provide
Assignee all reasonable assistance in perfecting Assignee's Sewage Capacity
Rights hereunder.
4. Attorneys' Fees. In the event of litigation between the
parties with respect to this Assignment, the prevailing party (by way of
settlement, dismissal or final judgment) shall be entitled to its reasonable
costs and expenses incurred in connection with such litigation, including,
without limitation, reasonable attorneys' fees. For purposes of this provision,
"prevailing party" shall include a party which dismisses such litigation in
exchange for payment of the sum allegedly due, performance of covenants
allegedly breached, or consideration substantially equal to the relief sought in
the litigation.
5. Certain Obligations Non-Recourse. Assignor's obligations
hereunder are intended to be the obligations of the limited partnership and of
the corporations which are the managing general partner and any other general
partner thereof only, and no recourse for the payment of any amount due under
this Agreement or for any claim based thereon or otherwise in respect thereof,
shall be held against any limited partner of Assignor or any incorporator,
shareholder, officer, director or affiliate, as such, past, present or future of
such corporate managing general partner or other general partner or of any
corporate limited partner or of any successor corporation to such corporate
managing general partner or other general partner or any corporate limited
partner of Assignor, or against any direct or indirect parent corporation of
such corporate managing general partner or other general partner or of any
limited partner of Assignor or any other subsidiary or affiliate of any such
direct or indirect parent corporation or any incorporator, shareholder officer
or director, as such, past, present or future, of any such parent or other
subsidiary or affiliate, it being understood that Assignor is a limited
partnership formed for the purpose of acquiring and owning the Property and
acting as lessor to Electronic Arts Redwood, Inc., on the express understanding
aforesaid. Nothing contained in this Section 6 shall be construed to limit the
exercise or enforcement, in accordance with the terms of this Agreement and any
other documents referred to herein, of rights and remedies against the limited
partnership or the corporate managing general partner or any other general
partner of Assignor or the assets of the limited partnership or the corporate
managing general partner or any other general partner of Assignor. As used in
this Section 6, "affiliate" means any other person controlling, controlled by or
under direct or indirect common control with such person; "person" means any
individual, corporation, partnership, limited liability company, private limited
company, joint venture, association joint-stock company, trust, unincorporated
association, organ of government or any agency or political subdivision thereof;
and "control," when used with any specified person, means the power to direct
the management and policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
6. Governing Law. This Assignment shall be governed by and
construed in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the parties have executed this Assignment
as of the date first written above.
ASSIGNOR: FLATIRONS FUNDING, LIMITED PARTNERSHIP
a Delaware limited partnership
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
ASSIGNEE: ---------------------------------------,
a
------------------------------
By:
-----------------------------------
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EXHIBIT J
RECORDING REQUESTED BY, AND )
WHEN RECORDED MAIL TO: )
)
Nossaman, Guthner, Knox & Elliott, LLP )
50 California Street, 34th Floor )
San Francisco, California 94111 )
Attention: David L. Kimport, Esq. )
)
--------------------------------------------------------------------------------
FORM OF
ASSIGNMENT AND ASSUMPTION OF
DEVELOPMENT AGREEMENT AND PERMITS
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made as of ___________,
1999, by and between FLATIRONS FUNDING, LIMITED PARTNERSHIP, a Delaware limited
partnership ("Assignor"), and ____________________, a ________________________,
whose address is ________________________________________________ ("Assignee").
ELECTRONIC ARTS REDWOOD, INC., a Delaware corporation ("EAR"), is a party with
respect to Sections 3 through 13 only.
RECITALS
A. EAR and Assignee entered into that certain Agreement of
Purchase and Sale dated ___________________, 1999 (the "Purchase Agreement")
whereby EAR agreed to sell to Assignee, and Assignee agreed to purchase from
EAR, certain real property as more particularly described in Exhibit "A" of the
Purchase Agreement (the "Property"), which consists of Zones 2 and 4 as set
forth in the Development Agreement, all in accordance with the terms and
conditions of the Purchase Agreement.
B. Pursuant to the Purchase Agreement, EAR agreed to cause
Assignor to assign to Assignee, and Assignee to assume, the Development
Agreement dated November 7, 1996, by and between Assignor and the City of
Redwood City and recorded November 8, 1996, as Instrument No. 96-138988, as the
same may be amended from time to time (the "Development Agreement"), as the same
applies to or affects the Property; and further to cause Assignor to assign to
Assignee all permits, licenses, governmental approvals, and development rights
pertaining to the Property, to the extent of Seller's rights, title, and
interest therein and thereto and ability to assign the same (the "Other
Rights"), subject to the terms and conditions set forth in this Assignment.
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<PAGE>
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions herein contained, the parties hereto (together, the
"Parties," and each sometimes a "Party") hereby act and agree as follows:
1. Assignment. Assignor hereby assigns, sets over and transfers to
Assignee, and Assignee hereby takes and accepts from Assignor, (A) all of
Assignor's rights in, under and to the Development Agreement as it applies to
the Property and to all benefits and privileges hereafter accruing to Assignor
thereunder, including without limitation Assignee's right to build an aggregate
340,000 square feet of Gross Building Floor Area (as that term is defined in the
Development Agreement and subject to the restrictions set forth in Section 4(e)
of the Development Agreement) distributed among Zones 2 and 4 in accordance with
the Development Agreement, and, (B) to the extent assignable, all of Seller's
right, title and interest (if any) in and to of the Other Rights.
2. Assumption of Obligations and Liabilities by Assignee. Assignee
hereby expressly and unconditionally assumes all of the obligations and
liabilities of Assignor under the Development Agreement as it applies to the
Property accruing from and after the date hereof. Assignee covenants that
Assignee shall at all times fully comply with, and that the development,
construction and use of the Property shall at all times be in full compliance
with the Development Agreement.
3. Covenant and Indemnification. Assignor and Assignee covenant to
perform all their respective obligations under the Development Agreement.
Assignee shall indemnify and hold Assignor and EAR harmless from any and all
liability, cost, loss, damage, or expense, including attorneys fees, arising out
of Assignee's failure to observe or perform any of the obligations or
liabilities so assumed. EAR shall indemnify and hold Assignee harmless from any
and all liability, cost, loss, damage, or expense, including attorneys fees,
arising out of FFLP's or EAR's failure to observe or perform any of its
obligations or liabilities under the Development Agreement other than those
expressly assumed by Assignee hereunder.
4. No Impairment of Purchase Agreement Provisions. Nothing contained in
this Assignment shall be deemed to limit, waive or otherwise derogate from any
warranty, representation, covenant or indemnification made in the Purchase
Agreement by either Party, or to waive or abrogate any limits on liability
specified in the Purchase Agreement, and none of such provisions in the Purchase
Agreement shall be deemed to have merged into the assignment made by this
Assignment. To the extent any rights granted under the Development Agreement may
be limited or restricted by terms of the Purchase Agreement or of that certain
Assumption and Covenants Agreement dated as of August 31, 1998, by and between
Assignor and Assignee ("Covenants Agreement"), the terms of the Purchase
Agreement or the Covenants Agreement shall prevail.
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<PAGE>
5. Further Assurances. Assignor shall promptly execute and deliver to
Assignee any additional instrument or other document which Assignee reasonably
requests to evidence or better effect the assignment contained herein.
6. Counterparts. This Assignment may be executed in any number of
counterparts and by each Party on a separate counterpart or counterparts, each
of which when so executed and delivered shall be deemed an original and all of
which taken together shall constitute but one and the same instrument.
7. Governing Law. This Assignment shall be deemed to be an agreement
made under the laws of the State of California and for all purposes shall be
governed by and construed in accordance with such laws.
8. Binding Effect. This Assignment shall be binding upon and inure to
the benefit of each of the Parties and its successors and assigns.
9. Warranty of Signers. Each individual executing and delivering this
Assignment on behalf of a Party hereby represents and warrants to the other
Party that such individual has been duly authorized and empowered to make such
execution and delivery.
10. Notices. Any notice, demand or request which may be permitted,
required or desired to be given in connection with this Assignment shall be
given in writing and directed as follows:
If to Assignor: Flatirons Funding Limited Partnership
c/o ML Leasing Equipment Corp.
North Tower, 27th Floor
World Financial Center
250 Vesey Street
New York, New York 10281-1327
Attn: Jean M. Tomaselli
With a copy to: Electronic Arts Redwood, Inc.
207 Redwood Shores Parkway
Redwood City, California 94065
Attn: James F. Healey, President
and a copy to: Nossaman, Guthner, Knox & Elliott, LLP
50 California Street, 34th Floor
San Francisco, California 94111
Attn: Michael B. Wilmar, Esq.
If to Assignee:
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<PAGE>
With a copy to:
Notices shall be either (i) personally delivered (including delivery by Federal
Express or other courier service) to the offices set forth above, in which case
they shall be deemed delivered on the date of delivery to said offices; (ii)
sent by telecopy, in which case they shall be deemed delivered on the date sent
(provided, however, that any notices sent by telecopy shall also be sent by
overnight courier on the same day); or (iii) sent by certified mail, postage
prepaid, return receipt requested, in which case they shall be deemed delivered
on the date shown on the receipt unless delivery is refused or delayed by the
addressee, in which event the notice shall be deemed delivered on the date of
deposit in the United States mail. The addresses and addressees may be changed
by giving notice of such change in the manner provided for in this Section 10.
11. No Liability. None of Assignor, Assignor's Assigns, or the
beneficial owner(s) of the Property or any of their respective present or future
partners, officers, directors, shareholders, agents, employees, guarantors,
parents, subsidiaries or affiliates, and including Electronic Arts Redwood, Inc.
(collectively the "Assignor Parties") shall be directly or indirectly liable or
responsible for any loss, claim, cause of action, liability, indebtedness,
damage or injury of any kind or character to any person, entity or property
(collectively, "Claims") arising from any construction on, or occupancy or use
of, any of the Property or Improvements, including, without limitation, any
claims caused by, or arising from: (i) any defect in any building, structure,
grading, fill, landscaping or other improvements on the Property or in any
on-site or off-site improvement or other facility; (ii) any act or omission of
Assignee or any of Assignee's agents, employees, independent contractors,
licensees or invitees; (iii) any accident in, on or about the Property or
Improvements, or any fire, flood, or other casualty or hazard or Act of God
thereon; (iv) the failure of Assignee, any of Assignee's licensees, employees,
invitees, agents, independent contractors or other representatives to maintain
all or any part of the Property or the Improvements in a safe condition; and (v)
any nuisance made or suffered on any part of the Property or Improvements. In
addition, none of the Assignor Parties shall be liable to Assignee or any other
party on the basis of any actions or failure to act under this Assignment,
including, without limitation, mistakes of judgment, negligent or otherwise,
unless and to the extent resulting from the Assignor Parties' intentional torts
or willful misconduct.
12. Limitation on Liability.
(a) Assignee. Notwithstanding anything set forth in this
Assignment to the contrary, the officers, directors, shareholders, partners,
members, and direct and indirect owners
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<PAGE>
of Assignee shall not be liable for any debts or other obligations of Assignee
or in respect of any claims against Assignee arising under this Assignment, and
any such debts, obligations or claims shall be satisfied solely out of the
assets of Assignee. No personal judgment shall be sought or obtained against any
officer, director, shareholder, partner, member, or direct or indirect owner of
Assignee.
(b) EAR. Notwithstanding anything set forth in this Assignment
to the contrary, the officers, directors, shareholders, partners, members, and
direct and indirect owners of EAR shall not be liable for any debts or other
obligations of EAR or in respect of any claims against EAR arising under this
Assignment, and any such debts, obligations or claims shall be satisfied solely
out of the assets of EAR. No personal judgment shall be sought or obtained
against any officer, director, shareholder, partner, member, or direct or
indirect owner of EAR.
13. Certain Obligations of Assignor Non-Recourse. Assignor's
obligations hereunder are intended to be the obligations of the limited
partnership and of the corporations which are the managing general partner and
any other general partner thereof only, and no recourse for the payment of any
amount due under this Assignment or for any claim based thereon or otherwise in
respect thereof, shall be held against any limited partner of Assignor or any
incorporator, shareholder, officer, director or affiliate, as such, past,
present or future of such corporate managing general partner or other general
partner or of any corporate limited partner or of any successor corporation to
such corporate managing general partner or other general partner or any
corporate limited partner of Assignor, or against any direct or indirect parent
corporation of such corporate managing general partner or other general partner
or of any limited partner of Assignor or any other subsidiary or affiliate of
any such direct or indirect parent corporation or any incorporator, shareholder
officer or director, as such, past, present or future, of any such parent or
other subsidiary or affiliate, it being understood that Assignor is a limited
partnership formed for the purpose of acquiring and owning the Project and
acting as lessor to Electronic Arts Redwood, Inc., on the express understanding
aforesaid. Nothing contained in this Section 13 shall be construed to limit the
exercise or enforcement, in accordance with the terms of this Assignment and any
other documents referred to herein, of rights and remedies against the limited
partnership or the corporate managing general partner or any other general
partner of Assignor or the assets of the limited partnership or the corporate
managing general partner or any other general partner of Assignor. As used in
this Section 13, "affiliate" means any other person controlling, controlled by
or under direct or indirect common control with such person; "person" means any
individual, corporation, partnership, limited liability company, private limited
company, joint venture, association joint-stock company, trust, unincorporated
association, organ of government or any agency or political subdivision thereof;
and "control," when used with any specified person, means the power to direct
the management and policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
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<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Assignment to be
executed and delivered by their respective representatives, thereunto duly
authorized, as of the date first above written.
ASSIGNOR
FLATIRONS FUNDING, LIMITED PARTNERSHIP,
a Delaware limited partnership
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
ASSIGNEE
---------------------------------------,
a
----------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
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<PAGE>
FOR VALUABLE CONSIDERATION, the receipt and adequacy of which is acknowledged
hereby, the undersigned executes this Assignment and becomes a party thereto for
the purposes of Sections 3 through 13 only.
ELECTRONIC ARTS REDWOOD, INC., a
Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
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<PAGE>
EXHIBIT K
FORM OF
PROMISSORY NOTE
Redwood City, California
$____________________ ________________, 1999
FOR VALUE RECEIVED, the undersigned, [Buyer], a
__________________________ (herein called "Maker"), and subject to the terms
hereof, hereby promises to pay on or before June 20, 2001 to the order of
ELECTRONIC ARTS REDWOOD, INC., a Delaware corporation (herein together with all
subsequent holders hereof called "Holder"), at 207 Redwood Shores Parkway,
Redwood City, California, or at any other address identified by Holder for that
purpose, in lawful money of the United State of America, the principal sum of
_______________________ Dollars ($___________), together with interest thereon
at the rate of _____ percent (__%) per annum until paid. This Note is executed
and delivered pursuant to that certain Agreement of Purchase and Sale and Escrow
Instructions between Maker and Holder dated ______________, 1999 (the "Purchase
Agreement").
1.Payment. Principal and interest shall be payable in level quarterly
installments of ________________________ Dollars ($_____________) each, due the
twentieth day of March, June, September, and December of each year ("payment
dates"), commencing September 20, 1999, and continuing until paid in full. The
entire principal and all accrued and unpaid interest, if any, shall be due and
payable on June 20, 2001. Notwithstanding the foregoing, Holder may demand
payment of all or any part of the outstanding principal on a payment date upon
thirty (30) days prior written notice to Maker.
2. Security. This Note is secured by a Deed of Trust and Assignment of
Rents ("Deed of Trust") of even date herewith encumbering certain unimproved
real property ("Property") in the City of Redwood City, County of San Mateo,
State of California and by [description of Guaranty] (the "Guaranty").
3. Default; Acceleration. Failure to pay an installment of principal
and interest when due shall, upon three (3) business days notice from Holder,
constitute a default hereunder. In addition to any other remedies specified
herein, upon the occurrence of any default in payment hereunder, or of an event
of default specified in the Purchase Agreement, the Deed of Trust, or the
Guaranty, Holder shall have the option of declaring the principal balance hereof
and all accrued and unpaid interest to be immediately due and payable.
4. No Prepayment. Except upon demand by Holder pursuant to Section 1 or
acceleration by Holder pursuant to Section 3, this Note may not be prepaid.
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<PAGE>
5. Maker's Waiver. Maker and all endorsers of this Note hereby
severally waive demand, presentment, notice of dishonor, notice of default,
notice of protest and nonpayment and diligence in taking any action to collect
any sums owed under this Note.
6. Waiver. No waiver of any default or failure of condition under the
terms of this Note, the Deed of Trust, or the Guaranty shall be implied from any
failure of Holder to take, or any delay by Holder in taking, action with respect
to any default or failure of condition, or from any previous waiver. A waiver of
any term in this Note must be made in writing and shall be limited to the
express written terms of such waiver.
7. Attorneys' Fees. In the event Holder incurs any attorneys' fees or
other costs because of Maker's default or to enforce or defend any provision of
this Note, Maker shall pay reasonable attorneys' fees and all costs incurred by
Holder. All costs and fees incurred by Holder together with interest thereon
shall be added to the principal owing hereunder and shall also be secured by the
Deed of Trust.
8. Time of Essence. Time is of the essence with respect to every
provision hereof.
9. Controlling Law. This Note shall be construed, interpreted and
enforced in accordance with laws of the State of California.
10. Remedies Cumulative. The remedies of Holder as provided herein or
in the Deed of Trust or in the Guaranty or in law or in equity, shall be
cumulative and concurrent, and may be pursued singularly, successively, or
together at the sole discretion of the Holder, and may be exercised as often as
occasion therefor shall occur; and the failure to exercise any such right or
remedy shall in no event be construed as a waiver or a release thereof.
11. Purchase Money Note. This Note is given as part of the purchase
price for the Property.
12. Binding Nature. The terms, covenants and conditions contained
herein shall be binding upon the heirs, successors and assigns of Maker and
shall inure to the benefit of the successors and assigns of Holder.
[BUYER], a _____________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
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<PAGE>
EXHIBIT L
Recording requested by:
And when recorded mail to:
NOSSAMAN, GUTHNER, KNOX & ELLIOTT, LLP
50 California Street, 34th Floor
San Francisco, California 94111
Attention: David L. Kimport, Esq.
================================================================================
SPACE ABOVE THIS LINE FOR RECORDER'S USE
FORM OF
DEED OF TRUST
ATTENTION: COUNTY RECORDER--THIS INSTRUMENT COVERS GOODS THAT ARE OR
ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN AND IS TO
BE FILED FOR 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 A FINANCING STATEMENT
COVERING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY
DESCRIBED HEREIN. THE MAILING ADDRESSES OF THE TRUSTOR (DEBTOR) AND
BENEFICIARY (SECURED PARTY) ARE SET FORTH IN SECTION 5.06 OF THIS DEED
OF TRUST.
THIS DEED OF TRUST AND FIXTURE FILING (this "Deed of Trust")
dated as of _____________, 1999, for reference purposes only, is made by
______________________, a _______________________ ("Trustor"), whose principal
place of business is ______________________ ___________________, to FIRST
AMERICAN TITLE COMPANY, as Trustee ("Trustee"), for the benefit of ELECTRONIC
ARTS REDWOOD, INC., a Delaware corporation ("Beneficiary"), whose address is 207
Redwood Shores Parkway, Redwood City, California 94065.
THIS DEED OF TRUST is given in connection with that certain
Promissory Note made as of _______________, 1999 by Trustor to the order of
Beneficiary (the "Note")
FOR GOOD AND VALUABLE CONSIDERATION, including the
indebtedness herein recited and the trust herein created, the receipt and
adequacy of which are hereby acknowledged, Trustor hereby irrevocably grants,
transfers, sets over, conveys and assigns to Trustee, IN TRUST, WITH POWER OF
SALE, for the benefit and security of Beneficiary, under and subject to the
terms and conditions hereinafter set forth, all rights, titles, interests,
estates, power and privileges that Trustor now has or may hereafter acquire in
or to the following property and interests therein to the extent the same
constitute real property under the laws of the State of California
(collectively, the "Trust Estate"):
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<PAGE>
THAT CERTAIN REAL PROPERTY in San Mateo County, State of
California, more particularly described on Exhibit A attached hereto and
incorporated herein by this reference (the "Land");
TOGETHER WITH any and all buildings, landscaping and other
improvements now or hereafter erected in or on the Land, including, without
limitation, the fixtures, attachments, appliances, equipment, machinery, and
other articles attached to said buildings and improvements (collectively, the
"Improvements," and together with the Land, the "Property"), all of which shall
be deemed and construed to be a part of the realty;
TOGETHER WITH all interests, estates or other claims, both in
law and in equity, which Trustor now has or may hereafter acquire in the
Property;
TOGETHER WITH all easements, rights-of-way and rights now
owned or hereafter acquired by Trustor used in connection with the Property as a
means of access to the Property, including, without limiting the generality of
the foregoing, all rights pursuant to any trackage agreement and all rights to
the nonexclusive use of common drive entries, and all tenements, hereditaments
and appurtenances thereof and thereto, and all water and water rights and shares
of stock evidencing the same;
TOGETHER WITH all oil and gas and other mineral rights in or
pertaining to the Land, if any, and all royalty, leasehold and other rights of
Trustor pertaining thereto;
TOGETHER WITH all right, title and interest now owned or
hereafter acquired by Trustor in and to any land lying within the right-of-way
of any street, open or proposed, adjoining the Land, and any and all sidewalks,
alleys and strips and gores of land adjacent to or used in connection with the
Land or the Property;
TOGETHER WITH all furniture, furnishings, fixtures, equipment,
appliances, machinery, attachments, construction materials and supplies, goods,
agreements with architects and engineers relating to the design of the
Improvements, plans and specifications and permits for the development and
construction of the Improvements, agreements with contractors and vendors
relating to the construction and installation of the Improvements, and other
personal property (to the extent any of which constitute personal property under
applicable law) (the "Personal Property"), and all replacements, additions,
substitutions and proceeds thereof or thereto, now or hereafter owned by Trustor
or in which Trustor now or hereafter has any rights and which is now or
hereafter located on or at, or affixed or attached to, or used in connection
with the ownership, development, design, construction, operation, management,
maintenance or repair of the Property or the Improvements; and
TOGETHER WITH all the estate, interest, right, title, other
claim or demand, both in law and in equity, including claims or demands with
respect to the proceeds of insurance in effect with respect thereto, which
Trustor now has or may hereafter acquire in the Property, and any and all awards
made for the taking by eminent domain, or by any proceeding or purchase in lieu
thereof, of the whole or any part of the Trust Estate including, without
limitation, any award resulting from a change of grade of streets and any award
for severance damages (collectively, "Proceeds").
FOR THE PURPOSE OF SECURING:
1. Payment and performance of all obligations of Trustor under the
Note, as the same may be modified, amended, restated and supplemented from time
to time.
2. Performance of all obligations of Trustor under this Deed of Trust
and performance of each covenant and agreement of Trustor in this Deed of Trust,
and all modifications, amendments, replacements, extensions and renewals thereof
and substitutions therefor.
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<PAGE>
3. Payment of all sums advanced by Beneficiary to protect the security
of this Deed of Trust or the Trust Estate, with interest thereon at the rate of
11% per annum (the "Advance Interest Rate").
This Deed of Trust, the Note, and any other instrument (excluding any
guaranty or indemnity not secured by this Deed of Trust) given to evidence or
further secure the payment and performance of any indebtedness or obligation
secured hereby may hereafter be referred to collectively as the "Loan
Instruments." Capitalized terms used but not defined herein shall have the
meanings set forth in the Note.
TO PROTECT THE PREMISES AND THE SECURITY GRANTED BY THIS DEED OF TRUST, TRUSTOR
HEREBY COVENANTS AND AGREES AS FOLLOWS:
ARTICLE I
COVENANTS AND AGREEMENTS OF TRUSTOR
1.01. Payment of Secured Obligations. Trustor shall pay when due the
principal, interest, premium, if any, and all other amounts due to Beneficiary
under the Loan Instruments; the principal of and interest on any sum advanced in
the future and secured by this Deed of Trust; and the principal of and interest
on any other sum secured by this Deed of Trust.
1.02. Maintenance, Repair, Alterations. Trustor: (i) shall maintain,
keep and preserve the Trust Estate in good condition and repair; (ii) shall
comply with all laws, ordinances, rules, regulations, covenants, conditions and
restrictions now or hereafter affecting the Trust Estate or any part thereof or
requiring any alteration or improvement to be made thereon or thereto, subject
to Trustor's right to contest Impositions as defined in Subsection 1.08(a) of
this Deed of Trust in accordance with the provisions of Subsection 1.08(d)
hereof; (iii) shall not commit, suffer or permit any act to be done in, upon or
to the Trust Estate or any part thereof in violation of any law, ordinance,
rule, regulation or order; (iv) shall not commit or permit any waste or
deterioration of the Trust Estate; (v) shall keep and maintain abutting grounds,
sidewalks, roads, parking and landscape areas in good and neat order and repair;
(vi) will not take any action which, if taken (or fail to take any action, if
not taken), would increase in any way the risk of fire or other hazard occurring
to or affecting the Property or otherwise would impair the security of
Beneficiary in the Trust Estate; (vii) shall not abandon the Trust Estate or any
portion thereof or leave the Property unprotected, unguarded, vacant or
deserted, provided, however, nothing in this clause (vii) shall require Trustor
to protect or guard the Property more than a prudent operator would protect or
guard property similar to the Property under the same or similar conditions;
(viii) shall secure and maintain in full force and effect all permits necessary
for the use, occupancy and operation of the Trust Estate; and (ix) except as
otherwise prohibited or restricted by the Loan Instruments, or any of them,
shall do any and all other acts which may be reasonably necessary to protect and
preserve the value of the Trust Estate and the rights of Trustee and Beneficiary
with respect thereto.
1.03. Required Insurance.
(a) Trustor shall at all times provide, maintain, keep in full
force and effect or cause to be provided, maintained, and kept in full force and
effect, at no expense to Trustee or Beneficiary, policies of standard broad
form/all-risk insurance excluding earthquake in such form and amounts, with such
deductibles, and issued by companies, associations or organizations reasonably
satisfactory to Beneficiary.
(b) All policies of insurance required by the terms of this
Deed of Trust or the Note shall either have attached thereto a lender's loss
payable endorsement for the benefit of Beneficiary in form satisfactory
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<PAGE>
to Beneficiary or shall name Beneficiary as additional insured and shall contain
an endorsement or agreement by the insurer that any loss shall be payable in
accordance with the terms of such policy notwithstanding any act or negligence
of Trustor or any party holding under Trustor which might otherwise result in
forfeiture of said insurance and the further agreement of the insurer waiving
all rights of setoff, counterclaim and deduction against Trustor.
1.04. Delivery of Policies; Payment of Premium. At Beneficiary's
option, Trustor shall furnish Beneficiary with an original certificate of
insurance for each policy of insurance required under Section 1.03 hereof
setting forth the coverage, the limits of liability, the deductibles, if any,
the name of the carrier, the policy number, and the period of coverage, which
certificates shall have been executed by authorized officials of the companies
issuing such insurance, or by agents or attorneys-in-fact authorized to issue
said certificates (in which event each such certificate shall be accompanied by
a notarized affidavit, agency agreement or power of attorney evidencing the
authority of the signatory to issue such certificate on behalf of the insurer
named therein). If Beneficiary consents, Trustor may provide any of the required
insurance through blanket policies carried by Trustor and covering more than one
location, or by policies procured by a tenant or other party holding under
Trustor; provided, however, all such policies shall be in form and substance and
issued by companies satisfactory to Beneficiary. At least thirty (30) days prior
to the expiration of each required policy, Trustor shall deliver to Beneficiary
evidence satisfactory to Beneficiary of the payment of premium and the renewal
or replacement of such policy continuing insurance in form as required by this
Deed of Trust. All such policies shall contain a provision that, notwithstanding
any contrary agreement between Trustor and the insurance company, such policies
will not be canceled, allowed to lapse without renewal, surrendered or
materially amended (which term shall include any reduction in the scope or
limits of coverage) without at least thirty (30) days' prior written notice to
Beneficiary. All consents and approvals of Beneficiary required by this Section
1.04 shall be given or withheld in the reasonable discretion of Beneficiary. If
Trustor fails to provide, maintain, keep in force or deliver to Beneficiary the
policies of insurance required by this Deed of Trust or by any of the Loan
Instruments, Beneficiary may (but shall have no obligation to) procure such
insurance, or single interest insurance for such risks covering Beneficiary's
interests, and Trustor will pay all premiums therefor promptly upon demand by
Beneficiary; and until such payment is made by Trustor, the amount of all such
premiums, together with interest thereon at the Advance Interest Rate, shall be
secured by this Deed of Trust.
l.05. Casualties. Trustor shall give prompt written notice thereof to
Beneficiary after the happening of any casualty to or in connection with the
Trust Estate or any part thereof, whether or not covered by insurance.
1.06. Assignment of Policies Upon Foreclosure. In the event of
foreclosure of this Deed of Trust or other transfer of title or assignment of
the Trust Estate in extinguishment, in whole or in part, of the debt secured
hereby, then, except with respect to blanket policies of insurance carried by
Trustor, all right, title and interest of Trustor in and to all other policies
of insurance required by Section 1.03 hereof and any unearned premiums paid
thereon shall, without further act, be assigned to and shall inure to the
benefit of and pass to the successor in interest to Trustor or the purchaser or
grantee of the Trust Estate, and Trustor hereby irrevocably appoints Beneficiary
its lawful attorney-in-fact to execute an assignment thereof and any other
document necessary to effect such transfer. The foregoing power of attorney is
coupled with an interest and cannot be revoked.
1.07. Subrogation: Waiver of Offset.
(a) Trustor waives any and all right to claim or recover
against Beneficiary, its officers, employees, agents and representatives, for
loss of or damage to Trustor, the Trust Estate, Trustor's property or the
property of others under Trustor's control from any cause insured against or
required to be insured against by the provisions of this Deed of Trust;
provided, however, that this waiver of subrogation shall not be effective with
respect to any policy of insurance permitted or required by this Deed of Trust
if (i) such policy prohibits, or if
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<PAGE>
coverage thereunder would be reduced as a result of, such waiver of subrogation
and (ii) Trustor is unable to obtain from a carrier issuing such insurance a
policy that, by special endorsement or otherwise, permits such a waiver of
subrogation.
(b) Except as otherwise specifically provided herein, all sums
payable by Trustor pursuant to this Deed of Trust shall be paid without notice,
demand, counterclaim, setoff, deduction or defense and without abatement,
suspension, deferment, diminution or reduction, and the obligations and
liabilities of Trustor hereunder shall in no way be released, discharged or
otherwise affected (except as expressly provided herein) by reason of: (i) any
damage to or destruction of or any condemnation or similar taking of the Trust
Estate or any part thereof; (ii) any restriction or prevention of or
interference by any unaffiliated third party with any use of the Trust Estate or
any part thereof; (iii) any title defect or encumbrance or any eviction from the
Property or any part thereof by title paramount or otherwise; (iv) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to Beneficiary, or any action
taken with respect to this Deed of Trust by any trustee or receiver of
Beneficiary, or by any court, in any such proceeding; (v) any claim which
Trustor has or might have against Beneficiary; (vi) any default or failure on
the part of Beneficiary to perform or comply with any of the terms hereof or of
any other agreement with Trustor; or (vii) any other occurrence whatsoever,
whether similar or dissimilar to the foregoing; whether or not Trustor shall
have notice or knowledge of any of the foregoing. Except as expressly provided
herein, Trustor waives all rights now or hereafter conferred by statute or
otherwise to any abatement, suspension, deferment, diminution or reduction of
any sum secured hereby and payable by Trustor.
1.08 Taxes and Impositions.
(a) Trustor shall pay, or cause to be paid prior to
delinquency, all real property taxes and assessments, general and special, and
all other taxes and assessments of any kind or nature whatsoever including,
without limitation, non-governmental levies or assessments such as maintenance
charges, levies or charges resulting from covenants, conditions and restrictions
affecting the Trust Estate, which are assessed or imposed upon the Trust Estate,
or upon Trustor as owner or operator of the Trust Estate, or become due and
payable, and which create, may create or appear to create a lien upon the Trust
Estate or any part thereof, or upon any personal property, equipment or other
facility used in the operation or maintenance thereof (all of the above
hereinafter referred to, collectively, as "Impositions"); provided, however,
that if, by law, any such Imposition is payable, or may at the option of the
taxpayer be paid, in installments, Trustor may pay the same or cause it to be
paid, together with any accrued interest on the unpaid balance of such
Imposition, in installments as the same become due and before any fine, penalty,
interest or cost may be added thereto for the nonpayment of any such installment
and interest.
(b) If at any time after the date hereof there shall be
assessed or imposed (i) a tax or assessment on the Trust Estate in lieu of or in
addition to the Impositions payable by Trustor pursuant to subsection 1.08(a)
hereof, or (ii) a license fee, tax or assessment imposed on Beneficiary and
measured by or based in whole (or in part) upon the amount of the outstanding
obligations secured hereby, then all (or said part of) such taxes, assessments
or fees shall be deemed to be included within the term "Impositions" as defined
in subparagraph (a) hereof, and Trustor shall pay and discharge the same as
herein provided with respect to the payment of Impositions. If Trustor fails to
pay such Impositions prior to delinquency or if Trustor is prohibited by law
from paying such Impositions, Beneficiary may at its option declare all
obligations secured hereby together with all accrued interest thereon,
immediately due and payable. Anything to the contrary herein notwithstanding,
Trustor shall have no obligation to pay any franchise, estate, inheritance,
income, excess profits or similar tax levied on Beneficiary or on the
obligations secured hereby.
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(c) Subject to the provisions of Subsection 1.08(d) and upon
request by Beneficiary, Trustor shall deliver to Beneficiary within thirty (30)
days after the date upon which any such Imposition is delinquent official
receipts of the appropriate taxing authority, or other proof satisfactory to
Beneficiary, evidencing the payment thereof.
(d) Trustor shall have the right before any delinquency occurs
to contest or object to the amount or validity of any such Imposition by
appropriate legal proceedings, but this shall not be deemed or construed in any
way as relieving, modifying or extending Trustor's covenant to pay any such
Imposition at the time and in the manner provided herein unless Trustor has
given prior written notice to Beneficiary of Trustor's intent to so contest or
object to an Imposition, and unless, at Beneficiary's sole option, (i) Trustor
shall demonstrate to Beneficiary's satisfaction that the legal proceedings shall
conclusively operate to prevent the sale of the Trust Estate, or any part
thereof, to satisfy such Imposition prior to final determination of such
proceedings; or (ii) Trustor shall furnish a good and sufficient bond, surety or
other assurances of payment as requested by and satisfactory to Beneficiary; or
(iii) Trustor shall demonstrate to Beneficiary's satisfaction that Trustor has
provided a good and sufficient undertaking as may be required or permitted by
law to accomplish a stay of any such sale.
(e) Trustor shall not suffer, permit or initiate the joint
assessment of any real and personal property which may constitute all or a
portion of the Trust Estate or suffer, permit or initiate any other procedure
whereby the lien of the real property taxes and the lien of the personal
property taxes shall be assessed, levied or charged to the Trust Estate as a
single lien.
1.09. Utilities. Trustor shall pay or shall cause to be paid when due
all utility charges which are incurred for the benefit of the Trust Estate
(excluding therefrom utility charges, if any, incurred by tenants which are not
the obligation of the Trustor to pay under the terms of the leases) or which may
become a charge or lien against the Trust Estate for gas, electricity, water or
sewer services furnished to the Trust Estate and all other assessments or
charges of a similar nature, whether public or private, affecting or related to
the Trust Estate or any portion thereof, whether or not such taxes, assessments
or charges are or may become liens thereon.
1.10. Defense of Actions and Costs. Trustor, at no cost or expense to
Beneficiary or Trustee, shall appear in and defend any action or proceeding
purporting to affect the security hereof, the other Loan Instruments, any
additional or other security for the obligations secured hereby, the interest of
Beneficiary, or the rights, powers or duties of Beneficiary hereunder. If
Beneficiary elects to become a party to such action or proceeding, or is made a
party thereto or to any other action or proceeding, of whatever kind or nature,
concerning the Note, this Deed of Trust, any of the Loan Instruments, the Trust
Estate or any part thereof or interest therein, or the occupancy thereof,
Trustor shall to the extent such action or proceeding relates to or arises from
events occurring subsequent to Trustor's acquisition of the Property: (i)
indemnify, defend and hold Trustee and Beneficiary harmless from all liability,
damage, cost and expense incurred by Trustee and Beneficiary, or either of them,
by reason of said action or proceeding (including, without limitation, Trustee's
fees and expenses, the fees of attorneys for Trustee and for Beneficiary, and
other expenses, of whatever kind or nature, incurred by Trustee or Beneficiary,
or either of them, as a result of such action or proceeding), whether or not
such action or proceeding is prosecuted to judgment or decision; and (ii) upon
written notice from Trustee or Beneficiary, assume the investigation and defense
of said action or proceeding, including the employment of counsel reasonably
acceptable to Beneficiary and the payment of all expenses. Trustee or
Beneficiary, as the case may be, shall have the right to employ separate counsel
in any action or proceeding and to participate in the defense thereof, but
unless such separate counsel is employed with the Trustor shall not be required
to pay the fees and expenses of such separate counsel.
Notwithstanding the foregoing, however, this provisions shall
not require Trustor to indemnify Beneficiary or Trustee for any claims, costs,
fees, expenses or liabilities arising from (i) the gross negligence or
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willful misconduct of Beneficiary or Trustee and/or (ii) related to or arising
from events or conditions occurring prior to Trustor's acquisition and
possession of the Property. Immediately upon demand therefor by Trustee or
Beneficiary, Trustor shall pay thereto an amount equal to Trustor's liability to
such person under this Section 1.10, together with interest thereon from date of
expenditure at the Advance Interest Rate; and until paid, such sums shall be
secured hereby.
1.11. Action by Beneficiary to Preserve Trust Estate. If Trustor fails
to make any payment or to do any act as and in the manner provided in any of the
Loan Instruments, Beneficiary, in its own discretion, without obligation so to
do, without releasing Trustor from any obligation, and subject only to the
notice and cure provisions of the Note, may make or do the same in such manner
and to such extent as Beneficiary may deem necessary to protect the security
hereof. In connection therewith (without limiting their general and other
powers, whether conferred herein, in another Loan Instrument or by law),
Beneficiary shall have and is hereby given the right, but not the obligation:
(i) to enter upon and take possession of the Trust Estate; (ii) to make
additions, alterations, repairs and improvements to the Trust Estate which
Beneficiary may consider necessary or proper to keep the Trust Estate in good
condition and repair; (iii) to appear and participate in any action or
proceeding affecting or which may affect the security hereof or the rights or
powers of Beneficiary or Trustee; (iv) to pay, purchase, contest or compromise
any encumbrance, claim, charge, lien or debt which in the judgment of
Beneficiary may affect or appears to affect the security of this Deed of Trust
or to be prior or superior hereto; and (v) in exercising such powers, to pay
necessary expenses, including employment of counsel or other necessary or
desirable consultants. Trustor shall, immediately upon demand therefor by
Beneficiary pay to Beneficiary an amount equal to all costs and expenses
incurred by it in connection with the exercise by Beneficiary of the foregoing
rights including, without limitation, costs of evidence of title, court costs,
appraisals, surveys and receiver's, trustee's and attorneys' fees, costs and
expenses whether or not an action is actually commenced in connection therewith,
together with interest thereon from the date of such expenditures until
Beneficiary has been repaid such amount at the Advance Interest Rate and, until
paid, said sums shall be secured hereby.
1.12. Survival of Warranties. Trustor shall fully and faithfully
satisfy and perform the obligations of Trustor contained in the Loan
Instruments, each agreement of Trustor incorporated by reference therein or
herein and each agreement the performance of which is secured hereby, and any
modification or amendment thereof. All representations, warranties and covenants
of Trustor contained in any such Loan Instrument or agreement between Trustor
and Beneficiary shall survive the execution and delivery hereof and shall remain
continuing obligations of Trustor during any time when any portion of the
obligations secured hereby remain outstanding.
1.13. Condemnation and Other Awards. Immediately upon its obtaining
knowledge of the institution or the threatened institution of any proceeding for
the condemnation or other taking for public or quasi-public use of the Trust
Estate or any part thereof, or if the same be taken or damaged by reason of any
public improvement or condemnation proceeding, or in any other manner, or should
Trustor receive any notice or other information regarding such proceeding,
action, taking or damage, Trustor shall promptly notify Trustee and Beneficiary
of such fact. Trustor shall then, if requested by Beneficiary, file or defend
its rights thereunder and prosecute the same with due diligence to its final
disposition and shall cause any award or settlement to be paid over to
Beneficiary for disposition pursuant to the terms of this Deed of Trust. If the
Trust Estate or any part thereof is taken or diminished in value, or if a
consent settlement is entered, by or under threat of such proceeding, all
compensation, awards, damages, rights of action, proceeds and settlements
payable to Trustor by virtue of its interest in the Trust Estate (the
"Condemnation Proceeds") shall be and hereby are assigned, transferred and set
over unto Beneficiary to be held by it, in trust, subject to the lien and
security interest of this Deed of Trust. Any such Condemnation Proceeds shall be
first applied to reimburse Trustee and Beneficiary for all costs and expenses,
including reasonable attorneys fees, incurred in connection with the collection
of such award or settlement and costs of any restoration of the Property. The
balance of such award or settlement shall be applied in accordance with the
terms of the Note, as applicable. Application or release of the Condemnation
Proceeds as provided herein
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shall not cure or waive any default or notice of default hereunder or invalidate
any act done pursuant to such notice.
1.14. Additional Security. No other security now existing, or hereafter
taken, to secure the obligations secured hereby nor the liability of any maker,
surety, guarantor or endorser with respect to such obligations, or any of them,
shall be impaired or affected by the execution of this Deed of Trust; and all
additional security shall be taken, considered and held as cumulative. The
taking of additional security, execution of partial releases of the security, or
any extension of the time of payment of the indebtedness shall not diminish the
force, effect or lien of this Deed of Trust and shall not affect or impair the
liability of any maker, surety, guarantor or endorser for the payment of said
indebtedness. In the event Beneficiary at any time holds additional security for
any of the obligations secured hereby, it may enforce the sale thereof or
otherwise realize upon the same, at its option, either before, concurrently, or
after a sale is made hereunder.
1.15. Inspections. Beneficiary, Trustee and the agents, representatives
or workers of each of them, are authorized to enter upon reasonable notice at
any reasonable time upon or in any part of the Trust Estate for the purpose of
inspecting the same and for the purpose of performing any of the acts it is
authorized to perform hereunder or under the terms of any of the Loan
Instruments.
1.16. Liens. Except for liens, encumbrances and charges approved by
Beneficiary in writing, Trustor shall pay and promptly discharge when due, at
Trustor's cost and expense, all liens, encumbrances and charges upon the Trust
Estate, or any part thereof or interest therein; provided that the existence of
any mechanic's, laborer's, materialman's, supplier's or vendor's lien or right
thereto shall not constitute a violation of this Section 1.16 if payment is not
yet due under the contract which is the foundation thereof and if such contract
does not postpone payment for more than forty-five (45) days after the
performance thereof. Trustor shall have the right to contest in good faith the
validity of any such lien, encumbrance or charge, provided Trustor shall first
deposit with Beneficiary a bond or other security satisfactory to Beneficiary in
such amounts as Beneficiary shall reasonably require, but not more than one
hundred fifty percent (150%) of the amount of the claim, and provided further
that Trustor shall thereafter diligently proceed to cause such lien, encumbrance
or charge to be removed and discharged. If Trustor shall fail either to remove
and discharge any such lien, encumbrance or charge or to deposit security in
accordance with the preceding sentence, if applicable, then, in addition to any
other right or remedy of Beneficiary, Beneficiary may, but shall not be
obligated to, discharge the same, without inquiring into the validity of such
lien, encumbrance or charge nor into the existence of any defense or offset
thereto, either by paying the amount claimed to be due, or by procuring the
discharge of such lien, encumbrance or charge by depositing in a court a bond or
the amount claimed or otherwise giving security for such claim, or in such
manner as is or may be prescribed by law. Trustor shall, immediately upon demand
therefor by Beneficiary, pay to Beneficiary an amount equal to all costs and
expenses incurred by Beneficiary in connection with the exercise by Beneficiary
of the foregoing right to discharge any such lien, encumbrance or charge,
together with interest thereon from the date of such expenditure at the Advance
Interest Rate, and, until paid, such sums shall be secured hereby.
Notwithstanding the foregoing, Beneficiary consents to the lien of any deed(s)
of trust securing financing for the construction of the Improvements provided
such lien shall be subordinate to the lien of this Deed of Trust. Beneficiary
further agrees to execute such agreements and/or other documents as reasonably
requested by the beneficiary of any such subordinate deed of trust in connection
with any financing of the Improvements, including reasonable amendments to this
Deed of Trust, provided the same shall not materially impair the first lien
priority position of this Deed of Trust or Beneficiary's rights hereunder or the
adequacy of the Property to secure Trustor's obligations hereunder.
1.17. Beneficiary's Powers. Without affecting the liability of any
other person liable for the payment of any obligation herein mentioned, and
without affecting the lien or charge of this Deed of Trust upon any portion of
the Trust Estate not then or theretofore released as security for the full
amount of all unpaid obligations,
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Beneficiary may, from time to time and without notice (i) release any person so
liable, (ii) extend the maturity or alter any of the terms of any such
obligation, (iii) grant other indulgences, (iv) release or reconvey or cause to
be released or reconveyed at any time at Beneficiary's option any parcel,
portion or all of the Trust Estate, (v) take or release any other or additional
security for any obligation herein mentioned, or (vi) make compositions or other
arrangements with debtors in relation thereto. By accepting payment or
performance of any obligation secured by this Deed of Trust after the payment or
performance thereof is due or after the filing of a notice of default and
election to sell, Beneficiary shall not have thereby waived its right to require
prompt payment or performance, when due, of all other obligations secured
hereby, or to declare a default for failure so to pay or perform, or to proceed
with the sale under any notice of default and election to sell theretofore given
by Beneficiary, or with respect to any unpaid balance of the indebtedness
secured hereby. The acceptance by Beneficiary of any sum in an amount less than
the sum then due shall not constitute a waiver of the obligation of Trustor to
pay the entire sum then due. Trustor's failure to pay the entire sum then due
shall continue to be a default, notwithstanding the acceptance of partial
payment, and, until the entire sum then due shall have been paid, Beneficiary or
Trustee shall at all times be entitled to declare a default and to exercise all
the remedies herein conferred, and the right to proceed with a sale under any
notice of default and election to sell shall in no way be impaired, whether or
not such amounts are received prior or subsequent to such notice. No delay or
omission of Trustee or Beneficiary in the exercise of any right or power
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.
1.18. Environmental Compliance.
(a) As used in this Deed of Trust, the following definitions
shall apply:
(i) "Environmental Laws" shall mean all federal,
state and local laws, ordinances, rules and regulations now or hereafter in
force, as amended from time to time, in any way relating to or regulating human
health or safety, or industrial hygiene or environmental conditions, or
protection of the environment, or pollution or contamination of the air, soil,
surface water or groundwater, and includes the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. ss 9601, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. ss 6901, et seq., the
Clean Water Act, 33 U.S.C. ss 1251, et seq., the Hazardous Substance Account
Act, California Health and Safety Code ss 25100, et seq., the Medical Waste
Management Act, California Health and Safety Code ss 25015, et seq., and the
Porter-Cologne Water Quality Control Act, California Water Code ss 13000, et
seq.
(ii) "Hazardous Substances" shall mean any substance
or material that is described as a toxic or hazardous substance, waste or
material or a pollutant or contaminant, or words of similar import, in any of
the Environmental Laws, and includes asbestos, petroleum (including crude oil or
any fraction thereof, natural gas, natural gas liquids, liquefied natural gas,
or synthetic gas usable for fuel, or any mixture thereof), petroleum products,
polychlorinated biphenyls, urea formaldehyde, radon gas, radioactive matter,
medical waste, and chemicals which may cause cancer or reproductive toxicity.
(iii) "Person" shall mean any natural person, any
organization or legal entity of any kind, and any government or governmental
agency or authority of any kind, including the U.S. Environmental Protection
Agency, the California Environmental Protection Agency and the California
Department of Toxic Substances Control.
(iv) "Release" shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing into the environment, including continuing
migration, of Hazardous Substances into or through soil, surface water or
groundwater.
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(b) Trustor shall not use, produce, process, manufacture,
generate, treat, handle, store or dispose of any Hazardous Substances in, on or
under the Trust Estate, or use the Trust Estate for any such purposes, or
Release any Hazardous Substances into any air, soil, surface water or
groundwater comprising the Trust Estate, or permit any Person using or occupying
the Trust Estate or any part thereof to do any of the foregoing. The preceding
sentence shall not prohibit the ordinary use of Hazardous Substances normally
used in the operation or maintenance of properties similar to the Trust Estate,
provided that the amount of such Hazardous Substances does not exceed the
quantity necessary for the normal operation and maintenance of the Trust Estate
in the ordinary course of business and the use, storage and disposal of such
Hazardous Substances strictly comply with all applicable Environmental Laws.
Trustor shall comply, and shall cause all Persons using or occupying the Trust
Estate or any part thereof to comply, with all Environmental Laws applicable to
the Trust Estate, or the use or occupancy thereof, or any operations or
activities therein or thereon. Trustor shall obtain all permits, licenses and
approvals required by all applicable Environmental Laws for the use and
occupancy of, and all operations and activities in, the Trust Estate, comply
fully with all such permits, licenses and approvals, and keep all such permits,
licenses and approvals in full force and effect. Immediately after Trustor
obtains any information indicating that any Hazardous Substances may be present
or any Release or threatened Release of any Hazardous Substances may have
occurred in, on or under the Trust Estate (or any nearby real property which
could migrate to the Trust Estate) or that any violation of any Environmental
Laws may have occurred at the Trust Estate, Trustor shall give notice thereof to
Beneficiary with a reasonably detailed description of the event, occurrence or
condition in question. Trustor shall immediately furnish to Beneficiary copies
of all written communications received by Trustor from any Person (including
notices, claims or citations that any Release or threatened Release of any
Hazardous Substances or any violation of any Environmental Laws has actually or
allegedly occurred) or given by Trustor to any Person concerning any past or
present Release or threatened Release of any Hazardous Substances in, on or
under the Trust Estate (or any nearby real property which could migrate to the
Trust Estate) or any past or present violation of any Environmental Laws at the
Trust Estate. If Beneficiary obtains any information that Beneficiary believes
in good faith indicates a reasonable possibility that any Hazardous Substances
may be present or any Release or threatened Release of any Hazardous Substances
may have occurred in, on or under the Trust Estate (or any nearby real property
which could migrate to the Trust Estate) or any violation of any Environmental
Laws may have occurred at the Trust Estate, then Trustor shall, at the expense
of Trustor, promptly after a request by Beneficiary, have a qualified
environmental engineer investigate the presence, Release or threatened Release
of such Hazardous Substances and the existence of such violation of
Environmental Laws and prepare and submit to Beneficiary a written report
containing the findings and conclusions resulting from such investigation. The
environmental engineer who will prepare the report, the scope of the
investigation to be undertaken (which may include soil and groundwater sampling)
and the methodology to be used shall be subject to the prior approval of
Beneficiary. Beneficiary (and its representatives) shall have the right, at all
reasonable times and after reasonable prior notice (except no notice shall be
required in an emergency), to inspect the Trust Estate and every part thereof
and to review all books, records and files of Trustor relating to any past or
present Release or threatened Release of any Hazardous Substances in, on or
under the Trust Estate or any past or present violation of any Environmental
Laws at the Trust Estate. Trustor shall give Beneficiary (and its
representatives) access to the Trust Estate and every part thereof at all
reasonable times (and at any time in an emergency) for such purposes. Trustor
shall promptly furnish in writing to Beneficiary all information concerning any
past or present Release or threatened Release of any Hazardous Substances in, on
or under the Trust Estate or any past or present violation of any Environmental
Laws at the Trust Estate that is requested from time to time by Beneficiary.
(c) If any Release or threatened Release of any Hazardous
Substances in, on or under the Trust Estate exists or occurs, Trustor shall
immediately give notice of the condition to Beneficiary, and Trustor shall
promptly clean up and remove all Hazardous Substances and restore the Trust
Estate (the "Remediation Work"). Trustor shall comply with the orders and
directives of all Persons having jurisdiction over the Trust Estate or the
Remediation Work. Trustor shall submit to Beneficiary, for Beneficiary's prior
approval, complete plans and specifications for all Remediation Work to be done
by Trustor before any Remediation Work is
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performed, except in an emergency. Such plans and specifications shall be
prepared by qualified licensed engineers or contractors approved in writing by
Beneficiary, shall comply with all applicable Environmental Laws and other
applicable laws, ordinances, rules and regulations, shall be in a form
sufficient to secure the approval of all Persons with jurisdiction over the
Trust Estate or the Remediation Work, and shall be otherwise satisfactory to
Beneficiary. Trustor shall cause all Remediation Work to be performed in a good
and workmanlike manner by a qualified licensed contractor approved in writing by
Beneficiary, under the supervision of a qualified environmental engineer
approved in writing by Beneficiary, in accordance with the plans and
specifications for the Remediation Work approved in writing by Beneficiary, and
in compliance with all applicable Environmental Laws and other applicable laws,
ordinances, rules and regulations. Trustor shall obtain all required permits,
licenses and approvals for the Remediation Work, prosecute the Remediation Work
diligently, and complete the Remediation Work in a timely manner. Trustor shall
pay for all Remediation Work, including the cost of plans and specifications,
utilities, permits, fees, taxes and insurance premiums in connection therewith.
Trustor shall, on demand, pay to Beneficiary all direct costs and reimburse
Beneficiary for all expenses incurred by Beneficiary in connection with any
review, approval or inspection by Beneficiary relating to any Remediation Work,
together with interest thereon from the date of expenditure until paid at the
Advance Interest Rate except to the extent the Remediation Work relates to or
arises from events or conditions occurring prior to Trustor's acquisition and
possession of the Property. Under no circumstances shall Beneficiary be liable
to Trustor for any damage, loss, cost or expense incurred by Trustor on account
of any plans and specifications for the Remediation Work, the performance of any
Remediation Work, or any delay in completion of any Remediation Work except to
the extent the Remediation Work relates to or arises from events or conditions
occurring prior to Trustor's acquisition and possession of the Property. Trustor
shall furnish to Beneficiary, promptly upon receipt or preparation, copies of
all reports, studies, analyses, investigations, contracts, correspondence,
claims, complaints, pleadings and other information and communications received
or prepared by Trustor at any time in connection with any Remediation Work, or
any past or present Release or threatened Release of any Hazardous Substances
in, on or under the Trust Estate (or any nearby real property which could
migrate to the Trust Estate), or any past or present violation of any
Environmental Laws at the Trust Estate. Beneficiary shall have the right, but no
obligation, to participate in any action or proceeding relating to any past or
present Release or threatened Release of any Hazardous Substances in, on or
under the Trust Estate, or any past or present violation of any environmental
Laws at the Trust Estate, or the necessity for or adequacy of any Remediation
Work.
(d) Trustor shall indemnify and defend Beneficiary (and its
directors, officers, employees, agents and representatives) against and hold
Beneficiary (and its directors, officers, employees, agents and representatives)
harmless from all claims, demands, liabilities, losses, damages, costs and
expenses (collectively, "Claims") in any way arising from, relating to or
connected with the existence, location, nature, use, generation, manufacture,
storage, disposal, handling, or present or future Release or threatened Release
of any Hazardous Substances in, on or under the Trust Estate, or any present or
future violation of any Environmental Laws at the Trust Estate, or any breach of
any representation or warranty made by Trustor in this Deed of Trust, or any
failure to perform any obligation of Trustor in accordance with this Deed of
Trust except to the extent such Claims relate to or arise from events or
conditions occurring prior to Trustor's acquisition and possession of the
Property. The foregoing indemnification shall include all expenses of
investigation and monitoring, costs of containment, abatement, removal, repair,
cleanup, restoration and remedial work, penalties and fines, attorneys' fees and
disbursements, and other response costs. If Trustor fails to perform any
obligation of Trustor in accordance with this Deed of Trust, Beneficiary shall
have the right, but no obligation, to perform such obligation on behalf of
Trustor. Trustor shall, on demand, pay to Beneficiary all sums expended by
Beneficiary in the performance of any such obligations of Trustor, together with
interest thereon from the date of expenditure until paid at the Advance Interest
Rate. If any Event of Default occurs under this Deed of Trust, Beneficiary shall
have the right, but no obligation, at the expense of Trustor, to have a
comprehensive environmental assessment of the Trust Estate, including soil and
groundwater sampling and in scope satisfactory to Beneficiary, prepared by an
engineer selected by Beneficiary in order to ascertain whether any hazardous
substances are present or any Release or threatened
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Release of any Hazardous Substances has occurred in, on or under the Trust
Estate (or any nearby real property which could migrate to the Trust Estate) or
any violation of any Environmental Laws exists at the Trust Estate. Trustor
shall, on demand, pay to Beneficiary all sums expended by Beneficiary in
connection with any such comprehensive environmental assessment, together with
interest thereon from the date of expenditure until paid at the Advance Interest
Rate.
(e) The obligation of Trustor under this Section 1.18 are
separate from and in addition to the payment and performance of the other
obligations under this Deed of Trust and the Note. The liability of Trustor
under this Section 1.18 shall not be limited to or measured by the amount of the
indebtedness owed under the Note or this Deed of Trust or the value of the Trust
Estate. Trustor shall be fully and personally liable for all obligations of
Trustor under this Section 1.18 and a separate action may be brought and
prosecuted against Trustor under this Section 1.18. The liability of Trustor
under this Section 1.18 shall not be subject to any limitation set forth in the
Note or elsewhere in this Deed of Trust, or the recourse of Beneficiary for
satisfaction of such obligations. Trustor agrees that no action for the
enforcement of or recovery of damages under this Section 1.18 shall constitute
an action within the meaning of California Code of Civil Procedure ss 726, which
shall not apply to this Section 1.18, and no judgment against Trustor in any
action pursuant to this Section 1.18 shall constitute a money judgment or a
deficiency judgment within the meaning of California Code of Civil Procedure ss
ss 580a, 580b, 580d or 726. This Section 1.18 and the obligations of Trustor
hereunder shall survive, and remain in full force and effect after, any
reconveyance of this Deed of Trust or any foreclosure of this Deed of Trust
(whether by judicial action, exercise of the power of sale, deed in lieu of
foreclosure, or otherwise) with respect to any past, present or future Release
or threatened Release of any Hazardous Substances in, on or under the Trust
Estate or any past, present or future violation of any Environmental Laws at the
Trust Estate which occurred, or the onset of which occurred, before such
reconveyance or foreclosure, and Beneficiary shall have the right to enforce
this Section 1.18 after any such reconveyance or foreclosure. Trustor waives the
right to assert any statute of limitations as a bar to the enforcement of this
Section 1.18 or to any action brought to enforce this Section 1.18. This Section
1.18 shall not affect, impair or waive any rights or remedies of Beneficiary or
Trustor or any obligations of Beneficiary or of Trustor with respect to
Hazardous Substances created or imposed by Environmental Laws (including
Beneficiary's rights of reimbursement or contribution under Environmental Laws).
The remedies in this Section 1.18 are cumulative and in addition to all remedies
provided by law.
1.19. Other Instruments. Except as otherwise expressly provided in
Subsection 1.08(d) hereof with respect to Impositions, Trustor shall punctually
pay all amounts due and payable, and shall promptly and faithfully perform or
observe each and every other obligation or condition to be performed or
observed, under each deed of trust, mortgage or other lien or encumbrance,
lease, sublease, declaration, covenant, condition, restriction, license, order
or other instrument or agreement which affects or appears to affect the Trust
Estate, whether at law or in equity.
ARTICLE II
INTENTIONALLY OMITTED
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ARTICLE III
SECURITY AGREEMENT
3.01. Creation of Security Interest. Trustor hereby grants to
Beneficiary a security interest in the Personal Property and in all amounts of
money now or at any time hereafter deposited with or in the possession of
Beneficiary (all of the foregoing items are referred to collectively as the
"Collateral") for the purpose of securing the indebtedness and obligations
secured by this Deed of Trust.
3.02. Warranties, Representations and Covenants of Trustor. Trustor
hereby warrants, represents and covenants as follows:
(a) Except for the security interest granted hereby, Trustor
is, and as to portions of the Collateral to be acquired after the date hereof
will be, the sole owner of the Collateral, free from any lien, security
interest, encumbrance or adverse claim thereon of any kind whatsoever. Trustor
shall notify Beneficiary of, and shall indemnify and defend Beneficiary and the
Collateral against, all claims and demands of all persons at any time claiming
the Collateral or any part thereof or any interest therein.
(b) The Collateral is not, and shall not be, used or bought
for personal, family or household purposes.
(c) The Personal Property shall be kept on or at the Property
and Trustor shall not remove the Personal Property from the Property without the
prior consent of Beneficiary, except for such portions or items of Personal
Property as are consumed or worn out in ordinary usage, all of which Trustor
shall promptly replace with new items of equal or better quality.
(d) Trustor maintains a place of business in the State of
California at the address set forth in this Deed of Trust and Trustor shall
immediately notify Beneficiary in writing of any change in its place of
business.
(e) At the request of Beneficiary, Trustor shall execute one
or more financing statements and continuations and amendments thereof pursuant
to the Uniform Commercial Code of California in form satisfactory to
Beneficiary, and Trustor shall pay the cost of filing the same in all public
offices whenever and wherever filing is deemed by Beneficiary to be necessary or
desirable.
(f) All covenants and agreements of Trustor in this Deed of
Trust relating to the Trust Estate shall be deemed to apply to the Personal
Property whether or not expressly referred to herein.
(g) This Deed of Trust constitutes a security agreement as
that term is used in the Uniform Commercial Code of California. This Deed of
Trust is also a financing statement (fixture filing), covers goods which are or
are to become fixtures, and is to be recorded in the real estate records.
Trustor is the record owner of the Property.
ARTICLE IV
REMEDIES UPON DEFAULT
4.01. Event of Default. Any of the following events shall be deemed to
be an event of default ("Event of Default") hereunder:
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(a) Default shall be made in the payment, when due, of
any sum secured hereby and such default is not cured
within ten (10) days of written notice to Trustor
that such sums are due; or
(b) There shall occur a breach of or default under any
other covenant, agreement or obligation of Trustor
contained herein, and such breach or default shall
remain unremedied for thirty (30) days following
written notice to Trustor of such default unless such
default cannot reasonably be remedied within such
thirty (30) day period and provided Trustor commences
and diligently proceeds to remedy the default within
such period;
(c) There shall occur a default under the Note beyond any
applicable grace period; or
(d) There shall occur a default under any of the other
Loan Instruments.
4.02. Acceleration Upon Default: Additional Remedies. Upon the
occurrence of an Event of Default, Beneficiary may, at its option, declare all
indebtedness and obligations secured hereby to be immediately due and payable
without any presentment, demand, protest or notice of any kind; and whether or
not Beneficiary exercises said option, Beneficiary may:
(a) Either in person or by agent, with or without bringing any
action or proceeding, appointed by a court and without regard to the adequacy of
its security, enter upon and take possession of the Trust Estate, or any part
thereof, in its own name or in the name of Trustee, and do any act which it
deems necessary or desirable to preserve the value, marketability or rentability
of the Trust Estate, or part thereof or interest therein, increase the income
therefrom or protect the security hereof and, with or without taking possession
of the Trust Estate. The entering upon and taking possession of the Trust Estate
shall not cure or waive any default or notice of default hereunder or invalidate
any act done in response to such default or pursuant to such notice of default
and, notwithstanding the continuance in possession by Trustee, Beneficiary or a
receiver of all or any portion of the Trust Estate, the Trustee or Beneficiary
shall be entitled to exercise every right provided for in any of the Loan
Instruments or by law upon occurrence of any Event of Default, including the
right to exercise the power of sale;
(b) Commence an action to foreclose this Deed of Trust as a
mortgage, appoint a receiver, or specifically enforce any of the covenants
hereof;
(c) Deliver to Trustee a written declaration of default and
demand for sale, and a written notice of default and election to cause Trustor's
interest in the Trust Estate to be sold, which notice the Trustee or Beneficiary
shall cause to be duly filed for record in the Official Records of the County in
which the Land is located; or
(d) Exercise all other rights and remedies provided herein, in
any Loan Instrument or other document or agreement now or hereafter securing all
or any portion of the obligations secured hereby, or provided by law.
4.03. Foreclosure By Power of Sale.
(a) Should Beneficiary elect to foreclose by exercise of the
power of sale herein contained, Beneficiary shall notify Trustee and shall
deposit with Trustee this Deed of Trust and such receipts and evidence of
expenditures made and secured hereby as Trustee may require.
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(b) Upon receipt of such notice from Beneficiary, Trustee
shall cause to be recorded, published and delivered to Trustor such Notice of
Default and Election to Sell as is then required by law. Trustee shall, without
demand on Trustor, after lapse of such time as may then be required by law and
after recordation of such Notice of Default and after Notice of Sale having been
given as required by law, sell the Trust Estate at the time and place of sale
fixed by it in said Notice of Sale, either as a whole, or in separate lots or
parcels or items, and in such order as Beneficiary may direct Trustee so to do,
at public auction to the highest bidder for cash in lawful money of the United
States payable at the time of sale. Trustee shall deliver to such purchaser or
purchasers thereof its good and sufficient deed or deeds conveying the property
so sold, but without any covenant or warranty, express or implied. The recitals
in such deed of any matter or fact shall be conclusive proof of the truthfulness
thereof. Any person including, without limitation, Trustor, Trustee or
Beneficiary may purchase at such sale.
(c) After deducting all costs, fees and expenses of
Beneficiary and Trustee, including costs of evidence of title in connection with
sale, Beneficiary shall apply the proceeds of sale in the following priority, to
payment of (i) first, all sums expended under the terms hereof, not then repaid,
with accrued interest at the Advance Interest Rate; (ii) second, all other sums
then secured hereby; and (iii) the remainder, if any, to the person or persons
legally entitled thereto.
(d) Subject to California Civil Code Section 2924g, Trustee
may postpone sale of all or any portion of the Trust Estate by public
announcement at such time and place of sale, and from time to time thereafter
may postpone such sale by public announcement or subsequently noticed sale, and
without further notice make such sale at the time fixed by the last
postponement, or may, in its discretion, give a new notice of sale.
(e) A sale of less than the whole of the Trust Estate or any
defective or irregular sale made hereunder shall not exhaust the power of sale
provided for herein; and subsequent sales may be made hereunder until all
obligations secured hereby have been satisfied, or the entire Trust Estate sold,
without defect or irregularity.
4.04. Intentionally Omitted.
4.05. Application of Funds After Default. Except as otherwise herein
provided, upon the occurrence and during the continuance of an Event of Default
hereunder, Beneficiary may, at any time without notice, apply any or all sums or
amounts received and held by Beneficiary to pay insurance premiums, Impositions,
or either of them, or as rents or income of the Trust Estate, or as insurance or
condemnation proceeds, and all other sums or amounts received by Beneficiary
from or on account of Trustor or the Trust Estate, or otherwise, upon any
indebtedness or obligation of Trustor secured hereby, in such manner and order
as Beneficiary may elect, notwithstanding that said indebtedness or the
performance of said obligation may not yet be due. The receipt, use or
application of any such sum or amount shall not be construed to affect the
maturity of any indebtedness secured by this Deed of Trust, or any of the rights
or powers of Beneficiary or Trustee under the terms of the Loan Instruments, or
any of the obligations of Trustor or any guarantor under the Loan Instruments;
or to cure or waive any default or notice of default under any of the Loan
Instruments or to invalidate any act of Trustee or Beneficiary.
4.06. Costs of Enforcement. If any Event of Default occurs, Beneficiary
and Trustee, and each of them, may employ an attorney or attorneys to protect
their rights hereunder. Trustor promises to pay to Beneficiary, on demand, the
reasonable fees and expenses of such attorneys and all other actual costs of
enforcing the obligations secured hereby including, without limitation,
recording fees, the expense of a Trustee's Sale Guarantee, Trustee's fees and
expenses, receivers' fees and expenses, and all other expenses, of whatever kind
or nature, incurred by Beneficiary and Trustee, and each of them, in connection
with the enforcement of the obligations secured hereby,
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whether or not such enforcement includes the filing of a lawsuit. Until paid,
such sums shall by secured hereby and shall bear interest, from date of
expenditure, at the Advance Interest Rate.
4.07. Remedies Not Exclusive. Trustee and Beneficiary, and each of
them, shall be entitled to enforce payment and performance of any indebtedness
or obligation secured hereby and to exercise all rights and powers under this
Deed of Trust or under any Loan Instrument or other agreement or any law now or
hereafter in force, notwithstanding some or all of the said indebtedness and
obligations secured hereby may now or hereafter be otherwise secured, whether by
guaranty, mortgage, deed of trust, pledge, lien, assignment or otherwise.
Neither the acceptance of this Deed of Trust nor its enforcement whether by
court action or pursuant to the power of sale or other powers herein contained,
shall prejudice or in any manner affect Trustee's or Beneficiary's right to
realize upon or enforce any other security now or hereafter held by Trustee or
Beneficiary, it being agreed that Trustee and Beneficiary, and each of them,
shall be entitled to enforce this Deed of Trust and any other security now or
hereafter held by Beneficiary or Trustee in such order and manner as they may in
their absolute discretion determine. No remedy herein conferred upon or reserved
to Trustee or Beneficiary is intended to be exclusive of any other remedy herein
or by law provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute. Every power or remedy given by any of the Loan
Instruments to Trustee or Beneficiary or to which either of them may be
otherwise entitled may be exercised, concurrently or independently, from time to
time and as often as may be deemed expedient by Trustee or Beneficiary, and
either of them may pursue inconsistent remedies.
4.08. Request For Notices. Trustor hereby requests that a copy of any
notice of default and a copy of any notice of sale hereunder be mailed to it at
the addresses specified for Trustor in Section 4.06 hereof.
ARTICLE V
MISCELLANEOUS COVENANTS AND AGREEMENTS
5.01. Amendments. This instrument cannot be waived, changed, discharged
or terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of any waiver, change, discharge or termination is
sought. A copy of said instrument shall be sent by said party to all other
parties in the manner specified in Section 5.06 hereof.
5.02. Trustor's Waiver of Rights. Trustor waives, to the extent
permitted by law, (i) the benefit of all laws now existing or that may hereafter
be enacted providing for any appraisement before sale of any portion of the
Trust Estate, and, whether now existing or hereafter arising or created, (ii)
all rights of redemption, valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of the secured indebtedness and
marshaling in the event of foreclosure of the liens hereby created, and (iii)
all rights and remedies which Trustor may have or be able to assert by reason of
the laws of the State of California pertaining to the rights and remedies of
sureties; provided, however, nothing contained herein shall be deemed to be a
waiver of Trustor's rights under Section 2924c of the California Civil Code.
5.03. Statement by Trustor. Trustor shall, within ten (10) days after
written notice thereof from Beneficiary, deliver to Beneficiary a written
statement setting forth the amounts then unpaid and secured by this Deed of
Trust and stating whether any offset or defense exists against payment of such
amounts.
5.04. Beneficiary Statement. For any statement or accounting requested
by Trustor or any other entitled person pursuant to Section 2943 or Section 2954
of the California Civil Code or pursuant to any other provision of applicable
law, or any other document or instrument furnished to Trustor by Beneficiary,
Beneficiary may charge the maximum amount permitted by law at the time of the
request therefor, or if there be no such maximum, then in
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accordance with Beneficiary's customary charges therefor or the actual cost to
Beneficiary therefor, whichever is more.
5.05. Reconveyance by Trustee. So long as no default shall have
occurred in the performance or observance of Trustor's covenants, agreements and
obligations under the Note, then upon written request of Beneficiary stating
that all sums and obligations secured hereby have been paid and fully performed,
and upon surrender by Beneficiary of this Deed of Trust to Trustee for
cancellation and retention and upon payment by Trustor of Trustee's fees and the
costs and expenses of executing and recording any requested Reconveyance,
Trustee shall reconvey to Trustor, or to the person or persons legally entitled
thereto, without warranty, any portion of the Trust Estate then held hereunder.
The recitals in any such reconveyance of any matter of fact shall be conclusive
proof of the truthfulness thereof. The grantee in any such reconveyance may be
described as "the person or persons legally entitled thereto."
5.06. Notices. All notices and other communications to be made or
permitted to be made hereunder to any party hereto shall be in writing and shall
be delivered to the addresses shown below or such other addresses that the
parties may provide to one another in accordance herewith. Such notices and
other communications shall be given by any of the following means: (a) by
personal service; (b) by prepaid telegram; (c) by national express air courier,
provided such courier maintains written verification of actual delivery; or (d)
by facsimile, provided such facsimile transmission is confirmed by sending a
written copy of same by national express air courier. Any notice or other
communication given by subsection (a) or (c) above shall be deemed effective
upon the date of receipt or of refusal to accept delivery by the party to whom
such notice or other communication has been sent. Any notice or other
communication given by subsection (b) or (d) above shall be deemed effective on
the Business Day immediately following the date on which the telegraphic or
facsimile transmission, as applicable, occurs.
To Beneficiary: Electronic Arts, Redwood, Inc.
207 Redwood Shores Parkway
Redwood City, California 94065
Fax: (650) 628-________
Attn: James F. Healy, President
with a copy to: Nossaman, Guthner, Knox & Elliott, LLP
50 California Street, 34th Floor
San Francisco, California 94111
Attn: David L. Kimport, Esq.
To Trustor:
with a copy to:
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5.07. Acceptance by Trustee. Trustee accepts this Trust when this Deed
of Trust is duly executed and acknowledged and is made a public record as
provided by law.
5.08. Captions. The captions or headings at the beginning of Articles,
Sections and Subsections hereof are for the convenience of the parties, are not
a part of this Deed of Trust, and shall not be used in construing it.
5.09. Invalidity of Certain Provisions. Every provision of this Deed of
Trust is intended to be severable. In the event any term or provision hereof is
declared to be illegal, invalid or unenforceable for any reason whatsoever by a
court of competent jurisdiction, such illegality, invalidity or unenforceability
shall not affect the balance of the terms and provisions hereof, which terms and
provisions shall remain binding and enforceable. If the lien of this Deed of
Trust is invalid or unenforceable as to any part of the debt, or if the lien is
invalid or unenforceable as to any part of the Trust Estate, the unsecured or
partially secured portion of the debt shall be completely paid prior to the
payment of the remaining and secured or partially secured portion of the debt,
and all payments made on the debt, whether voluntary or under foreclosure or
other enforcement action or procedure, shall be considered to have been first
paid on and applied to the full payment of that portion of the debt which is not
secured or fully secured by the lien of this Deed of Trust.
5.10. No Merger of Leases. Upon the foreclosure of the lien created by
this Deed of Trust on the Trust Estate pursuant to the provisions hereof, any
lease or sublease then existing and affecting all or any portion of the Trust
Estate shall not be destroyed or terminated by application of the law of merger
or as a matter of law or as a result of such foreclosure unless Beneficiary or
any purchaser at such foreclosure sale shall so elect. No act by or on behalf of
Beneficiary or any such purchaser shall constitute a termination of any lease or
sublease unless Beneficiary or such purchaser shall give written notice of such
termination to such tenant or subtenant. If both the lessor's and lessee's
estate under any lease or any portion thereof which constitutes a part of the
Trust Estate shall at any time become vested in one owner, this Deed of Trust
and the lien created hereby shall not be destroyed or terminated by application
of the doctrine of merger unless Beneficiary so elects as evidenced by recording
a written declaration so stating, and, unless and until Beneficiary so elects,
Beneficiary shall continue to have and enjoy all of the rights and privileges of
Beneficiary hereunder as to the separate estates.
5.11. Governing Law. This Deed of Trust shall be governed by and
construed in accordance with the laws of the State of California.
5.12. Statute of Limitations. Except insofar as now or hereafter
prohibited by law, the right to plead, use or assert any statute of limitations
as a plea or defense or bar of any kind, or for any purpose, to any debt, demand
or obligation secured or to be secured hereby, or to any complaint or other
pleading or proceeding filed, instituted or maintained for the purpose of
enforcing this Deed of Trust or any rights hereunder, is hereby waived by
Trustor.
5.13. Joint and Several Obligations. Should this Deed of Trust be
signed by more than one party, all obligations herein contained shall be deemed
to be the joint and several obligations of each party executing this Deed of
Trust. Any married person signing this Deed of Trust agrees that recourse may be
had against community assets and against his or her separate property for the
satisfaction of all obligations contained herein.
5.l4. Interpretation. In this Deed of Trust the singular shall include
the plural and the masculine shall include the feminine and neuter and vice
versa, if the context so requires; and the word "person" shall include
corporation, partnership or other form of association.
5.15. Trust Irrevocable: No Offset. The Trust created hereby is
irrevocable by Trustor. No offset or claim that Trustor now or may in the future
have against Beneficiary shall relieve Trustor from paying the indebtedness or
performing any other obligation contained herein or secured hereby.
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5.16. Corrections. Trustor shall, upon request of Beneficiary, promptly
correct any defect, error or omission which may be discovered in the contents
hereof or in the execution or acknowledgment hereof, and will execute,
acknowledge and deliver such further instruments and do such further acts as may
be necessary or as may be reasonably requested by Beneficiary to carry out more
effectively the purposes hereof, to subject to the lien and security interest
hereby created any of Trustor's properties, rights or interest covered or
intended to be covered hereby, or to perfect and maintain such lien and security
interest.
5.17. Further Assurances. Trustor, Beneficiary and Trustee agree to do
or to cause to be done such further acts and things and to execute and deliver
or to cause to be executed and delivered such additional assignments,
agreements, powers and instruments, as any of them may reasonably require or
deem advisable to keep valid and effective the charges and lien hereof, to carry
into effect the purposes of this Deed of Trust or to better assure and confirm
unto any of them their rights, powers and remedies hereunder; and, upon request
by Beneficiary, shall supply evidence of fulfillment of each of the covenants
herein contained concerning which a request for such evidence has been made.
5.18. Execution of Documents by Trustee. At any time, and from time to
time, without liability therefor and without notice, upon written request of
Beneficiary and presentation of this Deed of Trust, and without affecting the
personal liability of any person for payment of the indebtedness or the
performance of any other obligation secured hereby or the effect of this Deed of
Trust upon the remainder of said Trust Estate, Trustee may (i) reconvey any part
of said Trust Estate, (ii) consent in writing to the making of any map or plat
thereof, (iii) join in granting any easement thereon, or (iv) join in any
extension agreement, agreement subordinating the lien or charge hereof, or other
agreement or instrument relating hereto or to the Trust Estate or any portion
thereof.
5.19. Appointment of Successor Trustee. Trustee or any successor acting
hereunder may resign and thereupon be discharged of the trusts hereunder upon
thirty (30) days' written notice to Beneficiary. Regardless of whether such
resignation occurs, Beneficiary may, from time to time, substitute a successor
or successors to any Trustee named herein or acting hereunder in accordance with
any statutory procedure for such substitution; or if Beneficiary, in its sole
discretion, so elects, Beneficiary may substitute such successor or successors
by recording in the office of the recorder of the county or counties where the
Land is situated, an instrument executed by Beneficiary, and containing the name
of the original Trustor, Trustee and Beneficiary hereunder, the book and page
where this Deed of Trust is recorded and the name and address of the new
Trustee, which instrument shall be conclusive proof of proper substitution of
such successor Trustee or Trustees, who shall succeed, without conveyance from
the predecessor Trustee, all its title, estate, rights, powers and duties
hereunder.
5.20. Successors and Assigns. This Deed of Trust applies to, inures to
the benefit of and binds Trustor and its heirs, legatees, devisees,
administrators, personal representatives, executors and the successors and
assigns thereof, Trustee and Beneficiary. As used herein, the term "Beneficiary"
shall mean the holder or holders of the Note from time to time, whether or not
named as Beneficiary herein; the term "Trustee" shall mean the trustee appointed
hereunder from time to time, whether or not notice of such appointment is given;
and the term "Trustor" shall mean the Trustor named herein and the
successors-in-interest, if any, of said named Trustor in and to the Trust Estate
or any part thereof. If there be more than one Trustor hereunder, their
obligations shall be joint and several.
5.21. Priority. This Deed of Trust is intended to have and retain
priority over all other liens and encumbrances upon the Trust Estate, excepting
only: (i) such impositions as at the date hereof have, or by law gain, priority
over the lien created hereby; (ii) covenants, conditions, restrictions,
easements, and rights of way which are of record or are disclosed of record and
which affect the Trust Estate on the date hereof; and (iii) leases, liens,
encumbrances and other matters as to which Beneficiary hereafter expressly
subordinates the lien of this
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Deed of Trust by written instrument in recordable form. Under no circumstance
shall Beneficiary be obligated or required to subordinate the lien hereof to any
lease, lien, encumbrance, covenant or other matter affecting the Trust Estate or
any portion thereof. Beneficiary may, however, at Beneficiary's option,
exercisable in its sole and absolute discretion, subordinate the lien of this
Deed of Trust, in whole or in part, to any or all leases, liens, encumbrances or
other matters affecting all or any portion of the Trust Estate by executing and
recording in the Office of the County Recorder of the County and State in which
the Land is located, a unilateral declaration of such subordination specifying
the lease, lien, encumbrance or other matter or matters to which this Deed of
Trust shall thereafter be subordinate. Notwithstanding the foregoing, upon the
request of Trustor, Beneficiary agrees to execute a nondisturbance and
attornment agreement with tenant(s) under any lease(s) of the Property providing
that so long as such tenant is not in default of the terms of its lease, upon
and following a foreclosure of this Deed of Trust, Beneficiary shall not disturb
the possession of such tenant in accordance with the terms of its lease.
5.22. Financing Statement and Fixture Filing.
(a) This Deed of Trust constitutes a financing statement and
fixture filing in the Official Records of the County Recorder of the County and
State in which the Property is located with respect to any and all Fixtures (as
hereinafter defined) included with the term "Improvements" as used herein and
with respect to any goods, collateral or other personal property that may now be
or hereafter become Fixtures. As used herein, the term "Fixtures" shall mean all
fixtures located upon or within the Improvements or now or hereafter installed
in, or used in connection with any of the Improvements, including, but not
limited to, any and all partitions, screens, awnings, motors, engines, boilers,
furnaces, pipes, plumbing, elevators, cleaning and sprinkler systems, fire
extinguishing apparatus and equipment, water tanks, heating, ventilating, air
conditioning, and air cooling equipment, refrigerators, washer and dryer units,
and gas and electric machinery, appurtenances and equipment, whether or not
permanently affixed to the Property or Improvements.
(b) It is understood and agreed that, to protect the
Beneficiary against the effect of California Commercial Code Section 9313, as
amended from time to time, in the event that (x) any Fixture owned by the
Trustor in the Trust Estate, or any part thereof, is replaced or added to, or
any new Fixture owned by the Trustor is installed by the Trustor, and in each
case such Fixture has a cost or fair market value in excess of Ten Thousand
Dollars ($10,000.00), and (y) such Fixture is or may be subject to a security
interest held by a seller or any other party:
(i) Trustor or any owner of all or any part of the
Trust Estate shall, before the replacement, addition, or installation of any
such Fixture, obtain the prior written approval of the Beneficiary, and give the
Beneficiary written notice that a security agreement with respect to such
Fixture has been or will be consummated, which notice shall contain the
following information:
(A) a description of the Fixtures to be
replaced, added to, installed or
substituted;
(B) a recital of the location at which
the Fixtures will be replaced, added
to, installed or substituted;
(C) a statement of the name and address
of the holder and amount of the
security interest; and
(D) the date of the purchase of such
Fixtures.
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Neither this subparagraph nor any consent by the Beneficiary
pursuant to this subparagraph shall constitute an agreement to subordinate any
right of the Beneficiary in Fixtures or other property covered by this Deed of
Trust.
(ii) The Beneficiary may, at its option, at any time,
pay the balance due under said security agreement and the amount so paid shall
be (A) secured by this Deed of Trust and shall be a lien on the Trust Estate
enjoying the same priorities vis-a-vis the estates and interests encumbered
hereby as this Deed of Trust, and (B) payable on demand with interest at the
Advance Interest Rate from the time of such payment as aforesaid; and the
Beneficiary shall have the privilege of acquiring by assignment from the holder
of said security interest any and all contract rights, accounts receivable,
chattel paper, negotiable or non-negotiable instruments, or other evidence of
the Trustor's indebtedness for such Fixtures, and, upon acquiring such interest
aforesaid by assignment, shall have the right to enforce the security interest
as assignee thereof, in accordance with the terms and provisions of the
California Commercial Code, as amended or supplemented, and in accordance with
the law.
(iii) Whether or not the Beneficiary has paid or
taken an assignment of such security interest, if at any time the Trustor shall
be in default under the security agreement covering the Fixtures beyond the
applicable cure period therefor, if any, as specified therein, such default
shall be a material breach of the Trustor's covenants under this Deed of Trust,
and shall at the option of the Beneficiary constitute a default under this Deed
of Trust.
(iv) The provisions of subparagraphs (ii) and (iii)
above shall not apply if the goods which may become Fixtures are of at least
equivalent value and quality as any property being replaced and if the rights of
the party holding such security interest have been expressly subordinated, at no
cost to the Beneficiary, to the lien of this Deed of Trust in a manner
satisfactory to the Beneficiary, including, without limitation, at the option of
the Beneficiary, providing to the Beneficiary a satisfactory opinion of counsel
to the effect that this Deed of Trust constitutes a valid and subsisting first
lien on such Fixtures which is not subordinate to the lien of such security
interest under any applicable law, including, without limitation, the provisions
of Section 9313 of the California Commercial Code.
IN WITNESS THEREOF, Trustor has caused this Deed of Trust to
be executed by its duly authorized agents and representatives as of the date
first above written.
TRUSTOR
______________________, a _______________
By:_____________________________________
Name:___________________________________
Title:__________________________________
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EXHIBIT A
Legal Description of the Land
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EXHIBIT M
FORM OF
CONTINUING GUARANTY
To induce ELECTRONIC ARTS REDWOOD, INC. (hereinafter called "Lender")
to grant credit and or make financial accommodation to
____________________________, a _____________________________ (hereinafter
called "Borrower") and in consideration thereof of any loans, advances, or
financial accommodations heretofore or hereafter granted by Lender to or for the
account of Borrower, the undersigned (hereinafter called "Guarantor")
unconditionally guarantees and promises to pay Lender, or order, on demand, in
lawful money of the United States, any and all indebtedness (as hereinafter
defined) of Borrower to Lender under any existing or future agreement or
otherwise, and also guarantee the due performance by Borrower of all of its
obligations under all existing and future contracts and agreements with Lender.
1. The word "indebtedness" means the loan evidenced by that certain
Promissory Note made by Borrower to Lender in the original principal amount of
________________________________Dollars ($________________) (the "Note"),
secured by a deed of trust on the property located at Redwood Shores, Redwood
City, California, as described in Exhibit A attached hereto, together with all
renewals, extensions, modifications and/or substitutions of or for the Note,
including all principal, interest, collection costs and expenses relating to the
Note or any collateral for the Note. Collection costs and expenses include,
without limitation, all of Lender's attorneys' fees and legal expenses, whether
or not suit is instituted, and all foreclosure expenses.
2. This Guaranty is a Continuing Guaranty which shall remain effective
until all of the indebtedness has been finally paid in full, at which time it
shall be of no further force or effect.
3. The obligations hereunder are joint and several, and independent of
the obligations of Borrower, and a separate action or actions may be brought and
prosecuted against Guarantor, whether action is brought against Borrower or
whether Borrower is joined in any such action or actions, and Guarantor waives
the benefit of any statute of limitations affecting their liability hereunder or
the enforcement hereof.
4. Guarantor authorizes Lender, without notice or demand and without
affecting their liability hereunder, from time to time to (a) renew, compromise,
extend, accelerate or otherwise change the time for payment of, or otherwise
change the terms of the indebtedness or any part thereof; (b) take and hold
security for the payment of this Guaranty or the indebtedness guaranteed, and
exchange, enforce, waive and release any such security; (c) apply such security
and direct the order or manner of sale thereof as Lender in its sole discretion
may determine; and (d) assign, without notice, this Guaranty in whole or in part
and/or Lender's rights hereunder to anyone at any time.
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5. Guarantor waives all rights and defenses arising out of an election
of remedies by Lender, even though that election of remedies, such as
nonjudicial foreclosure with respect to security for a guaranteed obligation,
has destroyed Guarantor's rights of subrogation and reimbursement against
Borrower by the operation of Section 580d of the Code of Civil Procedure or
otherwise, and/or any similar law of California, or of any other State, or of
the United States. Guarantor waives any right to require Lender to (a) proceed
against Borrower; (b) proceed against or exhaust any security held from
Borrower; or (c) pursue any other remedy in Lender's power whatsoever. Guarantor
waives any defense arising by reason of any disability or other defense of
Borrower or by reason of the cessation from any cause whatsoever of the
liability of Borrower. Guarantor also agrees that nothing shall discharge or
satisfy the liability of Guarantor hereunder except the full payment and
performance of all of Borrower's debts and obligations to Lender with interest.
Guarantor waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
default, notices of acceptance of this Guaranty and all other notices to which
Guarantors or any of them might otherwise be entitled, and the right to a jury
trial in any action hereunder or arising out of Lender's transactions with
Borrower.
6. Guarantor agrees that it is its responsibility to keep informed of
the financial status of Borrower and of any circumstance which may affect
Guarantor's obligations or Borrower, and Guarantor recognizes and agrees that
Lender is not obligated to keep Guarantor informed of any such circumstances.
Where Borrower is a corporation or partnership it is not necessary for Lender to
inquire into the powers of Borrower, of the officers, directors, partners or
agents acting or purporting to act on its behalf, and any indebtedness made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
7. Guarantor agrees to pay a reasonable attorney's fee and all other
costs and expenses which may be incurred by Lender in the enforcement of this
Guaranty or any claim hereunder or under any other instrument or guaranty.
8. No termination or modification of this Guaranty shall be effective
for any purpose unless it is in writing and executed by an officer of Lender
authorized to do so.
9. All acts and transactions hereunder and the rights and obligations
of the parties hereto shall be governed, construed, and interpreted in
accordance with the laws of the State of California.
10. Guarantor shall deliver, or caused to be delivered, to Lender
audited year end financial statements, prepared by a certified public accounting
firm, of Guarantor within 90 days of each fiscal year end and, if reasonably
requested by Lender, more frequently (but in no event more than quarterly).
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IN WITNESS WHEREOF, the undersigned Guarantor has executed this
Guaranty this ____ day of __________, 1999.
GUARANTOR:
___________________, a
__________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
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EXHIBIT N
LEGAL DESCRIPTION
of
NO-BUILD ZONE No. 1
Lands of Electronic Arts
All that real property being a portion of Parcel 2, as shown on that certain
Parcel Map entitled "Parcel Map No. 98-6," recorded in Volume 70 of Parcel Maps
at Pages 78-79, Records of San Mateo County, State of California, bounded to the
northwest by the northwesterly property line of said Parcel 2, designated North
43 degrees 19'38" East 169.07 feet, bounded to the southeast by a line parallel
to and offset 127.00 feet southeasterly from said northwesterly properly line of
said Parcel 2, bounded to the southwest by the southwesterly property line of
said Parcel 2, and bounded to the northeast by the northeasterly property line
of said Parcel 2.
LEGAL DESCRIPTION
of
NO-BUILD ZONE No. 2
Lands of Electronic Arts
All that real property being a portion of Parcel 2, as shown on that certain
Parcel Map entitled "Parcel Map No. 98-6," recorded in Volume 70 of Parcel Maps
at Pages 78-79, Records of San Mateo County, State of California, bounded to the
northeast by the northeasterly property line of said Parcel 2, bounded to the
southwest by a line parallel to and offset 79.00 feet southwesterly from the
northeasterly property line of said Parcel 2 designated North 46 degrees 40'22"
West 292.00 feet, bounded to the northwest by a line parallel to and offset
127.00 feet southeasterly from said northwesterly properly line of said Parcel 2
designated North 43 degrees 19'38" East 169.07 feet, and bounded to the
southeast by a line parallel to and offset 400.00 feet southeasterly from the
northwesterly property line of said Parcel 2 designated North 43 degrees 19'38"
East 169.07 feet.
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EXHIBIT O
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
================================================================================
SPACE ABOVE THIS LINE FOR RECORDER'S USE
FORM OF
EASEMENT AGREEMENT
(ACCESS)
This Easement Agreement is made this _____ day of _________________,
1999, by and between FLATIRONS FUNDING, LIMITED PARTNERSHIP, a Delaware limited
partnership ("FFLP"), ELECTRONIC ARTS REDWOOD, INC., a Delaware corporation
("EAR"), and _____________________, a _____________________ ("Buyer").
WHEREAS, FFLP is the owner of certain real property located in Redwood
City, San Mateo County, California, more particularly described in Exhibit A
attached hereto, hereinafter referred to as the "Servient Tenement;" and
WHEREAS, EAR is the lessee of the Servient Tenement and adjacent
buildings; and
WHEREAS, Buyer is the owner of certain real property adjacent to the
Servient Tenement, more particularly described in Exhibit B attached hereto,
hereinafter referred to as the "Dominant Tenement;" and
WHEREAS, EAR as of the date hereof has sold the Dominant Tenement to
Buyer, and one of the conditions of the sale is that FFLP grants the easement
described herein to Buyer, its successors and assigns, on the terms and
conditions hereinafter set forth; and
WHEREAS, FFLP wishes to grant the easement and EAR consents to such
grant;
NOW, THEREFORE, it is agreed as follows:
1. Grant of Easement. FFLP hereby grants to Buyer, its successors and
assigns, in perpetuity, as appurtenant to the Dominant Tenement, a non-exclusive
right-of-way easement as described in Section 2 below (the "Right-of-Way
Easement"). Persons designated in Section 2 as entitled to use the Right-of-Way
Easement are collectively referred to as "Permittees."
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2. Description of Right-Of-Way Easement. The Right-of-Way Easement
granted herein is a right-of-way for Buyer, its successors, assigns, and tenants
of the buildings located or to be located on the Dominant Tenement, and their
respective employees, agents, visitors, and invitees, to cross that portion of
the Servient Tenement described in Exhibit C attached hereto en route to or from
the entrance to the buildings located or to be located on the Dominant Tenement.
3. Maintenance, Repair, and Replacement. FFLP shall be responsible for
the maintenance, repair, and replacement of the right of way located on the
Servient Tenement.
(a) Costs. FFLP shall be responsible for the cost of such
maintenance, repair, or replacement; provided, however, that if any repair or
maintenance to the right of way is required by reason of the negligence, willful
misconduct or other fault of Buyer or its Permittees, unless otherwise agreed
Buyer shall be obligated to pay for the entire cost of such repair or
maintenance. If FFLP initially pays the cost of such maintenance or repair,
Buyer shall remit payment in full to FFLP within thirty (30) days from the date
of receipt of a written request for payment from FFLP. Nothing contained in this
Agreement shall limit the right of Buyer to charge, allocate, pass through or
apportion all or any part of such expense to any Permittees of Buyer.
(b) Access. For purposes of repairing, maintaining, or
replacing the right of way, FFLP shall have the right to temporarily suspend or
block use of or access to portions of the Servient Tenement to the extent
reasonably necessary to undertake such repairs or maintenance, without being
deemed to be in violation of the terms and conditions of this Agreement;
provided, however, that, except in an emergency, such work shall be performed at
times and in a manner reasonably convenient to the continued and uninterrupted
operation of the businesses located on the Dominant Tenement.
(c) Reallocation of Obligations. Maintenance and repair
obligations and costs may be reallocated between the parties and/or additional
or substitute parties in the future by an amendment to this Agreement signed,
acknowledged and duly recorded by the parties.
4. Damage and Destruction; Eminent Domain. In the event of any damage
to or destruction of all or any portion of the Servient Tenement, or a taking of
all or any portion of the Servient Tenement by power of eminent domain, FFLP
shall rebuild and restore the remainder, if any, of the Servient Tenement to the
extent possible. In the event of a taking by power of eminent domain of part or
all of the Servient Tenement, the obligations of FFLP pursuant to this Agreement
shall cease as of the date of the taking with respect to the portion of the
Servient Tenement so taken. Nothing contained herein shall be construed to give
Buyer any interest in any award or payment made to FFLP in connection with any
exercise of eminent domain or transfer in lieu thereof affecting any portion of
the Servient Tenement.
5. Payment of Property Taxes. FFLP shall pay or cause to be paid
promptly when due all real property taxes and other special taxes and
assessments which may be levied or assessed against the Servient Tenement;
provided, however, that in the event any real property taxes or other special
taxes or assessments are separately assessed or levied against Buyer's interest
under this Agreement, Buyer shall pay or cause to be paid promptly when due all
such taxes or assessments.
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6. Insurance. Each of FFLP and Buyer shall provide, keep in force, and
maintain commercial general liability insurance with a reputable and solvent
insurance company covering their respective interests in the Servient Tenement.
Such policies (a) shall insure against bodily injury, death and property damage
with a combined single limit of coverage of not less than Five Million Dollars
($5,000,000); (b) shall name the other party and EAR as an additional insured;
and (c) shall be increased from time to time to amounts reasonable and customary
for similar properties in the area where the Servient Tenement is located. All
such policies shall provide that the same shall not be canceled without thirty
(30) days' prior written notice to the named and additional insureds. Each of
FFLP and Buyer shall provide the other with certificates of insurance on July 1
of each year and upon any renewal or replacement of insurance during the year.
If a party fails to procure the required insurance, the other party may obtain
such insurance in the defaulting party's name and bill the defaulting party for
such costs.
7. Indemnity. Buyer shall indemnify, defend and hold harmless against
all penalties, losses, liability and claims of any nature whatsoever, including,
without limitation, claims or liabilities for loss or damage to property or for
injury to or death of persons, and all costs and attorneys' fees, arising out of
the activities of Buyer or its Permittees upon or using the Servient Tenement;
provided, however, that the foregoing indemnification shall not apply to matters
resulting directly or indirectly from the negligence or willful misconduct of
FFLP or EAR, or their respective successors, assigns, tenants, visitors, or
invitees.
8. Default. In the event a party hereunder breaches or defaults in its
obligations hereunder, the other party may sue for damages in the event of
failure to pay money or seek specific performance in the event of a failure to
maintain or repair. Neither party may block or inhibit access to the Servient
Tenement as a result of a breach or default hereunder.
9. EAR Consent and Assumption. FFLP hereby assigns and delegates all of
its duties and obligations hereunder to EAR, its successors and assigns, for so
long as EAR, its successors and assigns, are tenants of the Servient Tenement
under lease from FFLP or its successors or assigns. EAR accepts such assignment
and delegation, hereby consents to FFLP's granting the within easements, and
hereby subordinates its leasehold interest to the within easements.
10. Mortgages. No breach of this Agreement shall defeat, render
invalid, diminish or impair the lien of any first mortgage or deed of trust on
the Servient Tenement made in good faith and for value, but the covenants,
conditions and restrictions contained herein shall be binding upon and effective
against any mortgagee who acquires title to either of the Parcels or any portion
thereof by foreclosure, trustee's sale, deed in lieu of foreclosure or
otherwise, pursuant to a mortgage or deed of trust created after the date of
this Agreement.
11. Entire Agreement. This instrument contains the entire agreement
between the parties relating to the rights herein granted and the obligations
herein assumed. Any oral representations or modifications concerning this
instrument shall be of no force or effect except in a subsequent modification in
writing, signed by the party to be charged.
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12. Attorney's Fees. In the event of any controversy, claim, or dispute
relating to this instrument or the breach thereof, the prevailing party shall be
entitled to recover from the losing party reasonable expenses, attorney's fees,
and costs.
13. Binding Effect. This instrument shall be binding on and shall inure
to the benefit of the heirs, executors, administrators, successors, and assigns
of FFLP, EAR, and Buyer, and each of them.
14. No Dedication. Nothing contained in this Agreement shall be deemed
to be a gift or dedication of any portion of the Servient Tenement to or for the
general public or for any public purposes whatsoever. It is the intention of the
parties that this Agreement shall be strictly limited to and for the purposes
expressed herein.
15. Covenants Running With the Land. All of the provisions, agreements,
rights, powers, covenants, conditions and obligations contained in this
Agreement shall be binding upon and shall inure to the benefit of the FFLP,
Buyer, EAR and their respective successors (by merger, consolidation or
otherwise), assigns, and representatives, and all other persons acquiring an
interest in all or any portion of the Servient Tenement or the Dominant
Tenement. All of the provisions of this Agreement shall constitute covenants
running with the land and equitable servitudes pursuant to any and all
applicable laws.
16. Estoppel Certificates. Either FFLP, EAR, or Buyer may, at any time
and from time to time, in connection with the sale, transfer, financing or
refinancing of its Tenement, deliver a written notice to the other parties
requesting that the other parties execute a certificate certifying that the
requesting party is not in default in the performance of its obligations under
this Agreement or, if in default, describing therein the nature and amount of
any default. Such certificate shall be executed and returned within ten (10)
days following the receipt of the notice from the requesting party. Failure by a
party to execute and return the certificate within the specified period shall be
deemed an admission by such party that the requesting party is current and not
in default in the performance of its obligations under this Agreement. Any such
certificate may be relied upon by all transferees, mortgagees, and deed of trust
beneficiaries.
17. Certain Obligations of FFLP Non-Recourse. FFLP's obligations
hereunder are intended to be the obligations of the limited partnership and of
the corporations which are the managing general partner and any other general
partner thereof only, and no recourse for the payment of any amount due under
this Easement Agreement or for any claim based thereon or otherwise in respect
thereof, shall be held against any limited partner of FFLP or any incorporator,
shareholder, officer, director or affiliate, as such, past, present or future of
such corporate managing general partner or other general partner or of any
corporate limited partner or of any successor corporation to such corporate
managing general partner or other general partner or any corporate limited
partner of FFLP, or against any direct or indirect parent corporation of such
corporate managing general partner or other general partner or of any limited
partner of FFLP or any other subsidiary or affiliate of any such direct or
indirect parent corporation or any incorporator, shareholder officer or
director, as such, past, present or future, of any such parent or other
subsidiary or affiliate, it being understood that FFLP is a limited partnership
formed for the purpose of
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acquiring and owning property including the Servient Tenement and acting as
lessor to Electronic Arts Redwood, Inc., on the express understanding aforesaid.
Nothing contained in this Section 17 shall be construed to limit the exercise or
enforcement, in accordance with the terms of this Easement Agreement and any
other documents referred to herein, of rights and remedies against the limited
partnership or the corporate managing general partner or any other general
partner of FFLP or the assets of the limited partnership or the corporate
managing general partner or any other general partner of FFLP. As used in this
Section 17, "affiliate" means any other person controlling, controlled by or
under direct or indirect common control with such person; "person" means any
individual, corporation, partnership, limited liability company, private limited
company, joint venture, association joint-stock company, trust, unincorporated
association, organ of government or any agency or political subdivision thereof;
and "control," when used with any specified person, means the power to direct
the management and policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
IN WITNESS WHEREOF, the parties hereto have executed this Easement
Agreement as of the date first-above written.
FLATIRONS FUNDING, LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Flatirons Capital, Inc.
Managing General Partner
By: ___________________________________
Its: __________________________________
_______________________________,
a _______________________
By: ___________________________________
Its: __________________________________
ELECTRONIC ARTS REDWOOD, INC.,
a Delaware corporation
By: ___________________________________
Name: _________________________________
Title: ________________________________
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Acknowledgment
State of California
County of _____________
On ________________, 1999, before me, ____________________________,
personally appeared _________________________________________ [personally known
to me or proved to me on the basis of satisfactory evidence] to be the person[s]
whose name[s] _______________ ____________________________________ [is or are]
subscribed to the within instrument and acknowledged to me that
_______________________ [he or she or they] executed the same in
______________________________ [his or her or their] authorized
______________________ [capacity or capacities], and that by [his or her or
their] signature[s] on the instrument the person[s], or the entity upon behalf
of which the person[s] acted, executed the instrument.
WITNESS my hand and official seal.
____________________________________ _____________________________
[Signature] [Seal]
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EXHIBIT P
FORM OF
EXERCISE NOTICE
Electronic Arts, Redwood, Inc.
207 Redwood Shores Parkway
Redwood City, California 94065
Attn: James F. Healy, President
Re: Option Agreement, Agreement of Purchase and Sale and
Joint Escrow Instructions, dated _______________,
1999 (the "Purchase Agreement") between Electronic
Arts Redwood, Inc. ("Seller") and
______________________________("Buyer")
Gentlemen and Ladies:
This letter constitutes the Exercise Notice contemplated by the
above-referenced Purchase Agreement and is delivered to exercise Buyer's option
granted under the Purchase Agreement to purchase the Property (as defined in the
Purchase Agreement) on the terms and for the price stated in the Purchase
Agreement.
Buyer hereby expressly confirms to Seller that Buyer has completed to
its satisfaction the inspection and review contemplated by Article 2 of the
Purchase Agreement. Buyer further confirms that it has deposited the full
Deposit (as defined in the Purchase Agreement) with the Escrow Agent.
Accordingly, Buyer is prepared to proceed with the purchase of the
Property in accordance with the terms of the Purchase Agreement subject only to
the satisfaction or waiver of the conditions described in Section 4.2 of the
Purchase Agreement.
Very truly yours,
[BUYER]
By:_____________________________________
Name:___________________________________
Title:__________________________________
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EXHIBIT Q
FORM OF
ESTOPPEL CERTIFICATE
TO: [BUYER]
Re: Development Agreement dated November 7, 1996
The undersigned The City of Redwood City (the "City") understands that
[BUYER] has contracted to purchase that certain real property located
in Redwood City, California, identified as Zones 2 and 4 of the
Electronic Arts Business Park (the "Property"), which is subject to the
terms and conditions of that certain Development Agreement dated as of
November 7, 1996, by and between Flatirons Funding, Limited
Partnership, a Delaware limited partnership ("FFLP"), and the City and
recorded November 8, 1996, as Instrument No. 96-138988, Official
Records, San Mateo County, California, as the same may be amended
through the date hereof (the "Development Agreement"). The City hereby
certifies the following information with respect to the Development
Agreement and agrees that you and your assigns may rely upon the same
in purchasing said real property:
1. The Development Agreement is in full force and effect, constitutes a
binding obligation of the parties, and has not been modified or amended
either orally or in writing except by (i) that First Amendment to
Development Agreement dated as of April 15, 1998 and recorded on April
15, 1998, as Instrument No. 98-054809, Official Records, San Mateo
County, California; (ii) that First Amendment to Development Agreement
dated as of April 6, 1998 and recorded on August 25, 1998 (recorded to
correct typographical errors of the First Amendment recorded on April
15, 1998), as Instrument No. 98-135753, Official Records, San Mateo
County, California; and (iii) that Second Amendment to Development
Agreement dated as of August 31, 1998 and recorded on September 2,
1998, as Instrument No. 98-141937, Official Records, San Mateo County,
California.
2. The City finds that FFLP has demonstrated good faith compliance with
the terms of the Development Agreement and has met all its obligations,
both monetary and non-monetary, under the Development Agreement.
3. The City asserts no claim of default under the Development Agreement
and to the best of the City's knowledge and belief, there is no default
by FFLP under the Development Agreement.
Dated: __________, 1999.
Very truly yours,
THE CITY OF REDWOOD CITY
By
_______________________________
Michael Church
Planning and
Redevelopment Manager
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