þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware
(State or other jurisdiction of incorporation or organization) |
13-2595091
(I.R.S. Employer Identification No.) |
|
500 108
th
Avenue NE
Bellevue, Washington (Address of principal executive offices) |
98004
(Zip code) |
Title of each class |
Name of each exchange
on which registered |
|
Common Stock ($.20 par value)
Preferred Stock Purchase Rights |
New York Stock Exchange
New York Stock Exchange |
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3
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6
7
8
9
Name | Position with the Company | Age | ||||
Robert W. Cremin
|
Chairman, President and Chief Executive Officer | 65 | ||||
Robert D. George
|
Vice President, Chief Financial Officer, Secretary and Treasurer | 49 | ||||
Marcia J. M. Greenberg
|
Vice President, Human Resources | 53 | ||||
Frank E. Houston
|
Group Vice President | 54 | ||||
Larry A. Kring
|
Senior Group Vice President | 65 | ||||
Stephen R. Larson
|
Vice President, Strategy & Technology | 61 | ||||
Richard J. Wood
|
Group Vice President | 52 |
10
| A significant downturn in the aerospace industry; | ||
| A significant reduction in defense spending; | ||
| A decrease in demand for our products as a result of competition, technological innovation or otherwise; | ||
| Our inability to integrate acquired operations or complete acquisitions; and | ||
| Loss of a significant customer or defense program. |
| Encountering difficulties identifying and executing acquisitions; | ||
| Increased competition for targets, which may increase acquisition costs; |
11
| Consolidation in our industry reducing the number of acquisition targets; | ||
| Acquisition financing not being available on acceptable terms or at all; and | ||
| Competition laws and regulations preventing us from making certain acquisitions. |
| The business culture of the acquired business may not match well with our culture; | ||
| Technological and product synergies, economies of scale and cost reductions may not occur as expected; | ||
| Management may be distracted from overseeing existing operations by the need to integrate acquired businesses; | ||
| We may acquire or assume unexpected liabilities; | ||
| Unforeseen difficulties may arise in integrating operations and systems; | ||
| We may fail to retain and assimilate employees of the acquired business; | ||
| We may experience problems in retaining customers and integrating customer bases; and | ||
| Problems may arise in entering new markets in which we may have little or no experience. |
12
13
14
| Depending on interest rates and debt maturities, a substantial portion of our cash flow from operations could be dedicated to paying principal and interest on our debt, thereby reducing funds available for our acquisition strategy, capital expenditures or other purposes; | ||
| A significant amount of debt could make us more vulnerable to changes in economic conditions or increases in prevailing interest rates; | ||
| Our ability to obtain additional financing for acquisitions, capital expenditures or for other purposes could be impaired; | ||
| The increase in the amount of debt we have outstanding increases the risk of non-compliance with some of the covenants in our debt agreements which require us to maintain specified financial ratios; and | ||
| We may be more leveraged than some of our competitors, which may result in a competitive disadvantage. |
15
16
| Protest or challenge by unsuccessful bidders; and | ||
| Unilateral termination, reduction or modification in the event of changes in government requirements. |
17
| The frequent need to bid on programs in advance of the completion of their design, which may result in unforeseen technological difficulties and/or cost overruns; | ||
| The substantial time and effort, including design, development and marketing activities, required to prepare bids and proposals for contracts that may not be awarded to us; and | ||
| The design complexity and rapid rate of technological advancement of defense-related products. |
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19
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21
Approximate
Owned
Square
or
Location
Type of Facility
Business Segment
Footage
Leased
Office, Plant &
Warehouse
Advanced Materials
429,000
Owned
Office & Plant
Advanced Materials
175,000
Leased
Office & Plant
Avionics & Controls
200,000
Leased
Office & Plant
Advanced Materials
112,000
Owned
Office & Plant
Sensors & Systems
110,000
Owned*
Office & Plant
Sensors & Systems
109,000
Leased
Office & Plant
Sensors & Systems
108,000
Leased
Office & Plant
Avionics & Controls
96,000
Leased
Office & Plant
Advanced Materials
93,000
Owned
Office & Plant
Advanced Materials
88,000
Owned
Office & Plant
Avionics & Controls
88,000
Leased
Office & Plant
Advanced Materials
85,000
Leased
Office & Plant
Advanced Materials
81,000
Leased
Office & Plant
Sensors & Systems
70,000
Leased
Office & Plant
Sensors & Systems
61,000
Leased
Office & Plant
Sensors & Systems
54,000
Owned
Office & Plant
Advanced Materials
50,000
Leased
*
The building is located on a parcel of land covering 16.1 acres that is leased by the company.
Table of Contents
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(a)
The high and low market sales prices of our common stock for each quarterly period
during fiscal years 2005 and 2004, respectively, is set forth under the section entitled
Market Price of Esterline Common Stock of the Annual Report to Shareholders for the
fiscal year ended October 28, 2005. The Annual Report is included as Exhibit 13 to this
report.
(b)
Restrictions on the ability to pay future cash dividends is set forth in Note 10 to the
Consolidated Financial Statements contained in the Annual Report to Shareholders for the
fiscal year ended October 28, 2005. The Annual Report is included as Exhibit 13 to this
report.
Table of Contents
Table of Contents
25
Table of Contents
26
Annual Report
Reference
*
*
*
*
*
*
*
Incorporated by reference to the Annual Report to Shareholders for the fiscal year ended October
28, 2005. The Annual Report is included as Exhibit 13 to this report.
Table of Contents
27
28
29
30
31
32
33
ESTERLINE TECHNOLOGIES CORPORATION
(Registrant)
By
/s/ Robert D. George
Robert D. George
Vice President,
Chief Financial Officer,
Secretary and Treasurer
(Principal Financial Officer)
Chairman, President and
January 6, 2006
Chief Executive Officer
Date
(Principal Executive Officer)
Vice President,
January 6, 2006
Chief Financial Officer,
Date
Secretary and Treasurer
(Principal Financial Officer)
Corporate Controller and
January 6, 2006
Chief Accounting Officer
Date
(Principal Accounting Officer)
Director
January 6, 2006
Date
Director
January 6, 2006
Date
Table of Contents
Director
January 6, 2006
Date
Director
January 6, 2006
Date
Director
January 6, 2006
Date
Director
January 6, 2006
Date
Director
January 6, 2006
Date
Director
January 6, 2006
Date
Table of Contents
Exhibit
Number
Exhibit
Restated Certificate of Incorporation, dated June 6, 2002. (Incorporated by reference to
Exhibit 3.1 to the Companys Quarterly Report on Form 10-Q for the quarter ended April 26,
2002 [Commission File Number 1-6357].)
By-laws of the Company, as amended and restated September 8, 2005 (Incorporated by
reference to Exhibit 3.2 to the Companys Current Report on Form 8-K dated September 9, 2005
[Commission File Number 1-6357].)
Rights Agreement dated as of December 11, 2002, between Esterline Technologies
Corporation and Mellon Investor Services LLC, as Rights Agent, which includes as Exhibit A
the Form of Certificate of Designation of Series B Serial Preferred Stock, as Exhibit B the
Form of Rights of Certificate and as Exhibit C the Summary of Rights to Purchase Preferred
Shares. (Incorporated by reference to Exhibit 4.1 to Esterline Technologies Corporations
Registration Statement on Form 8-A, as amended, filed on December 12, 2002 [Commission File
Number 1-6357].)
Indenture relating to Esterline Technologies Corporations 7.75% Senior Subordinated
Notes due 2013, dated as of June 11, 2003. (Incorporated by reference to Exhibit 4.1 to
Esterline Technologies Corporations Form 10-Q for the quarter ended August 1, 2003
[Commission File Number 1-6357].)
Form of Exchange Note. (Incorporated by reference to Exhibit 4.3 to Esterline
Technologies Corporations Form S-4, as amended, filed on September 30, 2003 [Commission File
Number 333-109325].)
Amendment No. 3 Credit Agreement, dated as of November 14, 2005, among Esterline
Technologies Corporation, the financial institutions referred to therein and Wachovia Bank,
National Association, as Administrative Agent. (Incorporated by reference to Exhibit 10.2 to
the Companys Current Report on Form 8-K dated November 14, 2005 [Commission File Number
1-6357].)
Industrial Lease dated July 17, 1984, between 901 Dexter Associates and Korry Electronics
Co., First Amendment to Lease dated May 10, 1985, Second Amendment to Lease dated June 20,
1986, Third Amendment to Lease dated September 1, 1987, and Notification of Option Exercise
dated January 7, 1991, relating to the manufacturing facility of Korry Electronics at 901
Dexter Avenue N., Seattle, Washington.
Fourth Amendment dated July 27, 1994, to Industrial Lease dated July 17, 1984 between Houg
Family Partnership, as successor to 901 Dexter Associates, and Korry Electronics Co.
Table of Contents
Exhibit
Number
Exhibit
Industrial Lease dated July 17, 1984, between 801 Dexter Associates and Korry Electronics
Co., First Amendment to Lease dated May 10, 1985, Second Amendment to Lease dated June 20,
1986, Third Amendment to Lease dated September 1, 1987, and Notification of Option Exercise
dated January 7, 1991, relating to the manufacturing facility of Korry Electronics at 801
Dexter Avenue N., Seattle, Washington.
Fourth Amendment dated March 28, 1994, to Industrial Lease dated July 17, 1984, between
Michael Maloney and the Bancroft & Maloney general partnership, as successor to 801 Dexter
Associates, and Korry Electronics Co.
Compensation of Directors. (Incorporated by reference to Other Information as to
Directors Compensation of Directors in the definitive form of the Companys Proxy
Statement, relating to its 2006 Annual Meeting of Shareholders to be held on March 1, 2006,
and to be filed with the Securities and Exchange Commission and the New York Stock Exchange.)
Amended and Restated 1987 Stock Option Plan. (Incorporated by reference to Exhibit 10 to
Registration Statement of Form S-8 [No. 33-52851] filed March 28, 1994.)
Esterline Corporation Supplemental Retirement Income Plan for Key Executives.
Esterline Technologies Corporation Long-Term Incentive Plan. (Incorporated by reference
to Exhibit 10.16k to the Companys Quarterly Report on Form 10-Q for the quarter ended July
29, 2005 [Commission File Number 1-6357].)
Executive Officer Termination Protection Agreement.
Offer Letter from Esterline
Technologies Corporation to Richard Wood dated February 9, 2005.
(Incorporated by reference to Exhibit 10.19b to the
Companys Quarterly Report on Form 10-Q for the quarter
ended January 28, 2005 [Commission File Number 1-6357].)
Severance Protection Agreement between Richard Wood and Esterline Technologies
Corporation, dated February 23, 2005. (Incorporated by reference to Exhibit 10.19c to the
Companys Quarterly Report on Form 10-Q for the quarter ended January 28, 2005 [Commission
File Number 1-6357].)
Executive Officer Compensation.
(Incorporated by reference to Executive Compensation in
the definitive form of the Companys Proxy Statement, relating to its
2006 Annual Meeting of Shareholders to be held on March 1, 2006,
and to be filed with the Securities and Exchange Commission and the
New York Stock Exchange.)
Offer Letter from Esterline Technologies Corporation to Frank Houston dated March 4, 2005.
(Incorporated by reference to Exhibit 10.19e to the Companys Current Report on Form 8-K
dated March 29, 2005 [Commission File Number 1-6357].)
Esterline Technologies Corporation Fiscal Year 2005 Annual Incentive Compensation Plan.
(Incorporated by reference to Exhibit 10.20k to the Companys Quarterly Report on Form 10-Q
for the quarter ended January 28, 2005 [Commission File Number 1-6357].)
Esterline Technologies Corporation Fiscal Year 2006 Annual Incentive Compensation Plan.
Table of Contents
Exhibit
Number
Exhibit
Real Property Lease and Sublease, dated June 28, 1996, between 810 Dexter L.L.C. and Korry
Electronics Co.
Esterline Technologies Corporation Amended and Restated 1997 Stock Option Plan.
(Incorporated by reference to Annex B in the definitive form of the Companys Proxy
Statement, relating to its 2003 Annual Meeting of Shareholders held on March 5, 2003, filed
with the Securities and Exchange Commission and the New York Stock Exchange on January 23,
2003 [Commission File Number 1-6357].)
Property lease between Slibail Immobilier and Norbail Immobilier and Auxitrol S.A., dated
April 29, 1997, relating to the manufacturing facility of Auxitrol at 5, allée Charles Pathé,
18941 Bourges Cedex 9, France, effective on the construction completed date (December 5, 1997).
Industrial and build-to-suit purchase and sale agreement between The Newhall Land and
Farming Company, Esterline Technologies Corporation and TA Mfg. Co., dated February 13, 1997
including Amendments. The agreement is for land and building located at 28065 West Franklin
Parkway, Valencia, CA 91384, effective upon acceptance of construction completion (May 12, 1998).
Counterpart Underlease, dated January 4, 1993, between Openment Limited and Muirhead
Vactric Components Limited, relating to premises located at Oakfield Road, Penge in the
London Borough of Bromley. (Incorporated by reference to Exhibit 10.30 to the Companys
Annual Report on Form 10-K for the fiscal year ended October 27, 2000 [Commission File Number 1-6357].)
Lease Agreement, dated as of February 27, 1998, between Glacier Partners and Advanced
Input Devices, Inc., Lease Amendment #1, dated February 27, 1998. (Incorporated by reference
to Exhibit 10.31 to the Companys Annual Report on Form 10-K for the fiscal year ended
October 27, 2000 [Commission File Number 1-6357].)
Esterline Technologies Corporation 2002 Employee Stock Purchase Plan. (Incorporated by
reference to Annex D in the definitive form of the Companys Proxy Statement, relating to its
2006 Annual Meeting of Shareholders to be held on March 1, 2006, and to be filed with the
Securities and Exchange Commission and the New York Stock Exchange.)
Table of Contents
Exhibit
Number
Exhibit
Lease Agreement, dated as of August 6, 2003, by and between the Prudential Insurance
Company of America and Mason Electric Co., relating to premises located at Sylmar,
California. (Incorporated by reference to Exhibit 10.34 to the Companys Annual Report on
Form 10-K for the fiscal year ended October 31, 2003 [Commission File Number 1-6357].)
Occupation Lease of Buildings known as Phases 3 and 4 on the Solartron Site at Victoria
Road, Farnborough, Hampshire between J Sainsbury Developments Limited and Weston Aerospace
Limited, dated July 21, 2000. (Incorporated by reference to Exhibit 10.35 to the Companys
Annual Report on Form 10-K for the fiscal year ended October 31, 2003 [Commission File Number 1-6357].)
Esterline Technologies Corporation 2004 Equity Incentive Plan. (Incorporated by reference
to Annex C in the definitive form of the Companys Proxy Statement, relating to its 2006
Annual Meeting of Shareholders to be held on March 1, 2006, and to be filed with the
Securities and Exchange Commission and the New York Stock Exchange.)
Form of Stock Option Agreement. (Incorporated by reference to Exhibit 10.36a to the
Companys Quarterly Report on Form 10-Q for the quarter ended January 28, 2005 [Commission
File Number 1-6357].)
Lease Agreement dated as of March 19, 1969, as amended, between Leach Corporation and Gin
Gor Ju, Trustee of Ju Family Trust, relating to premises located in Orange County.
(Incorporated by reference to Exhibit 10.37 to the Companys Annual Report on Form 10-K for
the fiscal year ended October 29, 2004 [Commission File Number 1-6357].)
Esterline Technologies Corporation Amended and Restated Non-Employee Directors Stock
Compensation Plan. (Incorporated by reference to Exhibit 10.40 to the Companys Quarterly
Report on Form 10-Q for the quarter ended January 28, 2005 [Commission File Number 1-6357].)
Schedule setting forth computation of earnings per share for the five fiscal years ended
October 28, 2005.
Statement of Computation of Ratio of Earnings to Fixed Charges.
Portions of the Annual Report to Shareholders for the fiscal year ended October 28, 2005,
incorporated by reference herein.
List of subsidiaries.
Consent of Independent Registered Public Accounting Firm.
Table of Contents
Exhibit
Number
Exhibit
Certification of Chief Executive Officer.
Certification of Chief Financial Officer.
Certification (of Robert W. Cremin) pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification (of Robert D. George) pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
*
Indicates management contract or compensatory plan or arrangement.
Table of Contents
Balance at | Charged | Balance | ||||||||||||||
Beginning | to Costs | at End | ||||||||||||||
Description | of Year | and Expenses | Deductions | of Year | ||||||||||||
Reserve for Doubtful
Accounts Receivable
|
||||||||||||||||
|
||||||||||||||||
Fiscal Years
|
||||||||||||||||
|
||||||||||||||||
2005
|
$ | 3,687 | $ | 1,511 | $ | (736 | ) 1 | $ | 4,462 | |||||||
|
||||||||||||||||
|
||||||||||||||||
2004
|
$ | 2,669 | $ | 1,294 | $ | (276 | ) 1 | $ | 3,687 | |||||||
|
||||||||||||||||
|
||||||||||||||||
2003
|
$ | 2,700 | $ | 741 | $ | (772 | ) 1 | $ | 2,669 | |||||||
|
1 | Uncollectible accounts written off, net of recoveries. |
34
EXHIBIT 10.4
INDUSTRIAL LEASE
-MODIFIED NET-
1. PARTIES, This Lease, dated, for reference purposes only, July 17, 1984, is made by and between Dexter Avenue Associates (herein called "Landlord") and Korry Electronics Co., a division of Criton Technologies (herein called "Tenant").
2. PREMISES, Landlord hereby leases to Tenant and Tenant leases from Landlord for the term, at the rental, and upon all of the conditions set forth herein, that certain real property situated in the City of Seattle, County of King, State of Washington, commonly known as 901 Dexter Avenue North and described as Approximately 29,000 sq. ft. at the southend of the 1st and 2nd floors and the 2nd floor of the middle building, said space being over the space now occupied by Calcom, Inc. Said real property, including the land and all improvements thereon, is herein called "the Premises".
3. TERM.
3.1 TERM. The term of this Lease shall be for three (3) years, commencing on July 18, 1984 and ending on July 17, 1987 unless sooner terminated pursuant to any provision hereof.
3.2 DELAY IN COMMENCEMENT. Notwithstanding said commencement date, if for any reason Landlord cannot deliver possession of the Premises to Tenant on said date, Landlord shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or the obligations of Tenant hereunder or extend the term hereof, but in such case Tenant shall not be obligated to pay rent until possession of the Premises is transferred to Tenant; provided, however, that if Landlord shall not have delivered possession of the Premises within ninety (90) days from said commencement date, Tenant may, at Tenant's option, by notice in writing to Landlord within ten (10) days thereafter, cancel this Lease. If Landlord shall not have delivered possession of the Premises within one (1) year from said commencement date, Landlord may, by notice in writing to the Tenant within ten (10) days thereafter, cancel the Lease. If either party cancels as hereinabove provided. Landlord shall return any monies previously deposited by Tenant and the parties shall be discharged from all obligations hereunder.
3.3 EARLY POSSESSION. In the event that landlord shall permit Tenant to occupy the premises prior to the commencement date of the term, such occupancy shall be subject to all of the provisions of this Lease. Said early possession shall not advance the termination date of this Lease.
3.4 DELIVERY OF POSSESSION. Tenant shall be deemed to have taken possession of the Premises when any of the following occur: (a) Landlord deliver possession of the premises to tenant and a Certificate of Occupancy is granted by the proper governmental agency, or (b) upon a Certificate from the Landlords architect or contractor that the Premises are ready for occupancy.
4. RENT. Tenant shall pay to Landlord as rent for the Premises equal monthly installments of Fourteen Thousand Five Hundred And No/100's Dollars ($14,500.00) Dollars, in advance, on the first day of each month of the term hereof. Tenant shall pay Landlord upon the execution hereof the sum of Twenty Nine Thousand And No/100's Dollars ($29,000.00) Dollars as rent for First and last months. Landlord will credit Tenants rent. Rent for any period during the term hereof which is for less than one month shall be a pro rata portion of the monthly installment. Rent shall be payable without notice or demand and without any deduction, offset, or abatement in lawful money of the United States of America to Landlord at the address stated herein or to such other persons or at such other places as Landlord may designate in writing.
5. SECURITY DEPOSIT. Tenant shall deposit with Landlord upon execution hereof the sum of _________________________________________________________ ($ ______) Dollars as security for Tenant's faithful performance of Tenant's obligations hereunder. If Tenant fails to pay rent or other charges due hereunder, or otherwise default with respect to any provision of this Lease, Landlord may use, apply or retain all or any portion of said deposit for the payment of any rent or other charge in default or for the payment of any other sum to which Landlord may become obligated by reason of Tenant's default, or to compensate Landlord for any loss or damage which Landlord may suffer thereby. If Landlord so uses or applies all or any portion of the said deposits, Tenant shall within (10) days after written demand therefor deposit cash with Landlord in an amount sufficient to restore said deposit to the full amount hereinabove stated and Tenant's failure to do so shall be a breach of this Lease, and Landlord may at his option terminate the Lease. Landlord shall not be required to keep said deposit separate from its general accounts. If Tenant performs all of Tenant's obligations hereunder, said deposit or so much thereof as had nor therefore been applied by Landlord, shall be returned, without payment of interest or other increment for its use, to Tenant (or, at Landlords option, to the last assignee, if any, of Tenant's interest hereunder) within fifteen (15) days after the expiration of the term hereof, or after Tenant has vacated the Premises, whichever is later.
6. USE.
6.1 USE. The Premises shall be used an occupied only for Office & Manufacturing Purposes.
6.2 COMPLIANCE WITH LAW. Tenant shall, at Tenant's expense, comply promptly with all applicable statutes, ordinances, rules, regulations, orders and requirement in effect during the term or any part of the term hereof regulating the use by Tenant of the Premises. Tenant shall not use or permit the use of the Premises in any manner that will lend to create waste or a nuisance, or if there shall be more than one Tenant of the Building containing the Premises, which shall tend to unreasonably disturb such other tenants.
6.3 CONDITION OF PREMISES. Tenant hereby accepts the Premises in their condition existing as of the date of the possession hereunder, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Tenant acknowledges that either Landlord nor Tenant's agent has made any representation or warranty as to the suitability of the Premises for the conduct of Tenant's business.
6.4 INSURANCE CANCELLATION. Notwithstanding the provisions of Article 6.1 hereinabove, no use shall be made or permitted to be made of the premises nor acts done which will cause the cancellation of any insurance policy covering said Premises or any building of which the Premises may be a part, and if Tenant's use of the Premises causes an increase in said insurance rates Tenant shall pay any such increase.
6.5 LANDLORD'S RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the rules and regulations that Landlord shall from time
(PAGE 1 - MODIFIED NET)
to time promulgate. A copy of said rules and regulations is attached hereto. Landlord reserves the right from time to time to make all reasonable modifications to said rules and regulations. The additions and modifications to those rules and regulations shall be binding upon Tenant upon delivery of a copy of them to Tenant. Landlord shall not be responsible to Tenant for the nonperformance of any of said rules and regulations by any other tenants or occupants.
7. MAINTENANCE, REPAIRS AND ALTERATIONS.
7.1 LANDLORD'S OBLIGATIONS. Subject to the provisions of Article 9, and except for damage caused by any negligent or international act or omission of Tenant, Tenant's agents, employees, or invitees, Landlord, at Landlord's expense, shall keep in good order, conditions and repair the foundation, interior walls and the exterior roof of the Premises. Landlord shall not, however be obligated to paint such exterior, nor shall Landlord be required to maintain the interior surface or exterior walls, windows, doors or plate glass. Landlord shall have no obligation to make repairs under this Article 7.1 until reasonable time after receipt or written notice of the need for such repairs. Tenant expressly wavies the benefits of any statute now or hereafter in effect which would otherwise afford Tenant the right to make repairs at Landlord's expense.
7.2 TENANT'S OBLIGATIONS. Subject to the provisions of Article 7.1 and Article 9, Tenant, at Tenant's expense, shall keep in good order, condition and repair the Premises and every part thereof (regardless of whether the damaged portion of the Premises or the means of repairing the same are accessible to Tenant, including without limiting the generality of the foregoing, all plumbing, heating, air conditioning, ventilating, electrical and lighting facilities and equipment within the Premises, fixtures, interior walls, ceilings, windows, doors, plate glass, and skylights, located within the Premises.
7.3 SURRENDER. On the last day of the term hereof, or on any sooner termination, Tenant shall surrender the Premises to Landlord in good condition, broom clean, ordinary wear and tear excepted. Tenant shall repair any damage to the Premises occasioned by its use thereof, or by the removal of Tenant's trade fixtures, furnishings and equipment pursuant to Article 7.5, which repair shall include the patching and filling of holes and repair of structural damage.
7.4 LANDLORD'S RIGHTS. If Tenant fails to perform Tenant's obligations under this Article 7, Landlord may at its option but shall not be required to enter upon the Premises, after ten (10) days prior written notice to Tenant, and put the same in good order, condition and repair, and the cost thereof together with interest thereon at the rate of ten (10%) percent per annum shall become due and payable as additional rental to Landlord together with Tenant's next rental installment.
7.5 ALTERATIONS AND ADDITIONS.
(a) Tenant shall not, without Landlord's prior written consent, make any alterations, improvements, or additions, on or about the Premises, except for non structural alterations not exceeding $1,000 in cost. As a condition to giving such consent, Landlord may require that Tenant remove any such alterations, improvements, additions or utility installations at the expiration of the term, and to restore the Premises to their prior condition.
(b) Before commencing any work relating to alterations, additions and improvements affecting the Premises, Tenant shall notify Landlord in writing of the expected date of commencement thereof. Landlord shall then have the right at any time and from time to time to post and maintain on the Premises such notices as Landlord reasonably deems necessary to protect the Premises and Landlord from mechanics' liens, materialmen's liens or any other liens. In any event, Tenant shall pay, when due, all claims for labor or materials furnished to or for Tenant at or for use in the Premises. Tenant shall not permit any mechanics or materialmen's liens to be levied against the Premises for any labor or material furnished to Tenant or claimed to have been furnished to Tenant or to Tenant's agents or contractors in connection with work of any character performed or claimed to have been performed on the Premises by or at the direction of Tenant.
(c) Unless Landlord requires the approval, as set forth in Article 7.5(a), all alterations, improvements or additions which may be made on the Premises, shall become the property of Landlord and remain upon and be surrendered with the Premises at the expiration of the term. Notwithstanding the provisions of this Article 7.5(c), Tenants machinery, equipment and trade fixtures, other than that which is alloted to the Premises so that it cannot be removed without material damage to the Premises, shall remain the property of Tenant and may be removed by Tenant subject to the provisions of Article 7.3.
8. INSURANCE; INDEMNITY.
8.1 INSURING PARTY. As used in this Article 8, the term "insuring party" shall mean the party who has the obligation to obtain the insurance required hereunder. The insuring party in this case shall be designated in Article 20. Whether the insuring party is the Landlord or the Tenant, Tenant shall, as additional rent for the Premises, pay the cost of all insurance required hereunder. If Landlord is the insuring party Tenant shall, within ten (10) days following demand by Landlord, reimburse Landlord for the cost of the insurance so obtained.
8.2 LIABILITY INSURANCE. The Tenant shall obtain and keep in force during the term of this Lease a policy of comprehensive public liability insurance insuring the Landlord and Tenant against any liability arising out of the ownership, use occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be in an amount of not less than $300,000 for injury to or death of one person in any one accident or occurence and in amount of not less than $500,000 for injury to or death of more than one person in any one accident or occurence. Such insurance shall further insure Landlord and Tenant against liability for property damage of at least $50,000. The limits of said insurance shall have a Landlord's Protective Liability endorsement attached thereto. If the tenant shall fail to procure and maintain said insurance the Landlord may, but shall not be required to procure and maintain the same, but at the expense of Tenant.
8.3 PROPERTY INSURANCE. The insuring party shall obtain and keep in force during the term of this Lease a policy or policies of insurance covering loss or damage to the Premises, in the amount of the full replacement value thereof, providing protection against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, special extended perils (all risk) and spinkler leakage. Said insurance shall provide for payment for loss thereunder to Landlord or to the holder of a first mortgage or deed of trust the Premises. If the insuring party shall fail to procure and maintain said insurance the other party may, but shall not be required to, procure and maintain the same, but at the expense of Tenant.
8.4 INSURANCE POLICIES. Insurance required hereunder shall be in companies rated A+ AAA or better in "Best's Insurance Guide". The insuring party shall deliver prior to possession to the other party copies of policies of such insurance or certificates evidencing the existence and amounts of such insurance with loss payable clauses satisfactory to Landlord. No such policy shall be cancellable or subject to reduction of coverage or other modification except after ten (10) days' prior written notice to Landlord. If Tenant is the insuring party, Tenant shall, within ten (10) days prior to the expiration of such policies, furnish Landlord with renewals thereof, or Landlord may order such insurance and charge the cost thereof to Tenant, which amount shall be payable by Tenant upon demand. Tenant shall not do or permit to be done anything which shall invalidate the insurance policies referred to in Article 8.3. Tenant shall forthwith, upon Landlord's demand, reimburse Landlord for any additional premiums attributable to any act or omission or operation of Tenant causing such increase in the cost of insurance. If Landlord is the insuring party, and if the insurance policies maintained hereunder cover other improvements in addition to the Premises. Landlord shall deliver to Tenant a written statement setting forth the amount of any such cost increase and showing in reasonable detail the manner in which it has been computed.
8.5 WAIVER OF SUBROGATION. Tenant and Landlord each waives any and all rights of recovery against the other, or against the officers, employees, agents and representatives of the other, for loss or damage to such waiving party or its property or the property of others under its control, where such loss or damage is insured against under any insurance policy in force at the time of such loss or damage. Tenant and Landlord shall upon obtaining the policies of insurance required hereunder, give notice to the insurance carriers that the foregoing mutual waiver of subrogation is contained in this Lease.
8.6 HOLD HARMLESS. Tenant shall indemnify, defend and hold Landlord harmless from any and all claims arising from Tenant's use of the Premises or from the conduct of its business or from any activity, worth or things which may be permitted or suffered by Tenant in or about the Premises and shall further indemnity, defend and hold Landlord harmless from and against any and all claims arising from any breach or default in the performance of any obligation on Tenant's part to be performed under the provision of this Lease or arising from any negligence of Tenant or any of its agents, contractor, employees or invitees and from any and all costs attorneys' fees, expenses and liabilities incurred in the defense of any such claim or any action or proceeding brought thereon. Tenant hereby assumes all risk of damage to property or injury to persons in or about the Premises from any cause, and Tenant hereby waivers all claims in respect thereof against Landlord, excepting where said damage arises out of negligence of Landlord.
8.7 EXEMPTION OF LANDLORD FROM LIABILITY. Tenant hereby agrees that Landlord shall not be liable for injury to Tenant's business or any loss of income therefrom on for damage to the goods, wores, merchandise or other property of Tenant, Tenant's employees, invitees, customers, or any other person in or about the Premises, nor, unless through its negligence, shall Landlord be liable for injury to the person of Tenant, Tenant's employees, agents or contractors and invitees, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain or from breakage, leakage, obstruction or other defects of pipes, spinklers, wires appliances, plumbing, air conditioning or lighting fixtures, or from any other cause whether the said damage or injury results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible to
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Landlord or Tenant, Landlord shall not be liable for any damages arising from any act of neglect of any other tenant, if any, of the building in which the Premises are located.
9. DAMAGE ON DESTRUCTION.
9.1 PARTIAL DAMAGE - INSURED. Subject to the provisions of Article 9.1, if the Premises are damaged and such damage was caused by a casualty covered under an insurance policy required to be maintained pursuant to Article 8.3. Landlord shall at Landlord's expense repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. Notwithstanding the above, if the Tenant is the insuring party, and if the insurance proceeds received by Landlord are not sufficient to effect such repair. Landlord shall give notice to Tenant of the amount required in addition to the insurance proceeds to affect such repair. Tenant may, at Tenant's option, contribute the required amount, but upon failure to do so within thirty (30) days following such notice. Landlord's sole remedy shall be, at Landlord's option and with no liability to Tenant, to cancel and terminate this Lease. If Tenant shall contribute such amount to Landlord within said thirty (30) days period, Landlord shall make such repairs as soon as reasonably possible and this Lease shall continue in full force and effect. Tenant shall in no event have any right to reimbursement for nay such amount so contributed.
9.2 DAMAGE - UNINSURED. In the event the Premises may be damaged or destroyed by a casualty which is not covered by fire and extended coverage insurance carried by Landlord, then Landlord shall restore same, provided that if the damage or destruction is to an extent greater than ten (10%) per cent of the then replacement cost of improvements on the Premises (exclusive of Tenant's trade fixtures and equipment and exclusive of foundations) then Landlord may elect not to restore and to terminate this Lease. Landlord must give Tenant written notice of its election not to restore within thirty (30) days from the date of damage and if, not given, Landlord shall be deemed to have elected to restore and in such event shall repair any damage as soon as reasonably possible. In the event Landlord elects to give such notice of Landlord's intention to cancel and terminate the Lease, Tenant shall have the right within ten (10) days after the receipt of such notice to give written notice to Landlord of Tenant's intention to repair such damage of Tenant's expense, without reimbursement from Landlord, in which event this Lease shall continue in full force and effect and Tenant shall proceed to make such repair as soon as reasonably possible. If Tenant does not give such notice within such ten (10) day period, this Lease shall be cancelled and terminated as of the date of the occurrence of such damage.
9.3 TOTAL DESTRUCTION. If at any time during the term hereof the Premises are totally destroyed from any cause whether or not covered by the insurance required to be maintained by Landlord pursuant to Article 8.3 (including any total destruction required by any authorized public authority) this Lease shall automatically terminate as of the date of such total destruction.
9.4 DAMAGE NEAR END OF TERM. If the Premises are partially destroyed or damaged during the last six (6) months of the term of this Lease. Landlord may, at Landlord's option, cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to Tenant of Landlord's election to do so within thirty (30) days after the date of occurrence of such damage.
9.5 ABATEMENT OF RENT.
(a) If the Premises are partially destroyed or damaged and Landlord or Tenant repairs or restores them pursuant to the provisions of this Article 9, the rent payable hereunder for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Tenant's reasonable use of the Premises is impaired. Except for abatement of rent, if any, Tenant shall have no claim against Landlord for any damage suffered by reason of any such damage, destruction, repair or restoration.
(b) If Landlord shall be obligated to repair or restore the Premises under the provisions of this Article 9 and shall not commence such repair or restoration within ninety (90) days after such obligations shall accrue. Tenant may at Tenant's option cancel and terminate this Lease by giving Landlord written notice of Tenant's election to do so at any time prior to the commencement of such repair or restoration. In such event this Lease shall terminate as of the date of such notice. Any abatement in rent shall be computed as provided in Article 9.5(a).
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Tenant shall pay all real property taxes applicable to the Premises during the term of this Lease. All such payments shall be made at least ten (10) days prior to the delinquency date of such payment. Tenant shall promptly furnish Landlord with satisfactory evidence that such taxes have been paid. If any such taxes paid by Tenant shall cover any period of the time prior to or after the expiration of the term hereof. Tenant's share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required. If Tenant shall fail to pay any such taxes, Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to Landlord with Tenant's next rent installment together with interest at the rate of ten (10%) percent per annum.
10.2 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term "real property tax" shall include any form of assessment, license fee, rent, tax, levy, penalty, or tax (other than inheritance or estate taxes), imposed by any authority having the direct or indirect power to tax, including any city, county, state or federal government, or any school, agricultural, lighting, drainage or other improvement distinct thereof, as against any legal or equitable interest of Landlord in the Premises or in the real property of which the Premises are a part, as against Landlord's right to rent or other income therefrom, or as against Landlord's business of leasing the Premises, and, Tenant shall pay and all charges and fees which may be imposed by the EPA or other similar government regulations or authorities.
10.3 JOINT ASSESSMENT. If the Premises are not separately assessed, Tenant's liability shall be an equitable proportion of the real property taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Landlord from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available. Landlord's reasonable determination thereof, in good faith, shall be conclusive.
10.4 PERSONAL PROPERTY TAXES.
(a) Tenant shall pay prior to delinquency all taxes assessed against and levied upon leasehold improvements, fixtures, furnishings, equipment and all other personal property of Tenant contained in the Premises or elsewhere. Tenant shall cause said leasehold improvements, trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord.
(b) If any of Tenant's said personal property shall be assessed with Landlord's real property, Tenant shall pay Landlord the taxes attributable to Tenant within ten (10) days after receipt of a written statement setting forth the taxes applicable to Tenant's property.
10.5 NOTWITHSTANDING THE PROVISIONS OF ARTICLE 10 HEREINABOVE. Tenant shall pay any increase in "real property taxes" resulting from any and all improvement of any kind whatsoever placed on or in the Premises for the benefit of or at the request of Tenant regardless of whether said improvements were installed or constructed either by Landlord or Tenant, except those items included with the original Premises.
11. COMMON AREAS. When, in fact, there are Common Areas, then the following shall apply:
11.1 DEFINITIONS. The phrase "Common Areas" means all areas and facilities outside the Premises that are provided and designated for general use and convenience of Tenant and other tenants and their respective officers, agents and employees, customers, and invitees. Common Areas include (but are not limited to) pedestrian sidewalks, landscaped areas, roadways, parking areas and railroad tracks, if any. Landlord reserves the right from time to time to make changes in the shape, size, location, number, and extent of the Land and improvements constituting the Common Areas. Landlord may designate from time to time additional parcels of land for use as a part thereof; and any additional land so designated by Landlord for such use shall be included until such designation is revoked by Landlord.
11.2 MAINTENANCE. During the term of this Lease, Landlord shall operate, manage, and maintain the Common Areas so that they are clean and free from accumulations of debris, filth, rubbish and garbage. The manner in which such Common Areas shall be so maintained, and the expenditure for such maintenance, shall be at the sole discretion of Landlord, and the use of the Common Areas shall be subject to such reasonable regulations and changes therein as Landlord shall make from time to time, including (but not by way of limitations) the right to close from time to time, if necessary, all or any portion of the Common Areas to such extent or may be legally sufficient, in the opinion of Landlord's counsel, to prevent a dedication thereof or the accrual of rights of any person or of the public therein, or to close temporarily all or any portion of such Common Areas for such purposes.
11.3 TENANT'S RIGHTS AND OBLIGATIONS. Landlord hereby grants to Tenant, during the term of this Lease, the license to use, for the benefit of Tenant and its officers, agents, employees, customers, and invitees, in common with the others entitled to such use, the Common Areas as they from time to time exist, subject to the rights, powers, and privileges herein reserved to Landlord. Storage, either permanent or temporary, of any materials, supplies or equipment in the Common Areas is strictly prohibited. Should Tenant violate this provision of the Lease, than in such event, Landlord may, at his option either terminate this Lease or, without notice to Tenant, remove said materials, supplies or equipment from the Common Areas and place such items in storage, the cost thereof to be reimbursed by Tenant within (10) days from receipt of a statement submitted by Landlord. All subsequent costs in connection with the storage of said items shall be paid to the Landlord by Tenant as accrued. Failure of Tenant to pay these charges within ten (10) days from receipt of a statement shall constitute a breach of this Lease. Tenant and its officers, agents, employees, customers and invitees shall park their motor vehicles only in areas designated by Landlord for that purpose from time to time. Within five (5) days after request from Landlord, Tenant shall furnish to Landlord a list of the license numbers assigned to its motor vehicles and those of its officers, agents, and employees. Tenant shall not at any time park or permit the parking of motor vehicles, belonging to it or to others, so as to interfere with the pedestrian sidewalk, roadways and loading areas, or in any portion of the parking areas not designed by Landlord for such use by Tenant. Tenant agrees that receiving and shipping of goods and merchandise and all removal of refuse shall be made only by way of the loading areas constituting part of the Premises. Tenant shall repair, at its cost, all deteriorations or damages to the Common Areas, occasioned by its lack of ordinary care.
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11.4 CONSTRUCTION. Landlord, while engaged in constructing improvements or making repairs or alterations in or about the Premises or in their vicinity, shall have the right to make reasonable use of the Common Areas.
12. UTILITIES. Tenant shall pay for all water, gas, heat, light, power, telephone and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered to Tenant, Tenant shall pay a reasonable proportion to be determined by Landlord of all charges jointly metered with other premises
13. ASSIGNMENT AND SUBLETTING.
13.1 LANDLORD'S CONSENT REQUIRED. Tenant shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all of any part of Tenant's interest in this Lease or in the Premises without Landlord's prior written consent, which Landlord shall not unreasonably withhold. Any attempted assignment, transfer, mortgage, encumbrance, or subletting without such consent shall be void and shall constitute a breach of the Lease. Any transfer of Tenant's interest in this Lease or in the Premises from Tenant by merger, consolidation, or liquidation or by any subsequent change in the ownership of thirty (30%) percent or more of the capital stock of Tenant shall be deemed a prohibited assignment within the meaning of this Article 13.
13.2 NO RELEASE OF TENANT. Regardless of Landlord's consent, no subletting or assignment shall release Tenant of Tenant's obligation to pay the rent and to perform all other obligations to be performed by Tenant hereunder for the term of this Lease. The acceptance of rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting.
13.3 ASSIGNMENT FEE. In the event that Landlord shall consent to a sublease or assignment under Article 13.1, Tenant shall pay Landlord reasonable fees not to exceed One Hundred and no/100th ($100,00) Dollars incurred in connection with giving such consent.
14. DEFAULTS; REMEDIES.
14.1 DEFAULTS. The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Tenant
(a) The vacating or abandonment of the Premises by Tenant.
(b) The failure by Tenant to make any payment of rent or any other payment required to be made by Tenant hereunder, as and when due, where such failure shall continue for a period of three (3) days after written notice thereof from Landlord to Tenant
(c) The failure by Tenant to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Tenant, other than described in Paragraph (b) above, where such failure shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant's default is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commenced such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion.
(d) (i) The making by Tenant of any general assignment, or general
arrangement for the benefit of creditors; (ii) the filing by or against Tenant
of a petition to have Tenant adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against Tenant, the same is dismissed within sixty
(60) days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within thirty (30)
days.
14.2 REMEDIES IN DEFAULT. In the event of any such default or breach by Tenant, Landlord may at any time thereafter, with or without notice or demand and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such default or breach.
(a) Terminate Tenant's right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. In such event Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default including, but not limited to, the cost of recovering possession of the Premises; expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorney's fees, and any real estate commission actually paid; the worth at the time of award by the court having jurisdiction thereof of the amount by which the unpaid rent for the balance of the term after the time of such award exceeds the amount of such rental loss for the same period that Tenant proves could be reasonably avoided; and that portion of the leasing commission paid by Landlord applicable to the unexpired term of this Lease. Unpaid installments of rent or other sums shall bear interest from the date due at the rate of ten (10%) percent per annum. In the event Tenant shall have abandoned the Premises, Landlord shall have the option of (i) retaking possession of the Premises and recovering from Tenant the amount specified in this Article 14.2(a), or (ii) proceeding under Article 14.2(b).
(b) Maintain Tenant's right to possession, in which case this Lease shall continue in effect whether or not Tenant shall have abandoned the Premises, in such event, Landlord shall be entitled to enforce all of Landlord's rights and remedies under this Lease, including the right to recover the rent as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the state in which the Premises are located.
14.3 DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant to Landlord and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion.
14.4 LATE CHARGES. Tenant hereby acknowledges that late payment by Tenant to Landlord of rent and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to processing and accounting charges, and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of rent or any other sum due from Tenant shall not be received by Landlord or Landlord's designee within ten (10) days after written notice that said amount is past due, then Tenant shall pay to Landlord a late charge equal to ten (10%) percent of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the cost Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder.
15. CONDEMNATION. If the Premises or any portion thereof are taken under the power of eminent domain, or sold by Landlord under the threat of the exercise of said power (all of which is herein referred to as "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title of possession, whichever occurs first, if more than twenty-five (25%) percent of the floor area of any buildings on the Premises, or more than twenty-five (25%) percent of the land area of the Premises not covered with buildings, is taken by condemnation, either Landlord or Tenant may terminate this Lease as of the date the condemning authority takes possession by notice in writing of such election within twenty (20) days after Landlord shall have notified Tenant of the taking or, in the absence of such notice, then within twenty (20) days after the condemning authority shall have taken possession.
If this Lease is not terminated by either Landlord or Tenant then it shall remain in full force and effect as to the portion of the Premises remaining, provided the rental shall be reduced in proportion to the floor area of the buildings taken within the Premises as bears to the total floor area of all buildings located on the Premises. In the event this Lease is not so terminated then Landlord agrees, at Landlord's sole cost, to as soon as reasonably possible restore the Premises to a complete unit of like quality and character as existed prior to the condemnation. All awards for the taking of any part of the Premises or any payment made under the threat of the exercise of power of eminent domain shall be the property of Landlord, whether made as compensation for diminution of value of the leasehold or for the taking of the fee or as severance damages; provided, however, that Tenant shall be entitled to any award for loss of or damage to Tenant's trade fixtures and removable personal property.
16. GENERAL PROVISIONS.
16.1 OFFSET STATEMENT.
(a) Tenant shall at any time upon not less than ten (10) days' prior written notice from Landlord execute, acknowledge and deliver to Landlord a statement in writing (i) certifying that this Lease is unmodified and in full force and effect for, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect and the date to which the rent, security deposit, and other charges are paid in advance, if any, and (ii) acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such defaults, if any, which are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrances of the premises.
(b) Tenant's failure to deliver such statement within such time shall be conclusive upon Tenant (i) that this Lease is in full force and effect, without modification except as may be represented by Landlord, (ii) that there are no uncured defaults in Landlord's performance and (iii) that
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not more than one (1) month's rent has been paid in advance.
(c) If Landlord desires to finance or refinance the Premises, or any part thereof, Tenant hereby agrees to deliver to any lender designated by Landlord such financial statements of Tenant as may be reasonably required by such lender. Such statements shall include the past three (3) years' financial statements of Tenant. All such financial statements shall be received by Landlord in confidence and shall be used only for the purposes herein set forth.
16.2 LANDLORD'S INTERESTS. The term "Landlord" as used herein shall mean only the owner or owners at the time in question of the title or a tenant's interest in a ground lease of the Premises. In the event of any transfer of such title or interest, Landlord herein named (and in case of any subsequent transfers the then grantor) shall be relieved from and after the date of such transfer of all liability as respects Landlord's obligations thereafter to be performed, provided that any funds in the hands of Landlord or the then grantor at the time of such transfer. In which Tenant has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Landlord shall, subject as aforesaid, be binding on Landlord's successors and assigns, only during their respective periods of ownership.
16.3 SEVERABILITY. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.
16.4 INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided, any amount due to Landlord not paid when due shall bear interest at ten (10%) percent per annum from the date due. Payment of such interest shall not excuse or cure any default by Tenant under this Lease.
16.5 TIME OF ESSENCE. Time is of the essence.
16.6 CAPTIONS. Article and paragraph captions are not a part hereof.
16.7 INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all agreements of the parties with respect to any master mentioned herein. No prior agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified in writing only, signed by the parties in interest at the time of the modification.
16.8 WAIVERS. No waiver by Landlord of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Tenant of the same or any other provision. Landlord's consent to or approval of any act shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act by Tenant. The acceptance of rent hereunder by Landlord shall not be a waiver of any preceding breach by Tenant of any provision hereof, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent.
16.9 RECORDING. Tenant shall not record this Lease. Any such recordation shall be a breach under this Lease.
16.10 HOLDING OVER. If Tenant remains in possession of the Premises or any part thereof after the expiration of the term hereof with the express written content of Landlord, such occupancy shall be a tenancy from month to month at a rental in the amount of the last monthly rental plus all other charges payable hereunder, and upon the terms hereof applicable to month-to-month tenancy.
16.11 CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed exclusive, but shall wherever possible, be cumulative with all other remedies at law or in equity.
16.12 COVENANTS AND CONDITIONS. Each provision of this Lease performable by Tenant shall be deemed both a covenant and a condition.
16.13 BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof restricting assignment or subletting by Tenant and subject to the provisions of Article 16.2, this Lease shall bind the parties, their personal representatives, successors and assigns. This Lease shall be governed by the laws of the state where the Premises are located.
16.14 SUBORDINATION.
(a) That Lease, at Landlord's option, shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation for security now or hereafter placed upon the real property of which the Premises are a part and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof. Notwithstanding such subordination, Tenant's right to quiet possession of the Premises shall not be disturbed if Tenant is not in default and so long as Tenant shall pay the rent and observe and perform all of the provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms. If any mortgages, trustee or ground lesse shall elect to have this Lease prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of trust, or ground lease, whether this Lease is dated prior or subsequent to the date of said mortgage, deed of trust or ground lease or the date of recording thereof.
(b) Tenant agrees to execute any documents required to effectuate such subordination or to make this Lease prior to the lien of any mortgage, deed of trust or ground lease, as the case may be, and failing to do so within ten (10) days after written demand, does hereby make, constitute and irrevocably appoint Landlord as Tenant's attorney in fact and in Tenant's name, place and stead, to do so.
16.15 ATTORNEY'S FEES. If either party named herein brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in any such action, on trial or appeal, shall be entitled to his reasonable attorney's fees to be paid by the losing party as fixed by the court.
16.16 LANDLORD'S ACCESS. Landlord and Landlord's agents shall have the right to enter the Premises at reasonable times for the purpose of inspecting the same, showing the same to prospective purchasers, or tenders, and making such alterations, repairs, improvements or additions to the Premises or to the building of which they are a part as Landlord may deem necessary or desirable. Landlord may at any time place on or about the Premises any ordinary "For Sale" signs and Landlord may at any time during the last one hundred twenty (120) days of the term hereof place on or about the Premises any ordinary "For Sale or Lease" signs, all without rebate of rent or liability to Tenant.
16.17 AUCTIONS. Tenant shall not place any auction sign upon the Premises or conduct any auction thereon without Landlord's prior written consent.
16.18 MERGER. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subtenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or all of such subtenancies.
16.19 CORPORATE AUTHORITY. If Tenant is a corporation, each individual executing this Lease on behalf of said corporation represents and warrants that he is duly authorized to execute and deliver this Lease on behalf of said corporation in accordance with a duly adopted resolution of the Board of Directors of said corporation or in accordance with the Bylaws of said corporation, and that this Lease is binding upon said corporation in accordance with its terms.
16.20 LANDLORD'S LIABILITY. If Landlord is a limited partnership, the liability of the partners of the Landlord pursuant to this Lease shall be limited to the assets of the partnership; and Tenant, its successors and assigns hereby waive all rights to proceed against any of the parteners, or the officers, shareholders, or directors of any corporate partner of Landlord except to the extent of their interest in the partnership. The term "Landlord", as used in this Article, shall mean only the owner or owners at the time in question of the fee title or its interest in a ground lease of the Premises, and in the event of any transfer of such title or interest. Landlord herein named land in case of any subsequent transfers the then grantor shall be relieved from and after the date of such transfer of all liability as respects Landlord's obligations thereafter to be performed, provided that any funds in this hands of Landlord or the then grantor at the time of such transfer, in which Tenant has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Landlord shall, subject as aforesaid, be binding on Landlord's successors and assigns, only during their respective periods of ownership.
17. PERFORMANCE BOND. At any time Tenant either desires to or is required to make any repairs, alterations, additions, improvements or utility installation thereon pursuant to Articles 7.5 or 9.2 herein, or otherwise, Landlord may at his sole option require Tenant, at Tenant's sole cost and expense, to obtain and provide to Landlord a lien and completion bond in an amount equal to one and one-half (1 1/2) times the estimated cost of such improvements, to insure Landlord against liability for mechanics' and materialmen's liens and to insure completion of the work.
(PAGE 5 - MODIFIED NET)
18. BROKERS. The parties hereto acknowledge that Kidder, Mathews & Segner, Inc. were the real estate brokers that represented the parties herein, and that no other commissions are due to any brokers whatsoever, other than the above named brokers.
19. NOTICES. Whenever under this Lease provision is made for any demand, notice or declaration of any kind, or where it is deemed desirable or necessary by either party to give or serve any such notice, demand or declaration to the other party, it shall be in writing and served either personally or send by United States mail, postage prepaid, addressed at the addresses set forth hereinbelow.
To Landlord at 802 Dexter Associates, 710 Cherry St., Seattle, WA 98104 To Tenant at R.W. Stevenson, Criton Technologies 10800 N.E. 8th, Bellevue, Wa 98004 Copy to: Bogle and Gates, Bank of California Center, Seattle, WA 98164 Attn: Michael Courtnage |
20. INSURING PARTY. The insuring party under this Lease shall be the Landlord
See Exhibit "A", Addendum to Lease, attached hereto and by this reference is made a part hereof.
The parties hereto have executed this Lease at the place and on the dates specified immediately adjacent to their respective signatures.
Dexter Avenue Associates
Korry Electronics Company, A Division of Executed at Criton Technologies ------------------------- on By /s/ Lee Zuker 7/17/4 ---------------------------------- ------------------------------ Lee Zuker, President |
If this Lease has been filled in it has been prepared for submission to your attorney for his approval. No representation or recommendation is made by the real estate broker or its agents or employees as to the legal sufficiency, legal effect, or tax consequences of this Lease or the transaction relating thereto.
(PAGE 6 - MODIFIED NET)
FIRST AMENDMENT TO LEASE
THIS AGREEMENT, entered into as of this 10th day of May, 1985, between DEXTER AVENUE ASSOCIATES, a Washington general partnership ("Landlord"), and KORRY ELECTRONICS CO., a Division of Criton Technologies ("Tenant"),
RECITALS
A. Landlord and Tenant are parties to a Lease dated July 17, 1984 with respect to certain premises (the "Existing 901 Premises") located at 901 Dexter Avenue North, Seattle, Washington (the "901 Lease"), as described more particularly in the 901 Lease.
B. The parties wish to expand the area of the Existing 901 Premises and extend and modify the Lease in certain other respects.
NOW, THEREFORE, the parties covenant and agree as follows:
1. The 901 Lease is modified as follows:
1.1 The Existing 901 Premises are expanded to include the remainder of the building in which the Existing 901 Premises are located, other than the facility with the street address of 945 Dexter Avenue North. Thus added to the Existing 901 Premises are a facility with the street address of 925 Dexter Avenue North (the "925 Premises") and the shed which lies to the rear of the 925 Premises (collectively, the "Expanded 901 Premises"), effective as of September 1, 1985.
1.2 The monthly rental shall be increased to Nineteen Thousand Five Hundred Dollars ($19,500), effective as of September 1, 1985. The $19,500 rental rate is predicated on the assumption that the usable area of the 925 Premises, exclusive of shed, is ten thousand (10,000) square feet. The actual area shall be measured in a manner acceptable to both parties, and the rent shall be adjusted by fifty cents ($.50) per square foot, upward or downward, as appropriate, to reflect any difference between the measured area and 10,000 square feet. In addition to Landlord's impovements specified herein, Landlord shall give Tenant a $10,000 credit against the September 1, 1985 rent for Tenant's renovation of the 925 Premises.
1.3 Landlord shall improve the 925 Premises in the same manner as is specified in paragraph 4 of Exhibit A to the 901 Lease; shall finish and paint the walls of the 925 Premises to match the Existing 901 Premises; shall upgrade the electrical system of the 925 Premises in the manner described in Exhibit 1 hereto; shall renovate the front of the 925 Premises to match the existing 901 Premises; and shall install a heating, ventilating and air conditioning system capable of satisfying the requirements of paragraph 5.11 of Exhibit A to the 901 Lease, all by no later than August 31, 1985.
1.4 Landlord shall build additional men's and women's restrooms on the first and second floors of the Extended 901 Premises and in the 925 Premises and shall completely renovation of the existing second floor men's and women's restrooms in the Existing 901 Premises, all in accordance with Tenant's specifications, by no later than August 31, 1985. All work performed by Landlord within the Existing 901 Premises shall be performed in a manner which minimizes its impact on Tenant's operations. The enclosure of the new bathrooms in the Existing 901 Premises shall be accomplished on a weekend.
1.5 If the work specified in paragraphs 1.3 and 1.4 hereof is not completed by September 1, 1985 and a permanent certificate of occupancy for the Expanded 901 Premises has not been obtained by such date, then Tenant shall receive a $l0,000-per-month credit against rent for each such month or partial month period that completion of the work or the obtaining of the certificate is delayed.
1.6 Landlord shall be required to provide Tenant with the following parking on an exclusive basis without additional charge: forty (40) spaces in the lot lying to the north of the Premises; fifty (50) spaces in the two lots currently leased by Landlord on Aurora Avenue; and, if Landlord acquires Lots 7 and 8, Block 21, which lie between the Aurora Avenue parking lots, all parking spaces on such new site. These parking areas are depicted on Exhibit 2 hereto. Landlord has indicated its intention to construct a facility, including parking garage, on property which includes the lot to the north of the Premises which presently affords Tenant forty (40) parking spaces. If Landlord proceeds to develop the parking garage, it shall provide Tenant, during the construction period, with forty (40) substitute parking spaces in close proximity to the Premises and shall provide Tenant with one hundred twenty (120) spaces in the parking garage once construction thereof has been completed.
2. The duration of the 901 Lease is modified as follows:
2.1 The basic Lease term is extended through August 31, 1990.
2.2 Paragraph 1 of Exhibit A to the 901 Lease is deleted in its entirety. Tenant shall have an option to extend the term of the 901 Lease for up to ten (10) consecutive two (2) year periods. To exercise a renewal option, Tenant must give Landlord written notice thereof not less than one hundred eighty (180) days prior to the end of the lease term then in effect. If Tenant fails to exercise a renewal option with respect to the 901 Lease, all subsequent renewal options with respect to the 901 Lease shall terminate.
2.3 If the first renewal option is exercised under the 901 Lease,
then the monthly rent for the first renewal period shall be the monthly rent
payable during the base period, increased by the percentage increase in the cost
of living, as indicated by the Consumer Price Index for All Urban Consumers -
All Items, for the Seattle Metropolitan Area, as published by the U.S.
Department of Labor's Bureau of Labor Statistics (the "Index") during the
immediately preceding twelve (12) month period, up to a maximum percentage
increase of two and one-half percent (2-1/2%). If subsequent renewal options are
exercised, then the monthly rent for each such renewal period shall be equal to
the monthly rent payable during the prior renewal period, increased by the
percentage increase in the Index during the prior two (2) year period, up to a
maximum percentage increase of two and one-half percent (2-1/2%) in any one year
and a maximum of five percent (5%) increase for the two-year period. (By way of
illustration only, if the monthly rent under the 901 Lease were $20,000 for the
September 1, 1990 - August 31, 1992 period and the Index increased four percent
(4%) during the September 1, 1990 - August 31, 1991 period and one percent (1%)
during the September 1, 1991 - August 31, 1992 period, then the monthly rent for
the September 1, 1992 - August 31, 1994 period would be increased by three and
one-half percent (3-1/2%), or Seven Hundred Dollars ($700.00), based on the
2-1/2% ceiling for the increase in the September 1, 1990 - August 31, 1991
period and the actual 1% increase during the following twelve-month period.) If
the Index is discontinued,
the parties shall substitute a comparable index of consumer prices.
3. This is made expressly contingent upon Tenant and 801 Dexter Associates executing a first amendment to their lease extending the term thereof in the same manner as is described in paragraph 2 above. If such amendment has not been executed by May 15, 1985, then this Amendment shall terminate, unless Tenant waives such contingency.
4. The parties shall promptly execute and record a memorandum of the 901 Lease.
5. The 901 Lease shall otherwise continue in full force and effect as written.
6. If after the date hereof, Landlord intends to offer for lease any other portion of the real property of which the Expanded 901 Premises forms a part at the date of execution of this First Amendment to Lease, it shall not do so without first offering such premises to Tenant. If Landlord and Tenant are not able to reach agreement thereon within 60 days, the Landlord may proceed to offer such premises to a third party. If Landlord receives a lease proposal from a third party which Landlord wishes to accept, it shall not accept such without first providing Tenant with a copy of such offer and offering to lease such premises to Tenant on the same terms and conditions. If the Tenant does not accept such proposal within five days of its receipt thereof, the Landlord shall be free to enter into the lease with the third party on the offered terms and conditions.
IN WITNESS WHEREOF, the parties have executed this First Amendment as of the day and year first above written.
DEXTER AVENUE ASSOCIATES
("Landlord")
By /s/ Delton Bonds ------------------------------------- Delton Bonds, Its Managing Partner |
KORRY ELECTRONICS CO.,
a Division of Criton Technologies
("Tenant")
By /s/ R. W. Stevenson ------------------------------------- Its V P. Criton Technologies |
STATE OF OF WASHINGTON ) ) ss. COUNTY OF KING ) |
On this 14th day of May, 1985, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Delton Bonds, to me known to be the Managing Partner of the general partnership that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said general partnership for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute the said instrument.
WITNESS my hand and official seal hereto affixed the day and year first above written.
/s/ Illegible ---------------------------------------- NOTARY PUBLIC, in and for the State of Washington, residing at Illegible |
STATE OF OF WASHINGTON ) ) ss. COUNTY OF KING ) |
On this 10th day of May, 1985, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared R. W. Stevenson, to me known to be the Vice President of Criton Technologies, the company that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said company for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute the said instrument.
WITNESS my hand and official seal hereto affixed the day and year first above written.
/s/ Illegible ---------------------------------------- NOTARY PUBLIC, in and for the State of Washington residing at Redmond |
SECOND AMENDMENT TO LEASE
THIS AGREEMENT entered into as of this 20th day of June, 1986 between DEXTER AVENUE ASSOCIATES, a Washington general partnership ("Landlord") and KORRY ELECTRONICS CO., a division of Criton Technologies ("Tenant").
RECITALS
A. Landlord and Tenant are parties to a lease dated July 17, 1984, as amended by First Amendment dated May 10th, 1985 (collectively the "Lease") with respect to premises located at 901 and 925 Dexter Avenue North, Seattle, Washington as described more particularly in the Lease (the "Premises").
B. Landlord is obligated to Tenant for certain sums in connection with the Lease, and the parties wish to modify the Lease to deal with that and related matters.
NOW, THEREFORE, the parties covenant and agree as follows:
1. Landlord acknowledges that it is indebted to Tenant in the amount of one Hundred and Fifty Thousand Dollars ($150,000), and that it has requested that Tenant pay Seventy-Five Thousand Dollars ($75,000) of the cost of the improvements described in Exhibit 1 hereto (the "Improvements"). In consideration of Tenant's agreement to forgive the $150,000 and to advance $75,000 of the Improvement costs, as and when due, Landlord agrees that:
1.1 The monthly rental due under the Lease is reduced to Fourteen Thousand Four Hundred Ninety Five Dollars ($14,495) per month, commencing on August 1, 1936 and continuing at such rate through July 31, 1991; and
l.2 The basic Lease term is extended through July 31, 1991;
2. Landlord agrees that it will complete construction of the forty
(40) parking spaces referenced in paragraph 1.6 of the First Amendment to Lease
on or before 20 Dec, 1986, and it if fails to do so, Tenant shall receive a
credit against the rent due under the Lease of $150.00 per day for each day
thereafter that completion of construction is so delayed.
3. Landlord agrees that it will pay the first Fifty Thousand Dollars ($50,000) of the cost of the Improvements and, in addition, all costs and expenses of the Improvements in excess of the first One Hundred and Twenty Five Thousand
(6/17/86)
Dollars ($125,000). These sums will be paid by permitting Tenant to offset against the rents next accruing under the Lease the first $50,000 paid by Tenant in costs and expenses in connection with the construction of the Improvements and for all costs and expenses of the Improvements in excess of $125,000, as such costs and expenses are incurred. Tenant shall present Landlord on each' rental payment date hereafter with a schedule reflecting the Improvements costs incurred by Tenant during the preceding month and shall reduce the rental payment by the total thereof until such time as it has been reimbursed for the $50,000 in Improvements costs and for all costs and expenses of the Improvements in excess of $125,000. If Tenant's Improvements expenditures in any month exceed the rental amount due for the succeeding month, Tenant may deduct the excess from the next rent payment due from it thereafter.
4. If improvements to the 925 Premises (as described in the First Amendment to Lease) are not completed by July 31, 1986, then effective August 1, 1986 monthly rent shall be reduced by Five Thousand Dollars ($5,000) per month to Nine Thousand Four Hundred Ninety-Five Dollars ($9,495) per month until such time as such improvements are completed and accepted by Tenant. In addition, if the improvements to the 925 Premises are not completed by August 15, 1986, then for each day thereafter until the improvements to the 925 Premises are completed and accepted by Tenant, Tenant shall receive a credit of One Hundred Sixty-Seven Dollars ($167) per day against the rent otherwise due under the Lease.
5. Landlord agrees that Tenant may select the contractor and contract for the Improvements and such additional work as Tenant elects to have performed for its own account.
6. This Second Amendment is made expressly contingent upon Tenant and 801 Dexter Associates executing a second amendment to the 801 Dexter Associates lease extending the term thereof in the same manner as is described in paragraph 1.2 above. If such amendment has not been executed by June 23, 1986, then this Second Amendment shall terminate, unless Tenant waives such contingency.
7. If Landlord fails to perform its obligations under the Lease as required thereunder, Tenant may elect to do so on Landlord's behalf and offset the cost thereof against rents next coming due under the Lease or pursue any other remedy available to it at law or in equity for Landlord's default.
8. The Lease shall otherwise continue in full force and effect as written.
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date and year first above written.
DEXTER AVENUE ASSOCIATES
("Landlord")
By: /s/ Delton Bonds ------------------------------------ Delton Bonds Its Managing Partner |
KORRY ELECTRONICS CO., a Division of Criton Technologies
("Tenant")
By: /s/ Illegible ------------------------------------ Its: President |
STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) |
On this 20th day of June, 1986, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn personally appeared DELTON BONDS, known to me to be the Managing Partner of DEXTER AVENUE ASSOCIATES, the partnership that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said partnership, for the purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.
WITNESS my hand and official seal hereto affixed the day and year in the certificate above written.
/s/ Illegible ----------------------------------------- NOTARY PUBLIC in and for the State of Washington, residing at Illegible County. My commission expires 6-1-86. |
STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) |
On this 20th day of June, 1986, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn personally appeared A. LEE ZUKER, known to me to be the PRESIDENT of KORRY ELECTRONICS CO., the company that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said company, for the purposes therein mentioned, and on oath stated that _________ he was authorized to execute said instrument.
WITNESS my hand and official seal hereto affixed the day and year in the certificate above written.
/s/ Illegible ----------------------------------------- NOTARY PUBLIC in and for the state of Washington, residing at Illegible County. My commission expires 6-1-86. |
THIRD LEASE AMENDMENT AGREEMENT
THIS AGREEMENT is made this 1st day of September, 1987 by and between Korry Electronics Co. ("Korry"), a division of Criton Technologies, a New York general partnership, and Dexter Avenue Associates, a Washington general partnership referred to herein as the "Partnership."
RECITALS
A. Korry and Dexter Avenue Associates entered into an Industrial Lease on or about July 17, 1984 for certain commercial premises located in King County, Washington, which premises is commonly known and is referred to herein as "901 Dexter Avenue North." Said Industrial Lease was subsequently amended by First and Second Lease Amendment agreements dated May 10, 1985 and June 20, 1986, respectively. Said Industrial Lease and the First and Second Lease Amendment agreements shall be collectively referred to herein as the "901 Lease."
B. The parties now desire to amend the 901 Lease in certain material respects as set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. The Partnership shall immediately paint over the "Calcom" signage area on the building located at 925 Dexter Avenue North and perform any other required work so the signage area blends with the color and texture of the surrounding wall area. Such work and the materials to be used in connection with such work shall be to a standard and of a quality to the reasonable satisfaction of Korry.
2. In return for the agreement of Dexter Avenue Associates listed above,
Korry agrees that the Landlord's maintenance and replacement obligations under
the 901 Lease shall hereafter be limited to (1) the maintenance of the
utilities located outside of the leased premises, the foundations, the exterior
side of the roofs, and the exterior side of the exterior walls and (2) boiler,
heat pump/compressor replacement costs in excess of Five Thousand Dollars
($5,000.00) per calendar year. Dexter Avenue Associates hereby agrees that it
shall be responsible for the repair and maintenance of the exterior walls, roof
and foundation of both the 801 building, and 901-925 building to the extent that
(1) the Landlord for the 801 building is not responsible for such repair and
maintenance; and (2) insurance proceeds do not cover the same.
3. Korry represents and acknowledges to the
Partnerships that the right of first refusal provisions as contained in Section
4 of Exhibit A to the Lease, as existing and as modified below, shall not and do
not extend to the air rights over and above the 801, 901 and 925 Dexter Avenue
North premises or the parking lot used by Korry and located immediately to the
north of the 945 Dexter Avenue North premises ("Air Rights"); provided, however,
the Lease shall be and is hereby amended to substitute the following right of
first refusal provision for the right of first refusal provisions contained in
Section 4 of Exhibit A to the Lease, which new provision shall be applicable,
according to its terms, to all future proposed purchase and exchange
transactions, and any proposed transactions concerning any of the Air Rights:
Landlord shall not sell or exchange the Property at any time during the
term of this Lease, including any extensions thereof, without first
complying with the terms of this paragraph. If at any time during the term
of this Lease (including any extensions thereof), Landlord receives any
bona fide offer for the purchase or exchange of the Property, which
Landlord intends to accept, (an "Offer"), Landlord shall promptly advise
Tenant of the receipt and acceptability of the Offer and provide to Tenant
a copy of all documents pertaining to said sale or exchange and information
on all the material terms and conditions thereof. Tenant shall have ten
(10) business days following the receipt of all such documents and
information within which to advise Landlord whether Tenant is willing to
purchase the Property on the same terms and conditions as the Offer,
subject to receipt of the approval of its governing Board or if Tenant is a
corporation, its Board of Directors. If Tenant so notifies Landlord of
Tenant's decision to purchase the Property, and further advises Landlord of
its Board's approval within ten (10) business days thereafter, then
Landlord shall sell the Property to Tenant, and Tenant shall purchase the
Property from Landlord, on the same terms and conditions as the Offer;
provided, however, that in the case of an exchange transaction described in
Section 1031(a) or (b) of the Internal Revenue Code of 1986 (an "Exchange"
and the "Code," respectively, Tenant shall have the right to purchase the
except tax benefits,
If Tenant elects not to exercise its right of first refusal, Landlord may sell the Property to the party making the Offer on the terms and conditions stated in the Offer. If the sale or exchange transaction is not closed within ninety (90) days in accordance with the terms and conditions of the Offer, then Landlord must again notify Tenant as provided herein. This right of first refusal shall run with the Property during the term of this Lease, including any extensions thereof.
4. The phrase "in close proximity to," as contained in Line 14 of Section 1.6 of the First Amendment to the 901 Dexter Avenue North Lease, shall be construed to mean parking located within a 500 yard radius of the center of the building at 901 Dexter Avenue North. When construction of the improvements to the parking lot property located to the north of 945 Dexter Avenue North has been completed, the Partnership shall immediately thereafter provide Korry with one hundred twenty (120) parking spaces in the parking garage built as part of the improvements to the parking lot, which parking spaces may be used by Korry without charge to Korry and shall be at locations in the parking garage which are the most convenient to Korry and its employees.
5. Korry shall pay to Dexter Avenue Associates, during the term of the 901 Lease, 30% of the reasonable maintenance costs actually incurred by Dexter Avenue Associates for the parking lots located at North of 945 Dexter No.
6. All other terms, conditions and covenants of the Lease shall otherwise remain in full force and effect.
Dated this 1st day of September, 1987.
KORRY ELECTRONICS CO
By /s/ R. W. Stevenson ------------------------------------- Sr. V. P. of Criton Technologies |
DEXTER AVENUE ASSOCIATES
/s/ Delton J. Bonds ---------------------------------------- By Delton J. Bonds Managing Partner |
STATE OF WASHINGTON ) ) ss COUNTY OF KING ) |
ON this 1st day of September, 1987, before me, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared R. W. Stevenson, to me known to be the Sr. V. P. of Criton Technologies named in and which executed the foregoing instrument; and he acknowledged to me that he signed the same as the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned, being authorized so to do, and that the corporate seal affixed thereto is the seal of said corporation.
WITNESS my hand and official seal the day and year in this certificate above written.
(SEAL) /s/ Penelope B. Brenton ---------------------------------------- Notary Public in and for the State of Washington, residing at Illegible My appointment expires Sept 5, 1989 |
STATE OF WASHINGTON ) ) ss COUNTY OF KING ) |
ON this 1st day of September, 1987, before me, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Delton J. Bonds, to me known to be the Managing Partner of Dexter Avenue Associates, the Partnership named in and which executed the foregoing instrument; and he acknowledged to me that he signed the same as the free and voluntary act and deed of said partnership for the uses and purposes therein mentioned, being authorized so to do, and that the partnership seal, if any, affixed thereto is the seal of said partnership.
WITNESS my hand and official seal the day and year in this certificate above written.
(SEAL) /s/ Penelope B. Brenton ---------------------------------------- Notary Public in and for the State of Washington, residing at Illegible My appointment expires Sept 5, 1989 |
(CRITON LOGO) (KORRY LOGO)
CRITON TECHNOLOGIES KORRY ELECTRONICS CO. Electronics and 901 Dexter Avenue North Defense Group Seattle, Washington 98109 206 281-1300 January 7, 1991 Houg Family Partnership c/o Dr. Andrew Houg 11066 - 5th Avenue, Suite 101 Seattle, Washington 98125 Subject: Lease Renewal |
Dear Dr. Houg:
This letter is to notify you that Korry Electronics Company is exercising its option to renew its lease on facilities located at 901 (and 925) Dexter Avenue North, Seattle, Washington, 98109, for the two year period Beginning August 1, 1991. The Second Amendment to Lease, dated June 20, 1986, extends the basic period of the lease through July 31, 1991. The rental rate during the option period will be calculated in accordance with Paragraph 2.3 of the First Amendment to Lease, dated May 10, 1985, which was unchanged by subsequent amendments.
Sincerely,
KORRY ELECTONICS CO.
/s/ Stephen R. Larson ------------------------------------- Stephen R. Larson President |
SRL/cp
cc: Del Bond
EXHIBIT 10.4A
FOURTH AMENDMENT TO LEASE
(901 Lease)
This Fourth Amendment to Lease (this "Agreement") is entered into this 27 day of July, 1994, by and between Korry Electronics Co., a Delaware corporation ("Korry") and Houg Family Partnership ("HFP"), a Washington limited partnership.
RECITALS
a. HFP's predecessor, 901 Dexter Avenue Associates, and Korry's predecessor, Criton Technologies ("CT"), a Delaware general partnership, entered into an industrial lease agreement (the "Original Lease") dated July 17, 1974, under the terms of which CT, as tenant, leased certain property (the "Premises") located at 901 Dexter Avenue North, Seattle, Washington. The Original Lease has been amended by three amendments, dated respectively May 10, 1985 (the "First Amendment"), June 20, 1986 (the "Second Amendment"), and September 1, 1987 (the "Third Amendment"). The Original Lease, as amended by these three amendments, is hereinafter designated as the "Amended Lease."
b. HFP succeeded to the landlord's interest under the Amended Lease on it acquired title to the Premises on April 17, 1989. Korry succeeded to the lessee's interest under the Amended Lease pursuant to an assignment dated September 27, 1989.
c. The parties wish to amend the Amended Lease under the terms and conditions set forth below.
TERMS AND CONDITIONS
1. Term of Occupancy; Termination. The Lease term is hereby extended to July 31, 2011, and Korry shall have the sole and exclusive right to peaceful and quiet enjoyment of the Premises, and to occupy the Premises without interruption or interference for the entire remainder of the term as extended hereby. However, Korry shall have the right to terminate the Lease at any time by giving written notice to HFP at least two years in advance of the termination date. Korry shall not be liable for any obligations arising under or in connection with the Lease following the date specified as the termination date.
2. Notices. Paragraph 19 of the Original Lease is hereby deleted and replaced by the following:
a. Notice Addresses. Any notice, keys, drawings, or other item or items that may or shall be delivered pursuant to the terms of this Lease shall be delivered to the following addresses:
If to Landlord, to the following:
Houg Family Partnership
c/o Dr. Andrew Houg
11066 5th Avenue N.E.
Seattle, WA 98125
If to Tenant, to the following:
Korry Electronics Co.
901 Dexter Avenue North
Seattle, WA 98109
Attn: Director of Finance
b. Form of Notice and Delivery. Any and all notices shall be in writing and either delivered by hand or mailed, via certified United States mail, postage prepaid, to the addresses of the respective recipient as set forth above. Delivery shall be deemed complete and effective upon receipt by the addressee or upon the third business day following mailing, whichever shall first occur.
c. Covenant to Accept Notice. Neither party shall refuse or otherwise attempt to avoid delivery of any notice.
d. Change of Notice Address. Either party may change its notice address by giving written notice of a new address in accordance with the foregoing notice provisions.
3. Continuation of Unmodified Terms. Except as modified by this Agreement, the terms of the Amended Lease remain in full force and effect. In the event of conflict or inconsistency between the provisions of the Amended Lease and the provisions of this Agreement, this Agreement will control.
4. Binding Effect. The terms and conditions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
5. Entire Agreement. This Agreement contains the entire understanding between and among the undersigned parties in connection with the subject matter addressed herein. It supersedes and replaces any and all prior negotiations, agreements, discussions, representations, statements and promises, whether oral or written. Each party hereby acknowledges that no promise, representation or warranty whatsoever, express or implied, has been made by any other party or agent or attorney of any other party to induce it to execute this document, other than the terms expressly stated in this written Agreement.
6. Construction of this Agreement.
a. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington.
b. The paragraph headings used in this Agreement are inserted for convenience only and are not intended to be a part of this Agreement or to affect its construction.
c. When used in this Agreement, terms such as "herein," "hereto," and "hereof" refer to the entire Agreement, and are not limited to any portion or portions hereof.
d. The language of this Agreement, including without limitation any ambiguities, shall not be construed in favor of any party or against any other party.
e. Time is of the essence in this Agreement.
f. This Agreement is exclusively for the benefit of the undersigned parties, and no intent to benefit any third person or entity shall be inferred, implied, or presumed in construing this Agreement.
7. Signing Authority. Each of the individuals signing below on behalf of one of the parties warrants that he is authorized to sign this Agreement on that party's behalf and that his signature binds that party to this Agreement.
Dated the day and year first set forth above.
KORRY ELECTRONICS CO. HOUG FAMILY PARTNERSHIP by /s/ David Elkins by /s/ Andrew Houg ---------------------------------- ------------------------------------- David Elkins Andrew Houg President Managing General Partner |
ESTERLINE TECHNOLOGIES, INC.
by /s/ R. W. Stevenson ---------------------------------- R. W. Stevenson - Chief Financial Officer |
EXHIBIT 10.5
INDUSTRIAL LEASE
-MODIFIED NET-
1. PARTIES, This Lease, dated, for reference purposes only, July 17, 1984, is made by and between 801 Dexter Associates (herein called "Landlord") and Korry Electronics Co., a division of Criton Technologies (herein called "Tenant").
2. PREMISES, Landlord hereby leases to Tenant and Tenant leases from Landlord for the term, at the rental, and upon all of the conditions set forth herein, that certain real property situated in the City of Seattle, County of King, State of Washington, commonly known as 801 Dexter Avenue North and described as The both floors consisting 60,000 Sq. Ft. +- of open area. This shall constitute, for purposes of allocation of property tax and insurance charges, the entire building. Said real property, including the land and all improvements thereon, is herein called "the Premises".
3. TERM.
3.1 TERM. The term of this Lease shall be for three (3) years, commencing on July 18, 1984 and ending on July 17, 1987 unless sooner terminated pursuant to any provision hereof.
3.2 DELAY IN COMMENCEMENT. Notwithstanding said commencement date, if for any reason Landlord cannot deliver possession of the Premises to Tenant on said date, Landlord shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or the obligations of Tenant hereunder or extend the term hereof, but in such case Tenant shall not be obligated to pay rent until possession of the Premises is transferred to Tenant; provided, however, that if Landlord shall not have delivered possession of the Premises within ninety (90) days from said commencement date, Tenant may, at Tenant's option, by notice in writing to Landlord within ten (10) days thereafter, cancel this Lease. If Landlord shall not have delivered possession of the Premises within one (1) year from said commencement date, Landlord may, by notice in writing to the Tenant within ten (10) days thereafter, cancel the Lease. If either party cancels as hereinabove provided. Landlord shall return any monies previously deposited by Tenant and the parties shall be discharged from all obligations hereunder.
3.3 EARLY POSSESSION. In the event that Landlord shall permit Tenant to occupy the premises prior to the commencement date of the term, such occupancy shall be subject to all of the provisions of this Lease. Said early possession shall not advance the termination date of this Lease.
3.4 DELIVERY OF POSSESSION. Tenant shall be deemed to have taken possession of the Premises when any of the following occur: (a) Landlord delivers possession of the premises to Tenant and a Certificate of Occupancy is granted by the proper governmental agency, or (b) upon a Certificate from the Landlord's architect or contractor that the Premises are ready for occupancy.
4. RENT. Tenant shall pay to Landlord as rent for the Premises equal monthly installments of Twenty Five Thousand Five Hundred Illegible And No/100's Dollars ($25,500.00) Dollars, in advance, on the first day of each month of the term hereof. Tenant shall pay Landlord upon the execution hereof the sum of Twenty One Thousand Illegible And No/100's Dollars ($21,000.00) Dollars as rent for First and Last months. Landlord will credit Tenant's rent $10,000 toward new carpet, and $25,000 for free rent agreed to under previous lease and not yet allocated. Rent for any period during the term hereof which is for less than one month shall be a pro rata portion of the monthly installment. Rent shall be payable without notice or demand and without any deduction, offset, or abatement in lawful money of the United States of America to Landlord at the address stated herein or to such other persons or at such other places as Landlord may designate in writing.
5. SECURITY DEPOSIT. Tenant shall deposit Landlord upon execution hereof the sum of _________________________________________________________ ($______) Dollars as security for Tenant's faithful performance of Tenant's obligations hereunder. If Tenant fails to pay rent or other charges due hereunder, or otherwise defaults with respect to any provision of this Lease, Landlord may use, apply or retain all or any portion of said deposit for the payment of any rent or other charge in default or for the payment of any other sum to which Landlord may become obligated by reason of Tenant's default, or to compensate Landlord for any loss or damage which Landlord may suffer thereby. If Landlord so uses or applies all or any portion of said deposit, Tenant shall within ten (10) days after written demand therefor deposit cash with Landlord in an amount sufficient to restore said deposit to the full amount hereinabove stated and Tenant's failure to do so shall be a breach of this Lease, and Landlord may at his option terminate this Lease. Landlord shall not be required to keep said deposit separate from its general accounts. If Tenant performs all of Tenant's obligations hereunder, said deposit or so much thereof as had nor therefore been applied by Landlord, shall be returned, without payment of interest or other increment for its use, to Tenant (or, at Landlords option, to the last assignee, if any, of Tenant's interest hereunder) within fifteen (15) days after the expiration of the term hereof, or after Tenant has vacated the Premises, whichever is later.
6. USE.
6.1 USE. The Premises shall be used an occupied only for Office & Manufacturing Purposes.
6.2 COMPLIANCE WITH LAW. Tenant shall, at Tenant's expense, comply promptly with all applicable statutes, ordinances, rules, regulations, orders and requirements in effect during the term or any part of the term hereof regulating the use by Tenant of the Premises. Tenant shall not use or permit the use of the Premises in any manner that will tend to create waste or a nuisance, or if there shall be more than one Tenant of the Building containing the Premises, which shall tend to unreasonably disturb such other tenants.
6.3 CONDITION OF PREMISES. Tenant hereby accepts the Premises in their condition existing as of the date of the possession hereunder, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Tenant acknowledges that either Landlord nor Tenant's agent has made any representation or warranty as to the suitability of the Premises for the conduct of Tenant's business.
6.4 INSURANCE CANCELLATION. Notwithstanding the provisions of Article 6.1 hereinabove, no use shall be made or permitted to be made of the premises nor acts done which will cause the cancellation of any insurance policy covering said Premises or any building of which the Premises may be a part, and if Tenant's use of the Premises causes an increase in said insurance rates Tenant shall pay any such increase.
6.5 LANDLORD'S RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the rules and regulations that Landlord shall from time
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to time promulgate. A copy of part rules and regulations is attached hereto Landlord reserves the right from time to time to make all reasonable modifications to land rules and regulations. The additions and modifications to those rules and reputations shall be burning upon Tenant upon delivery of a copy of them to Tenant. Landlord shall not be responsible to Tenant for the nonperformance of any of said rules and regulations by any other tenants or occupants.
7. MAINTENANCE, REPAIRS AND ALTERATIONS.
7.1 LANDLORD'S OBLIGATIONS. Subject to the provisions of Article 9 and except for damage caused by any negligent or international act or omission of Tenant. Tenant's agents, employees, or invitees, Landlord, at Landlord's expense, shall keep in good order, conditions and repair the foundations, interior walls and the exterior roof of the Premises. Landlord shall not, however be obligated to paint such exterior, nor shall Landlord be required to maintain the interior surface or exterior walls, windows, doors or plate glass. Landlord shall have no obligation to make repairs under this Article 7.1 until reasonable time after receipt or written notice of the need to such repairs. Tenant expressly wavies the benefits of any statue now or hereafter in effect which would otherwise allow the Tenant the right to make repairs at Landlord's expense or to terminate this Lease because of Landlord's failure to keep the Premises in good order, condition and repair.
7.2 TENANT'S OBLIGATIONS. Subject to the provisions of Article 7.1 and Article 9, Tenant, at Tenant's expense, shall keep in good order, condition and repair the Premises and every part thereof (regardless of whether the damaged portion of the Premises or the means of repairing the same are accessible to Tenant, including without limiting the generality of the foregoing, all plumbing, heating, air conditioning, ventilating, electrical and lighting facilities and equipment within the Premises, fixtures, interior walls, ceilings, windows, doors, plate glass and skylights, located within the Premises and all sidewalks, landscaping, driveways, parking lott, lences and signs located in the areas which are adjacent to and included with the Premises.
7.3 SURRENDER. On the last day of the term hereof, or on any sooner termination, Tenant shall surrender the Premises to Landlord in good condition, broom clean, ordinary wear and tear excepted. Tenant shall repair any damage to the Premises occasioned by its use thereof, or by the removal of Tenant's trade fixtures, furnishings and equipment pursuant to Article 7.5, which repair shall include the patching and filling of holes and repair of structural damage.
7.4 LANDLORD'S RIGHTS. If Tenant fails to perform Tenant's obligations under this Article 7, Landlord may at its option but shall not be required to enter upon Premises, after ten (10%) percent per annum shall become due and payable as additional rental to Landlord together with Tenant's next rental installment.
7.5 ALTERATIONS AND ADDITIONS.
(a) Tenant shall not, without Landlord's prior written consent, make any alterations, improvements, or additions, in, on or about the Premises, except for non-structural alterations not exceeding $1,000 in cost. As a condition to giving such consent, Landlord may require that Tenant remove any such alterations, improments, additions or utility installations at the expiration of the term, and to restore the Premises to their prior condition.
(b) Below commencing any work relating to alterations, additions and improvements affecting the Premises, Tenant shall notify Landlord in writing of the expected date of commencement thereof. Landlord shall then have the right at any time and from time to time to post and maintain on the Premises such notices as Landlord reasonably deems necessary to protect the Premises and Landlord from mechanics liens, materialmen's liens or any other liens. In any event, Tenant shall pay, when due, all claims for labor or materials furnished to or for Tenant at or for use in the Premises Tenant shall not permit any mechanics or materialmen's liens to be levied against the Premises for any labor or material furnished to Tenant or claimed to have been furnished to Tenant or to Tenant's agents or contractors in connection with work of any character performed or claimed to have been performed on the Premises by or at the direction of Tenant.
(c) Unless Landlord requires the removal, as set forth in Article 7.5(a), all alterations, improvements or additions which may be made on the Premises, shall become the property of Landlord and remain upon and the surrendered with the Premises at the expiration of the term. Notwithstanding the provisions of this Article 7.5(c), Tenant's machinery, equipment and trade fixtures, other than that which is affected to the Premises so that it cannot be removed without material damage to the Premises, shall remain the property of Tenants and may be removed by Tenant subject to the provisions of Article 7.3.
8. INSURANCE INDEMNITY.
8.1 INSURING PARTY. As used in this Article 8, the term "insuring party
landlord" shall mean the party who has the obligation to obtain the insurance
required hereunder. The insuring party in this case shall be designated in
Article 19. Whether the insuring party is the Landlord or the Tenant, Tenant
shall, as additional rent for the Premises, pay the cost of all insurance
required hereunder. If Landlord is the insuring party Tenant shall, within ten
(10) days following demand by Landlord, reimburse Landlord for the cost of the
insurance so obtained.
8.2 LIABILITY INSURANCE. The Tenant shall obtain and keep in force during the term of this lease a policy comprehensive public liability insurance insuring Landlord and Tenant against any liability arising out of the ownership, use occupancy or maintenance of the Premises and all areas appartenant thereto. Such insurance shall be in an amount of not less than $300,000 for injury to or death of one person in any one accident or occurence and in amount of not less than $500,000 for injury to or death of more than one person in any one accident or occurence. Such insurance shall further insure Landlord and Tenant against liability for property damage of at least $50,000. The limits of said insurance shall not, however, limit the liability of Tenant hereunder. In the event that the premises constitute a part of a larger property said insurance shall have a Landlord's Protective Liability endorsement attached thereto. If the tenant shall fail to procure and maintain said insurance the Landlord may, but shall not be required to, procure and maintain the same, but at the expense of Tenant.
8.3 PROPERTY INSURANCE. The insuring party shall obtain and keep in force during the term of this Lease a policy or policies of insurance covering loss or damage to the Premises, in the amount of the full replacement value thereof, providing protection against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, special extended perils (all risk) and spinkler leakage. Said insurance shall provide for payment for loss thereunder to Landlord or to the holder of a first mortgage or deed of trust the Premises. If the insuring the party shall fail to procure and maintain said insurance the other party may, but shall not be required to, procure and maintain the same, but at the expense of Tenant.
8.4 INSURANCE POLICIES. Insurance required hereunder shall be in companies rated A+ AAA or better in "Best's Insuarnce Guider". The insuring party shall deliver prior to possession to the other party copies of policies of such insurance or certificates evidencing the existence and amounts of such insurance with loss payable clauses satisfactory to Landlord. No such policy shall be cancellable or subject to reduction of coverage or other modification except after ten (10) days prior written notice to Landlord. If Tenant is the insuring party, Tenant shall, within ten (10) days prior to the expiration of such policies, furnish Landlord with renewals thereof, or Landlord may order such insurance and charge the cost thereof to Tenant, which amount shall be payable by Tenant upon demand. Tenant shall not do or permit to be done anything which shall invalidate the insurance policies referred to in Article 8.3. Tenant shall forthwith, upon Landlord's demand, reimburse Landlord for any additional premiums attributable to any act or omission or operation of Tenant causing such increase in the cost of insurance. If Landlord is the insuring party, and if the insurance policies maintained hereunder cover other improvements in addition to the Premises. Landlord shall deliver to Tenant a written setting forth the amount of any such cost increase and showing in reasonable detail the manner in which it has been computed.
8.5 WAIVER OF SUBROGATION. Tenant and Landlord each waivers any and all rights of recovery against the other, or against the others, employees, agents and representatives of the other, for loss or damage to such waiving party or its property or the property of others under its control, where such loss or damage is insured against under any insurance policy in force at the time of such loss or damage. Tenant and Landlord shall upon obtaining the policies of insurance required hereunder, give notice to the insurance carriers that the foregoing mutual waiver of subrogation is contained in this Lease.
8.6 HOLD HARMLESS. Tenant shall indemnify, defend and hold Landlord harmless from any and all claims arising from Tenant's use of the Premises or from the conduct of its business or from any activity, worth or things which may be permitted or suffered by Tenant in or about the Premises and shall further indemnify, defend and hold Landlord harmless from and against any and all claims arising from any breach or default in the performance of any obligation on Tenant's part to the performed under the provision of this Lease or arising from any negligence of Tenant or any of its agents, contractors, employees or invitees and from any and all costs attorneys fees, expenses and liabilities incurred in the defense of any such claim or any action or proceeding brought thereon. Tenant hereby assumes all risk of damage to property or injury to persons in or about the Premises from any cause, and Tenant hereby waives all claims in respect thereof against Landlord, excepting where said damage arises out of negligence of Landlord.
8.7 EXEMPTION OF LANDLORD FROM LIABILITY. Tenant hereby agrees that Landlord shall not be liable for injury to Tenant's business or any loss of income therefrom on for damage to the goods, wares, merchandise or other property of Tenant, Tenant's employees, invitees, customers, or any other person in or about the Premises, nor, unless through its negligence, shall Landlord be liable for injury to the person of Tenant, Tenant's employees, agents or contractors and invitees, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain or from breakage, leakage, obstruction or other defects of pipes, spinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause whether the said damage or inquiry results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible to
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Landlord or Tenant, Landlord shall not be liable for any damages arising from any act of neglect of any other tenant, if any, of the building in which the Premises are located.
9. DAMAGE ON DESTRUCTION.
9.1 PARTIAL DAMAGE - Insured. Subject to the provisions of Article 9.1, if the Premises are damaged and such damage was caused by a casualty covered under an insurance policy required to be maintained pursuant to Article 8.3. Landlord shall at Landlord's expense repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. Notwithstanding the above, if the Tenant is the insuring party, and if the insurance proceeds received by Landlord are not sufficient to effect such repair. Landlord shall give notice to Tenant of the amount required in addition to the insurance proceeds to affect such repair. Tenant may, at Tenant's option, contribute the required amount, but upon failure to do so within thirty (30) days following such notice. Landlord's sole remedy shall be, at Landlord's option and with no liability to Tenant, to cancel and terminate this Lease. If Tenant shall contribute such amount to Landlord within said thirty (30) days period, Landlord shall make such repairs as soon as reasonably possible and this Lease shall continue in full force and effect. Tenant shall in no event have any right to reimbursement for nay such amount so contributed.
9.2 DAMAGE - Uninsured. In the event the Premises may be damaged or destroyed by a casualty which is not covered by fire and extended coverage insurance carried by Landlord, then Landlord shall restore same, provided that if the damage or destruction is to an extent greater than ten (10%) per cent of the then replacement cost of improvements on the Premises (exclusive of Tenant's trade fixtures and equipment and exclusive of foundations) then Landlord may elect not to restore and to terminate this Lease. Landlord must give Tenant written notice of its election not to restore within thirty (30) days from the date of damage and if, not given, Landlord shall be deemed to have elected to restore and in such event shall repair any damage as soon as reasonably possible. In the event Landlord elects to give such notice of Landlord's intention to cancel and terminate the Lease, Tenant shall have the right within ten (10) days after the receipt of such notice to give written notice to Landlord of Tenant's intention to repair such damage of Tenant's expense, without reimbursement from Landlord, in which event this Lease shall continue in full force and effect and Tenant shall proceed to make such repair as soon as reasonably possible. If Tenant does not give such notice within such ten (10) day period, this Lease shall be cancelled and terminated as of the date of the occurrence of such damage.
9.3 TOTAL DESTRUCTION. If at any time during the term hereof the Premises are totally destroyed from any cause whether or not covered by the insurance required to be maintained by Landlord pursuant to Article 8.3 (including any total destruction required by any authorized public authority) this Lease shall automatically terminate as of the date of such total destruction.
9.4 DAMAGE NEAR END OF TERM. If the Premises are partially destroyed or damaged during the last six (6) months of the term of this Lease, Landlord may, at Landlord's option, cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to Tenant of Landlord's election to do so within thirty (30) days after the date of occurrence of such damage.
9.5 ABATEMENT OF RENT.
(a) If the Premises are partially destroyed or damaged and Landlord or Tenant repairs or restores them pursuant to the provisions of this Article 9, the rent payable hereunder for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Tenant's reasonable use of the Premises is impaired. Except for abatement of rent, if any, Tenant shall have no claim against Landlord for any damage suffered by reason of any such damage, destruction, repair or restoration.
(b) If Landlord shall be obligated to repair or restore the Premises under the provisions of this Article 9 and shall not commence such repair or restoration within ninety (90) days after such obligations shall accrue. Tenant may at Tenant's option cancel and terminate this Lease by giving Landlord written notice of Tenant's election to do so at any time prior to the commencement of such repair or restoration. In such event this Lease shall terminate as of the date of such notice. Any abatement in rent shall be computed as provided in Article 9.5(a).
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Tenant shall pay all real property taxes applicable to the Premises during the term of this Lease. All such payments shall be made at least ten (10) days prior to the delinquency date of such payment. Tenant shall promptly furnish Landlord with satisfactory evidence that such taxes have been paid. If any such taxes paid by Tenant shall cover any period of the time prior to or after the expiration of the term hereof. Tenant's share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required. If Tenant shall fail to pay any such taxes, Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to Landlord with Tenant's next rent installment together with interest at the rate of ten (10%) percent per annum.
10.2 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term "real property tax" shall include any form of assessment, license fee, rent, tax, levy, penalty, or tax (other than inheritance or estate taxes), imposed by any authority having the direct or indirect power to tax, including any city, county, state or federal government, or any school, agricultural, lighting, drainage or other improvement distinct thereof, as against any legal or equitable interest of Landlord in the Premises or in the real property of which the Premises are a part, as against Landlord's right to rent or other income therefrom, or as against Landlord's business of leasing the Premises, and, Tenant shall pay and all charges and fees which may be imposed by the EPA or other similar government regulations or authorities.
10.3 JOINT ASSESSMENT. If the Premises are not separately assessed, Tenant's liability shall be an equitable proportion of the real property taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Landlord from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available. Landlord's reasonable determination thereof, in good faith, shall be conclusive.
10.4 PERSONAL PROPERTY TAXES.
(a) Tenant shall pay prior to delinquency all taxes assessed against and levied upon leasehold improvements, fixtures, furnishings, equipment and all other personal property of Tenant contained in the Premises or elsewhere. Tenant shall cause said leasehold improvements, trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord.
(b) If any of Tenant's said personal property shall be assessed with Landlord's real property, Tenant shall pay Landlord the taxes attributable to Tenant within ten (10) days after receipt of a written statement setting forth the taxes applicable to Tenant's property.
10.5 Notwithstanding the provisions of Article 10 hereinabove, Tenant shall pay any increase in "real property taxes" resulting from any and all improvement of any kind whatsoever placed on or in the Premises for the benefit of or at the request of Tenant regardless of whether said improvements were installed or constructed either by Landlord or Tenant, except those items included with the original Premises.
11. COMMON AREAS. When, in fact, there are Common Areas, then the following shall apply:
11.1 DEFINITIONS. The phrase "Common Areas" means all areas and facilities outside the Premises that are provided and designated for general use and convenience of Tenant and other tenants and their respective officers, agents and employees, customers, and invitees. Common Areas include (but are not limited to) pedestrian sidewalks, landscaped areas, roadways, parking areas and railroad tracks, if any. Landlord reserves the right from time to time to make changes in the shape, size, location, number, and extent of the Land and improvements constituting the Common Areas. Landlord may designate from time to time additional parcels of land for use as a part thereof; and any additional land so designated by Landlord for such use shall be included until such designation is revoked by Landlord.
11.2 MAINTENANCE. During the term of this Lease, Landlord shall operate, manage, and maintain the Common Areas so that they are clean and free from accumulations of debris, filth, rubbish and garbage. The manner in which such Common Areas shall be so maintained, and the expenditure for such maintenance, shall be at the sole discretion of Landlord, and the use of the Common Areas shall be subject to such reasonable regulations and changes therein as Landlord shall make from time to time, including (but not by way of limitations) the right to close from time to time, if necessary, all or any portion of the Common Areas to such extent or may be legally sufficient, in the opinion of Landlord's counsel, to prevent a dedication thereof or the accrual of rights of any person or of the public therein, or to close temporarily all or any portion of such Common Areas for such purposes.
11.3 TENANT'S RIGHTS AND OBLIGATIONS. Landlord hereby grants to Tenant, during the term of this Lease, the license to use, for the benefit of Tenant and its officers, agents, employees, customers, and invitees, in common with the others entitled to such use, the Common Areas as they from time to time exist, subject to the rights, powers, and privileges herein reserved to Landlord. Storage, either permanent or temporary, of any materials, supplies or equipment in the Common Areas is strictly prohibited. Should Tenant violate this provision of the Lease, than in such event, Landlord may, at his option either terminate this Lease or, without notice to Tenant, remove said materials, supplies or equipment from the Common Areas and place such items in storage, the cost thereof to be reimbursed by Tenant within (10) days from receipt of a statement submitted by Landlord. All subsequent costs in connection with the storage of said items shall be paid to the Landlord by Tenant as accrued. Failure of Tenant to pay these charges within ten (10) days from receipt of a statement shall constitute a breach of this Lease. Tenant and its officers, agents, employees, customers and invitees shall park their motor vehicles only in areas designated by Landlord for that purpose from time to time. Within five (5) days after request from Landlord, Tenant shall furnish to Landlord a list of the license numbers assigned to its motor vehicles and those of its officers, agents, and employees. Tenant shall not at any time park or permit the parking of motor vehicles, belonging to it or to others, so as to interfere with the pedestrian sidewalk, roadways and loading areas, or in any portion of the parking areas not designed by Landlord for such use by Tenant. Tenant agrees that receiving and shipping of goods and merchandise and all removal of refuse shall be made only by way of the loading areas constituting part of the Premises. Tenant shall repair, at its cost, all deteriorations or damages to the Common Areas, occasioned by its lack of ordinary care.
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11.4 Construction Landlord, while engaged in constructing improvements or making repairs or alterations in or about the Premises or in their vicinity, shall have the right to make reasonable use of the common Areas.
12. UTILITIES. Tenant shall pay for all water, gas, heat, light, power, telephone and other utilities and services supplied in the Premises, together with any taxes thereon. If any such services are not separately metered to Tenant, Tenant shall pay a reasonable proportion to be determined by Landlord of all charges jointly metered with other premises.
13. ASSIGNMENT AND SUBLETTING.
13.1 LANDLORD'S CONSENT REQUIRED. Tenant shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all of any part of Tenant's interest in this Lease or in the Premises without Landlord's prior written consent, which Landlord shall not unreasonably withhold. Any attempted assignment, transfer, mortgage, encumbrance, or subletting without such consent shall be void and shall constitute a breach of the Lease. Any transfer of Tenant's interest in this Lease or in the Premises from Tenant by merger consolidation or liquidation or by any subsequent change in the ownership of thirty (30%) percent or more of the capital stock of Tenant shall be deemed a prohibited assignment within the meaning of this Article 13.
13.2 NO RELEASE OF TENANT. Regardless of Landlord's consent, no subletting or assignment shall release Tenant of Tenant's obligation to pay the rent and to perform all other obligations to be performed by Tenant hereunder for the term of this Lease. The acceptance of rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting.
13.3 ASSIGNMENT FEE. In the event that Landlord shall consent to a sublease or assignment under Article 13.1. Tenant shall pay Landlord reasonable fees not to exceed One Hundred and no/100th ($100,00) Dollars incurred in connection with giving such consent.
14. DEFAULTS; REMEDIES.
14.1 DEFAULTS. The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Tenant.
(a) The vacating or abandonment of the Premises by Tenant.
(b) The failure by Tenant to make any payment of rent or any other payment required to be made by Tenant hereunder, as and when due, where such failure shall continue for a period of three (3) days after written notice thereof from Landlord to Tenant.
(c) The failure by Tenant to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Tenant, other than described in Paragraph (b) above, where such failure shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant's default is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commenced such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion.
(d) (i) The making by Tenant of any general assignment, or general
arrangement for the benefit of creditors; (ii) the filing by or against Tenant
of a petition to have Tenant adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against Tenant, the same is dismissed within sixty
(60) days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within thirty (30)
days.
14.2 REMEDIES IN DEFAULT. In the event of any such default or breach by Tenant. Landlord may at any time thereafter, with or without notice or demand and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such default or breach.
(a) Terminate Tenant's right to possession of the Premises by any lawful means in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. In such event Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default including, but not limited to, the cost of recovering possession of the Premises expenses of reletting, including necessary renovation and alteration of the premises, reasonable attorney's fees, and any real estate commission actually paid: the worth at the time of award by the court having jurisdiction thereof of the amount by which the unpaid rent for the balance of the term after the time of such award exceeds the amount of such rental loss for the same period that Tenant proves could be reasonably avoided; and that portion of the leasing commission paid by Landlord applicable to the unexpired term of this Lease. Unpaid installments of rent or other sums shall bear interest from the date due at the rate of ten (10%) percent per annum. In the event Tenant shall have abandoned the Premises. Landlord shall have the option of (i) retaking possession of the Premises and recovering from Tenant the amount specified in this Article 14.2(a), or (ii) proceeding under Article 14.2(b).
(b) Maintain Tenant's right to possession, in which case this Lease shall continue in effect whether or not Tenant shall have abandoned the Premises, in such event, Landlord shall be entitled to enforce all of Landlord's rights and remedies under this Lease, including the right to recover the rent as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the state in which the Premises are located.
14.3 DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant to Landlord and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion.
14.4 LATE CHARGES. Tenant hereby acknowledges that late payment by Tenant to Landlord of rent and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to processing and accounting charges, and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of rent or any other sum due from Tenant shall not be received by Landlord or Landlord's designee within ten (10) days after written notice that said amount is past due, then Tenant shall pay to Landlord a late charge equal to ten (10%) percent of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the cost Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder.
15. CONDEMNATION. If the Premises or any portion thereof are taken under the power of eminent domain, or sold by Landlord under the threat of the exercise of said power (all of which is herein referred to as "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title of possession, whichever occurs first, if more than twenty-five (25%) percent of the floor area of any buildings on the Premises, or more than twenty-five (25%) percent of the land area of the Premises not covered with buildings, is taken by condemnation, either Landlord or Tenant may terminate this Lease as of the date the condemning authority takes possession by notice in writing of such election within twenty (20) days after Landlord shall have notified Tenant of the taking or, in the absence of such notice, then within twenty (20) days after the condemning authority shall have taken possession.
If this Lease is not terminated by either Landlord or Tenant then it shall remain in full force and effect as to the portion of the Premises remaining, provided the rental shall be reduced in proportion to the floor area of the buildings taken within the Premises as bears to the total floor area of all buildings located on the Premises. In the event this Lease is not so terminated then Landlord agrees, at Landlord's sole cost, to as soon as reasonably possible restore the Premises to a complete unit of like quality and character as existed prior to the condemnation. All awards for the taking of any part of the Premises or any payment made under the threat of the exercise of power of eminent domain shall be the property of Landlord, whether made as compensation for diminution of value of the leasehold or for the taking of the fee or as severance damages; provided, however, that Tenant shall be entitled to any award for loss of or damage to Tenant's trade fixtures and removable personal property.
16. GENERAL PROVISIONS.
16.1 OFFSET STATEMENT.
(a) Tenant shall at any time upon not less than ten (10) days' prior written notice from Landlord execute, acknowledge and deliver to Landlord a statement in writing (i) certifying that this Lease is unmodified and in full force and effect for, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect and the date to which the rent, security deposit, and other charges are paid in advance, if any and (b) acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such defaults, if any, which are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrances of the premises.
(b) Tenant's failure to deliver such statement within such time shall be conclusive upon Tenant (i) that this Lease is in full force and effect, without modification except as may be represented by Landlord, (ii) that there are no uncured defaults in Landlord's performance and (iii) that
(PAGE 4 - MODIFIED NET)
not more than one (1) month's rent has been paid in advance.
(c) If Landlord desires to finance or refinance the Premises, or any part thereof, Tenant hereby agrees to deliver to any lender designated by Landlord such financial statements of Tenant as may be reasonably required by such lender. Such statements shall include the past three (3) years' financial statements of Tenant. All such financial statements shall be received by Landlord in confidence and shall be used only for the purposes herein set forth.
16.2 LANDLORD'S INTERESTS. The term "Landlord" as used herein shall mean only the owner or owners at the time in question of the title or a tenant's interest in a ground lease of the Premises. In the event of any transfer of such title or interest, Landlord herein named (and in case of any subsequent transfers the then grantor) shall be relieved from and after the date of such transfer of all liability as respects Landlord's obligations thereafter to be performed, provided that any funds in the hands of Landlord or the then grantor at the time of such transfer. In which Tenant has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Landlord shall, subject as aforesaid, be binding on Landlord's successors and assigns, only during their respective periods of ownership.
16.3 SEVERABILITY. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.
16.4 INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided, any amount due to Landlord not paid when due shall bear interest at ten (10%) percent per annum from the date due. Payment of such interest shall not excuse or cure any default by Tenant under this Lease.
16.5 TIME OF ESSENCE. Time is of the essence.
16.6 CAPTIONS. Article and paragraph captions are not a part hereof.
16.7 INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all agreements of the parties with respect to any master mentioned herein. No prior agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified in writing only, signed by the parties in interest at the time of the modification.
16.8 WAIVERS. No waiver by Landlord of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Tenant of the same or any other provision. Landlord's consent to or approval of any act shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act by Tenant. The acceptance of rent hereunder by Landlord shall not be a waiver of any preceding breach by Tenant of any provision hereof, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent.
16.9 RECORDING. Tenant shall not record this Lease. Any such recordation shall be a breach under this Lease.
16.10 HOLDING OVER. If Tenant remains in possession of the Premises or any part thereof after the expiration of the term hereof with the express written content of Landlord, such occupancy shall be a tenancy from month to month at a rental in the amount of the last monthly rental plus all other charges payable hereunder, and upon the terms hereof applicable to month-to-month tenancy.
16.11 CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed exclusive, but shall wherever possible, be cumulative with all other remedies at law or in equity.
16.12 COVENANTS AND CONDITIONS. Each provision of this Lease performable by Tenant shall be deemed both a covenant and a condition.
16.13 BINDING EFFECT; Choice of Law. Subject to any provisions hereof restricting assignment or subletting by Tenant and subject to the provisions of Article 16.2, this Lease shall bind the parties, their personal representatives, successors and assigns. This Lease shall be governed by the laws of the state where the Premises are located.
16.14 SUBORDINATION.
(a) That Lease, at Landlord's option, shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation for security now or hereafter placed upon the real property of which the Premises are a part and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof. Notwithstanding such subordination, Tenant's right to quiet possession of the Premises shall not be disturbed if Tenant is not in default and so long as Tenant shall pay the rent and observe and perform all of the provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms. If any mortgages, trustee or ground lesse shall elect to have this Lease prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of trust, or ground lease, whether this Lease is dated prior or subsequent to the date of said mortgage, deed of trust or ground lease or the date of recording thereof.
(b) Tenant agrees to execute any documents required to effectuate such subordination or to make this Lease prior to the lien of any mortgage, deed of trust or ground lease, as the case may be, and failing to do so within ten (10) days after written demand, does hereby make, constitute and irrevocably appoint Landlord as Tenant's attorney in fact and in Tenant's name, place and stead, to do so.
16.15 ATTORNEY'S FEES. If either party named herein brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in any such action, on trial or appeal, shall be entitled to his reasonable attorney's fees to be paid by the losing party as fixed by the court.
16.16 LANDLORD'S ACCESS. Landlord and Landlord's agents shall have the right to enter the Premises at reasonable times for the purpose of inspecting the same, showing the same to prospective purchasers, or tenders, and making such alterations, repairs, improvements or additions to the Premises or to the building of which they are a part as Landlord may deem necessary or desirable. Landlord may at any time place on or about the Premises any ordinary "For Sale" signs and Landlord may at any time during the last one hundred twenty (120) days of the term hereof place on or about the Premises any ordinary "For Sale or Lease" signs, all without rebate of rent or liability to Tenant.
16.17 AUCTIONS. Tenant shall not place any auction sign upon the Premises or conduct any auction thereon without Landlord's prior written consent.
16.18 MERGER. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subtenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or all of such subtenancies.
16.19 CORPORATE AUTHORITY. If Tenant is a corporation, each individual executing this Lease on behalf of said corporation represents and warrants that he is duly authorized to execute and deliver this Lease on behalf of said corporation in accordance with a duly adopted resolution of the Board of Directors of said corporation or in accordance with the Bylaws of said corporation, and that this Lease is binding upon said corporation in accordance with its terms.
16.20 LANDLORD'S LIABILITY. If Landlord is a limited partnership, the liability of the partners of the Landlord pursuant to this Lease shall be limited to the assets of the partnership; and Tenant, its successors and assigns hereby waive all rights to proceed against any of the parteners, or the officers, shareholders, or directors of any corporate partner of Landlord except to the extent of their interest in the partnership. The term "Landlord", as used in this Article, shall mean only the owner or owners at the time in question of the fee title or its interest in a ground lease of the Premises, and in the event of any transfer of such title or interest. Landlord herein named land in case of any subsequent transfers the then grantor shall be relieved from and after the date of such transfer of all liability as respects Landlord's obligations thereafter to be performed, provided that any funds in this hands of Landlord or the then grantor at the time of such transfer, in which Tenant has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Landlord shall, subject as aforesaid, be binding on Landlord's successors and assigns, only during their respective periods of ownership.
17. PERFORMANCE BOND. At any time Tenant either desires to or is required to make any repairs, alterations, additions, improvements or utility installation thereon pursuant to Articles 7.5 or 9.2 herein, or otherwise, Landlord may at his sole option require Tenant, at Tenant's sole cost and expense, to obtain and provide to Landlord a lien and completion bond in an amount equal to one and one-half (1 1/2) times the estimated cost of such improvements, to insure Landlord against liability for mechanics' and materialmen's liens and to insure completion of the work.
(PAGE 5 - MODIFIED NET)
18. BROKERS. The parties hereto acknowledge that Kidder, Mathews & Segner, Inc. were the real estate brokers that represented the parties herein, and that no other commissions are due to any brokers whatsoever, other than the above named brokers.
19. NOTICES. Whenever under this Lease provision is made for any demand, notice or declaration of any kind, or where it is deemed desirable or necessary by either party to give or serve any such notice, demand or declaration to the other party, it shall be in writing and served either personally or send by United States mail, postage prepaid, addressed at the addresses set forth hereinbelow.
To Landlord at 801 Dexter Associates, 710 Cherry Street, Seattle, WA 98104 To Tenant at R.W. Stevenson, Criton Technologies 10800 N.E. 8th, Bellevue, WA 98004 Copy to: Bogle and Gates, Bank of California Center, Seattle, WA 98164 Attn: Michael Courtnage |
20. INSURING PARTY. The insuring party under this Lease shall be the Landlord
See Exhibit "A", Addendum to Lease, attached hereto and by this reference is made a part hereof.
The parties hereto have executed this Lease at the place and on the dates specified immediately adjacent to their respective signatures.
801 Dexter Associates
Korry Electronics Company, A Division of Executed at Criton Technologies ------------------------- on By /s/ Lee Zuker 7/17/4 ---------------------------------- ------------------------------ Lee Zuker, President |
If this Lease has been filled in it has been prepared for submission to your attorney for his approval. No representation or recommendation is made by the real estate broker or its agents or employees as to the legal sufficiency, legal effect, or tax consequences of this Lease or the transaction relating thereto.
(PAGE 6 - MODIFIED NET)
EXHIBIT "A"
This is an Addendum to that Industrial Lease dated for reference purposes only July 17, 1984, between 801 Dexter Associates, as Landlord, and Korry Electronics Company, a division Criton Technologies, as Tenant. The Lease is amended as follows:
1. Lease Options.
(a) Tenant will have option to extend this Lease for two (2) additional years under the same terms and conditions as written. Notification of each exercise must be made in writing to Landlord six (6) months before the then scheduled lease expiration. Any option not exercised cancels all subsequent options. Lease payment during this option period is $30,000 per month, (NNN).
(b) If Tenant exercises the extension option referenced in 1(a) above, Tenant will also have the option to extend this Lease for an additional term of three (3) years, commencing at the end of the end of the two year extension. To exercise this option, Tenant must give Landlord written notice thereof not later than six (6) months prior to lease expiration. If this extension option is exercised, the Lease will continue on the same terms and conditions as written, except rent, which will be $30,000 per month, (NNN) plus CPI increase based on the CPI for Seattle metropolitan area over the prior twelve months period.
2. Parking
Tenant will have access to and use of the roof top parking on the subject lease premises together with 6 stalls on the southern end of the subject building.
3. Purchase Option.
4. First Rights of Refusal.
Landlord will not sell the Property during the term of this Lease without complying with the terms of this paragraph. Landlord agrees that if at any time during the term of this lease, as extended, Landlord receives a bona fide written offer (the "Offer") for the purchase of the Property which Landlord intends to accept, Landlord shall promptly advise tenant thereof in writing and provide Tenant with a copy of the Offer and any other information submitted by the offeror. Tenant shall have five (5) days from the receipt of such documentation within which to adivse Landlord whether Tenant is willing to purchase the Property on the terms and conditions stated in the Offer, subject to Tenant's receipt of approval from its Board. If Tenant so advises Landlord, and further advises Landlord of its board approval within ten (10) days thereafter, then Landlord shall be obligated to sell the Property to Tenant, and Tenant to purchase it from Landlord, on the terms and conditions stated in the Offer. If Tenant elects not to exercise this right of first refusal, Landlord may sell the Property to the offeror listed in the Offer, on the terms and conditions and at the time stated in the Offer, free from Tenant's right of first refusal. If the sale is not so closed with the offeror in accordance with the Offer, then Tenant's right of first refusal shall continue to be effective for the terms of this Lease, as extended.
INDUSTRIAL LEASE
Exhibit "A"
Landlord: 801 Dexter Associates
Tenant: Korry Electronics Company,
A Division of Criton Technologies
Date: July 17, 1984
Page Two
5. MODIFICATIONS TO STANDARD LEASE FORM
5.1 Paragraph 3.2 of Lease is deleted in its entirety.
5.2 Paragraph 6.3 of the Lease is modified to:
(A) Add a warranty by Landlord that the Premises are zoned for the purposes for which they are leased to Tenant and in compliance with applicable law; and
(B) Permit Tenant five (5) days from delivery of possession of the Premises to inspect corrections thereto performed by Landlord and to advise Landlord of any deficiencies therein. Landlord shall promptly correct any such deficiencies.
5.3 Paragraph 7.1 of lease is expanded to require Landlord, to maintain the parking area, ramp, heating ventilating, mechanical, electrical and plumbing systems; to require Landlord to act promptly to correct deficiencies; and to delete the last nineteen (19) words of that paragraph. Landlord will not be responsible, Tenant will be, for repairs due to neglect or abuse by Tenant or employees. Normal wear will be responsibility of Landlord.
5.4 Paragraph 7.2 of the Lease is modified to delete from Tenant's responsibilities the duty to maintain those items added to Landlord's responsibility under item 4 above and matters resulting from Landlord's failure to perform its leasehold obligations and to delete the last twenty-two (22) words of that paragraph.
5.5 Paragraph 7.3 of the Lease is modified to exclude damage due to casualty and structural repairs from Tenant's return obligations.
5.6 The paragraph 8.3 insurance shall be a policy which applies only to the Premises.
5.7 Paragraph 8.6 of the Lease is modified to exclude from Tenant's indemnification duty and risks assumed by its matters attributable to Landlord's negligence, willfull misconduct and breach of its leasehold obligations.
5.8 Paragraph 9.1 of the Lease is modified to give Tenant the right to terminate the Lease if the repairs will take more than sixty (60) days to accomplish.
5.9 Paragraph 9.5 of the Lease is modified to provide for abatement of rent from the date of the casualty until completion of the restoration.
INDUSTRIAL LEASE
Exhibit "A"
Landlord: 801 Dexter Associates
Tenant: Korry Electronics Company,
A Division of Criton Technologies
Date: July 17, 1984
Page Three
5.10 Paragraph 11 of the Lease is deleted in its entirety.
5.11 Paragraph 12 of the Lease is modified to provide for the allocation of non-metered utilities on the basis of the number of square feet of usable area on the first floor of the building to the number of square feet of usable area on both floors of the building. Utility, heating, and ventilating services shall be available to the Premises during such hours as may be designated by Tenant and during such hours such systems shall maintain the Premises at temperatures within the 68 degrees F - 78 degrees F range.
5.12 Paragraph 13 of the Lease shall not apply to transfers resulting from reorganizations of Criton Technologies.
5.13 Paragraph 14.3 of the Lease is modified to reduce the time period to two (2) days for curing defaults which deprive Tenant of the use of the Premises in part and to twelve (12) hours for curing defaults which wholly deprive Tenant of the uses of the Premises.
5.14 Paragraphs 16.1(b) and (c) of the Lease are deleted in their entirety.
This Lease supercedes prior Lease between Landlord and Tenant executed May 21, 1984. By signature of both parties acknolwedged, prior Lease is null and void.
IN WITNESS WHEREOF, the parties have executed this Addendum as of July _______, 1984
8O1 Dexter Associates
By /s/ Delton Bonds 7-18-84 ------------------------------------- DATE Delton Bonds Its Managing Partner |
("Landlord")
K0RRY ELECTRONICS CO., A Division of
CRITON TECHNOLOGIES
By /s/ Lee Zuker ------------------------------------- DATE Lee Zuker President |
("Tenant")
FIRST AMENDMENT TO LEASE
THIS AGREEMENT, entered into as of this 10th day of May, 1985, between 801 DEXTER ASSOCIATES, a Washington general partnership ("Landlord"), and KORRY ELECTRONICS CO., a Division of Criton Technologies ("Tenant"),
RECITALS
A. Tenant and Landlord are parties to a Lease dated July 17, 1984 with respect to certain premises located at 801 Dexter Avenue North, Seattle, Washington (the "801 Lease"), as described more particularly in the 801 Lease.
B. The parties wish to extend and modify the 801 Lease.
HOW, THEREFORE, the parties covenant and agree as follows:
1. The 801 Lease is modified as follows:
1.1 The basic Lease term is extended through August 31, 1990.
1.2 Paragraph 1 of Exhibit A to the 801 Lease is deleted in its entirety. Tenant shall have an option to extend the term of the 801 Lease for up to ten (10) consecutive two (2) year periods. To exercise a renewal option, Tenant must give Landlord written notice thereof not less than one hundred eighty (180) days prior to the end of the lease term then in effect. If Tenant fails to exercise a renewal option with respect to the 801 Lease, all subsequent renewal options with respect to the 801 Lease shall terminate.
1.3 If the first renewal option is exercised under the 801 Lease,
then the monthly rent for the first renewal period shall be the monthly rent
payable during the base period, increased by the percentage increase in the
cost of living, as indicated by the Consumer Price Index for All Urban Consumers
- All Items, for the Seattle Metropolitan Area, as published by the U.S.
Department of Labor's Bureau of Labor Statistics (the "Index") during the
immediately preceding twelve (12) month period, up to a maximum percentage
increase of two and one-half percent (2-1/2%). If subsequent renewal options are
exercised, then the monthly rent for each such renewal period shall be equal to
the monthly rent payable during the prior renewal period, increased by the
percentage increase in the Index during the prior two (2) year period, up to a
maximum percentage increase of two and one-half percent (2-1/2%) in any one year
and a maximum of five percent (5%) increase for the two-year period. (By way of
illustration only, if the monthly rent under the 801 Lease were $20,000 for the
September 1, 1990 - August 31, 1992 period and the Index increased four percent
(4%) during the September 1, 1990 - August 31, 1991 period and one percent (1%)
during the September 1, 1991 - August 31, 1992 period, then the monthly rent for
the September 1, 1992 - August 31, 1994 period would be increased by three and
one-half percent (3-1/2%), or Seven Hundred Dollars ($700.00), based on the
2-1/2% celling for the increase in the September 1, 1990 - August 31, 1991
period and the actual 1% increase during the following twelve-month period.) If
the Index is discontinued, the parties shall substitute a comparable index of
consumer prices.
2. Landlord shall promptly complete its repair work to the roof of the 801 Premises to prevent further leaks.
3. This Lease is made expressly contingent upon Tenant and Dexter Avenue Associates executing a first amendment to their lease extending the terms thereof in the same manner as is described in paragraph 1 above. If such amendment has not been executed by May 15, 1985, then this Amendment shall terminate, unless Tenant waives such contingency.
4. The parties shall promptly execute and record a memorandum of the 801 Lease.
5. The 8O1 Lease shall otherwise continue in full force and effect as written.
IN WITNESS WHEREOF, the parties have executed this First Amendment as of the day and year first above written.
801 DEXTER ASSOCIATES
("Landlord"}
By /s/ Delton Bonds ------------------------------------- Delton Bonds, Its Managing Partner |
KORRY ELECTRONICS CO.,
a Division of Criton Technologies
("Tenant")
By /s/ R.W. Stevenson ------------------------------------- Its V.P. Criton Technologies |
STATE OF OF WASHINGTON ) ) ss. COUNTY OF King ) |
On this 14th day of May, 1985, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Delton Bonds, to me known to be the Managing Partner of the general partnership that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said general partnership for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute the said instrument.
WITNESS my hand and official seal hereto affixed the day and year first above written.
/s/ Illegible ---------------------------------------- NOTARY PUBLIC, in and for the State of Washington, residing at Illegible |
STATE OF OF WASHINGTON ) ) ss. COUNTY OF King ) |
On this 10th day of May, 1985, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared R.W. Stevenson, to me known to be the Vice President of KORRY ELECTRONICS CO., A Division of Criton Technologies, the company that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said company for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute the said instrument.
WITNESS my hand and official seal hereto affixed the day and year first above written.
/s/ Illegible ---------------------------------------- NOTARY PUBLIC, in and for the State of Washington, residing at Redmond |
SECOND AMENDMENT TO LEASE
THIS AGREEMENT entered into as of this 20th day of June, 1986 between 801 DEXTER ASSOCIATES, a Washington general partnership ("Landlord") and KORRY ELECTRONICS CO., a division of Criton Technologies ("Tenant"):
RECITALS
A. Tenant and Landlord are parties to a lease dated July 17, 1984, as amended by First Amendment dated May l0th, 1985 (collectively the "Lease") with respect to certain premises located 801 Dexter Avenue North, Seattle, Washington, as described more particularly in the Lease.
B. The parties wish to modify the Lease in certain respects.
NOW, THEREFORE, the parties covenant and agree as follows:
1. The basic term of the Lease is extended through July 31, 1991.
2. This Lease is made expressly contingent upon Tenant and Dexter Avenue Associates executing a Second Amendment to that Dexter Avenue Associates Lease extending the term thereof in the same manner as is described in paragraph 1 above. If such Amendment has not been executed by June 23, 1986, then this Amendment shall terminate unless Tenant waives such contingency.
3. If Landlord fails to perform its obligations under the Lease as required thereunder, Tenant may elect to do so on Landlord's behalf and offset the cost thereof against rents next coming due under the Lease or pursue any other remedy available to it at law or in equity for Landlord's default.
4. The Lease shall otherwise continue in full force and effect as written.
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the day and year first above written.
801 DEXTER ASSOCIATES
("Landlord")
By /s/ Delton Bonds ------------------------------------- Delton Bonds Its Managing Partner |
KORRY ELECTRONICS CO., a Division
of Criton Technologies
("Tenant")
By /s/ Illegible ------------------------------------- Its President |
STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) |
On this 20th day of June, 1986, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn personally appeared DELTON BONDS, known to me to be the Managing Partner of 801 DEXTER ASSOCIATES, the partnership that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said partnership, for the purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.
WITNESS my hand and official seal hereto affixed the day and year in the certificate above written.
/s/ Illegible ---------------------------------------- NOTARY PUBLIC in and for the State of Washington, residing at Illegible. My commission expires 6-1-86. |
STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) |
On this 20th day of June, 1986, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn personally appeared A. LEE ZUKER, known to me to be the PRESIDENT of KORRY ELECTRONICS CO., the company that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said company, for the purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.
WITNESS my hand and official seal hereto affixed the day and year in the certificate above written.
/s/ Illegible ---------------------------------------- NOTARY PUBLIC in and for the State of Washington, residing at Illegible. My commission expires 6-1-88. |
THIRD LEASE AMENDMENT AGREEMENT
(8O1)
THIS AGREEMENT is made this 1st day of September, 1987 by and between Korry Electronics Co. ("Korry"), a division of Criton Technologies, a New York general partnership, and 801 Dexter Associates, a Washington general partnership referred to herein as the "Partnership."
RECITALS
A. Korry and 801 Dexter Associates entered into an Industrial Lease on or about July 17, 1984 for certain commercial premises located in King County, Washington, which premises is commonly known as "801 Dexter Avenue North." Said Industrial Lease was subsequently amended by First and Second Lease Amendment agreements dated May 10, 1985 and June 20, 1986, respectively. Said Industrial Lease and the First and Second Lease Amendment agreements shall be collectively referred to herein as the "801 Lease."
B. The parties now desire to amend the 801 Lease in certain material respects as set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. The Partnership shall immediately contract for the installation of additional new HVAC equipment to be installed on the building located at 801 Dexter Avenue North, which HVAC equipment shall upgrade the current HVAC system to a level where it will have sufficient heating and cooling capacity to maintain 801 Dexter Avenue North at temperatures of between 68 degrees F. and 78 degrees F. at all times during normal business hours and such additional hours as may be designated by Korry but in no event shall the new HVAC equipment have less performance capability than or be of lesser quality than the HVAC equipment described in Exhibit A attached hereto. The new HVAC equipment and its installation shall comply with all applicable federal, state and local regulations. The new HVAC equipment shall be fully installed and fully operational no later than October 17, 1987. The failure to so install the new HVAC equipment by October 17, 1987 shall be a material breach of the Lease by Landlord and shall render Section 2 of this Third Lease Amendment null and void, unless the failure to so install the new HVAC equipment is caused by events beyond Landlord's control and Landlord continues installation as soon as possible.
2. In return for the agreement of 801 Dexter Associates listed above, Korry agrees that the Landlord's maintenance and replacement obligations under the 801 Lease shall hereafter be limited to (1) the maintenance of the utilities located outside of the leased premises, the foundations, the
exterior side of the roofs, and the exterior side of the exterior walls and (2) heat pump/compressor replacement costs in excess of Five Thousand Dollars ($5,000.00) per calendar year.
3. Korry represents and acknowledges to the Partnerships that (i) the right of first refusal provisions as contained in Section 4 of Exhibit A to the Lease shall not apply to the proposed exchange transaction with Michael J. Maloney ("Maloney"), as that transaction has been described to Korry; (ii) said right of first refusal provisions as existing and as modified below, shall not and do not extend to the air rights over and above the 801, 901 and 925 Dexter Avenue North premises or the parking lot used by Korry and located immediately to the north of the 945 Dexter Avenue North premises ("Air Rights"); and (iii) Korry shall not take any action to enforce said right of first refusal provisions against the Partnership or Maloney to the extent they may apply to the proposed exchange transaction with Maloney, as that transaction has been described to Korry; provided, however, the Lease shall be and is hereby amended to substitute the following right of first refusal provision for the right of first refusal provisions contained in Section 4 of Exhibit A to the Lease, which new provision shall be applicable, according to its terms, to all future proposed purchase and exchange transactions excluding the proposed exchange transaction with Maloney, as that transaction has been described to Korry, and any proposed transactions concerning any of the Air Rights:
Landlord shall not sell or exchange the Property at any time during the
term of this Lease, including any extensions thereof, without first
complying with the terms of this paragraph. If at any time during the term
of this Lease (including any extensions thereof), Landlord receives any
bona fide offer for the purchase or exchange of the Property, which
Landlord intends to accept, (an "Offer"), Landlord shall promptly advise
Tenant of the receipt and acceptability of the Offer and provide to Tenant
a copy of all documents pertaining to said sale or exchange and information
on all the material terms and conditions thereof. Tenant shall have ten
(10) business days following the receipt of all such documents and
information within which to advise Landlord whether Tenant is willing to
purchase the Property on the same terms and conditions as the Offer,
subject to receipt of the approval of its governing Board or if Tenant is a
corporation, its Board of Directors. If Tenant so notifies Landlord of
Tenant's decision to purchase the Property, and further advises Landlord of
its Board's approval within ten (10) business days thereafter, then
Landlord shall sell the Property to Tenant, and Tenant shall purchase the
Property from Landlord, on the same terms and conditions as the Offer;
provided, however, that in the case of an
exchange transaction described in Section 1031(a) or (b) of the Internal
Revenue Code of 1986 (an "Exchange" and the "Code," respectively, Tenant
shall have the right to purchase the Property for cash consideration equal
to the total of the sum of the appraised fair market value of the real
property to be received by Landlord, the appraised fair market value of any
other consideration or property to be received by Landlord as part of the
Exchange and an amount equal to the Tax Benefits which would be realized by
Landlord because the transaction is an Exchange and not a sale. For
purposes hereof, the term "Tax Benefits" means an amount equal to the
product of (i) the total taxable gain realized by Landlord not recognizable
pursuant to Subsection (a) or (b) (as applicable) of Code Section 1031 and
(ii) the highest marginal Federal income tax rate then applicable to
individuals. If Tenant elects not to exercise its right of first refusal,
Landlord may sell the Property to the party making the Offer on the terms
and conditions stated in the Offer. If the sale or exchange transaction is
not closed within ninety (90) days in accordance with the terms and
conditions of the Offer, then Landlord must again notify Tenant as provided
herein. This right of first refusal shall run with the Property during the
term of this Lease, including any extensions thereof.
4. All other terms, conditions and covenants of the Lease shall otherwise remain in full force and effect.
Dated this 1st day of September, 1987.
KORRY ELECTRONICS CO
By /s/ R.W. Stevenson ------------------------------------- Sr. VP of Crinton Technologies |
801 DEXTER ASSOCIATES
By /s/ Delton J. Bonds ------------------------------------- Delton J. Bonds Managing Partner |
STATE OF WASHINGTON ) ) ss COUNTY OF KING ) |
ON this 1st day of September, 1987, before me, a Notary Public in and for the State of Washington, duly
commissioned and sworn, personally appeared R.W. Stevenson, to me known to be the Sr. V. P. of Criton Technologies named in and which executed the foregoing instrument; and he acknowledged to me that he signed the same as the free and voluntary act and deed of said corporation for the uses and purposes thereing mentioned, being authorized so to do, and that the corporate seal affixed thereto is the seal of said corporation.
WITNESS my hand and official seal the day and year in this certificate above written.
/s/ Penelope B. Brenton ---------------------------------------- (SEAL) Notary Public in and for the State of Washington, residing at Illegible. My commission expires Sept 9, 1989 |
STATE OF WASHINGTON ) ) ss COUNTY OF KING ) |
ON this 1st day of September, 1987, before me, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Delton J. Bonds, to me known to be the Managing Partner of 801 Dexter Associates, the Partnership named in and which executed the foregoing instrument; and he acknowledged to me that he signed the same as the free and voluntary act and deed of said partnership for the uses and purposes thereing mentioned, being authorized so to do, and that the partnership seal, if any, affixed thereto is the seal of said partnership.
WITNESS my hand and official seal the day and year in this certificate above written.
/s/ Penelope B. Brenton ---------------------------------------- (SEAL) Notary Public in and for the State of Washington, residing at Illegible. My commission expires Sept 9, 1989 |
(CRITON LOGO) (KORRY LOGO)
CRITON TECHNOLOGIES KORRY ELECTRONICS CO. Electronics and 301 Dexter Avenue North Defense Group Seattle, Washington 98109 206 281-1300 January 7, 1991 Mr. Michael Maloney P.O. Box 33007 Seattle, Washington 98133 Subject: Lease Renewal |
Dear Mr. Maloney:
This letter is to notify you that Korry Electronics Company is exercising its option to renew its lease on facilities located at 801 Dexter Avenue North, Seattle, Washington, 98109, for the two year period beginning August 1, 1991. The Second Amendment to Lease, dated June 20, 1986, extends the basic period of the lease through July 31, 1991. The rental rate during the option period will be calculated in accordance with Paragraph 2.3 of the First Amendment to Lease, dated May 10, 1985, which was unchanged by subsequent amendments.
Sincerely,
KORRY ELECTONICS CO.
/s/ Stephen R. Larson ------------------------------------ President |
SRL/cp
cc: Bruce Benson
Del Bond
EXHIBIT 10.5a
FOURTH AMENDMENT TO LEASE
(801 LEASE)
This Fourth Amendment to Lease (this "Agreement") is entered into this 28 day of March, 1994, by and between Korry Electronics Co., a Delaware corporation ("Korry"), Esterline Technologies, Inc., a Delaware corporation ("Esterline"), and Michael Maloney ("Maloney"), a single man, acting individually and as managing partner for the Bancroft & Maloney general partnership.
RECITALS
a. Maloney's predecessor, 801 Dexter Associates, and Korry's predecessor, Criton Technologies ("CT"), a Delaware general partnership, entered into an industrial lease agreement (the "Original Lease") dated July 17, 1974, under the terms of which CT, as tenant, leased certain property (the "Premises") located at 801 Dexter Avenue North, Seattle, Washington. The lease has been amended by three amendments, dated respectively May 10, 1985 (the "First Amendment"), June 20, 1986 (the "Second Amendment"), and September 1, 1987 (the "Third Amendment"). The Original Lease, as amended by these three amendments, is hereinafter designated as the "Amended Lease."
b. Maloney succeeded to the landlord's interest under the Lease pursuant to an assignment dated August 30, 1988. Korry succeeded to the lessee's interest under the Lease pursuant to an assignment dated September 27, 1989, which assignment has been and is hereby recognized and consented to by Maloney as being effective as of September 27, 1989.
c. The parties wish to amend the Amended Lease under the terms and conditions set forth below.
TERMS AND CONDITIONS
1. Esterline's Agreement to be Bound by Amended Lease. Esterline agrees to be bound as tenant by all terms and covenants of the Amended Lease, including this Agreement and any and all subsequent amendments or modifications to the Amended Lease which Korry and Esterline sign hereafter.
2. Landlord's Maintenance Obligations. Paragraph 2 of the Third Amendment is hereby deleted and replaced with the following, to be effective as of the date of this Agreement:
The Landlord's maintenance and replacement obligations under the Lease shall hereafter be limited to the costs of the maintenance of the utilities located outside of the leased premises, the foundations, and the exterior side of the exterior walls, and heat pump/compressor replacement costs; provided, that the Tenant shall be solely responsible for paying the first $5,000 of the costs incurred in the aggregate in connection with these items during any Lease year (as that term is defined below), and Tenant and Landlord shall each pay one-half of all additional costs incurred in connection with these items in excess of $5,000 during each Lease year. As used herein, the term "Lease year" means any period commencing with August 1 of any given year during which the Lease remains in effect and continuing through July 31 of the following year or such earlier date as the Lease may terminate.
3. Rental Adjustments. Paragraph 1.3 of the First Amendment is hereby deleted and replaced with the following:
a. The monthly rent for the period 8/1/93 through 7/31/95 (the "Base Period") is and shall continue to be $27,444.
b. The monthly rent for the two-year period 8/1/95 through 7/31/97 and for each successive two-year period during the term of this lease shall be equal to the monthly rent payable during the prior two-year period, increased by a percentage equal to the percentage increase in the Index (defined below) during the prior two-year period,up to a maximum percentage increase of two and one-half percent in any one year, for a maximum of a five percent increase for each two-year period.
c. As used herein, the term "Index" means the Consumer Price Index for all Urban Consumers - All Items, for the Seattle MetropolitanArea, as published by the U.S. Department of Labor's Bureau of Labor Statistics.
d. In addition to the rental adjustments described above, and not in lieu thereof, a rent adjustment shall be made on August 1, 2001, which shall be an amount equal to one-half of the sum of Monthly Excess Amounts (defined below) computed at the end of each of the following two-year periods: 8/1/93 through 7/31/95, 8/1/95 through 7/31/97, 8/1/97 through 7/31/99, and 8/1/99 through 7/31/01.
e. As used herein, the term "Monthly Excess Amount" means the difference between (a) the monthly rent increase that would have been made for the upcoming two-year period if the two and one-half percent annual limit were not in effect, and (b) the monthly rent
increase actually payable (i.e., with the two and one-half percent annual limit in effect).
f. In addition to the rental adjustments described above, and not in lieu thereof, a rent adjustment shall be made on August 1, 2005, which shall be an amount equal to one-half of the sum of the Monthly Excess Amounts computed at the end of each of these two-year periods: 8/1/01 through 7/31/03 and 8/1/03 through 7/31/05.
g. By way of illustration only, if the Index were to increase by four percent during the first twelve months of the Base Period and one percent during the second twelve months of the Base Period, the monthly rent for the following two-year period (8/1/95 through 7/31/97) would be $28,404.54 (i.e., the Base Period monthly rent of $27,444 plus three and one-half percent of $27,444, or $960.54, based on the two and one-half percent limit for the first twelve months and the actual one percent increase during the second twelve months). The Monthly Excess Rent at the end of the Base Period would be $411.66 (calculated by multiplying the Base Period monthly rent of $27,444 by one and one-half percent, or .015, which is the difference between the five percent increase in the Index during the Base Period and the three and one-half percent increase actually applied to the rent adjustment for the following period.) The Monthly Excess Amount for the period from 8/1/95 through 7/31/97 would be calculated based on a beginning monthly rent of $28,404.54. A similar calculation will be made for each successive two-year period.
h. If the Index is discontinued, the parties shall substitute a comparable index of consumer prices.
4. Term of Occupancy; Last Month's Rent. The Lease term is hereby extended to July 31, 2011, and Tenant shall have the sole and exclusive right to peaceful and quiet enjoyment of the Premises, and to occupy the Premises without interruption or interference for the entire remainder of the term as extended hereby. However, Tenant shall have the right to terminate the Lease at any time by giving written notice to Landlord at least two years in advance of the termination date. Tenant shall not be liable for any obligations arising under or in connection with the Lease following the date specified as the termination date. Maloney, Korry, and Esterline agree that a termination notice shall be binding and no party will apply to a Court in equity or otherwise to extend the term of the Amended Lease beyond the date specified in the termination notice. The parties recognize Maloney is not holding the last month's rent. Upon termination of the Amended Lease no rent prepaid prior to the date of this Agreement will be returned.
5. Improvements to the Property. Paragraph 7.5(a) of the Original Lease is hereby deleted and replaced by the following:
a. Tenant shall not make any alterations, improvements, or additions in, on, or about the Premises, except (i) non-structural alterations not exceeding $5,000 in cost and/or (ii) in the case of an emergency, to protect life or property, without first obtaining Landlord's consent, which consent shall not be unreasonably withheld. As a condition of giving such consent, Landlord may require Tenant to remove any such alterations, improvements, additions, or utility installations hereafter installed at the expiration of the Lease term or any prior termination thereof, and to restore the Premises to their condition just prior to making the requested alteration, improvement, or addition. Landlord's consent to Tenant's request for such consent shall be implied as given, and Tenant shall be entitled to make such alterations, improvements, or additions as have been described in a notice issued to Landlord, if Landlord does not object to the alter- ations, improvements, or additions within fifteen days after actual receipt of such notice from Tenant. Notice and objections under this paragraph must be made in accordance with the notice provisions of paragraph 6 of this Agreement; provided, however, that the requirement of receipt of any fifteen-day notice sent by Tenant may be met by actual receipt of the notice by either of the notice recipients for Landlord identified in paragraph 6.a. of this Agreement, rather than both.
b. Any and all requests for alterations, improvements, or additions affecting exterior or load bearing walls or the foundation of the building located on the Premises, or which involve cutting holes through floors in the building, shall be accompanied by a writing from a licensed structural engineer, certifying that, in the opinion of the structural engineer, the structural integrity of the building would not be impaired by the proposed alterations, improvements, or additions.
6. Notices. Paragraph 19 of the Original Lease is hereby deleted and replaced by the following:
a. Notice Addresses. Any notice, keys, drawings, or other item or items that may or shall be delivered pursuant to the terms of this Lease shall be delivered to the following addresses:
If to Landlord, to both of the following:
Michael Maloney
P.O. Box 33007
Seattle, WA 98133
Ryan Swanson & Cleveland
Suite 3400, 1201 Third Avenue
Seattle, WA 98101
Attn: Roger J. Kindley
Barbara J. Duffy
If to Tenant, to both of the following:
Korry Electronics Co.
901 Dexter Avenue North
Seattle, WA 98109
Attn: Director of Finance
Esterline Technologies, Inc.
10800 N.E. 8th
Bellevue, WA 98004
Attn: Chief Financial Officer
b. Form of Notice and Delivery. Any and all notices shall be in writing and either delivered by hand or mailed, via certified United States mail, postage prepaid, to the addresses of the respective recipient as set forth above. Delivery shall be deemed complete and effective upon receipt by the recipient or upon the third business day following mailing, whichever shall first occur.
c. Covenant to Accept Notice. No party shall refuse or otherwise attempt to avoid delivery of any notice.
d. Change of Notice Address. Any party may change its notice address by giving written notice of a new address in accordance with the foregoing notice provisions.
7. Continuation of Unmodified Terms. Except as modified by this Agreement, the terms of the Amended Lease remain in full force and effect. In the event of conflict or inconsistency between the provisions of the Amended Lease and the provisions of this Agreement, this Agreement will control.
8. Binding Effect. The terms and conditions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors, personal representatives, and permitted assigns.
9. Entire Agreement. This Agreement contains the entire understanding between and among the undersigned parties in connection with the subject matter addressed herein. It supersedes and replaces any and all prior negotiations, agreements, discussions, representations, statements and promises, whether oral or written. Each party hereby acknowledges that no promise, representa- tion or warranty whatsoever, express or implied, has been made by any other party or agent or attorney of any other party to induce it to execute this document, other than the terms expressly stated in this written Agreement.
10. Construction of this Agreement.
a. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington.
b. The paragraph headings used in this Agreement are inserted for convenience only and are not intended to be a part of this Agreement or to affect its construction.
c. When used in this Agreement, terms such as "herein," "hereto," and "hereof" refer to the entire Agreement, and are not limited to any portion or portions hereof.
d. This Agreement has been negotiated by counsel for all parties, and the language hereof, including without limitation any ambiguities, shall not be construed in favor of any one or more parties or against any one or more other parties.
e. Time is of the essence in this Agreement.
f. This Agreement is exclusively for the benefit of the undersigned parties, and no intent to benefit any third person or entity shall be inferred, implied, or presumed in construing this Agreement.
11. Signing Authority. Each of the individuals signing below on behalf of Korry and Esterline hereby warrants that he is authorized to sign this Agreement on that party's behalf and that his signature binds that party.
Maloney hereby warrants that he is authorized to sign this Agreement on behalf of the Bancroft & Maloney partnership as well as on his own behalf, and that he and the partnership are bound thereby.
Dated the day and year first set forth above.
KORRY ELECTRONICS CO. MICHAEL MALONEY by /s/ David Elkins by /s/ Michael Maloney ---------------------------------- ------------------------------------- David Elkins Michael Maloney, individually President and as managing partner of Bancroft & Maloney, a general partnership |
ESTERLINE TECHNOLOGIES, INC.
by /s/ R. W. Stevenson ---------------------------------- R. W. Stevenson Chief Financial Officer |
Exhibit 10.15
ESTERLINE TECHNOLOGIES CORPORATION
SUPPLEMENTAL RETIREMENT INCOME PLAN FOR KEY EXECUTIVES
ESTERLINE TECHNOLOGIES CORPORATION
SUPPLEMENTAL RETIREMENT INCOME FOR KEY EXECUTIVES
ARTICLE I
Purpose
This Supplemental Retirement Income Plan is intended to promote the interests of Esterline Technologies Corporation (the "Company") and its shareholders by stimulating the efforts of selected key executives of the Company by providing such key executives with a source of retirement income supplementary to their retirement income from the Esterline Technologies Corporation Retirement Plan and Trust (the "Qualified Plan") ; Such benefits are intended to provide a portion of such executives' benefits under the Qualified Plan that are lost because of statutory limits applicable to higher paid employees.
ARTICLE II
Definitions
1. "Administrator" shall mean the Company's Board as set forth in Article IX hereof.
2. "Accrued Benefit" shall have the same meaning as provided in the Qualified Plan.
3. "Beneficiary" shall mean the person or persons designated by the Participant as provided herein or, if none, the person or persons specified in Article VI hereof, to receive any benefits payable under the Plan in the event of such Participant's death. Each such designation shall be filed with the Administrator in a form acceptable to the Administrator and shall become effective only when received and acknowledged in writing by the Administrator.
4. "Board" shall mean the Board of Directors of the Company.
5. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.
6. "Company" shall mean Esterline Technologies Corporation, a Delaware corporation, and any affiliate (as designated by the Board) or any successor to such corporation.
7. "Early Retirement Date" Shall have the same meaning as provided in the Qualified Plan.
8. "Eligible Spouse" shall mean the lawful spouse of a Participant as of the date of death or incompetency of the Participant.
9. "Normal Retirement Age" shall have the same meaning as provided in the Qualified Plan.
10. "Normal Retirement Date" shall have the same meaning as provided in the Qualified Plan.
11. "Participant" shall mean any individual who has been designated by the Board as eligible to participate in the Plan and who has executed a Participation Agreement and returned it to the Administrator as provided in Article III hereof.
12. "Participation Agreement" shall mean a written agreement governing a Participant's rights under the Plan, which shall be executed by the Company and the Participant in such form as the Administrator shall specify.
13. "Person" shall include individuals, partnerships, corporations, associations, and other entities.
14. "Plan" shall mean the Supplemental Retirement Plan set forth herein.
15. "Qualified Plan" shall mean the Esterline Technologies Corporation Retirement Plan and Trust, as amended from time to time.
16. "Supplemental Retirement Income" shall mean the supplemental retirement benefit described in Article V hereof.
17. "Vested" or "Vesting" shall mean the degree to which a Participant's right to benefits under the Plan has become nonforfeitable.
18. "Year of Service" for all purposes shall have the same meaning as provided in the Qualified Plan.
ARTICLE III
Eligibility and Participation
1. Eligibility. The Board shall designate, from time to time, certain officers of the Company, including officers who also may be directors of the Company, who are determined by the Board to be key executives of the Company and thus eligible to participate in the Plan. In selecting the officers eligible to participate in the Plan, the Board shall consider the position and responsibilities of such individuals, the value of their services to the Company, and such other factors as the Board deems pertinent. After the Board has designated an officer as eligible to participate in the Plan, the Administrator shall notify such officer and present him with a Participation Agreement executed by the Company.
2. Participation and Contribution. An eligible officer shall become a Participant in the Plan upon executing and returning to the Administrator the Participation Agreement described in paragraph 1 above and agreeing to have withheld from his compensation an amount equal to 1% of the amount by which his compensation as described in the Participation Agreement for any year exceeds the limit provided in Section 401 (a)(17) of the Code for that year. Participant contributions shall be made by payroll deduction.
ARTICLE IV
Vested Right to Benefits
The Participant's interest in the benefits which he is eligible to receive under the terms of the Plan shall be vested and nonforfeitable as provided in the Participation Agreement.
ARTICLE V
Supplemental Retirement Income
1. Pre-retirement Termination. Upon the termination of Participant's employment prior to his retirement for reasons other than his death, he shall be entitled to a Supplemental Retirement Income in the amount and payable over the term specified in the Participation Agreement.
2. Retirement. Upon reaching his Normal Retirement Date or qualifying under the Qualified Plan for Early Retirement, the Participant (or his Beneficiary) shall be entitled to receive from the Company a supplemental retirement income benefit (the "Supplemental Retirement Income" herein) in such amount, commencing at his Normal Retirement Date or his Early Retirement Date, as the case may be, as shall be set forth in the Participation Agreement.
3. Form of Supplemental Retirement Income. A Participant's Supplemental Retirement Income shall be paid in one of the forms permitted under the Qualified Plan for benefits provided under said Qualified Plan.
ARTICLE VI
Survivor Benefits
1. Pre-retirement Death Benefit. If a Participant dies prior to the commencement of his Supplemental Retirement Income under Article V hereof, and his Beneficiary would be entitled to a survivor's benefit under the terms of the Qualified Plan, the Participant's Beneficiary shall be entitled to receive a survivor's benefit in the Supplemental Retirement Income, calculated in the same manner as the survivor's benefit under the Qualified Plan but using the Supplemental Retirement Income in place of the Accrued Benefit under the Qualified Plan. Such survivor's benefit shall be in lieu of all other benefits which the Participant (or his Beneficiary) would have been eligible to receive under the terms of the Plan. The Participant shall have the right to specify the Beneficiary entitled to receive the Participant's survivor's benefit in the same manner as he could have done under the terms of the Qualified Plan.
2. Post-retirement Supplemental Retirement Income. If a Participant dies after commencing to receive his Supplemental Retirement Income under Article V hereof and has selected a survivor's form of benefit, the Participant's Beneficiary shall be entitled to receive from the Company the survivor's benefit as provided by the Participant's election.
ARTICLE VII
Withholding Taxes
Notwithstanding anything in the Plan to the contrary, the Company shall withhold from all benefit payments made to a Participant (or his Beneficiary) under the Plan, any amount which the Company is required to withhold for any applicable state or federal taxes.
ARTICLE VIII
Amendment and Termination of Plan
The Plan may be amended, discontinued or terminated by the Board at any time; provided, however, that no amendment, discontinuance or termination of the Plan shall, without the consent of any persons affected thereby, alter or impair any rights created prior to such amendment, discontinuance or termination.
ARTICLE IX
Administration
The Plan shall be administered by the Board. The Board shall interpret the Plan and may from time to time make such decisions and adopt such rules and regulations for implementing the Plan as it deems appropriate. In so administering the Plan, the decisions and actions of the Board shall be final.
ARTICLE X
Miscellaneous
1. Source of Funding. The rights of a Participant (and/or his Beneficiary) to benefits under the Plan shall be solely those of an unsecured creditor of the Company, and all benefits payable under the Plan shall be paid from the general funds of the Company.
2. Not a Contract of Employment. The terms and conditions of the Plan shall not be deemed to constitute a contract of employment between the Company and the Participant, and the Participant (and his Beneficiary) shall have no rights against the Company except as specifically provided herein. Moreover, nothing in the Plan shall be deemed to give a Participant the right to be retained in the employ of the Company or to interfere with the right of the Company to discipline or discharge the Participant at any time.
3. Successors. A Participant shall not have any right to transfer, assign, encumber, hypothecate or otherwise dispose of his (or his Beneficiary's) right to receive benefit payments under the Plan. The provisions of the Plan shall bind and inure to the benefit of the Company and its successors and assigns. The term "successors" as used herein shall include any corporation or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business or assets of the Company.
4. Expenses. All expenses and costs in connection with the adoption and administration of the Plan shall be borne by the Company.
5. No Prior Right or Offer. Except as expressly granted pursuant to the Plan subsequent to its effective date, nothing in the Plan shall be deemed to give any director, officer or employee, or his legal representatives or assigns or any other person or entity claiming under or through him, any contractual or other right to participate in the benefits of the Plan.
6. Notice. Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed given when personally delivered to the addressee or deposited in the United States mail, postage prepaid and properly addressed to the addressee's last known address.
7. Terms. Whenever any words are used herein in the masculine they shall be construed as though they were used in the feminine in all cases where they would so apply and wherever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply. Titles of Articles and paragraphs hereof are for general information only, and the Plan is not to be construed by reference thereto.
8. Incompetence. If the Administrator determines that a Participant is unable to care for his affairs because of illness, accident or otherwise, any payment due the Participant shall be made only to a duly authorized guardian or other legal representative or, upon appropriate indemnification of the Administrator, to the Eligible Spouse. Any such payment shall be a payment for the account of the Participant and shall be a complete discharge of any liability of the Company therefore.
9. Governing Law. The provisions of the Plan shall be governed by and construed in accordance with the laws of the State of Washington. Invalidation of any one of the provisions of the Plan for any reason shall in no way affect the other provisions hereof, and all such other provisions shall remain in full force and effect.
EXHIBIT A
ESTERLINE TECHNOLOGIES CORPORATION
SUPPLEMENTAL RETIREMENT INCOME PLAN FOR KEY EXECUTIVES
PARTICIPATION AGREEMENT
This is an AGREEMENT made as of _____________________, by and between ESTERLINE TECHNOLOGIES CORPORATION, a Delaware corporation (the "Company") and ___________________________________________ (the "Participant").
RECITALS
A. Pursuant to the Company's Supplemental Retirement Income Plan for Key Executives (the "Plan"), to which this Agreement is attached hereto and which is incorporated herein by this reference, the Board of Directors of the Company (the "Board") has designated the Participant as eligible to participate in the Plan on the terms and conditions set forth in the Plan and in this Agreement.
B. The Participant wishes to participate in the Plan.
Now, therefore, the parties AGREE as follows:
1. Participation in Plan. Pursuant to paragraph 2 of Article III of the Plan, the Participant shall become a Participant in the Plan upon executing this Agreement and delivering it to the Board. The Participant acknowledges that he has read the Plan and agrees to all of its terms, conditions and provisions. The parties agree that the definitions of terms used in this Agreement are as defined in the Plan or in the Qualified Plan.
2. Contributions.
a. Participant hereby agrees to have withheld from his gross compensation 1% of the amount by which his compensation for any year as described in Section 3 below exceeds the limit provided in Section 401 (a)(17) of the Code for that year.
b. The Company shall set aside or otherwise reserve all amounts in addition to the Participant contributions necessary to fund the Supplemental Retirement Income described hereafter.
3. Supplemental Retirement Income. The Participant's Supplemental Retirement Income shall equal the excess of (A) the Participant's Modified Accrued Benefit over (B) his Accrued Benefit payable under the Qualified Plan. The Participant's Modified Accrued Benefit shall be his Accrued Benefit determined as provided under Qualified Plan except that his compensation shall include only his salary and incentive compensation from annual plans and shall specifically exclude: (i) compensation from the exercise or surrender of stock options issued by the Company or the exercise or surrender of stock options or stock appreciation rights issued by Criton Corporation and (ii) long term incentive compensation and divestiture bonuses paid by either the Company or Criton Technologies. The Participant's compensation, however, shall not be limited as provided in 5401(a) (17) of the Code or any other similar statutory limitation on compensation, nor shall the benefit so determined be limited as provided by 5415 of the Code or any other similar statutory limitation on benefits.
4. Termination Benefit.
a. If Participant's employment is terminated by the Company without cause as defined below or he quits, he shall be entitled to his vested portion of his Supplemental Retirement Income at his Normal or Early Retirement Date.
b. If Participant's employment is terminated for cause, he shall not be entitled to any portion of his Supplemental Retirement Income hereunder.
c. Cause when used in connection with the termination of Participant's employment by the Company, shall mean (i) the willful and continued failure by Participant substantially to perform his duties and obligations to the Company (other than any such failure resulting from any illness, sickness or physical or mental incapacity) which failure continues after the Company has given notice thereof to Participant or (ii) the willful engaging by Participant in misconduct which is significantly injurious to the Company, monetarily or otherwise. For purposes of this definition, no act, or failure to act, on Participant's part shall be considered "willful" unless done, or omitted to be done, by Participant in bad Faith and without reasonable belief that his action or omission was in the best interests of the Company.
5. Normal Retirement Benefit. Upon reaching his Normal Retirement Age, the Participant shall be entitled to his Supplemental Retirement Income which shall be paid by the Company in the manner elected by the Participant for his Accrued Benefit under the Qualified Plan.
6. Early Retirement Benefit. If the Participant elects to retire early he shall be entitled to his Supplemental Retirement Income reduced however by the Qualified Plan's early retirement factor,
7. Vesting. The Participant's Supplemental Retirement Income hereunder shall be vested as his Accrued Benefit shall vest under the Qualified Plan.
8. Miscellaneous.
8.1 This Agreement is binding upon and inures to the benefit of the parties hereto and their respective successors, assignees, legal representatives, and heirs; provided, however, that the Participant may not assign any of his rights under the Plan or this Agreement.
8.2 This instrument together with the Plan constitutes the entire agreement between the parties hereto relating to the subject matter hereof and except as provided specifically herein shall not be modified or amended in any way except in writing signed by both parties.
8.3 Neither the failure nor the delay on the part of any party hereto to exercise any right, power, or privilege shall operate as a waiver in that or any subsequent instance.
8.4 This Agreement shall be governed by and construed in accordance with the laws of the State of Washington.
EXECUTED as of the day and year first above written.
ESTERLINE TECHNOLOGIES CORPORATION
PARTICIPANT
Exhibit 10.19
TERMINATION PROTECTION AGREEMENT
This Agreement ("Agreement") is made this _____ day of _______________, 200_ between Esterline Technologies Corporation, a Delaware corporation, with its principal offices at 500 108th Avenue N.E., Suite 1500, Bellevue, Washington 98004 (the "Company") and _______________ (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board") has determined it is appropriate to encourage the continued attention and dedication of Company executives to their assigned duties without distraction in circumstances arising from a possible change in control of the Company; and
WHEREAS, the Executive is willing to enter into this Agreement for the purposes and on the terms and conditions described below;
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 "Cause" shall mean: (a) the willful and continued failure by the Executive to substantially perform his or her duties and obligations to the Company (other than any such failure resulting from illness, sickness, or physical or mental incapacity) which failure continues after the Company has given notice to the Executive; or (b) the willful engaging by the Executive in misconduct that is significantly injurious to the Company, monetarily or otherwise. For purposes of this definition, no act, or failure to act, on the Executive's part shall be considered "willful" unless done, or omitted to be done, by the Executive in bad faith and without reasonable belief that his or her action or omission was in the best interests of the Company.
1.2 "Change in Control Event" shall mean the first to occur of the following events:
(a) an acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (1) the then outstanding shares of common stock of the Company or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, excluding, however, the following (i) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege where the security being so converted was not acquired directly from the Company by the party exercising the conversion privilege, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Related Company, or (iv) a Related Party Transaction; or
(b) a change in the composition of the Board during any two-year period such that the individuals who, as of the beginning of such two-year period, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board subsequent to the beginning of the two-year period, whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least two-thirds of those individuals
who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; and provided further, however, that any such individual whose initial assumption of office occurs as a result of or in connection with an actual or threatened solicitation of proxies or consents by or on behalf of an Entity other than the Board shall not be considered a member of the Incumbent Board.
1.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.4 "Contract Period" shall mean the twenty-four (24) month period beginning on the Effective Date.
1.5 "Disability" shall mean any physical or mental condition for which the Executive would be eligible to receive benefits under the disability insurance provisions of (a) the Social Security Act or (b) the Company's long-term disability program.
1.6 "Effective Date" shall mean the day preceding a Change in Control Event.
1.7 "Equity Incentive Plan" shall mean the Esterline Technologies Corporation 2004 Equity Incentive Plan, as amended from time to time.
1.8 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
1.9 "Fringe Benefit Program" shall mean any employee benefit plan, program, or arrangement, including, without limitation, employee benefit plans within the meaning of the Employee Retirement Income Security Act of 1974, as amended, but excluding the Equity Incentive Plan and any nonqualified deferred compensation plan or other incentive compensation plan.
1.10 "Final Fiscal Period" shall mean the number of days the Executive was employed by the Company during the Fiscal Year in which the Executive's Termination Date occurs.
1.11 "Fiscal Year" shall mean the twelve (12)-month period ending on October 31.
1.12 "Good Reason" shall mean:
(a) Assignment to the Executive of any duties inconsistent with, or the reduction of powers or functions associated with, his or her positions, duties, responsibilities and status with the Company immediately prior to the Effective Date, or any removal of the Executive from or any failure to re-elect the Executive to any positions or offices the Executive held immediately prior to the Effective Date, except in connection with the termination of the Executive's employment by the Company for Cause or for Disability, or the failure to maintain a working environment conducive to the performance of the Executives' duties or the effective exercise of the powers or functions associated with the Executive's position, responsibilities and status with Company immediately prior to the Effective Date; or
(b) The Company's failure to pay the Executive a monthly base salary at least equal to the then applicable Minimum Base Salary; or
(c) The Company's failure to pay the Executive, within seventy-five
(75) days following the end of a Fiscal Year, compensation with
respect to each such Fiscal Year ending after the Effective Date in an
amount at least equal to the Minimum Total Compensation; or
(d) The Company's mandatory transfer of the Executive to another geographic location, without the Executive's consent, outside of a twenty (20) mile radius from the Executive's current location, except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations prior to the Effective Date; or
(e) Company action or omission, in its capacity as a plan administrator or otherwise, that would adversely affect the Executive's participation in any Fringe Benefit Program in effect on the Effective Date, or materially reduce the value of his or her benefits under any such program, including benefits under any Company car allowance and vacation policy; or
(f) Failure by the Company to obtain an assumption of the obligations of the Company to perform this Agreement by any successor, as provided in Section 7.1.
1.13 "Minimum Base Salary" shall mean the Executive's annual rate of salary on the Effective Date, payable monthly, increased by ten (10)% per annum compounded annually on each anniversary of the Executive's most recent raise.
1.14 "Minimum Total Compensation" shall mean a sum equal to the Executive's aggregate gross cash compensation (excluding Non-Recurring Compensation) paid to the Executive by the Company during the twenty-four (24) month period ending on the Effective Date, divided by two (2).
1.15 "Non-Recurring Compensation" shall mean amounts received by the Executive (a) under any nonqualified deferred compensation plan or arrangement or, (b) as the result of the exercise or receipt of stock appreciation rights, stock options or other equity-based compensation.
1.16 "Related Company" shall have the meaning given such term under the Equity Incentive Plan.
1.17 "Related Party Transaction" shall have the meaning given such term under the Equity Incentive Plan
1.18 "Termination Date" shall mean the effective date of the Executive's "separation from service" (as that term is defined under Code Section 409A and the regulations issued thereunder) from the Company.
2. Scope of Agreement. This Agreement shall apply with respect to any termination of employment of the Executive that occurs during the Contract Period. It shall not apply to any termination of the Executive's employment that occurs other than during the Contract Period.
3. Termination During Contract Period.
3.1 General. During the Contract Period and subject to any employment agreement between the Company and the Executive, the Company shall have the right to terminate
the Executive's employment with the Company for any reason or for no reason, and the Executive may terminate his or her employment with the Company for any reason or for no reason. In the event of any such termination of employment, the Executive shall be entitled to such compensation, if any, as provided for in this Agreement.
3.2 Without Cause or For Good Reason. In the event the Executive's
employment with the Company is terminated during the Contract Period by the
Company without Cause, or by the Executive with Good Reason, then the
Executive shall be entitled to the compensation and benefits provided in
Section 4.
3.3 Other Than For Good Reason. In the event the Executive terminates his or her employment with the Company during the Contract Period for any reason other than for Good Reason, the Executive shall not be entitled to any compensation under this Agreement, other than the Executive's accrued but unpaid salary and accrued but unused vacation through his or her Termination Date.
3.4 For Cause, Disability, or Death. In the event the Executive's employment with the Company is terminated by the Company during the Contract Period for Cause or for Disability, or if the Executive's employment with the Company is terminated as the result of the Executive's death, neither the Executive nor his or her beneficiary, as the case may be, shall be entitled to receive any compensation or benefits under this Agreement other than the Executive's accrued but unpaid salary and accrued but unused vacation through his or her Termination Date.
4. Compensation and Benefits Upon Termination by the Company Without Cause or by Executive for Good Reason.
4.1 If the conditions set forth in Section 3.2 are satisfied, the Executive shall be entitled to receive the following compensation and benefits:
(a) a pro rata amount of the Minimum Total Compensation, calculated as follows: the Minimum Total Compensation multiplied by a fraction, the numerator of which is the Final Fiscal Period and the denominator of which is 365, with the product thereof reduced (but not below zero) by the cash compensation (excluding Non-Recurring Compensation) actually paid, or earned and unpaid, to the Executive with respect to service performed during the Final Fiscal Period;
(b) all other amounts earned by the Executive and unpaid as of the Termination Date, including any accrued but unpaid vacation;
(c) an amount equal to three (3) times the Minimum Total Compensation;
(d) reimbursement of all legal fees and related expenses as may be incurred by the Executive in seeking to obtain or enforce any right or benefit provided to the Executive by this Agreement, provided (1) the Executive's claims are determined under Section 9, or by agreement of the parties, to be well-founded in substantial part, and (2) that fees and expenses are reasonable in light of the claims at issue; and,
(e) all life insurance, medical, health, dental, accident and disability coverage provided to the Executive immediately prior to the Termination Date, until the earliest to occur of (1) the end of the Contract Period, or (2) the Executive's
commencement of full time employment with a new employer; provided that the Executive's continued participation in the plans, programs or arrangements providing such coverage is practicable under the general terms and provisions of such plans, programs or arrangements. If the Executive's participation in any such plan, program or arrangement is not practicable, the Company shall in its sole discretion arrange to provide the Executive with: (3) benefits substantially similar to those the Executive was entitled during employment to receive under such plans, programs or arrangements; or (4) cash compensation on an after-tax basis sufficient for the Executive to purchase such benefits.
4.2 The amounts specified in Sections 4.1(a), (b), (c), and (e)(4) (if applicable), shall be payable to the Executive in a lump sum as soon as practicable, but no later than within sixty (60) days of his or her Termination Date.
4.3 The benefits or amounts specified in Sections 4.1(d) and (if applicable) the clauses in (e)(1), (2) or (3) shall be provided or payable to the Executive only to the extent provision or payment of such benefits or amounts would not be subject to tax under Code Section 409A.
4.4 Except as specifically provided herein, the amount of any compensation or benefits provided for in this Agreement shall not be subject to mitigation by the Executive.
5. Specified Employees. Notwithstanding any provision of this Agreement to the contrary, in the event that the Executive is a "Specified Employee" (as that term is defined under Section 409A of the Code and the regulations issued thereunder) at the time the Executive becomes entitled to any benefits under this Agreement, no benefit shall be paid to the Executive under this Agreement until the date that is six months and one day following the Executive's Termination Date. If the preceding sentence results in a delay in the payment of the Executive's benefits under this Agreement, such benefits shall be credited with interest for the period commencing on the Executive's Termination Date and ending on the date the Executive's benefits under this Agreement are actually distributed to him based on an annual interest rate equal to the greater of (a) the interest rate used to determine participant interest credits under the Company's defined benefit cash balance plan for the Fiscal Year in which the Executive's Termination Date occurs and (b) the applicable federal rate appropriate for a six-month loan determined as of the Executive's Termination Date.
6. 280G Provisions. Notwithstanding any provision of this Agreement to the contrary, if all or any portion of the amount payable to the Executive pursuant to this Agreement, alone or together with other payments the Executive has the right to receive from the Company, constitute "excess parachute payments" within the meaning of Section 280G of the Code, as amended, that are subject to the excise tax imposed by Section 4999 of the Code, such amounts payable hereunder shall be reduced to the extent necessary, after first applying any similar reduction to payments to be received from any other plan or program sponsored by the Company from which the Executive has a right to receive payments subject to Sections 280G and 4999 of the Code, so that the excise tax imposed by Section 4999 of the Code does not apply; provided, however, that this payment reduction shall take place only if such reduction would provide to the Executive a greater net, after-tax benefit than he or she would receive if such amounts were not subject to such reduction.
7. Successors; Binding Agreement.
7.1 The Company will require any successor or successors (whether direct or indirect, by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the business and/or assets of the Company, upon or prior to such succession, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. A copy of such assumption and agreement shall be delivered to the Executive promptly after its execution by the successor. Failure of the Company to obtain such agreement upon or prior to the effectiveness of any such succession shall entitle the Executive to terminate his or her employment for Good Reason, as set forth in Section 1.12(f). As used in this Agreement "Company" shall include any successor to its business and/or assets that executes and delivers the agreement provided for in this Section 7.1 or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.
7.2 This Agreement is personal to the Executive and the Executive may not assign or transfer any part of his or her rights or duties hereunder, or any compensation due to him hereunder, to any other person, except that this Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, heirs, distributees, devisees, legatees or beneficiaries.
8. Modification; Waiver. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and by the Chief Executive Officer of the Company or such other director or officer as may be specifically designated by the Board. Waiver by any party of any breach of or failure to comply with any provision of this Agreement by the other party shall not be construed as, or constitute, a continuing waiver of such provision, or a waiver of any other breach of, or failure to comply with, any other provision of this Agreement.
9. Arbitration of Disputes.
9.1 Any disagreement, dispute, controversy or claim arising out of or relating to this Agreement or the interpretation or validity hereof shall be settled exclusively and finally by arbitration. It is specifically understood and agreed that any disagreement, dispute or controversy that cannot be resolved between the parties, including without limitation any matter relating to the interpretation of this Agreement, may be submitted to arbitration irrespective of the magnitude thereof, the amount in controversy or whether such disagreement, dispute or controversy would otherwise be considered justiciable or ripe for resolution by a court or arbitral tribunal.
9.2 The arbitration shall be conducted in accordance with the Commercial Arbitration Rules (the "Arbitration Rules") of the American Arbitration Association (the "AAA").
9.3 The arbitral tribunal shall consist of one arbitrator. The parties to the arbitration jointly shall directly appoint such arbitrator within 30 days of initiation of the arbitration. If the parties shall fail to appoint such arbitrator as provided above, such arbitrator shall be appointed by the AAA as provided in the Arbitration Rules and shall be a person who (a) maintains his or her principal place of business in the State of Washington; and (b) has had substantial experience in business transactions. The Company shall pay all of the fees, if any, and expenses of such arbitrator.
9.4 The arbitration shall be conducted in Seattle, Washington or in such other city in the United States of America as the parties to the dispute may designate by mutual written consent.
9.5 At any oral hearing of evidence in connection with the arbitration, each party thereto or its legal counsel shall have the right to examine its witnesses and to cross-examine the witnesses of any opposing party. No evidence of any witness shall be presented in written form unless the opposing party or parties shall have the opportunity to cross-examine such witness, except as the parties to the dispute otherwise agree in writing or except under extraordinary circumstances where the interests of justice require a different procedure.
9.6 Any decision or award of the arbitral tribunal shall be final and binding upon the parties to the arbitration proceeding. The parties hereto hereby waive to the extent permitted by law any rights to appeal or to seek review of such award by any court or tribunal. The parties hereto agree that the arbitral award may be enforced against the parties to the arbitration proceeding or their assets wherever they may be found and that a judgment upon the arbitral award may be entered in any court having jurisdiction.
9.7 Nothing herein contained shall be deemed to give the arbitral tribunal any authority, power, or right to alter, change, amend, modify, add to, or subtract from any of the provisions of this Agreement.
10. Payment Obligations Absolute. Except as otherwise provided in this Agreement, the Company's obligation to pay the Executive the amounts provided for hereunder and to make the arrangements provided for hereunder shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right the Company may have against the Executive or anyone else. Except as otherwise set forth in this Agreement, all amounts payable by the Company hereunder shall be paid without notice or demand. Subject to the right of the Company to seek arbitration under Section 9 and recover any payment made hereunder, each and every payment made hereunder by the Company shall be final and the Company will not seek to recover all or any part of such payment from the Executive or from whosoever may be entitled thereto, for any reason whatsoever.
11. Notice. All notices, requests, demands and other communications required or permitted to be given by either party to the other party by this Agreement (including, without limitation, any notice under the Arbitration Rules of an intention to arbitrate) shall be in writing and shall be deemed to have been duly given when delivered personally or received by certified or registered mail, return receipt requested, postage prepaid, at the address of the other party, as follows:
If to Company, to
Esterline Technologies Corporation
500 108th Avenue N.E.
Suite 1500
Bellevue, Washington 98004
Attention: Board of Directors and Secretary
If to the Executive, to
Either party may change its address for purposes of this Section 11 by giving fifteen (15) days' prior notice to the other party.
12. Severability. If any term or provision of this Agreement or the application hereof to any person or circumstances shall to any extent be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
13. Headings. The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of this Agreement.
14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original.
15. Governing Law. This Agreement shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of Washington, without regard to its conflicts of laws principles.
16. Payroll and Withholding Taxes. All payments to be made or benefits to be provided hereunder by the Company shall be subject to reduction for any applicable payroll-related or withholding taxes.
17. Entire Agreement. This Agreement supersedes any and all other oral or
written agreements made relating to the subject matter hereof and constitutes
the entire agreement of the parties relating to the subject matter hereof;
provided that this Agreement shall not supersede or limit or in any way affect
(a) the Executive's rights under the Company's Equity Incentive Plan, any other
incentive compensation plan, or any deferred compensation plan as in effect on
the Effective Date or with respect to any awards made pursuant to such plans;
(b) any rights the Executive may have under any other company employee benefit
plan, program or arrangement (including, without limitation, any pension, life
insurance, medical, dental, health, vacation and accident and disability plans,
programs and arrangements); or (c) the Company's right to amend or terminate its
employee benefit plans in accordance with their terms.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
EXECUTIVE
Exhibit 10.21
FY06 ANNUAL INCENTIVE COMPENSATION PLAN
ESTERLINE TECHNOLOGIES CORPORATION
1. PURPOSE. The Board of Directors has established this Plan to encourage Esterline officers and senior managers to make prudent decisions that will strengthen current year financial results for shareholders. The Plan is designed to reward participants for successful achievement of an earnings objective, and to provide incentives for them to achieve outstanding results.
2. MEMBERSHIP. The Board will appoint selected officers and senior managers from among Esterline's corporate staff to Plan membership. Individuals become members upon return of a signed acceptance.
3. OBJECTIVE. The Plan's earnings objective will be determined by the Board's Compensation Committee, and approved by the Board at the beginning of the fiscal year.
4. INCENTIVE FORMULA.
A. TARGET INCENTIVE COMPENSATION. The Board will establish a target incentive compensation award level for each member ("target IC"), which will range from 5% to 60% of the member's base salary as of fiscal year-end. Esterline will pay the target IC amount if the corporation achieves its earnings objective, subject to other terms of this Plan.
B. THRESHOLD. Members will earn no IC if the corporation's earnings fall below a minimum established by the Board ("Plan threshold"). At the Plan threshold, members will earn 25% of their target IC.
C. MAXIMUM. Members may earn up to 200% of their target IC for exceptional achievement if corporate earnings exceed the Plan's objective and reach this "Plan maximum". Plan members will earn no additional IC for achievement above the Plan maximum.
D. PROPORTIONATE AWARDS. Between the Plan threshold and Plan maximum, member earnings will increase or decrease from target levels in direct proportion to incremental achievement.
5. GENERAL TERMS.
A. PLAN ADMINISTRATION. The Board has delegated administrative authority to its Compensation Committee, which shall consider any issues arising under the Plan, oversee Plan award calculations, and make recommendations to the Board for final approval.
B. ADJUSTMENTS. The Compensation Committee may exercise its discretion to recommend the Board either subtract from or add to computed awards, provided, however, that the Compensation committee may not adjust awards for any member who is a covered
employee for purposes of Section 162(m) of the Internal Revenue Code of 1986 in such a manner as would increase the amount of compensation otherwise payable to that employee. The maximum range of such adjustments is limited to either 25% of the member's computed award or 25% of the member's target IC, whichever is greater.
C. CALCULATIONS. Esterline will calculate earnings per share on a fully-diluted basis, as audited, and before extraordinary items.
D. PAYMENT. Esterline will pay Plan awards within 60 days following fiscal year-end, provided:
- Company auditors have issued an opinion that supports earnings calculations;
- The Board has approved the proposed awards; and,
- Members remain employed through the entire fiscal year and through the payment date, except as provided in sections 5f and 5g below.
E. EMPLOYMENT. This Plan does not affect members' terms of employment, except as specifically provided here. This Plan does not guarantee continued employment. Members remain subject to usual Esterline policies and practices.
F. PARTIAL YEAR MEMBERSHIP. If an employee is appointed to the Plan mid-year, Esterline will pay a pro-rata amount based on the member's period of employment, and on the terms under which they were appointed to the Plan.
G. TERMINATION. If a member leaves Esterline employment prior to the Plan payment date for any reason, whether voluntary or involuntary, s/he shall forfeit any IC award otherwise earned, except:
i. The Board may exercise its discretion to grant a pro-rata award to a terminated employee based on his/her period of employment; or,
ii. If a member leaves due to retirement, disability or death, Esterline will pay a pro-rata amount based on the member's period of active employment.
H. ENTIRE AGREEMENT. This Plan, together with the member's appointment letter and signed acknowledgement, comprise the entire agreement between the member and Esterline with respect to these subjects.
I. MODIFICATION. The Board may modify or terminate this Plan at any time, provided it pays members on a pro-rata basis for any IC earned prior to such change.
Approved by the Board and issued on its behalf:
/s/ Robert W. Cremin ------------------------------------- Robert W. Cremin Chairman, President & CEO December 8, 2005 |
(ESTERLINE LOGO)
FY06 Annual Incentive Compensation Plan
EXHIBIT 10.22
REAL PROPERTY LEASE AND SUBLEASE
THIS REAL PROPERTY LEASE AND SUBLEASE (this "Lease"), dated for reference purposes the 28th day of June, 1996, is by and between 810 DEXTER L.L.C., a Washington limited liability company (the "Landlord"), and KORRY ELECTRONICS CO., a Delaware corporation (the "Tenant").
Landlord and Tenant agree as follows:
1. PREMISES. Landlord hereby leases to Tenant and Tenant leases from Landlord, upon the terms and subject to the conditions set forth in this Lease, that certain real property and improvements thereon, commonly known as 810 Dexter Avenue North, Seattle, Washington, along with the Adjoining Parking Lot (defined hereafter), all as legally described on Exhibit A attached hereto and incorporated herein by this reference (the "Real Property"). The leased premises (the "Premises") shall contain the entire building (the "Building"), which is approximately 93,000 square feet, and the Adjoining Parking Lot. Tenant may not use, occupy or penetrate the roof of the Premises without Landlord's consent.
2. PARKING. The Premises leased by Tenant hereunder shall include without additional cost or charge the Adjoining Parking Lot (the "Adjoining Parking Lot") adjacent to the Building subject to Landlord's sublease of all but thirty two (32) unreserved parking spaces. At the commencement of the Fourth Lease Year (defined hereinafter) Landlord shall sublease only one-third of the Adjoining Parking Lot and at the commencement of the Sixth Lease Year (defined hereinafter) Landlord shall cease subleasing any of the Adjoining Parking Lot. Landlord hereby grants to Tenant a first right of refusal on all parking spaces Landlord is subleasing from Tenant which may become available and which are not needed by other tenants from time to time, at a price of $50 per space per month. Landlord recognizes that Tenant may need additional parking and accordingly Landlord agrees to discuss in good faith with Tenant, at Tenant's request, Landlord's construction of a parking garage for Tenant on property in the present parking lot. So long as Landlord fulfills its obligation to discuss construction of the parking garage in good faith, it shall not be obligated to build same. In addition, Landlord reserves the right to construct at its sole cost and expense and at no cost to Tenant a parking garage structure on the Adjoining Parking Lot. Landlord shall provide Tenant with at least four (4) months prior written notice of commencement of construction. In either event, upon completion Tenant shall have the same number of spaces in the garage that are provided above at no additional cost, and during construction of the garage, to the extent Tenant is not able to use the portion of the Adjoining Parking Lot which Landlord is not then subleasing, Landlord shall provide Tenant at Landlord's expense with substitute parking within two (2) blocks of the Adjoining Parking Lot. During construction Landlord shall not unreasonably disrupt Tenant's use of the remainder of the Premises.
3. TERM.
3.1 Initial Term. The initial term (the "Initial Term") of this Lease shall be for a period, commencing on the Commencement Date (defined hereinafter) and ending July 31, 2011, unless sooner terminated pursuant to any provision hereof. For purposes of this Lease, the term "Lease Year" shall be the one year period beginning on an anniversary of the Commencement Date and continuing through the day before the next anniversary of the Commencement Date (except the final Lease Year ending July 31, 2011 may be less than twelve (12) months).
3.2 Commencement Date. This Lease shall be effective when signed by Landlord and Tenant. The Initial Term shall commence (the "Commencement Date") on the earlier of Tenant's occupancy of the Premises to conduct business or the issuance of a "Certificate of Occupancy" after completion of Tenant's Work (defined in Section 9.2 hereafter), whichever occurs first, but in no event later than December 1, 1996; provided, however, that if Tenant has not been issued a "Certificate of Occupancy" for the Premises by December 1, 1996, Tenant shall have the right to terminate this Lease on notice to Landlord so long as Tenant completes Tenant's Work (for which Landlord must reimburse Tenant up to $150,000 within ten (10) days of completion), and all Tenant's Work shall become property of Landlord. Tenant shall use all reasonable efforts to complete Tenant's Work by December 1, 1996.
3.3 Extensions. If Tenant is not in default under this Lease beyond the applicable cure period either at the time of option exercise or at any time until commencement of an Extension Term, Tenant shall have the right and option ("Option to Renew") of extending the term of this Lease for two (2) additional successive terms (each an "Extension Term") of five (5) years each, upon the terms and conditions provided herein. If Tenant elects to exercise such option, it shall do so by giving notice in writing to Landlord of such election at least one hundred eighty (180) days prior to the expiration of the Initial Term or as such Initial Term may be extended.
3.4 Tenant's Early Termination Rights. Tenant shall have the right to terminate this Lease by providing Landlord two (2) years irrevocable advance notice of its intent to terminate. If Tenant so terminates this Lease, Landlord shall reimburse Tenant for the unamortized portion of Tenant's costs (as specified by Tenant) to obtain all permits and approvals for its work on the Premises, costs of complying with energy codes and costs of installed heating and air-conditioning systems ("Reimbursable Costs"). The Reimbursable Costs shall be amortized on a straight line basis over fifteen (15) years, and the amount owed by Landlord shall not exceed $300,000 for the top floor, $100,000 for the middle floor, and $100,000 for the bottom floor. For example, if Tenant terminates at the end of the Third Lease Year, Tenant will be entitled to receive 12/15th's of the first $300,000 of its top floor Reimbursable Costs.
Tenant shall also have the right to terminate this Lease at any time in the event soil or groundwater contamination is discovered on, under or near the Premises and a local, state or federal agency requires investigations, testing or cleanup that materially interfere with Tenant's use of the Premises; provided, if such contamination is confined to the Adjoining Parking Lot Landlord may defeat Tenant's termination by notifying Tenant in writing within fifteen (15) days of receipt of Tenant's notice that Landlord will eliminate the contaminated area from the Premises and supply Tenant with replacement parking within two (2) blocks of the Premises, for all spaces eliminated from the Premises. Landlord and Tenant shall enter into an amendment to this Lease to evidence such elimination. If the Lease is terminated pursuant to this paragraph Reimbursable Costs shall be capped at $150,000.
4. MONTHLY AND ADDITIONAL RENT.
4.1 Minimum Monthly Rent - Initial Term. Subject to reduction pursuant to
Section 10 and Section 43, but otherwise without offset or deduction except as
expressly set forth herein, Tenant shall pay to Landlord, without notice or
demand, on or before the first day of each calendar month, at the address
specified below Landlord's signature hereon or at such other place as Landlord
shall designate, minimum monthly rent during the Initial Term for the Premises
as follows:
(a) For the first lease year, the ("First Lease Year") which begins on the Commencement Date and continues through the day before the first anniversary of the Commencement Date, minimum monthly rent shall be $36,000 per month (prorated for partial months);
(b) For the second lease year the ("Second Lease Year"), which begins on the first anniversary of the Commencement Date and continues through the day before the second anniversary of the Commencement Date, minimum monthly rent shall be $38,000 per month;
(c) For the third lease year (the "Third Lease Year"), which begins on the second anniversary of the Commencement Date and continues through the day before the third anniversary of the Commencement Date, minimum monthly rent shall be $40,000 per month;
(d) For the fourth lease year (the "Fourth Lease Year"), which begins on the third anniversary of the Commencement Date and continues through the day before the fourth anniversary of the Commencement Date, and for each successive lease year thereafter continuing until the last month of the Initial Term, minimum monthly rent shall be $40,000 per month; provided that beginning with the first month of the Fourth Lease Year and continuing on the first day of every other succeeding Lease Year, the minimum monthly rent shall be increased by a percentage equal to the percentage increase in the Index (defined below) during the prior two-year period, up to a maximum percentage increase of two and one-half percent (2-1/2%) in any one year, for a maximum of five percent (5%) increase for each two-year period.
(e) As used herein, the term "Index" shall mean the Consumer Price Index for all Urban Consumers - All Items, West Cities A Average, as published by the U.S. Department of Labor's Bureau of Labor Statistics.
(f) In addition to the rental adjustments described above, and not in lieu thereof, a rent adjustment shall be made on August 1, 2001, which shall be an amount equal to one-half of the sum of Monthly Excess Amounts (defined below) computed at the end of each of the following two-year periods: 8/1/97 through 7/31/99, and 8/1/99 through 7/31/01.
(g) As used herein, the term "Monthly Excess Amount" means the difference between (a) the monthly increase that would have been made for the upcoming two-year period if the two and one-half percent annual limit were not in effect, and (b) the monthly rent increase actually payable (i.e., with the two and one-half percent annual limit in effect).
(h) In addition to the rental adjustments described above, and not in lieu thereof, a rent adjustment shall be made on August 1, 2005, which shall be an amount equal to one-half of the sum of the Monthly Excess Amounts computed at the end of each of these two-year periods: 8/1/01 through 7/31/03 and 8/1/03 through 7/31/05.
(i) If the Index is discontinued, the parties shall substitute a comparable index of consumer prices.
4.2 Minimum Monthly Rent - Extension Terms.
(a) Subject to reduction pursuant to Section 10 and Section 43, but otherwise without offset or deduction except as specifically set forth herein, Tenant shall pay to Landlord, without notice or demand, on or before the first day of each calendar month, at the address specified below Landlord's signature hereon or at such other place as Landlord shall designate, minimum monthly rent for: (i) the first Lease Year of each Extension Term shall be determined pursuant to Section (b) below, and (ii) the final four (4) Lease Years of each Extension Term shall be an amount equal to the minimum monthly rent applicable during the first year of such Extension Term, increased by a percentage increase equal to the percentage increase in the Index over the prior two (2) Lease Years; provided the increase shall not be less than two and one-half percent (2-1/2%) or more than five percent (5%) for any two (2) year period. In no event will minimum monthly rent decrease.
(b) Following Tenant's exercise of an Option to Renew, and at least one hundred fifty (150) days prior to the commencement of each Extension Term, Landlord and Tenant shall attempt in good faith to agree on minimum monthly rent for the first Lease Year of the Extension Term. If Landlord and Tenant fail to agree, rent for said Lease Year shall be equal to the prevailing market rent as determined by appraisal (the "Prevailing Market Rent"). Landlord and Tenant shall each designate an appraiser to determine the Prevailing Market Rent. If the two (2) appraisers so selected are unable to agree upon the Prevailing Market Rent within twenty (20) days of their appointment, they shall jointly designate a third appraiser. If the three (3) appraisers do not agree, the closest two (2) shall be averaged, to determine rent. The appraisers shall complete their determination of the Prevailing Market
Rent on or before Ninety (90) days prior to the commencement of such Extension Term. All appraisers designated for the foregoing purpose shall be duly licensed and members of the American Institute of Real Estate Appraisers or any comparable successor certifying organization if such institute is not then in existence. The determination of rent hereunder shall be conclusive and binding on Landlord and Tenant.
(c) The Prevailing Market Rent shall be determined by taking into account the size and location of the Premises, its usage and which party paid for the various improvements.
5. USE. The Premises may be used by Tenant for any purpose in accordance with law. Tenant shall not do or permit to be done in or about Premises anything which is illegal or unlawful, or which would constitute a nuisance.
6. UTILITIES. Tenant hereby covenants and agrees to pay all charges (including, without limitation, all taxes by governmental units billed with or on utilities) for water, sewer, garbage removal, heat, light, and for all other utilities which shall be used in or charged against the Premises during the Initial Term of this Lease and as it may be extended. In the event any such utilities are not separately metered for the Premises, Tenant shall pay its share ("Tenant's Share") of such utilities, as reasonably determined by Landlord based on increases over usage in the Building immediately prior to the Commencement Date and reflecting the usage by all Building occupants. Tenant's Share shall be rebuttably presumed to be a reasonable determination, unless Tenant within thirty (30) days of such notice provides Landlord with a professional opinion of a qualified consultant which concludes that a different allocation is more accurate. Landlord shall not be liable in any manner whatsoever should the furnishing of any of these services be delayed, interrupted or prevented unless caused by the negligence or wilful misconduct of Landlord. If, at the commencement of the Initial Term, any extension thereof, or any time thereafter, Landlord or Tenant shall elect to separately meter any utilities to the Premises, Tenant shall timely and directly pay all such separately metered utilities relating to Tenant's use of the Premises. Utilities payments required by Tenant shall be additional rent. Landlord may pay Tenant's Share of said utilities if and to the extent Tenant does not pay after receipt of notice of default and expiration of the applicable cure period.
7. REPAIR AND CARE OF PREMISES. The Premises have been inspected and are
accepted by Tenant in their present condition, AS IS, and Tenant will at all
times keep the Premises neat, clean and in a sanitary condition. Tenant will at
all times preserve the Premises in as good repair as they now are or may
hereafter be put to, ordinary wear and tear excepted. Tenant will commit no
waste, damage or injury to the Premises, Building or Real Property. All repairs
and maintenance shall be at Tenant's sole cost and expense, except that (i) at
all times Landlord shall be responsible for structural repairs to the Building,
and for repair of damage caused by sink holes in the Adjoining Parking Lot and
(ii) from the Commencement Date through the end of the Third Lease Year,
Landlord shall be responsible for maintenance, repair and replacement of the
asphaltic portions of the roof of the Building.
Should either party fail to make any repairs required of it hereunder within a reasonable time (which, except in the event of an emergency, shall mean within thirty (30) days after prior written notice from the non-repairing party or longer if necessary if the repair is commenced within such thirty (30) day period and diligently prosecuted to completion), or fail to make any payments of any kind required of it by any provisions of this Lease, the other party may, at its option, make the same, and the amount or cost thereof shall immediately become due and payable by the other. Regardless of the allocation of responsibility of care of the Premises, Landlord and Tenant shall be responsible for damage caused by themselves, their agents, tenants, employees or contractors.
8. Intentionally deleted.
9. IMPROVEMENTS.
9.1 Landlord's Work. Landlord shall provide for the benefit of the Premises, at its sole cost and expense, each of the following ("Landlord's Work"):
(a) Proper removal from the Premises of all asbestos and other hazardous materials from the Premises as of the Commencement Date; provided Tenant is responsible for all lead based paint, for all asbestos removed by Tenant without prior notice to Landlord, and for any removal or other remediation of hazardous materials which are discovered as a result of Tenant's penetration of the Real Property.
(b) Resurface the floor of the top floor at a cost not to exceed $100,000, as necessary to receive Tenant's floor covering per Tenant's specifications.
(c) Remove (and not permit replacements of) any sign on the exterior of the Premises except for those floor(s) subleased by Landlord. Where signs may be retained, Landlord may retain only existing signs or their comparable replacements.
9.2 Tenant's Work. Tenant shall construct those initial Tenant improvements
specified on Exhibit B attached hereto ("Tenant's Work"). Tenant's Work shall
include sealing or other repairs to the roof, including the vents and skylights,
to prevent leakage. Such roof work shall be done prior to the end of the Third
Lease Year in a manner reasonably approved by Landlord and Tenant. Any and all
unused portion of the $100,000 floor allowance from Landlord specified in
Section 9.1(b) above shall be applied to Tenant's roof repair work set forth
above, to the extent of the cost of such work.
After completion of Tenant's Work and upon notice by Tenant to Landlord, Tenant shall have the right during the term of this Lease to make such interior alterations, changes and improvements to the Premises, as Tenant desires. Any alterations, changes or improvements which adversely affect the structural members of the Building or involve penetration of the surface of the Real Property or modify the exterior of the Building, or impair any street access to the Real Property, require Landlord's advance written approval, which may be granted or withheld in Landlord's sole discretion.
With respect to Tenant's Work and any other alterations, changes or improvements to the Premises by Tenant, Tenant shall comply with the following:
(a) Compliance with Laws. All work shall be performed in conformity with all permits, rules, orders, regulations, ordinances, laws and other requirements of all governmental authorities having jurisdiction over such work.
(b) Disputes. Tenant shall have sole responsibility to resolve any and all disputes relating to any construction it undertakes under this Lease, and shall pay all fees, costs, expenses, judgments, awards and liabilities incurred in connection therewith.
(c) No Liens. At no time during or after the completion of any such work
shall Tenant or any contractor of Tenant create or suffer there to be any lien
or encumbrance upon the Premises including, without limit construction liens or
other claims for lien made by parties claiming to have provided labor or
material (collectively, "Construction Liens"). Notwithstanding the foregoing
prohibition against Construction Liens, Tenant may in good faith and with due
diligence contest the validity or amount of any Construction Lien and defer
payment and discharge thereof during the pendency of such contest provided that:
(i) such contest shall have the effect of preventing the sale or forfeiture of
the Real Property, Building or any part thereof; (ii) within ten (10) days after
Tenant has been notified of the filing of such Construction Lien, Tenant shall
have notified Landlord in writing of Tenant's intention to contest such
Construction Lien, and (iii) Tenant shall have deposited or caused to be
deposited with Landlord a sum of money which shall be sufficient to pay in full
such Construction Lien and all interest which might become due thereon, and
shall keep on deposit an amount so sufficient at all times, increasing such
amount to cover additions to the amount of such Construction Lien or additional
interest. Such deposits are to be held without any allowance of interest.
Landlord may apply such deposit as necessary to discharge the Construction Lien
in dispute following the entry of a judgment and shall return any unused funds
to Tenant.
(d) Damage to Building or Property. Tenant agrees that at no time will
Tenant (i) destroy, damage or impair the Building or any portion thereof
including, without limitation, any systems or structural components thereof,
(ii) impair the access to or from the Building or the Real Property except as
reasonably necessary in connection with work consented to or approved by
Landlord, or (iii) eliminate any access to a public street.
(e) Disruption of Other Tenants. Tenant will take all reasonable measures to minimize all sounds, vibrations, debris, activities, impairment of access to or egress from, interruption or disruption of utility services or mechanical or other Building services, and other conditions that disrupt or impair the use and enjoyment of the Building or the Real Property by any other tenant. Tenant shall give such tenants reasonable notice of when disruptions or interruptions to access, utilities or building services shall occur and will take reasonable steps to minimize their duration and their impact on other tenants. To the extent practicable, Tenant shall schedule any disruptions or interruptions to access, utilities or Building services to occur on weekends or during evening hours.
(f) Ownership of Improvements. All alterations, additions and improvements made or constructed by Tenant shall be and remain the property of Tenant during the Term of this Lease and shall become the property of Landlord as of the date of termination of this Lease or upon earlier vacating of the Premises and shall be delivered up to the Landlord with the Premises, normal wear and tear and damage by casualty and condemnation excepted. All trade fixtures installed by Tenant may be removed by Tenant upon the termination of this Lease if Tenant so elects, and shall be removed by the date of termination of this Lease or upon earlier vacating of the Premises if required by Landlord. Upon any such removal Tenant shall repair any damage to the Premises caused by such removal.
In all projects other than Tenant's Work for which Tenant's construction costs are budgeted to exceed $750,000, Tenant shall in addition comply with the following terms and conditions:
(a) Compliance with Plans and Specifications. All work shall be performed in accordance with all plans and specifications reasonably approved by Landlord and Tenant.
(b) Approval of Contractors. All general contractors or other contractors directly engaged by Tenant shall be subject to Landlord's advance reasonable approval. All contracts entered into directly by Tenant shall name Landlord as a third-party beneficiary. Copies of all such agreements shall be delivered to Landlord promptly upon execution thereof. All construction and consultants' reports delivered to Tenant relating to any construction matters shall also be delivered and addressed to Landlord.
(c) Bonding. Landlord may condition its approval of any work exceeding a cost of $750,000 upon a requirement that the contractor provide payment and performance bonds in adequate amounts to assure the full completion of the work undertaken.
(d) Security for Tenant's Performance. Tenant shall grant to Landlord a security interest in all of the construction plans, specifications, purchase orders, agreements, work orders, permits and other rights and interests necessary to enable Landlord to complete any such work in the event Tenant defaults in any of its construction obligations. Landlord's lien shall be junior to the liens of Tenant's construction lender(s), if any. Tenant shall not otherwise pledge, encumber or transfer any such assets or rights.
(e) Insurance. In addition to the other insurance to be purchased hereunder, Tenant shall purchase, at its expense, appropriate casualty and liability insurance to fully protect to commercially reasonable standards Tenant's and Landlord's respective interests. Tenant agrees that all general or other contractors it hires will carry general liability and builder's risk insurance on commercially reasonable terms.
10. SEISMIC UPGRADES.
10.1 If seismic upgrades are required by the City of Seattle or any other governmental entity as a result of a change in laws that affects all improvements and not as the sole result of Tenant's Work, Tenant shall perform such work and shall share in the cost
of seismic upgrades in an amount equal to 50% of the portion of the Premises leased by Tenant (but not subleased to Landlord), e.g. 1/3 space occupied X 50% = 17%.
10.2 Except as described in Section 10.1, if any work by Tenant on the Premises results in a requirement by the City of Seattle that certain seismic upgrades be made to the Building, then the parties agree that:
(a) Tenant shall pay all amounts up to $400,000 of the required seismic upgrades;
(b) Landlord shall be responsible for all amounts in excess of $400,000 up to $600,000;
(c) Tenant will finance Landlord's portion of the seismic upgrades referred to in Subsection 10.2(b), which shall be payable by Landlord to Tenant through a fifty percent (50%) rent reduction, plus interest at a rate of eight percent (8%) per year, commencing as funds are expended.
(d) Tenant and Landlord will share the additional cost of seismic upgrades which exceed $600,000, on a 50/50 basis, with Tenant's portion determined by multiplying fifty percent (50) times the percentage of space leased (but not subleased by Landlord) (e.g. 50% x 2/3 Building = 34%).
11. INSURANCE AND TAXES.
11.1 Liability Insurance. Tenant shall, at all times during the term hereof and at Tenant's cost and expense, maintain in effect primary commercial general public liability insurance, naming Landlord as an additional insured in an amount of not less than $2,000,000 per person per occurrence and not less than $l,000,000 for damage to property in connection with the use, operation or condition of the Premises. In no event shall the limits of said policies be considered as limiting the liability of Tenant under this Lease, nor shall Tenant's duty to carry insurance create any legal responsibility of Tenant for any insured casualty. The insurance shall be issued prior to commencement of Tenant's Work by an insurance company or companies currently used by Tenant, in a commercially reasonable form, and a copy of each policy or certificate of insurance shall be delivered to Landlord before the commencement of Tenant's Work and before the expiration of each policy. If Tenant does not timely pay the premium for the insurance required hereunder Tenant shall so notify Landlord and Landlord may immediately upon notice to Tenant, pay such premium or provide a replacement policy.
11.2 Casualty Insurance. Tenant shall obtain and keep in full force and effect such policy or policies of fire and all-risk extended coverage insurance (including earthquake coverage at Tenant's option), and including coverage for vandalism and malicious mischief, on the Building and Premises, including any improvements thereon, insuring the Building for its full replacement cost. Such policies shall be primary, and the proceeds of any such insurance shall first be used to rebuild or repair the Premises if and as required hereunder. Landlord shall be named as an additional insured. Any such proceeds not required for such
rebuilding or repairing shall be paid to and belong to Landlord. Tenant may also at its option obtain boiler insurance, rental loss insurance, and plate glass insurance, and such other coverages (including for the fire and all-risk extended coverage policies) as shall be commercially reasonable from time to time. If Tenant does not timely pay the premium for the insurance required hereunder Tenant shall so notify Landlord and Landlord may immediately upon notice to Tenant, pay such premium or provide a replacement policy.
11.3 Taxes And Assessments. In addition to the rent to be paid by Tenant as above provided, during the term of this Lease, Tenant shall timely pay directly to the taxing authority all real estate taxes and assessments levied on the Real Property. Landlord shall supply Tenant with the real estate tax statements at least two (2) months before taxes are due. Tenant shall have the right to, at its expense, appeal the real estate tax assessment for the Real Property. Such taxes and obligations shall be apportioned during the Initial Term and any extension thereof if applicable, so that Tenant shall pay only that proportion thereof as shall accrue during said term. Landlord shall elect to pay assessments over the maximum period possible.
11.4 Alternative Method Of Taxation. If at any time during the Term, the present method of taxation shall be changed so that in lieu of the whole or any part of any taxes, assessments, fees or charges levied, assessed or imposed on the Premises, there shall be levied, assessed or imposed on Landlord a capital levy or other tax directly on the rents received therefrom and/or a franchise tax, assessment, levy charge measured by or based, in whole or in part upon such rents, then all such taxes, assessments, fees or charges (except income taxes), or the part thereof so measured or based, shall be deemed to be included within the term "rent" for the purposes hereof.
Tenant shall be liable for all taxes levied against personal property placed by Tenant in the Premises. If any such taxes are levied against Landlord or Landlord's property and if Landlord elects to pay the same or if the assessed value of Landlord's property is increased by inclusion of personal property placed by Tenant in the Premises and Landlord elects to pay the taxes based on such increase, Tenant shall pay as additional rent to Landlord upon demand that part of such taxes for which Tenant is liable hereunder.
12. DAMAGE OR DESTRUCTION.
12.1 Repair and Restoration. All casualty insurance payments for damage to the Building shall be used for the sole purpose of repairing, rebuilding and/or restoring the Building. From the date hereof and throughout the Initial Term, as it may be extended, if the Building is damaged or destroyed by fire or other casualty Tenant shall promptly rebuild and restore the Building to the extent of insurance proceeds and any deductible to its condition existing immediately prior to such fire or other casualty, provided that if Tenant reasonably estimates that it will take more than one hundred eighty (180) days from the date of damage to restore the Premises, or if the Building is damaged by an uninsured casualty Tenant, may elect to terminate this Lease upon thirty (30) days written notice to Landlord, given within thirty (30) days after such damage. Any such proceeds not required for such rebuilding or
repairing shall be paid to and belong to Landlord. If the Lease is not so terminated, the Building shall be repaired in the manner and subject to the conditions provided for above and elsewhere in this Lease. If the conditions set forth above which enable Tenant to terminate this Lease occur during the last Lease Year, Landlord shall also have the right to terminate this Lease, unless Tenant, within twenty (20) days of receipt of Landlord's notice of termination, exercises the next remaining Option to Renew, if any.
12.2 Rental Abatement. In the event of damage or destruction to the Building which substantially affects Tenant's ability to operate its business, minimum monthly rent (but no other charges under this Lease) shall be abated in the same proportion that the area of the Premises used by Tenant after such casualty bears to the total area of the Premises, until the Building is repaired or restored, or the Lease expires or is sooner terminated under the other terms of this Lease, but in no event shall minimum monthly rent be abated for more than six (6) months.
13. INDEMNITY.
13.1 Indemnification by Tenant. Subject to the conditions and provisions of this Paragraph 13.1 and commencing upon execution of this Lease Tenant agrees to indemnify, defend and hold harmless Landlord and Landlord's assigns, affiliates, owners, beneficiaries, trustees, employees, representatives, officers, directors and agents ("Indemnitees") from and against any and all demands, claims, complaints, actions or causes of action, suits, proceedings, investigations, arbitrations, assessments, liens, losses, damages, liabilities, costs and expenses, including, but not limited to, interest, penalties and reasonable attorneys' fees and disbursements, asserted against, imposed upon or incurred by any Indemnitee, directly or indirectly, by reason of or resulting from any liability, obligation or claim (whether absolute, accrued, contingent or otherwise and whether a contractual, tax or any other type of liability, obligation or claim) arising out of, relating to or resulting from (a) any misrepresentation or breach of the representations, warranties, covenants or agreements of Tenant contained in or made pursuant to this Lease; (b) any failure to timely perform or comply in all material respects with any material covenant, agreement or undertaking of Tenant contained in or made pursuant to this Lease; (c) any violation or alleged violation by Tenant or any assignee or sublessees of Tenant of any permits, rules, orders, regulations, ordinances, laws and other requirements of any governmental authorities; (d) Tenant, Tenant's employees acting in the course of their employment, Tenant's business or operations, any assignee or sublessees of Tenant, their employees acting in the course of their employment or their business or operations; (e) any accident, injury or damage, howsoever and by whomsoever caused, to any person or property, occurring on the Premises unless caused by Landlord, its agents or other tenants of Landlord pursuant to the Sublease; (f) any injury to persons, damage to property or other liability caused by or resulting from Tenant's construction, improvement or maintenance in any part of the Building or Real Property; and (g) any damage to property or injury to the employees, business invitees or guests of Tenant or any assignee or sublessees of Tenant occurring in or about any other portion of the Project except if caused by Landlord or its agents.
13.2 Indemnification by Landlord. Subject to the conditions and provisions of this Paragraph 13.2, and commencing upon execution of this Lease, Landlord agrees to indemnify, defend and hold harmless Tenant and Tenant's assigns, affiliates, owners, beneficiaries, trustees, employees, representatives, officers, directors and agents ("Indemnitees") from and against any and all demands, claims, complaints, actions or causes of action, suits, proceedings, investigations, arbitrations, assessments, liens, losses, damages, liabilities, costs and expenses, including, but not limited to, interest, penalties and reasonable attorneys' fees and disbursements, asserted against, imposed upon or incurred by any Indemnitee, directly or indirectly, by reason of or resulting from any liability, obligation or claim (whether absolute, accrued, contingent or otherwise and whether a contractual, tax or any other type of liability, obligation or claim) arising out of, relating to or resulting from (a) any misrepresentation or breach of the representations, warranties, covenants or agreements of Landlord contained in or made pursuant to this Lease (which includes the sublease); (b) any failure to timely perform or comply in all material respects with any material covenant, agreement or undertaking of Landlord contained in or made pursuant to this Lease; (c) any violation or alleged violation by Landlord or any assignee or sublessees of Landlord of any permits, rules, orders, regulations, ordinances, laws and other requirements of any governmental authorities; (d) Landlord, Landlord's employees acting in the course of their employment, Landlord's business or operations, any assignee or sublessees of Landlord, their employees acting in the course of their employment or their business or operations; (e) any accident, injury or damage, howsoever and by whomsoever caused, to any person or property, occurring on the Premises caused by Landlord, its agents, contractors or employees; (f) any injury to persons, damage to property or other liability caused by or resulting from Landlord's construction, improvement or maintenance in any part of the Building or Real Property; and (g) any damage to property or injury to the employees, business invitees or guests of Landlord or any assignee or sublessees of Landlord occurring in or about any other portion of the Project except if caused by Tenant or its agents.
14. INSOLVENCY. In the event Tenant becomes insolvent, voluntarily or involuntarily bankrupt, or if a receiver, assignee or other liquidating officer is appointed for the business of Tenant, then Landlord may cancel this Lease at Landlord's option, effective thirty (30) days after giving Tenant and Guarantor notice of cancellation and opportunity to cure.
15. DEFAULT AND RE-ENTRY. Tenant shall be in default if it fails to pay any installment of rent when due after Landlord gives Tenant and Guarantor ten (10) days prior written notice of such failure to pay and opportunity to cure within such ten (10) days.
Tenant shall also be in default if it fails to perform any other obligation under this Lease after Landlord gives Tenant and Guarantor thirty (30) days prior written notice and opportunity to cure; provided if Tenant commences to cure within the thirty (30) day period, but is unable to complete the cure within the thirty (30) day period, and if Tenant continues to proceed diligently to effect the cure, the thirty (30) day period shall be extended for such time as is necessary to reasonably allow Tenant to complete its cure of the default.
16. LANDLORD'S REMEDIES.
16.1 Remedies - General. If Tenant is in default, then Landlord shall have all rights available to it under Washington law including, without limit, the following rights and remedies, which are not exclusive: (i) to declare the Term hereof ended and to reenter the Premises and take possession thereof and remove all persons therefrom, and Tenant shall have no further claim thereon or hereunder; (ii) to cure such default on Tenant's behalf and at Tenant's sole expenses and charge Tenant for all costs and expenses incurred by Landlord in effecting such cure as additional rent with interest on such amounts at the rate specified in this Lease until paid; (iii) without declaring this Lease terminated, to reenter the Premises and occupy the whole or any part thereof for and on account of Tenant and to collect any unpaid Rent which has become payable, or which may thereafter become payable; or (iv) even though it may have reentered the Premises, at any time thereafter elect to terminate this Lease and all of the rights of Tenant in or to the Premises.
16.2 Reentry. If Landlord reenters the Premises, Landlord shall not be deemed to have terminated this Lease or the liability of Tenant to pay any Rent thereafter accruing as it becomes due, or to have terminated Tenant's liability for damages under any of the provisions hereof, by any such reentry or by any action, in unlawful detained or otherwise, to obtain possession of the Premises, unless Landlord shall have notified Tenant in writing that it has so elected to terminate this Lease, and Tenant shall be liable for and reimburse Landlord upon demand for all costs and expenses of every kind and nature incurred in retaking possession of the Premises and all other losses suffered by Landlord as a consequence of Tenant's default. In the event of any entry or taking possession of the Premises, Landlord shall have the right, but not the obligation, to remove therefrom all or any part of the personal property located therein and may place the same in storage at a public warehouse at the expense and risk of Tenant.
16.3 Termination. If Landlord elects to terminate this Lease Landlord may recover from Tenant as damages, the following: (i) the worth at the time of award of any unpaid Rent which had been earned at the time of such termination; plus (ii) the worth at the time of award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of the Rent loss that could have been reasonably avoided; plus (iii) the worth at the time of award of the amount by which the unpaid Rent for the balance of the Term after the time of award exceeds the amount of the Rent loss that could be reasonably avoided; plus (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease including, but not limited to, any costs or expenses incurred by Landlord in retaking possession of the Premises, including reasonable attorneys' fees therefor; maintaining or preserving the Premises after such default; preparing the Premises for reletting to a new tenant, including repairs or alterations to the Premises for such reletting; leasing commissions; and any other costs necessary or appropriate to relet the Premises; and (v) such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by the laws of the State of Washington. As used in this Paragraph 16.3, the "worth at the time of award" shall be computed by allowing interest at
the greater of nine percent (9%) per annum or two percentage points (2%) above the prime rate as publicly announced by Seattle First National Bank, N.A., or its lawful successor. For purposes of this Paragraph only, the term "rent" shall be deemed to be the rent and all additional rent and other sums required to be paid by Tenant pursuant to the terms of this Lease.
17. COSTS AND ATTORNEYS' FEES. If by reason of any default on the part of Landlord, Tenant or Guarantor it becomes necessary for another party hereto to employ an attorney, or in case Landlord, Tenant or Guarantor shall bring suit to recover any amount due hereunder, or for breach of any provision of this Lease (including the Guaranty), or to recover possession of the leased Premises, or if Landlord, Tenant or Guarantor shall bring any action for any relief against the other, declaratory or otherwise, arising out of this Lease, then and in any of such events, the prevailing party shall be entitled to a reasonable attorneys' fee and all costs and expenses expended or incurred in connection with such default or action, including any appellate action.
18. ASSIGNMENT AND SUBLETTING. On twenty (20) days prior notice to Landlord, Tenant may assign its interest in this Lease or sublease all or any portion of the Premises. Tenant and its guarantor, Esterline Technologies Corporation, shall be released from liability under this Lease if Tenant assigns its interest hereunder to an entity which assumes this Lease and has a net worth of at least equal to guarantor's at the time of assignment, otherwise no such assignment or subletting shall relieve Tenant of any liability under this Lease, and Tenant and guarantor shall remain primarily liable hereunder.
19. OPTION TO PURCHASE. Landlord hereby grants Tenant the option to purchase the Real Property and Building ("Purchase Option"). The Purchase Option must be exercised prior to the expiration of the Third Lease Year for the purchase price of $7,000,000 plus one percent (1%) per month beginning with the Commencement Date (the "Purchase Price"). Tenant shall provide Landlord with written notice of its exercise of the Purchase Option prior to expiration of the Third Lease Year.
In the event Tenant exercises its Purchase Option, such sale shall close no later than six (6) months after option exercise and Landlord shall, upon receipt of the Purchase Price together with full payment of any unpaid Rent and other amounts due and payable by Tenant with respect to any period ending on or before the date of the purchase, deliver to Tenant a statutory warranty deed which conveys to Tenant the Real Property and Building free and clear of all monetary liens and free of all other encumbrances except those Tenant has agreed in writing to accept; provided, Tenant's sole remedy in the event it does not accept any no monetary encumbrance is to terminate its Purchase Option. Landlord covenants and agrees that until the end of the Third Lease Year it will not further encumber the Premises except with utility easements and/or other items necessary for the use and operation of the Real Property; provided, consensual monetary encumbrances which are removed by closing are permitted. Upon such conveyance of the Real Property and Building, this Lease shall terminate. Landlord shall pay the cost of standard title insurance, attorneys' fees incurred by Landlord in connection with such conveyance, real estate excise taxes and one-half of the
escrow fee. Tenant shall pay all recording fees and attorneys fees incurred by Tenant in connection with the conveyance of the Real Property and Building, any title insurance premium above standard coverage, any personal property tax and one-half of the escrow fee. If such sale shall fails to be consummated this Lease shall continue in full force and effect, and any options to extend or renew the Term of this Lease which otherwise would have expired during the escrow period of such proposed sale shall be deemed to remain in effect for thirty (30) days after termination of the escrow or other arrangement covering the closing of such proposed sale. If such sale fails to close due to a default by Tenant, Tenant shall reimburse Landlord all Landlord's out-of-pocket costs directly related to such sale as Landlord's sole remedy. Tenant agrees to cooperate with Landlord if Landlord elects to complete the sale as a like kind exchange under Section 1031 of the Internal Revenue Code, and Landlord shall pay Tenant for any additional cost incurred and indemnify and hold Tenant harmless from and against any liability sustained as a result of such cooperation. Landlord shall use a qualified intermediary and employ direct deeding in any such exchange. Such purchase shall be on an "as-is" basis, but without releasing or indemnifying Landlord from any liability, and Landlord shall, as part of such sale, assign to Tenant all warranties and indemnities received from its seller, the Seattle School District.
20. SUCCESSORS. All of the covenants, agreements, terms and conditions contained in this Lease shall apply to and be binding upon Landlord and Tenant and their respective heirs, executors, administrators, successors and assigns.
21. SUBORDINATION. This Lease is subject to and is hereby subordinated to
all present mortgages, deeds of trust and other encumbrances affecting the
Premises. Tenant will execute such instruments as may be required to subordinate
the rights and interest of the Tenant under this Lease to the lien of any
mortgage or deeds of trust at any time placed on the land of which the leased
Premises are a part; provided, however, that any subordination effected by this
Section shall not affect Tenant's rights under this Lease, including without
limitation Tenant's right to possession, use and occupancy of the Premises.
Tenant further agrees that any such subordination agreement will contain a
provision whereby Tenant will agree, in the event of foreclosure of any such
mortgage or deeds of trust to attorn to and recognize as its landlord under the
terms of this Lease said lender or any purchaser of the leased property at a
foreclosure sale or their heirs, successors or assigns.
22. NO DISTURBANCE AGREEMENT. Landlord covenants and agrees to obtain from the holder of the sole existing loan secured by the Premises a No disturbance Agreement in a form reasonably acceptable to Tenant no later than twenty (20) days prior to the Commencement Date.
23. SURRENDER OF POSSESSION. Upon expiration of the term of this Lease, whether by lapse of time or otherwise, Tenant shall promptly and peacefully surrender Premises to Landlord in good condition and repair, except for ordinary wear and tear, damage from condemnation or casualty and such repairs as Tenant is not required to make hereunder. On or before expiration of the term of this Lease, Tenant shall be entitled to
remove its trade fixtures and equipment installed by it from Premises. Any damage caused by such removal shall be repaired by Tenant at its expense.
24. HOLD OVER TENANCY. If (without execution of a new lease or written extension) Tenant shall hold over after the expiration of the term of this Lease (as it may have been extended pursuant to this Lease), it shall be deemed to be occupying Premises as a Tenant from month to month, which tenancy may be terminated by either party as provided by law. During such tenancy, all terms and conditions of this Lease in effect for the last month of the Term, as it may have been extended shall apply, and the parties shall be bound by all of the terms, covenants and conditions as herein specified; provided, if Tenant holds over without Landlord's consent minimum monthly rent shall be 125% of that payable prior to immediately prior to expiration.
25. WAIVER OF SUBROGATION. Landlord and Tenant each releases and relieves the other and waives its entire right of recovery against the other for loss or damage arising out of or incident to the perils of fire, explosion, or any other perils described in the "extended coverage" insurance endorsement approved for use in Washington, which occurs in, on or about the Premises, whether due to the negligence of either party, their agents, employees, or otherwise, provided liability and fire extended coverage insurance providing said waiver is reasonably available without a significant increase in the premiums.
26. NOTICES. All notices under this Lease shall be in writing and delivered
in person or sent by registered or certified mail, return receipt requested, to
Landlord at the address to which rent payments are designated to be sent and to
Tenant at the Premises, effective as of personal delivery, if delivered, or two
(2) business days after mailing, if mailed. Either party may change the address
for notice by giving written notice thereof to the other party. Any notice to
Landlord hereunder shall also be given to Landlord's lender, which shall be
given a reasonable time to cure any default by Landlord. Landlord shall give
Tenant written notice of the name and address of its lender and, from time to
time, of the change in its lender.
27. CONDEMNATION. If all of the Premises or such portions thereof as may be required for Tenant's reasonable use of the Premises as determined by Tenant, are taken by eminent domain, this Lease shall automatically terminate as of the date Tenant is required to vacate the Premises and all rentals shall be paid to that date. In case of a taking of a part of the Premises, or another portion of the Building or Real Property not required for Tenant's reasonable use of the Premises, then this Lease shall nonetheless continue in full force and effect and the rental shall be equitably reduced based on the proportion by which the floor area of the Premises is reduced (or Tenant's use of the Premises is affected, if such taking pertains to the Building or the land upon which it is located), such rent reduction to be effective as of the date possession of such portion is delivered to the condemning authority, and there shall be a corresponding reduction in sublease rent due from Landlord. Landlord reserves all rights to damage to the Premises for any taking by eminent domain, and Tenant hereby assigns to Landlord any right Tenant may have to such damages or award, and Tenant shall make no claim against Landlord for damages for termination of the leasehold interest or
interference with Tenant's business. Tenant shall, however, have the right to claim against the condemning authority for any losses compensable under relevant law; provided that the same does not reduce the amount received by Landlord or Landlord's lender.
28. ESTOPPEL CERTIFICATE. Tenant or Landlord shall, from time to time, within ten (10) business days after receiving a written request from the other party, execute and deliver a written statement. This written statement, which may be relied upon by Landlord and any third party with whom Tenant or Landlord is dealing, shall certify:
28.1 The accuracy of the Lease document(s);
28.2 The beginning and ending dates of the Lease;
28.3 Whether or not the Lease is in full force and effect and the date through which rent is paid;
28.4 Whether there is any known default or if Landlord or Tenant has any claims or demands; and, if so, specifying the default claim or demand; and
28.5 To the accuracy of other correct and ascertainable facts that are covered by the Lease terms.
29. AUTHORITY. If either party is a corporation, partnership or limited liability company, each individual executing this Lease on behalf of said entity represents and warrants that he/she is duly authorized to execute and deliver this Lease on behalf of said entity and that this Lease is binding upon said entity in accordance with its terms.
30. MISCELLANEOUS.
30.1 Time is of the essence of this Lease.
30.2 This Lease contains all of the agreements between the parties hereto relating to the subject matter hereof and may be amended only in a writing signed by all the parties hereto.
30.3 The titles to Sections in this Lease are not a part of this lease and shall have no effect upon the construction or interpretation of any part thereof. Tenant will be referred to by the pronouns "it" and "its" irrespective of number, gender or the fact of incorporation. This Lease shall be construed and governed by the law of the State of Washington. This Lease shall be interpreted without regard to which party drafted any or all of its provisions.
30.4 In the event of any dispute between the parties in connection with this Agreement, the parties hereby consent to the jurisdiction of the Superior Court for the State of Washington with venue in King County and confirm that said jurisdiction is exclusive.
30.5 Whenever provision is made in this Lease for any written notice or demand by Landlord or Tenant to be given to the other party, it shall be hand delivered, faxed (with receipt confirmed), or mailed postage prepaid, return receipt requested, to Landlord or Tenant at the following addresses or such other address as the parties shall inform each other in writing:
FOR TENANT Korry Electronics Co. Attn: Bill Mason 901 Dexter Avenue North Seattle, WA 98109 COPY TO Timothy R. Osborn Boggle & Gates P.L.L.C. Two Union Square 601 Union Street Seattle, Washington 98101 FOR GUARANTOR: Esterline Technologies Corporation Attn: Robert W. Stevenson 10800 N.E. 8th, Suite 600 Bellevue, Washington 98004 FOR LANDLORD: 810 Dexter L.L.C. c/o Michael Maloney The Highlands Seattle WA 98177 COPY TO: Bruce H. Benson Helsell Fetterman LLP 1500 Puget Sound Plaza 1325 Fourth Avenue Seattle, WA 98101 |
30.6 If any term, covenant, condition or provision of this Lease or the application thereof to any person or circumstances shall, at any time or to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to person or circumstances other than those as to which this Lease is held invalid or unenforceable, shall not be affected thereby, and each term, covenant, condition and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law.
30.7 This Lease shall not be recorded, but at the request of either Landlord or Tenant the parties shall execute and acknowledge a Memorandum of this Lease for recording. The Memorandum shall include such provisions of this Lease as the parties desire, excluding, however, the amount of rent and other monetary terms.
31. AGENCY. The parties represent and warrant to each other that no real estate broker or agent has been involved in connection with this Lease for which a claim may be made against Landlord or Tenant, and Landlord or Tenant agree to indemnify the other against and hold the other harmless from any claim, loss or liability in connection with a breach of said representation and warranty. This indemnification and hold harmless agreement shall survive the termination or expiration of this Lease.
32. QUIET ENJOYMENT. So long as Tenant is not in default hereunder past any applicable cure period Tenant shall have quiet enjoyment of the Premises, free from any claims of parties claiming by, under, or through Landlord and Landlord shall defend, indemnify and hold Tenant harmless from any and all damages or liability (including actual attorneys' fees) incurred as a result of a breach of the foregoing provision, or any claim that if successful would result in breach.
33. SURVIVAL OF REPRESENTATIONS, ETC. The representations, warranties, covenants and agreements in this Lease or pursuant hereto shall survive the execution and delivery of this Lease and the expiration or earlier termination of this Lease for the applicable statute of limitations period.
34. ACCESS. Landlord and its agents shall have the right to enter into and upon the Premises at all reasonable times and upon reasonable notice (or without notice in the event of emergency such as fire) for the purposes of inspecting the Premises, making repairs required of Landlord, and/or showing the Premises to a prospective purchaser, tenant or lender. Landlord shall have the right to place a "for rent" sign on the Premises and show the Premises for one hundred seventy (170) days prior to the expiration of the lease term.
35. BINDING ON SUCCESSORS AND ASSIGNS. The terms, provisions and covenants, and conditions contained in this Lease shall apply to, inure to the benefit of and be binding upon, the parties hereto and upon their respective heirs, legal representatives, successors and permitted assigns.
36. AMENDMENTS TO THE LEASE. This Lease may not be altered, changed or amended except by an instrument in writing signed by both parties hereto.
37. SEVERABILITY. If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws effective during the term of this Lease, then and in that event it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby.
38. INTEREST. Rent and any other sums due under this Lease from Landlord or Tenant shall bear interest at the greater of nine percent (9%) per annum or two percentage points (2%) over the prime rate as announced by Seafirst Bank or its lawful successor, until paid in full.
39. NO IMPLIED WARRANTIES. LANDLORD AND TENANT EXPRESSLY AGREE THAT THERE ARE AND SHALL BE NO IMPLIED WARRANTIES OF MERCHANTABILITY, HABITABILITY, FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER KIND ARISING OUT OF THIS LEASE REGARDING THE CONDITION OF THE BUILDING, THE PREMISES OR THE REAL PROPERTY. LANDLORD MAKES NO WARRANTIES REGARDING THE CONDITION OF THE BUILDING, THE PREMISES OR THE REAL PROPERTY.
40. BROKERS. Tenant and Landlord each represents and warrants to the other that it has not entered into any agreement with, nor otherwise had any dealings with, any broker or agent in connection with the negotiation or execution of this Lease which could form the basis of any claim by any such broker or agent for a brokerage fee or commission, finder's fee or any other compensation of any kind or nature in connection herewith. Each party shall indemnify, defend and hold the other harmless from and against any costs (including but not limited to court costs and attorneys' fees), expenses or liability for commissions or other compensation claimed by any broker or agent other than those listed above in this Paragraph with respect to this Lease which arises out of any agreement or dealings, or alleged agreement or dealings, between Landlord or Tenant and any such agent or broker.
41. NO WAIVER. No waiver by either party of any covenant, condition or agreement in this Lease shall operate as a waiver of the covenant, condition or agreement itself, or of any subsequent breach thereof.
42. REMEDIES CUMULATIVE. The specified remedies to which Landlord or Tenant may resort under the terms of this Lease are cumulative and are not intended to be exclusive of any other remedies or means of redress to which Landlord or Tenant may lawfully be entitled in case of any breach or threatened breach by Tenant or Landlord of any provision of this Lease. In addition to the other remedies in this Lease provided, Landlord or Tenant shall be entitled to the restraint by injunction of the violation, or attempted or threatened violation, of any of the covenants, conditions or provisions of this Lease.
43. SUBLEASE. Landlord hereby subleases from Tenant and Tenant subleases to Landlord on the following terms and conditions:
43.1 For the first three (3) years of the Lease, beginning on the Commencement Date and continuing through the Third Lease Year, Landlord will sublease from Tenant both the bottom floor and the middle floor of the Building and the parking as referred to in Section 2 above for a minimum monthly rental amount of $24,000 per month in advance.
43.2 For the fourth and fifth years of the Lease, beginning on the first day of the Fourth Lease Year and continuing through the last day of the Fifth Lease Year, Landlord will sublease from Tenant the bottom floor of the Building for a minimum monthly rental amount of $12,000 per month. The first five (5) Lease Years are sometimes referred to herein as the "Sublease Term."
43.3 During the Sublease Term, Landlord shall pay when due a share of taxes, insurance and utilities as follows:
(a) Taxes: Real estate taxes and assessments attributable to land value shall be prorated on a Building square footage basis, and for improvements shall be allocated based on 40% for the top floor, 30% for the middle floor and 30% for the bottom floor for existing improvements and, assuming no improvements to the subleased premises by Landlord, Tenant shall be responsible for all increases in real estate taxes subsequent to 1996 for improvements.
(b) Insurance: All Tenant's insurance costs shall be allocated 40% to the top floor, 30% to the middle floor and 30% to the bottom floor which for allocation purposes shall be limited to Landlord's current cost of insurance, which for 1996 is $6,000, subject to annual increase by the percentage increase in the Index for the prior year.
(c) Utilities: Landlord shall pay all utilities of the type required to be
paid by Tenant pursuant to Section 6 of this Lease which are metered separately
to the subleased premises or are not allocated to Tenant as Tenant's share under
Section 6.
43.4 During the sublease term, Landlord shall maintain the interior of the subleased premises in a manner determined by Landlord, but Tenant shall retain control over the exterior of Premises, including the premises subleased by Landlord, and Landlord's right to place or retain signs on the exterior of the Building shall be as provided in Section 9.1(c). Landlord shall have the right to paint the exterior of the Building. Except for damage caused by Tenant or its employees, contractors, agents or invitees, Tenant's obligations under Section 7 of the Lease, "Repair and Care of Premises", shall not apply to the subleased premises.
43.5 Tenant, as sublessor hereunder, agrees that with respect to the sublease set forth in this Section, Landlord may use and sub-sublease the property so subleased for any commercial use that is in accordance with law, is consistent with the prime Lease and which would not, in Tenant's reasonable judgment, materially impair or interfere with Tenant's use of the Premises. No sub-sublease shall be for a term beyond the Sublease Term except for the LCM International lease. Landlord warrants and it has the right to eliminate LCM's right to lease beyond the Sublease Term and shall do so at Tenant's request. Tenant approves the existing uses identified as follows:
- bakery
- auto repair and painting
- wholesale wine
- wholesale clothing
- delivery service
- storage of boats and vehicles
- auto detailing
- distribution
- limo service
- storage of advertising materials
Landlord, as subtenant hereunder, shall not do or permit to be done in or about Premises anything which is illegal or unlawful, or which will be dangerous to life or limb, or which will constitute a nuisance or increase the existing rate of insurance upon the Building, or cause cancellation of any insurance policy covering any part of the Building or the Premises.
43.6 Landlord and Tenant agree that with respect to the sublease of premises from Tenant to Landlord set forth in this Section 43, Tenant shall not be liable or held responsible for any actions of Landlord in connection with its use of the premises so subleased hereunder.
43.7 Tenant shall not be responsible for any breach or default in payment of rent or otherwise under this Lease if and to the extent caused by Landlord's breach of this sublease.
43.8 In lieu of Landlord paying Tenant sublease rent and other and sums due from Landlord to Tenant under this sublease, Tenant shall deduct any and all amounts due from Landlord to Tenant under this Sublease from any all amounts owed by Tenant to Landlord under this Lease.
43.9 All obligations and duties of Tenant under this Lease regarding the Premises shall not apply to subleased premises during the Sublease Term. Landlord shall be subject to the same obligations with respect to holding over and surrendering the subleased premises as Tenant is under Sections 26 and 27 of this Lease regarding the Premises.
43.10 Landlord shall not assign its interest in this sublease. If Landlord is a corporation, partnership or limited liability company, transfer of a controlling interest in such entity shall be deemed as assignment. Landlord may sub-sublease all or a portion of the subleased premises pursuant to Section 43.5 During the first five (5) years of the prime Lease, any new sub-subleases by Landlord shall contain a provision allowing Landlord to terminate such sub-sublease on six (6) months notice, which Landlord shall exercise if so directed by Tenant following Tenant's irrevocable election to terminate the Sublease (by purchasing the Premises or otherwise by mutual agreement) at the end of such six (6) month period.
43.11 Tenant shall also have the first opportunity to terminate the sublease as to all or portions of the subleased premises, as follows: If Landlord desires to sub-sublease at least 2000 square feet of the subleased premises, it shall first offer said space to Tenant in writing. Tenant shall have twenty (20) days after receipt to accept said offer. If Tenant accepts, the additional space shall automatically become part of the Premises free of the sublease, subject to all terms of this Lease, and rent for such space shall be determined based on the average square footage rate being paid by Tenant at that time, and the sublease rent shall be reduced based on the average square footage rate being paid by Landlord at that time. If Tenant does not accept Landlord's offer within the twenty (20) day period, Landlord may proceed to sub-sublease to the proposed new tenant. Tenant's right of first opportunity shall again become effective anytime Landlord desires to sub-sublease part of the subleased premises at least 2000 square feet in area.
44. GUARANTY. Esterline Technologies Corporation ("Guarantor") hereby guaranties Tenant's obligations under this Lease. Landlord may not exercise its rights against Guarantor under this guaranty until thirty (30) days have elapsed following expiration of the cure period specified in the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the day and year first above written.
Landlord: Tenant: 810 DEXTER L.L.C. KORRY ELECTRONICS CO. By /s/ Michael J. Maloney By /s/ David G. Elkins ---------------------------------- ------------------------------------- Michael J. Maloney Its President Its Sole Managing Member Guarantor: ESTERLINE TECHNOLOGIES CORPORATION By /s/ Larry A. Kring ---------------------------------- Its Group Vice President |
EXHIBIT 10.25
JEAN-LOUIS REGNIER, JEAN-LUC REGNIER
GERARD HERVET, CHARLES BRICARD
LUC BOUVET ET FRANCOIS THESSIEUX
NOTARIES
holders of a notarial office at
20, RUE DES PYRAMIDES, PARIS
At the head office of Societe Civile Professionnelle "Jean BERGERAULT, Francis BERGERAULT, Bruno BERGERAULT, Notaires associes, holder of a notarial office at 3 rue Emile Zola, Bourges (Cher),
Maitre Francois THESSIEUX, notary in partnership of a company holding a notarial office at 20, rue des Pyramides, 75001 Paris, received this deed in authentic form.
INFORMATION ABOUT THE PARTIES
1. LESSORS
1.1 SLIBAIL IMMOBILIER
A public limited company,
governed by existing laws, notably Article 2 of Act No 66-455 of 2 July 1966, modified by government order No 67-837 of 28 September 1967, with respect to enterprises carrying on a leasing business, and by its bylaws,
with a capital of two hundred twenty million French francs (FRF 220,000,000),
having its registered office at 19 boulevard des Italiens, 75002 Paris,
entered in the Register of Companies of Paris under No B 682 039 086 (68B03908),
approved for the benefit of the tax rules applicable to SICOMIs (French
tax-exempt commercial property companies) by an order from the Ministry of
Finance dated 3 October 1968, whose decision to preserve the benefit of this tax
regime on the conditions stipulated in Article 96.I, second paragraph, of Act
90.1168 (Budget Act for 1991) was recorded on 4 July 1991 by the Ministry of the
Economy, Finance and the Budget,
originally incorporated under the name "SOCIETE LYONNAISE IMMOBILIERE POUR LES
COMMERCE ET L'INDUSTRIE - SLICOMI" and having:
- changed its name to "SLIBAILSICOMI" by virtue of a resolution adopted by the Extraordinary General Meeting of partners of the said company on 9 November 1992, a duly certified copy of whose minutes was appended, after mention, to an office copy of a deed recording their registration, received by Maitre Jean-Louis REGNIER, notary in partnership in Paris, on 21 December 1992,
- adopted its current name by virtue of a resolution adopted by the Extraordinary General Meeting of partners of the said company on 29 January 1996, a duly certified copy of whose minutes was appended, after mention, to an office copy of a deed recording their registration, received by Maitre Jean-Louis REGNIER, notary in partnership in Paris, on 4 March 1996,
represented by:
Mr Jean-Pierre HIEBEL, attorney in fact, domiciled at 106 rue des Trois Fontanot, Nanterre, Hauts de Seine,
acting on behalf of Mr Claude VIVIEN, General Manager of the said company, by virtue of a power of attorney granted privately on 28 April 1997 in Nanterre, appended hereto after mention,
the said Mr VIVIEN being at the time domiciled at 34 rue Laffitte, 75009 Paris and currently domiciled at 106 rue des Trois Fontanot, Nanterre, Hauts de Seine, duly empowered to act herein by virtue of his functions, confirmed for an indefinite time, with the right of substitution and with the broadest possible powers to act under all circumstances on behalf of the said company, including the power to act before the courts, by virtue of a resolution adopted by the Board of Directors of the said company on 16 February 1995, a duly certified copy of whose minutes was appended, after mention, to an office copy of a deed recording their registration, received by Maitre Jean-Louis REGNIER, the aforesaid notary, on 22 May 1995.
1.2 NORBAIL IMMOBILIER
A public limited company,
with a capital of FRF 50,000,000,
having its registered office at 16 rue Le Peletier, 75009 Paris,
entered in the Register of Companies of Paris under No B 352 109 656 (89B14721),
represented by:
Mrs Elisabeth MORIN-GAILLARD, domiciled at 16 rue Le Peletier, 75009 Paris,
acting in her capacity as corporate secretary of the said company and by virtue of the powers delegated to her by Mr DESMADRYL under a private deed executed in Paris on 28 May 1996, filed on 12 June 1996 at the notarial office at 83 boulevard Haussmann, 75008 Paris.
Under the said deed, Mr DESMADRYL himself acted as Chairman of the Board of Directors of the said company, a function to which he was elected and which he accepted by virtue of a resolution adopted by the Board of Directors on 29 March 1996, of which the minutes were filed on 12 June 1996 at the notarial office at 83 boulevard Haussmann, 75008 Paris.
SLIBAIL IMMOBILIER and NORBAIL IMMOBILIER as well as their representatives are herein referred to as the "LESSOR", acting jointly and respectively up to 50% for SLIBAIL IMMOBILIER, the lead manager, and up to 50% for NORBAIL IMMOBILIER,
PARTY OF THE FIRST PART
2. LESSEE
AUXITROL SA
A public limited company,
with a capital of FRF 25,000,000,
having its registered office at 78, 80 avenue de la Prospective, Bourges, Cher,
entered in the Register of Companies of Bourges under No B 602 023 251 (63B64),
represented by:
Mr Henri VERGES, Chairman of the Board of Directors of the said company, domiciled at 78, 80 avenue de la Prospective, Bourges, duly empowered to act herein by virtue of a resolution adopted by the Board of Directors of the said company in Saint Cloud on 3 April 1997, of which a duly certified copy is appended hereto after mention.
AUXITROL SA and its representative are herein referred to as the "LESSEE",
PARTY OF THE SECOND PART
PREAMBLE
WITNESSETH
1. The LESSEE wishes to have industrial premises, to be constructed on the site described hereinafter, located in BOURGES (Cher) and currently owned by SEMARB, hereinafter referred to as the OWNER OF THE SITE.
2. Without intervention by the LESSOR, the LESSEE has taken the initiative to negotiate its acquisition terms directly with the OWNER OF THE SITE.
3. The LESSEE arranged to have established, according to its needs, the construction program for the premises to be erected at the site.
4. On 10 February 1997, the LESSEE filed a building permit application.
On 7 March 1997, the LESSEE obtained a building permit bearing No 018033 97 P0025, delivered by the Commune of BOURGES.
This permit was displayed at the townhall of BOURGES, as witness an affidavit issued by the said townhall on 14 April 1997, and was displayed at the site, as witness a report drawn up on 11 March 1997 by Maitre Jean CHASTEL, bailiff in partnership in BOURGES.
5. The LESSEE has asked the LESSOR for the following property financing transaction in its favor, including:
- acquisition of the said site by the LESSOR,
- construction by the LESSOR of the premises needed by the LESSEE,
- and lease by the LESSEE of the building, under a lease tied to a sales undertaking.
6. The LESSOR has agreed to carry out this financing transaction in the light of the LESSEE's person and the guarantees which the LESSEE has agreed to provide.
7. Under a deed received this day by Maitre Francis BERGERAULT, notary in partnership in BOURGES, the LESSOR accordingly acquired the said site at a price of FIVE MILLION FRANCS excluding VAT (FRF 5,000,000 ex-VAT), incremented by ONE MILLION THIRTY THOUSAND FRENCH FRANCS (FRF 1,030,000) by way of VAT, paid cash.
The LESSOR has further paid the notary the sum of SEVENTY-FIVE THOUSAND FRANCS (FRF 75,000) by way of provision for the duties, taxes, costs and emoluments due in connection with said acquisition.
8. The LESSEE has intervened in this sales deed to declare that all clauses and terms of this deed correspond to those which the LESSEE itself had negotiated with the seller.
DESCRIPTION OF PROPERTY
LAND TO BE ACQUIRED
In BOURGES (Cher).
A building site survey section ZM number 139 at the site known as "Le Noir a Beurat", with a content of five hectares thirty-seven areas and ninety-one centiares (5ha 37a 91ca).
The said site is part of a development program governed by the ZONE D'AMENAGEMENT CONCERTE DE L'ECHANGEUR (cloverleaf concerted development zone) procedure adopted by resolution of the town council of the city of BOURGES on 26 October 1989, approved by the Prefect of the Cher district on 26 October 1989, of which the documents are filed with Maitre BOUTET, notary in partnership in BOURGES, referred to more extensively hereinafter.
CONSTRUCTIONS TO BE ERECTED
An industrial building with a gross leasing area of 10,183 sq.m. and 251 parking places at the surface.
In the remainder of the text, the term "property" shall be used to refer to all property elements and rights covered by the lease.
AGREEMENTS
NOW THEREFORE IT HAS BEEN AGREED AS FOLLOWS
The parties agree to carry out, within the framework of Act No 66-455 of 2 July 1966 and Article 57 of Act No 95-115 of 4 February 1995, the property financing transaction described in the foregoing preamble and forming an indivisible whole by agreement between the parties.
Accordingly,
- the parties have laid down and agreed to their reciprocal obligations during the construction period;
- the LESSOR leases to the LESSEE, which agrees to let, the property described above;
- the LESSOR undertakes to sell said property to the LESSEE, which accepts this undertaking as an undertaking only, and reserves the right to acquire or not to acquire said property at its discretion;
on the General Terms (part one) and the Special Terms (part two) laid out below.
PART ONE
GENERAL TERMS
GENERAL TERMS
CONTENTS
PRELIMINARY DECLARATION: TRANSFER OF RISKS TO THE LESSEE
TITLE 1
100 AGREEMENT REGARDING PERIOD PRIOR TO EFFECTIVE DATE OF LEASE
101 Purchase of site (*)
102 Erection of constructions (*)
103 Financing of works (*)
104 Pre-rent (*)
105 Resolution during the period prior to the effective date of the lease
TITLE 2
200 LEASE
201 Effective date - Term (*)
202 Defects in leased property
203 Enjoyment and purpose of property (*)
204 Transfer of contract
205 Sublet - Pledge of business
206 Works
207 Rent (*)
207bis Temporary complementary rent (*)
208 Charges
209 Termination
210 Termination at LESSEE's request
211 Expropriation
212 Insurance
213 Insurance losses
TITLE 3
300 UNILATERAL UNDERTAKING TO SELL THE LEASED PROPERTY
301 Purpose
302 Request to consummate sale
303 Terms and conditions of sale (*)
(1) Note: The paragraphs followed by the (*) sign must be filled out with the data in the corresponding paragraph in the Special Terms. The other paragraphs may also be modified in the Special Terms.
TITLE 4
400 GUARANTEES OFFERED BY THE LESSEE
401 Personal guarantee (*)
402 Death and disability insurance (*)
403 Other guarantees (*)
TITLE 5
NOT APPLICABLE
TITLE 6
600 CONDITION PRECEDENT
TITLE 7
700 MISCELLANEOUS PROVISIONS AND REPRESENTATIONS
701 Terms of payment governing sums owed by the LESSEE (*)
702 Late-payment interest
703 Vacation of premises
704 LESSOR's privilege
705 VAT option
706 Repayment of VAT to the Treasury by way of regularization
707 Land registration (*)
708 General Meetings of Co-owners Association
709 Miscellaneous costs
710 Management powers (*)
711 Other provisions (*)
712 LESSEE's representation
713 Election of domicile - jurisdiction
PRELIMINARY DECLARATION: TRANSFER OF RISKS TO THE LESSEE
The parties represent that it is their common intention to consider all phases and aspects of this operation - notably its legal and financial aspects - an indivisible whole.
Moreover, the parties wish to stress the LESSOR's essentially financial intervention in this operation.
The LESSEE, which has taken the initiative to make this investment, chosen the site and ordered construction drawings according to its needs, and will be the user of the property and may become its owner if it so desires, intends to remain entirely in control of the operation, both during the construction period and during the term in which the property is leased, even though the property will be owned by the LESSOR for the financing term.
The LESSOR acknowledges that, even though it is the legal owner of the property, its role, within the limits agreed between the parties and provided the LESSEE fully performs its contractual obligations, is to finance a site chosen by the LESSEE and the constructions defined in descriptive specifications.
Accordingly, it not only seems legitimate for the LESSEE to assume the risks generated by its legal situation but also to assume the transfer of any and all obligations and any and all risks, even those resulting from force majeure, which would be incumbent on the builder and the property owner under general law provisions.
This agreement is drafted subject to this preliminary declaration, which shall be the constant reference to determine the division of charges, obligations and risks between the parties and as necessary to determine the common intention of the parties.
TITLE 1 OF THE GENERAL TERMS
100 AGREEMENT REGARDING PERIOD PRIOR TO EFFECTIVE DATE OF LEASE
*101 PURCHASE OF SITE
Acquisition shall be by notarized deed.
The notarized deed can be signed only if the building permit and any administrative authorizations necessary for construction and use of the property by the LESSEE have been duly issued and have not been or can no longer be subject to recourse.
The LESSEE shall intervene in the acquisition deed in order to certify that all clauses and terms of this deed correspond to those which the LESSEE itself had negotiated with the seller.
If said acquisition deed is not signed this day at the same time as this contract (as specified in the Special Terms), it shall at all events be signed before the deadline stipulated in paragraph 101 of the Special Terms, in accordance with paragraph 600 "CONDITION PRECEDENT" below.
The parties undertake to provide the notary in time with all necessary information and documents.
102 ERECTION OF CONSTRUCTIONS
102.1 The constructions to be erected are defined by the drawings and descriptive specifications established at the initiative of the LESSEE and approved by the LESSOR.
102.2 In accordance with the principles laid out in the PRELIMINARY DECLARATION above, the LESSEE alone shall be charged with construction of the constructed works, of which it shall deemed to be the builder and for which it alone shall have full responsibility.
Accordingly, the LESSEE undertakes to assume any and all consequences vis-a-vis the LESSEE itself as well as vis-a-vis third parties and the government for all insurance losses to the property during construction, all bad workmanship or defects in the constructions, whether during or after construction, as well as all damage or harm to third parties due to the site and the constructed works, and to reimburse the LESSOR promptly all sums which the latter may have incurred in this respect.
102.3 The LESSOR vests full powers in the LESSEE, which shall not be entitled to substitute a third party for the performance of this mandate, in order to accomplish all formalities and steps, sign all documents, agreements and contracts and do whatever else is necessary to build the constructed works to completion, from the building permit application (or, if already delivered, from application to transfer it to the LESSOR's name) until acceptance report and completion declaration, in order to obtain the certificate of conformity for the property as soon as possible.
102.3.1 Safety and health prevention and coordination
The LESSEE shall comply with the special provisions applicable to building and civil engineering operations under Act No 93.1148 of 31 December 1993 and decree no 94.1159 of 26 December 1994.
Accordingly, if necessitated by the duration or volume of the works, the LESSEE shall notably file the prior declaration with the authorities in charge of job-related health and safety.
At its own expense, the LESSEE shall also appoint a safety and health protection coordinator with the qualifications stipulated in the applicable regulations, which the LESSEE shall be able to prove.
Moreover, if required because of the size of the works, the LESSEE shall see to the organization of a college of contractors before the start of the works and to compliance with disclosure obligations vis-a-vis this college.
The LESSEE undertakes to reimburse the LESSOR all sums which the latter may have to pay if forced to substitute itself for the LESSEE because of the latter's non-performance, notably in order to comply with a request from the authorities.
In the event that the LESSEE does not perform its commitments, this contract may be terminated in accordance with paragraph 209 below.
102.4 Insurance - construction
102.4.1 In order to be able to cover the risk transfer referred to above, and to comply with the provisions of the law of 4 January 1978, the LESSEE shall take out the following before groundbreaking day, in its own name as well as on behalf of the LESSOR:
- a policy covering "Decennial owner and prime contractor's (constructed works damage) liability"
designed to cover, apart from assignment of liability, payment of the works necessary to repair all damage, even resulting from soil deficiencies, which:
* jeopardizes the strength or solidity of the constructed works forming the construction operation;
* affects one or more integral parts of the said constructed works or one or more of their fixtures or facilities in such a way as to make them unfit for their design purpose;
* affect the strength or solidity of one of the fixtures or facilities which forms an integral part of the development, foundation, framework, roof or wall works in the meaning of Article 1792-2 of the Civil Code.
as well as any necessary demolition, earth, removal or disassembly works.
- A policy covering "Decennial liability of the building owner"
designed to cover the decennial liability of the LESSOR and the LESSEE as the LESSOR's agent against tangible damage to the building entailing the insured's liability, tangible damage entailing exercise of the cover for proper operation and intangible damage (excluding bodily injuries) suffered by the LESSOR, the LESSEE or any other occupant of the building, resulting from an insured tangible risk.
- A policy covering "All construction site risks"
designed to cover tangible damage to the constructed works during construction, damage to existing property, any financial losses and various costs and fees, and to cover the property at new value, the fees of experts and the liability of the LESSOR or the LESSEE for risks linked to fire or explosions as well as CIVIL LIABILITY to cover claims which may be made by damaged third parties against the LESSOR and the LESSEE further to accidental damage caused by the building works,
the cover to be in an amount compatible with the nature of the executed works and at least for the term of the works.
102.4.2 Subscription
The insurance policies listed in paragraph 102.4.1 shall be taken out by the LESSEE as part of the "group" insurance policies under the asset protection plan which the LESSOR, with the assistance of its insurance broker, has implemented. The purpose of this plan is to ensure that the LESSEE is covered by a policy which meets the exact requirements stipulated in paragraph 102.4.1 above.
Should the LESSEE exceptionally, on its sole responsibility, decide not to subscribe to the LESSOR's "group" insurance contracts but to cover the risks which it is obliged to insure (as stipulated in paragraph 102.4.1) by means of "other insurance policies", it shall provide evidence of subscription of such "other policies" by supplying the LESSOR's insurance broker with copies thereof, failing which the LESSOR shall be entitled to cover the foregoing risks at the LESSEE's expense.
The LESSEE shall also reply to every request for information or additional documents received from the LESSOR's insurance broker.
Said "other policies" shall stipulate that the insurance company concerned may not suspend their covers for any reason, nor refuse to indemnify the LESSOR in case of loss on the ground that the LESSEE has not complied with the obligations of the insurance contract, without notifying the LESSOR at least one month in advance by registered letter, in which event the LESSOR, at its own discretion, shall be entitled to pay the premiums in the LESSEE's place.
The "other policies" shall specify that all indemnities payable under the damage covers shall be paid directly to the LESSOR and shall necessarily provide for reciprocal waiver of recourse between the LESSOR and the LESSEE.
Moreover, the LESSEE may or shall take out all complementary policies it considers useful or necessary.
The LESSOR reserves the right to require subscription of all complementary policies which turn out to be necessary. Inspection or lack of inspection of said policies by the LESSOR or its insurance broker shall not entail any liability on its part for lack of insurance or inadequate insurance.
102.4.3 Premiums:
As part of the LESSOR's asset protection plan and in application of the preliminary declaration, the LESSEE shall be solely responsible for negotiating with the LESSOR's broker both the face amount to be insured and the premium rate of the subscribed insurance.
The LESSOR's broker shall send the invoices for the premiums on the insurance taken out within the framework of this plan to the LESSEE for the latter's approval. The insurance premiums referred to in paragraph 102.4.1 above shall be paid by the LESSOR on the terms and within the limits provided for in paragraph 103.2 and 103.4 of this contract.
102.4.4 Insurance broker
The LESSOR has appointed the following insurance broker:
SGAP
SOCIETE GENERALE D'ASSURANCES ET de PREVOYANCE
having its registered office at
50 rue de Chateaudun
75009 PARIS
The LESSOR expressly reserves the right to appoint any other insurance broker in place of the above broker, which the LESSEE herewith accepts.
102.4.5 Miscellaneous
At its own expense, the LESSEE shall resort to the services of an officially approved technical inspection firm to carry out the assignments stipulated in title II of Act No 78-12 of 4 January 1978. Its services shall cover all construction lots.
The LESSEE shall comply with its obligations in this respect and shall disclose the inspector's recommendations, comments and reservations simultaneously to the insurer and the contractor concerned and shall not prevent the insurers, at their own expense, from asking the technical inspector, in his official capacity, for any additional information they believe they may need to judge the insured risks.
The LESSEE shall also verify that the chosen contractors are adequately insured.
102.5 Acceptance of works
The LESSEE shall notify the LESSOR at least fifteen days in advance, by registered letter with notice of receipt, of the date and time of the works acceptance procedure, which the LESSOR shall be entitled to attend at its own discretion.
*102.6 Works completion date
The works shall be completed and accepted at the latest by the date stipulated in the Special Terms, failing which the LESSOR shall be entitled to apply the resolution condition stipulated in paragraph 105.1.a.
102.7 Documents and information to be disclosed by the LESSEE to the LESSOR
- Copy of the building permit application (and appended drawings) and the original of the acknowledgment of receipt issued by the authorities.
- Building permit and builder and user authorizations (if these government authorizations are necessary).
- Name and address of main contractor (architect or design firm).
- Detailed drawings and complete descriptive specifications of the contemplated constructions, including all works drawings.
- Contracts signed by the LESSEE and stamped by the main contractor.
- Works and payment schedules.
- Copy of insurance certificates, insurance policies and premium receipts from the insurance companies for the construction insurance policies.
- Name and address of officially approved technical inspector.
- Copy of declaration opening the construction site.
- Copy of construction site reports.
- Contractors' payment requests bearing the LESSEE's "good for payment" and the main contractor's stamp.
- Copies of various documents delivered by the authorities, notably as regards safety and hygiene.
- Reports on any significant incident or suspension of works.
- Works acceptance reports and as applicable reservation withdrawal reports.
- Copy of works completion declaration.
- Original of certificate of conformity.
- Copy of prior declaration provided for by Article L.235-2 of the French Labor Code.
- Contract signed with the safety and health protection
- coordinator.
- Affidavit as to the coordinator's qualifications.
- Insurance certificate regarding the coordinator's decennial liability.
- General safety and health protection coordination plan.
- Rules of college of contractors.
- File on subsequent intervention on the constructed works, as delivered by the coordinator on acceptance of the works.
These documents and information must be sent to the LESSOR as soon as they are established or are served on or known to the LESSEE.
Within forty-five days from completion of the property, the LESSEE, after having duly performed its obligations, shall send the LESSOR, for the latter's signature, the new construction declaration designed for the Survey Department. In the event that the LESSEE fails to send this document, it shall bear all consequences thereof, especially any resulting loss of partial temporary exemption from land tax.
103 FINANCING OF WORKS
103.1 The LESSOR shall not be obliged to make payments to finance the constructions as long as:
1. It has not been able to become, on the conditions provided for under paragraph 101 above and by authenticated deed, owner of the site or holder of a real property right to the said site.
2. The LESSEE has not provided it with evidence that the insurance policies stipulated under paragraph 102.4 have been implemented.
3. The LESSOR is not in possession of the contract or agreement corresponding to the expense.
*103.2 The LESSOR agrees to finance the investment (land and constructions provided for in the descriptive specifications) up to the ceiling specified in the Special Terms.
The LESSEE undertakes to bear all additional costs. It is agreed that the fraction of the construction financed by it shall become the LESSOR's property by accretion, without indemnity, whether on early termination of the lease, irrespective of the reason, or at its normal expiration, if the LESSEE does not exercise the sales undertaking granted in its favor.
103.3 The LESSOR shall in no event be obliged to finance works not provided for in the descriptive specifications.
103.4 Requests for payment (invoices, accounts, bills for fees) established in the LESSOR's name shall bear the LESSEE's notice "good for payment" and the stamp of the architect or the design firm, in accordance with the directives given by the LESSOR.
Payments shall be made cash by check, which shall be the sole payment method. The LESSOR shall have at least fifteen days from the date of receipt of such payment requests to make these payments.
104. PRE-RENT
*104.1 Commitment fee
The LESSEE shall pay a commitment fee whose calculation method and terms of payment are stipulated in the Special Terms.
*104.2 Interim interest
During the period between the date on which this contract is signed and the effective date of the lease, the LESSEE shall pay the LESSOR quarterly interest, payable in arrears, prorated to the annual rate stipulated in the Special Terms, on all sums (including VAT) paid by the LESSOR in connection with the operation. It is herewith specified that sums paid in respect of VAT which can be recovered shall bear interest over a fixed period of four months.
104.3 After the effective date of the lease, the interest referred to in paragraph 104.2 shall continue to be collected on each amount paid in connection with VAT which can be recovered.
*104.4 Financial engineering costs
The amount of these costs and their terms of payment are fixed in the Special Terms.
*104.5 Other fees and costs
A management fee, whose amount shall be the same as that stipulated in paragraph 207.5 of the Special Terms, shall be collected together with each pre-rent.
The other costs are specified and fixed in the Special Terms.
104.6 The pre-rent shall be subject to VAT; which shall be borne by the LESSEE, which shall further bear any tax added to or substituted for VAT.
105. RESOLUTION DURING THE PERIOD PRIOR TO THE EFFECTIVE DATE OF THE LEASE
105.1 It is expressly agreed that:
a. In the event that, irrespective of the reason, whether technical, legal, administrative or other, even in case of force majeure not under the LESSOR's control, the constructions cannot be completed, delivered and put at the LESSEE's disposal by the date stipulated in paragraph 102.6 of the Special Terms;
b. Or failing payment, at its due date, of any sum owed by the LESSEE to the LESSOR under this contract, from the date on which it is signed until the effective date of the lease, or failing performance of one or more of the obligations incumbent on the LESSEE during this period;
c. In the event that the activity planned on the premises to be erected is jeopardized further to recourse by third parties against a government authorization, notably a prefectural authorization to establish classified facilities under the Act of 19 July 1976 or authorization from the District Commission for Commercial Facilities;
This contract shall be automatically and fully terminated at the LESSOR's discretion, without legal formality, one month after the LESSEE is served a bailiff's writ containing the LESSOR's decision, or a summons to pay or perform containing the LESSOR's declaration that it intends to use the benefit of this clause has not been acted upon, notwithstanding payment or performance after expiration of this period of one month.
105.2 The LESSEE shall pay the LESSOR, within maximum one month from termination, by way of damages under the Articles 1152 and 1226 of the Civil Code, an indemnity equal to the amount of the financing ceiling stipulated in paragraph 103.2 plus VAT to be paid by the LESSOR to the Treasury, incremented by 20% over the total.
Said termination indemnity shall be incremented by the applicable VAT.
105.3 However, the LESSEE shall be entitled, but only in the case provided for in paragraph 105.1.a and provided it has duly performed all its contractual obligations, to acquire the real rights held by the LESSOR to the site as well as the constructions, in consideration of a price equal to the total expenses incurred by the LESSOR at the day of the sale and all sums due on works, including indemnities if any due to participants in the construction, the whole being increased by 10%.
In order to be admissible, the acquisition request must be sent by registered letter with notice of receipt accompanied by the price and the amount of costs within one month from the notice served in accordance with paragraph 105.1.
Moreover, the sale shall be consummated on the terms and conditions laid out in the paragraphs 303.4 and 303.10 below.
105.4 If the notarized sales deed cannot be signed for failure to pay the price or for any other reason due to the LESSEE, within four months from the aforesaid notice, the resolution clause provided for above shall apply.
105.5 Pre-rent shall remain due until the termination date of the lease or until the notarized property sales deed is signed.
TITLE 2 OF THE GENERAL TERMS
200 LEASE
201 EFFECTIVE DATE - TERM
201.1 The lease shall take effect at the date on which construction is completed.
*201.2 From this date, the lease shall have the term stipulated in the Special Terms.
In any event, as the constructions concerned are leased bare, the lease shall take effect in accordance with the foregoing, even if the LESSEE has not yet installed the facilities and equipment connected with its business.
201.3 The completion date shall become official by the signing of a works acceptance report, even if this document includes reservations.
201.4 The LESSEE undertakes not to demand any indemnity from the LESSOR in the event that completion of the constructions is overdue.
202 DEFECTS IN LEASED PROPERTY
202.1 The LESSEE, which has chosen the site, conceived the construction program and been mandated to have other parties carry out the works and to monitor progress, shall deal personally, without recourse against the LESSOR, with all urban development rules, formalities and government authorizations connected with the site and the constructions as well as their use and, as applicable, their opening to the public. The LESSEE releases the LESSOR from any obligation to provide a guarantee against visible or hidden defects, bad workmanship or faults, as well as easements of any and all kinds capable of affecting the leased property, even if such defects and faults emerge during the lease and even if they would prevent use of the property. The LESSEE notably undertakes not to demand any reduction in rent or any indemnity on this ground.
202.2 The LESSEE undertakes to inform the LESSOR of any bad workmanship, defects and faults affecting the constructions, within one month from their being noticed.
The LESSOR herewith fully empowers the LESSEE to dispute the quality of the works vis-a-vis the architects, contractors and other parties having participated in the erection of the constructions.
If such dispute cannot be settled amicably, the LESSOR shall be entitled to bring any necessary suit, provided recourse times have not lapsed.
All cots, duties and fees generated by these actions shall be borne exclusively by the LESSEE.
203 ENJOYMENT AND PURPOSE OF PROPERTY
*203.1 The property shall be occupied exclusively for the purpose provided for in the Special Terms.
The LESSEE represents that it takes sole responsibility for the declaration made under paragraph 203.1 of the Special Terms with respect to the use of the premises covered by this contract.
It herewith undertakes to preserve this use for the entire term of the property lease or to use said premises only for a purpose compatible with the law on property leasing in force at the day of the change in purpose, subject to the LESSOR's prior written consent. The LESSEE expressly represents that it shall deal personally with all legal and fiscal consequences of a change in purpose of the premises.
The LESSEE shall use the property in such a way as not to disturb the quiet or peaceful enjoyment by other occupants or neighbors of the property. It shall bear all consequences of actions brought by said occupants or neighbors in this respect.
This lease does not offer any guarantee of exclusive occupancy or non-competition on the part of the LESSOR, which reserves the right to lease any and all premises other than those governed by this contract for the exercise of any and all similar or identical activities, regardless of the place where they are located.
203.2 The premises shall at all times be furnished with the equipment, furnishings and movables in sufficient quantity and of sufficient quality to cover payment of the rent and to ensure performance of all lease terms.
203.3 In accordance with the Preliminary Declaration, the LESSEE shall during the entire lease term hold full surveillance, management and inspection powers over the leased property.
During the entire term of the lease, the LESSEE shall ensure compliance with the government regulations and safety rules applicable to the class of building concerned. It shall accomplish all formalities and bear all costs necessary to carry out its business and accordingly releases the LESSOR from any responsibility in this respect.
The LESSEE undertakes to comply with the laws and regulations applicable to environmental protection. It releases the LESSOR from any responsibility in this respect, notably in the event that soil pollution is discovered. In this case, the LESSEE alone shall bear all study and analysis costs and all expenses necessary to comply with all demands from the authorities or third parties. The LESSOR shall as necessary be entitled to demand that the LESSEE order an expert analysis at the LESSEE's own expense.
The LESSEE shall also bear the cost of all soil and subsoil removal and restoration works. Such works shall be carried out in accordance with the regulations applicable to the type of activity carried on and on the terms in paragraph 206.3 et seq.
For the entire lease term, the LESSEE undertakes not to bring any recourse against the LESSOR for compliance with environmental regulations and to make sure that the LESSOR is not wanted in the event that this contract is transferred or terminated or that the property is subsequently sold.
203.4 The LESSEE also releases the LESSOR from any liability for disruption of enjoyment by third parties.
203.5 The LESSEE alone shall bear all consequences of bodily injuries or tangible damage caused to third parties by the site or the constructions or by the existence or use of the fixtures or installations (water, gas, electricity and heating installations, etc.; elevators and freight elevators, escalators, etc.) or by the LESSEE's employees as well as all consequences of recourse brought by social security against the LESSOR further to job-related accidents.
203.6 In the event that the property belongs to a co-ownership or a regulated zone, the LESSEE undertakes to comply with the provisions of the co-ownership regulations, the zone regulations, the specifications or the internal rules.
204. TRANSFER OF CONTRACT
Transfer of the contract shall be subject to the LESSOR's prior written acceptance. In any event, transfer shall be authorized only if it complies with the following terms:
204.1 It shall be a total transfer; partial transfers of any kind shall be forbidden.
204.2 The LESSEE shall transfer to the transferee, in one and the same deed, the lease and the unilateral sales undertaking which, by express agreement between the parties and because of the very nature of the lease transactions, form an indivisible whole.
204.3 The transferee shall respect the exclusive purpose for the property referred to under paragraph 203.1 above.
If the transferor operates a classified facility, said transferor shall file a declaration of change of operator or cessation of business prior to transfer. In the event that the transferor ceases business, it shall complete all soil and subsoil removal and restoration works and prove by means of an expert analysis conducted at its expense that no pollution or trace of substances capable of contaminating the site remains.
204.4. The LESSEE shall remain the joint guarantor of the transferee and subsequent transferees, without being able to oppose the benefit of discussion or division.
204.5 In case of court-ordered reorganization or liquidation, transfer of the contract by the trustee in bankruptcy or by the debtor, assisted by the trustee in bankruptcy, shall be subject to the terms and conditions stipulated in this Article. In this case, the transferor's joint guarantee shall be replaced by a joint guarantee from a bank.
204.6 Transfer shall take place by notarized deed, executed with the participation of the LESSOR's notary. The LESSOR shall be invited to intervene in this deed by registered letter with notice of receipt and shall receive a binding copy without cost for said LESSOR.
204.7 The foregoing stipulations (paragraph 204.1 to 204.6 above) shall apply to all transfer cases, regardless of their form, as well as to assignment of the lease right to any company of any form, whether such assignment is to a new company or to an already existing company.
205 SUBLET - PLEDGE OF BUSINESS
205.1 Sublet
205.1.1 The LESSEE shall be authorized to sublet the property to one or more users.
205.1.2 Any sublet contract shall contain the following stipulations:
"The lessor, itself a lessee, has the enjoyment of the leased
property by virtue of a lease contract expiring on ......... (to be filled out by the lessor, itself a lessee, in the sublet deed).
The sublessee acknowledges that it has been informed that the rights it is granted herein are linked to the existence of the aforesaid lease and that the lease is not governed by the stipulations of the decree of 30 September 1953 on commercial leases.
Accordingly, this sublease shall automatically end on expiration of the aforesaid lease contract if the lessor, itself a lessee, has not requested consummation of the property sale, or before this date if the lease contract itself is terminated at an early date, irrespective of the reason.
In such case, the sublessee shall immediately release the premises without being able to claim any right against the lease company which is the owner."
205.1.3 The parties expressly acknowledge that, in their common intention, the premises governed by the lease for an indivisible whole.
205.1.4 All layout or repair works further to sublets and connected with either the constructions or the soil or subsoil shall be borne exclusively by the LESSEE, as shall all indemnities which the sublessees may claim from the LESSOR for any reason whatsoever.
205.2 Pledge of business
The LESSEE shall only be entitled to pledge the business carried on in the property covered by this contract after having informed the LESSOR by registered letter with notice of receipt and having received the latter's written permission.
In the event that a pledge is granted in violation of this clause or in the event that a privilege is registered by a third party, as validated by final court order with the force of RES JUDICATA, the LESSOR shall be entitled to terminate the contract at its sole discretion and apply the provisions stipulated in paragraph 209 below.
206. WORKS
206.1 Repair and maintenance works
The LESSEE shall not only be in charge of rental repairs and small maintenance works (Article 1720 paragraph 2 and Article 1754 paragraph 1 of the Civil Code) but shall also be responsible for major maintenance and repairs which become necessary during the contract, including the major repairs defined in Article 606 of the Civil Code, regardless of the origin of damage (construction defects or faults, wear, etc.).
The LESSEE shall immediately destroy all rodents, insects and other parasites appearing on the leased property.
The LESSEE shall promptly notify the insurers and the LESSOR of any damage, destruction or accident to or caused by the leased premises.
On normal expiration of the contract, if the LESSEE has not requested the sale to be consummated, or in case of early termination, the LESSEE shall prove by means of an inventory, prepared at its expense and approved by the parties, that the premises are well maintained and in excellent repair in all respects. Failing this, it shall reimburse the LESSOR the cost of the necessary repair works.
206.2 Improvement or layout works
At its own discretion but at its exclusive expense, the LESSEE shall be entitled to carry out such works.
Works entailing demolitions or piercing of walls, beams, floors or roofs, or extension or elevation, or a change in indoor layout, shall require prior written permission from the LESSOR which, in case of authorization, shall be entitled to impose inspection by its architect, whose fees shall be borne by the LESSEE.
206.3 Works imposed by the regulations
The LESSEE shall furthermore see personally to all works, irrespective of their cost, imposed by existing laws or regulations, or by order from the authorities, notably in order to obtain the health and safety certificate of conformity. The LESSEE shall not be entitled to claim the benefit of Article 1755 of the Civil Code in this respect.
The LESSEE undertakes to comply with applicable laws and regulations on protection against risks connected with asbestos and releases the LESSOR from any liability in respect of these provisions.
If the property covered by this lease is to be subjected to inspection, surveillance or works operations, the LESSEE shall deal personally with the performance of such obligations and alone shall bear the cost.
The LESSEE undertakes to provide the LESSOR with evidence of the accomplishment of such operations on the conditions stipulated in Article 711 of the Special Terms.
206.4 The LESSEE shall carry out all of the foregoing works on its sole responsibility and shall have no recourse against the LESSOR. It shall take out all necessary insurance policies, notably legally necessary policies or any policies which may be advisable and shall require contractors to take out adequate insurance for their risks.
206.5 In the event that the LESSEE fails to carry out the works provided for in paragraph 206.1 and 206.3, the LESSOR shall be entitled to substitute itself for the LESSEE, after a summons has not been acted upon within one month, and have such repairs or works carried out by a contractor of its choice. In the event, the LESSEE shall promptly reimburse the amount plus 10% to the LESSOR as soon as it is requested to do so, and shall alone remain responsible for any consequences of failure to carry out the said works by the stipulated date.
206.6 The LESSEE shall not be entitled to demand any reduction of rent or termination of the contract, regardless of the scope or length of works, and whether such works are carried out by the LESSEE or by the LESSOR.
206.7 All real property added by the LESSEE shall be deemed to be the LESSEE's property during the entire term of the lease and shall automatically and without indemnity become the LESSOR's property by accretion on normal expiration of the contract if the LESSEE has not exercised the option, or on early termination of the contract, irrespective of the reason for such termination.
The LESSEE shall not be entitled to remove or demolish them without the LESSOR's express consent. The LESSOR shall always be entitled to demand that the premises be restored in their original state at the LESSEE's cost and risk.
In case of departure, the LESSEE shall leave all existing telephone lines at the LESSOR's disposal.
206.8 The LESSOR's representatives shall be authorized to enter the leased property freely, subject to advance notice for the LESSEE.
206.9 If the leased property is part of a co-ownership, the obligations incumbent on the LESSEE by virtue of the foregoing stipulations shall only concern works connected with the leased private elements.
As regards works connected with the common elements, as approved and carried out by the co-ownership organization, the LESSEE shall reimburse the LESSOR its share of the expenses charged to the leased property, as part of the charges governed by paragraph 208 below.
207. RENT
It is herewith specified that the word "rent" is used here for convenience but should be considered a financial fee which comprises the interest on and amortization of the capital invested by the LESSOR in the operation.
The frequency and date of each rental payment are specified in paragraph 207.5 below.
The periodic rent shall be calculated and collected on the following conditions:
The rent shall be equal to the addition of the following two elements:
- Rent on the share invested by SLIBAIL IMMOBILIER
- Rent on the share invested by NORBAIL IMMOBILIER
RENT ON THE SHARE INVESTED BY SLIBAIL IMMOBILIER
207.1 AMOUNT OF PERIODIC BASIC NET RENT
207.1.1 At each rental term, the amount of the periodic basic net rent shall be equal to the addition of, first, an amount representing financial amortization, and, secondly, an amount representing interest.
*207.1.1.1 At each rental term of the periodic rent, the amount of financial amortization shall be determined by applying the percentages given in column 1 of the table in the Special Terms to the "total investment cost" defined in paragraph 207.1.2 below.
*207.1.1.2 At each rental term of the periodic rent, the amount of interest shall be calculated by applying, to the financial outstandings, according to the formula indicated below, the proportional annual rate T stipulated in the Special Terms. The financial outstandings themselves are determined at each rental term of the period rent by applying the percentages given in column 2 of the table in the Special Terms to the "total investment cost" defined in paragraph 207.1.2 below.
The amount of interest, "i", included at each rental term in the amount of the periodic basic net rent shall therefore be determined according to the following formula:
NB
in = PR x Pn x T x ---
where:
in Amount of interest included in the periodic basic net rent at term n
PR the "total investment cost" defined in paragraph 207.1.2
Pn The percentage indicated in column 2 of the table in the Special Terms for term n
T The proportional annual rate stipulated in the Special Terms
Nb 182.5 for a whole calendar period of six months and 91.25 for a whole calendar quarter
*207.1.2 "Total investment cost" is defined as the total sums, not including VAT which can be recovered, disbursed by the LESSOR, irrespective of the reason, in connection with this lease operation.
If the "total investment cost" is not definitively known at the effective date of the lease, the rent shall provisionally be calculated on the basis of the sums disbursed by the LESSOR by this date.
Disbursements, excluding recoverable VAT, made after the effective date of the lease shall generate complementary rent calculated by applying proportionally to the amount of such disbursements, excluding recoverable taxes, the annual rate used to calculate the due amount, prorated between the date of such disbursement and the date of their inclusion in the "total investment cost".
Moreover, in order to respect the financial amortization pace provided for in the contract (without changing the percentages included in the columns 1 and 2 of the table referred to in the paragraphs 207.1.1.1 and 207.1.1.2 above), the complementary rent shall be incremented by the financial amortization which had to be applied to disbursements excluding recoverable taxes if they had to be made at the effective date of the lease.
The foregoing disbursements excluding recoverable taxes shall be included in the "total investment cost". The non-indexed and indexed parts of the effective periodic rent excluding taxes defined in the paragraphs 207.2 and 207.3 below shall be modified accordingly at the date on which these disbursements are factored in.
After expiration of the second lease year, no more disbursements may be requested from the LESSOR, even if the financing ceiling stipulated in title 1 of these General Terms has not been reached at the time.
*207.2 INDEXATION OF PERIODIC BASIC NET RENT
Said rent shall be indexed at each term, at the percentage stipulated in, the Special Terms, against the national construction cost index published by INSEE. The balance shall remain non-indexed during the entire term of the lease.
In indexing the periodic basic net rent, the initial reference index shall be the index for the antepenultimate calendar quarter preceding the calendar quarter in progress at the effective date of the lease(1)
The periodic rent shall automatically vary at each term in the same direction as the said index.
The comparison index used to calculate each term of the periodic rent shall be the index for the antepenultimate calendar quarter preceding the quarter in which this term falls due.
In the event that the INSEE index goes down, the periodic rent shall go down as well. However, given the financial nature of this lease contract, it is expressly agreed that the periodic rent, after impact of indexation, shall in no event be less than the periodic basic rent.
If the national construction cost index issued by INSEE ceases to be published or if recourse to this index is forbidden by future regulations, it will be replaced, failing an official replacement index, by an equivalent index chosen by agreement or, failing this, by a single expert, appointed by agreement between the parties or by order of the Chief Judge of the District Court at the petition of the first party to act; the expert's costs and fees shall be borne exclusively by the LESSEE.
Moreover, should all indexation be forbidden by future regulation, the parties shall meet in order to replace the indexation provided for in the lease with another formula which complies with the applicable regulations and is designed to maintain the financial equilibrium of the contract.
207.3 FORMULA FOR CALCULATING PERIODIC BASIC NET RENT
The periodic basic net rent to be paid by the LESSEE shall be equal to the result of applying the indexation to the periodic basic net rent. This periodic basic net rent shall consist of a Non Indexed Part: PNI, and an Indexed Part: PI, calculated as follows:
- for the period between the effective date of the lease and the end of the calendar period (corresponding to the frequency of the rent specified in paragraph 207.5 below) then in progress, according to the following formula:
PNI1 = L1 x (1 - H1)
IND1
PI1 = L1 x HI ----
INDo
5 L'1 = PNI1 + PI1
- at subsequent terms according to the following formula:
Ln
PNIn = PNIn-1 x ----
Ln-1
LN INDn
PIn = PIn-1 x LN x -- x ------
LN INDn-1
L'n = PNIn + PIn
In the foregoing formulas:
HI Height, as a percent, of the periodic basic net rent subject to indexation, as defined in paragraph 207.2
PNI1 Non Indexed Part of the first due periodic basic net rent
PI1 Indexed Part of the first due periodic basic net rent
PNIn Non Indexed Part of term n of the first periodic basic net rent
PNIn-1 Non Indexed Part of term n-1 of the first periodic basic net rent
Pin Indexed Part of term n of the first periodic basic net rent
PIn-1 Indexed Part of term n-1 of the first periodic basic net rent
L1 Periodic basic net rent of the first term stipulated in paragraph 207.1
Ln Periodic basic net rent of term n stipulated in paragraph 207.1
Ln-1 Periodic basic net rent of term n-1 stipulated in paragraph 207.1
INDn National construction cost index issued by INSEE applicable to term n as defined in paragraph 207.2
INDn-1 National construction cost index issued by INSEE applicable to term n-1 as defined in paragraph 207.2
IND1 National construction cost index issued by INSEE applicable, by way of comparison, to term 1 as defined in paragraph 207.2
INDo National construction cost index issued by INSEE applicable, by way of initial reference, to term 1 as defined in paragraph 207.2
L'1 Periodic basic net rent of the first term
L'n Periodic basic net rent of term n
RENT ON THE SHARE INVESTED BY NORBAIL IMMOBILIER
The second part of the rent, connected with the share of NORBAIL IMMOBILIER, is defined in the Special Terms.
207.4 VAT ON RENT
Rent shall be subject to VAT (see 705 below). This tax shall be paid by the LESSEE, which shall also bear any tax added to or substituted for VAT.
*207.5 PAYMENT OF RENT
The periodic basic net rent, incremented by due VAT, shall fall due and be payable at the dates and according to the calendar frequency stipulated in the Special Terms.
A management fee, whose amount is fixed in the Special Terms, shall be payable together with each rental term.
If the effective date stipulated in paragraph 201.1 of the General Terms becomes only officially known afterwards to the LESSOR, the LESSOR, because the time needed to prepare the invoice, shall be entitled to postpone the term for payment of the first effective periodic rent. In this case, the amount of the first term shall simply be incremented by the impact of such postponement at the pro-rated agreed interest rate.
207BIS TEMPORARY COMPLEMENTARY RENT
207bis 1 In the event that the investment is subject to VAT because of acquisition of the building, the seller's delivery of a VAT attestation or financing of works by the LESSOR, the LESSEE shall owe complementary rent calculated as follows.
*207bis 2 Each amount disbursed by the LESSOR for recoverable VAT shall be subject to interest calculated over a fixed period of four months in proportion to the annual rate specified in the Special Terms.
207bis 3 This complementary rent, incremented by due VAT, shall be payable in arrears at the end of each calendar period defined in paragraph 207.5 of the Special Terms and for the first time on expiration of the calendar period in progress at the effective date of the lease.
208 CHARGES
208.1 All charges connected with the property - services and supplies, insurance premiums, taxes and levies, even though normally incumbent on the owner (notably annual tax on office premises located in the Ile-de-France region, land tax and insurance premiums on the property) shall without exception be borne exclusively by the LESSEE, which undertakes to pay them or to reimburse them promptly to the LESSOR when requested to do so.
As regards the annual tax on office premises located in the Ile-de-France region, created by Article 40 of the Supplementary Budget Act for 1989 (No 89.936 of 29 December 1989), the LESSEE, after having duly performed its obligation, shall send the LESSOR, without prompting, by registered letter with notice of receipt, for the latter's signature, thirty days before the regulatory filing deadline, the applicable declaration, indicating the address of the Treasury accountant in the district of the taxable premises who is to receive it. Should the LESSEE fail to send this document or should the information on this declaration be inexact, said LESSEE shall bear all consequences.
208.2 Charges normally incumbent on the LESSOR but which, further to paragraph 208.1 above, are incumbent on the LESSEE, being considered by the tax authorities as complementary rent subject to VAT like the basic rent, shall be billed additionally.
208.3 In the event that the premises belong to a co-ownership or a regulated zone, the related share of the common charges shall be borne entirely by the LESSEE.
208.4 The LESSEE shall see personally to all water, gas and electricity subscriptions, etc. whose cost it shall bear exclusively.
208.5 Suspension or breakdown of various supplies or services shall in no event justify a request for lower rent.
209. TERMINATION
209.1 It is expressly agreed that if the LESSEE fails to pay a single rental term at its due date, a fraction of such term or the corresponding VAT or fails to pay the charges referred to in paragraph 208 or fails to perform one or more of the other contractual stipulations (notably failure to deliver the certificate of conformity within two years from the effective date of the lease or refusal to deliver this document), this contract shall be automatically canceled, at the LESSOR's discretion, without need for
court order, if the LESSEE fails to remedy such non-performance within one month from receipt of a summons served by bailiff's writ.
If this contract provides for enrollment in group death and disability insurance contract UAP/CL No 2310, on the terms stipulated in Article 402 below, application of the termination clause shall automatically entail cancellation of enrollment in this group death and disability insurance.
If the property covered by this lease is designed for an activity to be carried on by classified facilities which require authorization, it is expressly agreed that this contract shall be terminated, at the LESSOR's discretion, without any legal formality, if, on expiration of the period of recourse available to third parties under Act No 76-663 of 19 July 1976, the operating authorization has not become final, either because of absence of recourse during the legal period or because a final court order further to recourse.
209.2 In accordance with the Articles 1152 and 1226 of the Civil Code, even in case of partial performance, the LESSEE shall owe the LESSOR, by way of damages, a termination indemnity equal to the sales price defined in paragraph 303.2 below, determined at the effective termination date, incremented by the amount of tax repayments in accordance with paragraph 303.3, the whole increased by two years of rent, based on the latest effective periodic rent demanded from the LESSEE prior to termination. This indemnity shall be incremented with due VAT.
The LESSEE formally recognizes the LESSOR's right to this indemnity, given the essentially financial aspect of this lease operation and the fact that the LESSOR enters into this operation at the LESSEE's express request and in consideration of the LESSEE's person and needs.
Accordingly, it is expressly agreed that this penalty clause shall be a substantive and decisive condition without which the LESSOR would not have entered into a contract.
210 TERMINATION AT THE LESSEE'S REQUEST
210.1 The LESSEE shall be entitled to request termination of this contract from expiration of the --th year of lease, on the following terms and conditions.
210.2 Said termination shall be possible only each year at the anniversary of the effective date of the lease.
The LESSEE shall notify the LESSOR at most twelve months and at least nine months in advance, by registered letter with notice of receipt, of its decision to use the termination option.
Termination shall be by notarized deed, whose cost shall be borne exclusively by the LESSEE.
210.3 The LESSEE shall vacate the property at least ten days before the effective termination date.
210.4 An inventory drawn up at the LESSOR's initiative and at the LESSEE's cost shall show that the property is perfectly maintained and in perfect repair, in accordance with the stipulations in paragraph 206, and that it can be leased for its design purpose without cost for the LESSOR.
210.5 The LESSEE shall be up to date on all its contractual obligations, in such a way that the termination clause in paragraph 209 does no apply.
210.6 The certificate of conformity shall have been obtained.
210.7 The LESSEE shall have paid the LESSOR, by way of agreed lump-sum indemnity, a sum equal to the sales price defined in Article 303.2 below, determined at the effective termination date, plus the amount of tax repayments covered by paragraph 303.3.
210.8 If one or more of the above conditions is not met at least ten days before the effective termination date, the LESSOR shall be entitled, at its own discretion, to consider the termination request made by the LESSEE void, subject to notice served at least ten days before the scheduled termination date by registered letter with notice of receipt, specifying the condition(s) which has/have not been met.
210.9 However, the LESSEE shall be exonerated from the obligation to pay an indemnity if, before the date set for termination, it has ensured acquisition of the building by a third party on the following conditions:
210.9.1 The price shall be at least equal to the sales price defined in paragraph 302.2, as determined at the day of the notarized sales deed, plus tax (notably on capital gains) due on the sale as well as the amount of tax repayments referred to in paragraph 303.3.
For collection of transfer duty, the market value of the property, if higher than the sales price, shall be covered by an estimate agreed between the parties in a declaration in the deed.
210.9.2 The sale shall furthermore be completed on the terms and conditions stipulated in the paragraphs 303.4 to 303.10 below.
210.9.3 The LESSEE shall inform the LESSOR, by registered letter with notice of receipt, of the name and address of the future buyer of the building and shall deal personally with all formalities to be accomplished by such buyer until completion of the sale. In this respect, the LESSOR does not intend to accept any liability vis-a-vis the LESSEE.
210.9.4 This contract shall end at the date on which the authentic sales deed is signed. The LESSEE shall intervene in this deed in order to terminate the contract and to accept personally vis-a-vis the buyer the undertaking to vacate the premises promptly.
210.10 Rent and charges shall be due until the termination date or until the notarized sales deed. Any excess payments shall be charged to sums owed by the LESSEE, if any, or shall be reimbursed.
210.11 The indemnity provided for in paragraph 210.7 shall also be due in the event that termination is due to the decision of the trustee appointed by judgment in bankruptcy or liquidation proceedings (Article 37 of Act No 85.98 of 25 January 1985).
211 EXPROPRIATION
211.1 TOTAL EXPROPRIATION
If the site and constructions are entirely expropriated, the lease shall automatically be terminated at the date of the order entailing transfer of ownership to the expropriating organization.
211.1.1 However, as enjoyment of the expropriated property can only revert to the expropriating organization after the LESSOR is paid the expropriation indemnity, the LESSEE shall owe the LESSOR, from the date of the aforesaid order and until actual payment of the expropriation indemnity, the date on which the premises shall be immediately vacated, an occupancy indemnity equal to the amount of rent due for this period, which indemnity shall be payable on the same conditions and at the same time as the rent. Moreover, the LESSEE shall continue to pay the amount of charges provided for in the terminated contract.
211.1.2 If the expropriation indemnity paid to the LESSOR is less than the sales price stipulated in paragraph 303.2, as determined at the day of payment of said indemnity, plus tax (notably on capital gains) due on the transfer of ownership, as well as the amount of tax repayments referred to in paragraph 706, the LESSEE shall pay the LESSOR the difference plus due VAT by way of termination indemnity.
In the opposite case, the difference plus due VAT shall be paid by the LESSOR to the LESSEE, also by way of termination indemnity.
211.2 PARTIAL EXPROPRIATION
If the site and constructions are only partly expropriated, the lease shall remain in effect for the remainder.
211.2.1 In this case, this contract shall be covered by an amendment recording the change in surface area of the property and modifying the financial terms to factor in the amount of the expropriation indemnity received by the LESSOR less all costs and expenses incurred by the latter and all taxes owed by it, notably capital gains tax and tax repayments in connection with the expropriation, as stipulated under paragraph 706 below.
211.2.2 Free transfer to government authorities
In the event that parts of the building (notably land parcels) have to transferred for free to a government authority, the financial terms of this lease (rent and sales undertaking) shall not be modified despite a change in surface area of the property.
211.3 REQUISITION
In case of requisition or occupancy of all or part of the site and constructions, whether temporarily or for the entire lease term, by any administration authorized to do so, the lease shall remain fully in effect and the LESSEE shall owe the rent on normal terms.
However, as soon as it has collected, the LESSOR shall pay the LESSEE the entire requisition or occupancy indemnity. It is herewith expressly stipulated that no offsetting shall be possible between the rent and the indemnity concerned.
212 INSURANCE
212.1 In order to cover its own risks and those transferred to it, the LESSEE shall, at its own expense and at the latest by the effective date of this lease, take out all insurance policies it deems necessary. However, it shall always take out the following policies:
212.1.1 A comprehensive tenant's risk policy (fire, explosions, related risks and civil liability of the tenant).
Said policy shall cover the LESSEE's furnishings, machinery and goods against fire, explosions and water damage. Said policy shall also provide cover against recourse by third parties and neighbors, the cost of removing and putting back the insured property further to works after an insured loss, civil liability directly related to operating risks after delivery. Said policy shall expressly provide for waiver of recourse against the LESSOR.
212.1.2 A comprehensive building risk policy
Said policy shall provide cover against fire, explosions and water damage for all constructions and all facilities, fixtures, fixed and mobile installations, whether outdoor or indoor, whether deemed fixtures by design or by use, without exception, at full reconstruction value, pegged to the construction price index established by Federation Nationale du Batiment et des Activites Annexes. The insured sum or cover shall include VAT if the LESSEE is not subject to VAT. Otherwise the insurance shall be taken out excluding VAT. If the LESSEE is only partly subject to VAT, the insured amount or cover shall provide for VAT in the adequate proportion.
The policy shall further cover the following risks:
Glass breakage, indirect losses up to 10% (ten percent), fees and urban development taxes which may be required in case of reconstruction, cost of earthworks, demolition, removal and transportation of destroyed parts, loss of rent up to two years of lease payments, deprivation of enjoyment, recourse of neighbors and third parties, electric damage, hurricanes, storms, falling aircraft, smoke and fumes, impact of vehicles, cost of searching for leaks, leaks in automatic fire extinguisher networks of the SPRINKLERS brand or similar, riots, acts of terrorism or sabotage, costs and fees of experts.
The policy shall include a clause canceling the rule on proportional face amount.
212.1.3 Civil liability policy
Said policy shall cover the civil liability of the LESSEE and the LESSOR in case of direct bodily injury, tangible or intangible damage caused to third parties by the property complex.
This policy shall be taken out before the property is acquired by the
LESSOR.
212.2 Enrollment:
The LESSEE shall take out the insurance policies listed in the paragraphs 212.1.2 and 212.1.3 as part of the "Group" insurance policies connected with the asset protection plan implemented by the LESSOR with the assistance of its insurance broker. The purpose of this plan is to provide the LESSEE with cover meeting the exact requirements stipulated in the paragraphs 212.1.2 and 212.1.3.
Should the LESSEE exceptionally, on its sole responsibility, decide not to subscribe to the LESSOR's "group" insurance contracts but to cover the risks which it is obliged to insure (as stipulated in the paragraphs 212.1.2 and 212.1.3) by means of "other insurance policies", it shall provide evidence of subscription of such "other policies" by supplying the LESSOR's insurance broker with copies thereof, failing which the LESSOR shall be entitled to cover the foregoing risks at the LESSEE's expense.
Said "other policies" shall stipulate that the insurance company concerned may not suspend their covers for any reason, nor refuse to indemnify the LESSOR in case of loss on the ground that the LESSEE has not complied with the obligations of the insurance contract, without notifying the LESSOR at least one month in advance by registered letter, in which event the LESSOR, at its own discretion, shall be entitled to pay the premiums in the LESSEE's place.
The "other policies" shall specify that all indemnities payable under the damage covers shall be paid directly to the LESSOR and shall necessarily provide for reciprocal waiver of recourse between the LESSOR and the LESSEE.
Moreover, the LESSEE may or shall take out all complementary policies it considers useful or necessary.
The LESSOR reserves the right to require subscription of all complementary policies which turn out to be necessary. Inspection or lack of inspection of said policies by the LESSOR or its insurance broker
shall not entail any liability on its part for lack of insurance or inadequate insurance.
212.3 Premiums:
As part of the LESSOR's asset protection plan and in application of the preliminary declaration, the LESSEE shall be solely responsible for negotiating with the LESSOR's broker both the face amount to be insured and the premium rate of the subscribed insurance.
Given that the insurance premiums payable by the LESSEE under Article 212.1 above to cover the risks for which the owner is liable are considered by the tax authorities as complementary rent subject to VAT like the basic rent, they shall be billed additionally and paid in accordance with paragraph 208.2 above.
As regards insurance taken out within the framework of the LESSOR's asset protection plan, the LESSEE shall be sent a complementary rental term by the LESSOR's insurance broker, mandated to this end by the LESSOR, which broker shall directly collect its premiums. The complementary rent shall correspond to the amount of the due annual premium plus the applicable VAT.
If the LESSEE is not enrolled in the LESSOR's asset protection plan, premium receipts sent to the LESSOR as proof of payment shall be prepared in such as way as to distinguish between premiums covering the owner's risks and premiums covering the LESSEE's risks.
In the event that the property is part of a co-ownership, the LESSEE shall, in the light of the policies taken out by the LESSOR or the property manager, subscribe, in the name and on behalf of the LESSOR, all supplemental policies necessary to cover the risks referred to in paragraph 212.1 entirely, notably those connected with the works carried out by the LESSOR as well as the LESSEE itself. Failing this, the LESSOR shall be entitled to take out insurance for the above risks at the LESSEE's cost.
The premiums on the policies taken out by the LESSOR or the co-ownership shall be included in the charges incumbent on the LESSEE under the paragraphs 208.1 and 208.3.
212.4 Insurance broker
The LESSOR has appointed the following insurance broker:
SGAP
SOCIETE GENERALE D'ASSURANCES ET de PREVOYANCE
having its registered office at
50 rue de Chateaudun
75009 PARIS
The LESSOR expressly reserves the right to appoint any other insurance broker in place of the above broker, which the LESSEE herewith accepts.
213. LOSSES
213.1 The LESSEE shall inform the insurer or the LESSOR's broker if it has enrolled in the LESSOR's asset protection plan, in the name and on behalf of the LESSOR, and in the form and by the deadline stipulated in the insurance policy, of any loss to the leased property, regardless of its extent, even if no visible damage results. The same day, the LESSEE shall send the LESSOR, by registered letter, a duly certified copy of its declaration.
The LESSEE shall further make all other declarations and accomplish all advisable or necessary formalities vis-a-vis all competent authorities or government services, file all complaints and, in general, carry out all formalities on behalf of the LESSOR made necessary by the circumstances.
213.2 In case of a loss, even due to an act of God or force majeure, which has caused total or partial destruction of the premises, this contract, by express derogation from the stipulations in the Articles 1184, 1722 and 1741 of the Civil Code, and all other similar legal provisions, shall not be automatically terminated. The LESSEE shall continue to owe the entire rent and charges on the agreed terms, regardless of the period for which enjoyment is suspended.
213.3 After having obtained the necessary administrative authorizations, the LESSEE shall, as applicable and at its own expense, either repair the damage to the leased premises or reconstruct the premises identically or, subject to the LESSOR's written permission, in equivalent form but in an amount which shall be at least equal to the cost of reconstructing the premises identically including all taxes.
Repair or reconstruction works shall be carried out on the LESSEE's sole responsibility within the framework of the mandate granted to said LESSEE by the LESSOR after the LESSOR has approved all drawings, quotations and contracts.
213.4 In accordance with the clauses in the policy, the insurance indemnities shall be paid to the LESSOR, which shall pay for the repair or reconstruction works conducted by the LESSEE. It is agreed that the LESSEE alone shall be all excess costs, including VAT, generated by repair or reconstruction as compared with the amount of the said indemnities.
Before commencing such works, the LESSEE shall provide the LESSOR with a joint guarantee from a bank for payment of such excess.
213.5 However, in case of total destruction of the constructions or partial destruction considered total destruction, the LESSEE, provided the conditions in paragraph 301.3 have been met, shall be entitled to demand, by virtue of the sales undertaking granted to it under paragraph 301.2, that the sale be consummated, provided it bear the fiscal consequences, if any, if the tax authorities disqualify the contract because of its short duration.
The price shall be equal to the sales price stipulated in paragraph 303.2 below, determined at the date of the notarized sales deed, increased with the amount of tax repayments stipulated in paragraph 706.
By virtue of the sale, the LESSEE shall be subrogated in all of the LESSOR's rights in respect of the insurance indemnity.
Accordingly, the price shall be payable less any sums received in this respect by the LESSOR prior to execution of the sales deed.
The sale shall take place on the terms and conditions stipulated in Paragraph 303.4 to 303.10.
213.6 If the LESSEE, at the date on which notice is served of the decision taken by the authorities concerned in respect of the building permit, has not used its option under paragraph 213.5 above, it shall be entitled to:
- if the building permit is delivered without restriction or reservation:
- opt for reconstruction of the buildings on the conditions stipulated in paragraph 213.3 and, accordingly, continue the contract. However, if the LESSEE does not offer the guarantee provided for excess reconstruction costs compared with the amount of insurance indemnities (see paragraph 213.4), the LESSOR shall be entitled to terminate the contract and to apply the provisions in the paragraphs 213.8, 213.9 and 213.10 below;
- or demand consummation of the sale on the terms and conditions stipulated in paragraph 213.5.
- if the building permit is refused or delivered precariously or with reservation, request consummation of the aforesaid sale or termination of the contract.
The LESSEE shall have one month from receipt of notice of the decision of the authorities concerned, given by registered letter with notice of receipt, to inform the LESSOR of its option.
213.7 Failure to reply by the stipulated deadline shall be considered:
- if the building permit has been delivered, as tacit agreement to continue the contract;
- if the building permit has been refused, as tacit agreement to terminate the contract.
213.8 In case of termination request or tacit agreement to termination, termination shall take effect at the day on which the termination indemnity provided for below is paid.
213.9 If the sales price stipulated in paragraph 303.2, as determined at the termination date, plus taxes and other costs owed by the LESSOR in connection with such termination or collection of the insurance indemnity, as well as the amount of the tax repayments referred to in paragraph 706, exceeds the amount of the insurance indemnity, the LESSEE shall pay the LESSOR the difference plus due VAT by way of termination indemnity.
In the opposite case, the LESSOR shall pay the LESSEE the differences, plus due VAT, by way of termination indemnity.
213.10 Rent and charges shall be due until the date on which the notarized sales deed is signed or until the termination effective.
Any excess payment shall be charged to sums owed by the LESSEE, if any, or be reimbursed.
TITLE 3 OF THE GENERAL TERMS
300 UNILATERAL UNDERTAKING TO SELL THE LEASED PROPERTY
301 PURPOSE
301.1 By virtue of the undertaking granted to it, the LESSEE shall be entitled to request consummation of the sale of the property at the end of the tenth year and each of the ensuing years of the lease until expiration of the contract.
301.2 The LESSEE shall also be entitled to request consummation of the sale in case of total loss or a similar event (see paragraphs 213.5 and 213.6).
301.3 The LESSEE shall only be entitled to request consummation of the sale if it has duly performed its obligations under the contract.
301.4 Termination of the lease, irrespective of the reason, shall void this sales undertaking.
302 REQUEST TO CONSUMMATE SALE
302.1 The LESSEE shall only be entitled to request consummation of the sale by registered letter with notice of receipt.
In the cases provided for in paragraph 301.1, the registered letter shall be sent to the LESSOR at most twelve months and at least nine months before the end of the lease year.
For the case provided for in paragraph 301.2, the maximum deadline at the LESSEE's disposal to request consummation of the sale is stipulated in paragraph 213.6.
302.2 If the LESSEE has not requested consummation of the sale at least nine months before the end of the last year of the lease, the sales undertaking shall become void, unless the LESSOR agrees to extend the term.
302.3 The request for consummation shall not entail transfer of ownership, which shall be by notarized sales deed.
However, in case of sale on termination of the contract, transfer of ownership shall be deferred until expiration of the lease if the notarized deed is signed before this date.
303 TERMS AND CONDITIONS OF SALE
303.1 The sale shall be consummated by notarized deed.
303.2 At the end of a given lease year, the sales price shall be equal to the indexed residual financial value of the "total investment cost".
*303.2.1 The residual financial value before indexation of the "total investment cost" shall be obtained by applying to the "total investment cost" as defined in paragraph 207.1.2 the percentages fixed in the Special Terms, the result being increased with any sums still to be disbursed by the LESSOR in connection with this lease operation.
303.2.2 The resulting residual financial value shall be pegged, in the same percentage as used for indexation of the periodic basic net rent stipulated in paragraph 207.2 of the Special Terms, to the national construction cost index issued by INSEE.
The basic reference index shall be the index for the antepenultimate calendar quarter preceding the calendar quarter in progress when the lease takes effect, the comparison index being the index for the antepenultimate calendar quarter preceding the quarter in which the sales deed is signed.
In the event that this index is not known at this date, the comparison index shall provisionally be the latest published index, in which case readjustment shall occur within eight days following publication of the aforesaid chosen comparison index.
However, it is expressly agreed that the sales price resulting from such revision shall in no event be less than the non indexed residual financial value determined in accordance with paragraph 303.2.1.
In the event that the INSEE index ceases to be published or recourse to this index or to any indexation is forbidden, the parties shall apply the provisions applicable in the same situation to the effective periodic rent.
303.2.3 Given the essentially financial nature of the LESSOR's intervention in this lease operation, as explained in the PRELIMINARY DECLARATION, it is expressly agreed between the parties, as a substantive condition of this contract, without which it would not have been entered into, that, if, for any reason connected with a fact under the LESSEE's control or connected with applicable laws or regulations, the periodic net rent effectively paid by the LESSEE is higher or lower than the periodic effective net rent defined in paragraph 207.3, the amount of such increase or reduction, shall respectively be reduced from or added to the amount of the sales price stipulated in paragraph 303.2.
Accordingly, in case of reduction of the agreed periodic effective net rent, the sales price shall be increased by adding the following elements:
- amount of difference between the total periodic effective net rent stipulated contractually and the effective rent actually received by the LESSOR;
- amount of interest calculated proportionally at the base rate of CREDIT LYONNAIS plus three points, pro-rated in time over the difference resulting from the foregoing paragraph.
In case of a rental increase imposed by the applicable laws or regulations, the sales price shall be reduced by the above elements.
303.3 The resulting sales price shall be increased with the amount of tax repayments stipulated in paragraph 706 below.
303.4 The sales price shall be paid cash at the day on which the sales deed is signed. However, the additional price if any resulting from index adjustment shall be paid within eight days from the date on which the accounts are drawn up and the invoice is issued. In this respect, the LESSOR expressly reserves the right to exercise the seller's privilege as well as the termination action.
303.5 All costs, duties, emoluments, taxes and levies connected with the sale shall be borne exclusively by the LESSEE.
303.6 The sale shall take place at the LESSEE's exclusive risk, without guarantee on the LESSOR's part, neither as regards eviction nor for faults or hidden defects in the sold property.
Consequently, the LESSEE:
- shall take the property as-is at the date on which ownership is transferred, without being entitled to bring any recourse against the LESSOR for bad condition of the soil, the subsoil or the buildings, construction defects, even if hidden, an error in description or surface area, any difference, up or down, even if such difference should exceed one-twentieth, to be the LESSEE's loss or gain;
- shall bear all negative easements and profit from all positive easements, at its own risk, and shall see personally to all administrative easements.
303.7 The LESSEE shall see personally to the continuation or termination of all insurance policies and all subscriptions, in such a way that no recourse can be brought against the LESSOR.
303.8 The sales deed shall be signed with the participation of the LESSOR's notary.
303.9 In the cases provided for in paragraph 301.1, the sales deed shall be signed at the latest at the expiration date of the lease year during which the LESSEE validly requests consummation of the sale. In the cases provided for in paragraph 301.2, it shall be signed within three months from the sales consummation request.
If it was impossible to execute the notarized deed by these deadlines due to an event ascribable to the LESSEE, the sales consummation request shall be deemed null and void, unless the LESSOR agrees to extend the term.
303.10 After acquisition of the property, the LESSEE shall comply with the provisions in Article 239 SEXTIES et seq. of the General Tax Code, whose text is contained in the appendix hereto titled "Regulatory texts".
TITLE 4 OF THE GENERAL TERMS
400 GUARANTEES OFFERED BY THE LESSEE
401 PERSONAL GUARANTEE
Not applicable.
402 DEATH AND DISABILITY INSURANCE
Not applicable.
*403 OTHER GUARANTEES
As applicable specified in the Special Terms.
TITLE 5 OF THE GENERAL TERMS
Not applicable.
TITLE 6 OF THE GENERAL TERMS
600 CONDITION PRECEDENT
As the LESSOR has received this day, by notarized deed, the rights referred to under paragraph 101 of the General Terms, this contract is not subject to any condition precedent.
TITLE 7 OF THE GENERAL TERMS
700 MISCELLANEOUS PROVISIONS AND REPRESENTATIONS
*701 TERMS OF PAYMENT GOVERNING SUMS OWED BY THE LESSEE
All sums owed by the LESSEE to the LESSOR, regardless which, shall be debited by the LESSOR by debit advice from the LESSEE's bank account specified in the Special Terms.
To this end, the LESSEE irrevocably undertakes to sign a "debit request" for the LESSOR and a "debit authorization" for its bank.
Before each due date, the LESSOR shall inform the LESSEE of the amount of due sums. Should the LESSOR for one or more terms forego issuing a debit advice and instead request the LESSEE to make payment by transfer, said LESSEE shall make such transfer to the LESSOR's bank account specified in the Special Terms, at the value date stipulated in the term advice, in order to comply with the financial nature of the contract.
702 LATE-PAYMENT INTEREST
In case of late payment of any sum due under this contract, the LESSEE shall owe the LESSOR, for every past-due month, a net indemnity calculated over the due amount and billed monthly in arrears at the base rate of CREDIT LYONNAIS in force at the first day of the period covered by the invoice for late-payment interest, plus six points. Said rate shall in no event be less than the annual proportional rate applied to the last periodic effective net rent prior to the late payment. Any month which has begun shall be counted as a full month.
This indemnity shall be automatically due without prior summons and its payment shall in no event be construed as approval of additional time for payment for the LESSEE.
703 VACATION OF PREMISES
703.1 In the event that no sales consummation request is made and no new lease is signed between the parties and in the event of early termination, the LESSEE and any occupant for whom it is answerable shall vacate the premises at the latest by the expiration or termination date of this contract.
In case of late departure from the premises, the LESSEE shall pay the LESSOR an occupancy indemnity equal to three times the rent of the last lease term, including VAT, calculated pro-rata temporis month by month. Each month which has begun shall be due. This indemnity shall be independent from the termination indemnity provided for in the paragraphs 209.2 and 210.7.
The LESSEE may further be constrained to leave the premises at once by order in summary proceedings finding in favor of termination of the contract and ordering the LESSEE's expulsion.
703.2 If the LESSEE carries on a business entailing pollution risks, notably of the subsoil, it shall, if no sales consummation request is made and in case of early termination, carry out the necessary soil and subsoil removal and restoration works and provide evidence of an expert analysis, conducted at its own expense, showing that no pollution remains, nor any trace of substances capable of contaminating the site.
If a classified facility, the LESSEE shall also produce the receipt for its declaration that it has ceased business.
704 LESSOR'S PRIVILEGE
It is expressly stipulated that the LESSOR's privilege shall guarantee not only payment of the rent and charges but also all complementary rent, all occupancy indemnities and all termination indemnities provided for in the contract.
705 VAT OPTION
At the LESSEE's request, the LESSOR declares that it opts for value-added tax on the income of this lease.
706 REPAYMENT OF VAT TO THE TREASURY BY WAY OF REGULARIZATION
706.1 In the event that, by virtue of applicable tax laws and regulations, notably Article 210, Appendix II, of the General Tax Code, the LESSOR has to repay VAT on the investment to the Treasury, the amount of such repayments shall be borne by the LESSEE or the buyer of the property on the following conditions.
706.2 If repayment is further to the sale of the property by virtue of any of the clauses of the contract, whether to the LESSEE or to a third party, the sales price, as defined in paragraph 303.2, shall be incremented by the amount of VAT repayments, in accordance with paragraph 303.3.
In consideration of this price increase, the LESSOR, in its capacity as seller, shall supply the buyer with an the affidavit provided for in paragraph IV of the before-mentioned Article 210, which shall enable the buyer to deduct the amount of VAT mentioned therein within the limits of its own rights.
If repayment is further to total expropriation, it shall be taken into account in calculating the lease termination indemnity incumbent on the LESSOR or the LESSEE, as applicable.
706.3 In all other cases of VAT repayment by the LESSOR, the LESSEE shall pay the LESSOR complementary net rent equal to the amount of the repayment, incremented by the corresponding VAT.
*707 LAND REGISTRATION
This deed shall be registered at the competent mortgage registry at the LESSEE's cost.
For collection of the land registration tax and the emoluments of the mortgage registrar, the parties shall value the cumulative rent for all years of the lease, the sale price to the LESSEE on expiration of the lease and the amounts of charges stipulated in the Special Terms.
In their common interest, the parties empower the persons designated in the Special Terms, with the power to act separately, to draw up and sign all complementary deeds or amendments to this contract necessary to accomplish the land registration formalities.
708 GENERAL MEETINGS OF CO-OWNERS ASSOCIATION
The LESSOR mandates the LESSEE to represent it at the General Meetings of the Co-Owners Association, if there is one, and on its behalf to take part in all deliberations and votes at such General Meetings.
The LESSEE shall send the LESSOR within fifteen days a report on such General Meetings.
709 MISCELLANEOUS COSTS
All costs, duties and emoluments connected with this contract, the deed recording performance of the condition precedent if there is one, the binding copy to be delivered to the LESSOR and all future costs, duties and emoluments connected with this, shall be borne exclusively by the LESSEE, which so accepts.
*710 MANAGEMENT POWERS (IF THE LESSOR IS AN UNDIVIDED ENTITY)
As applicable specified in the Special Terms.
*711 OTHER PROVISIONS
As applicable specified in the Special Terms.
712 LESSEE'S WARRANTIES AND REPRESENTATIONS
The LESSEE warrants and represents that it is a company governed by French law.
The LESSEE warrants and represents that it is not subject to any request for nullity or dissolution.
The LESSEE warrants and represents that it has no objection to the LESSOR's mentioning in its corporate documents the location of the lease property and the name of the LESSEE's business as well as the amount of the investment, as determined in this contract.
713 ELECTION OF DOMICILE - JURISDICTION
For the purpose of this contract and any deeds and documents further hereto, the parties elect domicile at the respective registered offices of the companies represented by them.
Moreover, it is agreed that all disputes connected with this lease contract and the unilateral sales undertaking contained herein shall be the exclusive jurisdiction of the courts of PARIS.
PART TWO
SPECIAL TERMS
This second part only refers to those General Terms which are complemented or modified in application of this contract.
TITLE 1 OF THE SPECIAL TERMS
100 AGREEMENT REGARDING THE PERIOD PRIOR TO THE EFFECTIVE DATE OF THE LEASE
101 PURCHASE OF SITE
The notarized deed of the LESSOR's acquisition of the rights referred to in paragraph 101 of the General Terms is signed this day in the presence of Maitre Francis BERGERAULT, the aforesaid notary.
An authentic copy of this deed shall be published at the competent mortgage registry.
102 ERECTION OF CONSTRUCTIONS
102.6 Works completion deadline: 31 March 1998
103 FINANCING OF WORKS
103.2 The LESSOR agrees to finance the investment up to the following ceiling:
- acquisition of site FRF 5,000,000 ex-VAT - provision for acquisition costs FRF 75,000 - construction FRF 25,925,000 ex-VAT --- ---------- FRF 31,000,000 |
(THIRTY-ONE MILLION FRANCS)
To this ceiling shall be added the corresponding VAT.
The investment shall be financed as follows:
- Financing by SLIBAIL IMMOBILIER FRF 15,500,000 - Financing by NORBAIL IMMOBILIER FRF 15,500,000 --- ---------- FRF 31,000,000 |
It is herewith specified that the LESSEE, in accordance with paragraph 403 of the Special Terms, in order to guarantee the financings provided by SLIBAIL IMMOBILIER and NORBAIL IMMOBILIER, the LESSEE shall pay an advance of FRF 8,000,000, including FRF 4,000,000 onto the account of SLIBAIL IMMOBILIER and FRF 4,000,000 onto the account of NORBAIL IMMOBILIER.
104 PRERENT
104.1 Commitment fee
Calculation basis: financing ceiling excluding recoverable VAT as defined above in the chapter "Works Financing".
Annual rate: 0.25% (zero unit and twenty-five centimes per cent).
Terms of payment:
Quarterly in advance on 1 January, 1 April, 1 July and 1 October of each year, from 30 November 1996 until the end of the calendar quarter during which the lease takes effect and, for the first time, at the day on which this contract is signed, for the period running until the end of the current calendar quarter.
104.2 Interim interest
Annual rate for calculating interest according to the terms specified in the General Terms:
Average monthly money market rate paid on the interbank market, established by Association Francaise des Banques and officially published by Societe des Bourses Francaises for the month preceding the month of the term, plus 1.00 point.
104.4 Financial engineering costs
FRF 50,000 paid when this contract is signed and divided as follows:
- SLIBAIL IMMOBILIER: FRF 40,000 - NORBAIL IMMOBILIER: FRF 10,000 |
104.5 Other costs
Not applicable.
TITLE 2 OF THE SPECIAL TERMS
200 LEASE
201 EFFECTIVE DATE - TERM
201.2 From its effective date, the lease shall have a term of 12 whole and consecutive years.
203 ENJOYMENT AND PURPOSE OF PREMISES
203.1 The premises shall be occupied exclusively for industrial use.
207 RENT
On the terms stipulated in paragraph 207.5 of the Special Terms, the periodic basic net rent shall fall due and be payable in advance, each calendar quarter.
207.1 Amount of periodic basic net rent
1) SHARE OF SLIBAIL IMMOBILIER
207.1.1.1 and 207.1.1.2
By exception to the General Terms, given that the LESSEE must pay SLIBAIL IMMOBILIER on the effective date of the lease an initial advance of FRF 4,000,000, as specified in Article 403 of the Special Terms, the rent shall consist of two elements:
1) FIRST ELEMENT
This first element shall be calculated by applying the percentages stipulated below, in accordance with paragraph 207.1 of the General Terms, to the "net total investment cost", as defined in paragraph 207.1.2 of the General Terms, less the amount of the initial advance paid by the LESSEE.
The first element shall be calculated in accordance with the terms laid out in the General Terms in application of the table below.
2) SECOND ELEMENT
This element, which shall consist only of amortization of the principal, shall be calculated by applying the same percentages as used for the first element to the amount of the initial advance paid by the LESSEE, assuming that the lease takes effect on the first day of a calendar period.
The net amount, ex-VAT, of this second element shall be paid by offsetting it with the amortization of the LESSEE's advance, as stipulated in paragraph 403 of the Special Terms.
If the LESSEE's advance of FRF 4,000,000 is not paid at the effective date of the lease, the first element of the periodic rent shall be calculated over the total investment cost as defined in paragraph 207.1.1 of the General Terms.
As the percentages to be applied to the "total investment cost" at each term of the periodic rent in order to determine, first, the amount of the financial amortization (column 1) and, secondly, the financial outstandings (column 2) used to calculate the amount of interest - established on the assumption that the effective date of the lease will fall on the first day of a calendar period - they shall therefore be revised, if the effective date of the lease occurs during a calendar period - have been fixed as follows:
FINANCIAL AMORTIZATION INTEREST CALCULATION BASIS DUE DATES (%) (%) --------- ------------------------- -------------------------- 1 2.94371 97.05629 two units and ninety-four ninety-seven units and thousand three hundred five thousand six hundred seventy-one thousandth twenty-nine thousandth percent percent 2 2.88903 94.16726 two units and eighty- ninety-four and sixteen eight thousand nine thousand seven hundred hundred three thousandth twenty-six thousandth percent percent 3 2.83579 91.33147 two units and eighty- ninety-one units and three thousand five thirty-three thousand one hundred seventy-nine hundred forty-seven thousandth percent thousandth percent 4 2.78397 88.54751 two units and seventy- eighty-eight units and eight thousand three fifty-four thousand seven hundred ninety-seven hundred fifty-one thousandth percent thousandth percent 5 2.73353 85.81398 two units and seventy- eighty-five three hundred three thousand three ninety-eight thousandth hundred fifty-three percent Thousandth units |
FINANCIAL AMORTIZATION INTEREST CALCULATION BASIS DUE DATES (%) (%) --------- ------------------------- -------------------------- 6 2.68445 83.12953 two units and sixty-eight eighty-three units and thousand four hundred twelve thousand nine forty-five thousandth hundred fifty-three percent thousandth percent 7 2,63670 80.49283 two units and sixty-three eighty units and forty- thousand six hundred ine thousand two hundred seventy thousandth eighty-three thousandth percent percent 8 2.59026 77.90257 two units and fifty-nine seventy-seven units and thousand twenty-six ninety thousand two hundred thousandth percent fifty-seven thousandth percent 9 2.54510 75.35747 two units and fifty-four seventy-five units and thousand five hundred ten thirty-five thousand thousandth percent seven hundred forty-seven thousandth percent 10 2.50119 72.85629 two units fifty thousand seventy-two units and one hundred nineteen eighty-five thousand six thousandth percent hundred twenty-nine thousandth percent |
FINANCIAL AMORTIZATION INTEREST CALCULATION BASIS DUE DATES (%) (%) --------- ------------------------- -------------------------- 11 2.45851 70.39778 two units and forty-five seventy units and thirty- thousand eight hundred nine thousand seven fifty-one thousandth hundred seventy-eight percent thousandth percent 12 2.41704 67.98074 two units and forty-one sixty-seven units and thousand seven hundred ninety-eight thousand four thousandth percent seventy-four thousandth percent 13 2.37675 65.60400 two units and thirty- sixty-five units and seven thousand six sixty thousand four hundred seventy-five hundred thousandth thousandth percent percent 14 2.33762 63.26638 two units and thirty- sixty-three units and three thousand seven twenty-six thousand six hundred sixty-two hundred thirty-eight thousandth percent thousandth percent 15 2.29963 60.96674 two units and twenty-nine sixty units and ninety- thousand nine hundred six thousand six hundred sixty-three thousandth seventy-four thousandth percent percent |
FINANCIAL AMORTIZATION INTEREST CALCULATION BASIS DUE DATES (%) (%) --------- ------------------------- -------------------------- 16 2.26276 58.70398 two units and twenty-six fifty-eight thousand thousand two hundred units and seventy seventy-six thousandth thousand three hundred percent ninety-eight thousandth percent 17 2.22699 56.47699 two units and twenty-two fifty-six units and thousand six hundred forty-seven thousand six ninety-nine thousandth hundred ninety-nine percent thousandth percent 18 2.19229 54.28470 two units and nineteen fifty-four units and thousand two hundred twenty-eight thousand twenty-nine thousandth four hundred seventy percent thousandth percent 19 2.15865 52.12605 two units and fifteen fifty-two units and thousand eight hundred twelve thousand six sixty-five thousandth hundred five thousandth percent percent 20 2.12605 50.0000 two units and twelve fifty units percent thousand six hundred five thousandth percent |
FINANCIAL AMORTIZATION INTEREST CALCULATION BASIS DUE DATES (%) (%) --------- ------------------------- -------------------------- 21 2.09447 47.90553 two units and nine forty-seven units and thousand four hundred ninety thousand five forty-seven thousandth hundred fifty-three percent thousandth percent 22 2.06389 45.84164 two units and six forty-five units and thousand three hundred eighty-four thousand one eighty-nine thousandth hundred sixty-four percent thousandth percent 23 2.03429 43.80735 two units and three forty-three units and thousand four hundred eighty thousand seven twenty-nine thousandth hundred thirty-five percent thousandth percent 24 2.00566 41.80169 two units and five forty-one units and hundred sixty-six eighty thousand one thousandth percent hundred sixty-nine thousandth percent 25 1.97798 39.82372 one unit and ninety-seven thirty-nine units and thousand seven hundred eighty-two thousand three ninety-eight thousandth hundred seventy-two percent thousandth percent |
FINANCIAL AMORTIZATION INTEREST CALCULATION BASIS DUE DATES (%) (%) --------- ------------------------- -------------------------- 26 1.95123 37.87249 one unit and ninety-five thirty-seven units and thousand one hundred eighty-seven thousand two twenty-three thousandth hundred forty-nine percent thousandth percent 27 1.92540 35.94709 one unit and ninety-two thirty-five units and thousand five hundred ninety-four thousand forty thousandth percent seven hundred nine thousandth percent 28 1.90047 34.04661 one unit and ninety thirty-four units and thousand forty-seven four thousand six hundred thousandth percent sixty-one thousandth percent 29 1.87643 32.17018 one unit and eighty-seven thirty-two units and thousand six hundred seventeen thousand forty-three thousandth eighteen thousandth percent percent 30 1.85327 30.31691 one unit and eighty-five thirty units and thirty- thousand three hundred one thousand six hundred twenty-seven thousandth ninety-one thousandth percent percent |
FINANCIAL AMORTIZATION INTEREST CALCULATION BASIS DUE DATES (%) (%) --------- ------------------------- -------------------------- 31 1.83096 28.48596 one unit and eighty-three twenty-eight units and thousand ninety-six forty-eight thousand five thousandth percent hundred ninety-six thousandth percent 32 1.80950 26.67646 one unit and eighty twenty-six units and thousand nine hundred sixty-seven thousand six fifty thousandth percent hundred forty-six thousandth percent 33 1.78887 24.88759 one unit and seventy- twenty-four units and eight thousand eight eighty-eight thousand hundred eighty-seven seven hundred fifty-nine thousandth percent thousandth percent 34 1.76906 23.11854 one unit and seventy-six twenty-three units and thousand nine hundred six eleven thousand eight thousandth percent hundred fifty-four thousandth percent 35 1.75005 21.36848 one unit and seventy-five twenty-one units and thousand five thousandth thirty-six thousand eight percent hundred forty-eight thousandth percent |
FINANCIAL AMORTIZATION INTEREST CALCULATION BASIS DUE DATES (%) (%) --------- ------------------------- -------------------------- 36 1.73185 19.63664 one unit and seventy- nineteen units and sixty- three thousand one three thousand six hundred eighty-five hundred sixty-four thousandth percent thousandth percent 37 1.71442 17.92221 one unit and seventy-one seventeen units and thousand four hundred ninety-two thousand two forty-two thousandth hundred twenty-one percent thousandth percent 38 1.69777 16.22445 one unit and sixty-nine sixteen units and twenty- thousand seven hundred two thousand six hundred seventy-seven thousandth forty-five thousandth percent percent 39 1.68188 14.54257 one unit and sixty-eight fourteen units and fifty- thousand one hundred four thousand two hundred eighty-eight thousandth fifty-seven thousandth percent percent 40 1.66674 12.87583 one unit and sixty-six twelve units and eighty- thousand six hundred seven thousand five seventy-four thousandth hundred eighty-three percent thousandth percent |
FINANCIAL AMORTIZATION INTEREST CALCULATION BASIS DUE DATES (%) (%) --------- ------------------------- -------------------------- 41 1.65234 11.22348 one unit and sixty-five eleven units and twenty- thousand two hundred two thousand three thirty-four thousandth hundred forty-eight percent thousandth percent 42 1.63867 9.58481 one unit and sixty-three nine units and fifty- thousand eight hundred eight thousand four sixty-seven thousandth hundred eighty-one percent thousandth percent 43 1.62573 7.95908 one unit and sixty-two seven units and ninety- thousand five hundred five thousand nine seventy-three thousandth hundred eight thousandth percent percent 44 1.61349 6.34559 one unit and sixty-one six units and thirty-four thousand three hundred thousand five hundred forty-nine thousandth fifty-nine thousandth percent percent 45 1.60196 4.74362 one unit and sixty four units and seven-four thousand on hundred thousand three hundred ninety-six thousandth sixty-two thousandth percent percent |
FINANCIAL AMORTIZATION INTEREST CALCULATION BASIS DUE DATES (%) (%) --------- ------------------------- -------------------------- 46 1.59113 3.15249 one unit and fifty-nine three units and fifteen thousand one hundred thousand two hundred thirteen thousandth forty-nine thousandth percent percent 47 1.58098 1.57151 one unit and fifty-eight one unit and fifty-seven thousand and ninety-eight thousand one hundred thousandth percent fifty-one thousandth percent 48 1.57151 0.0000 one unit and fifty-seven zero unit percent thousand one hundred fifty one thousandth percent |
207.1.1.2 The annual proportional rate T referred to in paragraph 207.1.1.2 of the General Terms shall be determined as follows:
T = 6.75%
Calculated according to the refinancing rates based on resources from industrial development accounts (CODEVI), currently subject to interest of 3.50%, this rate shall vary the same way as the average interest rate on the credit balance of such industrial development accounts (CODEVI) during the three (3) months preceding the month in which the periodic rental term is due.
For example, if the average interest rate on the credit balance of CODEVI accounts is lowered from 3.50% to 3.00% (i.e. a decrease of 0.50 point), the proportional annual rate T shall also be lowered by 0.50 point to 6.25%.
In the event that the average interest rate on the credit balance of CODEVI accounts can no longer be determined, irrespective of the reason, and no official replacement rate is provided, the proportional annual rate T applicable to each due date of the periodic rent shall be determined as follows:
T = M.TRM02 + 2.00 point. M.TRM02 shall be equal to the arithmetic mean of the average yield (TRM) on blue chip private-sector bonds on the secondary market, at the end of the week, calculated by Caisse des Depots et Consignations during the month preceding the month in which the periodic rental term falls due.
2) SHARE OF NORBAIL IMMOBILIER
The quarterly basic net rent (ex-VAT) shall be equal to the sum of the following elements.
1. 1ST ELEMENT
1ST PART
Reimbursement of principal over the term of the lease according to the accelerated amortization method, in accordance with the foregoing table, for the entire principal invested in the operation by NORBAIL IMMOBILIER less the amount of the initial advance paid by the LESSEE.
SECOND PART
This second part, which shall only include amortization of the principal, shall be calculated at the same amortization rate as the first part, over the amount of the initial advance paid by the LESSEE, on the assumption that the lease takes effect on the first day of a calendar period.
The ex-VAT amount of this second part shall be paid by offsetting it with the amortization of the LESSEE's advance, as stipulated in paragraph 403 of the Special Terms.
If the LESSEE's advance of FRF 4,000,000 is not paid at the effective date of the lease, the first element of the periodic rent shall be calculated over the total principal invested by NORBAIL IMMOBILIER and the LESSOR shall be entitled to demand application of the resolution clause, in accordance with paragraph 403 of the Special Terms.
2ND ELEMENT
Interest calculated pro-rata temporis, i.e. by entering under the numerator the exact number of days of the calendar year and under the denominator the financial year, and applying to the financial outstandings, after amortization of the principal invested by NORBAIL IMMOBILIER in the operation over interest-bearing resources, a quarterly coefficient equal to:
where TC stands for the interest rate on CODEVI savings accounts opened at CREDIT DU NORD with a minimum of 3.50%.
The TC shall be the rate in force at the date of the rental term.
For example, for an investment net of subsidies of FRF 1,000,000, excluding VAT, based on a quarter of 90 days and reference rate "TC" for March 1996, i.e. 3.50%, the straight-line constant quarterly rent, excluding VAT, would be FRF 30,230.76 during 48 quarters.
207.2 Indexation of periodic basic net rent
- percentage of indexable quarterly basic net rent: 0% (zero percent)
- percentage of indexable quarterly basic net rent: 100% (one hundred percent)
207.5 Payment of rent
The periodic effective net rent, plus due VAT, shall fall due and be payable quarterly in advance on 1 January, 1 April, 1 July and 1 October of each year and for the first time at the effective date of the lease, for the period remaining until the end of the calendar period then in progress.
No management fee shall be collected at each due date.
207bis TEMPORARY COMPLEMENTARY RENT
207bis 2 Annual rate to be retained for calculating interest according to the conditions stipulated in the Special Terms.
Average monthly money market rate paid on the interbank market, established by Association Francaise des Banques and officially published by Societe des Bourses Francaises for the month preceding the month of the term, plus 1.00 point.
TITLE 3 OF THE SPECIAL TERMS
300 UNILATERAL UNDERTAKING TO SELL THE LEASED PROPERTY
301 PURPOSE
301.1 By derogation from the provisions in the General Terms, the LESSEE shall be entitled to request consummation of the property sale by the end of the 5th year and each of the following lease years until expiration of the contract, subject to compliance with the option terms and deadlines stipulated in paragraph 302.2.
303 TERMS AND CONDITIONS OF SALE
303.2 Given the above derogation to paragraph 301.1 of the General Terms and if the stipulations in these Articles are exercised by the LESSEE, the sales price including an indemnity shall be calculated as follows:
The total rent remaining due after discounting at the contract rate less 2.50%. The contract rate would itself be discount on the basis of T (for SLIBAIL IMMOBILIER) and TC (for NORBAIL IMMOBILIER) known at the option exercise day, if the amount of this rate is less than that used to determine the rent.
303.2.1 At the end of each lease year, the residual financial value before indexation of the "total investment cost" shall be obtained by adding up the following two elements:
1ST ELEMENT
This element is obtained by applying the following percentages to the "total investment cost" defined in paragraph 207.1.2 of the General Terms less the amount of the LESSEE's initial advance.
2ND ELEMENT
This element is obtained by applying the same percentages as to element 1 to that part of the "total investment cost" defined in paragraph 207.1.2 of the General Terms, financed from the LESSEE's advance referred to in paragraph 403 of the Special Terms.
This second element shall be paid by offsetting it with the balance of the LESSEE's advance.
It is herewith specified that, although the LESSEE can only request consummation of the sale by the end of the fifth lease year at the earliest (paragraph 301.1), the following percentages are also given for earlier years, to make it possible, as applicable, to implement the provisions in the paragraphs 209, 210, 211 and 213 of the General Terms.
END OF LEASE YEAR RESIDUAL VALUE (%) ----------------- ------------------ 1 88.5475 eighty-eight units and fifty-four thousand seven hundred fifty-one thousandth percent 2 77.90257 seventy-seven units and ninety thousand two hundred fifty-seven thousandth percent 3 67.98074 sixty-seven units and ninety-eight thousand seventy- four thousandth percent 4 58.70398 fifty-eight thousand units and seventy thousand three hundred ninety-eight thousandth percent 5 50.0000 fifty units percent 6 41.80169 forty-one units and eighty thousand one hundred sixty-nine thousandth percent 7 34.04661 thirty-four units and four thousand six hundred sixty-one thousandth percent 8 26.67646 twenty-six units and sixty-seven thousand six hundred forty-six thousandth percent |
END OF LEASE YEAR RESIDUAL VALUE (%) ----------------- ------------------ 9 19.63664 nineteen units and sixty-three thousand six hundred sixty-four thousandth percent 10 12.87583 twelve units and eighty-seven thousand five hundred eighty-three thousandth percent 11 6.34559 six units and thirty-four thousand five hundred fifty-nine thousandth percent 12 1 one franc |
TITLE 1 OF THE SPECIAL TERMS
400 GUARANTEES OFFERED BY THE LESSEE
403 OTHER GUARANTEES
LESSEE'S ADVANCE
At the effective date of the lease, the LESSEE shall pay the LESSOR an advance of FRF 8,000,000, including FRF 4,000,000 onto the account of SLIBAIL IMMOBILIER and FRF 4,000,000 onto the account of NORBAIL IMMOBILIER, which shall not bear interest and which shall be deducted from the calculation basis of the first element of the rent referred to in paragraph 207.1 of the Special Terms.
This advance shall be reimbursed at each due date by offsetting it with the amount of the second element of the rent for SLIBAIL IMMOBILIER and with the second part of the first element of the rent for NORBAIL IMMOBILIER, as defined in paragraph 207.1 of the Special Terms.
In case of early exercise of the option, the balance of the advance shall be reimbursed by offsetting it with the sales price defined in paragraph 303.
The amount of the advance not yet reimbursed shall consist of cash pledged in favor of the LESSOR to guarantee that the LESSOR will be paid all sums due by the LESSEE under this contract.
Failure to pay the said advance of FRF 8,000,000 shall entail, at the LESSOR's discretion, application of the resolution clause referred to in paragraph of the General Terms.
TITLE 7 OF THE SPECIAL TERMS
700 MISCELLANEOUS PROVISIONS AND REPRESENTATIONS
701 TERMS OF PAYMENT GOVERNING SUMS OWED BY THE LESSEE
Reference of LESSOR's bank accounts to be credited:
For SLIBAIL IMMOBILIER
- Name of LESSOR: SLIBAIL IMMOBILIER
- Name of bank: CREDIT LYONNAIS (Code 30002)
- Designation and address of bank branch:
Agence ABI (Code 00880)
20 rue Treilhard, 75008 PARIS
- Account No: 2P, bank sort code 46
For NORBAIL IMMOBILIER
- Name of LESSOR: NORBAIL IMMOBILIER
- Name of bank: CREDIT DU NORD (Code 30076)
- Designation and address of bank branch:
Agence Centrale Entreprises 02020
- Account No: 27457200200, bank sort code 35
Reference of LESSEE's bank accounts:
For SLIBAIL IMMOBILIER
- Name of bank: CREDIT LYONNAIS (Code 30002)
- Designation and address of bank branch:
CAE LEVALLOIS 796 Nanterre
- Account No: 100 Z, bank sort code 09
For NORBAIL IMMOBILIER
- Name of bank: CREDIT DU NORD (Code 30076)
- Designation and address of bank branch:
Agence de Puteaux, rue Bellini
- Account No: 300760206310597700200, bank sort code 74
The share of each LESSOR in the rent shall be debited separately.
707 LAND REGISTRATION
Since this property lease does not exceed twelve (12) years, it will not be subjected to land publication formalities.
VALUATION
a) For the purpose of land publication, as applicable, the parties value:
- All cumulative years of rent, ex-VAT, at the sum of FORTY-TWO MILLION SIXTY-FIVE THOUSAND SIX HUNDRED TWENTY FRENCH FRANCS (FRF 42,065,620 ex-VAT), including ELEVEN MILLION SIXTY-FIVE THOUSAND SIX HUNDRED TWENTY FRENCH FRANCS (FRF 11,065,620 ex-VAT) for financial costs paid by the LESSEE, i.e. an assessment basis of THIRTY-ONE MILLION FRENCH FRANCS (FRF 31,000,000) for land publication tax.
b) For the emolument of the Registrar, as applicable, the parties value:
- All cumulative years of rent, including value-added tax, at the
sum of FIFTY MILLION SEVEN HUNDRED THIRTY-ONE THOUSAND ONE
HUNDRED THIRTY-SEVEN FRENCH FRANCS (FRF 50,731,137 including
VAT).
- The residual price in consideration of which the sale will be consummated in favor of the LESSEE when the operation is settled, if the aforesaid sales undertaking is exercised, shall be ONE FRENCH FRANC (FRF 1).
c) For the land publication tax and for the emolument of the Registrar,
as applicable, the parties value the charges incumbent on the LESSEE,
which would be due to the LESSOR, at the sum of THREE HUNDRED
SEVENTY-TWO THOUSAND FRENCH FRANCS (FRF 372,000).
The parties further specify that the amount of the total investment projected by the LESSOR for this operation amounts to the net sum of THIRTY-ONE MILLION FRENCH FRANCS (FRF 31,000,000 ex-VAT), i.e. including all taxes the sum of THIRTY-SEVEN MILLION THREE HUNDRED SEVENTY THOUSAND FIVE HUNDRED FIFTY FRENCH FRANCS (FRF 37,370,550 including VAT).
710 MANAGEMENT POWERS
Mrs Morane Gaillard, ex-officio as the representative of NORBAIL IMMOBILIER, herewith mandates SLIBAIL IMMOBILIER, for the entire term of this lease, to carry out all day-to-day management and administration operations connected with the said lease, notably:
- to collect all sums by way of pre-rent, ordinary and extraordinary charges, termination indemnities, sales price, levies and taxes, except NORBAIL IMMOBILIER's share in the rent, which it shall bill directly.
- to divide the income from its management between SLIBAIL IMMOBILIER and NORBAIL IMMOBILIER in proportion to their participation in this operation.
Mr Hiebel, ex-officio as the representative of SLIBAIL IMMOBILIER, expressly accepts the mandate hereby vested in SLIBAIL IMMOBILIER.
The LESSEE takes note of the above agreements and undertakes:
- to pay SLIBAIL IMMOBILIER all sums which it must pay the LESSOR in any respect by virtue of this lease, except NORBAIL IMMOBILIER's share in rent, which shall be paid directly.
- to send SLIBAIL IMMOBILIER notice of all option exercise requests, whether at an early date or not, or lease termination requests and to send it notice of all transfers or contributions of the right to this lease.
However, it is herewith specified:
- that VAT shall be managed separately by each property financing company;
- that the mandator's prior agreement shall be obtained for all decisions exceeding the framework of day-to-day management (early termination, transfer, expropriation of the building, insurance losses, legal actions, etc.).
711 OTHER PROVISIONS
- REGULATED ZONE
It is herewith stipulated that the property leased under this contract is part of the ZONE D'AMENAGEMENT CONCERTE DE L'ECHANGEUR ("Cloverleaf" concerted development zone), created by resolution of the town council of the city of BOURGES on 26 October 1989 and approved by the Prefect of the Cher district on 26 October 1989, of which the documents are filed with Maitre BOUTET, notary in partnership in BOURGES.
The LESSEE warrants and represents that it has acquainted itself with the terms and conditions of these development regulations (concession agreement, concession specifications, land transfer specifications) and undertakes, in the LESSOR's place, to comply with and to accomplish all obligations and conditions resulting from these documents, in such a way that the LESSOR can never be wanted in this respect for any reason whatsoever.
In accordance with paragraph 208.3 of the General Terms, the LESSEE shall also bear all charged resulting from these regulations, in such a way that the LESSOR can never be wanted in this respect for any reason whatsoever.
- BUILDING PERMIT
At the date on which this contract is signed, the period for recourse further to delivery of building permit No 018033 97 P0025 of 7 March 1997 has not yet expired.
This lease shall automatically be terminated, at the LESSOR's discretion, without legal formality, if, by 31 December 1997, the LESSEE has not obtained, for the premises governed by this contract, a building permit which has become final because of absence of recourse during the legal period of recourse or because of a final court order pronounced further to recourse.
Termination shall take effect at the date on which the LESSEE receives a registered letter informing it of the LESSOR's decision or a bailiff's writ with the same purpose.
The LESSEE shall pay the LESSOR, within maximum one month from termination, by way of damages under the Articles 1152 and 1226 of the Civil Code, an indemnity equal to the amount of the financing ceiling stipulated in paragraph 102.2 plus VAT to be paid by the LESSOR to the Treasury, incremented by 20% over the total.
Said termination indemnity shall be incremented by the applicable VAT.
However, the LESSEE shall be entitled, provided it has duly performed all its contractual obligations, to acquire the real rights held by the LESSOR to the site as well as the constructions, in consideration of a price equal to the total expenses incurred by the LESSOR at the day of the sale and all sums due on works, including indemnities if any due to participants in the construction, the whole being increased by 10%.
In order to be admissible, the acquisition request must be sent by registered letter with notice of receipt accompanied by the price and the amount of costs within one month from notification.
Moreover, the sale shall be consummated on the terms and conditions laid out in the paragraphs 303.4 and 303.10 of the General Terms.
If the notarized sales deed cannot be signed for failure to pay the price or for any other reason due to the LESSEE, within four months from the aforesaid notice, the resolution clause provided for above shall apply.
Pre-rent (or rent if termination occurs after the effective date of the lease) shall remain due until the termination date of the lease or until the notarized property sales deed is signed.
- RELIEF FOR CAUSE OF LESION
The site covered herein was acquired by SEMARB, the previous owner, less than two years ago. Accordingly, the period for bringing an action for relief for cause of lesion has not lapsed.
Consequently, further to transfer of the risks to the LESSEE, as stipulated in the PRELIMINARY DECLARATION to this contract, the LESSEE undertakes to reimburse the LESSOR all sums which the latter may be obliged to pay if this action is brought, to stop it from going further, notably a fair price complement.
Said sums shall be incremented with interest calculated pro-rata temporis at the rate of this contract.
712 LESSEE'S WARRANTIES AND REPRESENTATIONS
* REPRESENTATION REGARDING THE VALUE OF THE SITE
The LESSEE further warrants and represents that the value of the property site covered by this property financing contract is (FRF 5,000,000) ex-VAT at the acquisition date by the LESSOR. It undertakes to bear all consequences resulting from the foregoing declaration.
* REPRESENTATION REGARDING CLASSIFIED FACILITIES
Lastly, the LESSEE warrants and represents that it fully acquainted with the laws and regulations on classified facilities (Act No 76-663 of 19 July 1976 and Decree No 77-1133 of 21 September 1977, modified by Decree No 89-837 of 14 November 1989, and Decree No 80-813 of 15 October 1980).
It warrants and represents that the activity it plans to carry on at the premises covered herein fall within the scope of the declaration, as witnessed further by an affidavit issued by the Prefecture of Cher on 10 February 1997.
It undertakes to comply with said laws and regulations on classified facilities and to bear all consequences resulting from the aforesaid declaration.
713 SUBSIDIES
The LESSEE has informed the LESSOR that this property financing operation may be subject to subsidies.
The LESSEE declares that it has taken the initiative to request from:
1) FERI a subsidy of FRF 1,950,000 and a concessionary subsidy of FRF 650,000 to be applied to the rental terms;
2) the CONSEIL GENERAL OF THE CHER DISTRICT a subsidy in the amount of FRF 1,200,000, partly in the form of a concessionary subsidy to be applied to the rental terms;
in order to help finance this operation.
It is here agreed that in the remainder of this text, the term "subsidy" shall be used to designate all subsidies requested by the LESSEE for the property operation described in the preamble.
In this respect, the LESSEE warrants and represents that it is aware of the obligations resulting from delivery of such subsidy and undertakes to comply with them and promptly to produce evidence of compliance with such agreements when requested to do so.
In practice, this subsidy will be granted to the LESSOR which, at the LESSEE's express request, shall offer the latter its benefit by reducing the amount of periodic rent, net of tax, based on the net cash received on this head.
Said reduction shall be found by applying to the amount of the subsidy actually received by the LESSOR the same coefficients as applied to the total investment cost to determine the periodic basic rent.
Subsidies in the form of abatements shall be granted to the LESSOR which, at the LESSEE's express request, shall offer the latter the benefit thereof by reducing the amount of periodic rent, net of tax, as defined in paragraph 207.1 of the General Terms, in the amount of the net abatements received on this head.
As regards the share financed by NORBAIL IMMOBILIER, the bill for each rental term shall take account of reinstatement, over the term of the contract, in accordance with the applicable laws, of a fraction of the equipment subsidies granted in the form of a credit, net of value-added tax, at the same pace as the pace used for financial amortization on the rental scale.
Moreover, as it is the LESSEE which will benefit from the subsidy, the LESSEE alone shall be responsible for compliance with all conditions, if any, determining delivery or continuance of such assistance by the authority concerned.
The LESSEE shall also bear all consequences of termination of such assistance.
Thus, if the conditions laid down by the authority having granted the subsidy are not complied with, the LESSEE shall pay, by way of non-interest bearing guarantee deposit, a sum equal to the amount of the reimbursement requested by such authority.
It is herewith also noted that the LESSEE is and shall remain exclusively responsible for monitoring of such subsidy, in the broadest meaning of the term. Accordingly, the LESSOR assumes no responsibility in this respect, has no tangible charge and can in no event be held liable or wanted in case of difficulties.
For example, preparation of the application file, follow-up of disbursement planning, and submission of all information or evidence to the authority having paid the subsidy shall remain the LESSEE's responsibility.
In the event that the LESSOR has to intervene in respect of the authority charged with paying the subsidy, whether to send a file, to request actual payment of the subsidy or to submit documents claimed in connection with said subsidy, the LESSEE shall send the LESSOR all draft letters or documents necessary to submit the requested documents.
Accordingly, the LESSOR shall in no event be liable for late availability of the subsidy if due to late delivery of papers or documents because said LESSOR was not informed in time by the LESSEE.
More generally, the LESSEE undertakes to make sure that the LESSOR does not suffer any prejudice because of the approval and processing of the subsidy, in accordance with the stipulations in the PRELIMINARY DECLARATION "TRANSFER OF RISKS TO THE LESSEE" in this lease contract.
Drawn up on ninety-two (92) pages
With the participation of Maitre Jean TARRADE, associate notary in PARIS, counsel for NORBAIL IMMOBILIER,
And with the participation of Maitre Francis BERGERAULT, the aforesaid notary, counsel for the LESSEE,
After reading, the parties have signed with the undersigned associate notary
Twenty-nine April
Nineteen hundred ninety-seven
Six referrals
Twenty-five crossed-out blank spaces
Twenty-four crossed-out figures
Nine lines and eighteen words void
Referrals:
1) sixth
1) in column 1 of the following table
1) fifth
1) directly to the latter
1) March
1) Five million French francs ex-VAT
At the notarial office / 75001 PARIS
Maitre Francois THESSIEUX, notary in partnership of a company holding a notarial office at 20, rue des Pyramides, 75001 Paris, received this deed in authentic form.
INFORMATION ABOUT THE PARTIES
I. LESSORS
1. SLIBAIL IMMOBILIER
A public limited company,
governed by existing laws, notably Article 2 of Act No 66-455 of 2 July 1966, modified by government order No 67-837 of 28 September 1967, with respect to enterprises carrying on a leasing business, and by its bylaws,
with a capital of two hundred twenty million French francs (FRF 220,000,000),
having its registered office at 19 boulevard des Italiens, 75002 Paris,
entered in the Register of Companies of Paris under No B 682 039 086 (68B03908),
approved for the benefit of the tax rules applicable to SICOMIs (French
tax-exempt commercial property companies) by an order from the Ministry of
Finance dated 3 October 1968, whose decision to preserve the benefit of this tax
regime on the conditions stipulated in Article 96.I, second paragraph, of Act
90.1168 (Budget Act for 1991) was recorded on 4 July 1991 by the Ministry of the
Economy, Finance and the Budget,
originally incorporated under the name "SOCIETE LYONNAISE IMMOBILIERE POUR LES
COMMERCE ET L'INDUSTRIE - SLICOMI" and having:
- changed its name to "SLIBAILSICOMI" by virtue of a resolution adopted by the Extraordinary General Meeting of partners of the said company on 9 November 1992, a duly certified copy of whose minutes was appended, after mention, to an office copy of a deed recording their registration, received by Maitre Jean-Louis REGNIER, notary in partnership in Paris, on 21 December 1992,
- adopted its current name by virtue of a resolution adopted by the Extraordinary General Meeting of partners of the said company on 29 January 1996, a duly certified copy of whose minutes was appended, after mention, to an office copy of a deed recording their registration, received by Maitre Jean-Louis REGNIER, notary in partnership in Paris, on 4 March 1996,
represented by:
Mr ____________, notarial clerk, domiciled at 20 rue des Pyramides, 75001 PARIS,
acting on behalf of and as attorney in fact for Mr Hubert GAVAU, Vice-President Sales, domiciled at 106 rue des Trois Fontanot, Nanterre, Hauts de Seine, duly empowered to act herein by virtue of a private deed dated __________, Nanterre, appended hereto after mention,
in which power Mr GAVAU, with the right of substitution, acted on behalf of and as attorney in fact for Mr Claude VIVIEN, General Manager of the said company, being at the time domiciled at 34 rue Laffitte, 75009 Paris and currently domiciled at 106 rue des Trois Fontanot, Nanterre, Hauts de Seine, under a deed received by Maitre Jean-Louis REGNIER, the aforesaid notary on 22 May 1995,
in which power Mr VIVIEN himself acted by virtue of his functions, confirmed for an indefinite time, with the right of substitution and with the broadest possible powers to act under all circumstances on behalf of the said company, including the power to act before the courts, by virtue of a resolution adopted by the Board of Directors of the said company on 16 February 1995, a duly certified copy of whose minutes was appended, after mention, to an office copy of a deed recording their registration, received by Maitre Jean-Louis REGNIER, the aforesaid notary, on 22 May 1995.
2. NORBAIL IMMOBILIER
A public limited company,
with a capital of FRF 50,000,000,
having its registered office at 16 rue Le Peletier, 75009 Paris,
entered in the Register of Companies of Paris under No B 352 109 656 (89B14721),
represented by:
Mr ______________, notarial clerk, domiciled at 20 rue des Pyramides, 75001
PARIS,
by virtue of ___________________________________________________________________
SLIBAIL IMMOBILIER and NORBAIL IMMOBILIER as well as their representatives are herein referred to as the "LESSOR", acting jointly and respectively up to 50% for SLIBAIL IMMOBILIER, the lead manager, and up to 50% for NORBAIL IMMOBILIER,
PARTY OF THE FIRST PART
II. LESSEE
AUXITROL SA
A public limited company,
with a capital of FRF 25,000,000,
having its registered office at Centre d'Affaires Esplanade ***, 5 Allee Charles Pathe, 18941 Bourges Cedex 9,
entered in the Register of Companies of Bourges under No B 602 023 251 (63B64),
represented by:
Mr ______________, notarial clerk, domiciled at 20 rue des Pyramides, 75001
PARIS,
by virtue of ___________________________________________________________________
AUXITROL SA and its representative are herein referred to as the "LESSEE",
PARTY OF THE SECOND PART
PREAMBLE
WITNESSETH
1. The LESSEE wishes to have industrial premises with a net leasing area of 10,183 sq.m., to be constructed on the site described hereinafter, located in BOURGES (Cher) and currently owned by SEMARB, hereinafter referred to as the OWNER OF THE SITE.
2. Without intervention by the LESSOR, the LESSEE has taken the initiative to negotiate its acquisition terms directly with the OWNER OF THE SITE.
3. The LESSEE arranged to have established, according to its needs, the construction program for the premises to be erected at the site.
4. On 10 February 1997, the LESSEE filed a building permit application.
On 7 March 1997, the LESSEE obtained a building permit bearing No 018033 97 P0025, delivered by the Commune of BOURGES.
This permit was displayed at the townhall of BOURGES, as witness an affidavit issued by the said townhall on 14 April 1997, and was displayed at the site, as witness a report drawn up on 11 March 1997 by Maitre Jean CHASTEL, bailiff in partnership in BOURGES.
5. The LESSEE has asked the LESSOR for the following property financing transaction in its favor, including:
- acquisition of the said site by the LESSOR,
- construction by the LESSOR of the premises needed by the LESSEE,
- and lease by the LESSEE of the building, under a lease tied to a sales undertaking.
6. The LESSOR has agreed to carry out this financing transaction in the light of the LESSEE's person and the guarantees which the LESSEE has agreed to provide.
7. Under a deed received on 29 April 1997 by Maitre Francis BERGERAULT, notary in partnership in BOURGES, the LESSOR accordingly acquired the said site at a price of FIVE MILLION FRANCS excluding VAT (FRF 5,000,000 ex-VAT), incremented by ONE MILLION THIRTY THOUSAND FRENCH FRANCS (FRF 1,030,000) by way of VAT, paid cash and of which a receipt was given in the said deed.
The LESSOR has further paid the notary the sum of SEVENTY-FIVE THOUSAND FRANCS (FRF 75,000) by way of provision for the duties, taxes, costs and emoluments due in connection with said acquisition.
An office copy of this deed was published at the BOURGES mortgage registry on 13 May 1997, volume 1997 P, number 2704.
DESCRIPTION OF PROPERTY
LAND TO BE ACQUIRED
In BOURGES (Cher).
A building site survey section 2M number 139 at the site known as "Le Noir a Beurat", with a content of five hectares thirty-seven areas and ninety-one centiares (5ha 37a 91ca).
The said site is part of a development program governed by the ZONE D'AMENAGEMENT CONCERTE DE L'ECHANGEUR (cloverleaf concerted development zone) procedure adopted by resolution of the town council of the city of BOURGES on 26 October 1989, approved by the Prefect of the Cher district on 26 October 1989, of which the documents are filed with Maitre BOUTET, notary in partnership in BOURGES.
The LESSEE has intervened in this sales deed to declare that all clauses and terms of this deed correspond to those which the LESSEE itself had negotiated with the seller.
8. Under a deed received on 29 April 1997 by Maitre THESSIEUX, the undersigned notary in partnership, the LESSOR and the LESSEE agreed to carry out, within the framework of Act No 66-455 of 2 July 1966 and Article 57 of Act No 95-115 of 4 February 1995, the property financing transaction described in the foregoing preamble.
Accordingly,
- the parties have laid down and agreed to their reciprocal obligations during the construction period;
- the LESSOR leases to the LESSEE, which agrees to let, the property described above;
- the LESSOR undertakes to sell said property to the LESSEE, which accepts this undertaking as an undertaking only, and reserves the right to acquire or not to acquire said property at its discretion;
Under the said deed, it was notably stipulated as follows, reiterated literally:
TITLE 1 OF THE SPECIAL TERMS
100 AGREEMENT REGARDING THE PERIOD PRIOR TO THE EFFECTIVE DATE OF THE LEASE
101 PURCHASE OF SITE
. . .
102 ERECTION OF CONSTRUCTIONS
102.6 Works completion deadline: 31 March 1998
103 FINANCING OF WORKS
103.2 The LESSOR agrees to finance the investment up to the following ceiling:
- acquisition of site FRF 5,000,000.00 ex-VAT - provision for acquisition costs FRF 75,000.00 - construction FRF 25,925,000.00 ex-VAT FRF 31,000,000.00 |
(THIRTY-ONE MILLION FRANCS)
To this ceiling shall be added the corresponding VAT.
The investment shall be financed as follows:
- Financing by SLIBAIL IMMOBILIER FRF 15,500,000.00 - Financing by NORBAIL IMMOBILIER FRF 15,500,000.00 FRF 31,000,000.00 |
It is herewith specified that the LESSEE, in accordance with paragraph 403 of the Special Terms, in order to guarantee the financings provided by SLIBAIL IMMOBILIER and NORBAIL IMMOBILIER, the LESSEE shall pay an advance of FRF 8,000,000, including FRF 4,000,000 onto the account of SLIBAIL IMMOBILIER and FRF 4,000,000 onto the account of NORBAIL IMMOBILIER.
9. The LESSEE has asked the LESSOR to bear the cost of additional works to be carried on the premises covered by the property lease contract concerned.
The cost of these works amounts to ONE MILLION EIGHT HUNDRED THIRTY-FIVE
THOUSAND FRENCH FRANCS ex-VAT (FRF 1,835,000 ex-VAT).
Accordingly, the LESSOR and the LESSEE have agreed to raise the ceiling of the original property lease contract from THIRTY-ONE MILLION FRENCH FRANCS (FRF 31,000,000) to THIRTY-TWO MILLION EIGHT HUNDRED THIRTY-FIVE THOUSAND FRENCH FRANCS ex-VAT (FRF 32,835,000 ex-VAT).
Further to this new agreement, the parties have agreed to modify the following paragraph of the property lease contract received by Maitre Francois THESSIEUX, the undersigned notary, on 29 April 1997.
NOW THEREFORE IT HAS BEEN AGREED AS FOLLOWS:
AMENDMENT
The property lease received by Maitre Francois THESSIEUX, the undersigned notary, on 29 April 1997, is amended as follows:
TITLE 1 OF THE SPECIAL TERMS
100 AGREEMENT REGARDING THE PERIOD PRIOR TO THE EFFECTIVE DATE OF THE LEASE
. . .
103 FINANCING OF WORKS
103.2 The LESSOR agrees to finance the investment up to the following ceiling:
.acquisition of site FRF 5,000,000.00 ex-VAT provision for acquisition costs FRF 75,000.00 construction FRF 27,760,000.00 ex-VAT FRF 32,835,000.00 |
(THIRTY-TWO MILLION EIGHT HUNDRED THIRTY-FIVE THOUSAND FRANCS)
To this ceiling shall be added the corresponding VAT.
The investment shall be financed as follows:
- Financing by SLIBAIL IMMOBILIER FRF 16,417,500.00 - Financing by NORBAIL IMMOBILIER FRF 16,417,500.00 FRF 32,835,000.00 |
It is herewith specified that the LESSEE, in accordance with paragraph 403 of the Special Terms, in order to guarantee the financings provided by SLIBAIL IMMOBILIER and NORBAIL IMMOBILIER, the LESSEE shall pay an advance of FRF 8,000,000, including FRF 4,000,000 onto the account of SLIBAIL IMMOBILIER and FRF 4,000,000 onto the account of NORBAIL IMMOBILIER.
No other amendment is made to the property lease contract of 29 April 1997.
LAND REGISTRATION - POWERS
Since the aforesaid property lease of 29 April 1997 does not exceed twelve
(12) years, it will not be subjected to land publication formalities.
Accordingly, this amendment will not be subjected to land publication formalities.
VALUATION
a) For the purpose of land publication, as applicable, the parties value:
- All cumulative years of complementary rent, ex-VAT, at the sum of TWO MILLION FOUR HUNDRED NINETY THOUSAND THIRTEEN FRENCH FRANCS (FRF 4,490,013 ex-VAT), including SIX HUNDRED FIFTY-FIVE THOUSAND AND THIRTEEN FRENCH FRANCS (FRF 655,013 ex-VAT) for financial costs paid by the LESSEE, i.e. an assessment basis of ONE MILLION EIGHT HUNDRED THIRTY-FIVE FRENCH FRANCS (FRF 1,835,000) for land publication tax.
b) For the emolument of the Registrar, as applicable, the parties value:
- All cumulative years of rent, including value-added tax, at the sum of THREE MILLION TWO THOUSAND NINE HUNDRED FIFTY-FIVE FRENCH FRANCS (FRF 3,002,955 ex-VAT).
- The parties note that the residual price in consideration of which the sale will be consummated in favor of the LESSEE when the operation is settled, if the aforesaid sales undertaking is exercised, shall be ONE FRENCH FRANC (FRF 1).
c) For the land publication tax and for the emolument of the Registrar,
as applicable, the parties value the charges incumbent on the LESSEE,
which would be due to the LESSOR, at the sum of TWENTY-TWO THOUSAND
TWENTY FRENCH FRANCS (FRF 22,020).
The parties further specify that the amount of the complementary investment
projected by the LESSOR under this amendment amounts to the net sum of ONE
MILLION EIGHT HUNDRED THIRTY-FIVE FRENCH FRANCS (FRF 1,835,000 ex-VAT),
i.e. including all taxes the sum of TWO MILLION TWO HUNDRED THIRTEEN
THOUSAND AND TEN FRENCH FRANCS (FRF 2,213,010 including VAT) and further
specify that, because of this amendment, the amount of the total investment
projected by the LESSOR amounts to THIRTY-TWO MILLION EIGHT HUNDRED
THIRTY-FIVE THOUSAND FRENCH FRANCS ex-VAT (FRF 32,835,000 ex-VAT), i.e.
including all taxes the sum of THIRTY-NINE MILLION FIVE HUNDRED
EIGHTY-THREE THOUSAND FIVE HUNDRED SIXTY FRENCH FRANCS (FRF 39,583,560
including VAT).
NOTICE
Notice hereof shall be given wherever needed.
MISCELLANEOUS COSTS
All costs, duties and emoluments connected with this amendment and all resulting or related costs shall be borne by the LESSEE, which so accepts.
WHEREOF RECORD
Established on ___ pages. With the participation of Maitre Jean TARRADE, associate notary in PARIS, counsel for NORBAIL IMMOBILIER, And with the participation of Maitre Francis BERGERAULT, the aforesaid notary, counsel for the LESSEE, After reading, the parties have signed with the undersigned associate notary
This day,
NINETEEN HUNDRED NINETY-EIGHT
EXHIBIT 10.26
INDUSTRIAL AND BUILD-TO-SUIT
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
THE NEWHALL LAND AND FARMING COMPANY
(A CALIFORNIA LIMITED PARTNERSHIP), AS SELLER,
AND
ESTERLINE TECHNOLOGIES CORP., A CORPORATION
AND
TA MFG COMPANY, A CALIFORNIA CORPORATION,
COLLECTIVELY AS BUYER
DATED AS OF FEBRUARY 13, 1997
TABLE OF CONTENTS
Page ---- ARTICLE I PURCHASE AND SALE.............................................. 1 ARTICLE II PURCHASE PRICE AND DEPOSITS................................... 2 2.01 Escrow.......................................................... 2 2.02 Purchase Price.................................................. 2 2.03 Form of Deposit and Payment..................................... 3 2.04 Buyer's Review Period........................................... 3 ARTICLE III CONDITIONS PRECEDENT......................................... 4 3.01 Conditions to Buyer's Obligations............................... 4 A. Delivery of Title Report.................................. 4 B. Delivery of Title and Title Insurance..................... 4 C. Substantial Completion of Improvements.................... 5 E. Representations and Warranties............................ 6 3.02 Conditions to Seller's Obligations.............................. 6 A. Governmental Approvals.................................... 6 B. Delivery of Purchase Price................................ 6 C. Board Approval............................................ 6 D. Representations and Warranties............................ 6 E. Performance of Buyer's Covenants.......................... 6 3.03 Failure of Conditions........................................... 6 ARTICLE IV CLOSING....................................................... 7 4.01 Closing......................................................... 7 A. Closing Date.............................................. 7 B. Closing Documents......................................... 7 C. Closing Procedure......................................... 8 4.02 Fees; Expenses; Prorations...................................... 9 A. Fees, Expenses, Transfer Taxes............................ 9 B. Real Property Taxes and Assessments....................... 9 C. Brokerage Commission...................................... 9 ARTICLE V BREACH......................................................... 9 5.01 Notice.......................................................... 9 5.02 Failure to Cure................................................. 10 5.03 Remedies........................................................ 10 5.04 Build-to-Suit................................................... 10 5.05 Limitation of Liability......................................... 11 ARTICLE VI SELLER'S OBLIGATION TO CONSTRUCT IMPROVEMENTS................. 11 6.01 Seller's Work................................................... 11 |
ARTICLE VII CONDITION OF PROPERTY........................................ 11 7.01 Condition of Property........................................... 11 7.02 Seller's Warranty............................................... 12 7.03 No Additional Warranties........................................ 12 7.04 Governmental Approvals.......................................... 12 7.05 Environmental Conditions........................................ 13 7.06 Cooperation with Development of Adjacent Property............... 13 7.07 Covenants, Conditions and Restrictions.......................... 14 ARTICLE VIII REPRESENTATIONS AND WARRANTIES.............................. 15 8.01 Buyer's Representations and Warranties.......................... 15 8.02 Seller's Representations and Warranties......................... 15 ARTICLE IX CONDEMNATION, DAMAGE AND DESTRUCTION.......................... 17 9.01 Condemnation.................................................... 17 9.02 Damage and Destruction.......................................... 17 ARTICLE X ANTI-SPECULATION............................................... 18 ARTICLE XI MISCELLANEOUS................................................. 18 11.01 Assignment...................................................... 18 11.02 Attorneys' Fees................................................. 18 11.03 Notices......................................................... 18 11.04 Cooperation..................................................... 19 11.05 Survival........................................................ 20 11.06 Interpretation.................................................. 20 11.07 Successors and Assigns; Time Is of the Essence.................. 20 11.08 Waivers......................................................... 20 11.09 Severability.................................................... 21 11.10 Counterpart Execution........................................... 21 11.11 Duty of Confidentiality......................................... 21 11.12 Force Majeure................................................... 21 11.13 Waiver of Jury Trial............................................ 21 ARTICLE XII ARBITRATION.................................................. 21 |
LIST OF EXHIBITS
Exhibit "A-1" Legal Description of Build-to-Suit Parcel Exhibit "A-2" Legal Description of Expansion Parcel
Exhibit "B" Work Letter Agreement Exhibit "C" Title Report Exhibit "D" Declaration of Covenants, Conditions & Restrictions Exhibit "E" Non-Foreign Investor Affidavit |
Schedule 2.04 Seller's Delivery Items Schedule
INDUSTRIAL AND BUILD-TO-SUIT
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT ("Agreement") is dated as of February 13,
1997 by and between THE NEWHALL LAND AND FARMING COMPANY (A CALIFORNIA LIMITED
PARTNERSHIP) ("Seller"), and Esterline Technologies Corp., a corporation, and TA
MFG COMPANY, a California Corporation (individually and collectively and jointly
and severally, "Buyer").
RECITALS
A. Seller is the owner of those certain parcels of real property, located in the County of Los Angeles, State of California and more particularly described on Exhibit "A-1" (the "Build-to-Suit-Parcel") and Exhibit "A-2" (the "Expansion Parcel"), both of which are attached hereto and incorporated herein by this reference and which together with the build-to-suit improvements (the "Improvements) that Seller intends to construct for Buyer pursuant to the Work Letter Agreement attached hereto as Exhibit "B" and incorporated by reference herein, are collectively referred to as the "Property."
B. Buyer desires to purchase the Property from Seller, and Seller desires to sell the Property to Buyer, on the terms, covenants and conditions contained in this Agreement.
C. TA MFG Company is the wholly-owned subsidiary of Esterline Technologies Corp.
In consideration of the mutual covenants, agreements and representations contained herein, the adequacy and sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows:
ARTICLE I
PURCHASE AND SALE
Buyer agrees to purchase the Property from Seller, and Seller agrees to sell the Property to Buyer, subject to the conditions, covenants and terms contained in this Agreement. The Property shall consist of the Build-to-Suit Parcel, Expansion Parcel, and the Improvements, including those certain "Building Shell Improvements," "Site Improvements" and "Interior Improvements," all of which are defined in the Work Letter Agreement, that Seller intends to construct for Buyer pursuant to those certain "Building Shell Plans," "Site Work Plans" and "Interior Plans" that have been, or will be, approved by Buyer and Seller pursuant to the Work Letter Agreement. The Build-to-Suit Parcel consists of approximately 4.42 acres (approximately 192,906 square feet) and the Expansion Parcel consists of approximately 1.88 acres (approximately 81,829 square feet), for a total of approximately 6.3 acres (approximately 274,735 square feet) of land located in the County of Los Angeles, State of California, as determined by a survey of the Build-to-Suit Parcel and Expansion Parcel prepared by Sikand Engineering Associates ("Sikand"). The Building Shell Improvements will include an approximately 85,000 square foot building with an approximately 75,000 square foot footprint and 10,000 square feet of mezzanine space. The
Site Improvements will include related on-site and offsite improvements that will be constructed in accordance with plans and specifications that are approved by Buyer and Seller pursuant to the Work Letter Agreement. The Interior Improvements will include certain interior improvements that are constructed pursuant to the Interior Plans that have been approved by Buyer and Seller pursuant to the Work Letter Agreement so that the Improvements can be used by Buyer for Buyer's conduct of its manufacturing business on the Property in accordance with the CC&R's (as defined in Section 7.07). The Building Shell Improvements shall consist of a concrete tilt-up industrial building that will be constructed substantially in accordance with the most recent Uniform Building Code and other applicable laws, codes and regulations.
ARTICLE II
PURCHASE PRICE AND DEPOSITS
2.01 ESCROW. Within three (3) business days after this Agreement is executed by both parties, Seller and Buyer shall open an escrow ("Escrow") with Continental Lawyer's Title Company, located at 800 East Colorado Boulevard, Suite #200, Pasadena, California, Attention: Renee Blair, escrow officer ("Escrow Agent"), and shall deliver to Escrow Agent an executed copy of this Agreement, together with the Initial Deposit, as defined in Section 2.02 below ("Opening of Escrow"). The Escrow Agent shall deposit the Initial Deposit and Additional Deposits when received and as defined in Section 2.02, into a federally insured interest bearing account or accounts that are segregated and refer to the Escrow and require the signature of an authorized officer of Escrow Agent for withdrawal of funds. All interest earned on the Initial Deposit and Additional Deposits shall be credited to and be for the benefit and account of the Buyer. The Closing of Escrow shall be in accordance with Article IV of this Agreement.
2.02 PURCHASE PRICE. The total purchase price ("Purchase Price") for the Property shall be Six Million Two Hundred and Eighty Thousand Four Hundred Ninety-Six and no/100 Dollars ($6,280,496.00), consisting of $4,541,949.50 for the Build-to-Suit Parcel, Site Work Improvements and Building Shell Improvements; $1,043,000 for the Interior Improvements and $695,546.50 for the Expansion Parcel. The Purchase Price for the Build-to-Suit Parcel and the Expansion Parcel shall be increased or decreased by $8.50 for each square foot above or under 274,735 as determined by a survey of the Build-to-Suit Parcel and Expansion Parcel by Sikand following the County of Los Angeles' approval of a lot line adjustment for the Expansion Parcel and Build-to-Suit Parcel. For purposes of calculating the acreage and square feet for determining any Purchase Price adjustment, Sikand shall determine the gross acreage and number of square feet within the perimeter boundaries of the Build-to-Suit Parcel and Expansion Parcel and subtract from such gross number the area contained within the cut slopes that are at the rear of and along Braxton Avenue adjacent to the Build-to-Suit Parcel and that are not included within building set back or side yard areas. The Purchase Price shall be subject to increase in accordance with the terms of the Work Letter Agreement that is not caused by Seller's default under this Agreement or the Work Letter Agreement. The Purchase Price shall be paid as follows:
A. Upon the Opening of Escrow, Buyer shall deposit with the Escrow Agent cash, or cashier's check or certified check drawn on good and sufficient funds of a federally insured bank in California and made payable to the order of the Escrow Agent, in the amount of Two Hundred Fifty Thousand Dollars ($250,000.00) ("Initial Deposit");
B. Three additional deposits of One Hundred Thousand Dollars ($100,000.00) each, aggregating to a total amount of Three Hundred Thousand Dollars ($300,000) in additional deposits, (each an "Additional Deposit" and collectively the "Additional Deposits,") shall be deposited into Escrow by Buyer in immediately available federal funds in accordance with the following schedule: (i) an Additional Deposit of $100,000 upon commencement of construction of the Building Shell Improvements; (ii) an Additional Deposit of $100,000 upon substantial completion of the concrete tilt-up walls for the Building Shell Improvements as certified by the architect and general contractor; and (iii) an Additional Deposit of $100,000 upon substantial completion of the Building Shell Improvements as certified by the architect and general contractor. The Initial Deposit and Additional Deposits and all interest earned on the Initial Deposit and Additional Deposits are collectively referred to as the "Deposit."
C. Upon the close of Escrow, the Deposit shall be disbursed to Seller and credited toward the Purchase Price. One (1) business day before the close of Escrow, Buyer shall deposit with the Escrow Agent the balance of the Purchase Price in cash or a cash equivalent, as described below in Section 2.03 such that the Escrow Agent will be able to disburse the cash proceeds owed to Seller on the Close of Escrow.
2.03 FORM OF DEPOSIT AND PAYMENT. All money payable under this Agreement, including the Deposit, additional sums payable under the Work Letter Agreement, the balance of the Purchase Price or otherwise, shall be paid in cash, a cashier's check or certified check, or wire transfer of immediately available federal funds of the United States.
2.04 BUYER'S REVIEW PERIOD. Prior to the execution of this Agreement, Seller has provided Buyer with a list and copies of current reports, studies, surveys, assessments, inspections and tests ("Delivery Items") pertaining to the Property (other than confidential or proprietary property or data of Seller) that Seller has in its possession or control. The Delivery Items are identified on Schedule 2.04 attached hereto and incorporated by reference herein. Buyer acknowledges that within twenty (20) business days after the date of this Agreement (i.e. March 2, 1997, "Buyer's Review Period"): (i) Buyer shall have reviewed and approved or shall have or will have conducted such surveys, reports, studies, assessments, tests and inspections, and made such boring, percolation, geologic, seismic, environmental and soils tests and other studies of the Property, as Buyer determines, to be prudent or advisable in Buyer's commercially reasonable judgment, and (ii) Buyer shall have had an adequate opportunity to make such inspection of the Property (including an inspection for zoning, land use, environmental and other laws, regulations and restrictions, as Buyer has, in Buyer's commercially reasonable discretion, deemed necessary as a condition precedent to Buyer's purchase of the Property and to determine the physical and land use characteristics of the Property (including its subsurface) and its suitability for Buyer's intended use. Buyer shall protect, defend, indemnify, and hold Seller (and Seller's general partners and the agents, employees, partners, unitholders, shareholders, affiliates, officers and directors of Seller and
its general partners, collectively "Seller's Indemnitees"), harmless from and against any and all losses, costs, expenses (including reasonable attorneys' fees and court costs) claims, damages, personal injuries, property damage, liens, and stop notices whatsoever, including, without limitation, repairing any and all damages to any portion of the Property, arising out of or related to Buyer's conducting such inspections, surveys, tests, and studies or relating to Buyer's access to or entry onto the Property prior to the close of Escrow.
ARTICLE III
CONDITIONS PRECEDENT
The purchase and sale under this Agreement shall be subject to the satisfaction of the following conditions (unless waived in writing by the party to whom the benefit runs) on or before the Closing Date:
3.01 CONDITIONS TO BUYER'S OBLIGATIONS.
A. Delivery of Title Report. Prior to the execution of this Agreement, Seller has provided Buyer with a title report for the Property, a copy of which is or shall be attached hereto and incorporated herein by this reference as Exhibit "C" ("Title Report"). Buyer shall have until the expiration of Buyer's Review Period to provide Seller with written notice specifying any reason(s) if Buyer disapproves any item or exception shown on the Title Report. Failure of Buyer to disapprove any item or exception shown on the Title Report during such time period shall be deemed to be an approval of title to the Property in its entirety. If Buyer disapproves of any item or exception shown in the Title Report, Seller shall have the right, but not the obligation, to (a) remove or cure the defect to the reasonable satisfaction of Buyer or (b) elect not to cure such defect. If Seller fails to notify Buyer of Seller's election to cure such item or exception within five (5) days after Seller's receipt of Buyer's notice of disapproval, Seller shall be deemed to have elected not to cure such defect. If Seller elects not to cure any such defect, then Buyer's exclusive remedy shall be to (i) accept such item or exception and proceed to take title to the Property without either deduction or offset to the Purchase Price and waive such defect without cause of action hereunder against Seller, or (ii) terminate this Agreement and the Escrow by giving five (5) days' prior written notice of such termination to Seller and to Escrow Agent after Buyer's receipt or deemed receipt of Seller election not to cure. Buyer's failure to provide Seller with five (5) days' prior written notice of termination shall constitute Buyer's election under (i) above.
B. Delivery of Title and Title Insurance. Seller shall convey fee title to the Property to Buyer at the Closing, subject to the Permitted Exceptions. The term "Permitted Exceptions" as used herein shall mean: (i) liens for real property taxes and assessments and all other taxes shown as exceptions in the Title Report, provided that the taxes are not delinquent and do not include any utility hook-up fees or building fees relating to Seller's construction of the Improvements; (ii) the standard exceptions to coverage under Chicago Title Insurance Company (Title Insurer's) 1992 ALTA-Owner's Extended Coverage Policy of Title Insurance; (iii) such exceptions to coverage as may be shown in the Title Report and that are approved by Buyer during Buyer's Review Period; (iv) the CC&R's, as described in Section 7.07 of this Agreement; (v) reasonable water, sanitary sewer, utility,
slope, and drainage and street widening easements that are necessary in connection with the subdivision or development of the Property and any Adjacent Property, as defined in Section 7.06 of this Agreement, that are either shown on a survey or tract, subdivision or boundary line adjustment map for the Build-to-Suit Parcel and Expansion Parcel that Buyer approves during Buyer's Review Period or that are located within utility corridors within the perimeter boundaries of the Property as shown on such maps and do not adversely affect or increase the cost of Buyer's proposed expansion of its improvements or conduct of business within the Improvements after the close of Escrow; (vi) minor boundary line adjustments that are contemplated by the boundary line adjustment map that is approved by Buyer during Buyer's Review Period and that do not interfere or impair the use of the Property and do not reduce Buyer's ability to expand its improvements after the Close of Escrow as contemplated by Section 7.07 of this Agreement; and (vi) any other exception Buyer has approved in writing or caused or permitted to encumber the Property. Buyer agrees that Seller's obligation to convey insurable title to Buyer shall be deemed satisfied upon Title Insurer's willingness to issue the Title Policy subject only to the Permitted Exceptions.
C. Substantial Completion of Improvements. Seller shall have substantially completed the Improvements in accordance with the Work Letter Agreement and Seller shall have received a temporary certificate of occupancy or its equivalent for the Improvements, unless Seller is prevented from obtaining a temporary certificate of occupancy as a result of any act or omission of Buyer or Buyer's employees, agents or contractors or as a result of Buyer's failure or delay in obtaining any necessary environmental permit related to Buyer's manufacturing use of the Property, including any necessary permit from SCAQMD. Any costs incurred by Buyer in examining and investigating the Property under this Agreement shall be at Buyer's sole cost and expense. During the five (5) day period between substantial completion of the Improvements and Closing, Buyer and Seller shall complete a walk-through of the Property and prepare and initial a punch-list of those items which remain incomplete, but are not material to substantial completion of the Improvements. Seller shall promptly obtain bids from the applicable subcontractors to complete such punch-list items and shall promptly cause the general contractor and subcontractors to complete such work. If the estimated cost of completing such punch-list exceeds $20,000, Seller shall withhold the estimated cost of completing such punch-list work from the final payment due the general contractor until such punch-list work is completed.
D. During Buyer's Review Period and after substantial completion of
the Building Shell Improvements but prior to substantial completion of the
Improvements, Seller agrees that Buyer and its agents and contractors may enter
the Property for the purpose of the examination and investigation under this
Section 3.01(D) from time to time or for the purpose of installing Buyer's Work
in accordance with the Work Letter Agreement; provided that such activity does
not unreasonably interfere with Seller's performance under this Agreement,
including the Work Letter Agreement. Buyer shall keep the Property free and
clear of any mechanics' lien or materialmen's liens related to any such
activity, and Buyer shall provide Seller with two (2) days prior written notice
of such entry onto the Property and evidence that Buyer has procured the
insurance required by the Work Letter Agreement and named Seller and its general
contractor as additional insureds prior to any such entry onto the Property.
E. Representations and Warranties. Each of the representations and warranties by Seller contained in Article VIII was true and correct in all material respects as of the date made and continues to be true and correct in all material respects as of the Closing Date.
3.02 CONDITIONS TO SELLER'S OBLIGATIONS.
A. Governmental Approvals. On or before July 21, 1997, the Seller shall have obtained a building permit for the Building Shell Improvements and on or before October 21, 1997, or such later date as may be agreed to by Buyer and Seller during Buyer's Review Period in connection with Buyer and Seller's approval of the construction schedule for the Improvements pursuant to the Work Letter Agreement, Seller have obtained a building permit for the Interior Improvements to be constructed pursuant to the Work Letter Agreement. Seller agrees to use due diligence to obtain such permits by such dates subject to Force Majeure Delays and Buyer Delays and any extensions to such dates as may be approved by Buyer and Seller pursuant to the Work Letter Agreement.
B. Delivery of Purchase Price. The Purchase Price shall have been delivered to Escrow Agent in immediately available funds on or before the Closing Date.
C. Board Approval. Approval of this Agreement and the consolidated financial statements of Buyer and Guarantor that have been prepared in accordance with generally accepted accounting principles consistently applied by Seller's Board of Directors or senior management on or before February 7, 1997.
D. Representations and Warranties. Each of the representations and warranties by Buyer contained in Article VIII was true and correct in all material respects as of the date made and continues to be true and correct in all material respects as of the Closing Date.
E. Performance of Buyer's Covenants. Buyer shall have performed in full all of its obligations under this Agreement and the Work Letter Agreement.
3.03 FAILURE OF CONDITIONS. If any of the conditions precedent contained in this Article III are not satisfied (or waived or the time for satisfaction extended by the party to whom the benefit of the condition runs) within the time periods specified in this Agreement, the party to whose benefit the condition runs shall have the right to terminate this Agreement by delivering written notice to the other party within the time period specified by this Agreement and if either party elects to so terminate this Agreement, neither party shall have any further obligations or liabilities thereunder or pursuant to the terms of this Agreement; provided, however, that each party shall pay one-half (1/2) of Escrow Agent and Title Insurer's normal Escrow and title policy cancellation fees, if any. Nothing contained herein is intended nor shall permit any party in default to terminate this Agreement or the Escrow provided for herein as a result of such default. If Buyer elects to terminate this Agreement during Buyer's Review Period, Buyer shall reimburse Seller for the out-of-pocket costs and expenses that Seller incurs pursuant to the Work Letter Agreement for the Work Cost (as defined in the Work Letter Agreement) up to a maximum amount of $17,000. Seller shall
provide Buyer with bills, receipts, invoices and other written evidence that Seller has incurred such out-of-pocket costs and expenses.
ARTICLE IV
CLOSING
4.01 CLOSING. The purchase and sale of the Property shall be consummated through a closing ("Closing") in accordance with the following:
A. Closing Date. The closing date ("Closing Date") shall occur at the
Pasadena office of the Escrow Agent, or such other location as is acceptable to
the parties hereto, on or before 4:00 p.m. on the earlier to occur of: (i) five
(5) days after substantial completion of the Improvements, as certified by the
Architect and general contractor or (ii) on February 21, 1998 such later date as
may be agreed to by Buyer and Seller in connection with Buyer and Seller's
approval of the construction schedule pursuant to the Work Letter Agreement,
provided all contingencies have been completed and subject to extensions for
Force Majeure Events beyond Seller's reasonable control and Seller Delays
totaling up to thirty (30) days in the aggregate but in no event later than
October 31, 1998. Buyer and Seller acknowledge that both parties would prefer to
close Escrow on or before December 31, 1997, and shall cooperate with each other
in good faith to coordinate and expedite the construction schedule to the extent
that it is commercially reasonable to do so without increasing construction
costs in the prudent business judgment of Buyer and Seller. For example, Buyer
and Seller agree to approve design-build subcontracts with the major trade
subcontractors who are approved pursuant to the Work Letter Agreement.
B. Closing Documents. (i) Seller. Not less than one (1) business day prior to the Closing Date, Seller shall duly execute, acknowledge if required, and deliver to Escrow Agent the following:
(a) Grant Deed ("Deed") conveying the Property to Buyer, along with Seller's share of any costs or expenses to be paid to or through Escrow Agent;
(b) A Non-Foreign Entity Affidavit, in the form attached hereto as Exhibit "E";
(c) An assignment, without recourse and on a non-exclusive basis for a period of one year after the Closing Date, of all contractor and manufacturer warranties regarding the Improvements;
(d) Such documents and instruments as Escrow Agent or Title Insurer may reasonably require to evidence the due authorization and execution of the documents and instruments to be delivered by Seller hereunder and to issue its title insurance policy; and
(e) Lien releases (which may be conditional as to the final payment and unconditional as to all prior payments) from the general contractor and major trade subcontractors and suppliers of material and equipment for the Improvements and an owner's indemnity agreement for Seller's Work as may be required by the Title Insurer to issue its 1992-ALTA Owner's Extended Coverage Title Policy.
(ii) Buyer. Not less than one (1) business day prior to the Closing Date, Buyer shall deliver to the Escrow Agent the following:
(a) Purchase Price, along with Buyer's share of any costs and expenses to be paid to or through Title Insurer and Escrow Agent;
(b) A Change of Ownership Statement, as required by Title Insurer or Escrow Agent; and
(c) Documents and instruments executed and acknowledged as may be reasonably required by Escrow Agent or Title Insurer to evidence the due authorization and execution of the various documents and instruments to be delivered by Buyer hereunder and to issue its title insurance policy, including an owner's indemnity agreement for any Buyer's Work (as defined in the work Letter Agreement) that is commenced by Buyer prior to the Closing Date.
C. Closing Procedure. At such time as the Escrow Agent has received
all of the items specified in Section 4.01, and at such time as Title Insurer is
prepared to issue a policy of title insurance in accordance with Section 3.01
hereof, Buyer and Seller hereby authorize and instruct Escrow Agent to: (i)
cause Title Insurer to record the Deed; (ii) pay to the authorities lawfully
entitled thereto any recordation fees and transfer taxes in connection
therewith; (iii) compute prorations relating to taxes and assessments for the
accounts of Seller and Buyer; (iv) pay to Seller an amount equal to the Purchase
Price less any prorations chargeable to Seller and any amounts payable by Seller
to Escrow Agent for its services and expenditures in connection herewith; and
(v) pay to Buyer the balance of the funds then held by Escrow Agent, less any
prorations chargeable to Buyer and any amounts payable by Buyer to Escrow Agent
for its services and expenditures in connection herewith.
4.02 EXPENSES; PRORATIONS.
A. Fees, Expenses, Transfer Taxes. Seller shall pay the documentary transfer taxes, one-half of the escrow fees and the cost of a 1992-CLTA standard coverage Owner's Policy of Title Insurance for Buyer in the amount of the Purchase Price. Buyer shall pay the recordation fees of the Deed and one-half of the fees and expenses of Escrow Agent in connection with the escrow and any other customary fees and charges and expenditures authorized by Buyer, and Buyer shall pay for the increased cost of the ALTA Extended Coverage Policy, the cost of any survey that the Escrow Agent requires for issuance of an ALTA Policy or any ALTA, as-built survey that Buyer requires pursuant to the Work Letter Agreement and for the cost of any other increase in the amount or scope of title insurance if Buyer elects to increase the amount or scope of title insurance coverage.
B. Real Property Taxes and Assessments. All real property taxes and assessments for the fiscal years of the taxing and assessing authorities, or any owner's association annual dues under the CC&R's described in Section 7.07 becoming due prior to the Closing Date shall be prorated at the Closing with appropriate debits and credits to the accounts of Buyer and Seller so that Seller shall be responsible for paying all of the same, to the extent duly allocable to the period ending on the day immediately prior to the Closing Date, and Buyer shall be responsible for paying all of the same, to the extent duly allocable to the period commencing upon the Closing Date. At Closing, Buyer shall reimburse Seller for any taxes and assessments, which are allocable to the period commencing upon the Closing Date and which Seller has already paid.
C. Brokerage Commission. With the exception of Locker Realty Corp, having its business address at 601 East Glenoaks Blvd., Suite 200, Glendale, California 91207-1760 ("Buyer's Broker") and CB Commercial Real Estate Group, Inc., having its business address at 15301 Ventura Blvd., Suite 120, Sherman Oaks, California 91403-3157 ("Seller's Broker"), Buyer and Seller represent and warrant to each other that to the best of their knowledge no other person or entity may claim or is entitled to a real estate commission, finder's fee or any similar payment with respect to this Agreement or the Property. The Seller's Broker and Buyer's Broker are collectively referred to as the "Brokers." Buyer and Seller shall each protect, defend, indemnify and hold the other harmless from and against all such claims for fees or commissions in connection with the sale of the Property or this Agreement. Seller shall pay to the Brokers a brokerage commission pursuant to separate written agreements between Seller and Buyer's Broker and Seller's Broker.
ARTICLE V
BREACH
5.01 NOTICE. The failure by either party to observe or perform any of the covenants or provisions of this Agreement, where such a failure shall continue for a period of five (5) days after written notice thereof from the non-breaching party to the breaching party, shall constitute a breach under this Agreement. If the nature of the breaching party's default is non-monetary and such that more than five (5) days are reasonably required for its cure, then the breaching party shall not be deemed to be in default if the breaching party shall commence such cure within said five (5) day period and thereafter diligently prosecute such
cure to completion, which completion shall occur not later than thirty (30) days from the date of such notice or not later than the Outside Closing Date if the breach relates to Seller's failure to substantially complete the Improvements.
5.02 FAILURE TO CURE. If a breaching party fails to cure or commence to cure the default after notice, the non-breaching party may, without terminating this Agreement, suspend performance under this Agreement.
5.03 REMEDIES. If either party breaches this Agreement, upon expiration of the cure period, the non-breaching party may sue for specific performance; provided, however, Buyer's right to sue for specific performance is conditioned upon Esterline's delivery of an agreement in writing to Seller on or before the Closing Date to segregate the Purchase Price in a segregated account and Seller shall have the right to expunge any lis pendens filed by Buyer without posting a bond if Esterline fails to deliver such written agreement to Seller prior to Buyer's commencement of its action for specific performance. In addition to an action for specific performance, the non-breaching party may commence an arbitration proceeding for damages pursuant to Article XII of this Agreement. Buyer agrees that its damages will be limited to Holdover Rental Costs (as defined below) and $1,250 for each additional day of Seller Delay as liquidated damages for Seller's failure to substantially complete the Improvements on or before the date permitted by clause (ii) of Section 1.4 of the Work Letter Agreement as a result of more than thirty (30) days of Seller's Delays (subject to extension for the number of days of Buyer's Delays and Force Majeure Delays), provided Seller substantially completes the Improvements on or before the Outside Closing Date subject to extension for the number of days of Buyer Delays and Force Majeure Delays. The parties acknowledge that it would be difficult to estimate Buyer's actual damages and $1,250 per day and Holdover Rental Costs represents a reasonable amount. Holdover Rental Costs shall mean the difference between (a) TA MFG Company's existing occupancy costs ("TA's Existing Occupancy Cost") for its existing facilities as set forth on Schedule 5.03 attached hereto and incorporated by reference herein and (b) the lower of (i) TA's actual holdover costs or (ii) 150% of TA's Existing Occupancy Cost, for Seller's failure to substantially complete the Improvements on or before the date permitted by clause (ii) of Section 1.4 of the Work Letter Agreement as a result of more than thirty (30) days of Seller Delay. Buyer represents and warrants to Seller that Schedule 5.03 accurately sets forth TA's existing lease obligations, and the existing termination dates of TA's existing leases. Buyer and Seller shall act reasonably and in good faith and cooperate with each other to minimize Buyer's holdover costs and to minimize Buyer and Seller's damages as a result of Seller Delays, Buyer Delays and Force Majeure Delays. Buyer represents and warrants to Seller that TA has the right to terminate its existing lease on its manufacturing facility on 365 days prior notice to its landlord. Buyer agrees not to send any termination notice prior to approval of its Interior Plans and meeting with Seller and agreeing upon the projected date of substantial completion of the Improvements and the number of days of Seller Delays, Buyer Delays, and Force Majeure Delays then existing. Buyer also agrees to meet with Seller prior to extending its office lease or agreeing to any increase in its occupancy cost above in TA's Existing Occupancy Cost.
5.04 BUILD-TO-SUIT. BUYER ACKNOWLEDGES AND AGREES THAT SELLER IS CONSTRUCTING THE IMPROVEMENTS TO ACCOMMODATE AND SATISFY THE UNIQUE AND SPECIFIC REQUIREMENTS OF BUYER THAT ARE
REQUIRED FOR THE MANUFACTURING BUSINESS REQUIREMENTS OF BUYER AND THAT SELLER WOULD NOT CONSTRUCT THE IMPROVEMENTS BUT FOR THE AGREEMENT OF BUYER UNDER THIS AGREEMENT AND THE WORK LETTER AGREEMENT. IF BUYER BREACHES ITS OBLIGATION TO PURCHASE THE PROPERTY HEREUNDER, THEN SELLER WILL BE IRREPARABLY DAMAGED DUE TO THE UNIQUE AND BUILD-TO-SUIT NATURE OF THE IMPROVEMENTS THAT SELLER IS CONSTRUCTING ON BEHALF OF BUYER. CONSEQUENTLY, SELLER SHALL HAVE THE RIGHT OF SPECIFIC PERFORMANCE AGAINST BUYER IN ADDITION TO ANY REMEDIES SELLER HAS AT LAW, IN EQUITY, OR PURSUANT TO THIS AGREEMENT OR THE WORK LETTER AGREEMENT FOR SUCH BREACH, INCLUDING BUT NOT LIMITED TO CLAIMS FOR DAMAGES, ATTORNEYS' FEES AND INDEMNITY. SELLER AND BUYER WITNESS THEIR APPROVAL OF THIS SPECIFIC PERFORMANCE CLAUSE BY INITIALING THIS SECTION 5.04.
Seller's Initials: /s/ JB Buyer's Initials: /s/ SRL, ------------------ ---------------------- /s/ RWS ---------------------- |
5.05 LIMITATION OF LIABILITY. The obligations of the Seller under this Agreement shall be without recourse to the assets of the general partners or of any general partner, officer, shareholder, director, unit holder or employee of Seller or any general partner of Seller. The sole recourse of Buyer for any obligation of the Seller under this Agreement shall be limited solely to the Property and the income and proceeds therefrom.
ARTICLE VI
SELLER'S OBLIGATION TO CONSTRUCT IMPROVEMENTS
6.01 SELLER'S WORK. Seller will be responsible for substantially completing the Improvements in accordance with the Work Letter Agreement prior to the Closing Date, subject to extensions for up to thirty (30) days of Seller Delays and extensions for Force Majeure Events or delays caused by Buyer. Seller shall also install, at Buyer's expense, a fully irrigated landscape strip fronting Franklin Parkway on the Expansion Parcel in accordance with landscaping plans that are approved by Buyer during the landscaping phase of the development of the adjacent building. Buyer's obligation to pay for the cost of such work as it progresses shall survive the Closing Date and recordation of the Deed.
ARTICLE VII
CONDITION OF PROPERTY
7.01 CONDITION OF PROPERTY. Buyer understands and acknowledges that the Property may be subject to earthquake, fire, floods, erosion, high water table, dangerous underground soil conditions and similar occurrences that may alter its condition or affect its suitability for any proposed use. Seller shall have no responsibility or liability with respect to any such occurrence. Except for the express representations and warranties of Seller contained in this Agreement, Buyer represents and warrants that it is acting, and will act only, upon information obtained by it directly from its own inspection of the Property. The suitability or lack of suitability of the Property for Buyer's intended use, or availability or lack of availability of permits or approvals of governmental or regulatory authorities (other than a temporary certificate of occupancy for the Improvements) shall not affect the rights or
obligations of the Buyer hereunder. Seller shall deliver the Property to Buyer clean and free of debris on the Closing Date.
7.02 SELLER'S WARRANTY. Seller warrants to Buyer that all items of "Seller's Work" as defined in Paragraph 1.1 of the Work Letter Agreement, shall be in good operating condition on the Closing Date and shall be completed substantially in accordance with the requirements of this Agreement. Seller's warranty shall not extend to, or provide a remedy for, abuse, defects caused by Buyer's alteration or modification of Seller's Work, improper or insufficient maintenance, improper operation, and normal wear and tear under normal usage.
Seller's warranty obligations shall commence at the time of substantial completion of Seller's Work. If within one year after substantial completion of Seller's Work any portion of Seller's Work is found not to be in accordance with the requirements of this Agreement, Seller shall, after receipt of written notice from Buyer, promptly correct, or cause the general contractor to correct, such work. Seller hereby agrees to execute any documentation reasonably requested by Buyer in order to evidence the fact that effective one (1) year after the Closing Date, Seller shall assign on a non-exclusive basis all of its right, title and interest in and to any warranties regarding workmanship and material with respect to the Seller's Work to be performed pursuant to the terms of this Agreement, including, but not limited to, the warranties regarding the operation of systems such as air-conditioning or heating. Seller shall cooperate with Buyer, at no cost to Seller, with respect to the enforcement of any such warranties upon the written request by Buyer and Buyer shall cooperate with Seller in enforcing any such warranties in connection with the performance of Seller's obligations under this Section 7.02. In no event shall Seller be liable to Buyer for any latent or patent construction defects that are not asserted by Buyer within one (1) year after the Closing Date.
7.03 NO ADDITIONAL WARRANTIES. Except as expressly provided in this Agreement, the Property is purchased and sold "AS IS". The Purchase Price and the terms and conditions set forth herein are the result of arm's-length bargaining between entities familiar with transactions of this kind, and said price, terms, and conditions reflect the fact that, Buyer shall have the benefit of, and is relying upon, no statements, representations, or warranties whatsoever made by or enforceable directly against Seller relating to the condition, operations, dimensions, descriptions, soil condition, suitability, compliance or lack of compliance with any state, federal, county or local law, ordinance, order, permit or regulation, or any other attribute or matter of or relating to the Property. Buyer represents, warrants, and covenants to Seller that, except for Seller's express representations and warranties specified in this Agreement, Buyer is relying solely upon its own investigation of the Property. If Seller obtains or has obtained the services, opinions, or work product of surveyors, architects, engineers, Escrow Agent, Title Insurer, governmental authorities, or any other third person or entity with respect to the Property, Buyer and Seller agree that Seller shall do so only for the convenience of both parties, and the reliance by Buyer upon any such services, opinions, or work product shall not create or give rise to any liability of or against Seller.
7.04 GOVERNMENTAL APPROVALS. It is understood and agreed by the parties that Seller's performance of its obligations under this Agreement, including the Work Letter Agreement, is subject to obtaining all necessary governmental permits and approvals from all appropriate governmental authorities for the Improvements. Seller will use due diligence to
obtain said governmental permits or approvals to construct the Improvements. Nothing contained in this Agreement shall be construed as authorizing or requiring Buyer to apply for a zone change, variance, subdivision maps, lot line adjustment, or other discretionary governmental act, approval or permit with respect to the Property prior to the Close of Escrow and Buyer agrees not to do so without Seller's prior written approval, which approval may be withheld in Seller's sole and absolute discretion. Buyer agrees not to submit any reports, studies or other documents, including without limitation, plans and specifications, impact statements for water, sewage, drainage or traffic, environmental review forms, or energy conservation checklists to any governmental agency, or any amendment or modification to any such instruments or documents prior to the Close of Escrow unless first approved by Seller, which approval Seller may withhold in Seller's sole discretion. Buyer's obligation to purchase the Property shall not be subject to or conditioned upon Buyer's obtaining any variances, zoning amendments, subdivision maps, lot line adjustment or other discretionary governmental act, approval or permit.
7.05 ENVIRONMENTAL CONDITIONS. Except as disclosed to Buyer in writing, to the best of Seller's knowledge, as of the date of this Agreement, there has been no release of Hazardous Materials in violation of applicable law on the Property. Seller's obligations to disclose matters "known to Seller," "to the best of Seller's knowledge" or words of like import shall be deemed breached only if Thomas E. Dierckman, Senior Vice President of Seller, had actual knowledge (as opposed to imputed, inquiry or constructive knowledge after consultation with the staff of Seller's commercial and industrial division of the Valencia Company, a division of Seller) of the material inaccuracy of the matter not disclosed to Buyer. Except as set forth above in this Paragraph, Buyer shall rely upon its own inspection and environmental audit of the Property in determining the Property's physical and environmental condition, including an examination of all public records relating to the environmental condition of the Property. If Buyer discovers that there has been a release of Hazardous Materials on the Property in violation of applicable law, Buyer shall immediately notify Seller in writing. Buyer shall protect, defend indemnify and hold Seller free and harmless from and against any and all claims, liabilities, damages, costs and expenses (including reasonable cleanup and remediation costs and reasonable attorney and consultant fees) relating to a release of Hazardous Materials on or beneath the Property by Buyer or its agents or contractors in violation of applicable law after the Close of Escrow. Buyer's indemnity obligations shall survive the Close of Escrow. As used in this Paragraph, Hazardous Materials shall mean any and all hazardous substances, hazardous materials or hazardous waste as defined under federal, state or local laws or regulations.
7.06 COOPERATION WITH DEVELOPMENT OF ADJACENT PROPERTY. Buyer shall cooperate with Seller and the Declarant under CC&R's, as defined in Section 7.07 below, and with the owners of the property surrounding, abutting or adjoining the Property ("Adjacent Property"), in the development of the Adjacent Property, by executing subdivision maps and other appropriate documents necessary to obtain all government approvals to develop the Adjacent Property. Seller hereby reserves easements for drainage, sewer, utilities, and slopes across the Property that are reasonably necessary for the subdivision, development and construction of the Adjacent Property and that are Permitted Exceptions under this Agreement. If requested by Seller or Declarant under the CC&R's or owners of Adjacent Property, Buyer shall execute and record easements precisely describing the location thereof.
7.07 COVENANTS, CONDITIONS AND RESTRICTIONS.
A. Buyer acknowledges and agrees to comply with the Declaration of Covenants, Conditions and Restrictions encumbering the Property dated August 26, 1996 and recorded in the Los Angeles County Recorder's Office as Instrument No. 961516213, a copy of which will be attached hereto as Exhibit "D" and incorporated herein by this reference and as may be amended from time to time (the "CC&R's"). Buyer acknowledges and agrees that construction of the Improvements on the Property and construction of any additional improvements on the Property after the Close of Escrow is subject to compliance with the size, density, building material, aesthetic and other architectural controls under the CC&R's. At the Closing, Seller shall deliver to Buyer a certificate executed by the Declarant under the CC&R's to evidence that construction of the Improvements was in compliance with the CC&R's. Prior to expiration of Buyer's Review Period, Seller shall cause the Declarant to deliver a letter to Buyer confirming that Buyer's intended use of the Build-to-Suit Parcel is permitted under the CC&R's subject to Declarant's approval of the plans and specifications for the Improvements and Buyer's compliance with all applicable laws and regulations. Buyer shall obtain the approval of the Architectural Review Committee and Declarant under the CC&R's prior to submitting any plans or applications for approval to any governmental authority regarding any expansion of the Improvements after the Closing Date. The parties acknowledge that after the Close of Escrow, Buyer contemplates expanding the Improvements on the Build-to-Suit and Expansion Parcels by approximately 50,000 square feet subject to Buyer's compliance with all applicable laws, ordinances, codes and regulations in connection with any expansion of the Improvements by Buyer. Buyer acknowledges that Buyer's ability to expand may be affected by changes in laws and regulations and by Buyer's use of the Improvements and proposed use of the expansion area. In connection with any such expansion Seller agrees to be bound by the following provisions.
(i) Buyer shall have no obligation to develop the Expansion Parcel for up to five (5) years after the Closing Date. If Buyer has not commenced construction of any improvement on the Expansion Parcel on or before the fifth (5th) anniversary of the Closing Date, Buyer shall market the sale of the Expansion Parcel to a purchaser who agrees to construct improvements on the Expansion Parcel in accordance with and subject to the limitations set forth in the CC&R's. The marketing of the Property will be done by listing the Expansion Parcel with licensed California real estate broker.
(ii) Approval of Buyer's submittal as to design, materials and color of Buyer's proposed expansion shall not be withheld if the improvements for the Expansion Parcel shall have a substantially similar design and shall include substantially similar materials and color unless the use of such design or materials are prohibited by applicable laws and regulations then in effect.
(iii) Seller agrees to cause the Declarant under the CC&R's to consider on the Architectural Committee agenda a submittal made by Buyer for an improvement on the Expansion Parcel within two (2) meetings of the Architectural Committee after proper delivery of such submittal by Buyer to the Declarant in accordance with the CC&R's.
(iv) If Declarant disapproves Buyer's submittal, Seller will cause the Declarant to deliver to Buyer, in writing, as detailed explanation for such disapproval.
(v) In calculating maximum lot coverage under the CC&R's for any such proposed expansion by Buyer, Seller shall cause the Declarant to consider the Expansion Parcel and the Build-to-Suit Parcel to be as one Site (as defined in the CC&R's) as long as the Build-to-Suit Parcel and Expansion Parcel are both owned by Buyer, Buyer agrees to execute and record a covenant to hold the Expansion Parcel and Build-to-Suit Parcel as one parcel in compliance with all applicable laws and Buyer complies with all applicable laws and regulations regarding any such expansion.
(vi) If Buyer sells the Expansion Parcel to a third party, Buyer and such third party shall each be entitled to place a monument sign identifying Buyer on the Build-to-Suit Parcel and the third party on the Expansion Parcel in compliance with the CC&R's.
(vii) Declarant shall have the right to assign its interest under the CC&R's to any person, corporation or association subject to any such assignee's assumption of Seller's obligations under this Section 7.07.
B. Subject to Subsection 7.07A above, Buyer shall obtain the approval of the Architectural Review Committee and Declarant under the CC&R's prior to submitting any plans or applications for approval to any governmental authority regarding any alteration to the Improvements or construction of additional improvements on the Build-to-Suit Parcel after the Closing Date. The CC&R's shall also restrict Buyer's use of the Property to light manufacturing and related office, administrative, warehouse and storage in compliance with all applicable laws and regulations.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.01 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants to Seller that, as of the date this Agreement is executed, and as of the Closing Date, Buyer has full right, power, and authority to execute and deliver this Agreement and to perform the undertakings of Buyer contained herein and therein, and that this Agreement constitutes valid and binding obligations of Buyer that are legally enforceable in accordance with their terms, and that to the best of Buyer's knowledge none of the undertakings of Buyer contained herein violates any applicable statute, law, regulation or ordinance or any order or ruling of any court or governmental entity, or conflicts with, or constitutes a breach or default under, any agreement by which Buyer is bound or regulated.
8.02 SELLER'S REPRESENTATIONS AND WARRANTIES. Seller hereby represents and warrants to Buyer that, as of the date this Agreement is executed, and as of the Closing Date (except as provided otherwise below), as follows:
A. The persons executing this Agreement on behalf of the Seller are
duly authorized to do so and are authorized to sell the Property. Seller is the
owner in fee of the Property and the Property will not be encumbered by any
liens, easements, or licenses except for the Permitted Exceptions, as defined in
Section 3.01B hereof.
B. To the best of Seller's knowledge, there is no pending condemnation or similar proceeding affecting the Property or any portion thereof, and Seller has not received any notice and has no knowledge that any such proceeding is contemplated as of the date of this Agreement.
C. There are no contracts or other obligations outstanding for the sale, exchange, lease or transfer of the Property or any portion thereof.
D. Seller is not aware of any violation of any zoning, land use, building, health, flood control, fire or other law, ordinance, or regulation relating to the Build-to-Suit Parcel or the Expansion Parcel as of the date of this Agreement.
E. Except as disclosed in writing to Buyer by the Delivery Items and/or as disclosed on the Title Report, or Survey, or as approved by Buyer pursuant to the Work Letter Agreement, Seller has not made and will not make any commitments to the applicable governmental authorities, or any adjoining or surrounding property owners that would interfere with Buyer's ability to expand the Improvements on the Expansion Parcel and Build-to-Suit Parcel in the manner contemplated by this Agreement.
F. There are no attachments, executions, assignments for the benefit of creditors, receiverships, conservatorships or voluntary or involuntary proceedings in bankruptcy or pursuant to any other debtor relief laws contemplated or filed by Seller or pending against Seller or the Property.
G. Seller is not a foreign individual, foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations). Seller shall execute and deliver to Buyer at the Closing an affidavit substantially in the form of Exhibit "E" attached hereto, certifying the representations and warranties made pursuant to this subsection.
H. All the documents executed by Seller which are to be delivered to Buyer on or before the Closing Date are, and on the Closing Date will be legal, valid, and binding obligations of Seller.
I. Except as disclosed by the Delivery Items or Buyers review of public records and other reports it receives during Buyer's Review Period, including existing environmental, zoning, land use, health, fire, flood control and other applicable laws, ordinances and regulations, or as disclosed to Buyer pursuant to the Work Letter Agreement, Seller has not failed to disclose to Buyer any material fact that Seller has actual knowledge of and that materially and adversely affects the condition of the Build-to-Suit Parcel or Expansion Parcel as of the date of this Agreement.
J. From and after the date hereof, and except as otherwise provided in this subparagraph, Seller shall not without the prior written consent of Buyer enter into any agreement, contract, commitment, lease or other transaction to sell, dispose of or lease any portion of the Property.
ARTICLE IX
CONDEMNATION, DAMAGE AND DESTRUCTION
9.01 CONDEMNATION.
A. If, between the date hereof and the Closing Date, condemnation or eminent domain proceedings affecting the Property (defined as 10% or more of the Build-to-Suit Parcel and the Expansion Parcel) are initiated or are threatened to be initiated, then, both Seller and Buyer shall have the option by written notice to: (i) affirm this Agreement, which shall remain in full force and effect without any diminution of the Purchase Price, and Seller shall assign to Buyer upon the Closing Date all of Seller's rights to any condemnation awards by depositing an assignment of said award with the Escrow Agent; or (ii) terminate this Agreement and return the Deposit to Buyer, less one-half (1/2) of the Escrow Agent's and Title Insurer's escrow and title cancellation fees and costs.
B. If, between the date hereof and the Closing Date, condemnation or eminent domain proceedings affecting a portion of the Property (defined as 10% or less of either the Expansion Parcel or the Build-to-Suit Parcel) are initiated or are threatened to be initiated, then, Seller shall have the option by written notice to Buyer to: (i) affirm this Agreement, which shall remain in full force and effect without any diminution of the Purchase Price, and Seller shall assign to Buyer upon the Closing Date all of Seller's rights to any condemnation awards by depositing an assignment of said award with the Escrow Agent or (ii) terminate this Agreement and all obligations to Buyer, and return the Deposit to Buyer, less one-half (1/2) of the Escrow Agent's and Title Insurer's escrow and title cancellation fees and costs. As of the date hereof, Seller has received no notice that there are any eminent domain or condemnation proceedings pending or threatened against the Property. As used herein, material portion means more than 10% of the aggregate land area of the Build-to-Suit Parcel and Expansion Parcel or any portion of the land on which the Shell Improvements are located.
9.02 DAMAGE AND DESTRUCTION. Seller shall maintain insurance, or cause the general contractor to maintain insurance, on the Property in accordance with the Work Letter Agreement until the Closing Date in accordance with the Work Letter Agreement. If, between the date hereof and the Closing Date, any material portion of the Property is damaged or destroyed (defined as 10% or more of the replacement cost of the Improvements), the Buyer shall have the option by written notice to Seller to terminate this Agreement, and subject to Seller's rights set forth below, Buyer shall have no obligation to purchase the Property, and Seller shall have no obligation to sell the Property to Buyer, unless Seller elects, in its sole and absolute discretion, to pay for the cost of restoring and substantially completing the Improvements in accordance with the approved plans prior to the Outside Closing Date under the Work Letter Agreement, in which event Buyer will not have the right to terminate this Agreement and shall be obligated to close on or before the Outside Closing Date. If this Agreement is so terminated, Escrow Agent shall return to Buyer the Deposit, less one-half (1/2) of escrow and Escrow Agent's costs and fees and any
cancellation fees. If the Property is materially damaged by a casualty and Seller cannot complete the restoration of the Improvements prior to the Outside Closing Date, either Buyer or Seller may terminate this Agreement by delivering written notice to the other party. If this Agreement is so terminated, the Deposit less one-half of the Escrow termination fees shall be returned to Buyer and all insurance proceeds shall be paid to Seller. If Seller elects to restore the Property following any such damage on or before the Outside Closing Date, Buyer and Seller shall reaffirm this Agreement, which shall remain in full force and effect without any diminution or increase in the Purchase Price.
ARTICLE X
ANTI-SPECULATION
Buyer acknowledges that it has represented to Seller that it is acquiring the Property for business purposes for use as a manufacturing facility and not to speculate in the appreciation in the value of the Build-to-Suit Parcel or Expansion Parcel. Buyer further acknowledges that Seller would not have entered into this Agreement, including the Work Letter Agreement if Buyer were acquiring the Property for speculative purposes.
ARTICLE XI
MISCELLANEOUS
11.01 ASSIGNMENT. Buyer shall neither assign its rights nor delegate is obligations hereunder, without obtaining Seller's prior written consent, which shall not be unreasonably withheld but which may be conditioned upon the assignee's express written assumption of all of Buyer's obligations hereunder and the Buyer's reaffirmation of its obligations under this Agreement. Notwithstanding the foregoing, Buyer shall have the right to assign this Agreement to an affiliate or a successor by merger or consolidation, as long as Esterline Technologies Corp. reaffirms its obligation under this Agreement. In no event shall any assignment delay the Closing Date or release Buyer from any liability under this Agreement, including the Work Letter Agreement, as applicable. Any other purported or attempted assignment or delegation without obtaining Seller's prior written consent shall be void and of no effect. Seller acknowledges that Buyer shall have the right to designate TA MFG Company, a California corporation, to take title to the Property at the Closing without the consent of Seller.
11.02 ATTORNEYS' FEES. If any action or proceedings is brought to interpret or enforce the terms of this Agreement, the prevailing party shall be entitled, in addition to all other damages, to receive reasonable attorney's fees and costs.
11.03 NOTICES. All notices and requests hereunder shall be in writing and shall be sent by personal delivery or by certified or registered mail, postage prepaid, return receipt requested, or delivered in person to the following street addresses:
SELLER:
The Newhall Land and Farming Company
23823 Valencia Boulevard
Valencia, California 91355
Attention: Mr. Jim Brown
Phone: (805) 255-4261
Fax: (805) 259-2957
With a copy to:
Brobeck, Phleger & Harrison LLP
550 South Hope Street, Suite 2100
Los Angeles, California 90071
Attention: Jerry Walsh, Esq.
Phone: (213) 745-3358
Fax: (213) 745-3345
BUYER:
TA MFG Company
375 West Arden Avenue
P.O. Box 2500
Glendale, California 91209-2500
Attention: Dennis Miller
Phone: (818) 240-4600
Fax: (818) 241-3948
AND
Esterline Technologies Corp.
c/o Bogle & Gates PLLC
601 Union Street, Suite 5100
Seattle, Washington 98121
Attention: Serena M. Schourup, Esq.
Phone: (206) 621-1415
Fax: (206) 621-2660
All notices shall be effective upon the earlier of facsimile, personal delivery or receipt of the United States mail's return receipt, as set forth above; provided, however, receipt of the Purchase Price shall only be effective upon actual receipt in the form required under Section 2.04 hereof. Either party may change its fax number, address or designate a new street address for notices hereunder by notice complying with the terms of this Section.
11.04 COOPERATION. Each party shall fully cooperate with the other in connection with the requirements imposed by this Agreement upon the other, to the end that neither party shall act in any manner to impede the other in performing its obligations hereunder.
11.05 SURVIVAL. The provisions of this Agreement shall survive the Closing and shall not be merged into or defeated by the execution, delivery, or recordation of the Deed given in connection herewith. Written disclosures made to Buyer by Seller or any other entity prior to the Closing Date shall constitute notice to Buyer of the matter disclosed, and Seller shall have no further liability thereafter if Buyer waives such matter and consummates the transaction contemplated hereby. If prior to the Closing Date, Buyer receives notice of any information which indicates that any of Seller's representations and warranties are untrue in any material respect, Buyer shall promptly advise Seller in writing of such information. If Buyer fails to notify Seller, Buyer shall be deemed to have waived such representation and warranty. If Buyer waives any representation or warranty, then Seller shall have no liability under this Agreement for such representation or warranty to the extent waived. If this Agreement is terminated because of a failure of conditions in Article IV or pursuant to Article IX, then neither Buyer nor Seller shall have any liability if any of Buyer's or Seller's representations or warranties are inaccurate. In no event shall Seller have any liability for a breach of a representation or warranty under this Agreement if Buyer fails to assert any such breach within one year after the Closing Date, except for those representations and warranties contained in subsections 4.02C, Sections 7.05 and 7.07 and subsections 8.02C, E, G, and I for which Seller shall have continuing liability.
11.06 INTERPRETATION. This Agreement shall be construed and enforced in accordance with the laws of the State of California as applicable to contracts entered into in California among parties doing business therein and the parties consent to the personal jurisdiction and venue of the Superior Courts of the State of California located in Los Angeles County and the service of process by any means authorized by such courts. This Agreement contains the entire agreement between the parties respecting the purchase and sale of the Property and supersedes all prior agreements between the parties hereto with respect to such matters. Exhibits "A" through "E", as attached hereto are incorporated by reference herein. The paragraph headings of this Agreement are for convenience only and are not to be construed as part of this Agreement, and do not in any way amplify or define the terms, conditions, and covenants of this Agreement, and shall not be used in construction or interpretation hereof. There are no third party beneficiaries to this Agreement. TA MFG Company and Esterline Technologies Corp. are jointly and severally liable for the obligations of Buyer under this Agreement. Unless the context otherwise indicates, whenever used in this Agreement, the word "party" or "parties" means Buyer or Seller or both, as the context may require.
11.07 SUCCESSORS AND ASSIGNS; TIME IS OF THE ESSENCE. This Agreement shall be binding upon and inure to the benefits of the heirs, successors and assigns of the parties hereto. In no event shall Buyer have any right to delay or postpone the Closing to create a partnership, corporation or other form of business association or to obtain financing to acquire title to the Property or to coordinate with any other sale, transfer, exchange or conveyance. Time is of the essence of each term of this Agreement.
11.08 WAIVERS. Except as herein otherwise expressly provided, no waiver by a party of any breach of this Agreement or of any warranty or representation hereunder shall be deemed to be a waiver of any other breach not of the same or similar nature, and no acceptance of payment or performance by a party after any breach by any other party shall be deemed to be a waiver of any breach of this Agreement or of any representation or warranty hereunder by such other party whether or not the first party knows of such breach at the time
it accepts such payment or performance. No failure or delay by a party to exercise any right it may have by reason of the default of the other party shall operate as a waiver of default or modification of this Agreement or shall prevent the exercise of any right by the first party while the other party continues to be in default.
11.09 SEVERABILITY. If any term or provision of this Agreement is determined to be invalid or unenforceable, the remaining terms and provisions shall not be affected thereby and shall remain in full force and effect to the maximum extent permitted by law.
11.10 COUNTERPART EXECUTION. This Agreement may be executed in several
counterparts, each of which shall be fully effective as an original and all of which together shall constitute one and the same instrument.
11.11 DUTY OF CONFIDENTIALITY. Buyer and Seller represent and warrant that each shall keep all information obtained from the other, or related to or connected with the Property, the other party, or this transaction, confidential and will not disclose any such information to any person or entity (other than its accountants, lawyers and consultants) without obtaining the prior written consent of the other party, which consent shall not be unreasonably withheld.
11.12 FORCE MAJEURE. The performance of Seller's obligations under this Agreement shall be extended by any delay caused by any of the following events (each a "Force Majeure Event"): any acts of god, casualty, damage, destruction, fire, flood, severe weather, war, riot, civil unrest, earthquake, strike, lockout, unavailability of building materials or supplies, embargoes, epidemics, labor unrest, governmental action or inaction or any other event beyond Seller's control. The financial condition of Seller shall not be deemed to be a Force Majeure Event. Within five (5) days after the occurrence of a Force Majeure Event, Seller shall provide Buyer with a written notice which describes the Force Majeure Event in detail and sets forth the number of calendar days of extension caused or estimated to be caused by such Force Majeure Event.
11.13 WAIVER OF JURY TRIAL. The parties hereto waive any right to have a jury trial for any dispute under this Agreement and/or the Work Letter Agreement.
ARTICLE XII
ARBITRATION
Issues relating to specific performance shall be determined by the Superior Court for the County where the Property is located. Any other dispute between the parties hereto may be determined by arbitration. Whenever any such dispute arises between the parties hereto in connection with Improvements, Work Letter Agreement or this Agreement and either party gives written notice to the other that such dispute shall be determined by arbitration, then within thirty (30) days after the giving of the notice, both parties shall select and hire one member of the panel of Judicial Arbitration and Mediation Services, Inc. ("Judge"). The Judge shall be a retired judge experienced with commercial real property lease disputes in the County in which Improvements are located. As soon as reasonably possible, but no later than forty (40) days after the Judge is selected, the Judge shall meet with the parties at a location reasonably acceptable to Seller, Buyer and the Judge. The Judge shall determine the
matter within ten (10) days after any such meeting. Each party shall pay half the costs and expenses of the Judge.
If Judicial Arbitration and Mediation Services, Inc. ceases to exist, and either party gives written notice to the other that a dispute shall be determined by arbitration, then, unless agreed otherwise in writing by the parties, all arbitrations hereunder shall be governed by California Code of Civil Procedure Sections 1280 through 1294.2, inclusive, as amended or recodified from time to time, to the extent they do not conflict with this Article. Any determination by arbitration hereunder may be entered in any court having jurisdiction. Within ten (10) days after delivery of such notice, each party shall select an arbitrator with at least five (5) years' experience in commercial real property build-to-suit transactions in the County in which the Property is located and advise the other party of its selection in writing. The two arbitrators so named shall meet promptly and seek to reach a conclusion as to the matter to be determined, and their decision, rendered in writing and delivered to the parties hereto, shall be final and binding on the parties. If said arbitrators shall fail to reach a decision within ten (10) days after the appointment of the second arbitrator, said arbitrators shall name a third arbitrator within the succeeding period of five (5) days. Said three arbitrators thereafter shall meet promptly for consideration of the matter to be determined and the decision of any two (2) of said arbitrators rendered in writing and delivered to the parties hereto shall be final and binding on the parties.
If either party fails to appoint an arbitrator within the prescribed time, and/or if either party fails to appoint an arbitrator with the qualifications specified herein, and/or if any two arbitrators are unable to agree upon the appointment of a third arbitrator within the prescribed time, then the Superior Court of the County in which the Property is located may, upon request of any party, appoint such arbitrators, as the case may be, and the arbitrators as a group shall have the same power and authority to render a final and binding decision as where the appointments are made pursuant to the provisions of the preceding paragraph. All arbitrators shall be individuals with at least five (5) years' experience negotiating or arbitrating disputes arising out of commercial real property build-to-suit transactions in the County where the Property is located. All determinations by arbitration hereunder shall be binding upon Seller and Buyer.
NOTICE: BY INITIALLING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW
AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE
LITIGATED IN A COURT OR JURY TRIAL. BY INITIALLING IN THE SPACE BELOW
YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS
THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS
PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION
PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND
AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE
"ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION.
BUYER SELLER /s/ STEPHEN R. LARSON /s/ JB ------------------------------------- ---------------------------------------- /s/ R. W. STEVENSON /s/ GEORGE M. JONES ------------------------------------- ---------------------------------------- |
SELLER AND BUYER HAVE CAREFULLY READ AND REVIEWED THIS AGREEMENT AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS AGREEMENT, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS AGREEMENT IS EXECUTED, THE TERMS OF THIS AGREEMENT ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF SELLER AND BUYER WITH RESPECT TO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Agreement this 13th day of February, 1997.
SELLER:
THE NEWHALL LAND AND FARMING COMPANY
(a California Limited Partnership)
By: NEWHALL MANAGEMENT LIMITED PARTNERSHIP,
A California Limited Partnership
its Managing General Partner
By: NEWHALL MANAGEMENT CORPORATION,
A California Corporation
its Managing General Partner
By: /s/ THOMAS DIERCKMAN --------------------------------- Its: Senior Vice President By: /s/ JAMES BACKER --------------------------------- Its: Vice President |
BUYER:
TA MFG COMPANY, a California corporation
By: /s/ GEORGE M. JONES --------------------------------- Its: President |
ESTERLINE TECHNOLOGIES CORP., a corporation
By: /s/ STEPHEN R. LARSON --------------------------------- Its: Group VP By: /s/ R. W. STEVENSON --------------------------------- Its: EVP & CFO |
Exhibit 11
ESTERLINE TECHNOLOGIES CORPORATION
(In thousands, except per share amounts)
Computation of Earnings (Loss) Per Share - Basic
2005 2004 2003 2002 2001 ------- ------- ------- -------- ------- Income From Continuing Operations $51,034 $29,375 $28,147 $ 28,477 $46,246 Income (Loss) From Discontinued Operations, Net of Tax 6,992 10,208 (5,312) (25,264) (9,294) ------- ------- ------- -------- ------- Earnings Before Cumulative Effect of a Change in Accounting Principle 58,026 39,583 22,835 3,213 36,952 Cumulative Effect of a Change in Accounting Principle, Net of Tax -- -- -- (7,574) (403) ------- ------- ------- -------- ------- Net Earnings (Loss) $58,026 $39,583 $22,835 $ (4,361) $36,549 ======= ======= ======= ======== ======= Weighted Average Number of Shares Outstanding - Basic 24,927 21,195 20,900 20,751 19,641 ======= ======= ======= ======== ======= Earnings (Loss) Per Share - Basic: Continuing operations $ 2.05 $ 1.39 $ 1.35 $ 1.37 $ 2.35 Discontinued operations .28 .48 (.26) (1.22) (.47) ------- ------- ------- -------- ------- Earnings per share before cumulative effect of a change in accounting principle 2.33 1.87 1.09 .15 1.88 Cumulative effect of a change in accounting principle -- -- -- (.36) (.02) ------- ------- ------- -------- ------- Earnings (Loss) Per Share - Basic $ 2.33 $ 1.87 $ 1.09 $ (.21) $ 1.86 ======= ======= ======= ======== ======= |
ESTERLINE TECHNOLOGIES CORPORATION
(In thousands, except per share amounts)
Computation of Earnings (Loss) Per Share - Diluted
2005 2004 2003 2002 2001 ------- ------- ------- -------- ------- Income From Continuing Operations $51,034 $29,375 $28,147 $ 28,477 $46,246 Income (Loss) From Discontinued Operations, Net of Tax 6,992 10,208 (5,312) (25,264) (9,294) ------- ------- ------- -------- ------- Earnings Before Cumulative Effect of a Change in Accounting Principle 58,026 39,583 22,835 3,213 36,952 Cumulative Effect of a Change in Accounting Principle, Net of Tax -- -- -- (7,574) (403) ------- ------- ------- -------- ------- Net Earnings (Loss) $58,026 $39,583 $22,835 $ (4,361) $36,549 ======= ======= ======= ======== ======= Weighted Average Number of Shares Outstanding 24,927 21,195 20,900 20,751 19,641 Net Shares Assumed to be Issued for Stock Options 375 344 205 270 373 ------- ------- ------- -------- ------- Weighted Average Number of Shares and Equivalent Shares Outstanding - Diluted 25,302 21,539 21,105 21,021 20,014 ======= ======= ======= ======== ======= Earnings (Loss) Per Share - Diluted: Continuing operations $ 2.02 $ 1.37 $ 1.33 $ 1.35 $ 2.31 Discontinued operations .27 .47 (.25) (1.20) (.46) ------- ------- ------- -------- ------- Earnings per share before cumulative effect of a change in accounting principle 2.29 1.84 1.08 .15 1.85 Cumulative effect of a change in accounting principle -- -- -- (.36) (.02) ------- ------- ------- -------- ------- |
2005 2004 2003 2002 2001 ------- ------- ------- -------- ------- Earnings (Loss) Per Share - Diluted $ 2.29 $ 1.84 $ 1.08 $ (.21) $ 1.83 ======= ======= ======= ======== ======= Earnings (Loss) Per Share - Basic $ 2.33 $ 1.87 $ 1.09 $ (.21) $ 1.86 ======= ======= ======= ======== ======= Dilutive Effect Per Share $ .04 $ .03 $ .01 $ -- $ .03 ======= ======= ======= ======== ======= |
Exhibit 12.1
ESTERLINE TECHNOLOGIES CORPORATION
(In thousands)
Statement of Computation of Ratio of Earnings to Fixed Charges
2005 2004 2003 2002 2001 ------- ------- ------- ------- ------- Income from continuing operations before income taxes $67,670 $38,989 $40,605 $37,588 $72,835 Fixed charges (1) Interest expense 18,159 17,336 11,991 7,117 7,658 Amortization of debt issuance cost 56 56 703 167 178 Interest included in rental expense 3,137 2,894 2,398 2,164 2,035 ------- ------- ------- ------- ------- Total 21,352 20,286 15,092 9,448 9,871 Earnings (2) $89,022 $59,275 $55,697 $47,036 $82,706 Ratio of earnings available to cover fixed charges 4.2 2.9 3.7 5.0 8.4 |
(1) Fixed charges consist of interest on indebtedness and amortization of debt issuance cost plus that portion of lease rental expense representative of the interest factor.
(2) Earnings consist of income from continuing operations before income taxes plus fixed charges.
For Fiscal Years | 2005 | 2004 | ||||||
Operating Results
|
||||||||
Net sales
|
$ | 835,403 | $ | 613,610 | ||||
Segment earnings
|
105,799 | 67,890 | ||||||
Income from continuing operations
|
51,034 | 29,375 | ||||||
Income from discontinued operations, net of tax
|
6,992 | 10,208 | ||||||
Net earnings
|
58,026 | 39,583 | ||||||
|
||||||||
Earnings per share diluted:
|
||||||||
Continuing operations
|
2.02 | 1.37 | ||||||
Discontinued operations
|
.27 | .47 | ||||||
Earnings per share
|
2.29 | 1.84 | ||||||
|
||||||||
Weighted average shares outstanding diluted
|
25,302 | 21,539 | ||||||
|
||||||||
Financial Position
|
||||||||
Total assets
|
$ | 1,115,248 | $ | 935,348 | ||||
Property, plant and equipment, net
|
138,214 | 145,135 | ||||||
Long-term debt, net
|
175,682 | 249,056 | ||||||
Shareholders equity
|
620,864 | 461,028 | ||||||
1
2
3
Increase (Decrease) | ||||||||||||
Dollars In Thousands | From Prior Year | 2005 | 2004 | |||||||||
Avionics & Controls
|
24.8 | % | $ | 261,550 | $ | 209,498 | ||||||
Sensors & Systems
|
76.8 | % | 319,539 | 180,768 | ||||||||
Advanced Materials
|
13.9 | % | 254,314 | 223,344 | ||||||||
Total
|
$ | 835,403 | $ | 613,610 | ||||||||
4
5
6
7
Increase (Decrease) | ||||||||||||
Dollars In Thousands | From Prior Year | 2004 | 2003 | |||||||||
Avionics & Controls
|
5.7 | % | $ | 209,498 | $ | 198,249 | ||||||
Sensors & Systems
|
34.7 | % | 180,768 | 134,228 | ||||||||
Advanced Materials
|
3.1 | % | 223,344 | 216,655 | ||||||||
Total
|
$ | 613,610 | $ | 549,132 | ||||||||
8
9
10
11
12
13
2005 | 2004 | |||||||
Principal assumptions as of fiscal year end:
|
||||||||
Discount Rate
|
5.5 | % | 6.0 | % | ||||
Rate of increase in future compensation levels
|
4.5 | % | 4.5 | % | ||||
Assumed long-term rate of return on plan assets
|
8.5 | % | 8.5 | % |
14
15
Less than | 1-3 | 4-5 | After 5 | |||||||||||||||||
In Thousands | Total | 1 year | years | years | years | |||||||||||||||
Long-term debt
|
$ | 246,616 | $ | 69,922 | $ | 1,227 | $ | 412 | $ | 175,055 | ||||||||||
Credit facilities
|
2,031 | 2,031 | | | | |||||||||||||||
Operating lease obligations
|
57,312 | 9,257 | 16,297 | 14,186 | 17,572 | |||||||||||||||
Purchase obligations
|
||||||||||||||||||||
Not recorded on balance sheet
|
93,501 | 75,958 | 14,233 | 3,310 | | |||||||||||||||
Recorded on balance sheet
|
160,568 | 160,568 | | | | |||||||||||||||
Total contractual obligations
|
$ | 560,028 | $ | 317,736 | $ | 31,757 | $ | 17,908 | $ | 192,627 | ||||||||||
16
Long-Term Debt Fixed Rate | Interest Rate Swap | |||||||||||||||||||
Principal | Average | Notional | Average | Average | ||||||||||||||||
Maturing in: | Amount | Rates | Amount | Pay Rate (1) | Receive Rate | |||||||||||||||
2006
|
$ | 70,934 | 6.62 | % | $ | | * | 7.75 | % | |||||||||||
2007
|
763 | 5.79 | % | | * | 7.75 | % | |||||||||||||
2008
|
464 | 7.20 | % | | * | 7.75 | % | |||||||||||||
2009
|
390 | 7.08 | % | | * | 7.75 | % | |||||||||||||
2010
|
22 | 7.18 | % | | * | 7.75 | % | |||||||||||||
Thereafter
|
175,055 | 7.75 | % | 75,000 | * | 7.75 | % | |||||||||||||
Total
|
$ | 247,628 | $ | 75,000 | ||||||||||||||||
|
||||||||||||||||||||
Fair Value at
10/28/2005
|
$ | 252,330 | $ | (1,012 | ) |
(1) | The average pay rate is LIBOR plus 2.56%. |
17
Long-Term Debt Fixed Rate | Interest Rate Swap | |||||||||||||||||||
Principal | Average | Notional | Average | Average | ||||||||||||||||
Maturing in: | Amount | Rates | Amount | Pay Rate (1) | Receive Rate | |||||||||||||||
2005
|
$ | 1,031 | 7.40 | % | $ | | * | 7.75 | % | |||||||||||
2006
|
30,763 | 6.40 | % | | * | 7.75 | % | |||||||||||||
2007
|
502 | 7.00 | % | | * | 7.75 | % | |||||||||||||
2008
|
438 | 7.00 | % | | * | 7.75 | % | |||||||||||||
2009
|
40,437 | 6.80 | % | | * | 7.75 | % | |||||||||||||
Thereafter
|
175,147 | 7.75 | % | 75,000 | * | 7.75 | % | |||||||||||||
Total
|
$ | 248,318 | $ | 75,000 | ||||||||||||||||
|
||||||||||||||||||||
Fair Value at
10/29/2004
|
$ | 271,069 | $ | 1,769 |
(1) | The average pay rate is LIBOR plus 2.56%. |
18
Euro | U.K. Pound | |||||||
Firmly Committed | Firmly Committed | |||||||
Sales Contracts | Sales Contracts | |||||||
Fiscal Years | United States Dollar | United States Dollar | ||||||
2006
|
$ | 26,883 | $ | 15,705 | ||||
2007
|
6,153 | 2,072 | ||||||
2008
|
2,094 | 402 | ||||||
2009
|
| 2,909 | ||||||
2010
|
| 46 | ||||||
Total
|
$ | 35,130 | $ | 21,134 | ||||
19
United States Dollar | ||||||||
Fiscal Years | Notional Amount | Avg. Contract Rate | ||||||
2006
|
$ | 17,800 | 1.266 | |||||
2007
|
2,090 | 1.244 | ||||||
Total
|
$ | 19,890 | ||||||
|
||||||||
Fair Value at 10/28/2005
|
$ | (501 | ) |
United States Dollar | ||||||||
Fiscal Years | Notional Amount | Avg. Contract Rate | ||||||
2006
|
$ | 16,370 | 1.824 | |||||
2007
|
2,240 | 1.800 | ||||||
Total
|
$ | 18,610 | ||||||
|
||||||||
Fair Value at 10/28/2005
|
$ | (433 | ) |
1 | The Company has no derivative contracts maturing after fiscal 2007. |
20
Euro | U.K. Pound | |||||||
Firmly Committed | Firmly Committed | |||||||
Sales Contracts | Sales Contracts | |||||||
Fiscal Years | United States Dollar | United States Dollar | ||||||
2005
|
$ | 18,199 | $ | 10,816 | ||||
2006
|
5,205 | 101 | ||||||
2007
|
5,452 | 149 | ||||||
2008
|
3 | | ||||||
2009
|
2 | | ||||||
Total
|
$ | 28,861 | $ | 11,066 | ||||
21
United States Dollar | ||||||||
Fiscal Years | Notional Amount | Avg. Contract Rate | ||||||
2005
|
$ | 13,340 | 1.204 | |||||
2006
|
1,700 | 1.218 | ||||||
Total
|
$ | 15,040 | ||||||
|
||||||||
Fair Value
at 10/29/2004
|
$ | 855 |
United States Dollar | ||||||||
Fiscal Years | Notional Amount | Avg. Contract Rate | ||||||
2005
|
$ | 10,575 | 1.782 | |||||
2006
|
900 | 1.754 | ||||||
Total
|
$ | 11,475 | ||||||
|
||||||||
Fair Value
at 10/29/2004
|
$ | 241 |
1 | The Company has no derivative contracts maturing after fiscal 2006. |
22
23
24
25
26
27
For Fiscal Years | 2005 | 2004 | ||||||||||||||
High | Low | High | Low | |||||||||||||
Quarter
|
||||||||||||||||
First
|
$ | 36.62 | $ | 28.70 | $ | 29.55 | $ | 21.71 | ||||||||
Second
|
36.52 | 29.20 | 29.80 | 23.00 | ||||||||||||
Third
|
43.01 | 31.60 | 31.70 | 22.52 | ||||||||||||
Fourth
|
44.27 | 35.85 | 34.19 | 27.83 | ||||||||||||
28
For Fiscal Years | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Operating Results
1
|
||||||||||||||||||||
Net sales
|
$ | 835,403 | $ | 613,610 | $ | 549,132 | $ | 421,706 | $ | 413,220 | ||||||||||
Cost of sales
|
573,453 | 418,590 | 376,931 | 285,900 | 261,422 | |||||||||||||||
Selling, general
and administrative
|
137,426 | 118,746 | 105,301 | 79,085 | 67,586 | |||||||||||||||
Research, development
and engineering
|
42,238 | 25,856 | 17,782 | 13,829 | 12,443 | |||||||||||||||
Other (income) expense
|
514 | (509 | ) | | | | ||||||||||||||
Loss (gain) on sale
of product line
|
| (3,434 | ) | 66 | | | ||||||||||||||
Insurance settlement
|
| | | | (4,631 | ) | ||||||||||||||
Loss (gain) on derivative
financial instruments
|
| | (2,676 | ) | 1 | (786 | ) | |||||||||||||
Interest income
|
(4,057 | ) | (1,964 | ) | (868 | ) | (1,814 | ) | (3,307 | ) | ||||||||||
Interest expense
|
18,159 | 17,336 | 11,991 | 7,117 | 7,658 | |||||||||||||||
Income from
continuing operations
before income taxes
|
67,670 | 38,989 | 40,605 | 37,588 | 72,835 | |||||||||||||||
|
||||||||||||||||||||
Income tax expense
|
16,301 | 9,592 | 12,458 | 9,111 | 26,589 | |||||||||||||||
Income from
continuing operations
|
51,034 | 29,375 | 28,147 | 28,477 | 46,246 | |||||||||||||||
Income (loss) from
discontinued
operations, net of tax
|
6,992 | 10,208 | (5,312 | ) | (25,264 | ) | (9,294 | ) | ||||||||||||
Cumulative effect of a
change in
accounting principle
|
| | | (7,574 | ) | (403 | ) | |||||||||||||
Net earnings (loss)
|
58,026 | 39,583 | 22,835 | (4,361 | ) | 36,549 | ||||||||||||||
|
||||||||||||||||||||
Earnings (loss) per
share diluted:
|
||||||||||||||||||||
Continuing
operations
|
$ | 2.02 | $ | 1.37 | $ | 1.33 | $ | 1.35 | $ | 2.31 | ||||||||||
Discontinued
operations
|
.27 | .47 | (.25 | ) | (1.20 | ) | (.46 | ) | ||||||||||||
Cumulative effect
of a change in
accounting principle
|
| | | (.36 | ) | (.02 | ) | |||||||||||||
Earnings (loss) per
share diluted
|
2.29 | 1.84 | 1.08 | (.21 | ) | 1.83 | ||||||||||||||
29
For Fiscal Years | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Financial Structure
|
||||||||||||||||||||
Total assets
|
$ | 1,115,248 | $ | 935,348 | $ | 802,827 | $ | 573,678 | $ | 561,306 | ||||||||||
Long-term debt, net
|
175,682 | 249,056 | 246,792 | 102,133 | 102,125 | |||||||||||||||
Shareholders equity
|
620,864 | 461,028 | 396,069 | 357,164 | 351,793 | |||||||||||||||
Weighted average shares
outstanding diluted
|
25,302 | 21,539 | 21,105 | 21,021 | 20,014 | |||||||||||||||
1 | Operating results for 2005 through 2001 and balance sheet items for 2003 through 2002 reflect the segregation of continuing operations from discontinued operations. See Note 2 to the Consolidated Financial Statements. |
For Fiscal Years | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Other Selected Data
2
|
||||||||||||||||||||
EBITDA from continuing
operations
|
$ | 119,326 | $ | 83,497 | $ | 73,984 | $ | 61,732 | $ | 82,214 | ||||||||||
Stock option expense
(income)
|
2,799 | 4,326 | 1,428 | 4,711 | (6,385 | ) | ||||||||||||||
Capital expenditures
|
23,730 | 21,800 | 16,764 | 15,008 | 15,319 | |||||||||||||||
Interest expense
|
18,159 | 17,336 | 11,991 | 7,117 | 7,658 | |||||||||||||||
Depreciation and
amortization from
continuing operations
|
34,241 | 28,753 | 23,438 | 14,129 | 16,830 |
2 | EBITDA from continuing operations is a measurement not calculated in accordance with GAAP. We define EBITDA from continuing operations as operating earnings from continuing operations plus stock option expense and depreciation and amortization (excluding amortization of debt issuance cost). We do not intend EBITDA from continuing operations to represent cash flows from continuing operations or any other items calculated in accordance with GAAP, or as an indicator of Esterlines operating performance. Our definition of EBITDA from continuing operations may not be comparable with EBITDA from continuing operations as defined by other companies. We believe EBITDA is commonly used by financial analysts and others in the aerospace and defense industries and thus provides useful information to investors. Our management and certain financial creditors use EBITDA as one measure of our leverage capacity and debt servicing ability, and is shown here with respect to Esterline for comparative purposes. EBITDA is not necessarily indicative of amounts that may be available for discretionary uses by us. The following table reconciles operating earnings from continuing operations to EBITDA from continuing operations. |
30
For Fiscal Years | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Operating earnings
from continuing
operations
|
$ | 82,286 | $ | 50,418 | $ | 49,118 | $ | 42,892 | $ | 71,769 | ||||||||||
Stock option expense
|
2,799 | 4,326 | 1,428 | 4,711 | (6,385 | ) | ||||||||||||||
Depreciation and
amortization from
continuing
operations
|
34,241 | 28,753 | 23,438 | 14,129 | 16,830 | |||||||||||||||
EBITDA from
continuing
operations
|
$ | 119,326 | $ | 83,497 | $ | 73,984 | $ | 61,732 | $ | 82,214 | ||||||||||
31
For Each of the Three Fiscal Years | ||||||||||||
in the Period Ended October 28, 2005 | 2005 | 2004 | 2003 | |||||||||
Net Sales
|
$ | 835,403 | $ | 613,610 | $ | 549,132 | ||||||
Cost of Sales
|
573,453 | 418,590 | 376,931 | |||||||||
|
261,950 | 195,020 | 172,201 | |||||||||
Expenses
|
||||||||||||
Selling, general and administrative
|
137,426 | 118,746 | 105,301 | |||||||||
Research, development
and engineering
|
42,238 | 25,856 | 17,782 | |||||||||
Total Expenses
|
179,664 | 144,602 | 123,083 | |||||||||
Operating
Earnings From Continuing Operations
|
82,286 | 50,418 | 49,118 | |||||||||
Other (income) expense
|
514 | (509 | ) | | ||||||||
Loss (gain) on sale of product line
|
| (3,434 | ) | 66 | ||||||||
Gain on derivative
financial instruments
|
| | (2,676 | ) | ||||||||
Interest income
|
(4,057 | ) | (1,964 | ) | (868 | ) | ||||||
Interest expense
|
18,159 | 17,336 | 11,991 | |||||||||
Other Expense, Net
|
14,616 | 11,429 | 8,513 | |||||||||
Income From
Continuing Operations Before Income Taxes
|
67,670 | 38,989 | 40,605 | |||||||||
Income Tax Expense
|
16,301 | 9,592 | 12,458 | |||||||||
Income From
Continuing Operations Before Minority Interest
|
51,369 | 29,397 | 28,147 | |||||||||
Minority Interest
|
(335 | ) | (22 | ) | | |||||||
Income From Continuing Operations
|
51,034 | 29,375 | 28,147 | |||||||||
Income
(Loss) From Discontinued Operations, Net of Tax
|
6,992 | 10,208 | (5,312 | ) | ||||||||
Net Earnings
|
$ | 58,026 | $ | 39,583 | $ | 22,835 | ||||||
32
For Each of the Three Fiscal Years | ||||||||||||
in the Period Ended October 28, 2005 | 2005 | 2004 | 2003 | |||||||||
Earnings
(Loss) Per Share Basic:
|
||||||||||||
Continuing operations
|
$ | 2.05 | $ | 1.39 | $ | 1.35 | ||||||
Discontinued operations
|
.28 | .48 | (.26 | ) | ||||||||
|
||||||||||||
Earnings Per
Share Basic
|
$ | 2.33 | $ | 1.87 | $ | 1.09 | ||||||
|
||||||||||||
Earnings
(Loss) Per Share Diluted:
|
||||||||||||
Continuing operations
|
$ | 2.02 | $ | 1.37 | $ | 1.33 | ||||||
Discontinued operations
|
.27 | .47 | (.25 | ) | ||||||||
|
||||||||||||
Earnings Per
Share Diluted
|
$ | 2.29 | $ | 1.84 | $ | 1.08 | ||||||
33
As of October 28, 2005 and October 29, 2004 | 2005 | 2004 | ||||||
Assets
|
||||||||
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 118,304 | $ | 29,479 | ||||
Cash in escrow
|
11,918 | 8,511 | ||||||
Short-term investments
|
62,656 | | ||||||
Accounts receivable, net of allowances
of $4,462 and $3,687
|
149,751 | 132,206 | ||||||
Inventories
|
130,469 | 119,054 | ||||||
Deferred income tax benefits
|
26,868 | 23,499 | ||||||
Prepaid expenses
|
7,533 | 9,441 | ||||||
Other current assets
|
| 435 | ||||||
Total Current Assets
|
507,499 | 322,625 | ||||||
|
||||||||
Property, Plant and Equipment
|
||||||||
Land
|
15,869 | 17,341 | ||||||
Buildings
|
79,219 | 80,998 | ||||||
Machinery and equipment
|
187,022 | 177,098 | ||||||
|
282,110 | 275,437 | ||||||
Accumulated depreciation
|
143,896 | 130,302 | ||||||
|
138,214 | 145,135 | ||||||
Other Non-Current Assets
|
||||||||
Goodwill
|
261,167 | 247,817 | ||||||
Intangibles, net
|
166,118 | 169,876 | ||||||
Debt issuance costs, net of accumulated
amortization of $1,602 and $928
|
5,144 | 5,818 | ||||||
Deferred income tax benefits
|
13,320 | 11,216 | ||||||
Other assets
|
23,786 | 32,861 | ||||||
Total Assets
|
$ | 1,115,248 | $ | 935,348 | ||||
34
As of October 28, 2005 and October 29, 2004 | 2005 | 2004 | ||||||
Liabilities and Shareholders Equity
|
||||||||
|
||||||||
Current Liabilities
|
||||||||
Accounts payable
|
$ | 41,453 | $ | 37,867 | ||||
Accrued liabilities
|
119,115 | 97,038 | ||||||
Credit facilities
|
2,031 | 6,977 | ||||||
Current maturities of long-term debt
|
70,934 | 1,031 | ||||||
Federal and foreign income taxes
|
8,798 | 6,678 | ||||||
Total Current Liabilities
|
242,331 | 149,591 | ||||||
|
||||||||
Long-Term Liabilities
|
||||||||
Long-term debt, net of current maturities
|
175,682 | 249,056 | ||||||
Deferred income taxes
|
46,421 | 43,443 | ||||||
Other liabilities
|
27,237 | 29,852 | ||||||
|
||||||||
Commitments and Contingencies
|
| | ||||||
|
||||||||
Minority Interest
|
2,713 | 2,378 | ||||||
|
||||||||
Shareholders Equity
|
||||||||
Common stock, par value $.20 per share,
authorized 60,000,000 shares,
issued and outstanding 25,319,892 and 21,319,698 shares |
5,064 | 4,264 | ||||||
Additional paid-in capital
|
260,095 | 144,879 | ||||||
Retained earnings
|
345,370 | 287,344 | ||||||
Accumulated other comprehensive income
|
10,335 | 24,541 | ||||||
Total Shareholders Equity
|
620,864 | 461,028 | ||||||
Total Liabilities and Shareholders Equity
|
$ | 1,115,248 | $ | 935,348 | ||||
35
For Each of the Three Fiscal Years | ||||||||||||
in the Period Ended October 28, 2005 | 2005 | 2004 | 2003 | |||||||||
Cash Flows Provided (Used)
by Operating Activities
|
||||||||||||
Net earnings
|
$ | 58,026 | $ | 39,583 | $ | 22,835 | ||||||
Minority interest
|
335 | 22 | | |||||||||
Depreciation and amortization
|
35,308 | 31,145 | 26,215 | |||||||||
Deferred income tax
|
(4,501 | ) | 3,264 | 9,235 | ||||||||
Stock-based compensation
|
2,799 | 4,326 | 1,428 | |||||||||
Loss (gain) on disposal and holding period
loss on discontinued operations
|
| (12,521 | ) | 9,282 | ||||||||
Gain on sale of discontinued operations
|
(9,456 | ) | | | ||||||||
Loss on sale of building
|
59 | | | |||||||||
Gain on sale of land
|
| (892 | ) | | ||||||||
Loss (gain) on sale of product line
|
| (3,434 | ) | 66 | ||||||||
Gain on sale of short-term investments
|
(1,397 | ) | | | ||||||||
Working capital changes, net of
effect of acquisitions
|
||||||||||||
Accounts receivable
|
(17,645 | ) | (9,032 | ) | (9,516 | ) | ||||||
Inventories
|
(11,636 | ) | (9,095 | ) | 6,322 | |||||||
Prepaid expenses
|
1,702 | (659 | ) | 117 | ||||||||
Other current assets
|
435 | | | |||||||||
Accounts payable
|
4,166 | 2,600 | (4,396 | ) | ||||||||
Accrued liabilities
|
19,916 | 10,240 | 4,926 | |||||||||
Federal and foreign income taxes
|
5,169 | 8,951 | (923 | ) | ||||||||
Other liabilities
|
(6,414 | ) | 4,359 | | ||||||||
Other, net
|
(454 | ) | (5,530 | ) | 197 | |||||||
|
76,412 | 63,327 | 65,788 | |||||||||
|
||||||||||||
Cash Flows Provided (Used)
by Investing Activities
|
||||||||||||
Purchases of capital assets
|
(23,776 | ) | (22,126 | ) | (17,130 | ) | ||||||
Proceeds from sale of discontinued operations
|
21,421 | 10,000 | 3,850 | |||||||||
Proceeds from sale of building
|
2,319 | | | |||||||||
Proceeds from sale of product line
|
| 3,475 | 5,630 | |||||||||
Proceeds from sale of land
|
| 1,654 | | |||||||||
Escrow deposit
|
(4,207 | ) | (12,500 | ) | (1,036 | ) | ||||||
Proceeds from sale of capital assets
|
2,312 | 778 | 766 | |||||||||
Purchase of short-term investments
|
(173,273 | ) | | (12,797 | ) | |||||||
Proceeds from sale of short-term investments
|
112,014 | 12,797 | | |||||||||
Acquisitions of businesses,
net of cash acquired
|
(28,261 | ) | (138,811 | ) | (111,735 | ) | ||||||
|
(91,451 | ) | (144,733 | ) | (132,452 | ) | ||||||
36
For Each of the Three Fiscal Years | ||||||||||||
in the Period Ended October 28, 2005 | 2005 | 2004 | 2003 | |||||||||
Cash Flows Provided (Used)
by Financing Activities
|
||||||||||||
Proceeds provided by stock issuance
under employee stock plans
|
4,727 | 2,807 | 2,424 | |||||||||
Proceeds provided by sale of common stock
|
108,490 | | | |||||||||
Net change in credit facilities
|
(4,829 | ) | 4,122 | 2,279 | ||||||||
Repayment of long-term debt, net
|
(3,302 | ) | (29,429 | ) | (732 | ) | ||||||
Debt and other issuance costs
|
| (268 | ) | (7,735 | ) | |||||||
Proceeds from note issuance
|
| | 175,000 | |||||||||
|
105,086 | (22,768 | ) | 171,236 | ||||||||
|
||||||||||||
Effect of foreign exchange rates on cash
|
(1,222 | ) | 2,290 | 4,280 | ||||||||
|
||||||||||||
Net increase (decrease) in
cash and cash equivalents
|
88,825 | (101,884 | ) | 108,852 | ||||||||
Cash and
cash equivalents beginning of year
|
29,479 | 131,363 | 22,511 | |||||||||
Cash and
cash equivalents end of year
|
$ | 118,304 | $ | 29,479 | $ | 131,363 | ||||||
|
||||||||||||
Supplemental Cash Flow Information
|
||||||||||||
Cash paid for interest
|
$ | 16,610 | $ | 17,394 | $ | 6,945 | ||||||
Cash paid (refunded) for taxes
|
14,193 | (1,909 | ) | (558 | ) |
37
For Each of the Three Fiscal Years | ||||||||||||
in the Period Ended October 28, 2005 | 2005 | 2004 | 2003 | |||||||||
Common Stock, Par Value $.20 Per Share
|
||||||||||||
Beginning of year
|
$ | 4,264 | $ | 4,213 | $ | 4,157 | ||||||
Shares issued under stock option plans
|
64 | 51 | 56 | |||||||||
Shares issued under equity offering
|
736 | | | |||||||||
End of year
|
5,064 | 4,264 | 4,213 | |||||||||
|
||||||||||||
Additional Paid-in Capital
|
||||||||||||
Beginning of year
|
144,879 | 137,797 | 134,001 | |||||||||
Shares issued under stock option plans
|
4,663 | 2,756 | 2,368 | |||||||||
Shares issued under equity offering
|
107,754 | | | |||||||||
Stock-based compensation expense
|
2,799 | 4,326 | 1,428 | |||||||||
End of year
|
260,095 | 144,879 | 137,797 | |||||||||
|
||||||||||||
Retained Earnings
|
||||||||||||
Beginning of year
|
287,344 | 247,761 | 224,926 | |||||||||
Net earnings
|
58,026 | 39,583 | 22,835 | |||||||||
End of year
|
345,370 | 287,344 | 247,761 | |||||||||
|
||||||||||||
Accumulated Other Comprehensive Gain (Loss)
|
||||||||||||
Beginning of year
|
24,541 | 6,298 | (5,920 | ) | ||||||||
Change in fair value of derivative
financial instruments, net of tax
|
43 | 581 | 61 | |||||||||
Adjustment for supplemental executive
pension liability, net of tax
|
(75 | ) | (850 | ) | | |||||||
Foreign currency translation adjustment
|
(14,174 | ) | 18,512 | 12,157 | ||||||||
End of year
|
10,335 | 24,541 | 6,298 | |||||||||
Total Shareholders Equity
|
$ | 620,864 | $ | 461,028 | $ | 396,069 | ||||||
|
||||||||||||
Comprehensive Income
|
||||||||||||
Net earnings
|
$ | 58,026 | $ | 39,583 | $ | 22,835 | ||||||
Change in fair value of derivative
financial instruments, net of tax
|
43 | 581 | 61 | |||||||||
Adjustment for supplemental executive
pension liability, net of tax
|
(75 | ) | (850 | ) | | |||||||
Foreign currency translation adjustment
|
(14,174 | ) | 18,512 | 12,157 | ||||||||
Comprehensive Income
|
$ | 43,820 | $ | 57,826 | $ | 35,053 | ||||||
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
2005
2004
2003
$
58,026
$
39,583
$
22,835
1,862
2,906
1,061
(2,504
)
(1,784
)
(1,295
)
57,384
40,705
22,601
$
2.33
$
1.87
$
1.09
2.30
1.92
1.08
$
2.29
$
1.84
$
1.08
2.26
1.89
1.07
2005
2004
2003
45.3
%
47.1
%
48.5
%
4.48 4.60
%
3.12 3.84
%
2.88 3.94
%
69
58
58
In Thousands
2005
2004
2003
$
(52
)
$
3,261
$
789
(13
)
1,067
293
(39
)
2,194
496
7,031
8,014
(5,808
)
$
6,992
$
10,208
$
(5,312
)
In Thousands
2005
2004
$
64,377
$
58,736
45,798
43,326
20,294
16,992
$
130,469
$
119,054
Avionics &
Sensors &
Advanced
In Thousands
Controls
Systems
Materials
Total
$
57,608
$
44,380
$
83,365
$
185,353
20,505
38,997
100
59,602
2,862
2,862
$
78,113
$
86,239
$
83,465
$
247,817
20,180
3,611
23,791
(7,070
)
(7,070
)
(1,169
)
(2,202
)
(3,371
)
$
97,124
$
80,578
$
83,465
$
261,167
2005
2004
Weighted
Gross
Gross
Average Years
Carrying
Accum.
Carrying
Accum.
In Thousands
Useful Life
Amount
Amort.
Amount
Amort.
18
$
140,460
$
20,307
$
134,657
$
12,698
16
8,976
2,105
8,979
1,465
13
37,329
20,135
35,488
17,611
$
186,765
$
42,547
$
179,124
$
31,774
$
21,900
$
22,526
Fiscal Year
$
10,593
10,470
10,226
9,546
8,952
In Thousands
2005
2004
$
47,781
$
39,316
13,022
11,940
6,962
6,338
8,811
6,633
13,537
9,001
7,895
8,510
6,203
14,904
15,300
$
119,115
$
97,038
NOTE 7:
Other
Liabilities
Other liabilities at the end of fiscal 2005 and 2004 consisted of the following:
In Thousands
2005
2004
$
22,994
$
24,852
4,243
5,000
$
27,237
$
29,852
2005
2004
5.5
%
6.0
%
4.5
%
4.5
%
8.5
%
8.5
%
Actual
Plan assets allocation as of fiscal year end:
Target
2005
2004
6575
%
65.4
%
67.4
%
2535
%
32.2
%
32.6
%
0
%
2.4
%
100.0
%
100.0
%
In Thousands
2005
2004
2003
$
3,537
$
3,838
$
3,524
10,055
7,618
7,088
(11,851
)
(9,766
)
(8,416
)
77
18
19
18
1,260
468
1,596
$
3,019
$
2,177
$
3,887
In Thousands
2005
2004
$
166,328
$
114,196
(325
)
3,537
3,838
10,055
7,620
19,412
7,300
1,127
40,542
(9,805
)
(7,168
)
$
190,329
$
166,328
$
142,311
$
115,202
17,357
14,577
976
19,141
5,232
559
(10,412
)
(7,168
)
$
155,464
$
142,311
$
(34,865
)
$
(24,017
)
31,119
17,910
(31
)
(12
)
27
(31
)
$
(3,750
)
$
(6,150
)
$
16,129
$
17,647
(21,461
)
(25,277
)
(5,872
)
107
141
7,347
1,339
$
(3,750
)
$
(6,150
)
In Thousands
$
10,733
11,132
11,648
12,099
12,441
68,005
In Thousands
2005
2004
2003
$
13,726
$
7,835
$
10,063
2,657
1,000
600
4,419
284
2,230
20,802
9,119
12,893
(1,656
)
3,705
(1,435
)
(1,104
)
847
(180
)
(1,741
)
(4,079
)
1,180
(4,501
)
473
(435
)
$
16,301
$
9,592
$
12,458
In Thousands
2005
2004
2003
$
40,162
$
32,705
$
33,896
27,508
6,284
6,709
$
67,670
$
38,989
$
40,605
In Thousands
2005
2004
$
18,320
$
12,667
11,343
13,677
2,274
2,116
5,689
3,740
2,066
2,515
496
1,158
40,188
35,873
(17,083
)
(14,851
)
(29,338
)
(25,310
)
(4,440
)
(46,421
)
(44,601
)
$
(6,233
)
$
(8,728
)
2005
2004
2003
35.0
%
35.0
%
35.0
%
1.5
1.7
1.0
(6.6
)
(5.8
)
(0.7
)
(1.2
)
(1.7
)
(2.0
)
0.9
6.8
(5.6
)
(3.8
)
(4.4
)
(5.1
)
(2.5
)
(1.8
)
2.0
0.8
0.4
0.5
24.1
%
24.6
%
30.7
%
In Thousands
2005
2004
$
175,000
$
175,000
40,000
40,000
30,000
30,000
2,628
3,318
247,628
248,318
(1,012
)
1,769
70,934
1,031
$
175,682
$
249,056
In Thousands
Fiscal Year
$
70,934
763
464
390
22
175,055
$
247,628
2005
2004
Outstanding
Interest
Outstanding
Interest
In Thousands
Borrowings
Rate
Borrowings
Rate
$
$
5,000
3.46
%
2,031
2.76
%
1,977
2.72
%
$
2,031
$
6,977
In Thousands
Fiscal Year
$
9,257
8,809
7,488
7,291
6,895
17,572
$
57,312
2005
2004
2003
Weighted
Weighted
Weighted
Shares
Average
Shares
Average
Shares
Average
Subject to
Exercise
Subject to
Exercise
Subject to
Exercise
Option
Price
Option
Price
Option
Price
1,438,000
$
18.34
1,497,750
$
16.25
1,618,125
$
14.85
347,400
36.36
229,000
25.09
245,000
18.68
(340,050
)
14.93
(278,250
)
12.53
(264,000
)
8.83
(44,250
)
20.65
(10,500
)
21.99
(101,375
)
19.05
1,401,100
$
23.56
1,438,000
$
18.34
1,497,750
$
16.25
738,200
$
18.32
877,750
$
16.39
942,375
$
14.94
Options Outstanding
Options Exercisable
Weighted
Average
Weighted
Weighted
Range of
Remaining
Average
Average
Exercise Prices
Shares
Life (years)
Price
Shares
Price
11.38 15.82
316,000
4.47
$
13.79
284,000
$
13.56
17.90 19.65
293,200
6.25
18.73
180,200
18.76
19.88 23.85
301,500
5.83
22.28
204,500
21.60
26.24 34.30
303,000
8.38
30.32
69,500
26.97
34.38 38.90
187,400
9.59
38.74
In Thousands
As of June 3, 2005
$
8,079
2,151
9,001
2,082
5
11,088
1,526
17,166
40,010
6,571
4,317
$
29,122
In Thousands
As of August 27, 2004
$
50,977
24,380
30,117
2,235
4,300
4,721
41,373
13,720
14,123
56,441
4,259
205,273
20,631
2,192
20,144
12,511
2,356
$
147,439
In Thousands
As of June 11, 2003
$
16,838
13,020
42,677
2,799
1,428
46,904
7,191
22,919
487
107,359
7,840
4,934
$
94,585
In Thousands
2005
2004
2003
$
261,550
$
209,498
$
198,249
319,539
180,768
134,228
254,314
223,344
216,655
$
835,403
$
613,610
$
549,132
$
37,325
$
32,077
$
29,507
34,482
7,809
8,293
33,992
28,004
28,671
105,799
67,890
66,471
(23,513
)
(17,472
)
(17,353
)
(514
)
509
3,434
(66
)
2,676
4,057
1,964
868
(18,159
)
(17,336
)
(11,991
)
$
67,670
$
38,989
$
40,605
245,016
$
198,142
$
144,492
398,801
374,123
219,247
266,327
267,811
262,001
2
2
205,104
95,270
177,085
$
1,115,248
$
935,348
$
802,827
$
3,538
$
6,483
$
2,744
11,155
3,335
2,927
8,283
11,492
8,857
46
326
366
754
490
2,236
$
23,776
$
22,126
$
17,130
In Thousands
2005
2004
2003
$
6,972
$
5,525
$
4,964
14,311
10,337
5,794
12,469
12,394
11,982
141
1,452
2,444
1,415
1,437
1,031
$
35,308
$
31,145
$
26,215
1
Primarily cash, prepaid pension expense (see Note 8) and deferred tax assets (see Note 9).
In Thousands
2005
2004
2003
$
489,644
$
369,424
$
364,832
95,370
88,567
61,870
10,179
2,769
1,085
595,193
460,760
427,787
108,236
58,788
54,857
13,528
5,050
3,182
121,764
63,838
58,039
108,901
90,531
61,998
3,021
2,406
65
111,922
92,937
62,063
33,252
6,300
5,575
2,850
938
1,280
36,102
7,238
6,855
(29,578
)
(11,163
)
(5,612
)
$
835,403
$
613,610
$
549,132
In Thousands
2005
2004
2003
$
79,555
$
62,743
$
59,769
14,987
227
4,539
7,975
4,746
2,861
3,282
174
(698
)
$
105,799
$
67,890
$
66,471
$
569,000
$
432,365
$
448,780
140,049
197,431
42,828
190,090
202,411
133,309
11,005
7,871
825
$
910,144
$
840,078
$
625,742
1
Before corporate expense, shown on page 72.
2
Excludes corporate, shown on page 72.
2005
2004
2003
14
%
16
%
18
%
16
%
19
%
17
%
12
%
13
%
16
%
6
%
8
%
10
%
In Thousands, Except Per Share Amounts
Fiscal Year 2005
Fourth
Third
Second
First
$
224,146
$
209,873
$
211,592
$
189,792
69,619
65,693
68,538
58,100
15,366
11,859
2
13,726
10,083
24
3
(562
)
7,527
$
15,390
$
11,862
2
$
13,164
$
17,610
$
.61
$
.47
$
.55
$
.42
(.03
)
.31
$
.61
$
.47
$
.52
$
.73
$
.60
$
.46
$
.54
$
.41
(.02
)
.31
$
.60
$
.46
$
.52
$
.72
In Thousands, Except Per Share Amounts
Fiscal Year 2004
Fourth
Third
Second
First
$
190,346
$
147,424
$
146,474
$
129,366
61,982
45,862
48,584
38,592
14,381
5
5,336
9,426
232
4
8,498
576
960
174
$
22,879
5
$
5,912
$
10,386
$
406
4
$
.67
$
.25
$
.45
$
.01
.40
.03
.04
.01
$
1.07
$
.28
$
.49
$
.02
$
.66
$
.25
$
.44
$
.01
.39
.02
.04
.01
$
1.05
$
.27
$
.48
$
.02
1
The effects of stock options expense, net of tax, are included in income from continuing operations and presented below:
Fourth
Third
Second
First
$
881
$
(2,308
)
$
(941
)
$
442
$
(237
)
$
(1,737
)
$
474
$
(1,472
)
2
Included a $2.0 million reduction of previously estimated tax liabilities due to
the expiration of the statute of limitations and adjustments resulting from a reconciliation
of U.S. and non-U.S. tax returns to the provision for income taxes.
3
The sum of the quarterly per share amounts may not equal per share amounts reported
for year-to-date periods. This is due to changes in the number of weighted average shares
outstanding and the effects of rounding for each period.
4
Included $4.5 million in legal, severance and early retirement expense in the
Sensors & Systems segment. Included a $1.9 million reduction of previously estimated tax
liabilities associated with the receipt of a NOPA from the Internal Revenue Service.
5
Included a $3.4 million gain on the sale of a product line in the Sensors & Systems segment.
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
75,364
$
2,154
$
40,786
$
$
118,304
11,918
11,918
62,656
62,656
671
96,931
52,149
149,751
84,351
46,118
130,469
25,115
102
1,651
26,868
179
4,481
2,873
7,533
175,903
188,019
143,577
507,499
2,687
95,001
40,526
138,214
191,919
69,248
261,167
107
82,196
83,815
166,118
5,144
5,144
11,257
2,063
13,320
2,638
16,266
4,882
23,786
134,964
64,835
(199,799
)
615,599
129
(128
)
(615,600
)
$
948,299
$
638,365
$
343,983
$
(815,399
)
$
1,115,248
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
990
$
19,877
$
20,586
$
$
41,453
38,620
53,246
27,249
119,115
2,031
2,031
70,000
934
70,934
3,634
76
5,088
8,798
113,244
73,199
55,888
242,331
173,988
1,694
175,682
30,880
(10
)
15,551
46,421
9,323
11,209
6,705
27,237
195,829
(195,829
)
2,713
2,713
620,864
553,967
65,603
(619,570
)
620,864
$
948,299
$
638,365
$
343,983
$
(815,399
)
$
1,115,248
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
$
574,864
$
278,767
$
(18,228
)
$
835,403
403,823
187,858
(18,228
)
573,453
171,041
90,909
261,950
90,892
46,534
137,426
17,399
24,839
42,238
108,291
71,373
179,664
62,750
19,536
82,286
(15,940
)
(3,015
)
(2,679
)
17,577
(4,057
)
18,261
4,642
12,833
(17,577
)
18,159
50
86
378
514
2,371
1,713
10,532
14,616
(2,371
)
61,037
9,004
67,670
(728
)
14,409
2,620
16,301
(1,643
)
46,628
6,384
51,369
(335
)
(335
)
(1,643
)
46,628
6,049
51,034
6,992
6,992
59,669
(59,669
)
$
58,026
$
53,620
$
6,049
$
(59,669
)
$
58,026
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
58,026
$
53,620
$
6,049
$
(59,669
)
$
58,026
335
335
22,152
13,156
35,308
3,205
(112
)
(7,594
)
(4,501
)
2,262
537
2,799
(9,456
)
(9,456
)
59
59
(1,397
)
(1,397
)
1,550
(11,458
)
(7,737
)
(17,645
)
(6,350
)
(5,286
)
(11,636
)
174
(903
)
2,431
1,702
147
288
435
470
2,638
1,058
4,166
9,540
7,401
2,975
19,916
638
1
4,530
5,169
40
(6,838
)
384
(6,414
)
7,830
(3,783
)
(4,501
)
(454
)
80,223
49,521
6,337
(59,669
)
76,412
(754
)
(15,289
)
(7,733
)
(23,776
)
21,421
21,421
2,319
2,319
(4,207
)
(4,207
)
3
2,017
292
2,312
(173,273
)
(173,273
)
112,014
112,014
(28,261
)
(28,261
)
(66,217
)
(17,793
)
(7,441
)
(91,451
)
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
4,727
4,727
108,490
108,490
(5,000
)
171
(4,829
)
(2,781
)
(57
)
(464
)
(3,302
)
(50,479
)
(31,962
)
22,772
59,669
54,957
(32,019
)
22,479
59,669
105,086
(458
)
92
(856
)
(1,222
)
68,505
(199
)
20,519
88,825
6,859
2,353
20,267
29,479
$
75,364
$
2,154
$
40,786
$
$
118,304
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
6,859
$
2,353
$
20,267
$
$
29,479
8,511
8,511
2,221
83,115
46,870
132,206
76,168
42,886
119,054
40,630
(17,131
)
23,499
353
3,598
5,490
9,441
147
288
435
58,721
165,522
98,382
322,625
2,369
99,360
43,406
145,135
175,607
72,210
247,817
141
77,160
92,575
169,876
5,818
5,818
11,216
11,216
9,780
18,309
4,772
32,861
152,346
36,188
(188,534
)
558,234
92
(558,326
)
$
798,625
$
572,146
$
311,437
$
(746,860
)
$
935,348
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
520
$
16,814
$
20,533
$
$
37,867
29,880
41,466
25,692
97,038
5,000
1,977
6,977
50
981
1,031
2,996
75
3,607
6,678
38,396
58,405
52,790
149,591
246,769
7
2,280
249,056
43,149
294
43,443
9,283
13,840
6,729
29,852
186,310
(186,310
)
2,378
2,378
461,028
499,894
60,656
(560,550
)
461,028
$
798,625
$
572,146
$
311,437
$
(746,860
)
$
935,348
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
$
461,067
$
155,073
$
(2,530
)
$
613,610
320,285
100,835
(2,530
)
418,590
140,782
54,238
195,020
79,038
39,708
118,746
10,275
15,581
25,856
89,313
55,289
144,602
51,469
(1,051
)
50,418
(1,700
)
(1,734
)
(3,434
)
(14,316
)
(3,017
)
(828
)
16,197
(1,964
)
17,010
3,272
13,251
(16,197
)
17,336
(520
)
(239
)
250
(509
)
474
16
10,939
11,429
(474
)
51,453
(11,990
)
38,989
(140
)
12,934
(3,202
)
9,592
(334
)
38,519
(8,788
)
29,397
(22
)
(22
)
(334
)
38,519
(8,810
)
29,375
10,208
10,208
39,917
(39,917
)
$
39,583
$
48,727
$
(8,810
)
$
(39,917
)
$
39,583
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
39,583
$
48,727
$
(8,810
)
$
(39,917
)
$
39,583
22
22
22,320
8,825
31,145
3,375
(111
)
3,264
3,191
1,135
4,326
(12,521
)
(12,521
)
(892
)
(892
)
(1,700
)
(1,734
)
(3,434
)
(2,126
)
(5,513
)
(1,393
)
(9,032
)
(6,897
)
(2,198
)
(9,095
)
(219
)
760
(1,200
)
(659
)
382
(684
)
2,902
2,600
11,800
(1,444
)
(116
)
10,240
8,935
(804
)
820
8,951
9,283
(923
)
(4,001
)
4,359
(9,734
)
5,668
(1,464
)
(5,530
)
59,579
50,988
(7,323
)
(39,917
)
63,327
(490
)
(18,881
)
(2,755
)
(22,126
)
10,000
10,000
1,700
1,775
3,475
1,654
1,654
(12,500
)
(12,500
)
23
1,190
(435
)
778
12,797
12,797
(50,855
)
(87,956
)
(138,811
)
1,530
(56,892
)
(89,371
)
(144,733
)
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
2,807
2,807
5,000
(180
)
(698
)
4,122
(27,996
)
(77
)
(1,356
)
(29,429
)
(268
)
(268
)
(143,641
)
5,573
98,151
39,917
(164,098
)
5,316
96,097
39,917
(22,768
)
14
(89
)
2,365
2,290
(102,975
)
(677
)
1,768
(101,884
)
109,834
3,030
18,499
131,363
$
6,859
$
2,353
$
20,267
$
$
29,479
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
$
426,051
$
124,638
$
(1,557
)
$
549,132
293,913
84,575
(1,557
)
376,931
132,138
40,063
172,201
79,460
25,841
105,301
7,564
10,218
17,782
87,024
36,059
123,083
45,114
4,004
49,118
66
66
(2,676
)
(2,676
)
(5,492
)
(2,511
)
(370
)
7,505
(868
)
11,624
2,526
5,346
(7,505
)
11,991
(116
)
96
20
3,340
111
5,062
8,513
(3,340
)
45,003
(1,058
)
40,605
(868
)
13,572
(246
)
12,458
(2,472
)
31,431
(812
)
28,147
(5,312
)
(5,312
)
25,307
(25,307
)
$
22,835
$
26,119
$
(812
)
$
(25,307
)
$
22,835
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
22,835
$
26,119
$
(812
)
$
(25,307
)
$
22,835
22,230
3,985
26,215
14,051
(4,221
)
(595
)
9,235
1,137
291
1,428
9,282
9,282
66
66
154
(10,824
)
1,154
(9,516
)
2,078
4,244
6,322
(97
)
(8
)
222
117
115
503
(5,014
)
(4,396
)
7,905
1,155
(4,134
)
4,926
(7,451
)
6,639
(111
)
(923
)
(1,754
)
(2,397
)
4,348
197
35,758
51,693
3,644
(25,307
)
65,788
(2,235
)
(12,334
)
(2,561
)
(17,130
)
3,850
3,850
5,630
5,630
(1,036
)
(1,036
)
38
581
147
766
(12,797
)
(12,797
)
(32,767
)
(78,968
)
(111,735
)
(16,030
)
(40,670
)
(75,752
)
(132,452
)
Non-
Guarantor
Guarantor
In Thousands
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
2,424
2,424
2,279
2,279
(235
)
(76
)
(421
)
(732
)
(7,735
)
(7,735
)
175,000
175,000
(85,867
)
(9,443
)
70,003
25,307
83,587
(9,519
)
71,861
25,307
171,236
(83
)
41
4,322
4,280
103,232
1,545
4,075
108,852
6,602
1,485
14,424
22,511
$
109,834
$
3,030
$
18,499
$
$
131,363
93
94
Esterline Technologies Corporation
Bellevue, Washington
95
Esterline Technologies Corporation
Bellevue, Washington
Ernst & Young LLP
December 30, 2005
.
.
.
Exhibit 21
SUBSIDIARIES
The subsidiaries of the Company as of October 28, 2005 are as follows:
Jurisdiction of Name of Subsidiary Incorporation ------------------ --------------- Advanced Input Devices, Inc. Delaware Memtron Technologies Co. Delaware Advanced Input Devices (UK) Ltd. England LRE Medical GmbH Germany Esterline Input Devices (Shanghai) Ltd. China Armtec Defense Products Co. Delaware Armtec Countermeasures Co. Delaware Auxitrol Technologies S.A. France Auxitrol S.A. France Auxitrol Co. Delaware BVR Technologies Co. Delaware Hytek Finishes Co. Delaware Kirkhill - TA Co. California Korry Electronics Co. Delaware AVISTA Incorporated Wisconsin Palomar Products, Inc. Delaware Leach International Corporation Delaware Leach International Europe S.A. France Mason Electric Co. Delaware Muirhead Aerospace Limited England Weston Aerospace Ltd. England Norwich Aero Products Ltd. New York Pressure Systems, Inc. Virginia |
The above list excludes certain subsidiaries that, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as of October 28, 2005.
Exhibit 23
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in this Annual Report (Form 10-K) of Esterline Technologies Corporation of our report dated December 30, 2005, included in the 2005 Annual Report to Shareholders of Esterline Technologies Corporation.
Our audits also included the financial statement schedule of Esterline Technologies Corporation listed in Item 15(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements (Forms S-8 No. 333-43843, No. 33-58375, No. 333-62650, No. 333-85440 and Form S-3 No. 333-117905) pertaining to the 1997 Stock Option Plan, Non-Employee Directors' Stock Compensation Plan, Amended and Restated 1997 Stock Option Plan, the 2002 Employee Stock Purchase Plan of Esterline Technologies Corporation and the $300,000,000 Shelf Registration Statement of our report dated December 30, 2005, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Esterline Technologies Corporation for the fiscal year ended October 28, 2005.
Ernst & Young LLP
Seattle, Washington
January 4, 2006
Exhibit 31.1
CERTIFICATIONS
I, Robert W. Cremin, certify that:
1. I have reviewed this annual report on Form 10-K of Esterline Technologies Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: January 6, 2006 By: /s/ Robert W. Cremin ------------------------------------ Robert W. Cremin Chairman, President and Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS
I, Robert D. George, certify that:
1. I have reviewed this annual report on Form 10-K of Esterline Technologies Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: January 6, 2006 By: /s/ Robert D. George ------------------------------------ Robert D. George Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Esterline Technologies Corporation (the "COMPANY") on Form 10-K for the fiscal year ended October 28, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "FORM 10-K"), I, Robert W. Cremin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2) The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: January 6, 2006 By: /s/ Robert W. Cremin ------------------------------------ Robert W. Cremin Chairman, President and Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Esterline Technologies Corporation (the "COMPANY") on Form 10-K for the fiscal year ended October 28, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "THE FORM 10-K"), I, Robert D. George, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2) The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: January 6, 2006 By: /s/ Robert D. George ------------------------------------ Robert D. George Vice President, Chief Financial Officer, Secretary and Treasurer |