Document:

ex10-1.htm

Exhibit 10.1

 

AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS

 

ARTICLE I

SUMMARY AND DEFINITION OF BASIC TERMS

 

This Agreement of Purchase and Sale and Joint Escrow Instructions (the "Agreement"), dated as of the Effective Date set forth in Section 1 of the Summary of Basic Terms, below, is made by and between ACTH II LLC, a Delaware limited liability company ("Buyer"), and COHU, INC., a Delaware corporation ("Seller"). The terms set forth below shall have the meanings set forth below when used in the Agreement.

 

	
TERMS OF AGREEMENT
(first reference in the Agreement)
	 	
DESCRIPTION

	 	 	 	 
	1.	
Effective Date 
(Introductory Paragraph):
	 	
The date upon which Escrow Holder has received fully-executed counterparts of this Agreement from Buyer and Seller.

	 	 	 	 
	2.	
Building
(Recital A):
	 	
The building located on the Land situated in the City of Poway (the "City"), County of San Diego (the "County"), California, and commonly known as 12367 Crosthwaite Circle, Poway, California.

	 	 	 	 
	3.	
Broker
(Section 15):
	 	
CBRE (Louay Alsadek).

	 	 	 	 
	4.	
Buyer's Notice Address
(Section 14):
	 	
ACTH II LLC

c/o CT Realty Corporation

65 Enterprise

Aliso Viejo, CA 92656

Attn: Dominic Petrucci and Steven J. Provencio

Fax No.: (949) 330-5771

Email: dpetrucci@ctrinvestors.com / sprovencio@ctrinvestors.com

With a copy to:

CT Realty Corporation

65 Enterprise

Aliso Viejo, CA 92656

Attn: Michael W. Traynham, Esq.

Fax No.: (949) 330-5771

Email: mtraynham@ctrinvestors.com

 

 

 

 

 

 

	5.	
Purchase Price
(Section 2.1):
	 	
$34,250,000.00.

	 	 	 	 
	6.	
Initial Deposit
(Section 2.1.1):
	 	
$250,000.00.

	 	 	 	 
	7.	
Additional Deposit
(Section 2.1.1)
	 	
$250,000.00.

	 	 	 	 
	8.	
Escrow Holder
(Section 3):
	 	
Chicago Title Company
2365 Northside Drive, Suite 600
San Diego, CA 92108
Attn: Annemarie LoCoco
Fax No.: (619) 640-9635

Email: lococoa@ctt.com

	 	 	 	 
	9.	
Contingency Date
(Section 4.1):
	 	
Thirty (30) days following the Effective Date.

	 	 	 	 
	10.	
Closing Date
(Section 3.2):
	 	
Thirty (30) days following the Contingency Date, subject to extension as provided in Section 3.2.

	 	 	 	 
	11.	
Title Company
(Section 4.2):
	 	
Chicago Title Company

2365 Northside Drive, Suite 500

San Diego, CA 92108

Attn: Tom Votel & Ken Cyr

Fax No.: (619) 521-3608

Email: VotelT@CTT.com/Ken.Cyr@ctt.com

	 	 	 	 
	12.	
Seller's Representative
(Section 11.3):
	 	
John Allen, Jeffrey Jones and Gary Ingoglia.

 

ARTICLE II

RECITALS

 

A.     Seller owns that certain parcel of land more particularly described on Exhibit "A" attached hereto (the "Land"), which land is improved with the Building.

 

B.     Seller desires to sell and convey to Buyer and Buyer desires to purchase and acquire from Seller the following:

 

i.     The Land and all of Seller's right, title and interest in all rights, privileges, easements and appurtenances benefiting the Land and/or the Improvements, including, without limitation, Seller's interest, if any, in all mineral and water rights and all easements, rights-of-way and other appurtenances used or connected with the beneficial use or enjoyment of the Land and/or the Improvements (the Land, the Improvements and all such rights, privileges, easements and appurtenances are sometimes collectively hereinafter referred to as the "Real Property");

 

 

 

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ii.     The Building, associated parking and landscaped areas and all other improvements located on the Land (the "Improvements");

 

iii.     The personal property, equipment, supplies and fixtures (collectively, the "Personal Property") owned by Seller and used or useful in the operation of the Real Property and specifically identified on the attached Exhibit "J", if any; and

 

iv.     To the extent assignable, all of Seller's right, title and interest in any intangible property used or useful in connection with the foregoing, contract rights, warranties, guaranties, licenses, permits, entitlements, governmental approvals and certificates of occupancy which benefit the Real Property, the Improvements, and/or the Personal Property (the "Intangible Personal Property"). The Real Property, the Improvements, the Personal Property, and the Intangible Personal Property are sometimes collectively hereinafter referred to as the "Property."

 

C.     Prior to the Contingency Date, Buyer will have the opportunity to conduct all due diligence with regard to the Property as set forth in Sections 4.1 and 4.2 below (collectively, the "Due Diligence Investigations").

 

ARTICLE III

AGREEMENT

 

NOW, THEREFORE, in consideration of the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller hereby agree as follows, and hereby instruct Escrow Holder as follows.

 

1.     Purchase and Sale; Leaseback; Leases. Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property upon the terms and conditions set forth in this Agreement. Notwithstanding anything to the contrary contained herein, Seller shall lease the Property back from Buyer pursuant to, and in accordance with, the terms and conditions of the Lease in the form attached hereto as Exhibit "I" ("Leaseback Agreement"), which Leaseback Agreement will be executed and delivered by Buyer and Seller through escrow at Closing. For purposes of clarity, the parties hereby acknowledge and agree that a party's failure to execute and deliver the Leaseback Agreement, in the form attached hereto as Exhibit "I", through escrow at Closing as required by Section 5 below, shall constitute a material default under this Agreement by such party. In addition, Seller is not conveying or assigning to Buyer, and Seller is retaining all right, title and interest as lessor in and to, the following leases in effect as of the Effective Date (collectively, the "Leases"): (i) that certain Lease between Seller, as landlord, and Broadcast Microwave Services, Inc., as tenant, dated June 10, 2015 (together with all amendments and modifications thereto made prior to the Effective Date, collectively, the "BMS Lease"); (ii) that certain Lease between Seller, as landlord, and Sirius Acquisition, LLC, as tenant, dated June 3, 2014 (together with all amendments and modifications thereto prior to the Effective Date, collectively, the "Sirius Lease"); and (iii) that certain Lease between Seller, as landlord, and Alex Machining Corporation, as tenant, dated March 29, 2013 (together with all amendments and modifications thereto prior to the Effective Date, collectively, the "AMC Lease"). The tenants, licensees and/or occupants of the Property under the Leases are referred to herein collectively as the "Tenants" and individually as a "Tenant". The Tenants shall become subtenants of Seller for the remainder of the respective terms of the Leases from and after Closing.

 

 

 

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2.     Purchase Price.

 

2.1     Purchase Price. Buyer shall pay the Purchase Price for the Property as hereinafter provided in this Section 2.

 

2.1.1     Initial Deposit. Within two (2) Business Days after the Effective Date, Buyer shall deliver to Escrow Holder the Initial Deposit by cashier's check or wire transfer of immediately available funds. If Buyer fails to deliver the Initial Deposit to Escrow Holder strictly as and when contemplated herein, Seller shall have the right to terminate this Agreement by delivering written notice thereof to Buyer at any time prior to Escrow Holder's receipt of the Initial Deposit, and in the event of such termination Buyer shall be responsible for and shall pay any and all title and escrow cancellation fees and charges. The Initial Deposit shall remain fully refundable to Buyer until Buyer's delivery of Buyer's Approval Notice pursuant to Section 4.1.4 below. If Buyer fails to deliver Buyer's Approval Notice by the time specified in Section 4.1.4 below, this Agreement shall terminate and the Initial Deposit, together with interest accrued thereon, shall be returned to Buyer, without the need for, and despite any contrary instructions received from, Seller, and thereafter neither party shall have any further rights or obligations hereunder except for Seller's and Buyer's obligations and indemnities under this Agreement that by their terms expressly survive the termination of this Agreement.

 

2.1.2     Additional Deposit. Within one (1) Business Day after the Property Approval Period, and provided Buyer shall have delivered Buyer's Approval Notice (and therefore shall have not elected (or deemed to have elected) to terminate this Agreement pursuant to Section 4.1.4 below), Buyer shall deliver to Escrow Holder the Additional Deposit (the Initial Deposit, together with the Additional Deposit, if and when made by Buyer, and all interest that accrues on the Initial Deposit and the Additional Deposit while such amounts are held by Escrow Holder may be referred to herein collectively as the "Deposit"). Buyer's failure to timely deliver the Additional Deposit after delivering Buyer's Approval Notice shall constitute a material default by Buyer under this Agreement. If Buyer delivers Buyer's Approval Notice pursuant to Section 4.1.4 below, then, after the Contingency Date, the Deposit shall be: (i) applied and credited toward payment of the Purchase Price at the Close of Escrow, or (ii) retained by Seller as liquidated damages in accordance with the terms and conditions of Section 16.1 below unless this Agreement is terminated (or deemed terminated) by Buyer pursuant to an express termination right in favor of Buyer under this Agreement.

 

2.1.3     Interest Bearing Account. The Deposit shall be deposited by Escrow Holder in an interest-bearing account at a federally insured institution as Escrow Holder, Buyer and Seller deem appropriate and consistent with the timing requirements of this Agreement. The interest on the Deposit (while held by Escrow Holder) shall accrue to the benefit of the party receiving the Deposit pursuant to the terms of this Agreement, and Buyer and Seller hereby acknowledge that there may be penalties or interest forfeitures if the applicable instrument is redeemed prior to its specified maturity. Any interest earned on the Deposit shall be deemed to be a part of the Deposit for the purposes of this Agreement. Buyer agrees to provide its Federal Tax Identification Number to Escrow Holder upon the opening of Escrow.

 

 

 

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2.1.4     Cash Balance. On or before one (1) Business Day prior to the Closing Date, Buyer shall deposit with Escrow Holder cash by means of a confirmed wire transfer through the Federal Reserve System the amount of the balance of the Purchase Price, as adjusted for any applicable closing costs and prorations allocated to Buyer pursuant to Sections 7 and 8 below.

 

2.2     Independent Contract Consideration. Concurrently with Buyer's delivery of the Deposit to Escrow Holder, Buyer shall deliver to Escrow Holder the sum of $100.00 (the "Independent Contract Consideration"), which shall be immediately released by Escrow Holder to Seller, and shall be accepted by Seller as the independent contract consideration for Seller's execution and delivery of this Agreement and the rights extended to Buyer hereunder. The Independent Contract Consideration is earned as of the execution hereof by Buyer and Seller, and is nonrefundable under all circumstances.

 

3.     Escrow and Title.

 

3.1     Opening of Escrow. Buyer and Seller shall promptly deliver a fully executed copy of this Agreement to Escrow Holder, and the date of Escrow Holder's receipt thereof is referred to as the "Opening of Escrow". Escrow Holder shall promptly notify Buyer and Seller of the date of Opening of Escrow. Seller and Buyer shall execute and deliver to Escrow Holder any additional or supplementary instructions as may be reasonably necessary to implement the terms of this Agreement and close the transactions contemplated hereby, provided such instructions are consistent with and merely supplement this Agreement and shall not in any way modify, amend or supersede this Agreement. Such supplementary instructions, together with the escrow instructions set forth in this Agreement, as they may be amended from time to time by the parties, shall collectively be referred to as the "Escrow Instructions." The Escrow Instructions may be amended and supplemented by such standard terms and provisions as the Escrow Holder may request the parties hereto to execute; provided, however, that the parties hereto and Escrow Holder acknowledge and agree that in the event of a conflict between any provision of such standard terms and provisions supplied by the Escrow Holder and the Escrow Instructions, the Escrow Instructions shall prevail.

 

3.2     Close of Escrow/Closing. For purposes of this Agreement, the "Close of Escrow" or the "Closing" shall mean the date on which the Deed (as defined in Section 5.1.1 below) is recorded in the Official Records of the County where the Land is located (the "Official Records"). The Close of Escrow shall occur on the Closing Date. Notwithstanding the foregoing, Buyer shall have a one-time right to extend the Closing Date for up to an additional thirty (30) days, which right shall be exercised, if at all, by: (i) Buyer's delivery of written notice to Seller no later than three (3) Business Days prior to the original scheduled Closing Date, and (ii) concurrently therewith, Buyer's delivery of an additional $200,000.00 deposit with Escrow Holder (which additional sum shall not be considered part of the Deposit under this Agreement and as such not applicable to the Purchase Price at Closing and shall not be refundable to Buyer unless this Agreement is terminated by Buyer pursuant to Section 16.1 due to a Seller default).

 

 

 

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3.3     Title Insurance. At the Close of Escrow, and as a condition thereto, the Title Company shall be prepared to issue to Buyer an ALTA extended coverage Owner's Policy of Title Insurance (the "Title Policy") with liability in the amount of the Purchase Price, showing title to the Property vested in Buyer, subject only to (i) the preprinted standard exceptions in such Title Policy, (ii) exceptions approved or deemed approved by Buyer pursuant to Section 4.2, (iii) the rights and interests, as tenants only, of the Tenants under the Leases and Seller under the Leaseback Agreement, (iv) non-delinquent real property taxes and special assessments, (v) any exceptions arising from Buyer's actions, and (vi) any matters which would be disclosed by an accurate survey or readily apparent from a reasonable visual inspection of the Property (collectively, the "Permitted Exceptions"). The Property Approval Period and Close of Escrow shall not be extended due to Buyer's Title Policy requirements, including without limitation the need to obtain an updated ALTA survey. Notwithstanding the foregoing, if Buyer elects not to pay for the additional premium for the ALTA extended coverage policy, or if Buyer does not timely provide Title Company with an updated ALTA survey in form sufficient for Title Company to issue such ALTA extended coverage policy at the Close of Escrow, then the Title Policy to be issued on the Close of Escrow shall be a standard coverage ALTA Owner's Policy of Title Insurance which may include, in addition to the Permitted Exceptions, a general survey exception.

 

4.     Contingencies; Conditions Precedent to the Close of Escrow.

 

4.1     Buyer's Review.

 

4.1.1     Delivery of Due Diligence Materials by Seller. To the extent within the possession or control of Seller and within three (3) Business Days following the Effective Date, Seller shall deliver to Buyer or make available to Buyer and Buyer's representatives on a CBRE website for inspection, the documents and materials identified on the attached Exhibit "K" (collectively, the "Due Diligence Items"). In addition, following reasonable prior telephonic or written notice from Buyer, Seller agrees to allow Buyer, its authorized agents or representatives, at Buyer's expense, to inspect and make copies of such other documents and property records relating to the ownership, operation and maintenance of the Property, which are not provided to Buyer as part of the Due Diligence Items and which are reasonably requested by Buyer, at Seller's offices. In addition, Seller shall promptly deliver to Buyer any additional material instruments and documents relating to the Property, except for Excluded Information, that Seller's Representative first discovers or obtains after the Effective Date; provided, however, that neither Seller nor Seller's Representative shall have any obligation whatsoever to undertake any search, investigation or inquiry for any such instruments and documents. Notwithstanding the foregoing, the Due Diligence Items shall not include, and Seller shall not be obligated to provide to Buyer, any confidential or privileged materials, any appraisals or other financial analysis prepared by or on behalf of Seller or any other proprietary materials of Seller (collectively, "Excluded Information". Except as expressly provided herein, Seller makes no representations or warranties regarding the accuracy of the Due Diligence Items or that the Due Diligence Items are complete copies of the same. Buyer acknowledges and understands that all such materials made available by Seller are only for Buyer's convenience in making its own examination and determination prior to the Contingency Date as to whether it wishes to purchase the Property, and, in so doing, Buyer shall, except as expressly provided herein or in any Other Document (defined below) and rely exclusively upon its own independent investigation and evaluation of every aspect of the Property and not on any materials supplied by Seller. 

 

 

 

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4.1.2     Inspection. Commencing upon the Effective Date and continuing until 5:00 p.m. (Pacific Time) on the Contingency Date (the "Property Approval Period"), Buyer shall have the right to review and investigate the Due Diligence Items, the physical and environmental condition of the Property, the character, quality, value and general utility of the Property, the zoning, land use, environmental and building requirements and restrictions applicable to the Property, the state of title to the Property, and any other factors or matters relevant to Buyer's decision to purchase the Property. Buyer, in Buyer's sole and absolute discretion, may determine whether or not the Property is acceptable to Buyer within the Property Approval Period and whether Buyer can secure appropriate financing thereon. Buyer shall provide Seller with at least one (1) Business Day's prior written notice of its desire to enter upon the Real Property for tenant interviews, inspection and/or testing and any such tenant interviews, inspections or testing shall be conducted at a time and manner reasonably approved by Seller and to minimize disruption or interference with any tenants. Seller shall have the right to be present at any such tenant interviews, inspections or testings. Prior to conducting any inspections or testing, Buyer or its consultants, shall deliver to Seller a certificate of insurance naming Seller as additional insured (on a primary, non-contributing basis) evidencing commercial general liability and property damage insurance with limits of not less than $2,000,000.00 in the aggregate for liability coverage and not less than $2,000,000.00 in the aggregate for property damage. Notwithstanding the foregoing, Buyer shall not be permitted to undertake any air sampling or any intrusive or destructive testing of the Property, including, without limitation, a "Phase II" environmental assessment (collectively, the "Intrusive Tests"), without in each instance first obtaining Seller's prior written consent thereto, which consent shall not be unreasonably withheld, conditioned or delayed if such Intrusive Tests are recommended by Buyer's "Phase I" Environmental Assessment. Buyer shall repair any damage to the Property caused by Buyer or its consultant's entry on the Property such that the affected areas of the Property are restored to the same condition in which it was found prior to such entry immediately after any and all testing and inspections conducted by or on behalf of Buyer, provided, however, that Buyer shall not be required to repair any damage (i) not caused by Buyer or its consultant's or (ii) that results solely from Buyer's or Buyer's consultant's mere discovery of any conditions on the Property. Buyer hereby indemnifies and holds Seller, Seller Parties and the Property harmless from any and all costs, loss, damages or expenses of any kind or nature actually incurred or suffered by Seller or any of the Seller Parties and arising out of or resulting from any entry and/or activities upon the Property by Buyer and/or Buyer's agents, employees, contractors or consultants (together, "Buyer Parties"); provided, however, such indemnification obligation shall not be applicable to Buyer's mere discovery of any pre-existing adverse physical condition at the Property. Buyer's indemnification obligations under this section shall survive the Close of Escrow or any termination of this Agreement. Without limiting the foregoing, Section 25359.7 of the California Health and Safety Code requires owners of non-residential real property who know, or have reasonable cause to believe, that any release of hazardous substance has come to be located on or beneath the real property to provide written notice of such to a buyer of the real property. Notwithstanding anything to the contrary contained herein, Buyer (i) hereby acknowledges Buyer's receipt of the foregoing notice given pursuant to Section 25359.7 of the California Health and Safety Code; (ii) has, or will have prior to the expiration of the Property Approval Period, fully investigated the condition of the Property; and (iii) after receiving advice of Buyer's legal counsel, waives any and all rights Buyer may have to assert that Seller has not complied with the requirements of Section 25359.7 of the California Health and Safety Code. For the purposes of this Agreement, "Seller Parties" shall mean Seller's affiliates, subsidiaries, property manager, asset manager, and their respective officers, directors, members, trustees, employees, consultants, attorneys, agents, representatives, contractors and subcontractors. Buyer's repair and indemnity obligations under this Section 4.1.1 shall survive the termination of this Agreement.

 

 

 

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4.1.3     Reserved. 

 

4.1.4     Termination. Buyer shall have the right, exercisable in Buyer's sole and absolute discretion at any time prior to the expiration of the Property Approval Period by written notice to Seller, to terminate this Agreement. If Buyer fails, prior to 5:00 p.m. (Pacific time) on the Contingency Date, to deliver written notice ("Buyer's Approval Notice") to Seller and Escrow Holder of Buyer's approval of the Property in the form attached hereto as Exhibit "D", Buyer shall be deemed to have disapproved the Property and this Agreement shall automatically terminate. If Buyer timely delivers Buyer's Approval Notice as provided in this Section 4.1.4, then Buyer shall be deemed to have elected to waive its right to terminate this Agreement pursuant to this Section 4.1.4 and proceed to Closing in accordance with the terms and conditions of this Agreement.

 

4.1.5     Due Diligence Materials. In the event Buyer does not purchase the Property for any reason other than a Seller Default, within five (5) Business Days after the date this Agreement is terminated Buyer shall return to Seller all documents, information and other materials supplied by Seller to Buyer, and, at Seller's written request, without warranty or representation of any kind, any inspection reports, studies, surveys, and other reports and/or test results (collectively, "Third-Party Reports") (provided the same do not restrict such delivery to a third party) relating to the Property which were prepared by third-party consultants retained by Buyer in contemplation of this Agreement and in Buyer's possession or control and, if so requested by Seller, Seller shall reimburse Buyer for the cost of all such Third-Party Reports. Buyer's and Seller's obligations under this Section 4.1.4 shall survive the termination of this Agreement.

 

4.2     Title Report and Additional Title Matters. 

 

4.2.1     Title Report. Within five (5) Business Days after the Effective Date, Seller shall obtain and deliver to Buyer a preliminary title report for the Property prepared by Title Company (the "PTR"), together with copies of all underlying title documents described in the PTR and the most current ALTA survey of the Property in Seller's possession ("Survey"). Buyer shall have until ten (10) Business Days prior to the Contingency Date (the "Title Notice Date") to provide written notice (the "Title Notice") to Seller and Escrow Holder of any matters shown by the PTR or Survey which are not satisfactory to Buyer. If Seller has not received the Title Notice from Buyer by the Title Notice Date, that shall be deemed, subject to Section 4.1.4 above, Buyer's unconditional approval of the condition of title to the Property and the Survey, except that prior to the Closing Date, Seller shall be required to remove any and all liens secured by deeds of trust securing loans made to Seller and delinquent real property taxes and assessments and remove or endorse over (to Buyer's reasonable satisfaction) any mechanics' liens relating to work contracted for by Seller and any judgment liens against Seller (herein "Monetary Liens"). Except as expressly provided herein, Seller shall have no obligation whatsoever to expend or agree to expend any funds, to undertake or agree to undertake any obligations or otherwise to cure or agree to cure any title objections other than Monetary Liens. To the extent Buyer timely delivers a Title Notice, then Seller shall deliver, no later than five (5) Business Days after receipt of Buyer's Title Notice, written notice to Buyer and Escrow Holder identifying which disapproved items Seller shall undertake to cure or not cure ("Seller's Response"); however, Seller must cure the Monetary Liens. If Seller does not deliver a Seller's Response prior to such date, Seller shall be deemed to have elected to not remove or otherwise cure any exceptions disapproved by Buyer. If Seller elects, or is deemed to have elected, not to remove or otherwise cure an exception disapproved in Buyer's Title Notice, Buyer shall have until 5:00 p.m. (Pacific time) on the Contingency Date to (i) deliver Buyer's Approval Notice to Seller and Escrow Holder thereby waiving any objection to the PTR or the Survey other than Monetary Liens and exceptions that Seller has elected to cure prior to Closing, or (ii) terminate this Agreement and the Escrow by not timely delivering Buyer's Approval Notice, in which case Escrow Holder shall return to Buyer the Deposit. Notwithstanding anything to the contrary contained herein, Buyer's delivery of Buyer's Approval Notice shall be deemed Buyer's affirmative approval of the actual or deemed Seller Response. If Seller and Escrow Holder have not received Buyer's Approval Notice from Buyer by the Contingency Date, that shall be deemed Buyer's disapproval of the Seller Response and election to terminate the Agreement and Escrow. In addition, if Buyer delivers a Buyer's Approval Notice, all matters (except for Monetary Liens) shown in the PTR and the Survey with respect to which Buyer fails to give a Title Notice on or before 5:00 p.m. (Pacific Time) on the Title Notice Date shall be deemed to be approved by Buyer.

 

 

 

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4.2.2     Additional Title Matters. In the event Title Company issues any amendment or supplement to the PTR after the Title Notice Date showing any additional exception to title that is not included in the PTR (a "New Exception"), Buyer shall be entitled to object to any such New Exception by delivering a Title Notice to Seller and Escrow Holder on or before the date that is three (3) Business Days after Buyer's receipt of written notice of the New Exception from Title Company; provided, however, Buyer may not object to (and shall be deemed to have approved) any New Exception (i) caused by the acts or omissions of Buyer or Buyer Parties, or (ii) resulting from Buyer's delivery of a new survey or an update to the Survey to Title Company after the Title Notice Date. If Buyer fails to deliver a Title Notice objecting to a New Exception (other than a Monetary Lien) within such three (3) Business Day period, Buyer shall be deemed to have accepted such New Exception. Seller shall have three (3) Business Days after receipt of the Title Notice to provide a Seller's Response. Seller shall be deemed to have elected not to remove or cure the New Exception if Seller fails deliver a Seller's Response within such three (3) Business Days. If Seller elects or is deemed to have elected not to remove or cure such New Exception, Buyer shall have two (2) Business Days after the date of Seller's Response, or two (2) Business Days after the expiration of the three (3) Business Day period for Seller to deliver a Seller's Response if Seller fails to deliver a Seller's Response within such three (3) Business Day period, to give Seller and Escrow Holder written notice that Buyer either waives Buyer's prior objection to the New Exception, or that Buyer elects to terminate this Agreement, in which case Escrow Holder shall return to Buyer the Deposit. Except with respect to Monetary Liens, if Buyer fails to timely deliver any such notice, Buyer shall be deemed to have waived its prior objection to such New Exception. If necessary, the Closing Date shall automatically be extended to allow for the running of the notice and cure periods described in this paragraph. Notwithstanding the foregoing to the contrary, Buyer need give no notice of its disapproval of any New Exception which constitutes a Monetary Lien, all of which Seller shall remove or endorse over (to Buyer's satisfaction) at or before Closing.

 

 

 

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4.3     Buyer's Conditions Precedent to Closing: The Close of Escrow and Buyer's obligations with respect to the transactions contemplated by this Agreement are subject to the satisfaction or waiver of the following conditions:

 

4.3.1     Title Policy. On or before the Closing Date, Title Company shall have unconditionally and irrevocably committed to issue to Buyer the Title Policy described in Section 3.3, subject only to the payment of the applicable premium pursuant to Section 7 below.

 

4.3.2     Seller's Performance. On or before the Closing Date, Seller shall have duly performed in all material respects each and every material covenant of Seller hereunder including without limitation, Seller's timely delivery of the items specified to be delivered by Seller in Section 5.1 below.

 

4.3.3     Accuracy No Breach of Representations and Warranties. All representations and warranties made by Seller in Section 11.1 shall be true and correct in all material respects as of the Closing Date as if made on and as of the Closing Date, subject to Section 11.2.

 

4.3.4     Tenant Estoppel Certificates. On or before the Closing, Buyer shall have received estoppel certificates (collectively, "Estoppel Certificates" and individually, an "Estoppel Certificate") reasonably satisfactory to Buyer, which Seller shall use its good faith efforts to obtain, duly executed by Broadcast Microwave Services, Inc., Alex Machining Corporation and Sirius Acquisition, LLC (the "Existing Tenants"), dated not earlier than forty-five (45) days prior to the original Closing Date set forth in this Agreement (i.e., without extension thereof). The Estoppel Certificates shall be in the form of Exhibit "G" attached hereto or such other form as is required by or is otherwise consistent in all material respects with the requirements of the applicable Lease. Seller shall deliver to Buyer, for Buyer's approval, executed Estoppel Certificates promptly after Seller's receipt of the same. Buyer's failure to disapprove an executed Estoppel Certificate within five (5) Business Days following Buyer's receipt thereof shall be deemed to constitute Buyer's approval thereof; provided, however, that Buyer shall not have the right to disapprove an executed Estoppel Certificate satisfying the criteria above (or terminate this Agreement based thereon after the Contingency Date) unless it: (a) discloses material adverse economic terms of the applicable Lease that were not disclosed to Buyer (whether in the applicable Lease, this Agreement or any other document delivered to Buyer) prior to the date which is five (5) Business Days prior to the expiration of the Property Approval Period, (b) alleges a material default of Seller (as landlord) under the applicable Lease, (c) discloses a material dispute between the Seller (as landlord) and the Tenant in connection with the applicable Lease, or (d) contains any material adverse modification or qualification or the insertion therein of any other materially adverse information by the Tenant; provided, however, and notwithstanding the foregoing, Buyer shall not have the right to disapprove any Estoppel Certificate or to terminate this Agreement after the expiration of the Property Approval Period based upon (i) any matter disclosed in writing to Buyer prior to the date which is five (5) Business Days prior to the expiration of the Property Approval Period, or (ii) any matter disclosed in writing to Buyer after the Property Approval Period which is not disapproved in writing by Buyer to Seller within five (5) Business Days after Buyer receives written notice thereof (which disapproval notice shall constitute Buyer's election to terminate this Agreement). If Seller has been unable to timely obtain an Estoppel Certificate from a Tenant as provided herein, Seller may deliver its own certificate to Buyer ("Seller's Lease Certificate") in the form attached hereto as Exhibit "H" for such Tenants that did not deliver an Estoppel Certificate so as to provide Estoppel Certificates and Seller Lease Certificates that, taken together, shall satisfy this condition. In the event that after delivery of a Seller's Lease Certificate Seller receives an Estoppel Certificate from any Tenant for whom Seller previously delivered a Seller's Lease Certificate, Seller may deliver such Estoppel Certificate to Buyer and the corresponding Seller's Lease Certificate shall be automatically canceled upon Buyer's approval thereof (with Buyer's right to disapprove such Estoppel Certificate governed by the provisions set forth above). The immediately preceding sentence shall survive the Close of Escrow. Notwithstanding the foregoing, Buyer shall not be required to accept Seller's Lease Certificates for more than twenty (20%) of the leased rentable square footage of the Property or any Tenant occupying more than 50,000 rentable square feet at the Property. In addition, Seller will reasonably cooperate with Buyer and Buyer's lender, at no cost to Seller, to deliver to all Tenants a Subordination, Non-Disturbance and Attornment Agreement ("SNDAs"), in the form required by Buyer's lender in connection with its acquisition of the Property. The failure of Buyer or Buyer's lender to obtain an executed SNDAs shall not be a contingency to the Closing and shall not extend the Closing Date.

 

 

 

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4.3.5     No Casualty or Condemnation. No casualty or condemnation shall have occurred pursuant to which Buyer has elected to terminate the Agreement in accordance with Section 13 below.

 

4.4     Failure of Conditions Precedent to Buyer's Obligations; Extension of Closing Date. Buyer's obligations with respect to the transactions contemplated by this Agreement are subject to the satisfaction of the conditions precedent to such obligations for Buyer's benefit set forth in Section 4.3 (collectively, "Buyer's Closing Conditions"). If Buyer (i) fails to deliver the Buyer's Approval Notice to Escrow Holder or (ii)  terminates this Agreement by written notice to Seller because of the failure of any such condition precedent, then Escrow Holder shall return the Deposit to Buyer in accordance with Buyer's written instructions within five (5) Business Days following the effective date of such termination, Seller and Buyer shall each pay one-half (1/2) of any Escrow cancellation fees or charges, and except for Seller's and Buyer's indemnity and confidentiality obligations under the Agreement which expressly survive termination of the Agreement, the parties shall have no further rights or obligations to one another under this Agreement. Notwithstanding any term or provision contained in this Agreement to the contrary, if Seller is unable to timely satisfy the conditions precedent to Buyer's obligation to effect the Closing under Section 4.3 above (other than Seller's timely delivery of any of the items specified to be delivered by Seller in Section 5.1 below), then, following written notice delivered to Buyer no later than five (5) Business Days prior to the Closing Date, Seller may, at its election, extend the Closing Date for one or more periods not to exceed fifteen (15) days, in the aggregate, in connection with Seller's satisfaction of any such Buyer's Closing Condition under Section 4.3 above. If, after any such extension, the conditions precedent to Buyer's obligation to effect the Closing under Section 4.3 above continue not to be satisfied (and Buyer has not waived the same in writing), or if Seller does not elect to extend the Closing Date as provided hereunder, and, in either case, such failure of condition precedent is not the direct result of Buyer's default hereunder, then Buyer shall, within five (5) Business Days following the expiration of the foregoing applicable period (or in the event Seller elects not to extend the Closing Date as provided hereunder), have the right to terminate this Agreement by written notice thereof to Seller, or waive Seller's failure to satisfy such condition precedent and proceed to Closing on or before the expiration of the applicable period for Seller's satisfaction of such condition, it being further provided that Buyer's failure to deliver a written notice electing to waive Seller's failure to satisfy such condition precedent and proceed to Closing on or before the expiration of the applicable period for Seller's satisfaction of such condition shall be deemed Buyer's election to terminate this Agreement. If this Agreement is so terminated, then Buyer shall be entitled to the return of the Deposit and neither party shall have any further obligations hereunder, except those expressly stated to survive the termination hereof. Notwithstanding the foregoing, in the event that the failure of any such Buyer's Closing Condition also constitutes a default hereunder by Seller, Buyer also shall be entitled to pursue its rights and remedies under Section 16.1 hereof.

 

 

 

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4.5     Conditions Precedent to Seller's Obligations. The Close of Escrow and Seller's obligations with respect to the transactions contemplated by this Agreement are subject to the timely satisfaction or waiver of the following conditions: 

 

4.5.1     Buyer's Performance. Buyer shall have duly performed in all material respects each and every material covenant of Buyer hereunder, including without limitation, Buyer's timely delivery of the Purchase Price pursuant to the provisions of Section 2 above; and 

 

4.5.2     Accuracy No Breach of Representations and Warranties. Buyer's representations and warranties set forth in Section 11.2 of this Agreement shall be true and correct in all material respects as of the Closing Date as if made on and as of the Closing Date. 

 

Notwithstanding the foregoing, in the event that the failure of any such condition also constitutes a default hereunder by Buyer, Seller also shall be entitled to pursue its rights and remedies under Section 16.2 hereof.

 

5.     Deliveries to Escrow Holder.

 

5.1     Seller's Deliveries. Seller hereby covenants and agrees to deliver or cause to be delivered to Escrow Holder at least one (1) Business Day prior to the Closing Date (or other date specified) the following instruments and documents, the delivery of each of which shall be a condition to the Close of Escrow:

 

5.1.1     Deed. A Grant Deed (the "Deed") in the form of Exhibit "B" attached hereto, duly executed and acknowledged in recordable form by Seller, conveying Seller's interest in the Real Property to Buyer;

 

 

 

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5.1.2     Non-Foreign Certifications. FIRPTA and California 593-C Certificates duly executed by Seller in the forms prepared by Escrow Holder or otherwise reasonably required by Buyer (the "Tax Certificates");

 

5.1.3     Leaseback Agreement. Two (2) counterparts of the Leaseback Agreement duly executed by Seller;

 

5.1.4     Bill of Sale. Two (2) counterparts of a Bill of Sale ("Bill of Sale") duly executed by Seller in the form attached hereto as Exhibit "E" conveying Seller's right, title and interest in and to the Personal Property;

 

5.1.5     General Assignment. Two (2) counterparts of a General Assignment duly executed by Seller in the form of Exhibit "F" attached hereto (the "General Assignment"); 

 

5.1.6     Notice of Sirius Lease Termination. A notice to Sirius Acquisition, LLC, terminating the Sirius Lease as required by the Leaseback Agreement.

 

5.1.7     Insurance Certificates. Copies of the insurance certificates (the "Tenant Insurance Certificates") required to be delivered by Seller as the tenant under the Leaseback Lease;

 

5.1.8     Proof of Authority. Such proof of Seller's authority and authorization to enter into this Agreement and the transactions contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of Seller to act for and bind Seller, as may be reasonably required by Title Company;

 

5.1.9     Title Company Documents. A standard title company owners' affidavit, closing statement(s) and such other documents that may reasonably be required by the Title Company and/or Escrow Holder to issue the Title Policy and close the purchase and sale of the Property in accordance with this Agreement, each in a form reasonably acceptable to Seller; and

 

5.1.10     Miscellaneous. To the extent in Seller's possession, originals of the warranties assigned to Buyer and all keys, security codes, maintenance records, plans, permits, certificates of occupancy, surveys and building specifications pertaining to the Property, provided that, at Seller's election, these documents may be delivered outside of Escrow on or within a reasonable period of time after the Closing (not to exceed five (5) Business Days).

 

5.2     Buyer's Deliveries. Buyer hereby covenants and agrees to deliver or cause to be delivered to Escrow Holder at least one (1) Business Day prior to the Closing Date the following funds, instruments and documents, the delivery of each of which shall be a condition to the Close of Escrow:

 

5.2.1     Buyer's Funds. The Purchase Price, plus such additional funds, if any, necessary to comply with Buyer's obligations hereunder regarding prorations, credits, costs and expenses, less the Deposit;

 

 

 

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5.2.2     Leaseback Agreement. Two (2) counterparts of the Leaseback Agreement duly executed by Buyer;

 

5.2.3     General Assignment. Two (2) counterparts of the General Assignment duly executed by Buyer; 

 

5.2.4     Reserved. 

 

5.2.5     Bill of Sale. Two (2) counterparts of the Bill of Sale duly executed by Buyer; and 

 

5.2.6     Proof of Authority. Such proof of Buyer's authority and authorization to enter into this Agreement and the transactions contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of Buyer to act for and bind Buyer, as may be reasonably required by Title Company.

 

6.     Deliveries Upon Close of Escrow. Upon the Close of Escrow, Escrow Holder shall promptly undertake all of the following:

 

6.1     Tax Filings. The Title Company shall file the information return for the sale of the Property required by Section 6045 of the Internal Revenue Code of 1986, as amended, and the Income Tax Regulations thereunder.

 

6.2     Prorations. Prorate all matters referenced in Section 8 based upon the statement delivered into Escrow signed by the parties;

 

6.3     Recording. Cause the Deed and any other documents which the parties hereto may direct, to be recorded in the Official Records in the order directed by the parties;

 

6.4     Buyer Funds. Disburse from funds deposited by Buyer with Escrow Holder towards payment of all items and costs (including, without limitation, the Purchase Price) chargeable to the account of Buyer pursuant hereto in payment of such items and costs and disburse the balance of such funds, if any, to Buyer;

 

6.5     Documents to Seller. Deliver to Seller counterpart originals of the Leaseback Agreement and the General Assignment executed by Buyer and a conformed recorded copy of the recorded Deed;

 

6.6     Documents to Buyer. Deliver to Buyer an original of the Tax Certificates and Bill of Sale, the Tenant Insurance Certificates and counterpart originals of the Leaseback Agreement and the General Assignment executed by Seller, a conformed recorded copy of the Deed, and, when issued, the Title Policy;

 

6.7     Title Policy. Direct the Title Company to issue the Title Policy to Buyer; and

 

 

 

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6.8     Seller Funds. Deduct all items chargeable to the account of Seller pursuant to Section 7. If, as the result of the net prorations and credits pursuant to Section 8, amounts are to be charged to the account of Seller, deduct the total amount of such charges (unless Seller elects to deposit additional funds for such items in Escrow); and if amounts are to be credited to the account of Seller, disburse such amounts to Seller, or in accordance with Seller's instructions, at Close of Escrow. Disburse the net proceeds of the Purchase Price to Seller, or as otherwise directed by Seller, promptly upon the Close of Escrow in accordance with Seller's wire transfer instructions.

 

7.     Costs and Expenses. Seller shall pay (i) that portion of the Title Policy premium for ALTA owner's standard coverage and all costs related to the removal or cure of title exceptions that Seller has agreed or is required to remove or cure pursuant to Section 4.2 above, (ii) all documentary transfer taxes assessed by the County and City, and (iii) one-half (1⁄2) of the Escrow Holder's fee. In addition Seller shall pay outside of Escrow all legal and professional fees and costs of attorneys and other consultants and agents retained by Seller. Buyer shall pay through Escrow (x) all document recording charges, (y) the additional Title Policy premium for ALTA extended coverage and any title endorsements requested by Buyer, and (z) one-half (1⁄2) of the Escrow Holder's fee. Buyer shall pay outside of Escrow all costs and expenses related to the Due Diligence Investigations, charges for any new survey or updates to the Survey requested by Buyer and all legal and professional fees and costs of attorneys and other consultants and agents retained by Buyer. All other costs and charges, if any, shall be charged to Seller or Buyer as customarily charged to sellers and buyers in accordance with common escrow practices in the County.

 

8.     Prorations. The following prorations between Seller and Buyer shall be made by Escrow Holder computed as of the Close of Escrow:

 

8.1     Taxes and Assessments. In light of Seller's obligations as tenant under the Leaseback Agreement, there shall be no pro-ration of real estate taxes and assessments. Seller shall be responsible for all delinquent and non-delinquent real property taxes and assessments on the Property accrued as of the Closing.

 

8.2     Excise, Transfer and Sales Taxes. Buyer and Seller agree that no portion of the Purchase Price will be allocated to the Personal Property or Intangible Personal Property, and each party will reflect such allocation in any tax of similar filings. Therefore, there will be no excise, transfer and use taxes imposed with respect to the conveyance of any personal property contemplated by this Agreement.

 

8.3     Operating Expenses. Any common area maintenance, elevator maintenance, taxes other than real estate taxes such as rental taxes, other expenses incurred in operating the Property that Seller pays on an estimated or other basis, and any other costs incurred in the ordinary course of business or the management and operation of the Property, shall be prorated on an accrual basis. Seller shall pay all such expenses that accrue prior to the Close of Escrow and Buyer shall pay all such expenses accruing on the Close of Escrow and thereafter. Seller and Buyer shall obtain billings as of the Close of Escrow to aid in such prorations. In light of Seller's obligations as tenant under the Leaseback Agreement, there shall be no proration of utilities as of the Closing. Seller shall be responsible for all utility charges accruing prior to and, subject to and as provided in the Leaseback Agreement, following the Closing.

 

 

 

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8.4     Base Rent; Security Deposit. At Closing, Seller shall, as the tenant under the Leaseback Agreement, pay, or Buyer shall be credited, for (i) "Base Rent" payable under the Leaseback Agreement for the month in which the Closing occurs as provided in the Leaseback Agreement; and (ii) the "Security Deposit" required under the Leaseback Agreement.

 

At least two (2) Business Days prior to the Close of Escrow, the parties shall agree upon all of the prorations to be made and submit a statement to Escrow Holder setting forth the same. In the event that any prorations, apportionments or computations made under this Section 8 shall require final adjustment, then the parties shall make the appropriate adjustments promptly when accurate information becomes available and either party hereto shall be entitled to an adjustment to correct the same, but in no event shall such final adjustment occur later than two hundred seventy (270) days following the Close of Escrow. Any corrected adjustment or proration shall be paid in cash to the party entitled thereto. The provisions of this Section 8 shall survive the Close of Escrow.

 

9.     Covenants of Seller. Seller hereby covenants with Buyer, as follows:

 

9.1     Contracts. Following the Effective Date, Seller shall not enter into any new contract pertaining to the Property, which by its terms cannot be terminated on or before the Closing, without the express written approval of Buyer, which approval shall not be unreasonably delayed, conditioned or withheld, provided that following the Contingency Date, Buyer shall have the right to withhold such consent in its sole and absolute discretion. Buyer's consent to such new contract shall be deemed to have been given if Buyer does not notify Seller to the contrary in writing within five (5) Business Days after Seller provides written notice to Buyer of such new contract.

 

9.2     Leases. Between the Effective Date and the Closing Seller will not enter into any new Leases that are for a period which will survive Closing or otherwise affect the use, operation or enjoyment of the Property after Closing (collectively, "New Leases") without Buyer's prior written consent, which consent following the Contingency Date, Buyer shall have the right to withhold in its sole and absolute discretion. Seller will provide Buyer with copies of all lease proposals and letters of intent upon the delivery or receipt thereof.

 

9.3     Operation in the Ordinary Course. Subject to Sections 9.1 and 9.2 above, from the Effective Date until the Close of Escrow, Seller shall (i) operate and manage the Property in the ordinary course and consistent with Seller's past practices, (ii) maintain all present services and amenities, (iii) maintain the Property in good condition, repair and working order, excepting normal wear and tear and casualty damage (and Seller shall not be required to make capital improvements), and (iv) keep on hand sufficient materials, supplies, equipment and other personal property for the efficient operation and management of the Property. None of the Personal Property shall be removed from the Real Property, unless replaced by unencumbered personal property of equal or greater utility and value. Without limitation of the foregoing, Seller will keep in full force and effect all existing insurance policies affecting the Property or any portion thereof through the Close of Escrow. Seller shall remain responsible for all charges, bills and invoices for utilities, labor, goods, materials and services of any kind relating to the Property for the period prior to the Closing Date and Seller shall not, directly or indirectly, (x) take action so as to cause the further encumbrance of the Property, or (y) take action so as to cause the recording of any lien thereon.

 

 

 

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10.     AS-IS Sale and Purchase. 

 

10.1     Buyer's Acknowledgment. As a material inducement to Seller to enter into this Agreement and to convey the Property to Buyer, Buyer hereby acknowledges and agrees that:

 

10.1.1     AS-IS. Except as otherwise expressly set forth in this Agreement, and subject to Seller's representation and warranties set forth in this Agreement and/or in any Other Document, Buyer is purchasing the Property in its existing condition, "AS-IS, WHERE-IS, WITH ALL FAULTS," and upon the Closing Date has made or has waived all inspections and investigations of the Property and its vicinity which Buyer believes are necessary to protect its own interest in, and its contemplated use of, the Property.

 

10.1.2     No Representations. Other than the express representations and warranties of Seller contained in this Agreement and/or in any Other Document, neither Seller, nor any Seller Parties have made any representation, warranty, inducement, promise, agreement, assurance or statement, oral or written, of any kind to Buyer upon which Buyer is relying, or in connection with which Buyer has made or will make any decisions concerning the Property or its vicinity including, without limitation, its use, condition, value, compliance with "Governmental Regulations," the existence or absence of Hazardous Substances, or the permissibility, feasibility, or convertibility of all or any portion of the Property for any particular use or purpose, including, without limitation, its present or future prospects for sale, lease, development, occupancy or suitability as security for financing. As used herein, the term "Governmental Regulations" means any laws (including Environmental Laws), ordinances, rules, requirements, resolutions, policy statements and regulations (including, without limitation, those relating to land use, subdivision, zoning, Hazardous Substances, occupational health and safety, the Americans with Disabilities Act, water, earthquake hazard reduction, and building and fire codes) of any governmental or quasi-governmental body or agency claiming jurisdiction over the Property. As used in this Agreement, the following definitions shall apply: "Environmental Laws" shall mean all federal, state and local laws, ordinances, rules and regulations now or hereafter in force, as amended from time to time, and all federal and state court decisions, consent decrees and orders interpreting or enforcing any of the foregoing, in any way relating to or regulating human health or safety, or industrial hygiene or environmental conditions, or protection of the environment, or pollution or contamination of the air, soil, surface water or groundwater, and includes, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq., and the Clean Water Act, 33 U.S.C. § 1251, et seq., and any similar law of the State of California. "Hazardous Substances" shall mean any substance or material that is described as a toxic or hazardous substance, waste or material or a pollutant or contaminant, or words of similar import, in any of the Environmental Laws, and includes asbestos, petroleum (including crude oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel, or any mixture thereof), petroleum-based products and petroleum additives and derived substances, lead-based paint, mold, fungi or bacterial matter, polychlorinated biphenyls, urea formaldehyde, radon gas, radioactive matter, medical waste, and chemicals which may cause cancer or reproductive toxicity.

 

 

 

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10.1.3     No Implied Warranties. Excluding any express representation or warranty set forth herein or in any Other Document, Seller hereby specifically disclaims: (a) all warranties implied by law arising out of or with respect to the execution of this Agreement, any aspect or element of the Property, or the performance of Seller's obligations hereunder including, without limitation, all implied warranties of merchantability, habitability and/or fitness for a particular purpose; and (b) any warranty, guaranty or representation, oral or written, past, present or future, of, as to, or concerning (i) the nature and condition of the Property or other items conveyed hereunder, including, without limitation, the water, soil, and geology, the suitability thereof and of the Property or other items conveyed hereunder for any and all activities and uses which Buyer may elect to conduct thereon, the existence of any environmental hazards or conditions thereon (including but not limited to the presence of asbestos or other Hazardous Substances) or compliance with applicable Environmental Laws; (ii) the nature and extent of any right-of-way, lease, possession, lien, encumbrance, license, reservation, condition or otherwise; and (iii) the compliance of the property or other items conveyed hereunder or its operation with any governmental regulations.

 

10.1.4     Information Supplied by Seller. Buyer specifically acknowledges and agrees that, except as expressly contained in this Agreement, the Seller has made no representation or warranty of any nature concerning the accuracy or completeness of any documents delivered or made available for inspection by Seller to Buyer, including, without limitation, the Due Diligence Items, and that Buyer has undertaken such inspections of the Property as Buyer deems necessary and appropriate and that, subject to Seller's representation and warranties set forth in this Agreement and/or in any Other Document, Buyer is relying solely upon such investigations and not on any of the Due Diligence Items or any other information provided to Buyer by or on behalf of Seller. As to the Due Diligence Items, Buyer specifically acknowledges that they may have been prepared by third parties with whom Buyer has no privity and Buyer acknowledges and agrees that, except as expressly provided herein, no warranty or representation, express or implied, has been made, nor shall any be deemed to have been made, to Buyer with respect thereto, either by the Seller Parties or by any third parties that prepared the same.

 

10.1.5     Release. As of the Close of Escrow, Buyer on behalf of itself and on behalf of the Buyer Parties hereby forever, fully and irrevocably release Seller and Seller Parties from any and all claims that Buyer or Buyer Parties may have or thereafter acquire against Seller or Seller Parties for any cost, loss, liability, damage, expense, demand, action or cause of action ("Claims") arising from or related to any matter of any nature relating to, and condition of, the Property including any latent or patent construction defects, errors or omissions, compliance with law matters, Hazardous Substances and other environmental matters within, under or upon, or in the vicinity of the Property, any statutory or common law right Buyer or Buyer Parties may have to receive disclosures from Seller or Seller Parties, including, without limitation, any disclosures as to the Property's location within areas designated as subject to flooding, fire, seismic or earthquake risks by any federal, state or local entity, the need to obtain flood insurance, the certification of water heater bracing and/or the advisability of obtaining title insurance, the energy use of the Property, or any other condition or circumstance affecting the Property, its financial viability, use or operation, or any portion thereof. This release includes Claims of which Buyer or Buyer Parties are presently unaware or which Buyer or Buyer Parties do not presently suspect to exist in its favor which, if known by Buyer or Buyer Parties, would materially affect Buyer's or Buyer Parties' release of Seller or Seller Parties. In connection with the general release set forth in this Section 10.1.5, Buyer specifically waives on its behalf and behalf of Buyer Parties the provisions of California Civil Code Section 1542, which provides as follows:

 

 

 

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"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR."

 

Notwithstanding anything to the contrary set forth in this Section 10.1.5, the foregoing release is not intended to and does not cover (i) Fraud (as defined below), (ii) any Claims arising from a breach of Seller's express representations or warranties set forth in this Agreement or in any Other Document, (iii) any other breach by Seller of an express obligation of Seller under this Agreement which by its terms survives the Close of Escrow, under the Leaseback Agreement or under any Other Document, or (iv) injuries to persons or property during Seller's ownership of the Property to the extent that the same are covered by insurance maintained by Seller (herein collectively the ""Excluded Claims"). The term "Fraud" means a final judicial determination by a court of competent jurisdiction that Seller deliberately and intentionally concealed or affirmatively misrepresented in writing any material, adverse facts relative to the Property as of Closing that (a) would be reasonably likely to be expected to cause Buyer to terminate the Escrow had such facts been disclosed to Buyer prior to Closing, and (b) are or were known by Seller prior to Closing.

 

Buyer also agrees never to commence, aid in any way, participate in, or prosecute against Seller or Seller Parties any action or other proceeding based upon any losses, liabilities, damages, claims, demands, causes of action, costs and expenses covered in this Section 10.1.5 (other than the Excluded Claims).

 

10.1.6     Natural Hazard Disclosure. Buyer and Seller acknowledge that Seller is required to disclose if any of the Property lies within the following natural hazard areas or zones: (i) a special flood hazard area designated by the Federal Emergency Management Agency; (ii) an area of potential flooding; (iii) a very high fire hazard severity zone; (iv) a wild land area that may contain substantial forest fire risks and hazards; (v) an earthquake fault or special studies zone; or (vi) a seismic hazard zone. Buyer acknowledges that Seller will employ the services of Disclosure Source ("Natural Hazard Expert") to examine the maps and other information specifically made available to the public by government agencies and to report the results of its examination to Buyer in writing. The written report prepared by the Natural Hazard Expert regarding the results of its examination fully and completely discharges Seller from its disclosure obligations referred to herein, and, for the purposes of this Agreement, the provisions of Civil Code Section 1103.4 regarding the non-liability of Seller for errors and/or omissions not within its personal knowledge shall be deemed to apply, and the Natural Hazard Expert shall be deemed to be an expert dealing with matters within the scope of its expertise with respect to the examination and written report regarding the natural hazards referred to above.

 

 

 

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10.1.7     Energy Performance Disclosure Waiver. Buyer acknowledges that Seller may be required to disclose certain information concerning the energy performance of the Property pursuant to California Public Resources Code Section 25402.10 and the regulations adopted pursuant thereto (collectively the "Energy Disclosure Requirements"). Buyer hereby waives any rights under the Energy Disclosure Requirements and further waives any right to receive the Disclosure Summary Sheet, Statement of Energy Performance, Data Checklist, and Facility Summary, all as defined in the Energy Disclosure Requirements (collectively, the "Energy Disclosure Information"). Buyer, on its behalf and on behalf of Buyer Parties, hereby forever releases Seller and Seller Parties of any liability under the Energy Disclosure Requirements, including, without limitation, any liability of Seller or Seller Parties' arising as a result of Seller's or Seller Parties' failure to provide to Buyer the Energy Disclosure Information. Buyer's approval of the condition of the Property pursuant to the terms of this Agreement shall be deemed to be Buyer's approval of the energy performance of the Property. The terms of this Section shall survive the recordation of the Deed or earlier termination of this Agreement.

 

11.     Seller's Representations and Warranties. 

 

11.1     Representations and Warranties. Seller represents and warrants to Buyer as of the Effective Date as follows:

 

11.1.1     Formation; Authority. Seller is duly formed, validly existing, and in good standing under laws of the state of its formation. Seller has full power and authority to enter into this Agreement and to perform this Agreement. The execution, delivery and performance of this Agreement by Seller have been duly and validly authorized by all necessary action on the part of Seller and all required consents and approvals have been duly obtained. All requisite action has been taken by Seller in connection with the entering into of this Agreement and the instruments referenced herein and the consummation of the transactions contemplated hereby. The individual(s) executing this Agreement and the instruments referenced herein on behalf of Seller have the legal power, right and actual authority to bind Seller to the terms and conditions hereof and thereof.

 

11.1.2     No Conflict. The execution, delivery and performance of this Agreement and the Closing hereunder will not conflict with any agreement, contract or law applicable to Seller nor constitute a default under any agreement or instrument to which Seller is a party or by which Seller or the Property are bound.

 

11.1.3     Options. Seller has not entered, with any other party, into any existing or pending written contracts of sale, leases, options to purchase or rights of first refusal (or the like) with respect to the Property.

 

11.1.4     Leases. Subject to Seller's right to enter into New Leases pursuant to Section 9.2 above with Buyer's written consent, and other than the Leases identified in Section 1 above and the Leaseback Agreement, Seller has not entered into any other written leases, licenses or other similar occupancy agreements with respect to the leasing or occupancy of the Property. The copies of the Leases delivered or to be delivered to Buyer pursuant to this Agreement are or will be true, correct, and complete copies of all of the Leases in effect with respect to the Property as of the date of their delivery and at Closing there will be no unpaid tenant improvements, leasing concessions or brokerage commission due that have not been disclosed to Buyer in writing. Seller has not received any written notice of any default by Seller that is uncured under any Lease.

 

 

 

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11.1.5     Contracts. To Seller's knowledge, and except as provided in the Due Diligence Items or as shown in the PTR, Seller is not currently a party to any management, service, supply, security, maintenance or other similar contracts or agreements, oral or written, that will affect the Property after Closing. The copies of the contracts delivered or to be delivered to Buyer pursuant to this Agreement are or will be true, correct, and complete copies of all of the contracts to which Seller is a party and in effect with respect to the Property as of the date of their delivery. Seller has not received any written notice of any default by Seller that is uncured under any contract.

 

11.1.6     Code Compliance. Except as otherwise disclosed in the Due Diligence Items or any other written information delivered by Seller to Buyer within three (3) Business Days after the Effective Date, Seller has not received any written notice from any governmental agency that the Property or any condition existing thereon or any present use thereof violates any law or regulations applicable to the Property, including, without limitation, any environmental law, ordinance or regulation and/or the Americans with Disabilities Act.

 

11.1.7     Litigation. Except as otherwise disclosed in the Due Diligence Items or any other written information delivered to Buyer within three (3) Business Days after the Effective Date, Seller has not received written notice of any litigation, arbitration or other legal or administrative suit, action, proceeding or investigation of any kind pending or threatened against or involving Seller relating to the Property or any part thereof, including, but not limited to, any condemnation action relating to the Property or any part thereof, which has not been adjudicated or dismissed prior to the Effective Date.

 

11.1.8     Foreign Person. Seller is not a "foreign person" as defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and the Income Tax Regulations thereunder.

 

11.1.9     Hazardous Substances. Seller has provided Buyer with a true and complete copy of the most current Phase 1 environmental site assessment report pertaining to the Property in Seller's possession and except as otherwise disclosed in such Phase 1 environmental site assessment report, the other Due Diligence Items or any other written information delivered by Seller to Buyer within three (3) Business Days after the Effective Date, Seller has not received written notice of any release of Hazardous Substances has come to be located upon or under the Property. Except as otherwise disclosed in the Due Diligence Items or any other written information delivered by Seller to Buyer within three (3) Business Days after the Effective Date, Seller has not received written notice of any proceeding or inquiry by any governmental authority with respect to the presence of Hazardous Materials upon or under the Property or the migration thereof from or to other property.

 

 

 

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11.1.10     Due Diligence Items. To Seller's knowledge, the copies of the Due Diligence Items delivered or made available to Buyer pursuant to Section 4.1.1 above constitute true and complete copies of such documents in Seller's possession. The schedule of Building-related expenses for the Property delivered or to be delivered to Buyer were prepared by or for Seller in the ordinary course of its business. Other than the Excluded Information, Seller's Representative has not intentionally elected to withhold materials, reports or other written information known to Seller concerning the Property in the nature of the Due Diligence Items on the grounds that it contains information which would have a materially adverse impact on the value or use of the Property.

 

11.1.11     Insolvency. No attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings, whether voluntary or involuntary, are pending or to Seller's knowledge, threatened against Seller, nor are any of such proceedings contemplated by Seller.

 

11.1.12     OFAC. Seller is not a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control ("OFAC") of the Department of the Treasury (including those named on OFAC's Specially Designated Nationals and Blocked Persons List) or under any statute or executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism).

 

11.2     Subsequent Changes. If, after Effective Date, Seller first becomes aware of any fact or circumstance which would result in any of its representations or warranties contained herein being untrue or incorrect, then Seller will promptly give notice of such changed fact or circumstance to Buyer. Upon Buyer becoming actually aware of any fact or circumstance which would result in a breach of one of Seller's representations or warranties contained herein, Buyer, as its sole remedy, shall have the option of (i) waiving the breach of the representation or warranty and proceeding with the Close of Escrow, or (ii) terminating this Agreement, in which event the Deposit and any other funds deposited by Buyer into the Escrow and all interest earned thereon shall be returned to Buyer and, if (x) the representation and warranty was untrue when made as of the Effective Date, or (y) the failure of such representation and warranty to be true also constitutes, or was otherwise caused, a breach by Seller of any of its obligations under this Agreement (e.g., prior to the Effective Date, Seller had received written notice of an uncured release of Hazardous Substances under the Property and failed to include such notice in the Due Diligence Documents) or was otherwise caused by the affirmative acts or omissions of Seller in violation of a specific obligation expressly set forth in this Agreement, then Buyer may also pursue its remedies under Section 16.1 hereof. Any such election shall be made by Buyer not later than the earlier to occur of the Scheduled Closing Date or the date which is seven (7) days after the expiration of the notice and cure period set forth in Section 16.5 below. If Buyer does not so timely elect to terminate this Agreement pursuant to this Section 11.2, then Buyer shall be deemed to have elected to waive its rights to terminate this Agreement by reason of the existence of such fact or circumstance, elected to acquire the Property on the terms set forth in this Agreement, and waived all remedies at law or in equity with respect to any representations or warranties resulting from the facts or circumstances disclosed by Seller in its notice to Buyer.

 

 

 

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11.3     Seller's Knowledge. Whenever phrases such as "to Seller's knowledge", "known to Seller" or "Seller has no knowledge" or similar phrases are used herein, they will be deemed to refer exclusively to matters within the current actual (as opposed to constructive) knowledge of the Seller's Representative. No duty of inquiry or investigation on the part of Seller or Seller's Representative will be required or implied by the making of any representation or warranty which is so limited to matters within Seller's actual knowledge, and Buyer agrees and acknowledges that in no event shall Seller's Representative have any personal liability therefor. Seller represents and warrants to Buyer that Seller's Representative is a person who has significant knowledge of the matters described in the representations and warranties in this Agreement which are limited by the knowledge of Seller.

 

11.4     Survival. All of the representations and warranties of Seller contained herein, and any representations and warranties of Seller contained in any document delivered to Buyer at Closing, shall not be deemed to have merged with the Deed and will survive Closing for a period of nine (9) months after the Closing Date ("Survival Period"). No claim for a breach of any representation or warranty of Seller will be actionable or payable if (i) Buyer does not notify Seller in writing of such breach and commence a "legal action" thereon within the Survival Period, or (ii) the breach in question results from or is based on a condition, state of facts or other matter which was actually known to Buyer prior to Closing.

 

12.     Buyer's Representations and Warranties. Buyer represents and warrants to Seller as of the Effective Date, and as of the Closing Date, as follows:

 

12.1     Formation; Authority. Buyer is duly formed, validly existing and in good standing under laws of the state of its formation. Buyer has full power and authority to enter into this Agreement and has, or prior to Closing will have, full power and authority to consummate the Closing under this Agreement. The execution, delivery and, performance of this Agreement by Buyer have been duly and validly authorized by all necessary action on the part of Buyer and all required consents and approvals have been duly obtained. Subject to the preceding provisions of this Section 12.1, all requisite action has been taken by Buyer in connection with the entering into of this Agreement and the instruments referenced herein and the consummation of the transactions contemplated hereby. The individual(s) executing this Agreement and the instruments referenced herein on behalf of Buyer have the legal power, right and actual authority to bind Buyer to the terms and conditions hereof and thereof.

 

12.2     No Conflicts. Neither the execution of this Agreement nor the consummation of the transactions contemplated in this Agreement will constitute a violation of, be in conflict with, or constitute a default under (or with the passage of time or delivery of notice, or both, would constitute a default under) any term or provision of Buyer's operating agreement or any other agreement or other instrument to which Buyer is bound.

 

12.3     Funds. Buyer has (or shall have at Closing) the requisite funds in cash or cash equivalents to pay the Purchase Price and any other sums due and owing from Buyer under this Agreement; it being agreed and acknowledged that in no event shall this Agreement or the Close of Escrow be contingent or conditioned upon Buyer obtaining financing or other funds necessary to pay the Purchase Price and any other sums due and owing from Buyer under this Agreement.

 

 

 

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12.4     OFAC. Buyer is not a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the OFAC (including those named on OFAC's Specially Designated Nationals and Blocked Persons List) or under any statute or executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism). 

 

12.5     Survival. All of the representations and warranties of Buyer contained herein, and any representations and warranties of Buyer contained in any document delivered to Seller at Closing, shall not be deemed to have merged with the Deed and will survive Closing for the Survival Period. No claim for a breach of any representation or warranty of Buyer will be actionable or payable if (i) Seller does not notify Buyer in writing of such breach and commence a "legal action" thereon within the Survival Period, or (ii) the breach in question results from or is based on a condition, state of facts or other matter which was actually known to Seller prior to Closing.

 

13.     Casualty and Condemnation.

 

13.1     Material Casualty. In the event that prior to the Close of Escrow the Real Property, or any material portion thereof, is destroyed or materially damaged, Buyer shall have the right, exercisable by giving written notice to Seller within ten (10) Business Days after receipt of written notice from Seller of such damage or destruction, either (i) to terminate this Agreement in which event the Deposit shall be immediately returned to Buyer, any other money or documents in Escrow shall be returned to the party depositing the same, and thereafter neither party shall have any further rights or obligations hereunder except for Seller's and Buyer's obligations and indemnities under this Agreement that by their terms expressly survive the termination of this Agreement, or (ii) to accept the Real Property in its then condition and to proceed with the consummation of the transaction contemplated by this Agreement, with an abatement or reduction in the Purchase Price in the amount of the deductible for the applicable insurance coverage, and to receive a full assignment of all of Seller's rights to any insurance proceeds payable by reason of such damage or destruction. If Buyer elects to proceed under clause (ii) above, Seller shall not compromise, settle or adjust any claims to such proceeds without Buyer's prior written consent.

 

13.2     Non-Material Casualty. In the event that prior to the Close of Escrow there is any non-material damage to the Real Property, or any part thereof, Seller may repair or replace such damage prior to the Close of Escrow. However, in the event Seller elects not to repair or replace such damage, Seller shall notify Buyer in writing of such fact (the "Non-Repair Notice") and Buyer shall thereafter accept the Real Property in its then condition, and proceed with the transaction contemplated by this Agreement and Buyer shall receive an abatement or reduction in the Purchase Price in the amount of the deductible for the applicable insurance coverage, and Buyer shall be entitled to a full assignment of all of Seller's rights to any insurance proceeds payable by reason of such damage or destruction. In the event Seller does not repair or replace such damages, Seller shall not compromise, settle or adjust any claims to such proceeds without Buyer's prior written consent.

 

 

 

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13.3     Material Condemnation. In the event that prior to the Close of Escrow, all or any material portion of the Real Property is subject to a taking by a public or governmental authority, Buyer shall have the right, exercisable by giving written notice to Seller within ten (10) Business Days after receiving written notice of such taking, either (i) to terminate this Agreement, in which event the Deposit shall be immediately returned to Buyer, any other money or documents in Escrow shall be returned to the party depositing the same, and (ii) to accept the Real Property in its then condition, without a reduction in the Purchase Price, and to receive a full assignment of all of Seller's rights to any condemnation award or proceeds payable by reason of such taking. If Buyer elects to proceed under clause (ii) above, Seller shall not compromise, settle or adjust any claims to such award without Buyer's prior written consent.

 

13.4     Non-Material Condemnation. In the event that prior to the Close of Escrow, any non-material portion of the Real Property is subject to a taking by any public or governmental authority, Buyer shall accept the Real Property in its then condition and proceed with the consummation of the transaction contemplated by this Agreement, in which event Buyer shall be entitled to a full assignment of all of Seller's rights to any award or proceeds payable in connection with such taking. In the event of any such non-material taking, Seller shall not compromise, settle or adjust any claims to such award without Buyer's prior written consent.

 

13.5     Materiality Standard. For purposes of this Section 13, damage to the Real Property or a taking of a portion thereof shall be deemed to involve a material portion thereof if (i) the estimated cost of restoration or repair, as estimated by Buyer and Seller in their reasonable discretion, of such damage shall exceed Five Hundred Thousand Dollars ($500,000), (ii) the amount of the condemnation award with respect to such taking shall exceed Five Hundred Thousand Dollars ($500,000), or (iii) there is any actual or threatened condemnation or eminent domain action of any direct or indirect material access to the Property or that would result in the Property being non-conforming under current zoning.

 

13.6     Notice of Casualty and Condemnation. Seller agrees to give Buyer prompt written notice of any taking of, proposed taking of, damage to or destruction of the Real Property and, as soon thereafter as reasonably practicable, the estimated cost of restoration or repair.

 

13.7     Uninsured Casualty. Notwithstanding anything in this Section 13 to the contrary, in the event that prior to the Close of Escrow the Real Property, or any portion thereof, is damaged or destroyed and the damage or destruction arises out of an uninsured risk and (i) Buyer has not elected to terminate this Agreement pursuant to Section 13.1 above, or (ii) if the value of the Property destroyed or damaged is equal to or less than Five Hundred Thousand Dollars ($500,000.00), then Seller shall advise Buyer, by written notice within ten (10) days of the occurrence of such damage or destruction, whether or not Seller will agree to close the transaction contemplated hereby with a reduction of the Purchase Price equal to the costs of repairing the Property, as reasonably estimated by an engineer engaged by Seller and reasonably acceptable to Buyer. If Seller fails to agree to provide such credit, Buyer shall have the right to terminate this Agreement by delivery of written notice to Seller within five (5) Business Days following Buyer's receipt of such written notice from Seller.

 

 

 

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14.     Notices. All notices or other communications required or permitted hereunder shall be in writing, and shall be personally delivered (including by means of professional messenger service or reputable air express service utilizing receipts) or sent by telecopy, receipt confirmed, or email transmission and shall be deemed received upon the date of receipt thereof if received prior to 5:00 p.m. Pacific time, and if not so received, shall be deemed received upon the following Business Day; provided that any notice sent by email transmission must be either (i) followed by a confirmatory notice sent by national overnight delivery service or personal delivery within two (2) Business Days thereafter, or (ii) acknowledged as being received by the party to whom notice is given.

 

	 	
To Seller:
	
Cohu, Inc.
12367 Crosthwaite Circle 

Poway, California 92064
Attn: John H. Allen
Fax No.: (858) 848-8185

E-mail: jallen@cohu.com 

 

	 	
and:
	
Crosbie Gliner Schiffman Southard & Swanson LLP
12750 High Bluff Drive, Suite 250
San Diego, California 92130
Attn: Thomas B. Crosbie, Esq.
Fax No.: (858) 345-1991
E-mail: tcrosbie@cgs3.com  

 

	 	
To Buyer:
	
At Buyer's Notice Address set forth in the Summary and Definitions of Basic Terms.

 

	 	
To Escrow Holder:
	
At Escrow Holder's Address set forth in the Summary and Definitions of Basic Terms.

 

Notice of change of address shall be given by written notice in the manner detailed in this Section 14.

 

15.     Broker Commissions. Upon the Close of Escrow, Seller shall pay a real estate brokerage commission to Broker with respect to this Agreement in accordance with Seller's separate agreement with Broker. Seller represents and warrants to Buyer, and Buyer represents and warrants to Seller, that no other broker or finder has been engaged by it, respectively, in connection with any of the transactions contemplated by this Agreement, or to its knowledge is in any way connected with any of such transactions. In the event of any additional claims for brokers' or finders' fees or commissions in connection with the negotiation, execution or consummation of this Agreement, then as a covenant which shall survive the termination of this Agreement or the Close of Escrow, Buyer shall protect, defend, indemnify and hold Seller harmless from and against such claims if they shall be based upon any statement or representation or agreement by Buyer, and Seller shall protect, defend, indemnify and hold Buyer harmless if such claims shall be based upon any statement, representation or agreement made by Seller.

 

 

 

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16.     Default.

 

16.1     Default by Seller. In the event that the Close of Escrow does not occur as herein provided by reason of any material default of Seller and provided Buyer is not otherwise in default, Buyer may, at its option and as its exclusive remedy, either (i) terminate this Agreement by giving written notice of termination to Seller whereupon Escrow Holder will return to Buyer the Deposit, Seller shall reimburse Buyer for all costs and expenses incurred by Buyer in connection with the transactions contemplated by this Agreement, including, without limitation, attorney's fees and expenses, costs incurred as part of due diligence reviews and the performance of Buyer's obligations hereunder and any fees or deposits forfeited to Buyer's lender up to a maximum aggregate amount of One Hundred Thousand Dollars ($100,000.00) (collectively, "Transaction Costs"), and both Buyer and Seller will be relieved of any further obligations or liabilities hereunder, except for those obligations which expressly survive any termination hereof, or (ii) Buyer may seek specific performance of this Agreement. If Buyer elects the remedy in subsection (ii) above, Buyer must commence and file such specific performance action in the appropriate court not later than forty-five (45) days following the scheduled Closing Date. If Buyer timely brings an action for specific performance under and pursuant to the terms of subsection (ii) above and the remedy of specific performance is not available because Seller conveyed the Property to another party or Seller subjected the Property to a Monetary Lien in an amount greater than the Purchase Price, in each case prior to the date that is thirty (30) days after the date upon which Buyer or Seller has delivered written notice of termination of this Agreement to the other, then Buyer shall have the right to bring a claim against Seller to recover Buyer's full actual damages arising from Buyer's inability to purchase the Property. Except as specifically set forth in this Section 16.1, Buyer does hereby specifically waive any right to pursue any other remedy at law or equity for such default of Seller, including, without limitation, any right to seek, claim or obtain damages, punitive damages or consequential damages; provided, however, that nothing herein shall vitiate or limit any right or remedy Buyer may have with respect to claims of Seller against Buyer to the extent based upon Seller’s Fraud.

 

16.2     Default by Buyer. IN THE EVENT THE CLOSE OF ESCROW DOES NOT OCCUR AS HEREIN PROVIDED BY REASON OF ANY MATERIAL DEFAULT OF BUYER (A "BUYER DEFAULT") AND PROVIDED SELLER IS NOT OTHERWISE IN DEFAULT, BUYER AND SELLER AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY SUFFER. THEREFORE BUYER AND SELLER DO HEREBY AGREE THAT A REASONABLE ESTIMATE OF THE TOTAL NET DETRIMENT THAT SELLER WOULD SUFFER IN THE EVENT OF A BUYER DEFAULT IS AND SHALL BE AN AMOUNT EQUAL TO THE DEPOSIT; AND, AS SELLER'S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY), SAID AMOUNT SHALL BE PAID TO SELLER AS THE FULL, AGREED AND LIQUIDATED DAMAGES FOR A BUYER DEFAULT, ALL OTHER CLAIMS TO DAMAGES OR OTHER REMEDIES IN RESPECT OF A BUYER DEFAULT BEING HEREIN EXPRESSLY WAIVED BY SELLER. SUCH PAYMENT IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677. NOTHING CONTAINED IN THIS SECTION SHALL LIMIT SELLER'S RIGHT TO RECEIVE REIMBURSEMENT FOR COSTS AND EXPENSES PURSUANT TO SECTION 18.5 BELOW, NOR WAIVE OR AFFECT BUYER'S INDEMNITY AND CONFIDENTIALITY OBLIGATIONS HEREUNDER.

 

	
 
	
 
	 	
 
	
 

	
 
	
SELLER'S INITIALS
	 	
BUYER'S INITIALS
	
 

 

 

 

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16.3     Indemnities; Defaults after Closing or Termination. The limitations on the parties' remedies set forth in Sections 16.1 and 16.2 will not be deemed to prohibit either party from (i) specifically seeking indemnification from the other for any matter with respect to which such other party has agreed hereunder to provide indemnification or from seeking damages from such other party in the event it fails or refuses to provide such indemnification; (ii) subject to the terms, conditions and limitations of this Agreement, seeking damages incurred during the period of time after Closing that a representation or warranty by the other party hereunder survives Closing, for the other party's breach of such representation or warranty discovered after such Closing; or (iii) subject to the terms, conditions and limitations of this Agreement, seeking damages or such equitable relief as may be available for the other party's failure to perform after any termination of this Agreement any obligation hereunder which expressly survives such termination; provided, however, that, except as expressly set forth in Sections 16.1 and/or 16.2 above, in no event whatsoever will either party be entitled to recover from the other any punitive, special, consequential or speculative damages.

 

	
 
	
 
	
 
	
 
	
 

	
 
	
SELLER'S INITIALS
	
 
	
BUYER'S INITIALS
	
 

 

16.4     Limited Liability. Notwithstanding anything to the contrary herein, Buyer on its own behalf and on behalf of Buyer Parties hereby agrees that in no event or circumstance shall any of the Seller Parties have any personal liability under this Agreement. Buyer on its own behalf and on behalf of Buyer Parties agrees to look solely to Seller and its assets for the satisfaction of any liability or obligation arising under this Agreement and the transactions contemplated hereby, or for the performance of any of the covenants, warranties or other agreements contained herein, and further agrees not to sue or otherwise seek to enforce any personal obligation against any of Seller Parties with respect to any matters arising out of or in connection with this Agreement or the transactions contemplated hereby; provided, however, to the extent that Buyer obtains a final non-appealable judgment against Seller, and Seller does not have sufficient assets to satisfy such judgment because Seller distributed assets to any of the Seller Parties, Buyer may proceed against any such Seller Parties, but only to the extent of assets distributed to any such Seller Parties and subject to the Cap Amount (as defined below). Notwithstanding anything to the contrary contained herein: (a) the maximum aggregate liability of Seller or Seller Parties, and the maximum aggregate amount which may be awarded to and collected by Buyer or Buyer Parties (including, without limitation, for any breach of any representation, warranty and/or covenant of Seller) under this Agreement or the Exhibits attached hereto (collectively, the "Other Documents") shall, under no circumstances whatsoever, exceed One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) (the "CAP Amount"); (b) Buyer shall notify Seller in writing of any claim of any breach of any representation, warranty and/or covenant of Seller under the Agreement or the Other Documents and commence a "legal action" thereon within the Survival Period; and (c) no claim by Buyer alleging a breach by Seller of any representation, warranty and/or covenant of Seller contained herein or any of the Other Documents may be made, and Seller shall not be liable for any judgment in any action based upon any such claim, unless and until such claim, either alone or together with any other claims by Buyer alleging a breach by Seller of any such representation, warranty and/or covenant, is for an aggregate amount in excess of $25,000.00 (the "Floor Amount"), in which event Seller's liability respecting any final judgment concerning such claim or claims shall be for the entire amount thereof, subject to the CAP Amount set forth in clause (a) above; provided, however, that if any such final judgment is for an amount that is less than or equal to the Floor Amount, then Seller shall have no liability with respect thereto. Notwithstanding the foregoing or anything contained in this Agreement to the contrary, nothing shall vitiate or limit any right or remedy Buyer may have with respect to claims of Seller against Buyer to the extent based upon Seller's Fraud. Seller covenants that during the Survival Period it shall (i) at all times be and remain in good standing under the laws of the state of its formation, and (ii) retain sufficient funds following the Closing to satisfy all of Seller's post-closing obligations under this Agreement and/or under any Other Document. Seller's obligations under this Section 16.4 shall survive the Closing. 

 

 

 

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16.5     Notice and Opportunity to Cure. Neither party shall be deemed to be in default hereunder unless the party claiming such default shall have given written notice to the party claimed to be in default and the party claimed to be in default shall not have cured such notice of default within five (5) Business Days after receipt of notice of default; provided, however, in no event shall (i) the provisions of this Section 16.5 apply to the failure by Buyer to timely deliver the Additional Deposit, the extension payment required by Section 3.2 above, or the Purchase Price, or (ii) the Closing be extended or delayed to permit the cure of a default pursuant to this Section 16.5.

 

17.     Assignment. Buyer may not assign, transfer or convey its rights and obligations under this Agreement without the prior written consent of Seller, which consent shall be granted or withheld in Seller's sole and absolute discretion; provided that Buyer shall have the right, without Seller's consent, to assign its rights and obligations under this Agreement to any entity in which Buyer or its sole member has an interest or in the name of one or more institutional investors for which Buyer, its sole member or one of their respective affiliates, is then acting as investment, development or construction manager. No such assignment shall relieve Buyer from its liability under this Agreement, unless and until the Closing (at which time the original Buyer hereunder shall be deemed released), and any assignee shall assume all of Buyer's obligations hereunder and succeed to all of Buyer's rights and remedies hereunder. Any assignment and assumption must be in writing and a copy of such writing shall be delivered to Seller at least five (5) Business Days prior to the Closing Date. As used herein, "control" (and all variations thereof) shall mean the ownership, directly or indirectly, of at least fifty percent (50%) or more of the voting securities of, or possession of the right to vote, in the ordinary direction of its affairs, of at least fifty percent (50%) or more of the voting interest in, any person or entity.

 

18.     Miscellaneous.

 

18.1     Governing Law. The parties hereto expressly agree that this Agreement shall be governed by, interpreted under, and construed and enforced in accordance with the laws of the State of California.

 

 

 

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18.2     Partial Invalidity. If any term or provision or portion thereof of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision or portion thereof to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law.

 

18.3     Waivers. No waiver of any breach of any covenant or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant or provision herein contained. No extension of time for performance of any obligation or act shall be deemed an extension of the time for performance of any other obligation or act.

 

18.4     Successors and Assigns. Subject to the provisions of Section 17, this Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the parties hereto.

 

18.5     Professional Fees. In the event of the bringing of any action or suit by a party hereto against another party hereunder by reason of any breach of any of the covenants, agreements or provisions on the part of the other party arising out of this Agreement, then in that event the prevailing party shall be entitled to have and recover of and from the other party all costs and expenses of the action or suit and any appeals therefrom, and enforcement of any judgment in connection therewith, including actual attorneys' fees, accounting and engineering fees, and any other professional fees resulting therefrom.

 

18.6     Entire Agreement. This Agreement (including all Exhibits attached hereto) is the final expression of, and contains the entire agreement between, the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. This Agreement may not be modified, changed, supplemented or terminated, nor may any obligations hereunder be waived, except by written instrument signed by the party to be charged or by its agent duly authorized in writing or as otherwise expressly permitted herein. This Agreement may be executed in one or more counterparts, each of which shall be an original, and all of which together shall constitute a single instrument. The parties do not intend to confer any benefit hereunder on any person, firm or corporation other than the parties hereto.

 

18.7     Time of Essence/Business Days. Seller and Buyer hereby acknowledge and agree that time is strictly of the essence with respect to each and every term, condition, obligation and provision hereof and that failure to timely perform any of the terms, conditions, obligations or provisions hereof by either party shall constitute a material breach of and a non-curable (but waivable) default under this Agreement by the party so failing to perform. Unless the context otherwise requires, all periods terminating on a given day, period of days, or date shall terminate at 5:00 p.m. (Pacific time) on such date or dates, and references to "days" shall refer to calendar days except if such references are to "Business Days" which shall refer to days which are not Saturday, Sunday or a legal holiday under the laws of the United States. Notwithstanding the foregoing, if any event is specified to occur, or any period is scheduled to terminate, on a Saturday, Sunday or a legal holiday under the laws of the United States, such event or termination of such period shall occur on the next succeeding Business Day.

 

 

 

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18.8     Construction. Headings at the beginning of each paragraph and subparagraph are solely for the convenience of the parties and are not a part of the Agreement. Whenever required by the context of this Agreement, the singular shall include the plural and the masculine shall include the feminine and vice versa. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if both parties had prepared the same. Unless otherwise indicated, all references to sections are to this Agreement. All exhibits referred to in this Agreement are attached and incorporated by this reference. In the event the date on which Buyer or Seller is required to take any action under the terms of this Agreement is not a Business Day, the action shall be taken on the next succeeding Business Day.

 

19.     Exchange. Upon the request of a party hereto (the "Requesting Party"), the other party (the "Cooperating Party") shall cooperate with the Requesting Party in Closing the sale of the Property in accordance with this Agreement so as to qualify such transaction as an exchange of like-kind property; provided, however, the Cooperating Party shall not be required to take title to any exchange property and the Cooperating Party will not be required to agree to or assume any covenant, obligation or liability in connection therewith, the Closing hereunder shall not be delayed as a result of, or conditioned upon, such exchange, the Requesting Party shall pay all costs associated with such exchange, and the Requesting Party shall remain primarily liable under this Agreement and indemnify the Cooperating Party from any liability in connection with such exchange.

 

20.     Confidentiality. Buyer agrees that (a) except as otherwise provided or required by valid law (including any Seller obligation to disclose the transactions contemplated by this Agreement pursuant to the rules and regulations of the Securities and Exchange Commission) or court order, (b) except to the extent Buyer considers such documents or information reasonably necessary to prosecute and/or defend any claim made with respect to the Property or this Agreement, (c) except to the Title Company and/or Escrow Holder, (d) except to the extent that such information is a matter of public record, and (d) except to the extent reasonably necessary to deliver such documents or information to the Buyer's and Buyer's Parties' respective employees, paralegals, attorneys, consultants potential lenders and/or financing sources in connection with Buyer's evaluation or financing of this transaction, Buyer, Buyer's Parties and Buyer Parties' agents and consultants (collectively, the "Buyer's Representatives"), shall keep and maintain the contents of (x) any non-public materials, reports, documents, data, test results, and other information related to the transaction contemplated hereby, including, without limitation, the Due Diligence Items and all information regarding Buyer's acquisition or ownership of the Property strictly confidential, (y) this Agreement, including, without limitation, the amount of consideration being paid by Buyer for the Property strictly confidential (collectively, the "Confidential Information"). In addition Buyer and Buyer's Representatives and Seller and the Seller Parties shall refrain from generating or participating in any publicity or press release regarding this transaction without the prior written consent of the other party, except that if the transaction contemplated by this Agreement closes, Buyer and the Buyer Parties shall have the right, without obtaining the consent of Seller, to issue a press release regarding the acquisition of the Property, without referring to Seller or any of its affiliates and without including the terms of this Agreement. Buyer acknowledges that significant portions of the Due Diligence Items are proprietary in nature and that Seller would suffer significant and irreparable harm in the event of the misuse or disclosure of the Due Diligence Items. Without affecting any other rights or remedies that either party may have, Buyer acknowledges and agrees that Seller shall be entitled to seek the remedies of injunction, specific performance and other equitable relief for any breach, threatened breach or anticipatory breach of the provisions of this Section 20 by Buyer or any of Buyer's Representatives. Notwithstanding the foregoing, the parties agree that the term "Confidential Information" does not include information which (i) is or becomes generally available to the public other than as a result of wrongful disclosure by Buyer; (ii) prior to or subsequent to disclosure by Buyer hereunder is lawfully received from a third party having the right to disseminate the information, without notice of any restriction against its further disclosure; or (iii) is generated independently by Buyer from sources other than the Confidential Information without violating any of the obligations under this Agreement. The provisions of this Section 20 shall survive any termination of this Agreement but shall not survive the Closing except for Buyer's covenant in clause (y) hereof and Buyer and Seller's covenants regarding press releases, which covenants shall survive the Closing.

 

 

 

-31-

 

 

20.1     Counterparts. This Agreement may be executed in counterparts, each of which when executed shall be deemed an original and all of which counterparts taken together shall constitute but one and the same instrument. Signature pages may be detached from the counterparts and attached to a single copy of this Agreement to form one document.

 

20.2     Electronic Signatures. Signatures to this Agreement transmitted by facsimile or by electronic transmission shall be valid and effective to bind the party so signing. Each party agrees to promptly deliver an execution original of this Agreement with its actual signature to the other party, but a failure to do so shall not affect the enforceability of this Agreement, it being expressly agreed that each party to this Agreement shall be bound by its own telecopied or scanned signature and shall accept the telecopied or scanned signature of the other party to this Agreement.

 

[Signature page follows]

 

 

 

-32-

 

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year hereinabove written.

 

 

	"SELLER"	COHU, INC.,	 
	 	a Delaware corporation	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Jeffrey D. Jones
	
 

	
 
	
Name:
	
Jeffrey D. Jones
	
 

	
 
	
Title:
	
V.P. Finance and CFO
	
 

 

 

	"BUYER"	ACTH II LLC,	 
	
 
	
a Delaware limited liability company
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Dominic J. Petrucci
	
 

	
 
	
Name:
	
Dominic J. Petrucci
	
 

	
 
	
Title:
	
Authorized Signatory
	
 

 

 

 

-33-

 

  

JOINDER BY ESCROW HOLDER

 

Escrow Holder (as defined in Section 8 of Article I above) hereby acknowledges that it has received this Agreement executed by the Seller and Buyer and accepts the obligations of and instructions for the Escrow Holder set forth herein. Escrow Holder agrees to disburse and/or handle the Deposit, the Purchase Price and all closing documents in accordance with this Agreement.

  

	Dated: _________, 2015	CHICAGO TITLE COMPANY,	 
	
 
	
a California corporation
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
 
	
 

	
 
	
Name: 
	
 
	
 

	
 
	
Title:
	
 
	
 

  

 

 

-34-

 

 

EXHIBIT "A"

 

LEGAL DESCRIPTION

 

That certain real property located in the City of Poway, County of San Diego, State of California, described as follows:

 

 

EXHIBIT "A" 

 

 

-1-

 

 

EXHIBIT "B"

 

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

 

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
 

	 	 

  

(Above Space For Recorder's Use Only)

 

GRANT DEED

 

The undersigned grantor(s) declare(s): 

 

Documentary Transfer Tax: $______________.
☒ Computed on full value of property conveyed.

  

City of ______________
County of ___________

 

FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, ____________________________________, a _______________________________, hereby GRANTS to ____________________________________, a __________________________, that certain real property which is more particularly described on Exhibit "A" which is attached hereto.

 

Subject to: 

 

1.     Nondelinquent taxes and assessments; and

 

2.     All matters of record recorded in the Official Records of San Diego County or that would be readily visible from a reasonable inspection of the property or which an accurate ALTA survey of the property would disclose. 

 

	
Dated: __________, 201_
	
 
	
,

	 	a	 	 
	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	 	
 

	
 
	
Name:
	
 
	
 

	
 
	
Title:
	
 
	
 

 

EXHIBIT "B"

 

 

-1-

 

  

	
 

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

 

 

State of California                                            )

County of ______________________     )

 

	
On
	
 
	
, before me,
	
 
	,
	
 
	
 
	
 
	
(insert name of notary)
	 

 

Notary Public, personally appeared      , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

 

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

 

WITNESS my hand and official seal.

 

Signature                                                                                                        (Seal)

 

EXHIBIT "B"

 

 

-2-

 

  

EXHIBIT "A" TO GRANT DEED

 

LEGAL DESCRIPTION

 

That certain real property located in the City of _______________, County of _______________, State of California, described as follows:

 

[TO BE PROVIDED]

 

 EXHIBIT "B"

 

-3-

 

  

EXHIBIT "C"

 

RESERVED

  
EXHIBIT "C"

 

 

-1-

 

 

EXHIBIT "D"

 

FORM OF BUYER'S APPROVAL NOTICE

 

[TO BE PLACED ON BUYER LETTERHEAD]

 

__________________________
__________________________
__________________________
Attn: ______________________

 

	 	
Re:
	
Buyer's Approval Notice (this "Notice"); Agreement of Purchase and Sale and Joint Escrow Instructions by and between [___________________] ("Seller") and [_______________] ("Buyer") dated as of [______], 201__ (the "Agreement")

 

Gentlemen:

 

This letter shall serve as Buyer's Approval Notice pursuant to Section 4.1.4 of the Agreement and notice of Buyer's election to proceed with the transaction contemplated in the Agreement past the expiration of the Property Approval Period. Buyer has waived its right to terminate the Agreement under Sections 4.1.4 and 4.2.1 of the Agreement. Additionally, Buyer hereby acknowledges that, in accordance with the terms of Section 4.2 of the Agreement, except for the Monetary Liens and any objection set forth in the Title Notice which Seller has elected to cure in Seller's Response, all matters shown in the PTR and the Survey are hereby approved by Buyer. All capitalized terms used herein shall have the meaning given such terms in the Agreement unless otherwise expressly provided herein.

 

Sincerely,

 

[________________]

 

By:                                    
Name:                               
Its:                                     

 

EXHIBIT "D"

 

 

-1-

 

 

EXHIBIT "E"

 

BILL OF SALE

 

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, ______________________________________, a _____________________________, ("Seller"), does hereby GRANT, SELL, CONVEY, TRANSFER AND DELIVER to ____________________, a ________________________ ("Buyer"), without any warranty of any kind, any and all of Seller's right, title and interest in and to the personal property owned and utilized by Seller in connection with the operation and management of, and located at, the real property described in Exhibit "A" attached hereto and made a part hereof (the "Property"). Notwithstanding the foregoing, Seller hereby represents and warrants that Seller has not previously conveyed, assigned or encumbered by financing lien any such personal property. 

 

IN WITNESS WHEREOF, this Bill of Sale has been executed as of this ___ day of __________, 201__. 

 

	
SELLER:
	 	,
	  	a 	  	 
	  	 	  	 
	  	 	  	 
	
BUYER:
	 	,
	  	a	  	 

 

EXHIBIT "E" 

 

 

-1-

 

 

EXHIBIT "F"

 

GENERAL ASSIGNMENT

 

This General Assignment is made as of the ____ day of ______________, 201__ ("Assignment Date"), by ______________________________________, a _____________________________, (the "Assignor"), and __________________________, a _________________________ (the Assignee").

 

Pursuant to that certain Agreement of Purchase and Sale and Joint Escrow Instructions dated as of ______________, 201__ (the "Purchase Agreement"), Assignee has this day acquired from Assignor the Property. Capitalized terms used herein shall have the meanings ascribed to them in the Purchase Agreement.

 

In consideration of the acquisition of the Property by Assignee and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.     Assignment. Assignor hereby assigns, transfers and sets over unto Assignee, without representation or warranty of any kind, and Assignee hereby accepts from Assignor, any and all of Assignor's right, title and interest in and to (i) all freely transferable warranties and guaranties (the "Warranties and Guaranties"), if any, with respect to the Property, (ii) all freely transferable consents, authorizations, variances or waivers, licenses, permits and approvals and certificates of occupancy ("Approvals") from any governmental or quasi-governmental agency, department, board, commission, bureau or other entity or instrumentality of any nature relating solely to the Property, and (iii) all other intangible rights and property owned by Seller and used in connection with the Property (the "Other Intangible Property"). Assignor warrants to Assignee that Assignor owns all right, title and interest in the property being assigned and conveyed pursuant to this Assignment, free and clear of any lien, security interest or adverse claim.

 

2.     Further Assurances. Assignor hereby covenants that Assignor will, at any time and from time to time upon written request therefor, execute and deliver to Assignee, Assignee's successors, nominees or assigns, at no cost or expense to Assignor, such documents as Assignee or they may reasonably request in order to fully assign and transfer to and vest in Assignee or Assignee's successors, nominees and assigns the property being assigned and conveyed pursuant to this Assignment.

 

3.     Counterparts. This Assignment may be executed in counterparts, each of which shall be deemed an original, and all of which shall taken together be deemed one document.

 

4.     Survival. This Assignment and the provisions hereof shall inure to the benefit of and be binding upon the parties to this Assignment and their respective successors, heirs and permitted assigns.

 

5.     No Third Party Beneficiaries. Except as otherwise expressly set forth herein, Assignor and Assignee do not intend, and this Assignment shall not be construed, to create a third-party beneficiary status or interest in, nor give any third-party beneficiary rights or remedies to, any other person or entity not a party to this Assignment.

 

EXHIBIT "F"

 

 

-1-

 

 

6.     Governing Law. This Assignment shall be governed by, interpreted under, and construed and enforceable in accordance with, the laws of the State of California.

 

IN WITNESS WHEREOF, Assignor and Assignee have caused this instrument to be executed as of the date above-written.

 

	
"Assignor"
	 	,
	 	a	 	 
	 	 	 	 
	 	 	 	 
	
"Assignee"
	 	,
	 	a	 	 

 
EXHIBIT "F"

 

 

-2-

 

  

EXHIBIT "G"

 

FORM OF TENANT ESTOPPEL CERTIFICATE

  

 

[Name of Buyer]
_________________________
_________________________
Attn: ____________________

 

Re:      [Address of Property]     Suite: ______________
Tenant: [Name of Tenant]

 

Gentlemen:

 

You are hereby advised that the undersigned is the Tenant and present occupant of a portion of those certain premises comprising real property and improvements thereon commonly known as ____________________________ located in __________________, California (the "Premises"). The undersigned hereby certifies:

 

1.     The Premises are leased under the provisions of a lease agreement dated ___________ __, _____ between Tenant and ___________________ ("Landlord"). The lease agreement is valid and in full force and effect and has not been modified except by document(s) dated ________ __, _____; true, complete and correct copy(ies) of the Lease and all such amendments are attached hereto, and the same contain all of the understandings and agreements between Landlord and Tenant (herein collectively referred to as the "Lease"). Tenant's leased Premises contain _________ rentable square feet.

 

2.     The commencement date of the term of the Lease is _______________ ___, _____ and the expiration date is __________________, 20__; and the undersigned's obligation to pay rent has commenced.

 

3.     The Lease provides for an option to renew the Lease term as follows: _____________________________________________________________________________, at a rental rate of $__________.

 

4.     The Lease provides for rent payable as follows:

 

a.     Current minimum fixed monthly rent: $__________ with future escalations as follows: __________ ______________________________________________.

 

b.     No rent has been paid by Tenant in advance under the Lease except for the minimum monthly rent that became due for the current month. The minimum rent has been paid through __________ ___, 20____.

 

c.     The Lease provides for the Tenant to pay its pro rata share of property operating expenses, including but not limited to insurance and real property taxes.

 

EXHIBIT "G"

 

 

-1-

 

 

d.     The Lease provides for the payment of percentage rent as follows: _____________________________________________________________________________.

 

5.     The Lease contains no first right of refusal, right of first offer, option to expand, option to terminate, or exclusive business or use rights, except as follows: __________________________ ____________________________________________________________________________________________________________________________________________.

 

6.     The Lease contains no options to purchase or right of first offer, right of first refusal, right of first negotiation or any other preferential right to purchase all or any part of the Premises or all or any part of the building or project of which the Premises are a part.

 

7.     Landlord is holding a security deposit of $__________ and, to Tenant's knowledge, no portion thereof has been applied by Landlord.

 

8.     The improvements and space required to be furnished according to the Lease have been duly delivered by Landlord and accepted by the Tenant; except as follows: _______________________. Landlord's obligations to pay for or construct tenant improvements or common area, if any, have been satisfied in full; except as follows ______________________________________________________.

 

9.     The undersigned has no known rights of setoffs or defenses against Landlord or any rents payable under the Lease, nor does the undersigned assert or allege any claim against Landlord for any failure of performance of any of the terms of said Lease. There are no known defaults by Landlord, including, without limitation, defaults relating to the design, construction, condition and tenant uses of the Premises or the building or project of which the Premises are a part. Tenant knows of no event or condition which, with the passage of time, the giving of notice, or both, would constitute a default by Landlord under the Lease. Tenant is not in default under the Lease and, to Tenant's knowledge, no events or conditions exist which, with the passage of time or giving of notice or both, would constitute a default by Tenant under the Lease.

 

10.     The undersigned has not entered into any sublease, assignment or any other agreement transferring any of its interest in the Lease or the Premises except as follows: ___________________________________________________________________________________________________________________________________________________________.

 

11.     Tenant has not filed (and does not currently intend to file) any form of bankruptcy petition and Tenant is not subject to any bankruptcy, insolvency, creditors' rights or similar proceeding in any federal, state or other court or jurisdiction. Tenant is not insolvent.

 

12.     Tenant has not used, generated, released, discharged, stored or disposed of any Hazardous Substances on, under, in or about the Premise or the building or land in or on which the Premises are located, other than Hazardous Substances used in the ordinary and commercially reasonable course of Tenant's business in compliance with all applicable laws. As used herein , "Hazardous Substance" means any substance, material or waste (including petroleum and petroleum products) which is designated, classified or regulated as being "toxic" or "hazardous" or a "pollutant" or which is similarly designated, classified or regulated, under any federal, state or local law, regulation or ordinance.

 

EXHIBIT "G"

 

 

-2-

 

 

The undersigned makes this statement for your (and your assignee's) benefit and protection, and for the benefit and protection of any lender making a loan to be secured, in whole or in part, by a lien on the Premises, with the understanding that (i) you (and any assignee of your right to purchase the Property) intend to rely upon this statement in connection with your intended purchase of the above-described Premises from Landlord and (ii) any such lender intends to rely upon this statement in connection with such lender's making of a loan to you (or your assignee) for the purchase the Premises. 

 

 

	
Dated: __________ ___, 20____
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	 	 	
 

	
 
	
 
	
"TENANT"
	
 

	 	 	 	 
	
 
	
 
	
 
	
 

	 	 	(Signature)	 
	 	 	 	 
	 	 	 	 
	 	 	(Title)	 

  

EXHIBIT "G"

 

 

-3-

 

 

EXHIBIT "H"

 

FORM OF SELLER'S LEASE CERTIFICATE

 

[Name of Buyer]

 

_________________________

 

_________________________

 

Attn: ____________________

  

 

Re:      [Address of Property]     Suite: ______________

 

Tenant: __________________ ("Tenant")

  

 

Gentlemen:

 

You are hereby advised that Tenant (defined above) is the tenant and present occupant of a portion of those certain premises comprising real property and improvements thereon commonly known as ____________________________ located in __________________, California (the "Premises"). The undersigned hereby certifies, to the undersigned's knowledge (as defined below), as follows:

 

1.     The Premises are leased under the provisions of a lease agreement dated ___________ __, _____ between Tenant and the undersigned ("Landlord"). The lease agreement is valid and in full force and effect and has not been modified except by document(s) dated ________ __, _____; true, complete and correct copy(ies) of the Lease and all such amendments are attached hereto, and the same contain all of the understandings and agreements between Landlord and Tenant (herein collectively referred to as the "Lease"). Tenant's leased Premises contain _________ rentable square feet.

 

2.     The commencement date of the term of the Lease is _______________ ___, _____ and the expiration date is __________________, 20__; and the undersigned's obligation to pay rent has commenced.

 

3.     The Lease provides for an option to renew the Lease term as follows: _____________________________________________________________________________, at a rental rate of $__________.

 

4.     The Lease provides for rent payable as follows:

 

(a) Current minimum fixed monthly rent: $__________ with future escalations as follows: __________ ______________________________________________.

 

EXHIBIT "H"

 

 

-1-

 

 

(b)     No rent has been paid by Tenant in advance under the Lease except for the minimum monthly rent that became due for the current month. The minimum rent has been paid through __________ ___, 20____.

 

(c)     The Lease provides for the Tenant to pay its pro rata share of property operating expenses, including but not limited to insurance and real property taxes.

 

(d)     The Lease provides for the payment of percentage rent as follows: __________________ ______________________________________________________________________.

 

(e)     No future free rent periods or other concessions of any kind or nature have been granted to Tenant under the Lease, except as follows: _______________________________ __________________________________________________________________________________________________________________________________________________________.

 

5.     The Lease contains no first right of refusal, right of first offer, option to expand, option to terminate, or exclusive business or use rights, except as follows: __________________________ _____________________________________________________________________________________________________________________________________________________________.

 

6.     The Lease contains no options to purchase or right of first offer, right of first refusal, right of first negotiation or any other preferential right to purchase all or any part of the Premises or all or any part of the building or project of which the Premises are a part, except as follows: _______________________________________________________________________________________________________________________________________________________________.

 

7.     Landlord is holding a security deposit of $__________ and no portion thereof has been applied by Landlord.

 

8.     The improvements and space required to be furnished according to the Lease have been duly delivered by Landlord and accepted by the Tenant; except as follows: _______________________. Landlord's obligations to pay for or construct tenant improvements or common area, if any, have been satisfied in full; except as follows ______________________________________________________.

 

9.     Tenant has no rights of setoffs or defenses against Landlord or any rents payable under the Lease, nor does the undersigned assert or allege any claim against Landlord for any failure of performance of any of the terms of said Lease. There are no defaults by Landlord, including, without limitation, defaults relating to the design, construction, condition and tenant uses of the Premises or the building or project of which the Premises are a part. No event or condition exists which, with the passage of time, the giving of notice, or both, would constitute a default by Landlord under the Lease. Tenant is not in default under the Lease and Landlord knows of no events or conditions exist which, with the passage of time or giving of notice or both, would constitute a default by Tenant under the Lease.

 

EXHIBIT "H"

 

 

-2-

 

 

10.     Tenant has not entered into any sublease, assignment or any other agreement transferring any of its interest in the Lease or the Premises except as follows: ___________________ ______________________________________________________________________________________________________________________________________________________________.

 

11.     Tenant has not filed (and to Landlord's knowledge, does not currently intend to file) any form of bankruptcy petition and Tenant is not subject to any bankruptcy, insolvency, creditors' rights or similar proceeding in any federal, state or other court or jurisdiction. Tenant is not insolvent.

 

12     Tenant has not generated, used, stored, spilled, disposed or released any Hazardous Substances at, on or in the Premises or any other portion of the building or project of which the Premises is a part in violation of any applicable law. "Hazardous Substances" means any flammable, explosive, toxic, carcinogenic, mutagenic or corrosive substance, material, chemical or waste, including, but not limited to, any substance, chemical, waste or other material which is listed, defined or otherwise identified as "hazardous" or "toxic" under any federal, state, local or administrative agency, ordinance, law, ruling, regulation or decision including, without limitation, formaldehyde, urea, polychlorinated biphenyls, petroleum, petroleum products or byproducts, crude oil, natural gas, methane, liquefied natural gas, synthetic gas usable for fuel or mixture thereof, radon, asbestos, solvents or any nuclear substances or materials.

 

Landlord makes this statement for your (and your assignee's) benefit and protection, and for the benefit and protection of any lender making a loan to be secured, in whole or in part, by a lien on the Premises, with the understanding that (i) you (and any assignee of your right to purchase the Property) intend to rely upon this statement in connection with your intended purchase of the above-described Premises from Landlord and (ii) any such lender intends to rely upon this statement in connection with such lender's making of a loan to you (or your assignee) for the purchase the Premises. Where in this certificate a statement is made or limited to the knowledge of Landlord or the knowledge of Landlord is referred to herein, such statement (1) is deemed to be limited to the current, actual knowledge of the Seller's Representative (as defined in that certain Agreement of Purchase and Sale and Joint Escrow Instructions dated as of ______________, 201__, by and between you, as buyer, and Landlord, as seller (as amended, the "Purchase Agreement"), and (2) shall in no event or circumstance impose upon Landlord or Seller's Representative any duty or obligation to verify, inquire or make any independent inquiry or investigation of any such statement, or to otherwise investigate the facts or circumstances relating or otherwise pertinent thereto. Buyer further acknowledges and agrees that Seller's Representative shall not be personally liable for, or otherwise have any personal liability under or in connection with, this certificate, including without limitation, in connection with any statement made in connection with, or pursuant to, this certificate. Notwithstanding the foregoing, in the event Landlord delivers to Buyer an Estoppel Certificate (as defined in the Purchase Agreement) executed by Tenant that does not conflict in any material, adverse manner with the statements set forth in this certificate, then this certificate shall automatically be canceled ab initio and of no further force of effect. In addition, this certificate shall automatically be canceled ab initio and of no further force of effect on upon the expiration of the Survival Period (as defined in the Purchase Agreement) unless Buyer commences suit against Landlord with respect to any alleged breach prior to the expiration of the Survival Period (and, in the event any such suit is timely commenced by Buyer against Landlord, shall survive thereafter only insofar as the subject matter of the alleged breach specified in such suit is concerned). If suit is not timely commenced by Buyer prior to the expiration of the Survival Period, then Landlord's representations and warranties contained in this certificate shall thereafter be void and of no force or effect. 

  

 

Dated: __________ ___, 20____

 

EXHIBIT "H"

 

 

-3-

 

  

EXHIBIT "I"

 

LEASEBACK AGREEMENT

 

 

LEASE

 

BY AND BETWEEN

 

___________________,

a _____________________[ENTITY TO BE INCLUDED UPON CLOSING],

 

AS LANDLORD,

 

AND

 

COHU, INC.,

a Delaware corporation,

 

AS TENANT

 

12367 Crosthwaite Circle

 

SUITE 100 [200]

 

[DRAFTING NOTE: ALTERNATIVE PROVISIONS FOR SHORT-TERM LEASE ARE NOTED THROUGHOUT WITH BRACKETS. SEPARATE SHORT-TERM LEASE WILL BE PREPARED WHEN LONG-TERM LEASE HAS BEEN FINALIZED]

 

EXHIBIT "I" 

 

 

 

 

 

LEASE

 

This Lease ("Lease") is made and entered into as of the ______ day of _________, 2015, by and between _________________________________, a ________________ ("Landlord"), and COHU, INC., a Delaware corporation ("Tenant").

 

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the premises described as Suite No. 100 [200], as designated on the plan attached hereto and incorporated herein as Exhibit "A" ("Premises"), of the project ("Project") whose address is 12367 Crosthwaite Circle, Poway, California 92064, for the Term and upon the terms and conditions hereinafter set forth, and Landlord and Tenant hereby agree as follows:

 

ARTICLE 1
BASIC LEASE PROVISIONS

 

	
A.
	
Term:
	
Ten (10) years [Approximately ______ (__) months].

	 	 	 
	  	
Commencement Date:
	
______________, 2015 [ESCROW HOLDER TO FILL IN CLOSING DATE]

	 	 	 
	  	
Expiration Date:
	
The date immediately preceding the tenth (10th) anniversary of the Commencement Date; provided, however, that if the Commencement Date is a date other than the first (1st) day of a month, the Expiration Date shall be the last day of the month which is one hundred twenty (120) months after the month in which the Commencement Date falls, unless extended or earlier terminated pursuant to this Lease. [The later of (i) the last day of the month which is twelve (12) months after the Commencement Date, or (ii) July 31, 2016]

	 	 	 
	
B.
	
Square Footage of Premises:
	
Approximately 146,635 [Approximately 192,629] rentable square feet. The square footage of the Premises includes Tenant's prorata share of the shared electrical room and any other shared utility room in the Project (collectively, the "Shared Space").

 

EXHIBIT "I"

 

 

-2-

 

 

	
C.
	
Basic Rental:
	  

 

	  	
Months
	
Monthly
Basic Rental
	
Approximate
Monthly Basic Rental
Per Rentable Square Foot

	  	
1-12*
	
$131,971.50
	
$.900

	  	
13-24
	
$135,930.64
	
$.927

	  	
25-36
	
$140,008.55
	
$.955

	  	
37-48
	
$144,208.80
	
$.983

	  	
49-60
	
$148,535.06
	
$1.013

	  	
61-72
	
$152,991.11
	
$1.043

	  	
73-84
	
$157,580.84
	
$1.075

	  	
85-96
	
$162,308.26
	
$1.107

	  	
97-108
	
$167,177.50
	
$1.140

	  	
109-120
	
$172,192.82
	
$1.174

 

	
*Plus any partial month at the beginning of the Term. [subject to adjustment based upon Shared Space allocation] [FOR SHORT TERM LEASE, BASIC RENTAL SHALL BE $50,000.00 PER MONTH]

 

	
D.
	
Tenant's Proportionate Share:
	
43.22 [56.78]%, based upon a total of 339,264 rentable square feet in the Project. [subject to adjustment based upon Shared Space allocations]

	 	 	 
	
E.
	
Security Deposit:
	
A security deposit of $131,971.50 [$50,000.00] shall be due and payable by Tenant to Landlord upon the Commencement Date.

	 	 	 
	
F.
	
Permitted Use:
	
Research and development, warehouse, manufacturing and general office use.

	 	 	 
	
G.
	
Broker:
	
CBRE, Inc. (representing Tenant only).

	 	 	 
	
H.
	
Parking:
	
Tenant shall be entitled to use three (3) parking spaces for each 1,000 rentable square feet contained in the Premises, which equals four hundred forty (440) [five hundred seventy-eight (578)] spaces, upon the terms and conditions provided in Article 23 hereof. [NOT APPLICABLE TO SHORT-TERM LEASE: Tenant shall have the exclusive right to use those parking spaces depicted on Exhibit "D" attached hereto and made a part hereof and Tenant's remaining parking spaces shall be for unreserved parking.]

 

EXHIBIT "I"

 

 

-3-

 

 

ARTICLE 2
TERM/PREMISES

 

The Term of this Lease shall commence on the Commencement Date as set forth in Article 1.A. of the Basic Lease Provisions and shall end on the Expiration Date set forth in Article 1.A. of the Basic Lease Provisions. Landlord and Tenant hereby stipulate that the Premises contains the number of square feet specified in Article 1.B. of the Basic Lease Provisions, subject to adjustment based upon the final determination of the square footage of the Shared Space. Landlord shall deliver to Tenant a Commencement Letter in a form substantially similar to that attached hereto as Exhibit "B", which Tenant shall edit (if necessary), execute and return to Landlord within thirty (30) days of receipt thereof. 

 

ARTICLE 3
RENTAL

 

(a)     Basic Rental. Tenant agrees to pay to Landlord during the Term hereof, at Landlord's office or to such other person or at such other place as directed from time to time by written notice to Tenant from Landlord, the monthly sums as set forth in Article 1.C. of the Basic Lease Provisions, payable in advance on the first (1st) day of each calendar month, without demand, setoff or deduction (except as expressly provided in this Lease) in lawful money of the United States, and in the event this Lease commences or the date of expiration of this Lease occurs other than on the first (1st) day or last day of a calendar month, the rent for such month shall be prorated based upon the actual number of days in such month. If the Commencement Date is not the first day of a month, Basic Rental for the partial month commencing as of the Commencement Date shall be prorated based upon the actual number of days in such month and shall be due and payable upon the Commencement Date.

 

(b)     Direct Costs. Tenant shall pay an additional sum for each calendar year during the Term equal to the product of the percentage set forth in Article 1.D. of the Basic Lease Provisions multiplied by the amount of "Direct Costs." In the event this Lease shall terminate on any date other than the last day of a calendar year, the additional sum payable hereunder by Tenant during the calendar year in which this Lease terminates shall be prorated on the basis of the relationship which the number of days which have elapsed from the commencement of said calendar year to and including said date on which this Lease terminates bears to three hundred sixty five (365). Any and all amounts due and payable by Tenant pursuant to this Lease (other than Basic Rental) shall be deemed "Additional Rent" and Landlord shall be entitled to exercise the same rights and remedies upon default in these payments as Landlord is entitled to exercise with respect to defaults in monthly Basic Rental payments. 

 

(c)     Definitions. As used herein the term "Direct Costs" shall mean the sum of the following:

 

(i)     "Tax Costs", which shall mean any and all real estate taxes and other similar charges on real property or improvements, assessments, water and sewer charges, and all other charges assessed, reassessed or levied upon the Project and appurtenances thereto and the parking or other facilities thereof, or the real property thereunder (collectively the "Real Property") which are assessed, reassessed or levied by the United States, the State of California or any local government authority or agency or any political subdivision thereof, and shall include Landlord's reasonable legal fees, costs and disbursements incurred in connection with proceedings for reduction of Tax Costs or any part thereof. Any taxes or assessments that may be paid over more than a one-year period shall be included in Tax Costs as if such payments were made in the maximum number of installments permitted by applicable law and only the portion thereof attributable to a given year shall be in included in Tax Costs for that year. Notwithstanding anything to the contrary contained in this Section 3(c)(i), there shall be excluded from Tax Costs (i) all excess profits taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes, federal and state income taxes, and other taxes to the extent applicable to Landlord's general or net income, (ii) any items included as Operating Costs, and (iii) any items paid by Tenant under Article 6 of this Lease. In no event shall Tenant be permitted to contest Tax Costs for the Project; provided that if Landlord and Tenant mutually agree in good faith that a tax contest is warranted, Landlord shall contest the Tax Costs for the Project.

 

EXHIBIT "I"

 

 

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(ii)     "Operating Costs", which shall mean all costs and expenses incurred by Landlord in connection with the maintenance, operation and repair of the Project including the Common Areas of the Project as defined below. Operating Costs shall include but not be limited to, personal property taxes on property used in the maintenance and operation of the Project; fees, costs, expenses or dues payable pursuant to the terms of any covenants, conditions or restrictions or owners' association pertaining to the Project; capital expenditures incurred to effect economies of operation of the Project where the economies reasonably expected to be achieved each year are in excess of the reasonably expected annual amortized cost of such expenditure and capital expenditures required by Laws not in effect as of the Commencement Date; provided, however, that capital expenditures included in Operating Costs shall be amortized over their useful life as determined in accordance with generally accepted accounting principles; charges for electricity, gas, water and other utilities furnished to the common areas of the Project and any taxes thereon; all charges for fire and extended coverage, liability and all other insurance in connection with the Project carried by Landlord; the cost of all building and cleaning supplies and materials; all charges for service contracts and other services with independent contractors for repair, maintenance and operation of the Project; a property management fee in the amount of two percent (2%) of Basic Rental per year and license, permit and inspection fees relating to the operation, maintenance and repair of Project. As used herein, the term "Common Area" is defined for all purposes of this Lease as that part of the Project intended for the common use of all tenants and their employees and other invitees, including among other facilities (as such may be applicable to the Project), the Shared Space, the parking areas, private streets and alleys, landscaping, curbs, sidewalks, lighting facilities and the like, as they may exist from time to time. In addition, although the roof of the building in the Project is not literally part of the Common Area, it will be deemed to be so included solely for purposes of (A) Landlord's ability to prescribe rules and regulations regarding same (subject to Section 30(p) below), and (B) Tenant's obligations to pay Operating Costs with respect thereto (subject to the express exclusions below). Landlord reserves the right subject to the provisions of Article 12 below regarding the cooling tower, to change from time to time the dimensions, size and location of the Common Area, as well as the dimensions, identities, locations, number, size and types of signs or other improvements in the Project, including, without limitation, driveways, entrances, parking spaces, parking areas, loading areas, ingress, egress, direction of traffic, walkways and landscape areas; provided, however, that no such changes will materially and adversely impair Tenant's parking rights pursuant to Article 23 hereof, the access to the Premises or the area immediately adjacent to Tenant's primary entry. In no event shall Tenant be permitted to erect any structures, fencing or other improvements in the Common Area.

 

EXHIBIT "I"

 

 

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Notwithstanding anything above to the contrary, Operating Costs shall not include (1) the cost of providing any service directly to and paid directly by any tenant (outside of such tenant's Direct Cost payments) such as where a Tenant directly contracts for electric power or other utilities with the local public services company; (2) the cost of any items for which Landlord is reimbursed by insurance proceeds, condemnation awards, a tenant of the Project (outside of such tenant's Direct Cost payments), or otherwise to the extent so reimbursed; (3) any real estate brokerage commissions or other costs incurred in procuring tenants, or any fee in lieu of commission; (4) amortization of principal and interest on mortgages or ground lease payments (if any); (5) costs of items considered capital repairs, replacements, improvements and equipment under generally accepted accounting principles consistently applied except as expressly included in Operating Costs pursuant to the definition above; (6) costs incurred by Landlord due to the violation by Landlord or any tenant of the terms and conditions of any lease of space in the Project or any law, code, regulation, ordinance or the like; (7) any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord; (8) bad debt expenses and interest, principal, points and fees on debts; (9) marketing costs, including those costs described in (3) above, attorneys' fees in connection with the negotiation and preparation of letters, deal memos, letters of intent, leases, subleases and/or assignments, space planning costs, and other costs and expenses incurred in connection with lease, sublease and/or assignment negotiations and transactions with present or prospective tenants or other occupants of the Project, including attorneys' fees and other costs and expenditures incurred in connection with disputes with present or prospective tenants or other occupants of the Project; (10) costs, including permit, license and inspection costs, incurred with respect to the installation of other tenants' or occupants' improvements made for tenants or other occupants in the Project or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants in the Project; (11) any costs expressly excluded from Operating Costs elsewhere in this Lease; (12) costs of any items (including, but not limited to, costs incurred by Landlord for the repair of damage to the Project) to the extent Landlord receives reimbursement from insurance proceeds or from a third party (except that any commercially reasonable deductible amount under any insurance policy shall be included within Operating Costs up to a maximum of $100,000.00 per casualty [provided that such maximum shall not be applied to any earthquake deductible so long as any earthquake deductible is amortized over the useful life of the repair and in no event shall Tenant's Proportionate Share thereof exceed $75,000.00 per year]); (13) rentals and other related expenses for leasing an HVAC system, elevators, or other items (except when needed in connection with normal repairs and maintenance of the Project) which if purchased, rather than rented, would constitute a capital improvement not included in Operating Costs pursuant to this Lease; (14) depreciation, amortization and interest payments, except as specifically included in Operating Costs pursuant to the terms of this Lease and except on materials, tools, supplies and vendor-type equipment purchased by Landlord to enable Landlord to supply services Landlord might otherwise contract for with a third party, where such depreciation, amortization and interest payments would otherwise have been included in the charge for such third party's services, all as determined in accordance with generally accepted accounting principles, consistently applied, and when depreciation or amortization is permitted or required, the item shall be amortized over its reasonably anticipated useful life; (15) expenses in connection with services or other benefits which are not offered to Tenant or for which Tenant is charged for directly but which are provided to another tenant or occupant of the Project, without charge; (16) costs (including in connection therewith all attorneys' fees and costs of settlement, judgments and/or payments in lieu thereof) arising from claims, disputes or potential disputes in connection with potential or actual claims litigation or arbitrations pertaining to Landlord and/or the Project; (17) costs associated with the operation of the business of the partnership, corporation or limited liability company which constitutes Landlord as the same are distinguished from the costs of operation of the Project; (18) costs incurred to remove, remedy, contain, or treat any Hazardous Material; (19) any salaries or benefits for property management personnel (except that for personnel that provide maintenance and repair services to the Project, such salaries and benefits may be included in Operating Costs, provided that such costs for any individual who provides services to any other building or project shall be prorated based upon time devoted to this Project); (20) costs and expenses otherwise includable in Operating Costs to the extent the same arise from the negligence or tortious acts of Landlord or any of Landlord's agents, employees or contractors; or (21) any overhead and/or profit increment paid to Landlord or to subsidiaries or affiliates or Landlord for services in the Project to the extent the same exceed the amount which would generally be expected to be the cost of such services rendered by comparably qualified unaffiliated third parties.

 

EXHIBIT "I"

 

 

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Notwithstanding anything to the contrary contained herein, the aggregate Controllable Operating Costs, as that term is defined below, shall not increase more than four percent (4%) in any calendar year over the maximum amount of Controllable Operating Costs chargeable for the immediately preceding calendar year, calculated on a cumulative basis. "Controllable Operating Costs" shall mean all Direct Costs except Tax Costs, utility charges, insurance costs, trash collection costs, costs of services provided under a union contract, payments under CC&R's or to an owners' association, capital expenditures that are permitted herein, and costs associated with repairs due to casualty.

 

(d)     Determination of Payment.

 

(i)     Landlord shall give Tenant a yearly expense estimate statement (the "Estimate Statement") which shall set forth Landlord's reasonable estimate (the "Estimate") of what the total amount of Direct Costs for the then-current calendar year shall be and Tenant's Proportionate Share thereof. Tenant shall pay, within thirty (30) days after receipt of the Estimate Statement, a fraction of the Estimate for the then-current calendar year (reduced by any amounts paid pursuant to the last sentence of this Section 3(d)(i)). Such fraction shall have as its numerator the number of months which have elapsed in such current calendar year to the month of such payment, both months inclusive, and shall have twelve (12) as its denominator. Until a new Estimate Statement is furnished, Tenant shall pay monthly, with the Monthly Basic Rental installments, an amount equal to one-twelfth (1/12th) of the total Estimated Direct Costs set forth in the previous Estimate Statement delivered by Landlord to Tenant.

 

(ii)     In addition, Landlord shall give to Tenant within one hundred twenty (120) days following the end of each calendar year, a statement (the "Statement") which shall state the Direct Costs incurred or accrued for such preceding calendar year. Upon receipt of the Statement for each calendar year during the Term, if amounts paid by Tenant on an estimated basis pursuant to Section 3(d)(i) above are less than Tenant's Proportionate Share of the actual Direct Costs for such year as specified on the Statement, Tenant shall pay, within thirty (30) days thereafter, the full amount of Direct Costs for such calendar year, less the amounts paid during such calendar year on an estimated basis pursuant to Section 3(d)(i) above. If, however, the Statement indicates that amounts paid by Tenant on an estimated basis pursuant to Section 3(d)(i) above are greater than Tenant's Proportionate Share of the actual Direct Costs for such year as specified on the Statement, such overpayment shall be refunded to Tenant within thirty (30) days after the Statement. The failure of Landlord to timely furnish the Statement for any calendar year shall not prejudice Landlord from enforcing its rights under this Article 3, for a period of twelve (12) months after the expiration of such one hundred twenty (120) day period, except where the failure to timely furnish the Statement as to any particular item includable in the Statement is beyond Landlord's reasonable control (e.g. tax assessments that are late in arriving from the assessor), in which case such twelve (12) month limit shall not be applicable. Even though the Term has expired and Tenant has vacated the Premises, when the final determination is made of Tenant's Proportionate Share of the Direct Costs for the calendar year in which this Lease terminates, Tenant shall pay to Landlord an amount as calculated pursuant to the provisions of this Section 3(d). 

 

EXHIBIT "I"

 

 

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(e)     Use of Common Area. Tenant and its employees and invitees, and when duly authorized pursuant to the provisions of this Lease, its subtenants and licensees, shall have the nonexclusive right to use the Common Area (expressly excluding the roof of the building in the Project other than for Tenant to comply with its repair and maintenance obligations under Article 9 below and except as provided in Section 30(p) below [but otherwise subject to the provisions thereof]) as constituted from time to time, such use to be in common with Landlord, other tenants in the Project and other persons permitted by Landlord to use the same, and subject to such reasonable rules and regulations governing use as Landlord may from time to time prescribe. For example, and without limiting the generality of Landlord's ability to establish rules and regulations governing all aspects of the Common Area, Tenant agrees as follows:

 

(i)     Tenant shall not take any action which would unreasonably interfere with the rights of other persons to use the Common Area.

 

(ii)     Landlord may temporarily close any part of the Common Area for such periods of time as may be necessary to make repairs or alterations or during construction or to prevent the public from obtaining prescriptive rights, provided that access to the Premises remains reasonably available and Landlord uses reasonable efforts to minimize any disruption to Tenant's use and enjoyment of the Premises and the parking to which it is entitled hereunder.

 

(iii)     With regard to the roof of the building in the Project, any use of the roof whatsoever is hereby exclusively reserved to Landlord for any and all purposes and in all respects in its reasonable discretion other than for Tenant to comply with its repair and maintenance obligations under Article 9 below and except as provided in Section 30(p) below (but otherwise subject to the provisions thereof). Landlord shall otherwise have the exclusive rights to use, possess, lease, alter, construct on, or otherwise manage the roof in its reasonable discretion. In performing Tenant's obligations pursuant to Article 9 and Section 30(p), Tenant shall take no action and Tenant will comply with all Landlord requirements in connection therewith that would invalidate any roof warranty.

 

EXHIBIT "I"

 

 

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(f)     Maintenance of Common Area. Subject to Tenant's reimbursement obligations set forth in this Article 3, Landlord shall be responsible for the operation, management and maintenance of the Common Area, the manner of maintenance and the expenditures therefore to be generally in keeping with similar properties within the same geographical area as the Project. Without limiting the generality of the immediately preceding sentence, Tenant acknowledges that LANDLORD MAKES NO REPRESENTATION, COVENANT OR WARRANTY REGARDING WHETHER OR NOT LANDLORD WILL PROVIDE SECURITY SERVICES, OR IF SO, WHAT FORM OF SECURITY SERVICES WILL BE PROVIDED. [NOT APPLICABLE TO SHORT-TERM LEASE However, notwithstanding anything to the contrary contained herein, Tenant may maintain a security system for the Premises, at Tenant's sole cost, which may include, without limitation, security personnel at a security desk at the entrance to the Premises; provided that Landlord reserves the right to have Tenant, at Tenant's cost, upon the expiration or early termination of this Lease, to remove any security system which does not exist as of the date hereof and to repair any damage caused thereby].

 

ARTICLE 4
SECURITY DEPOSIT

 

Tenant has deposited or concurrently herewith is depositing with Landlord the sum set forth in Article 1.E. of the Basic Lease Provisions as security for the full and faithful performance of every provision of this Lease to be performed by Tenant. If Tenant breaches any provision of this Lease, including but not limited to the payment of rent, Landlord may use all or any part of this Security Deposit for the payment of any rent or any other sums in default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant's default. If any portion of said deposit is so used or applied, Tenant shall, within ten (10) days after written demand therefor, deposit funds with Landlord in an amount sufficient to restore the Security Deposit to its full amount. Tenant agrees that Landlord shall not be required to keep the Security Deposit in trust, segregate it or keep it separate from Landlord's general funds, but Landlord may commingle the Security Deposit with its general funds and Tenant shall not be entitled to interest on such Security Deposit. Subject to this Article 4, within thirty (30) days after Tenant (i) has surrendered the Premises to Landlord (which, Landlord and Tenant agree, includes turning over to Landlord's representative all keys to the Premises), and (ii) has provided Landlord with a forwarding address, Landlord shall return to Tenant the portion of the Security Deposit remaining after deducting all damages, charges and other amounts permitted by the terms of this Lease and applicable law. Tenant acknowledges and agrees that if Tenant has breached this Lease before or during Tenant's surrendering the Premises to Landlord, then Landlord shall be entitled to deduct from the Security Deposit being returned to Tenant (if any) all damages and losses that Landlord has suffered as a result of such breach of this Lease by Tenant under Article 20 below. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code and agrees that the provisions of this Article 4 shall govern the treatment of Tenant's Security Deposit in all respects for this Lease.

 

If Landlord transfers its interest in the Premises during the Term of this Lease, Landlord may assign the Security Deposit to the transferee and upon such transfer and the transferee's written acknowledgement of responsibility for the Security Deposit (which acknowledgement will be deemed to have been effected if the transferee assumes the obligations of the Landlord under this Lease (i.e., even without a specific mention of the Security Deposit), Landlord shall thereafter have no further liability for the return of the Security Deposit.

 

EXHIBIT "I"

 

 

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ARTICLE 5
HOLDING OVER

 

Tenant is not permitted to hold over possession of the Premises after the expiration or earlier termination of the Term without the express prior written consent of Landlord, which consent Landlord may withhold in its sole and absolute discretion. Should Tenant, without Landlord's written consent, hold over after expiration or earlier termination of this Lease, Tenant shall become a tenant at sufferance upon each and all of the terms herein provided as may be applicable to such a tenancy and any such holding over shall not constitute an extension of this Lease. During such holding over, Tenant shall pay in advance, Basic Rental at a rate equal to one hundred twenty-five percent (125%) of the rate in effect for the last month of the Term of this Lease for the first ninety (90) days of such holdover, and one hundred fifty percent (150%) of the rate in effect for the last month of the Term thereafter. Any such payments shall be in addition to, and not in lieu of, all other payments required to be made by Tenant hereunder including but not limited to Tenant's Proportionate Share of Direct Costs. Nothing contained in this Article 5 shall be construed as consent by Landlord to any holding over of the Premises by Tenant, and Landlord expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord as provided in this Lease upon the expiration or earlier termination of the Term. In no event shall Tenant be responsible for any consequential damages incurred by Landlord due to a holdover by Tenant. [FOR SHORT TERM LEASE: 200% HOLDOVER RATE STARTING DAY 1]

 

ARTICLE 6
OTHER TAXES

 

Tenant shall pay, prior to delinquency, all taxes assessed against or levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant located in the Premises. Tenant shall assume and pay to Landlord at the time Basic Rental next becomes due (or if assessed after the expiration of the Term, then within ten (10) days), any excise, sales, use, rent, occupancy, garage, parking, gross receipts or other taxes (other than net income taxes) which may be assessed against or levied upon Landlord on account of the letting of the Premises or the payment of Basic Rental or any other sums due or payable hereunder, and which Landlord may be required to pay or collect under any law now in effect or hereafter enacted. In addition to Tenant's obligation pursuant to the immediately preceding sentence, Tenant shall pay directly to the party or entity entitled thereto all business license fees, gross receipts taxes and similar taxes and impositions which may from time to time be assessed against or levied upon Tenant, as and when the same become due and before delinquency. Notwithstanding anything to the contrary contained herein, any sums payable by Tenant under this Article 6 shall not be included in the computation of "Tax Costs."

 

EXHIBIT "I"

 

 

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ARTICLE 7
PERMITTED USE/COMPLIANCE WITH LAWS

 

(a)     Permitted Use. Tenant shall use and occupy the Premises only for the use set forth in Article 1.F. of the Basic Lease Provisions and shall not use or occupy the Premises or permit the same to be used or occupied for any other purpose without the prior written consent of Landlord. 

 

(b)     Compliance with Laws. Tenant shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances, governmental regulations or requirements (collectively, "Laws") now in force or which may hereafter be in force relating to or affecting (i) the condition, use or occupancy of the Premises (excluding structural changes not related to Tenant's particular use of the Premises), and (ii) Alterations installed or constructed in the Premises by or on behalf of Tenant. Landlord shall be responsible for compliance with all Laws with respect to the Common Areas of the Project and the Real Property and all other portions of the Project other than those which are the responsibility of Tenant pursuant to the immediately preceding sentence. In addition to the foregoing, Tenant shall procure at its sole expense any permits and licenses required for the transaction of business in the Premises. At Landlord's request, Tenant shall deliver to Landlord copies of all necessary permits and licenses.

 

(c)     Certain Prohibited Uses. Tenant shall not conduct or give notice of any fire, auction (public or private), "going-out-of-business," "lost-our-lease," "moving," bankruptcy or similar sale at or on the Premises. Tenant shall not permit any objectionable noises, odors, vibrations, dust, gas, exhaust or smoke to emanate from the Premises (or from any facility or equipment servicing the Premises); nor except as provided in Section 30(p) below (but subject to the provisions set forth therein) place or permit any radio or television antenna, satellite dish, loudspeaker or amplifier on the roof or exterior walls or outside the Premises or where the same can be seen or heard from outside the Premises; nor place any antenna, equipment, awning or other projection on the exterior of the Premises or any building; nor take any other action which would constitute a nuisance or would unreasonably interfere with, disturb or endanger Landlord or other tenants of the Project, or unreasonably interfere with their use of their respective premises; nor permit any unlawful practice to be carried on or committed on the Premises; nor do or permit anything which would void Tenant's or Landlord's insurance. If Tenant causes any increase in the cost of insurance on the Premises or the Project, then Tenant shall pay to Landlord the amount of such increase as Additional Rent.

 

(d)     Care of Premises by Tenant. Tenant shall take good care of the Premises and shall operate in the Premises in a safe, careful and proper manner; shall not commit or suffer waste in or about the Premises, nor to any facility or equipment for which Tenant is responsible; and shall keep the Premises free of insects, rodents, vermin and other pests. As indicated in Section 3(f) above, Tenant hereby acknowledges that security is Tenant's responsibility and that Tenant is not relying on any representation or warranty by Landlord in this regard. Tenant shall not overload the floors in the Premises, nor deface or injure the Premises. Tenant shall store all trash and garbage within the Premises, or in a trash dumpster or similar container and Landlord shall arrange for trash pick-up for the Project as part of Operating Costs. Outside storage, including, without limitation, storage of containers, trailers, trucks and other vehicles, is prohibited without Landlord's prior written consent, which may be withheld in Landlord's sole and absolute discretion.

 

EXHIBIT "I"

 

 

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(e)     Tenant Financial Statements. In connection with a proposed sale or refinance of the Project and not more than one (1) time in any calendar year, Tenant shall, within ten (10) business days after a request from Landlord, deliver to Landlord such financial statements as are reasonably requested by Landlord that have been previously prepared by Tenant to verify the net worth of Tenant. However, the immediately preceding sentence shall not apply if, at such time, Tenant is publicly traded. Tenant further agrees to cooperate with any reasonable request by Landlord for Tenant's written permission or other cooperation in connection with Landlord's obtaining, at Landlord's sole cost, a credit report or similar information regarding Tenant from third-party sources.

 

(f)     Confidentiality; Marketing Materials. Landlord shall use good faith efforts to keep confidential all non-public financial statements supplied by Tenant; however, if Landlord notifies such parties of the requirement to keep such information confidential, Landlord has the right to reveal such information to mortgagees, prospective purchasers and prospective mortgagees (and their respective agents) and to Landlord's managers, officers, personnel, affiliates, partners, directors, advisors, accountants, attorneys, members, and consultants, and as may be required by Law, including, without limitation, securities regulations, or by legal process; and, provided further, that Landlord and Landlord's affiliates have the right to include, disclose, or otherwise publicize Tenant's name as one of Landlord's or Landlord's affiliates' tenants in any of Landlord's marketing materials, press releases, presentations, or other disclosures. The following materials and information are not considered "non-public financial statements" for purposes of this Lease and will not be subject to the restrictions set for in the preceding sentence: (i) information which is or becomes generally available to the public other than as a result of a wrongful disclosure by Landlord; (ii) information which reasonably can be demonstrated to be known to Landlord prior to its disclosure by Tenant hereunder; (iii) information which becomes available to Landlord on a non-confidential basis from sources other than Tenant; and (iv) information which Landlord may be compelled to disclose by court order or applicable law. 

 

ARTICLE 8
CONDITION OF PREMISES

 

(a)     Existing Condition. Landlord and Tenant acknowledge that Tenant has, prior to the Commencement Date, owned the Project and occupied the Premises. Tenant hereby agrees that except as provided in this Lease (including, without limitation, the following provisions of this Article 8 and Section 11(a), below), the Premises shall be taken "as is", "with all faults", and "without any representations or warranties", and Landlord makes no warranty of any kind, express or implied, with respect to the Premises and the Real Property (without limitation, Landlord makes no warranty as to the habitability, fitness or suitability of the Premises for a particular purpose, nor as to compliance with any laws, rules or regulations, nor as to the absence of any toxic or otherwise Hazardous Materials).

 

EXHIBIT "I"

 

 

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(b)     Landlord's Work. Landlord shall, at Landlord's sole cost, cause the following work to be performed: (a) within one (1) year after the Commencement Date, install RainShield RS-2P-3W roofing system (or its equivalent) with twenty (20) year guarantee including installation of new curb mount, steel frame, single dome skylights and smoke vents in accordance with the June 8, 2015 proposal from Highland Commercial Roofing (or an equivalent or better proposal from a different vendor, as mutually agreed by Landlord and Tenant), (b) install a demising wall(s) separating the Premises from the remainder of the Project utilizing specifications and materials reasonably determined by Landlord (the "Demising Work"), which Demising Work shall include the separation of the electric service as described in Section 11(a) below. In order to separate the electric service, Landlord and Tenant contemplate that the existing 120/208 gear currently serving the Project will be upgraded to 277/480 and then be dedicated to serve the space which is the subject of the Short Term Lease (defined below). The 120/208 load currently connected to the existing 120/208 gear will be disconnected and re-connected (through a new step-down transformer) to the existing 277/480 gear currently serving the Project. A 1.5MW generator will be supplied to maintain the Tenant's 120/208 service during the changeover if change over cannot be scheduled during a period which would not unreasonably interfere with Tenant's business. The existing 277/480 gear will then be dedicated to serve the Premises [TO BE MODIFIED FOR SHORT TERM LEASE.] The Demising Work shall be completed prior to the date which is the earlier of the date that is one (1) year after Tenant has surrendered the Short Term Lease space to Landlord in the condition required in the Short Term Lease, or the date any new tenant commences occupancy of space in the remainder of the Project, (c) repaint the exterior of the Project utilizing specifications and materials reasonably determined by Landlord and reasonably approved by Tenant, with such work to be completed prior to the date which is two (2) years after the Commencement Date, (d) slurry coat, repair and reseal the parking lot of the Project pursuant to a parking, striping and truck loading plan reasonably determined by Landlord, with such work to be completed on or before the date which is two (2) years after the Commencement Date, and (e) upgrade the landscaping at the Project pursuant to a plan reasonably determined by Landlord within one (1) year after the Commencement Date [NOT APPLICABLE TO SHORT TERM LEASE]. Tenant agrees that Landlord shall be provided with access to the Premises to complete such Demising Work in accordance with, and subject to, Article 12 below, and shall reasonably cooperate with Landlord so as to allow Landlord to timely complete all of the foregoing work. Except as otherwise expressly provided in this Lease, Landlord agrees that any costs to relocate electrical conduits required by the Demising Work shall be borne by Landlord and any shutdown of the electrical system to the Premises required by the Demising Work shall be performed pursuant to a schedule mutually acceptable to Landlord and Tenant. 

 

(c)     Tenant Improvements. The existing leasehold improvements in the Premises as of the date of this Lease may be collectively referred to herein as the "Tenant Improvements." Notwithstanding the existing Tenant Improvements, promptly following the Commencement Date, Tenant shall have the obligation, at Tenant's sole cost, to relocate and raise any portion of its compressed air supply lines to be located not lower than 24' 6" above the floor. [SHORT TERM LEASE ONLY]

 

ARTICLE 9
REPAIRS AND ALTERATIONS

 

(a)     Landlord's Obligations. Landlord shall, as part of Operating Costs to the extent permitted under Article 3 above, maintain the structural portions of the Project in good condition and repair, including the foundation, floor/ceiling slabs, roof, roof membrane, curtain walls, exterior glass, columns, beams, shafts, stairs, stairwells, elevator cabs and common areas, and shall also maintain and repair the basic mechanical, electrical, life safety, plumbing, sprinkler systems and heating, ventilating and air-conditioning systems serving the Project (the "Project Systems"), although Tenant shall be responsible, at Tenant's sole cost, for repair and maintenance of any such systems that exclusively service the Premises. Should any of the Project Systems (including, without limitation, any such systems that exclusively serve the Premises such as the heating ventilation and air-conditioning system that exclusively services the Premises ("HVAC System")) require replacement, Landlord shall be responsible for such replacement, which replacement cost shall be passed through to Tenant as Additional Rent so long as such amount is amortized over the useful life of the replaced system in accordance with the following procedure ("Agreed Amortization Procedure"): a monthly straight-line basis commencing as of the date such replacement is placed into service, over the useful life of the replaced system (which useful life is deemed to be ten (10) years for replacement of any HVAC System units). [NOT APPLICABLE TO SHORT TERM LEASE: Notwithstanding the foregoing, in the event an R-22 HVAC System unit that exclusively services the Premises fails and cannot be repaired at a cost less than forty percent (40%) of the replacement cost, the unit shall be replaced and the "Initial Aggregate Cost" (defined below) of the replacement of such unit(s) shall be paid for by Tenant as Additional Rent and the remainder of such replacement costs shall be passed through to Tenant as Additional Rent pursuant to the Agreed Amortization Procedure, but with such amortization commencing as of the first day of the next calendar year. The term "Initial Aggregate Cost" shall mean Fifty Thousand Dollars ($50,000.00) in the aggregate for the period which constitutes the first three (3) years of the Term, Forty Thousand Dollars ($40,000.00) in the aggregate for the fourth (4th) year of the Term, Thirty Thousand Dollars ($30,000.00) in the aggregate for the fifth (5th) year of the Term, Twenty Thousand Dollars ($20,000.00) in the aggregate for the sixth (6th) year of the Term, Ten Thousand Dollars ($10,000.00) in the aggregate for the seventh (7th) year of the Term, and Zero Dollars ($0) thereafter.  Such amortization payments for any of the first seven (7) years shall commence only after Tenant's payment of the Initial Aggregate Cost for such year. By way of example only, and not as limitation upon the foregoing, if in the fifth (5th) year of the Term, five (5) R-22 HVAC System units must be replaced and if the total aggregate cost of such replacements is $40,000.00 for such year, then the Initial Aggregate Amount for such replacements for such year would be $30,000.00, which amount will be payable by Tenant as Additional Rent within thirty (30) days after Tenant's receipt of paid invoices from Landlord and the remaining $10,000.00 of such replacement costs shall be amortized pursuant to the Agreed Amortization Procedure, with such amortization to begin on the first day of the sixth (6th) year of the Term.] In no event shall Tenant be responsible for the cost of repair, maintenance or replacement of any heating, ventilation or air-conditioning system that does not service the Premises. Except as expressly provided in Section 9(b) below, Tenant waives the right to make repairs at Landlord's expense under any applicable Laws. 

 

EXHIBIT "I"

 

 

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(b)     Tenant's Right to Make Repairs.

 

(i)     Notwithstanding any provision set forth in this Lease to the contrary, if Tenant provides written notice to Landlord of an event or circumstance which requires the action of Landlord with respect to repair and/or maintenance under Section 9(a) above (hereinafter, a "Required Action"), and Landlord fails to commence such action within a reasonable period of time, given the circumstances, after the receipt of such notice, but in no event later than thirty (30) days after Landlord's receipt of such notice (or sooner in case of emergency, as set forth below in subsection (iii)), then if such repair is in the interior, non-structural portion of the Premises, or if Landlord's failure with respect to such repair and maintenance obligations otherwise materially and adversely affects Tenant's normal business operations, Tenant may proceed to take the required action following the delivery of an additional ten (10) business days notice to Landlord specifying in bold-faced capital letters that: "LANDLORD'S FAILURE TO PERFORM AN OBLIGATION WITHIN (10) BUSINESS DAYS OF RECEIVING THIS NOTICE MAY RESULT IN TENANT EXERCISING SELF-HELP", and if such action was required under the terms of the Lease to be taken by Landlord and was not taken by Landlord within such additional ten (10) business day period, then Tenant shall be permitted to perform such repair at Landlord's cost. In the event Tenant takes such action, and such work will affect the Project Systems or the structural integrity of the Project, Tenant shall use only those contractors used by Landlord in the Project for work on such Project Systems or structure unless such contractors are unwilling or unable to perform, or timely perform, such work, in which event Tenant may utilize the services of any other qualified contractor which normally and regularly performs similar work in comparable buildings.

 

EXHIBIT "I"

 

 

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(ii)     If Landlord fails to pay to Tenant the actual documented cost of such cure within twenty (20) days following Landlord's receipt of Tenant's demand therefor, including a statement setting forth the amount due, and, if available, executed mechanics' lien releases from the party or parties performing such repairs complying with the appropriate provisions of California Civil Code Sections 8136 and 8138, then Tenant may provide to Landlord a second written demand therefor ("Second Demand") which contains the following phrase on page 1 of the notice in all capital letters and boldface type (or it shall not be deemed validly delivered to Landlord) "YOUR FAILURE TO REIMBURSE TENANT AS REQUIRED HEREIN WITHIN TEN (10) DAYS SHALL ENTITLE THE UNDERSIGNED TO EXERCISE CERTAIN OFFSET RIGHTS AS SET FORTH IN THE LEASE WITHOUT FURTHER NOTICE."  If Landlord fails to pay to Tenant the amount due to Tenant within ten (10) days following Landlord's receipt of the Second Demand, then Tenant may offset from the next installments of rent and other charges coming due under this Lease the full amount owed by Landlord to Tenant together with interest at the Interest Rate from the date of payment until the date of offset, provided, however, that (i) the amount of offset during any month shall not exceed the greater of (A) ten percent (10%) of the total Basic Rent payable by Tenant to Landlord for such month, or (B) the amount necessary to fully amortize Tenant’s cost of cure from the date of completion of such cure to the earlier to occur of (x) the date which is twenty four (24) months after such date of completion, or (y) the expiration date of the Term (without regard to any unexercised renewal options); and (ii) Landlord is not then contesting same (or having contested same, a judgment, decision or ruling in such action, mediation or arbitration has been rendered in favor of Tenant).  Tenant shall obtain and deliver to Landlord waivers of liens from all contractors, subcontractors and materialmen providing work or materials with respect to any such repairs performed by or on behalf of Tenant.

 

(iii)     Notwithstanding the foregoing, if there exists an emergency that is not addressed by Article 16 below such that the Premises or a material portion thereof are rendered untenantable or if Tenant is unable to conduct business from a material portion of the Premises as a result of such emergency and if Tenant gives Landlord written notice (the "Emergency Notice") of Tenant's intention to take action with respect thereto (the "Necessary Action") and the Necessary Action is also a Required Action, Tenant may take the Necessary Action if Landlord does not commence the Necessary Action prior to the end of the business day which is two (2) business days following the day of Landlord's receipt of the Emergency Notice (the "Emergency Cure Period") and thereafter use its commercially reasonably efforts and due diligence to complete the Necessary Action as soon as reasonably practicable. If Tenant takes any Necessary Action hereunder, Tenant shall use only those contractors used by Landlord in the Project for such work unless such contractors are unwilling or unable to perform such work, in which event Tenant may utilize the services of any other qualified contractor which normally and regularly performs similar work in comparable buildings.

 

EXHIBIT "I"

 

 

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(c)     Tenant's Obligations. Except as expressly provided as Landlord's obligation in this Article 9, Tenant shall keep all portions of the Premises in good condition and repair, excluding only those portions that are Landlord's express obligation to maintain as provided above. Tenant's obligations include, without limitation, maintenance and repair of the compressed air system and nitrogen tank located in or solely benefitting the Premises (regardless of whether such systems are located entirely in the Premises), lighting within the Premises, any HVAC System that exclusively services the Premises (as described in Section 9(a) above), plumbing systems within the Premises, exhaust systems within the Premises and the electrical system within the Premises. In addition, Tenant's responsibility shall also include, with respect to the Premises, all repairs in ducts, conduits, pipes and wiring. Tenant shall give Landlord prompt written notice of any leaks or water damage that becomes known to Tenant. If any repairs required to be made by Tenant hereunder are not commenced within ten (10) days after written notice delivered to Tenant by Landlord (or less than ten (10) days, in the case of an emergency situation which by its nature requires an immediate response or a response within fewer than ten (10) days), or if Tenant timely commences such repairs but fails to diligently prosecute such repairs to completion, Landlord may, upon notice to Tenant and at Landlord's option, make such repairs without liability to Tenant for any loss or damage which may result by reason of such repairs. In such event, Tenant shall reimburse Landlord's costs therefor as Additional Rent within thirty (30) days of Landlord's written demand. Tenant shall have access to the roof of the Project and other areas of the Project required in order for Tenant to repair and maintain any systems that exclusively service the Premises (as required by Section 9(a) above) and to otherwise comply with Tenant's repair and maintenance obligations under this Lease. All damage or injury to the Premises or the Project resulting from the act or negligence of Tenant, its employees, agents or visitors, guests, invitees or licensees or by the use of the Premises, shall be promptly repaired by Tenant at its sole cost and expense (except to the extent covered by insurance). 

 

(d)     Alterations. Tenant shall make no alterations, installations, changes or additions in or to the Premises or the Project (collectively, "Alterations") without Landlord's prior written consent, which shall not be unreasonably withheld, conditioned or delayed; provided, however, (i) Landlord hereby consents to those Alterations listed on Exhibit "E" attached hereto and made a part hereof (so long as such Alterations are otherwise completed in accordance with the requirements set forth in this Lease), and (ii) Landlord's prior written consent shall not be required for Tenant's interior painting, and for any non-structural installation of fixtures, equipment, interior floors and floor coverings in the Premises, all of which may otherwise be completed in accordance with this Lease. Any Alterations approved by Landlord must be performed in accordance with the terms hereof, using only contractors reasonably approved by Landlord in writing and upon the reasonable approval by Landlord in writing of plans and specifications pertaining to the Alterations in question, to be prepared and submitted by Tenant at its sole cost and expense. Landlord shall grant or deny consent to a proposed Alteration within ten (10) business days after Landlord's receipt of plans and specifications therefor. If Landlord fails to so respond in writing to Tenant within said ten (10) business day period, Tenant may send a second written notice ("Alteration Notice") to Landlord indicating that such Alteration Notice is being delivered by Tenant pursuant to this Section 9(d). Landlord's failure to withhold its consent by written notice to Tenant within five (5) business days after Landlord's receipt of a properly delivered Alteration Notice shall be deemed to constitute Landlord's consent to such Alteration. Tenant shall at its sole cost and expense obtain all necessary approvals and permits pertaining to any Alterations approved by Landlord. Tenant shall cause all Alterations to be performed in a good and workmanlike manner, in conformance with all applicable Laws and pursuant to a valid building permit. Landlord shall not be entitled to a construction management fee or review fee in connection with any Alterations. Notwithstanding anything to the contrary contained herein, Tenant may also make minor alterations to the Premises (the "Minor Alterations"), without Landlord's consent, provided that the cost of any such Minor Alteration does not exceed $75,000 in any one instance and more than $200,000 in the aggregate during the Term; and provided further that such Minor Alteration does not (i) require any structural modifications to the Premises, (ii) require any changes to, nor adversely affect, the Project Systems, and (iii) affect the exterior appearance of the Project. Notwithstanding the rights accorded to Tenant pursuant to the immediately preceding sentences, Tenant acknowledges and agrees that Landlord's permission for Tenant to commence construction or Landlord's monitoring of such work shall in no way constitute any representation or warranty by Landlord as to the adequacy or sufficiency of such plans and specifications, the improvements to which they relate, the capabilities of such contractors or the compliance of any such work with any applicable Laws; instead, any such permission or monitoring shall merely be the consent of Landlord as required hereunder.

 

EXHIBIT "I"

 

 

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(e)     Insurance. Prior to the commencement of any Alterations, Tenant shall provide Landlord with evidence that Tenant or Tenant's contractor carries insurance for workers' compensation, "Builder's All Risk" insurance in an amount approved by Landlord covering the construction of such Alterations, and such other insurance as Landlord may reasonably require, it being understood that all such Alterations shall be insured by Tenant pursuant to Article 14 of this Lease immediately upon completion thereof. 

 

(f)     Costs and Fees; Removal. If permitted Alterations are made, they shall be made at Tenant's sole cost and expense and shall be and become the property of Landlord, except that Landlord may, by written notice to Tenant given at the time of Landlord's consent to an Alteration (or if Landlord's consent is not required, then Landlord's notice shall be provided within thirty (30) days after Landlord receives written notice of the Alteration), require Tenant at Tenant's expense to remove such Alteration from the Premises upon expiration or earlier termination of this Lease, and to repair any damage to the Premises and the Project caused by such removal.

 

(g)     Quality of Construction Work by Tenant. All construction work done by Tenant within the Premises shall be performed in a good and workmanlike manner, lien-free and in compliance with all Laws, and in such manner as to reasonably minimize interference with other construction in progress and with the transaction of business in the Project. Without limiting the generality of the foregoing, Landlord shall have the right to require that such work be performed in accordance with non-discriminatory rules and regulations which Landlord may from time to time reasonably prescribe by prior written notice to Tenant. 

 

EXHIBIT "I"

 

 

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(h)     Renovation by Landlord. In the event that Landlord elects to renovate all or any portion of the Project, including, without limitation, performing the Demising Work, subject to Article 12 below, Tenant will reasonably cooperate with such renovations, including Tenant's tolerating temporary and reasonable inconveniences (which will be minimized by Landlord to the extent practicable and may include, without limitation, the temporary removal of Tenant's signs) in order to facilitate such renovations, as they may relate to the exterior of the Premises.

 

ARTICLE 10
LIENS

 

Tenant shall keep the Premises and the Project free from any mechanics' liens, vendors liens or any other liens arising out of any work performed, materials furnished or obligations incurred by Tenant, and Tenant agrees to defend, indemnify and hold Landlord harmless from and against any such lien or claim or action thereon, together with costs of suit and reasonable attorneys' fees and costs incurred by Landlord in connection with any such claim or action. Before commencing any work of alteration, addition or improvement to the Premises, Tenant shall give Landlord at least ten (10) business days' written notice of the proposed commencement of such work (to afford Landlord an opportunity to post appropriate notices of non-responsibility). In the event that there shall be recorded against the Premises or the Project or the property of which the Premises is a part any claim or lien arising out of any such work performed, materials furnished or obligations incurred by Tenant and such claim or lien shall not be removed by bond or otherwise or discharged within ten (10) days of filing, upon notice to Tenant and the expiration of a fifteen (15) day cure period, Landlord shall have the right but not the obligation to pay and discharge said lien without regard to whether such lien shall be lawful or correct (in which case Tenant shall reimburse Landlord for any such payment made by Landlord within ten (10) days following written demand). Upon completion of the work, Tenant shall deliver to Landlord final lien waivers from all contractors and suppliers. Landlord may post at the Premises such notices of non-responsibility as may be provided for under applicable Law. Tenant shall provide Landlord with as-built plans and specifications for all Alterations done by Tenant.

 

ARTICLE 11
PROJECT SERVICES

 

(a)     Utilities and Services. [NOT APPLICABLE TO SHORT TERM LEASE: Landlord and Tenant acknowledge that, concurrently with their execution and delivery of this Lease, Landlord and Tenant are entering into a Lease for the remainder of the Project consisting of approximately 192,629 rentable square feet (the "Short Term Lease"). Tenant acknowledges and agrees that the shared electrical room for the Project requires expansion, and Tenant agrees that it will cooperate with Landlord to have such expansion occur into Tenant's storage room. Upon the completion of the expansion, the added space shall be included in the Shared Space. Landlord and Tenant further acknowledge and agree that the telephone room shall be located solely in Tenant's Premises and may be used exclusively by Tenant and not any other occupant. In accordance with the timeframes set forth in Section 8(b) above, Landlord shall, at Landlord's sole cost, (i) separate the Project Systems (excluding fire system branch lines, fire life safety systems and common HVAC elements) serving the Premises from the remainder of the Project, and (ii) have separate meters or submeters installed for each of the following utilities: electricity, water and natural gas. Notwithstanding the foregoing or anything to the contrary herein, Landlord shall have the right, as determined in Landlord's sole discretion and at Landlord's sole cost, to either (A) separate the Project's condensed water loop and dedicate the existing cooling towers in the Project to service the Premises exclusively, or (B) maintain the condensed water loop and cooling tower as a Common Area in accordance with the terms of this Lease, in which event, Landlord shall install, at Landlord's sole cost, a new Siemens Talon Controls Building Management System (or comparable system) (the "BMS System") with controllers at each water source heat pump. Tenant shall cooperate with Landlord and Landlord's contractor to allow the timely completion of the foregoing work. If Landlord elects to maintain the condensed water loop and cooling towers as Common Area, Landlord shall utilize the BMS System to monitor and record the water heat source pump fan and compressor operation times to establish the costs attributable to each party utilizing same. Any utility costs attributable to Tenant as determined by Landlord's review of the BMS System shall be paid by Tenant to Landlord as Additional Rent within fifteen (15) days of Landlord's demand. Tenant shall have the right to connect additional equipment to the BMS System at Tenant's sole cost, so long as such additional equipment is reasonably approved by Landlord, complies with all applicable laws, does not overload the BMS System and otherwise complies with all of the requirements set forth in this Lease. Any meters and sub-meters shall be installed for each such utility in order to measure amounts supplied to the Premises, other space in the Project and the Common Areas (and the costs measured from such meters and sub-meters shall be solely paid by the parties utilizing such systems as further described in this Section 11(a) below). After such separate meters are installed,] Tenant shall contract directly with the applicable utility company for utilities separately metered to the Premises, Tenant shall have no responsibility for utilities provided to other space in the Project and utilities provided to the Common Areas of the Project shall be included in Operating Costs. Landlord shall bill Tenant for Tenant's usage (as determined by Landlord's review of the sub-meter readings) for any utilities that are sub-metered, and Tenant shall reimburse Landlord for such actual costs (without mark-up from Landlord) as Additional Rent within fifteen (15) days of demand. Until such separate meters and submeters are installed, Tenant shall pay Tenant's Proportionate Share of the cost of such utilities on a monthly basis. Landlord shall provide, as an Operating Cost of the Project, trash removal services and janitorial service to the Common Areas (but not to the Premises). Tenant shall be responsible, at Tenant's sole cost, for janitorial services to the Premises. Landlord shall not be liable for, and except as provided in Section 11(b) below, there shall be no rent abatement as a result of, any stoppage, reduction or interruption of any such services caused by governmental rules, regulations or ordinances, riot, strike, labor disputes, breakdowns, accidents or necessary repairs.

 

EXHIBIT "I"

 

 

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(a)     Abatement Event. An "Abatement Event" shall be defined as an event caused by Landlord's negligence or willful misconduct that prevents Tenant from using the Premises or any portion thereof, as a result of any failure to provide essential services (i.e., utilities under Section 11(a) above) or access to the Premises, where (i) Tenant does not actually use the Premises or such portion thereof in the manner in which it was used prior to the Abatement Event, and (ii) such event is not caused by the negligence or willful misconduct of Tenant, its agents, employees or contractors. Tenant shall give Landlord notice ("Abatement Notice") of any such Abatement Event, and if such Abatement Event continues beyond the "Eligibility Period" (as that term is defined below), then, as Tenant's sole and exclusive remedy at law and in equity (other than in the case of Landlord's default, in which case Section 19(b) below shall apply) the Basic Rental and Tenant's Proportionate Share of Direct Costs shall be abated entirely or reduced, as the case may be, after expiration of the Eligibility Period for such time that Tenant continues to be so prevented from using, and does not use, the Premises or a portion thereof, in the proportion that the rentable area of the portion of the Premises that Tenant is prevented from using, and does not use, bears to the total rentable area of the Premises; provided, however, in the event that Tenant is prevented from using, and does not use, a portion of the Premises for a period of time in excess of the Eligibility Period and the remaining portion of the Premises is not sufficient to allow Tenant to effectively conduct its business therein, and if Tenant does not conduct its business from such remaining portion, then for such time after expiration of the Eligibility Period during which Tenant is so prevented from effectively conducting its business therein, the Basic Rental and Tenant's Proportionate Share of Direct Costs for the entire Premises shall be abated entirely for such time as Tenant continues to be so prevented from using, and does not use, the Premises. If, however, Tenant reoccupies any portion of the Premises during such period, the Basic Rental and Tenant's Proportionate Share of Direct Costs allocable to such reoccupied portion, based on the proportion that the rentable area of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall be payable by Tenant from the date Tenant reoccupies such portion of the Premises. The term "Eligibility Period" shall mean a period of five (5) consecutive business days after Landlord's receipt of any Abatement Notice(s). If a fire or other casualty results in Tenant's inability to use the Premises or a portion thereof, the terms and conditions of Article 16 below shall apply rather than this Section 11(b).

 

EXHIBIT "I"

 

 

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ARTICLE 12
ENTRY RIGHTS OF LANDLORD

 

Landlord and its agents shall have the right to enter the Premises at all reasonable times upon one (1) business day’s prior notice (except that no notice shall be required in the case of an emergency) for the purpose of examining or inspecting the same, serving or posting and keeping posted thereon notices as provided by law, or which Landlord deems necessary for the protection of Landlord or the Project, showing the same to prospective tenants (but as to prospective tenants, only during the last nine (9) months of the Term or the Option Terms, if applicable, or at any time in which Tenant is in default under this Lease after expiration of applicable cure periods), lenders or purchasers of the Project, in the case of an emergency, and for making such alterations, repairs, improvements or additions to the Premises or to the Project as may be required under this Lease, all without being deemed guilty of or liable for any breach of any covenant of quiet enjoyment or eviction of Tenant (provided Landlord uses reasonable efforts to present any disruption to Tenant's business operations) and without abatement of rent. For each of the foregoing purposes, Tenant shall provide Landlord with a key or other device in order to provide entry to the Premises (excluding Tenant's vaults and safes), and Landlord may open said doors to the Premises in an emergency in order to obtain entry to the Premises. Landlord shall provide Tenant with an opportunity to have a representative of Tenant escort Landlord in connection with any such entry (except any such entry in the case of an emergency). Furthermore, except as expressly provided in this Lease, Landlord shall not be entitled to make alterations, additions or improvements to the Premises or to the exterior façade surrounding the Premises without Tenant's consent.

 

EXHIBIT "I"

 

 

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ARTICLE 13
INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY

 

(a)     Indemnity. Tenant shall indemnify, defend and hold Landlord and its members, officers, directors, employees and contractors (collectively, "Landlord Parties") harmless from any and all claims arising from Tenant's breach of this Lease and/or Tenant's use of the Premises or the Project or from the conduct of its business or from any activity, work or thing which may be permitted or suffered by Tenant in the Premises and shall further indemnify, defend and hold Landlord and the Landlord Parties harmless from and against any and all loss, cost, expense, damages or claims arising from the negligence or willful misconduct of Tenant or any of its agents, contractors or employees and from any and all costs, attorneys' fees and costs, expenses and liabilities incurred in the defense of any claim or any action or proceeding brought thereon, including negotiations in connection therewith. However, notwithstanding the foregoing, Tenant shall not be required to indemnify and/or hold Landlord or the Landlord Parties harmless from any loss, cost, liability, damage or expense, including, but not limited to, penalties, fines, attorneys' fees or costs (collectively, "Claims"), to any person, property or entity to the extent resulting from the negligence or willful misconduct of Landlord or its agents, contractors, or employees. Landlord hereby indemnifies Tenant and holds Tenant harmless from any Claims to the extent resulting from the negligence or willful misconduct of Landlord or its agents, contractors or employees and/or for Landlord's breach of the Lease, and not covered by insurance required to be carried under this Lease by Tenant or actually carried by Tenant. Further, Tenant's agreement to indemnify Landlord and Landlord's agreement to indemnify Tenant pursuant to this Section 13(a) is not intended to and shall not relieve any insurance carrier of its obligations under policies required to be carried by Landlord or Tenant pursuant to this Lease, to the extent such policies cover the matters subject to such indemnification obligations. 

 

(b)     Exemption of Landlord from Liability. Landlord and the Landlord Parties shall not be liable for injury to Tenant's business, or loss of income therefrom, however occurring (including, without limitation, from any failure or interruption of services or utilities or as a result of Landlord's negligence), or, except in connection with damage or injury resulting from the negligence or willful misconduct of Landlord or the Landlord Parties (provided that in such case Landlord's liability shall be limited to amounts not covered by insurance carried by Tenant or required to be carried by Tenant pursuant to this Lease), for damage that may be sustained by the person, goods, wares, merchandise or property of Tenant, its employees, invitees, customers, agents, or contractors.

 

ARTICLE 14
INSURANCE

 

(a)     Tenant's Insurance. Tenant, shall at all times during the Term of this Lease, and at its own cost and expense, procure and continue in force the following insurance coverage: (i) Commercial General Liability Insurance (which may include umbrella insurance) insuring both Landlord and Tenant against all claims, demands or actions for bodily injury, property damage, personal and advertising injury, and medical payments arising out of or in connection with Tenant's use or occupancy of the Premises, or by the condition of the Premises, written on an occurrence basis, with a combined single limit for bodily injury and property damages of not less than Two Million Dollars ($2,000,000) per occurrence and Three Million Dollars ($3,000,000) in the annual aggregate (and no offset for occurrences on property other than the Premises), including products liability coverage if applicable, owners and contractors protective coverage (when Tenant performs Alterations), blanket contractual coverage, and personal injury coverage; (ii) a policy of standard fire, extended coverage and special extended coverage insurance (all risks), including a vandalism and malicious mischief endorsement, sprinkler leakage coverage where sprinklers are provided in an amount equal to the full replacement value new without deduction for depreciation of all (A) Tenant Improvements and Alterations, and (B) trade fixtures, furniture, equipment and other personal property installed by or at the expense of Tenant; and (iii) Worker's Compensation and Employers liability coverage as required by Law. Tenant shall carry and maintain during the entire Term (including any Option Terms, if applicable), at Tenant's sole cost and expense, increased amounts of the insurance required to be carried by Tenant pursuant to this Article 14 and such other reasonable types of insurance coverage and in such reasonable amounts covering the Premises and Tenant's operations therein, as may be reasonably required by Landlord, but Landlord shall only be entitled to require such increased amounts and/or other coverages if they are then generally required by owners of comparable buildings in the San Diego County, California area.

 

EXHIBIT "I"

 

 

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(b)     Form of Policies. The aforementioned minimum limits of policies and Tenant's procurement and maintenance thereof shall in no event limit the liability of Tenant hereunder. The Commercial General Liability Insurance policy shall name Landlord, Landlord's property manager, if any, Landlord's lender(s) and such other persons or firms as Landlord specifies in writing to Tenant from time to time, as additional insureds. All such insurance policies carried by Tenant shall be with companies having a rating of not less than A-VII in Best's Insurance Guide. Tenant shall furnish to Landlord certificates of coverage. Tenant shall, prior to the expiration of such policies, furnish Landlord with renewals or binders. Tenant agrees that if Tenant does not take out and maintain such insurance or furnish Landlord with renewals or binders in a timely manner, upon notice to Tenant and expiration of a reasonable cure period, Landlord may (but shall not be required to) procure said insurance on Tenant's behalf and charge Tenant the cost thereof, which amount shall be payable by Tenant upon demand with interest (at the Interest Rate set forth in Section 20(e) below) from the date such sums are expended. Tenant shall have the right to provide such insurance coverage pursuant to blanket or umbrella policies obtained by Tenant, provided such blanket or umbrella policies afford coverage to the Premises and to Tenant as required by this Lease.

 

(c)     Landlord's Insurance. Landlord shall, as a cost to be included in Operating Costs, procure and maintain at all times during the Term of this Lease, a policy or policies of insurance covering loss or damage to the Project in the amount of the full replacement cost without deduction for depreciation thereof, providing protection against all perils included within the classification of fire and extended coverage, vandalism coverage and malicious mischief, sprinkler leakage, water damage, and special extended coverage on the building. Additionally, Landlord may carry: (i) Bodily Injury and Property Damage Liability Insurance and/or Excess Liability Coverage Insurance; and (ii) Earthquake and/or Flood Damage Insurance; and (iii) Rental Income Insurance; and (iv) any other forms of insurance Landlord may deem appropriate or any lender may require. The costs of all insurance carried by Landlord shall be included in Operating Costs.

 

EXHIBIT "I"

 

 

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(d)     Waiver of Subrogation. Landlord and Tenant each agree to require their respective insurers issuing the insurance described in Sections 14(a)(ii) and the first sentence of Section 14(c), to waive any rights of subrogation that such companies may have against the other party. Tenant hereby waives any right that Tenant may have against Landlord and Landlord hereby waives any right that Landlord may have against Tenant as a result of any loss or damage to the extent such loss or damage is insurable under such policies and such waiver shall also apply to deductible and self-insured retention amounts.

 

ARTICLE 15
ASSIGNMENT AND SUBLETTING

 

Except as expressly provided in this Article 15, Tenant shall have no power to, either voluntarily, involuntarily, by operation of law or otherwise, sell, assign, mortgage, pledge, transfer or hypothecate this Lease, or sublet the Premises or any part thereof, without the prior written consent of Landlord, which consent shall not be unreasonably withheld. Landlord shall grant or deny consent to a proposed Transfer by written notice to Tenant within ten (10) business days after Landlord's receipt of an executed duplicate original of the proposed Transfer document together with financial information reasonably requested by Landlord. If Landlord fails to so respond in writing to Tenant within said ten (10) business day period, Tenant may send a second written notice ("Deemed Response Notice") to Landlord with such information and indicating that such Deemed Response Notice is being delivered pursuant to Article 15 of this Lease. Landlord's failure to withhold its consent by written notice to Tenant within five (5) business days after Landlord's receipt of a properly delivered Deemed Response Notice shall be deemed to constitute Landlord's consent to such Transfer. Tenant may transfer its interest pursuant to this Lease only upon the following express conditions, which conditions are agreed by Landlord and Tenant to be reasonable:

 

(a)     That the proposed Transferee (as hereafter defined) shall be subject to the prior written consent of Landlord, which consent will not be unreasonably withheld.

 

(b)     That Tenant shall pay to Landlord Landlord's reasonable attorneys' fees and costs incurred in connection with the proposed Transfer, not to exceed a total of $1,500.00 per proposed Transfer.

 

(c)     That the proposed Transferee shall execute an agreement pursuant to which it shall agree to perform faithfully and be bound by all of the terms, covenants, conditions, provisions and agreements of this Lease applicable to that portion of the Premises so transferred.

 

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(d)     That an executed duplicate original of said assignment and assumption agreement or other Transfer on a form reasonably approved by Landlord, shall be delivered to Landlord within five (5) days after the execution thereof, and that such Transfer shall not be binding upon Landlord until the delivery thereof to Landlord and the execution and delivery of Landlord's consent thereto. It shall be a condition to Landlord's consent to any subleasing, assignment or other transfer of part or all of Tenant's interest in the Premises ("Transfer") that (i) [NOT APPLICABLE TO SHORT TERM LEASE: upon Landlord's consent to any Transfer, Tenant shall pay and continue to pay Landlord fifty percent (50%) of any "Transfer Premium" (defined below), received by Tenant from the Transferee;] (ii) any sublessee of part or all of Tenant's interest in the Premises shall agree that in the event Landlord gives such sublessee notice that Tenant is in default under this Lease, such sublessee shall thereafter make all sublease or other payments directly to Landlord, which will be received by Landlord without any liability whether to honor the sublease or otherwise (except to credit such payments against sums due under this Lease), and any sublessee shall agree to attorn to Landlord or its successors and assigns at their request should this Lease be terminated for any reason, except that in no event shall Landlord or its successors or assigns be obligated to accept such attornment; (iii) Landlord may require that Tenant not then be in default hereunder after expiration of any applicable cure period; and (iv) Tenant or the proposed subtenant or assignee (collectively, "Transferee") shall agree to pay Landlord, upon demand, as Additional Rent, a sum equal to the additional costs, if any, incurred by Landlord for maintenance and repair as a result of any change in the nature of occupancy caused by such subletting or assignment. [NOT APPLICABLE TO SHORT TERM LEASE: "Transfer Premium" shall mean all rent, Additional Rent or other consideration payable by a Transferee in connection with a Transfer in excess of the Basic Rental and Direct Costs payable by Tenant under this Lease during the term of the Transfer and if such Transfer is for less than all of the Premises, the Transfer Premium shall be calculated on a rentable square foot basis. In any event, the Transfer Premium shall be calculated after deducting the reasonable expenses incurred by Tenant for (1) any changes, alterations and improvements to the Premises paid for by Tenant in connection with the Transfer, (2) any other out-of-pocket monetary concessions provided by Tenant to the Transferee, and (3) any brokerage commissions and attorneys' fees paid for by Tenant in connection with the Transfer.] In no event shall the consent by Landlord to any Transfer be construed as relieving Tenant or any Transferee from obtaining the express written consent of Landlord to any further Transfer, or as releasing Tenant from any liability or obligation hereunder whether or not then accrued and Tenant shall continue to be fully liable therefor. No collection or acceptance of rent by Landlord from any person other than Tenant shall be deemed a waiver of any provision of this Article 15 or the acceptance of any Transferee hereunder, or a release of Tenant (or of any Transferee of Tenant). 

 

The term "Affiliate" shall mean (i) any entity that is controlled by, controls or is under common control with, Tenant or (ii) any entity that merges with, is acquired by, or acquires Tenant through the purchase of stock or assets so long as the resulting entity has the same or greater net worth than that of Tenant as of the date of the Transfer. Notwithstanding anything to the contrary contained in this Article 15, an assignment or subletting of all or a portion of the Premises to an Affiliate of Tenant, shall not be deemed a Transfer under this Article 15 (and shall not require Landlord's consent nor result in an obligation to share Transfer Premium), provided that Tenant notifies Landlord of any such assignment or sublease and promptly supplies Landlord with any documents or information requested by Landlord regarding such assignment or sublease or such Affiliate, and further provided that such assignment or sublease is not a subterfuge by Tenant to avoid its obligations under this Lease. An assignee of Tenant's entire interest in this Lease pursuant to the immediately preceding sentence may be referred to herein as an "Affiliated Assignee." "Control," as used in this Article 15, shall mean the ownership, directly or indirectly, of greater than fifty percent (50%) of the voting securities of, or possession of the right to vote, in the ordinary direction of its affairs, of greater than fifty percent (50%) of the voting interest in, an entity.

 

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[FOR SHORT-TERM LEASE ONLY: Landlord and Tenant acknowledge that the following leases currently apply to portions of the Premises (collectively, the "Existing Leases"): (i) a lease dated as of March 29, 2013 and amended by Amendment No. 1 dated as of March 29, 2014 and Amendment No. 2 dated as of March 31, 2015 to Alex Machining Corporation for approximately 3,116 square feet (as so amended, the "Alex Machining Lease"); (ii) a lease dated as of June 3, 2014 to Sirius Acquisition, LLC for approximately 31,476 square feet (the "Sirius Lease"); and (iii) a lease dated as of June 10, 2015 to Broadcast Microwave Services, Inc. for approximately 27,200 square feet (the "Broadcast Microwave Services Lease"). The tenants under this Existing Leases may be collectively referred to herein as the "Existing Tenants". Landlord and Tenant acknowledge that upon the Commencement Date, due to Landlord's purchase of the Project from Tenant, and Landlord and Tenant entering into this Lease, the Existing Leases shall automatically become subleases and Tenant shall take any and all actions required to document the same. Notwithstanding anything to the contrary contained herein, Landlord hereby consents to the Existing Leases. Landlord and Tenant acknowledge that the Lease Expiration Date of the Sirius Lease is June 6, 2017 and that pursuant to Section 2.3 of the Sirius Lease, Tenant and Sirius Acquisition, LLC each have the right to terminate the Sirius Lease in its entirety upon twelve (12) month prior written notice, which termination will be effective as of the last day of the twelfth (12th) month following the receipt by the other party of such termination notice. Tenant agrees to deliver such termination notice to Sirius Acquisition, LLC upon the Commencement Date (through the escrow established for Landlord's purchase of the Project or otherwise).]

 

Notwithstanding anything contained herein to the contrary and without limiting the generality of the foregoing provisions of this Article 15, Tenant shall not: (a) sublet all or part of the Premises or assign this Lease on any basis such that the rental or other amounts to be paid by the subtenant or assignee thereunder would be based, in whole or in part, on the income or profits derived by the business activities of the subtenant or assignee; (b) sublet all or part of the Premises or assign this Lease to any person or entity in which, under Section 856(d)(2)(B) of the Internal Revenue Code (the "Code"), the Company (defined in Section 30(s) below) or any affiliate of the Company owns, directly or indirectly (by applying constructive ownership rules set forth in Section 856(d) (5) of the Code), a ten percent (10%) or greater interest (it being agreed that Tenant may request Landlord to confirm that an assignee or sublessee will not violate such provision); or (c) sublet all or part of the Premises or assign this Lease in any other manner or otherwise derive any income which could cause any portion of the amounts received by Landlord pursuant hereto or any sublease to fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code, or which could cause any other income received by Landlord to fail to qualify as income described in Section 856(c) (2) of the Code (provided that any Transfer Premium paid shall not constitute a violation of this provision and Tenant may request Landlord to confirm that there is no violation of this provision). The requirements of this Article 15 shall likewise apply to any further subleasing by any subtenant. All references herein to Section 856 of the Code (or any subsection thereof) also shall refer to any amendments thereof or successor provisions thereto.

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ARTICLE 16
DAMAGE OR DESTRUCTION

 

Tenant shall give immediate written notice to Landlord upon Tenant's knowledge of any damage caused to the Premises by fire or other casualty. If the Project is damaged by fire or other insured casualty and the insurance proceeds have been made available therefor by the holder or holders of any mortgages or deeds of trust covering the Project (as further addressed in Article 17 below) and Landlord does not elect to terminate this Lease as hereinafter provided, the damage shall be repaired by Landlord provided such repairs can, as reflected in the Damage Repair Estimate (as defined below), be completed within two hundred seventy (270) days after the necessity for repairs as a result of such damage becomes known to Landlord and until such repairs are completed Basic Rental and Additional Rent shall be abated in proportion to the part of the Premises which is unusable by Tenant in the conduct of its business (but there shall be no abatement of rent by reason of any portion of the Premises being unusable for a period equal to one (1) day or less). Within sixty (60) days after the date Landlord learns of the necessity for repairs as a result of damage, Landlord shall notify Tenant (the "Damage Repair Estimate") of Landlord's reasonable estimate of the period of time in which the repairs will be completed, based upon an estimate from a contractor experienced in comparable repairs. Upon the occurrence of any damage to the Premises, Tenant shall assign to Landlord (or to any party designated by Landlord) all insurance proceeds payable to Tenant under Section 14(a)(ii)(A) above. If repairs cannot, as reflected in the Damage Repair Estimate, be completed within two hundred seventy (270) days after the necessity for repairs as a result of such damage becomes known to Landlord without the payment of overtime or other premiums, Landlord may, at its option, either (i) make such repairs in a reasonable time and in such event this Lease shall continue in effect and the Basic Rental and Additional Rent shall be abated, if at all, in the manner provided in this Article 16, or (ii) elect not to effect such repairs and instead terminate this Lease, by notifying Tenant in writing of such termination within sixty (60) days after Landlord learns of the necessity for repairs as a result of damage, such notice to include a termination date giving Tenant sixty (60) days to vacate the Premises. However, if the Damage Repair Estimate indicates that repairs cannot be completed within two hundred seventy (270) days after being commenced, Tenant may elect, not later than thirty (30) days after Tenant's receipt of the Damage Repair Estimate, to terminate this Lease by written notice to Landlord effective as of the date specified in Tenant's notice. In addition, Landlord may elect to terminate this Lease if the Project shall be damaged by fire or other casualty or cause, whether or not the Premises are affected, if the damage is material and is not fully covered, except for deductible amounts, by Landlord's insurance policies, unless Tenant agrees to fund the insurance shortfall. Finally, if the Premises or the Project is damaged to any substantial extent during the last twelve (12) months of the Term, then notwithstanding anything contained in this Article 16 to the contrary, Landlord and Tenant shall each have the option to terminate this Lease by giving written notice to the other party of the exercise of such option within sixty (60) days after such party learns of the necessity for repairs as the result of such damage; provided, however, that Tenant may nullify any such termination by Landlord if Tenant properly exercises an available extension Option under Article 31 below (but otherwise subject to the provisions set forth above). Except as provided in this Article 16, there shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant's business or property arising from such damage or destruction or the making of any repairs, alterations or improvements in or to any portion of the Project or the Premises or in or to fixtures, appurtenances and equipment therein. Tenant understands that Landlord will not carry insurance of any kind on Tenant's furniture, furnishings, trade fixtures or equipment, and that Landlord shall not be obligated to repair any damage thereto or replace the same. With respect to any damage which Landlord is obligated to repair or elects to repair, Tenant, as a material inducement to Landlord entering into this Lease, irrevocably waives and releases its rights under the provisions of Sections 1932 and 1933 of the California Civil Code, except as expressly provided in this Article 16 above.

 

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ARTICLE 17
SUBORDINATION

 

This Lease is subject and subordinate to all mortgages and deeds of trust which affect the Real Property, including all renewals, modifications, consolidations, replacements and extensions thereof. Tenant agrees that any mortgagee or ground lessor shall have no duty, liability or obligation to perform any of the obligations of Landlord under this Lease and shall have the right at any time to subordinate its mortgage, deed of trust, ground lease or other lien to this Lease; provided, however, notwithstanding that this Lease may be (or may become) superior to a mortgage, deed of trust, ground lease or other lien, the mortgagee shall not be liable for prepaid rentals, security deposits (unless delivered to such mortgagee, deed of trust beneficiary or ground lessor) and claims accruing during Landlord's ownership (unless the circumstances giving rise to such claims continue after such entity succeeds to Landlord's interest); and further provided that the provisions of a mortgage, deed of trust, ground lease or other lien relative to the rights of the mortgagee with respect to proceeds arising from an eminent domain taking (including a voluntary conveyance by Landlord) and provisions relative to proceeds arising from insurance payable by reason of damage to or destruction of the Premises shall be prior and superior to any contrary provisions contained in this Lease with respect to the payment or usage thereof (but if such proceeds are not allocated for repairs as otherwise provided in this Lease, and Landlord does not otherwise fund the cost of such repairs, Tenant may terminate this Lease). Landlord is hereby irrevocably vested with full power and authority to subordinate this Lease to any mortgage, deed of trust, ground lease or other lien hereafter placed upon the Premises; provided, however, that (i) within ten (10) business days' written request of Landlord to Tenant, Tenant agrees to promptly execute, acknowledge and deliver any and all commercially reasonable documents or instruments which Landlord or such holder or holders deem necessary or desirable for purposes thereof; and (ii) a condition precedent to such subordination shall be that Landlord obtains from the lender or other party in question a commercially reasonable non-disturbance agreement in favor of Tenant. Subject to the foregoing, (a) Landlord shall have the right to cause this Lease to be and become and remain subject and subordinate to any and all mortgages or deeds of trust which may hereafter be executed covering the Premises, the Project or the property or any renewals, modifications, consolidations, replacements or extensions thereof, for the full amount of all advances made or to be made thereunder and without regard to the time or character of such advances, together with interest thereon and subject to all the terms and provisions thereof and (b) Tenant agrees, within ten (10) business days after Landlord's written request therefor, to execute, acknowledge and deliver upon request any and all commercially reasonable documents or instruments requested by Landlord or necessary or proper to assure the subordination of this Lease to any such mortgages, deed of trust, or leasehold estates. Tenant agrees that in the event any proceedings are brought for the foreclosure of any mortgage or deed of trust or any deed in lieu thereof, to attorn to the purchaser or any successors thereto upon any such foreclosure sale or deed in lieu thereof as so requested to do so by such purchaser and to recognize such purchaser as the lessor under this Lease; Tenant shall, within ten (10) business days after request execute such further instruments or assurances as such purchaser may reasonably deem necessary to evidence or confirm such attornment. Tenant agrees to provide copies of any notices of Landlord's default under this Lease to any mortgagee or deed of trust beneficiary whose address has been provided to Tenant. Tenant waives the provisions of any current or future statute, rule or law which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of the Tenant hereunder in the event of any foreclosure proceeding or sale. Concurrently with their execution and delivery this Lease, Landlord, Tenant and any lender under a mortgage or deed of trust which may affect the Real Property as of the Commencement Date shall execute and deliver a subordination, non-disturbance and attornment agreement as a condition to the subordination of this Lease to any such mortgage or deed of trust.

 

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ARTICLE 18
EMINENT DOMAIN

 

If the whole of the Premises or the Project or so much thereof as to render the balance unusable by Tenant shall be taken under power of eminent domain, or is sold, transferred or conveyed in lieu thereof, this Lease shall automatically terminate as of the date possession is taken by the condemning authority. No award for any partial or entire taking shall be apportioned, and Tenant hereby assigns to Landlord any award which may be made in such taking or condemnation, together with any and all rights of Tenant now or hereafter arising in or to the same or any part thereof; provided, however, that nothing contained herein shall be deemed to give Landlord any interest in or to require Tenant to assign to Landlord any award made to Tenant for the taking of personal property and trade fixtures belonging to Tenant and removable by Tenant at the expiration of the Term hereof as provided hereunder or for the interruption of, or damage to, Tenant's business or for Tenant's moving costs (as long as such separate award does not reduce the amount of the award that would otherwise be awarded to Landlord). In the event of a partial taking described in this Article 18, or a sale, transfer or conveyance in lieu thereof, which does not result in a termination of this Lease, the rent shall be apportioned according to the ratio that the part of the Premises remaining useable by Tenant bears to the total area of the Premises. Tenant hereby waives any and all rights it might otherwise have pursuant to Section 1265.130 of the California Code of Civil Procedure.

 

ARTICLE 19
DEFAULT

 

(a)     Tenant's Default. Each of the following acts or omissions of Tenant shall constitute an "Event of Default":

 

(i)     Failure or refusal to pay Basic Rental, Additional Rent or any other amount to be paid by Tenant to Landlord hereunder within five (5) days after notice that the same is due or payable hereunder;

 

(ii)     Except as set forth in items (i) above and (iii) and (iv) below, failure to perform or observe any other covenant or condition of this Lease to be performed or observed within thirty (30) days following written notice to Tenant of such failure; provided, however, if the nature of such default is such that the same cannot be reasonably cured within a thirty (30) day period, Tenant shall not be deemed to be in default if Tenant diligently commences such cure within such period and thereafter diligently proceeds to rectify and cure said default for a period not to exceed ninety (90) days. Such thirty (30) day notice shall be in lieu of, and not in addition to, any required under Section 1161 of the California Code of Civil Procedure or any similar or successor law;

 

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(iii)     The taking in execution or by similar process or law (other than by eminent domain) of the estate hereby created; or

 

(iv)     The filing by Tenant or any guarantor hereunder in any court pursuant to any statute of a petition in bankruptcy or insolvency or for reorganization or arrangement for the appointment of a receiver of all or a portion of Tenant's property; the filing against Tenant or any guarantor hereunder of any such petition, or the commencement of a proceeding for the appointment of a trustee, receiver or liquidator for Tenant, or for any guarantor hereunder, or of any of the property of either, or a proceeding by any governmental authority for the dissolution or liquidation of Tenant or any guarantor hereunder, if such proceeding shall not be dismissed or trusteeship discontinued within thirty (30) days after commencement of such proceeding or the appointment of such trustee or receiver; or the making by Tenant or any guarantor hereunder of an assignment for the benefit of creditors. Tenant hereby stipulates to the lifting of the automatic stay in effect and relief from such stay for Landlord in the event Tenant files a petition under the United States Bankruptcy laws, for the purpose of Landlord pursuing its rights and remedies against Tenant and/or a guarantor of this Lease.

 

(b)     Landlord's Default. In the event Landlord should default in any of its obligations hereunder, Tenant shall give Landlord written notice specifying such default and Landlord shall thereupon have thirty (30) days (plus an additional reasonable period as may be required in the exercise by Landlord of due diligence) in which to cure any such default provided that if the default is not reasonably capable of being cured in thirty (30) days, Landlord shall be deemed to be in compliance with this Lease if Landlord commences to cure the default within such thirty (30) day period and diligently and continuously prosecutes such cure to completion for a period not to exceed ninety (90) days; provided however, if Landlord's default is of a nature which if not cured immediately, poses an imminent risk of harm to persons or property and/or will have an immediate, material, adverse effect on the conduct of Tenant's business operations at the Premises, Tenant shall have the right to cure such default immediately, with only such prior notice (if any) to Landlord as is reasonable under the circumstances. Furthermore, upon any such default by Landlord under this Lease, Tenant may, except as otherwise specifically provided in this Lease to the contrary, exercise any of its rights provided at law or in equity; provided that in no event may Tenant terminate the Lease without first obtaining a judgment.

 

ARTICLE 20
REMEDIES

 

(a)     Upon the occurrence of an Event of Default under this Lease as provided in Article 19 hereof, Landlord may exercise all of its remedies as may be permitted by law, including but not limited to the remedy provided by Section 1951.4 of the California Civil Code and any successor statute or similar Law, and including without limitation, terminating this Lease, reentering the Premises and removing all persons and property therefrom, which property may be stored by Landlord at a warehouse or elsewhere at the risk, expense and for the account of Tenant. If Landlord elects to terminate this Lease, Landlord shall be entitled to recover from Tenant the aggregate of all amounts permitted by law, including but not limited to (i) the worth at the time of award of the amount 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 such rental loss that Tenant proves 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 such rental loss that Tenant proves could have been 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 or which in the ordinary course of things would be likely to result therefrom; and (v) at Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable law. The term "rent" as used in this Section 20(a) shall be deemed to be and to mean all sums of every nature required to be paid by Tenant pursuant to the terms of this Lease, whether to Landlord or to others. As used in items (i) and (ii), above, the "worth at the time of award" shall be computed by allowing interest at the rate set forth in item (e), below, but in no case greater than the maximum amount of such interest permitted by law. As used in item (iii), above, the "worth at the time of award" shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). Tenant hereby waives for Tenant and all those claiming under Tenant all right now or hereafter existing including, without limitation, any rights under California Code of Civil Procedure Sections 1174 and 1179 and Civil Code Section 1950.7 to redeem by order or judgment of any court or by any legal process or writ, Tenant's right of occupancy of the Premises after any termination of this Lease.

 

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(b)     Nothing in this Article 20 shall be deemed to affect Landlord's right to indemnification for liability or liabilities arising prior to the termination of this Lease for personal injuries or property damage under the indemnification clause or clauses contained in this Lease.

 

(c)     Notwithstanding anything to the contrary set forth herein, Landlord's re-entry to perform acts of maintenance or preservation of or in connection with efforts to relet the Premises or any portion thereof, or the appointment of a receiver upon Landlord's initiative to protect Landlord's interest under this Lease shall not terminate Tenant's right to possession of the Premises or any portion thereof and, until Landlord does elect to terminate this Lease, this Lease shall continue in full force and effect and Landlord may enforce all of Landlord's rights and remedies hereunder including, without limitation, the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate this Lease on account of any default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all rent as it becomes due.

 

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(d)     All rights, powers and remedies of Landlord hereunder and under any other agreement now or hereafter in force between Landlord and Tenant shall be cumulative and not alternative and shall be in addition to all rights, powers and remedies given to Landlord by law, and the exercise of one or more rights or remedies shall not impair Landlord's right to exercise any other right or remedy.

 

(e)     Any amount due from one (1) party to another hereunder which is not paid when due shall bear interest at the rate ("Interest Rate") equal to the lower of ten percent (10%) per annum or the maximum lawful rate of interest from the due date until paid, unless otherwise specifically provided herein, but the payment of such interest shall not excuse or cure any default by Tenant under this Lease. In addition to such interest, if Basic Rental is not paid on or before the fifth (5th) day of the calendar month for which the same is due, a late charge equal to three percent (3%) of the amount overdue shall be immediately due and owing, which late charge Tenant hereby agrees is a reasonable estimate of the damages Landlord shall suffer as a result of Tenant's late payment. Such charges for interest and late payments are separate and cumulative and are in addition to and shall not diminish or represent a substitute for any or all of Landlord's rights or remedies under any other provision of this Lease. Notwithstanding the foregoing, Tenant shall be entitled to notice and the expiration of a five (5) day cure period prior to an imposition of any late charge or interest charge under this Section 20(e) one (1) time per calendar year; after such written notice has been provided to Tenant in a calendar year, Tenant shall not be entitled to any further notice prior to imposition of a late charge or interest under this Section 20(e) in such calendar year.

 

(f)     Notwithstanding anything to the contrary set forth in this Lease, Landlord shall be in default in the performance of any obligation required to be performed by Landlord pursuant to this Lease if Landlord fails to perform such obligation within thirty (30) days after the receipt of notice from Tenant specifying in detail Landlord's failure to perform; provided, however, if the nature of Landlord's obligation is such that more than thirty (30) days are required for its performance, then Landlord shall not be in default under this Lease if it shall commence such performance within such thirty (30) day period and thereafter diligently pursue the same to completion. Upon any such default by Landlord under this Lease, Tenant may, except as otherwise specifically provided in this Lease to the contrary, exercise any of its rights provided at law or in equity.

 

(g)     When this Lease requires service of a notice, that notice shall replace rather than supplement any equivalent or similar statutory notice, including any notice required by California Code of Civil Procedure Section 1161 or any similar or successor statute. When a statute requires service of a notice in a particular manner, service of that notice (or a similar notice required by this Lease) in the manner required by this Article 20 shall replace and satisfy the statutory service-of-notice procedures, including those required by California Code of Civil Procedure Section 1162 or any similar or successor statute. 

 

ARTICLE 21
TRANSFER OF LANDLORD'S INTEREST

 

In the event of any transfer or termination of Landlord's interest in the Premises or the Project by sale, assignment, transfer, foreclosure, deed-in-lieu of foreclosure or otherwise whether voluntary or involuntary, Landlord shall be automatically relieved of any and all obligations and liabilities on the part of Landlord from and after the date of such transfer or termination, including furthermore without limitation, the obligation of Landlord under Article 4 and California Civil Code 1950.7 above to return the security deposit, provided said security deposit is transferred to said transferee. Tenant agrees to attorn to the transferee upon any such transfer and to recognize such transferee as the lessor under this Lease and Tenant shall, within five (5) days after request, execute such further commercially reasonable instruments or assurances as such transferee may reasonably deem necessary to evidence or confirm such attornment.

 

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ARTICLE 22
BROKER

 

In connection with this Lease, Landlord and Tenant warrant and represent that they have had dealings only with the firm set forth in Article 1.G. of the Basic Lease Provisions and that they know of no other person or entity who is or might be entitled to a commission, finder's fee or other like payment in connection herewith. Each party does hereby indemnify and agree to hold the other and their agents, members, partners, representatives, officers, affiliates, shareholders, employees, successors and assigns harmless from and against any and all loss, liability and expenses that the other may incur should such warranty and representation prove incorrect, inaccurate or false.

 

ARTICLE 23
PARKING

 

Tenant shall be entitled to use, commencing on the Commencement Date, the number of parking spaces set forth in Article 1.H. of the Basic Lease Provisions. Those parking spaces designated on Exhibit "D" shall be for the exclusive use of Tenant and may be designated by Tenant as reserved for Tenant and the remaining parking spaces shall be available on an unreserved basis [THE FOLLOWING TO BE SUBSTITUTED FOR SHORT-TERM LEASE: Broadcast Microwave Services, Inc. shall be entitled to retain the four (4) reserved parking spaces to which it is entitled under its Existing Lease and the remaining parking spaces shall be available on an unreserved basis]. Tenant shall not be required to pay to Landlord any fee for parking spaces during the initial Term or any applicable Option Term. Tenant shall abide by all reasonable and non-discriminatory rules and regulations which are prescribed from time to time for the orderly operation and use of the parking areas of the Project and Tenant shall cooperate in seeing that Tenant's employees and visitors also comply with such rules and regulations. Subject to Tenant's parking rights hereunder, Landlord specifically reserves the right to change the size, configuration, design, layout and all other aspects of the Project parking facility at any time and Tenant acknowledges and agrees that Landlord may, without incurring any liability to Tenant and without any abatement of rent under this Lease, from time to time, temporarily close-off or restrict access to areas of the Project parking facility for purposes of permitting or facilitating any such construction, alteration or improvements. Landlord may delegate its responsibilities hereunder to a parking operator or a lessee of the parking facility in which case such parking operator or lessee shall have all the rights of control attributed hereby to the Landlord. In the event that parking capacity problems arise for the Project, Landlord shall implement such parking programs as reasonably determined by Landlord to alleviate such capacity problem, which programs may include, without limitation, valet programs, security programs and parking decals (collectively, the "Parking Programs"). The cost of such Parking Programs shall be included in Operating Costs; provided that if a parking problem is caused solely by Tenant or any other tenants of the Project as determined by Landlord in its commercially reasonable discretion, then the cost of the particular Parking Program shall be borne solely by the party or parties causing the problem.

 

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ARTICLE 24
WAIVER

 

No waiver by Landlord or Tenant of any provision of this Lease shall be deemed to be a waiver of any other provision hereof or of any subsequent breach of the same or any other provision. No provision of this Lease may be waived by Landlord or Tenant, except by an instrument in writing executed by the waiving party. Landlord's consent to or approval of any act by Tenant requiring Landlord's consent or approval shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act of Tenant, whether or not similar to the act so consented to or approved. No act or thing done by Landlord or Landlord's agents during the Term of this Lease shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such surrender shall be valid unless in writing and signed by Landlord. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, 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. Any payment by Tenant or receipt by Landlord of an amount less than the total amount then due hereunder shall be deemed to be in partial payment only thereof and not a waiver of the balance due or an accord and satisfaction, notwithstanding any statement or endorsement to the contrary on any check or any other instrument delivered concurrently therewith or in reference thereto. Accordingly, Landlord may accept any such amount and negotiate any such check without prejudice to Landlord's right to recover all balances due and owing and to pursue its other rights against Tenant under this Lease, regardless of whether Landlord makes any notation on such instrument of payment or otherwise notifies Tenant that such acceptance or negotiation is without prejudice to Landlord's rights.

 

ARTICLE 25
ESTOPPEL CERTIFICATE

 

Tenant shall, at any time and from time to time, upon not less than fifteen (15) days' prior written notice from Landlord, execute, acknowledge and deliver to Landlord a statement in writing certifying the following information, (but not limited to the following information in the event further information regarding this Lease is requested by Landlord): (i) that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as modified, is in full force and effect); (ii) the dates to which the rental and other charges are paid in advance, if any; (iii) the amount of Tenant's security deposit, if any; and (iv) acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, and no events or conditions then in existence which, with the passage of time or notice or both, would constitute a default on the part of Landlord hereunder, or specifying such defaults, events or conditions, if any are claimed. It is expressly understood and agreed that any such statement may be relied upon by any prospective purchaser or encumbrancer of all or any portion of the Real Property.

 

EXHIBIT "I"

 

 

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ARTICLE 26
LIABILITY OF LANDLORD

 

Notwithstanding anything in this Lease to the contrary, any remedy of Tenant for the collection of a judgment (or other judicial process) requiring the payment of money by Landlord in the event of any default by Landlord hereunder or any claim, cause of action or obligation, contractual, statutory or otherwise by Tenant against Landlord or the Landlord Parties concerning, arising out of or relating to any matter relating to this Lease and all of the covenants and conditions or any obligations, contractual, statutory, or otherwise set forth herein, shall be limited solely and exclusively to an amount which is equal to the sum of (a) the rents, issues and profits of the Project (which shall be deemed to include the net proceeds of any sale of the Project by Landlord, provided that any claim is made by Tenant within one (1) year following the date of any such sale, as well as any insurance or condemnation proceeds not applied to the restoration of the Project and subject to the prior rights of any mortgagee or ground or underlying lessor of Landlord), plus (b) the interest of Landlord in and to the Project. No other property or assets of Landlord or any Landlord Party shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant's remedies under or with respect to this Lease, Landlord's obligations to Tenant, whether contractual, statutory or otherwise, the relationship of Landlord and Tenant hereunder, or Tenant's use or occupancy of the Premises.

 

ARTICLE 27
INABILITY TO PERFORM

 

This Lease and the obligations of both parties hereunder shall not be affected or impaired because a party obligated to perform is unable to fulfill any of its obligations hereunder or is delayed in doing so, if such inability or delay is caused by reason of any prevention, delay or stoppage due to strikes, lockouts, acts of God, terrorism, evacuation or any other cause previously, or at such time, beyond the reasonable control or anticipation of such party (collectively, a "Force Majeure") and such party's obligations under this Lease shall be forgiven and suspended by any such Force Majeure; provided, however, that this Article 27 is not intended to, and shall not, extend the time period for the payment of any monetary amounts due (including, without limitation, rent payments from Tenant) from either party to the other under this Lease nor relieve either party from their monetary obligations to the other under this Lease.

 

ARTICLE 28
HAZARDOUS WASTE

 

(a)     Tenant shall not cause or permit any Hazardous Material (as defined in Section 28(b) below) to be brought, kept or used in or about the Project by Tenant, its agents, employees or contractors, except for products that are incidental to Tenant's use of the Premises and general office supplies typically used in the ordinary course of business (e.g., copier toner, glue, ink, and cleaning solvents), which shall be in commercially reasonable amounts and in accordance with all applicable Environmental Laws. Tenant indemnifies Landlord and the Landlord Parties from and against any breach by Tenant of the obligations stated in the preceding sentence, and agrees to indemnify, defend and hold Landlord and the Landlord Parties harmless from and against any and all Claims as a result of the release of Hazardous Materials by Tenant or Tenant's agents, employees, contractors and subcontractors. Such obligations shall survive the expiration or termination of this Lease.

 

EXHIBIT "I"

 

 

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(b)     As used herein, the term "Hazardous Material" means any hazardous or toxic substance, material, or waste which is or becomes regulated by any local governmental authority, the State of California or the United States Government. The term "Hazardous Material" includes, without limitation, any material or substance which is (i) defined as "Hazardous Waste," "Extremely Hazardous Waste," or "Restricted Hazardous Waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "Hazardous Substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a "Hazardous Material," "Hazardous Substance," or "Hazardous Waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "Hazardous Substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) listed under Article 9 or defined as Hazardous or extremely hazardous pursuant to Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (viii) designated as a "Hazardous Substance" pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C. § 1317), (ix) defined as a "Hazardous Waste" pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903), or (x) defined as a "Hazardous Substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (42 U.S.C. § 9601).

 

(c)     As used herein, the term "Environmental Laws" means any applicable federal, state or local law, ordinance, or regulation relating to any Hazardous Material affecting the Project, including, without limitation, the laws, ordinances, and regulations referred to in Section 28(b) above.

 

(d)     Landlord shall, at no cost to Tenant (and not as an Operating Cost), remove or remediate any Hazardous Material in the Project to the extent required under applicable Environmental Laws, except where such removal or remediation is Tenant's responsibility pursuant to Section 28(a) above and except that the cost of any abatement, clean-up or remediation of Hazardous Materials which exist at the Project as of the date of this Lease and required by Environmental Laws may be passed through to Tenant as an Operating Cost.

 

ARTICLE 29
SURRENDER OF PREMISES; REMOVAL OF PROPERTY

 

(a)     The voluntary or other surrender of this Lease by Tenant to Landlord, or a mutual termination hereof, shall not work a merger, and shall at the option of Landlord, operate as an assignment to it of any or all subleases or subtenancies affecting the Premises.

 

EXHIBIT "I"

 

 

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(b)     Upon the expiration of the Term of this Lease, or upon any earlier termination of this Lease, Tenant shall quit and surrender possession of the Premises to Landlord in the same condition as on the Commencement Date, reasonable wear and tear and repairs which are Landlord's obligation excepted, and shall, without expense to Landlord, remove or cause to be removed from the Premises all debris and rubbish, all furniture, equipment, business and trade fixtures, free-standing cabinet work, moveable partitioning, and other articles of personal property in the Premises. Tenant shall be responsible for the cost to repair all damage to the Premises resulting from the removal of any of such items from the Premises.

 

(c)     Whenever Landlord shall reenter the Premises as provided in Article 20 hereof, or as otherwise provided in this Lease, any property of Tenant not removed by Tenant upon the expiration of the Term of this Lease, as provided in this Lease, shall be considered abandoned and Landlord may remove any or all of such items and dispose of the same in any manner or store the same in a public warehouse or elsewhere for the account and at the expense and risk of Tenant, and if Tenant shall fail to pay the cost of storing any such property after it has been stored for a period of thirty (30) days or more, Landlord may sell any or all of such property at public or private sale, in such manner and at such times and places as Landlord, in its sole discretion, may deem proper, without notice to or demand upon Tenant, for the payment of all or any part of such charges or the removal of any such property, and shall apply the proceeds of such sale as follows: first, to the cost and expense of such sale, including reasonable attorneys' fees and costs for services rendered; second, to the payment of the cost of or charges for storing any such property; third, to the payment of any other sums of money which may then or thereafter be due to Landlord from Tenant under any of the terms hereof; and fourth, the balance, if any, to Tenant.

 

(d)     Tenant Improvements and Alterations attached to or built into the Premises prior to or during the Term shall be and remain part of the Premises and shall not be removed by Tenant at the end of the Term unless otherwise expressly provided in Section 9(f) above. However, notwithstanding the foregoing, (i) Tenant shall be required to remove any specialized chillers, chilled water lines, compressors and liquid nitrogen tanks in accordance with all applicable Laws upon the expiration or earlier termination of this Lease, and (ii) Tenant may, but shall not be obligated to, remove the items listed on Exhibit "C" attached hereto and made a part hereof, in which case Tenant shall repair any damage to the Premises resulting from such removal.

 

ARTICLE 30
MISCELLANEOUS

 

(a)     SEVERABILITY; ENTIRE AGREEMENT. ANY PROVISION OF THIS LEASE WHICH SHALL PROVE TO BE INVALID, VOID, OR ILLEGAL SHALL IN NO WAY AFFECT, IMPAIR OR INVALIDATE ANY OTHER PROVISION HEREOF AND SUCH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT. THIS LEASE AND THE EXHIBITS ATTACHED HERETO CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH REGARD TO TENANT'S OCCUPANCY OR USE OF ALL OR ANY PORTION OF THE PROJECT, AND NO PRIOR AGREEMENT OR UNDERSTANDING PERTAINING TO ANY SUCH MATTER SHALL BE EFFECTIVE FOR ANY PURPOSE. NO PROVISION OF THIS LEASE MAY BE AMENDED OR SUPPLEMENTED EXCEPT BY AN AGREEMENT IN WRITING SIGNED BY THE PARTIES HERETO OR THEIR SUCCESSOR IN INTEREST. THE PARTIES AGREE THAT ANY DELETION OF LANGUAGE FROM THIS LEASE PRIOR TO ITS MUTUAL EXECUTION BY LANDLORD AND TENANT SHALL NOT BE CONSTRUED TO HAVE ANY PARTICULAR MEANING OR TO RAISE ANY PRESUMPTION, CANON OF CONSTRUCTION OR IMPLICATION INCLUDING, WITHOUT LIMITATION, ANY IMPLICATION THAT THE PARTIES INTENDED THEREBY TO STATE THE CONVERSE, OBVERSE OR OPPOSITE OF THE DELETED LANGUAGE.

 

EXHIBIT "I"

 

 

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(b)     Attorneys' Fees; Waiver of Jury Trial.

 

(i)     In any action to enforce the terms of this Lease, including any suit by Landlord for the recovery of rent or possession of the Premises, the losing party shall pay the successful party a reasonable sum for attorneys' fees and costs in such suit and such attorneys' fees and costs shall be deemed to have accrued prior to the commencement of such action and shall be paid whether or not such action is prosecuted to judgment.

 

(ii)     TO THE EXTENT PERMITTED BY LAW, EACH PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION SEEKING SPECIFIC PERFORMANCE OF ANY PROVISION OF THIS LEASE, FOR DAMAGES FOR ANY BREACH UNDER THIS LEASE, OR OTHERWISE FOR ENFORCEMENT OF ANY RIGHT OR REMEDY HEREUNDER.

 

(c)     Time of Essence. Time is of the essence with respect to the performance of every provision of this Lease.

 

(d)     Headings. The article headings contained in this Lease are for convenience only and do not in any way limit or amplify any term or provision hereof. The terms "Landlord" and "Tenant" as used herein shall include the plural as well as the singular, and the neuter shall include the masculine and feminine genders.

 

(e)     Rules and Regulations. Tenant shall observe the reasonable and non-discriminatory rules and regulations ("Rules and Regulations") which Landlord may from time to time reasonably adopt by notice to Tenant for the safety, care and cleanliness of the Project, the facilities thereof, or the preservation of good order therein. Any such Rules and Regulations shall be consistent with the terms of this Lease and in the event of any inconsistency between this Lease and the Rules and Regulations, this Lease shall prevail.

 

(f)     Quiet Possession. Upon Tenant's paying the Basic Rental, Additional Rent and other sums provided hereunder and observing and performing all of the covenants, conditions and provisions on Tenant's part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the entire Term hereof, subject to all of the provisions of this Lease.

 

(g)     Rent. All payments required to be made hereunder to Landlord shall be deemed to be rent, whether or not described as such.

 

EXHIBIT "I"

 

 

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(h)     Successors and Assigns. Subject to the provisions of Article 15 hereof, all of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns.

 

(i)     Notices. Any notice required or permitted to be given hereunder shall be in writing and may be given by personal service evidenced by a signed receipt (or refusal to accept delivery) or sent by registered or certified mail, return receipt requested, or via overnight courier, and shall be effective upon proof of delivery (or refusal to accept delivery), addressed to Tenant at the Premises, Attn: Chief Financial Officer, or to Landlord at ________________________ [TO BE PROVIDED BY LANDLORD]. Either party may by notice to the other specify a different address for notice purposes.

 

(j)     Survival of Obligations. Any obligations of Landlord or Tenant occurring prior to the expiration or earlier termination of this Lease shall survive such expiration or earlier termination.

 

(k)     Governing Law. This Lease shall be governed by and construed in accordance with the laws of the State of California. No conflicts of law rules of any state or country (including, without limitation, California conflicts of law rules) shall be applied to result in the application of any substantive or procedural laws of any state or country other than California. All controversies, claims, actions or causes of action arising between the parties hereto and/or their respective successors and assigns, shall be brought, heard and adjudicated by the courts of the State of California, with venue in the County in which the Project is located. Each of the parties hereto hereby consents to personal jurisdiction by the courts of the State of California in connection with any such controversy, claim, action or cause of action, and each of the parties hereto consents to service of process by any means authorized by California law and consent to the enforcement of any judgment so obtained in the courts of the State of California on the same terms and conditions as if such controversy, claim, action or cause of action had been originally heard and adjudicated to a final judgment in such courts. Each of the parties hereto further acknowledges that the laws and courts of California were freely and voluntarily chosen to govern this Lease and to adjudicate any claims or disputes hereunder.

 

(l)     Office of Foreign Assets Control. Each party certifies to the other that (i) they are not entering into this Lease, nor acting, for or on behalf of any person or entity named as a terrorist or other banned or blocked person or entity pursuant to any law, order, rule or regulation of the United States Treasury Department or the Office of Foreign Assets Control, and (ii) they shall not assign their interest in this Lease or, in the case of Tenant, sublease to any such person or entity or anyone acting on behalf of any such person or entity.

 

(m)     California Certified Access Specialist Inspection. Landlord hereby informs Tenant that the Project has not undergone inspection by a Certified Access Specialist (as defined in the California Code of Regulations).

 

(n)     Exterior Equipment. Throughout the Term of this Lease (as may be extended), Tenant shall be entitled to maintain any existing backup generators serving the Premises and, subject to Landlord's prior approval of all plans and specifications, which approval shall not be unreasonably withheld, Landlord shall permit Tenant to install and maintain, at Tenant's sole cost and expense, a new backup generator at a location reasonably approved by Landlord (collectively, "Backup Generators"). Such Backup Generators shall be used by Tenant during (i) testing and regular maintenance, and (ii) any period of electrical power outage in the Project. Tenant shall ensure that the Backup Generators do not result in Hazardous Materials contamination (and Section 28(a) will apply to Tenant's use of Backup Generators) and Tenant shall be responsible for ensuring that the Backup Generators do not unreasonably interfere with the use of the Project by other tenants. Furthermore, throughout the Term of this Lease (as may be extended), Tenant shall be entitled to maintain and Landlord shall not disturb any existing air compressors, air tanks, and pipes for chilled water, vacuum and liquid nitrogen inside and outside of the Premises (together with the Backup Generators, collectively, "Exterior Equipment"); provided that Tenant, at Tenant's cost, shall maintain all such equipment in good condition and repair and in compliance with all applicable Laws. Upon expiration or earlier termination of this Lease, except as expressly provided in Section 29(d) above, the Exterior Equipment shall not be removed by Tenant and shall be left in place.

 

EXHIBIT "I"

 

 

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(o)     Landlord Lien Waiver/Equipment Financing. Landlord acknowledges that some of Tenant's furniture, trade fixtures, equipment and other personal property (collectively "Tenant's Property") installed and used by Tenant on the Premises may be financed by a third-party lender or lessor (collectively, an "Equipment Lienor"), and Landlord hereby agrees to recognize the rights of any such Equipment Lienor to remove Tenant's Property from the Premises during the Lease Term (or any Option Term, if applicable), subject to the Lienor Requirements below. Landlord agrees that all of Tenant's Property installed or to be installed on the Premises shall be and remain personal property and not real property. Landlord waives the right of distraint and agrees that it does not have and shall not assert any right, lien or claim in or to the financed or leased Tenant's Property, and agrees that, subject to the Lienor Requirements, any Equipment Lienor may remove and dispose of such financed or leased Tenant's Property, without reference to, and free and clear of, any demand of Landlord. Upon Tenant's request, Landlord shall promptly execute and deliver to Tenant a form of Landlord's waiver reasonably acceptable to Landlord in favor of any Equipment Lienor; provided, however, that any such document must provide the following (collectively, the "Lienor Requirements"): (i) such lender shall not have the right to place a lien on, nor remove, any Tenant Improvements, any Alterations, any item which is a part of Landlord's realty or any other item which has been permanently affixed to the Premises or the Project, (ii) any such Equipment Lienor must agree to repair any damage to the Premises and the Project resulting from such removal and to indemnify, defend and hold Landlord harmless from any and all loss, cost, damage, expense and liability (including without limitation court costs and reasonable attorneys' fees) incurred in connection with or arising from such Equipment Lienor's exercise of its rights under such lien and/or removal of any such items from the Premises, and (iii) no such Equipment Lienor shall be entitled to dispose of, sell or auction any such item at the Premises or the Project.

 

(p)     Communication Equipment. Subject to Tenant's compliance with all Laws, Tenant and Tenant's contractors (which shall first be reasonably approved by Landlord) shall have the right and access to install, repair, replace, remove, operate and maintain satellite dishes or other similar devices, such as antennae (collectively, "Communication Equipment") and all cable, wiring, conduits and related equipment, for the purpose of receiving and sending radio, television, computer, telephone or other communication signals, at location(s) on the roof of the Project designated by Tenant and reasonably approved by Landlord; provided that (1) Tenant maintains all such equipment in good condition and repair and in a manner that will not unreasonable interfere with other tenants' operations in the Project, and (2) Tenant takes no action that will invalidate any roof warranties. If penetration of the roof cannot be avoided, Tenant shall retain Landlord's designated roofing contractor to make any necessary penetrations and associated repairs to the roof in order to preserve Landlord's roof warranty. Tenant's installation and operation of the Communication Equipment shall be governed by the following terms and conditions:

 

EXHIBIT "I"

 

 

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(i)     All plans and specifications for the Communication Equipment shall be subject to Landlord's reasonable approval.

 

(ii)     All costs of installation, operation and maintenance of the Communication Equipment and any necessary related equipment (including, without limitation, costs of obtaining any necessary permits and connections to the Project's electrical system) shall be borne by Tenant.

 

(iii)     Tenant shall use the Communication Equipment so as not to cause any interference to other tenants in the Project, and not to damage the Project or interfere with the normal operation of the Project and shall use the Communication Equipment solely for its use in the Premises.

 

(iv)     Tenant shall (A) promptly pay any tax, license or permit fees charged pursuant to any laws or regulations in connection with the installation, maintenance or use of the Communication Equipment, and (B) pay for all necessary repairs, replacements to or maintenance of the Communication Equipment.

 

(v)     The Communication Equipment shall remain the sole property of Tenant. Tenant shall remove the Communication Equipment and related equipment at Tenant's sole cost and expense upon the expiration or sooner termination of this Lease, and shall repair the Project upon such removal to the extent required by such work of removal. 

 

(q)     Exhibits. The Exhibits attached hereto are incorporated herein by this reference as if fully set forth herein.

 

(r)     Counterparts. This Lease may be executed in counterparts, each of which shall be deemed an original, but such counterparts, when taken together, shall constitute one agreement.

 

(s)     REIT Compliance. Tenant acknowledges that it has been informed that Atlantic CT REIT, Inc., a Delaware corporation (the "Company"), an affiliate of Landlord, elects to be taxed as a real estate investment trust (a "REIT") under the Code. Therefore, notwithstanding anything to the contrary in this Lease, Tenant shall not take any action, or permit any status to exist at the Premises, which (i) Tenant has been notified would adversely affect the Company's status as a REIT, and (ii) is not permitted under this Lease. Tenant hereby agrees to modifications of this Lease required to retain or clarify the Company's status as a REIT, provided such modifications: (a) are reasonable, (b) do not adversely affect Tenant's use of the Premises as herein permitted, and (c) do not increase the Basic Rental, Additional Rent or other sums to be paid by Tenant. Landlord may submit to Tenant an amendment to this Lease incorporating such required modifications, and Tenant shall execute, acknowledge and deliver such amendment to Landlord within thirty (30) days after Tenant's receipt thereof.

 

EXHIBIT "I"

 

 

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(t)     No Recording. Neither this Lease nor any memorandum thereof shall be recorded by or on behalf of Tenant in any real property records or other public records without the prior written consent of Landlord, which may be withheld in Landlord's sole and absolute discretion. 

 

ARTICLE 31
OPTION TO EXTEND

 

(a)     Option Right. Provided that Tenant is not then in material default under this Lease after expiration of any applicable cure period, Landlord hereby grants the Tenant named in this Lease (the "Original Tenant") or any Affiliated Assignee two (2) options ("Options") to extend the Term (or first Option Term, as applicable) for the entire Premises for a period of five (5) years each ("Option Terms"), which Options shall be exercisable only by written notice delivered by Tenant to Landlord as set forth below. The rights contained in this Article 31 shall be personal to the Original Tenant and any Affiliated Assignee and may only be exercised by the Original Tenant or any Affiliated Assignee (and not any other transferee) if the Premises is not subject to a sublease to other than Affiliate of greater than twenty percent (20%) of the Premises as of the date of Tenant's Acceptance (as defined in Section 31(c) below).

 

(b)     Option Rent. The rent payable by Tenant during the Option Term ("Option Rent") shall be equal to the "Market Rent" (defined below). "Market Rent" shall mean the applicable Monthly Basic Rental at which tenants, as of the commencement of the Option Term, are entering into leases for non-sublease space which is comparable in size, location and quality to the Premises in new and renewal transactions, for a term comparable to the Option Term, which comparable space is located in buildings comparable to the Project in Poway, California, taking into consideration any applicable concessions including, without limitation, free rent, improvements and improvement allowances, and also taking into consideration the value of the existing improvements in the Premises as compared to the value of the existing improvements in such comparable space.

 

(c)     Exercise of Options. The Options shall be exercised by Tenant by delivering written notice ("Tenant's Acceptance") to Landlord not more than twelve (12) months nor less than nine (9) months prior to the expiration of the Term (or first Option Term, as applicable). Within fifteen (15) business days of Landlord's receipt of Tenant's written notice, Landlord shall deliver notice ("Option Rent Notice") to Tenant setting forth Landlord's determination of the Option Rent. Tenant may, at its option, within fifteen (15) business days of receiving Landlord's Option Rent Notice, object to Landlord's determination of the Option Rent contained in the Option Rent Notice by written notice ("Objection Notice") to Landlord. Tenant's failure to deliver the Tenant's Obligation Notice on or before the date specified above shall be deemed to constitute Tenant's approval of the terms set forth in the Option Rent Notice. If Tenant timely and properly exercises its Option, the Term (or first Option Term, as applicable) shall be extended for the Option Term upon all of the terms and conditions set forth in this Lease, except that the rent for the Option Term shall be as indicated in the Option Rent Notice unless Tenant objects to the Option Rent contained in the Option Rent Notice within the timeframe set forth above, in which case the parties shall follow the procedure and the Option Rent shall be determined, as set forth in Section 31(d) below.

 

EXHIBIT "I"

 

 

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(d)     Determination of Market Rent. If Tenant timely objects to the Market Rent as provided above, Landlord and Tenant shall attempt to agree upon the Market Rent using their best good-faith efforts. If Landlord and Tenant fail to reach agreement within thirty (30) days following Tenant's Acceptance ("Outside Agreement Date"), then Tenant shall make a separate determination of the Market Rent which shall be submitted to Landlord, and Tenant's determination of Market Rent and Landlord's determination of Market Rent as set forth in the Option Rent Notice shall be submitted to arbitration in accordance with the following items (i) through (vii):

 

(i)     Landlord and Tenant shall each appoint, within ten (10) days of the Outside Agreement Date, one arbitrator who shall by profession be a current real estate broker or appraiser of comparable commercial properties in the immediate vicinity of the Project, and who has been active in such field over the last ten (10) years. The determination of the arbitrators shall be limited solely to the issue of whether Landlord's or Tenant's submitted Market Rent is the closest to the actual Market Rent as determined by the arbitrators, taking into account the requirements of item (b), above (i.e., the arbitrators may only select Landlord's or Tenant's determination of Market Rent and shall not be entitled to make a compromise determination).

 

(ii)     The two (2) arbitrators so appointed shall within five (5) business days of the date of the appointment of the last appointed arbitrator agree upon and appoint a third arbitrator who shall be qualified under the same criteria set forth hereinabove for qualification of the initial two (2) arbitrators.

 

(iii)     The three (3) arbitrators shall within fifteen (15) days of the appointment of the third arbitrator reach a decision based on the concurrence of no less than two (2) of such arbitrators as to whether the parties shall use Landlord's or Tenant's submitted Market Rent, and shall notify Landlord and Tenant thereof.

 

(iv)     The decision of the majority of the three (3) arbitrators shall be binding upon Landlord and Tenant.

 

(v)     If either Landlord or Tenant fails to appoint an arbitrator within ten (10) days after the applicable Outside Agreement Date, the arbitrator appointed by one of them shall reach a decision, notify Landlord and Tenant thereof, and such arbitrator's decision shall be binding upon Landlord and Tenant.

 

(vi)     If the two (2) arbitrators fail to agree upon and appoint a third (3rd) arbitrator, or both parties fail to appoint an arbitrator, then the appointment of the third arbitrator or any arbitrator shall be dismissed and the matter to be decided shall be forthwith submitted to arbitration under the provisions of the American Arbitration Association, but subject to the instruction set forth in this item (d).

 

(vii)     The cost of arbitration shall be paid by Landlord and Tenant equally.

 

[ARTICLE 31 NOT APPLICABLE TO SHORT-TERM LEASE]

 

EXHIBIT "I"

 

 

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ARTICLE 32
RIGHT OF FIRST OFFER

 

Subject to the following terms and conditions, and provided that Tenant is not then in material default under this Lease after expiration of applicable cure periods, Landlord hereby grants to Tenant a continuing right of first offer with respect to the remainder of the Project ("First Offer Space"). Notwithstanding the foregoing, such first offer right of Tenant shall become effective only after the date which is three (3) years from the Commencement Date; it being agreed that Landlord shall be free to market the remainder of the Project for the first three (3) years following the Commencement Date without having to offer any space to Tenant as provided in this Article 32. Tenant's right of first offer shall be on the terms and conditions set forth in this Article 32.

 

(a)     Procedure for Offer. If, after the first three (3) years following the Commencement Date, any space is available in the Project that Landlord desires to lease to a third party, Landlord shall notify Tenant (the "First Offer Notice") from time to time. The First Offer Notice shall describe the space so offered to Tenant and shall set forth Landlord's proposed material economic terms and conditions applicable to Tenant's lease of such space (collectively, the "Economic Terms"), including the proposed rent payable for the First Offer Space; provided, however, that the term of Tenant's lease of the First Offer Space shall be for the greater of (i) five (5) years, or (ii) a period which is co-terminous with the Term of Tenant's lease of the Premises. Notwithstanding the foregoing, Landlord's obligation to deliver the First Offer Notice shall not apply during the last twelve (12) months of the Term or first Option Term unless Tenant has timely delivered Tenant's Acceptance to Landlord pursuant to Section 31(c) above.

 

(b)     Procedure for Acceptance. If Tenant wishes to exercise Tenant's right of first offer with respect to the space described in the First Offer Notice, then within ten (10) business days after delivery of the First Offer Notice to Tenant, Tenant shall deliver notice ("Exercise Notice") to Landlord of Tenant's exercise of its right of first offer with respect to the entire space described in the First Offer Notice, and the Economic Terms shall be as set forth in the First Offer Notice unless Tenant objects thereto in the Exercise Notice (which objection shall include Tenant's proposed Economic Terms). If Tenant objects in Tenant's Exercise Notice to Landlord's determination of the Economic Terms and provides Tenant's proposed Economic Terms therein, then Landlord and Tenant shall negotiate, in good faith, to agree upon such Economic Terms. If Tenant does not exercise its right of first offer within the aforementioned ten (10) business day period, or if Tenant does exercise its right of first offer by timely delivery of the Exercise Notice but objects to Landlord's determination of Economic Terms (and Landlord and Tenant are unable to agree upon such Economic Terms within ten (10) business days after Tenant's delivery of the Exercise Notice), then Landlord shall be free to lease the space described in the First Offer Notice to anyone to whom Landlord desires; provided, however, that if Landlord intends to enter into a lease upon Economic Terms which are more than five percent (5%) more favorable to a third (3rd) party tenant than those Economic Terms proposed by Landlord in the First Offer Notice (blending all concessions on a straight-line basis over the applicable lease terms), Landlord shall first deliver written notice to Tenant ("Second Chance Notice") providing Tenant with the opportunity to lease the First Offer Space on such more favorable Economic Terms. Tenant's failure to elect to lease the First Offer Space upon such more favorable Economic Terms by written notice to Landlord within five (5) business days after Tenant's receipt of such Second Chance Notice from Landlord shall be deemed to constitute Tenant's election not to lease such space upon such more favorable Economic Terms, in which case Landlord shall be entitled to lease such space to any third (3rd) party on terms no more favorable to the third (3rd) party than those set forth in the Second Chance Notice. If Landlord does lease such First Offer Space to a third (3rd) party tenant pursuant to the terms and conditions of this Section 32(b) above, Tenant shall have no further right to lease such First Offer Space until the expiration or earlier termination of such third (3rd) party lease including any renewal or extension of such third (3rd) party lease pursuant to an extension or renewal option specified therein. Notwithstanding anything to the contrary contained herein, Tenant must elect to exercise its right of first offer, if at all, with respect to all of the space offered by Landlord to Tenant at any particular time, and Tenant may not elect to lease only a portion thereof.

 

EXHIBIT "I"

 

 

-43-

 

 

(c)     Lease of First Offer Space. If Tenant timely and properly exercises Tenant's right to lease the First Offer Space as set forth herein, Landlord and Tenant shall execute an amendment to this Lease adding such First Offer Space to the Premises upon the same non-economic terms and conditions as applicable to the Premises, and the Economic Terms and conditions as provided in this Article 32.

 

(d)     Limitation. The rights contained in this Article 32 shall be personal to the Original Tenant and any Affiliated Assignee and may only be exercised by the Original Tenant or any Affiliated Assignee (and not any other transferee) if the Premises is not subject to a sublease to other than an Affiliate of greater than twenty percent (20%) of the Premises as of the date of Tenant's receipt of the First Offer Notice.

 

[ARTICLE 32 NOT APPLICABLE TO SHORT-TERM LEASE]

 

ARTICLE 33
SIGNAGE

 

Tenant shall be entitled to retain the existing monument sign located closest to the Premises throughout the Term of this Lease. In addition, Tenant shall be entitled to install, at its sole cost and expense, signage on the exterior of the Project ("Signage"). The graphics, materials, size, color, design, lettering, lighting (if any), specifications and exact location of the Signage (collectively, the "Signage Specifications") shall be subject to the prior written approval of Landlord, which approval shall not be unreasonably withheld. In addition, the Signage and all Signage Specifications therefor shall be subject to Tenant's receipt of all required governmental permits and approvals and all covenants, conditions and restrictions effecting the Project. The cost of installation of Signage and all costs of design and construction of such Signage and the cost of maintenance and repair of the Signage shall be the sole responsibility of Tenant. Upon the expiration or earlier termination of this Lease, Tenant shall, at its sole cost and expense, cause the Signage to be removed from the Project and to repair any damage to the Project resulting from such removal. [ALTERNATIVE CLAUSE APPLICABLE TO SHORT-TERM LEASE: Throughout the term of this Lease, the Existing Tenants shall be entitled to retain the signs installed pursuant to their Existing Lease and to otherwise install signs to which they are entitled under their Existing Lease, subject to the applicable terms of their Existing Lease.]

 

EXHIBIT "I"

 

 

-44-

 

 

IN WITNESS WHEREOF, the parties have executed this Lease, consisting of the foregoing provisions and Articles, including all exhibits referenced therein, as of the date first above written.

 

	
"LANDLORD"
	
 
	
 

	
 
	
a
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ 
	
 

	
 
	
Print Name:
	
 
	
 

	
 
	
Title:
	
 
	
 

 

 

	"TENANT"	COHU, INC.,	 
	
 
	
a Delaware corporation
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ 
	
 

	
 
	
Print Name:
	
 
	
 

	
 
	
Title:
	
 
	
 

	 	 	 	 
	 	By:	 	 
	 	Print Name:	 	 
	 	Title:	 	 

 

EXHIBIT "I" 

 

 

-45-

 

 

EXHIBIT "A" TO EXHIBIT "I"

 

PREMISES

 

EXHIBIT "A" TO 

 EXHIBIT "I"

 

 

-1-

 

  

EXHIBIT "B" TO EXHIBIT "I"

 

NOTICE OF TERM DATES
AND TENANT'S PROPORTIONATE SHARE

 

 

	
TO: 
	
 
	
DATE:
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

 

	
RE:
	
Lease dated ________________, 20__, between ________________________________ ______________________________ ("Landlord"), and _________________________ ______________________________ ("Tenant"), concerning Suite ________, located at __________________________________________.

 

Ladies and Gentlemen:

 

In accordance with the Lease, Landlord wishes to advise and/or confirm the following:

 

1.     That the Premises have been accepted herewith by Tenant.

 

2.     That the Tenant has taken possession of the Premises and acknowledges that under the provisions of the Lease the Term of said Lease shall commence as of ____________ for a Term of ________________________ ending on ________________________.

 

3.     That in accordance with the Lease, Basic Rental commenced to accrue on ________________________.

 

4.     If the Commencement Date of the Lease is other than the first day of the month, the first billing will contain a pro rata adjustment. Each billing thereafter shall be for the full amount of the monthly installment as provided for in said Lease.

 

5.     Rent is due and payable in advance on the first day of each and every month during the Term of said Lease. Your rent checks should be made payable to ________________________ at ________________________________________________.

 

6.     The exact number of rentable square feet within the Premises is __________ square feet (which includes Tenant's share of the Shared Space).

 

 

EXHIBIT ONLY
***DO NOT SIGN***

 

EXHIBIT "B" TO

EXHIBIT "I"

 

 

-1-

 

 

7.     Tenant's Proportionate Share, as adjusted based upon the exact number of rentable square feet within the Premises (and Tenant's share of the Shared Space) is _______%.

 

AGREED AND ACCEPTED:

 

TENANT:

 

	 	,	 	 	 
	a 	 	 	 	 	 
	 	
 
	
 
	
 
	
 
	
 

	 	 	
 
	
 
	 	
 

	By:	
 
	
 
	
 
	 	
 

	Its:	 	
 
	
 
	 	
 

 

 

EXHIBIT ONLY
***DO NOT SIGN***

 

EXHIBIT "B" TO

EXHIBIT "I"

 

 

-2-

 

  

EXHIBIT "C" TO EXHIBIT "I"

 

REMOVABLE ITEMS

 

[FOR LONG TERM LEASE]

 

[FOR SHORT TERM LEASE]

  

 [FOR SHORT TERM LEASE]

 

EXHIBIT "C" TO

EXHIBIT "I"

 

 

-1-

 

    

EXHIBIT "D" TO EXHIBIT "I"

 

EXCLUSIVE PARKING AREA [N/A TO SHORT-TERM LEASE]

 

EXHIBIT "D" TO

EXHIBIT "I"

 

 

-1-

 

 

 

 

 

EXHIBIT "D" TO

EXHIBIT "I" 

 

 

-2-

 

   

EXHIBIT "E" TO EXHIBIT "I"

 

PRE-APPROVED ALTERATIONS

 

  

EXHIBIT "E" TO

EXHIBIT "I" 

 

 

-1-

 

 

EXHIBIT "J"

 

LIST OF INCLUDED PERSONAL PROPERTY

 

All (i) fixtures, (ii) building systems, and (iii) equipment and other tangible personal property that, as of the Effective Date or at any time prior to Closing, is affixed to the Real Property.

 

EXHIBIT "J"

 

 

-1-

 

 

EXHIBIT "K"

 

DUE DILIGENCE ITEMS

 

 

EXHIBIT "K"  

 

 

-1-

 

 

 

 

 

 EXHIBIT "K"

 

 

-2-

 

 

 

 

 

 EXHIBIT "K"

 

 

-3-

 

 

 

 

 EXHIBIT "K"

 

 

-4-

 

 

 

 

 EXHIBIT "K"

 

 

-5-

 

 

 

 

 EXHIBIT "K"

 

 

-6-

 

 

 

 

 EXHIBIT "K"

 

 

-7-

 

 

 

 

 EXHIBIT "K"

 

 

-8-

 

 

 

 

 EXHIBIT "K"

 

 

-9-

 

 

 

 

 EXHIBIT "K"

 

 

-10-

 

 

 

 

 

EXHIBIT "K"

 

 

-11-

 

 

 

 

EXHIBIT "K" 

 

 

-12-

 

 

 

 

 EXHIBIT "K"

 

 

-13-

 

 

 

 

 

-14-

 

  

AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS

 

BETWEEN

 

COHU, INC., 
a Delaware corporation,

 

AS SELLER

 

and

 
ACTH II LLC,
a Delaware limited liability company,

 

AS BUYER

 

 

 

 

  

	
1.
	Purchase and Sale 	3
	 	 	 	 
	
2.
	Purchase Price 	4
	
 
	2.1 	Purchase Price 	4
	
 
	2.2 	Independent Contract Consideration 	5
	 	 	 	 
	
3.
	Escrow and Title 	5
	
 
	3.1 	Opening of Escrow 	5
	
 
	3.2 	Close of Escrow/Closing 	5
	
 
	3.3 	Title Insurance 	6
	 	 	 	 
	
4.
	Contingencies 	6
	
 
	4.1 	Buyer's Review 	6
	
 
	4.2 	Title Report and Additional Title Matters	8
	
 
	4.3 	Buyer's Conditions Precedent to Closing 	10
	
 
	4.4 	Failure of Conditions Precedent to Buyer's Obligations 	11
	
 
	4.5 	Conditions Precedent to Seller's Obligations 	12
	 	 	 	 
	
5.
	Deliveries to Escrow Holder 	12
	
 
	5.1 	Seller's Deliveries 	12
	
 
	5.2 	Buyer's Deliveries 	13
	 	 	 	 
	
6.
	Deliveries Upon Close of Escrow 	14
	
 
	6.1 	Tax Filings 	14
	
 
	6.2 	Prorations 	14
	
 
	6.3 	Recording 	14
	
 
	6.4 	Buyer Funds 	14
	
 
	6.5 	Documents to Seller 	14
	
 
	6.6 	Documents to Buyer 	14
	
 
	6.7 	Title Policy 	14
	
 
	6.8 	Seller Funds 	15
	 	 	 	 
	
7.
	Costs and Expenses 	15
	 	 	 	 
	
8.
	Prorations 	15
	
 
	8.1 	Taxes and Assessments 	15
	
 
	8.2 	Excise, Transfer and Sales Taxes 	15
	
 
	8.3 	Operating Expenses 	15
	
 
	8.4 	Base Rent 	16
	 	 	 	 
	
9.
	Covenants of Seller 	16
	
 
	9.1 	Contracts 	16
	
 
	9.2 	Leases 	16
	
 
	9.3 	Operation in the Ordinary Course 	16
	 	 	 	 
	
10.
	AS-IS Sale and Purchase 	17
	
 
	10.1 	Buyer's Acknowledgment 	17

 

 

 

-ii-

 

  

	
11.
	Seller's Representations and Warranties 	20
	
 
	11.1 	Representations and Warranties 	20
	
 
	11.2 	Subsequent Changes 	22
	
 
	11.3 	Seller's Knowledge 	23
	
 
	11.4 	Survival 	23
	 	 	 	 
	
12.
	Buyer's Representations and Warranties 	23
	
 
	12.1 	Formation 	23
	
 
	12.2 	No Conflicts 	23
	
 
	12.3 	Funds 	23
	
 
	12.4 	OFAC 	24
	
 
	12.5 	Survival 	24 
	 	 	 	 
	
13.
	Casualty and Condemnation 	24
	
 
	13.1 	Material Casualty 	24
	
 
	13.2 	Non-Material Casualty 	24
	
 
	13.3 	Material Condemnation 	25
	
 
	13.4 	Non-Material Condemnation 	25
	
 
	13.5 	Materiality Standard 	25
	
 
	13.6 	Notice of Casualty and Condemnation 	25
	
 
	13.7 	Uninsured Casualty 	25
	 	 	 	 
	
14.
	Notices 	26
	 	 	 	 
	
15.
	Broker Commissions 	26
	 	 	 	 
	
16.
	Default 	27
	
 
	16.1 	Default by Seller 	27
	
 
	16.2 	Default by Buyer 	27
	
 
	16.3 	Indemnities 	28
	
 
	16.4 	Limited Liability 	28
	
 
	16.5 	Notice and Opportunity to Cure 	29
	 	 	 	 
	
17.
	Assignment 	29
	 	 	 	 
	
18.
	Miscellaneous 	29
	
 
	18.1 	Governing Law 	29
	
 
	18.2 	Partial Invalidity 	30
	
 
	18.3 	Waivers 	30
	
 
	18.4 	Successors and Assigns 	30
	
 
	18.5 	Professional Fees 	30
	
 
	18.6 	Entire Agreement 	30
	
 
	18.7 	Time of Essence/Business Days 	30
	
 
	18.8 	Construction 	31
	 	  	  	  
	
19.
	Exchange 	31
	 	 	 	 
	
20.
	Confidentiality 	31
	 	 	 	 
	 	20.1 	Counterparts 	32
	 	20.2 	Electronic Signatures 	32

 

 

 

-iii-

 

   

	
EXHIBITS
	 
	 	 
	
Exhibit "A" 
	Legal Description
	 	 
	
Exhibit "B" 
	Grant Deed
	 	 
	
Exhibit "C" 
	Assignment of Contracts
	 	 
	
Exhibit "D" 
	Form of Buyer's Approval Notice
	 	 
	
Exhibit "E" 
	Bill of Sale
	 	 
	
Exhibit "F" 
	General Assignment
	 	 
	
Exhibit "G" 
	Form of Tenant Estoppel Certificate
	 	 
	
Exhibit "H" 
	Form of Seller's Lease Certificate
	 	 
	
Exhibit "I" 
	Leaseback Agreement
	 	 
	
Exhibit "J" 
	List of Included Personal Property
	 	 
	
Exhibit "K" 
	Due Diligence Items

 

 

 

-iv-

 

 

	INDEX 
	
 
	Page(s)
	  	  
	
Agreement 
	1
	
AMC Lease 
	4
	
Approvals 
	Exhibit F
	
Bill of Sale 
	13
	
Broker 
	1
	
Building 
	1
	
Buyer 
	1
	
Buyer Parties 
	7
	
Buyer's Approval Notice 
	8
	
Buyer's Closing Conditions 
	11
	
Buyer's Notice Address 
	1
	
Buyer's Representatives 
	31
	
CAP Amount 
	28
	
City 
	1
	
Claims 
	18
	
Close of Escrow 
	5
	
Closing 
	5
	
Closing Date 
	2
	
Confidential Information 
	31
	
Contingency Date 
	2
	
control 
	29
	
Cooperating Party 
	31
	
County 
	1
	
Deed 
	12
	
Deposit 
	2
	
Due Diligence Investigations 
	3
	
Due Diligence Items 
	6
	
Effective Date 
	1
	
Energy Disclosure Information 
	20
	
Energy Disclosure Requirements 
	20
	
Environmental Laws 
	17
	
Escrow Holder 
	2
	
Escrow Instructions 
	5
	
Estoppel Certificate 
	10
	
Estoppel Certificates 
	10
	
Excluded Claims 
	19
	
Excluded Information 
	6
	
Floor Amount 
	29
	
General Assignment 
	13
	
Governmental Regulations 
	17
	
Hazardous Substances 
	17
	
Improvements 
	3
	
Independent Contract Consideration 
	5
	
Intangible Personal Property 
	3

 

 

 

-i-

 

 

	
 
	Page(s)
	  	  
	
Intrusive Tests
	7
	
Land 
	2
	
Leases 
	3
	
Major Tenants 
	10
	
Monetary Liens 
	9
	
Natural Hazard Expert 
	19
	
New Exception 
	9
	
New Leases 
	16
	
Non-Repair Notice 
	24
	
Notice 
	Exhibit D
	
OFAC 
	 22
	
Official Records 
	5
	
Opening of Escrow 
	5
	
Other Documents 
	28
	
Other Intangible Property 
	Exhibit F
	
Permitted Exceptions 
	6
	
Personal Property 
	3
	
Property 
	3
	
Property Approval Period 
	7
	
PTR 
	8
	
Purchase Agreement 
	Exhibit F
	
Purchase Price 
	2
	
Real Property 
	3
	
Requesting Party 
	31
	
Seller
	1
	
Seller Parties 
	8
	
Seller's Broker 
	 26
	
Seller's Lease Certificate 
	11
	
Seller's Representative 
	2
	
Seller's Response 
	9
	
SNDAs 
	11
	
Survey 
	8
	
Survival Period 
	23
	
Tax Certificates 
	13
	
Tenant 
	4
	
Tenant Insurance Certificates 
	13
	
Tenants 
	4
	
Third-Party Reports 
	8
	
Title Company 
	2
	
Title Notice 
	8
	
Title Notice Date 
	8
	
Title Policy 
	6
	
Transaction Costs 
	27
	
Warranties and Guaranties 
	Exhibit F

 

-ii-psa-20151103 Exhibit101

		
			EXECUTION VERSION
		

		
			 
		

		
			 
		

		
			
pUBLIC STORAGE
		

		
			€242,013,552.76
		

		
			2.175% Senior Notes due November 3, 2025
		

		
			______________
		

		
			
NOTE PURCHASE AGREEMENT
		

		
			______________
		

		
			Dated as of November 3, 2015
		

		
			 
		

		
			 
		

		
			 
		

		 

		

			 

		

 

		

			 

		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						TABLE OF CONTENTS

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Page

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						1.

					
					
						AUTHORIZATION OF NOTES; GUARANTEES.

					
1 
				
	
					
						1.1.

					
					
						Authorization of Notes.

					
1 
				
	
					
						1.2.

					
					
						Possible Future Guarantees.

					
1 
				
	
					
						2.

					
					
						SALE AND PURCHASE OF NOTES.

					
2 
				
	
					
						3.

					
					
						CLOSING.

					
2 
				
	
					
						4.

					
					
						CONDITIONS TO CLOSING.

					
3 
				
	
					
						4.1.

					
					
						Representations and Warranties.

					
3 
				
	
					
						4.2.

					
					
						Performance; No Default.

					
3 
				
	
					
						4.3.

					
					
						Compliance Certificates.

					
3 
				
	
					
						4.4.

					
					
						Opinions of Counsel.

					
3 
				
	
					
						4.5.

					
					
						Purchase Permitted By Applicable Law, Etc.

					
4 
				
	
					
						4.6.

					
					
						Sale of Other Notes.

					
4 
				
	
					
						4.7.

					
					
						Private Placement Number.

					
4 
				
	
					
						4.8.

					
					
						Payment of Special Counsel Fees.

					
4 
				
	
					
						4.9.

					
					
						Changes in Corporate Structure.

					
4 
				
	
					
						4.10.

					
					
						Funding Instructions.

					
4 
				
	
					
						4.11.

					
					
						Proceedings and Documents.

					
5 
				
	
					
						5.

					
					
						REPRESENTATIONS AND WARRANTIES.

					
5 
				
	
					
						5.1.

					
					
						Organization; Power and Authority.

					
5 
				
	
					
						5.2.

					
					
						Authorization, Etc.

					
5 
				
	
					
						5.3.

					
					
						Disclosure.

					
5 
				
	
					
						5.4.

					
					
						Organization and Ownership of Shares of Subsidiaries; Affiliates.

					
6 
				
	
					
						5.5.

					
					
						Financial Statements; Material Liabilities.

					
7 
				
	
					
						5.6.

					
					
						Compliance with Laws, Other Instruments, Etc.

					
7 
				
	
					
						5.7.

					
					
						Governmental Authorizations, Etc.

					
7 
				
	
					
						5.8.

					
					
						Litigation; Observance of Agreements, Statutes and Orders.

					
7 
				
	
					
						5.9.

					
					
						Taxes.

					
8 
				
	
					
						5.10.

					
					
						Title to Property; Leases.

					
8 
				
	
					
						5.11.

					
					
						Licenses, Permits, Etc.

					
8 
				
	
					
						5.12.

					
					
						Compliance with ERISA; Non-U.S. Plans.

					
8 
				
	
					
						5.13.

					
					
						Private Offering by the Company.

					
10 
				
	
					
						5.14.

					
					
						Use of Proceeds; Margin Regulations.

					
10 
				
	
					
						5.15.

					
					
						Existing Indebtedness.

					
11 
				
	
					
						5.16.

					
					
						Foreign Assets Control Regulations, Etc.

					
11 
				
	
					
						5.17.

					
					
						Status under Certain Statutes.

					
13 
				
	
					
						5.18.

					
					
						Ranking of Obligations

					
13 
				
	
					
						6.

					
					
						REPRESENTATIONS OF THE PURCHASERS.

					
13 
				
	
					
						6.1.

					
					
						Purchase for Investment.

					
13 
				
	
					
						6.2.

					
					
						Source of Funds.

					
14 
				
	
					
						7.

					
					
						INFORMATION AS TO COMPANY.

					
15 
				
	
					
						7.1.

					
					
						Financial and Business Information.

					
15 
				
	
					
						7.2.

					
					
						Officer’s Certificate.

					
18 
				

		
			 
		

		
			-i-
		

		

		

		 

		

			 

		

 

		

			 

		

		
		

			
					
						 

				
	
					
						TABLE OF CONTENTS
(continued)

				
	
					
						 

					
					
						 

					
					
						Page

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						7.3.

					
					
						Visitation.

					
19 
				
	
					
						7.4.

					
					
						Electronic Delivery.

					
19 
				
	
					
						7.5.

					
					
						Limitation on Disclosure Obligation.

					
20 
				
	
					
						8.

					
					
						PAYMENT AND PREPAYMENT OF THE NOTES.

					
21 
				
	
					
						8.1.

					
					
						Maturity; Required Prepayments.

					
21 
				
	
					
						8.2.

					
					
						Optional Prepayments with Make-Whole Amount.

					
21 
				
	
					
						8.3.

					
					
						Allocation of Partial Prepayments.

					
21 
				
	
					
						8.4.

					
					
						Maturity; Surrender, Etc.

					
21 
				
	
					
						8.5.

					
					
						Purchase of Notes.

					
22 
				
	
					
						8.6.

					
					
						Make-Whole Amount.

					
22 
				
	
					
						8.7.

					
					
						Payments Due on Non-Business Days.

					
24 
				
	
					
						8.8.

					
					
						OFAC Sanctions.

					
24 
				
	
					
						8.9.

					
					
						Change of Control Prepayment Offer.

					
26 
				
	
					
						9.

					
					
						AFFIRMATIVE COVENANTS.

					
29 
				
	
					
						9.1.

					
					
						Compliance with Law.

					
29 
				
	
					
						9.2.

					
					
						Insurance.

					
29 
				
	
					
						9.3.

					
					
						Maintenance of Properties.

					
30 
				
	
					
						9.4.

					
					
						Payment of Taxes and Claims.

					
30 
				
	
					
						9.5.

					
					
						Corporate Existence, Etc.

					
30 
				
	
					
						9.6.

					
					
						Books and Records.

					
30 
				
	
					
						9.7.

					
					
						Priority of Obligations.

					
31 
				
	
					
						9.8.

					
					
						Subsidiary Guarantors.

					
31 
				
	
					
						9.9.

					
					
						REIT Status.

					
32 
				
	
					
						10.

					
					
						NEGATIVE COVENANTS.

					
32 
				
	
					
						10.1.

					
					
						Transactions with Affiliates.

					
32 
				
	
					
						10.2.

					
					
						Merger, Consolidation, Etc.

					
32 
				
	
					
						10.3.

					
					
						Ratio of Secured Indebtedness to Gross Asset Value.

					
34 
				
	
					
						10.4.

					
					
						Limitation on Subsidiary Unsecured Indebtedness.

					
34 
				
	
					
						10.5.

					
					
						Ratio of Total Indebtedness to Gross Asset Value.

					
35 
				
	
					
						10.6.

					
					
						Ratio of Adjusted EBITDA to Fixed Charges.

					
35 
				
	
					
						10.7.

					
					
						Ratio of Unencumbered Asset Value to Unsecured Indebtedness.

					
36 
				
	
					
						10.8.

					
					
						Limitations on Certain Investments.

					
36 
				
	
					
						10.9.

					
					
						Terrorism Sanctions Regulations.

					
36 
				
	
					
						10.10.

					
					
						Line of Business.

					
37 
				
	
					
						11.

					
					
						EVENTS OF DEFAULT.

					
37 
				
	
					
						12.

					
					
						REMEDIES ON DEFAULT, ETC.

					
40 
				
	
					
						12.1.

					
					
						Acceleration.

					
40 
				
	
					
						12.2.

					
					
						Other Remedies.

					
41 
				
	
					
						12.3.

					
					
						Rescission.

					
41 
				

		
			 
		

		
			-ii-
		

		

		

		 

		

			 

		

 

		

			 

		

		
		

		
			 
		

			
					
						TABLE OF CONTENTS
(continued)

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Page

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						12.4.

					
					
						No Waivers or Election of Remedies, Expenses, Etc.

					
42 
				
	
					
						13.

					
					
						REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

					
42 
				
	
					
						13.1.

					
					
						Registration of Notes.

					
42 
				
	
					
						13.2.

					
					
						Transfer and Exchange of Notes; No Transfer to Competitors.

					
42 
				
	
					
						13.3.

					
					
						Replacement of Notes.

					
43 
				
	
					
						14.

					
					
						PAYMENTS ON NOTES.

					
44 
				
	
					
						14.1.

					
					
						Place of Payment.

					
44 
				
	
					
						14.2.

					
					
						Home Office Payment.

					
44 
				
	
					
						15.

					
					
						EXPENSES, ETC.

					
44 
				
	
					
						15.1.

					
					
						Transaction Expenses.

					
44 
				
	
					
						15.2.

					
					
						Survival.

					
45 
				
	
					
						16.

					
					
						SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

					
45 
				
	
					
						17.

					
					
						AMENDMENT AND WAIVER.

					
46 
				
	
					
						17.1.

					
					
						Requirements.

					
46 
				
	
					
						17.2.

					
					
						Solicitation of Holders of Notes.

					
46 
				
	
					
						17.3.

					
					
						Binding Effect, Etc.

					
47 
				
	
					
						17.4.

					
					
						Notes Held by Company, Etc.

					
47 
				
	
					
						18.

					
					
						NOTICES.

					
47 
				
	
					
						19.

					
					
						REPRODUCTION OF DOCUMENTS.

					
48 
				
	
					
						20.

					
					
						CONFIDENTIAL INFORMATION.

					
48 
				
	
					
						21.

					
					
						SUBSTITUTION OF PURCHASER.

					
49 
				
	
					
						22.

					
					
						MISCELLANEOUS.

					
50 
				
	
					
						22.1.

					
					
						Successors and Assigns.

					
50 
				
	
					
						22.2.

					
					
						Accounting Terms.

					
50 
				
	
					
						22.3.

					
					
						Severability.

					
51 
				
	
					
						22.4.

					
					
						Construction, Etc.

					
51 
				
	
					
						22.5.

					
					
						Counterparts.

					
51 
				
	
					
						22.6.

					
					
						Governing Law.

					
52 
				
	
					
						22.7.

					
					
						Jurisdiction and Process; Waiver of Jury Trial.

					
52 
				
	
					
						22.8.

					
					
						Obligation to Make Payment in Euros.

					
53 
				
	
					
						22.9.

					
					
						Fair Value Accounting.

					
53 
				
	
					
						22.10.

					
					
						FATCA Information.

					
53 
				

		
			 
		

		
			-iii-
		

		
			 
		

		
			 
		

		

		

		 

		

			 

		

 

		

			 

		

		 
		

			
					
						s

					
					
						 

					
					
						 

				
	
					
						Schedule A

					
					
						—

					
					
						Defined Terms 

				
	
					
						Schedule B

					
					
						—

					
					
						Information Relating to Purchasers

				
	
					
						Schedule 5.4 

					
					
						—

					
					
						Subsidiaries and Ownership of Subsidiary Stock

				
	
					
						Schedule 5.15

					
					
						—

					
					
						Existing Indebtedness

				
	
					
						Exhibit 1.1

					
					
						—

					
					
						Form of 2.175% Senior Note due November 3, 2025

				
	
					
						Exhibit 1.2 

					
					
						—

					
					
						Form of Subsidiary Guaranty Agreement

				
	
					
						Exhibit 4.4(a) 

					
					
						—

					
					
						Form of Opinion of U.S. Special Counsel for the Company

				
	
					
						Exhibit 4.4(b)

					
					
						—

					
					
						Form of Opinion of U.S. Special Counsel for Purchasers

				

		
			 
		

		
			
		

		
			 
		

		

		

		 

			

					

						 

					

					

						 

					

					

						 

				
	

					

						 

					

					

						 

					

					

						 

				

		

			 

		

 

		

			 

		

		PUBLIC STORAGE
		

		
			701 Western Avenue
		

		
			Glendale, California 91201-2349
		

		
			United States of America
		

		
			 
		

		
			2.175% Senior Notes due November 3, 2025
		

		
			 
		

		
			November 3, 2015
		

		
			To Each of the Purchasers Listed in
		

		
			Schedule B Hereto:
		

		
			Ladies and Gentlemen:
		

		
			PUBLIC STORAGE, a real estate investment trust formed under the laws of the State of Maryland (together with any successor thereto that becomes a party hereto pursuant to Section 10.2, the “Company”) agrees with each of the Purchasers as follows:
		

			
	
			
				 1.
			

			
	
			
			AUTHORIZATION OF NOTES;  GUARANTEES.

			
	
			
				 1.1.
			

			
	
			
			Authorization of Notes.

		
			The Company will authorize the issue and sale of €242,013,552.76 aggregate principal amount of its 2.175% Senior Notes due November 3, 2025 (the “Notes,” such term to include any amendment, restatement or other modification from time to time pursuant to Section 17 and including any such notes issued in substitution therefor pursuant to Section 13).  The Notes shall be substantially in the form set out in Exhibit 1.1.  Certain capitalized and other terms used in this Agreement are defined in Schedule A. References to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.  References to a “Section” are references to a Section of this Agreement unless otherwise specified.
		

			
	
			
				 1.2.
			

			
	
			
			Possible Future Guarantees.

		
			The payment of the Notes and the performance by the Company of its obligations under this Agreement may, from time to time, be guaranteed by Subsidiaries of the Company (each being a “Subsidiary Guarantor”),  pursuant to a Subsidiary Guaranty Agreement of such Subsidiary Guarantor (as amended from time to time).
		

		 

		

			 

		

 

		

			 

		

			
	
			
				 2.
			

			
	
			
			SALE AND PURCHASE OF NOTES.

		
			Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser and each Purchaser will purchase from the Company, at the Closing provided for in Section 3, Notes in the principal amount specified opposite such Purchaser’s name in Schedule B at the purchase price of 100% of the principal amount thereof.  The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.
		

			
	
			
				 3.
			

			
	
			
			CLOSING.

		
			(a)The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the offices of Vedder Price P.C., 275 Battery Street, Suite 2464, San Francisco, California 94111, at 9:00 a.m., New York City time, at a closing (the “Closing”) on November 3, 2015.  At the Closing the Company will deliver to each Purchaser the Notes to be purchased by such Purchaser in the form of a single Note to be purchased by such Purchaser (or such greater number of Notes in denominations of at least €500,000 as such Purchaser may request) dated the date of the Closing and registered in such Purchaser’s name (or in the name of its nominee), against delivery by such Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company with the following wiring instructions:
		

			
					
						BENEFICIARY BANK:

					
					
						Wells Fargo Bank, N.A.

				
	
					
						ATTN:

					
					
						 

				
	
					
						ADDRESS:

					
					
						

				
	
					
						PHONE:

					
					
						 

				
	
					
						BENEFICIARY BANK SWIFT CODE:

					
					
						 

				
	
					
						IBAN:

					
					
						 

				
	
					
						CORRESPONDENT BANK:

					
					
						 

				
	
					
						CORRESPONDENT BANK SWIFT CODE:

					
					
						 

				

		
			ALL FUNDS ARE FOR FINAL BENEFICIARY WELLS FARGO BANK
		

		
			FOR FURTHER CREDIT TO PUBLIC STORAGE ACCOUNT
		

		
			IN ALL CASES CLEARLY REFERENCE: PUBLIC STORAGE PRIVATE PLACEMENT
		

		
			 
		

		
			(b)If at the Closing the Company shall fail to tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of any of the conditions specified in Section 4 not having been fulfilled to such Purchaser’s satisfaction or such failure by the Company to tender such Notes.
		

		 

		

			2

		

		

			 

		

		

			 

		

		

			 

		

 

		

			 

		

			
	
			
				 4.
			

			
	
			
			CONDITIONS TO CLOSING.

		
			Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at the Closing, of the following conditions:
		

			
	
			
				 4.1.
			

			
	
			
			Representations and Warranties.

		
			The representations and warranties of the Company in this Agreement shall be correct when made and at the Closing. 
		

			
	
			
				 4.2.
			

			
	
			
			Performance; No Default.

		
			The Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing.  Before and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.14), no Default or Event of Default shall have occurred and be continuing.
		

			
	
			
				 4.3.
			

			
	
			
			Compliance Certificates.

		
			(a)Officer’s Certificate.  The Company shall have delivered to such Purchaser an Officer’s Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
		

		
			(b)Secretary’s Certificate.  The Company shall have delivered to such Purchaser a certificate of the Secretary or another appropriate person, dated the date of the Closing, certifying as to (i) the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Notes and this Agreement and (ii) the Company’s organizational documents as then in effect.   
		

			
	
			
				 4.4.
			

			
	
			
			Opinions of Counsel.

		
			Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing (a) from Morrison & Foerster (UK) LLP, U.S. special counsel for the Company,  substantially in the form set forth in Exhibit 4.4(a)  and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Company hereby instructs its counsel to deliver such opinion to the Purchasers) and (b) from Vedder Price P.C., the Purchasers’ special U.S. counsel in connection with such transactions substantially in the form set forth in Schedule 4.4(b) and covering such other matters incident to such transactions as such Purchaser may reasonably request.
		

		 

		

			3

		

		

			 

		

		

			 

		

		

			 

		

 

		

			 

		

			
	
			
				 4.5.
			

			
	
			
			Purchase Permitted By Applicable Law, Etc.

		
			On the date of the Closing such Purchaser’s purchase of Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof.  If requested by such Purchaser, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.
		

			
	
			
				 4.6.
			

			
	
			
			Sale of Other Notes.

		
			Contemporaneously with the Closing the Company shall issue to each other Purchaser and each other Purchaser shall purchase the Notes to be purchased by it at the Closing as specified in Schedule B.
		

			
	
			
				 4.7.
			

			
	
			
			Private Placement Number.

		
			A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained for the Notes.
		

			
	
			
				 4.8.
			

			
	
			
			Payment of Special Counsel Fees.

		
			Without limiting Section 15.1, the Company shall have paid on or before the Closing the reasonable fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4 to the extent reflected in a  statement of such counsel rendered to the Company at least one Business Day prior to the Closing.
		

			
	
			
				 4.9.
			

			
	
			
			Changes in Corporate Structure.

		
			The Company shall not have changed its jurisdiction of incorporation or organization, as applicable, or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following December 31,  2014.
		

			
	
			
				 4.10.
			

			
	
			
			Funding Instructions.

		
			At least three Business Days prior to the date of the Closing, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Company confirming the information specified in Section 3 including (a) the name and address of the transferee bank, (b) such transferee bank’s ABA 
		

		 

		

			4

		

		

			 

		

		

			 

		

		

			 

		

 

		

			 

		

		number/SWIFT code/IBAN and (c) the account name and number into which the purchase price for the Notes is to be deposited.
		

			
	
			
				 4.11.
			

			
	
			
			Proceedings and Documents.

		
			All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.
		

			
	
			
				 5.
			

			
	
			
			REPRESENTATIONS AND WARRANTIES.

		
			As of the date of Closing, the Company represents and warrants to each Purchaser that:
		

			
	
			
				 5.1.
			

			
	
			
			Organization; Power and Authority.

		
			The Company is a real estate investment trust duly organized and validly existing under the laws of its jurisdiction of organization and, where applicable, is duly qualified as a foreign corporation and, where applicable, is in good standing in each jurisdiction in which such qualification or good standing is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  The Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to perform the provisions hereof and thereof.    
		

			
	
			
				 5.2.
			

			
	
			
			Authorization, Etc.

		
			This Agreement and the Notes have been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
		

			
	
			
				 5.3.
			

			
	
			
			Disclosure.

		
			This Agreement and the financial statements referenced in the first sentence of Section 5.5 and the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company prior to October 13, 2015 in connection with 
		

		 

		

			5

		

		

			 

		

		

			 

		

		

			 

		

 

		

			 

		

		the transactions contemplated hereby (this Agreement, such financial statements and such documents, certificates or other writings delivered to each Purchaser prior to October 13, 2015 being referred to, collectively, as the “Disclosure Documents”), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made.  Except as disclosed in the Disclosure Documents, since December 31, 2014 there has been no change in the financial condition, operations, business or properties of the Company or any Subsidiary except changes that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  
		

			
	
			
				 5.4.
			

			
	
			
			Organization and Ownership of Shares of Subsidiaries; Affiliates.

		
			(a)Attached as Schedule 5.4 is the Group Structure Chart, with information containing (except as noted therein) a complete and correct list of (i) the Company’s Subsidiaries, showing, as to each Subsidiary, the name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary, (ii) the Company’s Affiliates, other than Subsidiaries, and (iii) the Company’s directors and senior officers.
		

		
			(b)All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and, where applicable, non-assessable and are owned by the Company or another Subsidiary free and clear of any Lien that is prohibited by this Agreement.
		

		
			(c)Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly organized, validly existing and, where applicable, in good standing under the laws of its jurisdiction of organization, and, where applicable, duly qualified as a foreign corporation or other legal entity and, where applicable, is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact.
		

		
			(d)No Subsidiary is subject to any legal, regulatory, contractual or other restriction (other than the agreements listed on Schedule 5.4 and customary limitations imposed by corporate law or similar statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.
		

		 

		

			6

		

		

			 

		

		

			 

		

		

			 

		

 

		

			 

		

			
	
			
				 5.5.
			

			
	
			
			Financial Statements; Material Liabilities.

		
			The audited consolidated financial statements of the Company for each of its fiscal years ended December 31,  2014, 2013, 2012, 2011 and 2010 (including in each case the related schedules and notes) and the unaudited consolidated financial statements of the Company for the fiscal period ended June 30, 2015, fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of such respective dates and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments).  The Company and its Subsidiaries do not have any Material liabilities that are not disclosed in the Disclosure Documents.
		

			
	
			
				 5.6.
			

			
	
			
			Compliance with Laws, Other Instruments, Etc.

		
			The execution, delivery and performance by the Company of this Agreement and the Notes will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter, by-laws, shareholders agreement or any other agreement or instrument to which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary.
		

			
	
			
				 5.7.
			

			
	
			
			Governmental Authorizations, Etc.

		
			No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company of this Agreement or the Notes, including, without limitation, any thereof required in connection with the obtaining of Euros to make payments under this Agreement or the Notes.
		

			
	
			
				 5.8.
			

			
	
			
			Litigation; Observance of Agreements, Statutes and Orders.

		
			(a)There are no actions, suits, investigations or proceedings pending or, to the best knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
		

		

		

		 

		

			7

		

		

			 

		

		

			 

		

		

			 

		

 

		

			 

		

		(b)Neither the Company nor any Subsidiary is (i) in violation of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or (ii) in violation of any applicable law, ordinance, rule or regulation of any Governmental Authority (including, without limitation, Environmental Laws, the USA PATRIOT Act or any of the other laws and regulations that are referred to in Section 5.16), which default or violation would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
		

			
	
			
				 5.9.
			

			
	
			
			Taxes.

		
			The Company and its Subsidiaries have filed all known income tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (i) the amount of which, individually or in the aggregate, is not Material or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP.  The U.S. federal income tax liabilities of the Company and its Subsidiaries have been finally determined (whether by reason of completed audits or the statute of limitations having run) for all fiscal years up to and including the fiscal year ended 2011.
		

			
	
			
				 5.10.
			

			
	
			
			Title to Property; Leases.

		
			The Company and its Subsidiaries have good and sufficient title to their respective Material properties, including all such properties reflected in the most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by the Company or any Subsidiary after such date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of any Lien prohibited by this Agreement, except for those defects in title and Liens that, individually or in the aggregate would not have a Material Adverse Effect.  All Material leases are valid and subsisting and are in full force and effect in all material respects.
		

			
	
			
				 5.11.
			

			
	
			
			Licenses, Permits, Etc.

		
			The Company and its Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others except for those conflicts that, individually or in the aggregate, would not have a Material Adverse Effect.
		

			
	
			
				 5.12.
			

			
	
			
			Compliance with ERISA; Non-U.S. Plans.

		
			(a)The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances 
		

		 

		

			8

		

		

			 

		

		

			 

		

		

			 

		

 

		

			 

		

		of noncompliance as have not resulted in and could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that would, individually or in the aggregate, reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to section 430(k) of the Code or to any such penalty or excise tax provisions under the Code or federal law or section 4068 of ERISA or by the granting of a security interest in connection with the amendment of a Plan, other than such liabilities or Liens as would not be individually or in the aggregate Material.
		

		
			(b)The present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans), determined as of the end of such Plan’s most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities by more than $500,000 in the case of any single Plan and by more than $500,000 in the aggregate for all Plans.   The present value of the accrued benefit liabilities (whether or not vested) under each Non-U.S. Plan that is funded, determined as of the end of the Company’s most recently ended fiscal year on the basis of reasonable actuarial assumptions, did not exceed the current value of the assets of such Non-U.S. Plan allocable to such benefit liabilities by more than $500,000.  The term “benefit liabilities” has the meaning specified in section 4001 of ERISA and the terms “current value” and “present value” have the meaning specified in section 3 of ERISA. 
		

		
			(c)The Company and its ERISA Affiliates have not incurred (i) withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material or (ii) any obligation in connection with the termination of or withdrawal from any Non-U.S. Plan that individually or in the aggregate are Material.
		

		
			(d)The expected postretirement benefit obligation (determined as of the last day of the Company’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 715-60, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Company and its Subsidiaries is not Material.
		

		
			(e)The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.  The representation by the Company to each Purchaser in the first sentence of this Section 5.12(e) is made in reliance upon and 
		

		 

		

			9

		

		

			 

		

		

			 

		

		

			 

		

 

		

			 

		

		subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the funds to be used to pay the purchase price of the Notes to be purchased by such Purchaser.
		

		
			(f)All Non-U.S. Plans have been established, operated, administered and maintained in compliance with all laws, regulations and orders applicable thereto, except where failure so to comply would not be reasonably expected to have a Material Adverse Effect.  All premiums, contributions and any other amounts required by applicable Non-U.S. Plan documents or applicable laws to be paid or accrued by the Company and its Subsidiaries have been paid or accrued as required, except where failure so to pay or accrue would not be reasonably expected to have a Material Adverse Effect.
		

			
	
			
				 5.13.
			

			
	
			
			Private Offering by the Company.

		
			Neither the Company nor anyone acting on its behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy the Notes or any similar securities from, or otherwise approached or negotiated in respect thereof with, the Purchasers and not more than one other Institutional Investor (of the type described in clauses (c) and (d) of the definition thereof), each of which has been offered the Notes at a private sale for investment.  Neither the Company nor anyone acting on its behalf has, with respect to the Notes, engaged in any form of “general solicitation or general advertising,” as defined under Rule 502(c) of the Securities Act.  The Company has provided each Purchaser an opportunity to discuss with the Company’s management the financial statements delivered pursuant to Section 5.5, as well as the Company’s business, management, financial affairs and the terms and conditions of the offering of the Notes.  Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of section 5 of the Securities Act or to the registration requirements of any securities laws of the jurisdiction of organization of the Company.    
		

			
	
			
				 5.14.
			

			
	
			
			Use of Proceeds; Margin Regulations.

		
			The Company will apply the proceeds of the sale of the Notes hereunder for general corporate purposes.  No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).  Margin stock does not constitute more than 5% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 5% of the value of such assets.  As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.
		

		 

		

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				 5.15.
			

			
	
			
			Existing Indebtedness.

		
			(a)Except as described therein, Schedule 5.15 sets forth a complete and correct list of all outstanding Indebtedness of the Company and its Subsidiaries (other than Indebtedness owing from one member of the Group to another) as of September 30, 2015 (including descriptions of the obligors and obligees, principal amounts outstanding, any collateral therefor and any Guaranties thereof), since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Indebtedness of the Company or its Subsidiaries.  Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company or such Subsidiary and no event or condition exists with respect to any Indebtedness of the Company or any Subsidiary the outstanding principal amount of which exceeds $100,000,000 that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.
		

		
			(b)Neither the Company nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of the Company or such Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter or any other organizational document) which would prohibit the issuance of the Notes or the incurrence of the Indebtedness related thereto.
		

			
	
			
				 5.16.
			

			
	
			
			Foreign Assets Control Regulations, Etc.

		
			(a)None of the Company nor any Controlled Entity is (i) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by the Office of Foreign Assets Control, United States Department of the Treasury (“OFAC”) (an “OFAC Listed Person”) (ii) an agent, department, or instrumentality of, or is otherwise beneficially owned by, controlled by or acting on behalf of, directly or indirectly, (x) any OFAC Listed Person or (y) any Person, entity, organization, foreign country or regime that is subject to any OFAC Sanctions Program, or (iii) otherwise blocked, subject to sanctions under or engaged in any activity in violation of other United States economic sanctions, including but not limited to, the Trading with the Enemy Act, the International Emergency Economic Powers Act, CISADA or any similar law or regulation with respect to Iran or any other country, the Sudan Accountability and Divestment Act, any OFAC Sanctions Program, or any economic sanctions regulations administered and enforced by the United States or any enabling legislation or executive order relating to any of the foregoing (collectively, “U.S. Economic Sanctions”) (each OFAC Listed Person and each other Person, entity, organization and government of a country described in clause (i), clause (ii) or clause (iii),  a “Blocked Person”).  None of the Company nor any Controlled Entity (i) has been notified that its name appears or may in the future appear on a state list of Persons that engage in investment or other commercial activities in Iran or any other country that is 
		

		 

		

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		subject to U.S. Economic Sanctions or (ii) is a target of sanctions that have been imposed by the United Nations or the European Union.
		

		
			(b)No part of the proceeds from the sale of the Notes hereunder constitutes or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used by the Company or any Controlled Entity, directly or indirectly, (i) in connection with any investment in, or any transactions or dealings with, any Blocked Person, (ii) for any purpose that would cause any Purchaser to be in violation of any U.S. Economic Sanctions or (iii) otherwise in violation of U.S. Economic Sanctions.
		

		
			(c)None of the Company nor any Controlled Entity (i) has been found in violation of, charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes under the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act), the USA PATRIOT Act, any U.S. Economic Sanctions, or any other United States law or regulation governing such activities or under any other similar laws of any other jurisdiction governing such activities (collectively, “Anti-Money Laundering/Anti-Terrorism Laws”), (ii) to the Company’s actual knowledge after making due inquiry, is under investigation by any Governmental Authority for possible violation of U.S. Economic Sanctions or Anti-Money Laundering/Anti-Terrorism Laws, (iii) has been assessed civil penalties under any Anti-Money Laundering/Anti-Terrorism Laws, or (iv) has had any of its funds seized or forfeited in an action under any Anti-Money Laundering/Anti-Terrorism Laws. The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable Anti-Money Laundering/Anti-Terrorism Laws and U.S. Economic Sanctions.
		

		
			(d)(1)None of the Company nor any Controlled Entity (i) has been charged with, or convicted of bribery or any other anti-corruption related activity under any applicable law or regulation in a U.S. or any non-U.S. country or jurisdiction, including but not limited to, the U.S. Foreign Corrupt Practices Act and the UK Bribery Act 2010 (collectively, “Anti-Corruption Laws”), (ii) to the Company’s actual knowledge after making due inquiry, is under investigation by any U.S. or non-U.S. Governmental Authority for possible violation of Anti-Corruption Laws, (iii) has been assessed civil or criminal penalties under any Anti-Corruption Laws or (iv) has been or is the target of sanctions imposed by the United Nations or the European Union;
		

		
			(2)To the Company’s actual knowledge after making due inquiry, none of the Company nor any Controlled Entity has, within the last five years, directly or indirectly offered, promised, given, paid or authorized the offer, promise, giving or payment of anything of value to a Governmental Official or a commercial counterparty for the purposes of: (i) influencing any act, decision or failure to act by such Governmental Official in his or her official capacity or 
		

		 

		

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		such commercial counterparty, (ii) inducing a Governmental Official to do or omit to do any act in violation of the Governmental Official’s lawful duty, or (iii) inducing a Governmental Official or a commercial counterparty to use his or her influence with a government or instrumentality to affect any act or decision of such government or entity; in each case in order to obtain, retain or direct business or to otherwise secure an improper advantage in violation of any applicable law or regulation or which would cause any holder to be in violation of any law or regulation applicable to such holder; and
		

		
			(3)No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for any illegal payments, including bribes, to any Governmental Official or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage in each case which would be in violation of, or cause any Purchaser to be in violation of, any applicable Anti-Corruption Laws.  The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable U.S. Economic Sanctions, Anti-Money Laundering/Anti-Terrorism Laws and Anti-Corruption Laws. 
		

			
	
			
				 5.17.
			

			
	
			
			Status under Certain Statutes.

		
			None of the Company nor any Subsidiary is subject to regulation under the United States Investment Company Act of 1940, as amended, the United States Public Utility Holding Company Act of 2005, as amended, the United States ICC Termination Act of 1995, as amended, or the United States Federal Power Act, as amended. 
		

			
	
			
				 5.18.
			

			
	
			
			Ranking of Obligations

		
			The Company’s payment obligations under this Agreement and the Notes will, upon issuance of the Notes, rank at least pari passu, in right of payment without preference or priority, with all other unsecured and unsubordinated Indebtedness of the Company except for those obligations that are mandatorily preferred by law.
		

			
	
			
				 6.
			

			
	
			
			REPRESENTATIONS OF THE PURCHASERS.

			
	
			
				 6.1.
			

			
	
			
			Purchase for Investment.

		
			Each Purchaser severally represents that (i) it is an “accredited investor” within the meaning of Regulation D of the Securities Act and is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control and (ii) it has knowledge and experience in financial and business matters and  is capable of evaluating the merits and risks of its investment in the Notes and is able to bear the economic risk of holding the Notes for an 
		

		 

		

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		indefinite period of time.  Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to register the Notes nor does it intend to do so and, in any event, a Purchaser shall only reoffer or resell the Notes purchased by it in accordance with any available exemption from the requirements of Section 5 of the Securities Act, except as aforesaid.
		

			
	
			
				 6.2.
			

			
	
			
			Source of Funds.

		
			Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder:
		

		
			(a)the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the NAIC (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or
		

		
			(b)the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or
		

		
			(c)the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or
		

		
			(d)the Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified 
		

		 

		

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		professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption), no employee benefit plan’s assets that are managed by the QPAM in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, represent more than 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM maintains an ownership interest in the Company that would cause the QPAM and the Company to be “related” within the meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM and (ii) the names of any employee benefit plans whose assets in the investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization, represent 10% or more of the assets of such investment fund, have been disclosed to the Company in writing pursuant to this clause (d); or
		

		
			(e)the Source constitutes assets of a “plan(s)” (within the meaning of Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10% or more interest in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or
		

		
			(f)the Source is a governmental plan; or
		

		
			(g)the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (g); or
		

		
			(h)the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.
		

		
			As used in this Section 6.2, the terms “employee benefit plan,” “governmental plan,” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA.
		

			
	
			
				 7.
			

			
	
			
			INFORMATION AS TO COMPANY.

			
	
			
				 7.1.
			

			
	
			
			Financial and Business Information.

		
			The Company shall deliver to each holder of a Note that is an Institutional Investor:
		

		

		

		 

		

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		(a)Quarterly Reports -- within 60 days (or such shorter period as is the earlier of (x) 15 days greater than the period applicable to the filing of the Company’s Quarterly Report on Form 10-Q (the “Form 10-Q”) with the SEC regardless of whether the Company is subject to the filing requirements thereof and (y) the date by which such financial statements are required to be delivered under the Principal Bank Facility or the date on which such corresponding financial statements are delivered under the Principal Bank Facility if such delivery occurs earlier than such required delivery date) after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of,
		

		
			(i)a consolidated balance sheet of the Company and its Subsidiaries as at the end of such fiscal period, and
		

		
			(ii)consolidated statements of income, changes in shareholders’ equity and cash flows of the Company and its Subsidiaries, for such fiscal period,
		

		
			setting forth in each case in comparative form the figures for the corresponding period in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the consolidated financial position of the companies being reported on and their consolidated results of operations and consolidated cash flows, subject to changes resulting from year-end adjustments,  provided that delivery within the time period specified above of copies of the Company’s Form 10-Q prepared in compliance with the requirements therefor and filed with the SEC shall be deemed to satisfy the requirements of this Section 7.1(a);
		

		
			(b)Annual Statements -- within 105 days (or such shorter period as is the earlier of (x) 15 days greater than the period applicable to the filing of the Company’s Annual Report on Form 10-K (the “Form 10-K”) with the SEC regardless of whether the Company is subject to the filing requirements thereof and (y) the date by which such financial statements are required to be delivered under the Principal Bank Facility or the date on which such corresponding financial statements are delivered under the Principal Bank Facility if such delivery occurs earlier than such required delivery date) after the end of each fiscal year of the Company, duplicate copies of
		

		
			(i)a consolidated balance sheet of the Company and its Subsidiaries as at the end of such year, and
		

		
			(ii)consolidated statements of income, changes in shareholders’ equity and cash flows of the Company and its Subsidiaries for such year,
		

		
			setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon of independent public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, 
		

		 

		

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		the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, provided that the delivery within the time period specified above of the Company’s Form 10-K for such fiscal year (together with the Company’s annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Securities Exchange Act of 1934) prepared in accordance with the requirements therefor and filed with the SEC, shall be deemed to satisfy the requirements of this Section 7.1(b);
		

		
			(c)SEC and Other Reports -- promptly upon their becoming available, one copy of (i) each financial statement, report, circular, notice or proxy statement or similar document sent by the Company or any Subsidiary to its principal lending banks as a whole (excluding information sent to such banks in the ordinary course of administration of a bank facility, such as information relating to pricing and borrowing availability,  or to its public securities holders generally, and (ii) each regular or periodic report, each registration statement that shall have become effective (without exhibits except as expressly requested by such holder), and each final prospectus and all amendments thereto filed by the Company or any Subsidiary with the SEC;
		

		
			(d)Notice of Default or Event of Default -- promptly and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default, a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto;
		

		
			(e)Employee Benefits Matters -- promptly and in any event within five days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto:
		

		
			(i)with respect to any Plan, any reportable event, as defined in section 4043(c) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or
		

		
			(ii)the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or
		

		
			(iii)any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of 
		

		 

		

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		the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect; or
		

		
			(iv)receipt of notice of the imposition of a Material financial penalty (which for this purpose shall mean any tax, penalty or other liability, whether by way of indemnity or otherwise) with respect to one or more Non-U.S. Plans;
		

		
			(f)Requested Information -- with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries (including, but without limitation, actual copies of the Company’s Form 10-Q and Form 10-K) or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of a Note.
		

			
	
			
				 7.2.
			

			
	
			
			Officer’s Certificate.

		
			Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or (b) shall be accompanied by a certificate of a Senior Financial Officer:
		

		
			(a)Covenant Compliance —  setting forth the information from such financial statements that is required in order to establish whether the Company was in compliance with the requirements of Section 10.3 through Section 10.8, inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such provision that involves mathematical calculations, the information from such financial statements that is required to perform such calculations), and reasonably detailed calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence, together with a reconciliation of such financial statements with Frozen Accounting Principles (if Frozen Accounting Principles are being applied at such time) showing, in reasonable detail, the effect of the application of Frozen Accounting Principles.  With respect to Section 10.3 through Section 10.8 (inclusive), in the event that the Company or any Subsidiary has made an election to measure any related financial liability using fair value (which election is being disregarded for purposes of determining compliance with any requirement of Section 10.3 through Section 10.8 (inclusive) of this Agreement pursuant to Section 22.9) as to the period covered by any such financial statement, such Senior Financial Officer’s certificate as to such period shall include a reconciliation from GAAP with respect to such election; and 
		

		
			(b)Event of Default — certifying that such Senior Financial Officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall 
		

		 

		

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		not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.
		

			
	
			
				 7.3.
			

			
	
			
			Visitation.

		
			The Company shall permit the representatives of each holder of Notes (other than a Competitor) that is an Institutional Investor:
		

		
			(a)No Default — if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company and during normal business hours twice in any calendar year, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company’s officers, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times and as often as may be reasonably requested in writing; and
		

		
			(b)Default — if a Default or Event of Default then exists, at the expense of the Company to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and the Company’s independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested.
		

			
	
			
				 7.4.
			

			
	
			
			Electronic Delivery.

		
			Financial statements, opinions of independent certified public accountants, other information and Officer’s Certificates that are required to be delivered by the Company pursuant to Sections 7.1(a), (b) or (c) and Section 7.2 shall be deemed to have been delivered if the Company satisfies any of the following requirements with respect thereto:
		

		
			(a)such financial statements satisfying the requirements of Section 7.1(a) or (b) and related Officer’s Certificate satisfying the requirements of Section 7.2 and any other information required under Section 7.1(c) are delivered to each holder of a Note by e-mail at the e-mail address set forth in such holder’s Schedule B information or as communicated from time to time in a separate writing delivered to the Company; or
		

		
			(b)such financial statements satisfying the requirements of Section 7.1(a) or Section 7.1(b) and related Officer’s Certificate(s) satisfying the requirements of Section 7.2 and any other information required under Section 7.1(c) are either publicly filed in electronic format with the SEC or timely posted by or on behalf of the Company 
		

		 

		

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		on IntraLinks or on any other similar website to which each holder of Notes has free access or are made available via its website, which is currently located at https://www.publicstorage.com as of the date of this Agreement;
		

		
			provided however, that in the case of clause (b), the Company shall have given each holder of a Note prior written notice, which may be by e-mail or in accordance with Section 18, of such posting or availability in connection with each delivery, provided further, that upon request of any holder to receive paper copies of such forms, financial statements, other information and Officer’s Certificates or to receive them by e-mail, the Company will promptly e-mail them or deliver such paper copies, as the case may be, to such holder.
		

			
	
			
				 7.5.
			

			
	
			
			Limitation on Disclosure Obligation.

		
			Neither the Company nor any Subsidiary shall be required to disclose the following information pursuant to Section 7.1(c), 7.1(f) or 7.3:
		

		
			(a)information that the Company or any Subsidiary determines after consultation with counsel qualified to advise on such matters that, notwithstanding the confidentiality requirements of Section 20, it would be prohibited from disclosing by applicable law or regulations without making public disclosure thereof; or
		

		
			(b)information that, notwithstanding the confidentiality requirements of Section 20, the Company or any Subsidiary is prohibited from disclosing by the terms of an obligation of confidentiality contained in any agreement with any non-Affiliate binding upon the Company or any Subsidiary and not entered into in contemplation of this clause (b), provided that the Company or such relevant Subsidiary shall use commercially reasonable efforts to obtain consent from the party in whose favor the obligation of confidentiality was made to permit the disclosure of the relevant information and provided further that the Company or such relevant Subsidiary has received a written opinion of counsel (which may be an internal counsel) confirming that disclosure of such information without consent from such other contractual party would constitute a breach of such agreement.
		

		
			Promptly after a request therefor from any holder of Notes that is an Institutional Investor, the Company will provide such holder with a written opinion of counsel (which may be addressed to the Company and which may be of an internal counsel) relied upon as to any requested information that the Company is prohibited from disclosing to such holder under circumstances described in this Section 7.5.
		

		
			Under no circumstances shall the Company or any Subsidiary be required to disclose any information whatsoever under the terms of this Agreement to any Person that is a Competitor.
		

		 

		

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				 8.
			

			
	
			
			PAYMENT AND PREPAYMENT OF THE NOTES.

			
	
			
				 8.1.
			

			
	
			
			Maturity; Required Prepayments.

		
			As provided therein, the entire unpaid principal balance of the Notes shall be due and payable on the stated maturity date of the Notes.
		

			
	
			
				 8.2.
			

			
	
			
			Optional Prepayments with Make-Whole Amount.

		
			The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes, in an amount not less than 5% of the aggregate principal amount of the Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, and the Make-Whole Amount (if any) determined for the prepayment date with respect to such principal amount.  The Company will give each holder of Notes written notice of each optional prepayment under this Section 8.2 not less than 10 days and not more than 60 days prior to the date fixed for such prepayment unless the Company and the Required Holders agree to another time period pursuant to Section 17.  Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.3), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount (if any) for each applicable Note due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation.  Two Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.
		

			
	
			
				 8.3.
			

			
	
			
			Allocation of Partial Prepayments.

		
			In the case of each partial prepayment of the Notes pursuant to Section 8.2, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes  at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment. 
		

			
	
			
				 8.4.
			

			
	
			
			Maturity; Surrender, Etc.

		
			In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment (which shall be a Business Day), together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any.  From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue.  Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and 
		

		 

		

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		shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.
		

			
	
			
				 8.5.
			

			
	
			
			Purchase of Notes.

		
			The Company will not and will not permit any Affiliate which it directly or indirectly controls to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with this Agreement and the Notes or (b) pursuant to an offer to purchase made by the Company or an Affiliate which it directly or indirectly controls pro rata to the holders of all Notes at the time outstanding upon the same terms and conditions, which offer shall remain outstanding for a reasonable period of time (not to be less than 15 days); provided, that any such offer shall provide each holder with sufficient information to enable it to make an informed decision with respect to such offer.  If the holders of more than 50% of the principal amount of the Notes then outstanding accept any such offer made pursuant to the foregoing subpart (b), the Company shall promptly notify the remaining holders of such fact and the expiration date for the acceptance by holders of Notes of such offer shall be extended by the number of days necessary to give each such remaining holder at least 5 Business Days from its receipt of such notice to accept such offer.  A failure by a holder of Notes to respond to an offer to purchase made pursuant to subpart (b) of this Section 8.5 shall be deemed to constitute a rejection of such offer by such holder. The Company will promptly cancel all Notes acquired by it or any Affiliate which it directly or indirectly controls pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.
		

			
	
			
				 8.6.
			

			
	
			
			Make-Whole Amount.

		
			The term “Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may not in any event be less than zero.  For the purposes of determining the Make-Whole Amount with respect to any Note, the following terms have the following meanings:
		

		
			“Called Principal” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.
		

		
			“Discounted Value” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.
		

		

		

		 

		

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		“Recognized German Bund Market Makers” means two internationally recognized dealers of German Bunds reasonably selected by Prudential Investment Management, Inc. (“Prudential”).
		

		
			“Reinvestment Yield”  means, with respect to the Called Principal of any Note, the sum of (x) 0.50% (50 basis points) plus (y) the yield to maturity implied by (i) the ask-side yields reported, as of 10:00 a.m. (New York time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated “Page PXGE” on Bloomberg Financial Markets (“Bloomberg”) (or, if Bloomberg shall cease to report such yields on Page PXGE or shall cease to be Prudential’s customary source of information for calculating yield-maintenance amounts on privately placed notes, then such source as is then Prudential’s customary source of such information) for the actively traded benchmark German Bunds having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or if such yields are not reported as of such time or the yields reported shall not be ascertainable, (ii) the average of the ask-side yields for such securities as determined by Recognized German Bund Market Makers.  Such implied yield will be determined, if necessary, by (a) converting quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the actively traded benchmark German Bunds with the maturity closest to and greater than the Remaining Average Life of such Called Principal and (2) the actively traded benchmark German Bunds with the maturity closest to and less than the Remaining Average Life of such Called Principal.
		

		
			“Remaining Average Life”  means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.
		

		
			“Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or 12.1.
		

		

		

		 

		

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		“Settlement Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.
		

			
	
			
				 8.7.
			

			
	
			
			Payments Due on Non-Business Days.

		
			Anything in this Agreement or the Notes to the contrary notwithstanding, (x) subject to clause (y), any payment of interest on any Note that is due on a date that is not a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day; and (y) any payment of principal of or Make-Whole Amount on any Note (including principal due on the Maturity Date of such Note) that is due on a date that is not a Business Day shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.
		

			
	
			
				 8.8.
			

			
	
			
			OFAC Sanctions.

		
			(a)Within five Business Days after the Company’s receipt of notice from any Affected Noteholder that a Noteholder Sanctions Violation has occurred with respect to such Affected Noteholder as a result of any OFAC Event, which notice shall (i) refer specifically to this Section 8.8 and describe in reasonable detail such Noteholder Sanctions Violation and such OFAC Event and (ii) be accompanied by an opinion of nationally recognized independent counsel in the appropriate jurisdiction to the effect that a Noteholder Sanctions Violation shall have occurred with respect to such Affected Noteholder, the Company shall by written notice (a “Sanctions Prepayment Notice”) delivered to such Affected Noteholder offer to prepay on a Business Day not less than 30 days and not more than 60 days after the date of such Sanctions Prepayment Notice (the “Sanctions Prepayment Date”) the Notes of such Affected Noteholder, at 100% of the principal amount of such Notes at par (and without any make-whole, premium, penalty or Make-Whole Amount whatsoever or however described), together with interest accrued thereon to the Sanctions Prepayment Date, and specify the Sanctions Prepayment Response Date (as defined below).  Such Affected Noteholder shall notify the Company of such Affected Noteholder’s acceptance or rejection of such offer by giving written notice of such acceptance or rejection to the Company on a date at least ten Business Days prior to the Sanctions Prepayment Date (such date ten Business Days prior to the Sanctions Prepayment Date being the “Sanctions Prepayment Response Date”).  If such Affected Noteholder has accepted the Company’s prepayment offer in accordance with this Section 8.8, on the Sanctions Prepayment Date, the entire unpaid principal amount of the Notes held by such holder of Notes which has accepted such prepayment offer, together with interest accrued to the Sanctions Prepayment Date (but without any make-whole, premium, penalty or Make-Whole Amount whatsoever or howsoever described), shall become due and payable.  The failure by such Affected Noteholder to respond to such offer in writing on or before the Sanctions Prepayment Response Date shall be deemed to be a rejection of such offer.  Under no circumstances shall any 
		

		 

		

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		Affected Noteholder who has rejected (or who has been deemed to have rejected) any such offer have any right to claim a Default or Event of Default relating to the OFAC Event relating to such offer.
		

		
			(b)No prepayment of any Note shall be permitted pursuant to this Section 8.8 as a result of any OFAC Event if a Prohibited Subsequent Action shall have occurred with respect to such OFAC Event.
		

		
			(c)Promptly, and in any event within five (5) Business Days, after the Company’s receipt of notice from any Affected Noteholder that a Noteholder Sanctions Violation shall have occurred with respect to such Affected Noteholder as a result of any OFAC Event, the Company shall forward a copy of such notice to each holder of Notes. 
		

		
			(d)Notwithstanding anything to the contrary contained in this Section 8.8, if an OFAC Event has occurred but (i) the Company and/or its Controlled Entities have taken such action(s) in relation to their activities so as to remedy any violation of Section 10.9(b)(ii) (as applicable) prior to the applicable Sanctions Prepayment Date (such that such Affected Noteholder(s) shall not be in violation of any law or regulation applicable to such Affected Noteholder or subject to sanctions under CISADA or any similar law or regulation with respect to Iran or any other country that is subject to U.S. Economic Sanctions), then the Company shall not be obliged to prepay such Affected Notes in relation to such OFAC Event which is no longer continuing.  If the Company and/or its Controlled Entities shall undertake any actions to remedy any such OFAC Event, the Company shall keep the holders reasonably and timely informed of such actions and the results thereof.
		

		
			(e)Notwithstanding the provisions of Section 8.8(a), if any Affected Noteholder that has given written notice to the Company of its acceptance of the Company’s prepayment offer in accordance with this Section 8.8 also gives notice to the Company prior to the relevant Sanctions Prepayment Date that it has determined (in its sole discretion) that it requires clearance from any United States Governmental Authority in order to receive a prepayment pursuant to this Section 8.8, the principal amount of the Affected Noteholder’s Notes, together with interest accrued thereon to the date of prepayment, shall become due and payable on the later of (i) such Sanctions Prepayment Date and (ii) the date that is 10 Business Days after such Affected Noteholder gives notice to the Company that it is entitled to receive a prepayment pursuant to this Section 8.8, and in any event, any such delay in accordance with the foregoing clause (e)(ii) shall not be deemed to give rise to any Default or Event of Default.
		

		
			(f)The Company shall promptly, and in any event within 10 Business Days, give written notice to the holders after the Company or any Controlled Entity having been notified that (i) its name appears on any list that is adopted by any state Governmental Authority within the United States of America pertaining to Persons that engage in investment or other commercial activities in Iran or any other country that is a target of economic sanctions imposed under U.S. Economic Sanctions or (ii) it is in violation of, or is subject to the imposition of sanctions under, any U.S. Economic 
		

		 

		

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		Sanctions, in each case which notice shall describe the facts and circumstances thereof and set forth the action, if any, that the Company or a Controlled Entity proposes to take with respect thereto.
		

			
	
			
				 8.9.
			

			
	
			
			Change of Control Prepayment Offer. 

		
			(a)A “Change of Control Prepayment Event” occurs if: (x)  a Change of Control occurs or any condition in the nature of a Change of Control exists and, as  a  consequence  thereof, the Company or any Subsidiary has become obligated to purchase, repay or redeem a Material Amount of Applicable Long-Term Financing(s) before its (or their) regular maturity or mandatory redemption date or before its (or their) regularly scheduled dates of payment or redemption; (y) a Change of Control occurs or any condition in the nature of a Change of Control exists under the Principal Bank Facility and a Material Amount of any Indebtedness thereunder has been declared, or has become, due and payable  before  its stated maturity or before its regularly scheduled dates of payment, or (z) within the period of 90 days from and including the date on which a Change of Control occurs (or such longer period as the rating of any Rated Securities or Issuer Credit Rating shall be under publicly announced consideration by any Rating Agency), either (i) there are Rated Securities or an Issuer Credit Rating outstanding at the time of such Change of Control and a Rating Downgrade in respect of that Change of Control occurs or (ii) at such time there are no Rated Securities nor Issuer Credit Rating and the Company fails to obtain (whether by failing to seek a rating or otherwise) either a rating of the Notes or any other unsecured and unsubordinated Indebtedness of the Company having an initial maturity of five years or more (and which does not have the benefit of a guarantee from any Person other than any such Person that at such time also so guarantees the obligations of the Company under this Agreement and the Notes) or an Issuer Credit Rating from a Rating Agency, in either case, of at least Investment Grade (a “Negative Rating Event”), in each case after giving pro forma effect to the transaction giving rise to such Change of Control (that Change of Control and the related Rating Downgrade or, as the case may be, Negative Rating Event, together (but not individually) constituting the Change of Control Prepayment Event).
		

		
			(b)Promptly upon becoming aware that a Change of Control has occurred, and in any event not later than 10 Business Days after becoming aware of the Change of Control, the Company shall give written notice of such fact to all holders of the Notes. Promptly upon becoming aware that a Change of Control Prepayment Event has occurred, and not later than five Business Days after becoming aware of the Change of Control Prepayment Event, the Company shall give written notice (the “Company Notice”) of such fact to all holders of the Notes. The Company Notice shall (i) describe the facts and circumstances of such Change of Control Prepayment Event in reasonable detail, (ii) refer to this Section 8.9 and the rights of the holders hereunder and (iii) contain an offer by the Company to prepay the entire unpaid principal amount of Notes held by each holder at 100% of the principal amount of such Notes at par (and without any make-whole, premium, penalty or Make-Whole Amount whatsoever or howsoever described), together with interest accrued thereon to the prepayment date selected by the Company, which prepayment shall be on a date specified in the Company Notice, which date shall 
		

		 

		

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		be a Business Day not less than 30 days and not more than 60 days after such Company Notice is given should any agreement to the contrary not be reached among the Company and each of the holders of the Notes.
		

		
			(c)On the prepayment date specified in the Company Notice, the entire unpaid principal amount of the Notes held by each holder of Notes which has accepted such prepayment offer, together with interest accrued thereon to the prepayment date (but without any make-whole , premium, penalty or Make-Whole Amount whatsoever or howsoever described), shall become due and payable. The failure by a holder of a Note to respond to such prepayment offer shall be deemed to constitute a rejection of such offer.
		

		
			(d)For purposes of this Section 8.9:
		

		
			(i)“Applicable Long-Term Financing” means, at any time, (x) any series of Preferred Stock of the Company or any of its Subsidiaries, or any series of unsecured Indebtedness (excluding, as an abundance of caution, Non-Recourse Indebtedness) of the Company or any of its Subsidiaries consisting of public or private bonds or notes, or a term financing (other than under the Principal Bank Facility), in each case with an original aggregate liquidation preference amount or an original aggregate principal amount, as applicable, of at least $100,000,000 (or its equivalent in the relevant currency of payment) and, in each case, an original final mandatory redemption date or an original final maturity date of at least five years, (y) a bridge loan (other than under the Principal Bank Facility) with an original aggregate principal amount of at least $100,000,000 (or its equivalent in the relevant currency of payment) and an original final maturity date of at least 364 days.
		

		
			(ii)a “Change of Control”  means (a) during any period of 12 consecutive months ending after the date of this Agreement, individuals who at the beginning of any such 12-month period constituted the Board of Trustees of the Company (together with any new trustees whose election by such Board or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the trustees then still in office who were either trustees at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Trustees of the Company then in office; or (b) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than any Excluded Shareholder, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person will be deemed to have “beneficial ownership” of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the then outstanding voting stock of the Company;
		

		

		

		 

		

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		(iii)“Investment Grade” means a rating of BBB- by Standard & Poor’s Rating Services, Baa3 by Moody’s Investors Service, Inc. or BBB- by Fitch, Inc. (as applicable), or their respective equivalents for those Rating Agencies or any others for the time being, or better;
		

		
			(iv)“Issuer Credit Rating” means an issuer-level corporate credit rating or an issuer rating (or the equivalent of either such rating) (but, for the avoidance of doubt, not including a preferred stock issuer rating), from a Rating Agency; 
		

		
			(v)“Material Amount” means an amount equal to or exceeding the  greater of  (a) $100,000,000 (or  its equivalent  in  the relevant currency  of payment)  and  (b)  20% of an amount equal to the sum of Total Indebtedness plus the aggregate liquidation preference amount of all Preferred Stock of the Company or any of its Subsidiaries (exclusive of any such Preferred Stock held by the Company or any of its Subsidiaries) at such time.
		

		
			(vi)“Rated Securities” means the Notes, if at any time and for so long as they shall have a rating from a Rating Agency, and otherwise any other unsecured and unsubordinated Indebtedness of the Company (which does not have the benefit of a Guaranty from any Person other than any such Person that at such time also so guarantees the obligations of the Company under this Agreement and the Notes) which has an initial maturity of at least the lesser of five years or the remaining period to maturity of the last maturing Notes then outstanding and is rated by a Rating Agency (provided, however, that Rated Securities shall not include any preferred stock);
		

		
			(vii)“Rating Agency” means either Standard & Poor’s Rating Services, Moody’s Investors Service, Inc. or Fitch, Inc., or any of their respective rating agency subsidiaries and their successors; and
		

		
			(viii)“Rating Downgrade” shall be deemed to have occurred in respect of a Change of Control if (a) the rating(s) assigned to the Rated Securities (whether provided at the invitation of the Company or of its own volition) or (b) the Issuer Credit Rating, in either case, which is/are current immediately before the time the Change of Control occurs, (i) if Investment Grade, is/are either lowered by the relevant number of Rating Agencies to below Investment Grade or withdrawn and not replaced by an Investment Grade rating of the relevant number of Rating Agencies or (ii) if below Investment Grade, is/are not replaced by an Investment Grade rating of the relevant number of Rating Agencies (and for purposes of this paragraph (d)(viii), the “relevant number” shall be two or more, if such Rated Securities are rated or the Issuer Credit Rating is outstanding, by three or more Rating Agencies and one or more if such Rated Securities are rated, or such Issuer Credit Rating is provided, by less than three Rating Agencies).
		

		

		

		 

		

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		(e)For purposes of clause (a)(z) of this Section 8.9 only, a Change of Control shall not be deemed to have occurred by reason of a new Holding Company acquiring the entire issued share capital of the Company if:
		

		
			(i)such acquisition is for the purposes of solvent re-organization or re-construction of or within the Group; 
		

		
			(ii)the details of the new Holding Company and the proposed reorganization or reconstruction have been provided to the holders of the Notes; and
		

		
			(iii)such new Holding Company is organized in a Permitted Jurisdiction and its shares are directly or indirectly owned by substantially the same shareholders (and in substantially the same percentages) as those who owned the Company immediately before the acquisition of the Company.
		

			
	
			
				 9.
			

			
	
			
			AFFIRMATIVE COVENANTS.

		
			The Company covenants that so long as any of the Notes are outstanding:
		

			
	
			
				 9.1.
			

			
	
			
			Compliance with Law.

		
			Without limiting Section 10.9, the Company will, and will cause each of its Subsidiaries to, comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, ERISA, the USA PATRIOT Act and Environmental Laws and the other laws and regulations that are referred to in Section 5.16, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
		

			
	
			
				 9.2.
			

			
	
			
			Insurance.

		
			The Company will, and will cause each of its Subsidiaries to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.
		

		 

		

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				 9.3.
			

			
	
			
			Maintenance of Properties.

		
			Subject to Section 10.2, the Company will, and will cause each of its Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section 9.3 shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
		

			
	
			
				 9.4.
			

			
	
			
			Payment of Taxes and Claims.

		
			The Company will, and will cause each of its Subsidiaries to, file all income or similar tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges or levies imposed on them or any of their properties, assets, income or franchises, to the extent the same have become due and payable and before they have become delinquent,  provided that neither the Company nor any Subsidiary need pay any such tax, assessment, charge or levy if (i) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment of all such taxes, assessments, charges and levies in the aggregate would not reasonably be expected to have a Material Adverse Effect.
		

			
	
			
				 9.5.
			

			
	
			
			Corporate Existence, Etc.

		
			Subject to Section 10.2, the Company will at all times preserve and keep in full force and effect the corporate, REIT or other respective existence of each of its Subsidiaries (unless merged into the Company or a another Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise would not, individually or in the aggregate, have a Material Adverse Effect.
		

			
	
			
				 9.6.
			

			
	
			
			Books and Records.

		
			The Company will, and will cause each of its Subsidiaries to, maintain proper books of record and account in conformity with GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over the Company or such Subsidiary, as the case may be.
		

		 

		

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				 9.7.
			

			
	
			
			Priority of Obligations.

		
			The Company will ensure that its payment obligations under this Agreement and the Notes will at all times rank at least pari passu in right of payment, without preference or priority, with all other unsecured and unsubordinated Indebtedness of the Company, except for such Indebtedness as would be preferred by operation of bankruptcy, insolvency, liquidation or similar laws of general application.
		

			
	
			
				 9.8.
			

			
	
			
			Subsidiary Guarantors.

		
			(a)The Company (i) may, at its election, at any time or from time to time, cause any Subsidiary which is not then a Subsidiary Guarantor to become a Subsidiary Guarantor if the following conditions are satisfied and (ii) shall, if required by Section 9.8(c), cause each relevant Subsidiary to become a Subsidiary Guarantor and, in connection therewith, shall cause the following conditions to be satisfied:
		

		
			(i)each holder of a Note shall have received an executed Subsidiary Guaranty Agreement from such new Subsidiary Guarantor;
		

		
			(ii)each holder of a Note shall have received an opinion or opinions of counsel in all applicable jurisdictions to the combined effect that such Subsidiary Guaranty Agreement of such new Subsidiary Guarantor has been duly authorized, executed and delivered by such new Subsidiary Guarantor and constitutes a legal, valid and binding obligation enforceable against such new Subsidiary Guarantor in accordance with its terms, generally consistent with the opinions referenced in Section 4.4 and all as subject to any exceptions and assumptions of the type set forth in such opinions and as are reasonable under the circumstances; and
		

		
			(iii)each holder of a Note shall have received a certificate of the Secretary or a Director (or other appropriate officer or person) of the new Subsidiary Guarantor as to due authorization, charter documents, board resolutions and the incumbency of officers.
		

		
			(b)Subject to Section 9.8(c), at the election of the Company and by written notice to each holder of Notes, any Subsidiary Guarantor may be discharged from all of its obligations and liabilities under its Subsidiary Guaranty Agreement and shall be automatically released from its obligations thereunder without the need for the execution or delivery of any other document by the holders or any other Person, provided, in each case, that (i) immediately before and immediately after giving effect to such release no Default or Event of Default shall have occurred and be continuing, (ii) no amount is then due and payable under such Subsidiary Guaranty Agreement, (iii) each holder of Notes shall have received a certificate of a Responsible Officer to the foregoing effect and setting forth the information reasonably required to establish compliance with the foregoing requirements and (iv) any remuneration, whether by way of supplemental or additional interest, fee or similar payment made or security granted or credit support 
		

		 

		

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		provided, to any creditor under the Principal Bank Facility as consideration for or as an inducement to the release of the Guaranty provided by such Subsidiary Guarantor with respect to such Principal Bank Facility, shall be paid, granted or provided, on the same terms, ratably to the holders of all of the Notes then outstanding.    
		

		
			(c)The Company agrees that at all such times as any Subsidiary is a borrower or guarantor under or with respect to the Principal Bank Facility,  such Subsidiary shall be a Subsidiary Guarantor.
		

			
	
			
				 9.9.
			

			
	
			
			REIT Status.

		
			For the fiscal year ended December 31, 2014, the Company qualified as a REIT and intends to continue to qualify as a REIT.
		

			
	
			
				 10.
			

			
	
			
			NEGATIVE COVENANTS.

		
			The Company covenants that so long as any of the Notes are outstanding:
		

			
	
			
				 10.1.
			

			
	
			
			Transactions with Affiliates.

		
			Other than Excluded Transactions, the Company will not and will not permit any Subsidiary to enter into directly or indirectly any transaction or group of related transactions (including, without limitation, the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate, except pursuant to the reasonable requirements of the Company’s or such Subsidiary’s business and upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable arm’s-length transaction with a Person not an Affiliate.
		

			
	
			
				 10.2.
			

			
	
			
			Merger, Consolidation, Etc.

		
			The Company will not, and will not permit any Subsidiary Guarantor to, consolidate with or merge with any other Person or convey, transfer or lease all or substantially all of its assets in a single transaction or series of transactions to any Person, provided however, that:
		

		
			(a)the Company may consolidate or merge with, or sell, lease or otherwise dispose of all or substantially all of its assets to, any other Person if (i) either (A) the Company shall be the surviving or continuing Person, or (B) the surviving, continuing or resulting Person that purchases, leases or otherwise acquires all or substantially all of the assets of the Company (1) is a solvent REIT, corporation or limited liability company incorporated under the laws of any Permitted Jurisdiction and (2) expressly assumes the obligations of the Company hereunder and under the Notes,  in a writing which is in form and substance reasonably satisfactory to the Required Holders, and (ii) at the time of such transaction and after giving effect thereto no Default or Event of Default shall have occurred and be continuing;
		

		

		

		 

		

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		(b)any of the foregoing actions may be taken with respect to any Subsidiary Guarantor so long as immediately prior to the taking of such action, and immediately thereafter and after giving effect thereto, no Default or Event of Default is or would be in existence; notwithstanding the foregoing, any such Subsidiary Guarantor may enter into a transaction of merger pursuant to which such Subsidiary Guarantor is not the survivor of such merger only if the Company shall have given the holders of the Notes at least 10 Business Days’ prior written notice of such merger, such notice to include a certification to the effect that immediately after and after giving effect to such action, no Default or Event of Default is or would be in existence;
		

		
			(c)the Company and any Subsidiary Guarantor may sell, lease or otherwise dispose of their respective assets in accordance with the other provisions of this Section 10.2; and
		

		
			(d)the Company and the Subsidiary Guarantors may lease and sublease their respective assets, as lessor or sublessor (as the case may be), in the ordinary course of their business;
		

		
			provided, further, that in the event of a merger, consolidation or sale described in subparagraph (B) of paragraph (a) and where the merger, consolidation or sale is done amongst entities incorporated in more than one jurisdiction:
		

		
			(1)the holders of Notes shall have received an opinion of independent counsel to the surviving Person as to (i) the due organization, valid existence and, if legally applicable, good standing of the surviving Person, (ii) the due authorization, execution and delivery of any required assumption agreement by the surviving Person and (iii) the valid, binding and enforceable nature of the obligations of the surviving Person under such assumption agreement and of the obligations of the Company hereunder and under the Notes, in each case subject to reasonable and customary exceptions, assumptions and/or qualifications under the circumstances; and
		

		
			(2)the holders of Notes shall have received each then existing Subsidiary Guarantor’s unconditional and irrevocable confirmation and reaffirmation as to its obligations under the Subsidiary Guaranty Agreement to which it is a party, pursuant to a writing in form and substance reasonably satisfactory to the Required Holders.
		

		
			No such conveyance, transfer or lease of substantially all of the assets of the Company or any Subsidiary Guarantor shall have the effect of releasing the Company or such Subsidiary Guarantor or any successor REIT, corporation or limited liability company that shall theretofore have become such in the manner prescribed in this Section 10.2 from its liability under this Agreement, the Notes or any Subsidiary Guaranty Agreement, as applicable.
		

		 

		

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				 10.3.
			

			
	
			
			Ratio of Secured Indebtedness to Gross Asset Value.

		
			(a)The Company shall not permit the ratio of (i) Secured Indebtedness of the Company and its Subsidiaries on a consolidated basis to (ii) Gross Asset Value of the Company and its Subsidiaries to exceed 0.40 to 1:00 at any time.
		

		
			(b)Notwithstanding the foregoing, the Company will not, and will not permit any Subsidiary to, grant any Liens securing Indebtedness outstanding under or pursuant to the Principal Bank Facility pursuant to Section 10.3(a) unless and until all obligations of the Company under this Agreement and the Notes shall concurrently be secured equally and ratably with such Indebtedness pursuant to documentation in form and substance reasonably satisfactory to the Required Holders (an “Equal and Ratable Grant of Liens”).  In the event that, subsequent to any such Equal and Ratable Grant of Liens, the Company terminates and/or discharges the Liens (or portion thereof) granted to secure Indebtedness outstanding under or pursuant to the Principal Bank Facility, there shall be an equal and ratable termination and/or discharge of the Liens granted to the holders of the Notes pursuant to the corresponding Equal and Ratable Grant of Liens, provided, in each case, that (i) immediately before and immediately after giving effect to such termination and/or discharge no Default or Event of Default shall have occurred and be continuing and (ii) any remuneration, whether by way of supplemental or additional interest, fee or similar payment made or security granted or credit support provided, to any creditor under the Principal Bank Facility as consideration for or as an inducement to the termination and/or discharge of the Liens granted to secure Indebtedness outstanding under or pursuant to such Principal Bank Facility, shall be paid, granted or provided, on the same terms, ratably to the holders of all of the Notes then outstanding. 
		

			
	
			
				 10.4.
			

			
	
			
			Limitation on Subsidiary Unsecured Indebtedness.

		
			The Company will not permit any Subsidiary to create, assume, incur or guarantee or otherwise be or become liable in respect of any Unsecured Indebtedness other than: 
		

		
			(a)Indebtedness owed to another member of the Group;
		

		
			(b)Acquired Subsidiary Indebtedness, and the extension, renewal or replacement of such Indebtedness, but only to the extent that the principal amount thereof shall not be increased;
		

		
			(c)Indebtedness of any Subsidiary Guarantor, provided, that in the event that the amount recoverable under the Subsidiary Guaranty Agreement of any such Subsidiary Guarantor is limited to an amount which is less than the outstanding amounts owed under this Agreement and the Notes, the Indebtedness of such Subsidiary Guarantor in excess of such limitation (without double counting) shall not be excluded by this Section 10.4(c);
		

		

		

		 

		

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		(d)Indebtedness arising under any interest rate hedging transaction or a foreign exchange transaction for spot or forward delivery entered into in connection with protection against fluctuation in currency rates where that foreign exchange exposure arises in the ordinary course of trade, but not a foreign exchange transaction for investment or speculative purposes; 
		

		
			(e)Finance Subsidiary Indebtedness; and
		

		
			(f)Unsecured Indebtedness not otherwise permitted by the foregoing clauses (a) through (e) above, provided that the sum (without duplication) of (i) the aggregate principal amount of all unpaid Unsecured Indebtedness permitted pursuant to this clause (f) (but in the case of any Subsidiary that is not a Wholly Owned Subsidiary, taking into account only a percentage of its Unsecured Indebtedness counting towards this clause (f), such percentage to correspond to the Ownership Share of such Subsidiary held by the Company) plus (ii) the aggregate amounts outstanding and secured by Liens permitted by Section 10.3(a) shall not at any time exceed 40% of Gross Asset Value (to be determined as of the last day of the quarterly fiscal period then most recently ended, but, for the avoidance of doubt, in the case of any Subsidiary that is not a Wholly Owned Subsidiary, taking into account only a percentage of its assets that correspond to the Ownership Share of such Subsidiary held by the Company) (and for purposes of this clause (f)  if any Subsidiary Guarantor is discharged from its Subsidiary Guaranty Agreement pursuant to Section 9.8(b) it shall be deemed to have incurred all of its remaining Indebtedness (and any Indebtedness which theretofore constituted Finance Subsidiary Indebtedness of another member of the Group due to such Subsidiary’s status as a Subsidiary Guarantor shall be deemed to have been incurred if it does not otherwise qualify as Finance Subsidiary Indebtedness) on the date such Subsidiary Guaranty Agreement is discharged).
		

			
	
			
				 10.5.
			

			
	
			
			Ratio of Total Indebtedness to Gross Asset Value.

		
			The Company shall not permit the ratio of (a) Total Indebtedness of the Company and its Subsidiaries determined on a consolidated basis to (b) Gross Asset Value, at the end of any fiscal quarter, to exceed 0.60 to 1.00 at any time. 
		

			
	
			
				 10.6.
			

			
	
			
			Ratio of Adjusted EBITDA to Fixed Charges.

		
			The Company shall not permit the ratio of (a) Adjusted EBITDA of the Company and its Subsidiaries determined on a consolidated basis for the four fiscal quarter period most recently ended to (b) Fixed Charges of the Company and its Subsidiaries determined on a consolidated basis for such four fiscal quarter period, to be less than 1.5 to 1.0 at the end of each fiscal quarter.
		

		 

		

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				 10.7.
			

			
	
			
			Ratio of Unencumbered Asset Value to Unsecured Indebtedness.

		
			The Company shall not permit the ratio of (a) Unencumbered Asset Value to (b) Unsecured Indebtedness of the Company and its Subsidiaries on a consolidated basis to be less than 1.50 to 1:00 at any time.    
		

			
	
			
				 10.8.
			

			
	
			
			Limitations on Certain Investments.

		
			(a)The Company shall not, and shall not permit any Subsidiary to, make an Investment in or otherwise own the following items in clauses (i) through (iv) which would cause the aggregate value of such holdings of such Persons to exceed 35.0% of Gross Asset Value at any time:
		

		
			(i)unimproved real estate, calculated on the basis of the lower of cost or market value (a Property that is a Development Property shall not be considered to be unimproved real estate for purposes of this clause);
		

		
			(ii)(1) Equity Interests in Persons (other than Subsidiaries, Unconsolidated Affiliates, Persons that are REITs and any member of the Shurgard Group), calculated on the basis of the lower of cost or market, and (2) Indebtedness secured by Mortgages in favor of the Company or any Subsidiary, based on book value and determined on a consolidated basis;
		

		
			(iii)other commercial real estate not developed for use as storage facilities; and
		

		
			(iv)Total Budgeted Cost with respect to all Development Properties of the Company, its Subsidiaries and all of the Company’s Unconsolidated Affiliates.  For purposes of this clause (iv), the Total Budgeted Cost with respect to any Development Property owned by an Unconsolidated Affiliate of the Company shall equal the greater of (1) the product of (A) the Company’s Ownership Share in such Unconsolidated Affiliate and (B) the Total Budgeted Cost for such Development Property or (2) the recourse obligations of the Company and its Subsidiaries relating to the Indebtedness of such Unconsolidated Affiliate.
		

		
			(b)The Company shall not, and shall not permit any Subsidiary to, make Investments in Unconsolidated Affiliates, such that the aggregate value of such Investments exceeds 50.0% of Gross Asset Value at any time, with the “value” of any such Investment in an Unconsolidated Affiliate to be determined in accordance with GAAP.
		

			
	
			
				 10.9.
			

			
	
			
			Terrorism Sanctions Regulations.

		
			The Company will not,  nor will it permit any Controlled Entity to, (a) become (including by virtue of being owned or controlled by a Blocked Person), own or control a Blocked Person or any Person that is the target of sanctions imposed by the 
		

		 

		

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		United Nations or by the European Union or (b) have any investments in, or engage in any dealings or transactions (including, without limitation, any investment, dealing or transaction involving the proceeds of the Notes) with, any Blocked Person where such investments, dealings, or transactions would result in either (i) the Company or a Controlled Entity being in violation of, or subject to the imposition of sanctions under, any U.S. Economic Sanctions, except to the extent such violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or (ii) any holder of a Note (an “Affected Noteholder”) being in violation of any laws or regulations applicable to such Affected Noteholder or subjected to sanctions under CISADA or any similar law or regulation with respect to Iran or any other country that is subject to U.S. Economic Sanctions (any such violation described in this clause (ii), a “Noteholder Sanctions Violation”); provided that, a breach of clause (b)(ii) of this Section 10.9 as a result of any OFAC Event shall only occur with respect to any Noteholder Sanctions Violation if (A) the Noteholder Sanctions Violation directly resulted from actions taken by the Company or any Controlled Entity after the occurrence of such OFAC Event (“Prohibited Subsequent Actions”) or (B) so long as no Prohibited Subsequent Actions have occurred, (1) the Affected Noteholder with respect to such Noteholder Sanctions Violation has provided the Company with written notice of such Noteholder Sanctions Violation and such other information contemplated by Section 8.8 with respect thereto and (2) the Company shall have failed to comply with Section 8.8 with respect to such Noteholder Sanctions Violation.
		

			
	
			
				 10.10.
			

			
	
			
			Line of Business.

		
			The Company will not and will not permit any Subsidiary to engage in any business if, as a result, the general nature of the business in which the Company and its Subsidiaries, taken as a whole, would then be engaged would be substantially changed from the general nature of the business in which the Company and its Subsidiaries, taken as a whole, are engaged on the date of this Agreement, but this shall not prevent any member of the Group engaging in any ancillary or related businesses, including but not limited to, industrial, office, mixed industrial/office, residential, retail, lodging, malls and any other type of equity REIT.
		

			
	
			
				 11.
			

			
	
			
			EVENTS OF DEFAULT. 

		
			An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:
		

		
			(a)the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; provided that such failure shall not be an Event of Default if it occurs solely from any technical or administrative difficulties relating solely to the transfer of such amount and such failure is remedied within five Business Days after the due date for payment; or 
		

		

		

		 

		

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		(b)the Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or
		

		
			(c)the Company defaults in the performance of or compliance with any term contained in Sections 7.1(d), 9.8, 10.3 or 10.5 through and including 10.8  (provided, in the case of Section 9.8 and 10.3(b) only, such default has continued for a period of 45 days);  
		

		
			(d)the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in Sections 11(a), (b) and (c)) or any Subsidiary Guarantor defaults in the performance of or compliance with any term contained in any Subsidiary Guaranty Agreement to which it is a party and, except in the case of any such default in respect of any Subsidiary Guaranty Agreement, such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this Section 11(d)) provided however, if such default is capable of cure but cannot be cured within such 30-day period and the Company or such Subsidiary Guarantor, as the case may be, in good faith commenced to cure such default within such 30-day period and continues diligently to prosecute such cure, no Event of Default shall be deemed to have occurred unless such failure has not been cured within 30 days after the last day of the initial 30-day period; or
		

		
			(e)(i) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement or in any writing furnished in connection with the transactions contemplated hereby or thereby proves to have been false or incorrect in any material respect on the date as of which made, or (ii) any representation or warranty made in writing by or on behalf of any Subsidiary Guarantor or by any officer of such Subsidiary Guarantor in any Subsidiary Guaranty Agreement or any writing furnished in connection with such Subsidiary Guaranty Agreement proves to have been false or incorrect in any material respect on the date as of which made; or
		

		
			(f)(i) any member of the Group is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any outstanding Material Indebtedness beyond any period of grace provided with respect thereto, or (ii) any member of the Group is in default in the performance of or compliance with any term of any evidence of outstanding Material Indebtedness or of any mortgage, indenture or other agreement relating thereto or any other condition exists (and in all cases other than as a result of (A) any condition in the nature of a Change of Control (in which event the terms and provisions of Section 8.9 shall govern) or (B) the acquisition by a member of the Group of a  Subsidiary, which acquisition resulted in a default under any Material Indebtedness of such Subsidiary due to the fact that the Subsidiary was acquired by such member of the Group, but only so long as such default is cured or otherwise no longer outstanding on the 30th day 
		

		 

		

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		following the acquisition of such Subsidiary), and as a consequence of such default or condition such Material Indebtedness has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment; or
		

		
			(g)the Company or any Material Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction (in each case other than in connection with a solvent liquidation of a Material Subsidiary), (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property (other than in connection with a solvent liquidation of a Material Subsidiary), (v) is adjudicated as insolvent or to be liquidated (other than in connection with a solvent liquidation of a Material Subsidiary) or (vi) takes corporate action for the purpose of any of the foregoing (other than in connection with a  solvent liquidation of a Material Subsidiary); or
		

		
			(h)a court or Governmental Authority of competent jurisdiction enters an order appointing, without consent by the Company or any Material Subsidiary, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction (other than in connection with any winding-up petition which is frivolous or vexatious and such order is discharged, stayed or dismissed within 14 days of commencement), or ordering the dissolution, winding-up or liquidation of the Company or any Material Subsidiary, or any such petition shall be filed against the Company or any Material Subsidiary and such petition shall not be discharged, stayed or dismissed within 60 days; or
		

		
			(i)(i) any Subsidiary Guaranty Agreement shall cease to be in full force and effect for any reason whatsoever (other than in accordance with its terms or as otherwise agreed in writing by the parties thereto), including, without limitation, a determination by any Governmental Authority that such Subsidiary Guaranty Agreement is invalid, void or unenforceable or (ii) any Subsidiary Guarantor shall contest or deny in writing the validity or enforceability of any of its obligations under its Subsidiary Guaranty Agreement; or
		

		
			(j)a final judgment or judgments for the payment of money aggregating in excess of $100,000,000 (or its equivalent in the relevant currency of payment) are rendered against one or more of the Company and its Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; or
		

		

		

		 

		

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		(k)if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified any member of the Group or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the sum of (x) the aggregate “amount of unfunded benefit liabilities” (within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, plus (y) the amount (if any) by which the aggregate present value of accrued benefit liabilities under all funded Non-U.S. Plans exceeds the aggregate current value of the assets of such Non-U.S. Plans allocable to such liabilities, shall exceed an amount that could reasonably be expected to have a Material Adverse Effect, (iv) any member of the Group or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) any member of the Group or any ERISA Affiliate withdraws from any Multiemployer Plan, (vi) any member of the Group establishes or amends any Plan that provides post-employment welfare benefits in a manner that would increase the liability of any member of the Group thereunder,  (vii) the Company or any Subsidiary fails to administer or maintain a Non-U.S. Plan in compliance with the requirements of any and all applicable laws, statutes, rules, regulations or court orders or any Non-U.S. Plan is involuntarily terminated or wound up or (viii) the Company or any Subsidiary becomes subject to the imposition of a financial penalty (which for this purpose shall mean any tax, penalty or other liability, whether by way of indemnity or otherwise) with respect to one or more Non-U.S. Plans; and any such event or events described in clauses (i) through (viii) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect.
		

		
			As used in Section 11(k), the terms “employee benefit plan” and “employee welfare benefit plan” shall have the respective meanings assigned to such terms in section 3 of ERISA.
		

			
	
			
				 12.
			

			
	
			
			REMEDIES ON DEFAULT, ETC. 

			
	
			
				 12.1.
			

			
	
			
			Acceleration.

		
			(a)If an Event of Default with respect to the Company described in Section 11(g) or (h) (other than an Event of Default described in clause (i) of Section 11(g) or described in clause (vi) of Section 11(g) by virtue of the fact that such clause encompasses clause (i) of Section 11(g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.
		

		
			(b)If any other Event of Default has occurred and is continuing, the Required Holders may at any time at their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable.
		

		

		

		 

		

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		(c)If any Event of Default described in Section 11(a) or (b) has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable.
		

		
			Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon (including interest accrued thereon in respect of the Notes at the Default Rate, if applicable) and (y) the Make-Whole Amount (if any) determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived.  The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for) and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances.
		

			
	
			
				 12.2.
			

			
	
			
			Other Remedies.

		
			If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note or any Subsidiary Guaranty Agreement, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.
		

			
	
			
				 12.3.
			

			
	
			
			Rescission.

		
			At any time after any Notes have been declared due and payable pursuant to Section 12.1(b) or (c), the Required Holders, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) neither the Company nor any other Person shall have paid any amounts that have become due solely by reason of such declaration, (c) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 17,  
		

		 

		

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		and (d) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes.  No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.
		

			
	
			
				 12.4.
			

			
	
			
			No Waivers or Election of Remedies, Expenses, Etc.

		
			No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies.  No right, power or remedy conferred by this Agreement, any Subsidiary Guaranty Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise.  Without limiting the obligations of the Company under Section 15, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this Section 12, including, without limitation, reasonable attorneys’ fees, expenses and disbursements.
		

			
	
			
				 13.
			

			
	
			
			REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

			
	
			
				 13.1.
			

			
	
			
			Registration of Notes.

		
			The Company shall keep at its registered office or principal place of business a register for the registration and registration of transfers of Notes.  The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register.  If any holder of one or more Notes is a nominee, then (a) the name and address of the beneficial owner of such Note or Notes shall also be registered in such register as an owner and holder thereof and (b) at any such beneficial owner’s option, either such beneficial owner or its nominee may execute any amendment, waiver or consent pursuant to this Agreement.  Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary.  The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.
		

			
	
			
				 13.2.
			

			
	
			
			Transfer and Exchange of Notes; No Transfer to Competitors.

		
			(a)Upon surrender of any Note to the Company at the address and to the attention of the designated officer (all as specified in Section 18(iii)) for registration of transfer or exchange (and in the case of a surrender for registration of transfer accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder’s attorney duly authorized in writing and accompanied by the relevant name, address, jurisdiction of tax residence and other details for notices of each 
		

		 

		

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		transferee of such Note or part thereof and including confirmation of whether such transferee is entitled to the benefit of a double taxation treaty between its jurisdiction of tax residence and the United States of America) within ten Business Days thereafter the Company shall execute and deliver, at the Company’s expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note.  Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit 1.1, as applicable.  Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon.  The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes.  Notes shall not be transferred in denominations of less than €500,000,  provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than €500,000.  Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representations set forth in Section 6. 
		

		
			(b)Without limiting the foregoing, each Purchaser and each subsequent holder of any Note severally agrees that it will not directly or indirectly, resell any Notes purchased by it to a Person which is a Competitor (it being understood that such Purchaser shall advise any broker or intermediary acting on its behalf that such resale to a Competitor is prohibited hereby).  The Company shall not be required to recognize any sale or other transfer of a Note to a Competitor and no such transfer shall confer any rights hereunder upon such transferee.
		

			
	
			
				 13.3.
			

			
	
			
			Replacement of Notes.

		
			Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in Section 18(iii)) of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and
		

		
			(a)in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $100,000,000 (or its equivalent in any other currency) or a Qualified Institutional Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or
		

		
			(b)in the case of mutilation, upon surrender and cancellation thereof, within ten Business Days thereafter the Company at its own expense shall execute and deliver, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the 
		

		 

		

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		date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.
		

			
	
			
				 14.
			

			
	
			
			PAYMENTS ON NOTES.

			
	
			
				 14.1.
			

			
	
			
			Place of Payment.

		
			Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in New York, New York at the principal office of JPMorgan Chase Bank, N.A. in such jurisdiction.  The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in such jurisdiction.
		

			
	
			
				 14.2.
			

			
	
			
			Home Office Payment.

		
			So long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, interest and all other amounts becoming due hereunder by the method and at the address specified for such purpose below such Purchaser’s name in Schedule B, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment, prepayment in full or purchase of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 14.1.  Prior to any sale or other disposition of any Note held by a Purchaser or its nominee, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 13.2.  The Company will afford the benefits of this Section 14.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by a Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made in this Section 14.2.
		

			
	
			
				 15.
			

			
	
			
			EXPENSES, ETC.

			
	
			
				 15.1.
			

			
	
			
			Transaction Expenses.

		
			Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses (including reasonable attorneys’ fees of a special counsel for all of the holders of the Notes and, if reasonably required by the Required Holders, local or other counsel for all of the holders of the Notes) incurred by 
		

		 

		

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		the Purchasers and each other holder of a Note in connection with such transactions, the Notes and any Subsidiary Guaranty Agreement and in connection with any amendments, waivers or consents under or in respect of this Agreement, the Notes or any Subsidiary Guaranty Agreement (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement, the Notes or any Subsidiary Guaranty Agreement or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the Notes or any Subsidiary Guaranty Agreement, or by reason of being a holder of any Note, (b) the costs and expenses, including one financial advisor’s fees for all of the holders of the Notes, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes or any Subsidiary Guaranty Agreement and (c) the costs and expenses incurred in connection with the initial filing of this Agreement and all related documents and financial information with the SVO, provided that such costs and expenses under this clause (c) shall not exceed $3,000.  The Company will pay, and will save each Purchaser and each other holder of a Note harmless from, (i) all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those, if any, retained by a Purchaser or other holder in connection with its purchase of the Notes) and (ii) any and all wire transfer fees that any bank deducts from any payment under such Note to such holder or otherwise charges to a holder of a Note with respect to a payment under such Note.
		

			
	
			
				 15.2.
			

			
	
			
			Survival.

		
			The obligations of the Company under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement, any Subsidiary Guaranty Agreement or the Notes, and the termination of this Agreement.
		

			
	
			
				 16.
			

			
	
			
			SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

		
			All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Note.  All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement.  Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between each Purchaser and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.
		

		 

		

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				 17.
			

			
	
			
			AMENDMENT AND WAIVER. 

			
	
			
				 17.1.
			

			
	
			
			Requirements.

		
			This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Company and the Required Holders, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21, or any defined term (as it is used therein), will be effective as to any Purchaser unless consented to by such Purchaser in writing and (b) no such amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (i) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend Section 8 (except as set forth in the second sentence of Section 8.2), 11(a), 11(b), 12, 17, 20 or 22.9.
		

			
	
			
				 17.2.
			

			
	
			
			Solicitation of Holders of Notes.

		
			(a)Solicitation.  The Company will provide each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes or any Subsidiary Guaranty Agreement.  The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 17 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes.
		

		
			(b)Payment.  The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security or provide other credit support, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes of any waiver or amendment of any of the terms and provisions hereof or of the Notes or any Subsidiary Guaranty Agreement unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment.
		

		
			(c)Consent in Contemplation of Transfer.  Any consent made pursuant to this Section 17 or under any Subsidiary Guaranty Agreement by a holder of any Note that has transferred or has agreed to transfer such Note to the Company, any Subsidiary or any of their Affiliates  and has provided or has agreed to provide such 
		

		 

		

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		consent as a condition to such transfer shall be void and of no force or effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force or effect except solely as to such transferring holder.
		

			
	
			
				 17.3.
			

			
	
			
			Binding Effect, Etc.

		
			Any amendment or waiver consented to as provided in this Section 17 or any Subsidiary Guaranty Agreement applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver.  No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon.  No course of dealing between the Company and the holder of any Note, nor any delay in exercising any rights hereunder or under any Note or any Subsidiary Guaranty Agreement, shall operate as a waiver of any rights of any holder of such Note.  
		

			
	
			
				 17.4.
			

			
	
			
			Notes Held by Company, Etc.

		
			Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement, the Notes or any Subsidiary Guaranty Agreement, or have directed the taking of any action provided herein or in the Notes or in any Subsidiary Guaranty Agreement to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates or any Competitor shall be deemed not to be outstanding.
		

			
	
			
				 18.
			

			
	
			
			NOTICES.

		
			Except to the extent otherwise provided in Section 7.4, all notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by an internationally recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by an internationally recognized overnight delivery service (with charges prepaid).  Any such notice must be sent:
		

		
			(i)if to a Purchaser or its nominee, to such Purchaser or its nominee at the address specified for such communications in Schedule B, or at such other address as such Purchaser or its nominee shall have specified to the Company in writing (together with a hard copy if requested by such Purchaser),
		

		

		

		 

		

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		(ii)if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or
		

		
			(iii)if to the Company, to the Company at its address set forth at the beginning hereof to the attention of the Chief Financial Officer and the Chief Legal Officer or at such other address as the Company shall have specified to the holder of each Note in writing.
		

		
			Notices under this Section 18 will be deemed given only when actually received.
		

			
	
			
				 19.
			

			
	
			
			REPRODUCTION OF DOCUMENTS.

		
			This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, electronic, digital or other similar process and such Purchaser may destroy any original document so reproduced.  The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.  This Section 19 shall not prohibit the Company or any holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.
		

			
	
			
				 20.
			

			
	
			
			CONFIDENTIAL INFORMATION.

		
			For the purposes of this Section 20, “Confidential Information” means information delivered to any holder of Notes by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement, provided that such term does not include information that (a) was publicly known or otherwise known to such holder prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such holder or any person acting on such holder’s behalf, (c) otherwise becomes known to such holder other than through disclosure by the Company or any Subsidiary or (d) constitutes financial statements delivered to such holder under Section 7.1 that are otherwise publicly available.  Each holder of Notes will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such holder in good faith to protect confidential information of third parties delivered to such holder,  provided that such holder may deliver or disclose Confidential Information to (i) its directors, trustees, officers, employees, agents, attorneys and affiliates (to the extent such disclosure 
		

		 

		

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		reasonably relates to the administration of the investment represented by its Notes), (ii) its financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to which it sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20 and so long as such Person is not a Competitor), (v) any Person from which it offers to purchase any security of the Company or a Subsidiary Guarantor (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20 and so long as such Person is not a Competitor), (vi) any federal or state regulatory authority having jurisdiction over such holder, (vii) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about such holder’s investment portfolio, or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to such holder, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such holder is a party or (z) if an Event of Default has occurred and is continuing, to the extent such holder may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such holder’s Notes and this Agreement.  Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement.  On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 20.
		

		
			In the event that as a condition to receiving access to information (including pursuant to Section 7) relating to the Company or its Subsidiaries in connection with the transactions contemplated by or otherwise pursuant to this Agreement, any Purchaser or holder of a Note is required to agree to a confidentiality undertaking (whether through IntraLinks, another secure website, a secure virtual workspace or otherwise) which is different from this Section 20, this Section 20 shall not be amended thereby and, as between such Purchaser or such holder and the Company, this Section 20 shall supersede any such other confidentiality undertaking.
		

			
	
			
				 21.
			

			
	
			
			SUBSTITUTION OF PURCHASER.

		
			Each Purchaser shall have the right to substitute any one of its Affiliates as the purchaser of the Notes that it has agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both such Purchaser and such Affiliate, shall contain such Affiliate’s agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in Section 6.  Upon receipt of such notice, any reference to such Purchaser in 
		

		 

		

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		this Agreement (other than in this Section 21), shall be deemed to refer to such Affiliate in lieu of such original Purchaser.  In the event that such Affiliate is so substituted as a Purchaser hereunder and such Affiliate thereafter transfers to such original Purchaser all of the Notes then held by such Affiliate, upon receipt by the Company of notice of such transfer, any reference to such Affiliate as a “Purchaser” in this Agreement (other than in this Section 21), shall no longer be deemed to refer to such Affiliate, but shall refer to such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes under this Agreement. 
		

			
	
			
				 22.
			

			
	
			
			MISCELLANEOUS.

			
	
			
				 22.1.
			

			
	
			
			Successors and Assigns.

		
			All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not.
		

			
	
			
				 22.2.
			

			
	
			
			Accounting Terms. 

		
			(a)Except as provided below and as may otherwise be provided herein, (i) all accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP as applicable to the Company from time to time, (ii) all computations made pursuant to this Agreement shall be made in accordance with GAAP as applicable to the Company from time to time, and (iii) all financial statements deliverable hereunder shall be prepared in accordance with GAAP as applicable to the Company from time to time.
		

		
			(b)In the event that any change in GAAP shall, within a reasonable amount of time following such change in GAAP, (i) cause a Default or Event of Default related to any provision hereof (each an “Applicable Provision”) or (ii) result in an indication that a Default or Event of Default related to any Applicable Provision shall occur in the future, then the parties hereto shall proceed as follows:
		

		
			(i)such Default or Event of Default shall be tolled or suspended and the Company and the holders of all outstanding Notes shall promptly enter into good faith negotiations lasting for a period not to exceed ninety (90) days, pursuant to which the Company and the Required Holders shall (if possible) agree to an amendment or waiver of terms of this Agreement sufficient to eliminate or preempt any such Default or Event of Default; and
		

		
			(ii)in the event such good faith negotiations do not result in an amendment or waiver sufficient to eliminate or preempt any such Default or Event of Default, the Company shall be entitled to re-determine or determine (as applicable) compliance with such Applicable Provision on the basis of GAAP in effect on the date of (and as applied by the Company in connection with) the 
		

		 

		

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		Group’s most recent consolidated financial statements issued prior to such change in GAAP (the “Frozen Accounting Principles”).
		

		
			(c)In the event that any re-determination or determination (as applicable) of any Applicable Provision in accordance with the Frozen Accounting Principles shall indicate that the Company is then in compliance with the Applicable Provision on such basis, no Default nor Event of Default in relation thereto shall be deemed to have occurred (or be continuing) or shall occur thereafter (as applicable).
		

		
			(d)Notwithstanding any other term contained herein, at no time and under no circumstances shall any lease which is deemed by GAAP to be an operating lease as of the date hereof be treated as a finance lease for any purposes whatsoever, regardless of whether GAAP (whether in effect as of the date of determination or any prior date) or any other form of accounting standards are being applied at any such time or under any such circumstances, unless such lease is amended in a manner which would cause it to be treated as a finance lease under GAAP as in effect on the date hereof.
		

			
	
			
				 22.3.
			

			
	
			
			Severability.

		
			Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.
		

			
	
			
				 22.4.
			

			
	
			
			Construction, Etc.

		
			Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant.  Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.
		

		
			For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be deemed to be a part hereof.
		

			
	
			
				 22.5.
			

			
	
			
			Counterparts.

		
			This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument.  Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.
		

		 

		

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				 22.6.
			

			
	
			
			Governing Law.

		
			This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York excluding choice of law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State. 
		

			
	
			
				 22.7.
			

			
	
			
			Jurisdiction and Process; Waiver of Jury Trial.

		
			(a)The Company irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, the City of New York, over any suit, action or proceeding arising out of or relating to this Agreement or the Notes.  To the fullest extent permitted by applicable law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
		

		
			(b)The Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in Section 22.7(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in Section 18 or at such other address of which such holder shall then have been notified pursuant to said Section.  The Company agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it.  Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.  Nothing in this Section 22.7 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
		

		
			(c)The Company agrees, to the fullest extent permitted by applicable law, that a final judgment in any suit, action or proceeding of the nature referred to in Section 22.7(a) brought in any such court shall be conclusive and binding upon it subject to rights of appeal, as the case may be, and may be enforced in the courts of the United States of America or the State of New York (or any other courts to the jurisdiction of which it or any of its assets is or may be subject) by a suit upon such judgment.
		

		
			(d)THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, 
		

		 

		

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		THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.
		

			
	
			
				 22.8.
			

			
	
			
			Obligation to Make Payment in Euros.

		
			Any payment on account of an amount that is payable hereunder or under the Notes in Euros which is made to or for the account of any holder of Notes in any other currency, whether as a result of any judgment or order or the enforcement thereof or the realization of any security or the liquidation of the Company shall constitute a discharge of the obligation of the Company under this Agreement or the Notes only to the extent of the amount of Euros which such holder could purchase in the foreign exchange markets in London, England, with the amount of such other currency in accordance with normal banking procedures at the rate of exchange prevailing on the London Banking Day following receipt of the payment first referred to above.  If the amount of Euros that could be so purchased is less than the amount of Euros originally due to such holder, the Company agrees to the fullest extent permitted by law, to indemnify and save harmless such holder from and against all loss or damage arising out of or as a result of such deficiency.  This indemnity shall, to the fullest extent permitted by law, constitute an obligation separate and independent from the other obligations contained in this Agreement and the Notes, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by such holder from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due hereunder or under the Notes or under any judgment or order.  
		

		
			As used herein the term “London Banking Day” shall mean any day other than Saturday or Sunday or a day on which commercial banks are required or authorized by law to be closed in London, England. 
		

			
	
			
				 22.9.
			

			
	
			
			Fair Value Accounting.

		
			In determining compliance with the requirements of the financial covenants contained in Section 10.3 through Section 10.8 (inclusive), any election by the Company to measure any portion of Indebtedness at fair value (as permitted by Accounting Standards Codification 825-10-25 (previously referred to as SFAS 159) or any similar accounting standard) at balance sheet date, other than to reflect a hedge or swap (or other similar derivative instrument) of such Indebtedness (including, without limitation, both interest rate and foreign currency hedges and/or swaps), shall be disregarded and such determination shall be made as if such election had not been made. 
		

			
	
			
				 22.10.
			

			
	
			
			FATCA Information.

		
			By acceptance of any Note, the holder of such Note agrees that such holder will from time to time with reasonable promptness duly complete and deliver to or as reasonably directed by the Company or any of its agents from time to time (i) in the case of any such holder that is a U.S. Person, such holder’s United States tax 
		

		 

		

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		identification number or other forms reasonably requested by the Company necessary to establish such holder’s status as a U.S. Person under FATCA and as may otherwise be necessary for the Company to comply with its obligations under FATCA and (ii) in the case of any such holder that is not a U.S. Person, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation as may be necessary for the Company to comply with its obligations under FATCA and to determine that such holder has complied with such holder’s obligations under FATCA or to determine the amount (if any) to deduct and withhold from any such payment made to such holder.  Nothing in this Section 22.10 shall require any holder of Notes to provide information that is confidential or proprietary to such holder unless such information is prescribed by applicable law for the Company to comply with its obligations under FATCA and, in such event, the Company shall treat such information as confidential.
		

		
			*    *    *    *    *
		

		

		

		 

		

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		If you are in agreement with the foregoing, please sign the form of agreement on a counterpart of this Agreement and return it to the Company, whereupon this Agreement shall become a binding agreement between you and the Company.
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						Very truly yours,

				
	
					
						 

				
	
					
						 

				
	
					
						PUBLIC STORAGE

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						By: 

					
					
						/s/ John Reyes 

				
	
					
						 

					
					
						Name: John Reyes

				
	
					
						 

					
					
						Title: Senior Vice President and Chief Financial Officer

				

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		

		

		 

		

			 

		

 

		

			 

		

		This Agreement is hereby accepted and agreed to as of the date hereof.
		

		
			THE PRUDENTIAL INSURANCE COMPANY OF AMERICA 
		

			
					
						 

					
					
						 

				
	
					
						By: 

					
					
						/s/ Cornelia Cheng 

				
	
					
						 

					
					
						Name: Cornelia Cheng

				
	
					
						 

					
					
						Title: Vice President

				

		
			 
		

		
			 
		

		
			 
		

		
			PRUDENTIAL LEGACY INSURANCE COMPANY OF NEW JERSEY
		

		
			By:Prudential Investment Management, Inc., as investment manager 
		

			
					
						 

					
					
						 

				
	
					
						By: 

					
					
						/s/ Cornelia Cheng 

				
	
					
						 

					
					
						Name: Cornelia Cheng

				
	
					
						 

					
					
						Title: Vice President

				

		
			 
		

		
			 
		

		
			 
		

		
			PRUCO LIFE INSURANCE COMPANY 
		

			
					
						 

					
					
						 

				
	
					
						By: 

					
					
						/s/ Cornelia Cheng 

				
	
					
						 

					
					
						Name: Cornelia Cheng

				
	
					
						 

					
					
						Title: Assistant Vice President

				

		
			 
		

		
			 
		

		
			 
		

		
			
		

		
			 
		

		
			 
		

		

		

		 

		

			 

		

 

		

			SCHEDULE A

		

		 
		

		
			DEFINED TERMS
		

		
			As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:
		

		
			“Acquired Subsidiary Indebtedness” means all Indebtedness of any Person which becomes a Subsidiary after the date of Closing or is consolidated with or merged into a Subsidiary after the date of Closing and which (a) is outstanding on the date such Person becomes a Subsidiary (or such Person is at such time contractually bound, in writing to incur such Indebtedness) and (b) has not been (and is not being) incurred, extended or renewed in contemplation of such Person becoming a Subsidiary.
		

		
			“Adjusted EBITDA” means, with respect to the Company for any period, EBITDA of the Company and its Subsidiaries determined on a consolidated basis less the aggregate of all dividends or distributions paid or accrued by such Persons on any Preferred Stock of such Persons during such period plus, if during such period any of PS Business Parks, Inc., PS Business Parks L.P., any Subsidiary of PS Business Parks, Inc., Shurgard Europe or any Subsidiary of Shurgard Europe is not a Subsidiary of the Company, the amount of dividends or other distributions actually paid by each of foregoing Persons that is not a Subsidiary to the Company or any of its Subsidiaries during such period.
		

		
			“Affected Noteholder” is defined in Section 10.9.
		

		
			“Affiliate” means, at any time, and with respect to any Person, any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person.  As used in this definition only, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.  Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Company.
		

		
			“Agreement” means this Agreement, including all Schedules and Exhibits attached to this Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time.
		

		
			“Anti-Corruption Laws” is defined in Section 5.16(d)(1).
		

		
			“Anti-Money Laundering/Anti-Terrorism Laws” is defined in Section 5.16(c).
		

		
			“Applicable Long-Term Financing” is defined in Section 8.9(d).
		

		
			“Applicable Provision” is defined in Section 22.2(b).
		

		

		

		 

		

			 

		

 

		

			 

		

		“Blocked Person” is defined in Section 5.16(a).
		

		
			  “Business Day” means for the purposes of Section 8.6 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York or Frankfurt,  Germany are required or authorized to be closed and (b) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York are required or authorized to be closed.
		

		
			“Capitalization Rate” means 7.00%.
		

		
			“Capitalized EBITDA” means, with respect to a Person and as of a given date, (a) such Person’s EBITDA for the four fiscal quarters most recently ended divided by (b) the Capitalization Rate.  In determining Capitalized EBITDA, EBITDA attributable to real estate properties either acquired or disposed of by such Person during such four fiscal quarters shall be disregarded; provided,  however, EBITDA attributable to real estate properties acquired by the Company or any of its Subsidiaries during the four immediately preceding fiscal quarters may, at the Company’s option, be included in determinations of the Capitalized EBITDA of the Company.
		

		
			“Capitalized Lease Obligation” means obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.  The amount of a Capitalized Lease Obligation is the capitalized amount of such obligation determined in accordance with GAAP.    
		

		
			“Capitalized Unencumbered NOI” means as of a given date (a) Unencumbered NOI for the four fiscal quarters most recently ended divided by (b) the Capitalization Rate.  In determining Capitalized Unencumbered NOI, Unencumbered NOI attributable to Eligible Properties either acquired or disposed of by such Person during such four fiscal quarters shall be disregarded; provided,  however, Unencumbered NOI attributable to Eligible Properties acquired by the Company or any of its Subsidiaries during the four immediately preceding fiscal quarters may, at the Company’s option, be included in determinations of the Capitalized Unencumbered NOI.
		

		
			“Change of Control” is defined in Section 8.9(d).
		

		
			“Change of Control Prepayment Event”  is defined in Section 8.9(a).
		

		
			“CISADA” means the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, United States Public Law 111195, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
		

		
			“Closing” is defined in Section 3.
		

		
			“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.
		

		

		

		 

		

			 

		

 

		

			 

		

		“Company” is defined in the first paragraph of this Agreement.
		

		
			“Company Notice” is defined in Section 8.9(b).
		

		
			“Competitor” means any Person (other than any Purchaser) who is substantially engaged in the businesses of owning and renting storage facilities to the public and/or other activities reasonably related thereto provided that:
		

		
			(a)the provision of investment advisory services by a Person to a Plan or Non-U.S. Plan which is owned or controlled by a Person which would otherwise be a Competitor shall not of itself cause the Person providing such services to be deemed to be a Competitor if such Person has established procedures which will prevent confidential information supplied to such Person by any member of the Group from being transmitted or otherwise made available to such Plan or Non-U.S. Plan or Person owning or controlling such Plan or Non-U.S. Plan; and
		

		
			(b)in no event shall an Institutional Investor which maintains passive investments in any Person which is a Competitor be deemed a Competitor it being agreed that the normal administration of the investment and enforcement thereof shall be deemed not to cause such Institutional Investor to be a “Competitor”.
		

		
			“Confidential Information” is defined in Section 20.
		

		
			“Consolidated EBITDA” means the Net Income (Loss) of the Company and its Subsidiaries on a pro forma basis for the applicable period, plus (a) the sum of the following amounts of the Company and its Subsidiaries on a pro forma basis for such period (determined on a consolidated basis in accordance with GAAP) to the extent included in the determination of such Net Income (Loss): (i) depreciation expense, (ii) amortization expense and other noncash charges, (iii) interest expense, (iv) income tax expense, (v) extraordinary losses and other non-recurring charges (and other losses on asset sales not otherwise included in extraordinary losses and other non-recurring charges), (vi) earnings allocated to non-controlling interests, (vii) adjustments as a result of the straight lining of rents and (viii) foreign currency translation losses, less (b) extraordinary gains (including, without limitation, gains on asset sales and gains resulting from the early extinguishment of indebtedness, in each case not otherwise included in extraordinary gains, and foreign translation gains) of the Company and its Subsidiaries on a pro forma basis for such period (determined on a consolidated basis in accordance with GAAP) to the extent included in the determination of such Net Income (Loss).
		

		
			“Controlled Entity” means any of the Subsidiaries of the Company and any Affiliate over which the Company or any of its Subsidiaries exercises Control. As used in this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
		

		

		

		 

		

			 

		

 

		

			 

		

		“Credit Rating” means the lowest rating or implied rating assigned and published by a Rating Agency to each series of rated senior unsecured long-term Indebtedness of the Company.
		

		
			“Default” means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.
		

		
			“Default Rate” means for any Note that rate of interest that is the greater of (i) 1.00% per annum above the rate of interest first stated in clause (a) of the first paragraph of such Note and (ii) 1.00% over the rate of interest publicly announced by Deutsche Bank AG in Frankfurt, Germany as its “base” or “prime” rate.
		

		
			“Derivatives Contract” means any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement.  Not in limitation of the foregoing, the term “Derivatives Contract” includes any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any such master agreement.
		

		
			“Derivatives Termination Value” means, in respect of any one or more Derivatives Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Derivatives Contracts, (a) for any date on or after the date such Derivatives Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Derivatives Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Derivatives Contracts.
		

		
			“Development Property” means a Real Property currently under development on which the improvements have not been completed, or a Real Property where development has been completed as evidenced by a certificate of occupancy for the entire Real Property for the 30 month period following the issuance of such certificate of occupancy (provided that the Company may at its option elect to remove a Real Property from the category of Development Properties prior to the completion of the 30-month period, but any such Real Property may not be reclassified as a Development Property).  The term “Development Property” shall include real property of the type 
		

		 

		

			 

		

 

		

			 

		

		described in the immediately preceding sentence to be (but not yet) acquired by the Company, any Subsidiary or any Unconsolidated Affiliate upon completion of construction pursuant to a contract in which the seller of such real property is required to develop or renovate prior to, and as a condition precedent to, such acquisition.
		

		
			“Disclosure Documents” is defined in Section 5.3.
		

		
			“Dollars,” “U.S.$” or “$” means lawful money of the United States of America.
		

		
			“EBITDA” means, with respect to any Person, for any period and without duplication: (a) net earnings (loss) of such Person for such period (including equity in net earnings or net loss of Unconsolidated Affiliates) excluding the impact of the following amounts with respect to any Person and the Unconsolidated Affiliates (but only to the extent included in determining net earnings (loss) for such period): (i) depreciation and amortization expense and other non-cash charges of such Person for such period; (ii) interest expense of such Person for such period; (iii) income tax expense of such Person in respect of such period; (iv) extraordinary and nonrecurring gains and losses of such Person for such period, including without limitation, gains and losses from the sale of assets, write-offs and forgiveness of debt; (v) non-controlling interests, and (vi) distributions or other allocations of income to holders of Preferred Stock; minus (b) the Reserve for Replacements, and minus (c) if during such period any of PS Business Parks, Inc., PS Business Parks L.P., any Subsidiary of PS Business Parks, Inc., Shurgard Europe or any Subsidiary of Shurgard Europe is not a Subsidiary of the Company, the impact on EBITDA of each of the foregoing Persons that is not a Subsidiary.
		

		
			“Eligible Property” means a Real Property which satisfies all of the following requirements: (a) such Real Property is owned in fee simple, or leased under a Ground Lease, by the Company or a Wholly Owned Subsidiary; provided, that if a Subsidiary does not meet the definition of “Wholly Owned Subsidiary” solely because such Subsidiary has issued partnership interests that are or will be convertible at the option of the holder of such partnership interest into the Equity Interests or Preferred Stock of the Company, such Subsidiary shall be considered a “Wholly Owned Subsidiary” for purposes of this clause (a); (b) regardless of whether such Real Property  is owned in fee simple or leased under a Ground Lease by the Company or a Wholly Owned Subsidiary, the Company has the right directly, or indirectly through a Subsidiary, to take the following actions without the need to obtain the consent of any Person: (i) to create Liens on such Real Property as security for Indebtedness of the Company or such Subsidiary, as applicable and (ii) to sell, transfer or otherwise dispose of such Real Property; (c) neither such Real Property, nor if such Real Property is owned or leased under a Ground Lease by a Subsidiary, any of the Company’s direct or indirect ownership interest in such Subsidiary, is subject to (i) any Lien other than Permitted Liens or (ii) any Negative Pledge; and (d) such Real Property is free of all major structural defects or major architectural deficiencies, title defects, environmental conditions or other adverse matters except for defects, deficiencies, conditions or other matters which,  collectively, are not material to the profitable operation of the Real 
		

		 

		

			 

		

 

		

			 

		

		Property.  In addition, any Real Property that is owned by a Subsidiary of the Company is the subject of a bankruptcy proceeding or other proceeding, event or condition of the types referred to in Section 11(g) or (h) (and in the case of any case or proceeding described in 11(g), such case or proceeding has continued undismissed or unstayed for a period of 60 consecutive calendar days or an order for relief shall have been entered) shall cease to be an Eligible Property.
		

		
			“Environment” means humans, animals, plants and all other living organisms including the ecological systems of which they form part and the following media:
		

		
			(a)air (including, without limitation, air within natural or man-made structures, whether above or below ground);
		

		
			(b)water (including, without limitation, territorial, coastal and inland waters, water under or within land and water in drains and sewers); and
		

		
			(c)land (including, without limitation, land under water).
		

		
			“Environmental Claim” means any claim, proceeding, formal notice or investigation by any person in respect of any Environmental Law.
		

		
			“Environmental Laws” means any applicable law or regulation which relates to:
		

		
			(a)the pollution or protection of the Environment;
		

		
			(b)the conditions of the workplace; or
		

		
			(c)the generation, handling, storage, use, release or spillage of any substance which, alone or in combination with any other, is capable of causing harm to the Environment, including, without limitation, any waste.
		

		
			“Equity Interest” means, with respect to any Person, any share of capital stock of (or other ownership or profit interests in) such Person, any warrant, option or other right for the purchase or other acquisition from such Person of any share of capital stock of (or other ownership or profit interests in) such Person, any security convertible into or exchangeable for any share of capital stock of (or other ownership or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests), and any other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date of determination.
		

		

		

		 

		

			 

		

 

		

			 

		

		“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
		

		
			“ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under section 414 of the Code.
		

		
			“Euro” or “€” means the unit of single currency of the Participating Member States.
		

		
			“Event of Default” is defined in Section 11.
		

		
			“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, together with all rules and regulations issued thereunder.
		

		
			“Excluded Shareholder” means (a) any Hughes Family Member and (b) any Person eligible to file a statement on Schedule 13G pursuant to Rule 13d 1(b)(1) of the Exchange Act.
		

		
			“Excluded Transactions” means (a) transactions between the Company and Subsidiaries or between Subsidiaries and (b) current and future transactions between the Company and Subsidiaries on the one part and other Affiliates on the other part, that either (i) are disclosed in the Company’s financial statements or SEC filings of the Company or the Subsidiaries or (ii) are immaterial.
		

		
			“Fair Market Value” means, (a) with respect to a security listed (or an unlisted convertible security that is convertible into a security listed) on The NASDAQ Stock Market’s National Market System or have trading privileges on the New York Stock Exchange, the American Stock Exchange, or another recognized national United States securities exchange, the London Stock Exchange, Euronext or another recognized European securities exchange, the price of such security as reported on such exchange or market by any widely recognized reporting method customarily relied upon by financial institutions and (b) with respect to any other asset, the price which could be negotiated in an arm’s-length free market transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction. Except as otherwise provided herein, Fair Market Value under clause (b) shall be determined by the Board of Trustees of the Company acting in good faith conclusively evidenced by a board resolution thereof or, with respect to any asset valued at up to $5,000,000, such determination may be made by the chief financial officer or treasurer of the Company.
		

		
			“FATCA” means (a) sections 1471 to 1474 of the Code (or any amended or successor version thereof) or any associated regulations or other official guidance; (b) any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the United States and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) of this 
		

		 

		

			 

		

 

		

			 

		

		definition; or (c) any agreement pursuant to the implementation of paragraphs (a) or (b) of this definition with the United States Internal Revenue Service, the United States government or any governmental or taxation authority in any other jurisdiction.
		

		
			“Finance Subsidiary” means a Subsidiary which (a) has been formed for the purpose of, and whose primary activities are, the issuance of debt obligations to Persons other than Affiliates and the lending of net proceeds of such debt obligations to the Company and/or any Subsidiary Guarantor and activities related thereto, and (b) has no significant assets other than promissory notes evidencing such loans.
		

		
			“Finance Subsidiary Indebtedness” means any Indebtedness of a Finance Subsidiary, to the extent that the net proceeds thereof are lent on to the Company and/or any Subsidiary Guarantor.
		

		
			“Fixed Charges” means, with respect to a Person and for a given period, the sum of (a) the Interest Expense of such Person for such period, plus (b) the aggregate of all scheduled principal payments on Indebtedness made by such Person during such period (excluding balloon, bullet or similar payments of principal due upon the stated maturity of Indebtedness).  
		

		
			“Frozen Accounting Principles” is defined in Section 22.2(b).
		

		
			“GAAP”  means, generally accepted accounting principles in the United States of America set forth in the Accounting Standards Codification of the Financial Accounting Standards Board or in such other principles by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.
		

		
			“Governmental Authority” means
		

		
			(a)the government of
		

		
			(i)the United States of America or any State or other political subdivision of either thereof, or
		

		
			(ii)any other jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or
		

		
			(b)any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.
		

		
			“Governmental Official” means any governmental official or employee, employee of any government-owned or government-controlled entity, political party, any official of a political party, candidate for political office or anyone else acting in a similar official capacity.
		

		

		

		 

		

			 

		

 

		

			 

		

		“Gross Asset Value” means, at a given time, the sum (without duplication) of (a) Capitalized EBITDA of the Company and its Subsidiaries determined on a consolidated basis, excluding Capitalized EBITDA attributable to Real Properties acquired by the Company or such Subsidiary during the immediately preceding four consecutive  fiscal quarters of the Company and Development Properties, plus (b) all cash and cash equivalents (excluding tenant deposits and other cash and cash equivalents the disposition of which is restricted) of the Company and its Subsidiaries at such time, plus (c) the current book value of Development Properties and all land held for development; provided, however, any land which is not appropriately entitled or zoned to permit the use of such Real Property as a self-storage facility shall only be included at 50% of book value, plus (d) with respect to each Unconsolidated Affiliate of the Company, the Company’s respective Ownership Share of (i) the Capitalized EBITDA of each such Unconsolidated Affiliate and (ii) the current book values of all real property of each such Unconsolidated Affiliate upon which construction is in progress, plus (e) the purchase price paid by the Company or any Subsidiary (less any amounts paid to the Company or such Subsidiary as a purchase price adjustment, held in escrow, retained as a contingency reserve, or in connection with other similar arrangements, and without regard to allocations of property purchase prices pursuant to Statement of Financial Accounting Standards No. 141 or other provisions of GAAP) for any Real Property acquired by the Company or such Subsidiary during the immediately preceding four consecutive fiscal quarters of the Company, plus (f) the contractual purchase price of Real Properties of the Company and its Subsidiaries subject to purchase obligations, repurchase obligations, forward commitments and unfunded obligations to the extent such obligations and commitments are included in determinations of Total Liabilities of the Company, plus (g) the value (determined in accordance with GAAP) of all promissory notes payable solely to the Company or any of its Subsidiaries (excluding any such note where (i) the obligor is more than 30 days past due with respect to any payment obligation or is the subject of a bankruptcy proceeding or other proceeding, event or condition of the types referred to in Section 11(g) or (h) or (ii) the obligor is an Affiliate of the Company (other than PS Business Parks, Inc., PS Business Parks, L.P., Shurgard Europe, or a Subsidiary of Shurgard Europe so long as any such note issued by any of PS Business Parks, Inc., PS Business Parks, L.P., Shurgard Europe or a Subsidiary of Shurgard Europe matures within six months of issuance), plus (h) the Fair Market Value of all Marketable Securities owned by the Company and its Subsidiaries, plus (i) all other assets of the Company and its Subsidiaries (the value of which is determined in accordance with GAAP but excluding assets classified as intangible under GAAP).  No more than 10.0% of the Gross Asset Value may be attributable to the aggregate of the following (x) the current book value of land held for development and (y) the value attributable to the assets referenced in clauses (g) and (i) above.  For the avoidance of doubt, the value of the Equity Interests of PS Business Parks, Inc., PS Business Parks, L.P., any Subsidiary of PS Business Parks, Inc., Shurgard Europe, or any Subsidiary of Shurgard Europe owned by the Company and its Subsidiaries that constitute Marketable Securities shall be determined under clause (a) of the definition of Fair Market Value.  The Company shall have the option to include EBITDA under clause (a) above from Real Properties that are otherwise subject to valuation under clause (e) above; provided,  however, that if such 
		

		 

		

			 

		

 

		

			 

		

		election is made, any value attributable to such Real Properties under clause (e) above shall be excluded from the determination of the amount under clause (e).
		

		
			“Ground Lease” means a ground lease containing terms and conditions customarily required by mortgagees making a loan secured by the interest of the holder of the leasehold estate demised pursuant to a ground lease, including without limitation, the following: (a) a remaining term (exclusive of any unexercised extension options) of 40 years or more from the date hereof; (b) the right of the lessee to mortgage and encumber its interest in the leased property, and to amend the terms of any such mortgage or encumbrance, in each case, without the consent of the lessor; (c) the obligation of the lessor to give the holder of any mortgage Lien on such leased property written notice of any defaults on the part of the lessee and agreement of such lessor that such lease will not be terminated until such holder has had a reasonable opportunity to cure or complete foreclosures, and fails to do so; (d) acceptable transferability of the lessee’s interest under such lease, including ability to sublease; (e) acceptable limitations on the use of the leased property; and (f) clearly determinable rental payment terms which in no event contain profit participation rights.
		

		
			“Group” means, at any time, the Company and its Subsidiaries at such time.
		

		
			“Group Structure Chart” means the group structure chart set forth in Schedule 5.4.
		

		
			“Guaranty”, “Guaranteed” or to “Guarantee” as applied to any obligation means and includes:  (a) a guaranty (other than by endorsement of negotiable instruments for collection in the ordinary course of business), directly or indirectly, in any manner, of any part or all of such obligation, or (b) an agreement, direct or indirect, contingent or otherwise, and whether or not constituting a guaranty, the practical effect of which is to assure the payment or performance (or payment of damages in the event of nonperformance) of any part or all of such obligation whether by: (i) the purchase of securities or obligations, (ii) the purchase, sale or lease (as lessee or lessor) of property or the purchase or sale of services primarily for the purpose of enabling the obligor with respect to such obligation to make any payment or performance (or payment of damages in the event of nonperformance) of or on account of any part or all of such obligation, or to assure the owner of such obligation against loss, (iii) the supplying of funds to or in any other manner investing in the obligor with respect to such obligation, (iv) repayment of amounts drawn down by beneficiaries of letters of credit, or (v) the supplying of funds to or investing in a Person on account of all or any part of such Person’s obligation under a Guaranty of any obligation or indemnifying or holding harmless, in any way, such Person against any part or all of such obligation.  
		

		
			“Hazardous Materials” means all or any of the following: (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable Environmental Laws as “hazardous substances”, “hazardous materials”, “hazardous wastes”, “toxic substances” or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, 
		

		 

		

			 

		

 

		

			 

		

		carcinogenicity, reproductive toxicity, “TCLP” toxicity, or “EP toxicity”; (b) oil, petroleum or petroleum derived substances, natural gas, natural gas liquids or synthetic gas and drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (c) any flammable substances or explosives or any radioactive materials; (d) asbestos in any form; and (e) electrical equipment which contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty parts per million.
		

		
			“holder” means, with respect to any Note the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 13.1;  provided,  however, that if such Person is a nominee, then for the purposes of Sections 7, 12, 17.2 and 18 and any related definitions in this Schedule A, “holder” shall mean the beneficial owner of such Note whose name and address appears in such register.
		

		
			“Holding Company” means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary.
		

		
			“Hughes Family Member” means any of the following: (a) B. Wayne Hughes, his spouse, his children (natural or adopted) and the children (natural or adopted) of his children; or (b) any foundation, trust, partnership, corporation or other Person controlled by any of the individuals referred to in clause (a).
		

		
			 “Indebtedness” means, with respect to a Person, at the time of computation thereof, all of the following (without duplication): (a) all obligations of such Person in respect of money borrowed; (b) all obligations of such Person (other than trade debt incurred in the ordinary course of business), whether or not for money borrowed (i) represented by notes payable, or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, or (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property; (c) Capitalized Lease Obligations of such Person; (d) all reimbursement obligations of such Person under any letters of credit or acceptances (whether or not the same have been presented for payment); (e) all Off Balance Sheet Liabilities of such Person; (f) net obligations under any Derivative Contract not entered into as a hedge against interest rate risk in respect of existing Indebtedness in an amount equal to the Derivatives Termination Value thereof; and (g) all Indebtedness of other Persons which (i) such Person has Guaranteed or is otherwise recourse to such Person or (ii) is secured by a Lien on any property of such Person.
		

		
			“Institutional Investor” means (a) any Purchaser of a Note, (b) any holder of a Note holding (together with one or more of its affiliates) more than 5% of the aggregate principal amount of the Notes then outstanding, (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form, and (d) any Related Fund of any holder of any Note.
		

		

		

		 

		

			 

		

 

		

			 

		

		“Interest Expense” means, with respect to a Person and for any period, (a) all paid, accrued or capitalized interest expense (including, without limitation, capitalized interest expense (other than capitalized interest funded from a construction loan interest reserve account held by another lender and not included in the calculation of cash for balance sheet reporting purposes) and interest expense attributable to Capitalized Lease Obligations) of such Person and in any event shall include all letter of credit fees and all interest expense with respect to any Indebtedness in respect of which such Person is wholly or partially liable whether pursuant to any repayment, interest carry, performance Guarantee or otherwise, plus (b) to the extent not already included in the foregoing clause (a) such Person’s Ownership Share of all paid, accrued or capitalized interest expense for such period of Unconsolidated Affiliates of such Person (other than any such interest expense paid or payable by Unconsolidated Affiliates to such Person).  
		

		
			“Investment” means, with respect to any Person, any acquisition or investment (whether or not of a controlling interest) by such Person, whether by means of (a) the purchase or other acquisition of any Equity Interest in another Person, (b) a loan, advance or extension of credit to, capital contribution to, Guaranty of Indebtedness of, or purchase or other acquisition of any Indebtedness of, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute the business or a division or operating unit of another Person.  Any commitment or option to make an Investment in any other Person shall constitute an Investment.  Except as expressly provided otherwise, for purposes of determining compliance with any covenant contained in this Agreement, the amount or value of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.
		

		
			“Investment Grade” is defined in Section 8.9(d).
		

		
			“Issuer Credit Rating” is defined in Section 8.9(d).
		

		
			“Lien” as applied to the property of any Person means:  (a) any security interest, encumbrance, mortgage, deed to secure debt, deed of trust, pledge, lien, charge or lease constituting a Capitalized Lease Obligation, conditional sale or other title retention agreement, or other security title or encumbrance of any kind in respect of any property of such Person, or upon the income or profits therefrom; (b) any arrangement, express or implied, under which any property of such Person is transferred, sequestered or otherwise identified for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to the payment of the general, unsecured creditors of such Person; (c) the filing of any financing statement under the UCC or its equivalent in any jurisdiction; and (d) any agreement by such Person to grant, give or otherwise convey any of the foregoing.
		

		
			“Make-Whole Amount” is defined in Section 8.6.
		

		
			“Managed REIT” means a REIT managed or advised by the Company or its Subsidiaries.
		

		

		

		 

		

			 

		

 

		

			 

		

		“Management Contract” means a management contract or advisory agreement under which the Company or any of its Subsidiaries provides management and advisory services to a third party, consisting of management of properties or provision of advisory services on property acquisition and dispositions, equity and debt placements and related transactional matters.
		

		
			“Management Revenues” means, for any period, an amount equal to the aggregate sum of revenues for such period earned by the Company and its Subsidiaries on a pro forma basis from providing management and advisory services under Management Contracts (determined on a consolidated basis in accordance with GAAP), including asset management revenue, performance revenue, structuring revenue, advisor's participation in cash flow (if any), interest income or any revenue earned as stipulated in a Management Contract and booked for financial reporting purposes, and distributions received for such period related to the ownership of equity in managed funds and Managed REITs but excluding revenue related to reimbursed costs; provided,  however, that Management Revenues shall exclude any revenues earned under Management Contracts, or distributions received, by the Company and its Subsidiaries on a pro forma basis from a current Subsidiary that has not been a Subsidiary for the entirety of such period.
		

		
			“Marketable Securities” means: (a) common or preferred Equity Interests of Persons located in, and formed under the laws of, any State of the United States or America or the District of Columbia, which Equity Interests are subject to price quotations (quoted at least daily) on The NASDAQ Stock Market’s National Market System or have trading privileges on the New York Stock Exchange, the American Stock Exchange or another recognized national United States securities exchange, the London Stock Exchange, Euronext or another recognized European securities exchange; (b) convertible securities which can be converted at any time into common or preferred Equity Interests of the type described in the immediately preceding clause (a); and (c) securities evidencing Indebtedness issued by Persons located in, and formed under the laws of, any State of the United States or America or the District of Columbia, which Persons have a Credit Rating of BBB- or Baa3 or better.
		

		
			“Material” means material in relation to the business, operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a whole.
		

		
			“Material Indebtedness” means then outstanding Indebtedness (other than the Notes) of any member of the Group that is recourse to any one or more of the assets of any member of the Group in an aggregate principal amount exceeding $100,000,000; provided,  however, Material Indebtedness shall not include any Non-Recourse Indebtedness.
		

		
			“Material Subsidiary” means any Subsidiary to which $500,000,000 or more of the Gross Asset Value is attributable on an individual basis. 
		

		

		

		 

		

			 

		

 

		

			 

		

		“Material Adverse Effect” means a material adverse effect on (a) the business, assets or financial condition of the Group taken as a whole, (b) the ability of the Company to perform its payment obligations under this Agreement or the Notes and/or its obligations under any of Sections 10.3 through 10.8, (c) the ability of any Subsidiary Guarantor to perform its payment obligations under the Subsidiary Guaranty Agreement to which it is party or (d) the validity or enforceability of this Agreement, the Notes or any Subsidiary Guaranty Agreement.
		

		
			“Mortgage” means a mortgage, deed of trust, deed to secure debt or similar security instrument made by a Person owning an interest in real property granting a Lien on such interest in real property as security for the payment of Indebtedness of such Person.
		

		
			“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).
		

		
			“NAIC” means the National Association of Insurance Commissioners or any successor thereto.
		

		
			“Negative Pledge” means, with respect to a given asset, any provision of a document, instrument or agreement (other than this Agreement) which prohibits or purports to prohibit the creation of any Lien on such asset as security for Indebtedness of the Person owning such asset or any other Person.
		

		
			“Negative Rating Event”  is defined in Section 8.9(a).
		

		
			“Net Income (Loss)” means the aggregate of net income (or loss) of the Company and its Subsidiaries on a pro forma basis for the applicable period (determined on a consolidated basis in accordance with GAAP).
		

		
			“Net Operating Income” means, for any Real Property and for a given period, the sum (without duplication) of (a) rents and other revenues earned in the ordinary course from such Real Property (excluding pre-paid rents and revenues and security deposits except to the extent applied in satisfaction of tenants’ obligations for rent) minus (b) all expenses paid or accrued related to the ownership, operation or maintenance of such Real Property, including but not limited to, taxes, assessments and the like, insurance, utilities, payroll costs, maintenance, repair and landscaping expenses, marketing expenses, and general and administrative expenses (including an appropriate allocation for legal, accounting, advertising, marketing and other expenses incurred in connection with such Real Property, but specifically excluding general overhead expenses of the Company  and its Subsidiaries and any property management fees) minus (c) the Reserve for Replacements for such Real Property for such period minus (d) the actual property management fee, if any, paid during such period with respect to such Real Property.
		

		
			“Non-Domestic Property” means a Real Property located outside a state of the United States of America or the District of Columbia. 
		

		

		

		 

		

			 

		

 

		

			 

		

		“Non-Recourse Indebtedness” means, with respect to any Person, Indebtedness for borrowed money in respect of which recourse for payment (except for customary exceptions for fraud, misapplication of funds, environmental indemnities, voluntary bankruptcy, collusive involuntary bankruptcy and other similar customary exceptions to nonrecourse liability in a form reasonably acceptable to the Required Holders) is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness.
		

		
			“Non-U.S. Plan” means any plan, fund, pension scheme or other similar program that (a) is established or maintained outside the United States of America by the Company or any Subsidiary for the benefit of employees of the Company or one or more Subsidiaries residing outside the United States of America, which plan, fund, pension scheme or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and (b) is not subject to ERISA or the Code.
		

		
			“Notes” is defined in Section 1.1.
		

		
			“Noteholder Sanctions Violation” is defined in Section 10.9.
		

		
			“Occupancy Rate” means, with respect to a Property at any time, the ratio, expressed as a percentage, of (a) the net rentable square footage of such Property actually occupied by tenants paying rent pursuant to binding leases as to which no default exists to (b) the aggregate net rentable square footage of such Property.
		

		
			“OFAC” is defined in Section 5.16(a).
		

		
			“OFAC Event”  means (individually or collectively with one or more prior changes occurring after the date of this Agreement) an amendment to, or change in, any U.S. Economic Sanctions laws or regulations after the date of this Agreement, or an amendment to, or change in, an official interpretation or application of such U.S. Economic Sanctions laws or regulations after the date of this Agreement, which amendment or change is in force and continuing.
		

		
			“OFAC Listed Person” is defined in Section 5.16(a).
		

		
			“OFAC Sanctions Program”  means any economic or trade sanction that OFAC is responsible for administering and enforcing.  A list of OFAC Sanctions Programs may be found at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx. 
		

		
			“Off Balance Sheet Liabilities” means, with respect to any Person, (a) any repurchase obligation or liability, contingent or otherwise, of such Person with respect to any accounts or notes receivable sold, transferred or otherwise disposed of by such Person, (b) any repurchase obligation or liability, contingent or otherwise, of such Person with respect to property or assets leased by such Person as lessee and (c) all obligations, contingent or otherwise, of such Person under any synthetic lease, tax 
		

		 

		

			 

		

 

		

			 

		

		retention operating lease, off balance sheet loan or similar off balance sheet financing if the transaction giving rise to such obligation (i) is considered indebtedness for borrowed money for tax purposes but is classified as an operating lease or (ii) does not (and is not required to pursuant to GAAP) appear as a liability on the balance sheet of such Person.
		

		
			“Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities extend to the subject matter of such certificate.
		

		
			“Ownership Share” means, with respect to any Subsidiary of a Person (other than a Wholly Owned Subsidiary) or any Unconsolidated Affiliate of a Person, the greater of (a) such Person’s relative nominal direct and indirect ownership interest (expressed as a percentage) in such Subsidiary or Unconsolidated Affiliate or (b) such Person’s relative direct and indirect economic interest (calculated as a percentage) in such Subsidiary or Unconsolidated Affiliate determined in accordance with the applicable provisions of the declaration of trust, articles or certificate of incorporation, articles of organization, partnership agreement, joint venture agreement or other applicable organizational document of such Subsidiary or Unconsolidated Affiliate.  
		

		
			“Participating Member State” means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
		

		
			“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.
		

		
			“Permitted Jurisdiction” means (a) the United States of America, any State thereof or the District of Columbia, (b) Canada or any Province thereof, (c) any member of the European Union as of December 31, 2003 (except Greece, Italy, Spain and Portugal), (d) Scotland, (e) Guernsey, (f) Jersey, (g) Switzerland, (h) Australia and (i) New Zealand.
		

		
			“Permitted Liens” means, with respect to any asset or property of a Person, (a) Liens securing taxes, assessments and other charges or levies imposed by any Governmental Authority (excluding any Lien imposed pursuant to any of the provisions of ERISA or pursuant to any Environmental Laws) or the claims of materialmen, mechanics, carriers, warehousemen or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business; (b) Liens consisting of deposits or pledges made, in the ordinary course of business, in connection with, or to secure payment of, obligations under workmen’s compensation, unemployment insurance or similar applicable laws; (c) Liens consisting of encumbrances in the nature of zoning restrictions, easements, and rights or restrictions of record on the use of real property, which do not materially detract from the value of such property or impair the use thereof in the business of such Person; and (d) the rights of tenants under leases or subleases not interfering with the ordinary conduct of business of such Person and (e) Liens in favor of the holders (or their agent).
		

		

		

		 

		

			 

		

 

		

			 

		

		“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business entity or Governmental Authority.
		

		
			“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) subject to Title I of ERISA that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by any member of the Group or any ERISA Affiliate or with respect to which any member of the Group or any ERISA Affiliate may have any liability.
		

		
			“Preferred Stock” means, with respect to any Person, shares of capital stock of, or other equity interests in, such Person which are entitled to preference or priority over any other capital stock of, or other equity interest in, such Person in respect of the payment of dividends or distributions, or distribution of assets upon liquidation or both.
		

		
			“Principal Bank Facility”  means that certain Amended and Restated Credit Agreement, dated as of March 21, 2012 by and among the Company, Wells Fargo Securities, LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated (as Joint Lead Arrangers and Joint Bookrunners), Wells Fargo Bank, National Association (as Agent), Bank of America, N.A. (as Syndication Agent) and each of the other financial institutions listed more fully therein, as the same may be amended or modified from time to time including, without limitation, by that certain Third Amendment thereto dated as of March 31, 2015, and any successor or replacement syndicated credit facility or bilateral credit facility of the Company entered into to refinance or replace such facility so long as the principal amount of Indebtedness which is permitted to be incurred thereunder is equal to or in excess of $300,000,000 (or its equivalent in any other currency).    
		

		
			“Prohibited Subsequent Actions” is defined in Section 10.9.
		

		
			“Project” means any office, industrial/manufacturing facility, educational facility, retail facility, distribution/warehouse facility, assembly or production facility, hotel, day care center, storage facility, health care/hospital facility, restaurant, radio or TV station, broadcasting/communication facility (including any transmission facility), any combination of any of the foregoing, or any land to be developed into any one or more of the foregoing pursuant to a written agreement with respect to such land for a transaction involving a lease (or franchise agreement, in the case of a hotel), in each case owned, directly or indirectly, by any of the Company or its Subsidiaries.
		

		
			“Property EBITDA”  means, for any period, an amount equal to Consolidated EBITDA plus corporate level general and administrative expenses less Management Revenues plus any expenses related to the earning of Management Revenues.
		

		
			“property” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.
		

		

		

		 

		

			 

		

 

		

			 

		

		“PS Business Park Group” means PS Business Parks, Inc., PS Business Parks L.P., and any direct or indirect Subsidiary of PS Business Parks, Inc. or PS Business Parks L.P.
		

		
			 “PTE” is defined in Section 6.2(a).
		

		
			“Purchaser” or “Purchasers” means each of the purchasers that has executed and delivered this Agreement to the Company and such Purchaser’s successors and assigns (so long as any such assignment complies with Section 13.2), provided, however, that any Purchaser of a Note that ceases to be the registered holder or a beneficial owner (through a nominee) of such Note as the result of a transfer thereof pursuant to Section 13.2 shall cease to be included within the meaning of “Purchaser” of such Note for the purposes of this Agreement upon such transfer.
		

		
			“Qualified Institutional Buyer” means any Person who is a “qualified institutional buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.
		

		
			“Rated Securities” is defined in Section 8.9(d). 
		

		
			“Rating Agency” is defined in Section 8.9(d).
		

		
			“Rating Downgrade” is defined in Section 8.9(d).
		

		
			“Real Property” means a parcel (or group of related parcels) of real property developed (or to be developed) for use as storage facility either as a mini-warehouse or combination mini-warehouse and central warehouse for container storage.
		

		
			“Recourse Indebtedness” means, with respect to a Person, all Indebtedness of such Person that is not Non-Recourse Indebtedness.
		

		
			“Related Fund” means, with respect to any holder of any Note, any fund or entity that is an “accredited investor” within the meaning of Regulation D of the Securities Act and (a) invests in securities or bank loans, and (b) is advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment advisor.
		

		
			“REIT” means a Person qualifying for treatment as a “real estate investment trust” under the Code.
		

		
			“Required Holders” means, at any time, the holders of more than 50% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).
		

		
			“Reserve for Replacements” means, for any period and with respect to any Real Property, an amount equal to (a) the aggregate net rentable square footage of all completed space of such Real Property times (b) $0.35 times (c) the number of days such Real Property was operated in such period divided by (d) 365.  If the term Reserve for 
		

		 

		

			 

		

 

		

			 

		

		Replacements is used without reference to any specific Real Property, then it shall be determined on an aggregate basis with respect to all Real Properties and the applicable Ownership Shares with respect to all Real Properties of all Unconsolidated Affiliates.
		

		
			“Responsible Officer” means any Senior Financial Officer, the Secretary and any other officer or manager of the Company with responsibility for the administration of the relevant portion of this Agreement.
		

		
			“Sanctions Prepayment Date” is defined in Section 8.8(a). 
		

		
			“Sanctions Prepayment Notice” is defined in Section 8.8(a).
		

		
			“Sanctions Prepayment Response Date” is defined in Section 8.8(a).
		

		
			“SEC” means the Securities and Exchange Commission of the United States or any successor thereto.
		

		
			“Secured Indebtedness” means, with respect to any Person, (a) all Indebtedness of such Person that is secured in any manner by any Lien on any property plus (b) such Person’s Ownership Share of the Secured Indebtedness of any of such Person’s Unconsolidated Affiliates.
		

		
			“Securities Act” means the United States Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
		

		
			“Senior Financial Officer” means the chief executive officer, the chief financial officer, principal accounting officer, treasurer or comptroller of the Company.
		

		
			“Shurgard Group”  means Shurgard European Holdings LLC, a Delaware limited liability company (“SEH”), and Shurgard German Holdings LLC , a Delaware limited liability company (“SGH”), and any direct or indirect Subsidiary of SEH or SGH.
		

		
			“Shurgard Europe” means Shurgard European Holdings LLC.
		

		
			“Source” is defined in Section 6.2.
		

		
			“Subsidiary” means, for any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the Board of Trustees or other persons performing similar functions of such corporation, partnership, limited liability company or other entity (without regard to the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.  Notwithstanding the foregoing, no member of the Shurgard Group or the PS Business Park Group shall at any time constitute or be considered a Subsidiary for any purpose of this Agreement if at such time the shares of the holding company of the Shurgard Group or the PS Business Park Group (as 
		

		 

		

			 

		

 

		

			 

		

		applicable) are publicly traded and such holding company is not a Wholly Owned Subsidiary of the Company.
		

		
			“Subsidiary Guarantor” is defined in Section 1.2.
		

		
			“Subsidiary Guaranty Agreement” means a Subsidiary Guaranty Agreement of any Subsidiary Guarantor, substantially in the form of Exhibit 1.2.
		

		
			“SVO” means the Securities Valuation Office of the NAIC or any successor to such Office.
		

		
			“Total Budgeted Cost” means, with respect to a Development Property, and at any time, the aggregate amount of all costs budgeted to be paid, incurred or otherwise expended or accrued by the Company, a Subsidiary or an Unconsolidated Affiliate with respect to such Real Property to achieve an Occupancy Rate such that the Real Property is achieving breakeven or positive operating cash flow, including without limitation, all amounts budgeted with respect to all of the following:  (a) acquisition of land and any related improvements; (b) a reasonable and appropriate reserve for construction interest; (c) a reasonable and appropriate operating deficit reserve; (d) tenant improvements; (e) leasing commissions; and (f) other hard and soft costs associated with the development or redevelopment of such Real Property.  With respect to any Real Property to be developed in more than one phase, the Total Budgeted Cost shall exclude budgeted costs (other than costs relating to acquisition of land and related improvements) to the extent relating to any phase for which (i) construction has not yet commenced and (ii) a binding construction contract has not been entered into by the Company, any Subsidiary or any Unconsolidated Affiliate, as the case may be.
		

		
			“Total Indebtedness” means, without duplication, (a) Total Liabilities of the Company and its Subsidiaries on a consolidated basis minus (b) (i) all accounts payable and accrued expenses of the Company and its Subsidiaries and (ii) obligations in respect of preferred partnership units or other preferred Equity Interest issued by any Subsidiary (excluding obligations in respect of any such preferred Equity Interests beneficially owned by the Company or any Subsidiary).
		

		
			“Total Liabilities” means, as to any Person as of a given date, all liabilities which would, in conformity with GAAP, be properly classified as a liability on the balance sheet of such Person as of such date, and in any event shall include (without duplication): (a) all Indebtedness of such Person (whether or not Non-Recourse Indebtedness and whether or not secured by a Lien), including without limitation, Capitalized Lease Obligations; (b) all accounts payable and accrued expenses of such Person; (c) all purchase and repurchase obligations and forward commitments of such Person to the extent such obligations or commitments are evidenced by a binding purchase agreement (forward commitments shall include without limitation (i) forward equity commitments and (ii) commitments to purchase any real property under development, redevelopment or renovation); (d) all unfunded obligations of such Person; (e) all lease obligations of such Person (including ground leases) to the extent required under GAAP to be classified as a liability on the balance sheet of such Person; (f) all 
		

		 

		

			 

		

 

		

			 

		

		contingent obligations of such Person including, without limitation, all Guarantees of Indebtedness by such Person; (g) all liabilities of any Unconsolidated Affiliate of such Person, which liabilities such Person has Guaranteed or is otherwise obligated on a recourse basis; (h) such Person’s Ownership Share of the Indebtedness of any Unconsolidated Affiliate of such Person, including Non-Recourse Indebtedness of such Person (but excluding Indebtedness of such Unconsolidated Affiliate owing to such Person); and (i) in the case of the Company, obligations in respect of preferred partnership units or other preferred Equity Interest issued by any Subsidiary (excluding obligations in respect of any such preferred Equity Interests beneficially owned by the Company or any Subsidiary).  For purposes of clauses (c) and (d) of this definition, the amount of Total Liabilities of a Person at any given time in respect of (x) a contract to purchase or otherwise acquire unimproved or developed real property shall be equal to the total purchase price payable by such Person under the contract if, at such time, the seller of such real property would be entitled to specifically enforce the contract against such Person, and (y) a contract relating to the acquisition of real property which the seller is required to develop or renovate prior to, and as a condition precedent to, such acquisition, shall equal the maximum amount reasonably estimated to be payable by such Person under the contract assuming performance by the seller of its obligations under the contract, which amount shall include, without limitation, any amounts payable after consummation of such acquisition which may be based on certain performance levels or other related criteria.  
		

		
			“UCC” means the Uniform Commercial Code as in effect in any applicable jurisdiction.
		

		
			“Unconsolidated Affiliate” shall mean, with respect to any Person, any other Person (other than PS Business Parks, Inc., PS Business Parks L.P., Subsidiaries of PS Business Parks, Inc., Shurgard Europe and Subsidiaries of Shurgard Europe) in whom such Person holds an Investment, which Investment is accounted for in the financial statements of such Person on an equity basis of accounting and whose financial results would not be consolidated under GAAP with the financial results of such Person on the consolidated financial statements of such Person.
		

		
			“Unencumbered Asset” means a promissory note or a Marketable Security which satisfies all of the following requirements: (a) such property is wholly owned by the Company or a Wholly Owned Subsidiary provided, that if a Subsidiary does not meet the definition of “Wholly Owned Subsidiary” solely because such Subsidiary has issued partnership interests that are or will be convertible at the option of the holder of such partnership interest into the Equity Interests or Preferred Stock of the Company, such Subsidiary shall be considered a “Wholly Owned Subsidiary” for purposes of this clause (a); and (b) neither such property, nor if such asset is owned by a Subsidiary, any of the Company’s direct or indirect ownership interest in such Subsidiary, is subject to (i) any Lien other than Permitted Liens of the types described in clauses (a), (b), and (e) of the definition thereof or (ii) any Negative Pledge.
		

		

		

		 

		

			 

		

 

		

			 

		

		“Unencumbered Asset Value” means, at a given time, the sum (without duplication) of (a) Capitalized Unencumbered NOI, excluding Capitalized Unencumbered NOI attributable to Real Properties acquired by the Company or such Subsidiary during the immediately preceding four consecutive fiscal quarters of the Company and Development Properties, plus (b) all cash and cash equivalents (excluding tenant deposits and other cash and cash equivalents the disposition of which is restricted) of the Company or any Wholly Owned Subsidiary so long as such cash and cash equivalents are not subject to any Liens (other than Permitted Liens of the types described in clauses (a), (b), and (e) of the definition thereof) or to any Negative Pledge, plus (c) the current book value of Development Properties  and all land held for development that, in each case, constitute Eligible Properties; provided,  however, any land which is not appropriately entitled or zoned to permit the use of such Real Property as a self-storage facility shall only be included at 50% of book value, plus (d) at the Company’s option, the purchase price paid by the Company or any Subsidiary (less any amounts paid to the Company or such Subsidiary as a purchase price adjustment, held in escrow, retained as a contingency reserve, or in connection with other similar arrangements, and without regard to allocations of property purchase prices pursuant to Statement of Financial Accounting Standards No. 141 or other provisions of GAAP) for any Eligible Property acquired by the Company or such Subsidiary during the immediately preceding four consecutive fiscal quarters of the Company, plus (e) the contractual purchase price of Eligible Properties of the Company and its Subsidiaries subject to purchase obligations, repurchase obligations, forward commitments and unfunded obligations to the extent such obligations and commitments are included in determinations of  Unsecured Indebtedness of the Company and its Subsidiaries, plus (f) the value (determined in accordance with GAAP) of all promissory notes that are also Unencumbered Assets and payable solely to the Company or any of its Wholly Owned Subsidiaries (excluding any such note where (i) the obligor is more than 30 days past due with respect to any payment obligation or is the subject of a bankruptcy proceeding or other proceeding, event or condition of the types referred to in Section 11(g) or (h) or (ii) the obligor is an Affiliate of the Company (other than PS Business Parks, Inc., PS Business Parks, L.P., Shurgard Europe or a Subsidiary of Shurgard Europe, so long as any such note issued by any of PS Business Parks, Inc., PS Business Parks, L.P., Shurgard Europe or a Subsidiary of Shurgard Europe matures within six months of issuance), plus (g) the Fair Market Value of all Marketable Securities that are also Unencumbered Assets.  To the extent that the amount of Unencumbered Asset Value attributable to Real Properties leased pursuant to Ground Leases would constitute more than 10.0% of Unencumbered Asset Value, such excess shall be excluded.  To the extent that the amount of Unencumbered Asset Value attributable to Non-Domestic Properties would constitute more than 10.0% of Unencumbered Asset Value, such excess shall be excluded.  To the extent that the amount of Unencumbered Asset Value attributable to (x) the current book value of land held for development and (y) the value attributable to the assets referenced in clause (f) above, would exceed 10.0% of Unencumbered Asset Value, such excess shall be excluded.  For the avoidance of doubt, the value of the Equity Interests of PS Business Parks, Inc., PS Business Parks, L.P., any Subsidiary of PS Business Parks, Inc., Shurgard Europe, or any Subsidiary of Shurgard Europe owned by the Company and its Subsidiaries that constitute Marketable Securities shall be 
		

		 

		

			 

		

 

		

			 

		

		determined under clause (a) of the definition of Fair Market Value.  The Company shall have the option to include Capitalized Unencumbered NOI under clause (a) above from Real Properties that are otherwise subject to valuation under clause (d) above; provided,  however, that if such election is made, any value attributable to such Real Properties under clause (d) above shall be excluded from the determination of the amount under clause (d). Further, no Real Property or any of the other assets described in clauses (a) through (g) owned or held (or in the case of any Eligible Property subject to a Ground Lease, leased) by a Subsidiary shall be included in the calculation of Unencumbered Asset Value if such Subsidiary has incurred, acquired or suffered to exist any Recourse Indebtedness.  
		

		
			“Unsecured Indebtedness” means, with respect to any Person as of a given date, Indebtedness of such Person that is not Secured Indebtedness; provided,  however, that any Indebtedness that is secured only by a pledge of Equity Interests shall be deemed to be Unsecured Indebtedness.
		

		
			“Unencumbered NOI” means, for any period, the aggregate Net Operating Income for such period of all Eligible Properties. 
		

		
			“U.S. Economic Sanctions” is defined in Section 5.16(a).
		

		
			“USA PATRIOT Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
		

		
			“Wholly Owned Subsidiary” means any Subsidiary of a Person which all of the equity securities or other ownership interests (other than, in the case of a corporation, directors’ qualifying shares or, in the case of a trust, trustees’ qualifying shares) are at the time directly or indirectly owned or controlled by such Person or one or more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries of such Person. In the case of the Company, the term “Wholly Owned Subsidiary” shall also include any Subsidiary of the Company (a) of which the Company owns or controls, directly, or indirectly through one or more other Subsidiaries, at least 95% of the equity securities or other ownership interests of such Subsidiary and (b) the remaining the equity securities or other ownership interests of such Subsidiary are owned by Hughes Family Members.
		

		
			 
		

		
			 
		

		

		

		 

		

			 

		

 

		

			EXHIBIT 1.1

		

		 
		

		
			 
		

		
			Form of Note
		

		
			PUBLIC STORAGE
		

		
			2.175% Senior Note Due November 3, 2025
		

		
			No. R-[_____][Date]
		

		
			€[_______]      PPN:  74464# AA8
		

		
			FOR VALUE RECEIVED, the undersigned, PUBLIC STORAGE (herein called the “Company”) a real estate investment trust formed under the laws of the State of Maryland, hereby promises to pay to [____________], or registered assigns, the principal sum of [_____________________] EUROS (or so much thereof as shall not have been prepaid) on November 3, 2025 (together with any accrued interest to such date), with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at the rate of 2.175% per annum from the date hereof, payable semiannually, on the third day of May and November in each year, commencing with the May 3rd or November 3rd next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand) at a rate per annum from time to time equal to the Default Rate.
		

		
			Payments of any amounts due in respect of this Note are to be made in Euros at JPMorgan Chase Bank, N.A. in New York, New York or any successor thereto or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
		

		
			This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to the Note Purchase Agreement, dated as of November 3,  2015 (as from time to time amended, the “Note Purchase Agreement”), by and among the Company and the respective Purchasers named therein, and is entitled to the benefits thereof.  Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made the representations set forth in Section 6 of the Note Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.
		

		
			 
		

		

		

		 

		

			 

		

 

		

			 

		

		This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee.  Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
		

		
			This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
		

		
			The payment of this Note may from time to time be guaranteed by certain Subsidiary Guarantors. 
		

		
			If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
		

		
			 
		

		
			[signature page follows]
		

		
			 
		

		
			 
		

		

		

		 

		

			 

		

 

		

			 

		

		This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York excluding choice of law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.
		

		
			
PUBLIC STORAGE
		

		
			
________________________________
Name:
Title: 
		

		
			 
		

		

		

		 

		

			 

		

 

		

			EXHIBIT 1.2

		

		Form of Subsidiary Guaranty Agreement1
		

		
			[TO BE REVIEWED AND UPDATED BY LOCAL COUNSEL IN ORDER TO ACCOUNT FOR ANY LIMITATIONS OR LEGAL REQUIREMENTS FOR EACH JURISDICTION, WHICH WILL IN ANY CASE BE SUBSTANTIVELY IDENTICAL TO THOSE CONTAINED IN THE BANK FACILITY]
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			SUBSIDIARY GUARANTY AGREEMENT

€242,013,552.76
		

		
			2.175% Senior Notes due November 3, 2025
		

		
			of 

PUBLIC STORAGE
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			_____________________________
		

		
			1 Local counsel in each jurisdiction to draft forms of guaranty to account for local legal issues.
		

		
			 
		

		

		

		 

		

			 

		

 

		

			 

		

		
		

		
			This Subsidiary Guaranty Agreement (as may be amended, restated or otherwise modified from time to time, this “Guaranty Agreement”) is dated as of [_______] [__], 20[__] and is made by  [                      ], a [______________] organized/incorporated under the laws of [          ] (the “Guarantor”).
		

		
			RECITALS:
		

		
			A.The Guarantor is a direct or indirect subsidiary of Public Storage, a real estate investment trust formed under the laws of the State of Maryland (the “Company”).
		

		
			B.In order to refinance outstanding Indebtedness of the Group and for general corporate purposes, the Company entered into a Note Purchase Agreement dated as of November 3, 2015 (as may be amended, restated, or otherwise modified from time to time, the “Agreement”) with the institutions named on Schedule B to such Agreement (the “Purchasers”), providing for, among other things, the issue and sale to the Purchasers of €242,013,552.76 aggregate principal amount of its 2.175% Senior Notes due November 3, 2025 (collectively, as may be amended, restated or otherwise modified from time to time, including any such notes issued in substitution therefore pursuant to Section 13 of the Agreement, the “Notes”).  Capitalized terms used herein and not otherwise defined shall have the meanings assigned thereto in the Agreement.
		

		
			C.The Guarantor by reason of its interest in the financing by the Company of certain outstanding debt and in order to assist the Company in maintaining compliance with the Agreement, has agreed to execute this Guaranty Agreement.
		

		
			D.The Guarantor will receive direct and indirect benefits from the financing arrangements contemplated by the Agreement and the continued compliance therewith.  The [partner][Board of Directors][shareholders][board of managers] of the Guarantor [has][have] determined that the incurrence of its obligations hereunder is in the best interests of the Guarantor.
		

		
			NOW, THEREFORE, in consideration of the premises and the receipt whereof is hereby acknowledged, the Guarantor does hereby covenant and agree as follows:
		

		
			SECTION 1.GUARANTY.
		

		
			(a)The Guarantor hereby irrevocably, absolutely and unconditionally guarantees to the holders from time to time of the Notes:  (i) the full and prompt payment on demand of the principal of all of the Notes and of the interest thereon at the rate therein stipulated (including, without limitation, to the extent legally enforceable, interest on any overdue principal, Make-Whole Amount, if any,  and interest at the rates specified in the Notes and interest accruing or becoming owing both prior to and subsequent to the commencement of any bankruptcy, reorganization or similar proceeding involving the Company) and the Make-Whole Amount, if any, and all other amounts owing to the holders from time to time under the Notes and the Agreement when and as the same shall become due and payable, whether by lapse of time, upon redemption or prepayment, by extension or by acceleration or declaration, or otherwise, (ii) the full and prompt performance and observance by the Company of each and all 
		

		 

		

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		of the covenants and agreements required to be performed or observed by the Company under the terms of the Agreement and the Notes, and (iii) payment, upon demand by any holder of the Notes, of all costs and expenses, legal or otherwise (including reasonable attorney’s fees) and such expenses, if any, as shall have been expended or incurred in the protection or enforcement of any right or privilege under the Agreement, this Guaranty Agreement or any Note or in any consultation or action in connection therewith, and in each and every case irrespective of the validity, regularity, or enforcement of any of the Notes, the Agreement or any of the terms thereof or of any other like circumstance or circumstances (all of the obligations described in the foregoing clause (i), clause (ii) and clause (iii) being referred to herein as the “Guaranteed Obligations”).  The guaranty of the Guaranteed Obligations herein provided for is a guaranty of the immediate and timely payment of the principal, interest and Make-Whole Amount, if any, on the Notes as and when the same are due and payable and shall not be deemed to be a guaranty only of the collectability of such payments and that in consequence thereof each holder of the Notes may sue the Guarantor directly upon such Guaranteed Obligations. The Guarantor agrees as a primary obligation to indemnify each holder of a Note from time to time on demand from and against any loss incurred by it as a result of the Agreement, any Notes and/or this Guaranty Agreement being or becoming void, voidable or unenforceable for any reason whatsoever, whether or not known to such holder of a Note, the amount of such loss being the amount which such holder of a Note would otherwise have been entitled to recover from the Guarantor.
		

		
			(b)Principal Obligor.  The obligations of the Guarantor hereunder shall be deemed to be undertaken as principal obligor and not merely as surety.
		

		
			(c)Continuing Obligations.  The obligations of the Guarantor hereunder shall be continuing obligations notwithstanding any settlement of account or other matter or thing whatsoever and, in particular but without limitation, shall not be considered satisfied by any intermediate payment or satisfaction of all or any of the Company’s obligations under or in respect of any Note and the Agreement and shall continue in full force and effect until all sums due from the Company in respect of the Notes and the Agreement have been paid and all other obligations of the Company thereunder or in respect thereof have been satisfied, in full.
		

		
			SECTION 2.OBLIGATION ABSOLUTE AND UNCONDITIONAL; TERMINATION.
		

		
			(a)This Guaranty Agreement shall be absolute and unconditional and shall remain in full force and effect until the entire principal, interest, Make-Whole Amount (if any) on the Notes and all other sums due pursuant to the Agreement and the Notes shall have been fully, finally and indefeasibly paid and such Guaranteed Obligations shall not be affected, modified or impaired upon the happening from time to time of any event or condition, including without limitation any of the following, whether or not with notice to or the consent of the Guarantor:
		

		
			(i)the power or authority or the lack of power or authority of the Company to issue the Notes or of the Company to execute and deliver the Agreement, and irrespective of the validity of the Notes or the Agreement or any other Subsidiary Guaranty Agreement or of any defense whatsoever that the Company may or might have to the payment of the Notes (including, without limitation, principal, interest, Make-Whole Amount, if any) or to the performance or observance of any of the 
		

		 

		

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		provisions or conditions of the Agreement or the Notes or any other Subsidiary Guaranty Agreement, or the existence or continuance of the Company as a legal entity;
		

		
			(ii)any failure to present the Notes for payment or to demand payment thereof, or to give the Guarantor or the Company notice of dishonor for non-payment of the Notes, when and as the same may become due and payable, or notice of any failure on the part of the Company to do any act or thing or to perform or to keep any covenant or agreement by either of them to be done, kept or performed under the terms of the Notes or the Agreement;
		

		
			(iii)additional money lent to the Company, any extension of the obligation of the Notes, either indefinitely or for any period of time, or any other modification in the obligation of the Notes or the Agreement or any other Subsidiary Guaranty Agreement or the Company thereon, or in connection therewith, or any sale, release, substitution or exchange of any security;
		

		
			(iv)any act or failure to act with regard to the Notes or the Agreement or any other Subsidiary Guaranty Agreement or anything which might vary the risk of the Guarantor (including, without limitation, any release or substitution of any one or more of the endorsers or guarantors of the Guaranteed Obligations);
		

		
			(v)any action taken under the Agreement or the Notes, or any other Subsidiary Guaranty Agreement in the exercise of any right or power thereby conferred or any failure or omission on the part of any holder of any Note to first enforce any right or security given under the Agreement or the Notes or any other Subsidiary Guaranty Agreement or any failure or omission on the part of any holder of any of the Notes to first enforce any right against the Company or any other Subsidiary Guarantor;
		

		
			(vi)the waiver, compromise, settlement, release or termination of any or all of the obligations, covenants or agreements of the Company contained in the Agreement and the Notes, or of any other Subsidiary Guarantor contained in any other Subsidiary Guaranty Agreement, or of the payment, performance or observance thereof;
		

		
			(vii)the failure to give notice to the Company, the Guarantor or any other Subsidiary Guarantor of the occurrence of any Default or Event of Default under the terms and provisions of the Agreement or other breach by the Company, the Guarantor or any other Subsidiary Guarantor under the Notes or any other Subsidiary Guaranty Agreement;
		

		
			(viii)the extension of the time for payment of any principal of, or interest or Make-Whole Amount or any other amount, if any, on any Note owing or payable on such Note or of the time of or for performance of any obligations, covenants or agreements under or arising out of the Notes or any other Subsidiary Guaranty Agreement or the extension or the renewal of any thereof;
		

		

		

		 

		

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		(ix)the modification or amendment (whether material or otherwise) of any obligation, covenant or agreement set forth in the Agreement, the Notes or each Subsidiary Guaranty Agreement;
		

		
			(x)any failure, omission, delay or lack on the part of the holders of the Notes to enforce, assert or exercise any right, power or remedy conferred on the holders of the Notes in the Agreement, the Notes or any other Subsidiary Guaranty Agreement or any other act or acts on the part of the holders from time to time of the Notes;
		

		
			(xi)the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization or arrangement under bankruptcy or similar laws, composition with creditors or readjustment of, or other similar procedures affecting the Guarantor, or any other Subsidiary Guarantor, or the Company or any of the assets of any of them, or any allegation or contest of the validity of the Agreement, the Notes, any other Subsidiary Guaranty Agreement or the disaffirmance of the Agreement, the Notes or any other Subsidiary Guaranty Agreement in any such proceeding (it being understood that the obligations of the Guarantor under this Guaranty Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment made with respect to the Notes is rescinded or must otherwise be restored or returned by any holder of the Notes upon the insolvency, bankruptcy or reorganization of the Company, the Guarantor or any other Subsidiary Guarantor, all as though such payment had not been made);
		

		
			(xii)any event or action that would, in the absence of this clause, result in the release or discharge by operation of law of the Guarantor from the performance or observance of any obligation, covenant or agreement contained in this Guaranty Agreement;
		

		
			(xiii)the invalidity or unenforceability of the Agreement, the Notes or any other Subsidiary Guaranty Agreement;
		

		
			(xiv)the invalidity or unenforceability of the obligations of the Guarantor under this Guaranty Agreement, the absence of any action to enforce such obligations of the Guarantor, any waiver or consent by the Guarantor with respect to any of the provisions hereof or of the Agreement, the Notes or any other Subsidiary Guaranty Agreement or any other circumstances which might otherwise constitute a discharge or defense by the Guarantor, including, without limitation, any failure or delay in the enforcement of the obligations of the Guarantor with respect to this Guaranty Agreement or any of the Agreement, the Notes or any other Subsidiary Guaranty Agreement or of notice thereof; or any suit or other action brought by any shareholder or creditor of, or by, the Guarantor or any other Person, for any reason, including, without limitation, any suit or action in any way attacking or involving any issue, matter or thing in respect of this Guaranty Agreement, the Agreement or the Notes or any other agreement;
		

		

		

		 

		

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		(xv)the default or failure of any Subsidiary Guarantor fully to perform any of its covenants or obligations set forth in its respective Subsidiary Guaranty Agreement;
		

		
			(xvi)the impossibility or illegality of performance on the part of the Company or any other Person of its obligations under any of the Agreement, the Notes, each Subsidiary Guaranty Agreement or any other instruments;
		

		
			(xvii)in respect of the Company or any other Person, any change of circumstances, whether or not foreseen or foreseeable, whether or not imputable to the Company or any other Person, or other impossibility of performance through fire, explosion, accident, labor disturbance, floods droughts, embargoes, wars (whether or not declared), civil commotions, acts of God or the public enemy, delays or failure of suppliers or carriers, inability to obtain materials, action of any regulatory body or agency, change of law or any other causes affecting performance, or other force majeure, whether or not beyond the control of the Company or any other Person and whether or not of the kind hereinbefore specified;
		

		
			(xviii)any attachment, claim, demand, charge, lien, order, process, encumbrance or any other happening or event or reason, similar or dissimilar to the foregoing, or any withholding or diminution at the source, by reason of any taxes, assessments, expenses, indebtedness, obligations or liabilities of any character, foreseen or unforeseen, and whether or not valid, incurred by or against any Person, or any claims, demands, charges or liens of any nature, foreseen or unforeseen, incurred by any Person, or against any sums payable under this Guaranty Agreement, so that such sums would be rendered inadequate or would be unavailable to make the payments herein provided;
		

		
			(xix)any sale, exchange, release or surrender of any property at any time pledged or granted as security in respect of the Guaranteed Obligations, whether so pledged or granted by the Guarantor or another guarantor of the obligations of the Company under the Agreement, the Notes or any other Subsidiary Guaranty Agreement; or
		

		
			(xx)any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Guarantor in respect of the obligations of the Guarantor under this Guaranty Agreement, the Agreement or the Notes;
		

		
			provided that the specific enumeration of the above-mentioned acts, failures or omissions shall not be deemed to exclude any other acts, failures or omissions, though not specifically mentioned above, it being the purpose and intent of this paragraph that the obligations of the Guarantor hereunder shall be absolute and unconditional to the extent herein specified and shall not be discharged, impaired or varied except by the full, final and indefeasible payment to the holders thereof of the principal of, interest on and Make-Whole Amount, if any, and any other amounts due in respect of the Notes and under the Agreement, and then only to the extent of such payments.  Without limiting any of the other terms or provisions hereof, it is understood and agreed that in order to hold the Guarantor liable hereunder, there shall be no obligation on the part of any holder of any Note to resort, in any manner or form, for payment, to the Company, to 
		

		 

		

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		any other Person or to the properties or estates of any of the foregoing.  All rights of the holder of any Note pursuant thereto or to this Guaranty Agreement and the Agreement may be transferred or assigned at any time or from time to time and shall be considered to be transferred or assigned upon the transfer of such Note whether with or without the consent of or notice to the Guarantor or the Company.  Without limiting the foregoing, it is understood that repeated and successive demands may be made and recoveries may be had hereunder as and when, from time to time, the Company shall default under the terms of the Notes or the Agreement and that notwithstanding recovery hereunder for or in respect of any given default or defaults by the Company under the Notes or the Agreement, this Guaranty Agreement shall remain in full force and effect and shall apply to each and every subsequent default.
		

		
			(b)To the fullest extent permitted by law, the Guarantor does hereby expressly waive:
		

		
			(i)all of the matters specified in clause (a) of this Section 2 and any notices in respect thereof;
		

		
			(ii)notice of acceptance of this Guaranty Agreement;
		

		
			(iii)notice of any purchase or acceptance of the Notes under the Agreement, or the creation, existence or acquisition of any of the Guaranteed Obligations, subject to the Guarantor’s right to make inquiry of each holder to ascertain the amount of the Guaranteed Obligations at any reasonable time;
		

		
			(iv)notice of the amount of the Guaranteed Obligations, subject to the Guarantor’s right to make inquiry of each holder to ascertain the amount of the Guaranteed Obligations at any reasonable time; and
		

		
			(v)any stay (except in connection with a pending appeal), valuation, appraisal, redemption or extension law now or at any time hereafter in force that, but for this waiver, might be applicable to any sale of property of the Guarantor made under any judgment, order or decree based on this Guaranty Agreement, and the Guarantor covenants that it will not at any time insist upon or plead, or in any manner claim or take the benefit or advantage of any such law.
		

		
			(c)Each of the rights and remedies granted under this Guaranty Agreement to each holder in respect of the Notes held by such holder may be exercised by such holder without notice to, or the consent of or any other action by, any other holder.  Each holder may proceed to protect and enforce this Guaranty Agreement by making the payment hereunder on demand, by suit or suits or proceedings in equity, at law or in bankruptcy, and whether for the specific performance of any covenant or agreement contained herein or in execution or aid of any power herein granted; or for the recovery of judgment for the obligations hereby guaranteed or for the enforcement of any other proper, legal or equitable remedy available under applicable law.
		

		
			(d)If any holder shall have instituted any proceeding to enforce any right or remedy under this Guaranty Agreement, any Note held by such holder, the Agreement or any 
		

		 

		

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		other Subsidiary Guaranty Agreement and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to such holder, then and in every such case each such holder and the Company shall, except as may be limited or affected by any determination in such proceeding, be restored severally and respectively to its respective former position hereunder and thereunder, and thereafter the rights and remedies of such holders shall continue as though no such proceeding had been instituted.
		

		
			(e)Notwithstanding anything to the contrary above, the Guarantor, by written notice to each holder of a Note, may terminate this Guaranty Agreement at any time and all obligations hereunder arising after the date of said termination in accordance with Section 9.8 of the Agreement, provided, that, at the time of and after giving effect to such termination, no Default or Event of Default shall have occurred and be continuing under the Agreement.
		

		
			(f)Any term or provision of this Guaranty Agreement, the Agreement or the Notes notwithstanding, if any U.S. federal or state fraudulent conveyance laws are determined by a court of competent jurisdiction to be applicable to the obligations of the Guarantor hereunder, the Guarantor’s obligations hereunder shall be limited to the maximum aggregate amount of the obligations that would not render the Guarantor’s obligations subject to avoidance under applicable U.S. federal or state fraudulent conveyance laws.
		

		
			Accordingly, the Guarantor irrevocably and unconditionally agrees as a primary obligation to indemnify each holder of a Note from time to time from and against any loss incurred by such holder as a result of any of the obligations of the Company under or pursuant to any Note, the Agreement or any provision thereof being or becoming void, voidable, unenforceable or ineffective for any reason whatsoever, whether or not known to such holder or any other Person, the amount of such loss being the amount which such holder would otherwise have been entitled to recover from the Company.  Any amount payable pursuant to this indemnity shall be payable in the manner and currency prescribed by the Notes and the Agreement for payments by the Company in respect of the Notes.  This indemnity constitutes a separate and independent obligation from the other obligations under this Guaranty Agreement and shall give rise to a separate and independent cause of action.
		

		
			SECTION 3.SUBROGATION PAYMENTS HELD IN TRUST.
		

		
			(a)To the extent of any payments made under this Guaranty Agreement, the Guarantor shall be subrogated to the rights of the holder of the Notes receiving such payments, but the Guarantor covenants and agrees that such right of subrogation shall be subordinate in right of payment to the rights of any holders of the Notes for which full payment has not been made or provided for and, to that end, the Guarantor agrees not to claim or enforce any such right of subrogation or any right of setoff or any other right which may arise on account of any payment made by the Guarantor in accordance with the provisions of this Guaranty Agreement, including, without limitation, any right of reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any holder of the Notes against the Company or any other guarantor, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Company or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, 
		

		 

		

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		remedy or right unless and until 366 days after all of the Guaranteed Obligations (other than those arising by subrogation as aforesaid) owned by Persons other than the Guarantor and all other sums due or payable under this Guaranty Agreement have been fully paid and discharged or payment therefor has been provided.
		

		
			(b)If any payment shall be made to the Guarantor by the Company or any other guarantor of the Notes of any amounts owing to the Guarantor by the Company or such other guarantor during any time when the obligations of the Guarantor hereunder shall have become due and payable, the Guarantor shall hold in trust all such payments and amounts for the benefit of the holders of the Notes and shall forthwith pay such amounts and payments to the holders of the Notes to be credited and applied to the amounts due or to become due with respect to the Notes and all other amounts payable under this Guaranty Agreement, whether matured or unmatured.
		

		
			SECTION 4.PREFERENCE.
		

		
			The Guarantor agrees that to the extent the Company or any other Person makes any payment on the Guaranteed Obligations, which payment or any part thereof is subsequently invalidated, voided, declared to be fraudulent or preferential, set aside, or is required to be repaid to a trustee, liquidator, receiver or any other Person under any bankruptcy code, common law, or equitable cause, then and to the extent of such payment, the obligation or the part thereof intended to be satisfied shall be revived and continued in full force and effect with respect to the Guarantor’s obligations hereunder, as if said payment had not been made.  The liability of the Guarantor hereunder shall not be reduced or discharged, in whole or in part, by any payment to any holder of the Notes from any source that is thereafter paid, returned or refunded in whole or in part by reason of the assertion of a claim of any kind relating thereto, including, but not limited to, any claim for breach of contract, breach of warranty, preference, illegality, invalidity or fraud asserted by any account debtor or by any other Person.
		

		
			SECTION 5.MARSHALING.
		

		
			None of the holders of the Notes shall be under any obligation (a) to marshal any assets in favor of the Guarantor or in payment of any or all of the liabilities of the Company under or in respect of the Notes and the Agreement or the obligation of the Guarantor hereunder or (b) to pursue any other remedy that the Guarantor may or may not be able to pursue itself and that may lighten the Guarantor’s burden, any right to which the Guarantor hereby expressly waives.
		

		
			SECTION 6.REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR.
		

		
			The Guarantor represents and warrants to you as follows:
		

		
			(a)Organization and Authority:  The Guarantor is a ____________ duly organized, validly existing and, to the extent such concept is recognized, in good standing under the laws of its jurisdiction of incorporation; the Guarantor has the corporate (or other appropriate) power and authority to own its properties and to conduct its business and is duly qualified as a foreign entity and, to the extent such concept is recognized, is in good standing in each other 
		

		 

		

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		jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or, to the extent such concept is recognized, in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
		

		
			(b)Transaction Is Legal and Authorized.  The issuance of this Guaranty Agreement and compliance with all of the provisions of this Guaranty Agreement
		

		
			(1)are within the corporate (or other) powers of the Guarantor;
		

		
			(2)will not violate any provisions of any law or any order of any court or governmental authority or agency and will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under the articles of association, charter or by-laws or other constitutive documents of the Guarantor or any indenture or other agreement or instrument to which the Guarantor is a party or by which it may be bound or result in the imposition of any Lien on any property of the Guarantor; and
		

		
			(3)have been duly authorized by proper action on the part of the Guarantor and any required action by the stockholders or other equity holders of the Guarantor required by law or by the articles of association, charter or by-laws or other constitutive documents of the Guarantor or otherwise, executed and delivered by the Guarantor and this Guaranty Agreement constitutes the legal, valid and binding obligation, contract and agreement of the Guarantor enforceable in accordance with its terms, except as such terms may be limited by (i) bankruptcy, insolvency, fraudulent conveyance or similar laws affecting the enforcement of creditors’ rights generally and (ii) equitable principles of general applicability (regardless of whether such enforceability is considered in a proceeding in equity or at law).
		

		
			(c)Governmental Consent.  No approval, consent or withholding of objection on the part of any regulatory body is necessary in connection with the execution and delivery by the Guarantor of this Guaranty Agreement or compliance by the Guarantor with any of the provisions of this Guaranty Agreement.
		

		
			(d)Commercial Benefit.  The Guarantor will derive a commercial benefit from the execution and delivery of this Guaranty Agreement.
		

		
			(e)Solvency.  After giving effect to the execution and delivery of this Guaranty Agreement and taking into account (i) the likelihood of being required to perform this Guaranty Agreement and (ii) the fact that the Guarantor does not have any intention to defraud 
		

		 

		

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		any of its creditors, the Guarantor is solvent and able to pay its debts as and when they become due and payable.
		

		
			Without in any way limiting the generality of the warranties and representations contained in Section 5 of the Agreement, each of such warranties and representations is, insofar as it refers to any Subsidiary, true and correct with respect to the Guarantor.
		

		
			The Guarantor will comply with each of the provisions of Section 9 and Section 10 of the Agreement, and each other covenant and agreement contained therein, that is applicable to any Subsidiary generally.
		

		
			SECTION 7.SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
		

		
			(a)The Guarantor irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, the City of New York, over any suit, action or proceeding arising out of or relating to this Guaranty Agreement.  To the fullest extent permitted by applicable law, the Guarantor irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
		

		
			(b)The Guarantor agrees, to the fullest extent permitted by applicable law, that a final judgment in any suit, action or proceeding of the nature referred to in Section 7(a) brought in any such court shall be conclusive and binding upon it subject to rights of appeal, as the case may be.
		

		
			(c)The Guarantor consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in Section 7(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in Section 8 or at such other address of which such holder shall then have been notified pursuant to said Section.  The Guarantor agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it.  Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.  
		

		
			(d)Nothing in this Section 7 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Guarantor in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
		

		

		

		 

		

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		(e)THE GUARANTOR (AND BY ACCEPTANCE HEREOF EACH HOLDER OF A NOTE) HEREBY WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS GUARANTY AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH.
		

		
			SECTION 8.NOTICES.
		

		
			All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by a recognized overnight delivery service (with charges prepaid) or (c) by email where the recipient has designated an email address for such purpose.  Any such notice must be sent:
		

		
			(i)if to a Purchaser, to such Person at the address specified for such communications in Schedule B to the Agreement, or at such other address as the Purchaser shall have specified to the Company in writing, or
		

		
			(ii)if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or
		

		
			(iii)if to the Guarantor, c/o Public Storage, 701 Western Avenue, Glendale, California 91201-2349, United States of America, to the attention of the Chief Financial Officer and the Chief Legal Officer or at such other addresses as the Guarantor shall have specified to the holder of each Note in writing.
		

		
			Notices under this Section 8 will be deemed given only when actually received.
		

		
			SECTION 9.AMENDMENTS AND MODIFICATIONS; SOLICITATION OF NOTEHOLDERS.
		

		
			(a)This Guaranty Agreement may only be amended and compliance therewith waived (either generally or in a particular instance and either retroactively or prospectively) by an instrument in writing signed by the Guarantor and by the Required Holders; provided, that without the written consent of the holders of all of the Notes then outstanding, no such amendment or waiver shall be effective which will reduce the scope of the guaranty set forth in this Guaranty Agreement or amend the requirements of Sections 1, 2, 3, 4, 5, or 10 hereof or amend this Section 9.  No such amendment or modification shall extend to or affect any obligation not expressly amended or modified or impair any right consequent thereon.
		

		
			(b)The Guarantor will not solicit, request or negotiate for or with respect to any proposed waiver or amendment of any of the provisions of this Guaranty Agreement unless each holder of the Notes (irrespective of the amount of Notes then owned by it) shall be informed thereof by the Guarantor and shall be afforded the opportunity of considering the same and shall be supplied by the Guarantor with a sufficient information to enable it to make an informed decision with respect thereto.  The Guarantor will not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise or grant any security or provide other credit support, to any holder of the Notes as 
		

		 

		

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		consideration for or as an inducement to the entering into by any holder of the Notes of any waiver or amendment of any of the terms and provisions of this Guaranty Agreement, the Agreement or the Notes, unless such remuneration is concurrently paid or security is concurrently granted or other credit support is concurrently provided, on the same terms, ratably to the holders of all of the Notes then outstanding.  Promptly and in any event within 30 days of the date of execution and delivery of any such waiver or amendment, the Guarantor shall provide a true, correct and complete copy thereof to each of the holders of the Notes.
		

		
			(c)Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Guaranty Agreement, or have directed the taking of any action provided herein to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.
		

		
			SECTION 10.PARI PASSU.
		

		
			The payment obligations of the Guarantor under this Guaranty Agreement will at all times rank at least pari passu in right of payment with all other unsecured and unsubordinated Indebtedness of the Guarantor, except for such Indebtedness as would, by virtue only of the law in force in the jurisdiction in which the Guarantor is organized, be preferred by operation of bankruptcy, insolvency, liquidation or similar laws of general application.
		

		
			SECTION 11.OBLIGATION TO MAKE PAYMENT IN EUROS.
		

		
			Any payment on account of an amount that is payable hereunder, under the Agreement or under the Notes in Euros which is made to or for the account of any holder of Notes in any other currency, whether as a result of any judgment or order or the enforcement thereof or the realization of any security or the liquidation of the Guarantor, shall constitute a discharge of the obligation of the Guarantor hereunder, under the Agreement or the Notes only to the extent of the amount of Euros which such holder could purchase in the foreign exchange markets in London, England, with the amount of such other currency in accordance with normal banking procedures at the rate of exchange prevailing on the London Banking Day following receipt of the payment first referred to above.  If the amount of Euros that could be so purchased is less than the amount of Euros originally due to such holder, the Guarantor agrees to the fullest extent permitted by law, to indemnify and save harmless such holder from and against all loss or damage arising out of or as a result of such deficiency.  This indemnity shall, to the fullest extent permitted by law, constitute an obligation separate and independent from the other obligations contained in this Guaranty Agreement, the Agreement and the Notes, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by such holder from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due hereunder, under the Agreement or under the Notes or under any judgment or order.    
		

		

		

		 

		

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		As used herein the term “London Banking Day” shall mean any day other than Saturday or Sunday or a day on which commercial banks are required or authorized by law to be closed in London, England.    
		

		
			SECTION 12.MISCELLANEOUS.
		

		
			(a)No remedy herein conferred upon or reserved to any holder of any Note is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Guaranty Agreement now or hereafter existing at law or in equity.  No delay or omission to exercise any right or power accruing upon any default, omission or failure of performance hereunder shall impair any such right or power or shall be construed to be a waiver thereof but any such right or power may be exercised from time to time and as often as may be deemed expedient.  In order to entitle any holder of any Note to exercise any remedy reserved to it under this Guaranty Agreement, it shall not be necessary for such holder to physically produce its Note in any proceedings instituted by it or to give any notice, other than such notice as may be herein expressly required.
		

		
			(b)In case any one or more of the provisions contained in this Guaranty Agreement shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby.
		

		
			(c)This Guaranty Agreement shall be binding upon the undersigned Guarantor and its successors and assigns and shall inure to the benefit of the Purchasers and their respective successors and assigns so long as any of their respective Notes remain outstanding and unpaid.
		

		
			(d)The Guarantor will maintain an office at the address of the Guarantor referred to in Section 8, where notices, presentations and demands in respect hereof or of the Guaranteed Obligations may be made upon the Guarantor until such time as the Guarantor shall notify each holder of any change of location of such office.
		

		
			(e)This Guaranty Agreement,  shall be construed and enforced in accordance with, and the rights of the Guarantor and the holders of the Notes shall be governed by, the laws of the State of New York excluding choice of law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.
		

		
			 
		

		
			 
		

		
			[signature page follows]
		

		 

		

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			IN WITNESS WHEREOF, the Guarantor has executed and delivered this Guaranty Agreement on the date first above written.
		

		
			[Name of Guarantor]
		

		
			

By:___________________________
  Name:
  Title:

By:___________________________
  Name:
  Title:
		

		
			 
		

		
			 
		

		 

		

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