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EXHIBIT 10.18
LEASE RESTRUCTURE AGREEMENT
THIS LEASE RESTRUCTURE AGREEMENT (this "Agreement") is made and entered
into as of December 31, 1995, by and between CALIFORNIA STATE TEACHERS'
RETIREMENT SYSTEM, a retirement system created pursuant to the laws of the State
of California ("Landlord"), and MERCANTILE NATIONAL BANK, a national banking
association ("Tenant").
RECITALS
A. Landlord's predecessor, Northrop Corporation ("Northrop"), and
Tenant previously entered into that certain lease (the "Ground Floor Lease")
dated as of December 21, 1982, respecting certain "Premises" originally
designated as consisting of 9,830 rentable square feet of floor area located on
the ground floor of the building located at 1840 Century Park East, Los Angeles,
California 90067.
B. Northrop and Tenant also previously entered into that certain lease
(the "Original Second Floor Lease") dated as of December 21, 1982, respecting
certain "Premises" consisting of 16,168 rentable square feet of floor area
located on the second floor of the building located at 1840 Century Park East,
Los Angeles, California 90067.
C. The Original Second Floor Lease was supplemented and amended by that
certain Amendment to Lease between Northrop and Tenant dated June 9, 1986 (the
"First Amendment to Second Floor Lease") pursuant to which the second floor
"Premises" were expanded to include an additional 16,411 rentable square feet of
floor area located on the third floor of said building.
D. The Original Second Floor Lease, as so amended, was further amended
by that certain Second Amendment to Lease between Landlord and Tenant dated
December 18, 1992 (the "Second Amendment to Second Floor Lease") pursuant to
which the rent payable for said third floor premises was modified.
E. The Original Second Floor Lease, as amended by the First Amendment
to Second Floor Lease and the Second Amendment to Second Floor Lease, is
hereinafter referred to as the "Second Floor Lease". The Ground Floor Lease and
the Second Floor Lease are hereinafter individually referred to as a "Lease" and
collectively referred to as the "Leases". All terms used but not defined herein
shall have the meanings ascribed to such terms in the Leases.
F. In addition to the Leases, Landlord and Tenant entered into that
certain Standard Form Storage Agreement (the "Storage
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Agreement") dated August 6, 1993, respecting certain storage facilities located
in the Building.
G. Tenant, as Sublessor, and The Lewis Horwitz Organization
("Horwitz"), as Sublessee, entered into that certain Sublease Agreement dated
July 3, 1986, covering 2,115 rentable square feet of floor area located in the
ground floor Premises. The Sublessee's interest under such Sublease Agreement
was assigned to and assumed by Imperial Bank ("Imperial") pursuant to that
certain Assignment, Assumption and Consent Agreement among Tenant, Imperial and
Horwitz, and consented to by Northrop dated August 15, 1989. Pursuant to that
certain Sublease Amendment and Option Exercise Agreement dated July 1, 1992,
Tenant and Imperial extended the term of and granted each other termination
rights under said Sublease Agreement. Said Sublease Agreement, as so assigned,
assumed, extended and modified, is hereinafter referred to as the "Ground Floor
Sublease" and the Sublessee thereunder is hereinafter referred to as the "Ground
Floor Subtenant".
H. Tenant, as Sublessor, and Charlston, Revich & Williams
("Charlston"), as Sublessee, entered into that certain Office Sublease dated
December 16, 1992, covering 16,411 rentable square feet of floor area consisting
of the entire third floor of the Premises. Said Office Sublease is hereinafter
referred to as the "Third Floor Sublease" and the Sublessee thereunder is
hereinafter referred to as the "Third Floor Subtenant".
I. The Ground Floor Sublease and the Third Floor Sublease are
hereinafter individually referred to as a "Sublease" and collectively referred
to as the "Subleases". The Ground Floor Subtenant and the Third Floor Subtenant
are hereinafter individually referred to as a "Subtenant" and collectively
referred to as the "Subtenants".
J. Landlord and Tenant now desire to further supplement, and modify the
Leases and Storage Agreement, and deal with the Subleases as hereinafter
provided.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Landlord and Tenant hereby agree as
follows:
1. Conditions Precedent. This Agreement shall be of no force or effect
unless all of the following conditions are satisfied on or before January 12,
1996, or such later date as Landlord, in its sole and absolute discretion, may
designate in writing. The date all such conditions are satisfied shall be
established by written notice from Landlord to Tenant and is hereinafter
referred to as the "Effective Date":
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(a) Delinquent Rent. Tenant shall pay to Landlord the sum of
$288,838.63 on account of all Rent and other charges and payments due under the
Leases and Storage Agreement without regard to this Agreement prior to November
1, 1995. Such payment shall be final and conclusive.
(b) Rent. Tenant shall pay to Landlord all amounts due on
account of the Rent and other charges due on or after November 1, 1995 and
through the Effective Date under the Leases and Storage Agreement as modified
hereby.
(c) Warrants. Tenant shall cause National Mercantile Bancorp,
a California corporation ("Bancorp"), to issue to Landlord a warrant (the
"Warrant") to purchase shares of Bancorp's stock together with registration
rights with respect to such shares. The specific terms and provisions of the
Warrant, registration rights and related documents (collectively the "Warrant
Documents") must have been reviewed and approved by Landlord.
(d) Opinion of Counsel. Tenant shall cause to be delivered to
Landlord an opinion from counsel and in form and content acceptable to Landlord
to the effect that (i) both Tenant and Bancorp are duly incorporated and in good
standing with the corporate power and corporate authority to enter into and
perform their respective duties and obligations under this Agreement, the
Warrant Documents and the transactions contemplated hereby and thereby; (ii)
this Agreement, the Warrant Documents and any and all other documents executed
in connection with this Agreement or the Warrant Documents have been duly and
validly authorized, executed and delivered by the Tenant and Bancorp, as the
case may be; (iii) the Warrant has been duly and validly authorized and issued
to Landlord; (iv) the Warrant Documents, this Agreement and any and all other
documents executed in connection with this Agreement or the Warrant Documents
are enforceable against Tenant and Bancorp, as the case may be, in accordance
with their terms; and (v) the exercise of the Warrant and purchase of "Warrant
Shares" (as defined in the Warrant Documents) pursuant thereto, if made as of
the date hereof, may be made without a registration statement being in effect
thereto under the Securities Act of 1933, as amended.
(e) Bill of Sale. Tenant shall execute and deliver to Landlord
a Bill of Sale in form and content acceptable to Landlord covering the furniture
and art work described on Exhibit A attached hereto.
(f) Subtenants. With respect to the Subleases and the
Subtenants:
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(i) Financial Condition. Each of the Subtenants'
financial condition and the terms of each of the Subleases shall have been
reviewed and found acceptable by Landlord.
(ii) Attornment/New Lease. Each of the Subtenants
shall execute and deliver to Landlord an agreement, in form and content
acceptable to Landlord, agreeing to attorn to Landlord under its Sublease. At
Landlord's option, the documentation of either or both of such attornments may
take the form of a new direct lease from Landlord to the applicable Subtenant on
substantially the same economic terms as the applicable Sublease.
(iii) Estoppel. Each Subtenant shall execute and
deliver to Landlord an estoppel certificate, in form and content acceptable to
Landlord, including usual and customary estoppel items together with
confirmation of the amount of the Subtenant's security deposit. In addition, as
to the Third Floor Subtenant, such estoppel certificate shall contain
verification that the $61,000 tenant improvement allowance originally provided
for under the Third Floor Sublease has been exhausted and is of no further force
or effect and that title to the furniture and art work described on Exhibit A
attached hereto is owned by Landlord and that the Third Floor Subtenant is
obligated to return such personal property to Landlord upon the termination of
the Third Floor Sublease.
(iv) Release. The Subtenants shall each execute and
deliver to Landlord a release and waiver, similar in scope to the release and
waiver given by Tenant in this Agreement, with respect to any and all liability
arising prior to the date of such release and waiver.
(v) Rent. Tenant shall have collected from the
Subtenants and delivered to Landlord all rent and other charges due under the
Subleases for the period of November 1, 1995 through the Effective Date.
(vi) Security Deposit. Tenant shall deliver to
Landlord $20,349.64 representing the Third Floor Subtenant's security deposit.
Tenant hereby represents and warrants to Landlord that Tenant has not collected
any security deposit or advance payment from the Ground Floor Subtenant.
(vii) Accounting. Tenant shall deliver to Landlord in
reasonable detail an accounting of each of the Subtenant's payments on account
of its Proportionate Share of Building Operating Costs to enable Landlord to
effectively enforce and administer the Subtenants' obligations with respect
thereto going forward.
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(g) Inspection. Landlord shall have inspected the third floor
and the space on the ground floor of the Building which is to be excluded from
the Premises and been satisfied that such space remains in a good and sound
condition, free of any damage or deferred maintenance which is the Tenant's duty
to repair or maintain under the Lease.
(h) Fees and Expenses. All expenses incurred by Landlord
pursuant to this Agreement shall be paid by Tenant. Specifically, and without
limitation, Tenant shall pay to Landlord the amount of all attorneys' fees and
costs incurred by Landlord in the analysis, negotiation and preparation of this
Agreement, and all other documents and agreements contemplated hereby or entered
into in connection herewith, not to exceed $40,000.
2. Ground Floor Lease Modifications. Effective upon the satisfaction of
all of the conditions precedent set forth in Section 1 above, the following
existing provisions of the Ground Floor Lease shall be modified as set forth
below:
(a) Premises. The parties hereby stipulate that the ground
floor Premises shall be deemed to contain a total of 9,830 rentable square feet.
Tenant hereby surrenders to Landlord the portion, but only the portion, of the
ground floor Premises currently subleased to the Ground Floor Subtenant, which
the parties stipulate shall be deemed to consist of 2,115 rentable square feet
as set forth in the Ground Floor Sublease. Accordingly, the ground floor
Premises shall consist of only the portion thereof not currently subleased to
the Ground Floor Subtenant, which the parties stipulate shall be deemed to
contain a total of 7,715 rentable square feet. As part of this transaction,
Tenant is assigning all of its right, title and interest in and to the Ground
Floor Sublease to Landlord. Tenant and Landlord agree that, unless Landlord
shall otherwise consent in writing, insofar as it affects the Ground Floor
Sublease, the fee title to the ground floor subleased premises and the leasehold
estate therein created by the Ground Floor Lease shall not merge but shall
remain separate and distinct, notwithstanding the union of said estates in
Landlord or any third party by purchase, assignment or otherwise.
(b) Ground Floor Base Rent. As of November 1, 1995 and
continuing through October 31, 2000, the Base Rent under the Ground Floor Lease
shall be a flat $2.50 per rentable square foot (ie. $19,287.50) per month,
payable on the first day of every month in advance. Effective November 1, 2000
and continuing through October 31, 2004, the Base Rent under the Ground Floor
Lease shall be a flat rent payable on the first day of every month in advance
equal to the greater of (i) $3.00 per rentable square foot (ie. $23,145) per
month, and (ii) the rate per
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rentable square foot that Landlord in good faith determines to be the fair
market rent for the lease of comparable space within office buildings in the
vicinity of the Building. There will be no CPI adjustment of the foregoing Base
Rent pursuant to Section 3 of the Ground Floor Lease; however Section 4 of the
Ground Floor Lease regarding the pass through of Building Operating Costs shall
apply with the modified Base Year provided below.
(c) Assignment and Subletting. The words ", shall be deemed an
act of assignment hereunder" are hereby added to the second sentence of Section
15(a) of the Ground Floor Lease.
3. Second Floor Lease Modifications. Effective upon the
satisfaction of all of the conditions precedent set forth in Section 1 above,
the following existing provisions of the Second Floor Lease shall be modified as
set forth below:
(a) Premises. The third floor of the Building shall be
excluded from the Premises so that the Premises covered by the Second Floor
Lease shall consist of only the 16,168 rentable square feet on the second floor
of the Building. Tenant hereby surrenders to Landlord the portion, but only the
portion, of the Premises consisting of the third floor of the Building.
Accordingly, the Premises covered by the Second Floor Lease shall consist of
only the second floor of the Building, which the parties stipulate shall be
deemed to contain a total of 16,168 rentable square feet. As part of this
transaction, Tenant is assigning all of its right, title and interest in and to
the Third Floor Sublease to Landlord. Tenant and Landlord agree that, unless
Landlord shall otherwise consent in writing, insofar as it affects the Third
Floor Sublease, the fee title to the third floor subleased premises and the
leasehold estate therein created by the Second Floor Lease shall not merge but
shall remain separate and distinct, notwithstanding the union of said estates in
Landlord or any third party by purchase, assignment or otherwise.
(b) Second Floor Base Rent. As of November 1, 1995 and
continuing through October 31, 2000, the Base Rent under the Second Floor Lease
shall be a flat $2.25 per rentable square foot (ie. $36,378) per month, payable
on the first day of every month in advance. Effective November 1, 2000 and
continuing through October 31, 2004, the Base Rent under the Second Floor Lease
shall be a flat rent payable on the first day of every month in advance equal to
the greater of (i) $2.75 per rentable square foot (ie. $44,462) per month, and
(ii) the rate per rentable square foot that Landlord in good faith determines to
be the fair market rent for the lease of comparable space within office
buildings in the vicinity of the Building. There will be no CPI adjustment of
the foregoing Base Rent pursuant to Section 3 of the Second Floor Lease;
however, Section 4 of the Second Floor
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Lease regarding the pass through of Building Operating Costs shall apply with
the modified Base Year provided below.
(c) Expansion Space. Section 46 of the Lease, "Expansion
Space", is hereby deleted in its entirety and shall be of no further force or
effect.
4. Modifications Applicable to both Leases. Effective upon the
satisfaction of all of the conditions precedent set forth in Section 1 above,
the following existing provisions of
the Leases shall be modified as set forth below:
(a) Term. If not sooner terminated pursuant to the provisions
of the Leases, the Term of the Leases shall expire October 31, 2004 with no
further right or option to extend or renew. If not sooner terminated pursuant to
the provisions of the Storage Agreement, the term of the Storage Agreement shall
expire upon the expiration or sooner termination of the Leases, or either of
them.
(b) Base Year. For November and December, 1995, and all of
1996, Tenant's Proportionate Share of Building Operating Costs under both Leases
will be zero. 1996 will be the new Base Year for both Leases. Commencing January
1, 1997, the provisions of Section 4 of both Leases shall be applied with 1996
being the new Base Year and 1997 and each calendar year thereafter being a
Comparison Year.
(c) Building Operating Costs. With respect to the definition
of "Building Operating Costs", the intention of the parties has been and
continues to be that real estate taxes and assessments on the Land as well as
the Building are included in that definition. Accordingly, the parties agree
that each and every reference to the "Building" in Section 4(b)(1)(a) of the
Leases has and shall be interpreted to include, for that purpose, the "Land".
This will also confirm that the intention of the parties has been and continues
to be that "Building Operating Costs" includes the items within that definition
as they relate to the parking facilities which serve the Building. The parties
further agree that any increase in real estate taxes due solely to this
restructuring of the Leases shall not be passed through to the Tenant.
(d) Possessory Interest Tax. For so long as the Building is
owned by a state public retirement system, the full cash value, as defined in
Sections 110 and 110.1 of the California Revenue and Taxation Code, of the
possessory interest, upon which property taxes will be based, shall equal the
greater of (i) the full cash value of the possessory interest, or (ii) if Tenant
has leased less than all of the Building, the Tenant's Proportionate Share of
the full cash value of the Land and
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Building that would have been enrolled if the Land and Building had been subject
to property tax upon acquisition by Landlord. If permitted by the taxing
authority, Landlord shall administer billing of the possessory interest tax to
the tenants of the Building, in which event Tenant shall pay its possessory
interest tax pursuant to the provisions of the Leases governing payment of real
property taxes. Landlord agrees that during the term of the Leases, the
possessory interest tax shall not exceed Tenant's share of ad valorem real
property taxes that would otherwise have been due.
(e) Remedies. To bring the Leases into compliance with Section
1951.2 of the California Civil Code, Section 20(d) in both of the Leases is
amended and restated in its entirety to read as follows:
The "worth at the time of award" of the amount referred to in
Sections 20(c)(i) and (ii) above is computed by allowing
interest at the rate of ten percent (10%) per annum. The
"worth at the time of award" of the amount referred to in
Section (c)(iii) above is 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%) per
annum.
(f) Deletion of Option. Section 45 in both of the Leases,
"Option to Renew", is hereby deleted in its entirety and shall be of no further
force or effect.
5. INTENTIONALLY OMITTED.
6. Cross Default. A breach or default by Tenant under any one or
more of the Ground Floor Lease, the Second Floor Lease, the Storage Agreement,
this Agreement or any other document executed in connection with this Agreement
(collectively the "Lease Documents") shall also constitute a breach and default
by Tenant under all of the other Lease Documents. A breach or default by Bancorp
under any one or more of the Warrant Documents shall also be, and be deemed to
be, a breach and default by Tenant under the Lease Documents.
7. Operating Covenant. One of Landlord's principal purposes in
restructuring the Lease is to keep the Tenant as an operating bank at the
Building for the benefit that having an operating bank at the Building would
provide to the other tenants and the overall marketability of the Building.
Accordingly, as a material inducement to Landlord to enter into this Agreement,
Tenant covenants and agrees that, absent a merger or consolidation with another
institution that has more than ten (10) existing banking locations, Tenant shall
maintain its ground floor banking operations continuously open to the public for
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business during normal banking hours. Landlord recognizes that a merger or
consolidation with another institution that has more than ten (10) existing
banking locations may preclude the Tenant's continued operation at the Building.
However, notwithstanding any such merger or consolidation, the Leases as
modified and supplemented hereby and the Storage Agreement shall remain in full
force and effect as a continuing obligation of the Tenant and/or any entity with
or into which Tenant merges or consolidates. Further, and notwithstanding any
such merger or consolidation, if immediately following such merger or
consolidation the merged or consolidated entity has no other retail or
commercial banking operations within a one mile radius of the Building, the
operating covenant contained in the second sentence of this Section shall
continue to apply.
8. Condition Subsequent. Tenant acknowledges and agrees that
Landlord is making material and substantial concessions to the Tenant in this
Agreement worth several million dollars over the remaining term of the Leases,
and that the consideration being received by Landlord under this Agreement and
the Warrant Documents is only a small fraction of the consideration being
received by the Tenant. Even then, the full value of this Agreement and the
Warrant Documents will only be realized by Landlord if the Tenant and Bancorp
fully and timely comply with this Agreement, the other Lease Documents and the
Warrant Documents. Accordingly, the parties agree that in the event of any
breach or default by Tenant under this Agreement or any of the other Lease
Documents, or any breach or default by Bancorp under any of the Warrant
Documents, this Agreement shall be null, void and of no force or effect and the
Landlord's remedies, and the measure of the Tenant's liability, shall be
determined under the Leases as they existed prior to this Agreement and as if
this Agreement never existed, mitigated only to the extent of Tenant's actual
performance under this Agreement. No acceptance by Landlord of any performance
by Tenant under this Agreement or any of the other Lease Documents, or by
Bancorp under any of the Warrant Documents, shall be deemed a waiver of the
right to recovery provided in this Section. As a material portion of this
provision, Tenant hereby waives any and all statutes of limitation, statues of
repose and other time limitations, if any, with respect to the exercise or
pursuit of any rights or remedies under the Leases as they existed prior to this
Agreement.
9. Representations and Warranties. Tenant hereby represents and
warrants to Landlord that:
(a) Tenant is the lessee under the Leases and the sublessor
under the Subleases and has not assigned or agreed to assign its interest under
any of them in whole or in part.
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(b) The Leases and Subleases are in full force and effect,
and, to the best of Tenant's knowledge, no breach or default exists under any
thereof, nor, to the best of Tenant's knowledge, is there now any fact or
condition which, with notice or lapse of time or both, would constitute such a
breach or default.
(c) The Leases and Subleases contain the entire agreement of
the parties thereto and neither the Leases, the Sublease nor any of them has
been modified, altered or amended in any respect, except as described herein.
(d) Tenant has been informed that Landlord is a unit of the
California State and Consumer Services Agency established pursuant to Title I,
Division 1, Part 13 of the California Education Code, Sections 22000, et seq.,
as amended (the "Education Code"). Tenant has been informed that, as a result,
Landlord is prohibited from engaging in certain transactions with a "school
district or other employing agency" or a "member retirant or beneficiary" (as
those terms are defined in the Education Code). In addition, Tenant has been
informed that Landlord may be subject to certain restrictions and requirements
under the Internal Revenue Code, 26 U.S.C. Section 1 et seq. Accordingly, Tenant
represents and warrants to Landlord that (a) Tenant is neither a school district
or other employing agency; (b) to its knowledge, Tenant has not made any
contribution or contributions to Landlord; (c) to Tenant's knowledge, neither a
school district or other employing agency is related to Tenant by any
relationship described in Section 267(b) of the Internal Revenue Code; and (d)
to Tenant's knowledge, neither Landlord, its Investment Managers, Trust Company
of the West, TCW Realty Advisors, and Westmark Realty Advisors, LLC
(collectively "Advisors"), their affiliates, related entities, agents, officers
or employees, nor any Landlord board member, trustee, beneficiary, employee or
internal investment contractor (collectively "Landlord Affiliates") has received
or will receive, directly or indirectly, any payment, consideration or other
benefit from, nor does any Landlord Affiliate have any agreement or arrangement
with, Tenant or any person or entity affiliated with Tenant, relating to the
transactions contemplated by this Agreement except as expressly set forth in
this Agreement and the Warrant Documents.
(e) The Tenant has been duly organized and is validly existing
as a national banking association.
(f) This Agreement and the documents executed and delivered by
the Tenant pursuant hereto have been duly authorized, executed and delivered by
the Tenant and each is a valid and binding agreement enforceable in accordance
with its respective terms, subject to bankruptcy, insolvency, fraudulent
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transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity; and the Tenant has full power and authority necessary to enter into
such agreements and documents and to perform its obligations hereunder and
thereunder.
(g) No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Tenant is
required for execution of this Agreement or any of the documents to be executed
and delivered by Tenant pursuant hereto. The execution and delivery of this
Agreement and the other documents executed and delivered pursuant hereto by the
Tenant does not result in a violation of any law, rule or regulation, or any
order, judgment or decree of any court, or governmental agency applicable to the
Tenant.
10. Indemnity for Subtenant Claims. Tenant agrees to protect,
indemnify, defend and save harmless Landlord and its directors, officers,
trustees, members, agents and employees (the "Indemnitees") from and against any
and all liability, expense, loss or damage of any kind or nature, including
reasonable attorneys' fees and costs, arising from or on account of any action
or failure to act by Tenant under the Subleases or either of them prior to the
Effective Date. Landlord shall not be entitled to any indemnity on account of
Landlord's own actions or failure to act.
11. Release.
(a) Pre November 1,1995 Payments. Tenant hereby waives and
releases any and all claims to refunds or adjustments on account of the payment
set forth in Section 1(a) above and all prior payments of Rent, Tenant's
Proportionate Share of Building Operating Costs and any and all other payments
by Tenant under the Leases or either of them. Without limiting the generality of
the foregoing, Tenant hereby waives and releases any and all claims to refunds
or adjustments on account of amounts refunded or to be refunded to Landlord on
account of property taxes or other expenses.
(b) Tenant hereby acknowledges and agrees that it has
presently no defenses, offsets or claims against Landlord or against the
enforcement of the Leases, as supplemented and amended by this Agreement, or the
Storage Agreement, and that Landlord has not waived any of its rights or
remedies under either of the Leases, as supplemented and amended by this
Agreement, or the Storage Agreement (individually and collectively "Defenses").
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(c) Tenant does hereby forever release and discharge Landlord
and any and all of its directors, officers, trustees, members, agents and
employees from any and all claims, demands, controversies, actions, causes of
action, obligations, liabilities, costs, expenses, attorneys' fees and damages
of whatsoever character, nature and kind, at law or in equity, arising from or
related in any way to the Leases, the Storage Agreement, the Land or the
Building (individually and collectively "Liabilities").
(d) It is the intention of the parties hereto that the
foregoing acknowledgment and release shall be effective as a bar to all Defenses
and Liabilities, past and present, known and unknown, suspected and unsuspected
arising from or in any way related to any act or omission occurring or
commencing prior to the Effective Date, including without limitation any act or
omission, or series of similar or related acts or omissions, commencing prior to
the Effective Date and continuing after the Effective Date. In furtherance of
this intention, the Tenant hereby expressly waives any and all rights and
benefits conferred upon it by the provisions of California Civil Code Section
1542, which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
(e) The Tenant agrees that the foregoing acknowledgment,
release and waiver of the provisions of California Civil Code Section 1542 were
separately bargained for.
12. AS-IS. Tenant accepts the Premises in their present "AS IS"
condition. With the exception of Landlord's obligations under Sections 9(b) and
16 of the Leases, Tenant acknowledges that Landlord has no obligation to repair,
maintain or replace the Premises or to construct any improvements at the
Premises.
13. No Waiver. This Agreement shall not be deemed a waiver of any
right or remedy of Landlord under the any of the Leases or the Storage
Agreement. Without limiting the generality of the foregoing, any event currently
constituting a breach or default by Tenant under any of the Leases or the
Storage Agreement shall continue to constitute such a breach or default
notwithstanding this Agreement, and any circumstance which, with notice or the
passage of time, or both, would constitute such a breach or default shall
continue to constitute such a breach or default upon the giving of notice, the
passage of time, or both, notwithstanding this Agreement.
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14. Confidentiality. Tenant agrees that the existence and terms of
this Agreement shall be maintained by Tenant in strict confidence and no
disclosure of such existence or terms will be made by Tenant, except to such
attorneys, accountants and investment advisors as are reasonably required to
evaluate and consummate this Agreement. Any such disclosure to third parties
shall indicate that the information is confidential and should be so treated by
the third party. Tenant agrees and covenants that it will not disclose or
authorize the disclosure of the terms or existence of this Agreement in any
public statement, news release, or other announcement or publication. Nothing in
this Section shall prevent Tenant from disclosing any information to the extent
required by federal or state banking or securities laws, rules or regulations or
required by any judicial or governmental case, order or decree.
15. Brokers. Tenant and Landlord each warrant that it has had no
dealing with any broker or agent in connection with this Agreement. Tenant and
Landlord each will indemnify, defend and hold the other harmless from and
against any and all costs, expenses or liability for commissions or other
compensation or charges claimed by any broker or agent based on dealings with
the indemnifying party with respect to this Agreement.
16. Landlord Exculpation.
(a) It is expressly understood and agreed that notwithstanding
anything in this Agreement, any of the other Lease Documents or the Warrant
Documents to the contrary, and notwithstanding any applicable law to the
contrary, the liability of Landlord (including any successor or assign) under
the Lease Documents, and any recourse by Tenant against Landlord, shall be
limited solely and exclusively to the interest of Landlord in and to the Land
and Building, and Landlord shall have no personal liability therefor. Tenant
hereby expressly waives and releases such personal liability on behalf of itself
and all persons or entities claiming by, through or under Tenant.
(b) No present or future officer, director, employee, trustee,
member, retirant, beneficiary, internal investment contractor, investment
manager or agent of Landlord, or of Advisors', shall have any personal
liability, directly or indirectly, and recourse shall not be had against any
such officer, director, employee, trustee, member, retirant, beneficiary,
internal investment contractor, investment manager or agent, under or in
connection with the Lease Documents or any other instrument heretofore or
hereafter executed in connection with this Agreement or the Leases. Tenant
hereby waives and releases any and all such personal liability and recourse. The
limitations of liability provided in this Section are in addition to, and not in
limitation of, any limitation on liability
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applicable to Landlord provided by law or in any other contract, agreement or
instrument.
17. Successors and Assigns. This Agreement shall inure to the benefit
of, and shall be binding upon, the successors and assigns of each of the parties
to this Agreement.
18. Conflict. In the event of any conflict between the Leases and the
Storage Agreement on the one hand and this Agreement on the other, this
Agreement shall control. Except to the extent herein modified, the Leases and
the Storage Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have entered into this
Agreement as of the date first above written.
LANDLORD: CALIFORNIA STATE TEACHERS'
RETIREMENT SYSTEM, a retirement
system created pursuant to the laws
of the State of California
By: TRUST COMPANY OF THE WEST,
a California corporation,
as Investment Manager
By: /s/ HUGH DIRSTINE
-------------------------------
Hugh Dirstine,
Authorized Signatory
By: /s/ GARY NEUMEIER
-------------------------------
Gary Neumeier,
Authorized Signatory
TENANT: MERCANTILE NATIONAL BANK, a
national banking association
By: /s/ SCOTT A. MONTGOMERY
----------------------------------------
Print Name: Scott A. Montgomery
--------------------------------
Its: President
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