EXHIBIT 10.3
SECOND
AMENDED AND RESTATED
LEASE AGREEMENT
by and between
ET LLC,
a Delaware limited liability company
d/b/a
ET QRS LLC
as LANDLORD
and
ETEC SYSTEMS, INC.,
a Nevada corporation,
as TENANT
Premises: Hayward, California
Dated as of: February 2, 1998
TABLE OF CONTENTS
Page
1. Demise of Premises 1
2. Certain Definitions 2
3. Title and Condition 13
4. Use of Leased Premises; Quiet Enjoyment 16
5. Term 16
6. Basic Rent 17
7. Additional Rent 18
8. Net Lease; Non-Terminability 19
9. Payment of Impositions 20
10. Compliance with Laws and Easement Agreements; Environmental
Matters 22
11. Liens; Recording 24
12. Maintenance and Repair 25
13. Alterations and Improvements 26
14. Permitted Contests 27
15. Indemnification 28
16. Insurance 29
17. Casualty and Condemnation 34
18. Termination Events 35
19. Restoration; Reduction of Rent 37
20. Procedures Upon ▇▇▇▇▇▇▇▇ ▇▇
▇▇. Assignment and Subletting; Prohibition against Leasehold
Financing 40
22. Events of ▇▇▇▇▇▇▇ ▇▇
▇▇. Remedies and Damages Upon Default 48
24. Notices 52
25. Estoppel Certificate 52
26. Surrender 53
27. No Merger of Title 53
28. Books and Records 53
29. Determination of Value 55
30. Non-Recourse as to Landlord 59
31. Financing 59
32. Subordination 60
33. Financial Covenants; Covenant Breach Offer 60
34. Tax Treatment; Reporting 61
35. Right of First Refusal 62
36. Financing Major Alterations 64
37. Security Deposit 65
38. Right to Vacate; Rejectable Offer Upon Vacation 66
39. Miscellaneous 67
Exhibit A - Premises
Exhibit B - Machinery and Equipment
Exhibit C - Permitted Encumbrances
Exhibit D - Basic Rent Payments
Exhibit E - Financial Covenants
Schedule 1 - Termination Values
Schedule 2 - Approved Alterations to Building 2 and Building 3
Schedule 3 - Project I Improvements
SECOND AMENDED AND RESTATED LEASE AGREEMENT, made as of this 2nd
day of February, 1998, between ET LLC, a Delaware limited liability
company d/b/a ET QRS LLC ("Landlord"), with an address c/o W.P. ▇▇▇▇▇ &
Co., Inc., ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
and ETEC SYSTEMS, INC., a Nevada corporation ("Tenant"), with an address
at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
BACKGROUND
A. ESI (CA) QRS 12-6, Inc., as landlord ("Original Landlord")
and Tenant entered into a Lease Agreement dated as of February 1, 1995,
as amended by the terms of Exhibit 1 to that certain letter agreement
dated August 7, 1996 and amended and restated by an Amended and Restated
Lease Agreement, dated as of January 31, 1997 (said Lease Agreement, as
amended and amended and restated, the "Original Lease").
B. By Articles of Merger filed with the Secretary of State of
Delaware on January 29, 1998 Original Landlord merged with ET-ESI, INC.
and by Articles of Merger filed with the Secretary of State of Delaware
on January 29, 1998 ET-ESI, Inc. merged with ET LLC and by Limited
Liability Company Application for Registration filed with the Secretary
of State of the State said ET LLC qualified to do business in the State
in the name of ET QRS LLC.
C. Landlord desires to demise to Tenant and Tenant desires to
lease from Landlord the Project I Improvements and the Project II
Improvements (as such terms are hereinafter defined) and in connection
therewith to amend and restate the Original Lease in its entirety.
In consideration of the rents and provisions herein stipulated to
be paid and performed, Landlord and Tenant hereby covenant and agree as
follows:
1. Demise of Premises. Landlord hereby demises and lets to
Tenant, and Tenant hereby takes and leases from Landlord, for the term
and upon the provisions hereinafter specified, the following described
property (collectively, the "Leased Premises"): (a) the premises
described in Exhibit "A" hereto, together with the Appurtenances
(collectively, the "Land"); (b) the three office/manufacturing
facilities constructed on the Land, known as "Building 1," "Building 2"
and "Building 3" and containing approximately 60,000 square feet, 47,000
square feet and 106,000 square feet, respectively; (c) the Project I
Improvements described in Schedule 3 hereto; (d) the Project II
Improvements, and all other buildings, structures and other improvements
now or hereafter constructed on the Land (collectively, together with
the Project I Improvements, the "Improvements"); and (e) the fixtures,
machinery, equipment and other property described in Exhibit "B" hereto
(collectively, the "Equipment").
2. Certain Definitions.
"Acquisition Cost" shall mean the sum of (a) $14,321,137, (b)
Project I Costs and (c) Project II Costs.
"Additional Rent" shall mean Additional Rent as defined in
Paragraph 7(a).
"Adjoining Property" shall mean all sidewalks, driveways, curbs,
gores and vault spaces adjoining any of the Leased Premises.
"Alterations" shall mean all changes, additions, modifications,
improvements or repairs to, all alterations, reconstructions,
remodeling, renovations, renewals, replacements or removals of and all
substitutions or replacements for any of the Improvements or Equipment,
both interior and exterior, structural and non-structural, and ordinary
and extraordinary.
"Appurtenances" shall mean all tenements, hereditaments,
easements, rights-of-way, rights, privileges in and to the Land,
including (a) easements over other lands granted by any Easement
Agreement and (b) any streets, ways, alleys, vaults, gores or strips of
land adjoining the Land.
"Assignment" shall mean any assignment of rents and leases from
Landlord to a Lender which (a) encumbers any of the Leased Premises and
(b) secures Landlord's obligation to repay a Loan, as the same may be
amended, supplemented or modified from time to time.
"Basic Rent" shall mean Basic Rent as defined in Paragraph 6.
"Basic Rent Payment Dates" shall mean the Basic Rent Payment Dates
as defined in Paragraph 6.
"Building 4" shall mean the building to contain not less than
129,000 square feet, to be constructed on the easterly portion of the
Land, in accordance with the Project II Plans and the Project II Budget
and to be known as "Building 4".
"Buildings 2 and 3 Renovations" shall mean Buildings 2 and 3
Renovations as defined in the Construction Agency Agreement.
"Casualty" shall mean any injury to or death of any person or any
loss of or damage to any property (including the Leased Premises)
included within or related to the Leased Premises or arising from the
Adjoining Property.
"Commencement Date" shall mean Commencement Date as defined in
Paragraph 5(a).
"Completion Agreement" shall mean the Completion Agreement of even
date between Landlord and Tenant pursuant to which Tenant has agreed to
complete the Project I Improvements.
"Condemnation" shall mean a Taking and/or a Requisition.
"Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for
Condemnation.
"Construction Agency Agreement" shall mean the Construction Agency
Agreement of even date between Landlord, as owner, and Tenant, as agent
for Landlord pursuant to which Tenant, as such agent will cause the
Project II Improvements to be constructed.
"Costs" of a Person or associated with a specified transaction
shall mean all costs and expenses incurred by such Person or associated
with such transaction, including without limitation, reasonable
attorneys' fees and expenses, court costs, escrow fees, title insurance
premiums, mortgage points, recording fees and transfer taxes, as the
circumstances require.
"Covenant Breach" shall mean Covenant Breach as defined in
Paragraph 33(b).
"Covenants" shall mean Covenants as defined in Paragraph 33(a).
"CPI" shall mean CPI as defined in Paragraph 2 of Exhibit "D".
"Default Termination Amount" shall mean the Default Termination
Amount as defined in Paragraph 23(a)(iii).
"Default Rate" shall mean the Default Rate as defined in Paragraph
7(a)(iv).
"Deposit Amount" shall mean Deposit Amount as defined in
Paragraph 21(d).
"Easement Agreement" shall mean any conditions, covenants,
reservations, restrictions, easements, declarations, licenses and other
agreements listed as Permitted Encumbrances, including the Parking
Easement of even date from Tenant to Landlord or as may hereafter affect
the Leased Premises.
"Environmental Law" shall mean (i) whenever enacted or
promulgated, any applicable federal, state, foreign and local law,
statute, ordinance, rule, regulation, license, permit, authorization,
approval, consent, court order, judgment, decree, injunction, code,
requirement or agreement with any governmental entity, (x) relating to
pollution (or the cleanup thereof), or the protection of air, water
vapor, surface water, groundwater, drinking water supply, land
(including land surface or subsurface), plant, aquatic and animal life
from injury caused by a Hazardous Substance or (y) concerning exposure
to, or the use, containment, storage, recycling, reclamation, reuse,
treatment, generation, discharge, transportation, processing, handling,
labeling, production, disposal or remediation of Hazardous Substances,
Hazardous Conditions or Hazardous Activities, in each case as amended
and as now or hereafter in effect, and (ii) any common law or equitable
doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability)
that may impose liability or obligations or injuries or damages due to
or threatened as a result of the presence of, exposure to, or ingestion
of, any Hazardous Substance. The term Environmental Law includes,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control
Act, the Clean Air Act, the Clean Water Act, the Resources Conservation
and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the Solid Waste Disposal Act, the Toxic Substance
Control Act, the Insecticide, Fungicide and Rodenticide Act, the
Occupational Safety and Health Act of 1970, the National Environmental
Policy Act and the Hazardous Materials Transportation Act, each as
amended and as now or hereafter in effect and any similar foreign, state
or local Law.
"Environmental Violation" shall mean (a) any direct or indirect
discharge, disposal, spillage, emission, escape, pumping, pouring,
injection, leaching, release, seepage, filtration, migration or
transporting of any Hazardous Substance at, upon, under, onto or within
the Leased Premises, or from the Leased Premises to the environment, in
violation of any Environmental Law or which could be reasonably expected
to result in any liability to Landlord, Tenant or Lender, any Federal,
state or local government or any other Person for the costs of any
removal or remedial action or natural resources damage or for bodily
injury or property damage, (b) any deposit, storage, dumping, placement
or use of any Hazardous Substance at, upon, under or within the Leased
Premises or which extends to any other property in violation of any
Environmental Law or which could reasonably be expected to result in any
liability to any Federal, state or local government or to any other
Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (c) the
abandonment or discarding of any barrels, containers or other
receptacles containing any Hazardous Substances in violation of any
Environmental Laws, (d) any activity, occurrence or condition which
could be reasonably expected to result in any liability, cost or expense
to Landlord or Lender or any other owner or occupier of the Leased
Premises, or which could be reasonably expected to result in a creation
of a lien on the Leased Premises under any Environmental Law, or (e) any
violation of or noncompliance with any Environmental Law.
"Equipment" shall mean the Equipment as defined in Paragraph 1.
"Event of Default" shall mean an Event of Default as defined in
Paragraph 22(a).
"Existing Improvements" shall mean ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ ▇ and
Building 3 as described in Paragraph 1 hereof together with the existing
Equipment installed therein.
"Expiration Date" shall mean Expiration Date as defined in
Paragraph 5(a).
"Fair Market Rental Value" shall mean the fair market rental value
of the Leased Premises for the relevant Renewal Term determined in
accordance with the procedure specified in Paragraph 29.
"Fair Market Rental Value Date" shall mean any date on which Fair
Market Rental Value is finally determined in accordance with
Paragraph 29.
"Fair Market Value" shall mean the fair market value of the Leased
Premises as of the Relevant Date. For all purposes of this Lease, Fair
Market Value shall be determined in accordance with the procedure
specified in Paragraph 29.
"Fair Market Value Date" shall mean the date when the Fair Market
Value is finally determined in accordance with Paragraph 29.
"Federal Funds" shall mean federal or other immediately available
funds which at the time of payment are legal tender for the payment of
public and private debts in the United States of America.
"Federal Funds Effective Rate" shall mean for any day, the rate
set forth in the weekly statistical release designated as H.15(519), or
any successor publication, published by the Federal Reserve Board
(including any such successor, "H.15(519)") for such day opposite the
caption "Federal Funds (Effective)". If on any relevant day such rate
is not yet published in H.15(519), the rate for such day will be the
rate set forth in the daily statistical release designated as the
Composite 3:30 p.m. Quotations for U.S. Government Securities, or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m. Quotations") for
such day under the caption "Federal Funds Effective Rate." If on any
relevant day the appropriate rate for such day is not yet published in
either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for
such day will be the arithmetic mean of the rates for the last
transaction in overnight Federal Funds arranged prior to 9:00 a.m., New
York time, on that day by each of three leading brokers of federal funds
transactions in New York City, selected by the Landlord.
"Final Completion Date" shall mean, individually, the Project I
Final Completion Date or the Project II Final Completion Date, as the
context may require, and collectively, the Project I Final Completion
Date and the Project II Final Completion Date.
"Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or
creates any Hazardous Substance; (ii) causes or results in (or threatens
to cause or result in) the release, seepage, spill, leak, flow,
discharge or emission of any Hazardous Substance into the environment
(including, without limitation, the air, surface water, groundwater,
watercourses or water systems), (iii) involves the containment or
storage of any Hazardous Substance; or (iv) would cause the Leased
Premises or any portion thereof to become a hazardous waste treatment,
recycling, reclamation, processing, storage or disposal facility within
the meaning of any Environmental Law.
"Hazardous Condition" means any condition which would support or
be reasonably likely to result in any claim or liability under any
Environmental Law, including the presence of underground storage tanks.
"Hazardous Substance" means (i) any substance, material, product,
(including, without limitation, petroleum products), derivative
(including, without limitation, petroleum products), compound, mixture,
mineral (including, without limitation, asbestos), chemical, gas, waste,
contaminant or pollutant, in each case whether naturally occurring,
man-made or the by-product of any process, that is toxic, harmful or
hazardous or acutely hazardous to public health or safety or the
environment or (ii) any substance supporting a claim under any
Environmental Law, whether or not such substance is defined as hazardous
or toxic as such under any Environmental Law. By way of example, and
not of limitation, Hazardous Substances include, but are not limited to,
any toxic substance, hazardous substance, hazardous waste, hazardous
constituent, pollutant, contaminant, industrial waste, medical waste,
petroleum product, petroleum derivative, petroleum waste, radon,
radioactive material, asbestos, asbestos containing materials, urea
formaldehyde, foam insulation, lead or polychlorinated biphenyl.
"Impositions" shall mean the Impositions as defined in
Paragraph 9(a).
"Improvements" shall mean the Improvements as defined in
Paragraph 1.
"Indemnitee" shall mean an Indemnitee as defined in Paragraph 15.
"Initial Lender" shall mean Creditanstalt-Bankverein, its
successors and assigns.
"Initial Loan" shall mean the $8,221,345 loan from Initial Lender
evidenced by a Note dated January 31, 1997.
"Initial Term" shall mean Initial Term as defined in
Paragraph 5(a).
"Insurance Requirements" shall mean the requirements of all
insurance policies required to be maintained in accordance with this
Lease.
"Intended Assignment Offer" shall mean Intended Assignment Offer
as defined in Paragraph 21(d).
"Intended Assignment Purchase Date" shall mean Intended Assignment
Purchase Date as defined in Paragraph 21(d).
"Intended Transaction" shall mean Intended Transaction as defined
in Paragraph 33(b).
"Land" shall mean the Land as defined in Paragraph 1.
"Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation,
policy, requirement or administrative or judicial determination, even if
unforeseen or extraordinary, of every duly constituted governmental
authority, court or agency, now or hereafter enacted or in effect.
"Lease" shall mean this Second Amended and Restated Lease
Agreement.
"Lease Year" shall mean any twelve (12) consecutive month period
during the Term except that the first Lease Year commenced on
February 16, 1995 and terminated on February 29, 1996 and the last Lease
Year shall end on the last day of the Term.
"Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.
"Legal Requirements" shall mean all present and future Laws
(including but not limited to Environmental Laws and Laws relating to
accessibility to, usability by, and discrimination against, disabled
individuals) and all covenants, restrictions and conditions now or
hereafter of record which may be applicable to Tenant or to any of the
Leased Premises, or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration, repair or restoration of any of the
Leased Premises, even if compliance therewith necessitates structural
changes or improvements or results in interference with the use or
enjoyment of any of the Leased Premises.
"Lender" shall mean (a) Initial Lender, and (b) any person or
entity (and their respective successors and assigns) which may, after
the date hereof, make a Loan to Landlord or is the holder of any Note.
"LIBOR" means the rate of interest designated by Tenant
corresponding to the rate for one-month, two-month, three-month,
six-month or one-year periods for LIBOR as published in The Wall Street
Journal on the business day (the "Rate Determination Date") prior to the
first day of the applicable period (the first such designation to be
made as of the date hereof) which rate (a) shall remain fixed during the
period to which the rate corresponds, (b) shall, as to each such period,
be designated by notice to Landlord and (c) shall, as to such period,
not extend beyond May 31, 1999 as to the Project II Improvements and (d)
shall be the one-month rate if Tenant fails to make any required
designation.
If no such LIBOR rate appears in The Wall Street Journal as
described in the foregoing paragraph, LIBOR shall be the Federal Funds
Effective Rate on the Rate Determination Date.
All percentages resulting from any calculations referred to in
this definition will be rounded upwards, if necessary, to the nearest
multiple of 1/100 of 1% and all U.S. dollar amounts used in or resulting
from such calculations will be rounded to the nearest dollar (with fifty
cents or more being rounded upward).
"Loan" shall mean any loan made by one or more Lenders to
Landlord, which loan is secured by a Mortgage and an Assignment and
evidenced by a Note.
"Major Alterations" shall mean Major Alterations as defined in
Paragraph 36(a).
"Monetary Obligations" shall mean Rent and all other sums payable
by Tenant under this Lease to Landlord, to any third party on behalf of
Landlord or to any Indemnitee.
"Mortgage" shall mean any mortgage or deed of trust from Landlord
to a Lender which (a) encumbers any of the Leased Premises and
(b) secures Landlord's obligation to repay a Loan, as the same may be
amended, supplemented or modified.
"Net Award" shall mean (a) the entire award payable to Landlord or
Lender by reason of a Condemnation whether pursuant to a judgment or by
agreement or otherwise, or (b) the entire proceeds of any insurance
required under clauses (i), (ii) (to the extent payable to Landlord or
Lender), (iv), (v) or (vi) of Paragraph 16(a), as the case may be, less
any expenses incurred by Landlord and Lender in collecting such award or
proceeds.
"Non-Preapproved Assignee" shall mean Non-Preapproved Assignee as
defined in Paragraph 21(b).
"Non-Preapproved Assignment" shall mean Non-Preapproved Assignment
as defined in Paragraph 21(b).
"Note" shall mean any promissory note evidencing Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.
"Offer Amount" shall mean (i) prior to the expiration of the
Initial Term, the greater of (a) the Fair Market Value of the Leased
Premises as of the Relevant Date and (b) the sum of the Acquisition Cost
and the applicable Prepayment Premium which Landlord will be required to
pay in prepaying any Loan with the proceeds of the Offer Amount and
(ii) after the expiration of the Initial Term, the Fair Market Value of
the Leased Premises as of the Relevant Date.
"Original Landlord" shall mean Original Landlord as described in
the BACKGROUND.
"Partial Casualty" shall mean any Casualty which does not
constitute a Termination Event.
"Partial Condemnation" shall mean any Condemnation which does not
constitute a Termination Event.
"Permitted Encumbrances" shall mean those covenants, restrictions,
reservations, liens, conditions, easements, declarations, licenses and
other encumbrances, other than any Mortgage or Assignment, listed on
Exhibit "C" hereto (but such listing shall not be deemed to revive any
such encumbrances that have expired or terminated or are otherwise
invalid or unenforceable).
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Preapproved Assignee" shall mean Preapproved Assignee as defined
in Paragraph 21(a).
"Preapproved Assignment" shall mean Preapproved Assignment as
defined in Paragraph 21(a).
"Preapproved Sublet" shall mean Preapproved Sublet as defined in
Paragraph 21(h).
"Prepayment Premium" shall mean any payment (other than a payment
of principal and/or interest which Landlord is required to make under a
Note or a Mortgage) by reason of any prepayment by Landlord of any
principal due under a Note or Mortgage, and which may be (in lieu of
such prepayment premium or prepayment penalty) a "make whole" clause
requiring a prepayment premium in an amount sufficient to compensate the
Lender for the loss of the benefit of the Loan due to a prepayment or a
"breakage fee" or "funding losses" as a result of any prepayment;
provided, however, that the Prepayment Premium shall not exceed the
prepayment premium amount that would be payable if the outstanding
principal amount of the Loan being prepaid were the original principal
amount of the Replacement Loan (calculated on the basis of the full
funding of the Replacement Loan).
"Prime Rate" shall mean the annual interest rate as published,
from time to time, in the Wall Street Journal as the "Prime Rate" in its
column entitled "Money Rate". The Prime Rate may not be the lowest rate
of interest charged by any "large U.S. money center commercial banks"
and Landlord makes no representations or warranties to that effect. In
the event the Wall Street Journal ceases publication or ceases to
publish the "Prime Rate" as described above, the Prime Rate shall be the
average per annum discount rate (the "Discount Rate") on ninety-one (91)
day bills ("Treasury Bills") issued from time to time by the United
States Treasury at its most recent auction, plus three hundred (300)
basis points. If no such 91-day Treasury Bills are then being issued,
the Discount Rate shall be the discount rate on Treasury Bills then
being issued for the period of time closest to ninety-one (91) days.
"Project I Acquisition Fee" shall mean $518,324.
"Project I Costs" shall mean with respect to the Project I
Improvements, the sum of $11,000,000 and the Project I Acquisition Fee.
"Project I Final Completion Date" shall mean March 31, 1998.
"Project I Improvements" shall mean the Improvements to Buildings
2 and 3 as generally described in Schedule 3 to this Lease and more
particularly described in the Project I Plans.
"Project I Plans" shall mean Project I Plans delivered to Landlord
on the date hereof.
"Project II Acquisition Fee" shall mean an amount equal to the
difference between (x) Project II Costs (exclusive of the Project II
Acquisition Fee), divided by .955, minus (y) Project II Costs (exclusive
of the Project II Acquisition Fee).
"Project II Budget" shall mean the Project II Budget attached as
Exhibit "B" to the Construction Agency Agreement as the same may be
amended from time to time in accordance with the applicable provisions
of the Construction Agency Agreement.
"Project II Costs" shall mean (i) with respect to the Project II
Improvements the lesser of (A) the sum of $50,000,000 and the Project II
Acquisition Fee and (B) the sum of Project II Direct Costs, Project II
Indirect Costs and the Project II Acquisition Fee.
"Project II Direct Costs" shall mean Direct Costs as defined in
Section 1.1 of the Construction Agency Agreement.
"Project II Final Completion Date" shall mean the date on which
all "punch list" items are completed with respect to the Project II
Improvements which shall occur not later than July 31, 1999 with respect
to Building 4 and October 31, 1999 with respect to the Building 2 and 3
Renovations.
"Project II Substantial Completion Date" shall mean the date on
which a permanent certificate of occupancy is issued for Building 4, but
in no event later than May 31, 1999.
"Project II Improvements" shall mean, collectively, Building 4 and
the Buildings 2 and 3 Renovations.
"Project II Indirect Costs" shall mean Indirect Costs as defined
in Section 1.01 of the Construction Agency Agreement.
"Project II Plans" shall mean Plans as defined in Section 1.01 of
the Construction Agency Agreement.
"Project" shall mean, the Project I Improvements or Project II
Improvements, as applicable.
"Relevant Amount" shall mean the Termination Amount, Offer Amount
or the Default Termination Amount, as the case may be.
"Relevant Date" shall mean (a) the date immediately prior to the
date on which the applicable Condemnation Notice is received, in the
event of a Termination Notice under Paragraph 18 which is occasioned by
a Taking, (b) the date immediately prior to the date on which the
applicable Casualty occurs, in the event of a Termination Notice under
Paragraph 18 which is occasioned by a Casualty, (c) the date when Fair
Market Value is redetermined, in the event of a redetermination of Fair
Market Value pursuant to Paragraph 20(c), (d) the date immediately prior
to the date on which Landlord makes an Intended Assignment Offer,
(e) the date immediately prior to the Event of Default giving rise to
the need to determine Fair Market Value in the event Landlord provides
Tenant with notice of its intention to require Tenant to make a
termination offer under Paragraph 23(a)(iii), (f) the Fair Market Value
Date, in the event Landlord receives an offer to purchase the Leased
Premises pursuant to Paragraph 35(c), (g) with respect to a Covenant
Breach or an Intended Transaction, the date that is the earlier of
(i) the date immediately prior to the date on which Tenant notifies
Landlord that an Intended Transaction or Covenant Breach will occur or
makes a public announcement to such effect, or (ii) the date immediately
prior to the date on which the Covenant Breach or the Intended
Transaction occurs or, but for the acceptance by Landlord of the
rejectable offer under Paragraph 33, would occur, and (h) the date
immediately prior to the date on which Tenant vacates the Leased
Premises in the event Tenant makes a Vacation Offer pursuant to
Paragraph 38 or, with respect to any determination of Fair Market Rental
Value, the first day of the Renewal Term for which a determination of
Fair Market Rental Value is being made.
"Remaining Sum" shall mean Remaining Sum as defined in
Paragraph 19(c).
"Renewal Term" shall mean Renewal Term as defined in
Paragraph 5(b).
"Rent" shall mean, collectively, Basic Rent and Additional Rent.
"Replacement Loan" shall mean the Loan that refinances the Initial
Loan.
"Requisition" shall mean any temporary requisition or confiscation
of the use or occupancy of any of the Leased Premises by any
governmental authority, civil or military, whether pursuant to an
agreement with such governmental authority in settlement of or under
threat of any such requisition or confiscation, or otherwise.
"Retention Date" shall mean the later of the date on which the
amount of the Remaining Sum is finally determined or the date on which
Landlord's right to the Remaining Sum is finally determined.
"Security Deposit" shall mean Security Deposit as defined in
Paragraph 37(a).
"Significant Subsidiary" shall mean at any time any Subsidiary
that would at such time constitute a "significant subsidiary" (as such
term is defined in Regulation S-X of the Securities and Exchange
Commission as in effect on the date hereof) of the Tenant.
"Site Assessment" shall mean a Site Assessment as defined in
Paragraph 10(c).
"State" shall mean the State of California.
"Subsidiary" shall mean any corporation, partnership, limited
liability company, joint venture, association or other business entity
of which the Tenant now or hereafter owns directly or indirectly,
securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other governing body
thereof.
"Surviving Obligations" shall mean any obligations of Tenant under
this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease or which survive such
expiration or termination by their own terms.
"Taking" shall mean (a) any taking or damaging of all or a portion
of any of the Leased Premises (i) in or by condemnation or other eminent
domain proceedings pursuant to any Law, general or special, or (ii) by
reason of any agreement with any condemnor in settlement of or under
threat of any such condemnation or other eminent domain proceeding, or
(iii) by any other means, or (b) any de facto condemnation. The Taking
shall be considered to have taken place as of the later of the date
actual physical possession is taken by the condemnor, or the date on
which the right to compensation and damages accrues under the Law
applicable to the Leased Premises.
"Term" shall mean the Term as defined in Paragraph 5(a).
"Termination Amount" shall mean (i) prior to the expiration of the
Initial Term, the greater of (a) the sum of the applicable Termination
Value specified on Schedule 1 hereto and any Prepayment Premium which
Landlord will be required to pay in prepaying any Loan with proceeds of
the Termination Amount or (b) the Fair Market Value of the Leased
Premises as of the Relevant Date and (ii) after the expiration of the
Initial Term, the Fair Market Value of the Leased Premises as of the
Relevant Date.
"Termination Date" shall mean Termination Date as defined in
Paragraph 18(b).
"Termination Event" shall mean a Termination Event as defined in
Paragraph 18(a).
"Termination Notice" shall mean Termination Notice as defined in
Paragraph 18(a).
"Third Party Purchaser" shall mean Third Party Purchaser as
defined in Paragraph 21(o).
"Vacation Offer" shall mean Vacation Offer as defined in
Paragraph 38.
3. Title and Condition.
(a) The Leased Premises are demised and let subject to (i) the
Mortgage and Assignment presently in effect, (ii) the rights of any
Persons in possession of the Leased Premises, (iii) the existing state
of title of the Leased Premises, including any Permitted Encumbrances,
(iv) any state of facts which an accurate survey or physical inspection
of the Leased Premises might show, (v) all Legal Requirements, including
any existing violation of any thereof, and (vi) the condition of the
Leased Premises as of the commencement of the Term, without
representation or warranty by Landlord.
(b) Tenant acknowledges that the Existing Improvements are in
acceptable condition and repair at the inception of this Lease.
LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED
PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS
LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT
MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED
PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS
FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF
ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v) VALUE,
(vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE,
(ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION,
(xiii) DURABILITY, (xiv) OPERATION, (xv) THE EXISTENCE OF ANY HAZARDOUS
SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY OR (xvi) COMPLIANCE
OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT; AND ALL RISKS
INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT
THE LEASED PREMISES IS OF ITS SELECTION AND TO ITS SPECIFICATIONS AND
THAT THE EXISTING IMPROVEMENTS HAVE BEEN INSPECTED BY TENANT AND IS
SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF
THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD
SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR
FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY
IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED,
AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE
LEASED PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY
OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.
(c) Tenant represents to Landlord that Tenant has examined the
title to the Leased Premises prior to the execution and delivery of this
Lease and has found the same to be satisfactory for the purposes
contemplated hereby. Tenant represents and warrants that (i) Tenant has
conveyed fee simple title (both legal and equitable) in the Leased
Premises to Landlord and that Tenant has only the leasehold right of
possession and use of the Leased Premises as provided herein, (ii) the
Existing Improvements conform and on the applicable Final Completion
Date the applicable Project shall conform to all material Legal
Requirements and all Insurance Requirements, (iii) to Tenant's knowledge
all permits, licenses, approvals, consents and easements necessary or
appropriate for the use or operation of the Leased Premises have been
obtained, (iv) all contractors engaged by Tenant and to Tenant's
knowledge, all subcontractors who have performed work on or supplied
materials to the Existing Improvements have been fully paid or Tenant is
holding retainage sufficient to pay such contractors in full, and all
materials and supplies have been fully paid for or Tenant is holding
retainage sufficient to pay for such materials and supplies in full,
(v) the Existing Improvements have been fully completed, and on the
applicable Final Completion Date the applicable Project shall be
completed in all material respects in a workmanlike manner of first
class quality, and (vi) all Equipment necessary or appropriate for the
use or operation of the Leased Premises has been installed and is
presently fully operative in all material respects, and on the Project I
Final Completion Date and Project II Final Completion Date, as
applicable, all Equipment necessary or appropriate for the use and
operation of the applicable Project shall have been installed and shall
be fully operative in all material respects.
(d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all warranties, guaranties, indemnities and similar
rights which Landlord may have against any manufacturer, seller,
engineer, contractor or builder in respect of any of the Leased
Premises. Such assignment shall remain in effect until an Event of
Default occurs or until the expiration or earlier termination of this
Lease, whereupon such assignment shall cease and all of said warranties,
guaranties, indemnities and other rights shall automatically revert to
Landlord.
(e) As of the date hereof, Landlord has acquired a portion of
the Project I Improvements. Tenant covenants and agrees to cause the
Project I Improvements to be completed in a good and workmanlike manner
no later than the Project I Final Completion Date in accordance with the
terms of the Completion Agreement and shall pay in full all Project I
Costs no later than April 1, 1998, subject, however, to Tenant's right
to contest under Paragraph 14 hereof. All acknowledgments of Tenant
regarding the Leased Premises contained in Paragraph 3(b) shall be
deemed to have been made with respect to Project I as of the Project I
Final Completion Date.
(f) Pursuant to the Construction Agency Agreement, Tenant will
cause the Project II Improvements to be constructed with funds more
particularly described in the Construction Agency Agreement. The
Project II Improvements will be owned by Landlord and included within
the Leased Premises. Tenant acknowledges that the Project II
Improvements have not yet been constructed and that, pursuant to the
Construction Agency Agreement entered into by Landlord and Tenant,
Tenant has the responsibility for causing the Project II Improvements to
be completed in accordance with the terms of the Construction Agency
Agreement. Landlord will not make any representations or warranties
with respect to the Project II Improvements. Tenant further
acknowledges that, upon occurrence of an Event of Default, Landlord may
terminate the Construction Agency Agreement, and in addition to all
other remedies of Landlord under this Lease, Landlord shall have the
right but not the obligation to complete construction of the Project II
Improvements in accordance with the Project II Plans. If Landlord so
completes construction of the Project II Improvements, Tenant will not
be excused from paying all Rent due pursuant to the terms of this Lease,
and Landlord shall have the right to exercise any or all of its remedies
hereunder following an Event of Default. All acknowledgments of Tenant
regarding the Leased Premises contained in Paragraph 3(b) shall be
deemed to have been made with respect to the Project II Improvements as
of the Project II Final Completion Date.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for offices,
manufacturing, warehouse, distribution and research and development and
uses ancillary thereto and for no other purpose without Landlord's prior
written consent, which shall not be unreasonably withheld, delayed or
conditioned. Tenant shall not use or occupy or permit any of the Leased
Premises to be used or occupied, nor do or permit anything to be done in
or on any of the Leased Premises, in a manner which would or might
(i) violate any Law, Legal Requirement or Easement Agreement, (ii) make
void or voidable or cause any insurer to cancel any insurance required
by this Lease, or make it difficult or impossible to obtain any such
insurance at commercially reasonable rates, (iii) make void or voidable,
or cancel or cause to be cancelled or released any warranty, guaranty or
indemnity, (iv) cause structural injury to any of the Improvements or
(v) constitute a public or private nuisance or waste.
(b) Subject to the provisions hereof, so long as no Event of
Default has occurred and is continuing, Tenant shall quietly hold,
occupy and enjoy the Leased Premises throughout the Term, without any
hindrance, ejection or molestation by Landlord with respect to matters
that arise after the date hereof, provided that Landlord may, upon not
less than 48 hours' notice to Tenant, enter upon and examine any of the
Leased Premises at such reasonable times as Landlord may elect (except
that no notice shall be required if an Event of Default exists and
remains uncured), for the purpose of inspecting the Leased Premises,
verifying compliance or non-compliance by Tenant with its obligations
hereunder and the existence or non-existence of an Event of Default or
event which with the passage of time and/or notice would constitute an
Event of Default, showing the Leased Premises to prospective Lenders and
purchasers and taking such other action with respect to the Leased
Premises as is permitted by any provision hereof.
5. Term.
(a) Subject to the provisions hereof, Tenant shall have and hold
the Leased Premises for an initial term (herein, the "Initial Term", and
the Initial Term, as extended or renewed in accordance with the
provisions hereof, being called the "Term") that commenced on
February 16, 1995 (the "Commencement Date") and that expires on May 31,
2014 (the "Expiration Date"). If all Rent and all other sums due
hereunder shall not have been fully paid by the end of the Term,
Landlord may, at its option, extend the Term until all said sums shall
have been fully paid.
(b) Provided that if, on or prior to the Expiration Date or any
other Renewal Date (as hereinafter defined) (i) no Event of Default
exists and remains uncured, and (ii) this Lease shall not have been
terminated pursuant to any provision hereof, then on the Expiration Date
and on the fifth (5th) and tenth (10th) anniversaries of the Expiration
Date, each such anniversary being a "Renewal Date", the Term shall be
deemed to have been automatically extended for an additional period of
five (5) years, and on the fifteenth (15th) anniversary of the
Expiration Date for eight (8) months, such anniversary also being a
"Renewal Date", the Term shall be deemed to have been automatically
extended (each such extension period, a "Renewal Term"), unless in any
case Tenant shall notify Landlord in writing at least one (1) year prior
to the next Renewal Date that Tenant is terminating this Lease as of the
next Renewal Date. If Tenant elects not to extend the Term of this
Lease then, prior to the expiration date, Tenant shall, at the request
of Landlord, provide to Landlord a Termination of Lease in recordable
form. Any such extension of the Term shall be subject to all of the
provisions of this Lease, as the same may be amended, supplemented or
modified.
(c) If Tenant exercises its option not to extend or further
extend the Term, or if an Event of Default exists, then Landlord shall
have the right during the remainder of the Term then in effect and, in
any event, Landlord shall have the right during the last year of the
Term, to (i) advertise the availability of the Leased Premises for sale
or reletting and to erect upon the Leased Premises signs indicating such
availability and (ii) upon reasonable prior notice to Tenant show the
Leased Premises to prospective purchasers or tenants or their agents at
such reasonable times as Landlord may select and as may be approved by
Tenant, such approval not to be unreasonably withheld or delayed (except
that no approval shall be required if an Event of Default exists and
remains uncured).
6. Basic Rent. Landlord acknowledges that all Basic Rent has
been paid through January 31, 1998. Tenant shall pay to Landlord, as
annual rent for the Leased Premises during the portion of the Term
remaining from and after February 1, 1998, the amounts determined in
accordance with Exhibit "D" hereto ("Basic Rent"). Payments shall be
made on March 1, 1998 and on the first day of each month during the
remainder of the Term (each such day being a "Basic Rent Payment Date").
Each such rental payment shall be made, (a) at Landlord's sole
discretion, to Landlord at its address set forth above and/or to such
one or more other Persons, at such addresses and in such proportions as
Landlord may direct by fifteen (15) days' prior written notice to Tenant
(in which event Tenant shall give Landlord notice of each such payment
concurrent with the making thereof), and (b) in funds available to
Landlord on the applicable Basic Rent Payment Date.
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent"):
(i) except as otherwise specifically provided herein,
all costs and expenses of Tenant and all reasonable costs
and expenses of, Landlord and any other Persons specifically
referenced herein which are incurred in connection or
associated with (A) the use, non-use, occupancy, possession,
operation, condition, design, construction, maintenance,
alteration, repair or restoration of any of the Leased
Premises, (B) the performance of any of Tenant's obligations
under this Lease, (C) any sale or other transfer of any of
the Leased Premises to Tenant under this Lease, (D) any
Condemnation proceedings, (E) the adjustment, settlement or
compromise of any insurance claims involving or arising from
any of the Leased Premises, (F) the prosecution, defense or
settlement of any litigation involving or arising from any
of the Leased Premises, this Lease, or the sale of the
Leased Premises to Landlord, (G) the enforcement by
Landlord, its successors and assigns, of any of its rights
under this Lease, (H) any amendment to or modification or
termination of this Lease made at the request of Tenant,
(I) Costs of Landlord's and Lender's counsel incurred in
connection with the preparation, negotiation and execution
of this Lease, Costs of Landlord's and Lender's counsel
incurred in connection with the review and/or negotiation of
documents requested by Tenant and Costs of third party
consultants retained by Landlord in connection with any act
undertaken by Landlord at the request of Tenant, or
incurred in connection with any act of Landlord performed on
behalf of Tenant that Landlord has the right to perform
under the terms of this Lease, (J) the reasonable cost of a
consultant retained by Lender to review plans,
specifications, and contracts in connection with any
Alteration for which the approval of Lender is required or
permitted under the terms of the Mortgage and the reasonable
costs of Lender in connection with any inspection of the
Leased Premises, (K) out-of-pocket costs incurred by Lender
in connection with an Event of Default, (L) costs and
expenses of any trustee under any Mortgage and (M) any other
items specifically required to be paid by Tenant under this
Lease, which costs and expenses shall include, without
limitation, all Costs, judgments, settlement amounts,
Impositions, insurance premiums, appraisal fees, the cost of
performing and reporting any Site Assessment if an
Environmental Violation is found, the cost of monitoring
compliance with the provisions of Paragraph 10(f) hereof,
including the reasonable cost of consultants retained by
Landlord and Lender, the cost of curing any Environmental
Violation, and the cost of complying with all Legal
Requirements, fines, penalties and interest;
(ii) after the date all or any portion of any
installment of Basic Rent is due and not paid, an amount
("Late Charge") equal to three percent (3%) of the amount of
such unpaid installment or portion thereof; provided,
however, that with respect to the first two late payments of
all or any portion of any installment of Basic Rent in any
consecutive twelve (12) month period the Late Charge shall
not be due and payable unless the Basic Rent has not been
paid within three (3) business days following receipt by
Tenant of written notice that such installment has not been
received;
(iii) a sum equal to any additional sums (including
any late charge, default penalties, interest and fees of
Lender's counsel) which are payable by Landlord to any
Lender under any Note by reason of Tenant's late payment or
non-payment of Basic Rent or by reason of an Event of
Default; and
(iv) interest at the rate per annum (the "Default
Rate") equal to the default interest rate per annum in the
Note on the following sums until paid in full: (A) all
overdue installments of Basic Rent from the respective due
dates thereof, (B) all overdue amounts of Additional Rent
relating to obligations which Landlord shall have paid on
behalf of Tenant, from the date Tenant receives notice of
payment thereof by Landlord, and (C) all other overdue
amounts of Additional Rent, from the date that Tenant
receives notice any such amount has become overdue.
(b) Tenant shall pay and discharge (i) any Additional Rent
referred to in Paragraph 7(a)(i) when the same shall become due,
provided that amounts which are billed to Landlord or any third party,
but not to Tenant, shall be paid within five (5) days after Landlord's
demand for payment thereof, and (ii) any other Additional Rent,
immediately upon Landlord's demand for payment thereof.
(c) In no event shall amounts payable under Paragraph 7(a)(ii),
(iii) and (iv) exceed the maximum amount permitted by applicable Law.
8. Net Lease; Non-Terminability.
(a) This is a net lease and all Monetary Obligations shall be
paid without notice or demand and without set-off, counterclaim,
recoupment, abatement, suspension, deferment, diminution, deduction,
reduction or defense, except as specifically provided herein to the
contrary (collectively, a "Set-Off").
(b) Except as otherwise expressly provided herein, this Lease
and the rights of Landlord and the obligations of Tenant hereunder shall
not be affected by any event or for any reason, including the following:
(i) any damage to or theft, loss or destruction of any of the Leased
Premises, (ii) any Condemnation, (iii) the prohibition, limitation or
restriction of Tenant's use of any of the Leased Premises, (iv) any
eviction by paramount title or otherwise, (v) Tenant's acquisition of
ownership of any of the Leased Premises other than pursuant to an
express provision of this Lease, (vi) any default on the part of
Landlord hereunder or under any Note, Mortgage, Assignment or any other
agreement, (vii) any latent or other defect in any of the Leased
Premises, (viii) the breach of any warranty of any seller or
manufacturer of any of the Equipment, (ix) any violation of
Paragraph 4(b) or any other provision of this Lease by Landlord, (x) the
bankruptcy, insolvency, reorganization, composition, readjustment,
liquidation, dissolution or winding-up of, or other proceeding affecting
Landlord or Tenant, (xi) the exercise of any remedy, including
foreclosure, under any Mortgage or Assignment, (xii) any action with
respect to this Lease (including the disaffirmance hereof) which may be
taken by Landlord, any trustee, receiver or liquidator of Landlord or
any court under the Federal Bankruptcy Code or otherwise, (xiii) any
interference with Tenant's use of the Leased Premises, (xiv) market or
economic changes or (xv) any other cause, whether similar or dissimilar
to the foregoing, any present or future Law to the contrary
notwithstanding.
(c) The obligations of Tenant hereunder shall be separate and
independent covenants and agreements, all Monetary Obligations shall
continue to be payable in all events (or, in lieu thereof, Tenant shall
pay amounts equal thereto), and the obligations of Tenant hereunder
shall continue unaffected unless the requirement to pay or perform the
same shall have been terminated pursuant to an express provision of this
Lease. All Rent payable by Tenant hereunder shall constitute "rent" for
all purposes (including Section 502(b)(6) of the Federal Bankruptcy
Code).
(d) Except as otherwise expressly provided herein, Tenant shall
have no right and hereby waives all rights which it may have under any
Law (i) to quit, terminate or surrender this Lease or any of the Leased
Premises, or (ii) to any Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, not later than the due date thereof, or at
least five (5) days prior to the day before any fine, interest, penalty
or cost may be added thereto or imposed, or at least five (5) days prior
to the day any lien may be filed for the non-payment thereof (if such
day is used to determine the due date of the respective item), pay and
discharge all taxes (including real and personal property, franchise,
sales and rent taxes), all charges for any easement or agreement
maintained for the benefit of any of the Leased Premises, all
assessments and levies, all permit, inspection and license fees, all
rents and charges for water, sewer, utility and communication services
relating to any of the Leased Premises, all ground rents and all other
public charges whether of a like or different nature, even if unforeseen
or extraordinary, imposed upon or assessed against (i) Tenant, (ii) any
of the Leased Premises, including any increases in real estate taxes
from a reassessment of the Leased Premises by the applicable taxing
authority as a result of any transfer of the Leased Premises (A) to any
affiliate of Landlord or Landlord's parent of which Landlord's parent
directly or indirectly owns beneficially more than fifty percent (50%)
or (B) to Landlord's parent so long as in any such case Tenant has an
opportunity to review and comment upon the structure of such transfer
prior to the occurrence thereof, (iii) Landlord as a result of or
arising in respect of the acquisition, ownership, occupancy, leasing,
use, possession or sale of any of the Leased Premises, any activity
conducted on any of the Leased Premises, or the Rent, or (iv) any Lender
by reason of any Note, Mortgage, Assignment or other document evidencing
or securing a Loan and which (as to this clause (iv)) Landlord has
agreed to pay (collectively, the "Impositions"); provided, that nothing
herein shall obligate Tenant to pay (A) income, excess profits or other
taxes of Landlord (or Lender) which are determined on the basis of
Landlord's (or Lender's) net income or net worth (unless such taxes are
a substitute for any then existing tax, assessment or other charge upon
or with respect to the Leased Premises which, if it were in effect,
would be payable by Tenant under the provisions hereof or by the terms
of such tax, assessment or other charge), (B) any estate, inheritance,
succession, gift or similar tax imposed on Landlord or Lender, (C) any
capital gains tax imposed on Landlord in connection with the sale of the
Leased Premises to any Person or (D) any increases in real estate taxes
from a reassessment of the Leased Premises by the applicable taxing
authority as a result of (x) any sale or transfer of the Leased Premises
or, (y) any sale or transfer of ownership interests by any member of
Landlord, except as provided in (ii) above. If any Imposition may be
paid in installments without interest or penalty, Tenant shall have the
option to pay such Imposition in installments; in such event, Tenant
shall be liable only for those installments which accrue or become due
and payable during the Term. Tenant shall prepare and file all tax
reports required by governmental authorities which relate to the
Impositions. Tenant shall deliver to Landlord (1) copies of all
settlements and notices pertaining to the Impositions which may be
issued by any governmental authority within ten (10) days after Tenant's
receipt thereof, (2) receipts for payment of all taxes required to be
paid by Tenant hereunder within thirty (30) days after the due date
thereof and (3) receipts for payment of all other Impositions within ten
(10) days after Landlord's request therefor. Any refunds of Impositions
attributable to any period during the Term shall be payable to, and
shall be the property of, Tenant.
(b) Landlord shall have the right at any time following the
occurrence and during the continuation of an Event of Default to require
Tenant to pay to Landlord (or Lender if Landlord is so required pursuant
to the terms of the Mortgage) an additional monthly sum (the "Escrow
Payments") sufficient to pay the Escrow Charges (as hereinafter defined)
as they become due. As used herein, "Escrow Charges" shall mean real
estate taxes on the Leased Premises or payments in lieu thereof and
premiums on any insurance required by this Lease. Landlord shall
determine the amount of the Escrow Charges and of each Escrow Payment.
As long as the Escrow Payments are being held by Landlord and not
Lender, or if Lender shall hold the Escrow Payments and shall so agree,
the Escrow Payments shall not be commingled with other funds of
Landlord or other Persons and interest shall accrue thereon for the
benefit of Tenant, from the date such monies are received by or on
behalf of Landlord to the date such monies are disbursed to pay Escrow
Charges. Landlord or Lender, as the case may be, shall apply the Escrow
Payments to the payment of the Escrow Charges in such order or priority
as Landlord shall determine or as required by law. If at any time the
Escrow Payments theretofore paid to Landlord or Lender, as the case may
be, shall be insufficient for the payment of the Escrow Charges, Tenant,
within ten (10) days after Landlord's demand therefor, which shall
include written verification of such deficiency, shall pay the amount of
the deficiency to Landlord.
10. Compliance with Laws and Easement Agreements; Environmental
Matters.
(a) Tenant shall, at its sole expense, be in material compliance
with and conform to, and cause any other Person occupying any part of
the Leased Premises to be in material compliance with and conform to,
all Insurance Requirements and Legal Requirements (except that Tenant
and the Leased Premises shall be in absolute compliance with all
applicable Environmental Laws). Tenant shall not at any time (i) cause,
permit or suffer to occur any material Environmental Violation or
(ii) permit any sublessee, assignee or other Person occupying the Leased
Premises under or through Tenant to cause, permit or suffer to occur any
material Environmental Violation and, at the request of Landlord or
Lender, Tenant shall promptly remediate or undertake any other
appropriate response action to correct any existing Environmental
Violation, however immaterial.
(b) Tenant, at its sole cost and expense, will at all times
promptly and faithfully abide by, discharge and perform all of the
covenants, conditions and agreements contained in any Easement Agreement
on the part of Landlord or other occupier of the Leased Premises, to be
kept and performed thereunder. Tenant will not alter, modify, amend or
terminate any Easement Agreement, give any consent or approval
thereunder, or enter into any new Easement Agreement without, in each
case, the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Any such new Easement Agreement shall
automatically be a Permitted Encumbrance.
(c) In connection with the refinancing of the Initial Loan or as
reasonably requested by a Lender and in any other case not more
frequently than once every three (3) years or at any other time that, in
the opinion of Landlord or Lender, a reasonable basis exists to believe
that an Environmental Violation exists or a condition that could be
reasonably expected to result in an Environmental Violation exists, upon
prior written notice from Landlord or Lender, Tenant shall permit such
persons as Landlord or Lender may designate ("Site Reviewers") to visit
the Leased Premises at reasonable times agreed to by Tenant and perform,
as agents of Tenant, environmental site investigations and assessments
("Site Assessments") on the Leased Premises for the purpose of
investigating the Leased Premises. In addition to the permitted Site
Assessments, the Site Reviewers shall have the right to obtain from
Tenant information reasonably necessary to update any Site Assessment.
Such Site Assessments may include both above and below the ground
testing for Environmental Violations and such other tests as may be
reasonably necessary, in the opinion of the Site Reviewers, to conduct
the Site Assessments. Tenant shall supply to the Site Reviewers such
historical and operational information regarding the Leased Premises as
may be reasonably requested by the Site Reviewers to facilitate the Site
Assessments, and shall make available for meetings with the Site
Reviewers appropriate personnel having knowledge of such matters.
Landlord shall pay the cost of any such Site Assessment unless an
Environmental Violation is found, in which event the cost shall be paid
by Tenant.
(d) If an Environmental Violation occurs or is found to exist
and, in Landlord's reasonable judgment, the cost of remediation of, or
other response action with respect to, the same is likely to exceed
$250,000, or, if an Event of Default under Paragraph 22(a)(i) hereof has
occurred during the immediately preceding twelve (12) month period,
$50,000, Tenant shall provide to Landlord and Lender within ten (10)
days after Landlord's or Lender's request therefor, adequate financial
assurances that Tenant will effect such remediation or other response
action in accordance with applicable Environmental Laws.
(e) Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist that would render
the Leased Premises untenantable or unmarketable and the Term would
otherwise terminate or expire, then, at the option of Landlord, the Term
shall be automatically extended beyond the date of termination or
expiration and this Lease shall remain in full force and effect beyond
such date until the earlier to occur of (i) the completion of all
remedial or other response action in accordance with applicable
Environmental Laws or (ii) the date specified in a written notice from
Landlord to Tenant terminating this Lease.
(f) If Tenant fails to comply with (or promptly commence to
comply with and diligently pursue to completion) any requirement of any
Environmental Law in connection with any Environmental Violation which
occurs or is found to exist, then after ten (10) days prior notice to
Tenant (except that no notice shall be required if any emergency exists)
Landlord and/or Lender shall have the right (but no obligation) to take
any and all actions as Landlord and/or Lender shall deem necessary or
advisable in order to cure such Environmental Violation.
(g) Tenant shall notify Landlord and Lender immediately after
becoming aware of any Environmental Violation (or alleged Environmental
Violation) or noncompliance with any of the covenants contained in this
Paragraph 10 and shall forward to Landlord and Lender immediately upon
receipt thereof copies of all orders, claims, reports, notices, permits,
applications or other communications relating to any such violation or
noncompliance.
(h) All future leases, subleases or concession agreements
relating to the Leased Premises entered into by Tenant shall contain
covenants of the other party thereto which are comparable to the
covenants contained in this Paragraph 10.
(i) Tenant shall not release The ▇▇▇▇▇▇-▇▇▇▇▇ Corporation ("PE")
from any of its obligations under the Asset Purchase Agreement, dated
March 16, 1990, between Tenant and PE that relate to clause (f) of
Section 6.2 thereof or otherwise amend said clause (f) or any other
applicable provision without having obtained the prior written approval
of Landlord and Lender. Tenant represents and warrants to Landlord that
the indemnity under clause (f) of Section 6.2 includes 1,
1-dichloroethene on the Leased Premises.
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly, create or permit
to be created or to remain and shall promptly discharge or remove any
lien, levy or encumbrance on any of the Leased Premises or on any Rent
or any other sums payable by Tenant under this Lease, other than any
Mortgage or Assignment, the Permitted Encumbrances and any mortgage,
lien, encumbrance or other charge created by or resulting solely from
any act or omission of Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD
SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO
BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE
LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO MECHANICS' OR OTHER
LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR
AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES.
LANDLORD May AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT SHALL
PROMPTLY, POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH
NON-LIABILITY OF LANDLORD.
(b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or
permitted by any present or future Law in order to evidence the
respective interests of Landlord and Tenant in the Leased Premises, and
shall cause a memorandum of this Lease (or, if such a memorandum cannot
be recorded, this Lease), and any supplement hereto or thereto, to be
recorded in such manner and in such places as may be required or
permitted by any present or future Law in order to protect the validity
and priority of this Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain, at Tenant's sole cost
and expense, the Existing Premises and the Adjoining Property in
substantially as good repair and appearance as they are in on the date
hereof and shall at all times maintain the Project I Improvements and
Project II Improvements in substantially as good repair and appearance
as they are on the Project I Final Completion Date and Project II Final
Completion Date, ordinary wear and tear excepted, and fit to be used for
their intended use in accordance with the practices generally recognized
as then acceptable by other companies in its industry, and, in the case
of the Equipment, in as good mechanical condition as it was on the later
of the date hereof or the date of its installation, except for ordinary
wear and tear. Tenant shall take every other reasonable action
necessary or appropriate for the preservation and safety of the Leased
Premises. Tenant shall promptly make all Alterations of every kind and
nature, whether foreseen or unforeseen, which may be required to comply
with the foregoing requirements of this Paragraph 12(a). Landlord shall
not be required to make any Alteration, whether foreseen or unforeseen,
or to maintain any of the Leased Premises or Adjoining Property in any
way, and Tenant hereby expressly waives any right which may be provided
for in any Law now or hereafter in effect to make Alterations at the
expense of Landlord or to require Landlord to make Alterations. Any
Alteration made by Tenant pursuant to this Paragraph 12 shall be made in
conformity with the provisions of Paragraph 13.
(b) If any Improvement, now or hereafter constructed, shall
(i) encroach upon any setback or any property, street or right-of-way
adjoining the Leased Premises, (ii) violate the provisions of any
restrictive covenant affecting the Leased Premises, (iii) hinder or
obstruct any easement or right-of-way to which any of the Leased
Premises is subject or (iv) impair the rights of others in, to or under
any of the foregoing, Tenant shall, at Tenant's sole cost and expense,
promptly after receiving a notice thereof, correct such condition from
the party entitled to make such demand, and either (A) obtain from all
necessary parties waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation, hindrance,
obstruction or impairment, whether the same shall affect Landlord,
Tenant or both, or (B) take such action as shall be necessary to remove
all such encroachments, hindrances or obstructions and to end all such
violations or impairments, including, if necessary, making Alterations.
13. Alterations and Improvements.
(a) Tenant shall have the right, without having obtained the
prior written consent of Landlord and Lender, to make (i) non-structural
Alterations to the Leased Premises, (ii) structural Alterations or a
series of related structural Alterations that, as to any such
Alterations or series of related Alterations, do not cost in excess of
$1,000,000 or, with respect to Alterations to any "clean room" test area
in Buildings 2, 3 or 4 and any "process laboratory" in Buildings 2, 3
and 4, $2,500,000, (iii) to install Equipment in the Improvements or
accessions to the Equipment that, as to such Equipment or accessions, do
not cost in excess of $1,000,000 or, with respect to Alterations to any
"clean room" test area in Buildings 2, 3 and 4 and any "process
laboratory" in Buildings 2, 3 and 4 $2,500,000, and (iv) the Alterations
identified in Schedule 2 attached hereto, so long as at the time of
construction or installation of any such Equipment or Alterations
pursuant to clauses (i) through (iv) no Event of Default exists and the
value and utility of the Leased Premises is not diminished thereby and
no such Alterations shall be permitted under this Paragraph 13 with
respect to the Project II Improvements until the Project II Final
Completion Date. If the cost of any structural Alterations, series of
related structural Alterations, Equipment or accessions thereto is in
excess of $1,000,000 or, with respect to Alterations to any "clean room"
test area in Buildings 2, 3 or 4 and any "process laboratory" in
Buildings 2, 3 or 4, $2,500,000, the prior written approval of Lender
shall be required, such approval not to be unreasonably withheld,
delayed or conditioned, but may be withheld if an Event of Default
exists and remains uncured. Tenant shall not construct upon the Land
any additional buildings without having first obtained the prior written
consent of Landlord and Lender.
(b) If Tenant makes any Alterations pursuant to this
Paragraph 13 or Paragraph 36 or as required by Paragraph 12 or 17 (such
Alterations and actions being hereinafter collectively referred to as
"Work"), whether or not Landlord's or Lender's consent is required, then
(i) the market value of the Leased Premises shall not be lessened by any
such Work or its usefulness impaired, (ii) all such Work shall be
performed by Tenant in a good and workmanlike manner, (iii) all such
Work shall be expeditiously completed in compliance with all Legal
Requirements, (iv) all such Work shall comply with the Insurance
Requirements, (v) if any such Work involves the replacement of Equipment
or parts thereto, all replacement Equipment or parts shall have a value
and useful life so as not to diminish the value of the Improvements,
(vi) Tenant shall promptly discharge or remove all liens filed against
any of the Leased Premises arising out of such Work, (vii) Tenant shall
procure and pay for all permits and licenses required in connection with
any such Work, (viii) all such Work that constitutes part of the Leased
Premises shall be the property of Landlord and shall be subject to this
Lease, and Tenant shall execute and deliver to Landlord any document
requested by Landlord evidencing the assignment to Landlord of all
estate, right, title and interest (other than the leasehold estate
created hereby) of Tenant or any other Person thereto or therein, and
(ix) Tenant shall comply, to the extent requested by Landlord or
required by this Lease, with the provisions of Paragraph 19(a), whether
or not such Work involves restoration of the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of
this Lease, Tenant shall not be required to (a) pay any Imposition,
(b) comply with any Legal Requirement, (c) discharge or remove any lien
referred to in Paragraph 11 or 13 or (d) take any action with respect to
any encroachment, violation, hindrance, obstruction or impairment
referred to in Paragraph 12(b) (such non-compliance with the terms
hereof being hereinafter referred to collectively as "Permitted
Violations"), so long as at the time of such contest no Event of Default
exists and so long as Tenant shall contest, in good faith, the
existence, amount or validity thereof, the amount of the damages caused
thereby, or the extent of its or Landlord's liability therefor by
appropriate proceedings which shall operate during the pendency thereof
to prevent or stay (i) the collection of, or other realization upon, the
Permitted Violation so contested, (ii) the sale, forfeiture or loss of
any of the Leased Premises or any Rent to satisfy or to pay any damages
caused by any Permitted Violation, (iii) any material interference with
the use or occupancy of any of the Leased Premises, (iv) any
interference with the payment of any Rent, (v) the cancellation or
increase in the rate of any insurance policy or a statement by the
carrier that coverage will be denied or (vi) the enforcement or
execution of any injunction, order or Legal Requirement with respect to
the Permitted Violation. Tenant shall provide Landlord security which
is satisfactory, in Landlord's reasonable judgment, to assure that such
Permitted Violation is corrected, including all Costs, interest and
penalties that may be incurred or become due in connection therewith.
While any proceedings which comply with the requirements of this
Paragraph 14 are pending and the required security (if any) is held by
Landlord, Landlord shall not have the right to correct any Permitted
Violation thereby being contested unless Landlord is required by Law to
correct such Permitted Violation and Tenant's contest does not prevent
or stay such requirement as to Landlord. Each such contest shall be
promptly and diligently prosecuted by Tenant to a final conclusion,
except that Tenant, so long as the conditions of this Paragraph 14 are
at all times complied with, has the right to attempt to settle or
compromise such contest through negotiations. Tenant shall pay any and
all losses, judgments, decrees and Costs in connection with any such
contest and shall, promptly after the final determination of such
contest, fully pay and discharge the amounts which shall be levied,
assessed, charged or imposed or be determined to be payable therein or
in connection therewith, together with all penalties, fines, interest
and Costs thereof or in connection therewith, and perform all acts the
performance of which shall be ordered or decreed as a result thereof.
No such contest shall subject Landlord or Lender to the risk of any
civil or criminal liability.
15. Indemnification.
(a) Tenant shall pay, protect, indemnify, save and hold harmless
Landlord, Lender, its officers, directors, shareholders, employees and
trustees and all other Persons described in Paragraph 30 (each an
"Indemnitee") from and against any and all liabilities, obligations,
fines, losses, damages (including punitive damages), penalties, Costs,
causes of action, suits, claims, demands or judgments of any nature
whatsoever, howsoever caused, without regard to the form of action and
whether based on strict liability, gross negligence, negligence or any
other theory of recovery at law or in equity, arising from (i) any
matter pertaining to the acquisition (or the negotiations leading
thereto), ownership, use, non-use, occupancy, operation, condition,
design, construction, maintenance, repair or restoration of the Leased
Premises or Adjoining Property, (ii) any casualty in any manner arising
from the Leased Premises or Adjoining Property, whether or not Landlord
has or should have knowledge or notice of any defect or condition
causing or contributing to said casualty, (iii) any violation by Tenant
of any provision of this Lease, any contract or agreement to which
Tenant is a party, any Legal Requirement or any Permitted Encumbrance or
(iv) any alleged, threatened or actual Environmental Violation, however
immaterial, including (A) liability for response costs and for costs of
removal and remedial action incurred by the United States Government,
any state or local governmental unit or any other Person, or damages
from injury to or destruction or loss of natural resources, including
the reasonable costs of assessing such injury, destruction or loss,
incurred pursuant to Section 107 of CERCLA, or any successor section or
act or provision of any similar state or local Law, (B) liability for
costs and expenses of abatement, correction or clean-up, fines, damages,
response costs or penalties which arise from the provisions of any of
the other Environmental Laws and (C) liability for personal injury or
property damage arising under any statutory or common-law tort theory,
including damages assessed for the maintenance of a public or private
nuisance or for carrying on of a dangerous activity, but excluding in
all cases any and all liabilities, losses, damages (including punitive
damages), penalties, costs, causes of action, suits, claims, demands or
judgments caused by the gross negligence or willful misconduct of any
Indemnitee.
(b) In case any action or proceeding is brought against any
Indemnitee by reason of any such claim, such Indemnitee may either (i)
retain its own counsel and defend such action (it being understood that
Tenant may employ counsel of its choice to monitor the defense of any
such action) or (ii) notify Tenant to resist or defend such action or
proceeding by retaining counsel reasonably satisfactory to such
Indemnitee, and such Indemnitee will cooperate and assist in the defense
of such action or proceeding if reasonably requested so to do by Tenant.
(c) The obligations of Tenant under this Paragraph 15 shall
survive any termination or expiration of this Lease.
16. Insurance.
(a) Tenant shall maintain the following insurance on or in
connection with the Leased Premises:
(i) Insurance against physical loss or damage to the
Improvements and Equipment as provided under a standard "All
Risk" property policy including but not limited to flood (if
the Leased Premises is in a flood zone) in amounts not less
than the actual replacement cost of the Improvements and
Equipment. Such policies shall contain replacement cost and
agreed amount endorsements and shall contain deductibles not
more than $50,000.00 per occurrence. Tenant shall maintain
earthquake insurance for the Improvements and Equipment in
an amount equal to the product of full replacement cost of
the Improvements multiplied by the Probable Maximum Loss of
the Improvements determined every four (4) years by a
seismic engineer mutually acceptable to Landlord and Tenant
with a deductible of not more than 25% of the product of the
full replacement cost of the Improvements multiplied by the
Probable Maximum Loss, provided, however, that in the event
of a substantial change in the availability or cost of
earthquake coverage Landlord and Tenant shall in good faith
negotiate a different amount or a different deductible or
other different terms of such insurance (subject to the
consent of Lender), taking into account the cost and
availability of such insurance and the objective of
reasonably protecting the interests of Landlord and Lender.
(ii) Commercial General Liability Insurance against
claims for personal and bodily injury, death or property
damage occurring on, in or as a result of the use of the
Leased Premises, in an amount not less than $15,000,000 per
occurrence/annual aggregate including but not limited to
Incidental Medical Malpractice, Garagekeepers Liability,
Host Liquor Liability, Non-Owned and Hired Automobile
Liability and all other coverage extensions that are usual
and customary for properties of this size and type provided,
however, that the Landlord shall have the right to require
such higher limits as may be reasonable and customary for
properties of this size and type.
(iii) Workers' Compensation Insurance covering all
persons employed by Tenant in connection with any work done
on or about any of the Leased Premises for which claims for
death, disease or bodily injury may be asserted against
Landlord, Tenant or any of the Leased Premises or, in lieu
of such Workers' Compensation Insurance, a program of
self-insurance complying with the rules, regulations and
requirements of the appropriate agency of the State.
(iv) Comprehensive Boiler and Machinery Insurance on
any of the Equipment or any other equipment on or in the
Leased Premises including but not limited to Service
Interruption, Expediting Expenses, Ammonia Contamination,
Hazardous Clean-Up and Comprehensive Object Definition, in
an amount not less than $1,000,000 for damage to property,
bodily injury or death resulting from such covered perils as
found in a standard Comprehensive Boiler and Machinery
Policy. Such policies may contain a deductible not in
excess of $50,000.
(v) Business Income/Interruption Insurance to include
Loss of Rents on an Actual Loss Sustained basis with a
period of indemnity not less than one year from the time of
loss. Such insurance shall name Landlord and Lender as
"loss payee" solely with respect to Rent payable to or for
the benefit of Landlord under this Lease.
(vi) During construction of the Project I
Improvements and the Project II Improvements and during any
period in which substantial Alterations at the Leased
Premises are being undertaken, Builder's Risk insurance
covering the total completed value including any "soft
costs" with respect to the Improvements being altered or
repaired (on a completed value, non-reporting basis),
replacement cost of work performed and equipment, supplies
and materials furnished in connection with such construction
or repair of Improvements or Equipment, together with such
"soft cost" endorsements and such other endorsements as
Landlord may reasonably require and General Liability,
Workers' Compensation and Automobile Liability Insurance
with respect to the Improvements being constructed, altered
or repaired.
(vii) Such other insurance (or other terms with
respect to any insurance required pursuant to this
Paragraph 16, including without limitation amounts of
coverage, deductibles, form of mortgagee clause) on or in
connection with any of the Leased Premises as Landlord or
Lender may reasonably require, which at the time is usual
and commonly obtained in connection with properties similar
in type of building size and use to the Leased Premises.
(b) The insurance required by Paragraph 16(a) shall be written
by companies which have a Best's rating of A:X or above and are admitted
in, and approved to write insurance policies by the State Insurance
Department for, the State. The insurance policies (i) shall be for such
terms as Landlord may reasonably approve, (ii) shall be in amounts
sufficient at all times to satisfy any coinsurance requirements thereof
and (iii) shall (except for the worker's compensation insurance referred
to in Paragraph 16(a)(iii) hereof) name Landlord, Tenant and Lender as
additional insureds or loss payees, as their respective interests may
appear. If said insurance or any part thereof shall expire, be
withdrawn, become void, voidable, unreliable or unsafe for any reason,
including a breach of any condition thereof by Tenant or the failure or
impairment of the capital of any insurer, or if for any other reason
whatsoever said insurance shall become reasonably unsatisfactory to
Landlord of Lender, Tenant shall immediately obtain new or additional
insurance reasonably satisfactory to Landlord and Lender.
(c) Each policy required by any provision of Paragraph 16(a),
except clause (iii) thereof, shall provide that it may not be canceled,
substantially modified or allowed to lapse on any renewal date except
after sixty (60) days' prior notice to Landlord and Lender. Each such
policy shall also provide that any loss otherwise payable thereunder
shall be payable notwithstanding (i) any act or omission of Landlord or
Tenant which might, absent such provision, result in a forfeiture of all
or a part of such insurance payment, (ii) the occupation or use of any
of the Leased Premises for purposes more hazardous than those permitted
by the provisions of such policy, (iii) any foreclosure or other action
or proceeding taken by Lender pursuant to any provision of the Mortgage,
Note, Assignment or other document evidencing or securing the Loan upon
the happening of an event of default therein or (iv) any change in title
to or ownership of any of the Leased Premises.
(d) Tenant shall pay as they become due all premiums for the
insurance required by Paragraph 16(a), shall renew or replace each
policy and deliver to Landlord evidence of the payment of the full
premium therefor or installment then due prior to the expiration date of
such policy, and shall promptly deliver to Landlord each original policy
or a duplicate thereof.
(e) Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain
pursuant to Paragraph 16(a) may be carried under a "blanket" or umbrella
policy or policies covering other properties or liabilities of Tenant,
provided that such "blanket" or umbrella policy or policies otherwise
comply with the provisions of this Paragraph 16 and provided further
that such policies shall provide for a reserved amount thereunder with
respect to the Leased Premises sufficient to assure that the amount of
insurance required by this Paragraph 16 will be available
notwithstanding any losses with respect to other property covered by
such blanket policies. The amount of the total insurance allocated to
the Leased Premises, which amount shall be not less than the amounts
required pursuant to this Paragraph 16, shall be specified either (i) in
each such "blanket" or umbrella policy or (ii) in a written statement,
which Tenant shall deliver to Landlord and Lender, from the insurer
thereunder. The original or a certified copy of each such "blanket" or
umbrella policy shall promptly be delivered to Landlord and Lender.
(f) Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 16 and
(ii) all requirements of the insurers thereunder applicable to Landlord,
Tenant or any of the Leased Premises or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration or repair of
any of the Leased Premises, even if such compliance necessitates
Alterations or results in interference with the use or enjoyment of any
of the Leased Premises.
(g) Tenant shall not carry separate insurance concurrent in form
or contributing in the event of a Casualty with that required in this
Paragraph 16 unless (i) Landlord and Lender are included therein as loss
payee or additional insureds, with loss payable as provided herein, and
(ii) such separate insurance complies with the other provisions of this
Paragraph 16. Tenant shall immediately notify Landlord and Lender of
such separate insurance and shall deliver to Landlord and Lender copies
of the policies therefor.
(h) All policies shall contain effective waivers by the carrier
against all claims for insurance premiums against Landlord and Lender
and shall contain full waivers of subrogation against the Landlord and
Lender.
(i) All proceeds of any insurance required under Paragraph 16(a)
shall be payable as follows:
(i) Except for proceeds payable to a Person other
than Landlord, Tenant or Lender and, so long as no Event of
Default exists and remains uncured, proceeds of less than
$1,000,000, all proceeds of insurance required under clauses
(ii), (iv) and (vii) of Paragraph 16(a) and proceeds
attributable to the general liability coverage provisions of
Builder's Risk insurance under clause (vi) of
Paragraph 16(a) shall be payable to Landlord or, if required
by the Mortgage or requested by Lender pursuant to the
Mortgage, to Lender. All proceeds of insurance required
under clause (v) of Paragraph 16(a) shall be payable to
Landlord or, if required by the Mortgage, to Lender.
(ii) Proceeds of insurance required under clause (i)
of Paragraph 16(a) and proceeds attributable to Builder's
Risk insurance (other than its general liability coverage
provisions) under clause (vi) of Paragraph 16(a) shall be
payable as follows:
(A) In the event of a Casualty that is a
Termination Event for which a Termination Notice has
been given under Paragraph 18(a), the proceeds shall
be payable to Landlord or, if required by the Mortgage
or requested by Lender pursuant to the Mortgage, to
Lender. Landlord shall retain or apply the Net Award
in accordance with the provisions of Paragraphs 18 and
20.
(B) In the event of a Casualty that is not a
Termination Event where the proceeds exceed
$1,000,000, the proceeds shall be payable to Landlord
or, if required by the Mortgage or requested by Lender
pursuant to the Mortgage, to Lender. Landlord shall
apply the Net Award in accordance with the provisions
of Paragraph 19.
(C) In the event of a Casualty that is not a
Termination Event where the proceeds are equal to or
less than $1,000,000 and provided no Event of Default
exists and is continuing, and no fact or condition
exists which with the lapse of time or giving of
notice, or both, would in Landlord's or Lender's
judgment constitute an Event of Default, at the time
such proceeds are paid, the Net Award shall be payable
to Tenant. Tenant shall apply the Net Award to
restoration of the Leased Premises in accordance with
the applicable provisions of this Lease. If an Event
of Default exists and is continuing or a fact or
condition exists which with the lapse of time or
giving of notice, or both, would in Landlord's or
Lender's judgment constitute an Event of Default, all
proceeds shall be payable to Landlord or Lender.
(iii) In the event that Tenant is listed as a payee
on a check from an insurance carrier for insurance proceeds
which subparagraphs (i) and (ii) provide are to be payable
to Landlord, Lender or another party or parties, Tenant
shall cooperate by promptly endorsing said check over to the
party to whom the proceeds are to be payable under
subparagraphs (i) or (ii). Tenant hereby appoints each of
Landlord or Lender as Tenant's attorneys-in-fact to endorse
any such check.
17. Casualty and Condemnation.
(a) If any Casualty occurs the insurance proceeds for which is
reasonably estimated by Tenant to be equal to or in excess of One
Hundred Thousand Dollars ($100,000), Tenant shall give Landlord and
Lender immediate notice thereof. So long as no Event of Default exists,
and subject to the provisions of Paragraph 16(i)(ii), Tenant is hereby
authorized to adjust, collect and compromise all claims under any of the
insurance policies required by Paragraph 16(a) (except public liability
insurance claims payable to a Person other than Tenant, Landlord or
Lender) and to execute and deliver on behalf of Landlord and Lender all
necessary proofs of loss, receipts, vouchers and releases required by
the insurers and Landlord and Lender shall have the right to join with
Tenant therein. Any adjustment, settlement or compromise of any such
claim in excess of $1,000,000 shall be subject to the prior written
approval of Landlord and Lender, which shall not be unreasonably
withheld, conditioned or delayed and Landlord and Lender shall have the
right to prosecute or contest, or to require Tenant to prosecute or
contest, any such claim, adjustment, settlement or compromise. If an
Event of Default exists, Tenant shall not be entitled to adjust, collect
or compromise any claim or to participate with Landlord or Lender in any
adjustment, collection and compromise of the Net Award payable in
connection with a Casualty. Tenant agrees to sign, upon the request of
Landlord or Lender, all proofs of loss, receipts, vouchers and releases.
Each insurer is hereby authorized and directed to make payment under
said policies in excess of $1,000,000 and return of unearned premiums,
directly to Landlord or, if required by the Mortgage or requested by
Lender pursuant to the Mortgage, to Lender instead of to Landlord or
Landlord and Tenant jointly, and Tenant hereby appoints each of Landlord
and Lender as Tenant's attorneys-in-fact to endorse any draft therefor.
(b) Tenant, immediately upon receiving a Condemnation Notice,
shall notify Landlord and Lender thereof. So long as no Event of
Default exists, Tenant is authorized to collect, settle and compromise
the amount of any Net Award and Landlord and Lender shall have the right
to join with Tenant therein. No agreement with any condemnor in
settlement or under threat of any Condemnation shall be made by Tenant
without the written consent of Landlord and Lender which shall not be
unreasonably withheld, conditioned or delayed. If an Event of Default
exists, Landlord and Lender shall be authorized to collect, settle and
compromise the amount of any Net Award and Tenant shall not be entitled
to participate with Landlord and Lender in any Condemnation proceeding
or negotiations under threat thereof or to contest the Condemnation or
the amount of the Net Award therefor. Subject to the provisions of this
Paragraph 17(b), Tenant hereby irrevocably assigns to Landlord and
Lender any award or payment to which Tenant is or may be entitled by
reason of any Condemnation, whether the same shall be paid or payable
for Tenant's leasehold interest hereunder or otherwise; but nothing in
this Lease shall impair Tenant's right to any award or payment on
account of Tenant's trade fixtures, equipment or other tangible property
which is not part of the Equipment, moving expenses or loss of business,
if available, to the extent that and so long as (i) Tenant shall have
the right to make, and does make, a separate claim therefor against the
condemnor and (ii) such claim does not in any way reduce either the
amount of the award otherwise payable to Landlord for the Condemnation
of Landlord's fee interest in the Leased Premises or the amount of the
award (if any) otherwise payable for the Condemnation of Tenant's
leasehold interest hereunder.
(c) If any Partial Casualty (whether or not insured against) or
Partial Condemnation shall occur, this Lease shall continue,
notwithstanding such event, and there shall be no abatement or reduction
of any Monetary Obligations, except as provided in Paragraph 17(d) and
19(c). Promptly after such Partial Casualty or Partial Condemnation,
Tenant, as required in Paragraph 12(a), shall commence and diligently
continue to restore the Leased Premises as nearly as practicable to
their value, condition and character immediately prior to such event.
Upon the receipt by Landlord of the entire Net Award of such Partial
Casualty or Partial Condemnation, Landlord shall make such Net Award
available to Tenant for restoration in accordance with and subject to
the provisions of Paragraph 19(a). If any Casualty or Condemnation
which is not a Partial Casualty or Partial Condemnation shall occur,
Tenant shall comply with the terms and conditions of Paragraph 18.
(d) In the event of a Requisition of any of the Leased Premises,
if any Net Award payable by reason of such Requisition is retained by
Landlord or Lender, each installment of Basic Rent payable on or after
the date on which the Net Award is paid to Landlord shall be reduced by
a fraction, the denominator of which shall be the total amount of all
Basic Rent due from such date to and including the last day of the Term
(calculated on the basis of the Basic Rent in effect as of the date of
the Requisition) and the numerator of which shall be the amount of such
Net Award retained by Landlord. Upon the expiration of the Term, any
portion of such Net Award which shall not have been previously credited
to Tenant shall be retained by Landlord.
18. Termination Events.
(a) If (i) the Leased Premises shall be taken by a Taking or
(ii) any substantial portion of the Leased Premises shall be taken by a
Taking or all or any substantial portion of the Leased Premises shall
be damaged or destroyed by a Casualty and, in such case, Tenant
certifies to Landlord that it will forever abandon operations at the
Leased Premises (each of the events described in the above clauses (i)
and (ii) shall hereinafter be referred to as a "Termination Event"),
then (x) in the case of (i) above, Tenant shall be obligated, within
thirty (30) days after Tenant receives a Condemnation Notice and (y) in
the case of (ii) above, Tenant shall have the option, within thirty (30)
days after Tenant receives a Condemnation Notice or thirty (30) days
after the Casualty, as the case may be, to give to Landlord and Lender
written notice of the Tenant's option to terminate this Lease (a
"Termination Notice") in the form described in Paragraph 18(b).
(b) A Termination Notice shall contain (i) notice of Tenant's
intention to terminate this Lease on the first Basic Rent Payment Date
which occurs at least ninety (90) days after the Fair Market Value Date
(the "Termination Date"), (ii) a binding and irrevocable offer of Tenant
to purchase the Leased Premises for an amount equal to the Termination
Amount and (iii) if the Termination Event is an event described in
Paragraph 18(a)(ii), the certification described therein and a certified
resolution of the Board of Directors of Tenant authorizing the same.
Promptly upon the delivery to Landlord of a Termination Notice, Landlord
and Tenant shall commence to determine the Fair Market Value of the
Leased Premises.
(c) If Landlord shall reject such offer to purchase the Leased
Premises by written notice to Tenant (a "Rejection"), which Rejection
shall contain the written consent of Lender, not later than thirty (30)
days following the Fair Market Value Date, then this Lease shall
terminate on the Termination Date; provided that, if Tenant has not
satisfied all Monetary Obligations and all other obligations and
liabilities under this Lease which have arisen on or prior to the
Termination Date (collectively, "Remaining Obligations") on the
Termination Date, then Landlord may, at its option, extend the date on
which this Lease may terminate to a date which is no later than the
first Basic Rent Payment Date after the Termination Date on which Tenant
has satisfied all Remaining Obligations. Upon such termination (i) all
obligations of Tenant hereunder shall terminate except for any Surviving
Obligations, (ii) Tenant shall promptly vacate and shall have no further
right, title or interest in or to any of the Leased Premises and
(iii) the Net Award shall be retained by Landlord. Notwithstanding
anything to the contrary hereinabove contained, if Tenant shall have
received a Rejection and, on the date when this Lease would otherwise
terminate as provided above, Landlord shall not have received the full
amount of the Net Award payable by reason of the applicable Termination
Event, then on the Termination Date Tenant shall assign to Landlord all
of its right, title and interest, if any, in and to the Net Award.
(d) Unless Tenant shall have received a Rejection not later than
the thirtieth (30th) day following the Fair Market Value Date, Landlord
shall be conclusively presumed to have accepted such offer. If such
offer is accepted by Landlord then, on the Termination Date, Tenant
shall pay to Landlord (or Lender if the Mortgage requires or permits
Lender to so require) the Termination Amount and all Remaining
Obligations and, if requested by Tenant, Landlord shall (i) convey to
Tenant the Leased Premises or the remaining portion thereof, if any, and
(ii) pay to or assign to Tenant its entire interest in and to the Net
Award, all in accordance with Paragraph 20.
19. Restoration; Reduction of Rent.
(a) So long as no Event of Default, or fact or condition which
with the lapse of time or giving of notice or both would, in the
judgment of Landlord or Lender, constitute an Event of Default, exists,
any Net Award up to and including $1,000,000 shall be paid directly to
Tenant and Tenant shall restore the Leased Premises in accordance with
the requirements of Paragraph 13(b) of this Lease. Any Net Award in
excess of $1,000,000 shall be made available by Landlord to Tenant for
the restoration of any of the Leased Premises, and Landlord (or Lender
if required by any Mortgage or if the Mortgage permits Lender to so
require) shall hold such Net Award in a fund (the "Restoration Fund")
and disburse amounts from the Restoration Fund only in accordance with
the following conditions:
(i) prior to commencement of restoration, (A) the
architects, contracts, contractors, plans and specifications
for the restoration shall have been approved by Landlord and
Lender, such approval not to be unreasonably withheld,
conditioned or delayed and (B) Landlord and Lender shall,
upon reasonable request and based upon a review of the
contractor's and prime subcontractors' credit, be provided
with acceptable performance bonds which insure satisfactory
completion of the restoration, are in an amount and form and
have a surety acceptable to Landlord, and name Landlord and
Lender as additional dual obligees;
(ii) at the time of any disbursement, no Event of
Default, or fact or condition which with the giving of
notice or lapse of time or both would, in the judgment of
Landlord or Lender, constitute an Event of Default shall
exist and any mechanics' or materialmen's liens filed
against any of the Leased Premises shall have been insured
over or covered by a bond;
(iii) disbursements shall be made from time to time
in an amount not exceeding the cost of the work completed
since the last disbursement, upon receipt of (A)
satisfactory evidence, including architects' certificates,
of the stage of completion, the estimated total cost of
completion and performance of the work to date in a good and
workmanlike manner in accordance with the contracts, plans
and specifications, (B) waivers of liens, (C) contractors'
and subcontractors' sworn statements as to completed work
and the cost thereof for which payment is requested, (D) a
satisfactory bringdown of title insurance and (E) other
evidence of cost and payment so that Landlord and Lender can
verify that the amounts disbursed from time to time are
represented by work that is completed, in place and free and
clear of mechanics' and materialmen's lien claims;
(iv) each request for disbursement shall be
accompanied by a certificate of Tenant, signed by the
president or a vice president or the chief financial officer
of Tenant, describing the work for which payment is
requested, stating the cost incurred in connection
therewith, stating that Tenant has not previously received
payment for such work and, upon completion of the work, also
stating that the work has been fully completed and complies
with the applicable requirements of this Lease;
(v) Landlord or Lender may retain ten percent (10%)
of the Restoration Fund until the restoration is fully
completed;
(vi) if the Restoration Fund is held by Lender it may
be commingled with Lender's other funds and shall bear
interest unless otherwise required by Lender; if it is held
by Landlord it shall be commingled with Landlord's other
funds and shall bear interest at the best available interest
rate; and
(vii) such other reasonable conditions to insure
timely, lien free completion of the restoration as Landlord
or Lender may impose.
(b) Prior to commencement of restoration and at any time during
restoration, if the estimated cost of completing the restoration work
free and clear of all liens, as determined by Landlord or if required by
a Mortgage, by Lender, exceeds the amount of the Net Award available for
such restoration, the amount of such excess shall, upon demand by
Landlord, be paid by Tenant to Landlord or if required by a Mortgage or
by Lender pursuant to the terms of a Mortgage, to Lender to be added to
the Restoration Fund. Any sum so added by Tenant which remains in the
Restoration Fund upon completion of restoration shall be refunded to
Tenant. For purposes of determining the source of funds with respect to
the disposition of funds remaining after the completion of restoration,
the Net Award shall be deemed to be disbursed prior to any amount added
by Tenant.
(c) If any sum remains in the Restoration Fund after completion
of the restoration and any refund to Tenant pursuant to Paragraph 19(b),
such sum (the "Remaining Sum") shall be retained by Landlord or, if
required by a Note or Mortgage or by Lender pursuant to the terms of a
Note or Mortgage, paid by Landlord to a Lender. If the Remaining Sum is
(i) retained by Landlord, each installment of Basic Rent payable on or
after the Retention Date shall be reduced by a fraction, the denominator
of which shall be the total amount of all Basic Rent due from such date
to and including the last Basic Rent Payment Date for the then existing
Term calculated on the basis of the Basic Rent then in effect and taking
into account any applicable adjustments under Paragraphs 1(c)(i) and
1(c)(ii) of Exhibit "D" and the numerator of which shall be the
Remaining Sum, or (ii) paid to Lender, then each installment of Basic
Rent thereafter payable shall be reduced in the same amount as payments
are reduced under any Note as if the Loan were reamortized to reflect
such payment, in each case until such Remaining Sum has been applied in
full or until the Term has expired, whichever occurs first. Landlord
agrees that if the terms of a Note or Mortgage permit partial prepayment
of the principal balance of the Loan without premium or penalty and, in
such event, require the Lender to thereupon reamortize the Loan,
Landlord shall pay any Remaining Sum to Lender as a partial prepayment
of the Loan and clause (ii) of this Paragraph 19(c) shall apply. Upon
the expiration of the Term, any portion of the Remaining Sum which has
not been so applied shall be retained by Landlord.
20. Procedures Upon Purchase.
(a) If the Leased Premises is purchased by Tenant pursuant to
any provision of this Lease, Landlord need not convey any better title
thereto than that which was conveyed to Landlord, and Tenant shall
accept such title, subject, however, to the Permitted Encumbrances and
to all other liens, exceptions and restrictions on, against or relating
to any of the Leased Premises and to all applicable Laws, but free of
the lien of and security interest created by any Mortgage or Assignment
and liens, exceptions and restrictions on, against or relating to the
Leased Premises which have been created by or resulted solely from acts
of Landlord after the date of this Lease, unless the same are Permitted
Encumbrances or customary utility easements benefiting the Leased
Premises or were created with the concurrence of Tenant or as a result
of a default by Tenant under this Lease.
(b) Upon the date fixed for any such purchase of the Leased
Premises pursuant to any provision of this Lease (any such date the
"Purchase Date"), through an appropriate escrow, Tenant shall pay to
Landlord, or to any Person to whom Landlord directs payment, the
Relevant Amount therefor specified herein, in Federal Funds, less any
credit of the Net Award received and retained by Landlord or Lender
allowed against the Relevant Amount, and Landlord shall deliver to
Tenant (i) a special warranty deed which describes the premises being
conveyed and conveys the title thereto as provided in Paragraph 20(a),
(ii) such other instruments as shall be necessary to transfer to Tenant
or its designee any other property (or rights to any Net Award not yet
received by Landlord or a Lender) then required to be sold by Landlord
to Tenant pursuant to this Lease and (iii) any Net Award received by
Landlord, not credited to Tenant against the Relevant Amount and
required to be delivered by Landlord to Tenant pursuant to this Lease;
provided, that if any Monetary Obligations remain outstanding on such
date, then Landlord may deduct from the Net Award the amount of such
Monetary Obligations; and further provided, that if any event has
occurred which, in Landlord's reasonable judgment, is likely to subject
any Indemnitee to any liability which Tenant is required to indemnify
against pursuant to Paragraph 15, then an amount shall be deducted from
the Net Award which, in Landlord's reasonable judgment, is sufficient to
satisfy such liability, which amount shall be deposited in an escrow
account with a financial institution reasonably satisfactory to Landlord
and Tenant on terms reasonably satisfactory to Landlord and Tenant
pending resolution of such matter. If on the Purchase Date any Monetary
Obligations remain outstanding and no Net Award is payable to Tenant by
Landlord or the amount of such Net Award is less than the amount of the
Monetary Obligations, then Tenant shall pay to Landlord on the Purchase
Date the amount of such Monetary Obligations. Upon the completion of
such purchase, this Lease and all obligations and liabilities of Tenant
hereunder shall terminate, except any Surviving Obligations.
(c) If the Tenant shall cause completion of such purchase to be
delayed after (i) the Termination Date, in the event of a purchase
pursuant to Paragraph 18 or, (ii) the date scheduled for such purchase,
in the event of a purchase under any other provision of this Lease then
(x) Rent shall continue to be due and payable until completion of such
purchase and (y) at Landlord's sole option, Fair Market Value shall be
redetermined and the Relevant Amount payable by Tenant pursuant to the
applicable provision of this Lease shall be adjusted to reflect such
redetermination. Landlord shall not be deemed to have caused completion
of such purchase to be delayed if it in good faith disputes the process
or methodology for determining Fair Market Value.
(d) Any prepaid Monetary Obligations paid to Landlord shall be
prorated as of the Purchase Date, and the prorated unapplied balance
shall be deducted from the Relevant Amount due to Landlord.
21. Assignment and Subletting; Prohibition against
Leasehold Financing.
(a) Tenant shall have the right so long as no Event of Default
has occurred and is continuing, upon thirty (30) days prior written
notice to Landlord and Lender, with no consent of Landlord or Lender
being required or necessary ("Preapproved Assignment") to assign this
Lease to any Person ("Preapproved Assignee") that is a Subsidiary of
Tenant on the date hereof or that, after the date hereof, is a
wholly-owned Subsidiary of Tenant or which, whether or not in connection
with the transfer or sale of all or substantially all of Tenant's
business, immediately following such assignment satisfies all published
criteria necessary to obtain a publicly traded unsecured senior debt
rating of "A2" or better from ▇▇▇▇▇'▇ Investors Services, Inc. or a
rating of "A" or better from Standard & Poor's Ratings Service, and in
the event all of such rating agencies cease to furnish such ratings,
then a comparable rating by any rating agency reasonably acceptable to
Landlord and Lender.
(b) During the Initial Term, if Tenant desires to assign this
Lease to a Person ("Non-Preapproved Assignee") who would not be a
Preapproved Assignee ("Non-Preapproved Assignment") then Tenant shall,
not less than ninety (90) days prior to the date on which it desires to
make a Non-Preapproved Assignment submit to Landlord and Lender
information regarding the following with respect to the Non-Preapproved
Assignee: (A) credit, (B) capital structure, (C) management,
(D) operating history, (E) proposed use of the Leased Premises and (F)
risk factors associated with the proposed use of the Leased Premises by
the Non-Preapproved Assignee, taking into account factors such as
environmental concerns, product liability and the like. Landlord and
Lender shall review such information and shall approve or disapprove the
Non-Preapproved Assignee no later than the thirtieth (30th) day
following receipt of all such information, and Landlord and Lender shall
be deemed to have acted reasonably in granting or withholding consent
for any or no reason if such grant or disapproval is based on any of the
above-described information. Notwithstanding anything to the contrary
contained herein, if the request for consent to a Non-Preapproved
Assignment is in connection with the sale by Tenant of all or
substantially all of its assets, Landlord and Lender shall be deemed to
have consented to the Non-Preapproved Assignment so long as no Event of
Default has occurred and is continuing and if, immediately after the
assignment, the Non-Preapproved Assignee has, on a pro forma basis, an
Adjusted Consolidated Net Worth (as defined in Exhibit "E") of not less
than the sum of (x) Fifty-three Million Dollars ($53,000,000) plus (y)
an amount equal to 60% of Tenant's Consolidated Net Income on a
cumulative basis for each fiscal quarter in which such Consolidated Net
Income is positive, but with no adjustment for each fiscal quarter in
which Consolidated Net Income is negative (calculated at the end of each
fiscal quarter), commencing with the fiscal quarter of Tenant that
commenced on August 1, 1996 and continuing for each quarter to and
including the end of the fiscal quarter prior to the fiscal quarter in
which the Non-Preapproved Assignment occurs.
(c) After the Initial Term, if Tenant desires to carry out a
Non-Preapproved Assignment, then Tenant shall, not less than fifteen
(15) days prior to the date on which it desires to make such
Non-Preapproved Assignment, submit to Landlord (and Lender, if Lender's
consent to the Non-Preapproved Assignment is required), reasonable
information regarding the identity and credit of the Non-Preapproved
Assignee. Landlord (and Lender, if applicable) shall review such
information and shall, no later than the fifteenth (15th) day following
receipt of such information, approve or disapprove the Non-Preapproved
Assignee. Such approval shall be deemed given if the net worth of the
Non-Preapproved Assignee is greater than or equal to the net worth of
the Tenant as shown on its then most recently prepared financial
statements, and otherwise such approval shall not be unreasonably
withheld, conditioned or delayed.
(d) If Landlord and Lender withhold consent to the
Non-Preapproved Assignment and Tenant desires to complete the
Non-Preapproved Assignment, Tenant shall make a rejectable offer (the
"Intended Assignment Offer") to purchase the Leased Premises for a
purchase price equal to the Offer Amount and to consummate the purchase
on the first Basic Rent Payment Date occurring thirty (30) days after
the determination of Fair Market Value (the "Intended Assignment
Purchase Date"). Notwithstanding the foregoing, if the Intended
Assignment Offer is accepted by Landlord and the Non-Preapproved
Assignment occurs on a date (the "Assignment Date") that is prior to the
Intended Assignment Purchase Date, then on the Assignment Date Tenant
shall deposit in escrow with Lender an amount (the "Deposit Amount")
equal to one hundred percent (100%) of the sum of the Acquisition Cost
and any estimated Prepayment Premium. On the Intended Assignment
Purchase Date, Tenant shall increase the Deposit Amount by the amount by
which the actual Prepayment Premium exceeds the estimated Prepayment
Premium. The Deposit Amount shall be held by and invested by Lender and
the Deposit Amount, together with any interest earned thereon, shall be
applied on the Intended Assignment Purchase Date to payment of the Offer
Amount.
(e) If Landlord shall reject the Intended Assignment Offer by
notice to Tenant, such notice to contain the written consent of Lender
to such rejection, no later than the thirtieth (30th) day following
receipt of the Intended Assignment Offer by Landlord, then this Lease
shall remain in full force and effect and Landlord and Lender shall be
deemed to have consented to the Non-Preapproved Assignment. Nothing
provided herein shall constitute a waiver by Landlord of the obligation
of Tenant to comply with the requirements of this Paragraph 21(e) if a
subsequent Non-Preapproved Assignment arises. No rejection of the
Intended Assignment Offer shall be effective for any purpose unless
consented to in writing by Lender.
(f) Unless Landlord shall have rejected the Intended Assignment
Offer by the foregoing notice to Tenant not later than the thirtieth
(30th) day following receipt of information described in the foregoing
Paragraph 21(b) or 21(c), Landlord shall be conclusively presumed to
have accepted the Intended Assignment Offer. If the Intended Assignment
Offer is accepted by Landlord, Tenant shall pay to Landlord the Offer
Amount (less the Deposit Amount and interest thereon paid to Landlord)
on the Intended Assignment Purchase Date and, provided that no Rent or
any other charge is due and unpaid under this Lease as of the Intended
Assignment Purchase Date and Tenant is otherwise in compliance with the
terms of this Lease, Landlord shall convey to Tenant the Leased Premises
in accordance with the provisions of Paragraph 20 of this Lease.
(g) Any assignment of Tenant's interest in this Lease by
operation of law as a result of any merger or consolidation by Tenant
shall be governed by the provisions of Paragraph 1(c) of Exhibit "E".
(h) Tenant shall have the right, upon thirty (30) days prior
written notice to Landlord and Lender, to enter into one or more
subleases that demise, in the aggregate, up to but not in excess of
thirty-one percent (31%) of the gross space in the Improvements with no
consent or approval of Landlord or Lender being required or necessary
("Preapproved Sublet"). Other than pursuant to a Preapproved Sublet,
during the Initial Term, no portion of the Leased Premises shall be
subleased during the Term to any other Person without the prior written
consent of Landlord and Lender, which consent shall not be unreasonably
withheld or delayed, and which consent shall be granted or withheld
based on a review of the following criteria as they relate to the
proposed sublessee: (1) credit, (2) capital structure, (3) management,
(4) operating history and (5) the proposed use of the sublet portion of
the Improvements, taking into account factors related to the proposed
subtenant's use of the Leased Premises such as environmental concerns.
Landlord and Lender shall be deemed to have acted reasonably in granting
or withholding consent if such grant or disapproval is based on their
reasonable review of the above-described criteria.
(i) After the Initial Term, if Tenant desires to sublet any
portion of the Leased Premises other than as permitted by the first
sentence of Paragraph 21(b) above, then Tenant shall, not less than
fifteen (15) days prior to the date on which it desires to enter into
such sublease, submit to Landlord and Lender such information as
Landlord and Lender reasonably request regarding the identity and credit
of the proposed subtenant. Landlord and Lender shall review such
information and shall, no later than the fifteenth (15th) day following
receipt of such information, approve or disapprove the proposed
sublease. Such approval shall be deemed given if the net worth of the
proposed subtenant is greater than or equal to the net worth of the
Tenant as shown on its then most recently prepared financial statements,
and otherwise such approval shall not be unreasonably withheld,
conditioned or delayed.
(j) If Tenant assigns all its rights and interest under this
Lease, the assignee under such assignment shall expressly assume all the
obligations of Tenant hereunder, actual or contingent, including
obligations of Tenant which may have arisen on or prior to the date of
such assignment, including the obligation to comply with Exhibit "E", by
a written instrument delivered to Landlord at the time of such
assignment. Each sublease of any of the Leased Premises shall be
subject and subordinate to the provisions of this Lease. No assignment
or sublease made as permitted by this Paragraph 21 shall affect or
reduce any of the obligations of Tenant hereunder or under any document
executed by Tenant in favor of or for the benefit of Lender, and all
such obligations shall continue in full force and effect as obligations
of a principal and not as obligations of a guarantor, as if no
assignment or sublease had been made. No assignment or sublease shall
impose any additional obligations on Landlord under this Lease.
(k) With respect to any Preapproved Assignment or Preapproved
Sublet, Tenant shall provide to Landlord and to Lender legal opinions
and other information reasonably required by Landlord and Lender to
establish that any proposed Preapproved Assignment or Preapproved Sublet
satisfies the criteria set forth above.
(l) Tenant shall, within ten (10) days after the execution and
delivery of any assignment or sublease consented to by Landlord and
Lender , deliver a duplicate original copy thereof to Landlord and
Lender which, in the event of an assignment, shall be in recordable
form.
(m) As security for performance of its obligations under this
Lease, Tenant hereby grants, conveys and assigns to Landlord all right,
title and interest of Tenant in and to all subleases hereinafter entered
into for any or all of the Leased Premises, any and all extensions,
modifications and renewals thereof and all rents, issues and profits
therefrom. Landlord hereby grants to Tenant a license to collect and
enjoy all rents and other sums of money payable under any sublease of
any of the Leased Premises, provided, however, that Landlord shall have
the absolute right at any time during the existence of an Event of
Default, upon notice to Tenant and any subtenants, to revoke said
license and to collect such rents and sums of money and to retain the
same. Tenant shall not consent to, cause or allow any modification or
alteration of any of the terms, conditions or covenants of any of the
subleases or the termination thereof, without the prior written approval
of Landlord, which consent shall not be unreasonably withheld, nor shall
Tenant do nor permit anything to be done, the doing of which, nor omit
or refrain from doing anything, the omission of which, will or could be
a breach of or default in the terms of any of the subleases.
(n) Tenant shall have no right or power to grant a mortgage on,
or to pledge its leasehold interest in, or otherwise encumber its
interest under this Lease or any sublease of the Leased Premises, and
any such mortgage, pledge or encumbrance made in violation of this
Paragraph 21 shall be void. Tenant shall not permit any subtenant to
mortgage, pledge or otherwise encumber its subleasehold interest in the
Leased Premises.
(o) Subject to Tenant's rights under ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ may
sell or transfer the Leased Premises at any time without Tenant's
consent to any third party (each a "Third Party Purchaser"), provided,
that so long as no Event of Default exists either at the time Landlord
enters into an agreement of sale for the purchase of the Leased Premises
or on the date of conveyance to a Third Party Purchaser, Landlord shall
not sell the Leased Premises to any Person whose primary business is the
manufacturing of equipment that makes masks for the semi-conductor
industry. In the event of any such transfer, Tenant shall attorn to any
Third Party Purchaser as Landlord so long as such Third Party Purchaser
and Landlord notify Tenant in writing of such transfer and such Third
Party Purchaser assumes in writing the obligations of Landlord under
this Lease. At the request of Landlord, Tenant will execute such
documents confirming the agreement referred to above and such other
agreements as Landlord may reasonably request, provided that such
agreements do not increase the liabilities and obligations of Tenant
hereunder.
22. Events of Default.
(a) The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(b))
shall, at the sole option of Landlord, constitute an "Event of Default"
under this Lease:
(i) a failure by Tenant to make any payment of any
Monetary Obligation, regardless of the reason for such
failure;
(ii) a failure by Tenant duly to perform and observe,
or a violation or breach of, any other provision hereof not
otherwise specifically mentioned in this Paragraph 22(a);
(iii) any representation or warranty made by Tenant
herein or in any certificate, demand or request made
pursuant hereto proves to be incorrect, now or hereafter, in
any material respect;
(iv) a default beyond any applicable cure period or
at maturity by Tenant or any Subsidiary of Tenant in any
payment of principal or interest on any obligations for
borrowed money having an outstanding principal balance of
$10,000,000 or more in the aggregate, or in the performance
of any other provision contained in any instrument under
which any such obligation is created or secured (including
the breach of any covenant thereunder), (x) if such payment
is a payment at maturity or a final payment, or (y) if a
result of such default is to cause such obligation to be
accelerated prior to its stated maturity;
(v) a default by Tenant or any Subsidiary of Tenant
beyond any applicable cure period in the payment of rent
under, or in the performance of any other material provision
of, any other lease or leases that have, in the aggregate,
rental obligations over the terms thereof of $10,000,000 or
more in the aggregate if the landlord under any such lease
or leases commences to terminate such lease or leases,
dispossess Tenant or any Subsidiary or accelerate the rent
payable thereunder;
(vi) a final, non-appealable judgment or judgments
for the payment of money in excess of $10,000,000 (less any
amounts payable from the proceeds of insurance) in the
aggregate shall be rendered against Tenant or any Subsidiary
and the same shall not be payable from the proceeds of
insurance and shall remain undischarged, unbonded or
unsatisfied for a period of sixty (60) consecutive days;
(vii) Tenant shall breach any Covenant or an Intended
Transaction or a Non-Preapproved Assignment shall occur and
Tenant shall have failed to comply with the provisions of
Paragraph 21(d) through (f) or Paragraph 33, as applicable;
(viii) Tenant or any Significant Subsidiary of Tenant
shall (A) voluntarily be adjudicated a bankrupt or
insolvent, (B) seek or consent to the appointment of a
receiver or trustee for itself or for the Leased Premises,
(C) file a petition seeking relief under the bankruptcy or
other similar laws of the United States, any state or any
jurisdiction, (D) make a general assignment for the benefit
of creditors, or (E) be unable to pay its debts as they
mature;
(ix) a court shall enter an order, judgment or decree
appointing, without the consent of Tenant or any Significant
Subsidiary of Tenant, a receiver or trustee for it or for
any of the Leased Premises or approving a petition filed
against Tenant or any Significant Subsidiary which seeks
relief under the bankruptcy or other similar laws of the
United States, any state or any jurisdiction, and such
order, judgment or decree shall remain undischarged or
unstayed ninety (90) days after it is entered;
(x) the Leased Premises shall have been vacated
(i.e., ceased to be operated on a consistent basis) except
as permitted under, and subject to the terms and conditions
of, Paragraph 38 hereof or the Leased Premises shall have
been abandoned;
(xi) Tenant or any Significant Subsidiary of Tenant
shall be liquidated or dissolved or shall begin proceedings
towards its liquidation or dissolution;
(xii) the estate or interest of Tenant or any
Significant Subsidiary of Tenant in any of the Leased
Premises shall be levied upon or attached in any proceeding
and such estate or interest is about to be sold or
transferred or such process shall not be vacated or
discharged within sixty (60) days after it is made;
(xiii) a failure by Tenant, following any notice and
an opportunity to cure, to perform or observe, or a
violation or breach of, or a misrepresentation by Tenant
under any provision of any Assignment or any other document
between Tenant and Lender that, as to such Assignment or
other document, (A) recites that a breach, violation or
misrepresentation by Tenant thereunder will cause a default
under the Loan and (B) provides that Lender will give to
Tenant any notice of such default that it is required to
give to Landlord, if such failure, violation, breach or
misrepresentation gives rise to a default beyond any
applicable cure period with respect to any Loan;
(xiv) a failure by Tenant to maintain in effect any
occupancy permit for the Leased Premises or permit required
under any Environmental Law;
(xv) an Event of Default shall have occurred and be
continuing under the Construction Agency Agreement or the
Completion Agreement; or
(xvi) Tenant shall have failed to occupy Building 4
by August 1, 1999.
(b) No notice or cure period shall be required in any one or
more of the following events: (A) except as otherwise set forth below,
the occurrence of an Event of Default under clause (i), (iv), (v), (vi),
(vii), (viii), (ix), (x), (xi), (xii), (xiii), (xv) or (xvi) of
Paragraph 22(a); (B) the default consists of a failure to provide any
insurance required by Paragraph 16 or an assignment or sublease entered
into in violation of Paragraph 21; or (C) the default is such that any
delay in the exercise of a remedy by Landlord could reasonably be
expected to cause irreparable non-monetary harm to Landlord. If the
default consists of the failure to pay any Monetary Obligation under
clause (i) of Paragraph 22(a), the applicable cure period shall be five
(5) days from the date on which notice is given except that if the
failure is the failure to pay Basic Rent no notice shall be required and
only the five (5) day cure period shall be applicable, but in any event
Landlord shall not be obligated to allow any cure period for or, if
required, give notice of, any such default more than twice within any
Lease Year. If the default consists of a default under clauses (iv),
(v) or (x) the applicable cure period shall be ten (10) days from the
date on which notice is given provided that (X) with respect to a
default under clause (iv) or (v) Tenant immediately gives to Landlord
notice of acceleration or failure to pay at maturity or the exercise of
remedies by a landlord or (Y) with respect to a default under clause (x)
Tenant immediately give to Landlord notice that it has vacated the
Leased Premises. If the default consists of a default under clauses
(ii), (iii) or (xiv) of Paragraph 22(a), other than the events specified
in clauses (B) and (C) of the first sentence of this Paragraph 22(b),
the applicable cure period shall be twenty (20) days from the date on
which notice is given or, if the default cannot be cured within such
twenty (20) day period, the cure period shall be extended for the period
required to cure the default (but such cure period, including any
extension, shall not in the aggregate exceed one hundred eighty (180)
days), provided that Tenant shall commence to cure the default within
the said twenty-day period and shall actively, diligently and in good
faith proceed with and continue the curing of the default until it shall
be fully cured.
23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is
continuing, Landlord shall have the right, at its sole option, then or
at any time thereafter, to the extent permitted by applicable law, to
exercise its remedies and to collect damages from Tenant in accordance
with this Paragraph 23, without demand upon or notice to Tenant except
as otherwise provided in Paragraph 22(b) and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's
intention to terminate this Lease on a date specified in
such notice. Upon such date, this Lease, the estate hereby
granted and all rights of Tenant hereunder shall expire and
terminate. Upon such termination, Tenant shall immediately
surrender and deliver possession of the Leased Premises to
Landlord in accordance with Paragraph 26. If Tenant does
not so surrender and deliver possession of the Leased
Premises, Landlord may re-enter and repossess the Leased
Premises, with or without legal process, by peaceably
entering the Leased Premises and changing locks or by
summary proceedings, ejectment or any other lawful means or
procedure. Upon or at any time after taking possession of
the Leased Premises, Landlord may, by peaceable means or
legal process, remove any Persons or property therefrom.
Landlord shall be under no liability for or by reason of any
such entry, repossession or removal. Notwithstanding such
entry or repossession, Landlord may (A) exercise the remedy
set forth in and collect the damages permitted by
Paragraph 23(a)(iii) or (B) collect the damages set forth in
Paragraph 23(c).
(ii) After repossession of the Leased Premises
pursuant to clause (i) above, Landlord shall have the right
to relet any of the Leased Premises to such tenant or
tenants, for such term or terms, for such rent, on such
conditions and for such uses as Landlord in its sole
discretion may determine, and collect and receive any rents
payable by reason of such reletting. Landlord may make such
Alterations in connection with such reletting as it may deem
advisable in its sole discretion. Notwithstanding any such
reletting, Landlord may collect the damages set forth in
Paragraph 23(c).
(iii) To the extent permitted by applicable law,
Landlord may, upon notice to Tenant, require Tenant to make
an irrevocable offer to terminate this Lease upon payment to
Landlord of an amount (the "Default Termination Amount")
specified in the next sentence. The "Default Termination
Amount" shall be the greater of (A) the Fair Market Value of
the Leased Premises, or (B) the Acquisition Cost and the
Prepayment Premium which Landlord will be required to pay in
prepaying any Loan with proceeds of the Default Termination
Amount. Upon such notice to Tenant, Tenant shall be deemed
to have made such offer and shall, if requested by Landlord,
within ten (10) days following such request deposit with
Landlord as payment against the Default Termination Amount
the amount described in (B) above, and Landlord and Tenant
shall promptly commence to determine Fair Market Value.
Within thirty (30) days after the Fair Market Value Date,
Landlord shall accept or reject such offer. If Landlord
accepts such offer then, on the tenth (10th) business day
after such acceptance, Tenant shall pay to Landlord the
Default Termination Amount and, at the request of Tenant,
Landlord will convey the Leased Premises to Tenant or its
designee in accordance with Paragraph 20. Any rejection by
Landlord of such offer (which rejection shall have been
consented to in writing by Lender) shall have no effect on
any other remedy Landlord may have under this Lease.
(b) In addition to its other rights under this Lease, Landlord
has the remedy described in California Civil Code Section 1951.4 which
provides substantially as follows: Landlord may continue the Lease in
effect after Tenant's breach and abandonment and recover the Rent as it
becomes due. In accordance with California Civil Code Section 1951.4
(or any successor statute), Tenant acknowledges that in the event Tenant
breaches this Lease and abandons the Leased Premises, this Lease shall
continue in effect for so long as Landlord does not terminate Tenant's
right to possession, and Landlord may enforce all of its rights and
remedies under this Lease, including the right to recover the Rent as it
becomes due under this Lease. Tenant acknowledges that the limitations
on subletting and assignment set forth in Paragraph 21 are reasonable.
Acts of maintenance or preservation or efforts to relet the Leased
Premises or the appointment of a receiver upon initiative of Landlord to
protect Landlord's interest under this Lease shall not constitute a
termination of Tenant's right to possession.
(c) If Landlord elects to terminate this Lease upon the
occurrence of an Event of Default, Landlord may collect from Tenant
damages computed in accordance with the following provisions in
addition to Landlord's other remedies under this Lease:
(i) the worth at the time of award of any unpaid Rent
which has been earned at the time of such termination; plus
(ii) the worth at the time of award of the amount by
which any 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 be reasonably avoided, plus
(iv) any other reasonable Cost necessary to
compensate Landlord for all the detriment proximately caused
by Tenant's failure to perform its obligations under this
Lease, including out of pocket costs incurred by Lender, or
which in the ordinary course of things would be likely to
result therefrom including, without limitation, brokerage
commissions, the cost of repairing and reletting the Leased
Premises and reasonable attorneys' fees; plus
(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 state law. Damages shall be
due and payable from the date of termination.
(d) For purposes of clauses (i) and (ii) of Paragraph 23(c), the
"worth at the time of award" shall be computed by adding interest at the
Default Rate to the past due Rent. For the purposes of clause (iii) of
Paragraph 23(c), 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 the award, plus one percent (1%).
(e) Landlord shall be entitled to apply the Security Deposit to
any amounts due under Paragraph 23(c) if this Lease shall be terminated,
or, if this Lease shall remain in full force and effect, to any amounts
due under Paragraph 23(b) or in the following order: (i) to past due
Basic Rent, (ii) to other Monetary Obligations then due and owing and
(iii) to installments of Basic Rent in inverse order of maturity
commencing with the last installment of the Term.
(f) Notwithstanding anything to the contrary herein contained,
in lieu of or in addition to any of the foregoing remedies and damages,
Landlord may exercise any remedies and collect any damages available to
it at law or in equity. If Landlord is unable to obtain full
satisfaction pursuant to the exercise of any remedy, it may pursue any
other remedy which it has hereunder or at law or in equity.
(g) Landlord shall not be required to mitigate any of its
damages hereunder unless required to by applicable Law. If any Law
shall validly limit the amount of any damages provided for herein to an
amount which is less than the amount agreed to herein, Landlord shall be
entitled to the maximum amount available under such Law.
(h) No termination of this Lease, repossession or reletting of
the Leased Premises, exercise of any remedy or collection of any damages
pursuant to this Paragraph 23 shall relieve Tenant of any Surviving
Obligations.
(i) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, TENANT WAIVES ANY RIGHT TO A TRIAL BY JURY. Tenant agrees
that this Lease constitutes a written consent to waiver of trial by jury
pursuant to the provisions of California Code of Civil Procedure Section
631 and Tenant does hereby appoint Landlord its true and lawful
attorney-in-fact, which appointment is coupled with an interest, and
Tenant does hereby authorize and empower Landlord, in the name, place
and stead of Tenant, to file this Lease with the clerk or judge of any
court of competent jurisdiction as statutory written consent to waiver
of trial by jury.
(j) During the existence of any Event of Default, Landlord shall
have the right (but no obligation) to perform any act required of Tenant
hereunder and, if performance of such act requires that Landlord enter
the Leased Premises, Landlord may enter the Leased Premises for such
purpose.
(k) No failure of Landlord (i) to insist at any time upon the
strict performance of any provision of this Lease or (ii) to exercise
any option, right, power or remedy contained in this Lease shall be
construed as a waiver, modification or relinquishment thereof. A
receipt by Landlord of any sum in satisfaction of any Monetary
Obligation with knowledge of the breach of any provision hereof shall
not be deemed a waiver of such breach, and no waiver by Landlord of any
provision hereof shall be deemed to have been made unless expressed in a
writing signed by Landlord.
(l) Tenant hereby waives and surrenders, for itself and all
those claiming under it, including creditors of all kinds, (i) any right
and privilege which it or any of them may have under any present or
future Law to redeem any of the Leased Premises or to have a continuance
of this Lease after termination of this Lease or of Tenant's right of
occupancy or possession pursuant to any court order or any provision
hereof, and (ii) the benefits of any present or future Law which exempts
property from liability for debt or for distress for rent.
(m) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other
remedy. Each remedy may be exercised at any time an Event of Default
has occurred and is continuing and may be exercised from time to time.
No remedy shall be exhausted by any exercise thereof.
24. Notices. All notices, demands, requests, consents,
approvals, offers, statements and other instruments or communications
required or permitted to be given pursuant to the provisions of this
Lease shall be in writing and shall be deemed to have been given for all
purposes when delivered in person or by Federal Express or other
reliable 24-hour delivery service, addressed to the other party at its
address stated on page 1 of this Lease. A copy of any notice given by
Tenant to Landlord shall simultaneously be given by Tenant to ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Chairman, Real Estate Department. For the purposes of this
Paragraph, any party may substitute another address stated above (or
substituted by a previous notice) for its address by giving fifteen (15)
days' notice of the new address to the other party, in the manner
provided above.
25. Estoppel Certificate. At any time upon not less than ten
(10) days' prior written request by any of Landlord, Tenant or Lender
(the "Requesting Party") to Landlord or Tenant, as applicable, (the
"Responding Party"), the Responding Party shall deliver to the
Requesting Party a statement in writing, executed by an authorized
officer of the Responding Party, certifying (a) that, except as
otherwise specified, this Lease is unmodified and in full force and
effect, (b) the dates to which Basic Rent, Additional Rent and all other
Monetary Obligations have been paid, (c) that, to the knowledge of the
signer of such certificate and except as otherwise specified, no default
by either Landlord or Tenant exists hereunder, (d) such other matters as
the Requesting Party may reasonably request, and (e) if Tenant is the
Responding Party that, except as otherwise specified, there are no
proceedings pending or, to the knowledge of the signer, threatened,
against Tenant before or by any court or administrative agency which, if
adversely decided, would materially and adversely affect the financial
condition and operations of Tenant or Tenant's ability to perform its
obligations under this Lease. Any such statements by the Responding
Party may be relied upon by the Requesting Party, any Person whom the
Requesting Party notifies the Responding Party in its request for the
Certificate is an intended recipient or beneficiary of the Certificate,
any Lender or their assignees and by any prospective purchaser or
mortgagee of any of the Leased Premises. Any certificate required under
this Paragraph 25 and delivered by Tenant shall state that, in the
opinion of each person signing the same, he or she has made such
examination or investigation as is necessary to enable him or her to
express an informed opinion as to the subject matter of such
certificate, and shall briefly state the nature of such examination or
investigation.
26. Surrender. Upon the expiration or earlier termination of
this Lease, Tenant shall peaceably leave and surrender the Leased
Premises to Landlord in the same condition in which the Leased Premises
was at the commencement of this Lease, except as repaired, rebuilt,
restored, altered, replaced or added to as permitted or required by any
provision of this Lease, and except for ordinary wear and tear. Upon
such surrender, Tenant shall (a) remove from the Leased Premises all
property which is owned by Tenant or third parties other than Landlord
and (b) repair any damage caused by such removal. Property not so
removed shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises.
The cost of removing and disposing of such property and repairing any
damage to any of the Leased Premises caused by such removal shall be
paid by Tenant to Landlord upon demand. Landlord shall not in any
manner or to any extent be obligated to reimburse Tenant for any such
property which becomes the property of Landlord pursuant to this
Paragraph 26.
27. No Merger of Title. There shall be no merger of the
leasehold estate created by this Lease with the fee estate in any of the
Leased Premises by reason of the fact that the same Person may acquire
or hold or own, directly or indirectly, (a) the leasehold estate created
hereby or any part thereof or interest therein and (b) the fee estate in
any of the Leased Premises or any part thereof or interest therein,
unless and until all Persons having any interest in the interests
described in (a) and (b) above which are sought to be merged shall join
in a written instrument effecting such merger and shall duly record the
same.
28. Books and Records.
(a) Tenant shall permit Landlord and Lender by their respective
agents, accountants and attorneys, upon not less than 48 hours notice to
Tenant (except that if an Event of Default exists no notice shall be
required), to visit and inspect the Leased Premises and examine (and
make copies of) the records and books of account and to discuss the
finances and business with the officers of Tenant and its independent
accountants, at such reasonable times as may be requested by Landlord.
Upon the request of Lender (either telephonically or in writing), Tenant
shall provide to Lender (with a copy to Landlord) such other information
as Lender shall reasonably request.
(b) Tenant shall deliver to Landlord and to Lender within ninety
(90) days of the close of each fiscal year, annual audited financial
statements of Tenant and its consolidated Subsidiaries prepared by
nationally recognized independent certified public accountants. Tenant
shall also furnish to Landlord and Lender within forty-five (45) days of
the close of each of the remaining three (3) fiscal quarters unaudited
financial statements of Tenant, certified by Tenant's chief financial
officer, and all other quarterly reports of Tenant, and all filings, if
any, of Form 10-K, Form 10-Q and other required filings with the
Securities and Exchange Commission pursuant to the provisions of the
Securities Exchange Act of 1934, as amended, or any other Law. All
financial statements of Tenant shall be prepared in accordance with GAAP
(as defined in Exhibit "E" hereto) consistently applied. All annual
financial statements shall be accompanied (x) by an opinion of said
accountants stating that (1) there are no qualifications as to the scope
of the audit and (2) the audit was performed in accordance with GAAP and
(y) by the affidavit of the president or a vice president of Tenant,
dated within five (5) days of the delivery of such statement, stating
that (i) the affiant knows of no Event of Default, or event which, upon
notice or the passage of time or both, would become an Event of Default
which has occurred and is continuing hereunder or, if any such event has
occurred and is continuing, specifying the nature and period of
existence thereof and what action Tenant has taken or proposes to take
with respect thereto and (ii) except as otherwise specified in such
affidavit, that Tenant has fulfilled all of its obligations under this
Lease which are required to be fulfilled on or prior to the date of such
affidavit.
(c) Landlord and its agents, accountants and attorneys, shall
consider and treat on a confidential basis (i) any information contained
in the books and records of Tenant, (ii) any copies of any books and
records of Tenant, and any financial statements of Tenant pursuant to
Paragraph 28(b) which are delivered to or received by them. Neither
Landlord nor its agents, accountants and attorneys, shall disclose any
information contained in Tenant's books and records nor distribute
copies of any of such books and records nor Tenant's financial
statements to any other Persons without the prior written consent of the
chief operating officer of Tenant.
(d) The restrictions contained in Paragraph 28(c) shall not
prevent disclosure by Landlord of any information in any of the
following circumstances:
(i) Upon the order of any court or administrative
agency to the extent required by such order and not
effectively stayed or by appeal or otherwise;
(ii) Upon the request, demand or requirement of any
regulatory agency or authority having jurisdiction over such
party, including the United States Securities and Exchange
Commission (whether or not such request or demand has the
force of law);
(iii) That has been publicly disclosed by Tenant in a
press release or other public announcement of general
circulation or filed with the United States Securities and
Exchange Commission or that has become public through no
breach by the recipient of these confidentiality
obligations;
(iv) To counsel or accountants or other agents for
Landlord or counsel or accountants or other agents for such
other Person who has agreed to abide by the provisions of
Paragraph 28(c);
(v) While an Event of Default exists, in connection
with the exercise of any right or remedy under this Lease or
any other related document;
(vi) Independently developed by Landlord to the
extent that confidential information provided by Tenant is
not used to develop such information;
(vii) With respect to financial information and
information that Landlord or its attorneys deem to be
material in any reporting to the shareholders of Landlord or
the shareholders or prospective shareholders (whether
through a registered public offering or otherwise) of
Landlord's parent company;
(viii) In connection with any sale or financing of
the Leased Premises, provided that any recipient of such
information who is a prospective purchaser of the Leased
Premises (except for a purchaser that purchases all or
substantially all of the assets of Landlord's parent
company) shall agree to be bound by the terms of
Paragraph 28(c);
(ix) From Landlord to Lender or to any prospective
purchaser of the Leased Premises or to the National
Association of Insurance Commissioners; or
(x) As otherwise required by Law.
29. Determination of Value.
(a) Whenever a determination of Fair Market Value or Fair Market
Rental Value is required pursuant to any provision of this Lease, such
Fair Market Value or Fair Market Rental Value shall be determined in
accordance with the following procedure:
(i) Landlord and Tenant shall endeavor to agree upon
such Fair Market Value within thirty (30) days after the
date (the "Applicable Initial Date") on which (A) Tenant
provides Landlord with notice of its intention to terminate
this Lease and purchase the Leased Premises pursuant to
Paragraph 18, (B) Landlord provides Tenant with notice of
its intention to redetermine Fair Market Value pursuant to
Paragraph 20(c), (C) Landlord provides Tenant with notice of
Landlord's intention to require Tenant to make an offer to
terminate this Lease pursuant to Paragraph 23(a)(iii), (D)
Tenant provides Landlord with an Intended Assignment Offer
under Paragraph 21(d), (E) the date on which Landlord
accepts Tenant's offer pursuant to Paragraph 33(c), (F) the
date on which Landlord accepts the Third Party Purchaser's
offer pursuant to Paragraph 35(c) and (G) the date on which
Landlord accepts Tenant's offer pursuant to Paragraph 38(d).
Landlord and Tenant shall endeavor to agree on Fair Market
Rental Value on the date (also, an "Applicable Initial
Date") which is six (6) calendar months prior to the
expiration of the then current Term unless Tenant has
previously exercised its option pursuant to Paragraph 5(b)
not to have the Term automatically extended. Upon reaching
such agreement, the parties shall execute an agreement
setting forth the amount of such Fair Market Value or Fair
Market Rental Value, as the case may be.
(ii) If the parties shall not have signed such
agreement within thirty (30) days after the Applicable
Initial Date, Tenant shall within fifty (50) days after the
Applicable Initial Date select an appraiser and notify
Landlord in writing of the name, address and qualifications
of such appraiser. Within twenty (20) days thereafter,
Landlord shall select an appraiser and notify Tenant of the
name, address and qualifications of such appraiser. Such
two appraisers shall endeavor to agree upon Fair Market
Value or Fair Market Rental Value, as the case may be, based
on an appraisal made by each of them as of the Relevant
Date. If such two appraisers shall agree upon a Fair Market
Value or Fair Market Rental Value, as the case may be, the
amount of such Fair Market Value or Fair Market Rental
Value, as the case may be, as so agreed shall be binding and
conclusive.
(iii) If such two appraisers shall be unable to agree
upon a Fair Market Value or Fair Market Rental Value, as the
case may be, within twenty (20) days after the selection of
an appraiser by Landlord, then such appraisers shall advise
Landlord and Tenant of their respective determination of
Fair Market Value or Fair Market Rental Value, as the case
may be, and shall select a third appraiser to make the
determination of Fair Market Value or Fair Market Rental
Value, as the case may be, which determination as to the
selection of the third appraiser shall be binding and
conclusive upon Landlord and Tenant.
(iv) If such two appraisers shall be unable to agree
upon the designation of a third appraiser within ten (10)
days after the expiration of the twenty (20) day period
referred to in clause (iii) above, or if such third
appraiser does not make a determination of Fair Market Value
or Fair Market Rental Value, as the case may be, within
twenty (20) days after his selection, then such third
appraiser or a substituted third appraiser, as applicable,
shall, at the request of either party hereto (with notice to
the other party), be appointed by the President or Chairman
of the American Arbitration Association in San Francisco,
California. The determination of Fair Market Value or Fair
Market Rental Value, as the case may be, made by the third
appraiser appointed pursuant hereto shall be made within
twenty (20) days after such appointment.
(v) Fair Market Value or Fair Market Rental Value, as
the case may be, shall be the average of the determination
of Fair Market Value or Fair Market Rental Value, as the
case may be, made by the third appraiser and the
determination of Fair Market Value or Fair Market Rental
Value, as the case may be, made by the appraiser (pursuant
to Paragraph 29(a)(iii) hereof) whose determination of Fair
Market Value or Fair Market Rental Value, as the case may
be, is nearest to that of the third appraiser. Such average
shall be binding and conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed pursuant to
this Paragraph 29(a) shall (A) be independent qualified MAI
appraisers (B) have no right, power or authority to alter or
modify the provisions of this Lease, (C) utilize the
methodology for determining Fair Market Value set forth in
Paragraph 29(c) or the methodology for determining Fair
Market Rental Value as set forth in Paragraph 29(d), and (D)
be registered in the State if the State provides for or
requires such registration. The Cost of the procedure
described in this Paragraph 29(a) above shall be borne
equally by Landlord and Tenant, except that the Cost with
respect to the appraisals performed under Paragraphs 21, 23,
33 or 38 shall be paid by Tenant and the Cost with respect
to the appraisals performed under Paragraph 35 shall be paid
by the Third Party Purchaser.
(b) If, by virtue of any delay, Fair Market Value is not
determined by the expiration or termination of the then current Term,
then the date on which the Term would otherwise expire or terminate
shall be extended to the date specified for termination in the
particular provision of this Lease pursuant to which the determination
of Fair Market Value is being made. If, by virtue of any delay, Fair
Market Rental Value is not determined by the expiration or termination
of the then current Term, then until Fair Market Rental Value is
determined, Tenant shall continue to pay Basic Rent during the
succeeding Renewal Term in the same amount which it was obligated under
this Lease to pay prior to the commencement of the Renewal Term. When
Fair Market Rental Value is determined, the appropriate Basic Rent shall
be calculated retroactive to the commencement of the Renewal Term and
Tenant shall either receive a refund from Landlord (in the case of an
overpayment) or shall pay any deficiency to Landlord (in the case of an
underpayment).
(c) Fair Market Value shall be determined as follows: The
appraisers shall add (i) the present value of the Rent for the remaining
Term, (with assumed increases in the CPI to be determined by the
appraisers) using a discount rate (which may be determined by an
investment banker) based on the creditworthiness of Tenant and (ii) the
present value of the Fair Market Value of the Leased Premises as of the
end of the then current Term (without necessarily making any assumption
as to whether the Tenant will or will not exercise any remaining
options), using a yield rate required by investors for property having
similar characteristics, without consideration given to Tenant's credit
rating or creditworthiness. In determining the value under (ii), the
appraisers shall, insofar as possible, consider properties having
similar characteristics and in reasonable proximity to the Leased
Premises, but the appraisers shall not be precluded from considering
properties that do not have "clean" rooms, properties that are (or are
not) located in Hayward, California or properties having a different use
than the Leased Premises. The appraisers shall further assume that no
default then exists under the Lease, that Tenant has complied (and will
comply) with all provisions of the Lease, and that Tenant has not
violated (and will not violate) any of the Covenants.
(d) In determining Fair Market Rental Value, the appraisers
shall determine the amount that a willing tenant would pay, and a
willing landlord of a building having similar characteristics and in
reasonable proximity to the Leased Premises would accept, at arm's
length, taking into account: (a) the age, quality, and condition of the
Improvements; (b) that the Leased Premises may be leased as a whole or
substantially as a whole to a single user or leased to multiple users;
(c) a lease term of five (5) years; (d) an absolute triple net lease;
and (e) such other items that professional real estate appraisers
customarily consider. In determining Fair Market Rental Value, the
appraisers shall, insofar as possible, consider properties having
similar characteristics and in reasonable proximity to the Leased
Premises, but the appraisers shall not be precluded from considering
properties that do not have "clean" rooms, properties that are (or are
not) located in Hayward, California or properties having a different use
than the Leased Premises.
30. Non-Recourse as to Landlord. Anything contained herein to
the contrary notwithstanding, any claim based on or in respect of any
liability of Landlord under this Lease shall be enforced only against
the Leased Premises and not against any other assets, properties or
funds of (a) Landlord, (b) any director, officer, general partner,
shareholder, member, limited partner, advisor, employee or agent of
Landlord or any general partner of Landlord or any of its general
partners (or any legal representative, heir, estate, successor or assign
of any thereof), (c) any predecessor or successor partnership or
corporation (or other entity) of Landlord or any of its general
partners, shareholders, officers, directors, advisors, employees or
agents, either directly or through Landlord or its general partners,
shareholders, officers, directors, advisors, employees or agents or any
predecessor or successor partnership or corporation (or other entity),
or (d) any other Person (including W.P. ▇▇▇▇▇ Incorporated) affiliated
with any of the foregoing, or any director, officer, advisor, employee
or agent of any thereof.
31. Financing.
(a) Tenant covenants and agrees that it shall pay all reasonable
costs and expenses incurred by Landlord in refinancing the Initial Loan,
including the cost of any mortgage broker's fees, "points" or commitment
fees payable to the Lender, survey, title and environmental costs and
costs of Landlord's and Lender's counsel. Payment of such costs shall
be made within ten (10) days following receipt of a written request from
Landlord accompanied by invoices for the amounts requested.
(b) If Landlord desires to obtain or refinance any Loan, Tenant
shall negotiate in good faith with Landlord concerning any request made
by any Lender or proposed Lender for changes or modifications in this
Lease. In particular, Tenant shall agree, upon request of Landlord, to
supply any such Lender with such notices and information as Tenant is
required to give to Landlord hereunder and to extend the rights of
Landlord hereunder to any such Lender and to consent to such financing
if such consent is requested by such Lender. Tenant shall provide any
other consent or statement and shall execute any and all other documents
that such Lender requires in connection with such financing, including
any environmental indemnity agreement and subordination, non-disturbance
and attornment agreement, so long as the same do not materially
adversely affect any right, benefit or privilege of Tenant under this
Lease or materially increase Tenant's obligations under this Lease.
(c) Except as provided in Paragraph 31(a) above, Tenant shall
not be responsible for any fees or expenses associated with any of the
transactions contemplated by this Paragraph 31. Landlord shall
reimburse Tenant for all reasonable costs and expenses incurred by
Tenant in carrying out its obligations under this Paragraph 31 other
than as provided in the foregoing Paragraph 31(a).
32. Subordination. This Lease and Tenant's interest hereunder
shall be subordinate to any Mortgage or other security instrument
hereafter placed upon the Leased Premises by Landlord, and to any and
all advances made or to be made thereunder, to the interest thereon, and
all renewals, replacements and extensions thereof, provided that any
such Mortgage or other security instrument (or a separate instrument in
recordable form duly executed by the holder of any such Mortgage or
other security instrument and delivered to Tenant) shall provide for the
recognition of this Lease and all Tenant's rights hereunder unless and
until an Event of Default exists or Landlord shall have the right to
terminate this Lease pursuant to any applicable provision hereof all as
set forth in a Subordination, Non-Disturbance and Attornment Agreement
in form and substance reasonably satisfactory to Tenant.
33. Financial Covenants; Covenant Breach Offer.
(a) Until the expiration of the Initial Term, Tenant hereby
covenants and agrees to comply with all the covenants and agreements
(the "Covenants") described in Paragraphs 1 through 3 in Exhibit "E"
hereto.
(b) If (i) Tenant intends to take any action or, with respect to
Paragraph 1(b) of Exhibit "E", has knowledge that such action is
intended to be taken by another Person, or such action occurs (such
action, an "Intended Transaction") that would result in a breach of any
Covenant set forth in Paragraph 1 or 2 of Exhibit "E" attached hereto or
(ii) Tenant becomes aware that the Covenant set forth in Paragraph 3 of
Exhibit "E" will be or has been breached (a "Covenant Breach"), then,
not later than ninety (90) days prior to the Intended Transaction or the
date on which Tenant obtains knowledge of any such action, in the case
of (i) above, or immediately upon becoming aware that a Covenant Breach
will occur or has occurred, in the case of (ii) above, Tenant shall
submit to Landlord and Lender a description thereof specifying the
Intended Transaction or the Covenant Breach, as the case may be,
together with a rejectable offer of Tenant to purchase the Leased
Premises (as required by, and in accordance with, the provisions of this
Paragraph 33) and, if such offer is accepted by Landlord, Tenant shall
purchase the Leased Premises within the time prescribed for such
purchase (as provided in this Paragraph 33) and otherwise in accordance
with the provisions of Paragraph 20 of this Lease.
(c) Tenant shall make an offer to purchase the Leased Premises
no later than the date (the "Intended Transaction Closing Date") on
which the Intended Transaction will occur (or, in the case of a Covenant
Breach, no later than the earlier of ninety (90) days from the date
Tenant becomes aware that a Covenant Breach has occurred or will occur)
for a purchase price equal to the Offer Amount.
(d) If Landlord shall reject such offer by notice to Tenant,
such notice to contain the written consent of Lender to such rejection,
not later than the thirtieth (30th) day following receipt of such offer
by Landlord, then the Lease shall remain in full force and effect and
the Intended Transaction or Covenant Breach, as the case may be, shall
be deemed waived or acceptable by Landlord and Lender, respectively, and
the waiver or acceptance shall remain in effect for the balance of the
Term with respect to the specific Intended Transaction or specific set
of facts giving rise to the Covenant Breach only. No rejection of an
offer under this Paragraph 33 shall be effective for any purpose unless
consented to in writing by Lender.
(e) Unless Landlord shall have rejected such offer by the
foregoing notice to Tenant not later than the thirtieth (30th) day
following receipt of Tenant's offer by Landlord, Landlord shall be
conclusively presumed to have accepted such offer. If such offer is
accepted by Landlord, Tenant shall pay to Landlord the Offer Amount on
the Intended Transaction Closing Date (except that if the Fair Market
Value of the Leased Premises shall not yet have been determined, Tenant
shall pay to Landlord an amount equal to the Deposit Amount on the
Intended Transaction Closing Date and any excess of the Fair Market
Value of the Leased Premises over such sum shall be paid by Tenant to
Landlord within ten (10) days of the determination of such Fair Market
Value) and, provided that no Rent or any other charge is due and unpaid
under this Lease as of the Intended Transaction Closing Date, and Tenant
is otherwise in compliance with the terms of this Lease, Landlord shall
convey to Tenant the Leased Premises in accordance with the provisions
of Paragraph 20.
(f) Notwithstanding the foregoing, and only with respect to
offers made solely in anticipation of an Intended Transaction or a
Covenant Breach which Tenant anticipates will occur, if Tenant
determines that the Intended Transaction or Covenant Breach will not
occur, Tenant shall have the right to revoke its offer to purchase the
Leased Premises by notice to Landlord received not later than fifteen
(15) days prior to the anticipated Intended Transaction Closing Date
(TIME BEING OF THE ESSENCE), provided that Tenant shall be obligated to
pay all Costs of Landlord and Lender reasonably incurred as a result of
the offer made by Tenant pursuant to this Paragraph 33. Nothing
provided herein shall constitute a waiver by Landlord of the obligation
of Tenant to comply with the requirements of this Paragraph 33 if a
subsequent Covenant Breach or subsequent Intended Transaction will occur
or occurs.
34. Tax Treatment; Reporting. Landlord and Tenant each
acknowledge that each shall treat this transaction as a true lease for
state law purposes and shall report this transaction as a lease for
Federal income tax purposes. For Federal income tax purposes each shall
treat this Lease as a true lease with Landlord as the owner of the
Leased Premises and Tenant as the lessee of such Leased Premises
including: (1) treating Landlord as the owner of the property eligible
to claim depreciation deductions under Section 167 or 168 of the
Internal Revenue Code of 1986 (the "Code") with respect to the Leased
Premises, (2) Tenant reporting its Rent payments as a business expense
under Section 162 of the Code, and (3) Landlord reporting the Rent
payments as rental income.
35. Right of First Refusal.
(a) Except as otherwise provided in clause (e) of this
Paragraph 35, and provided an Event of Default does not then exist,
prior to selling the Leased Premises to any Third Party Purchaser, if
Landlord shall enter into a contract for the sale of the Leased Premises
with a Third Party Purchaser, (i) such contract shall be conditioned
upon Tenant's failure to exercise its right under this Paragraph 35 and
(ii) Landlord shall give written notice to Tenant of the contract for
sale, together with a copy of the executed offer or contract and the
name and business address of the Third Party Purchaser.
(b) For a period of thirty (30) days following receipt of such
notice, Tenant shall have the right and option, exercisable by written
notice to Landlord given within said thirty (30) day period, to elect to
purchase the Leased Premises at the purchase price and upon all the
terms and conditions set forth in such contract for sale except that no
contingencies contained in such contract for sale as to environmental
assessments, engineering studies, inspection of the Leased Premises,
sale of other property, state of the title to or encumbrances on the
Leased Premises which pertains to any exception of title created by, or
suffered to exist by, Tenant, or any other condition or contingency to
the Third Party Purchaser's obligation to purchase the Leased Premises
which pertains to the condition of the Leased Premises, shall apply to
Tenant's obligation to purchase the Leased Premises under this
Paragraph 35, and Tenant shall be obligated to purchase the Leased
Premises without any such condition or contingency.
(c) If at the expiration of the aforesaid thirty (30) day period
Tenant shall have failed to exercise the aforesaid option, Landlord may
sell the Leased Premises to such Third Party Purchaser upon the terms
set forth in such contract. For the purposes of Paragraph 35(a), the
purchase price in any contract to purchase the Leased Premises which is
received by Landlord between June 1, 2007 and May 31, 2008 shall be
deemed to be "acceptable to Landlord" if such offer (i) is for an amount
equal to or greater than the greater of (A) the sum of (1) Fair Market
Value (which shall be determined in accordance with the procedure set
forth in Paragraph 29 of this Lease, except that references to Tenant in
Paragraphs 29(a) and (b) hereof shall mean Third Party Purchaser) and
(2) the Prepayment Premium or (B) the sum of (1) the Acquisition Cost
reduced by the principal payments made on the Note to the date of
purchase and (2) the Prepayment Premium, (ii) provides that the
purchaser pays all costs in connection with such purchase, (iii)
provides that such purchase price is payable in cash at the closing of
the sale of the Leased Premises and (iv) the closing date for such
purchase will occur not later than sixty (60) days following May 31,
2008.
(d) Except as otherwise specifically provided in the foregoing
Paragraph 35(a), the closing date for any purchase of the Leased
Premises by Tenant pursuant to this Paragraph 35 shall be on a date
designated by Tenant, but not later than (i) ninety (90) days after the
date of Tenant's notice to Landlord of its intention to purchase the
Leased Premises upon the terms of the contract for sale with a Third
Party Purchaser or (ii) the closing date provided in such contract for
sale. At such closing Landlord shall convey the Leased Premises to
Tenant in accordance with, and Tenant shall pay to Landlord the purchase
price and other consideration set forth in, the applicable offer or
contract.
(e) Tenant shall have the right during the Term to exercise the
foregoing right of first refusal upon each proposed sale of the Leased
Premises prior to May 31, 2008; provided, that if, following compliance
with the procedure described in this Paragraph 35, a Third Party
Purchaser does not purchase the Leased Premises, such event shall not
count as an exercise of Tenant's right of first refusal.
NOTWITHSTANDING ANYTHING TO THE CONTRARY, IF TENANT FAILS TO EXERCISE
THE RIGHT OF FIRST REFUSAL BY May 31, 2008, OR IF THIS LEASE TERMINATES
OR THE TERM EXPIRES, SUCH RIGHT SHALL TERMINATE AND BE NULL AND VOID AND
OF NO FURTHER FORCE AND EFFECT.
(f) If Tenant does not exercise its right of first refusal to
purchase the Leased Premises and the Leased Premises are transferred to
a Third Party Purchaser, Tenant will attorn to any Third Party Purchaser
as Landlord so long as such Third Party Purchaser and Landlord notify
Tenant in writing of such transfer. At the request of Landlord, Tenant
will execute such documents confirming the agreement referred to above
and such other agreements as Landlord may reasonably request, provided
that such agreements do not increase the liabilities and obligations of
Tenant hereunder.
(g) The provisions of Paragraph 35(a) shall not apply to or
prohibit (i) any mortgaging, subjection to deed of trust or other
hypothecation of Landlord's interest in the Leased Premises, (ii) any
sale of the Leased Premises pursuant to a private power of sale under or
judicial foreclosure of any Mortgage or other security instrument or
device to which Landlord's interest in the Leased Premises is now or
hereafter subject, (iii) any transfer of Landlord's interest in the
Leased Premises to a Lender, beneficiary under deed of trust or other
holder of a security interest therein by deed in lieu of foreclosure,
(iv) any transfer of the Leased Premises to any governmental or
quasi-governmental agency with power of condemnation, (v) any transfer
of the Leased Premises to any affiliate of Landlord, Corporate Property
Associates 12 Incorporated ("CPA 12") or Corporate Property Associates
14 Incorporated ("CPA 14") or to any entity for whom W.P. ▇▇▇▇▇ & Co.,
Inc., W.P. ▇▇▇▇▇ Incorporated or any of their affiliates provides
material management or investment advice, (vi) any Person to whom CPA 12
or CPA 14 sell all or substantially all of their assets, (vii) any
transfer of the Leased Premises to any of the successors or assigns of
any of the Persons referred to in the foregoing clauses (i) through (vi)
or (viii) any transfer, sale or conveyance of any part or all of the
interests in Landlord between its members or to any affiliates of
Landlord, CPA 12 or CPA 14.
36. Financing Major Alterations.
(a) Should Tenant, during the Term of this Lease, desire to make
Alterations to any of the Leased Premises which are not readily
removable without causing material damage to the Leased Premises which
cannot be repaired and which will cost in excess of Five Hundred
Thousand Dollars ($500,000) ("Major Alterations"), Tenant may, prior to
the commencement of construction of such Major Alterations, request
Landlord (with a copy of such request to Lender) to reimburse the costs
thereof to Landlord (the "Alteration Cost") to Tenant, to wit: cost of
labor and materials, financing fees, legal fees, survey, title insurance
and other normal and customary loan or construction costs.
(b) Should Landlord agree to reimburse such costs, Landlord and
Tenant shall enter into good faith negotiations regarding the execution
and delivery of a written agreement of modification of this Lease, which
agreement shall provide for the following:
(i) payment by Landlord to Tenant of the Alteration
Cost within one hundred twenty (120) days of the date of
Landlord's agreement to pay the Alteration Cost, or in
installment payments as agreed, or on the date of completion
of the Major Alterations, whichever shall be the later;
(ii) an increase in the annual Basic Rent payable
during the Amortization Period (as hereinafter defined) to
an amount sufficient to amortize the Alteration Cost ("Total
Financing") over a period (the "Amortization Period") which
shall be the remainder of the then current Term and, if
Tenant so elects, any additional extension periods provided
for herein (so long as Tenant shall confirm any such
extension periods included in the Amortization Period by a
written waiver of its right to give notice of its intention
not to renew this Lease prior to the expiration of such
extension periods), at such rate of interest and upon such
other terms as shall be agreed upon between Landlord and
Tenant, but which shall be no less favorable than the
prevailing interest rate and terms for unsecured loans in a
principal amount equal to the Total Financings for borrowers
with credit ratings equivalent to the lesser of Landlord's
or Tenant's credit rating at that time; and
(iii) such other changes and amendments to this Lease
as may be necessary and appropriate in view of such payment
of the Alteration Cost by Landlord to Tenant.
(c) Tenant shall pay all Costs incurred by Landlord in
connection with any such modification to this Lease and such financing,
including closing costs, brokerage fees, taxes, recording charges and
legal fees and expenses.
(d) If Landlord and Tenant do not reach agreement on Tenant's
request to have Landlord finance the Alteration Costs, Tenant shall,
subject to the provisions of Paragraph 13 of this Lease, have the right
to construct the Major Alterations at Tenant's sole cost and expense.
In any event, the construction of the Major Alterations shall be
performed in accordance with the provisions of Paragraph 13 hereof and
the Major Alterations shall be the property of Landlord and part of the
Leased Premises subject to this Lease.
(e) Nothing contained in this Paragraph 36 shall be construed to
modify Paragraph 13 hereof, and the provisions of Paragraph 12 and
subparagraphs (i) and (ii) of Paragraph 13(a) shall apply to all Major
Alterations made or constructed hereunder, including the requirement for
Landlord's consent to Alterations.
37. Security Deposit.
(a) Tenant has delivered to Landlord a security deposit (the
"Security Deposit") in the amount of Three Hundred Forty-two Thousand
Five Hundred Eighty-one and 25/100 ($342,581.25). If not sooner applied
as provided in Paragraph 23(e), the Security Deposit shall be applied
(i) to monthly payments of the Basic Rent in reverse order, commencing
with the last month of the Initial Term, commencing with the last
payment due or (ii) if Tenant purchases the Leased Premises, against
Tenant's obligation to pay the Default Termination Amount, Offer Amount
or Termination Amount, as the case may be. The Security Deposit shall
be security for the payment by Tenant of the Rent and all other charges
or payments to be paid hereunder and the performance of the covenants
and obligations contained herein. Landlord shall have the right to
commingle the Security Deposit with other funds of Landlord. Anything
herein contained to the contrary notwithstanding, the Security Deposit
shall be credited against Rent or other obligations of Tenant hereunder.
(b) Landlord shall have the right to assign to Lender or any
other holder of a Mortgage the Security Deposit during the term of the
applicable Loan, and the Lender or such other holder of a Mortgage shall
have all of the rights of, and shall be subject to the terms of, this
Paragraph 37. Tenant covenants and agrees to execute such agreements,
consents and acknowledgments as may be reasonably requested by Landlord
and Lender from time to time to acknowledge the assignment of the
Security Deposit.
38. Right to Vacate; Rejectable Offer Upon Vacation.
(a) Tenant shall have the right at any time after June 1, 2004
to vacate the Leased Premises; provided that (i) Tenant shall notify
Landlord and Lender within ten (10) days after vacation of the Leased
Premises by Tenant, (ii) Tenant shall make reasonable good faith efforts
to sublet the Leased Premises, which sublease or subleases which shall
be subject to the provisions of Paragraph 21(h) or (i) hereof, as the
case may be, and (iii) Tenant shall continue to perform all of its
obligations under this Lease, including its obligation to maintain the
Leased Premises and to pay all Rent as and when due hereunder.
(b) If, at any time during the Term, the Leased Premises shall
be vacant for twelve (12) consecutive months, Tenant shall, on the first
day of the thirteenth (13th) month that Leased Premises are vacant, make
an offer (the "Vacation Offer") to purchase the Leased Premises on the
first Basic Rent Payment Date occurring thirty (30) days after the
determination of Fair Market Value (the "Vacation Purchase Date") for a
purchase price equal to the Offer Amount. Promptly upon the delivery to
Landlord of the Vacation Offer, Landlord and Tenant shall commence to
determine the Fair Market Value of the Leased Premises.
(c) No rejection of the Vacation Offer shall be effective for
any purpose unless consented to in writing by Lender. If Landlord shall
reject the Vacation Offer by notice to Tenant, containing the written
consent of Lender to such rejection, no later than the thirtieth (30th)
day following receipt of the Vacation Offer by Landlord, then this Lease
shall remain in full force and effect and Landlord and Lender shall be
deemed to have waived the Event of Default described in
Paragraph 22(a)(x) with respect to a vacation of the Leased Premises.
(d) Unless Landlord shall have rejected the Vacation Offer by
the foregoing notice to Tenant not later than the thirtieth (30th) day
following receipt of the Vacation Offer by Landlord, Landlord shall be
conclusively presumed to have accepted the Vacation Offer. If the
Vacation Offer is accepted by Landlord, then, through an appropriate
escrow, (i) Tenant shall pay to Landlord the Offer Amount on the
Vacation Purchase Date and, (ii) provided that no Rent or any other
charge is due and unpaid under this Lease as of the Vacation Purchase
Date and Tenant is otherwise in compliance with the terms hereof,
Landlord shall convey to Tenant the Leased Premises in accordance with
the provisions of Paragraph 20.
39. Miscellaneous.
(a) The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this
Lease or to be used in determining the intent of the parties or
otherwise interpreting this Lease.
(b) As used in this Lease, the singular shall include the plural
and any gender shall include all genders as the context requires and the
following words and phrases shall have the following meanings:
(i) "including" shall mean "including without limitation";
(ii) "provisions" shall mean "provisions, terms, agreements, covenants
and/or conditions"; (iii) "lien" shall mean "lien, charge, encumbrance,
title retention agreement, pledge, security interest, mortgage and/or
deed of trust"; (iv) "obligation" shall mean "obligation, duty,
agreement, liability, covenant and/or condition"; (v) "any of the Leased
Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any
part thereof or interest therein"; (vii) "any of the Improvements" shall
mean "the Improvements or any part thereof or interest therein";
(viii) "any of the Equipment" shall mean "the Equipment or any part
thereof or interest therein"; and (ix) "any of the Adjoining Property"
shall mean "the Adjoining Property or any part thereof or interest
therein".
(c) Any act which Landlord is permitted to perform under this
Lease may be performed at any time and from time to time by Landlord or
any person or entity designated by Landlord. Each appointment of
Landlord as attorney-in-fact for Tenant hereunder is irrevocable and
coupled with an interest. Except as otherwise specifically provided
herein, Landlord shall have the right, at its sole option, to withhold
or delay its consent whenever such consent is required under this Lease
for any reason or no reason. Time is of the essence with respect to the
performance by Tenant of its obligations under this Lease.
(d) Landlord shall in no event be construed for any purpose to
be a partner, joint venturer or associate of Tenant or of any subtenant,
operator, concessionaire or licensee of Tenant with respect to any of
the Leased Premises or otherwise in the conduct of their respective
businesses.
(e) This Lease and any documents which were executed by Tenant
at the request of Landlord on or about the date of the Original Lease
and may be executed by Tenant on or about the effective date hereof at
Landlord's request constitute the entire agreement between the parties
and supersede all prior understandings and agreements, whether written
or oral, between the parties hereto relating to the Leased Premises and
the transactions provided for herein. Landlord and Tenant are business
entities having substantial experience with the subject matter of this
Lease and have each fully participated in the negotiation and drafting
of this Lease. Accordingly, this Lease shall be construed without
regard to the rule that ambiguities in a document are to be construed
against the drafter.
(f) This Lease may be modified, amended, discharged or waived
only by an agreement in writing signed by the party against whom
enforcement of any such modification, amendment, discharge or waiver is
sought.
(g) The covenants of this Lease shall run with the land and bind
Tenant, its successors and assigns and all present and subsequent
encumbrances and subtenants of any of the Leased Premises, and shall
inure to the benefit of Landlord, its successors and assigns. If there
is more than one Tenant, the obligations of each shall be joint and
several.
(h) If any one or more of the provisions contained in this Lease
shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not
affect any other provision of this Lease, but this Lease shall be
construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
(i) This Lease shall be governed by and construed and enforced
in accordance with the Laws of the State.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to
be duly executed under seal as of the day and year first above written.
LANDLORD:
ET LLC, a Delaware limited
liability company, d/b/a ET QRS LLC
By: Corporate Property Associates
12 Incorporated, Member
By:
Title: First Vice President
By: Corporate Property Associates
14 Incorporated, Member
By:
Title: First Vice President
TENANT:
ETEC SYSTEMS, INC.,
a Nevada corporation
By:
Title: