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LEASE ADDENDUM
DATE: July 8, 1998
PARTIES: Glassow Ventures, L.L.C. ("Landlord")
2002 N.W. Glassow Drive
Bend, OR 97701
Advanced Power Technology, Inc. ("Tenant")
405 SW Columbia Street
Bend, OR 97702-1000
PREMISES: 307 SW Columbia Street
Bend, OR 97702
LEASE AMENDED:
That Commercial Lease between Landlord and Tenant dated March 6, 1996
(the "Lease").
RECITALS:
A. Tenant is in possession of the Premises under the terms of
the Lease.
B. Tenant wishes to extend fiber optic and copper cables from its
offices at 296 SW Columbia Street, Bend, Oregon, and 397 SW
Columbia Street, Bend, Oregon to the Premises. Landlord has
agreed to such installation.
C. The parties wish to amend the Lease to provide for the
installation of cables and the restoration and maintenance of
areas though which cable will be installed.
It is, therefore, agreed that the Lease be amended to include the following
terms:
AGREEMENT:
1. PERMISSION TO INSTALL CONDUITS AND CABLES. Landlord grants to Tenant
the right to install and maintain underground conduits containing fiber
optic and copper cables on and under the property of Landlord on which
the premises are located. Installation shall be at the location
identified on Exhibit A attached hereto and incorporated herein by
reference.
2. TENANT'S OBLIGATIONS. Tenant shall have the following obligations
with regard to the cable:
2.1 Restoration of the surface of the ground, including asphalt
and concrete surfaces, immediately following underground
installation.
2.2 Installation in a prompt and workmanlike manner, including
appropriate signage during excavation.
3. LANDLORD'S OBLIGATIONS. Landlord shall have no responsibility for
maintenance and/or
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repair of the cable.
4. LEASE PRESERVED. Upon execution, this Addendum shall be attached to and
become a part of the Lease. Except as specifically set forth herein,
the terms of the Lease remain unmodified and fully enforceable.
Landlord: Tenant:
Advanced Power Technology, Inc.
---------------------------- --------------------------------
Benji Gilchrist Greg Haugen
Vice-President, Finance and Administration
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LEGAL DESCRIPTION EXHIBIT
LOCATED IN THE NE i/4 OF SECTION 6,
TOWNSHIP 18 SOUTH, RANGE 12 EAST, W.M.
BEND DESCHUTES COUNTY OREGON
SHEVLIN CENTER
CS 09725
BLOCK 5
LOT 2
LOT 3
SO3;53;48:R
7.45;
[MAP]
EXISTING BUILDING
<PAGE>
COMMERCIAL LEASE
DATED MARCH 6, 1996
GLASSOW VENTURES, L.L.C.
AND
ADVANCED POWER TECHNOLOGY, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SECTION 1. OCCUPANCY.......................................................................................1
1.1 ORIGINAL TERM............................................................................................1
1.2 POSSESSION...............................................................................................1
1.3 RENEWAL OPTION...........................................................................................1
SECTION 2. RENT............................................................................................2
2.1 BASE RENT................................................................................................2
2.2 SECURITY DEPOSIT.........................................................................................2
2.3 ADDITIONAL RENT..........................................................................................3
2.4 ESCALATION...............................................................................................3
SECTION 3. USE OF THE PREMISES.............................................................................3
3.1 PERMITTED USE............................................................................................3
3.2 RESTRICTIONS ON USE......................................................................................3
SECTION 4. REPAIRS AND MAINTENANCE.........................................................................4
4.1 LANDLORD'S OBLIGATIONS...................................................................................4
4.2 TENANT'S OBLIGATIONS....................................................................................5
4.3 LANDLORD'S INTERFERENCE WITH TENANT......................................................................5
4.4 REIMBURSEMENT FOR REPAIRS ASSUMED........................................................................5
4.5 INSPECTION OF PREMISES...................................................................................5
SECTION 5. ALTERATIONS.....................................................................................6
5.1 ALTERATIONS PROHIBITED...................................................................................6
5.2 OWNERSHIP AND REMOVAL OF ALTERATIONS.....................................................................6
SECTION 6. INSURANCE.......................................................................................6
6.1 INSURANCE REQUIRED.......................................................................................6
6.2 PAYMENT OF PREMIUMS......................................................................................6
6.3 DETERMINATION OF REPLACEMENT VALUE.......................................................................7
6.4 WAIVER OF SUBROGATION....................................................................................7
SECTION 7. TAXES; UTILITIES................................................................................7
7.1 PROPERTY TAXES...........................................................................................7
7.2 SPECIAL ASSESSMENTS......................................................................................7
7.3 CONTEST OF TAXES.........................................................................................8
7.4 PRORATION OF TAXES.......................................................................................8
7.5 NEW CHARGES OR FEES......................................................................................8
7.6 PAYMENT OF MAINTENANCE COSTS AND UTILITIES CHARGES.....................................................8
SECTION 8. DAMAGE AND DESTRUCTION..........................................................................8
8.1 PARTIAL DAMAGE...........................................................................................8
8.2 DESTRUCTION..............................................................................................8
8.3 RENT ABATEMENT...........................................................................................9
8.4 DAMAGE LATE IN TERM......................................................................................9
SECTION 9. EMINENT DOMAIN..................................................................................9
9.1 PARTIAL TAKING...........................................................................................9
9.2 TOTAL TAKING............................................................................................10
9.3 SALE IN LIEU OF CONDEMNATION............................................................................10
SECTION 10. LIABILITY AND INDEMNITY........................................................................10
10.1 LIENS................................................................................................10
10.2 INDEMNIFICATION......................................................................................11
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<CAPTION>
<S> <C>
10.3 LIABILITY INSURANCE..................................................................................11
SECTION 11. QUIET ENJOYMENT; MORTGAGE PRIORITY.............................................................11
11.1 LANDLORD'S WARRANTY..................................................................................11
11.2 TRUST DEED PRIORITY..................................................................................11
11.3 ESTOPPEL CERTIFICATE.................................................................................12
SECTION 12. ASSIGNMENT AND SUBLETTING......................................................................12
12.1 ASSIGNMENT AND SUBLETTING............................................................................12
12.2 PERMITTED ASSIGNMENTS AND SUBLETTING.................................................................13
12.3 RELEASE OF LIABILITY.................................................................................13
SECTION 13. DEFAULT........................................................................................13
13.1 DEFAULT IN RENT......................................................................................13
13.2 DEFAULT IN OTHER COVENANTS...........................................................................14
13.3 INSOLVENCY...........................................................................................14
13.4 ABANDONMENT..........................................................................................14
SECTION 14. REMEDIES ON DEFAULT............................................................................14
14.1 TERMINATION..........................................................................................15
14.2 RELETTING............................................................................................15
14.3 DAMAGES..............................................................................................15
14.4 RIGHT TO SUE MORE THAN ONCE..........................................................................16
14.5 LANDLORD'S RIGHT TO CURE DEFAULTS....................................................................16
14.6 REMEDIES CUMULATIVE..................................................................................16
SECTION 15. SURRENDER AT EXPIRATION........................................................................16
15.1 CONDITION OF PREMISES................................................................................16
15.2 FIXTURES.............................................................................................17
15.3 HOLDOVER.............................................................................................17
SECTION 16. MISCELLANEOUS..................................................................................17
16.1 NONWAIVER............................................................................................17
16.2 ATTORNEY FEES........................................................................................18
16.3 NOTICES..............................................................................................18
16.4 SUCCESSION...........................................................................................18
16.5 RECORDATION..........................................................................................18
16.6 ENTRY FOR INSPECTION.................................................................................18
16.7 INTEREST ON RENT AND OTHER CHARGES...................................................................18
16.8 PRORATION OF RENT....................................................................................18
16.9 TIME OF ESSENCE.....................................................................................19
</TABLE>
<PAGE>
COMMERCIAL LEASE
DATE: March 6, 1996
BETWEEN: GLASSOW VENTURES L.L.C.
2002 N.W. GLASSOW DRIVE
BEND, OR 97701
("Landlord")
AND: ADVANCED POWER TECHNOLOGY, INC.
405 S.W. COLUMBIA.ST.
BEND, OR 97702
("Tenant")
Landlord leases to Tenant and Tenant leases from Landlord the following
described property (the "Premises") on the terms and conditions stated below:
Lot 3, Block 5, Shevlin Center, City of Bend, Deschutes
County, Oregon, and the North 20 feet of Lot. 4, Block 5, as
shown on the official plat of Shevlin Center, City of Bend,
Deschutes County, Oregon.
SECTION 1. OCCUPANCY
1.1 ORIGINAL TERM. The term of this lease shall commence on the date
set forth above and continue through the last day of February 2011, unless
sooner terminated or extended as hereinafter provided.
1.2 POSSESSION. Tenant's right to possession and obligations under the
lease shall commence on March 6, 1996.
1.3 RENEWAL OPTION. If the lease is not in default at the time each
option is exercised or at the time the renewal term is to commence, Tenant shall
have the option to renew this lease for two successive terms of five years each,
as follows:
A. Each of the renewal terms shall commence on the day
following expiration of the preceding term.
B. The option may be exercised by written notice to Landlord
given not less than 180 days prior to the last day of the expiring term. The
giving of such notice shall be
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sufficient to make the lease binding for the renewal term without further act of
the parties. Landlord and Tenant shall then be bound to take the steps required
in connection with the determination of rent as specified below.
C. The terms and conditions of the lease for each renewal term
shall be identical with the original term except for rent and except that Tenant
will no longer have any option to renew this lease that has been exercised. Rent
for a renewal term shall be the fair market rental value of the Premises. As
used herein, the "fair market rental rate" shall be the monthly rent (triple
net) then being obtained for five year fixed rate leases of comparable terms for
premises on property within the same geographical area, of similar types and
identity, quality and location as the Premises.
D. If the parties do not agree on the rent within 30 days
after notice of election to renew, the rent shall be determined by a qualified,
independent real property appraiser familiar with commercial rental values in
the area and not affiliated in any way with Landlord or Tenant. The appraiser
shall be chosen by Tenant from a list of not fewer than five such individuals
submitted by Landlord. If Tenant does not make the choice within five days after
submission of the list, Landlord may do so. If Landlord does not submit such a
list within 10 days after written request from Tenant to.do so, Tenant may name
as an appraiser any individual with such qualifications. Within 30 days after
appointment, the appraiser shall return a decision; which shall be final and
binding upon both parties. The cost of the appraisal shall be borne equally by
both parties.
SECTION 2. RENT
2.1 BASE RENT. During the original term, Tenant shall pay to Landlord
as base rent the sum of $16,500 per month. Rent shall be payable on the first
day of each month in advance at such place as may be designated by Landlord.
2.2 SECURITY DEPOSIT. To secure Tenant's compliance with all terms of
this lease, Tenant has paid Landlord the sum of $22,000 as a deposit. The
deposit shall be a debt from Landlord to Tenant, refundable within 30 days after
expiration of the lease term or other termination not caused by Tenant's
default. Landlord shall deposit the security deposit in a money market or other
interest bearing account reasonably agreeable to Tenant. Landlord shall have the
right to offset against the deposit any sums owing from Tenant to Landlord and
not paid
2
<PAGE>
when due, any damages caused by Tenant's default, the cost of curing any default
by Tenant should Landlord elect to do so, and the cost of performing any repair
or cleanup that is Tenant's responsibility under this lease. Offset against the
deposit shall not be an exclusive remedy in any of the above cases, but may be
invoked by Landlord, at its option, in addition to any other remedy provided by
law or this lease for Tenant's nonperformance. Landlord shall give notice to
Tenant each time an offset is claimed against the deposit, and, unless the lease
is terminated, Tenant shall within 10 days after such notice deposit with
Landlord a sum equal to the amount of the offset so that the total deposit
amount, net of offset, shall remain constant throughout the lease term.
2.3 ADDITIONAL RENT. All taxes, insurance costs, utility charges that
Tenant is required to pay by this lease, and any other sum that Tenant is
required to pay to Landlord or third parties shall be additional rent.
2.4 ESCALATION. The base rent provided in Section 2.1 shall be
increased to $19,000 per month beginning with the sixth lease year and
continuing through the tenth lease year, and shall be increased to $22,000 per
month beginning with the eleventh lease year and continuing through the
remainder of the original term. The base lease year is the 12-month period
commencing with the first full month during which this lease is in effect. Lease
years thereafter shall be each corresponding 12-month period during the term of
this lease.
SECTION 3. USE OF THE PREMISES
3.1 PERMITTED USE. The Premises shall be used for the design,
manufacture and sale of semi-conductors and other related products (and in the
case of any permitted assignee or sublessee any use permitted' by local
government authorities pursuant to applicable zoning ordinances) and for no
other purpose without the consent of Landlord, which consent shall not be
withheld unreasonably.
3.2 RESTRICTIONS ON USE. In connection with the use of the Premises,
Tenant shall:
A. Conform to all applicable laws and regulations of any
public authority affecting the premises and the use, and correct at Tenant's own
expense any failure of compliance created through Tenant's fault or by reason of
Tenant's use, but Tenant shall not be required to make any structural changes to
effect such compliance.
3
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B. Refrain from any activity that would make it impossible to
insure the Premises against casualty, would increase the insurance rate, or
would prevent Landlord from taking advantage of any ruling of the Oregon
Insurance Rating Bureau, or its successor, allowing Landlord to obtain reduced
premium rates for long-term fire insurance policies, unless Tenant pays the
additional cost of the insurance.
C. Refrain from any use that would be reasonably offensive to
other tenants or. owners or users of neighboring premises or that would tend to
create a nuisance or damage the reputation of the premises.
D. Tenant shall not cause or permit any Hazardous Substance to
be spilled, leaked, disposed of, or otherwise released on or under the Premises.
Tenant may use or otherwise handle on the Premises only those Hazardous
Substances typically used or sold in the prudent and safe operation of the
business specified in Section 3.1. Tenant may store such Hazardous Substances on
the Premises only in quantities necessary to satisfy Tenant's reasonably
anticipated needs. Tenant shall comply with all Environmental Laws and exercise
the highest degree of care in the use, handling, and storage of Hazardous
Substances and shall take all practicable measures to minimize the quantity and
toxicity of Hazardous Substances used, handled, or stored on the Premises. Upon
the expiration or termination of this Lease, Tenant shall remove all Hazardous
Substances from the Premises. The term Environmental Law shall mean any federal,
state, or local statute, regulation, or ordinance or any judicial or other
governmental order pertaining to the protection of health, safety or the
environment. The term Hazardous Substance shall mean any hazardous, toxic,
infectious or radioactive substance, waste, and material as defined or listed by
any Environmental Law and shall include, without limitation, petroleum oil and
its fractions.
SECTION 4. REPAIRS AND MAINTENANCE
4.1 LANDLORD'S OBLIGATIONS. The following shall be the responsibility
of Landlord:
A. On or before August 31, 1996, Landlord, at its
expense, shall perform the following maintenance:
(1) Remove and replace approximately 21,000
square feet of the roof on the Premises; and
4
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(2) Paint the exterior of the Premises in a
color and with a paint that is reasonably acceptable to Tenant. The work
described above shall be performed by a licensed and bonded contractor
acceptable to both Landlord and Tenant and on days and at times reasonably
acceptable to Tenant.
B. Except for the work described above in subparagraph A and
for the repair of any defects that may occur in such work, Landlord shall have
no other obligations to repair or maintain the Premises.
4.2 TENANT'S OBLIGATIONS. The following shall be the
responsibility of Tenant:
A. All other repairs to the premises which Landlord is
not required to make under Section 4.1.
4.3 LANDLORD'S INTERFERENCE WITH TENANT. In performing any repairs,
replacements, alterations, or other work performed on or around the Premises,
Landlord shall not cause unreasonable interference with use of the Premises by
Tenant. Tenant shall have no right to an abatement of rent nor any claim against
Landlord for any inconvenience or disturbance resulting from Landlord's
activities performed in conformance with the requirement of this provision.
4.4 REIMBURSEMENT FOR REPAIRS ASSUMED. If either party fails or refuses
to make repairs that are required by this Section 4, the other party may make
the repairs and charge the actual costs of repairs to the first party. Such
expenditures by Landlord shall be reimbursed by Tenant on demand together with
interest at the rate of 12 percent per annum from the date of expenditure by
Landlord. Such expenditures by Tenant may be deducted from rent and other
payments subsequently becoming due or, at Tenant's election, collected directly
from Landlord. Except in an emergency creating an immediate risk of personal
injury or property damage, neither party may perform repairs which are the
obligation of the other party and charge the other party for the resulting
expense unless at least 10 days before work is commenced, the defaulting party
is given notice in writing outlining with reasonable particularity the repairs
required, and such party fails within that time to initiate such repairs in good
faith.
4.5 INSPECTION OF PREMISES. Landlord shall have the right to inspect
the Premises at any reasonable time or times to determine the necessity of
repair. Whether or not such inspection
5
<PAGE>
is made, the duty of Landlord to make repairs shall not mature until a
reasonable time after Landlord has received from Tenant written notice of the
repairs that are required.
SECTION 5. ALTERATIONS
5.1 ALTERATIONS PROHIBITED. Tenant shall make no improvements or
alterations on the Premises of any kind without first obtaining Landlord's
written consent which consent may not be unreasonably withheld. All alterations
shall be made in a good and workmanlike manner, and in compliance with
applicable laws and building codes. As used herein, "alterations" does not
include the installation of computer and telecommunications wiring, cables, and
conduit and any further demising of the premises or rearrangement of interior
nonstructure supporting walls including the electrical, mechanical and plumbing
work connected-therewith, provided such installation does not diminish the value
of the Premises.
5.2 OWNERSHIP AND REMOVAL OF ALTERATIONS. All improvements and
alterations performed on the Premises by either Landlord or Tenant shall be the
property of Landlord when installed unless the applicable Landlord's consent
specifically provides otherwise. Improvements and alterations installed by
Tenant shall, at Landlord's option, be removed by Tenant and the premises
restored unless the applicable Landlord's consent specifically provides
otherwise.
SECTION 6. INSURANCE
6.1 INSURANCE REQUIRED. Tenant shall keep the Premises insured at the
full replacement value at Tenant's expense against fire and other risks covered
by a standard fire insurance policy with an endorsement for extended coverage.
Tenant shall bear the expense of any insurance insuring the property of Tenant
on the Premises against such risks. The policy shall name Landlord, Tenant and
Landlord's lender as insureds as their interests may appear and shall require
written notice to Landlord not less than 30 days prior to cancellation or
termination. Tenant shall furnish Landlord with a copy of all insurance policies
obtained by Tenant pursuant to this Section.
6.2 PAYMENT OF PREMIUMS. Tenant shall reimburse Landlord for the
premiums paid by Landlord for maintaining the insurance required by paragraph
6.1. Reimbursement shall be made by Tenant within 10 days after Tenant receives
a copy of the premium notice. Tenant's
6
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obligation to pay the insurance costs shall be prorated for any partial year at
the commencement and expiration or termination of the term.
6.3 DETERMINATION OF REPLACEMENT VALUE. The "full replacement value" of
the building and other improvements to be insured under paragraph 6.1 shall be
determined by the company issuing the insurance policy at the time the policy is
initially obtained. Not more frequently than once every 3 years, either party
shall have the right to notify the other party that it elects to have the
replacement value redetermined by an insurance company. The redetermination
shall be made promptly and in accordance with the rules and practices of the
Board of Fire Underwriters, or a like board recognized and generally accepted by
the insurance company, and each party shall be promptly notified of the results
by the company. The insurance policy shall be adjusted according to the
redetermination.
6.4 WAIVER OF SUBROGATION. . Neither party shall be liable to the other
(or to the other's successors or assigns) for any loss or damage caused by fire
or any of the risks enumerated in a standard fire insurance policy with an
extended coverage endorsement, and in the event of insured loss, neither party's
insurance company shall have a subrogated claim against the other. This waiver
shall be valid only if the insurance policy in question expressly permits waiver
of subrogation or if the insurance company agrees in writing that such a waiver
will not affect coverage under the policies. Each party agrees to use best
efforts to obtain such an agreement from its insurer if the policy, does not
expressly permit a waiver of subrogation.
SECTION 7. TAXES; UTILITIES
7.1 PROPERTY TAXES. Tenant shall pay as due all taxes on its personal
property located on the Premises. Tenant shall pay as due all real property
taxes and special assessments levied against the Premises. As used herein, real
property taxes includes any fee or charge relating to the ownership, use, or
rental of the Premises, other than taxes on the net income of Landlord or
Tenant. Each year Landlord shall notify Tenant of the real property taxes and
furnish Tenant with a copy of the tax bill. Tenant shall pay the real property
tax taxes not later than 10 days before the Deschutes County Assessor's
delinquency dates, including deferred payment dates.
7.2 SPECIAL ASSESSMENTS. If an assessment for a public improvement is
made against the Premises, Tenant may elect to cause such assessment to be paid
in installments, in which case
7
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only the installments payable during the lease term (including extensions
thereof) shall be treated the same as general real property taxes for purposes
of Section 7.1.
7.3 CONTEST OF TAXES. Tenant shall be permitted to contest the amount
of any tax or assessment as long as such contest is conducted in a manner that
does not cause any risk that Landlord's interest in the Premises will be
foreclosed for nonpayment. Landlord shall cooperate in any reasonable manner
with such contest by Tenant.
7.4 PRORATION OF TAXES. Tenant's share of real property taxes and
assessments for the years in which this lease commences or terminates shall be
prorated based on the portion of the tax year that this lease is in effect.
7.5 NEW CHARGES OR FEES
. If a new charge or fee relating to the ownership or use of the
Premises or the receipt of rental therefrom or in lieu of property taxes is
assessed or imposed, then, to the extent permitted by law, Tenant shall pay such
charge or fee. Tenant, however, shall have no obligation to pay any income,
profits, or franchise tax levied on the net income derived by Landlord from this
lease .
7.6 PAYMENT OF MAINTENANCE COSTS AND UTILITIES CHARGES. Tenant shall
pay when due all charges for services and utilities incurred in connection with
the use, occupancy, operation, and maintenance of the Premises, including (but
not limited to) charges for fuel, water, gas, electricity, sewage disposal, snow
removal, power, refrigeration, air conditioning, telephone, and janitorial
services.
SECTION 8. DAMAGE AND DESTRUCTION
8.1 PARTIAL DAMAGE. If the Premises are partly damaged and Section 8.2
does not apply, the Premises shall be repaired by Landlord at Landlord's
expense. Repairs shall be accomplished with all reasonable dispatch subject to
interruptions and delays from labor disputes and matters beyond the control of
Landlord and shall be performed in accordance with the provisions of Section
5.3.
8.2 DESTRUCTION. If the Premises are destroyed or damaged such that the
cost of repair exceeds 50 percent of the value of the structure before the
damage, either party may elect to terminate the lease as of the date of the
damage or destruction by notice given to the other in
8
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writing not more than 45 days following the date of damage. In such event all
rights and obligations of the parties shall cease as of the date of termination,
and Tenant shall be entitled to the reimbursement of any prepaid amounts paid by
Tenant and attributable to the anticipated term. If neither party elects to
terminate, Landlord shall proceed to restore the Premises to substantially the
same form as prior to the damage or destruction. Work shall be commenced as soon
as reasonably possible and thereafter shall proceed without interruption except
for work stoppages on account of labor disputes and matters beyond Landlord's
reasonable control.
8.3 RENT ABATEMENT. Rent shall be abated during the repair of any
damage to the extent the premises are untenantable.
8.4 DAMAGE LATE IN TERM. If damage or destruction to which Section 8.2
would apply occurs within one year before the end of the then-current lease
term, Tenant may elect to terminate the lease by written notice to Landlord
given within 30 days after the date of the damage.
SECTION 9. EMINENT DOMAIN
9.1 PARTIAL TAKING. If a portion of the Premises is condemned and
Section 9.2 does not apply, the lease shall continue on the following terms:
A. Landlord shall be entitled to all of the proceeds of
condemnation, and Tenant shall have no claim against Landlord as a result of the
condemnation except for that portion of the award specifically allocated to
compensate Tenant for its damages as a result of the condemnation.
B. Landlord shall proceed as soon as reasonably possible to
make such repairs and alterations to the Premises as are necessary to restore
the remaining Premises to a condition as comparable as reasonably practicable to
that existing at the time of the condemnation.
C. After the date on which title vests in the condemning
authority or an earlier date on which alterations or repairs are commenced by
Landlord to restore the balance of the Premises in anticipation of taking, the
rent shall be reduced in proportion to the reduction in Value of the Premises as
an economic unit on account of the partial taking. If the parties are
9
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unable to agree on the amount of the reduction of rent, the amount shall be
determined by arbitration in the manner provided in Section 17.
D. If a portion of Landlord's property not included in the
Premises is taken, and severance damages are awarded on account of the Premises,
or an award is made for detriment to the Premises as a result of activity by a
public body not involving a physical taking of any portion of the Premises, this
shall be regarded as a partial condemnation to which Sections 9.1 applies, and
the rent shall be reduced to the extent of reduction in rental value of the
Premises as though a portion had been physically taken.
9.2 TOTAL TAKING. If a condemning authority takes all of the Premises
or a portion sufficient to render the remaining premises reasonably unsuitable
for the use that Tenant was then making of the premises, the lease shall
terminate as of the date the title vests in the condemning authorities. Such
termination shall have the same effect as a termination under Section 9.1. The
parties shall be entitled to share in the condemnation proceeds in proportion to
the values of their respective interests in the Premises.
9.3 SALE IN LIEU OF CONDEMNATION. Sale of all or part of the premises
to a purchaser with the power of eminent domain in the face of a threat or
probability of the exercise of the power shall be treated for the purposes of
this Section 9 as a taking by condemnation.
SECTION 10. LIABILITY AND INDEMNITY
10.1 LIENS.
A. Except with respect to activities for which Landlord is
responsible, Tenant shall pay as due all claims for work done on and for
services rendered or material furnished to the Premises, and shall keep the
Premises free from any liens. If Tenant fails to pay any such claims or to
discharge any lien, Landlord may do so and collect the cost as additional rent.
Any amount so added shall bear interest at the rate of 12 percent per annum from
the date expended by Landlord and shall be payable on demand. Such action by
Landlord shall not constitute a waiver of any right or remedy which Landlord may
have on account of Tenant's default.
B. Tenant may withhold payment of any claim in connection with
a good-faith dispute over the obligation to pay, as long as Landlord's property
interests are not jeopardized. If a lien is filed as a result of nonpayment,
Tenant shall, within 10 days after
10
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knowledge of the filing, secure the discharge of the lien or deposit with
Landlord cash or sufficient corporate surety bond or other surety satisfactory
to Landlord in an amount sufficient to discharge the lien plus any costs,
attorney fees, and other charges that could accrue as a result of a foreclosure
or sale under the lien.
10.2 INDEMNIFICATION. Tenant shall indemnify and defend Landlord from
any claim, loss, or liability arising out of or related to any negligent
activity of Tenant on the Premises or any condition of the Premises in the
possession or under the control of Tenant including any such claim, loss, or
liability that may be caused or contributed to in whole or in part by Landlord's
own negligence or failure to effect any repair or maintenance required by this
lease.
10.3 LIABILITY INSURANCE. Before going into possession of the Premises,
Tenant shall procure and thereafter during the term of the lease shall continue
to carry the following insurance at Tenant's cost: comprehensive general
liability insurance in a responsible company with limits of not less than
$1,000,000 for injury to one person, $3,000,000 for injury to two or more
persons in one occurrence, and $300,000 for damage to property. Such insurance
shall cover all risks arising directly or indirectly out of Tenant's activities
on or any condition of the premises whether or not related to an occurrence
caused or contributed to by Landlord's negligence. Such insurance shall protect
Tenant against the claims of Landlord on account of the obligations assumed by
Tenant under Section 10.2, and shall name Landlord as an additional insured.
Certificates evidencing such insurance and bearing endorsements requiring 10
days' written notice to Landlord prior to any change or cancellation shall be
furnished to Landlord prior to Tenant's occupancy of the property.
SECTION 11. QUIET ENJOYMENT; MORTGAGE PRIORITY
11.1 LANDLORD'S WARRANTY. Landlord warrants that it is the owner of the
Premises and has the right to lease them free of all encumbrances except those
set forth on the attached schedule entitled "Exceptions to Title." Landlord will
defend Tenant's right to quiet enjoyment of the Premises from the lawful claims
of all persons during the lease term.
11.2 TRUST DEED PRIORITY. This lease is and shall be prior to any
mortgage or deed of trust ("Encumbrance") recorded after the date of this lease
and affecting the Premises. However, if any lender holding such an Encumbrance
requires that this lease be subordinate to the Encumbrance, then Tenant agrees
that the lease shall be subordinate to the Encumbrance if the
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holder thereof agrees in writing with Tenant that as long as Tenant performs its
obligations under this lease no foreclosure, deed given in lieu of foreclosure,
or sale pursuant to the terms of the Encumbrance, or other steps or procedures
taken under the Encumbrance shall affect Tenant's rights under this lease. If
the foregoing condition is met, Tenant shall execute the written agreement and
any other documents required by the holder of the Encumbrance to accomplish the
purposes of this paragraph. If the premises are sold as a result of foreclosure
of any Encumbrance thereon, or otherwise transferred by Landlord or any
successor, Tenant shall attorn to the purchaser or transferee.
11.3 ESTOPPEL CERTIFICATE. Either party will, within 20 days after
notice from the other, execute and deliver to the other party a certificate
stating whether or not this lease has been modified and is in full force and
effect and specifying any modifications or alleged breaches by the other party.
The certificate shall also state the amount of monthly base rent, the dates to
which rent has been paid in advance, and the amount of any security deposit or
prepaid rent and such other requirements as may reasonably be required by
Landlord's lender. Failure to deliver the certificate within the specified time
shall be conclusive proof upon the party from whom the certificate was requested
that the lease is in full force and effect and has not been modified except as
represented in the notice requesting the certificate.
SECTION 12. ASSIGNMENT AND SUBLETTING
12.1 ASSIGNMENT AND SUBLETTING. Landlord agrees that Tenant may assign
this lease (including, at Tenant's option, any renewal options) or sublease all
or a portion of the Premises in writing to any other party, with written consent
of Landlord, which consent shall not be unreasonably withheld, delayed or
conditioned, provided that:
A. Any such assignee shall, in writing, assume and agree to
keep, observe and perform all of the agreements, conditions, covenants and terms
of this lease on the part of Tenant to be kept, observed and performed, and
shall be and become liable for the nonperformance thereof accruing from said
date; and
B. Any such subtenant shall, in writing, agree to be subject
to all of the agreements, conditions, covenants and terms of this Lease on the
part of Tenant to be kept, observed and performed; and
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C. Except for Prestige Moving and Storage (see section 12.2),
Tenant furnishes Landlord with such financial and ownership information of such
subtenant as may be reasonably requested by Landlord.
D. No further or additional assignment or subletting of this
lease shall be made except upon compliance with and subject to the provisions of
this Section 12.
12.2 PERMITTED ASSIGNMENTS AND SUBLETTING. Tenant may assign this lease
or sublet all or part of the Premises, without Landlord's approval, to Prestige
Moving & Storage, to a parent corporation of Tenant, or to any subsidiary,
affiliate, limited liability company or partnership where Tenant or any
affiliate of Tenant is the managing or a general partner or managing member, or
in connection with a merger, acquisition, reorganization or consolidation of
Tenant, or in connection with the sale or transfer of all or substantially all
of -Tenant's (or its parent's or affiliates') stock or assets. The term
"affiliate" as used herein shall mean any entity in which Tenant or its parent
corporation holds 30% or more of the ownership interests.
12.3 RELEASE OF LIABILITY. No assignment shall relieve Tenant from
liability hereunder, unless Tenant can reasonably demonstrate to Landlord that
the assignee has a net worth on the date of assignment equal to or in excess of
$20,000,000 as prepared in accordance with generally accepted accounting
principles and has the ability to perform Tenant's obligations required by this
lease. In such event, Tenant shall be released from all liability hereunder
accruing after the date of assignment and Landlord shall execute such
instruments as Tenant may reasonably request to evidence such release of
liability. Before releasing Tenant from liability, Landlord may undertake
reasonable due diligence (but not including an audit) to confirm the prospective
Assignee's net worth, the cost of which shall be reimbursed by Tenant to
Landlord at the time of obtaining Landlord's release of liability.
SECTION 13. DEFAULT
The following shall be events of default:
13.1 DEFAULT IN RENT. Failure of Tenant to pay any rent or other charge
within 10.days after it is due; provided that Tenant shall not be in default
until five days following receipt of a
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notice from Landlord that the rent is past due and provided further that
Landlord shall not be required-tq give more than one such notice in any twelve
month period.
13.2 DEFAULT IN OTHER COVENANTS. Failure of Tenant to comply with any
term or condition or fulfill any obligation of the lease (other than the payment
of rent or other charges) within 30 days after written notice by Landlord
specifying the nature of the default with reasonable particularity. If the
default is of such a nature that it cannot be completely remedied within the
30-day period, this provision shall be complied with if Tenant begins correction
of the default within the 30-day period and thereafter proceeds with reasonable
diligence and in good faith to effect the remedy as soon as practicable.
13.3 INSOLVENCY. Insolvency of Tenant; an assignment by Tenant for the
benefit of creditors; the filing by Tenant of a voluntary petition in
bankruptcy; an adjudication that Tenant is bankrupt or the appointment of a
receiver of the properties of Tenant; the filing of any involuntary petition of
bankruptcy and failure of Tenant to secure a dismissal of the petition within 30
days after filing; attachment of or the levying of execution on the leasehold
interest and failure of Tenant to secure discharge of the attachment or release
of the levy of execution within 10 days shall constitute a default. If Tenant
consists of two or more individuals or business entities, the events of default
specified in this Section 13.3 shall apply to each individual unless within 10
days after an event of default occurs, the remaining individuals produce
evidence satisfactory to Landlord 'that they have unconditionally- acquired the
interest of the one causing the default. If the lease has been assigned, the
events of default so specified shall apply only with respect to the one then
exercising the rights of Tenant under the lease.
13.4 ABANDONMENT. Failure of Tenant for 30 days or more to occupy the
Premises for one or more of the purposes permitted under this lease, unless such
failure is excused under other provisions of this lease.
SECTION 14. REMEDIES ON DEFAULT
14.1 TERMINATION. In the event of a default the lease may be terminated
at the option of Landlord by written notice to Tenant. Whether or not the lease
is terminated by the election of Landlord or otherwise, Landlord shall be
entitled to recover damages from Tenant for the default, and Landlord may
reenter, take possession of the premises, and remove any persons or
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property by legal action or by self-help with the use of reasonable force and
without liability for damages and without having accepted a surrender.
14.2 RELETTING. Following reentry or abandonment, Landlord may relet
the Premises and in that connection may make any suitable alterations or
refurbish the Premises, or both, or change the character or use of the Premises,
but Landlord shall not be required to relet for any use or purpose which
Landlord may reasonably consider injurious to the Premises, or to any tenant.
that Landlord may reasonably consider objectionable. Landlord may relet all or
part of the Premises, alone or in conjunction with other properties, for a term
longer or shorter than the term of this lease, upon any reasonable terms and
conditions, including the granting of some rent-free occupancy or other rent
concession.
14.3 DAMAGES. In the event of termination or retaking of possession
following default, Landlord shall be entitled to recover immediately, without
waiting until the due date of any future rent or until the date fixed for
expiration of the lease term, the following amounts as damages:
A. The loss of rental from the date of default until a new
tenant is, or with the exercise of reasonable efforts could have been, secured
and paying rent.
B. The reasonable costs of reentry and reletting including
without limitation the cost of any cleanup, refurbishing, removal of Tenant's
property and fixtures, costs incurred under Section 14.5, or any other expense
occasioned by Tenant's default including but not limited to, any remodeling or
repair costs, attorney fees, court costs, broker commissions, and advertising
costs.
C. Any excess of the value of the rent and all of Tenant's
other obligations under this lease over the reasonable expected return from the
premises for the period commencing on the earlier of the date of trial or the
date the premises are relet, and continuing through the end of the term. The
present value of future amounts will be computed using a discount rate equal to
the prime loan rate of major Oregon banks in effect on the date of trial.
14.4 RIGHT TO SUE MORE THAN ONCE. Landlord may sue periodically to
recover damages during the period corresponding to the remainder of the lease
term, and no action for damages shall bar a later action for damages
subsequently accruing.
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14.5 LANDLORD'S RIGHT TO CURE DEFAULTS. If Tenant fails to perform any
obligation under this lease, Landlord shall have the option to do so after 30
days' written notice to Tenant. All of Landlord's expenditures to correct the
default shall be reimbursed by Tenant on demand with interest at the rate of 10
percent annum from the date of expenditure by Landlord. Such action by Landlord
shall not waive any other remedies available to Landlord because of the default.
14.6 REMEDIES CUMULATIVE. The foregoing remedies shall be in addition
to and shall not exclude any other remedy available to Landlord under applicable
law.
SECTION 15. SURRENDER AT EXPIRATION
15.1 CONDITION OF PREMISES. Upon expiration of the lease term or
earlier termination on account of default, Tenant shall deliver all keys to
Landlord and surrender the Premises broom clean and in the condition they were
in at the commencement of this lease except for reasonable wear and tear
associated with Tenant's permitted use. Alterations constructed by Tenant with
permission from Landlord shall not be removed or restored to the original
condition unless the terms of permission for the alteration so require. Tenant's
obligations under this section shall be subordinate to. the provisions of
Section 8 relating to destruction.
15.2 FIXTURES
A. All fixtures existing or placed upon the Premises during
the term, other than Tenant's trade fixtures, shall, at Landlord's option,
become the property of Landlord, provided that Tenant shall maintain ownership
of and have the right to remove (i) the HVAC system associated with the wafer
fabrication area; (ii) the deionized water system; (iii) the acid water system;
(iv) any office areas constructed of de-mountable partition systems; and (v) all
additions or improvements to items (i) through (iv). If Landlord so elects,
Tenant shall remove any or all fixtures that would otherwise remain the property
of Landlord, and shall repair any physical damage resulting from the removal of
such fixtures and damage resulting from the removal of items (i) through (iv)
above. If Tenant fails to remove such fixtures, Landlord may do so and charge
the cost to Tenant with interest at the rate of 12 percent per annum from the
date of expenditure.
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B. Prior to expiration or other termination of the lease term
Tenant shall remove all furnishings, furniture, and trade fixtures that remain
its property. If Tenant fails to do so, this shall be an abandonment of the
property, and Landlord may retain the property and all rights of Tenant with
respect to it shall cease or, by notice in writing given to Tenant within 20
days after removal was required, Landlord may elect to hold Tenant to its
obligation of removal. If Landlord elects to require Tenant to remove, Landlord
may effect a removal and place the property in public storage for Tenant's
account. Tenant shall be liable to Landlord for the cost of removal,
transportation to storage, and storage, with interest at the legal rate on all
such expenses from the date of expenditure by Landlord.
15.3 HOLDOVER
A. If Tenant does not vacate the Premises at the time
required, Landlord shall have the option to treat Tenant as a tenant from month
to month, subject to all of the provisions of this lease except the provisions
for term and renewal, or to eject Tenant from the Premises and recover damages
caused by wrongful holdover. Failure of Tenant to remove fixtures, furniture,
furnishings, or trade fixtures that Tenant is required to remove under this
lease shall constitute a failure to vacate to which this section shall apply if
the property not removed will substantially interfere with occupancy of the
Premises by another tenant or with occupancy by Landlord for any purpose
including preparation for a new tenant.
B. If a month-to-month tenancy results from a holdover by
Tenant under this. Section 15.3, the tenancy shall be terminable at the end of
any monthly rental period on written notice from Landlord given not less than 10
days prior to the termination date which shall be specified in the notice.
Tenant waives any notice that would otherwise be provided by law with respect to
a month-to-month tenancy.
SECTION 16. MISCELLANEOUS
16.1 NONWAIVER. Waiver by either party of strict performance of any
provision of this lease shall not be a .waiver of or prejudice the party's right
to require strict performance of the same provision in the future or of any
other provision.
16.2 ATTORNEY FEES. If suit or action is instituted in connection with
any controversy arising out of this lease, the prevailing party shall be
entitled to recover in addition
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to costs such sum as the court may adjudge reasonable as attorney fees at trial,
on petition for review, and on appeal.
16.3 NOTICES. . Any notice required or permitted under this lease shall
be given when actually delivered or 48 hours after deposit in United States mail
as certified mail addressed to the address first given in this lease or to such
other address as may be specified from time to time by either of the parties in
writing.
16.4 SUCCESSION. . Subject to the above-stated limitations on transfer
of Tenant's interest, this lease shall be binding on and inure to the benefit of
the parties and their respective successors and assigns.
16.5 RECORDATION. This lease shall not be recorded without the written
consent of Landlord. Landlord shall execute and acknowledge a memorandum of this
lease in a form suitable for recording, and Tenant may record the memorandum.
16.6 ENTRY FOR INSPECTION. Landlord shall have the right upon
reasonable advance notice to enter upon the Premises to determine Tenant's
compliance with this lease, to make necessary repairs to the building or to the
Premises, or to show the Premises to any prospective tenant or purchaser, and in
addition shall have the right, at any time during the last two months of the
term of this lease, to place and maintain upon the Premises notices for leasing
or selling of the Premises.
16.7 INTEREST ON RENT AND OTHER CHARGES. Any rent or other payment
required of Tenant by this lease shall, if not paid within 10 days after it is
due, bear interest at the rate of 10 percent per annum (but not in any event at
a rate greater than the maximum rate of interest permitted by law) from the due
date until paid.
16.8 PRORATION OF RENT. In the event of commencement or termination of
this lease at a time other than the beginning or end of one of the specified
rental periods, then the rent shall be prorated as of the date of commencement
or termination and in the event of termination for reasons other than default,
all prepaid rent shall be refunded to Tenant or paid on its account.
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16.9 TIME OF ESSENCE. Time is of the essence of the performance of each
of the parties obligations under this lease.
"LANDLORD" "TENANT"
GLASSOW VENTURES, L.L.C., ADVANCED POWER TECHNOLOGY, INC.
AN OREGON LIMITED LIABILITY COMPANY
COMPANY
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By By
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